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EXHIBIT 1.1
EXHIBIT A
FLOUR CITY INTERNATIONAL, INC.
UNDERWRITING AGREEMENT
May __, 1998
XXX XXXXXX & COMPANY
As Representative of the
Several Underwriters
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Flour City International, Inc., a Nevada corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the several Underwriters named in Schedule I hereto (each, an "Underwriter"
and collectively, the "Underwriters") an aggregate of 2,000,000 shares (the
"Firm Shares") of its authorized but unissued Common Stock, par value $0.0001
per share (the "Common Stock"). The Company also proposes to grant to the
Underwriters an option to purchase up to 300,000 additional shares of Common
Stock (the "Option Shares") for the sole purpose of covering over-allotments,
if any, in connection with the sale of the Firm Shares. The Firm Shares and
any Option Shares purchased pursuant to this Agreement are collectively
referred to below as the "Shares." Xxx Xxxxxx & Company is acting as
Representative of the several Underwriters and in that capacity is referred to
in this Agreement as the "Representative."
The Company hereby confirms its agreement with the several
Underwriters as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to and agrees with each Underwriter as follows:
(a) A registration statement (Registration No. 333-43793)
on Form S-1 under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the Shares, including such amendments to such registration
statement as may have been required to the date of this Agreement, has been
prepared by the Company under and in conformity with the provisions of the
Securities Act and the rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. After the execution of this Agreement, the
Company will file with the Commission either (i) if such registration
statement, as it may have been amended, has been declared by the Commission to
be effective under the Securities Act, either (A) if the Company relies on Rule
434 under the Securities Act, a Term Sheet (defined below) relating to the
Shares, that identifies the Preliminary Prospectus (defined below) that it
supplements and contains such information as is required or permitted by Rules
434, 430A and 424(b) of the Rules and Regulations or (B) if
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the Company does not rely on Rule 434 under the Securities Act, a prospectus in
the form most recently included in an amendment to such registration statement
(or, if no such amendment has been filed, in such registration statement), with
such changes or insertions as are required by Rule 430A of the Rules and
Regulations or permitted by Rule 424(b) of the Rules and Regulations, and in
the case of either (i)(A) or (i)(B) of this sentence, as has been provided to
and approved by the Representative prior to the execution of this Agreement, or
(ii) if such registration statement, as it may have been amended, has not been
declared by the Commission to be effective under the Securities Act, an
amendment to such registration statement, including a form of prospectus, a
copy of which amendment has been furnished to and approved by the
Representative prior to the execution of this Agreement. As used in this
Agreement, the term "Registration Statement" means such registration statement,
as amended at the time when it was or is declared effective, including all
financial schedules and exhibits thereto, any information omitted therefrom
pursuant to Rule 430A of the Rules and Regulations and included in the
Prospectus (defined below) and further including all filings or other documents
incorporated therein, as well as any additional registration statement filed in
connection with the offering of the Shares pursuant to Rule 462(b) under the
Securities Act; the term "Preliminary Prospectus" means each prospectus subject
to completion filed with such registration statement or any amendment thereto
(including the prospectus subject to completion, if any, included in the
Registration Statement or any amendment thereto at the time it was or is
declared effective and further including all filings or documents incorporated
therein); and the term "Prospectus" means the following, including any filings
or documents incorporated therein:
(A) if the Company relies on Rule 434 under the
Securities Act, the Term Sheet relating to the Securities that is first filed
pursuant to Rule 424(b)(7) under the Securities Act, together with the
Preliminary Prospectus identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434
under the Securities Act, the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Securities Act; or
(C) if the Company does not rely on Rule 434
under the Securities Act and if no prospectus is required to be filed pursuant
to Rule 424(b) under the Securities Act, the prospectus included in the
Registration Statement;
provided that if any revised prospectus that is provided to the Underwriters by
the Company for use in connection with the offering of the Shares 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 the
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 mean such
revised prospectus (including all filings and documents incorporated therein)
from and after the time it is first provided to the Underwriters for such use.
The term "Term Sheet" as used in this Agreement means any term sheet that
satisfies the requirements of Rule 434 under the Securities Act. Any reference
in this Agreement to the "date" of a Prospectus that includes a Term Sheet
means the date of such Term Sheet.
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(b) No order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of any Preliminary
Prospectus or the Prospectus has been issued and no proceedings for that
purpose are pending or, to the best knowledge of the Company, threatened or
contemplated by the Commission; no stop order suspending the sale of the Shares
in any jurisdiction has been issued and no proceedings for that purpose are
pending or, to the best knowledge of the Company, threatened or contemplated,
and any request of the Commission for additional information (to be included in
the Registration Statement, any Preliminary Prospectus or the Prospectus or
otherwise) has been complied with.
(c) As used in this Agreement, the word "subsidiary"
means any corporation, partnership, limited liability company or other entity
of which the Company directly or indirectly owns 50% or more of the equity or
that the Company directly or indirectly controls. The subsidiaries of the
Company (the "Subsidiaries") and the jurisdiction of incorporation of each
Subsidiary is listed on Exhibit A hereto. The Company has no subsidiaries
other than the Subsidiaries listed on Exhibit A hereto; except as set forth on
Exhibit A, the Company owns 100 percent of the issued and outstanding stock of
each of the Subsidiaries free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest of any type, kind or nature. Exhibit
B hereto lists each entity in which the Company or any Subsidiary holds an
equity interest, whether as shareholder, partner, member, joint venturer or
otherwise. Except as set forth on Exhibit B, neither the Company nor any
Subsidiary has any equity interest in any person. The Company and each of its
Subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has full power (corporate and other) and authority to own or
lease its properties and conduct its business as described in the Registration
Statement and the Prospectus and as is currently being conducted by it and is
duly qualified as a foreign corporation and in good standing in all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary (except
where the failure to be so qualified would not have a material adverse effect
on the business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries, taken as a whole
(a "Consolidated Material Adverse Effect")). The Company and each of its
Subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits from
federal, state, local and other governmental or regulatory authorities that are
material to the conduct of its or their business, all of which are valid and in
full force and effect. Each contractual joint venture in which the Company or
any Subsidiary is involved and, to the Company's best knowledge, each
participant therein is operating in compliance with the terms of its joint
venture agreement.
(d) When any Preliminary Prospectus was filed with the
Commission it (i) contained all statements required to be contained therein and
complied in all respects with the requirements of the Securities Act, the Rules
and Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations of the Commission thereunder (the "Exchange
Act Rules and Regulations") and (ii) did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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When the Registration Statement or any amendment thereto was or is declared
effective (the "Effective Date"), it (i) contained or will contain all
statements required to be contained therein and complied or will comply in all
respects with the requirements of the Securities Act, the Rules and
Regulations, the Exchange Act and the Exchange Act Rules and Regulations and
(ii) did not or will not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading. When the Prospectus or any Term Sheet that is a part thereof or
any amendment or supplement to the Prospectus is filed with the Commission
pursuant to Rule 424(b) (or, if the Prospectus or part thereof or such
amendment or supplement is not required to be so filed, when the Registration
Statement or the amendment thereto containing such amendment or supplement to
the Prospectus was or is declared effective) and on the Closing Date (defined
below) and any date on which Option Shares are to be purchased, the Prospectus,
as amended or supplemented at any such time, (i) contained or will contain all
statements required to be contained therein and complied or will comply in all
respects with the requirements of the Securities Act, the Rules and Regulations
and the Exchange Act Rules and Regulations and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (d) do not apply to statements or omissions made
in any Preliminary Prospectus, the Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representative specifically for use therein.
(e) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there has not
been any material loss or interference with the business of the Company or any
of its Subsidiaries from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any court or governmental action, order or
decree, or any changes in the capital stock or, except in the ordinary course
of its business, long- term debt of the Company or any of its Subsidiaries, or
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company, or any material change, or a development known to the
Company that might cause or result in a Consolidated Material Adverse Effect,
whether or not arising from transactions in the ordinary course of business, in
each case other than as may be set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and since such dates, except in the ordinary course of
business, neither the Company or any of its Subsidiaries has entered into any
material transaction not described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(f) There is no agreement, contract, license, lease or
other document required to be described in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. All contracts described
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), if any, are in full force and effect on the date
hereof, and neither the Company nor any of its direct or indirect
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subsidiaries nor, to the best knowledge of the Company, any other party, is in
material breach of or default under any such contract.
(g) The authorized and outstanding capital stock of the
Company is set forth in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and the description of the
capital stock therein conforms with and accurately describes the rights set
forth in the instruments defining the same. The Shares are duly authorized and
will, when issued in accordance with the terms of this Agreement and against
payment therefor, be validly issued, fully paid and non-assessable, and the
issuance of the Shares is not subject to any preemptive or similar rights.
(h) All of the 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 applicable federal and
state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities. All
of the issued shares of capital stock or other equity interests of each
Subsidiary have been duly and validly authorized and issued, are fully paid and
non-assessable, have been issued in compliance with all applicable laws,
including securities laws, were not issued in violation of or subject to any
preemptive or other rights to subscribe for or purchase such securities and are
directly or indirectly owned by the Company, except as otherwise set forth in
the Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted or exercised thereunder, set forth in the Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus),
accurately and fairly present the information required to be shown with respect
to such plans, arrangements, options and rights. Other than this Agreement,
the "Warrant Agreement" (as defined in Section 1(bb) below) and the options and
warrants to purchase Common Stock described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), there
are no options, warrants or other rights outstanding to subscribe for or
purchase any shares of the Company's capital stock. There are no preemptive
rights applicable to any shares of capital stock of the Company. There are no
options, warrants or other rights outstanding to subscribe for or purchase any
shares of the capital stock or registered capital of any Subsidiary and no
Subsidiary is subject to any obligation, commitment, plan, arrangement or court
or administrative orders with respect to the same. There are no preemptive
rights applicable to any shares of capital stock or registered capital of the
Subsidiaries. There are no restrictions upon the voting or transfer of any of
the Firm Shares or Option Shares pursuant to the Company's certificate of
incorporation, as amended to date ("Certificate of Incorporation"), bylaws or
other governing documents or any agreement to which the Company is a party or
by which it may be bound. Except as is provided in the Warrant Agreement and
for the Shares, neither the filing of the Registration Statement nor the
offering or sale of the Shares as contemplated by this Agreement gives rise to
any rights, other than those which have been waived, for or relating to the
registration of any securities of or issued by the Company.
(i) The Company has full right, power and authority to
enter into and perform its obligations under this Agreement and the Warrant
Agreement and to issue, sell and deliver the
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Shares. This Agreement and the Warrant Agreement have each been duly
authorized, executed and delivered by the Company and constitute the valid and
binding agreements of the Company, and each is enforceable against the Company
in accordance with its terms except insofar as enforceability may be affected
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except insofar as the indemnification and
contribution provisions of Section 7 of this Agreement and Section 3(f) of the
Warrant Agreement hereof may be affected by public policy concerns.
(j) Neither the Company nor any of its Subsidiaries is,
nor with the giving of notice or lapse of time or both would be, in violation
of or in default under, nor will the execution or delivery of this Agreement or
the Warrant Agreement or the consummation of the transactions contemplated by
this Agreement or the Warrant Agreement result in a violation of or constitute
a breach of or a default (including without limitation with the giving of
notice, the passage of time or otherwise) under the Certificate of
Incorporation, bylaws or other governing documents of the Company or any of its
Subsidiaries or any obligation, agreement, covenant or condition contained in
any bond, debenture, note or other evidence of indebtedness or in any contract,
indenture, mortgage, deed of trust, loan agreement, lease, license, joint
venture or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of its or their properties may be bound
or affected. The Company has not incurred any liability, direct or indirect,
for any finders' or similar fees payable on behalf of the Company or the
Underwriters in connection with the transactions contemplated by this
Agreement. The performance by the Company of its obligations under this
Agreement and the Warrant Agreement will not violate any law, ordinance, rule
or regulation or any order, writ, injunction, judgment or decree of any
governmental agency or body or of any court having jurisdiction over the
Company or any of its direct or indirect subsidiaries or any of its or their
properties, or result in the creation or imposition of any lien, charge, claim
or encumbrance upon any property or asset of the Company or any of its
Subsidiaries. Except for permits and similar authorizations required under the
Securities Act, the Exchange Act or under state securities or Blue Sky laws of
certain jurisdictions and for such permits and authorizations that have been
obtained, no consent, approval, authorization or order of any court,
governmental agency or body, financial institution or any other person is
required in connection with the consummation of the transactions contemplated
by this Agreement or the Warrant Agreement.
(k) Each of the Company and its Subsidiaries owns, or has
valid rights to use, all items of real and personal property which are material
to the business of the Company and its Subsidiaries, taken as a whole, free and
clear, except as described in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), of all liens, encumbrances and claims that might materially
interfere with the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company and its Subsidiaries, taken
as a whole, and subject to such exceptions that do not adversely affect the
present or prospective business of the Company or its Subsidiaries.
(l) Each of the Company and its Subsidiaries, taken as a
whole, owns or possesses adequate rights to use all material patents, patent
rights, inventions, trade secrets, know-how, trademarks, service marks,
tradenames and copyrights described or referred to in the
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Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) as owned by or used by any
of them, or which are necessary for the conduct of its or their business as
described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus); and
the Company has not received any express notice of infringement of or conflict
with asserted rights of others with respect to any patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, tradenames or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might have a Consolidated Material Adverse Effect.
(m) There is no litigation or governmental proceeding to
which the Company or any of its Subsidiaries is a party or to which any
property of the Company or any of its Subsidiaries is subject which is pending
or, to the best knowledge of the Company, is threatened or contemplated against
the Company or any of its Subsidiaries that might have a Consolidated Material
Adverse Effect, that might prevent consummation of the transactions
contemplated by this Agreement or the Warrant Agreement or that is required to
be disclosed in the Registration Statement or Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) and are not so
disclosed.
(n) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus), the
Company nor any of its Subsidiaries is in violation of any law, order,
ordinance, rule or regulation, or any order, writ, injunction, judgment or
decree of any governmental agency or body or of any court, to which it or its
properties (whether owned or leased) may be subject, which violation might have
a Consolidated Material Adverse Effect.
(o) The Company has not taken and shall not take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to cause or result in, under
the Exchange Act, the Exchange Act Rules and Regulations or otherwise, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares. No bid or purchase by the Company
and, to the best knowledge of the Company, no bid or purchase that could be
attributed to the Company (as a result of bids or purchases by an "affiliated
purchaser" within the meaning of Regulation M under the Exchange Act) for or of
the Common Stock, any securities of the same class or series as the Common
Stock or any securities convertible into or exchangeable for or that represent
any right to acquire the Common Stock is now pending or in progress or will
have commenced at any time prior to the completion of the distribution of the
Shares.
(p) Each of Deloitte & Touche LLP and Deloitte Touche
Tohmatsu, whose report appears in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) is, and during the periods covered by its report in the
Registration Statement was, independent accountants as required by the
Securities Act and the Rules and Regulations. The historical and pro forma
financial statements and schedules included in the Registration Statement, each
Preliminary Prospectus and the Prospectus present fairly (or, if the Prospectus
has not been filed with the Commission, as to the
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Prospectus, will present fairly) the financial condition, results of
operations, cash flows and changes in stockholders' equity of the Company and
its subsidiaries at the dates and for the periods indicated, and the historical
and pro forma financial statements and schedules included in the Registration
Statement present fairly the information required to be stated therein in all
material respects. Such financial statements and schedules have been prepared
in accordance with U.S. generally accepted accounting principles applied on a
consistent basis throughout the periods presented, except as may be stated
therein. All accounts receivable (net of any allowance for doubtful accounts)
shown on the Company's most recent financial statements included in the
Registration Statement, including but not limited to those relating to the
Empire Towers and GT International projects, are good and the Company expects
to collect all such accounts receivable in the ordinary course of business.
The selected and summary financial and statistical data included in the
Registration Statement and the Prospectus present fairly (or, if the Prospectus
has not been filed with the Commission, as to the Prospectus, will 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.
(q) The historical and any pro forma financial or other
information and related notes included in the Registration Statement, each
Preliminary Prospectus and the Prospectus comply (or, if the Prospectus has not
been filed with the Commission, as to the Prospectus, will comply) in all
material respects with the requirements of the Securities Act and the Rules and
Regulations and present fairly the historical and pro forma information shown,
as of the dates and for the periods covered by such information. Such pro
forma information, including any related notes and schedules, has been prepared
on a basis consistent with the historical financial statements and other
historical information, as applicable, included in the Registration Statement,
the Preliminary Prospectus and the Prospectus (if filed with the Commission),
except for the pro forma adjustments specified therein, and give effect to
assumptions made on a reasonable basis to give effect to historical and, if
applicable, proposed transactions described in the Registration Statement, each
Preliminary Prospectus and the Prospectus (if filed with the Commission).
(r) The books, records and accounts of the Company and
its Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in and dispositions of the assets of the Company and its
Subsidiaries. The systems of internal accounting controls maintained by the
Company and its Subsidiaries are sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary (x) to
permit preparation of financial statements in conformity with U.S. generally
accepted accounting principles and (y) to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(s) The Company has delivered to Xxx Xxxxxx & Company the
written agreement of each of its officers and directors and, to the knowledge
of the Company at the date of this Agreement, the beneficial owners of one
percent or more of the Common Stock (assuming
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for this purpose that all options and convertible securities held by each
beneficial owner, but not by any other person, have been exercised or exchanged
for or converted into Common Stock) (collectively, the "Holders") to the effect
that each of the Holders will not, for a period of 180 days following the date
of this Agreement, without the prior written consent of Xxx Xxxxxx & Company,
offer, sell, grant any option to purchase, contract to sell, or otherwise
dispose of any Common Stock or options or convertible securities exercisable
or exchangeable for, or convertible into, Common Stock or any rights to
purchase or acquire Common Stock, or announce any offer to do so.
(t) No labor disturbance by the employees of the Company
or any of its Subsidiaries exists, or, to the knowledge of the Company, is
imminent, contemplated or threatened; and the Company is not aware of an
existing, imminent or threatened labor disturbance by the employees of any
principal suppliers, manufacturers, contractors or others which such
disturbance might be expected to result in any Consolidated Material Adverse
Effect. Except as set forth in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), no collective bargaining
agreement exists with any of the Company's employees or those of its
Subsidiaries and, to the best knowledge of the Company, no such agreement is
imminent.
(u) Each of the Company and its Subsidiaries has filed
all federal, state, local and foreign tax returns which are required to be
filed or has requested extensions thereof and has paid all taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
to the extent that the same have become due and payable. No tax assessment or
deficiency has been made or proposed against the Company or any of its
Subsidiaries nor has the Company or any of its Subsidiaries received any notice
of any proposed tax assessment or deficiency. All tax liabilities of the
Company and its Subsidiaries are adequately provided for on the books of the
Company.
(v) Except as set forth in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), there
are no outstanding loans, advances or guaranties of indebtedness by the Company
or any of its Subsidiaries to or for the benefit of any of (i) its
"affiliates," as such term is defined in the Rules and Regulations, (ii) except
for immaterial advances in the ordinary course of business, any of the officers
or directors of any of its direct or indirect subsidiaries, or (iii) any of the
members of the families of any of them, in each case, required to be set forth
in the Prospectus (or, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus), under the Securities Act or Rules and
Regulations.
(w) Neither the Company nor any of its Subsidiaries has
directly or indirectly, at any time within the last five years: (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contribution, in violation of applicable law; (ii) made any payment to
any local, state, federal or foreign governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or allowed by all applicable laws; or (iii) violated any applicable
provision of the Foreign Corrupt Practices Act of 1977, as amended.
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(x) Neither the Company nor any of its Subsidiaries has
any liability, absolute or contingent, relating to: (i) public health or
safety; (ii) worker health or safety; or (iii) product defect or warranty (all
except as would not reasonably be expected to have a Consolidated Material
Adverse Effect or as are disclosed in the Registration Statement and Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus)).
(y) The Company has not distributed and will not
distribute prior to the Closing Date or on or prior to any date on which the
Option Shares are to be purchased, as the case may be, any prospectus or other
offering material in connection with the offering and sale of the Shares other
than the Preliminary Prospectus(es), the Prospectus, the Registration Statement
and any other material which may be permitted by the Securities Act and the
Rules and Regulations.
(z) Subject to official notice of issuance, the Shares
have been approved for inclusion for listing on the Nasdaq National Market.
(aa) The Company is not now, and intends to conduct its
affairs in the future in such a manner so that it will not become, an
investment company within the meaning of the Investment Company Act of 1940, as
amended.
(bb) The "Warrants" (as defined in the Warrant Agreement,
dated as of the date hereof, between the Company and Xxx Xxxxxx & Company (the
"Warrant Agreement")) have been duly and validly authorized by all requisite
corporate action of the Company and, when issued and delivered against payment
therefor as provided in Section 3(m) below, will be valid and binding
obligations of the Company in accordance with their terms; the "Warrant Shares"
(as defined in the Warrant Agreement) have been duly and validly reserved and
authorized for issuance upon exercise of the Warrants and when so issued
against payment therefor as provided in the Warrant Agreement will be validly
issued, fully paid and non-assessable; and no person has any preemptive rights
with respect to the Warrants or the Warrant Shares.
(cc) The Company and each of its Subsidiaries is in
compliance in all material respects with all presently applicable 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) for which the Company or any of its Subsidiaries
would have any liability has occurred; neither the Company nor any of its
Subsidiaries has incurred or expects to incur liability under (1) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension plan" or
(2) 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 or any of its
Subsidiaries 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.
(dd) Except as set forth in the Prospectus (or if the
Prospectus is not in existence, the most recent Preliminary Prospectus), there
has to the best knowledge of the
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Company been no storage, disposal, generation, manufacture, refinement,
transportation, handling or treatment of toxic wastes, hazardous wastes or
hazardous substances by the Company or any of its Subsidiaries (or any of their
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or its Subsidiaries in violation of
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit; there has to
the best knowledge of the Company been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by the Company or any of its Subsidiaries or with respect to which the Company
or any of its direct or indirect subsidiaries have knowledge; and the terms
"hazardous wastes," "toxic wastes" and "hazardous substances" shall have the
meanings specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(ee) The Company and each of its Subsidiaries are 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 they are engaged; neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for; and neither the Company
nor any such Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not cause a Consolidated Material Adverse
Effect.
(ff) Each certificate signed by any officer of the Company
or any of its Subsidiaries, as amended in writing from time to time, and
delivered to the Representative or Underwriters' counsel shall be deemed to be
a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(gg) Except as described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
neither the Company nor any Subsidiary has entered into any transaction with
any affiliate of the Company other than an arm's length transaction, and all
such transactions required to be described in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) have been described therein.
(hh) No former officer, director or stockholder of
Industrial Forest Industries, Inc. (each, an "IFI Person") has participated in
the business of the Company in any manner, including serving as an officer,
director or consultant of or to the Company, after the date of the "Public
Merger" (as such term is defined in the Prospectus).
2. PURCHASE, SALE AND DELIVERY OF SHARES
(a) On the basis of the representations,
warranties, covenants and agreements of the Company contained in this Agreement
and subject to the terms and conditions
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set forth in this Agreement, the Company agrees to sell to the several
Underwriters, and each of the Underwriters agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $___ per share [7.5%
DISCOUNT], the respective number of Firm Shares set forth opposite the name of
such Underwriter on Schedule I to this Agreement (subject to adjustment as
provided in Section 8 of this Agreement).
(b) On the basis of the several (and not joint)
covenants and agreements of the Underwriters contained in this Agreement and
subject to the terms and conditions set forth in this Agreement, the Company
grants an option to the several Underwriters to purchase from the Company,
severally and not jointly, all or any portion of the Option Shares at the same
price per share as the Underwriters are to pay for the Firm Shares. This
option may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters and may be exercised in whole or in part at any time
(but not more than once) on or before the 45th day after the date of the
Prospectus upon written or telecopied notice by the Representative to the
Company setting forth the aggregate number of Option Shares as to which the
several Underwriters are exercising the option and the settlement date. The
Option Shares shall be purchased severally, and not jointly, by each
Underwriter, if purchased at all, in the same proportion that the number of
Firm Shares set forth opposite the name of the Underwriter in Schedule I to
this Agreement bears to the total number of Firm Shares to be purchased by the
Underwriters under Section 2(a) above, subject to such adjustments as the
Representative in their absolute discretion shall make to eliminate any
fractional shares. Delivery of certificates for the Option Shares, and payment
therefor, shall be made as provided in Section 2(c) and Section 2(d) below.
Nothing contained in this Section 2 shall relieve any defaulting Underwriter of
its liability, if any, to the Company or to the remaining Underwriters for
damages occasioned by its default hereunder.
(c) Delivery of the Firm Shares and payment
therefor, less the nonaccountable expense allowance provided for in Section
4(a)(ii) of this Agreement, shall be made at the office of Xxx Xxxxxx & Company,
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (or at such
other location as is agreed by the parties), at 6:30 a.m., San Francisco time,
on the third business day after the date of this Agreement, or at such time on
such other day, not later than seven full business days after such third
business day, as shall be agreed upon in writing by the Company and the
Representative, or as provided in Section 7(h) of this Agreement. The date and
hour of delivery and payment for the Firm Shares are referred to in this
Agreement as the "Closing Date." As used in this Agreement, "business day" means
a day on which the Nasdaq National Market is open for trading and on which banks
in New York and California are open for business and not permitted by law or
executive order to be closed.
(d) If the option granted by the Company in
Section 2(b) above is exercised, delivery of the Option Shares and payment
therefor, less the applicable portion, if any, of the nonaccountable expense
allowance provided for in Section 4(a)(ii) of this Agreement, shall be made at
the office of Xxx Xxxxxx & Company, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 (or at such other location as is agreed by the
parties), at 6:30 a.m., San Francisco time, on the date specified by the
Representative (which shall be three business
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days after the exercise of the option, but not in excess of the period of time
specified in the Rules and Regulations).
(e) Payment of the purchase price for the Shares
by the several Underwriters shall be made at the election of the Representative
by (i) certified or official bank check or checks drawn in next-day funds,
payable to the order of the Company, or (ii) wire transfer of immediately
available funds to such account of the Company as the Company shall advise the
Representative in writing at least three business days prior to the Closing
Date, in the case of the Firm Shares, or three business days prior to the
purchase of the Option Shares. Such payment shall be made upon delivery of
certificates for the Shares to the Representative for the respective accounts
of the several Underwriters. Certificates for the Shares to be delivered to
the Representative shall be registered in such name or names and shall be in
such denominations as the Representative may request at least two business days
before the Closing Date, in the case of Firm Shares, and at least one business
day prior to the purchase of the Option Shares, in the case of the Option
Shares. Such certificates will be made available to the Underwriters for
inspection, checking and packaging at the offices of ____________________, New
York, New York, not less than one full business day prior to the Closing Date
or, in the case of the Option Shares, by 3:00 p.m., New York time, on the first
business day preceding the date of purchase.
It is understood that the Representative, individually and not on
behalf of the Underwriters, may (but shall not be obligated to) make payment to
the Company for Shares to be purchased by any Underwriter whose check shall not
have been received by the Representative on the Closing Date or any later date
on which Option Shares are purchased for the account of such Underwriter. Any
such payment shall not relieve such Underwriter from any of its obligations
hereunder.
(f) It is understood that the several
Underwriters propose to offer the Shares for sale to the public as soon as the
Representative deems it advisable to do so. The Firm Shares are to be
initially offered to the public at the public offering price set forth (or to
be set forth) in the Prospectus. The Representative may from time to time
thereafter change the public offering price and other selling terms.
(g) The information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), the legend respecting stabilization set forth on the inside
front cover page and the statements set forth under the caption "Underwriting"
in any Preliminary Prospectus and in the final form of Prospectus filed
pursuant to Rule 424(b) constitute the only information furnished by the
Underwriters to the Company for inclusion in any Preliminary Prospectus, the
Prospectus or the Registration Statement.
3. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and
agrees 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
of execution of this Agreement, to become effective as promptly as possible.
If the Registration Statement has become or becomes
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effective pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will file the Prospectus, properly
completed (and in form and substance reasonably satisfactory to the
Underwriters) pursuant to Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representative of such timely filing.
The Company will not file the Prospectus, any amended Prospectus, any amendment
(including post-effective amendments) to the Registration Statement or any
supplement to the Prospectus without (i) advising the Representative of and, a
reasonable time prior to the proposed filing of such amendment or supplement,
furnishing the Representative with copies thereof and (ii) obtaining the prior
consent of the Representative to such filing. The Company will prepare and file
with the Commission, promptly upon the request of the Representative, any
amendment to the Registration Statement or supplement to the Prospectus that
may be necessary or advisable in connection with the distribution of the Shares
by the Underwriters and use its best efforts to cause the same to become
effective as promptly as possible.
(b) The Company will promptly advise the Representative
(i) when the Registration Statement becomes effective, (ii) when any
post-effective amendment thereof becomes effective, (iii) of any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for any additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that purpose
and (v) of the receipt by the Company of any notification with respect to the
suspension of the registration, qualification or exemption from registration or
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order or suspension and, if
issued, to obtain as soon as possible the withdrawal thereof.
(c) The Company will (i) on or before the Closing Date,
deliver to the Representative and to Underwriters' counsel a signed copy of the
Registration Statement as originally filed and of each amendment thereto filed
prior to the time the Registration Statement becomes effective and, promptly
upon the filing thereof, a signed copy of each post-effective amendment, if
any, to the Registration Statement (together with, in each case, all exhibits
thereto unless and to the extent previously furnished to the Representative)
and all documents filed by the Company with the Commission under the Exchange
Act and deemed to be incorporated by reference into any Preliminary Prospectus
or the Prospectus and will also deliver to the Representative, for distribution
to the several Underwriters, a sufficient number of additional conformed copies
of each of the foregoing (excluding exhibits) so that one copy of each may be
distributed to each Underwriter, (ii) as promptly as possible deliver to each
of the Representative and send to the several Underwriters, at such office or
offices as the Representative may designate, as many copies of the Prospectus
as the Representative may reasonably request and (iii) thereafter from time to
time during the period in which a prospectus is required by law to be delivered
by an Underwriter or a dealer, likewise send to the Underwriters as many
additional copies of the Prospectus and as many copies of any supplement to the
Prospectus and of any amended Prospectus, filed by the Company with the
Commission, as the Representative may reasonably request for the purposes
contemplated by the Securities Act.
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(d) If at any time during the period in which a
prospectus is required by law to be delivered by an Underwriter or a dealer any
event shall occur as a result of which it is necessary to supplement or amend
the Prospectus in order to make the Prospectus not misleading or so that the
Prospectus will not omit to state a material fact necessary to be stated
therein, in each case at the time the Prospectus is delivered to a purchaser of
the Shares, or if it shall be necessary to amend or to supplement the
Prospectus to comply with the Securities Act or the Rules and Regulations, the
Company will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended Prospectus so that the Prospectus as so supplemented
or amended will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading and so that it then will otherwise comply with the Securities Act
and the Rules and Regulations. If, after the public offering of the Shares by
the Underwriters commences and during such period, the Underwriters propose to
vary the terms of offering thereof by reason of changes in general market
conditions or otherwise, the Representative will advise the Company in writing
of the proposed variation and if, in the opinion either of counsel for the
Company or counsel for the Underwriters, such proposed variation requires that
the Prospectus be supplemented or amended, the Company will forthwith prepare
and file with the Commission a supplement to the Prospectus or an amended
Prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Shares may be sold by the
Underwriters to use the Prospectus, as from time to time so amended or
supplemented, in connection with the sale of the Shares in accordance with the
applicable provisions of the Securities Act and the Rules and Regulations for
such period.
(e) The Company will cooperate with the Representative
and Underwriters' counsel in the qualification or registration of the Shares
for offer and sale under the securities or blue sky laws of such jurisdictions
as the Representative may designate and, if applicable, in connection with
exemptions from such qualification or registration and, during the period in
which a Prospectus is required by law to be delivered by an Underwriter or a
dealer, in keeping such qualifications, registrations and exemptions in effect;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports and other
documents as are or may be required to continue such qualifications,
registrations and exemptions in effect for so long a period as the
Representative may reasonably request for the distribution of the Shares.
(f) During a period of five years commencing with the
date of this Agreement, the Company will promptly furnish to the Representative
and to each Underwriter who may so request in writing copies of (i) all
periodic and special reports furnished by it to shareholders of the Company,
(ii) all information, documents and reports filed by it with the Commission,
Nasdaq National Market, any securities exchange or the NASD, (iii) all press
releases and material news items or articles in respect of the Company, its
products or affairs released or prepared by the Company (other than promotional
and marketing materials disseminated solely to customers and potential
customers of the Company in the ordinary course of business) and (iv) any
additional information concerning the Company or its business which the
Representative may reasonably request.
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(g) As soon as practicable, but not later than the 45th
day following the end of the fiscal quarter first ending after the first
anniversary of the Effective Date, the Company will make generally available to
its securities holders and furnish to the Representative an earnings statement
or statements in accordance with Section 11(a) of the Securities Act and Rule
158 thereunder.
(h) The Company agrees that, without the Representative's
prior written consent, the Company will not, and will not allow the Holders to,
in each case directly or indirectly, issue, sell, offer, contract to sell,
grant any option to purchase or otherwise dispose of any shares of Common
Stock, or any securities convertible into, exchangeable for or exercisable for
Common Stock or any rights to purchase or acquire Common Stock, for a period of
180 days following the date of this Agreement, excluding only (i) the sale of
the Shares to be sold to the Underwriters pursuant to this Agreement and (ii)
the grant of options to purchase Common Stock (provided that none of such
options are or become exercisable during such 180-day period) or the issuance
of shares of Common Stock upon the exercise in accordance with of options
previously granted under the Company's presently authorized stock option plans
as described in the Prospectus or in documents incorporated therein, or upon
the exercise in accordance with their terms of previously granted warrants
which are described in the Prospectus or in documents incorporated therein.
(i) The Company will establish and maintain all financial
control and financial reporting systems customary for well- established public
companies, including but not limited to adequate management information and
reporting systems, and will employ and maintain, with adequate staffing levels
at headquarters and at each significant Subsidiary or significant functional
division, and at each level of responsibility, an employee staff of well
trained and highly qualified financial professionals.
(j) The Company will apply the net proceeds from the
offering received by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(k) The Company will, and at all times for a period of at
least five years after the date of this Agreement, unless such securities are
then listed on a national securities exchange, use its best efforts to cause
the Common Stock (including the Shares) to be included for listing on the
Nasdaq National Market, and the Company will comply with all registration,
filing, reporting and other requirements of the Exchange Act and the Nasdaq
National Market which may from time to time be applicable to the Company.
(l) The Company will use commercially reasonable efforts
to maintain insurance of the types and in the amounts which it deems adequate
for its business consistent with insurance coverage maintained by companies of
similar size and engaged in similar businesses including, but not limited to,
general liability insurance covering all real and personal property owned or
leased by the Company against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against.
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(m) In accordance with the Warrant Agreement, which the
Company has executed and delivered, the Company agrees, upon its receipt of the
purchase price therefor (as specified in the Warrant Agreement), to deliver to
Xxx Xxxxxx & Company (individually and not as the Representative of the
Underwriters) on the Closing Date and simultaneously with completion of the
purchase and sale of the Firm Shares and on the date the Option Shares are
purchased by the Underwriters pursuant to Section 2 of this Agreement, Warrants
(in the form attached as Exhibit A to the Warrant Agreement) representing the
right to purchase 150,000 shares of Common Stock at a price equal to 120% of the
offering price per share to the public as set forth or to be set forth on the
Cover Page of the Prospectus or in the Term Sheet.
(n) The Company will issue no press release prior to or
within 70 days after the Closing Date without prior consultation with the
Representative with respect to the contents thereof.
(o) Within a reasonable time after the Closing Date, the
Company shall supply to the Representative and its counsel, at the Company's
cost, up to six bound volumes as requested by such counsel each containing all
material documents relating to the offering of the Shares.
4. FEES AND EXPENSES.
(a) The Company agrees with each Underwriter that:
(i) 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, any drafts of each of
them and any amendments or supplements to any of them; the duplication or, if
applicable, printing (including all drafts thereof) of this Agreement, the
Agreement Among Underwriters, any Selected Dealer Agreements, the Warrant
Agreement, the Preliminary Blue Sky Survey and any Supplemental Blue Sky
Survey, the Underwriters' Questionnaire and the Power of Attorney and the
duplication and printing (including of drafts thereof) of any other
underwriting documents and material (including but not limited to marketing
memoranda and other marketing material) in connection with the offering,
purchase, sale and delivery of the Shares; the issuance and delivery of the
Shares under this Agreement to the several Underwriters, including all
expenses, taxes, duties, fees and commissions on the purchase and sale of the
Shares and Nasdaq National Market, brokerage and transaction levies with
respect to the purchase and, if applicable, the sale of the Shares (x) incident
to the sale and delivery of the shares by the Company to the Underwriters and
(y) incident to the sale and delivery of the Shares by the Underwriters to the
initial purchasers thereof; the cost of printing all stock certificates; the
Transfer Agent's and Registrar's fees; the fees and disbursements of counsel
for the Company; all fees and other charges of the Company's independent public
accountants and any other experts named in the Prospectus; the cost of
furnishing to the several Underwriters copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectus(es) and the
Prospectus, the agreements and other documents and instruments referred to
above and any amendments or supplements to any of the foregoing; NASD filing
fees; the cost of qualifying or registering the Shares (or obtaining exemptions
from qualification or registration) under the laws
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of such jurisdictions as the Representative may designate (including filing
fees in connection with such state securities or blue sky qualifications,
registrations and exemptions) and preparing the preliminary and any final Blue
Sky Memorandum (including fees and disbursements of Underwriters' counsel in
connection therewith which fees and disbursements shall not exceed $15,000 in
the aggregate without prior approval of the Company) and all such fees and
costs shall be paid on or prior to the Closing Date; all fees and expenses in
connection with qualification of the Shares for inclusion for listing on the
Nasdaq National Market; the Company's share of roadshow expenses; and all other
expenses incurred by the Company in connection with the performance of its
obligations hereunder. Except as provided in this section 4, the Underwriters,
including the Representative, shall bear all expenses incurred by it in
connection with the offering, including (but not limited to) the expenses of
its own counsel.
(ii) In addition to its obligations under Section
4(a)(i) above, the Company agrees to pay the Representative a non-accountable
expense allowance equal to 1.5% of the public offering price of the Shares.
Such allowance shall be paid to the Representative as provided in Sections 2(c)
and 2(d) of this Agreement.
(iii) In addition to its obligations under Section
7(a) of this Agreement, the Company agrees that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any loss, claim, damage or liability described in
Section 7(a) of this Agreement, it will reimburse or advance to or for the
benefit of the Underwriters, and each of them, on a monthly basis (or more
often, if requested) for all legal and other expenses incurred in connection
with investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the Company's obligation to reimburse or
advance for the benefit of the Underwriters for such expenses or the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any portion, or all, of
any such interim reimbursement payments or advances are so held to have been
improper, the Underwriters receiving the same shall promptly return such
amounts to the Company together with interest, compounded daily, at the prime
rate (or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America, NT&SA, San Francisco,
California (the "Prime Rate"), but not in excess of the maximum rate permitted
by applicable law. Any such interim reimbursement payments or advances that
are not made to or for the Underwriters within 30 days of a request for
reimbursement or for an advance shall bear interest at the Prime Rate, but not
in excess of the maximum rate permitted by applicable law, from the date of
such request until the date paid.
(b) In addition to their obligations under Section 7(b)
of this Agreement, the Underwriters severally and in proportion to their
obligation to purchase Firm Shares as set forth on Schedule I hereto, agree
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
loss, claim, damage or liability described in Section 7(b) of this Agreement,
they will reimburse or advance to or for the benefit of the Company on a
monthly basis (or more often, if requested) for all legal and other expenses
incurred by the Company in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial
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determination as to the propriety or enforceability of the Underwriters'
obligation to reimburse or advance for the benefit of the Company for such
expenses and the possibility that such payments or advances might later be held
to have been improper by a court of competent jurisdiction. To the extent that
any portion, or all, of any such interim reimbursement payments or advances are
so held to have been improper, the Company shall promptly return such amounts
to the Underwriters together with interest, compounded daily, at the Prime
Rate, but not in excess of the maximum rate permitted by applicable law. Any
such interim reimbursement payments or advances that are not made to the
Company within 30 days of a request for reimbursement or for an advance shall
bear interest at the Prime Rate, but not in excess of the maximum rate
permitted by applicable law, from the date of such request until the date paid.
(c) Any controversy arising out of the operation of the
interim reimbursement and advance arrangements set forth in Sections 4(a)(iii)
and 4(b) above, including the amounts of any requested reimbursement payments
or advance, the method of determining such amounts and the basis on which such
amounts shall be apportioned among the indemnifying parties, shall be settled
by arbitration conducted under the provisions of the Constitution and Rules of
the Board of Governors of the New York Stock Exchange, Inc. or pursuant to the
Code of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or a written notice of
intention to arbitrate, therein electing the arbitration tribunal. If the
party demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to the demand or
notice is authorized to do so. Any such arbitration will be limited to the
interpretation and obligations of the parties under the interim reimbursement
and advance provisions contained in Sections 4(a)(iii) and 4(b) above and will
not resolve the ultimate propriety or enforceability of the obligation to
indemnify for or contribute to expenses that is created by the provisions of
Section 7 of this Agreement.
(d) If the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 5 of this Agreement is not satisfied, or because of any
termination pursuant to Section 8(b) of this Agreement, or because of any
refusal, inability or failure on the part of the Company to perform any
material covenant or agreement set forth in this Agreement or to comply with
any provision of this Agreement other than by reason of a default by any of the
Underwriters, the Company agrees to reimburse the Representative upon demand
for, or pay directly, all out-of-pocket expenses (including fees and
disbursements of counsel) that shall have been incurred by the Representative
in connection with investigating, preparing to market or marketing the Shares
or otherwise in connection with this Agreement or the offering of the Shares.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase and pay for the Shares shall be
subject, to the reasonable satisfaction of the Representative, to the accuracy
as of the date of execution of this Agreement, the Closing Date and the date on
which the Option Shares are to be purchased, as the case may be, of the
representations and warranties of the Company set forth in this Agreement, to
the accuracy of the statements of the Company and its officers made in any
certificate delivered pursuant to this Agreement, to the performance by the
Company of all of its obligations to be
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performed under this Agreement at or prior to the Closing Date or any later
date on which Option Shares are to be purchased, as the case may be, to the
satisfaction of all conditions to be satisfied or performed by the Company at
or prior to that date and to the following additional conditions:
(a) The Registration Statement shall have become
effective (or, if a post-effective amendment is required to be filed pursuant
to Rule 430A under the Act, such post-effective amendment shall become
effective and the Company shall have provided evidence satisfactory to the
Representative of such filing and effectiveness) not later than 5:00 p.m., New
York time, on the date of this Agreement or at such later date and time as the
Representative may approve in writing and, at the Closing Date or, with respect
to the Option Shares, the date on which such Option Shares are to be purchased;
no stop order suspending the effectiveness of the Registration Statement or any
qualification, registration or exemption from qualification or registration for
the sale of the Shares in any jurisdiction shall have been issued and no
proceedings for that purpose shall have been instituted or threatened; and any
request for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Representative and
Underwriters' counsel.
(b) The Representative shall have received from Xxxxxxx
Xxxxx & Xxxxx LLP, counsel for the Underwriters, an opinion, dated as of the
Closing Date or, if applicable, the date on which the Option Shares are to be
purchased, and the Company shall have furnished such counsel with all documents
which they may reasonably request for the purpose of enabling them to pass upon
such matters.
(c) The Representative shall have received on the Closing
Date and on any later date on which Option Shares are purchased, as the case
may be, the opinion of Xxxxxxx Xxxxxx & Xxxxx, counsel for the Company,
addressed to the Underwriters and dated as of the Closing Date or such later
date, with reproduced copies or signed counterparts thereof for each of the
Underwriters, covering the matters set forth in Annex A to this Agreement and
in form and substance reasonably satisfactory to the Representative.
(d) The Representative shall be satisfied that there has
not been any material change in the market for securities in general or in
political, financial or economic conditions as to render it impracticable in
the Representative's sole judgment to make a public offering of the Shares, or
a material adverse change in market levels for securities in general (or those
of environmental companies in particular) or financial or economic conditions
which render it inadvisable to proceed.
(e) The Representative shall have received on or before
the Closing Date and on any later date on which Option Shares are purchased a
certificate, dated as of the Closing Date or such later date, as the case may
be, and signed by the President and the Chief Financial Officer of the Company
stating that:
(i) the representations and warranties of the
Company set forth in Section 1 of this Agreement are true and correct with the
same force and effect as if expressly made at and as of the Closing Date or
such later date, and the Company has complied with all the
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agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date or such later date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or are threatened under the Securities Act;
and
(iii) (A) the respective signers of the certificate
have carefully examined the Registration Statement in the form in which it
originally became effective and the Prospectus and any supplements or
amendments to any of them and, as of the Effective Date, the statements made in
the Registration Statement and the Prospectus were true and correct in all
material respects and neither the Registration Statement nor the Prospectus
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading, (B) since the Effective
Date, no event has occurred that should have been set forth in an amendment to
the Registration Statement or a supplement or amendment to the Prospectus that
has not been set forth in such an amendment or supplement, (C) since the
respective dates as of which information is given in the Registration Statement
in the form in which it originally became effective and the Prospectus
contained therein, there has not been any Consolidated Material Adverse Effect
or any development involving a prospective Consolidated Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary course of business,
neither the Company or any of its direct or indirect subsidiaries has entered
into any material transaction not referred to in the Registration Statement in
the form in which it originally became effective and the Prospectus contained
therein, (D) there are not any pending or known threatened legal proceedings to
which the Company or any of its direct or indirect subsidiaries is a party or
of which property of the Company or any of its direct or indirect subsidiaries
is the subject which are material and which are not disclosed in the
Registration Statement and the Prospectus and (E) there are not any license
agreements, contracts, leases or other documents that are required to be filed
as exhibits to the Registration Statement that have not been filed as required.
(f) The Representative shall have received from Deloitte
& Touche LLP a letter or letters, addressed to the Underwriters and dated as of
the Closing Date and any later date on which Option Shares are purchased,
confirming that they are independent accountants with respect to the Company
within the meaning of the Securities Act and the applicable Rules and
Regulations thereunder and, based upon the procedures described in their
letter, referred to below, delivered to the Representative concurrently with
the execution of this Agreement (the "Original Letter"), but carried out to a
date not more than five business days prior to the Closing Date or such later
date on which Option Shares are purchased, (i) confirming, to the extent true,
that the statements and conclusions set forth in the Original Letter are
accurate as of the Closing Date or such later date, as the case may be, and
(ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter that are necessary to reflect any
changes in the facts described in the Original Letter since the date of the
Original Letter or to reflect the availability of more recent financial
statements, data or information. Such letters shall not disclose any change,
or any development involving a prospective change, in or affecting the
business, properties or condition (financial or otherwise), results of
operations or
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prospects of the Company or any of its direct or indirect subsidiaries which,
in the Representative's sole judgment, makes it impractical or inadvisable to
proceed with the public offering of the Shares or the purchase of the Option
Shares as contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). In addition, the
Representative shall have received from Deloitte & Touche LLP, on or prior to
the Closing Date, a letter addressed to the Company and made available to the
Representative for the use of the Underwriters stating that their review of the
Company's system of internal controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's consolidated
financial statements as of October 31, 1997, or in delivering their Original
Letter, did not disclose any weaknesses in internal controls that they
considered to be a material weaknesses.
(g) Prior to the Closing Date, the Shares shall have been
designated national market system securities, duly authorized for listing on
the Nasdaq National Market upon official notice of issuance.
(h) On or prior to the Closing Date, you shall have
received from all Material Holders executed agreements covering the matters
described in Section 1(s) of this Agreement.
(i) On or prior to the Closing Date, the Company shall
have entered into the Warrant Agreement, substantially in the form filed as
Exhibit 4.1 to the Registration Statement; and on the Closing Date,
concurrently with the purchase and sale of the Firm Shares and on the date any
Option Shares are purchased pursuant to this Agreement, the Company shall have
issued, sold and delivered the Warrants to the Representative.
(j) The Company shall have furnished to the
Representative such further certificates and documents as the Representative
shall reasonably request (including certificates of officers of the Company),
as to the accuracy of the representations and warranties of the Company set
forth in this Agreement, the performance by the Company of its obligations
under this Agreement and the other conditions concurrent and precedent to the
obligations of the Underwriters under this Agreement. Counsel to the
Representative shall provide a written memorandum to the Company identifying
closing documents which such counsel deems necessary for the Underwriters'
review, not less than two business days before the Closing Date.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement will be in compliance with the provisions of
this Agreement only if they are reasonably satisfactory to the Representative.
The Company will furnish the Representative with such number of conformed
copies of such opinions, certificates, letters and documents as the
Representative shall reasonably request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
time being of the essence, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representative and
Underwriters' counsel, this Agreement and all obligations of the Underwriters
hereunder may be
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canceled by the Representative at, or at any time prior to, the Closing Date or
(with respect to the Option Shares) prior to the date upon which the Option
Shares are to be purchased, as the case may be. Notice of such cancellation
shall be given to the Company in writing or by telephone or telecopy confirmed
in writing. Any such termination shall be without liability of the Company to
the Underwriters (except as provided in Section 4 or Section 7 of this
Agreement) and without liability of the Underwriters to the Company (except to
the extent provided in Section 7 of this Agreement).
6. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company to sell and deliver the Shares required to be delivered as and
when specified in this Agreement shall be subject to the condition that, at the
Closing Date or (with respect to the Option Shares) the date upon which the
Option Shares are to be purchased, no stop order suspending the effectiveness
of the Registration Statement shall be in effect and no proceedings therefor
shall be pending or threatened by the Commission.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person (including each partner or officer thereof)
who controls any Underwriter within the meaning of Section 15 of the Securities
Act from and against any and all losses, claims, damages or liabilities, joint
or several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statute,
law or regulation, at common law or otherwise, specifically including but not
limited to losses, claims, damages or liabilities (or actions in respect
thereof) related to negligence on the part of any Underwriter, and the Company
agrees to reimburse each such Underwriter and controlling person for any legal
or other expenses (including, except as otherwise provided below, settlement
expenses and fees and disbursements of counsel) incurred by the respective
indemnified parties in connection with defending against any such losses,
claims, damages or liabilities or in connection with any investigation or
inquiry of, or other proceeding that may be brought against, the respective
indemnified parties, in each case insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon, in
whole or in part, (i) any breach of any representation, warranty, covenant or
agreement of the Company in this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement in the form originally filed or in any amendment thereto (including
the Prospectus as part thereof) or any post-effective amendment thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or (iii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or
supplement thereto) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (iv) any untrue statement or alleged untrue statement
of a material fact contained in any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the
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Company filed in any jurisdiction in order to qualify or register the Shares
under the securities or Blue Sky laws thereof or to obtain an exemption from
such qualification or registration or filed with the Commission or any
securities association, the Nasdaq National Market, or any securities exchange,
or the omission or alleged omission to state therein a 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 (1) the indemnity agreements of the Company contained in this
Section 7(a) shall not apply to any such losses, claims, damages, liabilities
or expenses if such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through the Representative specifically for use in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
such amendment thereof or supplement thereto and (2) the indemnity agreement
contained in this Section 7(a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Shares that
are the subject thereof (or to the benefit of any person controlling such
Underwriter) if the Company can demonstrate that at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) (excluding the documents incorporated
therein by reference) was not sent or delivered to such person and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented), unless the failure is the result of noncompliance by the Company
with Section 3 of this Agreement. The indemnity agreements of the Company
contained in this Section 7(a) and the representations and warranties of the
Company contained in Section 1 of this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the delivery of and payment for the
Shares. This indemnity agreement shall be in addition to any liabilities which
the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees
to indemnify and hold harmless the Company, each of its officers who signs the
Registration Statement, each of its directors, each other Underwriter and each
person (including each partner or officer thereof) who controls the Company or
any such other Underwriter within the meaning of Section 15 of the Securities
Act from and against any and all losses, claims, damages or liabilities, joint
or several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act, or other federal or state statute,
law or regulation or at common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, settlement expenses and fees and disbursements of counsel) incurred
by the respective indemnified parties in connection with defending against any
such losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding that may be brought against,
the respective indemnified parties, in each case arising out of or based upon
(i) any breach of any representation, warranty, covenant or agreement of the
indemnifying Underwriter in this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (including the Prospectus as part thereof) or any post-effective
amendment thereto, or the omission or alleged omission to state therein 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
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or (iii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, but in each case under clauses (ii) and (iii) above,
as the case may be, only if such statement or omission was made in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of such indemnifying Underwriter through the Representative
specifically for use in the Registration Statement, in any Preliminary
Prospectus or the Prospectus or any such amendment thereof or supplement
thereto; provided, however, this indemnity shall not inure to the benefit of
any Underwriter if the alleged or actual untrue statement or omission in the
Preliminary Prospectus is corrected in the Prospectus (or the Prospectus as
amended or supplemented) and the failure to deliver the Prospectus to the
aggrieved person was not the result of non-compliance by the Company under
Sections 3(c) or (d). The Company acknowledges and agrees that the matters
described in Section 2(g) of this Agreement constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in the Registration Statement, any Preliminary Prospectus or the Prospectus.
The indemnity agreement of each Underwriter contained in this Section 7(b)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Shares. This indemnity agreement shall be
in addition to any liabilities which each Underwriter may otherwise have.
(c) Each person or entity indemnified under the
provisions of Sections 7(a) and 7(b) above agrees that, upon the service of a
summons or other initial legal process upon it in any action or suit instituted
against it or upon its receipt of written notification of the commencement of
any investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
Sections, it will, if a claim in respect thereunder is to be made against the
indemnifying party or parties under this Section 7, and give written notice
(the "Notice") of such service or notification to the party or parties from
whom indemnification may be sought hereunder within ten (10) calendar days
after receipt by them of written notice of the commencement of any actions
against them. No indemnification provided for in Sections 7(a) or 7(b) above
shall be available to any person who fails to so give the Notice if the party
to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related,
but only to the extent such party was materially prejudiced by the failure to
receive the Notice, and the omission so to notify such indemnifying party or
parties shall not relieve such indemnifying party or parties from any liability
which it or they may have to the indemnified party for contribution or
otherwise than on account of Sections 7(a) and 7(b). Any indemnifying party
shall be entitled at its own expense to participate in the defense of any
action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(the "Notice of Defense") to the indemnified party, to assume (alone or in
conjunction with any other indemnifying party or parties) the entire defense of
such action, suit, investigation, inquiry or proceeding, in which event such
defense shall be conducted, at the expense of the
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indemnifying party or parties, by counsel chosen by such indemnifying party or
parties and reasonably satisfactory to the indemnified party or parties;
provided, however, that (i) if the indemnified party or parties reasonably
determine that there may be a conflict between the positions of the
indemnifying party or parties and of the indemnified party or parties in
conducting the defense of such action, suit, investigation, inquiry or
proceeding or that there may be legal defenses or rights available to such
indemnified party or parties different from or in addition to those available
to the indemnifying party or parties, then separate counsel for and selected by
the indemnified party or parties shall be entitled to conduct, at the expense
of the indemnifying parties, the defense of the indemnified parties to the
extent determined by such counsel to be necessary to protect the interests of
the indemnified party or parties, and (ii) provided, further, that the
indemnifying party shall not be liable for the fees and expenses of more than
one separate counsel, reasonably approved by the indemnifying party, for all of
the indemnified parties, plus, if applicable, local counsel in each
jurisdiction. In addition, in any event, the indemnified party or parties
shall be entitled to have counsel selected by such indemnified party or parties
participate in, but not conduct, the defense. If, within a reasonable time
after receipt of the Notice, an indemnifying party gives a Notice of Defense
and, unless separate counsel is to be chosen by the indemnified party or
parties as provided above, the counsel chosen by the indemnifying party or
parties is reasonably satisfactory to the indemnified party or parties, the
indemnifying party or parties will not be liable under Sections 7(a) through
7(c) for any legal or other expenses subsequently incurred by the indemnified
party or parties in connection with the defense of the action, suit,
investigation, inquiry or proceeding, except that (A) the indemnifying party or
parties shall bear and pay the legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear and
pay such other expenses as it or they have authorized to be incurred by the
indemnified party or parties. If, within a reasonable time after receipt of
the Notice, no Notice of Defense has been given, the indemnifying party or
parties shall be responsible for any legal or other expenses incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding.
(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 7 but 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 to appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 7 provides for indemnification in such case, each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in Section 7(a) or 7(b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by each indemnifying
party from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each party in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Underwriters shall be deemed to be in the same respective proportions as
the total proceeds from the offering
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of the Shares, net of the underwriting discounts, received by the Company and
the total underwriting discount retained by the Underwriters bear to the
aggregate public offering price of the Shares. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by a party and the
party's relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this Section
7(d) and to the considerations referred to in the third sentence of the first
paragraph of this Section 7(d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities, or actions in respect
thereof, referred to in the first sentence of this Section 7(d) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating, preparing to defend or defending
against any action or claim which is the subject of this Section 7(d).
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by that Underwriter. For purposes of this
Section 7(d), each person who controls an Underwriter within the meaning of the
Securities Act shall have the same rights to contribution as such Underwriter,
and each person who controls the Company within the meaning of the Securities
Act, each officer of the Company who signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the immediately preceding and immediately
following sentences. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute in this Section
7(d) are several in proportion to their respective underwriting obligations and
not joint.
Each party or other entity entitled to contribution agrees that upon
the service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in Section 7(c) above). This Section 7(d) shall not be
operative as to any Underwriter to the extent that the Company is entitled to
receive or has received indemnity under this Section 7.
(e) The Company shall not, without the prior written
consent of each Underwriter, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not such Underwriter or any person who controls such Underwriter
within the meaning of Section 15 of the Securities Act is a party to such
claim, action, suit or proceeding) unless such settlement, compromise or
consent includes an
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unconditional release of each such Underwriter and each such controlling person
from all liability arising out of such claim, action, suit or proceeding.
(f) No Underwriter shall, without the consent of the
Company, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Company is a party to such claim, action, suit or proceeding), which consent
shall not be unreasonably withheld, unless such settlement, compromise or
consent includes an unconditional release of the Company, each of its officers
who signed the Registration Statement, each of its directors and each person
who controls the Company within the meaning of Section 15 of the Securities
Act, from all liability arising out of such claim, action, suit or proceeding.
(g) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of Sections 4(a)(iii), 4(b) and 4(c) and this
Section 7 of this Agreement and that they are fully informed regarding all such
provisions. They further acknowledge that the provisions of Sections
4(a)(iii), 4(b) and 4(c) and this Section 7 of this Agreement 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, each Preliminary Prospectus and the Prospectus as
required by the Securities Act, the Rules and Regulations, the Exchange Act and
the rules and regulations of the Commission under the Exchange Act. The
parties are advised that federal or state policy, as interpreted by the courts
in certain jurisdictions, may be contrary to certain provisions of Sections
4(a)(iii), 4(b) and 4(c) and this Section 7 of this Agreement and, to the
extent permitted by law, the parties hereto hereby expressly waive and
relinquish any right or ability to assert such public policy as a defense to a
claim under Sections 4(a)(iii), 4(b) or 4(c) or this Section 7 of this
Agreement and further agree not to attempt to assert any such defense.
(h) SUBSTITUTION OF UNDERWRITERS. If for any reason one
or more of the Underwriters fails or refuses (otherwise than for a reason
sufficient to justify the termination of this Agreement under the provisions of
Section 5 or Section 9 of this Agreement) to purchase and pay for the number of
Firm Shares agreed to be purchased by such Underwriter or Underwriters, the
Company shall immediately give notice thereof to the Representative and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by the Representative of such notice to purchase, or procure one or
more other Underwriters to purchase, in such proportions as may be agreed upon
among the Representative and such purchasing Underwriter or Underwriters and
upon the terms set forth herein, all or any part of the Firm Shares that such
defaulting Underwriter or Underwriters agreed to purchase. If the
non-defaulting Underwriters fail to make such arrangements with respect to all
such Shares, the number of Firm Shares that each non-defaulting Underwriter is
otherwise obligated to purchase under this Agreement shall be automatically
increased on a pro rata basis to absorb the remaining Shares that the
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defaulting Underwriter or Underwriters agreed to purchase; provided, however,
that the non-defaulting Underwriters shall not be obligated to purchase the
Shares that the defaulting Underwriter or Underwriters agreed to purchase if
the aggregate number of such Shares exceeds 10% of the total number of Firm
Shares that all Underwriters agreed to purchase under this Agreement. If the
total number of Firm Shares that the defaulting Underwriter or Underwriters
agreed to purchase shall not be purchased or absorbed in accordance with the
two preceding sentences, the Company shall have the right, within 24 hours next
succeeding the first 24-hour period above referred to, to make arrangements
with other underwriters or purchasers satisfactory to the Representative for
purchase of such Shares on the terms set forth in this Agreement. In any such
case, either the Representative or the Company shall have the right to postpone
the Closing Date determined as provided in Section 2(c) of this Agreement for
not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 2(c) in order that any necessary changes
in the Registration Statement, the Prospectus or any other documents or
arrangements may be made.
If neither the non-defaulting Underwriters nor the Company makes
arrangements within the time periods provided in the first three sentences of
the first paragraph of this Section 7(h) for the purchase of all the Firm
Shares that the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall be terminated without further act or deed and
without any liability on the part of the Company to any non-defaulting
Underwriter (except as provided in Section 4 or Section 7 of this Agreement)
and without any liability on the part of any non-defaulting Underwriter to the
Company (except to the extent provided in Section 7 of this Agreement).
Nothing in this Section 7(h), and no action taken hereunder, shall relieve any
defaulting Underwriter from liability, if any, to the Company or any
non-defaulting Underwriter for damages occasioned by its default under this
Agreement. The term "Underwriter" in this Agreement shall include any persons
substituted for an Underwriter under this Section 7(h).
8. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) If the Registration Statement has not been declared
effective prior to the date of this Agreement, this Agreement shall become
effective at such time, after notification of the effectiveness of the
Registration Statement has been released by the Commission, as the
Representative and the Company shall agree upon the public offering price and
the purchase price of the Shares. If the public offering price and the purchase
price of the Shares shall not have been determined prior to 5:00 p.m., New York
time, on the fifth full business day after the Registration Statement has
become effective, this Agreement shall thereupon terminate without liability on
the part of the Company to the Underwriters (except as provided in Section 4 or
Section 7 of this Agreement) or the Underwriters to the Company (except as set
forth in Section 7 of this Agreement). By giving notice before the time this
Agreement becomes effective, the Representative may prevent this Agreement from
becoming effective without liability of any party to the other party, except
that the Company shall remain obligated to pay costs and expenses to the extent
provided in Section 4 and Section 7 of this Agreement. If the Registration
Statement has been declared effective prior to the date of this Agreement, this
Agreement shall become effective upon execution and delivery by the
Representative and the Company.
(b) This Agreement may be terminated by the
Representative in its absolute discretion by giving written notice to the
Company at any time on or prior to the Closing Date or,
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with respect to the purchase of the Option Shares, on or prior to any later
date on which the Option Shares are to be purchased, as the case may be, if
prior to such time any of the following has occurred or, in the
Representative's opinion, is likely to occur: (i) after the respective dates as
of which information is given in the Registration Statement and the Prospectus,
any material adverse change or development involving a prospective adverse
change in or affecting particularly the business, properties, condition
(financial or otherwise), results of operations or prospects of the Company and
its direct and indirect subsidiaries, taken as a whole, whether or not arising
in the ordinary course of business, occurs which would, in the Representative's
sole judgment, make the offering or the delivery of the Shares impracticable or
inadvisable; or (ii) if there shall have been the engagement in hostilities or
an escalation of major hostilities by the United States or the declaration of
war or a national emergency by the United States on or after the date hereof,
or any outbreak of hostilities or other national or international calamity or
crisis or change in economic or political conditions, if the effect of such
outbreak, calamity, crisis or change in economic or political conditions on the
financial markets of the United States would, in the Representative's sole
judgment, make the offering or delivery of the Shares impracticable or
inadvisable; or (iii) if there shall have been suspension of trading in
securities generally or a material adverse decline in value of securities
generally on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market, or limitations on prices (other than limitations on
hours or numbers of days of trading) for securities on either such exchange or
system; or (iv) if there shall have been the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order
of, or commencement of any proceeding or investigation by, any court,
legislative body, agency or other governmental authority which in the
Representative's sole judgment has or may have a Consolidated Material Adverse
Effect; or (v) if there shall have been the declaration of a banking moratorium
by federal, New York or California state authorities; or (vi) if there shall
have been the taking of any action by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which in the
Representative's sole judgment has a material adverse effect on the securities
markets in the United States; or (vii) existing international monetary
conditions shall have undergone a material change which, in your sole judgment,
makes the offering or delivery of the Shares impracticable or inadvisable. If
this Agreement shall be terminated pursuant to this Section 8, there shall be
no liability of the Company to the Underwriters (except pursuant to Section 4
and Section 7 of this Agreement) and no liability of the Underwriters to the
Company (except to the extent provided in Section 7 of this Agreement).
9. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing and, if to the Underwriters, shall
be mailed, telecopied or delivered to Xxx Xxxxxx & Company, 000 Xxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Syndicate
Manager (telecopier: (000) 000-0000); and if to the Company, shall be mailed,
telecopied or delivered to it at 000 Xxxxxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxx Xxxx,
Xxxxxxxxx 00000 (telecopier: (000) 000-0000) Attention: President. All
notices given by telecopy shall be promptly confirmed by letter.
10. PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT. This
Agreement shall inure to the benefit of the Company and the several
Underwriters and, with respect to the provisions of Section 4 and Section 7 of
this Agreement, the several parties (in
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addition to the Company and the several Underwriters) indemnified under the
provisions of Section 4 and Section 7, and their respective personal
representatives, successors and assigns. Nothing in this Agreement is intended
or shall be construed to give to any other person, firm or corporation any
legal or equitable remedy or claim under or in respect of this Agreement or any
provision contained herein. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Shares from
the several Underwriters.
11. GENERAL. Notwithstanding any provision of this Agreement to
the contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties, covenants and
agreements in this Agreement shall remain in full force and effect regardless
of (a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof or by or on behalf of
the Company or their respective directors or officers and (c) delivery and
payment for the Shares under this Agreement; provided, however, that if this
Agreement is terminated prior to the Closing Date, the provisions of Sections
3(f)-3(n) of this Agreement shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which together shall constitute
one and the same instrument, and may be delivered by facsimile transmission.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS,
OF THE STATE OF CALIFORNIA.
12. AUTHORITY OF THE REPRESENTATIVE. In connection with this
Agreement, the Representative will act for and on behalf of the several
Underwriters, and any action taken under this Agreement by the Representative,
as representative of the several Underwriters, will be binding on all the
Underwriters.
[Remainder of page left intentionally blank]
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If the foregoing correctly sets forth your understanding, please so
indicate by signing in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement among the Company and the
several Underwriters.
Very truly yours,
FLOUR CITY INTERNATIONAL, INC.
By: ____________________________________
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the
date first above written.
On their own behalf and on behalf of each of the several Underwriters
named in Schedule I hereto.
XXX XXXXXX & COMPANY
By: ____________________________________
Xxxxx X. Xxxxxxx
Senior Vice President
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SCHEDULE I
UNDERWRITERS
Number of Firm Underwriters Shares to be Purchased:
Xxx Xxxxxx & Company . . . . . . . . . . . . . . . . . . . . . .
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . ==========
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ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE COMPANY
(i) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of Nevada; each of [U.S. and
Foreign Subsidiaries] has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of formation;
(ii) The Company and each Subsidiary has the corporate power to
own, lease and operate its properties and to conduct its business as described
in the Prospectus;
(iii) The Company and each Subsidiary is duly qualified to do
business as a foreign corporation and is in good standing in all jurisdictions
in which the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure so to qualify
would not have a Consolidated Material Adverse Effect on such entity;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the captions "Capitalization"
and "Description of Capital Stock" as of the dates stated therein; the issued
and outstanding shares of capital stock (or other securities) of the Company
and each Subsidiary have been duly and validly authorized and issued, are fully
paid and nonassessable and have not been issued in violation of any statutory,
or, to the best knowledge of such counsel, other preemptive right or other
rights to subscribe for or purchase securities or in violation of any
applicable federal or state securities laws; and except as reflected on Exhibit
A to the Underwriting Agreement, the Company directly or indirectly owns all of
the issued and outstanding equity securities of each of its Subsidiaries and,
to such counsel's actual, current knowledge, there are no outstanding options,
warrants or other rights to acquire any equity securities of any Subsidiary;
(v) The Shares will, upon issuance and delivery against payment
therefor in accordance with the terms of the Agreement, be duly authorized,
validly issued, fully paid and nonassessable and will not have been issued in
violation of any statutory, or, to the best knowledge of such counsel, other
preemptive right or other rights to subscribe for or purchase securities and
have been duly approved for listing on the Nasdaq National Market subject only
to official notice of issuance thereof;
(vi) The Company has corporate power to enter into the Agreement
and to issue, sell and deliver the Shares to the Underwriters.
(vii) The Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company and, assuming
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its due authorization, execution and delivery by the Representative, is the
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except insofar as the indemnification and
contribution provisions of the Agreement may be limited by public policy
concerns and except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally or by general equitable principles;
(viii) We have been informed by the staff of the Securities and
Exchange Commission that the Registration Statement has become effective under
the Securities Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act;
(ix) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements and
supporting schedules included therein, as to which such counsel need express no
opinion), as of the effective date of the Registration Statement, complied as
to form in all material respects with the requirements of the Securities Act
and the applicable Rules and Regulations;
(x) The terms and provisions of the capital stock of the Company
conform in all material respects to the description thereof contained in the
Registration Statement and Prospectus, and the forms of certificates evidencing
the Common Stock comply with Nevada law;
(xi) The information in the Prospectus under the captions "Risk
Factors," "Business - Legal Proceedings," "Description of Capital Stock" and
"Shares Eligible for Future Sale," to the extent it constitutes matters of law
or legal conclusions, has been reviewed by such counsel and is correct in all
material respects;
(xii) The description in the Registration Statement and the
Prospectus of the Articles of Incorporation and Bylaws of the Company and of
statutes and, to the best knowledge of such counsel, contracts are accurate in
all material respects and fairly present in all material respects the
information required to be presented by the Securities Act and the Rules and
Regulations;
(xiii) To the best knowledge of such counsel, there are no
agreements, contracts, licenses, leases or documents of a character required to
be described or referred to in the Registration Statement or Prospectus or to
be filed as an exhibit to the Registration Statement that are not described or
referred to therein or filed as required;
(xiv) The execution and delivery of the Agreement and the Warrant
Agreement do not, and the Company's performance of the Agreement and the
Warrant Agreement and the consummation of the transactions contemplated by each
of them will not, conflict with, violate or result in the material breach of
or a material default (including without limitation with the giving of notice,
the passage of time or otherwise) under any of the terms and provisions of the
Company's Articles of Incorporation or Bylaws or, to the undersigned's actual
current
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knowledge, any contract, indenture, mortgage, deed of trust, loan agreement,
lease, license, joint venture or, without limitation, other agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
its or their properties are bound or any law, ordinance, rule or regulation or,
to the best knowledge of such counsel, any order, writ, injunction, judgment or
decree of any governmental agency or body or of any court or arbitration
tribunal having jurisdiction over the Company or any Subsidiary or over any of
its or their properties; provided, however, that no opinion need be rendered
concerning state securities or Blue Sky laws;
(xv) No authorization, approval or consent or other order of any
governmental authority or agency is necessary in connection with the
consummation of the transactions contemplated by the Agreement or the Warrant
Agreement, except such as have been obtained under the Securities Act, are
necessary under the Securities Act in connection with the registration for
resale of the Warrant Shares or as may be required under state securities or
Blue Sky laws in connection with the purchase and the distribution of the
Shares by the Underwriters or the registration and sale of the Warrant Shares;
(xvi) To the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the Company or any
Subsidiary of a character which are required to be disclosed in the
Registration Statement or the Prospectus by the Securities Act or the
applicable Rules and Regulations, other than those described therein;
(xvii) To the best knowledge of such counsel, neither the Company nor
any Subsidiary is presently in breach of, or in default under, any bond,
debenture, note or other evidence of indebtedness or any contract, indenture,
mortgage, deed of trust, loan agreement, lease, license or, without limitation,
other agreement or instrument to which the Company or any Subsidiary is a party
or by which any of its or their properties are bound which breach or default,
individually or in the aggregate, is reasonably likely to result in a
Consolidated Material Adverse Effect.
(xviii) To the best knowledge of such counsel, except as set forth in
the Registration Statement and Prospectus, no holders of Common Stock or,
except as is provided in the Warrant Agreement, other securities of the Company
have unexercised registration rights with respect to any securities of the
Company;
(xix) The Warrant Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly
executed and delivered by the Company and, assuming due authorization,
execution and delivery by the Representative, is the valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general equitable principles;
(xx) The Warrants have been duly and validly authorized and
constitute valid and binding obligations of the Company enforceable in
accordance with their terms (except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable principles); the Warrant
Shares have been duly and validly reserved and authorized for issuance upon
exercise of the Warrants
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against payment therefor as provided in the Warrant Agreement (including, as
provided in the Warrant Agreement, by surrender of Warrants) and, when so
issued, will be validly issued, fully paid and nonassessable; and to the best
knowledge of such counsel no stockholder has any statutory or, to the best
knowledge of such counsel, other preemptive rights or other rights to subscribe
for or purchase with respect to the Warrants or the Warrant Shares;
In addition, such counsel shall state that such counsel has
participated in the preparation of the Registration Statement and Prospectus,
including participating in conferences with officers and other representatives
of the Company, the independent public accountants of the Company, the
Representative and counsel to the Underwriters, at which conferences the
contents of the Registration Statement and the Prospectus and related matters
were discussed and, although they have not independently verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, nothing has come to the attention of such counsel
that caused them to believe that, at the time the Registration Statement became
effective, the Registration Statement (except as to financial statements and
supporting schedules contained therein, as to which such counsel need express
no opinion) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or at the Closing Date or any later date on
which the Option Shares are to be purchased, as the case may be, the Prospectus
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
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