EXHIBIT 1.1
1,800,000 Shares
Common Stock
($0.10 Par Value)
UNDERWRITING AGREEMENT
----------------------
X.X. Xxxxxxx & Sons, Inc.
Xxxxx-Xxxxxx Capital Group, Inc.
As Representatives of the Several Underwriters
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
The undersigned, Koala Corporation, a Colorado corporation (the
"Company"), and the person listed on Schedule I hereto (the "Selling
Shareholder"), hereby address you as the representatives (the "Representatives")
of each of the persons, firms and corporations listed on Schedule II hereto
(collectively, the "Underwriters"). The Company and the Selling Shareholder
hereby confirm their agreement with the several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell to
the Underwriters 1,000,000 shares of its Common Stock, par value $0.10 per share
(the "Common Stock"), and the Selling Shareholder proposes to sell to the
Underwriters a total of 800,000 shares of Common Stock, as set forth on Schedule
I hereto (such 1,800,000 shares of Common Stock are herein referred to as the
"Firm Shares"). Solely for the purpose of covering over-allotments in the sale
of the Firm Shares, the Company further proposes to grant to the Underwriters
the right to purchase up to an additional 270,000 shares of Common Stock (the
"Option Shares"), as provided in Section 3 of this Agreement. The Firm Shares
and the Option Shares are herein sometimes referred to as the "Shares" and are
more fully described in the Prospectus hereinafter defined.
2. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees and the Selling
Shareholder agrees, severally and not jointly, to sell to the Underwriters, and
each such Underwriter agrees, severally and not jointly, (a) to purchase from
the Company and from the Selling Shareholder, pro rata, at a purchase price of
$_______ per share, the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule II hereto and (b) to purchase from the Company any
additional number of Option Shares which such Underwriter may become obligated
to purchase pursuant to Section 3 hereof.
The Company and the Selling Shareholder will deliver definitive
certificates for the Firm Shares at the office of X.X. Xxxxxxx & Sons, Inc., 00
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("Xxxxxxx' Office"), or such other place as you
and the Company may mutually agree upon, for the accounts of the Underwriters
against payment to the Company and the Selling Shareholder of the
purchase price for the Firm Shares sold by them to the several Underwriters by
wire transfer in same day funds payable to the order of the Company and the
Selling Shareholder, respectively, and delivered to Xxx Xxxxx Xxxxxxxxx Xxxxxx,
Xx. Xxxxx, Xxxxxxxx 00000, or at such other place as may be agreed upon between
you and the Company (the "Place of Closing"), at 10:00 a.m., St. Louis time, on
___________, 1998, or at such other time and date not later than five (5) full
business days thereafter as you and the Company may agree, such time and date of
payment and delivery being herein called the "Closing Date."
The certificates for the Firm Shares so to be delivered will be made
available to you for inspection at Xxxxxxx' Office (or such other place as you
and the Company may mutually agree upon) at least one (1) full business day
prior to the Closing Date and will be in such names and denominations as you may
request at least two (2) full business days prior to the Closing Date.
It is understood that an Underwriter, individually, may (but shall not
be obligated to) make payment on behalf of the other Underwriters whose funds
shall not have been received prior to the Closing Date for Shares to be
purchased by such Underwriter. Any such payment by an Underwriter shall not
relieve the other Underwriters of any of their obligations hereunder.
It is understood that the Underwriters propose to offer the Shares to
the public upon the terms and conditions set forth in the Registration Statement
hereinafter defined.
3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES. The Company
hereby grants an option to the Underwriters to purchase from it on a pro rata
basis up to 270,000 Option Shares at the same per share purchase price and on
the same terms and conditions as the Firm Shares; provided, however, that such
option may be exercised only for the purpose of covering any over-allotments
which may be made by them in the sale of the Firm Shares. No Option Shares shall
be sold or delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered.
The option is exercisable on behalf of the several Underwriters by
you, as Representatives, at any time, and from time to time, before the
expiration of forty-five (45) days from the date of this Agreement, for the
purchase of all or part of the Option Shares covered thereby, by notice given by
you to the Company in the manner provided in Section 13 hereof, setting forth
the number of Option Shares as to which the Underwriters are exercising the
option, and the date of delivery of said Option Shares, which date shall not be
more than five (5) business days after such notice unless otherwise agreed to by
the parties. You may terminate the option at any time, as to any unexercised
portion thereof, by giving written notice to the Company to such effect.
You, as Representatives, shall make such allocation of the Option
Shares among the Underwriters as may be required to eliminate purchases of
fractional Shares.
Delivery of the Option Shares with respect to which the option shall
have been exercised shall be made to or upon your order at Xxxxxxx' Office (or
at such other place as you and the Company may mutually agree upon), against
payment by you of the per share purchase price to the Company by wire transfer
in same day funds payable to the order of the Company. Such payment and delivery
shall be made at 10:00 a.m., St. Louis time, on the date designated in the
notice given
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by you as above provided for, unless some other date and time are agreed upon,
which date and time of payment and delivery are called the "Option Closing
Date." The certificates for the Option Shares so to be delivered will be made
available to you for inspection at Xxxxxxx' Office at least one (1) full
business day prior to the Option Closing Date and will be in such names and
denominations as you may request at least two (2) full business days prior to
the Option Closing Date. On the Option Closing Date, the Company shall provide
the Underwriters such representations, warranties, agreements, covenants,
opinions, letters, certificates and other documents with respect to the Option
Shares as are required to be delivered on the Closing Date with respect to the
Firm Shares.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
SELLING SHAREHOLDER.
(a) The Company represents and warrants to and agrees with each
Underwriter that:
(i) A registration statement (Registration No. ___________) on Form
SB-2 with respect to the Shares, including a preliminary prospectus, and such
amendments to such registration statement as may have been required prior to the
date of this Agreement, has been carefully prepared by the Company pursuant to
and in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the Rules and Regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission under the Copies of such registration statement,
including any amendments thereto; each related preliminary prospectus (meeting
the requirements of Rule 430 or 430A of the Rules and Regulations) contained
therein and the financial statements, exhibits and schedules thereto have
heretofore been delivered by the Company to you. If such registration statement
has not become effective under the Act, a further amendment to such registration
statement, including a form of final prospectus, necessary to permit such
registration statement to become effective will be filed promptly by the Company
with the Commission. If such registration statement has become effective under
the Act, a final prospectus containing information permitted to be omitted at
the time of effectiveness by Rule 430A of the Rules and Regulations will be
filed promptly by the Company with the Commission in accordance with Rule 424(b)
of the Rules and Regulations. The term "Registration Statement" as used in this
Agreement means the registration statement as amended at the time it becomes or
became effective under the Act (the "Effective Date"), including financial
statements and all exhibits and schedules thereto and, if applicable, the
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the Act and the
information deemed to be included therein by Rule 430A of the Rules and
Regulations. The term "Prospectus" as used in this Agreement means (i) the
prospectus as first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations or (ii) if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective Date or (iii)
if a Term Sheet (as such term is defined in Rule 434(b) of the Rules and
Regulations) is filed with the Commission pursuant to Rule 424(b)(7) of the
Rules and Regulations, the Term Sheet and the last Preliminary Prospectus filed
with the Commission prior to the time the Registration Statement became
effective, taken together. The term "Preliminary Prospectus" as used in this
Agreement shall mean a preliminary prospectus as contemplated by Rule 430 or
430A of the Rules and Regulations included at any time in the Registration
Statement.
(ii) The Commission has not issued, and is not to the knowledge of the
Company threatening to issue, an order preventing or suspending the use of any
Preliminary Prospectus or the
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Prospectus nor instituted proceedings for that purpose. Each Preliminary
Prospectus at its date of issue, the Registration Statement and the Prospectus
and any amendments or supplements thereto contain or will contain, as the case
may be, all statements which are required to be stated therein by, and in all
material respects conform or will conform, as the case may be, to the
requirements of, the Act and the Rules and Regulations. Neither the Registration
Statement nor any amendment thereto, as of the applicable Effective Date, and
neither the Prospectus nor any supplement thereto contains or will contain, as
the case may be, any untrue statement of a material fact or omits or will omit,
as the case may be, 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; provided, however, that the Company
makes no representation or warranty as to information contained in or omitted
from the Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon, and in conformity with, information relating to
the Underwriters and furnished to the Company in writing by or on behalf of the
Underwriters expressly for use therein.
(iii) The filing of the Registration Statement and the execution and
delivery of this Agreement have been duly authorized by the Board of Directors
of the Company; this Agreement constitutes a valid and legally binding agreement
of the Company enforceable in accordance with its terms (except to the extent
the enforceability of the indemnification and contribution provisions of Section
7 hereof may be limited by public policy considerations as expressed in the Act
as construed by courts of competent jurisdiction, and except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting creditors' rights generally and by general principles
of equity); the issuance and sale of the Shares by the Company and the
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a violation of the
Company's articles of incorporation or bylaws or result in a breach or violation
of any of the terms and provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or any of its subsidiaries under any
statute, any bond, debenture, note or other evidence of indebtedness, or any
agreement, indenture, mortgage, deed of trust, sale and leaseback arrangement,
joint venture or other instrument to which the Company or any of its
subsidiaries is a party or by which they are bound or to which any such
properties or assets is subject, or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or their properties, except to such extent as does not have a
Material Adverse Effect (as defined in Section 15 below); no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body is required for the consummation of the transactions
herein contemplated, except such as may be required by the National Association
of Securities Dealers, Inc. (the "NASD") or under the Act or the Rules and
Regulations or any state securities laws.
(iv) Except as described in the Prospectus, neither the Company nor any
of its subsidiaries have sustained since the date of the latest audited
financial statements included in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree. Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries have incurred any material
liabilities or material obligations, direct or contingent, other than in the
ordinary course of business, or entered into any material transactions not in
the ordinary course of
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business, and there has not been any material change in the capital stock or
long-term debt of the Company or any material adverse change in the condition
(financial or other), net worth, business, affairs, management, prospects or
results of operations of the Company. The Company and each of its subsidiaries
have filed all necessary federal, state and foreign income and franchise tax
returns and paid all taxes shown as due thereon; all tax liabilities are
adequately provided for on the books of the Company, except to such extent as
would not be or cause a Material Adverse Effect; the Company and each subsidiary
have made all necessary payroll tax payments and are current and up-to-date with
respect thereto as of the date of this Agreement; and the Company has no
knowledge of any tax proceeding or action pending or threatened against the
Company or any of its subsidiaries which might result in a Material Adverse
Effect.
(v) Except as described in the Prospectus, there is not now pending
or, to the knowledge of the Company, threatened or contemplated, any action,
suit or proceeding to which the Company is a party before or by any court or
public, regulatory or governmental agency or body which might be expected to
result (individually or in the aggregate) in Material Adverse Effect; and there
are no contracts or documents of the Company or its subsidiaries which would be
required to be filed as exhibits to the Registration Statement under the Act or
the Rules and Regulations which have not been filed as exhibits to the
Registration Statement.
(vi) All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
are not subject to any preemptive or similar right which has not been waived;
and the Shares have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
(vii) Except as disclosed in the Prospectus, no holder of any security
of the Company has any right (not heretofore waived) to require registration of
shares of Common Stock or any other security of the Company because of the
filing of the Registration Statement or the consummation of the transactions
contemplated hereby and, except as disclosed in the Prospectus, no person has
the right to require registration under the Act of any shares of Common Stock or
other securities of the Company. No person has the right, contractual or
otherwise, to cause the Company to permit such person to underwrite the sale of
any of the Shares. Except as disclosed in the Prospectus, there are no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or liens related to or entitling any person to
purchase or otherwise to acquire any shares of, or any security convertible into
or exchangeable or exercisable for, the capital stock of, or other ownership
interest in, the Company.
(viii) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, with full power and
authority (corporate and other) to own, lease and operate their properties and
conduct their business as described in the Registration Statement; the Company
and each of its subsidiaries are duly qualified to do business as foreign
corporations and are in good standing in each state or other jurisdiction in
which their respective ownership or leasing of property or conduct of business
legally requires such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect on the ability of the Company or its
subsidiaries to conduct their business as described in the Registration
Statement.
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(ix) Delta Play (US), Inc., Delta Play Company and Koala Foreign Sales
Corporation are the only subsidiaries of the Company. The Company owns directly
100% of the outstanding capital stock of such subsidiaries, free and clear of
any security interest, claim, lien, limitation on voting rights or encumbrances,
and all of such securities have been duly authorized, validly issued, are fully
paid and non-assessable and were not issued in violation of any preemptive or
similar rights. There are no outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire or instruments convertible into or
exchangeable for, any such shares of capital stock or other equity interests of
such subsidiaries.
(x) Each of Xxxxxxx Xxxxx Xxxxxxxx Xxxx, P.A. and Ernst & Young LLP,
the accounting firms which have certified the financial statements filed with
the Commission as a part of the Registration Statement, is an independent public
accounting firm within the meaning of the Act and the Rules and Regulations.
(xi) The consolidated financial statements and schedules of the
Company, including the notes thereto, filed with and as a part of the
Registration Statement, are accurate in all material respects and present fairly
the consolidated financial position of the Company and its subsidiaries as of
the respective dates thereof and the consolidated results of operations and
statements of cash flow for the respective periods covered thereby, all in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except as otherwise disclosed in the
Prospectus. The selected financial data included in the Registration Statement
and Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial statements in
the Registration Statement and Prospectus.
(xii) The Company maintains and keeps accurate books and records
reflecting its assets and maintains internal accounting controls which provide
reasonable assurance that (1) transactions are executed in accordance with
management's authorization, (2) transactions are recorded as necessary to permit
the preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company, (3) access to the assets
of the Company is permitted only in accordance with management's authorization,
and (4) the recorded accounts of the assets of the Company are compared with
existing assets once each calendar year.
(xiii) Neither the Company nor any of its subsidiaries is (i) in
violation of its articles of incorporation or bylaws or (ii) in default in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any other contract,
indenture, mortgage, deed of trust, sale and leaseback arrangement, joint
venture or other instrument, in each case material to the conduct of the
business of the Company and its subsidiaries taken as a whole, to which the
Company or any of its subsidiaries is a party or by which it or any of its
properties is bound, except where such defaults, individually or in the
aggregate, would not have a Material Adverse Effect.
(xiv) Neither the Company nor any of its subsidiaries is in violation of
any other laws, ordinances or governmental rules or regulations to which it is
subject, and neither the Company nor any of its subsidiaries has failed to
obtain any other license, permit, franchise, easement, consent, or other
governmental authorization necessary to the ownership, leasing and operation of
its properties or to the conduct of its business, which violation or failure
would have a Material Adverse Effect. Neither the Company nor, to the Company's
knowledge, any employee or agent of the Company or
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any of its subsidiaries has made any payment of funds in violation of any law,
rule or regulation, which payment of funds is of a character required to be
disclosed in the Prospectus.
(xv) The Company and its subsidiaries own or posses, or can acquire on
reasonable terms, adequate patents, patent licenses, software, software
licenses, trademarks, service marks, trade name and copyrights necessary to
conduct the business now operated by them, and neither Company nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any patents, patent licenses,
software, software licenses, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
(xvi) The Company and its subsidiaries have good and marketable title to
all property owned by them, free and clear of all liens, encumbrances,
restrictions and defects, except such as are described in the Registration
Statement or do not interfere with the use made and proposed to be made of such
property; and any property held under lease or sublease by the Company or its
subsidiaries is held under valid, subsisting and enforceable leases or subleases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property, and neither the Company nor any of its
subsidiaries has notice or knowledge of any material claim of any sort which has
been, or may be, asserted by anyone adverse to the Company's or any subsidiary's
rights as lessee or sublessee under any lease or sublease described above, or
affecting or questioning the Company's or any subsidiary's rights to the
continued possession of the leased or subleased premises under any such lease or
sublease in conflict with the terms thereof.
(xvii) Except as described in the Prospectus, there is no factual basis
for any action, suit or other proceeding involving the Company or any of its
subsidiaries or any of their material assets for any failure of the Company or
its subsidiaries, or any predecessor thereof, to comply with any requirements of
federal, state or local regulation relating to air, water, solid waste
management, hazardous or toxic substances, or the protection of health or the
environment. Except as described in the Prospectus, none of the property owned
or leased by the Company or its subsidiaries is, to the knowledge of the
Company, contaminated with any waste or hazardous substances, and neither the
Company nor any of its subsidiaries is deemed an "owner or operator" of a
"facility" or "vessel" which owns, possesses, transports, generates or disposes
of a "hazardous substance" as those terms are defined in (S)9601 of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,42
U.S.C. (S)9601 et seq.
(xviii) No labor disturbance exists with the employees of the Company or
any of its subsidiaries or is imminent which would have a Material Adverse
Effect. Except as described in the Registration Statement and Prospectus, none
of the employees of the Company and its subsidiaries is represented by a union,
and, to the knowledge of the Company, no union organizing activities are taking
place. Neither the Company nor any subsidiaries have violated any Federal, state
or local law or foreign law relating to discrimination in hiring, promotion or
pay of employees, nor any applicable wage or hour laws, nor any provision of the
Employee Retirement Income Security Act of 1979, as amended, or the rules and
regulations thereunder, or analogous foreign laws or regulations, which might
result in a Material Adverse Effect.
(xix) The Company and each of its subsidiaries maintains insurance
covering in all material respects their properties, personnel and business. Such
insurance insures against such
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losses and risks as are adequate in accordance with the Company's perception of
customary industry practice to protect in all material respects the Company and
its subsidiaries and their businesses. Neither the Company nor any of its
subsidiaries has received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to be made in
order to continue such insurance. All such insurance is outstanding and duly in
force on the date hereof and will be outstanding and duly in force on the
Closing Date, with such exceptions as would not have a Material Adverse Effect.
(xx) The Company has entered into an Asset Purchase Agreement (the
"Purchase Agreement") dated __________, 1998, between the Company and Park
Structures, Inc. ("Park") for the purchase of all property, plant, equipment,
leasehold improvements, accounts receivable, inventory, molds, patents,
trademarks, tradenames and all other assets necessary to or used in the business
of Park, as well as the assignment to the Company of all contract rights
associated with Park's existing manufacturing plant lease agreement. The
Purchase Agreement has been duly authorized, executed and delivered by the
Company and, to the knowledge of the Company, by Park. The Company is not, and,
to the knowledge of the Company, Park is not, in material breach of the
respective representations, warranties or covenants in the Purchase Agreement,
whether or not such breach has been waived, and the Company is not aware of any
fact, circumstance or event that would impede, delay or prevent the consummation
of the transactions contemplated in the Purchase Agreement.
(xxi) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock, and the Company is not aware of any such action taken or to be taken by
affiliates of the Company.
(xxii) The Company is not, and upon the sale of the Shares to be issued
and sold by it hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds," will not be, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(xxiii) The Company has filed an application to list the Shares on The
Nasdaq Stock Market National Market System and has received notification that
the listing has been approved, subject to official notice of issuance of the
Shares.
(xxiv) Each of the Company's directors and executive officers has
executed and delivered a letter in the form of Schedule VI hereto.
(b) The Selling Shareholder represents and warrants to and agrees with
each Underwriter and the Company that:
(i) All authorizations and consents necessary for the execution and
delivery by it of this Agreement and the sale and delivery of the Shares to be
sold by such Selling Shareholder hereunder have been given and are in full force
and effect on the date hereof and will be in full force and effect on the
Closing Date.
(ii) Such Selling Shareholder has full legal right, power and
authority, and any approval required by law, except such as may be required
under the Act or the Rules and Regulations or as
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may be required by the NASD or under state securities laws in connection with
the purchase and distribution of the Shares by the Underwriters, to enter into
this Agreement, the Power of Attorney and Custody Agreement (as defined herein)
and to sell, assign, transfer and deliver the Shares to be sold by such Selling
Shareholder.
(iii) Such Selling Shareholder has, and immediately prior to the Closing
Date such Selling Shareholder will have, good and valid title to such Shares to
be sold by such Selling Shareholder hereunder, free and clear of all liens,
mortgages, pledges, encumbrances, claims, equities and security interests
whatsoever; and, upon delivery of and payment for such Shares hereunder, the
several Underwriters will acquire good and valid title to such Shares to be sold
by such Selling Shareholder hereunder, free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security interests whatsoever.
(iv) The consummation by such Selling Shareholder of the transactions
contemplated herein and the fulfillment by such Selling Shareholder of the terms
hereof will not result in a violation or breach of any terms or provisions of,
or constitute a default under, the Articles of Organization or Operating
Agreement of the Selling Shareholder, or any statute, any bond, debenture, note
or other evidence of indebtedness, or any agreement, indenture, mortgage, deed
of trust, sale and leaseback arrangement, joint venture or other instrument to
which such Selling Shareholder is a party or by which such Selling Shareholder
is bound, or to which any of the property or assets of such Selling Shareholder
is subject, or of any order, rule or regulation applicable to such Selling
Shareholder of any court or of any regulatory body of an administrative agency
or other governmental body having jurisdiction over such Selling Shareholder or
the property or assets of such Selling Shareholder.
(v) Such Selling Shareholder has not taken and will not take, directly
or indirectly, any action designed to or which might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock, and such Selling Shareholder is not aware of any such action taken or to
be taken by affiliates of such Selling Shareholder.
(vi) When the Registration Statement becomes effective and at all times
subsequent thereto, such information in the Registration Statement and
Prospectus and any amendments or supplements thereto as specifically refers to
such Selling Shareholder will not 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 not misleading.
(vii) Certificates in negotiable form representing all of the Shares
to be sold by such Selling Shareholder hereunder have been placed in the
custody of __________ (the "Custodian") under a Power of Attorney and Custody
Agreement in the forms heretofore furnished to you (the "Custody Agreement"),
duly executed and delivered by such Selling Shareholder, with the Custodian
having the authority to deliver the Shares to be sold by such Selling
Shareholder hereunder, and that such Selling Shareholder has duly appointed
_____________ as such Selling Shareholder's attorney-in-fact (the "Attorney-in-
Fact") with the Attorney-in-Fact having authority to execute and deliver this
Agreement on behalf of such Selling Shareholder, to determine the purchase price
to be paid by and number of shares sold to the Underwriters as provided in
Section 2, to authorize the delivery of the Shares to be sold by it hereunder
and otherwise to act on
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behalf of such Selling Shareholder in connection with the transactions
contemplated by this Agreement and such Custody Agreement.
(viii) The Shares represented by the certificates held in custody for
such Selling Shareholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder, and the arrangements made by such
Selling Shareholder for such custody, and the appointment by such Selling
Shareholder of the Custodian and of the Attorney-in-Fact under the Custody
Agreement are to that extent irrevocable.
(ix) The obligations of such Selling Shareholder hereunder shall not be
terminated by operation of law.
(x) Such Selling Shareholder is not prompted to sell shares of Common
Stock by any information concerning the Company which is not included in the
Registration Statement.
(xi) Such Selling Shareholder has executed and delivered to the
Representative a letter in the form of Schedule VII hereto.
(xii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of applicable federal tax laws with respect
to the transactions herein contemplated, such Selling Shareholder has delivered
or, prior to the Closing Date, will deliver to you a properly completed and
executed United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
(c) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Underwriters shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby;
and any certificate signed by or on behalf of the Selling Shareholder as such
and delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Selling Shareholder to each Underwriter as to
the matters covered thereby.
5. ADDITIONAL COVENANTS. The Company and, where expressly indicated,
the Selling Shareholder, covenant and agree with the several Underwriters that:
(a) If the Registration Statement is not effective under the Act, the
Company will use its best efforts to cause the Registration Statement to become
effective as promptly as possible, and it will notify you, promptly after it
shall receive notice thereof, of the time when the Registration Statement has
become effective. The Company (i) will prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations, if required, a
Prospectus containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations or otherwise or a Term Sheet, as applicable; (ii) will not
file any amendment to the Registration Statement or supplement to the Prospectus
of which the Underwriters shall not previously have been advised and furnished
with a copy or to which the Underwriters shall have reasonably objected in
writing or which is not in compliance with the Rules and Regulations; and (iii)
will promptly notify you after it shall have received notice thereof of the time
when any amendment to the Registration Statement becomes effective or when any
supplement to the Prospectus has been filed.
10
(b) The Company will advise the Underwriters promptly, after it shall
receive notice or obtain knowledge thereof, of any request of the Commission for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information, or of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the use of
the Prospectus or of the institution or threatening of any proceedings for that
purpose, and the Company will use its best efforts to prevent the issuance of
any such stop order preventing or suspending the use of the Prospectus and to
obtain as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Underwriters and their counsel
in endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as they may have designated and will make such applications, file
such documents, and furnish such information as may be necessary for that
purpose, provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a consent
or to subject itself to taxation as doing business in any jurisdiction where it
is not now so taxed. The Company will, from time to time, file such statements,
reports, and other documents, as are or may be required to continue such
qualifications in effect for so long a period as the Underwriters may reasonably
request.
(d) The Company will deliver to, or upon the order of, the
Underwriters, without charge from time to time, as many copies of any
Preliminary Prospectus as they may reasonably request. The Company will deliver
to, or upon the order of, the Underwriters without charge as many copies of the
Prospectus, or as it thereafter may be amended or supplemented, as they may from
time to time reasonably request. The Company consents to the use of such
Prospectus by the Underwriters and by all dealers to whom the Shares may be
sold, both in connection with the offering or sale of the Shares and for such
other purposes and for such period of time thereafter as the Prospectus is
required by law to be delivered in connection with the offering or sale of the
Shares. The Company will deliver to the Underwriters at or before the Closing
Date two signed copies of the Registration Statement and all amendments thereto
including all exhibits filed therewith, and will deliver to the Underwriters
such number of copies of the Registration Statement, without exhibits, and of
all amendments thereto, as they may reasonably request.
(e) If, during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in your judgment or in the opinion of
counsel for the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with law.
(f) The Company will make generally available to its shareholders and
will file as an exhibit in a report pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), as soon as it is practicable to do so, but in
any event not later than 15 months after the Effective Date of the Registration
Statement, an earnings statement in reasonable detail, covering a period of at
least 12 consecutive months beginning after the Effective Date of the
Registration Statement, which
11
earnings statement shall satisfy the requirements of Section 1l(a) of the Act
and Rule 158 of the Rules and Regulations and will advise the Underwriters in
writing when such statement has been so made available.
(g) The Company will, for a period of five (5) years from the Closing
Date, deliver to the Underwriters at their principal executive offices a
reasonable number of copies of annual reports, quarterly reports, current
reports and copies of all other documents, reports and information furnished by
the Company to its shareholders or filed with any securities exchange pursuant
to the requirements of such exchange or with the Commission pursuant to the Act
or the 1934 Act. The Company will deliver to the Underwriters similar reports
with respect to any significant subsidiaries, as that term is defined in the
Rules and Regulations, which are not consolidated in the Company's financial
statements. Any report, document or other information required to be furnished
under this paragraph (g) shall be furnished as soon as practicable after such
report, document or information becomes available.
(h) The Company will apply the proceeds from the sale of the Shares as
set forth in the description under "Use of Proceeds" in the Prospectus, which
description complies in all respects with the requirements of Item 504 of
Regulation S-B.
(i) The Company will supply you with copies of all correspondence to
and from, and all documents issued to and by, the Commission in connection with
the registration of the Shares under the Act.
(j) Prior to the Closing Date (and, if applicable, the Option Closing
Date), the Company will furnish to you, as soon as they have been prepared,
copies of any unaudited interim financial statements of the Company for any
periods subsequent to the periods covered by the financial statements appearing
in the Registration Statement and the Prospectus.
(k) Prior to the Closing Date (and, if applicable, the Option Closing
Date), neither the Company nor any Selling Shareholder will issue any press
releases or other communications, directly or indirectly, and will hold no press
conferences with respect to the Company, the financial condition, results of
operations, business, properties, assets or liabilities of the Company, or the
offering of the Shares, without your prior written con sent.
(l) The Company will use its best efforts to maintain the quotation of
the Shares on The Nasdaq Stock Market National Market System.
(m) The Company will maintain and keep accurate books and records
reflecting its assets and will maintain internal accounting controls which
provide reasonable assurance that (1) transactions are executed in accordance
with management's authorization, (2) transactions are recorded as necessary to
permit the preparation of the Company's financial statements and to maintain
accountability for the assets of the Company, (3) access to the assets of the
Company is permitted only in accordance with management's authorization, and (4)
the recorded accounts of the assets of the Company are compared with existing
assets at reasonable intervals.
(n) For a period of 180 days from the effective date, the Company will
not directly or indirectly offer, sell, contract to sell or otherwise dispose of
any shares of the Company's Common Stock, any securities convertible into or
exchangeable for such Common Stock or any other rights to
12
acquired such shares, except for sales of shares of Common Stock pursuant to the
exercise of options under the Company' Stock Option Plans outstanding on the
date of this Agreement.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters to purchase and pay for the Shares, as provided herein,
shall be subject to the accuracy in all material respects, as of the date hereof
and as of the Closing Date (and, if applicable, the Option Closing Date), of the
representations and warranties of the Company and the Selling Shareholder
contained herein, to the performance in all material respects by the Company and
the Selling Shareholders of their covenants and obligations hereunder, and to
the following additional conditions:
(a) All filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made. No stop order suspending the effectiveness of
the Registration Statement, as amended from time to time, shall have been issued
and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened or contemplated by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the reasonable satisfaction of the Underwriters.
(b) No Underwriter shall have disclosed in writing to the Company on
or prior to the Closing Date (and, if applicable, the Option Closing Date), that
the Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of fact which, in the opinion of counsel to the
Underwriters, is material, or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(c) On the, Closing Date (and, if applicable, the Option Closing
Date), you shall have received the opinion of Parcel, Mauro & Xxxxxxxxx, counsel
for the Company, addressed to you and dated the Closing Date (and, if
applicable, the Option Closing Date), to the effect that:
(i) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as a corporation in good standing under
the laws of its state of incorporation, with full power and authority (corporate
and other) to own, lease and operate its properties and conduct its business as
described in the Registration Statement; the Company and each of its
subsidiaries is duly qualified to do business as a foreign corporation in good
standing in each state or other jurisdiction in which its ownership or leasing
of property or conduct of business legally requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on
the ability of the Company or such subsidiaries to conduct its or their business
as described in the Registration Statement.
(ii) The Company has duly and validly authorized capital stock as set
forth under the heading "Capitalization" in the Prospectus; all outstanding
shares of Common Stock of the Company and the Shares conform to the description
thereof in the Prospectus under the heading "Description of Securities," and the
outstanding shares of Common Stock have been duly authorized and are validly
issued, fully paid and non-assessable; the Shares to be sold by the Company have
been duly authorized and, when delivered and paid for in accordance with this
Agreement, will be
13
validly issued, fully paid and non-assessable, and the shareholders of the
Company have no preemptive or similar rights with respect to the Shares.
(iii) The Company owns directly 100% of the outstanding capital stock of
Delta Play (US), Inc., Delta Play Company and Koala Foreign Sales Corporation,
and all such securities have been duly authorized, validly issued, are fully
paid and nonassessable and, to the knowledge of such counsel, are owned by the
Company free and clear of any security interest, claim, limitation on voting
rights or encumbrances and were not issued in violation of any preemptive or
similar rights; to the knowledge of such counsel, there are no outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire, or instruments convertible into or exchangeable for, any such shares of
capital stock or other equity interests of such subsidiaries.
(iv) Such counsel has been advised by the staff of the Commission that
the Registration Statement has become effective under the Act and, to the
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Act.
(v) The Registration Statement and the Prospectus, and each Amendment
or supplement thereto (other than the financial statements and related schedules
and any other financial data therein, as to which such counsel need express no
belief), as of their respective Effective Date or issue date, comply as to form
and appear on their face to be appropriately responsive in all material respects
to the requirements of the Act and the applicable Rules and Regulations.
(vi) The descriptions in the Registration Statement and Prospectus of
contracts and other documents filed as exhibits to the Registration Statement
are accurate in all material respects; all other material agreements between the
Company and third parties expressly referenced in the Prospectus are legal,
valid and binding obligations of the Company.
(vii) No authorization, approval, consent, order, registration or
qualification of or with of any court or governmental body, authority or agency
is required with respect to the Company in connection with the transactions
contemplated by this Agreement, except such as may be required under the Act or
the Rules and Regulations or as may be required by the NASD or under state
securities laws in connection with the purchase and distribution of the Shares
by the Underwriters.
(viii) The filing of the Registration Statement has been duly authorized
by the Board of Directors of the Company. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
legally binding agreement of the Company enforceable in accordance with its
terms (except to the extent the enforceability of the indemnification and
contribution provisions of Section 7 hereof may be limited by public policy
considerations as expressed in the Act as construed by courts of competent
jurisdiction, and except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors' rights generally or by the availability of equitable remedies,
regardless of whether such enforcement is considered in a proceeding in equity
or at law). The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
violation of the Company's articles of incorporation or bylaws or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any properties or assets
14
of the Company under any statute, any bond, debenture, note or other evidence of
indebtedness, or any agreement, indenture, mortgage, deed of trust, sale and
leaseback arrangement, joint venture or any other instrument known to such
counsel to which the Company or any of its subsidiaries is a party or by which
it is bound or to which any of the properties or assets of the Company or any of
its subsidiaries is subject, or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction over the
Company and its subsidiaries or their properties, except, in the case of any
such violation, breach, default, creation or imposition, to such extent as does
not materially adversely affect the business of the Company and its subsidiaries
taken as a whole.
(ix) To the knowledge of such counsel, (A) there are no material
(individually or in the aggregate) legal, governmental or regulatory proceedings
pending or threatened to which the Company or any of its subsidiaries is a party
or of which the business or properties of the Company or its subsidiaries is the
subject which are not disclosed in the Registration Statement and Prospectus;
(B) there are no contracts or documents of a character required to be described
in the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which are not described or filed as required; and (C)
there are no statutes or regulations required to be described in the
Registration Statement or Prospectus which are not described as required.
(x) To the knowledge of such counsel, the Company and its subsidiaries
holds all licenses, certificates, permits and approvals from all state, federal
and other regulatory authorities, and have satisfied in all material respects
the requirements imposed on the Company and their subsidiaries by regulatory
bodies, administrative agencies or other governmental bodies, agencies or
officials, that are required for the Company and its subsidiaries lawfully to
own, lease and operate their properties and conduct their business as described
in the Prospectus, and, to the knowledge of such counsel, the Company and its
subsidiaries are conducting their business in compliance in all material
respects with all of the laws, rules and regulations of each jurisdiction in
which they conduct their business.
(xi) The statements made in the Registration Statement under the
captions "Risk Factors--Limitation on Director Liability; Anti-Takeover Effects
of Certain Charter Provisions," "Business--Park Structures Acquisition" and
"Description of Securities" and in Item 24 of Part II of the Registration
Statement, to the extent that they constitute summaries of documents referred to
therein or matters of law or legal conclusions, have been reviewed by such
counsel and are accurate summaries and fairly present the information disclosed
therein.
(xii) The Company is not, and upon the sale of the Shares to be issued
and sold by it hereunder and application of the net proceeds from such sale as
described the Prospectus under the caption "Use of Proceeds," will not be, an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(xiii) The Company had and has the corporate power and authority to
execute, deliver and perform the Purchase Agreement, subject to the conditions
of closing set forth therein. The Purchase Agreement constitutes a legal, valid
and binding obligation of the Company and, to the knowledge of such counsel,
Park. To the knowledge of such counsel, the execution, delivery and performance
of the Purchase Agreement, the consummation of the transactions contemplated
therein and compliance with the terms and provisions thereof do not and will not
conflict with or
15
result in the creation or imposition of any lien, claim, charge, encumbrance or
restriction, or constitute (with or without notice or lapse of time or both) a
breach of violation of any of the terms, provisions or conditions of, or a
default under, the articles of incorporation or by-laws of the Company or any of
its subsidiaries and do not and will not conflict with or result in the creation
or imposition of any lien, claim, charge, encumbrance or restriction, or
constitute (with or without notice or lapse of time or both) a breach or
violation of any of the terms, provisions or conditions of, or a default under,
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument known to such counsel, to which
the Company or any of its subsidiaries is a party, by which any of them are
bound, or any franchise, license, permit or applicable law, rule, regulation,
judgment, order or decree of any government, government instrumentality, court
or arbitrator, domestic or foreign, known to such counsel, having jurisdiction
over the Company or any of its subsidiaries or any of their respective
properties, which conflict, creation, imposition, breach, violation or default
would have, either singly or in the aggregate, a material adverse effect on the
condition, financial or otherwise, earnings, business or results of operations
of the Company and its subsidiaries taken as a whole.
Such counsel shall also state that, during the course of the preparation by
the Company of the Registration Statement and the Prospectus, such counsel has
participated in conferences with your representatives and counsel and with
officers and representatives of the Company, at which conferences the contents
of the Registration Statement and the Prospectus were discussed, reviewed and
revised, and, although (except as provided above) such counsel is not passing
upon, and does not assume any responsibility for, the accuracy, completeness or
fairness of the statements made in the Registration Statement and the
Prospectus, on the basis of the information that was developed during the course
thereof, considered in the light of such counsel's understanding of applicable
law and the experience it has gained through its practice thereunder, such
counsel has no reason to believe that, as of the effective date of the
Registration Statement, either the Registration Statement or the Prospectus
(other than the financial statements and related schedules and any other
financial data therein, as to which such counsel need express no belief)
contained or, as of the Closing Date (or, if applicable, the Option Closing
Date), contains any untrue statement of a material fact or omitted or, as of the
Closing Date (or, if applicable, the Option Closing Date), omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and such counsel does
not know of any amendment to the Registration Statement required to be filed or
of any contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described as
required by the Act and the Rules and Regulations.
In rendering the foregoing opinion, such counsel may rely, provided that
the opinion shall state that you and they are entitled to so rely, (1) as to
matters involving laws of any jurisdiction other than Colorado or the United
States, upon opinions addressed to the Underwriters of other counsel
satisfactory to them, and (2) as to all matters of fact, upon certificates of
public officials and of the executive of officers of the Company.
(d) On the Closing Date (and, if applicable, the Option Closing Date),
you shall have received the opinion of Parcel, Mauro & Xxxxxxxxx, P.C., counsel
to the Selling Shareholder, addressed to you and dated the Closing Date (and, if
applicable, the Option Closing Date), to the effect that:
16
(i) The Selling Shareholder has duly authorized, executed and
delivered the Custody Agreement, appointing ______________________ as such
Selling Shareholder's Custodian with authority to take custody of and deliver
the Shares as represented by certificates on behalf of such Selling Shareholder
in connection with the transactions contemplated by this Agreement and the
Custody Agreement and appointing ______________________ as such Selling
Shareholder's Attorney-in-Fact with authority to execute and deliver this
Agreement on behalf of such Selling Shareholder and otherwise to act on behalf
of such Selling Shareholder in connection with the transactions contemplated by
this Agreement and the Custody Agreement; such Custody Agreement and constitutes
a valid and legally binding agreement of each such Selling Shareholder in
accordance with its terms (except to the extent the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally or by the availability of
equitable remedies, regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(ii) This Agreement has been duly authorized, executed and delivered by
or on behalf of the Selling Shareholder, and is a valid and legally binding
agreement of the Selling Shareholder enforceable in accordance with its terms
(except to the extent the enforceability of the indemnification provisions of
Section 7 hereof may be limited by public policy considerations as expressed in
the Act and as construed by courts of competent jurisdiction and except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
or by the availability of equitable remedies, regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(iii) The Selling Shareholder has full legal right, power and authority
to enter into this Agreement, the Custody Agreement and to sell, assign,
transfer and deliver the Shares to be sold by such Selling Shareholder.
(iv) No consent, approval, authorization or order of any court, or
governmental agency or body is required for consummation of the transactions
contemplated by this Agreement in connection with the Shares to be sold by the
Selling Shareholder hereunder except such as may be required under the Act or
the Rules and Regulations or as may be required by the NASD or under state
securities laws in connection with the purchase and distribution of the Shares
by the Underwriters.
(v) The Selling Shareholder has good and valid title to the Shares
being sold by such Selling Shareholder hereunder, free and clear of any and all
"adverse claims" (as such term is defined in Section __________ of the Uniform
Commercial Code as in force in the State of Colorado), and has transferred to
the Underwriters good and valid title to the Shares being sold by such Selling
Shareholder on the Closing Date (and, if applicable, the Option Closing Date),
free and clear of any and all adverse claims.
In rendering the foregoing opinion, such counsel may rely, provided that
the opinion shall state that you and they are entitled to so rely, (1) as to
matters involving laws of any jurisdiction other than Missouri or the United
States, upon opinions addressed to the Underwriters of other counsel
satisfactory to them, and (2) as to all matters of fact, upon certificates of
the Selling Shareholder.
17
(e) You shall have received on the Closing Date from _______________,
counsel for Park, a copy of the opinion delivered by such counsel to the Company
pursuant to the Purchase Agreement, together with a letter from such counsel
addressing such opinion to the Underwriters.
(f) You shall have received on the Closing Date (and, if applicable,
the Option Closing Date), from Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, counsel to
the Underwriters, such opinion or opinions, dated the Closing Date (and, if
applicable, the Option Closing Date) with respect to the incorporation of the
Company, the validity of the Shares and other related matters as you may
reasonably require; the Company and Selling Shareholder shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass on such matters.
(g) On the date of the Prospectus at a time prior to the effectiveness
of this Agreement and on the Closing Date (and, if applicable, the Option
Closing Date), you shall have received from Ernst & Young LLP a letter or
letters, dated the date of this Agreement and the Closing Date (and, if
applicable, the Option Closing Date), respectively, in form and substance
satisfactory to you, confirming that they are independent public accountants
with respect to the Company within the meaning of the Act and the published
Rules and Regulations, and the answer to Item 509 of Regulation S-B set forth in
the Registration Statement is correct insofar as it relates to them, and stating
to the effect set forth in Schedule III hereto.
(h) On the date of the Prospectus at a time prior to the effectiveness
of this Agreement and on the Closing Date, you shall have received from Xxxxxxx
Xxxxx Xxxxxxxx & Xxxx, P.A., a letter or letters, dated the date of this
Agreement and the Closing Date respectively, in form and substance satisfactory
to you, confirming that they are independent public accountants with respect to
the Company within the meaning of the Act and the published Rules and
Regulations, and the answer to Item 509 of Regulation S-B set forth in the
Registration Statement is correct insofar as it relates to them, and stating to
the effect set forth in Schedule IV hereto.
(i) On the date of the Prospectus at a time prior to the effectiveness
of this Agreement and on the Closing Date, you shall have received from
Xxxxxxxxx Xxxxx & Co. a letter or letters, dated the date of this Agreement and
the Closing Date, respectively, in form and substance satisfactory to you,
confirming that they are independent public accountants with respect to Park and
the Company within the meaning of the Act and the published Rules and
Regulations, and the answer to Item 509 of Regulation S-B set forth in the
Registration Statement is correct insofar as it relates to them, and stating to
the effect set forth in Schedule V hereto.
(j) On the date of the Prospectus at a time prior to the effectiveness
of this Agreement and on the Closing Date, you shall have received from Ernst &
Young Chartered Accountants a letter dated the date of this Agreement and the
Closing Date, respectively, in form and substance satisfactory to you,
confirming that they are independent public accountants with respect to Delta
Play Ltd. and the Company within the meaning of the Act and published Rules and
Regulations, and the answer to Item 509 of Regulation S-B set forth in the
Registration Statement is correct insofar as it relates to them, and stating to
the effect set forth on Schedule VI hereto.
(k) Except as contemplated in the Prospectus (i) the Company shall not
have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or, governmental action, order or decree; and (ii)
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company shall not have incurred
any liability or obligation, direct or contingent, or entered into transactions,
and there shall not have been any change in the capital stock or long-term debt
of the Company or any change in the condition (financial or other), net worth,
business, affairs, management, prospects or results of operations of the
Company, the effect of which, in any such case described in clause (i) or (ii),
is in your judgment so material or adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
18
Shares being delivered on such Closing Date (and, if applicable, the Option
Closing Date) on the terms and in the manner contemplated in the Prospectus.
(l) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange or The Nasdaq Stock Market or the establishing on such
exchange by the Commission or by such exchange or on such market by the NASD of
minimum or maximum prices which are not in force and effect on the date hereof;
(ii) a suspension or material limitation in trading in the Company's securities
on The Nasdaq Stock Market; (iii) a general moratorium on commercial banking
activities declared by either federal or state authorities; (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this clause (iv) in your judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares in
the manner contemplated in the Prospectus; (v) any calamity or crisis, change in
national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, if the
effect of any such event specified in this clause (v) makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares in
the manner contemplated in the Prospectus; or (vi) the enactment, publication,
decree, or other promulgation of any federal or state statute, regulation, rule,
or order of any court or other governmental authority, or the taking of any
action by any federal, state or local government or agency in respect of fiscal
or monetary affairs, if the effect of any such event specified in this clause
(vi) in your judgment makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares in the manner contemplated in the
Prospectus.
(m) You shall have received certificates, dated the Closing Date (and,
if applicable, the Option Closing Date) and signed by the President and the
Chief Financial Officer of the Company stating that (i) they have carefully
examined the Registration Statement and the Prospectus as amended or
supplemented and nothing has come to their attention that would lead them to
believe that either the Registration Statement or the Prospectus, or any
amendment or supplement thereto as of their respective effective or issue dates,
contained, and the Prospectus as amended or supplemented at such Closing Date,
contains any untrue statement of a material fact, or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and that (ii) all representations and warranties made herein by the
Company are true and correct in all material respects at such Closing Date, with
the same effect as if made on and as of such Closing Date, and all agreements
herein to be performed by the Company on or prior to such Closing Date have been
duly performed in all material respects.
(n) The Company and the Selling Shareholder shall not have failed,
refused, or been unable, at or prior to the Closing Date (and, if applicable,
the Option Closing Date) to have performed in all material respects any
agreement on its part to be performed or any of the conditions herein contained
and required to be performed or satisfied by it at or prior to such Closing
Date.
(o) The Company and the Selling Shareholder shall have furnished to
you at the Closing Date (and, if applicable, the Option Closing Date) such other
certificates as you may have reasonably requested as to the accuracy, on and as
of such Closing Date (and, if applicable, the Option Closing Date), of the
representations and warranties of the Company and the Selling
19
Shareholder herein and as to the performance by the Company and the Selling
Shareholder of their obligations hereunder.
(p) The Shares shall have been duly approved for quotation, subject to
official notice of issuance, on The Nasdaq Stock Market National Market.
(q) The letters in the form set forth on Schedule VII hereto and dated
the date hereof or earlier have been executed and delivered to you by the
Company's directors and executive officers and by the Selling Shareholder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, counsel for the several
Underwriters. The Company and Selling Shareholder will furnish you with such
conformed copies of such opinions, certificates, letters and documents as you
may request.
If any of the conditions specified above in this Section 6 shall not
have been satisfied at or prior to the Closing Date (and, if applicable, the
Option Closing Date) or waived by you in writing, this Agreement may be
terminated by you on notice to the Company and the Selling Shareholder.
7. INDEMNIFICATION. (a) The Company will indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any blue sky
application or other document executed by the Company or based on any
information furnished in writing by the Company, filed in any jurisdiction in
order to qualify any or all of the Shares under the securities laws thereof
("Blue Sky Application"), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and will reimburse each Underwriter
and each such controlling person for any legal or other expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, or such amendment or supplement, or any Blue Sky Application in
reliance upon and in conformity with information furnished in writing to the
Company by you or by any Underwriter through you, expressly for use therein; and
provided, further, that if any Preliminary Prospectus or the Prospectus
contained any alleged untrue statement or allegedly omitted to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading and such statement or omission shall have been corrected
in a revised Preliminary Prospectus or in the Prospectus or in an amended or
supplemented Prospectus, the Company shall not be liable to any Underwriter or
controlling person under this subsection (a) with respect to such alleged untrue
statement or alleged omission to the extent that any such loss, claim, damage or
liability of such
20
Underwriter or controlling person results from the fact that such Underwriter
sold Shares to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, such revised Preliminary Prospectus or
Prospectus or amended or supplemented Prospectus. This indemnity agreement shall
be in addition to any liabilities which the Company may otherwise have.
(b) The Selling Shareholder will indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or any Blue Sky Application or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, such Preliminary Prospectus or the
Prospectus, or such amendment or supplement, or any Blue Sky Application, in
reliance upon and in conformity with information furnished in writing to the
Company or any Underwriter by the Selling Shareholder expressly for use therein;
and will reimburse any legal or other expenses reasonably incurred by each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act, in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
contained in this subsection (b) with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) in respect of any action or claim asserted
by a person who purchased any Shares from such Underwriter, if, within the time
required by the Act such person was not sent or given a copy of the Prospectus,
as then amended or supplemented. This indemnity agreement shall be in addition
to any liabilities which the Selling Shareholder may otherwise have.
(c) Each Underwriter will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed the Registration
Statement and, each person, if any, who controls the Company within the meaning
of the Act, and the Selling Shareholder, against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer or controlling person or any such Selling Shareholder may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, any
amendment or supplement thereto, or any Blue Sky Application or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, such Preliminary Prospectus or the Prospectus, such
amendment or supplement, or any Blue Sky Application in reliance upon and in
conformity with information furnished in writing to the Company by any such
Underwriter expressly for use therein; and will reimburse any legal or other
expenses reasonably incurred by Company or any such director, officer or
controlling person or the Selling Shareholder in connection with investigating
or defending any such loss, claim, damage,
21
liability or action. This indemnity agreement shall be in addition to any
liabilities which the Underwriters may otherwise have.
(d) Any party which proposes to assert the right to be indemnified
under this Section 7 shall, within ten (10) days after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party under this Section 7,
notify each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
such indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Section 7. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party, similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party at the expense of
the indemnifying party has been authorized by the indemnifying party, (ii) the
indemnified party shall have been advised by such counsel in a written opinion
that there may be a conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense, or certain aspects of the
defense, of such action (in which case the indemnifying party shall not have the
right to direct the defense of such action with respect to those matters or
aspects of the defense on which a conflict exists or may exist on behalf of the
indemnified party) or (iii) the indemnifying party shall not in fact have
employed counsel to assume the defense of such action, in any of which events
such fees and expenses to the extent applicable shall be borne by the
indemnifying party. An indemnifying party shall not be liable for any settlement
of any action or claim effected without its consent. Each indemnified party, as
a condition of such indemnity, shall cooperate in good faith with the
indemnifying party in the defense of any such action or claim. In no event shall
any indemnifying party be liable for the fees and expenses of more than one
counsel (except to the extent that local counsel, in addition to such counsel,
is required for effective representation) to represent all indemnified parties
with respect to a single action or separate but substantially similar actions in
the same jurisdiction arising out of the same general allegations, which counsel
shall be designated in writing by the Representative, on behalf of any
Underwriters and its controlling persons (and shall be reasonably acceptable to
the Company), and by the Company, on behalf of itself and any of its officers,
directors and its controlling persons and on behalf of any Selling Shareholders
(and shall be reasonably acceptable to the Representative).
(e) If the indemnification provided for in this Section 7 is for any
reason, other than pursuant to the terms thereof, 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 lost right to appeal) to be
unavailable to an indemnified party under subsections (a), (b) or (c) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the
22
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Shareholder and the Underwriters from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault, as applicable, of the Company, the Selling Shareholder and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as other relevant equitable considerations. The relative benefits
received by, as applicable, the Company, the Selling Shareholder and the
Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the Selling Shareholder bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Shareholder or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Selling Shareholder and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (e) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) 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 or claim. Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter. No person guilty of fraudulent misrepresentation
(within the meaning of Section ll(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company and the Selling
Shareholder contained in Sections 7 and 11 herein or in certificates delivered
pursuant hereto, and the agreements of the Underwriters contained in Section 7
hereof, shall remain operative and in full force and effect regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any Underwriter or any controlling person, the Company or any of its
officers, directors or any controlling persons, or the Selling Shareholder, and
shall survive delivery of the Shares to the Underwriters hereunder.
9. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter shall
default in its obligation to purchase the Shares which it has agreed to purchase
hereunder, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within thirty-
six (36) hours after such default by any Underwriter you do not arrange for the
purchase of such Shares, then the Company and the Selling Shareholder shall be
entitled to a
23
further period of thirty-six (36) hours within which to procure another party or
parties reasonably satisfactory to you to purchase such Shares on such terms. In
the event that, within the respective prescribed periods, you notify the Company
and the Selling Shareholder that you have so arranged for the purchase of such
Shares, or the Company and the Selling Shareholder notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Shareholder shall have the right to postpone the Closing Date for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any persons substituted under this Section 9 with like effect as
if such person had originally been a party to this Agreement with respect to
such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters made by you or the
Company and the Selling Shareholder as provided in subsection (a) above, the
aggregate number of Shares which remains unpurchased does not exceed one tenth
(1/10th) of the total Shares to be sold on the Closing Date, then the Company
and the Selling Shareholder shall have the right to require each non-defaulting
Underwriter to purchase the Shares which such Underwriter agreed to purchase
hereunder and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters made by you or the
Company and the Selling Shareholder as provided in subsection (a) above, the
number of Shares which remains unpurchased exceeds one tenth of the total Shares
to be sold on the Closing Date, or if the Company and the Selling Shareholder
shall not exercise the right described in subsection (b) above to require the
non-defaulting Underwriters to purchase Shares of the defaulting Underwriter or
Underwriters, then this Agreement shall thereupon terminate, without liability
on the part of any non-defaulting Underwriter or the Company and the Selling
Shareholder except for the expenses to be borne by the Company and the
Underwriters as provided in Section 11 hereof and the indemnity and contribution
agreements in Section 7 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. EFFECTIVE DATE AND TERMINATION OF AGREEMENT. (a) This Agreement
shall become effective at 1:00 p.m., St. Louis time, on the first business day
following the Effective Date of the Registration Statement, or at such earlier
time after the Effective Date of the Registration Statement as you in your
discretion shall first release the Shares for offering to the public; provided,
however, that the provisions of Section 7 and 11 shall at all times be
effective. For the purposes of this Section 10(a), the Shares shall be deemed to
have been released to the public upon release by you of the publication of a
newspaper advertisement relating to the Shares or upon release of telegrams,
facsimile transmissions or letters offering the Shares for sale to securities
dealers, whichever shall first occur.
24
(b) This Agreement may be terminated by you at any time before it
becomes effective in accordance with Section 10(a) by notice to the Company and
the Selling Shareholder; provided, however, that the provisions of this Section
10 and of Section 7 and Section 11 hereof shall at all times be effective. In
the event of any termination of this Agreement pursuant to Section 9 or this
Section 10(b) hereof, the Company and the Selling Shareholder shall not then be
under any liability to any Underwriter except as provided in Section 7 or
Section 11 hereof.
(c) This Agreement may be terminated by you at any time at or prior
to the Closing Date by notice to the Company and the Selling Shareholder if any
condition specified in Section 6 hereof shall not have been satisfied on or
prior to the Closing Date. Any such termination shall be without liability of
any party to any other party except as provided in Sections 7 and 11 hereof.
(d) This Agreement also may be terminated by you, by notice to the
Company and the Selling Shareholder, as to any obligation of the Underwriters to
purchase the Option Shares, if any condition specified in Section 6 hereof shall
not have been satisfied at or prior to the Option Closing Date or as provided in
Section 9 hereof.
If you terminate this Agreement as provided in Sections 10(b), 10(c) or
10(d), you shall notify the Company and the Selling Shareholder by telephone or
telegram, confirmed by letter.
11. COSTS AND EXPENSES. The Company will bear and pay the costs and
expenses incident to the registration of the Shares and public offering thereof,
including, without limitation, (a) the fees and expenses of the Company's
accountants and the fees and expenses of counsel for the Company, (b) the
preparation, printing, filing, delivery and shipping of the Registration
Statement, each Preliminary Prospectus, the Prospectus and any amendments or
supplements thereto (except as otherwise expressly provided in Section 5(d)
hereof) and the printing, delivery and shipping of this Agreement, the Agreement
Among Underwriters, the Selected Dealer Agreement, Underwriters' Questionnaires,
and Custody Agreements, (c) the furnishing of copies of such documents (except
as otherwise expressly provided in Section 5(d) hereof) to the Underwriters, (d)
the registration or qualification of the Shares for offering and sale under the
securities laws of the various states, including the reasonable fees and
disbursements of Underwriters' counsel relating to such registration or
qualification, (e) the fees payable to the NASD and the Commission in connection
with their review of the proposed offering of the Shares, (f) all printing and
engraving costs related to preparation of the certificates for the Shares,
including transfer agent and registrar fees, (g) all initial transfer taxes, if
any, (h) all fees and expenses relating to the authorization of the Shares for
trading on The Nasdaq Stock Market National Market, (i) all travel expenses,
including air fare and accommodation expenses, of representatives of the Company
in connection with the offering of the Shares and (j) all of the other costs and
expenses incident to the performance by the Company of the registration and
offering of the Shares; provided, however, that the Underwriters will bear and
pay the fees and expenses of the Underwriters' counsel (other than fees and
disbursements relating to the registration or qualification of the Shares for
offering and sale under the securities laws of the various states), the
Underwriters' out-of-pocket expenses, and any advertising costs and expenses
incurred by the Underwriters incident to the public offering of the Shares; and
provided, further, that the Selling Shareholder will bear and pay the fees and
expenses of the Selling Shareholder's counsel.
25
If this Agreement is terminated by you in accordance with the provisions
of Section 10(c), the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel to the Underwriters.
12. DEFAULT OF SELLING SHAREHOLDER. Failure or refusal by the
Selling Shareholder to sell and deliver on the Closing Date the Shares agreed to
be sold and delivered by such Selling Shareholder shall in no manner relieve the
Company of its obligations under this Agreement. If the Selling Shareholder
should fail or refuse to sell and deliver its Shares, the Underwriters, at your
option, will have the right to elect to purchase or not to purchase the Shares
to be sold by the Company. In the event the Underwriters purchase the Shares of
the Company pursuant to this Section 12, the Closing Date shall be postponed for
a period of not more than seven (7) days in order that the Registration
Statement and Prospectus or other documents may be amended or supplemented to
the extent necessary under the provisions of the Act and the Rules and
Regulations or under the securities laws of any jurisdiction. If the
Underwriters determine not to purchase the Shares of the Company, this Agreement
shall terminate and neither the Company nor the Underwriters shall be under any
obligation under this Agreement except as provided in Section 7 hereof and
except for the obligation of the Company to pay for such expenses as are set
forth in Section 11 hereof. Nothing herein shall relieve the defaulting Selling
Shareholder from liability for its default or from liability under Section 7
hereof or for expenses imposed by this Agreement upon such Selling Shareholder.
13. NOTICES. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to the
Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o X.X. Xxxxxxx & Sons, Inc. at Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Syndicate, facsimile number (314)
955-7387, or if sent to the Company shall be mailed, delivered, sent by
facsimile transmission, or telegraphed and confirmed to the Company at 0000
Xxxxx Xxxxxx Xxxxxx, facsimile number (000) 000-0000, Attention: Chairman and
Chief Executive Officer, or if sent to the Selling Shareholder shall be mailed,
delivered, sent by facsimile transmission or telegraphed and confirmed to such
Selling Shareholder, c/o the Attorney-in-Fact at the above address of the
Company. Notice to any Underwriter pursuant to Section 7 shall be mailed,
delivered, sent by facsimile transmission, or telegraphed and confirmed to such
Underwriter's address as it appears in the Underwriters' Questionnaire furnished
in connection with the offering of the Shares or as otherwise furnished to the
Company and the Selling Shareholder.
14. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Selling Shareholder, and the Company and
their respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, corporation or
other entity, other than the parties hereto and their respective successors and
assigns and the controlling persons, officers and directors referred to in
Section 7, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns and said controlling persons and said officers and directors, and for
the benefit of no other person, corporation or other entity. No purchaser of any
of the Shares from any Underwriter shall be construed a successor or assign by
reason merely of such purchase.
26
In all dealings with the Company and the Selling Shareholder under this
Agreement, you shall act on behalf of each of the several Underwriters, and the
Company, and the Selling Shareholder shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of the Underwriters, made or
given by you on behalf of the Underwriters, as if the same shall have been made
or given in writing by the Underwriters.
15. Material Adverse Effect. For purposes of Section 4 of this
Agreement, "Material Adverse Effect" shall mean any material adverse effect on
the condition (financial or other), net worth, earnings, business, prospects,
management or properties of the Company and its subsidiaries, taken as a whole.
16. COUNTERPARTS. This Agreement may be executed by any one or more
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
17. PRONOUNS. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.
18. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
27
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among the Company, each of the Selling
Shareholders and the Underwriters.
KOALA CORPORATION
By:______________________________________________
Title:___________________________________________
Selling Shareholder
By:______________________________________________
As Attorney-in-Fact acting on behalf of the
Selling Shareholder named in Schedule I to
this Agreement
Accepted in St. Louis,
Missouri as of the date
first above written, on
behalf of ourselves and each
of the several Underwriters
named in Schedule II hereto.
X.X. XXXXXXX & SONS, INC.
XXXXX-XXXXXX CAPITAL GROUP, INC.
By: X.X. XXXXXXX & SONS, INC.
By:______________________________
Title:___________________________
28
SCHEDULE I
NAME OF NUMBER OF
SELLING SHAREHOLDER FIRM SHARES
Rockmont Capital 800,000
Limited Liability Company
29
SCHEDULE II
NAME OF NUMBER OF
UNDERWRITER FIRM SHARES
X.X. Xxxxxxx & Sons, Inc.
Xxxxx-Xxxxxx Capital Group, Inc.
-------------------
Total 1,800,000
30
SCHEDULE III
Pursuant to Section 6(g) of the Underwriting Agreement, Ernst & Young
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company within the meaning of the Act and the applicable published rules
and regulations thereunder.
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited by them and included in the
Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the
applicable Rules and Regulations thereunder.
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accounts ("AICPA") of the
unaudited consolidated interim statements of income, balance sheets and
statements of cash flows included in the Prospectus. On the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited consolidated interim financial statements referred to in paragraph
(vi)(A) below comply as to form in all material respects with the applicable
accounting requirements of the Act, and the related published rules and
regulations, nothing came to their attention that caused them to believe that
the unaudited consolidated interim financial statements do not comply as to form
in all material respects with the applicable accounting requirements of the Act
and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and consolidated financial position of the
Company for the fiscal years audited by them included in the Prospectus agrees
with the corresponding amounts (after restatements where applicable) in the
audited financial statements for such fiscal years which were included in the
Company's Annual Reports on Form 10-KSB and the Company's Registration Statement
on Form SB-2 (File No. 333-___________) for such fiscal years;
(v) They have compared the information in this Prospectus under
selected captions with the disclosure requirements of Regulation S-K, and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them to believe
that this information does not conform in all material respects with the
disclosure requirements of Items 301, 302 and 402, respectively, of Regulation
S-K;
(vi) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below,
performing the procedures specified by the AICPA for a review of interim
financial information as discussed in SAS No. 71, Interim Financial Information,
on the latest available interim financial statements of the Company, inspection
of the minute books of the Company since the date of the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
31
(A) any material modifications should be made to the unaudited
consolidated statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in conformity
with generally accepted accounting principles, or the unaudited consolidated
statements of income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published Rules and Regulations thereunder;
(B) the unaudited pro forma condensed financial statements included
in the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the published Rules and
Regulations thereunder or the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those statements;
(C) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in consolidated capital stock or any
increase in consolidated long-term debt of the Company, or any decreases in
working capital, net assets, shareholders' equity or other items specified by
the Representatives, or any changes in any items specified by the
Representatives, in each case as compared with amounts shown in the latest
consolidated balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(D) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in Clause (C) there
were any decreases in consolidated net revenues or operating profit or the total
or per share amounts of net income or any other changes in any other items
specified by the Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of corresponding length
specified by the Representative, except in each case for changes, decreases or
increases which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) and (vi) above,
they have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Representatives,
which are derived from the general accounting records of the Company, which
appear in the Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and have found them to be in agreement.
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SCHEDULE IV
Pusuant to Section 6(h) of the Underwriting Agreement, Xxxxxxx Xxxxx
Xxxxxxxx & Xxxx, P.O. shall furnish letters to the Underwriters to the effect
that:
(i) They are independent certified public accountants with respect to
the Company within the meaning of the Act and the applicable published rules and
regulations thereunder.
(ii) In their opinion, the consolidated financial statements and any
supplementary financial information and schedules audited by them and included
in the Prospectus or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act and the
applicable Rules and Regulations thereunder.
(iii) The unaudited selected financial information with respect to the
consolidated results of operations and consolidated financial position of the
Company for the periods audited by them included in the Prospectus agrees with
the corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such periods which were included in the
Company's annual reports on Form 10-KSB and the Company's Registration Statement
on Form SB-2 (File No. 333-_________).
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SCHEDULE V
Pursuant to Section 6(i) of the Underwriting Agreement, Xxxxxxxxx Xxxxx
& Co shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to Park and the Company within the meaning of the Act and the applicable
published Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules of Park comply as to form in all material
respects with the applicable accounting requirements of the Act and the
applicable Rules and Regulations.
(iii) The unaudited selected financial information with respect to the
results of operations and financial position of Park for the periods included in
the Prospectus agrees with the corresponding amounts (after restatements where
applicable) in audited financial statements for such periods included in the
Company's Registration Statement on Form SB-2 (File No. 333-_____________) for
such periods.
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the most recent unaudited financial statement of Park, performing the
procedures specified by the American Institute of Certified Public Accountants
("AICPA") for a review of interim financial information as discussed in SAS No.
71, Interim Financial Information, on the latest available interim financial
statement of Park, inspection of the minute books of Park since the date of the
latest audited financial statements included in the Prospectus, inquiries of
officials of Park responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing came
to their attention that caused them to believe that:
(A) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the capital stock or any
increase in the long-term debt of Park, or any decreases in working capital, net
assets, shareholders' equity or other items specified by the Representatives, or
any changes in any items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described in such
letter; and
(B) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred to in
Clause (A) there were any decreases in net revenues or operating profit or the
total or per share amounts of net income or any other changes in any other items
specified by the Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of corresponding length
specified by the Representatives, except in each case for changes, decreases or
increases which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
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In addition to the examination referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) above, they have
carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Representatives,
which are derived from the general accounting records of Park, which appear in
the Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting records of Park and have found them to be in agreement.
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SCHEDULE VI
Pursuant to Section 6(j) of the Underwriting Agreement, Ernst & Young
Chartered Accountants shall furnish letters to the Underwriters to the effect
that:
(i) They are independent certified public accountants with respect to
Delta Play Ltd. and the Company within the meaning of the Act and the applicable
published Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited by them and included in the
Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the
applicable Rules and Regulations thereunder.
SCHEDULE VII
(Form of Lock-up Letter)
KOALA COPORATION
1,800,000 SHARES
COMMON STOCK, PAR VALUE $0.10 PER SHARE
X.X. Xxxxxxx & Sons, Inc.
Xxxxx-Xxxxxx Capital Group, Inc.
As Representatives of the Several Underwriters
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
The undersigned shareholder of Koala Corporation, a Colorado
corporation (the "Company"), wishes to facilitate the offering (the "Offering")
of 1,800,000 shares of Common Stock, par value $0.10 per share (the "Common
Stock"), of the Company. The Shareholder recognizes that the Offering will be of
benefit to the Company and the Shareholder.
In consideration of the foregoing and in order to induce you, as the
representatives (the "Representatives") of certain underwriters (the
"Underwriters") to enter into an underwriting agreement with the Company and the
selling shareholder (the "Underwriting Agreement") relating to the Offering and
to complete the purchase of the shares of Common Stock pursuant to such
Underwriting Agreement, the Shareholder hereby agrees with the Underwriters as
follows:
1. During the term of this Agreement, as specified in paragraph 2
hereof, such Shareholder shall not, directly or indirectly, offer, sell,
contract to sell or otherwise dispose of any shares of the Company's Common
Stock or any securities convertible into or exercisable or exchangeable for, or
any rights to purchase or acquire Common Stock or the beneficial ownership
thereof (collectively the "Subject Securities"), without your prior written
consent as Representative of the Underwriters.
2. This Agreement shall become effective upon the later of: (i) the
effective date of the Registration Statement filed by the Company with the
Securities and Exchange Commission on Form SB-2 (SEC Registration No. 333-
_______) in connection with the Offering, as such Registration Statement may be
amended from time to time (the "Registration Statement") or (ii) the execution
hereof by the Shareholder. This Agreement shall terminate without any prior
notice upon the earlier of (i) the date which is one hundred and eighty (180)
days after the effective date of the Registration Statement or (ii) the
termination or cancellation of the Underwriting Agreement for any reason prior
to the sale of the Common Stock to the Underwriters. Notwithstanding the
foregoing, this Agreement shall terminate immediately upon any abandonment of
the Registration Statement.
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3. This Agreement shall be construed and enforced in accordance
with the laws of the State of Missouri. The Underwriters shall be entitled to
all legal and equitable remedies in enforcing this Agreement, including without
limitation an injunction against any sale of shares of the Common Stock in
contravention of this Agreement. If at any time subsequent to the date of this
Agreement any provision hereof shall be held by any court of. competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such provision shall
have no effect upon and shall not impair the legality or enforceability of, any
other provision of this Agreement.
4. This Agreement may be executed in one or more counterparts, each
of which shall be an original, but all of which taken together shall constitute
one and the same instrument.
5. All of the terms and provisions of this Agreement shall inure to
the benefit of and be binding upon the respective heirs, successors, personal
representatives and permitted assigns of the parties hereto.
If the foregoing correctly sets forth the agreement between the
undersigned and the Underwriters, please indicate your acceptance in the space
provided below for that purpose.
Very truly yours,
_________________________________________
(Signature)
Print Name:______________________________
Date:____________________________________
Agreed to and accepted as of the date above written:
X.X. Xxxxxxx & Sons, Inc.
Xxxxx-Xxxxxx Capital Group, Inc.
By: X.X. Xxxxxxx & Sons, Inc.
By:_________________________
Name:_______________________
Title:______________________
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