600,000 Shares
ENTERPRISE SYSTEMS, INC.
Common Stock
PLACEMENT AGENCY AGREEMENT
October __, 1996
XXXXXXXXX, XXXXXXXX & COMPANY LLC
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
c/x Xxxxxxxxx, Xxxxxxxx & Company LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies/Gentlemen:
Enterprise Systems, Inc., a Delaware corporation (the "Company"), proposes
to offer and sell 600,000 shares of its Common Stock, $.01 par value per share
(the "Shares"), to certain investors (collectively, the "Investors"). The
Shares are more fully described in the Registration Statement defined below.
The Company hereby confirms its agreements with you as follows:
1. Agreement to Act as Placement Agent. On the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions of this Agreement, Xxxxxxxxx, Xxxxxxxx &
Company LLC and Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C. (collectively, the
"Placement Agents") agree to act as the Company's exclusive placement agents, on
a best efforts basis, in connection with the issuance and sale by the Company of
the Shares to the Investors. As compensation for services rendered, on the first
business day following the Closing Date, the Company shall pay to the Placement
Agents, by wire transfer of immediately available funds to an account or
accounts designated by the Placement Agents, an amount equal to 5.5% of the
gross proceeds received by the Company from the sale of the Shares at a price of
$____ per share. All shares of Common Stock, $.01 per value per share, of the
Company to be outstanding after giving effect to the sales contemplated hereby,
including the Shares, are hereinafter referred to as "Common Stock." The
Placement Agents may, in their sole discretion, retain one or more sub-Placement
Agents, upon prior notice to the Company.
2. Delivery and Payment.
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(a) On or before the third business day following the date on which
the Registration Statement (as defined below) is declared effective (the
"Closing Date") (as defined below), the Placement Agents shall notify the
Company of the total number of Shares for which it has received and confirmed
orders to purchase in the offering at a purchase price
acceptable to the Company (the "Purchased Shares").
(b) On the Closing Date, the Company shall cause its transfer agent,
through the Depository Trust Corporation ("DTC"), to credit "free of payment"
the total number of Purchased Shares to the account of Xxxxxxxxx, Xxxxxxxx &
Company LLC, to be held in the name and for the benefit of the Company (the
"Nominee Account"). Robertson, Stephens, & Company LLC will, in turn, cause DTC
to credit the account of each Investor through DTC with the number of Purchased
Shares purchased by such Investor against receipt of the full purchase price for
such Purchased Shares in the Nominee Account. On the first business day
following the Closing Date, the Xxxxxxxxx, Xxxxxxxx & Company LLC shall cause to
be paid to the Company, by wire transfer of immediately available funds to a
bank account or accounts designated by the Company, the gross proceeds from the
sale of the Purchased Shares in the offering which have been credited to the
Nominee Account. With respect to any Purchased Shares for which an Investor or
Investors has not credited payment in full to the Nominee Account by the Closing
Date (or such later date as the Company and the Placement Agent may agree), the
Xxxxxxxxx, Xxxxxxxx & Company LLC shall, through DTC, cause such Shares to be
returned to the Company's transfer agent. The Placement Agents shall have no
liability to the Company for any Purchased Shares credited to the Nominee
Account for which payment of the purchase price for such Shares is not, in turn,
credited to the Nominee Account as long as such Shares are returned to the
Company's transfer agent through DTC.
3. Representations, Warranties and Agreements of the Company.
---------------------------------------------------------
The Company represents and warrants to and agrees with each of the
Placement Agents that:
(a) A registration statement on Form S-1 (File No. 333-_____) with
respect to the Shares, including a prospectus subject to completion, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the applicable rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Act and has been filed with the Commission; such
amendments to such registration statement, such amended prospectuses subject to
completion and such abbreviated registration statements pursuant to Rule 462(b)
of the Rules and Regulations as may have been required prior to the date hereof
have been similarly prepared and filed with the Commission; and the Company will
file such additional amendments to such registration statement, such amended
prospectuses subject to completion and such abbreviated registration statements
as may hereafter be required. Copies of such registration statement and
amendments, of each related prospectus subject to completion (the "Preliminary
Prospectuses") and of any abbreviated registration statement pursuant to Rule
462(b) of the Rules and Regulations have been delivered to you.
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If the registration statement relating to the Shares has been declared
effective under the Act by the Commission, the Company will prepare and promptly
file with the Commission the information omitted from the registration statement
pursuant to Rule 430A(a) or, if the Placement Agents shall agree to the
utilization of Rule 434 of the Rules and Regulations, the information required
to be included in any term sheet filed pursuant to Rule 434(b) or (c), as
applicable, of the Rules and Regulations pursuant to subparagraph (1), (4) or
(7) of Rule 424(b) of the Rules and Regulations or as part of a post-effective
amendment to the registration statement (including a final form of prospectus).
If the registration statement relating to the Shares has not been declared
effective under the Act by the Commission, the Company will prepare and promptly
file an amendment to the registration statement, including a final form of
prospectus, or, if the Placement Agents shall agree to the utilization of Rule
434 of the Rules and Regulations, the information required to be included in any
term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the Rules and
Regulations. The term "Registration Statement" as used in this Agreement shall
mean such registration statement, including financial statements, schedules and
exhibits, in the form in which it became or becomes, as the case may be,
effective (including, if the Company omitted information from the registration
statement pursuant to Rule 430A(a) or files a term sheet pursuant to Rule 434 of
the Rules and Regulations, the information deemed to be a part of the
registration statement at the time it became effective pursuant to Rule 430A(b)
or Rule 434(d) of the Rules and Regulations) and, in the event of any amendment
thereto or the filing of any abbreviated registration statement pursuant to Rule
462(b) of the Rules and Regulations relating thereto after the effective date of
such registration statement, shall also mean (from and after the effectiveness
of such amendment or the filing of such abbreviated registration statement) such
registration statement as so amended, together with any such abbreviated
registration statement. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Shares as included in such Registration
Statement at the time it becomes effective (including, if the Company omitted
information from the Registration Statement pursuant to Rule 430A(a) of the
Rules and Regulations, the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 430A(b) of the Rules
and Regulations); provided, however, that if in reliance on Rule 434 of the
Rules and Regulations and with the consent of the Placement Agents, the Company
shall have provided to the the Placement Agents a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Act, the term "Prospectus" shall
mean the "prospectus subject to completion" (as defined in Rule 434(g) of the
Rules and Regulations) last provided to the Placement Agents by the Company and
circulated by the Placement Agents to all prospective purchasers of the Shares
(including the information deemed to be a part of the Registration Statement at
the time it became effective pursuant to Rule 434(d) of the Rules and
Regulations). Notwithstanding the foregoing, if any revised prospectus shall be
provided to the Placement Agents by the Company for use in connection with the
offering of the Shares that differs from the prospectus referred to in the
immediately preceding sentence (whether or not such revised prospectus is
required to be filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations), the term "Prospectus"
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shall refer to such revised prospectus from and after the time it is first
provided to the Placement Agents for such use. If in reliance on Rule 434 of the
Rules and Regulations and with the consent of the Placement Agents, the Company
shall have provided to the Placement Agents a term sheet pursuant to Rule 434(b)
or (c), as applicable, prior to the time that a confirmation is sent or given
for purposes of Section 2(10)(a) of the Act, the Prospectus and the term sheet,
together, will not be materially different from the prospectus in the
Registration Statement.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or instituted proceedings for that
purpose, and each such Preliminary Prospectus has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date, (i) the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained and will contain all material information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, (ii) the Registration Statement, and any amendments or supplements
thereto, did not and will not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (iii) the Prospectus, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties contained in this subparagraph (b) shall apply to information
contained in or omitted from the Registration Statement or Prospectus, or any
amendment or supplement thereto, in reliance upon, and in conformity with,
written information relating to the Placement Agents furnished to the Company by
the Placement Agents specifically for use in the preparation thereof.
(c) Each of the Company and its subsidiaries (as hereinafter defined)
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation with full power
and authority (corporate and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus; the Company owns all of the
outstanding capital stock of its subsidiaries free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest; each of the
Company and its subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its subsidiaries considered as one enterprise; no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
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seeking to revoke, limit or curtail, such power and authority or qualification;
neither the Company nor any of its subsidiaries is in violation of its
respective charter or bylaws or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
material bond, debenture, note or other evidence of indebtedness, or in any
material lease, contract, indenture, mortgage, deed of trust, loan agreement,
joint venture or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of its subsidiaries or their
respective properties may be bound; and neither the Company nor any of its
subsidiaries is in material violation of any law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or over their respective properties of which it has knowledge. The
Company does not have any subsidiaries, nor does it control, directly or
indirectly, or own, directly or indirectly, any shares of stock or any other
equity interest of any corporation, partnership or limited liability company,
other than those entities identified on Schedule A hereto. For purposes of this
Agreement, the term "subsidiary" includes any corporation, partnership, limited
liability company or other entity in which the Company or any subsidiary has a
controlling ownership interest.
(d) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and is
a valid and binding agreement on the part of the Company, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles; the performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a material breach or
violation of any of the terms or provisions of, or constitute a default under,
(i) any bond, debenture, note or other evidence of indebtedness, or under any
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries or their
respective properties may be bound, (ii) the charter or bylaws of the Company or
any of its subsidiaries, or (iii) any law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or over their respective properties. No consent, approval,
authorization or order of or qualification with any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or over their respective properties is
required for the execution and delivery of this Agreement and the consummation
by the Company or any of its subsidiaries of the transactions herein
contemplated, except such as may be required under the Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), all of which requirements
have been satisfied in all material respects, and except such as may be required
under state or other securities or Blue Sky laws.
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(e) There is not any pending or, to the best of the Company's
knowledge, threatened action, suit, claim or proceeding against the Company, any
of its subsidiaries or any of their respective officers or any of their
respective properties, assets or rights before any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or over their respective officers or
properties or otherwise which (i) might result in any material adverse change in
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise or might materially and adversely affect their properties, assets or
rights, (ii) might prevent consummation of the transactions contemplated hereby
or (iii) is required to be disclosed in the Registration Statement or Prospectus
and is not so disclosed; and there are no agreements, contracts, leases or
documents of the Company or any of its subsidiaries of a character required to
be described or referred to in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement by the Act or the Rules and
Regulations which have not been accurately described in all material respects in
the Registration Statement or Prospectus or filed as exhibits to the
Registration Statement.
(f) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the authorized and outstanding capital
stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" and conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus (and
such statements correctly state the substance of the instruments defining the
capitalization of the Company); the Shares have been duly authorized for
issuance and sale to the Investors and, when issued and delivered by the Company
against payment therefor in accordance with the terms of this Agreement, will be
duly and validly issued and fully paid and nonassessable, and will be sold free
and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest; and no preemptive right, co-sale right, tag along right,
registration right, right of first refusal or other similar right of
stockholders exists with respect to any of the Shares or the issuance and sale
thereof other than those that have been expressly waived prior to the date
hereof. No further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale or
transfer of the Shares except as may be required under the Act, the Exchange Act
or under state or other securities or Blue Sky laws. All issued and outstanding
shares of capital stock of each subsidiary of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, and were not
issued in violation of or subject to any preemptive right, or other rights to
subscribe for or purchase shares and are owned by the Company free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable interest.
Except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company and the related notes thereto included in the
Prospectus, neither the Company nor any subsidiary has outstanding any options
to purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
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commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the options
or other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights. Except as disclosed in the
Prospectus, there are no stockholders agreements, voting agreements or other
similar agreements with respect to the Common Stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company's
stockholders.
(g) KPMG Peat Marwick LLP, which has examined the consolidated
financial statements of the Company, together with the related schedules and
notes, as of December 31, 1994 and 1995 and for each of the years in the three
(3) years ended December 31, 1995 filed with the Commission as a part of the
Registration Statement, which are included in the Prospectus, are independent
accountants within the meaning of the Act and the Rules and Regulations; the
audited consolidated financial statements of the Company, together with the
related schedules and notes, and the unaudited consolidated financial
information, forming part of the Registration Statement and Prospectus, fairly
present the financial position and the results of operations of the Company and
its subsidiaries at the respective dates and for the respective periods to which
they apply; and all audited consolidated financial statements of the Company,
together with the related schedules and notes, and the unaudited consolidated
financial information, filed with the Commission as part of the Registration
Statement, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as may be
otherwise stated therein. The selected and summary financial and statistical
data included in the Registration Statement present fairly the information shown
therein and have been compiled on a basis consistent with the audited financial
statements presented therein. No other financial statements or schedules are
required to be included in the Registration Statement.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (i) any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise, (ii) any transaction that is material to the
Company and its subsidiaries considered as one enterprise, except transactions
entered into in the ordinary course of business, (iii) any obligation, direct or
contingent, that is material to the Company and its subsidiaries considered as
one enterprise, incurred by the Company or its subsidiaries, except obligations
incurred in the ordinary course of business, (iv) any change in the capital
stock or outstanding indebtedness of the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one enterprise,
(v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company or any of its subsidiaries, or (vi) any loss or
damage (whether or not insured) to the property of the Company or any of its
subsidiaries which has been sustained or will have been sustained which has a
material adverse effect on the condition (financial or otherwise),
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earnings, operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise.
(i) Except as set forth in the Registration Statement and Prospectus,
(i) each of the Company and its subsidiaries has good and marketable title to
all properties and assets described in the Registration Statement and Prospectus
as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than such as would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise, (ii) the agreements to which the Company or any of
its subsidiaries is a party described in the Registration Statement and
Prospectus are valid agreements, enforceable by the Company and its subsidiaries
(as applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and, to the best of the Company's knowledge, the other contracting
party or parties thereto are not in material breach or material default under
any of such agreements, and (iii) each of the Company and its subsidiaries has
valid and enforceable leases for all properties described in the Registration
Statement and Prospectus as leased by it, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Except as set forth in the Registration Statement
and Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted.
(j) The Company and its subsidiaries have timely filed all necessary
federal, state and foreign income and franchise tax returns and have paid all
taxes shown thereon as due, and there is no tax deficiency that has been or, to
the best of the Company's knowledge, might be asserted against the Company or
any of its subsidiaries that might have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries considered as one enterprise; and
all tax liabilities are adequately provided for on the books of the Company and
its subsidiaries.
(k) The Company and its subsidiaries maintain insurance with insurers
of recognized financial responsibility of the types and in the amounts generally
deemed adequate for their respective businesses and consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, insurance covering real and personal property owned or leased by
the Company or its subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied for; and
neither the Company nor any such subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a
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cost that would not materially and adversely affect the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its subsidiaries considered as one enterprise.
(l) To the best of Company's knowledge, no labor disturbance by the
employees of the Company or any of its subsidiaries exists or is imminent; and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, subassemblers, value added
resellers, subcontractors, original equipment manufacturers, authorized dealers
or international distributors that might be expected to result in a material
adverse change in the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries considered as
one enterprise. No collective bargaining agreement exists with any of the
Company's employees and, to the best of the Company's knowledge, no such
agreement is imminent.
(m) Each of the Company and its subsidiaries owns or possesses
adequate rights to use all patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names and copyrights which are
necessary to conduct its businesses as now conducted and as proposed to be
conducted; the expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries considered as
one enterprise; the Company has not received any notice of, and has no knowledge
of, any infringement of or conflict with asserted rights of the Company by
others with respect to any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights; and the Company
has not received any notice of, and has no knowledge of, any infringement of or
conflict with asserted rights of others with respect to any patent, patent
rights, inventions, trade secrets, know-how, 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 on
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as one
enterprise.
(n) Except as described in the Registration Statement and Prospectus,
the Company and its subsidiaries have operated and currently operate their
business in conformity with all applicable laws, rules and regulations of each
jurisdiction in which it is conducting business, except where the failure to be
so in compliance would not have a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company and its subsidiaries considered as one enterprise. The Company
and its subsidiaries have all licenses, certificates, authorizations, approvals,
permits, franchises, orders and consents from all state, federal and other
governmental or regulatory authorities which are necessary to the conduct of
their businesses, except where the failure to be so in compliance would not have
a material adverse effect on the condition (financial or otherwise), earnings,
operations, business or
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business prospects of the Company and its subsidiaries considered as one
enterprise. All of such licenses, certificates, authorizations, approvals,
permits, franchises, orders and consents are valid and in full force and effect.
Except as described in the Registration Statement and Prospectus, the Company
and its subsidiaries have fulfilled and performed, and will fulfill and perform,
all of their obligations with respect to, and are operating in compliance with,
all such licenses, certificates, authorizations, approvals, permits, franchises,
orders and consents and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or result in any
impairment of the rights of the holder thereof, except to the extent that any
such revocation, termination or impairment would not have a material adverse
effect on the financial condition, results of operations, business or business
prospects of the Company and its subsidiaries considered as one enterprise.
Except as set forth in the Registration Statement and Prospectus, no such
licenses, certificates, authorizations, approvals, permits, franchises, orders
or consents contain any restrictions that have or may have a material adverse
effect on the financial condition, results of operations, business or business
prospects of the Company and its subsidiaries considered as one enterprise. The
Company and its subsidiaries are not aware of any existing or imminent matter
which may adversely impact their operations or business prospects other than as
disclosed in the Registration Statement and Prospectus.
(o) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on The Nasdaq Stock Market, Inc. National Market (the
"Nasdaq National Market"), and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or de-listing the Common Stock from the Nasdaq National
Market, nor has the Company received any notification that the Commission or the
National Association of Securities Dealers, Inc. ("NASD") is contemplating
terminating such registration or listing. The Company has filed in a timely
manner all reports and other information required to be filed with the
Commission pursuant to the Exchange Act during the twelve calendar months and
any portion of a month immediately preceding the filing of the Registration
Statement (or during such shorter period of time that the Company has been
subject to the reporting requirements of the Exchange Act).
(p) The Company has been advised concerning the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it will not become an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the 1940 Act and such rules and regulations. Neither the Company nor any of
its subsidiaries is, nor will the Company or any of its subsidiaries become upon
the sale of the Shares and the application of the proceeds therefrom as
described in the Prospectus under the caption "Use of Proceeds," an "investment
company" or a person controlled by an "investment company" within the meaning of
the 1940 Act.
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(q) The Company has not distributed and will not distribute prior to
the Closing Date any offering material in connection with the offering and sale
of the Shares other than any Preliminary Prospectuses, the Prospectus, the
Registration Statement and other materials, if any, permitted by the Act.
(r) Neither the Company nor any of its subsidiaries, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company or any subsidiary has, directly or indirectly, used any corporate funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; failed to disclose fully
any contribution in violation of law; violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any
unlawful bribe, rebate, payoff, influence, kick-back or other unlawful payment.
(s) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(t) Each executive officer and director of the Company [AND EACH OF
THE PERSONS IDENTIFIED ON SCHEDULE B HERETO] has agreed in writing that such
person will not, for a period of 90 days from the date that the Registration
Statement is declared effective by the Commission (the "Lock-up Period"), offer
to sell, contract to sell, or otherwise sell, dispose of, loan, pledge or grant
any rights with respect to (collectively, a "Disposition") any shares of Common
Stock, any options or warrants to purchase any shares of Common Stock or any
securities convertible into or exchangeable for shares of Common Stock
(collectively, "Securities") now owned or hereafter acquired by such person,
directly or indirectly, or with respect to which such person has or hereafter
acquires the power of disposition, directly or indirectly, other than (i) as a
bona fide gift or gifts, provided the donee or donees thereof agree in writing
to be bound by this restriction, (ii) as a distribution to limited partners or
stockholders of such person, provided that the distributees thereof agree in
writing to be bound by the terms of this restriction, (iii) if such person is an
individual, to a member or members of his or her immediate family or to a trust
the beneficiaries of which are exclusively such person and/or a member or
members of his or her immediate family, provided that each transferee thereof
agrees in writing to be bound by the terms of this restriction, or (iv) with the
prior written consent of Xxxxxxxxx, Xxxxxxxx & Company LLC. Further, the trustee
of the 401(k) Plan has agreed in writing that such trustee will not, during the
Lock-up Period, effect a Disposition of any Securities now owned or hereafter
acquired by such trustee, directly or indirectly, for the benefit of the
participants in the 401(k) Plan or with respect to which such trustee has or
hereafter acquires the power of disposition, directly or indirectly, for the
benefit of the participants in the 401(k) Plan; other than (i) pursuant to a
valid distribution to a 401(k) Plan participant that is required by the terms
and conditions of the 401(k) Plan, (ii) pursuant to
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a private sale not effected through a securities broker or dealer or through the
Nasdaq National Market, provided that the purchaser thereof agrees in writing to
be bound by the terms of this restriction, or (iii) during any period there is
outstanding a tender offer that is subject to Section 14(d)(1) of the Exchange
Act. The foregoing restrictions are expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-up Period, even if such Securities would be disposed
of by someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities. Furthermore, each such person has agreed and consented to the entry
of stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by such person except in compliance with the
foregoing restrictions. The Company has provided to counsel for the Placement
Agents a complete and accurate list of all securityholders of the Company and
the number and type of securities held by each securityholder. The Company has
provided to counsel for the Placement Agents true, accurate and complete copies
of all of the agreements pursuant to which its officers, directors and
stockholders have agreed to such or similar restrictions (the "Lock-up
Agreements") presently in effect or effected hereby. The Company hereby
represents and warrants that it will not release any of its officers, directors
or other stockholders from any Lock-up Agreements currently existing or
hereafter effected without the prior written consent of Xxxxxxxxx, Xxxxxxxx &
Company LLC.
(u) The operations of the Company and its subsidiaries with respect
to any real property currently leased, owned or by any means controlled by the
Company or any of its subsidiaries (the "Real Property") are in compliance with
all federal, state, and local laws, ordinances, rules, and regulations relating
to occupational health and safety and the environment; the Company and its
subsidiaries maintain all licenses, permits and authorizations necessary to
operate under all such laws applicable to the Company and its subsidiaries; and
there is no pending or, to the best knowledge of the Company, threatened, claim,
litigation or any administrative agency proceeding, nor has the Company or any
subsidiary received any written or oral notice from any governmental entity or
third party, that: (i) alleges a violation of any such laws by the Company or
any of its subsidiaries; (ii) alleges that the Company or any of its
subsidiaries is a liable party under the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, 42 U.S.C. (S) 9601 et seq.
("CERCLA"), or any state superfund law; (iii) alleges possible contamination of
the environment by the Company or any of its subsidiaries; or (iv) alleges
possible contamination of the Real Property. No property which is owned, leased
or occupied by the Company has been designated as a Superfund site pursuant to
CERCLA or otherwise designated as a contaminated site under applicable state or
local law.
-12-
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(x) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus, and except
for loans, advances or guarantees to or for the benefit of any one of such
persons which do not exceed $60,000 in the aggregate.
(y) The Company has complied with all provisions of Florida Statutes
Section 517.075, and the regulations thereunder, relating to doing business with
the Government of Cuba or with any person or affiliate located in Cuba.
(z) No subsidiary of the Company is prohibited, directly or
indirectly, from paying any dividends, from making any other distributions on
such subsidiary's capital stock, from repaying to the Company any loans or
advances to such subsidiary or from transferring any of such subsidiary's
property or assets to the Company or any other subsidiary of the Company, except
as disclosed in the Registration Statement and Prospectus and except for such
limitations that may be contained in the corporate code of the jurisdiction
under which such subsidiary is incorporated.
(aa) To the best of the Company's knowledge, other than Xx. Xxxxxxx
Xxxxxxxxx'x relationship with Broadview Associates, Mr. M. Xxxxx Xxxxxx'x
relationship with Xxxxxx, Xxxxxxx & Co. and Xx. Xxxxx Xxxxx'x relationship with
Prudential Securities Incorporated, no officer, director or securityholder of
the Company has an "association" or "affiliation" with any member of the
National Association of Securities Dealers, Inc. ("NASD"), within the meaning of
Article III, Section 44 of the Rules of Fair Practice of the NASD. The Company
does not have an "association" or "affiliation" with any member of the NASD,
within the meaning of Article III, Section 44 of the Rules of Fair Practice of
the NASD.
4. Further Agreements of the Company. The Company agrees with each of the
Placement Agents that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as
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promptly as possible; the Company will use its best efforts to cause any
abbreviated registration statement pursuant to Rule 462(b) of the Rules and
Regulations as may be required subsequent to the date the Registration Statement
is declared effective to become effective as promptly as possible; the Company
will notify you, promptly after it shall receive notice thereof, of the time
when the Registration Statement, any subsequent amendment to the Registration
Statement or any abbreviated registration statement has become effective or any
supplement to the Prospectus has been filed; if the Company omitted information
from the Registration Statement at the time it was originally declared effective
in reliance upon Rule 430A(a) of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus contains such
information and has been filed, within the time period prescribed, with the
Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to such Registration
Statement as originally declared effective which is declared effective by the
Commission; if the Company files a term sheet pursuant to Rule 434 of the Rules
and Regulations, the Company will provide evidence satisfactory to you that the
Prospectus and term sheet meeting the requirements of Rule 434(b) or (c), as
applicable, of the Rules and Regulations, have been filed, within the time
period prescribed, with the Commission pursuant to subparagraph (7) of Rule
424(b) of the Rules and Regulations; if for any reason the filing of the final
form of Prospectus is required under Rule 424(b)(3) of the Rules and
Regulations, it will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed with the Commission within the time
period prescribed; it will notify you promptly of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; promptly upon your request, it will
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the reasonable opinion of counsel
for the Placement Agents ("Placement Agents' Counsel"), may be necessary or
advisable in connection with the placement of the Shares by the Placement
Agents; it will promptly prepare and file with the Commission, and promptly
notify you of the filing of, any amendments or supplements to the Registration
Statement or Prospectus which may be necessary to correct any statements or
omissions, if, at any time when a prospectus relating to the Shares is required
to be delivered under the Act, any event shall have occurred as a result of
which the Prospectus or any other prospectus relating to the Shares as then in
effect would include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; in case either of the
Placement Agents is required to deliver a prospectus nine (9) months or more
after the effective date of the Registration Statement in connection with the
sale of the Shares, it will prepare promptly upon request, but at the expense of
the Placement Agent, such amendment or amendments to the Registration Statement
and such prospectus or prospectuses as may be necessary to permit compliance
with the requirements of Section 10(a)(3) of the Act; and it will file no
amendment or supplement to the Registration Statement or Prospectus which shall
not previously have been submitted to you a reasonable time prior to the
proposed filing thereof or to which you shall reasonably object in writing,
subject, however, to compliance with the Act, the Rules and Regulations and the
provisions of this Agreement.
-14-
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge, of the issuance of any stop order by the Commission
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and it will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal at
the earliest possible moment if such stop order should be issued.
(c) The Company will use its best efforts to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as you may
designate and to continue such qualifications in effect for so long as may be
required for purposes of the distribution of the Shares, except that the Company
shall not be required in connection therewith or as a condition thereof to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process. In each
jurisdiction in which the Shares shall have been qualified as above provided,
the Company will make and file such statements and reports in each year as are
or may be reasonably required by the laws of such jurisdiction.
(d) The Company will furnish to you, as soon as available, and, in
the case of the Prospectus and any term sheet or abbreviated term sheet under
Rule 434, in no event later than the first (1st) full business day following the
first day that Shares are traded, copies of the Registration Statement (three of
which will be signed and which will include all exhibits), each Preliminary
Prospectus, the Prospectus and any amendments or supplements to such documents,
including any prospectus prepared to permit compliance with Section 10(a)(3) of
the Act, all in such quantities as you may from time to time reasonably request.
Notwithstanding the foregoing, if the Placement Agents shall agree to the
utilization of Rule 434 of the Rules and Regulations, the Company shall provide
to you copies of a Preliminary Prospectus updated in all respects through the
date specified by you in such quantities as you may from time to time reasonably
request.
(e) The Company will make generally available to its securityholders
as soon as practicable, but in any event not later than the ninetieth (90th) day
following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement, an earnings
statement (which will be in reasonable detail but need not be audited) complying
with the provisions of Section 11(a) of the Act and covering a twelve (12) month
period beginning after the effective date of the Registration Statement.
(f) During a period of five (5) years after the date hereof and for
so long as the Company is a reporting company under the Exchange Act, the
Company will furnish to its stockholders as soon as practicable after the end of
each respective period, annual reports (including financial statements audited
by independent certified public accountants) and unaudited quarterly reports of
operations for each of the first three quarters of the fiscal year, and will
furnish to you upon request (i) concurrently with
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furnishing such reports to its stockholders, statements of operations of the
Company for each of the first three (3) quarters in the form furnished to the
Company's stockholders, (ii) concurrently with furnishing to its stockholders, a
balance sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity, and of cash flows of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of independent certified public accountants, (iii) as soon as they are
available, copies of all reports (financial or other) mailed to stockholders,
(iv) as soon as they are available, copies of all reports and financial
statements furnished to or filed with the Commission, any securities exchange or
the NASD, (v) every material press release and every material news item or
article in respect of the Company or its affairs which was released or prepared
by the Company or any of its subsidiaries, and (vi) any additional information
of a public nature concerning the Company or its subsidiaries, or their
respective businesses, which you may reasonably request. During such five (5)
year period, if the Company shall have active subsidiaries, the foregoing
financial statements shall be on a consolidated basis to the extent that the
accounts of the Company and its subsidiaries are consolidated, and shall be
accompanied by similar financial statements for any significant subsidiary which
is not so consolidated.
(g) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the transfer agent) for its Common Stock.
(i) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement to be performed hereunder or to fulfill any condition of
the Placement Agents' obligations hereunder, or if the Company shall terminate
this Agreement pursuant to Section 11(a) hereof, or if the Placement Agents
shall terminate this Agreement pursuant to Section 11(b)(i), the Company will
reimburse the the Placement Agents for all out-of-pocket expenses (including
fees and disbursements of Placement Agents' Counsel) incurred by the Placement
Agents in investigating or preparing to market or marketing the Shares.
(j) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of and
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
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(k) During the Lock-up Period, the Company will not, without the
prior written consent of the Xxxxxxxxx, Xxxxxxxx & Company LLC, effect the
Disposition of, directly or indirectly, any Securities other than (i) the sale
of the Shares, (ii) the Company's issuance of options or Common Stock under the
Company's Long-Term Incentive Plan (the "Option Plan") and (iii) the issuance of
Securities in connection with the Company's acquisition of an ownership interest
in another business or entity, provided, however, that the Company may not
register such Securities under the Act or grant any registration rights with
respect to such Securities without the prior written consent of Xxxxxxxxx,
Xxxxxxxx & Company LLC.
(1) For so long as there are more than fifty (50) shareholders of
record of the Common Stock, the Company shall use its best efforts to maintain
the listing of the Common Stock on the Nasdaq National Market for a period of at
least five (5) years after the effective date of the Registration Statement.
(m) The Company shall use its best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date and to satisfy all conditions precedent to
the delivery of the Shares.
(n) The Company agrees to enforce (at its expense), for the benefit
of the Placement Agents and at the request of Xxxxxxxxx, Xxxxxxxx & Company LLC,
the Lock-Up Agreements and not to waive any condition of any such agreement
without the prior written consent of Xxxxxxxxx, Xxxxxxxx & Company LLC.
5. Expenses.
(a) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company agrees with each
of the Placement Agents that:
(i) The Company will pay and bear all costs and expenses in
connection with the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto; the
printing of this Agreement, the Preliminary Blue Sky Survey and any Supplemental
Blue Sky Survey and any instruments related to any of the foregoing; the
issuance and delivery of the Shares
-17-
hereunder to the Investors, including transfer taxes, if any, the cost of all
certificates representing the Shares and transfer agents' and registrars' fees;
the fees and disbursements, of counsel for the Company; all fees and other
charges of the Company's independent certified public accountants; the cost of
furnishing to the Placement Agents copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectus and the Prospectus, and
any amendments or supplements to any of the foregoing; NASD filing fees and the
cost of qualifying the Shares under the laws of such jurisdictions as you may
designate (including filing fees and fees and disbursements of Placement Agents'
Counsel in connection with such NASD filings and Blue Sky qualifications); and
all other expenses directly incurred by the Company in connection with the
performance of their obligations hereunder.
(ii) In addition to its other obligations under Section 7(a)
hereof, the Company agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding described in
Section 7(a) hereof, it will reimburse the Placement Agents on a monthly basis
for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim. action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Placement Agents for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Placement Agents shall promptly return such payment to the Company
together with interest, compounded daily, determined on the basis of the prime
rate (or other commercial lending rate for borrowers of the highest credit
standing) listed from time to time in The Wall Street Journal which represents
the base rate on corporate loans posted by a substantial majority of the
nation's thirty (30) largest banks (the "Prime Rate"). Any such interim
reimbursement payments which are not made to the Placement Agents within thirty
(30) days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request.
(b) In addition to its other obligations under Section 7(b) hereof,
the Placement Agents agree severally and not jointly that, as an interim
measure during the pendency of any claim, action investigation, inquiry or other
proceeding described in Section 7(b) hereof, they will reimburse the Company on
a monthly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Placement
Agents' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return such payment to the Placement Agents together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30) days
of a
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request for reimbursement shall bear interest at the Prime Rate from the date of
such request.
(c) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in Sections 5(a)(ii) and 5(b)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the reimbursing parties, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or a written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Any such arbitration will be limited to the operation of
the interim reimbursement provisions contained in Sections 5(a)(ii) and 5(b)
hereof and will not resolve the ultimate propriety or enforceability of the
obligation to indemnify for expenses which is created by the provisions of
Sections 7(a) and 7(b) hereof or the obligation to contribute to expenses which
is created by the provisions of Section 7(d) hereof.
6. Conditions of Placement Agents' Obligations. The obligations of the
Placement Agents hereunder shall be subject to the accuracy, as of the date
hereof and the Closing Date, of the representations and warranties of the
Company herein, to the performance by the Company of its obligations hereunder
and to the following additional conditions (any of which may be waived by the
Placement Agents):
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Eastern time, on the date of this Agreement or such later date
as shall be consented to in writing by you; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for that purpose
shall have been initiated or, to the knowledge of the Company or the Placement
Agents, threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus) shall have been complied with to the satisfaction of Placement
Agents' Counsel.
(b) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the Prospectus, and
the registration, authorization, issue, sale and delivery of the Shares, shall
have been reasonably satisfactory to Placement Agents' Counsel; and such counsel
shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to in
this Section; and such counsel shall have rendered to you such opinions as you
may reasonably request.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have been any change in the condition
(financial
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or otherwise), earnings, operations, business or business prospects of the
Company from that set forth in the Registration Statement or Prospectus, which,
in your sole judgment, is material and adverse and that makes it, in your sole
judgment, impracticable or inadvisable to proceed with the offering of the
Shares as contemplated by the Prospectus.
(d) You shall have received on the Closing Date a written opinion of
Xxxxxxxx & Xxxxxx, Ltd., counsel for the Company, dated the Closing Date and
addressed to the Placement Agents to the effect that:
(i) The Company and each subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation.
(ii) The Company and each subsidiary has the corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus.
(iii) The Company and each subsidiary is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction, if any, in which the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where
the failure to be so qualified or be in good standing would not have a
material adverse effect on the condition (financial or otherwise),
earnings, operations or business of the Company and its subsidiaries
considered as one enterprise. To such counsel's knowledge, the Company does
not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Schedule A hereto.
(iv) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein; the issued and outstanding
shares of capital stock of the Company have been duly and validly issued
and are fully paid and nonassessable, and, to such counsel's knowledge,
will not have been issued in violation of or subject to any preemptive
right, co-sale right, registration right, right of first refusal or other
similar right.
(v) All issued and outstanding shares of capital stock of
each subsidiary of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, and, to such counsel's knowledge,
have not been issued in violation of or subject to any preemptive right,
co-sale right, registration right, right of first refusal or other similar
right and are owned by the Company free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest.
(vi) The Shares have been duly authorized and, upon issuance
and delivery against payment therefor in accordance with the terms hereof,
will be
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duly and validly issued and fully paid and nonassessable, and will not have
been issued in violation of or subject to any preemptive right, co-sale
right, registration right, right of first refusal or other similar right of
stockholders.
(vii) The Company has the corporate power and authority to
enter into this Agreement and to issue, sell and deliver to the Investors
the Shares to be issued and sold by it hereunder.
(viii) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery by you, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except insofar as indemnification
provisions may be limited by applicable law, and except as enforceability
may be limited by laws pertaining to bankruptcy, insolvency, fraudulent
conveyance or transfer, equitable subordination, reorganization, moratorium
or similar laws and judicial decisions affecting creditors' rights
generally or by general principles of equity and public policy, including,
without limitation, concepts of materiality, reasonableness, good faith and
fair dealing, and except that the remedies of specific performance and
injunctive relief may be granted or denied in the discretion of a court.
(ix) The Registration Statement has become effective under
the Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Act.
(x) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements
(including supporting schedules) and financial data derived therefrom as to
which such counsel need express no opinion), as of the effective date of
the Registration Statement, complied as to form in all material respects
with the requirements of the Act and the applicable Rules and Regulations.
(xi) The terms and provisions of the capital stock of the
Company conform in all material respects to the description thereof
contained in the Registration Statement and Prospectus under the caption
"Description of Capital Stock"; and the form of certificates evidencing the
Common Stock and filed as an exhibit to the Registration Statement is in
due and proper form and complies with the requirements of Delaware law.
(xii) The descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings, contracts and
other documents, insofar as such statements constitute a summary of
documents referred to therein or matters of law, are accurate summaries and
correctly present in all
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material respects the information required to be presented by the Act and
the applicable Rules and Regulations.
(xiii) To such counsel's knowledge, there are no agreements,
contracts, leases or documents to which the Company is a party of a
character required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the Registration
Statement which are not described or referred to therein or filed as
required.
(xiv) The performance of this Agreement and the consummation
of the transactions herein contemplated (other than performance of the
Company's indemnification obligations hereunder, concerning which no
opinion need be expressed) will not (a) result in any violation of the
Company's charter or bylaws or (b) to such counsel's knowledge, result in a
material breach or violation of any of the terms and provisions of, or
constitute a default under, any material bond, debenture, note or other
evidence of indebtedness, or any lease, contract, indenture, mortgage, deed
of trust, loan agreement, joint venture or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which their
respective properties are bound, or any applicable statute, rule or
regulation, or any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or over any of their respective properties or operations
(other than state securities or Blue Sky laws, concerning which no opinion
need be expressed).
(xv) No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or over any
of their respective properties or operations is necessary in connection
with the consummation by the Company of the transactions herein
contemplated, except such as have been obtained under the Act or such as
may be required under state or other securities or Blue Sky laws in
connection with the placement of the Shares by the Placement Agents.
(xvi) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company or any
of its subsidiaries of a character required to be disclosed in the
Registration Statement or the Prospectus by the Act or the Rules and
Regulations, other than those described therein.
(xvii) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is presently (a) in material violation of its
respective charter or bylaws, or (b) in material breach of any applicable
statute, rule or regulation or any order, writ or decree of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or over any of their respective properties or operations.
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(xviii) To such counsel's knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Common Stock or other
securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the Company having
rights to registration of shares of Common Stock or other securities,
because of the filing of the Registration Statement by the Company have,
with respect to the offering contemplated thereby, waived such rights or
such rights have expired by reason of lapse of time following notification
of the Company's intent to file the Registration Statement or have included
securities in the Registration Statement pursuant to the exercise of and in
full satisfaction of such rights.
(xix) Neither the Company nor any of its subsidiaries is, nor
will the Company or any of its subsidiaries become upon the sale of the
Shares and the application of the proceeds therefrom as described in the
Prospectus under the caption "Use of Proceeds," an "investment company" or
a person controlled by an "investment company" within the meaning of the
1940 Act.
(xx) Upon the delivery of and payment for the Shares as
contemplated in this Agreement, each of the Investors will receive valid
marketable title to the Shares purchased by it from Company, free and clear
of any pledge, lien, security interest, encumbrance, claim or equitable
interest. In rendering such opinion, such counsel may assume that the
Investors purchased in good faith and without notice of any defect in the
title of the Shares being purchased from the Company.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Placement Agents, Placement Agents' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they are not passing upon and do not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (except as
specifically provided above), nothing has come to the attention of such counsel
which leads them to believe that, at the time the Registration Statement became
effective and at all times subsequent thereto up to and on the Closing Date, the
Registration Statement and any amendment or supplement thereto (other than the
financial statements including supporting schedules and other financial and
statistical information derived therefrom and other financial or statistical
data, as to which such counsel need express no comment) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or at
the Closing Date, the Registration Statement, the Prospectus and any amendment
or supplement thereto (except as aforesaid) contained any untrue statement of a
material fact
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or omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States or the States of Illinois and
Delaware upon opinions of local counsel, and as to questions of fact upon
representations or certificates of officers of the Company, and of government
officials, in which case their opinion is to state that they are so relying and
that they have no knowledge of any material misstatement or inaccuracy in any
such opinion, representation or certificate. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you and to
Placement Agents' Counsel.
(e) You shall have received on the Closing Date an opinion of Xxxxxx
& Bird, in form and substance satisfactory to you, with respect to the
sufficiency of all such corporate proceedings and other legal matters relating
to this Agreement and the transactions contemplated hereby as you may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon such
matters.
(f) You shall have received on the Closing Date a letter from KPMG
Peat Marwick LLP addressed to the Company and the Placement Agents, dated the
Closing Date, confirming that they are independent certified public accountants
with respect to the Company within the meaning of the Act and the applicable
published Rules and Regulations and based upon the procedures described in such
letter delivered to you concurrently with the execution of this Agreement
(herein called the "Original Letter"), but carried out to a date not more than
five (5) business days prior to the Closing Date (i) confirming, to the extent
true, that the statements and conclusions set forth in the Original Letter are
accurate as of the Closing Date and (ii) setting forth any revisions and
additions to the statements and conclusions set forth in the Original Letter
which are necessary to reflect any changes in the facts described in the
Original Letter since the date of such letter, or to reflect the availability of
more recent financial statements, data or information. The letter shall not
disclose any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise from that set forth in the Registration Statement
or Prospectus, which, in your judgment, is material and adverse and that makes
it, in your judgment, impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus. The Original Letter
from KPMG Peat Marwick LLP shall be addressed to or for the use of the Placement
Agents in form and substance satisfactory to the Placement Agents and shall (i)
represent, to the extent true, that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations, (ii) set forth their opinion with
respect to their examination of the consolidated balance sheets of the Company
as of December 31, 1995 and 1994 and related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1995, (iii) state that KPMG Peat Marwick
LLP has performed the
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procedure set out in Statement on Auditing Standards No. 71 ("SAS 71") for a
review of interim financial information and providing the report of KPMG Peat
Marwick LLP as described in SAS 71 on the financial statements for the six month
periods ended June 30, 1995 and 1995, and (iv) address other matters agreed upon
by KPMG Peat Marwick LLP and you.
(f) You shall have received on the Closing Date a certificate of the
Company, dated the Closing Date, signed by the Chief Executive Officer and Chief
Financial Officer of the Company, to the effect that, and you shall be satisfied
that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, as if made on and as of the Closing Date,
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act;
(iii) When the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained all material information required to be included therein by
the Act and the Rules and Regulations or the Exchange Act and the applicable
rules and regulations of the Commission thereunder, as the case may be, and in
all material respects conformed to the requirements of the Act and the Rules and
Regulations or the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, the Registration Statement, and any
amendment or supplement thereto, did not and does not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, the
Prospectus, and any amendment or supplement thereto, did not and does not
include any untrue statement of a material fact or omit 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, since the effective date of the
Registration Statement, there has occurred no event required to be set forth in
an amended supplemented Prospectus which has not been so set forth;
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been (a) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company, (b) any
transaction that is material to the Company, except transactions entered into in
the ordinary course of business, (c) any obligation, direct or contingent, that
is material to the Company, incurred by the Company, except obligations incurred
in the ordinary course of business, (d) any change in the capital stock or
outstanding indebtedness of the Company that is material to the Company, (e) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the
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Company, or (f) any loss or damage (whether or not insured) to the property of
the Company which has been sustained or will have been sustained which has a
material adverse effect on the condition (financial or otherwise), earnings,
exemptions, business or business prospects of the Company; and
(v) The Shares have been approved for listing on the Nasdaq
National Market.
(g) The Company shall have obtained and delivered to you an agreement
from each executive officer and director of the Company [AND EACH PERSON
IDENTIFIED ONSCHEDULE B HERETO] in writing prior to the date hereof that such
person will not, during the Lock-up Period, effect the Disposition of any
Securities now owned or hereafter acquired by such person, directly or
indirectly, or with respect to which such person has or hereafter acquires the
power of disposition, directly or indirectly, other than (i) as a bona fide gift
or gifts, provided the donee or donees thereof agree in writing to be bound by
this restriction, (ii) as a distribution to limited partners or stockholders of
such person, provided that the distributees thereof agree in writing to be bound
by the terms of this restriction, (iii) if such person is an individual, to a
member or members of his or her immediate family or to a trust the beneficiaries
of which are exclusively such person and/or a member or members of his or her
immediate family, provided that each transferee thereof agrees in writing to be
bound by the terms of this restriction, or (iv) with the prior written consent
of Xxxxxxxxx, Xxxxxxxx & Company LLC. As to the trustee of the 401(k) Plan, such
trustee shall have delivered to you an agreement in writing prior to the date
hereof that such trustee will not, during the Lock-up Period, effect a
Disposition of any Securities now owned or hereafter acquired by such trustee,
directly or indirectly, for the benefit of the participants in the ESOP or with
respect to which such trustee has or hereafter acquires the power of
disposition, directly or indirectly, for the benefit of the participants in the
401(k) Plan; other than (i) pursuant to a valid distribution to a 401(k) Plan
participant that is required by the terms and conditions of the 401(k) Plan,
(ii) pursuant to a private sale not effected through a securities broker or
dealer or through the Nasdaq National Market, provided that the purchaser
thereof agrees in writing to be bound by the terms of this restriction, or (iii)
during any period there is outstanding a tender offer that is subject to Section
14(d)(1) of the Exchange Act. The foregoing restrictions are expressly agreed to
preclude the holder of the Securities from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition of Securities during the Lock-up Period, even if such Securities
would be disposed of by someone other than the such holder. Such prohibited
hedging or other transactions would include, without limitation, any short sale
(whether or not against the box) or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to any
Securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from Securities. Furthermore, such person will have also agreed and
consented to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of the Securities held by such person except in
compliance with the foregoing restrictions.
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(i) The Company shall have furnished to you such further certificates
and documents as you shall reasonably request (including certificates of
officers of the Company) as to the accuracy of the representations and
warranties of the Company herein, as to the Performance by the Company of its
obligations hereunder and as to the other conditions concurrent and precedent to
the obligations of the Placement Agents hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Placement Agents' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each of the
Placement Agents against any losses, claims, damages or liabilities, joint or
several, to which either of them may become subject under the Act, the Exchange
Act or otherwise, specifically including, but not limited to, losses, claims,
damages or liabilities, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any breach of
any representation, warranty, agreement or covenant of the Company herein
contained, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and agrees to reimburse each of the Placement Agents for
any legal or other expenses reasonably incurred by either of them 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, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, such Preliminary
Prospectus or the Prospectus, or any such amendment or supplement thereto, in
reliance upon, and in conformity with, written information relating to the
Placement Agents furnished to the Company by the Placement Agents, directly or
through you, specifically for use in the preparation thereof and, provided
further, that the indemnity agreement provided in this Section 7(a) with respect
to any Preliminary Prospectus shall not inure to the benefit of the Placement
Agents with respect to any Investor asserting any losses, claims, damages,
liabilities or actions based upon any untrue statement or alleged untrue
statement of material fact or omission or alleged omission to state therein a
material fact who purchased Shares, if a copy of the Prospectus in which such
untrue statement or alleged untrue statement or omission or alleged omission was
corrected had not been sent or given to such person within the time required by
the Act and the Rules and Regulations, unless such failure is the result of
noncompliance by the Company with Section 4(d) hereof.
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The indemnity agreement in this Section 7(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each person, if
any, who controls either of the Placement Agents within the meaning of the Act
or the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which the Company may otherwise have.
(b) The Placement Agents agree severally and not jointly to indemnify
and hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject under the Act or otherwise,
specifically including, but not limited to, losses, claims, damages or
liabilities, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any breach of any
representation, warranty, agreement or covenant of such Placement Agent herein
contained, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 7(c) to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Placement Agent specifically for
use in the preparation thereof, and agrees to reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action.
The indemnity agreement in this Section 7(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each officer of
the Company who signed the Registration Statement and each director of the
Company, and each person, if any, who controls the Company within the meaning of
the Act or the Exchange Act. This indemnity agreement shall be in addition to
any liabilities which the Placement Agents may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 7, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party under this
Section 7 (except to the extent that such omission materially and adversely
affects the indemnifying party's ability to defend such action) or from any
liability otherwise than under this Section 7. In case any such action is
brought against any indemnified party, and it notified the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that
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it shall elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have received a written opinion from counsel that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of the indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with appropriate local counsel) approved by the
indemnifying party representing all the indemnified parties under Section 7(a)
or 7(b) hereof who are parties to such action), (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. In no event shall any indemnifying party be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
party shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnification could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 7
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 7 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that, except as set forth
in Section 7(e) hereof, the Placement Agents severally and not jointly are
responsible pro rata for the portion represented by the percentage that the
Placement Agents' fee bears to the gross proceeds received by the Company
(before deducting the Placement Agents' fee), and the Company is responsible for
the remaining portion, provided, however, that no person guilty of a fraudulent
-29-
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this Section 7(d) shall extend
upon the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls either Placement Agent or the Company within the
meaning of the Act or the Exchange Act and each officer of the Company who
signed the Registration Statement and each director of the Company. This
subsection (d) shall not be operative as to any Placement Agent to the extent
that the Company is entitled to receive or has received indemnity from such
Placement Agent under this Section 7.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 7 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act. The parties are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions, may be contrary to certain of the
provisions of this Section 7, and the parties hereto hereby expressly waive and
relinquish any right or ability to assert such public policy as a defense to a
claim under this Section 7 and further agree not to attempt to assert any such
defense.
8. Representations, Warranties, Covenants and Agreements to Survive
Delivery. All representations, warranties, covenants and agreements of the
Company and the Placement Agents herein or in certificates delivered pursuant
hereto, and the indemnity and contribution agreements contained in Section 7
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Placement Agents or any controlling
person within the meaning of the Act or the Exchange Act, or by or on behalf of
the Company or any of its officers, directors or controlling persons within the
meaning of the Act or the Exchange Act, and shall survive the delivery of the
Shares to the Investors or termination of this Agreement.
9. Termination.
Xxxxxxxxx, Xxxxxxxx & Company LLC shall have the right to terminate this
Agreement and to terminate any obligation of the Investors to purchase the
Shares by giving notice as hereinafter specified at any time at or prior to the
Closing Date (i) if the Company shall have failed, refused or been unable to
perform any agreement on its part to be performed, or because any other
condition of the Placement Agents' obligations hereunder required to be
fulfilled is not fulfilled, including, without limitation, any material adverse
change in the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company from that set forth in the Registration
Statement or Prospectus, or (h) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum
-30-
prices shall have been generally established on the New York Stock Exchange or
on the American Stock Exchange or in the over-the-counter market by the NASD, or
trading in securities generally shall have been suspended on either such
exchange or in the over the counter market by the NASD, or if a banking
moratorium shall have been declared by federal or New York authorities, or (iii)
if the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as to interfere materially with the
conduct of the business and operations of the Company regardless of whether or
not such loss shall have been insured, or (iv) if there shall have been a
material adverse change in the general political or economic conditions or
financial markets as in the reasonable judgment of Xxxxxxxxx, Xxxxxxxx & Company
LLC makes it inadvisable or impracticable to proceed with the offering, sale and
delivery of the Shares, or (v) if there shall have been an outbreak or
escalation of hostilities or of any other insurrection or armed conflict or the
declaration by the United States of a national emergency which, in the
reasonable opinion of Xxxxxxxxx, Xxxxxxxx & Company LLC, makes it impracticable
or inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus. In the event of any such termination, the Company shall
remain obligated to pay costs and expenses pursuant to Sections 4(i), 5 and 7
hereof.
If you elect to terminate this Agreement as provided in this Section 9, you
shall promptly notify the Company by telephone, telecopy or telegram, in each
case confirmed by letter.
10. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and
confirmed by letter) to Xxxxxxxxx, Xxxxxxxx & Company LLC, 000 Xxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, telecopier number (415)
781-0278, Attention: General Counsel; and if sent to the Company, such notice
shall be mailed, delivered, telegraphed (and confirmed by letter) or telecopied
(and confirmed by letter) to 0000 Xxxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000-
6524, telecopier number (000) 000-0000, Attention: Chief Executive Officer.
11. Parties. This Agreement shall inure to the benefit of and be binding
upon each Placement Agent, any sub-placement agents and the Company and their
respective executors, administrators, successors and assigns. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their respective
executors, administrators, successors and assigns, and the controlling persons
within the meaning of the Act or the Exchange Act, officers and directors
referred to in Section 7 hereof, any legal or equitable right, remedy or claim
in respect of this Agreement or any provisions 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 executors,
administrators, successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person or corporation.
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12. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California.
13. Counterparts. This Agreement may be signed in several counterparts,
each of which will constitute an original.
[Remainder of page intentionally left blank]
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If the foregoing correctly sets forth the understanding between the Company
and the Placement Agents. Please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
the Company and the Placement Agents.
Very truly yours,
ENTERPRISE SYSTEMS, INC.
By:
---------------------------
Title:
------------------------
Accepted as of the date first above written:
XXXXXXXXX, XXXXXXXX & COMPANY LLC
XXXXXXX, XXXXXX & XXXXXXXXX, L.L.C.
By: Xxxxxxxxx, Xxxxxxxx & Company LLC
---------------------------------
By:
----------------------------------
Authorized Signatory
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