Exhibit 1
2,000,000 SHARES
TRAINING DEVICES, INC.
(a Colorado corporation)
(No Par Value)
UNDERWRITING AGREEMENT
August __, 1999
CAPITAL WEST SECURITIES, INC.
000 X. Xxxxxxxx, Xxxxx 000
One Leadership Square
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Ladies/Gentlemen:
Training Devices, Inc., a Colorado corporation (the "Company"),
hereby confirms its agreement with Capital West Securities, Inc. ("Capital
West") as representative of the several underwriters named in Schedule A
hereto (collectively, the "Underwriters") as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
approximately 2,000,000 shares (the "Firm Shares") of its authorized and
unissued common stock, no par value (the "Common Stock"), to the Underwriters
upon the terms and subject to the conditions set forth herein. The Company
also proposes to grant to the Underwriters an option to purchase, for the
sole purpose of covering over-allotments in connection with the sale of Firm
Shares, an aggregate of up to 300,000 additional shares ("Option Shares") of
Common Stock upon the terms and subject to the conditions set forth herein
and as provided in Section 7 hereof. As used in this Agreement, the term
"Shares" shall include the Firm Shares and the Option Shares. All shares of
Common Stock of the Company, including the Shares, are hereinafter referred
to as "Common Stock."
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents and warrants to and agrees with the Underwriters, as
follows:
(a) A registration statement on Form SB-2 (File No.
333-______) (the "Registration Statement") with respect to the Shares,
including a prospectus subject to completion, has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the applicable rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act, and has been filed with the
Commission. Any amendments to such registration statement and any amended
prospectuses subject to completion, as may have been required prior to the
date hereof, have been similarly prepared and filed with the Commission. The
Company will file any additional amendments to the Registration Statement and
any amended prospectuses subject to completion, as may hereafter be required.
The Company meets the requirements for use of a registration statement on
Form SB-2. Copies of the Registration Statement and any amendments and copies
of each related prospectus subject to completion have been delivered to you.
If the Registration Statement has been declared effective
under the Securities Act by the Commission, the Company will prepare and
promptly file with the Commission the information omitted from the
Registration Statement pursuant to Rule 430A(a) of the Rules and Regulations
or as part of a post-effective amendment to the Registration Statement
(including a final form of prospectus). If the Registration Statement has not
been declared effective under the Securities Act by the Commission, the
Company will prepare and promptly file a further amendment to the
Registration Statement, including a final form of prospectus. The term
"Registration Statement" as used in this Agreement shall mean such
Registration Statement, including financial statements, schedules and
exhibits, in the form in which it became or becomes, as the case may be,
effective (including, if the Company omitted information from the
Registration Statement pursuant to Rule 430A(a) of the Rules and Regulations,
the information deemed to be a part of the Registration Statement at the time
it became effective pursuant to Rule 430A(b) of the Rules and Regulations)
and, in the event of any amendment thereto after the effective date of such
Registration Statement, shall also mean (from and after the effectiveness of
such amendment) such Registration Statement as so amended. The term
"Prospectus" as used in this Agreement shall mean the prospectus relating to
the Shares as included in the Registration Statement at the time it becomes
effective (including, if the Company omitted information from the
Registration Statement pursuant to Rule 430A(a) of the Rules and Regulations,
the information deemed to be a part of the Registration Statement at the time
it became effective pursuant to Rule 430A(b) of the Rules and Regulations),
except that if any revised prospectus shall be provided to the Underwriters
by the Company for use in connection with the offering of the Shares that
differs from the Prospectus on file with the Commission at the time the
Registration Statement became or becomes, as the case may be, effective
(whether or not such revised prospectus is required to be filed with the
Commission pursuant to Rule 424(b)(3) of the Rules and Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Underwriters for such use.
(b) The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus or instituted proceedings
for that purpose, and each such preliminary prospectus has conformed in all
material respects to the requirements of the Securities Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and at the time the Registration Statement became or becomes,
as the case may be, effective and at all times subsequent thereto up to and
on the Closing Date (hereinafter defined) and on any later date on which
Option Shares are to be purchased, (i) the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained and will
contain all material information required to be included therein by the
Securities Act and the Rules and Regulations, and will in all material
respects conform to the requirements of the Securities Act and the Rules and
Regulations, and (ii) neither the Registration Statement nor the Prospectus,
nor any amendments or supplements thereto, will include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties contained in this
subparagraph shall apply to information contained in or omitted from the
Registration Statement or the Prospectus or any such amendment or supplement
in
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reliance upon, and in conformity with, written information furnished to the
Company by any Underwriter specifically for inclusion or exclusion therein or
therefrom.
(c) Each contract, agreement, instrument, lease, license or
other item required to be described in the Registration Statement or the
Prospectuses or filed as an exhibit to the Registration Statement has been so
described or filed, as the case may be.
(d) The Company and each of its Subsidiaries (as such term
is defined in Rule 405 under the Securities Act) has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of its organization, with full corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Registration Statement; each of the Company and its
Subsidiaries is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the ownership or leasing of
its properties or the conduct of its business requires such qualification
except where the failure to be so qualified or to be in good standing would
not have a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
Subsidiaries considered as a whole; each of the Company and its Subsidiaries
is in possession of and operating in compliance with all authorizations,
licenses, certificates, consents, orders and permits from state, Federal and
other regulatory authorities which are material to the conduct of its
business, all of which are valid and in full force and effect; neither the
Company nor its Subsidiaries is in violation of its charter or bylaws or in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, or any material lease, contract, joint
venture, or other agreement or instrument to which it is a party or by which
its property is bound or in violation of any law, order, rule, regulation,
writ, injunction, judgment or decree of any government, governmental agency
or body or court, domestic or foreign, of which it has knowledge except such
failures to comply as would not, individually or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries considered as a
whole.
(e) The Company has full legal right, power and authority
to enter into this Agreement and perform the transactions contemplated
hereby. This Agreement and the Warrant Agreement (the "Warrant Agreement") by
and between the Company and the Managing Underwriter have been duly
authorized, executed and delivered by the Company and are valid and binding
agreements on the part of the Company, enforceable in accordance with their
respective terms, except as rights to indemnification and contribution
hereunder may be limited by applicable law and except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization
moratorium or other similar laws relating to or affecting creditors' rights
generally, or by general equitable principles; the performance of this
Agreement and the Warrant Agreement and the consummation of the transactions
herein and therein contemplated will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, (i) any
material indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note agreement or other evidence of indebtedness, or any material lease,
contract, joint venture or other agreement or instrument to which the Company
is a party or by which the property of the Company is bound including any
licenses from third parties, or (ii) the Articles of
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Incorporation and Bylaws of the Company, or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any government or
governmental agency or body or court, domestic or foreign, having
jurisdiction over the Company or over the properties of the Company, except
for breaches, violations or defaults that individually or in the aggregate,
would not have a material adverse effect on the Company; and no consent,
approval, authorization or order of any court or governmental agency or body
is required for the consummation of the transactions herein contemplated,
except such as may be required under the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or under state or
other securities or Blue Sky laws, all of which requirements have been
satisfied in all material respects.
(f) Except as disclosed in the Registration Statement or
the Prospectus, there is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or its
Subsidiaries which (i) is required to be disclosed in the Registration
Statement or the Prospectus or which might result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered
as one enterprise, or which might materially and adversely affect the
properties or assets thereof; or (ii) which might be expected to materially
and adversely affect the consummation of the transactions contemplated by
this Agreement; all pending legal or governmental proceedings to which the
Company or its Subsidiaries is a party or of which any of their respective
properties or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to
the Company's business, could not reasonably be expected to result in a
material adverse change in the condition, financial or otherwise, or the
earnings, business affairs or business properties of the Company and its
Subsidiaries considered as one enterprise; and there are no contracts or
documents of the Company or its Subsidiaries which are required to be
described in the Registration Statement or the Prospectus, or to be filed as
exhibits thereto, by the Securities Act or by the Rules and Regulations which
have not been accurately described in all material respects and filed as
exhibits to the Registration Statement. To the best of the Company's
knowledge, the contracts so described in the Prospectus are in full force and
effect on the date hereof, and neither the Company nor its Subsidiaries is in
breach of or default under, and to the Company's knowledge, no other party is
in material breach of or material default under, any of such contracts,
except for any liabilities specifically described in the Registration
Statement.
(g) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all Federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities (other than
such preemptive rights or other rights to subscribe for or purchase
securities as were fully complied with or expressly waived or with respect to
the violation of which the right to make claim is barred by the applicable
statute of limitations), and the authorized and outstanding capital stock of
the Company conforms in all material respects to the statements relating
thereto contained in the Registration Statement and the Prospectus (and such
statements correctly state the substance of the instruments defining the
capitalization of the Company); the Firm Shares and the Option Shares to be
purchased from the Company hereunder have been duly
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authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company against payment
therefor in accordance with the terms of this Agreement, will be duly and
validly issued and fully paid and nonassessable; the [200,000] shares of
Common Stock issuable under the warrant (the "Managing Underwriter's
Warrants") to be granted to the Managing Underwriter under the Warrant
Agreement have been duly authorized for issuance and sale to the Managing
Underwriter pursuant to this Agreement and, when issued and delivered by the
Company against payment therefor in accordance with the terms of the Warrant
Agreement, will be duly and validly issued and fully paid and nonassessable;
and no preemptive right, co-sale right, registration right, right of first
refusal or other similar right of stockholders exists with respect to any of
the Firm Shares, Option Shares or shares of Common Stock issuable under the
Managing Underwriter's Warrant or the issuance and sale thereof other than
those that have been expressly waived prior to the date hereof and those that
will automatically expire upon the consummation of the transactions
contemplated on the Closing Date. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance
and sale or transfer of the Shares except as may be required under the
Securities Act, the Exchange Act or under state or other securities or Blue
Sky laws. Except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company (including the notes thereto) included in
the Prospectus, the Company has no outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown with
respect to such plans, arrangements, options and rights. The shares of Common
Stock reserved for issuance upon exercise of the Company's outstanding
options and warrants have been duly and validly authorized and are sufficient
in number to meet the exercise requirements of such options.
(h) Xxxxxx Xxxxxxxx LLP, which has examined the financial
statements (together with related schedules and notes) of the Company filed
with the Commission as a part of the Registration Statement and which are
included in the Prospectus, are independent accountants within the meaning of
the Securities Act and the Rules and Regulations; the audited and pro forma
financial statements of the Company, together with the related schedules and
notes, and the unaudited financial information, forming part of the
Registration Statement and Prospectus, fairly present the financial position
and the results of operations of the Company at the respective dates and for
the respective periods to which they apply; and all audited and pro forma
financial statements, together with the related schedules and notes, and the
unaudited and pro forma financial information, filed with the Commission as
part of the Registration Statement, have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved except as may be otherwise stated therein. The selected and
summary financial and statistical data included in the Registration Statement
present fairly the information shown therein and have been compiled on a
basis consistent with the audited financial statements presented therein. No
other financial statements or schedules are required to be included in the
Registration Statement.
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(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (i) there has been no material adverse change in the
business, properties, operations, condition (financial or otherwise) or in
the earnings, business affairs or business prospects of the Company and its
Subsidiaries, whether or not arising in the ordinary course of business, (ii)
there have been no transactions entered into by the Company other than those
in the ordinary course of business, which are material with respect to the
Company, (iii) there has been no obligation that is material to the Company,
direct or contingent, incurred by the Company or any Subsidiary, except
obligations incurred in the ordinary course of business, (iv) there has been
no change in the capital stock of the Company, (v) there has been no change
in the outstanding indebtedness of the Company which is material to the
Company, (vi) there has been no dividend or distribution of any kind
declared, paid or made by the Company on behalf of any class of its
respective capital stock, (vii) there has been no redemption, purchase or
acquisition or agreement to redeem, purchase or acquire shares of Common
Stock of the Company, (viii) to the knowledge of the Company, there has been
no change in any Federal, state, or other laws, rules, or regulations (or
interpretations thereof) applicable to the business of the Company that would
have a material adverse effect on the Company, and, to the knowledge of the
Company, no such change is proposed other than as described in the Prospectus.
(j) Except as described in the Prospectus, (i) the Company
and its Subsidiaries have good and marketable title to all properties and
assets described in the Prospectus as owned by them, free and clear of all
liens, charges, encumbrances or restrictions of any kind, except those
described in the Prospectus, or those not material, singly or in the
aggregate, to the business of the Company and its Subsidiaries considered as
a whole, (ii) the agreements to which the Company is a party described in the
Prospectus are valid agreements, enforceable by the Company, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally or by general equitable principles, and (iii) the Company has valid
and enforceable leases for the properties described in the Prospectus as
leased by it except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles.
(k) All Federal, state, local and foreign tax returns
required to be filed by the Company or its Subsidiaries in any jurisdiction
have been filed, and all material taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges due or claimed to
be due from such entities have been paid other than those being contested in
good faith and for which adequate reserves have been provided or those
currently payable without penalty or interest; and adequate charges, accruals
and reserves have been provided for in the financial statements referred to
in Section 2(g) above in respect of all Federal, state, local and foreign
taxes for all periods as to which the tax liability of the Company or its
Subsidiaries has not been finally determined or remains open to examination
by applicable taxing authorities.
(l) No labor dispute with the employees of the Company or
its Subsidiaries exists or, to the knowledge of the Company, is imminent; and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers,
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contractors or customers which might be expected to result in any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise. No collective bargaining agreement exists with
any of the Company's employees and, to the Company's knowledge, no such
agreement is imminent.
(m) The Company and its Subsidiaries own or possess, or can
acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names presently
employed by them in connection with the business now operated by them and
neither the Company nor its Subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any patent or proprietary rights or of any facts or
circumstances which would render any patent and proprietary rights invalid or
inadequate to protect the interest of the Company or its Subsidiaries
therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) or invalidity or inadequacy singly
or in the aggregate, would result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise.
(n) Except as set forth in the Prospectus, the Company and
its Subsidiaries are in compliance in all material respects with all
applicable laws, statutes, ordinances, rules or regulations, the enforcement
of which, individually or in the aggregate, would be reasonably expected to
have a material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise.
(o) The Common Stock has been approved for quotation on the
Nasdaq National Market or the American Stock Exchange, subject to official
notice of issuance.
(p) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will not
become an "investment company" within the meaning of the 1940 Act and such
rules and regulations.
(q) The Company has not distributed and will not distribute
prior to the Closing Date or on any date on which Option Shares are to be
purchased, as the case may be, any offering material in connection with the
offering and sale of the Shares other than the Prospectus, the Registration
Statement and other materials permitted by the Securities Act.
(r) The Company has not at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office,
or failed to disclose fully any contribution in violation of law, or (ii)
made any payment to any Federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
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(s) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares. The Company has not
effected any sales of securities required to be disclosed in Item 26 of Form
SB-2 under the Securities Act, other than as disclosed in the Registration
Statement.
(t) Each officer and director of the Company and each
beneficial owner of at least 5% of the outstanding shares of Common Stock and
options and warrants to purchase Common Stock outstanding prior to the
effective date of the Registration Statement have agreed in writing that such
persons will not offer to sell, contract to sell, sell short, or otherwise
sell or dispose of any shares of Common Stock of the Company, any options or
warrants to purchase any shares of Common Stock of the Company, or any
securities convertible into or exchangeable for shares of the Common Stock
owned directly by such person or with respect to which such person has the
power of disposition otherwise than (i) as a gift or gifts, provided the
donee or donees thereof agree to be bound by this restriction or (ii) with
the prior written consent of Capital West, for a period expiring one year
after the effective date of the Registration Statement and for an additional
period of one year thereafter, not more than 10% of each such officer's,
director's or beneficial owner's interest may be sold in any one calendar
quarter. All shares held for investment by persons other than officers,
directors and 5% beneficial owners will be subject to restriction on resale
by the Managing Underwriter for a period of nine (9) months from the
effective date.
(u) Except as described in the Registration Statement, (i)
neither the Company nor its Subsidiaries is in violation of any Federal,
state, local or foreign laws or regulations relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or wildlife, including, without limitation, laws and regulations relating to
the release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum or petroleum
products (collectively, "Environmental Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Environmental Materials (collectively, the "Environmental Laws"),
except such violations as would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise, and (ii) to the Company's
knowledge, there are no events or circumstances that could form the basis of
an order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or its Subsidiaries relating to any Environmental Materials or the
violation of any Environmental Laws, which, singly or in the aggregate, could
reasonably be expected to have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise.
(v) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles as in
8
effect in the United States and to maintain asset accountability; (iii)
access to bank accounts 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.
(w) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus. Neither the Company nor any employee or agent of the Company has
made any payment or transfer of any funds or assets of the Company or
conferred any personal benefit by use of the Company's assets, or received
any funds, assets or personal benefit in violation of any law, rule or
regulation.
(x) On the Closing Date and upon delivery of the Option
Shares, as applicable, all transfer and other taxes (other than income taxes)
that are required to be paid in connection with the sale and transfer of the
Shares to the Underwriters will have been paid.
(y) The Company does not currently have and has never had
any pension plan subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability, the Company has not incurred
and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
(z) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 517.075, Florida Statutes
(Chapter 92-198, Laws of Florida) AN ACT RELATING TO DISCLOSURE OF DOING
BUSINESS WITH CUBA (the "Cuba Act"), and the Company further agrees that if
it commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the date the Registration Statement
becomes or has become effective with the Commission or the Florida Department
of Banking and Finance (the "Department"), whichever date is later, or if the
information reported or incorporated by reference in the Prospectus, if any,
concerning the Company's business in Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will provide the
Department notice of such business or change, as appropriate, in a form
acceptable to the Department.
(aa) Any certificate signed by any officer of the Company
and delivered to the Underwriters or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
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(bb) Except as may be set forth in the Prospectus, the
Company has not incurred any liability for a fee, commission, or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by the Underwriting Agreement.
(cc) The Company and each subsidiary is insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which the
Company and the subsidiaries are engaged.
3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, respectively, at a purchase price of
$10.00 per Share less an underwriting discount of 8.0%, the number of
Shares set forth in SCHEDULE A hereto (subject to adjustment as provided in
Section 10).
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made
against payment of the purchase price therefor by the Underwriters by
certified or official bank check in next day funds, payable to the order of
the Company at the offices of Capital West Securities, Inc., 000 X. Xxxxxxxx,
Xxxxx 000, One Leadership Square, Oklahoma City, Oklahoma 73102, or at such
other place as shall be agreed upon by the Underwriters and the Company, at
9:30 a.m. on the fourth business day following the first day that Shares are
traded (or at such time and date to which payments and delivery shall have
been postponed pursuant to Section 10 hereof), such time and date of payment
and delivery being herein called the "Closing Date." The certificates for the
Firm Shares to be so delivered will be made available to you at such office
or at such other location as you may reasonably request for checking at least
one business day prior to the Closing Date and will be in such names and
denominations as you may request, such request to be made at least two
business days prior to the Closing Date. If the Underwriters so elect,
delivery of the Shares may be made by credit through full fast transfer to
the accounts at Depository Trust Company designated by the Underwriters.
It is understood that Capital West, individually and not as
representative of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by Capital
West prior to the Closing Date for the Firm Shares to be purchased by such
Underwriter or Underwriters. Any such payment by Capital West shall not
relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder.
After the Registration Statement becomes effective, the several
Underwriters intend to offer the Firm Shares to the public as set forth in
the Prospectus.
The information set forth in the last paragraph on the front cover
page (insofar as such information relates to the Underwriters) and under
"Underwriting" in any Preliminary Prospectus and in the final form of
Prospectus filed pursuant to Rule 424(b) constitutes the only information
furnished
10
by the Underwriters to the Company for inclusion in any Preliminary
Prospectus, the Prospectus or the Registration Statement, and you, on behalf
of the Underwriters, represent and warrant to the Company that the statements
made therein do not include any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
such statements, in the light of the circumstances in which they were made,
not misleading.
4. FURTHER COVENANTS OF THE COMPANY. The Company covenants with the
several Underwriters as follows:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the
time and date that this Agreement is executed and delivered by the parties
hereto, to become effective as promptly as possible; it will notify Capital
West, promptly after it shall receive notice thereof, of the time when the
Registration Statement or any subsequent amendment to the Registration
Statement has become effective or any supplement to the Prospectus has been
filed; if the Company omitted information from the Registration Statement at
the time it was originally declared effective in reliance upon Rule 430A(a)
of the Rules and Regulations, the Company will provide evidence satisfactory
to Capital West that the Prospectus contains such information and has been
filed, within the time period prescribed, with the Commission pursuant to
subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as
part of a post-effective amendment to such Registration Statement as
originally declared effective which is declared effective by the Commission;
if for any reason the filing of the final form of Prospectus is required
under Rule 424(b)(3) of the Rules and Regulations, it will provide evidence
satisfactory to Capital West that the Prospectus contains such information
and has been filed with the Commission within the time period prescribed; it
will notify Capital West promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; promptly upon request of Capital West, it will
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel for the
several Underwriters, may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters; it will promptly prepare and
file with the Commission, and promptly notify Capital West of the filing of,
any amendments or supplements to the Registration Statement or Prospectus
which may be necessary to correct any statements or omissions, if, at any
time when a prospectus relating to the Shares is required to be delivered
under the Securities Act, any event shall have occurred as a result of which
the Prospectus or any other prospectus relating to the Shares as then in
effect would include any untrue statement of a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; in case any Underwriter is required to
deliver a prospectus nine (9) months or more after the effective date of the
Registration Statement in connection with the sale of the Shares, it will
prepare promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectus or
prospectuses as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Securities Act; and it will file no amendment or
supplement to the Registration Statement or Prospectus which shall not
previously have been submitted to Capital West a reasonable time prior to the
proposed filing thereof or to which Capital West shall reasonably object in
writing, subject,
11
however, to compliance with the Securities Act, the Rules and Regulations
thereunder and the provisions of this Agreement.
(b) The Company will advise Capital West, promptly after it
shall receive notice or obtain knowledge thereof of the issuance of any stop
order by the Commission suspending the effectiveness of the Registration
Statement or of the initiation or threat of any proceeding for that purpose;
and it will promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
(c) The Company will cooperate with the Underwriters and
Underwriters' counsel in connection with their efforts to qualify the Shares
for offering and sale under the securities laws of such jurisdictions as
Capital West may designate as to continue such qualifications in effect for
so long as may be required for purposes of the distribution of the Shares,
except that the Company shall not be required in connection therewith or as a
condition thereof to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or to make any undertaking
with respect to the conduct of its business. In each jurisdiction in which
the Shares shall have been qualified as above provided, the Company will make
and file such statements and reports in each year as are or may be reasonably
required by the laws of such jurisdiction.
(d) The Company will furnish Capital West, as soon as
available, copies of the Registration Statement (three of which will be
signed and include all exhibits), each Preliminary Prospectus, the Prospectus
and any amendments or supplements to such documents, including any prospectus
prepared to permit compliance with Section 10(a)(3) of the Securities Act,
all in such quantities as you may from time to time reasonably request.
(e) The Company will make generally available to its
stockholders as soon as practicable, but in any event not later than the 45th
day following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement, an earnings
statement (which will be in reasonable detail but need not be audited)
complying with the provisions of Section 11(a) of the Securities Act and
covering a twelve-month period beginning after the effective date of the
Registration Statement.
(f) As long as the Company is a reporting company under the
Exchange Act, the Company will furnish to its stockholders, as soon as
practicable after the end of each respective period, annual reports
(including financial statements audited by independent certified public
accountants) and unaudited quarterly reports of operations for each of the
first three (3) quarters of the fiscal year, and for a period of five (5)
years after the effective date of the Registration Statement, the Company
will furnish to the several Underwriters hereunder, upon request (i)
concurrently with furnishing such reports to its stockholders, statements of
operations of the Company for each of the first three (3) quarters in the
form furnished to the Company's stockholders; (ii) concurrently with
furnishing to its stockholders, a balance sheet of the Company as of the end
of such fiscal year, together with statements of operations, of stockholders'
equity, and of cash flows of the Company for such fiscal year, accompanied by
a copy of the certificate or report thereon of independent accountants; (iii)
as
12
soon as they are available, copies of all reports and financial statements
furnished to or filed with the Commission, any securities exchange or the
National Association of Securities Dealers, Inc. ("NASD"); (v) every material
press release and every material news item or article in respect of the
Company or its affairs which was released or prepared by the Company
(excluding, in each case customary product-related press releases and
articles); and (vi) any additional information of a public nature concerning
the Company, or its business which you may reasonably request. During such
five-year period, if the Company shall have active subsidiaries, the
foregoing financial statements shall be on a consolidated basis to the extent
that the accounts of the Company and its Subsidiaries are consolidated, and
shall be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated. For a period of five (5) years from
the date of the Registration Statement, the Company will furnish to Capital
West and, upon request, to each of the other Underwriters, as soon as
available, a copy of each report of the Company mailed to holders of the
Common Stock or publicly filed with the Commission or any automated quotation
system or national securities exchange on which any class of securities of
the Company is listed.
(g) The Company will apply the net proceeds from the sale
of the Shares being sold by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.
(h) 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.
(i) The Company shall comply with all provisions of all
undertakings contained in the Registration Statement.
(j) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed hereunder or to
fulfill any condition of the Underwriters' obligations hereunder, or if the
Company shall terminate this Agreement under Section 11(a), the Company will,
in order to reimburse the several Underwriters for all expenses (including
fees and disbursements of counsel for the several Underwriters) incurred by
the Underwriters in investigating, preparing to market or marketing the
Shares, pay to Managing Underwriter the sum of $50,000, which amount has
already been paid.
(k) If at any time during the 90-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company
will, after written notice from Capital West advising the Company to the
effect set forth above, forthwith prepare, consult with Capital West
concerning the substance of, and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on
such rumor, publication or event.
13
(l) On the Closing Date the Company will sell to Capital
West, for $.001 per share of Common Stock covered by each warrant, the
Managing Underwriter's Warrants to purchase one share of Common Stock of the
Company for each ten (10) shares of the Company's Common Stock which have
been sold (or purchased by the Underwriters), excluding any over-allotment
shares, as set forth in the Prospectus. The Managing Underwriter's Warrants
shall have the terms and be in the form filed as an exhibit to the
Registration Statement. At any time during the period commencing twelve (12)
months and ending five (5) years after the effective date of the Offering,
the Warrants shall be exercisable at an exercise price per share equal to
120% of the initial public offering price.
(m) As long as the Company is a reporting company under the
Exchange Act, the Company will comply with the Securities Act, the Exchange
Act, the rules and regulations of the NASD and applicable state securities or
Blue Sky laws so as to permit the continuance of sales and dealings in the
Common Stock under the Securities Act, the Exchange Act, the rules and
regulations of the NASD, and applicable state securities or Blue Sky laws,
including the filing with the NASD and the Commission of all reports required
to be filed pursuant to the applicable provisions of the rules and
regulations of the NASD, the Securities Act, and the Exchange Act, and will
deliver to the holders of the Common Stock all reports required to be
provided to such holders pursuant to the applicable provisions of the rules
and regulations of the NASD, the Securities Act, the Exchange Act, and
applicable state securities or Blue Sky
5. EXPENSES.
(a) The Company agrees with each Underwriter that the
Company will pay and bear all costs and expenses in connection with the
preparation, printing and filing of the Registration Statement (including
financial statements, schedules and exhibits), Preliminary Prospectuses and
the Prospectus and any amendments or supplements thereto; the printing of
this Agreement, the Preliminary Blue Sky Survey and any Supplemental Blue Sky
Survey, the Underwriters' Questionnaire and Power of Attorney and any
instruments related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the Underwriters, including transfer taxes, if any, and
the cost of all certificates representing the Shares and transfer agents' and
registrars' fees; the fees and disbursements of counsel for the Company; all
fees and other charges of the Company's independent public accountants; the
cost of furnishing to the Underwriters copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectus and the Prospectus,
and any amendments or supplements to any of the foregoing; and all postage
costs incurred in connection with the qualification of the Shares under the
laws of such jurisdictions as you may designate; and all other expenses
directly incurred by the Company in connection with the performance of its
obligations hereunder.
(b) Capital West shall be entitled to receive from the
Company, for itself and not as representative of the Underwriters, a
nonaccountable expense allowance equal to 2.5% of the gross proceeds of the
Offering less the $50,000 previously paid pursuant to the terms of the
Engagement Letter.
14
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased (the "Option Closing
Date"), as the case may be, of the representations and warranties of the
Company herein, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective
not later than 5:30 p.m. on the date hereof, or with the consent of the
Underwriters, at a later time and date, not later, however, than 5:30 p.m. on
the first business day following the date hereof, or at such later time and
date as may be approved by a majority in interest of the Underwriters; and no
stop order suspending the effectiveness of the Registration Statement shall
have been issued under the Securities Act or proceedings therefor initiated
or threatened by the Commission and any request on the part of the Commission
for additional information (to be included in the Registration Statement or
the Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters. If the Company has elected to
rely upon Rule 430A of the Rules and Regulations, the price of the Shares and
any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been transmitted
to the Commission for filing pursuant to Rule 424(b) of the Rules and
Regulations within the prescribed time period, and prior to the Closing Date
the Company shall have provided evidence satisfactory to the Underwriters of
such timely filing, or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations. Qualification under
the securities laws of such states as you may deem necessary to the success
of the underwriting of the issue and sale of the Shares upon the terms and
conditions set forth in this Agreement or contemplated by this Agreement and
containing no provisions unacceptable to you will have been secured, and no
stop order (or the equivalent thereof) will be in effect denying or
suspending effectiveness of such qualification, nor will any stop order
proceedings (or the equivalent thereof) with respect thereto be instituted or
pending or threatened under such laws.
(b) At the Closing Date and the Option Closing Date, if
any, counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Shares as contemplated herein and
related proceedings or in order to evidence the accuracy of any of the
representations and warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Shares as herein contemplated shall be
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.
(c) There shall not have been, since the date hereof or
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any change in the condition
(financial or otherwise), earnings, operations, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business which, in your sole
judgment, is material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus, and the Underwriters shall have
received a certificate of the President
15
or Vice President of the Company and of the chief financial or chief
accounting officer of the Company, dated as of the Closing Date, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 2 hereof are true and correct with
the same force and effect as though expressly made at and as of the Closing
Date, (iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been initiated or threatened by the Commission or any Blue Sky
jurisdiction.
(d) At the Closing Date the Underwriters shall have
received:
(1) The opinion, dated as of the Closing Date, of
Holland & Xxxx LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) The Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the State of Colorado.
(ii) The Company has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus and to
enter into and perform its obligations under this Agreement and to issue,
sell and deliver to the Underwriters the Firm Shares or the Option Shares, as
the case may be, to be issued and sold by it hereunder.
(iii) The Company is not qualified to do
business as a foreign corporation in any foreign jurisdictions, and to
counsel's knowledge is not required to be qualified to do business as a
foreign corporation in any other jurisdiction where a failure to be so
qualified would have a material adverse effect on the Company.
(iv) At the Closing Date, after giving
effect to the sale of the Firm Shares, the authorized capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization"
as of the dates stated therein; the issued and outstanding shares of Common
Stock have been duly authorized and validly issued under Colorado corporate
law and are fully paid and nonassessable and have not been issued in
violation of any preemptive right contained in the Articles of Incorporation
or Bylaws of the Company or, to such counsel's knowledge, any co-sale right,
registration right, right of first refusal or other similar right (other than
such preemptive rights or other rights to subscribe for or purchase
securities as were fully complied with or expressly waived or with respect to
the violation of which the right to make a claim is barred by the applicable
statute of limitation).
(v) The Firm Shares and the Option
Shares, as the case may be, to be purchased from the Company hereunder have
been duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment therefor in accordance with the terms hereof, will
be validly issued and fully paid and nonassessable, and will not be issued in
violation of any preemptive right under the
16
Articles of Incorporation or Bylaws of the Company or, to such counsel's
knowledge, any co-sale right, right of first refusal or other similar right
and the stockholders of the Company have no preemptive right under the
Articles of Incorporation or Bylaws of the Company or, to such counsel's
knowledge, other rights to purchase any of the Shares; the shares of Common
Stock reserved for issuance upon the exercise of the Underwriters' Warrants
have been duly and validly authorized and are presently sufficient in number
to meet the exercise requirements thereof, and such shares of Common Stock,
when issued upon exercise, will be duly and validly issued, fully paid
(assuming exercise in accordance with the Warrant Agreement and receipt by
the Company of the exercise price thereof) and nonassessable; the
stockholders of the Company have no preemptive right under the Articles of
Incorporation or Bylaws of the Company or, to such counsel's knowledge, other
rights to purchase any of the Shares; and the shares of Common Stock reserved
for issuance upon the exercise of the Company's outstanding options have been
duly and validly authorized and are presently sufficient in number to meet
the exercise requirements of such options, and such shares of Common Stock,
when issued upon exercise, will be duly and validly issued, fully paid
(assuming exercise in accordance with the governing instruments therefor and
receipt by the Company of the exercise price thereof) and nonassessable.
(vi) The issuance of the Shares to be
purchased hereunder is not subject to preemptive or other similar rights
arising by operation of law or, to the best of their knowledge and
information, otherwise.
(vii) Each Subsidiary has been duly
incorporated and is validly existing as a corporation and is in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own, lease and operate its properties and to conduct
it business as described in the Registration Statement, and is duly qualified
as a foreign corporation to transact business and is in good standing in the
State of Colorado, and, to the best of its knowledge, any Subsidiary is not
required to be qualified to do business as a foreign corporation in any other
jurisdiction; all of the issued and outstanding capital stock of each such
Subsidiary has been duly authorized and validly issued, is fully paid and
nonassessable and, to the best of their knowledge and information, is owned
by the Company directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(viii) This Agreement and the Warrant
Agreement have been duly authorized by all necessary corporate action on the
part of the Company and have been duly executed and delivered by the Company
and assuming due authorization, execution and delivery by the Underwriters,
if construed under the laws of Colorado, are valid and binding agreements of
the Company, except insofar as indemnification and contribution provisions
may be limited by applicable law or equitable principles, and except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally or any
general equitable principles.
(ix) The Registration Statement has been
declared effective under the Securities Act; any required filing of the
Prospectus pursuant to Rule 424(b) has been made in the
17
manner and within the time period required by Rule 424(b) and, to their
knowledge and information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act or
proceedings therefor have been initiated or are pending or threatened by the
Commission.
(x) The Registration Statement,
Prospectus and each amendment or supplement to the Registration Statement and
Prospectus, as of their respective effective or issue dates (other than the
financial statements and supporting schedules included therein, as to which
no opinion need be rendered) complied as to form in all material respects
with the requirements of the Securities Act and the applicable Rules and
Regulations.
(xi) The terms and provisions of the
capital stock of the Company conform in all material respects to the
description thereof contained in the Prospectus under the caption
"Description of Securities."
(xii) The information in the Prospectus
under the caption "Description of Securities" to the extent that they
constitute matters of law or legal conclusions, has been reviewed by such
counsel and accurately and fairly summarizes in such counsel's opinion the
matters described therein and to the knowledge of such counsel, there are no
outstanding options, warrants, convertible securities, or other rights to
acquire from the Company any capital stock, except as described in the
Registration Statement; in addition, the forms of certificates evidencing the
Company stock comply with Colorado law.
(xiii) To such counsel's knowledge,
except as set forth in the Prospectus, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or
its Subsidiaries is a party, or to which the property of the Company or its
Subsidiaries is subject, before or brought by any court or government agency
or body, which might reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered
as one enterprise, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of this
Agreement or the performance by the Company of its obligations hereunder; and
all pending legal or governmental proceedings to which the Company or its
Subsidiaries is a party or that affect any of their respective properties
that are not described in the Prospectus, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company and
its Subsidiaries considered as one enterprise.
(xiv) The information in the Prospectus
under the captions "Business - Legal Proceedings", " - Governmental
Regulation", "Certain Transactions" and "Description of Capital Stock" in the
Prospectus and Items 24 and 26 of Part II of the Registration Statement, to
the extent that such items constitute matter of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been reviewed by
them and is correct in all
18
material respects, and there are no legal or governmental actions, suits or
proceedings pending or threatened against the Company or its Subsidiaries
that are required to be described in the Prospectus but are not described as
required by the Securities Act or the applicable Rules and Regulations.
(xv) All descriptions in the Prospectus
of contracts and other documents are accurate in all material respects; to
their knowledge, there are no agreements, no contracts, indentures,
mortgages, loan agreements, notes, leases or other instrument required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or filed
as exhibits thereto.
(xvi) No authorization, approval, consent
or order of any court or governmental authority or agency (other than under
the Securities Act or the Rules and Regulations, which have been obtained, or
as may be required under the securities or Blue Sky laws of the various
states or foreign jurisdiction) is required in connection with the due
authorization, execution and delivery of this Agreement or for the offering,
issuance or sale of the Shares to the Underwriters; and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein and compliance by the Company with its
obligations hereunder (other than performance of the Company's
indemnification and contribution obligations hereunder, concerning which no
opinion need be expressed) will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach or
violation of, or default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or
its Subsidiaries pursuant to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument (A) which is an exhibit to the
Registration Statement and (B) to which the Company or its Subsidiaries is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or its Subsidiaries is subject, nor will
such action result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Company, or any applicable law, administrative
regulation or court decree, provided, however, no opinion need be rendered
concerning state securities or Blue Sky laws.
(xvii) To counsel's knowledge, with the
exception of the Managing Underwriter's Warrants and any registration rights
mentioned in the Registration Statement, no holder of any security of the
Company has any right to require registration of any shares of Common Stock
or any other security of the Company and, except as set forth in the
Registration Statement and Prospectus, all holders of securities of the
Company having rights to registration of such shares of Common Stock, or
other securities, because of the filing of the Registration Statement by the
Company have, with respect to the offering contemplated thereby, waived such
rights or such rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration Statement, or
have included securities in the Registration Statement pursuant to the
exercise of such rights.
(xviii) The Company is not an "investment
company" or an entity "controlled" by an "investment company" as such terms
are defined in the 1940 Act.
19
(xix) To counsel's knowledge, neither the
Company nor its Subsidiaries are in violation of their charter or by-laws.
In rendering such opinion, such counsel may rely as to matters of
fact (but not as to legal conclusions) on certificates of responsible
officers of the Company and public officials. All references in the above
opinions to "such counsel's knowledge" or "known to us" or similar phrases
mean the conscious awareness of facts or other information by the lawyer who
signs this opinion and other lawyers at our firm who have active involvement
in representing the Company after reasonable inquiry. The opinions of counsel
may be based on the current laws of the United States of America and the
State of Colorado and need not include an interpretation or statement
concerning the laws of any other state or jurisdiction. Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including with limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
In giving their opinion required by subsection (d)(1) of this
Section, Hollard & Xxxx LLP shall additionally state that nothing has come to
their attention that would lead them to believe that the Registration
Statement, at the time it became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Prospectus, at the effective date of the Registration Statement (unless
the term "Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of the
Shares which differs from the Prospectus declared effective by the
Commission, in which case at the time it is first provided to the
Underwriters for such use) or at the Closing Date, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Such opinion may state that such
counsel does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus except as otherwise expressly provided in such opinion, and such
counsel need express no opinion or belief as to the financial statements,
schedules, and other financial or statistical data included in the
Registration Statement or Prospectus.
(2) The opinion, dated as of Closing Date, of
McAfee & Xxxx A Professional Corporation, counsel for the Underwriters, in
form and substance satisfactory to you, with respect to the sufficiency of
all such corporate proceedings and other legal matters relating to this
Agreement and the transactions contemplated hereby as you may reasonably
require, and the Company shall have furnished to such counsel such papers,
opinions and information as they request to enable them to pass upon such
matters.
(e) At the time of the execution of this Agreement, the
Underwriters shall have received from Xxxxxx Xxxxxxxx LLP a letter dated such
date, in form and substance satisfactory to the Underwriters, to the effect
that:
(1) they are independent public accountants with
respect to the Company and its Subsidiaries within the meaning of the
Securities Act and the Rules and Regulations;
20
(2) it is their opinion that the consolidated
balance sheet included in the Registration Statement and covered by their
opinion therein complies as to form in all material respects with the
applicable accounting requirements of the Securities Act and the Rules and
Regulations;
(3) based upon limited procedures set forth in
detail in such letter, nothing has come to their attention which causes them
to believe that, at a specified date not more than three days prior to the
date of this Agreement, (A) the unaudited consolidated balance sheet of the
Company and its Subsidiaries included in the Registration Statement does not
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Rules and Regulations or is not
presented in conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited financial
statements included in the Registration Statement, or (B) at a specified date
not more than three days prior to the date of this Agreement, there has been
any change in the capital stock of the Company or any increase in the
combined long term debt of the Company and its Subsidiaries or any decrease
in combined net current assets or net assets as compared with the amounts
shown in the June 30, 1999 balance sheet included in the Registration
Statement or, during the period from June 30, 1999, to a specified date not
more than three days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period in the preceding year,
in combined revenues, net income or net income per share of the Company and
its Subsidiaries, except in all instances for changes, increases or decreases
which the Registration Statement and the Prospectus disclose have occurred or
may occur;
(4) in addition to the examination referred to in
their opinion and the limited procedures referred to in clause (3) above,
they have carried out certain specified procedures, not constituting an
audit, with respect to certain amounts, percentages and financial information
which are included in the Registration Statement and Prospectus and which are
specified by the Underwriters, and have found such amounts, percentages and
financial information to be in agreement with the relevant accounting,
financial and other records of the Company and its Subsidiaries identified in
such letter; and
(5) they have compared the information in the
Prospectus under selected captions with the disclosure requirements of
Regulation S-B and on the basis of limited procedures specified in such
letter nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not conform
in all material respects with the disclosure requirements of Item 402 of
Regulation S-B.
(f) At the Closing Date, the Underwriters shall have
received from Xxxxxx Xxxxxxxx LLP a letter, dated as of the Closing Date, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (e) of this Section 6, except that the specified date
referred to shall be a date not more than three days prior to the Closing
Date and, if the Company has elected to rely on Rule 430A of the 1933 Act
Regulations, to the further effect that they have carried out procedures as
specified in clause (4) of subsection (e) of this Section 6 with respect to
certain amounts, percentages and financial information specified by the
Underwriters and deemed to be a part of the
21
Registration Statement pursuant to Rule 430(A)(b) and have found such
amounts, percentages and financial information to be in agreement with the
records specified in such clause (4).
(g) At the Closing Date, the Common Stock shall have been
approved for listing on the Nasdaq National Market or the American Stock
Exchange.
(h) In the event that the Underwriters exercise their
option provided in Section 7 hereof to purchase all or any portion of the
Option Shares, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company
hereunder shall be true and correct as of the Option Closing Date and, at the
Option Closing Date, the Underwriters shall have received:
(1) A certificate, dated the Option Closing Date,
of the President or a Vice President of the Company and of the Chief
Financial or Chief Accounting Officer of the Company confirming that the
certificate delivered at the Closing Date pursuant to Section 5(c) hereof
remains true and correct as of the Option Closing Date (except that all
references in such Section to "Closing Date" shall be deemed to refer to the
"Option Closing Date").
(2) The opinions of Holland & Xxxx LLP, counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriters, dated the Option Closing Date, relating to the Option Shares
and otherwise to the same effect as the opinion required by Section 5(b)(1)
hereof (except that all references in such Section to "Closing Date" shall be
deemed to refer to the "Option Closing Date").
(3) The opinion of McAfee & Xxxx A Professional
Corporation, counsel for the Underwriters, dated the Option Closing Date,
relating to the Option Shares to be purchased on the Option Closing Date and
otherwise to the same effect as the opinion required by Section 5(b)(2)
hereof (except that all references in such Section to "Closing Date" shall be
deemed to refer to the "Option Closing Date").
(4) A letter from Xxxxxx Xxxxxxxx in form and
substance satisfactory to the Underwriters and dated the Option Closing Date,
substantially the same in form and substance as the letter furnished to the
Underwriters pursuant to Section 5(e) hereof, except that the "specified
date" in the letter furnished pursuant to this Section 6(h)(4) shall be a
date not more than three days prior to the Option Closing Date.
(i) The Company and the Underwriters shall have entered
into the Warrant Agreement and the Company shall have sold to the
Underwriters the Underwriters' Warrants, which shall be in the form attached
as an exhibit to the Warrant Agreement.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representative by notice to the Company at any time at or
prior to Closing Date, and such termination shall be without liability of any
party to any other
22
party except as provided in Section 4 and except that Sections 4(i) and 8
shall survive any such termination and remain in full force and effect.
7. OPTION SHARES.
(a) On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth,
the Company hereby grants to the several Underwriters, for the purpose of
covering over-allotments in connection with the distribution and sale of the
Firm Shares only, a non-transferable option to purchase up to an aggregate
300,000 Option Shares at the purchase price per share for the Firm Shares set
forth in Section 3 hereof. Such option may be exercised by Capital West on
behalf of the several Underwriters on one occasion in whole or in part during
the period of 45 business days from and after the date on which the Firm
Shares are initially offered to the public, by giving notice to the Company.
The number of Option Shares to be purchased by each Underwriter upon the
exercise of such option shall be the same proportion of the total number of
Option Shares to be purchased by the several Underwriters pursuant to the
exercise of such option as the number of Firm Shares purchased by such
Underwriter (set forth in SCHEDULE A hereto) bears to the total number of
Firm Shares purchased by the several Underwriters (set forth in SCHEDULE A
hereto), adjusted by the Underwriters in such manner as to avoid fractional
shares.
Delivery of definitive certificates for the Option Shares
to be purchased by the several Underwriters pursuant to the exercise of the
option granted by this Section 7 shall be made against payment of the
purchase price therefor by the several Underwriters by certified or official
bank check or checks drawn in same day funds, payable to the order of the
Company. Such delivery and payment shall take place at the offices of Capital
West Securities, Inc., 000 X. Xxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxx
00000 or at such other place as may be agreed upon between the Underwriters
and the Company on the Closing Date, if written notice of the exercise of
such option is received by the Company not later than three full business
days prior to the Closing Date.
The certificates for the Options Shares so to be delivered
will be made available to you at such office or other location including,
without limitation, in Oklahoma City, as you may reasonably request for
checking at least two full business days prior to the date of payment and
delivery and will be in such names and denominations as you may request, such
request to be made at least three full days prior to such date of payment and
delivery. If the Underwriters so elect, delivery of the Shares may be made by
credit through full fast transfer to the accounts at Depository Trust Company
by the Underwriters.
It is understood that Capital West, individually, and not
as the representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior
to the date of payment and delivery for the Option Shares to be purchased by
such Underwriter or Underwriters. Any such payment by Capital West shall not
relieve any Underwriter of any of its or their obligations hereunder.
23
(b) Upon exercise of any option provided for in Section
7(a) hereof the obligations of the Underwriters to purchase such Option
Shares will be subject (as of the date hereof and as of the date of payment
for such Option Shares) to the accuracy of and compliance with the
representations and warranties of the Company herein, to the accuracy of the
statements of the Company and officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of their respective
obligations hereunder, and to the condition that all proceedings taken at or
prior to the payment date in connection with the sale and transfer of such
Option Shares shall be satisfactory in form and substance to you and to
Underwriters' counsel, and you shall have been furnished with all such
documents, certificates and opinions as you may reasonably request in order
to evidence the accuracy and completeness of any of the representations,
warranties or statements, the performance of any of the covenants of the
Company or the compliance with any of the conditions herein contained.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, as incurred, to which such Underwriter may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any breach of any representation, warranty, agreement or covenant of the
Company herein contained, or (ii) any untrue statement or alleged untrue
statement made by the Company in Section 2 hereof, or (iii) any untrue
statement or alleged untrue statement of a material fact contained (A) in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (B) in any blue sky application or other
document executed by the Company specifically for that purpose or based upon
written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Shares under the
securities laws thereof (any such application, documents or information being
hereinafter called a "Blue Sky Application"), or (iii) the omission or
alleged omission to state in the Registration Statement or any amendment
thereto a material fact required to be stated therein or necessary to make
the statements therein not misleading, or the omission or alleged omission to
state in any Preliminary Prospectus, the Prospectus or any supplement thereto
or in any Blue Sky Application a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and shall reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments
for such expenses might later be held to be improper, in which case the
person receiving them shall promptly refund them; except that the Company
shall not be liable in any such case to the extent, but only to the extent,
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, such Preliminary Prospectus or
the Prospectus, or any amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of any Underwriter specifically for use in the preparation thereof and,
provided further, that the indemnity agreement provided in this Section 8(a)
with respect to any Preliminary Prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any losses, claims, charges,
liabilities or litigation
24
based upon any untrue statement or alleged untrue statement of material fact
or omission or alleged omission to state therein a material fact purchased
Shares, if a copy of the Prospectus in which such untrue statement or alleged
untrue statement or omission or alleged omission was corrected has not been
sent or given to such person within the time required by the Securities Act
and the Rules and Regulations thereunder, unless such failure is the result
of noncompliance by the Company with Section 4(d) hereof.
(b) Each Underwriter severally, but not jointly, shall
indemnify and hold harmless the Company against any losses, claims, damages
or liabilities, joint or several, as incurred, to which the Company may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement
of a material fact contained (A) in the Registration Statement, Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (B) in
any Blue Sky Application, or (ii) the omission or alleged omission to state
in the Registration Statement or any amendment thereto a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or the omission or alleged omission to state in any Preliminary
Prospectus, the Prospectus or any supplement thereto or in any Blue Sky
Application a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; except that such indemnification shall be
available in each such case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Company through the Underwriters by or on behalf of such
Underwriter specifically for use in the preparation thereof; and shall
reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigation or defending against any such loss, claim,
damage, liability or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the claim or the commencement of that
action; the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under such subsection. If any such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party; provided, however, if the defendants in any such
action include both the indemnified parties and the indemnifying party and
the indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel
to assume such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under such subsection for any legal or other
expenses subsequently incurred by the
25
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with appropriate local counsel) approved by the
indemnifying party, representing all the indemnified parties under Section
8(a) and 8(b) hereof who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the claim or action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party. In no event shall any indemnifying party be liable
in respect of any amounts paid in settlement of any action unless the
indemnifying party shall have approved the terms of such settlement;
provided, however, that such consent shall not be unreasonably withheld.
(d) In order to provide for just and equitable contribution
in any action in which a claim for indemnification is made pursuant to this
Section 8 for which 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 this Section 8 provides for indemnification in such case, all the
parties hereto shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Underwriters are responsible pro rata for the
portion represented by the percentage that the underwriting discount bears to
the initial public offering price, and the Company is responsible for the
remaining portion; provided, however, that (i) no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter, and (ii) no person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to a contribution from any person
who is not guilty of such fraudulent misrepresentation. This subsection (d)
shall not be operative as to any Underwriter to the extent that the Company
has received indemnity under this Section 8.
(e) The obligations of the Company under this Section 8
shall be in addition to any liability which the Company may otherwise have,
and shall extend, upon the same terms and conditions, to each officer and
director of each Underwriter and to each person, if any, who controls any
Underwriter within the meaning of the Securities Act; and the obligations of
the Underwriters under this Section 8 shall be in addition to any liability
that the respective Underwriters may otherwise have, and shall extend, upon
the same terms and conditions, to each director of the Company (including any
person who, with his consent, is named in the Registration Statement as about
to become a director of the Company), to each officer of the Company who has
signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Securities Act, in either case, whether
or not such person is a party to any action or proceeding.
(f) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including without
limitation the provisions of this Section 8, and are fully informed regarding
26
said provisions. They further acknowledge that the provisions of this Section
8 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required
by the Securities Act and the Exchange Act. The parties are advised that
Federal or state public policy, as interpreted by the courts in certain
jurisdictions, may be contrary to certain of the provisions of this Section
8, and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this
Section 8 and further agree not to attempt to assert any such defense.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties, covenants and agreements of the Company
contained in this Agreement (including, without limitation, the agreements of
the Company set forth in Sections 4(i)-(k)), or contained in certificates of
officers of the Company submitted pursuant hereto, and the indemnity and
contribution 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 or controlling person, or by or on behalf of the
Company, or any of its officers, controlling persons or directors and shall
survive delivery of the Shares to the several Underwriters hereunder or
termination of this Agreement.
10. SUBSTITUTION OF UNDERWRITER. If any Underwriter or Underwriters
shall fail to take up and pay for the number of Firm Shares agreed by such
Underwriter or Underwriters to be purchased hereunder upon tender of such
Firm Shares in accordance with the terms hereof, and if the aggregate number
of Firm Shares which such defaulting Underwriter or Underwriters so agreed
but failed to purchase does not exceed 10% of the Firm Shares, the remaining
Underwriters shall be obligated, severally in proportion to their respective
commitments hereunder, to take up and pay for the Firm Shares of such
defaulting Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters
agreed but failed to take up and pay for exceeds 10% of the Firm Shares, the
remaining Underwriters shall have the right, but shall not be obligated, to
take up and pay for (in such proportions as may be agreed upon among them)
the Firm Shares which the defaulting Underwriter or Underwriters so agreed
but failed to purchase. If such remaining Underwriters do not, at the Closing
Date, take up and pay for the Firm Shares which the defaulting Underwriter or
Underwriters so agreed but failed to purchase, the Closing Date shall be
postponed for twenty-four hours to allow the several Underwriters the
privilege of substituting within twenty-four hours (including non-business
hours) another underwriter or underwriters (which may include any
non-defaulting Underwriter) satisfactory to the Company. If no such
underwriter or underwriters shall have been substituted as aforesaid by such
postponed Closing Date, the Closing Date may, at the option of the Company,
be postponed for a further twenty-four hours, if necessary to allow the
Company the privilege of finding another underwriter or underwriters,
satisfactory to you, to purchase the Firm Shares which the defaulting
Underwriter or Underwriters so agreed but failed to purchase. If it shall be
arranged for the remaining Underwriters or substituted underwriters to take
up the Firm Shares of the defaulting Underwriter or Underwriters as provided
in this Section, (i) the Company shall have the right to postpone the time of
delivery for a period of not more than seven full business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the
27
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements
to the Prospectus which may thereby be made necessary, and (ii) the
respective number of Firm Shares to be purchased by the remaining
Underwriters and substitute underwriters shall be taken as the basis of their
underwriting obligation. If the remaining Underwriters shall not take up and
pay for all such Firm Shares so agreed to be purchased by the defaulting
Underwriter or Underwriters or substitute another underwriter or underwriters
as aforesaid and the Company shall not find or shall not elect to seek
another underwriter or underwriters for such Firm Shares as aforesaid, then
this Agreement shall terminate.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section, neither the Company shall be liable to
any Underwriter (except as provided in Sections 5 and 8 hereof) nor shall any
Underwriter (other than an Underwriter who shall have failed, otherwise than
for some reason permitted under this Agreement, to purchase the number of
Firm Shares agreed by such Underwriter to be purchased hereunder, which
Underwriter shall remain liable to the Company and the other Underwriters for
damages, if any, resulting from such default) be liable to the Company
(except to the extent provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at the later of
(i) execution of this Agreement, or (ii) when notification of the
effectiveness of the Registration Statement has been released by the
Commission.
(b) Capital West shall have the right to terminate this
Agreement by giving notice as hereinafter specified at any time at or prior
to the Closing Date (i) if the Company shall have failed, refused or been
unable, to perform any agreement on its part to be performed, or because any
other condition of the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled including, without limitation, any
change in the financial condition, earnings, operations, business,
management, technical staff, or business prospects of the Company from that
set forth in the Registration Statement or Prospectus which, in the sole
judgment of Capital West, is material and adverse, or (ii) if trading on the
American Stock Exchange or the Nasdaq National 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
American Stock Exchange or the Nasdaq National Market, by the American Stock
Exchange, the Nasdaq National Market or by order of the Commission or any
other governmental authority having jurisdiction, or if a banking moratorium
shall have been declared by Federal, New York or Oklahoma authorities, or
(iii) if on or prior to the Closing Date, or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, the Company
shall have sustained a loss by strike, fire, flood, earthquake, accident or
other calamity of such character as to interfere materially and adversely
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured, or (iv) if there shall
28
have been a material adverse change in the general political or economic
conditions or financial markets in the United States as in your reasonable
judgment makes it inadvisable or impracticable to proceed with the offering,
sale and delivery of the Shares, or (v) if on or prior to the Closing Date,
or on or prior to any later date on which Option Shares are to be purchased,
as the case may be, there shall have been an outbreak or escalation of
hostilities or other international or domestic calamity, crises or material
adverse change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it in
your reasonable judgment, inadvisable to proceed with the marketing of the
Shares. In the event of termination pursuant to this Section 11(b), the
Company shall remain obligated to pay costs and expenses pursuant to Section
4(j), 5 and 8 hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone or telecopy, in each case confirmed by
letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone or telecopy, in
each case, confirmed by letter.
12. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
directed to the Underwriters in care of Capital West Securities, Inc., 000 X.
Xxxxxxxx, Xxxxx 000, One Leadership Square, Xxxxxxxx Xxxx, Xxxxxxxx 00000,
attention of Xxxxxx X. XxxXxxxxx; notices to the Company shall be directed to
it at TRAINING DEVICES INTERNATIONAL, INC., 0000 X. XXXXXX XXXXXXX, XXXXXXXX
#0-X, XXXXXXXXX, XXXXXXXX 00000-0000, ATTENTION: XXXXXX X. XXXXXXXXX.
13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and their respective
executors, administrators, successors, and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their respective
executors, administrators, successors, and assigns and the controlling
persons and officers and directors referred to in Section 8 hereof any legal
or equitable right, remedy or claim under or in respect of this Agreement or
any provisions herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of
the parties hereto and their respective executors, administrators,
successors, and assigns and said controlling persons and said officers and
directors, and for the benefit of no other person or corporation. No
purchaser of the Shares from any Underwriter shall be construed to be a
successor by reason merely of such purchase.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oklahoma applicable to agreements
made and to be performed in said State. Specified times of day refer to
Central time.
15. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.
29
If the foregoing correctly sets forth your understanding of our
agreement, please sign in the space provided below for that purpose,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
*******
30
TRAINING DEVICES, INC.
By:________________________
CONFIRMED AND ACCEPTED, as of the date first above written:
CAPITAL WEST SECURITIES, INC.
By:________________________
31
SCHEDULE A
UNDERWRITER SHARES PURCHASED
----------- ----------------
Capital West Securities, Inc.
Total number of shares
32
