JENKON INTERNATIONAL, INC.
1,400,000 Shares (*)
Common Stock
UNDERWRITING AGREEMENT
_____________, 1998
MERIDIAN CAPITAL GROUP, INC.
XXXXXXXX, XXXXXX & COMPANY INCORPORATED
X.X. XXXXX & COMPANY INC.
As Representatives of the several Underwriters
c/o Meridian Capital Group, Inc.
0000 XxxXxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Jenkon International, Inc., a Delaware corporation (the "COMPANY"), hereby
confirms its agreement, with the several underwriters named in Schedule I hereto
for whom you have been duly authorized to act as representative, as set forth
below. If you are the only Underwriters (as such term is hereinafter defined),
all references herein to the Representative (as such term is hereinafter
defined) shall be deemed to be to the Underwriters.
1. SECURITIES. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the several Underwriters named in
Schedule 1 hereto (the "UNDERWRITERS") 1,100,000 shares (the "COMPANY
SECURITIES") of the Company's Common Stock, par value $0.001 per share (the
"COMMON SHARES"), and certain unaffiliated stockholders (the "FIRM SELLING
STOCKHOLDERS") propose to issue and sell to the several Underwriters an
aggregate of 300,000 Common Shares (the "FIRM SELLING STOCKHOLDER
SECURITIES"). The Company Securities and the Firm Selling Stockholder
Securities are hereinafter collectively referred to as the "FIRM SECURITIES".
Meridian Capital Group, Inc. and Xxxxxxxx, Xxxxxx & Company Incorporated and
X.X. Xxxxx & Company Inc. shall act as the representatives (the
"REPRESENTATIVES") of the several Underwriters.
The Company and two stockholders of the Company (the "OVER-ALLOTMENT
STOCKHOLDERS") also propose to issue and sell to the several Underwriters an
aggregate of not more than 40,000 and 170,000, respectively, additional Common
Shares (the "OPTION SECURITIES"), if and to the extent that the Representatives
shall have determined to exercise, on behalf of the Underwriters, the rights to
purchase such Common Shares granted to the Underwriters pursuant to Section 4 of
this Agreement.
The Firm Securities and any Option Securities are hereinafter collectively
referred to as the "SECURITIES." The Company, the Firm Selling Stockholders and
the Over-Allotment Stockholders are hereinafter
-------------------------
(*) Plus an option to purchase from each of the Company and two stockholders of
the Company an aggregate of up to 40,000 and 170,000, respectively,
additional shares to cover over-allotments.
1.
sometimes referred to individually as a "SELLER" and collectively as the
"SELLERS." The Firm Selling Stockholders and the Over-Allotment Stockholders
are hereinafter sometimes referred to collectively as the "SELLING
STOCKHOLDERS."
In addition, the Company proposed to sell to you, individually and not in
your capacity as the Representatives, five-year warrants (the "REPRESENTATIVES'
WARRANTS") to purchase an aggregate of up to 140,000 Common Shares (the
"REPRESENTATIVES' WARRANT SHARES"), which sale will be consummated in accordance
with the terms and conditions of the Representatives' Warrant Agreement filed as
an exhibit to the Registration Statement described below.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, each Underwriter that:
(a) A registration statement on Form SB-2 (File No. 333-56023) with
respect to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"COMMISSION") under the Securities Act of 1933, as amended (the "ACT"), and one
or more amendments to such registration statement have been so filed. After the
execution of this Agreement, the Company will file with the Commission either
(i) if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, a prospectus in the
form most recently included in an amendment to such registration statement (or,
if no such amendment shall have been filed, in such registration statement),
with such changes or insertions as are required by Rule 430A under the Act or
permitted by Rule 424(b) under the Act and as have been provided to and approved
by the Representatives prior to the execution of this Agreement, or (ii) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Representatives prior to the execution of this
Agreement. As used in this Agreement, the term "REGISTRATION STATEMENT" means
such registration statement, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "PRELIMINARY
PROSPECTUS" means the prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); and the term
"PROSPECTUS" means the prospectus in the form first filed with the Commission
pursuant to Rule 424(b) under the Act or, if no prospectus is required to be
filed pursuant to said Rule 424(b), the form of prospectus included in the
Registration Statement.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. When any Preliminary Prospectus dated
July __, 1998 or any date thereafter was filed with the Commission it (i)
complied in all material respects with the requirements of the Act and the rules
and regulations of the Commission thereunder and (ii) did not include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective, it (i) contained or will contain
all statements required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of, the Act and the
rules and regulations of the Commission thereunder and (ii) did not or will not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement thereto is filed with the Commission
pursuant to Rule 424(b) (or, if the Prospectus or such amendment or supplement
is not required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
2.
declared effective) and on the Firm Closing Date and any Option Closing Date
(both as hereinafter defined), the Prospectus, as amended or supplemented at any
such time, (i) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material respects
with the requirements of, the Act and the rules and regulations of the
commission thereunder and (ii) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein.
(c) The Company and its subsidiaries have been duly organized and are
validly existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation and are duly qualified to transact
business as foreign corporations and are in good standing under the laws of all
other jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company and
its subsidiaries taken as a whole.
(d) The Company and its subsidiaries have full power (corporate and
other) to own or lease their respective properties and conduct their respective
businesses as described in the Registration Statement and the Prospectus or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus; and
the Company has full power (corporate and other) to enter into this Agreement
and the Representatives' Warrant Agreement and to carry out all the terms and
provisions hereof and thereof to be carried out by it.
(e) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus. All of the issued shares of
capital stock of the Company (including the Securities to be sold by the Selling
Stockholders) have been duly authorized and validly issued and are fully paid
and nonassessable and have been issued in compliance with federal and state
securities laws. Except as disclosed in the Registration Statement and the
Prospectus (or if the Prospectus is not in existence, the most recent
Preliminary Prospectus), there is no outstanding option, warrant or other right
calling for the issuance of, and no commitment, plan or arrangement to issue,
any share of capital stock or other ownership interest in the Company or any of
its subsidiaries. The Securities have been duly authorized and at the Firm
Closing Date or the related Option Closing Date (as the case may be), after
payment therefor in accordance herewith, will be validly issued, fully paid and
nonassessable. No holders of outstanding shares of capital stock of the Company
are entitled as such to any preemptive or other rights to subscribe for any of
the Securities, and except as described in the Prospectus, or if the Prospectus
is not in existence, the most recent Preliminary Prospectus, no holder of
securities of the Company has any right which has not been fully exercised or
waived to require the Company to register the offer or sale of any securities
owned by such holder under the Registration Statement or to otherwise register
any securities owned by such holder under the Act by reason of the filing of the
Registration Statement.
(f) The capital stock of the Company conforms to the description
thereof contained in the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus.
(g) The combined financial statements and schedules of the Company
and its consolidated subsidiaries included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present the financial position of the Company and
its consolidated subsidiaries and the results of operations and changes in
financial condition as of the dates and for the periods
3.
therein specified. Such financial statements and schedules have been prepared
in accordance with generally accepted accounting principles, consistently
applied throughout the periods involved (except as otherwise noted therein).
The financial data set forth under the captions "Prospectus Summary - Summary
Financial Data," "Capitalization," "Selected Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present, on the basis stated in the Prospectus
(or such Preliminary Prospectus), the information included therein and have been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus. No other financial
statements or schedules of the Company or its subsidiaries are required by the
Act or the applicable rules and regulations thereunder to be included in the
Registration Statement or the Prospectus.
(h) BDO Xxxxxxx LLP, who have audited certain combined financial
statements of the Company and delivered their report with respect to the audited
consolidated financial statements and schedules included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), are independent public accountants as
required by the Act and the applicable rules and regulations thereunder.
(i) The execution and delivery of this Agreement has been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company, and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(j) No legal or governmental proceedings are pending to which the
Company is a party or to which the property of the Company is subject that are
required to be described in the Registration Statement or the Prospectus and are
not described therein (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), and to the best of the Company's knowledge, no
such proceedings have been threatened against the Company or with respect to any
of its properties; and no contract or other document is required to be described
in the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that is not described therein (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) or filed as
required.
(k) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the consummation of the
other transactions herein contemplated (i) do not require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except (1) such as have been obtained, (2) such as may be required
under state securities or blue sky laws, and (3) if the registration statement
filed with respect to the Securities (as amended) is not effective under the Act
as of the time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Act, and (ii) do not conflict
with or result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any indenture, mortgage, deed of trust, lease,
franchise contract or other agreement or instrument to which the Company is a
party or by which the Company or any of its properties are bound, or the charter
documents or by-laws of the Company, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or any
arbitrator applicable to the Company.
(l) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) except as described in the Prospectus, paid or agreed to pay
to any person any compensation for soliciting another to purchase any other
securities of the Company.
4.
(m) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), (1) there has not
been any material adverse change in the assets or properties, business, results
of operations, prospects or condition (financial or otherwise) of the Company,
whether or not arising from transactions in the ordinary course of business; (2)
the Company has not sustained any material loss or interference with its assets,
businesses or properties (whether owned or leased) from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree; (3) the Company has not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (4) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock; and (5) there has not been any
change in the capital stock (including outstanding options, warrants or other
rights calling for the issuance of, and commitments, plans or arrangements to
issue, any share of capital stock), and no material change in the short-term
debt or long-term debt, of the Company, except in each case as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(n) The Company has good and marketable title to all personal
property owned by it, in each case free and clear of any security interests,
liens, encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not interfere
with the use made or proposed to be made of such property by the Company, and
any real property and buildings held under lease by the Company are held under
valid, subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made or proposed to be made of such
property and buildings by the Company, in each case except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(o) No labor dispute with the employees of the Company exists or, to
the best of the Company's knowledge, is threatened or imminent that could result
in a material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(p) The Company owns or possesses all patents, patent applications,
trademarks, service marks, trade names, licenses, copyrights and proprietary or
other confidential information currently employed or planned to be employed by
it in connection with its business and its prospective business as described in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and neither the Company nor any such subsidiary has
received any notice of infringement of or conflict with asserted rights of any
third party with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(q) The Company's principal software products (including, without
limitation, Summit V and NOW!) are year 2,000 compliant.
(r) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged; the Company has not
been refused any insurance coverage sought or applied for; and the Company does
not have any reason to believe that it will not be able to renew its existing
insurance coverage as and when such
5.
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely effect the condition (financial or otherwise), business prospects, net
worth or results of operations of the Company, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus). The Company has no reason to believe that
it will not be able to obtain insurance from insurers of recognized financial
responsibility, of the type described in, and for the premiums described in, the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(r) Except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus), the
Company and each of its subsidiaries possesses all certificates, authorizations,
permits and licenses issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization, permit or license which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(s) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, and the consummation of the transactions
contemplated herein and the operation of the business of the Company as
described in the Registration Statement and Prospectus will not cause the
Company to become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(t) The Company has filed all foreign, federal, state, local and
franchise tax returns that are required to be filed or has requested extensions
thereof and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus). The Company has established on its books
and records reserves that are adequate for the payment of all taxes not yet due
and payable. There are no liens for taxes on the assets of the Company, except
for taxes not yet due. There are no audits known by the Company's management to
be pending of the tax returns of the Company (whether federal, state, local or
foreign) and there are no claims which have been or may be asserted relating to
any such tax returns, which audits and claims, if determined adversely, could
result in the assertion by any governmental agency of any deficiency that would
have a material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company.
Neither the Internal Revenue Service nor any state or local tax authority has
asserted or, to the best of the Company's knowledge, threatened to assert any
assessment, claim or liability for taxes due or to become due in connection with
any review or examination of the tax returns of the Company or its predecessors
filed for any year which would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition (financial
or otherwise) of the Company.
(u) The Company is not in violation of any federal or state or
foreign law or regulation relating to occupational safety and health, to the
storage, handling or transportation of hazardous or toxic materials, and the
Company has received all permits, licenses or other approvals required of it
under applicable federal, state, or foreign occupational safety and health,
environmental laws and regulations to conduct its business, and the Company is
in compliance with all terms and conditions of any such permit, license or
approval, except (i) for any such violation of law or regulation, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals which
6.
would not, singly or in the aggregate, result in a material adverse change in
the condition (financial or otherwise), business prospects, net worth or results
of operations of the Company or (ii) as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(v) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(w) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are executed in
accordance with management's general or specific authorizations; (2)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only in
accordance with management's general or specific authorization; and (4) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(x) Each agreement listed in the exhibits to the Registration
Statement is in full force and effect and is valid and enforceable by and
against the Company and where applicable to its subsidiaries in accordance with
its terms (assuming the due authorization, execution and delivery thereof by
each of the other parties thereto). Neither the Company, nor to the best of the
Company's knowledge, any other party (i) is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement and (ii) no event has occurred which with notice or a lapse of time or
both would constitute such a default, in any such case which default or event
could have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of the
Company. No default exists, and no event has occurred which with notice or
lapse of time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or any of its
subsidiaries of any other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the properties or business of the
Company or any of its subsidiaries may be bound or affected which default or
event could have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or otherwise)
of the Company and its subsidiaries taken as a whole.
(y) The Company is not in violation of any term or provision of its
charter and by-laws, or of any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, where the consequences of such violation
could have a material adverse effect on the assets or properties, results of
operations, prospects or condition (financial or otherwise) of the Company.
(z) No transaction has occurred between or among the Company on the
one hand, and any officer, director or principal stockholder of the Company or
any affiliate or affiliates (including family members) of any such officer,
director or principal stockholder on the other hand, that is required to be
described in and is not described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(aa) Neither the Commission nor the Blue Sky or securities authorities
of any jurisdiction has issued an order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of any preliminary
prospectus, the Prospectus, or the Registration Statement or suspending the
registration or qualification of the Securities, nor has the Commission or any
of such authorities instituted or, to the knowledge of the Company, threatened
to institute any proceedings with respect to such an order in any jurisdiction
in which the Securities are to be sold.
7.
(bb) Neither the Company nor any officer or director purporting to act
on behalf of the Company or any of its subsidiaries has at any time (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contributions, in violation of law; or (ii) made any payment to any
federal, state, local or foreign governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or allowed by applicable law; or (iii) made any payment outside the
ordinary course of business to any purchasing or selling agent or person charged
with similar duties of any entity to which the Company sells or from which the
Company buys products, for the purpose of influencing such agent or person to
buy products from or sell products to the Company; or (iv) engaged in any
transaction, maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Company.
(cc) The Company does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other business
organization other than Summit V, Inc., a Washington corporation and Jenkon
Europe, Ltd., a United Kingdom corporation.
(dd) Except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus), the
Company has not incurred any liability for finders, brokers or consulting fees
or agents' commissions in connection with the execution and delivery of this
Agreement, the offer and sale of the Securities or the transactions hereby
contemplated.
(ee) The Securities have been approved for quotation on the Nasdaq
SmallCap Market upon official notice of issuance.
(ff) The Representatives' Warrants and the Representatives' Warrant
Agreement have been duly and validly authorized by the Company and upon delivery
to you in accordance therewith will be duly issued and will constitute legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with the terms thereof.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder severally and not jointly, represents and warrants to and
agrees with each Underwriter and the Company that:
(a) Such Selling Stockholder now has and on the Closing Date and on
any later date on which Option Securities are purchased will have valid
marketable title to the Securities to be sold by such Selling Stockholder, free
and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest other than pursuant to this Agreement; and upon delivery of
such Securities hereunder and payment of the purchase price as herein
contemplated, each of the Underwriters will obtain valid marketable title to the
Securities purchased by it from such Selling Stockholder, free and clear of any
pledge, lien, security interest pertaining to such Selling Stockholder or such
Selling Stockholder's property, encumbrance, claim or equitable interest,
including any liability for estate or inheritance taxes, or any liability to or
claim of any creditor, devisee, legatee or beneficiary of such Selling
Stockholder.
(b) Such Selling Stockholder has duly authorized (if applicable),
executed and delivered, in the form heretofore furnished to the Representatives,
an Irrevocable Custody Agreement and Power of Attorney (the "Power of Attorney")
appointing Xxxxx Xxxxxxx and Xxxxx XxXxxx as attorneys-in-fact (collectively,
the "Attorneys" and individually, an "Attorney") and custodians (collectively,
the "Custodians" and individually, a "Custodian"); the Power of Attorney
constitutes a valid and binding agreement on the part of such Selling
Stockholder, enforceable in accordance with its terms, 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 each of such Selling
Stockholder's
8.
Attorneys, acting alone, is authorized to execute and deliver this Agreement and
the certificate referred to in Section 4(b) hereof on behalf of such Selling
Stockholder, to determine the purchase price to be paid by the several
Underwriters to such Selling Stockholder as provided in Section 4 hereof, to
authorize the delivery of the Option Securities and Firm Selling Stockholder
Securities to be sold by such Selling Stockholder under this Agreement and to
duly endorse (in blank or otherwise) the certificate or certificates
representing such Securities or a stock power or powers with respect thereto, to
accept payment therefor, and otherwise to act on behalf of such Selling
Stockholder in connection with this Agreement.
(c) All consents, approvals, authorizations and orders required for
the execution and delivery by such Selling Stockholder of the Power of Attorney,
the execution and delivery by or on behalf of such Selling Stockholder of this
Agreement and the sale and delivery of the Firm Selling Stockholder Securities
and the Option Securities to be sold by such Selling Stockholder under this
Agreement (other than, at the time of the execution hereof (if the Registration
Statement has not yet been declared effective by the Commission), the issuance
of the order of the Commission declaring the Registration Statement effective
and such consents, approvals, authorizations or orders as may be necessary under
state or other securities or Blue Sky laws) have been obtained and are in full
force and effect; and such Selling Stockholder has full legal right, power and
authority to enter into and perform its obligations under this Agreement and
such Power of Attorney, and to sell, assign, transfer and deliver the Securities
to be sold by such Selling Stockholder under this Agreement.
(d) Certificates in negotiable form for all Securities to be sold by
such Selling Stockholder under this Agreement, together with a stock power or
powers duly endorsed in blank by such Selling Stockholder, have been placed in
custody with the Custodians for the purpose of effecting delivery hereunder.
(e) Such Selling Stockholder 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 Securities.
(f) Such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Securities.
(g) All information furnished by or on behalf of such Selling
Stockholder relating to such Selling Stockholder and the Firm Selling
Stockholder Securities and Option Securities that is contained in the
representations and warranties of such Selling Stockholder in such Selling
Stockholder's Power of Attorney or set forth in the Registration Statement and
the Prospectus is, 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 Option Closing Date, was or will be, true, correct and complete, and does
not 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 Option
Closing Date, will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make such
information not misleading.
(h) Such Selling Stockholder will review the Prospectus and will
comply with all agreements and satisfy all conditions on its part to be complied
with or satisfied pursuant to this Agreement on or prior to the Option Closing
Date.
(i) Such Selling Stockholder does not have any preemptive right,
co-sale right or right of first refusal or other similar right to purchase any
of the Securities that are to be sold by the Company or any of the other Selling
Stockholders to the Underwriters pursuant to this Agreement; such Selling
Stockholder does not have any registration right or other similar right to
participate in the offering made by the Prospectus, other than such rights of
participation as have been satisfied by the participation of such Selling
Stockholder in the
9.
transactions to which this Agreement relates in accordance with the term of this
Agreement; and such Selling Stockholder does not own any warrants, options or
similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, rights, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus.
(j) Such Selling Stockholder is not aware that any of the
representations and warranties of the Company set forth in Section 2 above is
untrue or inaccurate in any material respect.
(k) Such Selling Stockholder will pay or cause to be paid the
underwriting discount and nonaccountable expense allowance payable hereunder
with respect to his Securities.
(l) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transactions herein contemplated, the Selling Stockholder agrees
to deliver to the Underwriters prior to or at the Firm Closing Date and any
Option Closing Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(m) Xxxxx Xxxxxxx and Xxxxx XxXxxx, severally and not jointly,
further represent and warrant to and agree with the Underwriters and the Company
that the Registration Statement and any amendments thereto, at the time such
Registration Statement or such amendment becomes effective, will not contain 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
the Prospectus and any amendments or supplements thereto will not at any such
time contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
4. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters, severally and not jointly, agrees to purchase from the
Company at a purchase price of $________ per share, the number of Firm
Securities set forth opposite the name of such Underwriter in Schedule 1 hereto.
One or more certificates in definitive form for the Firm Securities that the
several Underwriters have agreed to purchase hereunder, and in such denomination
or denominations and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company to Meridian Capital
Group, Inc. for the respective accounts of the Underwriters, against payment to
the Company by or on behalf of the Underwriters of the purchase price therefor
by certified or official bank check or checks drawn upon or by a New York
Clearing House bank and payable in next-day funds to the order of the Company.
Such delivery of and payment for the Firm Securities shall be made at the
offices of Xxxx & Xxxxx Professional Corporation, 0000 Xxxxxxx Xxxx Xxxx, 00xx
Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, at 8:30 A.M. Los Angeles time, on
_______________, 1998, or at such other place, time or date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 10 hereof, such time and date of delivery against
payment being herein referred to as the "FIRM CLOSING DATE." The Company will
make such certificate or certificates for the Firm Securities available for
checking and packaging by the Representatives at least 24 hours prior to the
Firm Closing Date at such location as may be designated by the Representatives.
10.
(b) Solely for the purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as contemplated
by the Prospectus, each Over-Allotment Stockholder hereby grants to the several
Underwriters an option to purchase, severally and not jointly, the number of
Option Securities set forth in Schedule 3 hereto opposite such Over-Allotment
Stockholder's name on such Schedule. The purchase price to be paid for any
Option Securities shall be the same price per share as the price per share for
the Firm Securities set forth above in paragraph (a) of this Section 4. The
options granted hereby may be exercised as to all or any part of the Option
Securities one time within 45 days after the date of the Prospectus (or if such
45th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange is open for trading). The foregoing
option granted by the Company shall not be exercisable unless and until the
foregoing options granted by the Over-Allotment Stockholders shall have first
been expired in full. If the foregoing options granted by the Over-Allotment
Stockholders are exercised with respect to less than all the Option Securities
purchasable from the Over-Allotment Stockholders, such Option Securities shall
be purchased from each Over-Allotment Stockholder pro rata in proportion to the
number of Option Securities set forth opposite such Over-Allotment Stockholder's
name on Schedule 3 hereto bears to the aggregate number of Option Securities.
The Underwriters shall not be under any obligation to purchase any of the Option
Securities prior to the exercise of such options. The Representatives may
exercise the options granted hereby by giving notice in writing or by telephone
(confirmed in writing) to the Company and the Over-Allotment Stockholder setting
forth the aggregate number of Option Securities as to which the several
Underwriters are then exercising the option and the date and time for delivery
of and payment for such Option Securities. Any such date of delivery shall be
determined by the Representatives but shall not be earlier than three business
days or later than five business days after such exercise of the option and, in
any event, shall not be earlier than the Firm Closing Date. The time and date
set forth in such notice, or such other time on such other date as the
Representatives, the Company and the Over-Allotment Stockholders may agree upon
or as the Representatives may determine pursuant to Section 10 hereof, is herein
called the "OPTION CLOSING DATE" with respect to such Option Securities. Upon
exercise of the options as provided herein, the Company and each Over-Allotment
Stockholder, as the case may be, shall become obligated to sell to each of the
several Underwriters, and, subject to the terms and conditions herein set forth,
each of the Underwriters (severally and not jointly) shall become obligated to
purchase from the Company and the Over-Allotment Stockholders, the same
percentage of the total number of the Option Securities as to which the several
Underwriters are then exercising the option as such Underwriter is obligated to
purchase of the aggregate number of Firm Securities, as adjusted by the
Representatives in such manner as they deem advisable to avoid fractional
shares. If the options are exercised as to all or any portion of the Option
Securities, one or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (a) of this Section 4, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) It is understood that you, individually and not as the
Representatives may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such
Underwriter or Underwriters from any of its or their obligations hereunder.
5. OFFERING BY THE UNDERWRITERS. Upon your authorization of the release
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Underwriters that:
11.
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and any
amendments thereto to become effective as promptly as possible. If required,
the Company will file the Prospectus and any amendment or supplement thereto
with the Commission in the manner and within the time period required by Rule
424(b) under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the rules and
regulations of the Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities in accordance with the
provisions hereof and of the Prospectus, as then amended or supplemented and
(ii) will not file with the Commission the prospectus or the amendment referred
to in the second sentence of Section 2(a) hereof, any amendment or supplement to
such prospectus or any amendment to the Registration Statement of which the
Representatives shall not previously have been advised and furnished with a copy
for a reasonable period of time prior to the proposed filing and as to which
filing the Representatives shall not have given their consent, which shall not
be unreasonably withheld. The Company will prepare and file with the
Commission, in accordance with the rules and regulations of the Commission,
promptly upon request by the Representatives or counsel for the Underwriters,
any amendments to the Registration Statement or amendments or supplements to the
Prospectus that may be necessary or advisable in connection with the
distribution of the Securities by the several Underwriters, and will use its
best efforts to cause any such amendment to the Registration Statement to be
declared effective by the Commission as promptly as possible. The Company will
advise the Representatives, promptly after receiving notice thereof, of the time
when the Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectus or any amendment or supplement thereto has
been filed and will provide evidence satisfactory to the Representatives of each
such filing or effectiveness.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any amendment thereto or any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, (iii) the institution, threat or contemplation of
any proceeding for any such purpose or (iv) any request made by the Commission
for amending the Registration Statement, for amending or supplementing the
Prospectus or for additional information. The Company will use its best efforts
to prevent the issuance of any such stop order and, if any such stop order is
issued, to obtain the withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities, provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company will promptly notify the
Representatives thereof and, subject to Section 6(a) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance. The Company
will provide as many copies of such amendment or supplement to the
12.
Prospectus as the Representatives may reasonably request and will pay all
expenses incurred in connection with preparing any such amendment or supplement
to the Prospectus.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a signed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto), (ii) conformed
copies of such registration statement and each amendment thereto (in each case
without exhibits thereto) in such quantities as the Representatives shall
reasonably request and (iii) so long as a prospectus relating to the Securities
is required to be delivered under the Act, as many copies of each Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request.
(f) For a period of five years after the date of this Agreement, the
Company shall supply to the Representatives, and to each other Underwriter who
may so request in writing, copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock and to furnish the
Representatives a copy of each annual or other report it shall be required to
file with the Commission (including the Report on Form SR required by Rule 463
under the Act).
(g) The Company, as soon as practicable, will make generally
available to its security holders and to the Representatives an earnings
statement of the Company and any consolidated subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(h) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will timely take all actions necessary to obtain all
trademarks, licenses, permits, approvals and authorizations necessary to engage
in its prospective businesses as described in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(j) The Company will not, from the date hereof until one year after
the Firm Closing Date, offer for sale, sell, distribute, issue, grant any option
for the sale of or otherwise dispose of, directly or indirectly, any Common
Shares or other equity securities of the Company (or any securities convertible
into, exercisable for, or exchangeable for Common Shares or other equity
securities of the Company), without the prior written consent of Meridian
Capital Group, Inc. except that the following shall not require any consent of
Meridian Capital Group, Inc.: (A) the issuance and sale of Common Shares
pursuant to this Agreement, (B) the issuance of Common Shares upon the exercise
or conversion of options, warrants and convertible securities outstanding on the
date hereof, and (C) the issuance of options under the Company's stock option
plans that are in effect on the date hereof.
(k) The Company will not for 180 days after the date hereof, directly
or indirectly, (i) take any action designed to cause or to result in, or that
will constitute or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (ii) sell, bid for, purchase,
or pay anyone any compensation for soliciting purchases of, the Securities or
(iii) pay or agree to pay to any person any compensation for soliciting another
to purchase any other outstanding securities of the Company.
(l) The Company will cause the Securities to be duly included for
quotation on the Nasdaq Stock Market's SmallCap Market (the "NASDAQ SMALLCAP
MARKET") prior to the Firm Closing Date. The
13.
Company will use its best efforts to ensure that the Securities remain included
for quotation on the Nasdaq SmallCap Market following the Firm Closing Date.
(m) The Company shall use its best efforts to obtain from each person
who is a director or officer of the Company and from each person who owns
outstanding Common Shares or other equity securities of the Company (or any
securities convertible into, exercisable for, or exchangeable for Common Shares
or other equity securities of the Company), an agreement to the effect that such
person will not, from the date of such agreement until the date twelve months
after the effective date of the offering of the Securities, offer for sale,
sell, distribute, grant any option for the sale of, otherwise dispose of,
directly or indirectly, or exercise any registration rights with respect to, any
Common Shares or other equity securities of the Company (or any securities
convertible into, exercisable for, or exchangeable for Common Shares or other
equity securities of the Company) then or thereafter owned by such person,
without the prior written consent of Meridian Capital Group, Inc.
(n) Prior to the Firm Closing Date, or if any Option Securities are
purchased, the Option Closing Date, if later, the Company will not issue,
directly or indirectly, any press release or other communication or hold any
press conference with respect to the Company or its activities or this offering
(other than trade releases issued in the ordinary course of the Company's
business with respect to the Company's operations) without the Representatives'
prior written consent which shall not be unreasonably withheld or, if such
consent is not granted after request by the Company, unless otherwise required
by law as determined in the good faith judgment of the Company.
(o) The Company will conduct its operations in a manner that will not
subject it to registration as an investment company under the Investment Company
Act of 1940, as amended, and at no time will the Company acquire or own
"investment securities" having a value exceeding 40% of the value of the
Company's total assets (exclusive of government securities and cash items) in
the absence of an exclusion from the definition of "investment company" under
the Investment Company Act of 1940.
(p) The Company will not grant options to purchase any of the
Company's securities for a period of two years following the effective date of
the Registration Statement to Xxx Xxxxxxxx, Xxxxx XxXxxx, Xxxxxx Xxxxxx and Xxxx
Xxxx, current holders of the Company's securities; provided, however, that the
Company may grant to Xxxxxx Xxxxxx options to purchase no more than 39,113
Common Shares exercisable at a price equal to the fair market value on the date
of grant of such options.
7. EXPENSES. The Company will pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 12 hereof, including all costs and expenses incident to (i)
the printing or other production of documents with respect to the transactions,
including any costs of printing the registration statement originally filed with
respect to the Securities and any amendment or supplement thereto, any
Preliminary Prospectus and the Prospectus and any amendment or supplement
thereto, this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement and any blue sky memoranda, (ii) all arrangements relating to the
delivery to the Underwriters of copies of the foregoing documents, (iii) the
fees and disbursements of the counsel, the accountants and any other experts or
advisors retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) all necessary issue, transfer and other stamp
taxes in connection with the issuance and delivery of the Securities to the
Underwriters, (vi) the qualification of the Securities under state securities
and Blue Sky laws, including filing fees and fees and disbursements of counsel
for the Underwriters relating thereto, (vii) the filing fees of the Commission
and the National Association of Securities Dealers, Inc. relating to the
Securities and (viii) any quotation of the Securities on the Nasdaq
14.
SmallCap Market. In addition, on the First Closing Date and any Option Closing
Date, the Company and the Selling Stockholders, severally and not jointly, will
also pay to you, individually and not in your capacity as the Representatives, a
non-accountable expense allowance equal to three percent (3%) of the initial
public offering price of the Securities sold by the Company or the Stockholders,
as the case may be, on the First Closing Date or such Option Closing Date. If
the sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 8 of this
Agreement is not satisfied, because this Agreement is terminated pursuant to
Section 12(a)(i) and (a)(ii) or because of any failure, refusal or inability on
the part of the Company to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities. You acknowledge that $15,000 has
previously been paid to you by the Company to be applied against such
non-accountable expense allowance or such reasonable out-of-pocket expenses if
the sale of Shares is not consummated as provided in the preceding sentences, as
the case may be. You agree that any portion of such $15,000 that is not
necessary to pay the Underwriters for their reasonable out-of-pocket expenses
actually incurred if the sale of Shares if not consummated for any reason shall
be returned to the Company. The Company shall not in any event be liable to any
of the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement. Except as provided in this Section 7 and Section 9
hereof, the Underwriters shall pay all of their own expenses, including the fees
and disbursements of their counsel (excluding those relating to the
qualification of the Securities under state securities and Blue Sky laws
referred to above) and all concessions to dealers who participate in the public
offering.
8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to (i) the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing
Date, (ii) the accuracy of the statements of the Company's officers in any
certificate delivered pursuant to the provisions hereof or in any other document
expressly delivered pursuant to this Section 8, (iii) the performance by the
Company of its covenants and agreements hereunder and (iv) the following
additional conditions:
(a) If the Registration Statement or any amendment thereto filed
prior to the Firm Closing Date has not been declared effective as of the time of
execution hereof, the Registration Statement or such amendment shall have been
declared effective not later than 8:00 A.M., Los Angeles time, on the date on
which the amendment to the registration statement originally filed with respect
to the Securities or to the Registration Statement, as the case may be,
containing information regarding the initial public offering price of the
Securities has been filed with the Commission, or such later time and date as
shall have been consented to by the Representative; if required, the Prospectus
and any amendment or supplement thereto shall have been filed with the
commission in the manner and within the time periods required by Rule 424(b) or
Rule 434, if applicable, under the Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto shall have
been issued, and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Company or the Representative, shall be
contemplated by the Commission; and the Company shall have complied with any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise).
(b) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Jeffer, Mangels, Xxxxxx & Marmaro LLP, counsel for the
Company, in the form attached hereto as Exhibit A.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials.
15.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Xxxx & Xxxxx Professional Corporation, counsel for the
Underwriters, with respect to the issuance and sale of the Securities, the
Registration Statement and the Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(d) The Representative shall have received from BDO Xxxxxxx LLP a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
(i) they are independent accountants with respect to
the Company within the meaning of the Act and the applicable rules and
regulations thereunder;
(ii) in their opinion, the audited consolidated
financial statements and schedules audited by them and included in the
Registration Statement and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations;
(iii) on the basis of a reading of the minute books of
the stockholders, the board of directors and any committees thereof of the
Company and each of its consolidated subsidiaries, and inquiries of certain
officials of the Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters, they will state that
management of the Company has advised them that at a specific date not more than
five business days prior to the date of such letter, there were no changes in
the capital stock or long-term debt of the Company and its consolidated
subsidiaries or any decreases in net current assets or stockholders' equity of
the Company and its consolidated subsidiaries, in each case compared with
amounts shown on the consolidated balance sheet included in the Registration
Statement and the Prospectus, except in all instances for changes, decreases or
increases set forth in such letter; and
(iv) they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the general
accounting records of the Company and its consolidated subsidiaries and are
included in the Registration Statement and the Prospectus, and have compared
such amounts, percentages and financial information with such records of the
Company and with information derived from such records and have found them to be
in agreement, excluding any questions of legal interpretation.
In the event that the letters referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (h) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(e) The Representatives shall have received a certificate, dated the
Firm Closing Date, of the chief executive officer and the principal financial or
accounting officer of the Company to the effect that:
16.
(i) the representations and warranties of the Company
in this Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date, does
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented as of the Firm Closing Date, does not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Company has
performed all covenants and agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and to the best
of the Company's knowledge no proceedings for that purpose have been instituted
or threatened or are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company has not sustained any material loss or interference with its business or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the condition
(financial or otherwise), management, business prospects, net worth or results
of operations of the Company and its subsidiaries taken as a whole, except in
each case as described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto).
(f) The Representatives shall have received from each person who is a
director or officer of the Company and from each person who owns outstanding
Common Shares or other equity securities of the Company (or any securities
convertible into, exercisable for, or exchangeable for Common Shares or other
equity securities of the Company) an agreement to the effect that such person
will not, from the date of such agreement until the date twelve months from the
effective date of the offering of the Securities, offer for sale, sell,
distribute, grant any option for the sale of, otherwise dispose of, directly or
indirectly, or exercise any registration rights with respect to, any Common
Shares or other equity securities of the Company (or any securities convertible
into, exercisable for, or exchangeable for Common Shares or other equity
securities of the Company) then or thereafter owned by such person, without the
prior written consent of the Representatives.
(g) The Company shall have duly exercised its rights to purchase, and
shall have duly purchased, the software program and rights therein, including
the Summit V software, as contemplated by the Prospectus.
(h) At or prior to the First Closing Date, the Representatives'
Warrant Agreement shall have been entered into by you and the Company, and the
Representatives' Warrants shall have been issued and sold to you pursuant
thereto.
(i) On or before the Firm Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(j) Prior to the commencement of the offering of the Securities, the
Securities shall have been approved for quotation on the Nasdaq SmallCap Market.
17.
(k) The Company shall have engaged and contracted for the services of
a financial public relations firm that the Company and the Representatives have
mutually agreed upon. The Company shall retain the services of said firm for
twelve months after the date hereof.
(l) The Company shall have entered into an agreement with the
Representatives, satisfactory in form and substance to the Representatives,
providing the Representatives with a right of first refusal to place all
future private and public equity offerings of the Company and its
subsidiaries and successors for the one-year period commencing on April 25,
1998 and ending on April 24, 1999.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representative and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement made by the Company in
Section 2 of this Agreement or any certificate provided by the Company to the
Representatives or Underwriters pursuant to the terms of this Agreement;
(ii) any untrue statement or alleged untrue statement
of any material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto or (B) any application or other document, or any amendment
or supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the securities or Blue Sky laws thereof or filed
with the Commission or any securities association or securities exchange (each a
"COMPANY APPLICATION"); or
(iii) the omission or alleged omission to state in such
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any Company
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse, as incurred, each
Underwriter and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Company Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein; and PROVIDED, FURTHER, that the Company will not
be liable to any Underwriter or any person controlling such Underwriter with
respect to any
18.
such untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented), at or prior to the written confirmation of the sale of
such Securities to such person in any case where such delivery of the Prospectus
(as amended or supplemented) is required by the Act, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 6(d) or (e) of this Agreement. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Firm Selling Stockholder and each Over-Allotment
Stockholder, severally and not jointly, agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement made by such Firm Selling
Stockholder or Over-Allotment Stockholder in Section 3 of this Agreement;
(ii) any untrue statement or alleged untrue statement
of any material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto based upon written information furnished by or on behalf
of such Firm Selling Stockholder or Over-Allotment Stockholder or (B) any
application or other document, or any amendment or supplement thereto, executed
by such Firm Selling Stockholder or Over-Allotment Stockholder or based upon
written information furnished by or on behalf of such Firm Selling Stockholder
or Over-Allotment Stockholder filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws thereof or filed with the
Commission or any securities association or securities exchange (each a
"STOCKHOLDER APPLICATION" and collectively with the Company Applications, each
an "Application"); or
(iii) the omission or alleged omission to state in such
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any Stockholder
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse, as incurred, each
Underwriter and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action, 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 or such Underwriter by or on behalf of such
Firm Selling Stockholder or Over-Allotment Stockholder, directly or through such
Firm Selling Stockholder's or Over-Allotment Stockholder's representatives,
specially for use therein or in the preparation thereof; PROVIDED, HOWEVER, that
such Firm Selling Stockholder or Over-Allotment Stockholder will not be liable
to any Underwriter or any person controlling such Underwriter with respect to
any such untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented), at or prior to the written confirmation of the sale of
such Securities to such person in any case where such delivery of the Prospectus
(as amended or supplemented) is required by the Act, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 6(d) or (e) of this Agreement. This
indemnity agreement will be in addition to any liability which such Firm Selling
Stockholder or Over-Allotment Stockholder may
19.
otherwise have. In no event shall a Firm Selling Stockholder or Over-Allotment
Stockholder's be liable to the Underwriters under this subsection 9(b) for an
amount greater than the gross proceeds received by such Firm Selling Stockholder
or such Over-Allotment Stockholder from the Underwriters of this offering.
(c) Each Underwriter will, severally and not jointly, indemnify and
hold harmless the Company, the Firm Selling Stockholders and the Over-Allotment
Stockholders, each of the Company's directors, each of the Company's officers
who signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person of the Company, may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or any Application or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company, or any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof.
(d) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party of the commencement thereof. No
indemnification provided for in Section 9(a), 9(b) or 9(c) shall be available to
any party who shall fail to give notice as provided in this Section 9(d) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability that it may
have to any indemnified party for contribution or otherwise than under this
Section 9. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel 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 reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 9 for any
legal or other expenses, other than reasonable costs of investigation,
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 preceding sentence (it being understood,
however, that in connection with such action the indemnifying party shall not be
liable for the expenses of more than one separate counsel (in addition to local
counsel), in any one action or separate but substantially similar actions in the
same
20.
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) or (b) of this
Section 9, representing the indemnified parties under such paragraph (a) or (b)
who are parties to such action or actions), (ii) the indemnifying party does not
promptly retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party.
(e) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable or insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company, the Firm Selling Stockholders, the Over-Allotment Stockholders and the
Underwriters shall be deemed to be in the same proportion as the total proceeds
from the offering (before deducting expenses) received by the Company and each
of the Firm Selling Stockholders and the Over-Allotment Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Sellers or the Underwriters, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Sellers and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to above in this paragraph (e).
Notwithstanding any other provision of this paragraph (e), no Underwriter shall
be obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Agreement Among Underwriters. For purposes of this paragraph (e), each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, shall have the same rights to contribution as the
Company.
10. DEFAULT OF UNDERWRITERS. If one or more Underwriters default in their
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other
21.
Underwriters may make arrangements satisfactory to the Representative for the
purchase of such Securities by other persons (who may include one or more of the
non-defaulting Underwriters, including the Representative), but if no such
arrangements are made by the Firm Closing Date or the related Option Closing
Date, as the case may be, the other Underwriters shall be obligated severally in
proportion to their respective commitments hereunder to purchase the Firm
Securities or Option Securities that such defaulting Underwriter or Underwriters
agreed but failed to purchase. If one or more Underwriters so default with
respect to an aggregate number of Securities that is more than ten percent of
the aggregate number of Firm Securities or Option Securities, as the case may
be, to be purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representatives are not made within 36 hours
after such default for the purchase by other persons (who may include one or
more of the non-defaulting Underwriters, including the Representatives) of the
Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company other than as provided in Section 11 hereof. In the event of any
default by one or more Underwriters as described in this Section 10, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 4
hereof for not more than seven business days in order that any necessary changes
may be made in the arrangements or documents for the purchase and delivery of
the Firm Securities or Option Securities, as the case may be. As used in this
Agreement, the term "UNDERWRITER" includes any person substituted for an
Underwriter under this Section 10. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
11. SURVIVAL. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company and the several
Underwriters set forth in this Agreement or made by or on behalf of them,
respectively, in any certificate delivered pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company, any of its officers or directors, any Underwriter or
any controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 7 and 9 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
12. TERMINATION.
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date, respectively, in the event that the Company
shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Firm Closing Date or such Option Closing Date,
respectively:
(i) The Company shall have, in the sole judgment of the
Representatives, sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding or there shall have been any material
adverse change, or any development involving a prospective material adverse
change (including without limitation, a change in management or control of the
Company), in the condition (financial or otherwise), business prospects, net
worth or results of operations of the Company, except in each case as described
in or contemplated by the Prospectus (exclusive of any amendment or supplement
thereto);
(ii) trading in the Common Shares shall have been suspended by
the Commission or the Nasdaq SmallCap Market;
22.
(iii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market or the
Nasdaq SmallCap Market shall have been suspended or minimum or maximum prices
shall have been established on any of such exchanges or market system;
(iv) a banking moratorium shall have been declared by New York,
Washington, California, or United States authorities; or
(v) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an outbreak or
escalation of any other insurrection or armed conflict involving the United
States or (C) any other calamity or crisis or material adverse change in general
economic, political or financial conditions having an effect on the financial
markets that, in the sole judgment of the Representative, makes it impractical
or inadvisable to proceed with the public offering or the delivery of the
securities as contemplated by the Registration Statement, as amended as of the
date hereof.
(b) Termination of this Agreement pursuant to this Section 12 shall
be without liability of any party to any other party except as provided in
Section 11 hereof.
13. INFORMATION SUPPLIED BY UNDERWRITERS. The statements set forth in the
last paragraph on the front cover page and under the heading "Underwriting"
(other than the final paragraph under such heading) in any Preliminary
Prospectus or the Prospectus (to the extent such statements relate to the
Underwriters) constitute the only information furnished by any Underwriter
through the Representatives to the Sellers for the purposes of Sections 2(b) and
9 hereof. The Underwriters confirm that such statements (to such extent) are
correct.
14. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be sent by mail, telex or facsimile
transmission and confirmed in writing to Meridian Capital Group, Inc., 0000
XxxXxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000; if sent to the
Company shall be delivered or sent by mail, telex or facsimile transmission and
confirmed in writing to the Company at 0000 X.X. 00xx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxxx 00000 Attention: Chief Executive Officer; if sent to the
Firm Selling Stockholders or the Over-Allotment Stockholders shall be delivered
or sent by mail, telex or facsimile transmission and confirmed in writing x/x
Xxxxxx, Xxxxxxx, Xxxxxx & Xxxxxxx XXX, Xxxxxxxxx: Xxxxxx X. Xxxxxxxxx, Esq.
15. SUCCESSORS. This Agreement shall inure to the benefit of and shall be
binding upon the several Underwriters, the Company, the Firm Selling
Stockholders and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company, the Firm Selling
Stockholders, and the Over-Allotment Stockholders contained in Section 9 of this
Agreement shall also be for the benefit of any person or persons who control any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Underwriters contained in Section 9
of this Agreement shall also be for the benefit of the directors of the Company,
the officers of the Company who have signed the Registration Statement, and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
23.
16. APPLICABLE LAW. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to any provisions relating to conflicts of laws.
17. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of California, and
by execution and delivery of this Agreement, the Company accepts for itself and
in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. The Sellers designate and appoint
Jeffer, Mangels, Xxxxxx & Xxxxxxx, LLP, and such other persons as may hereafter
be selected by the Sellers irrevocably agreeing in writing to so serve, as their
agent to receive on their behalf personal service of all process in any such
proceedings in any such court, such service being hereby acknowledged by the
Company to be effective and binding service in every respect. A copy of any
such process so served shall be mailed by registered mail to the Company at its
address provided in Section 14 hereof; PROVIDED, HOWEVER, that, unless otherwise
provided by applicable law, any failure to mail such copy shall not affect the
validity of service of such process. If any agent appointed by the Sellers
refuses to accept service, the Sellers hereby agree that service of process
sufficient for personal jurisdiction in any action against the Sellers in the
State of California may be made by registered or certified mail, return receipt
requested, to the Sellers at their respective addresses provided in Section 14
hereof, and the Sellers hereby acknowledge that such service shall be effective
and binding in every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of any
Underwriter to bring proceedings against the Sellers in the courts of any other
jurisdiction.
18. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all previous oral and written and all contemporaneous oral
negotiations, commitments, writings and understandings.
19. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed by
original or facsimile signature in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
24.
20. EFFECTIVENESS. This Agreement shall become effective upon the later
of (a) the execution and delivery hereof by the parties hereto and (b) the
release of notification of the effectiveness of the Registration Statement by
the Commission.
Very truly yours,
JENKON INTERNATIONAL INC.
By
-------------------------------
Xxxxx Xxxxxxx,
President and Chief Executive Officer
THE FIRM SELLING STOCKHOLDERS NAMED
IN SCHEDULE 2 HERETO
By:
------------------------------
Xxxxx Xxxxxxx,
Attorney-in-fact
By:
------------------------------
Xxxxx XxXxxx,
Attorney-in-fact
THE OVER-ALLOTMENT STOCKHOLDERS:
---------------------------------
Xxxxx Xxxxxxx
---------------------------------
Xxxxx XxXxxx
25.
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
MERIDIAN CAPITAL GROUP, INC.
By
------------------------------
Xxxx Xxxxxxxxx, President
For itself and as one of the
Representatives of the several Underwriters
named in Schedule 1 hereto.
XXXXXXXX, XXXXXX & COMPANY INCORPORATED
By
------------------------------
Xxxxxxx Xxxxxxxxx
For itself and as one of the
Representatives of the several Underwriters
named in Schedule 1 hereto.
X.X. XXXXX & COMPANY INC.
By
------------------------------
Xxxxxx Xxxxx
For itself and as one of the
Representatives of the several Underwriters
named in Schedule 1 hereto.
26.
SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to be
Underwriters Purchased
------------ ---------
Meridian Capital Group, Inc.
Xxxxxxxx, Xxxxxx & Company Incorporated
X.X. Xxxxx & Company Inc.
------------
Total 1,100,000
------------
------------
27.
SCHEDULE 2
FIRM SELLING STOCKHOLDERS
Number of Firm
Securities To Be
Firm Selling Stockholders Sold
------------------------- ----
[NAMES OF FIRM SELLING STOCKHOLDERS]
---------
Total 300,000
-----------
-----------
28.
SCHEDULE 3
OVER-ALLOTMENT STOCKHOLDERS
Number of Option
Securities To Be
Over-Allotment Stockholders Sold
----------------------------------------------------------- -----------------
Xxxxx Xxxxxxx 150,000
Xxxxx XxXxxx 20,000
--------
Total 170,000
--------
--------
29.
EXHIBIT A
[Form of Jeffer, Mangels, Xxxxxx & Xxxxxxx, LLP]
30.
