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EXHIBIT 1
SERIES A 9% CONVERTIBLE PREFERRED STOCK
AMCOR CAPITAL CORPORATION
UNDERWRITING AGREEMENT
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
XXXXXX XXXXX SECURITIES, INC.
000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Gentlemen:
AMCOR CAPITAL CORPORATION, a corporation organized under the laws of
the State of Delaware (the "Company"), confirms its agreement with Xxxxxx Xxxxx
Securities, Inc., a California corporation ("Xxxxxx Xxxxx"), and each of the
underwriters, if any, named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 11), for whom Xxxxxx Xxxxx is acting as
representative (in such capacity, Xxxxxx Xxxxx shall hereinafter be referred to
as "you" or the "Representative"), with respect to the sale by the Company of a
total of Five Hundred and Fifty Thousand (550,000) of the Company's Series A 9%
Convertible Preferred Stock (the "Preferred Stock") and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of
Preferred Shares set forth opposite their names on Schedule A. Such shares of
Preferred Stock are hereinafter referred to as the "Firm Shares."
Upon your request, as provided in Section 2(b) of this Agreement, the
Company shall also sell to the Underwriters, acting severally and not jointly,
up to an additional Eighty Two Thousand and Five Hundred (82,500) shares of
Preferred Stock (fifteen percent (15%) of the Firm Shares) for the purpose of
covering over-allotments, if any (the "Option Shares"). The Firm Shares and
the Option Shares are hereinafter together referred to as the "Shares." The
Underwriters are purchasing the Preferred Shares for resale and distribution
within the United States. The Company also proposes to issue and sell to you
warrants (the "Underwriters' Warrant") pursuant to the Underwriters' Warrant
Agreement (the "Underwriters' Warrant Agreement") for the purchase of up to an
additional number of shares of Preferred Stock equal to ten percent (10%) of
the aggregate of the Firm Shares. The shares of Preferred Stock issuable upon
exercise of the Underwriters' Warrant are hereinafter referred to as the
"Underwriter's Preferred Shares". The Firm Shares, the Option Shares, the
Underwriters' Warrant and the Underwriter's Preferred Shares (collectively,
hereinafter referred to as the "Securities") are more fully described in the
Registration Statement and the Prospectus defined below.
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE UNDERWRITERS
a. The Company makes the following representations and warranties
to each of the Underwriters as of the date hereof, and as of
the Closing Date (hereinafter defined) and the Option Closing
Date (as hereinafter defined). Each and every certificate
signed by any officer of the Company, and delivered to the
Underwriter or to Underwriters' Counsel (as defined herein)
shall be deemed a representation and warranty by the Company
to the Underwriter as to the matters covered thereby.
(i) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a registration
statement, and amendment or amendments thereto, on Form S-2 (No.
333-28373), including any related preliminary prospectus
("Preliminary Prospectus"), for the registration of the Firm Shares
and the Option Shares under the Securities Act of 1933, as amended
(the "Act"), which registration statement and amendment or amendments
have been prepared by the Company in conformity with the requirements
of the Act, and the Rules and Regulations of the Commission under the
Act. For purposes hereof, "Rules and Regulations" mean the rules and
regulations adopted by the Commission under either the Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the
time the registration statement becomes effective (including the
prospectus, financial statements, schedules, exhibits, and all other
documents filed as a part thereof or incorporated therein (including,
but not limited to, those documents or information incorporated by
reference therein and all information deemed to be a part thereof as
of such time pursuant to paragraph (b) of Rule 430(A) of the Rules and
Regulations)), is hereinafter called the "Registration Statement", and
the form of prospectus in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations, is hereinafter called the
"Prospectus".
(ii) Neither the Commission nor any securities exchange or
state authority has issued any order preventing or suspending the use
of any preliminary Prospectus, as defined under the Act (a
"Preliminary Prospectus"), the Registration Statement or the
Prospectus or any part thereof and no proceedings for a stop order
suspending the effectiveness of the Registration Statement or any of
the Company's securities have been instituted or are pending or to the
Company's knowledge, threatened. Each Preliminary Prospectus, the
Registration Statement and the Prospectus as of the time of filing
thereof conformed with the requirements of the Act and the Rules and
Regulations, and none of any Preliminary Prospectus, the Registration
Statement or Prospectus at the time of filing thereof contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein and necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, except that this
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representation and warranty does not apply to statements made in
reliance upon and in conformity with written information furnished to
the Company with respect to the Underwriters by or on behalf of the
Underwriters expressly for use in such Preliminary Prospectus,
Registration Statement or Prospectus.
(iii) When the Registration Statement becomes effective and
at all times subsequent thereto up to the Closing Date and each Option
Closing Date, if any, and during such longer period as the Prospectus
may be required to be delivered in connection with sales by the
Underwriters or a dealer, the Registration Statement and the
Prospectus will contain all statements which are required to be stated
therein in accordance with the Act, and the Rules and Regulations and
will conform to the requirements of the Act and the Rules and
Regulations; neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto, will contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided, however, that this representation and warranty
does not apply to statements made or statements omitted in reliance
upon and in conformity with information furnished to the Company in
writing with respect to the Underwriters by or on behalf of any
Underwriter expressly for use in the Preliminary Prospectus,
Registration Statement or Prospectus or any amendment thereof or
supplement thereto.
(iv) Each of the Company and each of its controlled
corporations, partnerships and limited liability companies as
described in the Registration Statement (hereinafter referred to as
the "Subsidiaries"), has been duly organized and is validly existing
and in good standing under the laws of the state of its formation.
Except as disclosed in the Prospectus, neither the Company nor any
Subsidiary owns a material interest in any corporation, partnership,
trust, joint venture or other business entity. Each of the Company
and each Subsidiary is duly qualified and licensed and in good
standing as a foreign corporation in each state or other jurisdiction
in which its ownership or leasing of any properties or the character
of its operations requires such qualification or licensing. Each of
the Company and each Subsidiary has all requisite power and authority,
and to the best knowledge of the Company, each has obtained any and
all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or
regulatory officials and bodies (including, without limitation, those
having jurisdiction over environmental or similar matters), to own or
lease its properties and conduct its business as described in the
Prospectus; to the best knowledge of the Company, each of the Company
and each Subsidiary is and has been doing business in compliance with
all such authorizations approvals, orders, licenses, certificates,
franchises and permits and all federal, state and local laws, rules
and regulations, and except as set forth in the Prospectus, at the
Closing Date and at the Option Closing Date, if any, neither the
Company nor any subsidiary shall have received
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notice of any proceedings relating to the revocation or modification
of any such authorization, approval, order, license, certificate,
franchise or permit, or in the aggregate, if subject to any
unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the
earnings, position, or prospects of the Company and its Subsidiaries
taken as a whole.
(v) This Underwriting Agreement has been duly authorized,
executed, and delivered by the Company and is binding upon the Company
in accordance with its terms; the issuance and delivery of the
Preferred Shares and Warrants to be purchased hereunder and the
Underwriters' Warrant, the execution, delivery and performance of this
Underwriting Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under: (i) any
contract, indenture, mortgage, deed of trust, loan agreement, bond
debenture, note, or other evidence of indebtedness, lease, contract,
or other agreement or instrument to which the Company or any
Subsidiary is a party or by which it or any of its properties may be
bound; (ii) the Company's or any Subsidiary's articles of
incorporation or bylaws; or (iii) any statute, law, order, rule,
regulation, writ, injunction, or decree of any court, foreign or
domestic, or governmental agency or body having jurisdiction over the
Company or any Subsidiary or their properties; and no consent,
approval, authorization, or order of any court or governmental agency
or body is required for the consummation by the Company of the
transactions on its part contemplated herein, except as may be
required under the Act and the Rules and Regulations, or under the
applicable securities laws of any state.
(vi) Except as set forth in the Prospectus, there shall
not be at the Closing Date or at the Option Closing Date, if any, to
the knowledge of the Company, any pending or threatened action, suit,
or proceeding to which the Company and/or any subsidiary is named as a
party before any court or governmental agency or body which might
result in a material adverse change, individually or in the aggregate,
in the condition, financial or otherwise, business or prospects of the
Company and its subsidiaries taken as a whole, and there are no
contracts or documents of the Company that are required to be
described in or filed as exhibits to the Registration Statement by the
Rules and Regulations that have not been described in or filed as
exhibits to the Registration Statement.
(vii) The outstanding shares of the capital stock of the
Company and the equity securities of each Subsidiary have been duly
authorized and validly issued and are fully paid, nonassessable, and
free of preemptive rights; the capital stock of the Company conforms
to the statements about it in the Registration Statement and
Prospectus (and such statements correctly state the substance of the
instruments defining the capitalization of the Company); all issued
and outstanding shares of the capital stock of the Company and the
equity securities of each Subsidiary and all other securities issued
and sold or exchanged by the Company and each Subsidiary have been
issued and sold or exchanged
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in compliance with all applicable securities laws and regulations; the
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Underwriting Agreement against payment
therefor, the Securities will be duly and validly issued, fully paid,
nonassessable, and free of preemptive rights; the Underwriters'
Warrants have been authorized for issuance to the Representative and
will, when issued, possess rights, privileges, and characteristics as
represented in the most recent form of Underwriters' Warrant filed as
an exhibit to the Registration Statement; the securities underlying
the Preferred Shares to be issued upon exercise of the Underwriters'
Warrant, when issued and delivered against payment therefor in
accordance with the terms of the Underwriters' Warrant, will be duly
and validly issued, fully paid, nonassessable and free of preemptive
rights, and all corporate action required to be taken for the
authorization and issuance of the Underwriters' Warrant, and the
securities underlying any Securities to be issued upon their exercise,
have been validly and sufficiently taken; and there are no outstanding
options, warrants, or other rights granted by the Company or any
Subsidiary or to the Company's knowledge, by any person named in the
table under "Principal Stockholders" in the Prospectus to purchase
Preferred Stock or other securities of the Company other than as
described in the Prospectus; and to the Company's knowledge, no
option, warrant or other right has been granted to any person, the
exercise of which would cause that person to own more than five
percent (5%) of any capital stock of the Company except as described
in the Prospectus. The Company is the sole record and beneficial
owner of all of the outstanding equity securities of each Subsidiary,
except as described in the Prospectus.
(viii) Xxxxx & Company, Independent Auditors, who have
examined the August 31, 1996 and 1995 financial statements filed with
the Commission as a part of the Registration Statement and included in
the Prospectus, are independent public accountants within the meaning
of the Act and the Rules and Regulations; the financial statements
filed as a part of the Registration Statement and included in the
Prospectus fairly present the financial position, results of
operations, stockholders' equity, and cash flows of the Company and
the Subsidiaries at the respective dates and for the respective
periods to which they apply and have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved. The financial statement schedules,
if any, included in the Registration Statement present fairly the
information required to be stated therein.
(ix) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and
except as may be otherwise stated or contemplated in the Registration
Statement or the Prospectus, as the case may be, there has not been
(a) any material adverse change in the business, properties, business
prospects, results of operations, or condition (financial or other) of
the Company or any Subsidiary, (b) any transaction entered into by the
Company or any Subsidiary that is material to the Company and the
Subsidiaries taken as a whole, except transactions in the
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ordinary course of business, (c) any direct or contingent obligation
incurred by the Company or any Subsidiary, except obligations incurred
in the ordinary course of business, (d) any transaction entered into
by the Company or any Subsidiary that is required to be and is not
described in the Prospectus or an appropriate amendment or supplement
thereto, (e) other than in the ordinary course of the Company's
business, any material change in the outstanding indebtedness of the
Company or any Subsidiary, (f) any material change in the capital
stock of the Company or equity securities of any subsidiary, or (g)
any dividend or distribution of any kind declared, paid, or made on
the Company's capital stock.
(x) Except as set forth in the Prospectus, the Company
and each Subsidiary has good and marketable title to all properties
and assets, tangible and intangible, described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances, or
restrictions. All of the leases and subleases under which the Company
or any Subsidiary holds properties are in full force and effect, and
the Company has no notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
Subsidiary under any of such leases or subleases, or affecting or
questioning the rights of the Company or any Subsidiary to the
continued possession of the leased or subleased premises or property
under any such lease or sublease.
(xi) The Company and each Subsidiary has filed all
required state and federal income, employment, excise, and franchise
tax returns or has filed extensions for the filing thereof, and has
paid all taxes shown as due thereon; and the Company has no knowledge
of any tax deficiency that might be asserted against it or any
Subsidiary that might materially and adversely affect the Company's or
any Subsidiary's business or properties.
(xii) Except as disclosed in the Prospectus, the Company
and each Subsidiary maintains insurance of the types and in amounts
generally deemed adequate for its business and consistent in coverage
and amount with insurance maintained by similar companies and
business, including, but not limited to, property and casualty
insurance and all other risks customarily insured against, all of
which insurance is in full force and effect.
(xiii) To the best knowledge of the officers and directors
of the Company so named in the Prospectus (hereinafter referred to as
the Company's management), no labor disturbance by the employees of
the Company or any Subsidiary exists or is imminent.
(xiv) To the best knowledge of the Company's management,
neither the Company nor any Subsidiary nor any employee or agent of
the Company or any
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Subsidiary has made any payment of funds of the Company or any
Subsidiary or received or retained any funds in violation of the law.
(xv) To the best knowledge of the Company's management
there is no occurrence or likely occurrence of any event or events
that would cause it to use the proceeds of the offering in a way
materially different from that stated in the Prospectus.
(xvi) To the best knowledge of the Company's management
there is no factual basis for any claim, by any present or former
employee of the Company or any Subsidiary, for salary, wages or the
like, reinstatement or damages of any kind related to his or her
employment.
(xvii) To the best knowledge of the Company's management
there is no factual basis for any claim, relating to its or any
Subsidiary's use, storage, handling or disposal of toxic wastes or to
such use, storage, handling or disposal by any other person on
property owned or leased by the Company or any Subsidiary.
(xviii) Neither the Company nor any of its employees,
directors, stockholders, partners, or affiliates, as defined in
Section 1(a)(xxiii)below, of any of the foregoing has taken or will
take, directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under
the Exchange Act, or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities or otherwise.
(xix) Except as otherwise disclosed in the Prospectus, none
of the trademarks, service marks, trade names and copyrights, and
license and rights to the foregoing presently owned or held by the
Company or any Subsidiary are in dispute so far as known by the
Company or are in any conflict with the right of any other person or
entity.
(xx) Except as described in the Prospectus under
"Underwriting", there are no claims, payments, issuances, arrangements
or understandings, whether oral or written, for services in the nature
of a finder's or origination fee with respect to the sale of the
Securities or any other arrangements, agreements, understandings,
payments or issuance with respect to the Company or any of its
officers, directors, stockholders, partners, employees or affiliates
that may affect the Underwriters' compensation, as determined by the
National Association of Securities Dealers, Inc. ("NASD").
(xxi) Neither the Company's management nor any of its
employees, agents, or any other person acting on behalf of the
Company, has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to
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customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or
employee of any governmental agency (United States or foreign) or
instrumentality of any government (United States or foreign) or any
political party or candidate for office (United States or foreign) or
other person who was, is, or may be in a position to help or hinder
the business of the Company (or assist the Company in connection with
any actual or proposed transaction) which (a) might subject the
Company, or any other such person to any damage or penalty in any
civil, criminal or governmental litigation or proceeding (United
States or foreign), (b) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the
Company, or (c) if not continued in the future, might adversely affect
the assets, business, operations or prospects of the Company.
(xxii) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 1 of the Laws of Florida,
Charter 00-000 Xxx Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it or any affiliate
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or with
the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported or
incorporated by reference in the Prospectus, if any, concerning the
Company's, or any affiliate's, business with Cuba or with any person
or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(xxiii) Except as set forth in the Prospectus, no officer,
director or stockholder of the Company, or any "affiliate" or
"associate" (as these terms are defined in Rule 405 promulgated under
the Rules and Regulations) of any of the foregoing persons or entities
has or has had, either directly or indirectly, (a) an interest in any
person or entity which furnishes or sells services or products which
are furnished or sold or are proposed to be furnished or sold by the
Company or purchases from or sells or furnishes to the Company any
goods or services, or (b) a beneficial interest in any contract or
agreement to which the Company is a party or by which it may be bound
or affected. Except as set forth in the Prospectus under "CERTAIN
TRANSACTIONS", there are no existing agreements, arrangements,
understandings or transactions or proposed agreements, arrangements,
understandings or transactions, between or among the Company and any
officer, director, or Principal Stockholder (as such term is defined
in the Prospectus) of the Company or any partner, affiliate or
associate of any of the foregoing persons or entities.
(xxiv) The minute books of the Company have been made
available to the Underwriters and contain a complete summary of all
meetings and actions of the directors, stockholders, audit committee,
compensation committee and any other
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committee of the Board of Directors of the Company, respectively,
since the time of its incorporation, and reflect all transactions
referred to in such minutes accurately in all material respects.
(xxv) Except and to the extent described in the
Registration Statement, no holders of any securities of the Company or
of any options, warrants or other convertible or exchangeable
securities of the Company have the right to include any securities
issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the
Company to file a registration statement under the Act and no person
or entity holds any anti-dilution rights with respect to any
securities of the Company.
x. Xxxxxx Pines and each of the Underwriters makes the following
representations and warranties to the Company as of the date hereof, and as of
the Closing Date (as hereinafter defined) and the Option Closing Date (as
hereinafter defined). Each and every certificate signed by any officer of
Xxxxxx Xxxxx and such Underwriter and delivered to the Company or to Company's
Counsel (as defined herein) shall be deemed a representation and warranty by
Xxxxxx Xxxxx and such Underwriter as to the matters covered thereby.
(i) Xxxxxx Xxxxx and such Underwriter (A) is a
corporation duly organized, validly existing and in good standing
under the laws of the state of its organization; and (B) has all
requisite power and authority to own its properties and to carry on
its business as it is now being conducted and as it is proposed to be
conducted during the Offering.
(ii) Xxxxxx Xxxxx and such Underwriter (A) is a member in
good standing of the NASD, and represents that it is a member in good
standing of the NASD; and (B) in making sales of the Shares, will
comply with all applicable rules of the NASD, including, without
limitation, the NASD's Interpretation with Respect to Free-Riding and
Withholding and Section 2110 of the NASD's Conduct Rules.
(iii) The execution, delivery and performance by Xxxxxx
Xxxxx and such Underwriter of this Agreement are within the corporate
power and authority of Xxxxxx Xxxxx and such Underwriter and have been
duly authorized by all necessary corporate action, and this Agreement
has been duly and validly authorized, executed and delivered by Xxxxxx
Xxxxx and such Underwriter and constitutes a valid and binding
obligation of Xxxxxx Xxxxx and such Underwriter enforceable against
Xxxxxx Xxxxx and such Underwriter in accordance with its terms.
(iv) Neither Xxxxxx Xxxxx nor such Underwriter has a
direct or indirect affiliation or association with any officer or
director of the Company or with any beneficial owner of five percent
(5.0%) or more of the Company's voting securities.
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(v) The information furnished by Xxxxxx Xxxxx or such
Underwriter or its counsel for inclusion in the Registration Statement
and the Prospectus, and in any amendment or supplement thereto, is
true and accurate in all material respects and no material information
has been omitted therefrom that would be necessary in order to make
the statements in the Registration Statement or the Prospectus
prepared in reliance on such information, in light of the
circumstances under which they were made, not misleading.
(vi) Neither Xxxxxx Xxxxx nor such Underwriter has taken,
or will take, directly or indirectly, any action designed to, or that
might reasonably be expected to, cause or result in the stabilization
or the manipulation of the price of the Shares or the Common Stock of
the Company except as may be authorized in writing by the
Representative.
(vii) To the best knowledge of Xxxxxx Xxxxx and such
Underwriter, no proceeding is pending or threatened against Xxxxxx
Xxxxx or such Underwriter or any of its directors or officers in any
court of competent jurisdiction, or before the Commission, any state
securities commission, or the NASD, concerning Xxxxxx Xxxxx or such
Underwriter's activities as a broker and/or dealer.
(viii) Neither Xxxxxx Xxxxx nor such Underwriter has
published, issued, or circulated or authorized the publication,
issuance, or circulation of any circular, notice or advertisement
regarding the Securities which has not previously been approved by the
Representative, the Company and Company's Counsel.
(ix) Neither Xxxxxx Xxxxx nor such Underwriter or any of
their associated persons, parents, or affiliates has a "Conflict of
Interest" with the Company within the meaning of Section 2(g) of
Schedule E to the NASD Bylaws.
(x) Neither Xxxxxx Xxxxx nor such Underwriter has made
any material representation, in writing or otherwise, to any purchaser
of the Shares regarding the Company, the Shares or the Offering, other
than such material representations as are set forth in the Prospectus
and/or the Registration Statement.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to Xxxxxx Xxxxx, as Representative of each
Underwriter, and each Underwriter, severally and not jointly, agrees to
purchase from the Company at a price of $9.10 per share, which is ninety-one
percent (91%) of the initial public offering price per Preferred Share, that
number of Firm Shares set forth in Schedule A opposite the name of such
Underwriter, plus any
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additional number of Firm Shares which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 11 hereof.
b. In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Representative and at the election of the Representative each Underwriter,
severally and not jointly, in the amounts designated in writing by the
Representative to purchase all or any part of the Option Shares at a price of
$9.10 per share, which is ninety-one percent (91%) of the initial public
offering price per Preferred Share. The option granted hereby will expire 45
days after (i) the date the Registration Statement becomes effective with the
Commission, if the Company has elected not to rely on Rule 430A under the Rules
and Regulations, or (ii) the date of this Agreement if the Company has elected
to rely upon Rule 430A under the Rules and Regulations and may be exercised in
whole or in part from time to time only for the purpose of covering over-
allotments which may be made in connection with the offering and distribution
of the Firm Shares upon notice by the Representative to the Company setting
forth the number of Option Shares as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for any
such Option Shares. Any such time and date of delivery (an "Option Closing
Date") shall be determined by the Representative, but shall not be later than
three (3) full business days after the exercise of said option, nor in any
event prior to the Closing Date, as hereinafter defined, unless otherwise
agreed upon by the Representative and the Company. Nothing herein contained
shall obligate the Underwriters to make any over-allotments. No Option Shares
shall be delivered unless the Firm Shares shall be simultaneously delivered or
shall theretofore have been delivered as herein provided.
c. Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of Xxxxxx Xxxxx
Securities, Inc. at 000 Xxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx
00000, or at such other place as shall be agreed upon by the Representative and
the Company. Such delivery and payment shall be made at 10:00 AM Pacific time)
on _____________________, 1997 or at such other time and date as shall be
agreed upon by the Representative and the Company, but not more than three (3)
full business days after the effective date of the Registration Statement (such
time and date of payment and delivery being herein called "Closing Date"). In
addition, in the event that any or all of the Option Shares are purchased by
the Underwriters, payment of the purchase price for, and delivery of
certificates for, such Option Shares shall be made at the above-mentioned
office of the Representative or at such other place as shall be agreed upon by
the Representative and the Company on each Option Closing Date as specified in
the notice from the Representative to the Company. Delivery of the
certificates for the Firm Shares and the Option Shares, if any, shall be made
to the Underwriters against payment by the Underwriters, severally and not
jointly, of the purchase price for the Firm Shares and the Option Shares, if
any, to the order of the Company for the Firm Shares and the Option Shares, if
any, by New York Clearing House funds. In the event such option is exercised,
each of the Underwriters, acting severally and not
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jointly, shall purchase that proportion of the total number of Option Shares
then being purchased which the number of Firm Shares set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares, subject in each case to such adjustments as the Representative in its
discretion shall make to eliminate any sales or purchases of fractional
Preferred Shares. Certificates of the Firm Shares and the Option Shares, if
any, shall be in definitive, fully registered form, shall bear no restrictive
legends and shall be in such denominations and registered in such names as the
Underwriters may request in writing at least two (2) business days prior to the
Closing Date or the relevant Option Closing Date, as the case may be. The
certificates for the Firm Shares and the Option Shares, if any, shall be made
available to the Representative at such office or such other place as the
Representative may designate for inspection, checking and packaging no later
than 9:30 AM on the last business day prior to Closing Date or the relevant
Option Closing Date, as the case may be.
d. On the Closing Date, the Company shall issue and sell to the
Representative, the Underwriters' Warrant. The Underwriters' Warrant shall
entitle the holders thereof to purchase an aggregate of 55,000 shares of
Preferred Stock (ten percent (10%) of the number of the total number of
Preferred Shares sold in the Offering). The Underwriters' Warrant shall be
exercisable for a period of twenty-four (24) months commencing twelve (12)
months from the effective date of the Registration Statement. The
Underwriters' Warrant Agreement and form of Warrant certificate shall be
substantially in the form filed as Exhibit A to that Agreement. Payment for
the Underwriters' Warrant shall be made on the Closing Date.
3. PUBLIC OFFERING OF THE PREFERRED SHARES
As soon after the Registration Statement becomes effective as the
Representative deems advisable, the Underwriters shall make a public offering
of the Preferred Shares (other than to residents of or in any jurisdiction in
which qualification of the Preferred Shares is required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
The Representative may from time to time increase or decrease the public
offering price after distribution of the Preferred Shares has been completed to
such extent as the Representative, in its discretion deems advisable. The
Underwriters may enter into one or more agreements as the Underwriters, in each
of their sole discretion, deem advisable with one or more broker-dealers who
shall act as dealers in connection with such public offering.
4. COVENANTS AND AGREEMENTS OF THE COMPANY
The Company covenants and agrees with each of the Underwriters as
follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective with the
Commission as promptly as practicable and will not at any time, whether before
or after the effective date of the Registration Statement, file any amendment
to the Registration Statement or supplement to the Prospectus or file any
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document under the Act or the Exchange Act before termination of the offering
of the Preferred Shares by the Underwriters of which the Representative shall
not previously have been advised and furnished with a copy, or to which the
Representative shall have objected within two (2) business days after its
receipt thereof or which is not in compliance with the Act, the Exchange Act or
the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representative and confirm the notice in
writing, (i) when the Registration Statement, as amended, becomes effective
with the Commission and, if the provisions of Rule 430A promulgated under the
Act will be relied upon, when the Prospectus has been filed in accordance with
said Rule 430A and when any post-effective amendment to the Registration
Statement becomes effective, (ii) of the issuance by the Commission of any stop
order or of the initiation or the threatening of any proceeding suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of the Preliminary Prospectus or the Prospectus, or any
amendment or supplement thereto, or the institution of proceedings for that
purpose, (iii) of the issuance by the Commission or by any state securities
commission of any proceedings for the suspension of the qualification of any of
the Securities for offering or sale in any jurisdiction or of the initiation,
or the threatening, of any proceeding for that purpose, (iv) of the receipt of
any comments from the Commission; and (v) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information. If the Commission or the state
securities commission authority of any state shall enter a stop order or
suspend such qualification at any time, the Company will make every effort to
obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representative) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424(b)(1) (or, if applicable and if consented to by the Representative,
pursuant to Rule 424(b)(4)) not later than the Commission's close of business
on the earlier of (i) the second business day following the execution and
delivery of this Agreement and (ii) the fifteenth business day after the
effective date of the Registration Statement.
(d) The Company will give the Representative notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Securities which
differs from the corresponding prospectus on file at the Commission, as the
case may be at the time the Registration Statement becomes effective, whether
or not such revised prospectus is required to be filed pursuant to Rule 424(b)
of the Rules and Regulations), and will furnish the Representative with copies
of any such amendment or supplement no later than two (2) business days after
its receipt thereof prior to such proposed filing or use, as the case may be,
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and will not file any such prospectus to which the Representative or Rushall &
XxXxxxxx ("Underwriters' Counsel") shall object.
(e) The Company shall endeavor in good faith, in cooperation with
the Representative, at or prior to the time the Registration Statement becomes
effective, to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as the Representative may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such
documents and furnish such information as may be required for such purpose;
provided, however, the Company shall not be required to qualify as a foreign
corporation or file a general or limited consent to service of process in any
such jurisdiction. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representative agrees that such action
is not at the time necessary or advisable, use all reasonable efforts to file
and make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus
relating to the Securities or the Underwriter's Preferred Shares is required to
be delivered under the Act, any event shall have occurred as a result of which,
in the opinion of counsel for the Company or Underwriters' Counsel, the
Prospectus, as then amended or supplemented, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time
to amend the Prospectus to comply with the Act, the Company will notify the
Representative promptly and prepare and file with the Commission an appropriate
amendment or supplement in accordance with Section 10 of the Act, each such
amendment or supplement to be satisfactory to Underwriters' Counsel, and the
Company will furnish to the Underwriters copies of such amendment or supplement
as soon as available and in such quantities as the Underwriters may request.
(g) During a period of three (3) years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable, each annual
report (including financial statements audited by independent public
accountants), and each report on Form 10-KSB (or 10-K, as the case may be),
including each amendment thereto, a copy of any report on Form 10-QSB (or 10-Q,
as the case may be), including any amendment thereto and each current report on
Form 8-K, including any amendment thereto, and will promptly deliver a copy of
each such report to the Representative and will deliver to the Representative:
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(i) every press release and every material news item or
article of interest to the financial community in respect of the
Company, or its affairs which was released or prepared by or on behalf
of the Company; and
(ii) any additional information of a public nature
concerning the Company (and any future subsidiary) or its businesses
which the Representative may request.
During such three (3)-year period, if the Company has an active
subsidiary, the foregoing financial statements will be on a consolidated basis
to the extent that the accounts of the Company and its subsidiary are
consolidated.
h. The Company will maintain a Transfer Agent and, if necessary
under the jurisdiction of incorporation of the Company, a Registrar (which may
be the same entity as the Transfer Agent) for its Preferred Stock.
i. The Company will furnish to the Representative or on the
Representative's order, without charge, at such place as the Representative may
designate, copies of each Preliminary Prospectus, the Registration Statement
and any pre-effective or post-effective amendments thereto (two of which copies
will be signed and will include all financial statements and exhibits), the
Prospectus, and all amendments and supplements thereto, including any
prospectus prepared after the effective date of the Registration Statement, in
each case as soon as available and in such quantities as the Representative may
request.
j. Neither the Company, nor any of its officers, directors,
stockholders, nor any of their respective affiliates (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action designed
to, or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities of the Company.
k. The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "USE
OF PROCEEDS" in the Prospectus. Except as described in the Prospectus, no
portion of the net proceeds will be used, directly or indirectly, to acquire
any securities issued by the Company.
l. The Company shall timely file all such reports, forms or other
documents as may be required from time to time, under the Act, the Exchange
Act, and the Rules and Regulations, and all such reports, forms and documents
filed will comply as to form and substance with the applicable requirements
under the Act, the Exchange Act, and the Rules and Regulations.
(m) The Company shall furnish to the Representative as early as
practicable prior to each of the Closing Date and each Option Closing Date, if
any, but no later than two (2) full business days prior thereto, a copy of the
latest available unaudited interim financial statements of the Company (which
in no event shall be as of a date more than thirty (30) days prior to the
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date of the Registration Statement) which have been read by the Company's
independent public accountants, as stated in its letter to be furnished
pursuant to Section 6(i) hereof.
(n) The Company shall use its best efforts to cause the Common
Stock to be quoted on NASDAQ and for a period of five (5) years from the date
of such listing, if any, use its best efforts to establish and maintain the
NASDAQ quotation of the Preferred Stock to the extent outstanding.
(o) Until the completion of the distribution of the Preferred
Shares, the Company shall not, without the prior written consent of the
Representative and Underwriters' Counsel, issue, directly or indirectly, any
press release or other communication or hold any press conference with respect
to the Company or its activities or the offering contemplated hereby, other
than trade releases issued in the ordinary course of the Company's business
consistent with past practices with respect to the Company's operations.
(p) The Company hereby grants to the Representative a preferential
right on the terms and subject to the conditions set forth in this paragraph,
for a period of three (3) years from the effective date of the Registration
Statement with the Commission to purchase for its account, or to sell for the
account of the Company or its present or future affiliates or subsidiaries, any
securities of the Company or any of its present or future affiliates or
subsidiaries, with respect to which the Company or any of its present or future
affiliates or subsidiaries may seek a public or private sale of such securities
pursuant to an underwriting or placement by a broker-dealer for compensation.
During such period the Company will consult, and will cause such present or
future affiliates or subsidiaries to consult with, the Representative with
regard to any such offering or placement of its securities and will offer, or
cause any of its present or future affiliates or subsidiaries to offer, to the
Representative the opportunity, on terms not more favorable to the Company or
such present or future affiliate or subsidiary than they can secure elsewhere,
to purchase or sell any such securities. If the Representative fails to accept
in writing such proposal made by the Company or any of its present or future
affiliates or subsidiaries within thirty (30) days after receipt of a notice
containing such notice, then the Representative shall have no further claim or
right with respect to the proposal contained in such notice. If, thereafter,
such proposal is materially modified, the Company shall again consult, and
cause each present or future affiliate or subsidiary to consult, with the
Representative in connection with such modification and shall in all respects
have the same obligations and adopt the same procedures with respect to such
proposal as are provided hereinabove with respect to the original proposal.
5. PAYMENT OF EXPENSES
a. The Company hereby agrees to pay on each of the Closing Date
and the Option Closing Date (to the extent not paid at the Closing Date) all
expenses and fees (other than fees of Underwriters' Counsel incident to the
performance of the obligations of the Company under
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this Agreement and the Underwriters' Warrant Agreement, including, without
limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing, (including mailing and handling charges)
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments
and supplements thereto and the printing, mailing (including the payment of
postage with respect thereto) and delivery of this Agreement, the Agreement
Among Underwriters, the Selected Dealer Agreements, and related documents,
including the cost of all copies thereof and of the Preliminary Prospectuses
and of the Prospectus and any amendments thereof or supplements thereto
supplied to the Underwriters and such dealers as the Underwriters may request,
in quantities as hereinabove stated, (iii) the printing, engraving, issuance
and delivery of the Securities, including, but not limited to, (A) the purchase
by the Underwriters of the Securities and the purchase by the Representative of
the Underwriters' Warrants from the Company, (B) the consummation by the
Company of any of its obligations under this Agreement and the Underwriters'
Warrant Agreement, and (C) the resale of the Securities by the Underwriters in
connection with the distribution contemplated hereby, (iv) the qualification of
the Securities under state or foreign securities or "Blue Sky" laws and
determination of the status of such securities under legal investment laws,
including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum", the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey", if any, and disbursements and fees of the Company's counsel in
connection therewith, (v) costs and expenses in connection with due diligence
investigations, including, but not limited to, the fees of any consultant
retained, (vi) fees and expenses of the transfer agent and registrar, (vii) the
fees payable to the Commission and the NASD, and (viii) the fees and expenses
incurred in connection with the quotation of the Securities on the appropriate
NASDAQ Market and any other exchange.
b. If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 12 hereof, the Company shall
reimburse and indemnify the Representative for all of its actual out-of-pocket
expenses.
c. The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 5, it will pay to the
Representative on the Closing date by certified or bank cashier's check or, at
the election of the Representative, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to three
percent (3.0%) of the gross proceeds received by the Company from the sale of
the Firm Shares, $_________ of which has been paid to date. In the event the
Representative elects to purchase the Option Shares described in Section 2(b)
hereof, the Company agrees to pay to the Representative on the Option Closing
Date (by certified or bank cashier's check or, at the Representative's
election, by deduction from the proceeds of the Option Shares) a
non-accountable expense allowance equal to three percent (3.0%) of the gross
proceeds received by the Company from the sale of the Option Shares, none of
which to date has been paid to Representative.
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6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS
The obligations of the Underwriters hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company herein
as of the date hereof and as of the Closing Date and each Option Closing Date,
if any, with respect to the Company as if it had been made on and as of the
Closing Date or each Option Closing Date, as the case may be; the accuracy on
and as of the Closing Date or Option Closing Date, if any, of the statements of
the officers of the Company made pursuant to the provisions hereof; and the
performance by the Company on and as of the closing Date and each Option
Closing Date, if any, of its covenants and obligations hereunder and to the
following further conditions:
a. At the Closing Date and each Option Closing Date, if any, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be pending or contemplated by the Commission and any request on the
part of the Commission for additional information shall have been complied with
to the reasonable satisfaction of Underwriters' Counsel. If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, the price of the
Preferred Shares and any price-related information previously omitted from the
effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the Rules
and Regulations within the prescribed time period, and prior to Closing date
the Company shall have provided evidence satisfactory to the Representative of
such timely filing, or a post- effective amendment providing such information
shall have been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations.
b. The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representative's opinion, is material, or omits to state
a fact which, in the Representative's opinion, is material and is required to
be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Representative's opinion, is material,
or omits to state a fact which, in the Representative's opinion, is material
and is required to be stated therein or is necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
c. At the Closing Date, the Underwriters shall have received the
favorable opinion of White and Xxxxx LLP, legal counsel to the Company, dated
as of the Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) Each of the Company and each Subsidiary (A) has been
duly organized and is validly existing as an entity of its respective
form in good standing under the laws
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of its jurisdiction, (B) is duly qualified and licensed and in good
standing as a foreign entity in each jurisdiction in which its
ownership or leasing of any properties or the character of its
operations requires such qualification or licensing, and (C) has all
requisite power and authority; and the Company has obtained any and
all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or
regulatory officials and bodies (including, without limitation, those
having jurisdiction over environmental or similar matters), to own or
lease its properties and conduct its business as described in the
Prospectus. The disclosures in the Registration Statement concerning
the effects of federal, state and local laws, rules and regulations on
the business of the Company and each Subsidiary as currently
conducted and as contemplated are correct in all material respects and
do not omit to state a fact necessary to make the statements contained
therein not misleading in light of the circumstances in which they
were made.
(ii) The Preferred Shares, the Underwriters' Warrant and
the Underwriter's Preferred Shares to be sold by the Company hereunder
and under the Underwriter's Warrant Agreement are not and will not be
subject to any preemptive or other similar rights of any stockholder,
have been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued, fully paid
and non-assessable and conform to the description thereof contained in
the Prospectus; the holders thereof will not be subject to any
liability solely as such holders; all corporate action required to be
taken for the authorization, issue and sale of the Preferred Shares,
the Underwriters' Warrant and the Underwriters' Preferred Shares has
been duly and validly taken; and the certificates representing the
Preferred Shares and the Underwriters' Warrant, are in due and proper
form. The Underwriters' Warrant constitutes a valid and binding
obligation of the Company to issue and sell, upon exercise thereof and
payment therefor, the number and type of securities of the Company
called for thereby. Upon the issuance and delivery pursuant to this
Agreement and the Underwriters' Warrant Agreement of the Preferred
Shares and the Underwriters' Warrant, respectively, to be sold by the
Company, the Underwriters and the Representative, respectively, will
acquire good and marketable title to the Preferred Shares and the
Underwriters' Warrant free and clear of any pledge, lien, charge,
claim, encumbrance, security interest, or other restriction or equity
of any kind whatsoever.
(iii) Each of the Company and each subsidiary is and has
been doing business in material compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises
and permits and all federal, state and local laws, rules and
regulations. The disclosures in the Registration Statement concerning
the effects of federal, state and local laws, rules and regulations on
the Company's and the Subsidiary's business as currently conducted and
as contemplated are correct in all material respects and do not omit
to state a fact necessary to make the statements contained therein not
misleading in light of the circumstances in which they were made.
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(iv) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and any
amendment or supplement thereto, and the Company is not a party to or
bound by any instrument, agreement or other arrangement providing for
it to issue any material amount of capital stock, rights, warrants,
options or other securities, except for this Agreement, the
Underwriters' Warrant Agreement and as described in the Prospectus.
The Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement and the
Prospectus. All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability by reason
of being such holders; and none of such securities were issued in
violation of the preemptive rights of any holders of any security of
the Company. The Preferred Shares, the Underwriters' Warrant and the
Underwriter's Preferred Shares to be sold by the Company hereunder and
under the Underwriters' Warrant Agreement are not and will not be
subject to any preemptive or other similar rights of any stockholder,
have been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued, fully paid
and non-assessable and conform to the description thereof contained in
the Prospectus; the holders thereof will not be subject to any
liability solely as such holders; all corporate action required to be
taken for the authorization, issue and sale of the Preferred Shares,
the Underwriters' Warrant and the Underwriter's Preferred Shares has
been duly and validly taken; and the certificates representing the
Preferred Shares and the Underwriters' Warrants are in due and proper
form. Each of the Underwriters' Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof
and payment therefor, the number and type of securities of the Company
called for thereby. Upon the issuance and delivery pursuant to this
Agreement and the Underwriters' Warrant Agreement of the Preferred
Shares and the Underwriters' Warrants, respectively, to be sold by the
Company, the Underwriters and the Representative, respectively, will
acquire good and marketable title to the Preferred Shares and
Underwriters' Warrant free and clear of any pledge, lien, charge,
claim, encumbrance, security interest, or other restriction or equity
of any kind whatsoever.
(v) The Registration Statement is effective under the Act
and if applicable, filing of all pricing information has been timely
made in the appropriate form under Rule 430A, and no stop order
suspending the use of the Preliminary Prospectus, the Registration
Statement or Prospectus or any part thereof or suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or,
to the best of such counsel's knowledge, threatened or contemplated
under the Act;
(vi) Each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplements
thereto (other than the financial
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statements and other financial and statistical data included thereon,
as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations.
(vii) To the best of such counsel's knowledge, (A) there
are no agreements, contracts or other documents required by the Act to
be described in the Registration Statement and the Prospectus and
filed as exhibits to the Registration Statement other than those
described in the Registration Statement (or required to be filed under
the Exchange Act if upon such filing they would be incorporated, in
whole or in part, by reference therein) and the Prospectus and filed
as exhibits thereto, and the exhibits which have been filed are
correct copies of the documents of which they purport to be copies;
(B) the descriptions in the Registration Statement and the Prospectus
and any supplement or amendment thereto of contracts and other
documents to which the Company is a party or by which it is bound,
including any document to which the Company is a party or by which it
is bound, incorporated by reference into the Prospectus and any
supplement or amendment thereto, are accurate in all material respects
and fairly represent the information required to be shown by Form S-2;
(C) there is not pending or threatened against the Company any action,
arbitration, suit, proceeding, inquiry, investigation, litigation,
governmental or other proceeding (including, without limitation, those
having jurisdiction over environmental or similar matters), domestic
or foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or business of the
Company which (x) is required to be disclosed in the Registration
Statement which is not so disclosed (and such proceedings as are
summarized in the Registration Statement are accurately summarized in
all material respects), (y) questions the validity of the capital
stock of the Company or this Agreement or the Underwriters' Warrant
Agreement, or of any action taken or to be taken by the Company
pursuant to or in connection with any of the foregoing; (D) no statute
or regulation or legal or governmental proceeding required to be
described in the Prospectus is not described as required; and (E)
there is no action, suit or proceeding pending, or threatened, against
or affecting the Company before any court or arbitrator or
governmental body, agency or official (or any basis thereof known to
such counsel) in which there is a reasonable possibility of an adverse
decision which may result in a material adverse change in the
condition, financial or otherwise, or the earnings, position,
prospects, stockholders' equity, value, operation, properties,
business or results of operations of the Company, which could
adversely affect the present or prospective ability of the Company to
perform its obligations under this Agreement or the Underwriters'
Warrant Agreement or which in any manner draws into question the
validity or enforceability of this Agreement or the Underwriters'
Warrant Agreement;
(viii) The Company has full legal right, power and authority
to enter into each of this Agreement and the Underwriters'
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Warrant Agreement, and to consummate the transactions provided for
therein; and each of this Agreement and the Underwriters' Warrant
Agreement has been duly authorized, executed and delivered by the
Company. Each of this Agreement and the Underwriters' Warrant
Agreement, assuming due authorization, execution and delivery by each
other party thereto constitutes a legal, valid and binding agreement
of the Company enforceable against the Company in accordance with its
terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or contribution
may be limited by applicable law), and none of the Company's execution
or delivery of this Agreement and the Underwriters' Warrant Agreement,
its performance hereunder or thereunder, its consummation of the
transactions contemplated herein or therein, or the conduct of its
business as described in the Registration Statement, the Prospectus,
and any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or violation of
any of the terms or provisions of, or constitutes or will constitute a
default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or
assets (tangible or intangible) of the Company pursuant to the terms
of, (A) the certificate of incorporation or by-laws of the Company,
(B) any license, contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Company is
a party or by which it is or may be bound or to which any of its
respective properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (C) any statute, judgment, decree,
order, rule or regulation applicable to the Company of any arbitrator,
court, regulatory body or administrative agency or other governmental
agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or
foreign, having jurisdiction over the Company or any of its activities
or properties;
(ix) Except as described in the Prospectus, no consent,
approval, authorization or order of, and no filing with, any court,
regulatory body, government agency or other body (other than such as
may be required under Blue Sky laws, as to which no opinion need be
rendered) is required in connection with the issuance of the Preferred
Shares pursuant to the Prospectus, the issuance of the Underwriters'
Warrant, and the Registration Statement, the performance of this
Agreement and the Underwriters' Warrant Agreement, and the
transactions contemplated hereby and thereby;
(x) The business and properties of the Company conform in
all material respects to the description thereof contained in the
Registration Statement and the Prospectus; and the Company has good
and marketable title to, or valid and enforceable leasehold estates
in, all items of real and personal property stated in the Prospectus
to be owned or leased by it, in each case free and clear of all liens,
charges, claims, encumbrances, pledges, security interests, defects or
other restrictions or equities of any
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kind whatsoever, other than those referred to in the Prospectus and
liens for taxes not yet due and payable;
(xi) To the best knowledge of such counsel, the Company is
not in breach of, or in default under, any term or provision of any
license, contract, indenture, mortgage, installment sale agreement,
deed of trust, lease, voting trust agreement, stockholders' agreement,
partnership agreement, note, loan or credit agreement or any other
agreement or instrument evidencing an obligation for borrowed money,
or any other agreement or instrument to which the Company is a party
or by which the Company may be bound or to which the property or
assets (tangible or intangible) of the Company is subject or affected;
and the Company is not in violation of any term or provision of its
certificate of incorporation, bylaws, or in violation of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation;
(xii) The Prospectus has been reviewed by such counsel, and
insofar as they refer to statements of law, descriptions of statutes,
licenses, rules or regulations or legal conclusions, are correct in
all material respects;
(xiii) Except as described in the Prospectus, such counsel
is not aware of any person, corporation, trust, partnership,
association or other entity which has the right to include and/or
register any securities of the Company in the Registration Statement,
require the Company to file any registration statement or, if filed,
to include any security in such registration statement.
(xiv) Except as described in the Prospectus, such counsel
is not aware of any claim, payment, issuance, arrangement or
understanding for services in the nature of a finder's or origination
fee with respect to the sale of the Securities hereunder or financial
consulting arrangement or any other arrangements, agreements,
understandings, payments or issuances that may affect the
Underwriters' compensation, as determined by the NASD.
(xv) Except as described in the Prospectus, the Company
does not (A) maintain, sponsor or contribute to any ERISA Plans, (B)
maintain or contribute, now or at any time previously, to a defined
benefit plan, as defined in Section 3(35) of ERISA, and (C) has never
completely or partially withdrawn from a multi employer plan.
(xvi) To the best of such counsel's knowledge after due
inquiry, the Registration Statement and the Prospectus do not contain
any untrue statement of material fact relating to the Company, or omit
to state any material fact relating to the Company which is required
to be stated in the Registration Statement and the Prospectus or is
necessary to make the statements therein not misleading.
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Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and related matters and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which
lead them to believe that either the Registration Statement any amendment
thereto, at the time such Registration Statement or amendment became effective
or the Preliminary Prospectus or Prospectus or amendment or supplement thereto
as of the date of such opinion contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and schedules and other financial and statistical data included in
the Preliminary Prospectus, the Registration Statement or the Prospectus).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company, and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and that the
Representative and they are justified in relying thereon.
d. On or prior to each of the Closing Date and the Option Closing
Date, if any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6 hereof, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions of the
Company, or herein contained.
e. Prior to and on each of the Closing Date and each Option
Closing Date, if any, (i) there shall have been no material adverse change or
development involving a prospectus, change in the condition, financial or
otherwise, prospects, stockholders' equity or the business activities of the
Company, whether or not in the ordinary course of business, from the latest
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dates as of which such condition is set forth in the Registration Statement and
Prospectus; (ii) there shall have been no transaction, not in the ordinary
course of business, entered into by the Company, from the latest date as of
which the financial condition of the Company is set forth in the Registration
Statement and Prospectus which is materially adverse to the Company; (iii)
except as may be described in the Prospectus, the Company shall not be in
default under any provision of any instrument relating to any outstanding
indebtedness; (iv) except as may be described in the Prospectus, the Company
shall not have issued any securities (other than the Securities), the Company
shall not have declared or paid any dividend or made any distribution in
respect of its capital stock of any class, and there has not been any change in
the capital stock of the Company, or, other than in the ordinary course of its
business, any material change in the debt (long or short term) or liabilities
or obligations of the Company (contingent or otherwise); (v) no material amount
of the assets of the Company shall have been pledged or mortgaged, except as
set forth in the Registration Statement and Prospectus; (vi) no action, suit or
proceeding, at law or in equity, shall have been pending or threatened (or
circumstances giving rise to same) against the Company, or affecting any of its
properties or business before or by any court or federal, state or foreign
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may adversely affect the business, operations,
prospects or financial condition or income of the Company, except as set forth
in the Registration Statement and Prospectus; and (vii) no stop order shall
have been issued under the act and no proceedings therefor shall have been
initiated, threatened or contemplated by the Commission.
f. At each of the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received a certificate of the Company signed
by the principal executive officer and by the chief financial or chief
accounting officer of the Company, dated the Closing Date or Option Closing
Date, as the case may be, to the effect that each of such persons has carefully
examined the Registration Statement, the Prospectus and this Agreement, and
that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, as if made on and as of the
Closing Date or the Option Closing Date, as the case may be, and the
Company has complied with all agreements and covenants and satisfied
all conditions contained in this Agreement on its part to be performed
or satisfied at or prior to such Closing Date or Option Closing Date,
as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no
proceedings for that purpose have been instituted or are pending or,
to the best of each of such person's knowledge, after due inquiry are
contemplated or threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if
any, each amendment and each supplement thereto, contain all
statements and information required to be included therein, and none
of the Registration Statement, the Prospectus nor any
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amendment or supplement thereto includes any untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading and neither the Preliminary Prospectus nor any supplement
thereto included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
(a) the Company has not incurred up to and including the Closing Date
or the Option Closing Date, as the case may be, other than in the
ordinary course of its business, any material liabilities or
obligations, direct or contingent; (b) the Company has not paid or
declared any dividends or other distributions on its capital stock;
(c) the Company has not entered into any transactions not in the
ordinary course of business; (d) there has not been any material
change in the capital stock of the Company or any material change in
the debt (long or short-term) of the Company other than in its
ordinary course of business; (e) the Company has not sustained any
material loss or damage to its property or assets, whether or not
insured; (f) there is no litigation which is pending or threatened (or
circumstances giving rise to same) against the Company, or any
affiliated party of any of the foregoing which is required to be set
forth in an amended or supplemented Prospectus which has not been set
forth; and (g) there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this
Section 6(f) are to such documents as amended and supplemented at the date of
such certificate.
g. By the Closing Date, the Underwriters will have received
clearance from the Corporate Financing Department of the NASD as to the amount
of compensation allowable or payable to the Underwriters, as described in the
Registration Statement.
h. At the time of this Agreement is executed, the Underwriters
shall have received a letter, dated such date, addressed to the Underwriters in
form and substance satisfactory (including the non-material nature of the
changes or decreases, if any, referred to in clause (iii) below) in all
respects to the Underwriters and Underwriters' Counsel, Rushall & XxXxxxxx, a
Professional Law Corporation, from the independent auditors:
(i) Confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act
and the applicable Rules and Regulations;
(ii) Stating that it is their opinion that the financial
statements of the Company as of August 31, 1996 and 1995 and for the
years ended August 31,
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1996 and 1995 all included in the Company's annual report on Form
10K-SB/A for the year ended August 31, 1996 and incorporated by
reference in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Rules and Regulations thereunder and that the
Representative may rely upon their opinion with respect to such
financial statements incorporated by reference in the Registration
Statement;
(iii) Stating that, on the basis of the latest available
unaudited interim financial statements of the Company, a reading of the
latest available minutes of the stockholders and board of directors and
the various committees of the boards of directors of the Company, and
consultations with officers of the Company responsible for financial
and accounting matters (A) the unaudited financial statements of the
Company incorporated by reference in the Registration Statement comply
as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations or are fairly
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements of the Company incorporated by reference in the
Registration Statement, and (B) at a specified date not more than five
(5) days prior to the effective date of the Registration Statement,
there has not been any change in the capital stock of the Company, any
change in the long-term debt of the Company, or any decrease in the
stockholders' equity of the Company or any decrease in the net current
assets or net assets of the Company as compared with amounts shown in
the August 31, 1996 balance sheets included in the Registration
Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or decrease,
setting forth the amount of such change or decrease, and (C) during the
period from August 31, 1996 to a specified date not more than five (5)
days prior to the effective date of the Registration Statement, there
was not any decrease in net revenues or net earnings of the Company or
decrease in net earnings per common share of the Company, in each case
as compared with the corresponding period beginning September 1, 1995
other than as set forth in or contemplated by the Registration
Statement, or, if there was any such decrease, setting forth the amount
of such decrease;
(iv) Setting forth, at a date not later than five (5) days
prior to the date of the Registration Statement, the amount of
liabilities of the Company; and
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(v) Stating that they have compared specific dollar
amounts, numbers of shares, earnings, and interest expense pertaining
to the Company set forth in the Prospectus under the captions
"Capitalization" and "Ratio of Earnings to Fixed Charges" in each case
to the extent that such amounts, numbers, and information may be
derived from the general accounting records, including work sheets, of
the Company and excluding any questions requiring an interpretation by
legal counsel, with the results obtained from the application of
specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with
generally accepted auditing standards) and found them to be in
agreement.
i. At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from Xxxxx & Company a letter, dated as of the
Closing Date or the Option Closing Date, as the case may be, to the effect that
they reaffirm the statements made in the letter furnished pursuant to Section
6(h) hereof except that the specified date referred to shall be a date not more
than five days prior to the Closing Date or the Option Closing Date, as the
case may be, and, if the Company has elected to rely on Rule 430A of the Rules
and Regulations, to the further effect that they have carried out procedures as
specified in clause (v) of Section 6(h) with respect to certain amounts,
percentages and financial information as specified by the Representative and
deemed to be a part of the Registration Statement pursuant to Rule 430A(b) and
have found such amounts, percentages and financial information to be in
agreement with the records specified in clause 6(h)(v) above.
j. The Company shall have delivered to the Representative a
letter from Xxxxx & Company addressed to the Company stating that they have not
during the immediately preceding two year period brought to the attentions of
the Company's management any "weakness" as defined in Statement of Auditing
Standards No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's internal controls.
k. On each of the Closing Date and Option Closing Date, if any,
there shall have been duly tendered to the Representative for the several
Underwriters' accounts the appropriate number of Shares.
l. No order suspending the sale of the Securities in any
jurisdiction designated by the Representative pursuant to Section 4(e) hereof
shall have been issued on either the Closing Date or the Option Closing Date,
if any, and no proceedings for that purpose shall have been instituted or shall
be contemplated.
m. On or before the Closing Date, the Company shall have executed
and delivered to the Representative, (i) the Underwriter's Warrant Agreement
substantially in the form filed
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as Exhibit ____ to the Registration Statement in final form and substance
satisfactory to the Representative, and (ii) the Underwriters' Warrant in such
denominations and to such designees as shall have been provided to the Company.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Option Closing Date,
as the case may be, is not so fulfilled, the Representative may terminate this
Agreement or, if the Representative so elects, it may waive any such conditions
which have not been fulfilled or extend the time for their fulfillment.
7. INDEMNIFICATION
a. The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the
Underwriter, including specifically each person who may be substituted for an
Underwriter as provided in Section 11 hereof), and each person, if any, who
controls the Underwriter ("controlling person") within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, from and against any and
all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, investigations, inquiries, and suits in respect thereof),
whatsoever (including, but not limited to, any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) any untrue
statement or alleged untrue statement of a material fact contained (i) in any
Preliminary Prospectus, the Registration Statement or the Prospectus (as from
time to time amended and supplemented); (ii) in any post-effective amendment or
amendments or any new registration statement and prospectus in which is
included securities of the Company issued or issuable upon exercise of the
Securities; or (iii) in any application or other document or written
communication (in this Section 7 collectively called an "application") executed
by the Company or based upon written information furnished by the Company
filed, delivered or used in any jurisdiction in order to qualify the Securities
under the securities laws thereof or filed with the Commission, any state
securities commission or agency, NASDAQ or any other securities exchange, (B)
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus, in the light of the circumstances under which they
were made), or (C) any breach of any representation, warranty, covenant or
agreement of the Company contained herein or in any certificate by or on behalf
of the Company or any of its officers delivered pursuant hereto unless, in the
case of clause (A) or (B) above, such statement or omission was made in the
reliance upon and in conformity with written information furnished to the
Company with respect to any Underwriter by or on behalf of such Underwriter
expressly for use in any Preliminary
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Prospectus, the Registration Statement or any Prospectus, or any amendment
thereof or supplement thereto, or in any application, as the case may be.
The indemnity agreement in this subsection (a) shall be in addition to
any liability which the Company may have at common law or otherwise.
b. Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of the Act, to the same extent
as the foregoing indemnity from the Company to the Underwriters but only with
respect to statements or omissions, if any, made in any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to any
Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof
or supplement thereto or in any such application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this Offering.
The Company acknowledges that the statements with respect to the public
offering of the Securities set forth under the heading "Underwriting" and the
stabilization legend in the Prospectus have been furnished by the Underwriters
expressly for use therein and constitute the only information furnished in
writing by or on behalf of the Underwriters for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in addition to
any liability which the Underwriters may have at common law or otherwise.
c. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against
one or more indemnifying parties under this Section 7, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
it from any liability which it may have under this Section 7 except to the
extent that it has been prejudiced in any material respect by such failure or
from any liability which it may have otherwise). In case any such action,
investigation, inquiry, suit or proceeding is brought against any indemnified
party, and it notifies an indemnifying party or parties of the commencement
thereof, the indemnifying party or parties will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case but the fees and expenses of such counsel shall be at
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the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action at the expense of the
indemnifying parties party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action, investigation, inquiry, suit or
proceeding on behalf of the indemnified party or parties), in any of which
events such fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action, investigation, inquiry, suit or proceeding or separate but
similar or related actions, investigations, inquiries, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances. Anything in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or
action effected without its written consent; provided, however, that such
consent was not unreasonably withheld. An indemnifying party will not, without
the prior written consent of the indemnified parties, settle compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, investigation, inquiry, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action),
unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
d. In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes claim for indemnification pursuant
to this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions, investigation, inquiries, suits or proceedings in respect thereof) (A)
in such proportion as is appropriate to reflect the relative benefits received
by each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the Securities or (B) if
the allocation provided by clause (A) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand in connection with the statements or omissions that resulted
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in such losses, claims, damages, expenses or liabilities, as well as any other
relevant equitable considerations. In any case where the Company is the
contributing party and the Underwriters are the indemnified party, the relative
benefits received by the Company on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Securities (before deducting expenses) bear to the
total underwriting discounts received by the Underwriters hereunder, in each
case as set forth in the table on the Cover Page of the Prospectus. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company, or by the Underwriters, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, expenses or liabilities (or
actions, investigations, inquiries, suits or proceedings in respect thereof)
referred to above in this subdivision (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action, claim, investigation, inquiry,
suit or proceeding. Notwithstanding the provisions of this subdivision (d) the
Underwriters shall not be required to contribute any amount in excess of the
underwriting discount applicable to the Securities purchased by the
Underwriters hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls the Company within the meaning of the Act, each officer of the Company
who has signed the Registration Statement, and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to this subparagraph (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit, inquiry,
investigation or proceeding against such party in respect to which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation
it or they may have hereunder or otherwise than under this subparagraph (d), or
to the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to
any liabilities which any indemnifying party may have at common law or
otherwise.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY
All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Company submitted
pursuant hereto, shall be deemed to be representations, warranties and
agreements at the Closing Date and the Option Closing Date, as the case may be,
and such representations, warranties and agreements of the Company and the
indemnity agreements contained in Section 7 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf
of any Underwriter, the Company,
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any controlling person of any Underwriter or the Company, and shall survive
termination of this Agreement or the issuance and delivery of the Securities to
the Underwriters and the Representative, as the case may be.
9. EFFECTIVE DATE
This Agreement shall become effective at 10:00 a.m., Pacific Daylight
time, on the next full business day following the date hereof, or at such
earlier time after the Registration Statement becomes effective as the
Representative, in its discretion, shall release the Securities for sale to the
public; provided, however, that the provisions of Section 5, Section 7 and
Section 10 of this Agreement shall at all times be effective. For purposes of
this Section 9, the Shares to be purchased hereunder shall be deemed to have
been so released upon the earlier of dispatch by the Representative of
telegrams to securities dealers releasing such shares for offering or the
release by the Representative for publication of the first newspaper
advertisement which is subsequently published relating to the Shares.
10. TERMINATION
a. Subject to subsection (b) of this Section 10, the
Representative shall have the right to terminate this Agreement, after the date
hereof, (i) if any domestic or international event or act or occurrence has
materially disrupted, or in the Representative's opinion will in the immediate
future materially adversely disrupt the financial markets; or (ii) any material
adverse change in the financial markets shall have occurred; or (iii) if
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Pacific
Stock Exchange, the Chicago Board of Trade, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Commission or any other
government authority having jurisdiction; or (iv) if trading of any of the
securities of the Company shall have been suspended, or any of the securities
of the Company shall have been delisted on any exchange; or (v) if the United
States shall have become involved in a war or major hostilities, or if there
shall have been an escalation in an existing war or major hostilities or a
national emergency shall have been declared; or (vi) if a banking moratorium
has been declared by a state or federal authority; or (vii) if a moratorium in
foreign exchange trading has been declared; or (viii) if the Company or any
Subsidiary shall have sustained a loss material or substantial to the Company
or the Subsidiary by fire, flood, accident, hurricane, earthquake, theft,
sabotage or other calamity or malicious act which, whether or not such loss
shall have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the delivery of the Securities; or (ix) if there
shall have occurred any outbreak or escalation of hostilities or any calamity
or crisis or there shall have been such a material adverse change in the
general market, political or economic conditions, in the United States or
elsewhere as in the Representative's judgment would make it inadvisable to
proceed with the offering, sale and/or delivery of the Securities.
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b. If this Agreement shall not be carried out within the time
specified herein, or any extension thereof granted to the Representative, by
reason of any failure on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement by it to be performed or satisfied
(including, without limitation, pursuant to Section 12 hereof) then, the
Company shall promptly reimburse and indemnify the Representative for all of
its actual out-of-pocket expenses, including the fees and disbursements of
counsel for the Underwriters (less amounts previously paid pursuant to Section
5(c) hereof). In addition, the Company shall remain liable for all Blue Sky
counsel fees and expenses and filing fees.
11. SUBSTITUTION OF THE UNDERWRITERS
If one or more of the Underwriters shall fail (otherwise than for a
reason sufficient to justify the termination of this Agreement under the
provisions of Section 12 hereof) to purchase the Securities which it or they
are obligated to purchase on such date under this Agreement (the "Defaulted
Securities"), the Representative shall have the right, within 24 hours
thereafter, to make arrangement for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Securities in such amounts as may be agreed upon and upon
the terms herein set forth.
12. DEFAULT BY THE COMPANY
If the Company shall fail at the Closing Date or at any Option Closing
Date, as applicable, to sell and deliver the number of Shares which it is
obligated to sell hereunder on such date, then this Agreement shall terminate
(or, if such default shall occur with respect to any Option Shares to be
purchased on an Option Closing Date, the Underwriters may at the
Representative's option, by notice from the Representative to the Company,
terminate the Underwriters' obligation to purchase Option Shares from the
Company on such date) without any liability on the part of any non-defaulting
party other than pursuant to Section 5, Section 7 and Section 10 hereof. No
action taken pursuant to this Section 12 shall relieve the Company from
liability, if any, in respect of such default.
13. NOTICES
All notices and communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed to the Representative at 000
Xxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention Xxxxxxx
Xxxxxx and Xxxx X. Xxxxx, with a copy to Rushall & XxXxxxxx, 0000 Xxxxxxx
Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X.
Xxxxxxx, Esq. Notices to the Company shall be directed to the Company at
00-000 Xxxxxxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxx,
Chief Executive Officer, with a copy to White
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& Xxxxx LLP, 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
14. GENERAL PROVISIONS
PARTIES. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or
claim under or in respect of or by virtue of this Agreement or any provisions
herein contained. No purchaser of Securities from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
CONSTRUCTION. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California without giving
effect to the choice of law or conflict of laws principles.
COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Underwriters'
Warrant Agreement constitute the entire agreement of the parties hereto and
supersede all prior written or oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may not be amended
except in a writing, signed by the Representative and the Company.
Please confirm that the foregoing correctly sets forth the
understanding between you and the Company by executing this letter in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.
Very truly yours,
AMCOR CAPITAL CORPORATION
By:_________________________________
Chief Executive Officer
CONFIRMED AND ACCEPTED AS OF
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THE DATE FIRST ABOVE WRITTEN.
XXXXXX XXXXX SECURITIES, INC.
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By: _________________________________
Xxxx X. Xxxxx
President
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SCHEDULE A
Number of Firm Shares
Name of Underwriters to be
Purchased
Xxxxxx Xxxxx Securities, Inc. ________________________________
Total ________________________________
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