Exhibit 1.1
PREFERRED EMPLOYERS HOLDINGS, INC.
______ Shares of Common Stock
UNDERWRITING AGREEMENT
_____________, 1997
Commonwealth Associates
As Representative of the
several Underwriters named
in Schedule I attached hereto
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Preferred Employers Holdings, Inc., a
Delaware corporation (the "Company"), hereby confirms its agreement with the
several underwriters named in Schedule I hereto (collectively, the
"Underwriters") for whom you have been authorized to act as representative (in
such capacity, the "Representative"), as set forth below.
1. Introduction. The Company proposes to issue and sell to the
Underwriters ______ shares (the "Stock") of the Company's Common Stock, par
value $.01 per share (the "Common Stock"). In addition, solely for the purpose
of covering over-allotments, the Company proposes to grant the Underwriters the
option to purchase from it up to an additional 150,000 shares (the "Additional
Stock") of Common Stock. The Common Stock is more fully described in the
Prospectus (as hereinafter defined).
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), a registration statement, and may have filed one
or more amendments thereto, on Form SB-2 (File No. 333-14103)(the
"Original Registration Statement"), including in such registration
statement and each such amendment a related Preliminary Prospectus (as
hereinafter defined), for the registration of (i) the Stock, (ii) the
Additional Stock, (iii) the common stock purchase warrants referred to
in Section 5(q) hereof (the "Representative Warrants"), and the (iv)
the shares of Common Stock underlying the
Representative Warrants (the "Warrant Stock") (the Stock, the
Additional Stock, the Representative Warrants and the Warrant Stock are
collectively referred to as the "Securities"). After the execution of
this Agreement, the Company will file with the Commission either (i) if
the Original Registration Statement, as it may have been amended, has
been declared by the Commission to be effective under the Act, either
(A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify
the Preliminary Prospectus that it supplements containing such
information as is required or permitted by Rules 434, 430A and 424(b)
under the Act or (B) if the Company does not rely on Rule 434 under the
Act, a prospectus in the form most recently included in an amendment to
the Original Registration Statement (or, if no such amendment shall
have been filed, in the Original 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 in the case of either
clause (i)(A) or (i)(B) of this sentence as shall have been provided to
and approved by the Representative prior to the execution of this
Agreement, or (ii) if the Original Registration Statement, as it may
have been amended, has not been declared by the Commission to be
effective under the Act, an amendment to the Original Registration
Statement, including a form of prospectus, a copy of which amendment
shall have been furnished to and approved by the Representative prior
to the execution of this Agreement, which approval shall not be
unreasonably withheld. The Company, with the prior consent of the
Representative, may have also filed a related registration statement
with the Commission pursuant to Rule 462(b) under the Act for the
purpose of registering a portion of the Securities (a "Rule 462(b)
Registration Statement"), which shall become effective upon filing. As
used in this Agreement, the term "Registration Statement" means
collectively, the Original 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, and (ii) any related Rule 462(b) Registration Statement
which may have been filed with the Commission pursuant to the Rule
462(b) under the Act (including the Original Registration Statement and
any Preliminary Prospectus or Prospectus incorporated therein at the
time such Rule 462(b) Registration Statement becomes effective); the
term "Preliminary Prospectus" means each prospectus subject to
completion filed with the Commission 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); the
term "Prospectus" means:
(A) if the Company relies on Rule 434 under the Act, the
Term Sheet relating to the Securities that is first
filed with the Commission pursuant to Rule 424(b)(7)
under the Act, together with the Preliminary
Prospectus identified therein that such Term Sheet
supplements;
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(B) if the Company does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the
Act and if no prospectus is required to be filed
pursuant to Rule 424(b) under the Act, the prospectus
included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) When any Preliminary Prospectus was filed with the
Commission it (i) contained all statements required to be stated
therein in accordance with, and 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, as the case may
be, 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 in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
When the Prospectus or any Term Sheet that is a part thereof or any
amendment or supplement to the Prospectus is filed with the Commission
pursuant to Rule 424(b) (or, if the Prospectus or any part thereof or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was or is declared effective)
and on the Closing Date and any Additional Closing Date (both as
hereinafter defined in Section 3), 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 as
stated in Section 8(b) with respect to any Underwriter through the
Representative specifically for use therein.
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(c) If the Company has elected to rely on Rule 462(b), then
(i) the Company has filed a Rule 462(b) Registration Statement in
compliance with and that is effective upon filing with the Commission
pursuant to Rule 462(b) and has received confirmation of its receipt,
and (ii) the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing
of the Rule 462(b) Registration Statement, in compliance with Rule 111
promulgated under the Act or the Commission has received payment of
such filing fee.
(d) Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction have issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of any of the Securities,
nor has any of such authorities instituted or threatened to institute
any proceedings with respect to a Stop Order.
(e) Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement and the
Prospectus (or if the Prospectus is not in existence, the most recent
Preliminary Prospectus) has been properly described therein. Any
contract, agreement, instrument, lease, or license required to be filed
as an exhibit to the Registration Statement has been filed with the
Commission as an exhibit to or has been incorporated as an exhibit by
reference into the Registration Statement.
(f) The only subsidiaries (as defined in the general rules and
regulations promulgated under the Act (the "Regulations")) of the
Company are set forth on Exhibit 21 to the Registration Statement
(collectively, the "Subsidiaries"). Each of the Company and each of the
Subsidiaries is a corporation duly organized, validly existing, and in
good standing under the laws of its jurisdiction of incorporation, with
full power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to carry on the
business in the manner described in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Each of the Company and each of the
Subsidiaries is duly qualified to do business and is in good standing
in every jurisdiction in which its ownership, leasing, licensing, or
use of property and assets or the conduct of its business makes such
qualification necessary. Except for the capital stock of the
Subsidiaries and as otherwise disclosed in the Registration Statement,
the Company does not own, and at the Closing Date and any Additional
Closing Date will not own, directly or indirectly, any shares of stock
or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, joint venture,
association or other entity.
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(g) The authorized capital stock of the Company consists of
(i) 10,000,000 shares of Common Stock, of which 3,000,000 shares are
outstanding, and (ii) 1,000,000 shares of preferred stock, par value
$.01 per share (the "Preferred Stock"), of which no shares are
outstanding. Each outstanding share of the Company's capital stock and
each outstanding share of capital stock of each Subsidiary has been
validly authorized, issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, has not been
issued and is not owned or held in violation of any preemptive rights
of stockholders, and in the case of the Subsidiaries is owned of record
and beneficially by the Company free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements and
voting trusts. There is no commitment, plan, or arrangement to issue,
and no outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of the Company or of any
Subsidiary or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for capital stock of
the Company, except as may be set forth in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus). Except as set forth in the Prospectus, there is
outstanding no security or other instrument which by its terms is
convertible into or exchangeable for capital stock of the Company or of
any Subsidiary.
(h) The consolidated financial statements 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,
the results of operations, and the other information purported to be
shown therein at the respective dates and for the respective periods to
which they apply. Such financial statements have been prepared in
accordance with generally accepted accounting principles (except to the
extent that certain footnote disclosures regarding any stub period may
have been omitted in accordance with the applicable rules of the
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) consistently applied throughout the periods involved,
are correct and complete, and are in accordance with the books and
records of the Company and its consolidated subsidiaries. The
accountants whose report on the audited financial statements is filed
with the Commission as a part of the Registration Statement are, and
during the periods covered by their report(s) included in the
Registration Statement and the Prospectus [(or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus)] were,
independent certified public accountants within the meaning of the Act
and the Regulations. No other financial statements are required by Form
SB-2 or otherwise to be included in the Registration Statement or the
Prospectus [(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus)]. There has at no time been a material adverse
change in the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company or
any Subsidiary from the latest information set forth in the
Registration Statement or the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), except as may be
properly described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
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(i) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation pending, or,
to the best of the Company's knowledge, threatened, or in prospect (or
any basis therefor) with respect to the Company, any Subsidiary or any
of their respective operations, business, properties, or assets except
as may be properly described in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) or such as
individually or in the aggregate do not now have and will not in the
future have a material adverse effect upon the operations, business,
properties, or assets of the Company and the Subsidiaries taken as a
whole. Neither the Company nor any Subsidiary is in violation of, or in
default with respect to, any law, rule, regulation, order, judgment, or
decree except as may be properly described in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus) or such as in the aggregate do not now have and will not in
the future have a material adverse effect upon the operations,
business, properties, or assets of the Company and the Subsidiaries
taken as a whole; nor is the Company or any Subsidiary required to take
any action in order to avoid any such violation or default.
(j) Each of the Company and each Subsidiary has good and
marketable title in fee simple absolute to all real properties and good
title to all other properties and assets which the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus) indicates are owned by it, free and clear of all liens,
security interests, pledges, charges, encumbrances, and mortgages
(except as may be properly described in the Prospectus, or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus)
or such as do not materially affect the value of such property and do
not interfere with the use made of such property by the Company and
such Subsidiary. No real property owned, leased, licensed, or used by
the Company or by a Subsidiary lies in an area which is, or to the
knowledge of the Company or any Subsidiary will be, subject to zoning,
use, or building code restrictions which would prohibit, and no state
of facts relating to the actions or inaction of another person or
entity or his or its ownership, leasing, licensing, or use of any real
or personal property exists or will exist which would prevent, the
continued effective ownership, leasing, licensing, or use of such real
property in the business of the Company or such Subsidiary as presently
conducted or as the Prospectus indicates it contemplates conducting
(except as may be properly described in the Prospectus, or if the
Prospectus is not in existence, the most recent Preliminary
Prospectus).
(k) Neither the Company nor any Subsidiary, nor to the
knowledge of the Company or any Subsidiary, any other party, is now or
is expected by the Company or any Subsidiary to be in violation or
breach of, or in default with respect to, complying with any material
provision of any contract, agreement, instrument, lease, license,
arrangement, or understanding which is material to the Company and the
Subsidiaries taken as a whole, and each such contract, agreement,
instrument, lease, license, arrangement, and understanding is in full
force and is the legal, valid, and binding obligation of the parties
thereto and is enforceable as to them in accordance with its terms
(subject to applicable bankruptcy, insolvency and other laws affecting
the
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enforceability of creditors' rights generally). Each of the Company and
each Subsidiary enjoys peaceful and undisturbed possession under all
leases and licenses under which it is operating. Except as may be
properly described in the Prospectus (or if the Prospectus is not in
existence, the most recent Preliminary Prospectus), neither the Company
nor any Subsidiary is a party to or bound by any contract, agreement,
instrument, lease, license, arrangement, or understanding, or subject
to any charter or other restriction, which has had or may in the future
have a material adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future
prospects of the Company and the Subsidiaries taken as a whole. Neither
the Company nor any Subsidiary is in violation or breach of, or in
default with respect to, any term of its certificate of incorporation
(or other charter document) or by-laws.
(l) All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises, and
other intangible properties and assets (all of the foregoing being
herein called "Intangibles") that the Company owns or has pending, or
under which it is licensed, are in good standing and uncontested. There
is no right under any Intangible necessary to the business of the
Company or of any Subsidiary as presently conducted or as the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) indicates it contemplates conducting (except as
may be so designated in the Prospectus, or, if the Prospectus if not in
existence, the most recent Preliminary Prospectus). Neither the Company
nor any Subsidiary has infringed, is infringing, or has received notice
of infringement with respect to, asserted Intangibles of others. To the
knowledge of the Company or any Subsidiary, there is no infringement by
others of Intangibles of the Company or any Subsidiary. To the
knowledge of the Company or any Subsidiary, there is no Intangible of
others which has had or may in the future have a materially adverse
effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company and
the Subsidiaries taken as a whole.
(m) Neither the Company, any Subsidiary, nor any director,
officer, agent, employee, or other person associated with or acting on
behalf of the Company has, directly or indirectly (i) used any
corporate funds for unlawful contributions, gifts, entertainment, or
other unlawful expenses relating to political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
Company funds, (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iv) made any bribe, rebate,
payoff, influence payment, kickback, or other unlawful payment.
(n) The Company has all requisite power and authority to
execute deliver, and perform each of this Agreement, the certificate
evidencing the Representative Warrants (the "Representative Warrant
Agreement") and the proposed financial advisory services letter
agreement to be entered into between the Company and the Representative
in connection with the consummation of the offering contemplated hereby
(the "Advisory Services Letter Agreement," and together with this
Agreement and the Representative Warrant Agreement, the "Company
Documents"). All necessary
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corporate proceedings of the Company or any Subsidiary have been duly
taken to authorize the execution, delivery, and performance of each of
the Company Documents by the Company. Each of this Agreement and the
Advisory Services Letter Agreement has been duly authorized, executed,
and delivered by the Company, is the legal, valid, and binding
obligation of the Company, and is enforceable as to the Company in
accordance with its terms. The Representative Warrant Agreement has
been duly authorized by the Company and when executed and delivered by
the Company, will be the legal, valid, and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
No consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any federal, state,
local, or other governmental authority or any court or other tribunal
is required by the Company or any Subsidiary for the execution,
delivery, or performance by the Company of any of the Company Documents
(except filings under the Act which have been or will be made before
the Closing Date and such consents consisting only of consents under
"blue sky" or securities laws which have been obtained at or prior to
the date of this Agreement). No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to
which the Company or any Subsidiary is a party, or to which any of
their respective properties or assets are subject, is required for the
execution, delivery, or performance of the Company Documents; and the
execution, delivery, and performance of any of the Company Documents
will not violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or understanding,
or violate or result in a breach of any term of the certificate of
incorporation (or other charter document) or by-laws of the Company or
any Subsidiary or violate, result in a breach of, or conflict with any
law, rule, regulation, order, judgment, or decree binding on the
Company or any Subsidiary or to which any of their respective
operations, businesses, properties, or assets are subject.
(o) The Stock and the Additional Stock are validly authorized
and, when issued and delivered in accordance with this Agreement, will
be validly issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders. The Underwriters
will receive good title to the Stock and Additional Stock purchased by
them, respectively, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting
trusts.
(p) The Warrant Stock is validly authorized and reserved for
issuance and, when issued and delivered upon exercise of the
Representative Warrants in accordance with the Representative Warrant
Agreement, will be validly issued, fully paid and non-assessable,
without any personal liability attaching to the ownership thereof, and
will not be issued in violation of any preemptive rights of
stockholders; and the holders of the Representative Warrants will
receive good title to the securities purchased by them, respectively,
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts.
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(q) The Common Stock, the Securities, and the Representative
Warrant Agreement conform in all material respects with all statements
relating thereto contained in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(r) 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)
and except as may otherwise be properly described in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), neither the Company nor any Subsidiary has (i) issued any
securities or incurred any liability or obligation, primary or
contingent, for borrowed money, (ii) entered into any transaction not
in the ordinary course of business, or (iii) declared or paid any
dividend on its capital stock otherwise than by a wholly owned
Subsidiary to the Company.
(s) Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, prior to the termination of the underwriting
syndicate contemplated by this Agreement, any action designed to
stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate
the sale or resale of any of the Stock or the Additional Stock.
(t) The Company has obtained from each of its directors and
officers, such director's and officer's enforceable written agreement,
in form and substance satisfactory to counsel for the Underwriters,
that for a period of 12 months from the Closing Date such individual
will not, without the prior written consent of the Representative,
offer, pledge, sell, contract to sell, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, any shares of
Common Stock or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for shares of Common
Stock or other securities of the Company, including, without
limitation, any shares of Common Stock issuable under any outstanding
stock options or warrants.
(u) No person or entity has the right to require registration
of shares of Common Stock or other securities of the Company because of
the filing or effectiveness of the Registration Statement.
(v) Except as may be set forth in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), the Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement.
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(w) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida), and will
continue to do so at all times subsequent to the date the Registration
Statement is declared effective with the Commission or with the Florida
Department of Banking and Finance.
(x) The Company is not, and does not intend to conduct its
business in a manner in which it would become, an "investment company"
as defined in Section 3(a) of the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(y) No officer, director, or 5% or, to the knowledge of the
Company, greater stockholder of the Company has any direct or indirect
affiliation or association with the National Association of Securities
Dealers, Inc. (the "NASD") or any member thereof.
(z) To the knowledge of the Company, no beneficial owner of
the Company's securities has any direct or indirect affiliation or
association with any NASD member.
3. Purchase, Sale, and Delivery of the Stock and the Additional Stock.
On the basis of the representations, warranties, covenants, and agreements of
the Company, but subject to the terms and conditions herein set forth, the
Company agrees to sell to the several Underwriters, and the Underwriters,
severally and not jointly, agree to purchase from the Company, the numbers of
shares of Stock set opposite the respective names of the Underwriters in
Schedule I attached hereto.
The purchase price per share of the Stock to be paid by the several
Underwriters shall be $_____. The public offering price per share of the Stock
shall be $______.
Payment for the Stock by the Underwriters shall be made by certified or
official bank check or checks drawn upon or by a New York Clearing House bank,
or by wire transfer, and payable in next-day funds to the order of the Company
at the offices of Commonwealth Associates, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place in the New York City metropolitan area as you
shall determine and advise the Company by at least two full days' notice in
writing, upon delivery of the Stock to you for the respective accounts of the
Underwriters. Such delivery and payment shall be made at 10:00 a.m., New York
City time, on _____________, 1997 (unless such time and date is postponed in
accordance with the provisions of Section 9(c) hereof), or at such other time as
shall be agreed upon between you and the Company. The time and date of such
delivery and payment are herein called the "Closing Date."
Certificates for the Stock shall be registered in such name or names
and in such authorized denominations as you may request in writing at least two
full business days' prior to the Closing Date. The Company shall permit you to
examine and package such certificates for delivery at least one full business
day prior to the Closing Date.
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In addition, the Company hereby grants to the several Underwriters the
option to purchase all or a portion of the Additional Stock as may be necessary
to cover over-allotments, at the same purchase price per share to be paid by the
several Underwriters to the Company for the Stock as provided for in this
Section 3. The Additional Stock shall be purchased by the several Underwriters
from the Company as provided herein, pro rata in accordance with the ratio which
the number of shares of Stock set forth opposite such Underwriter's name on
Schedule I bears to the total number of shares of Stock, subject to adjustment
to avoid fractional shares. This option may be exercised only to cover
over-allotments in the sale of shares by the several Underwriters. This option
may be exercised by you on the basis of the representations, warranties,
covenants, and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, at any time and from time to time on or
before the forty-fifth day following the effective date of the Registration
Statement, by written notice by you to the Company. Such notice shall set forth
the aggregate number of shares of Additional Stock as to which the option is
being exercised and the time and date, as determined by you, when such
Additional Stock is to be delivered (such time and date are herein called an
"Additional Closing Date"); provided, however, that no Additional Closing Date
shall be earlier than the Closing Date nor earlier than the second business day
after the date on which the notice of the exercise of the option shall have been
given nor later than the third business day after the date on which such notice
shall have been given.
Payment for the shares of Additional Stock by the Underwriters shall be
made by certified or official bank check or checks drawn upon or by a New York
Clearing House bank, or by wire transfer, and payable in next-day funds to the
order of the Company at the offices of Commonwealth Associates, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the New York City
Metropolitan Area as you shall determine and advise the Company by at least two
full days' notice in writing, upon delivery of the shares of Additional Stock to
you for the respective accounts of the Underwriters.
Certificates for the Additional Stock shall be registered in such name
or names and in such authorized denominations as you may request in writing at
least two full business days' prior to the Additional Closing Date with respect
thereto. The Company shall permit you to examine and package such certificates
for delivery at least one full business day prior to the Additional Closing Date
with respect thereto.
4. Offering. The Underwriters are to make a public offering of the
Stock as soon, on or after the effective date of the Registration Statement, as
you deem it advisable so to do. The Stock is to be initially offered to the
public at the initial public offering price as provided for in Section 3 hereof
(such price being herein called the "public offering price") and upon the terms
and subject to the conditions set forth in the Prospectus. After the public
offering, you may from time to time increase or decrease the public offering
price, in your sole discretion, by reason of changes in general market
conditions or otherwise.
5. Covenants of the Company. The Company covenants that it will:
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(a) 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 or any Term Sheet that
constitutes a part thereof and any amendments or supplements thereto
with the Commission in the manner and within the time period required
by Rules 434 and 424(b) under the Act. During any time when a
prospectus relating to the Stock and the Additional Stock is required
to be delivered under the Act, the Company (i) will comply with all
requirements imposed upon it by the Act and the Regulations to the
extent necessary to permit the continuance of sales of or dealings in
the Stock and the Additional Stock, 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, Term Sheet or the
amendment referred to in the second sentence of Section 2(a) hereof,
any amendment or supplement to such Prospectus or Term Sheet, or any
amendment to the Registration Statement of which the Representative
shall not have given its reasonable consent. The Company will prepare
and file with the Commission, in accordance with the Regulations,
promptly upon request by the Representative 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 Stock and
Additional Stock 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.
(b) Notify you immediately, and confirm such notice in
writing, (i) when the Registration Statement and any post-effective
amendment thereto becomes effective, (ii) of the receipt of any
comments from the Commission or the "blue sky" or securities authority
of any jurisdiction regarding the Registration Statement, any
post-effective amendment thereto, the Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, and (iii) of the
receipt of any notification with respect to a Stop Order or the
initiation or threatening of any proceeding with respect to a Stop
Order. The Company will use its best efforts to prevent the issuance of
any Stop Order and, if any Stop Order is issued, to obtain the lifting
thereof as promptly as possible.
(c) If, at any time prior to the later of (i) the final date
when a prospectus relating to the Stock or the Additional Stock, is
required to be delivered under the Act or the Regulations, or (ii) the
Additional 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 Regulations, the Company will
promptly notify the Representative thereof and, subject to Section 5(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.
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(d) The Company will, without charge, provide (i) to the
Representative and to counsel for the Underwriters a signed copy of the
Original Registration Statement filed with the Commission with respect
to the Securities and each amendment thereto (in each case including
exhibits thereto) or any Rule 462(b) Registration Statement, (ii) to
each other Underwriter, a conformed copy of the Original Registration
Statement, any Rule 462(b) Registration Statement, and each amendment
thereto (in each case without exhibits thereto), and (iii) so long as a
prospectus relating to the Stock and Additional Stock is required to be
delivered under the Act and the Regulations, as many copies of each
Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, as the Representative may reasonably request;
without limiting the application of clause (iii) of this sentence, the
Company, no later than (A) 6:00 p.m., New York City time, on the date
of determination of the public offering price, if such determination
occurred at or prior to 12:00 Noon, New York City time, on such date,
or (B) 6:00 p.m., New York City time, on the business day following the
date of determination of the public offering price, if such
determination occurred after 12:00 Noon, New York City time, on such
date, will deliver to the Representative, without charge, as many
copies of the Prospectus, and any amendment or supplement thereto, as
the Representative may reasonably request for purposes of confirming
orders that are expected to settle on the Closing Date.
(e) Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to
qualify the Stock and the Additional Stock for offering and sale under
the "blue sky" or securities laws of such jurisdictions as you may
designate; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a
foreign corporation doing business in such jurisdiction to which it is
not then subject. In each jurisdiction where such qualification shall
be effected, the Company will, unless you agree in writing that such
action is not at the time necessary or advisable, file and make such
statements or reports at such times as are or may be required by the
laws of such jurisdiction.
(f) Make generally available (within the meaning of Section
11(a) of the Act and the Regulations) to its security holders as soon
as practicable, but not later than May 15, 1998, an earnings statement
(which need not be certified by independent certified public
accountants unless required by the Act or the Regulations, but which
shall satisfy the provisions of Section 11(a) of the Act and the
Regulations) covering a period of at least twelve months beginning
after the effective date of the Registration Statement.
(g) For a period of twelve months after the Closing Date, not,
without the prior written consent of the Representative, offer, issue,
sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or other
securities of the Company (or any security or other instrument which by
its terms is convertible into, exercisable for, or exchangeable for
shares of Common Stock or other securities of the Company) except for
(i) the issuance of the
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Securities and (ii) the issuance of stock options which may be granted
pursuant to the Company's Stock Option Plan (as such term is defined in
the Prospectus) and the Common Stock issuable upon the exercise
thereof, as set forth in the Prospectus.
(h) For a period of five years after the effective date of the
Registration Statement, furnish to the Representative, without charge,
the following:
(i) within 90 days after the end of each fiscal year,
three copies of financial statements certified by independent
certified public accountants, including a balance sheet,
statement of income, and statement of cash flows of the
Company and its then existing subsidiaries, with supporting
schedules, prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal year and
for the 12 months then ended, which may be on a consolidated
basis;
(ii) as soon as practicable after they have been sent
to stockholders of the Company or filed with the Commission,
three copies of each annual and interim financial and other
report or communication sent by the Company to its
stockholders or filed with the Commission;
(iii) as soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company; and
(iv) such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its subsidiaries as you may from time to time reasonably
request.
(i) Apply the net proceeds received by it from the offering in
substantially the manner set forth under "Use of Proceeds" in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(j) Furnish to you as early as practicable prior to the
Closing Date and any Additional Closing Date, as the case may be, but
no less than two full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the
Company and its consolidated subsidiaries which have been read by the
Company's independent certified public accountants, as stated in their
letters to be furnished pursuant to Section 7(g).
(k) Comply in all material respects with all registration,
filing, and reporting requirements of the Exchange Act which may from
time to time be applicable to the Company.
(l) Comply in all material respects with all provisions of all
undertakings contained in the Registration Statement.
- 14 -
(m) Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication
directly or indirectly, and hold no press conference with respect to
the Company or any Subsidiary, the financial condition, results of
operations, business, properties, assets, liabilities of the Company or
any Subsidiary, or this offering, without your prior written consent,
which consent shall not be unreasonably withheld.
(n) File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the
effective date of the Registration Statement, unless such filing shall
comply with the Act and the Regulations and unless the Representative
shall previously have been advised of such filing and furnished with a
copy thereof, and the Representative and counsel for the Underwriters
shall have approved such filing in writing.
(o) If the principal stockholders, officers, or directors of
the Company are required by the "blue sky" or securities authority of
any jurisdiction selected by you pursuant to Section 5(e) hereof to
escrow or agree to restrict the sale of any security of the Company
owned by them for the Company to qualify or register the Common Stock
for sale under the "blue sky" or securities laws of such jurisdiction,
cause each such person to escrow or restrict the sale of such security
on the terms and conditions and in the form specified by the securities
administrator of such jurisdiction.
(p) Use its best efforts to cause (i) the application for
quotation of the Common Stock on the Nasdaq Stock Market's SmallCap
Market to be approved as soon as possible, and (ii) the application for
listing of the Securities on the Boston Stock Exchange to be approved
as soon as possible.
(q) On or prior to the Closing Date, sell to the
Representative (or its designees), individually and not as
representative of the Underwriters, the Representative Warrants to
purchase an aggregate of 150,000 shares of Warrant Stock, which
Representative Warrants shall be evidenced by the Representative
Warrant Agreement in the form set forth as an exhibit to the
Registration Statement.
(r) Until expiration of the Representative Warrants, keep
reserved sufficient shares of Common Stock for issuance upon exercise
thereof.
(s) Deliver to you, without charge, within a reasonable period
after the last Additional Closing Date or the expiration of the period
in which the Underwriters may exercise the over-allotment option, four
bound volumes of the Registration Statement and all related materials.
(t) For a period of five years after the Closing Date, supply
to the appropriate parties such information as may be necessary or
desirable, and otherwise use its best efforts, so that during such
five-year period the Company will be listed in
- 15 -
one or more of the securities manuals published by Standard & Poor's
Corporation and Xxxxx'x Investors Service, Inc. and that at all times
during such period such listing will, at a minimum, contain the names
of the Company's officers and directors, a balance sheet as of a date
not more than 18 months prior to such time, and a statement of
operations for either the fiscal year preceding such date or the most
recent fiscal year of operations.
(u) On or prior to the Closing Date, enter into the Advisory
Services Letter Agreement with the Representative, individually and not
as Representative of the Underwriters, in the form set forth as an
exhibit to the Registration Agreement.
(v) Until the expiration of three years from the Closing Date,
permit you, individually and not as Representative of the Underwriters,
to send an observer to all meetings of the Company's Board of
Directors.
(w) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable fees
in accordance with Rule 111 promulgated under the Act by the earlier of
(i) 10:00 p.m. eastern time on the date of this Agreement, and (ii) the
time confirmations are sent or given, as specified by Rule 462(b)(2).
6. Payment of Expenses. The Company hereby agrees to pay all expenses
(other than fees of counsel for the Underwriters, except as provided in Section
6(c)) in connection with (a) the preparation, printing, filing, distribution,
and mailing of the Registration Statement, any Preliminary Prospectus, the
Prospectus and the printing, filing, distribution, and mailing of this
Agreement, any Agreement Among Underwriters, any selected dealers agreement, and
all other documents related to the offering, purchase, sale and delivery of the
Securities, including the cost of all copies thereof and of the Preliminary
Prospectuses and of the Prospectus and any amendments or supplements thereto
supplied to the Underwriters in quantities as hereinabove stated, (b) the
issuance, sale, transfer, and delivery of the Stock and the Additional Stock,
including any transfer or other taxes payable thereon, (c) the qualification of
the Stock and the Additional Stock under state or foreign "blue sky" or
securities laws, including the costs of printing and mailing the preliminary and
final "Blue Sky Survey" and the fees of counsel for the Underwriters (in an
amount not to exceed $35,000) and their disbursements in connection therewith,
(d) the filing fees payable to the Commission, the NASD, and the jurisdictions
in which such qualification is sought, (e) the quotation of the Common Stock on
the Nasdaq Stock Market's SmallCap Market and the Boston Stock Exchange,
respectively, (f) the fees and expenses of the Company's transfer agent and
registrar, (g) the fees and expenses of the Company's legal counsel and
accountants, and (h) the costs of placing a "tombstone" advertisement in such
publications as the Representative shall determine. In addition, the Company
hereby agrees to pay to the Representative a non-accountable expense allowance
equal to 2% of the aggregate gross proceeds received by the Company from the
sale of the Stock and the Additional Stock, which amounts (less the [$_________]
previously paid to you in respect of such non-accountable expense allowance)
shall be paid to you on the Closing Date
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(with respect to Stock sold by the Company on the Closing Date) and, if
applicable, on the Closing Date and any Additional Closing Date (with respect to
Additional Stock sold by the Company on the Closing Date or such Additional
Closing Date).
7. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Stock and the Additional Stock,
as provided herein, shall be subject, in their discretion, to the continuing
accuracy of the representations and warranties of the Company contained herein
and in each certificate and document contemplated under this Agreement to be
delivered to you, as of the date hereof and as of the Closing Date (or the
Additional Closing Date, as the case may be), to the performance by the Company
of its obligations hereunder, and to the following conditions:
(a) If the Registration Statement or any amendment thereto
filed prior to the 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 11:00 a.m.,
New York City time, on the date on which the amendment to the
registration statement originally filed with respect to the Securities
or the Registration Statement, as the case may be, containing
information regarding the public offering price of the Stock and the
Additional Stock 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 or any Term Sheet that constitutes part
thereof, and any amendment or supplement thereto, shall have been filed
with the Commission in the manner and within the time period required
by Rules 434, 462(b)(2) and 424(b) 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) At the Closing Date and any Additional Closing Date, as
the case may be, the Representative shall have received the favorable
opinion of Xxxx Marks & Xxxxx LLP, counsel for the Company, dated the
date of delivery, addressed to the Underwriters, and in form and scope
reasonably satisfactory to counsel for the Underwriters, with
reproduced copies or signed counterparts thereof for each of the
Underwriters, to the effect that:
(i) each of the Company and each of the Subsidiaries
is a corporation, duly organized, validly existing, and in
good standing under the laws of its jurisdiction of
incorporation with full corporate power and authority, and all
necessary consents, authorizations, approvals, orders,
certificates, and permits of and from, and declarations and
filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals,
to own, lease, license, and use its properties and assets and
to conduct its business in the manner described in the
Prospectus. Each of the Company and each of the
- 17 -
Subsidiaries is duly qualified to do business and is in good
standing in every jurisdiction in which its ownership,
leasing, licensing, or use of property and assets or the
conduct of its business makes such qualification necessary;
(ii) the authorized capital stock of the Company is
as set forth in the Prospectus. Each outstanding share of
capital stock of the Company and each outstanding share of
capital stock of each Subsidiary, has been validly authorized
and issued, and is fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, has not
been issued and is not owned or held in violation of any
preemptive rights of stockholders and in the case of the
Subsidiaries is owned of record and beneficially by the
Company free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements and
voting trusts. To the knowledge of such counsel, there is no
commitment, plan, or arrangement to issue, and no outstanding
option, warrant, or other right calling for the issuance of,
any share of capital stock of the Company or of any
Subsidiary, or any security or other instrument which by its
terms is convertible into, exercisable for, or exchangeable
for capital stock of the Company or of any Subsidiary, except
as set forth in the Prospectus. Except as may be properly
described in the Prospectus, there is outstanding no security
or other instrument which by its terms is convertible into or
exchangeable for capital stock of the Company or of any
Subsidiary;
(iii) to the knowledge of such counsel and other than
as set forth or contemplated by the Prospectus, there is no
litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending,
threatened, or in prospect (or any basis therefor) with
respect to the Company, any Subsidiary, or any of their
respective operations, businesses, properties, or assets
except as may be properly described in the Prospectus or as
individually or in the aggregate do not now have and cannot
reasonably be expected in the future to have a material
adverse effect upon the operations, business, properties, or
assets of the Company and the Subsidiaries taken as a whole.
To the knowledge of such counsel, neither the Company nor any
Subsidiary is in violation of, or in default with respect to,
any law, rule, regulation, order, judgment, or decree, except
as may be properly described in the Prospectus or such as in
the aggregate do not now have and will not in the future have
a material adverse effect upon the operations, business,
properties, or assets of the Company and the Subsidiaries
taken as a whole; nor is the Company or any Subsidiary
required to take any action in order to avoid any such
violation or default;
(iv) to the knowledge of such counsel, neither the
Company, any Subsidiary nor any other party is now in
violation or breach of, or in default with respect to,
complying with any material provision of any contract,
agreement, instrument, lease, license, arrangement, or
understanding known to
- 18 -
such counsel except such violation which will not reasonably
be expected to have a material adverse effect on the Company
and the Subsidiaries taken as a whole;
(v) neither the Company nor any Subsidiary is in
violation or breach of, or in default with respect to, any
term of its certificate of incorporation (or other charter
document) or by-laws;
(vi) the Company has all requisite corporate power
and authority to execute, deliver, and perform each of the
Company Documents. All necessary corporate proceedings of the
Company or any Subsidiary have been taken to authorize the
execution, delivery, and performance by the Company of the
Company Documents. Each Company Document has been duly
authorized by the Company. Each Company Document has been duly
executed and delivered by the Company. Each Company Document
is the legal, valid, and binding obligation of the Company,
and (subject to applicable bankruptcy, insolvency, and other
laws affecting the enforceability of creditors' rights
generally) is enforceable as to the Company in accordance with
its terms. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by the
Company or any Subsidiary for the execution, delivery, or
performance by the Company of any of the Company Documents
(except filings under the Act which have been made prior to
the Closing Date and consents consisting only of consents
under "blue sky" or securities laws). No consent of any party
to any contract, agreement, instrument, lease, license,
arrangement, or understanding known to such counsel to which
the Company or any Subsidiary is a party, or to which any of
their respective properties or assets are subject, is required
for the execution, delivery, or performance of any of the
Company Documents; and the execution, delivery, and
performance of the Company Documents will not violate, result
in a breach of, conflict with, or (with or without the giving
of notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or
understanding known to such counsel, or violate or result in a
breach of any term of the certificate of incorporation (or
other charter document) or by-laws of the Company, or any
Subsidiary or violate, result in a breach of, or conflict with
any law, rule, regulation, order, judgment, or decree binding
on the Company or any Subsidiary or to which any of their
respective operations, business, properties, or assets are
subject;
(vii) the Stock, the Additional Stock and the Warrant
Stock have been validly authorized. Such opinion delivered at
the Closing Date or any Additional Closing Date shall state
that each share of Stock or Additional Stock, as the case may
be, to be delivered on that date is validly issued, fully
paid, and nonassessable, with no personal liability attaching
to the ownership thereof, and is not issued in violation of
any preemptive rights of stockholders, and the
- 19 -
Underwriters have received good title to the Stock and
Additional Stock purchased by them, respectively, from the
Company, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and
voting trusts;
(viii) the Warrant Stock has been duly and validly
reserved for issuance. Such opinion delivered at the Closing
Date shall state that the Representative Warrants have been
duly and validly issued and delivered. The Warrant Stock, when
issued and delivered in accordance with the Representative
Warrant Agreement, will be validly authorized and issued,
fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, and will not have been
issued in violation of any preemptive rights of stockholders;
and the holders of the Representative Warrants will receive
good title to the securities purchased by them, respectively,
free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, and voting
trusts;
(ix) the Common Stock, the Securities, and the
Representative Warrant Agreement conform to all statements
relating thereto contained in the Registration Statement and
the Prospectus;
(x) to the knowledge of such counsel, any contract,
agreement, instrument, lease, or license required to be
described in the Registration Statement or the Prospectus has
been properly described therein. To the knowledge of such
counsel, any contract, agreement, instrument, lease, or
license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to
or has been incorporated as an exhibit by reference into the
Registration Statement;
(xi) insofar as statements in the Prospectus purport
to summarize the status of litigation or the provisions of
laws, rules, regulations, orders, judgments, decrees,
contracts, agreements, instruments, leases, or licenses, such
statements have been prepared or reviewed by such counsel and
accurately reflect the status of such litigation and
provisions purported to be summarized and are correct in all
material respects;
(xii) to such counsel's knowledge, the conditions for
use of Form SB-2 have been satisfied with respect to the
Registration Statement;
(xiii) the Common Stock has been approved for
quotation on the Nasdaq SmallCap Market and the Boston Stock
Exchange, subject to official notice of issuance;
(xiv) to the knowledge of such counsel, no person or
entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statement;
- 20 -
(xv) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, or any
Term Sheet that constitutes a part thereof, pursuant to Rules
434 and 424(b) has been made in the manner and within the time
period required by Rules 434 and 424(b). To the knowledge of
such counsel, no Stop Order has been issued and no proceedings
for that purpose have been instituted or threatened;
(xvi) the Registration Statement and the Prospectus,
and any amendment or supplement thereto (other than
statistical data, financial statements and other financial
data and schedules which are or should be contained in any
thereof, as to which such counsel need express no opinion),
comply as to form in all material respects with the
requirements of the Act and the Regulations;
(xvii) such counsel has no reason to believe that the
Registration Statement or the Prospectus, or any amendment or
supplement thereto (other than financial statements and other
statistical and financial data and schedules which are or
should be contained in any thereof, as to which such counsel
need express no opinion), contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading;
(xviii) to the knowledge of such counsel, since the
effective date of the Registration Statement, no event has
occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus
which has not been set forth in such an amendment or
supplement; and
In rendering such opinion, counsel for the Company may rely
(A) as to matters involving the application of laws other than the laws
of the United States, the laws of the State of New York, and the
General Corporation Law of the State of Delaware, to the extent counsel
for the Company deems proper and to the extent specified in such
opinion, upon an opinion or opinions (in form and substance
satisfactory to counsel for the Underwriters) of other counsel,
acceptable to counsel for the Underwriters, familiar with the
applicable laws, in which case the opinion of counsel for the Company
shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company
and that reliance thereon by counsel for the Company and the
Underwriters is reasonable; (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the
Company; and (C) to the extent they deem proper, upon written
statements or certificates of officers of departments of various
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company, provided that copies of any
such statements or certificates shall be delivered to counsel for the
Underwriters.
(c) On or prior to the Closing Date and any Additional Closing
Date, as the case may be, the Underwriters shall have been furnished
such information, documents, certificates, and opinions as they may
reasonably require for the purpose of enabling
- 21 -
them to review the matters referred to in Section 7(b), and in order to
evidence the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions
herein contained, or as you may reasonably request.
(d) At the Closing Date and any Additional Closing Date, as
the case may be, the Representative shall have received a favorable
opinion of ___________________, counsel for the Company with respect to
insurance regulatory matters, dated the date of delivery, addressed to
the Underwriters, in form, substance and scope satisfactory to counsel
for the Underwriters.
(e) At the Closing Date and any Additional Closing Date, as
the case may be, the Representative shall have received a favorable
opinion of ___________________, counsel for the Company with respect to
matters of Bermuda law, dated the date of delivery, addressed to the
Underwriters, in form, substance and scope satisfactory to counsel for
the Underwriters.
(f) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received a certificate of the chief
executive officer and of the chief financial officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect (i) that the conditions set forth in Section 7(a)
have been satisfied, (ii) that as of the date of this Agreement and as
of the Closing Date or such Additional Closing Date, as the case may
be, the representations and warranties of the Company contained herein
were and are accurate, and (iii) that as of the Closing Date or such
Additional Closing Date, as the case may be, the obligations to be
performed by the Company hereunder on or prior thereto have been fully
performed.
(g) At the time this Agreement is executed and at the Closing
Date and any Additional Closing Date, as the case may be, you shall
have received a letter from KPMG Peat Marwick LLP, certified public
accountants, dated the date of delivery and addressed to the
Underwriters, in form and substance satisfactory to you, with
reproduced copies or signed counterparts thereof for each of the
Underwriters.
(h) All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Stock and the Additional Stock
shall be reasonably satisfactory in form and substance to you and to
counsel for the Underwriters, and the Underwriters shall have received
from such counsel for the Underwriters a favorable opinion, dated as of
the Closing Date and the Additional Closing Date, as the case may be,
with respect to such of the matters set forth under Section 7(b), and
with respect to such other related matters, as you may reasonably
request.
(i) The NASD, upon review of the terms of the public offering
of the Stock and the Additional Stock, shall not have objected to the
Underwriters' participation in such offering.
- 22 -
(j) Prior to or on the Closing Date, the Company shall have
entered into the Representative Warrant Agreement with the
Representative.
(k) Prior to or on the Closing Date, the Company shall have
provided to you a copy of the agreements referred to in Sections 2(t)
and (x) hereof.
(l) Prior to or on the Closing Date, the Company shall have
entered into the Advisory Services Letter Agreement with the
Representative.
Any certificate or other document signed by any officer of the Company
and delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company hereunder to the Underwriters as to
the statements made therein. If any condition to the Underwriters' obligations
hereunder to be fulfilled prior to or at the Closing Date or any Additional
Closing Date, as the case may be, is not so fulfilled, you may on behalf of the
several Underwriters elect to terminate this Agreement or, if you so elect, in
writing waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
8. Indemnification and Contribution. (a) Subject to the conditions set
forth below, the Company agrees to indemnify and hold harmless each Underwriter,
its officers, directors, partners, employees, agents, and counsel, and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against any and all loss,
liability, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Section 8, but not be limited to, reasonable attorneys' fees
and any and all expense whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, any Term Sheet, the Registration
Statement or the Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto, or (B) in any application or other document
or communication (in this Section 8 collectively called an "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify any of the Securities under the "blue sky" or securities laws thereof or
filed with the Commission or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company as stated in Section 8(b) with respect to any Underwriter by or
on behalf of such Underwriter through the Representative expressly for inclusion
in any Preliminary Prospectus, any Term Sheet, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (ii) any material breach of any representation, warranty,
covenant, or agreement of the Company contained in this Agreement. The foregoing
agreement to indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Agreement.
- 23 -
If any action is brought against an Underwriter or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of an Underwriter (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve the Company from
any liability it may have pursuant to this Section 8(a) or otherwise) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (satisfactory to such indemnified party or parties) and
payment of expenses. Such indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties unless
the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action or the Company shall not
have promptly employed counsel satisfactory to such indemnified party or parties
to have charge of the defense of such action or such indemnified party or
parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto), unless such settlement, compromise,
consent, or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees promptly
to notify the Underwriters of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of the Stock or the Additional Stock, any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or any application.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing indemnity from
the Company to the several Underwriters, but only with respect to statements or
omissions, if any, made in any Preliminary Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto, or in any application in reliance upon and
in conformity with written information furnished to the Company as stated in
this Section 8(b) with respect to any Underwriter by or on behalf of such
Underwriter through the Representative expressly for inclusion in the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be; provided, however, that the
obligation of each Underwriter to provide indemnity under the provisions of this
Section 8(b) shall be limited
- 24 -
to the amount which represents the product of the number of shares of Stock and
Additional Stock underwritten by such Underwriter hereunder and the public
offering price per share set forth on the cover page of the Prospectus. For all
purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus constitute the only information
furnished in writing by or on behalf of any Underwriter expressly for inclusion
in any Preliminary Prospectus, the Registration Statement or the Prospectus (as
from time to time amended or supplemented), or any amendment or supplement
thereto, or in any application, as the case may be. If any action shall be
brought against the Company or any other person so indemnified based on any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or in any application, and in respect of which
indemnity may be sought against any Underwriter pursuant to this Section 8(b),
such Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 8(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 8(a) or
8(b) (subject to the limitations thereof), but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act, or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed the Registration
Statement, and any controlling person of the Company), on the one hand, and the
Underwriters, in the aggregate (including for this purpose any contribution by
or on behalf of an indemnified party), on the other hand, shall contribute to
the losses, liabilities, claims, damages, and expenses whatsoever to which any
of them may be subject, so that the Underwriters are responsible for the
proportion thereof equal to the percentage which the underwriting discount per
share set forth on the cover page of the Prospectus represents of the initial
public offering price per share set forth on the cover page of the Prospectus
and the Company is responsible for the remaining portion; provided, however,
that if applicable law does not permit such allocation, then other relevant
equitable considerations such as the relative fault of the Company and the
Underwriters in the aggregate in connection with the facts which resulted in
such losses, liabilities, claims, damages, and expenses shall also be
considered. The relative fault, in the case of an untrue statement, alleged
untrue statement, omission, or alleged omission, shall be determined by, among
other things, whether such statement, alleged statement, omission, or alleged
omission relates to information supplied by the Company or by the Underwriters,
and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement, omission,
or alleged omission. The Company and the Underwriters agree that it would be
unjust and inequitable if the respective obligations of the Company and the
Underwriters for contribution were determined by pro rata or per capita
allocation of the aggregate losses, liabilities, claims, damages, and expenses
(even if the Underwriters and the other indemnified parties were treated as one
entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 8(c).
In no case shall any Underwriter be responsible for a portion of the
contribution obligation
- 25 -
imposed on all Underwriters in excess of its pro rata share based on the number
of shares of Stock underwritten by it as compared to the number of shares of
Stock underwritten by all Underwriters who do not default in their obligations
under this Section 8(c). No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(c), each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and each officer, director, partner, employee, agent,
and counsel of an Underwriter shall have the same rights to contribution as such
Underwriter and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, each officer of
the Company who shall have signed the Registration Statement, and each director
of the Company shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 8(c). Anything in this
Section 8(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 8(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
9. Default by an Underwriter. (a) If any Underwriter or Underwriters
shall default in its or their obligation to purchase Stock or Additional Stock
hereunder, and if the number of shares of Stock or Additional Stock to which the
defaults of all Underwriters in the aggregate relate does not exceed 10% of the
number of shares of Stock or Additional Stock, as the case may be, which all
Underwriters have agreed to purchase hereunder, then such shares of Stock or
Additional Stock to which such defaults relate shall be purchased by the
non-defaulting Underwriters in proportion to their respective commitments
hereunder.
(b) If such defaults exceed in the aggregate 10% of the number of
shares of Stock or Additional Stock, as the case may be, which all Underwriters
have agreed to purchase hereunder, you may in your discretion arrange for
yourself or for another party or parties to purchase such shares of Stock or
Additional Stock, as the case may be, to which such default relates on the terms
contained herein. If you do not arrange for the purchase of such shares of Stock
or Additional Stock, as the case may be, within one business day after the
occurrence of defaults relating to in excess of 10% of the Stock or the
Additional Stock, as the case may be, then the Company shall be entitled to a
further period of one business day within which to procure another party or
parties satisfactory to you to purchase such shares of Stock or Additional
Stock, as the case may be, on such terms. If you or the Company do not arrange
for the purchase of the Stock or Additional Stock, as the case may be, to which
such defaults relate as provided in this Section 9(b), this Agreement may be
terminated by you or by the Company without liability on the part of the Company
(except that the provisions of Sections 6, 8, 10, and 13 shall survive such
termination) or the several Underwriters, but nothing in this Agreement shall
relieve a defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for any damages occasioned by its default
hereunder.
(c) If the shares of Stock or Additional Stock to which such defaults
relate are to be purchased by the non-defaulting Underwriters, or are to be
purchased by another party or parties as aforesaid, you or the Company shall
have the right to postpone the Closing Date or
- 26 -
the Additional Closing Date, as the case may be, for a reasonable period but not
in any event more than seven days in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus or in
any other documents and arrangements with respect to the Stock or the Additional
Stock, and the Company agrees to prepare and file promptly any amendment or
supplement to the Registration Statement or the Prospectus which in the opinion
of counsel for the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 as if such party had originally been a party to this
Agreement and had been allocated the number of shares of Stock and Additional
Stock actually purchased by it as a result of its original commitment to
purchase Stock and Additional Stock and its purchase of shares of Stock or
Additional Stock pursuant to this Section 9.
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any indemnified person,
or by or on behalf of the Company or any person or entity which is entitled to
be indemnified under Section 8(b), and shall survive termination of this
Agreement or the delivery and the payment of the Stock and the Additional Stock
to the several Underwriters. In addition, the provisions of Sections 6, 8, 10,
11, and 13 shall survive termination of this Agreement, whether such termination
occurs before or after the Closing Date or any Additional Closing Date.
11. Effective Date of This Agreement and Termination Thereof. (a) This
Agreement shall become effective at 9:30 a.m., New York City time, on the first
full business day following the day on which the Registration Statement becomes
effective or at the time of the initial public offering by the Underwriters of
the Stock, whichever is earlier. The time of the initial public offering shall
mean the time, after the Registration Statement becomes effective, of the
release by you for publication of the first newspaper advertisement which is
subsequently published relating to the Stock or the time, after the Registration
Statement becomes effective, when the Stock is first released by you for
offering by the Underwriters or dealers by letter or telegram, whichever shall
first occur. The Representative or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party, except as
noted below in this Section 11, by giving the notice indicated in Section 11(c)
before the time this Agreement becomes effective.
(b) In addition to the right to terminate this Agreement pursuant to
Sections 7 and 9 hereof, you shall have the right to terminate this Agreement at
any time prior to the Closing Date or any Additional Closing Date, as the case
may be, by giving notice to the Company if any domestic or international event,
act, or occurrence has materially disrupted, or in your opinion will in the
immediate future materially disrupt, the securities markets; or if there shall
have been a general suspension of, or a general limitation on prices for,
trading in securities on the New York Stock Exchange, the Nasdaq Stock Market's
National Market, the Nasdaq
- 27 -
Stock Market's SmallCap Market, the Boston Stock Exchange or in the
over-the-counter market; or if there shall have been an outbreak of major
hostilities or other national or international calamity; or if a banking
moratorium has been declared by a state or federal authority; or if a moratorium
in foreign exchange trading by major international banks or persons has been
declared; or if there shall have been a material interruption in the mail
service or other means of communication within the United States; or if the
Company shall have sustained a material loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage, labor dispute, legal or governmental
proceeding or other calamity or malicious act which, whether or not such loss
shall have been insured, will, in your opinion, make it inadvisable to proceed
with the offering, sale, or delivery of the Stock or the Additional Stock, as
the case may be; or if there shall have been such material adverse change in the
condition of the Company, or such change in the market for securities in general
or in political, financial, or economic conditions as in your judgment makes it
inadvisable to proceed with the offering, sale, and delivery of the Stock or the
Additional Stock, as the case may be, on the terms contemplated by the
Prospectus.
(c) If you elect to prevent this Agreement from becoming effective, as
provided in this Section 11, or to terminate this Agreement pursuant to Section
7, 9, or this Section 11, you shall notify the Company promptly by telephone,
facsimile transmission, telex, or telegram, confirmed by letter. If the Company
elects to prevent this Agreement from becoming effective, as provided in this
Section 11, or if the Company elects to terminate this Agreement pursuant to
Section 9 of this Agreement, the Company shall notify you promptly by telephone,
facsimile transmission, telex, or telegram, confirmed by letter.
(d) Notwithstanding anything in this Agreement to the contrary other
than Section 11(e) hereof, if this Agreement shall not become effective by
reason of an election pursuant to this Section 11 or if this Agreement shall
terminate or shall otherwise not be carried out within the time specified herein
by reason of any failure on the part of the Company to perform any convent or
agreement or satisfy any condition of the Agreement by it to be performed or
satisfied, the sole liability of the Company to the several Underwriters, in
addition to the obligation the Company assumed pursuant to Section 6, will be to
(i) reimburse the several Underwriters for (x) all of their out-of-pocket
expenses, including the reasonable fees and disbursements of their counsel, as
shall have been incurred by them in connection with this Agreement and the
proposed offer, sale and delivery of the Stock and the Additional Stock, up to
$50,000; (y) for one-half of such expenses, on a dollar-for-dollar basis, in
excess of $50,000 up to $100,000, provided that the reimbursement under this
subclause (y) shall not exceed $25,000; and (z) for all such expenses in excess
of $100,000 and upon demand the Company agrees to pay promptly such amounts to
you for the respective accounts of the Underwriters, and (ii) if the Company has
elected to prevent this Agreement from becoming effective or if you terminate
this Agreement pursuant to Section 7, the Company and the Representative shall
enter into the Advisory Services Letter Agreement, substantially in the form set
forth as an exhibit to the Registration Statement.
- 28 -
(e) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 6, 8, 10, and 13 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered or transmitted via facsimile
transmission, telex or telegraph and confirmed by letter, to such Underwriter,
to Commonwealth Associates, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax
(000) 000-0000, Attention: Corporate Finance Department; and if sent to the
Company, shall be mailed, delivered or transmitted via facsimile transmission,
telex or telegraph and confirmed by letter, Preferred Employers Holdings, Inc.,
00000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx, Xxxxxxx 00000, Fax (000) 000-0000,
Attention: Xxx Xxxxxx. All notices hereunder shall be effective upon receipt by
the party to which it is addressed.
13. Parties. You represent that you are authorized to act on behalf of
the several Underwriters named in Schedule I hereto and the Company shall be
entitled to act and rely on any request, notice, consent, waiver, or agreement
purportedly given on behalf of the Underwriters when the same shall have been
given by you on such behalf. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the several Underwriters and the Company and the
persons and entities referred to in Section 8 who are entitled to
indemnification or contribution, and their respective successors, legal
representatives, and assigns (which shall not include any buyer, as such, of the
Stock or the Additional Stock), and no other person shall have or be construed
to have any legal or equitable right, remedy, or claim under or in respect of or
by virtue of this Agreement or any provision herein contained. Notwithstanding
anything contained in this Agreement to the contrary, all of the obligations of
the Underwriters hereunder are several and not joint.
14. Construction. This Agreement shall be construed in accordance with
the laws of the State of New York, without giving effect to conflict of laws.
TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. Consent to Jurisdiction. The Company irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out of
or relating to this Agreement, any document or instrument delivered pursuant to,
in connection with or simultaneously with this Agreement, or a breach of this
Agreement or any such document or instrument. In any such action or proceeding,
the Company waives personal service or any summons, complaint or other process
and agrees that service thereof may be made in accordance with Section 12.
Within 30 days after such service, or such other time as may be mutually agreed
upon in writing by the attorneys for the parties to such action or proceeding,
the Company shall appear or answer such summons, complaint or other process.
Should the Company fail to appear or answer within such 30 day period or such
extended period, as the case may be, the Company shall be deemed in default and
judgement may be entered against the Company for the amount as demanded in any
summons, complaint or other process so served.
- 29 -
If the foregoing correctly sets forth the understanding between you and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
PREFERRED EMPLOYERS HOLDINGS, INC.
By:________________________________
Xxx Xxxxxx, Chairman and
Chief Executive Officer
Accepted as of the date first above written.
New York, New York
COMMONWEALTH ASSOCIATES
By: COMMONWEALTH ASSOCIATES MANAGEMENT COMPANY, INC.,
General Partner
By: _____________________________
Name:
Title:
On behalf of itself and the other several
Underwriters named in Schedule I hereto.
- 30 -
SCHEDULE I
Number of Shares of
Stock to be Purchased
Underwriter from the Company
----------- -------------------------
COMMONWEALTH ASSOCIATES
TOTAL =============
- 31 -
