Exhibit 1.1
1,500,000 SHARES OF COMMON STOCK
1,500,000 SHARES OF % SENIOR CONVERTIBLE REDEEMABLE PREFERRED STOCK
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GRAND COURT LIFESTYLES, INC.
UNDERWRITING AGREEMENT
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New York, New York
March , 1997
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National Securities Corporation
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-00000
as Representative of the several Underwriters listed on Schedule B hereto
Ladies and Gentlemen:
Grand Court Lifestyles, Inc., a corporation organized under the laws
of the State of Delaware (the "Company") proposes to issue, and the persons
named in Schedule A (the "Selling Stockholders") propose to sell, to the
underwriters named in Schedule B (collectively, the "Underwriters", which
term shall also include any underwriter substituted as hereinafter provided
in Section 13 hereof), and confirm their agreement with the Underwriters
with respect to the sale by the Company and the Selling Stockholders and
the purchase by the Underwriters of an aggregate of one million five
hundred thousand (1,500,000) common shares ("Shares") of the Company,
par value $.01 per share ("Common Stock"), with one million two hundred
thousand (1,200,000) of the Shares being issued and sold to the
Underwriters by the Company and three hundred thousand (300,000) of the
Shares being sold to the Underwriters by the Selling Stockholders in
accordance with Schedule A, and one million five hundred thousand
(1,500,000) shares of % Senior Convertible Preferred Stock
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("Preferred Shares") of the Company, par value $.0001 per share, and $10.00
liquidation preference per share ("Preferred Stock"). Such Shares and
Preferred Shares are hereinafter referred to collectively as the "Firm
Securities." Upon your request, as provided in Section 3(b) of this
Agreement, the Company shall also issue and sell to the Underwriters up to
an additional one hundred eighty thousand (180,000) shares of Common
Stock and two hundred twenty-five thousand (225,000) shares of Preferred
Stock and the Selling Stockholders shall also sell to the Underwriters up
to an additional forty five thousand (45,000) shares of Common Stock for
the purpose of covering over-allotments, if any, all in accordance with
Schedule A. Such additional shares of Common Stock and Preferred Stock
are hereinafter referred to collectively as the "Option Securities."
The Company also proposes to issue and sell to National Securities
Corporation, as the Representative of the several Underwriters (the
"Representative"), warrants (the "Representative's Warrants") pursuant
to the Representative's Warrant Agreement dated as of March ___, 1997,
between the Company and the Representative (the "Representative's
Warrant Agreement"), for the purchase of an additional one hundred fifty
thousand (150,000) shares of Common Stock and one hundred fifty thousand
(150,000) shares of Preferred Stock. The shares of Common Stock and
Preferred Stock issuable upon exercise of the Representative's Warrants,
and the shares of Common Stock issuable upon conversion of the Preferred
Stock acquired upon exercise of the Representative's Warrants, are
hereinafter referred to collectively as the "Representative's Securities."
The aggregate one million seven hundred twenty-five thousand (1,725,000)
shares of Common Stock (including Common Stock constituting Option
Securities) and one million seven hundred twenty-five thousand (1,725,000)
shares of Preferred Stock (including Preferred Stock constituting Option
Securities) will be separately tradeable upon issuance. The Firm
Securities, the Option Securities, the Representative's Warrants, and the
Representative's Securities are hereinafter collectively referred to as
the "Securities" and are more fully described in the Registration
Statement and the Prospectus referred to below. The Company confirms the
agreements made by it with the Underwriters with respect to the Securities
and related matters as follows:
1. Representations and Warranties of the Company. The Company represents
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and warrants to, and agrees with, the Underwriters as of the date
hereof, and as of the Closing Date (as hereinafter defined) and the
Option Closing Date (as hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement,
and an amendment or amendments thereto, on Form S-1 (No. 333-
05955), including each related preliminary prospectus included
therein prior to the time such registration statement becomes
effective ("Preliminary Prospectus"), for the registration of the
Firm Securities and the Option Securities under the Securities
Act of 1933, as amended (the "Act"), which registration statement
and amendment or amendments have been prepared by the Company in
conformity with the requirements of the Act, and the Rules and
Regulations (as defined below) of the Commission under the Act.
The Company will not file any other amendment thereto to which
the Representative shall have reasonably objected in writing
after having been furnished with a copy thereof. Except as the
context may otherwise require, such registration statement, as
amended, on file with the Commission at the time the registration
statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as
a part thereof or incorporated therein (including, but not
limited to those documents or information incorporated by
reference therein) and all information deemed to be a part
thereof as of such time pursuant to paragraph (b) of Rule 430(A)
of the Regulations), is hereinafter called the "Registration
Statement," and the form of prospectus in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations,
is hereinafter called the "Prospectus." For purposes hereof,
"Rules and Regulations" mean the rules and regulations adopted by
the Commission under either the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or Prospectus
or any part of any thereof and no proceedings for a stop order
suspending the effectiveness of the Registration Statement or any
of the Company's securities have been instituted or are pending
or, to the Company's knowledge, are threatened. Each of the
Preliminary Prospectus, the Registration Statement and Prospectus
at the time of filing thereof conformed with the requirements of
the Act and the Rules and Regulations, and none of the
Preliminary Prospectus, the Registration Statement or Prospectus
at the time of filing thereof contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein and necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, except that this representation and warranty does not
apply to (i) statements made in reliance upon and in conformity
with written information furnished to the Company with respect to
the Underwriters by or on behalf of the Underwriters expressly
for use in such Preliminary Prospectus, Registration Statement or
Prospectus, or (ii) statements made in any Preliminary Prospectus
which were revised and/or corrected in any subsequent Preliminary
Prospectus or the Registration Statement or Prospectus, and which
subsequent Preliminary Prospectus or Prospectus was recirculated
to all recipients of the Preliminary Prospectus which had been
revised in accordance with the Rules and Regulations.
(c) When the Registration Statement [WAS DECLARED/BECOMES] effective
and at all times subsequent thereto up to the Closing Date and
the Option Closing Date, if any, and during such longer period as
the Prospectus may be required to be delivered in connection with
sales by the Underwriters or a dealer, the Registration Statement
and the Prospectus, as amended or supplemented as required, will
contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and will
conform in all material respects to the requirements of the Act
and the Rules and Regulations; neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, will
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which the statements where made or omitted, not misleading;
provided, however, that this representation and warranty does not
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apply to statements made or statements omitted in reliance upon
and in conformity with information furnished to the Company in
writing by or on behalf of the Underwriters expressly for use in
the Preliminary Prospectus, Registration Statement or Prospectus
or any amendment thereof or supplement thereto.
(d) Each of the Company and its subsidiaries has been duly organized
and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation. The Company's
subsidiaries are sometimes hereafter individually referred to as
a "Subsidiary" and collectively referred to as the
"Subsidiaries," and when reference is made to a Subsidiary it
also includes any general partnership, limited partnership or
limited liability company whose financial statements have been
consolidated with those of the Company in the consolidated
financial statements of the Company that are included in each
Preliminary Prospectus, the Registration Statement or the
Prospectus. Except as set forth in the Prospectus, the Company
does not own or control, directly or indirectly, any corporation,
partnership, trust, joint venture or other business entity other
than the subsidiaries listed in Exhibit 21 of the Registration
Statement. Each of the Company and any Subsidiary is duly
qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations
require such qualification or licensing, except where the failure
to be so qualified or licensed would not have a material and
adverse effect on the condition, financial or otherwise, or the
earnings, position, business affairs, operations, properties, or
results of operations of the Company and the Subsidiaries, taken
as a whole (the "Business"). Each of the Company and any
Subsidiary has all requisite power and authority (corporate and
other), and has obtained any and all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits
of and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties
and conduct its business as described in the Prospectus, except
where the failure to have such authorizations, approvals, orders,
licenses, certificates, franchises or permits would not have a
material and adverse effect on the Business; each of the Company
and any Subsidiary is and has been doing business in compliance
with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state,
local and foreign laws, rules and regulations; and neither the
Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise,
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and
adversely affect the Business; the disclosures in the
Registration Statement concerning the effects of federal, state,
local, and foreign laws, rules and regulations on each of the
Company's and any Subsidiary's businesses as currently conducted
and as contemplated are correct in all material respects and do
not omit to state a material fact necessary to make the
statements contained therein not misleading in light of the
circumstances in which they were made.
(e) At the dates as of which such information is set forth in the
Prospectus, and after giving effect to the stock split described
in the Prospectus, the Company had a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, under
the headings "Capitalization" and "Description of Capital Stock"
and will have the adjusted capitalization set forth therein on
the Closing Date and on the Option Closing Date, if any, based
upon the assumptions set forth therein, and neither the Company
nor any Subsidiary is a party to or bound by any instrument,
agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities,
except for this Agreement, the Representative's Warrant Agreement
and as described in the Prospectus. The Securities and all other
securities issued or issuable by the Company conform or, when
issued and paid for, will conform, in all material respects to
all statements with respect thereto contained in the Registration
Statement and the Prospectus. All issued and outstanding shares
of capital stock of the Company and all Subsidiaries have been
duly authorized and validly issued and are fully paid and
non-assessable and the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such
securities was issued in violation of the preemptive rights of
any holders of any security of the Company or similar contractual
rights granted by the Company or any Subsidiary. The Firm
Securities, the Representative's Warrant and the Option
Securities are not and will not be subject to any preemptive or
other similar rights of any stockholder, have been duly
authorized and, when issued, paid for and delivered in accordance
with the terms hereof, will be validly issued, fully paid and
nonassessable and will conform in all material respects to the
description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely as such
holders; all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly
and validly taken; and the certificates representing the
Securities will be in due and proper form.
(f) The consolidated financial statements of the Company and each
Subsidiary together with the related notes and schedules thereto,
included in the Registration Statement and the Prospectus fairly
present the consolidated financial position, income, changes in
cash flow, changes in stockholders' equity and the results of
operations of the Company and each Subsidiary at the respective
dates and for the respective periods to which they apply and such
financial statements have been prepared in conformity with the
Rules and Regulations and with generally accepted accounting
principles ("GAAP") consistently applied throughout the periods
involved. Except as disclosed in the Registration Statement and
the Prospectus, there has been no material adverse change or
development involving a material prospective change in the
Business, whether or not arising in the ordinary course of
business, since the date of the financial statements included in
the Registration Statement and the Prospectus and the outstanding
debt, the property, both tangible and intangible, and the
businesses of each of the Company and any Subsidiary taken as a
whole conform in all material respects to the descriptions
thereof contained in the Registration Statement and the
Prospectus. Financial information (including, without
limitation, any pro forma financial information) set forth in the
Prospectus under the headings "Summary Financial Data," "Selected
Consolidated Financial Data," "Capitalization," and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," fairly present, on the basis stated in the
Prospectus, the information set forth therein, and have been
derived from or compiled on a basis consistent with that of the
audited consolidated financial statements included in the
Prospectus, and have been prepared in accordance with the
applicable requirements of Regulation S-X promulgated under the
Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), and otherwise in accordance with the Rules and
Regulations.
(g) Each of the Company and any of its predecessors in interest (i)
has filed with the appropriate federal, state and local
governmental agencies, and all foreign countries and political
subdivisions thereof, all tax returns which are required to be
filed through the date hereof or has received extensions thereof;
(ii) has paid all federal, state, local, and foreign taxes shown
on such returns and all assessments received by it, to the extent
that the same are material and have become due, except where the
failure to so file or so pay could not have a material adverse
effect on the Business, including, but not limited to,
withholding taxes and amounts payable under Chapters 21 through
24 of the Internal Revenue Code of 1986 (the "Code"), and has
furnished all information returns it is required to furnish
pursuant to the Code; (iii) has established adequate reserves for
such taxes which are not due and payable; and (iv) does not have
any material tax deficiency or claims outstanding, proposed or
assessed against it.
(h) No transfer tax, stamp duty or other similar tax is payable by or
on behalf of the Underwriters in connection with (i) the issuance
by the Company of the Securities, (ii) the purchase by the
Underwriters of the Firm Securities and the Option Securities, if
any, from the Company and the purchase by the Representative of
the Representative's Warrants from the Company, (iii) the
consummation by the Company of any of their obligations under
this Agreement, or (iv) resales of the Firm Securities and Option
Securities in connection with the distribution contemplated
hereby.
(i) Except for the absence of policies which are disclosed in the
Prospectus, the Company and each of the Subsidiaries maintain
insurance by insurers of recognized financial responsibility of
the types and in the amounts as the Company and each of the
Subsidiaries believe is prudent and adequate for the business in
which it is engaged and customary in the industry in which the
Company and the Subsidiaries operate, including, but not limited
to, insurance covering property liability, and insurance covering
real and personal property owned or leased against theft, damage,
destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and
effect. The Company and each of the Subsidiaries, has delivered
to the Underwriters' Counsel satisfactory summaries of these
insurance policies. The Company has no reason to believe that it
and the Subsidiaries will not be able to renew existing insurance
coverage with respect to the Company and the Subsidiaries as and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its and the
Subsidiaries' businesses, in either case, at a cost that would
not have a material adverse effect on the Business. None of the
Company and any Subsidiary has failed to file any material
claims, has material disputes with its insurance company
regarding any claims submitted under its insurance policies, and
has not complied in all material respects with all material
provisions contained in its insurance policies where the failure
to do so could reasonably be expected to have a material adverse
effect on the Business.
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including,
without limitation, those having jurisdiction over environmental
or similar matters), domestic or foreign, pending or threatened
against (or circumstances that may give rise to the same), or
involving the properties or business of, the Company or any
Subsidiary which (i) questions the validity of the capital stock
of the Company, this Agreement, the Representative's Warrant
Agreement, or of any action taken or to be taken by the Company
or any Selling Stockholder pursuant to or in connection with this
Agreement or the Representative's Warrant Agreement, (ii) is
required to be disclosed in the Registration Statement which is
not so disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all material
respects), or (iii) could reasonably be expected to materially
and adversely affect the Business.
(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, to enter into
this Agreement and the Representative's Warrant Agreement and to
consummate the transactions provided for in such agreements, as
applicable; and this Agreement and the Representative's Warrant
Agreement have each been duly and properly authorized, executed
and delivered by the Company as applicable. Each of this
Agreement and the Representative's Warrant Agreement constitutes
a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or
contribution may be limited by applicable law), and none of the
Company's issue and sale of the Securities, or the execution or
delivery of this Agreement or the Representative's Warrant
Agreement by the Company, the performance hereunder and
thereunder by the Company, the consummation of the transactions
contemplated herein and therein by the Company, or the conduct of
the Company's business as described in the Registration
Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under,
or result in the creation or imposition of any lien of any kind
whatsoever upon, any property or assets (tangible or intangible)
of the Company or any Subsidiary pursuant to the terms of (i) the
certificate of incorporation or by-laws or the memorandum or
articles of association, as applicable, of the Company or any
Subsidiary, (ii) any license, contract, indenture, mortgage, deed
of trust, voting trust agreement, stockholders agreement, note,
loan or credit agreement or any other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of
them is or may be bound or to which any of their properties or
assets (tangible or intangible) is or may be subject, or (iii)
any statute, judgment, decree, order, rule or regulation
applicable to the Company or any Subsidiary of any arbitrator,
court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those
having jurisdiction over environmental or similar matters),
domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their respective activities or properties,
which could reasonably be expected to materially and adversely
affect the Business in each of the above instances.
(l) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other
body, domestic or foreign, is required for the issuance and sale
of the Securities pursuant to the Prospectus and the Registration
Statement, the performance of this Agreement and the
Representative's Warrant Agreement and the transactions
contemplated hereby and thereby, including without limitation,
any waiver of any preemptive, first refusal or other rights that
any entity or person may have for the issue and/or sale of any of
the Securities, except such as have been or may be obtained under
the Act or may be required under state securities or blue sky
laws (collectively, "Blue Sky") in connection with the
Underwriters' purchase and distribution of the Firm Securities
and the Option Securities, if any, and the Representative's
purchase of the Representative's Warrants to be sold by the
Company hereunder.
(m) All executed agreements, contracts or other documents or copies
of executed agreements, contracts or other documents filed as
exhibits to the Registration Statement to which the Company, any
Subsidiary, or any Selling Stockholder is a party or by which any
of them may be bound or to which any of their assets, properties
or businesses may be subject, have been duly and validly
authorized, executed and delivered by the Company, any
Subsidiary, or the Selling Stockholders and constitute the legal,
valid and binding agreements of the Company or any Subsidiary or
any Selling Stockholder, as the case may be, enforceable against
the Company or any Subsidiary, as the case may be, in accordance
with their respective terms (except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the
application of equitable principles in any action, legal or
equitable, and except as rights to indemnity or contribution may
be limited by applicable law). The descriptions in the
Registration Statement of such agreements, contracts and other
documents are accurate in all material respects and fairly
present the information required to be shown with respect thereto
by Form S-1, and there are no contracts or other documents which
are required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits to
the Registration Statement which are not described or filed as
required, and the exhibits which have been filed are complete and
correct copies of the documents of which they purport to be
copies.
(n) Subsequent to the respective dates as of which information is set
forth in the Registration Statement and Prospectus, and except as
may otherwise be indicated or contemplated herein or therein,
neither the Company nor any Subsidiary has (i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money except in the ordinary course of
business, (ii) entered into any transaction other than in the
ordinary course of business consistent with past practice, or
(iii) declared or paid any dividend with respect to its capital
stock, and there has not been any change in the capital stock
(other than upon the sale of the Firm Securities), or any
material change in the debt (long or short term) or liabilities,
or any material adverse change in the Business.
(o) Except as disclosed in the Prospectus, no default exists in the
due performance and observance of any term, covenant or condition
of any material license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust
agreement, stockholders' agreement, partnership agreement, note,
loan or credit agreement, purchase order, or any other material
agreement or instrument evidencing an obligation for borrowed
money, or any other material agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or
any Subsidiary may be bound or to which the property or assets
(tangible or intangible) of the Company or any Subsidiary is
subject or affected, except for such defaults, if any, which
individually and in the aggregate would not have a material
adverse effect on the Business.
(p) Each of the Company and the Subsidiaries has generally enjoyed a
satisfactory employer-employee relationship with its employees
and is in material compliance with all federal, state, local, and
foreign laws and regulations respecting employment and employment
practices, terms and conditions of employment and wages and
hours. To the Company's knowledge, there are no pending
investigations involving the Company or any Subsidiary, by the
U.S. Department of Labor, or any other foreign or domestic
governmental agency responsible for the enforcement of such
federal, state, local, or foreign laws and regulations. To the
Company's knowledge, there is no unfair labor practice charge or
complaint against the Company or any Subsidiary pending before
the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened
against or involving the Company or any Subsidiary, or any
predecessor entity. No representation question exists respecting
the employees of the Company or any Subsidiary, and no collective
bargaining agreement or modification thereof is currently being
negotiated by the Company or any Subsidiary. No grievance or
arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company or any
Subsidiary. No labor dispute with the employees of the Company
or, any Subsidiary exists, or, to its knowledge, is imminent.
(q) Except for the Grand Court Lifestyles, Inc. Employee Benefit
Plan, neither the Company nor any Subsidiary maintains, sponsors
or contributes to any program or arrangement that is an "employee
pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2),
3(1) and 3(37), respectively, of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (the foregoing are
collectively, "ERISA Plans"). Neither the Company nor any
Subsidiary maintains or contributes, now or at any time
previously, to a defined benefit plan, as defined in Section
3(35) of ERISA. No ERISA Plan (or any trust created thereunder),
if any, has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code,
which could subject the Company or any Subsidiary to any tax
penalty on prohibited transactions and which has not adequately
been corrected. Each ERISA Plan, if any, is in compliance with
all material reporting, disclosure and other requirements of the
Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal
Revenue Services with respect to each ERISA Plan which is
intended to comply with Code Section 401(a), stating that such
ERISA Plan and the attendant trust are qualified thereunder.
Neither the Company nor any Subsidiary has ever completely or
partially withdrawn from a "multiemployer plan."
(r) None of the Company, any Subsidiary, nor any of their respective
employees, directors, stockholders, partners, or affiliates
(within the meaning of the Rules and Regulations) has taken or
will take, directly or indirectly, any action designed to or
which has constituted or which might be expected to cause or
result in, under the Exchange Act, or otherwise, unlawful
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities or
otherwise.
(s) Except as otherwise disclosed in the Prospectus, none of the
patents, trademarks, service marks, trade names and copyrights,
and applications with respect thereto, and licenses and rights to
the foregoing presently owned or held by the Company and any
Subsidiary, are in dispute so far as known by the Company or, are
in any conflict with the right of any other person or entity. To
the Company's knowledge, each of the Company and any Subsidiary
(i) owns or has the right to use, free and clear of all Liens of
any kind whatsoever, all patents, trademarks, service marks,
trade names and copyrights, technology and licenses and rights
with respect to the foregoing, used in the conduct of its
business as now conducted or proposed to be conducted without
infringing upon or otherwise acting adversely to the right or
claimed right of any person, corporation or other entity under or
with respect to any of the foregoing and (ii) except as set forth
in the Prospectus, is not obligated or under any liability
whatsoever to make any payment by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any
patent, trademark, service xxxx, trade name, copyright, know-how,
technology or other intangible asset, with respect to the use
thereof or in connection with the conduct of its business or
otherwise, except for such obligations or liabilities, if any,
which individually and in the aggregate would not have a material
adverse effect on the Business.
(t) Each of the Company and the Subsidiaries has good and marketable
title to, or valid and enforceable leasehold estates in, all
items of real and personal property stated in the Prospectus to
be owned or leased by it free and clear of all liens, of any kind
whatsoever, other than those referred to in the Prospectus and
liens for taxes not yet due and payable, except for such liens
the existence of which does not materially affect the value of
the Company and the Subsidiaries real and personal property,
taken as a whole.
(u) Deloitte & Touche LLP, whose report is filed with the Commission
as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules
and Regulations.
(v) [Intentionally Left Blank.]
(w) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the
nature of a finder's, consulting or origination fee with respect
to the sale of the Securities hereunder or any other
arrangements, agreements, understandings, payments or issuance
with respect to the Company, any Subsidiary or any of their
respective officers, directors, stockholders, partners, employees
or affiliates that may affect the Underwriter's compensation, as
determined by the National Association of Securities Dealers,
Inc. ("NASD"), other than as described in the Prospectus.
(x) The Firm Securities and the Option Securities have been approved
for inclusion and quotation on the Nasdaq National Market
("Nasdaq-NMS").
(y) Neither the Company nor any Subsidiary, nor any of their
respective officers, employees, agents or any other person acting
on behalf of the Company or any Subsidiary has, directly or
indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee
or agent, governmental agency (domestic or foreign) or
instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or
other person who was, is, or may be in a position to help or
hinder the business of the Company or any Subsidiary (or assist
the Company or any Subsidiary in connection with any actual or
proposed transaction) which might subject the Company or any
Subsidiary, or any other such person to any damage or penalty in
any civil, criminal or governmental litigation or proceeding
(domestic or foreign). The Company's and each Subsidiary's
internal accounting controls are sufficient to cause the Company
and each Subsidiary to comply with the Foreign Corrupt Practices
Act of 1977, as amended.
(z) Except as set forth in the Prospectus, no officer, director,
stockholder or partner of the Company or any Subsidiary, or any
"affiliate" or "associate" (as these terms are defined in Rule
405 promulgated under the Rules and Regulations) of any of the
foregoing persons or entities has or has had, either directly or
indirectly (i) an interest in any person or entity which (A)
furnishes or sells services or products which are furnished or
sold or are proposed to be furnished or sold by the Company or
any Subsidiary, or (B) purchases from or sells or furnishes to
the Company or any Subsidiary any goods or services, or (ii) a
beneficial interest in any contract or agreement to which the
Company or any Subsidiary is a party or by which it may be bound
or affected. Except as set forth in the Prospectus, there are no
existing agreements, arrangements, understandings or
transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company or
any Subsidiary, and any officer, director, all holders of five
percent (5%) or more of the Common Stock of the Company or of the
capital stock or interests of or in any Subsidiary, or any
partner, affiliate or associate of any of the foregoing persons
or entities which are required to be disclosed in the Prospectus.
(aa) Any certificate signed by any officer of the Company or any
officer of any Subsidiary, and delivered to the Underwriters or
to the Underwriters' Counsel (as defined herein) shall be deemed
a representation and warranty by the Company to the Underwriters
as to the matters covered thereby.
(bb) Each of the minute books of the Company and each Subsidiary has
been made available to the Underwriters and contains a complete
summary of all meetings and actions of the directors and
stockholders of the Company and each Subsidiary, respectively,
since the time of its respective incorporation, and reflects all
transactions referred to in such minutes accurately and fairly in
all material respects.
(cc) Except and to the extent described in the Prospectus, no holders
of any securities of the Company or any Subsidiary or of any
options, warrants or other convertible or exchangeable securities
of the Company or any Subsidiary have the right to include any
securities issued by the Company or any Subsidiary in the
Registration Statement or any registration statement to be filed
by the Company or to require the Company to file a registration
statement under the Act and no person or entity holds any anti-
dilution rights with respect to any securities of the Company or
any Subsidiary.
(dd) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business
-----------------------------------------------
with Cuba, and the Company further agrees that if it or any
---------
affiliate commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the
date of the Registration Statement becomes or has become
effective with the Commission or with the Florida Department of
Banking and Finance (the "Department"), whichever date is later,
or if the information reported or incorporated by reference in
the Prospectus, if any, concerning the Company's, or any
affiliate's, business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will
provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(ee) The Company is not now, and immediately after the sale of the
Firm Securities, the Option Securities, if any, and the
Representative's Warrants hereunder, and the application of the
proceeds from such sale as described under the caption "Use of
Proceeds" in the Prospectus, will not be an "investment company"
or a company "controlled by" an "investment company" within the
meaning of such terms under the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission
thereunder.
(ff) The Company, and each Subsidiary, and each facility that is
managed by the Company or any Subsidiary, is in compliance with
all federal, state, local or foreign rules, laws, regulations,
ordinances, codes, administrative orders and common law, and has
all necessary licenses and permits, relating to pollution or
protection of human health or wildlife, the release or threatened
release, the use, distribution, manufacture, processing, storage,
treatment and disposal of toxic substances, toxic wastes,
chemicals, pollutants, contaminants, wastes, medical wastes,
hazardous wastes, hazardous substances, petroleum or petroleum
products and protection of health or the environment (including
without limitation, ambient air, surface water, groundwater,
landsurface or subsurface strata), other than such lack of
compliance or the absence of such licenses and permits the effect
of which does not and would not in the future have a material
adverse effect on the Business (collectively, "Environmental
Laws").
(gg) The Company will not, and will not permit any of its future
subsidiaries to, directly or indirectly, enter into any
transaction or series of related transactions (including, but not
limited to, the sale, purchase, exchange, lease, transfer or
other disposition of any properties, assets or services to, or
the purchase of any property, assets or services from, or the
entry into any contact, agreement, undertaking, loan, advance or
guarantee) with, or for the benefit of, an Affiliate (an
"Affiliate Transaction"), or extend, renew, waive or otherwise
modify the terms of any Affiliate Transaction entered into prior
to the date of issuance of the Securities unless (i) such
Affiliate Transaction is between or among the Company and its
wholly-owned subsidiaries, or (ii) the terms of such Affiliate
Transaction are fair and reasonable; provided, however,
notwithstanding anything to the contrary contained herein, the
Company may issue securities pursuant to the exercise of
outstanding options and warrants on the terms in effect and
described in the Prospectus relating to the Securities. All
Affiliate Transactions approved in good faith by the Board of
Directors of the Company and a minimum of two disinterested and
independent outside directors thereof, with such approval
evidenced by a Board Resolution, which refers to the criteria set
forth in this Section 1(gg), shall be deemed to meet the
criterion set forth in (i) or (ii) above. "Affiliate" is defined
in accordance with Rule 405 promulgated under the Rules and
Regulations.
2. Representations and Warranties of the Selling Stockholders. The
----------------------------------------------------------
Selling Stockholders, severally and not jointly, represent and warrant to,
and agree with, each of the Underwriters as of the date hereof, and as of
the Closing Date and each Option Closing Date, if any, as follows:
(i) Such Selling Stockholder has full legal right, power and
authority to enter into this Agreement, the Power of Attorney with
-----
and , or either of them, as attorney-in-fact (the "Attorney-in-Fact")
-----
in the form heretofore furnished to you (the "Power of Attorney") and the
Custody Agreement with First United Bank as custodian (the "Custodian") in
the form heretofore furnished to you (the "Custody Agreement"). Each
Selling Stockholder has full legal right, power and authority to deliver
and sell the Firm Securities and the Option Securities to be sold by such
Selling Stockholder under this Agreement, and to consummate the
transactions provided for in this Agreement, the Power of Attorney and the
Custody Agreement; and this Agreement, the Power of Attorney and the
Custody Agreement have each been duly and properly authorized, executed and
delivered by such Selling Stockholder. Each of this Agreement, the Power
of Attorney and the Custody Agreement constitutes a legal, valid and
binding agreement of such Selling Stockholder enforceable against such
Selling Stockholder in accordance with its terms (except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to
or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as
rights to indemnity or contribution may be limited by applicable law).
None of such Selling Stockholder's delivery and sale of the firm Securities
or Option Securities, execution or delivery of this Agreement, the Power of
Attorney or the Custody Agreement, its performance hereunder and
thereunder, or its consummation of the transactions contemplated herein and
therein, conflicts with or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation
or imposition of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of such Selling
Stockholder pursuant to the terms of any license, contract, indenture,
mortgage, deed of trust, lease, voting trust agreement, stockholders
agreement, note, loan or credit agreement or any other agreement or
instrument to which the Selling Stockholder is a party or by which the
Selling Stockholder is or may be bound or to which either of its properties
or assets (tangible or intangible) is or may be subject, or any statute,
judgement, decree, order, rule or regulation applicable to any Selling
Stockholder or any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body (including, without limitation,
those having jurisdiction over any matter), domestic or foreign, having
jurisdiction over the Selling Stockholder or any of his activities or
properties, which could reasonably be expected to materially and adversely
affect the Business in each of the above instances. The Attorney-in-Fact,
acting alone, is authorized to execute and deliver this Agreement and the
Custody Agreement and the certificates referred to in Section 8(j) hereof
----
on behalf of such Selling Stockholder, to authorize the delivery of the
Firm Securities or Option Securities to be sold by such Selling Stockholder
under this Agreement and to duly endorse (in blank or otherwise) the
certificate or certificates representing such Firm Securities or Option
Securities or a stock power or powers with respect thereto, to accept
payment therefor, and otherwise to act on behalf of such Selling
Stockholder in connection with this Agreement and the Custody Agreement.
(ii) No consent, approval, authorization or order of, and no filing
with, any court regulatory body, government agency or other body, domestic
or foreign, is required for the delivery and sale of the Firm Securities or
Option Securities to be sold by such Selling Stockholder under this
Agreement pursuant to the Prospectus and the Registration Statement, for
the performance of this Agreement, the Power of Attorney and the Custody
Agreement and for the transactions contemplated hereby and thereby,
including without limitation, any waiver of any preemptive, first refusal
or other rights that any entity or person may have for the delivery and
sale of any of the Firm Securities or Option Securities to be sold by such
Selling Stockholder under this Agreement, except such as have been or may
be obtained under the Act or may be required under state securities or Blue
Sky laws in connection with the Underwriters' purchase and distribution of
the Firm Securities and the Option Securities to be sold by such Selling
Stockholder under this Agreement.
(iii) At the date hereof such Selling Stockholder has, and at the
time of delivery of the Firm Securities or Option Securities to be sold by
the Selling Stockholder to the several Underwriters, such Selling
Stockholder will have full right, power and authority to sell, assign,
transfer and deliver the Firm Securities or Option Securities to be sold by
such Selling Stockholder hereunder. At the date hereof such Selling
Stockholder is, and at the time of delivery of the Firm Securities or
Option Securities to be sold by such Selling Stockholder, such Selling
Stockholder will be, the lawful owner of and has and will have, good and
marketable title to such Firm Securities or Option Securities free and
clear of any liens, charges, pledges, equities, encumbrances, security
interests, claims, community property rights, restrictions on transfer or
other defects in title. Upon delivery of and payment for the Firm
Securities or Option Securities to be sold by such Selling Stockholder
hereunder, good and marketable title to such Firm Securities or Option
Securities will pass to the Underwriters, free and clear of any liens,
charges, pledges, equities, encumbrances, security interests, claims,
community property rights, restrictions on transfer or other defects in
title. Except as described in the Registration Statement and the
Prospectus or created hereby, there are no outstanding options, warrants,
rights, or other agreements or arrangements requiring such Selling
Stockholder at any time to transfer any Common Stock to be sold hereunder
by such Selling Stockholder. The Firm Securities and Option Securities, to
be sold by such Selling Stockholder under this Agreement, are not and will
not be subject to any preemptive or other similar rights of such
stockholder.
(iv) At the time when the Registration Statement becomes or became
effective, and at all times subsequent thereto up to and including the
Closing Date and the Option Closing Date, the Registration Statement and
any amendments thereto will not contain any untrue statement of a material
fact regarding such Selling Stockholder or omit to state a material fact
regarding such Selling Stockholder required to be stated therein or
necessary in order to make the statements therein regarding such Selling
Stockholder not misleading, and the Prospectus (and any supplements
thereto) will not contain any untrue statement of a material fact regarding
such Selling Stockholder or omit to state a material fact regarding such
Selling Stockholder required to be stated therein or necessary in order to
make the statements therein regarding such Selling Stockholder, in light of
the circumstances under which they were made, not misleading, and such
Selling Stockholder is unaware of any material misstatement in or omission
from the Registration Statement or the Prospectus or of any material
adverse information regarding such Selling Stockholder and his security
holdings which is not set forth in the Registration Statement and the
Prospectus.
(v) Such Selling Stockholder or any of his affiliates (within the
meaning of the Rules and Regulations) has not taken or will not take,
directly or indirectly, any action designed to or which has constituted or
which might be expected to cause or result in, under the Exchange Act, or
otherwise, unlawful stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities
or otherwise.
(vi) There is not pending or, to such Selling Stockholder's knowledge,
threatened against such Selling Stockholder any action, suit or proceeding
which (A) questions the validity of this Agreement, the Power of Attorney,
the Custody Agreement or of any action taken or to be taken by such Selling
Stockholder pursuant to or in connection with this Agreement, the Power of
Attorney, or the Custody Agreement or (B) is required to be disclosed in
the Registration Statement which is not so disclosed, and such actions,
suits or proceedings as are summarized in the Registration Statement, if
any, are accurately summarized.
(vii) Upon executing this Agreement, certificates in negotiable
form for the Firm Securities and Option Securities to be sold by such
Selling Stockholder under this Agreement on the Closing Date, or Option
Closing Date if requested by the Underwriters pursuant to Section 3(b)
hereof, together with a stock power or powers duly endorsed in blank by
such Selling Stockholder, will have been placed in custody with the
Custodian for the purpose of effecting delivery hereunder and thereunder.
(viii) Such Selling Stockholder has no registration rights or other
similar rights with respect to any securities of the Company; and such
Selling Stockholders does not have any right of first refusal or other
similar right to purchase any securities of the Company upon the issuance
or sale thereof by the Company or upon the sale thereof by any other
stockholder of the Company.
(ix) Such Selling Stockholder has not since the effective date of the
Registration Statement (i) sold, bid for, purchased, attempted to induce
any person to purchase, or paid anyone any compensation for soliciting
purchases of Common Stock, or (ii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of the
Company (except for the sale of the Firm Securities and Option Securities
to the Underwriters under this Agreement and except as otherwise permitted
by law).
(x) No transfer tax, stamp duty or other similar tax is payable by or
on behalf of the Underwriters in connection with (i) the sale by such
Selling Stockholder of the Firm Securities and Option Securities, (ii) the
purchase by the Underwriters of the Firm Securities and Option Securities
from such Selling Stockholder, (iii) the consummation by such Selling
Stockholder of any of his obligations under this Agreement, or (iv) resales
of the Firm Securities and Option Securities sold by such Selling
Stockholder in connection with the distribution contemplated hereby.
(xi) Any certificate signed by or on behalf of such Selling
Stockholder and delivered to the Underwriters shall be deemed a
representation and warranty by such Selling Stockholder to the Underwriters
as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities and Representative's
------------------------------------------------------------------
Warrants.
--------
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company and the Selling
Stockholders, severally and not jointly, agree to issue and sell
to the respective Underwriters, and each of the Underwriters
agrees to purchase the Firm Securities (subject to such
adjustment as the Representative may determine to avoid
fractional shares, plus any additional numbers of Firm Securities
which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 13 hereof) which bears the same
proportion to the number of Firm Securities to be sold by the
Company or by that Selling Stockholder, as the case may be, as
the number of Firm Securities set forth opposite the name of such
Underwriters on Schedule B bears to the total number of Firm
Securities to be sold by the Company and such Selling
Stockholder, in each case on a firm commitment basis no later
than three (3) business days after the Effective Date of the
Registration Statement, at a price of $ per share of Common
------
Stock and $ per share of Preferred Stock [in each case 92.5%
----
of the initial public offering price].
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and the
Selling Stockholders hereby grant an option to the several
Underwriters to purchase, and the Underwriters shall have the
right to purchase, severally and not jointly pro rata from the
Company and the Selling Stockholders, all or any part of the
Option Securities at a price of $ per share of Common Stock
------
and $ per share of Preferred Stock [in each case 92.5% of
----
the initial public offering price]. The option granted hereby
will expire forty-five (45) days after (i) the date the
Registration Statement becomes effective, if the Company has
elected not to rely on Rule 430A under the Rules and Regulations,
or (ii) the date of this Agreement if the Company has elected to
rely upon Rule 430A under the Rules and Regulations, and may be
exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Firm
Securities upon notice by the Representative to the Company and
the Selling Stockholders setting forth the number of Option
Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and
delivery for any such Option Securities. Any such time and date
of delivery (an "Option Closing Date") shall be determined by the
Representative, but shall not be later than five (5) full
business days after the exercise of said option, nor in any event
prior to the Closing Date, as hereinafter defined, unless
otherwise agreed upon by the Representative and the Company.
Nothing herein contained shall obligate the Underwriters to make
any over-allotments. No Option Securities shall be delivered
unless the Firm Securities shall be simultaneously delivered or
shall theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Securities shall be made at the offices of the
Representative at 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxxxx 00000, or at such other place as shall be agreed upon
by the Representative and the Company. Such delivery and payment
shall be made at 10:00 a.m. (New York City time) on March ,
---
1997 or at such other time and date as shall be agreed upon by
the Representative and the Company, but not less than three (3)
nor more than four (4) full business days after the effective
date of the Registration Statement (such time and date of payment
and delivery being herein called "Closing Date"). In addition,
in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for,
and delivery of certificates for, such Option Securities shall be
made at the above mentioned office of the Representative or at
such other place as shall be agreed upon by the Representative
and the Company on each Option Closing Date as specified in the
notice from the Representative to the Company. Delivery of the
certificates for the Firm Securities and the Option Securities,
if any, shall be made to the Representative against payment by
the Underwriters of the purchase price for the Firm Securities
and the Option Securities, if any, to the order of the Company
and the Selling Stockholders, as applicable, by New York Clearing
House funds, subject in each case to such adjustments as the
Representative in its discretion shall make to eliminate any
sales or purchases of fractional shares. Certificates for the
Firm Securities and the Option Securities, if any, shall be in
definitive, fully registered form, shall bear no restrictive
legends and shall be in such denominations and registered in such
names as the Underwriters may request in writing at least two (2)
business days prior to the Closing Date or the relevant Option
Closing Date, as the case may be. The certificates for the Firm
Securities and the Option Securities, if any, shall be made
available to the Representative at such office or such other
place as the Representative may designate for inspection,
checking and packaging no later than 9:30 a.m. on the last
business day prior to the Closing Date or the relevant Option
Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative, the Representative's Warrants at a purchase price
of $.0001 per warrant, which warrants shall entitle the holder(s)
thereof to purchase an aggregate of 150,000 shares of Common
Stock and 150,000 shares of Preferred Stock. The
Representative's Warrants shall be exercisable for a period of
four (4) years commencing one (1) year from the effective date of
the Registration Statement at an exercise price of $ per
-----
share of Common Stock and $ per share of Preferred Stock [in
----
each case one hundred sixty-five percent (165%) of the public
offering price of the Firm Securities]. The Representative's
Warrant Agreement and form of Warrant Certificate shall be
substantially in the form filed as Exhibit 1.2 to the
Registration Statement. Payment for the Representative's
Warrants shall be made on the Closing Date.
4. Public Offering of the Shares.
-----------------------------
As soon after the Registration Statement becomes effective as the
Representative deems advisable, the Underwriters shall make a public
offering of the Firm Securities at the price and upon the other terms
set forth in the Prospectus. The Underwriters may from time to time
increase or decrease the public offering price and increase or
decrease concessions and discounts to dealers after distribution of
the Firm Securities has been completed to such extent as the
Representative, in its sole discretion deems advisable and as
permitted by the Act and the Rules and Regulations. The Underwriters
may enter into one or more agreements as the Representative, in its
sole discretion deems advisable, with one or more broker-dealers who
shall act as dealers in connection with such public offering.
5. Covenants and Agreements of the Company. The Company covenants and
---------------------------------------
agrees with the Underwriters as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before
or after the effective date of the Registration Statement, file
any amendment to the Registration Statement or supplement to the
Prospectus or file any document under the Act or Exchange Act
before termination of the offering of the Firm Securities and
Option Securities by the Underwriters of which the Underwriters
shall not previously have been advised and furnished with a copy,
or to which the Underwriters shall have reasonably objected or
which is not in compliance with the Act, the Exchange Act or the
Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise the Representative and confirm the notice
in writing (i) when the Registration Statement, as amended,
becomes effective, if the provisions of Rule 430A promulgated
under the Act will be relied upon, when the Prospectus has been
filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes
effective, (ii) of the issuance by the Commission of any stop
order or of the initiation, or the threatening, of any
proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the
Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, or the institution of proceedings for that
purpose, (iii) of the issuance by the Commission, or by any state
securities commission of any proceedings for the suspension of
the qualification of any of the Securities for offering or sale
in any jurisdiction or of the initiation, or the threatening, of
any proceeding for that purpose, (iv) of the receipt of any
comments from the Commission, and (v) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional
information. If the Commission, or any state securities
commission authority shall enter a stop order or suspend such
qualification at any time, the Company will use its best efforts
to obtain promptly the lifting of such order or suspension.
(c) The Company shall file the Prospectus (in form and substance
reasonably satisfactory to the Underwriter) or transmit the
Prospectus by a means reasonably calculated to result in filing
with the Commission pursuant to Rule 424(b).
(d) The Company will give the Representative notice of its intention
to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or
supplement to the Prospectus (including any revised prospectus
which the Company proposes for use by the Underwriters in
connection with the offering of the Firm Securities and Option
Securities which differs from the corresponding prospectus on
file at the Commission at the time the Registration Statement
becomes effective, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the Rules and
Regulations), and will furnish the Representative with copies of
any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and
will not file any such prospectus to which the Representative or
Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Xxxxxxx
("Underwriters' Counsel") shall reasonably object.
(e) The Company shall endeavor in good faith, in cooperation with the
Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Firm Securities and
Option Securities for offering and sale under the securities laws
of such jurisdictions as the Representative may reasonably
designate to permit the continuance of sales and dealings therein
for as long as may be necessary to complete the distribution, and
shall make such applications, file such documents and furnish
such information as may be required for such purpose; provided,
--------
however, the Company shall not be required to qualify as a
-------
foreign corporation or file a general or limited consent to
service of process in any such jurisdiction. In each
jurisdiction where such qualification shall be effected, the
Company will, unless the Representative agrees that such action
is not at the time necessary or advisable, use all reasonable
efforts to file and make such statements or reports at such times
as are or may reasonably be required by the laws of such
jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to
comply with all requirements imposed upon it by the Act and the
Exchange Act, as now and hereafter amended and by the Rules and
Regulations, as from time to time in force, so far as necessary
to permit the continuance of sales of or dealings in the Firm
Securities and Option Securities in accordance with the
provisions hereof and the Prospectus, or any amendments or
supplements thereto. If at any time when a prospectus relating
to the Firm Securities and Option Securities or the
Representative's Securities is required to be delivered under the
Act, any event shall have occurred as a result of which, in the
opinion of counsel for the Company or Underwriters' Counsel, the
Prospectus, as then amended or supplemented, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend
the Prospectus to comply with the Act, the Company will notify
the Representative promptly and prepare and file with the
Commission an appropriate amendment or supplement in accordance
with Section 10 of the Act, each such amendment or supplement to
be satisfactory to Underwriter's Counsel and the Company will
furnish to the Underwriters copies of such amendment or
supplement as soon as available and in such quantities as the
Representative may request.
(g) As soon as practicable, but in any event not later than forty-
five (45) days after the end of the 12-month period beginning on
the day after the end of the fiscal quarter of the Company during
which the effective date of the Registration Statement occurs
(ninety (90) days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company
shall make generally available to its security holders, in the
manner specified in Rule 158(b) of the Rules and Regulations, and
to the Representative, an earnings statement which will be in the
detail required by, and will otherwise comply with, the
provisions of Section 11 (a) of the Act and Rule 158(a) of the
Rules and Regulations, which statement need not be audited unless
required by the Act, covering a period of at least twelve (12)
consecutive months after the effective date of the Registration
Statement.
(h) During a period of five (5) years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable,
annual reports (including financial statements audited by
independent public accountants) and unaudited quarterly reports
of earnings, and will deliver to the Representative:
(i) concurrently with furnishing such quarterly reports to its
stockholders, consolidated statements of income of the
Company and its consolidated subsidiaries for each quarter
in the form furnished to the Company's stockholders;
(ii) concurrently with furnishing such annual reports to its
stockholders, a consolidated balance sheet of the Company
and its consolidated subsidiaries as at the end of the
preceding fiscal year, together with statements of
consolidated operations, stockholders equity, and cash flows
of the Company and its consolidated subsidiaries for such
fiscal year, accompanied by a copy of the certificate
thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all other
reports (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the
Commission, the NASD or any securities exchange;
(v) every press release and every material news item or article
of interest to the financial community in respect of the
Company or its affairs which was released or prepared by or
on behalf of the Company; and
(vi) any additional information of a public nature concerning the
Company or its businesses which the Representative may
request.
During such five-year period, if the Company continues to have
active subsidiaries, the foregoing financial statements will be
on a consolidated basis to the extent that the accounts of the
Company and its subsidiaries are consolidated and will be
accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(i) The Company will maintain a transfer agent (the "Transfer Agent")
and, if necessary under the jurisdiction of incorporation of the
Company, a Registrar (which may be the same entity as the
Transfer Agent) for its Common Stock and Preferred Stock, each of
which shall be satisfactory to the Representative.
(j) The Company will furnish or cause to be furnished to the
Representative without charge, at such place as the
Representative may designate, copies of each Preliminary
Prospectus, the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies will be
manually signed and will include all financial statements and
exhibits), the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective
date of the Registration Statement, in each case as soon as
available and in such quantities as the Representative may
reasonably request.
(k) Concurrently with the execution and delivery hereof, the Company
shall provide to the Underwriters, legally binding and
enforceable agreements, in form and substance satisfactory to the
Representative ("Lock-up Agreements") pursuant to which each of
the Selling Stockholders agrees that he will not, other than as
set forth in the Prospectus, directly or indirectly, offer to
sell, sell, make a short sale (including without limitation short
against the box), grant any option for the sale of, assign,
transfer, pledge, hypothecate or otherwise encumber or dispose of
any shares of Common Stock or securities convertible into,
exercisable or exchangeable for or evidencing any right to
purchase or subscribe for any shares of Common Stock (either
pursuant to Rule 144 of the Rules and Regulations or otherwise),
dispose of any beneficial interest therein, enter into any swap
or other agreement that transfers in whole or in part any of the
economic consequences or ownership of the shares of Common Stock,
whether any such transactions were to be settled by delivery of
Common Stock, other securities, cash or otherwise, for a period
of not less than thirteen (13) months following the effective
date of the Registration Statement without the prior written
consent of the Representative; provided, that the foregoing
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restriction shall not prohibit (a) the issuance of shares of
Common Stock or options to purchase shares of Common Stock in
connection with the Company's Stock Option and Performance Award
Plan, or (b) transfers to the estate or by the estate of the
Selling Stockholders, so long as any such transferees agree to be
bound by the restrictions set forth herein. The Company will
cause the Transfer Agent, as defined below, to xxxx an
appropriate legend on the face of stock certificates representing
all of such securities and to place "stop transfer"" orders on
the Company's stock ledgers.
(l) Each of the Company and its Subsidiaries will use its best
efforts to cause the Company and the Subsidiaries' respective
officers, directors, stockholders, and their respective
affiliates (within the meaning of the Rules and Regulations) not
to take, directly or indirectly, any action designed to, or which
might in the future reasonably be expected to cause or result in,
unlawful stabilization or manipulation of the price of any
securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Firm Securities and the Option Securities, if any, in the manner,
and subject to the conditions, set forth under "Use of Proceeds"
in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the
Company or any Subsidiary or any affiliate of either, except in
accordance with the disclosures contained in the Prospectus.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a
Form SR as may be required pursuant to Rule 463 of the
Regulations) from time to time, under the Act, the Exchange Act,
and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the
applicable requirements under the Act, the Exchange Act, and the
Rules and Regulations.
(o) The Company shall furnish to the Representative as early as
practicable prior to each of the Closing Date and Option Closing
Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim
financial statements of the Company which have been read by the
Company's independent public accountants as stated in their
letters to be furnished pursuant to Section 8(n) hereof.
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(p) The Company shall use its best efforts to cause the Common Stock
and the Preferred Stock to be listed on Nasdaq/NMS and for a
period of five (5) years from the date hereof use its best
efforts to maintain the Nasdaq-NMS listing of the Common Stock
and the Preferred Stock, to the extent outstanding.
(q) At the request of the Representative, for a period of five (5)
years from the Closing Date, the Company shall furnish to the
Representative at the Company's sole expense (i) monthly
consolidated transfer sheets relating to the Common Stock, (ii)
the list of holders of all of the Company's Common Stock,
Preferred Stock and any securities for which the Common Stock and
Preferred Stock are redeemable, convertible or exchangeable, on a
monthly basis, and (iii) a Blue Sky "Trading Survey" for
secondary sales of the Company's securities prepared by counsel
to the Company, to the extent that the Company's securities are
not eligible for solicited and unsolicited secondary sales in all
fifty (50) states of the United States and the District of
Columbia.
(r) As soon as practicable (i) but in no event more than ten (10)
business days before the effective date of the Registration
Statement, file a Form 8-A with the Commission providing for the
registration under the Exchange Act of the Common Stock and the
Preferred Stock, and (ii) but in no event more than thirty (30)
days from the effective date of the Registration Statement, take
all necessary and appropriate actions to be included in Standard
and Poors Corporation Descriptions and Moodys OTC Manual and to
continue such inclusion for a period of not less than seven (7)
years, only to the extent that the Common Stock and the Preferred
Stock are not included for trading on Nasdaq/NMS.
(s) The Company hereby agrees that it will not, without the prior
written consent of the Representative, for a period of thirteen
(13) months from the effective date of the Registration
Statement, adopt, propose to adopt or otherwise permit to exist
any employee, officer, director, consultant or compensation plan
or arrangement permitting (i) the grant, issue, sale or entry
into any agreement to grant, issue or sell any option, warrant or
other contract right to acquire any Common Stock or Preferred
Stock (x) at an exercise price that is less than the greater of
the public offering price of the Firm Securities set forth herein
and the fair market value on the date of grant or sale or (y) to
any of its executive officers or directors or to any holder of
five percent (5%) or more of the shares of Common Stock;
provided, however that this prohibition shall not apply to the
issuance of shares of Common Stock registered under the Act
pursuant to the Registration Statement, or pursuant to the
Company's 1996 Stock Option and Performance Award Plan; or (ii)
the maximum number of shares of Common Stock or other securities
of the Company purchasable at any time pursuant to options or
warrants issued by the Company to exceed two million five hundred
thousand (2,500,000) shares (subject to reasonable, customary
anti-dilution adjustments) reserved for issuance under the
Company's Stock Option and Performance Award Plan; or (iii) the
payment for such securities with any form of consideration other
than cash, or (iv) the existence of stock appreciation rights,
phantom options or similar arrangements.
(t) Until the completion of the distribution of the Firm Securities
and the Option Securities under the terms hereof, the Company
shall not, without the prior written consent of the
Representative or Underwriters' Counsel, issue, directly or
indirectly any press release or other communication or hold any
press conference with respect to the Company or its activities or
the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business with
respect to the Company's operations.
(u) For a period equal to the lesser of (i) seven (7) years from the
date hereof, and (ii) the sale to the public of the
Representative's Securities, the Company will not take any action
or actions which may prevent or disqualify the Company's use of
Form S-1 (or other appropriate form) for the registration under
the Act of the Representative's Securities.
6. Certain Covenants of the Selling Stockholders. Each of Selling
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Stockholders covenants and agrees, severally and not jointly, with each of
the Underwriters as follows:
(i) Such Selling Stockholder will not, directly or indirectly,
without the prior written consent of the Company and the
Representative, offer, offer to sell, sell, grant an option for the
sale or purchase of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock or any
securities convertible into, exchangeable or exercisable for, or
evidencing any right to purchase or subscribe for, any shares of
Common Stock (either pursuant to Rule 144 of the Rules and Regulations
or otherwise) or dispose of any beneficial interest therein for a
period of thirteen (13) months after the date hereof, except pursuant
to this Agreement or transfers to the estate or by the estate of such
Selling Stockholder, so long as such transferees agree to be bound by
the restrictions set forth herein, and such Selling Stockholder and
any of his affiliates (within the meaning of the Rules and
Regulations) will not take, directly or indirectly, any action
designated to, or which might in the future reasonably be expected to
cause or result in, unlawful stabilization or manipulation of the
price of any securities of the Company.
(ii) Such Selling Stockholder consents to the use of the
Prospectus and any amendment or supplement thereto by the Underwriters
and all dealers to whom the Securities may be sold, both in connection
with the offering or sale of the Securities and for such period of
time thereafter as the Prospectus is required by law to be delivered
in connection therewith.
(iii) Such Selling Stockholder will review the Prospectus and
will comply with all agreements and satisfy all conditions on its part
to be complied with or satisfied pursuant to this Agreement, the
Custody Agreement and the Power of Attorney at or prior to the Closing
Date and any Option Closing Date.
7. Payment of Expenses
-------------------
(a) The Company hereby agrees to pay on each of the Closing Date and
the Option Closing Date (to the extent not previously paid) all
expenses and fees (other than fees of Underwriters' Counsel,
except as provided in (iv) below) incident to the performance of
the obligations of the Company and the Selling Stockholders under
this Agreement and the Representative's Warrant Agreement,
including, without limitation, (i) the fees and expenses of
accountants and counsel for the Company; (ii) all costs and
expenses incurred in connection with the preparation,
duplication, printing (including mailing and handling charges)
filing, delivery and mailing (including the payment of postage
with respect thereto) of the Registration Statement, and the
Prospectus and any amendments and supplements thereto and the
printing, mailing (including the payment of postage with respect
thereto) and delivery of this Agreement, the Representative's
Warrant Agreement, selected dealer agreements (if any) and
related documents, including the cost of all copies thereof and
of the Preliminary Prospectuses and of the Prospectus and any
amendments thereof or supplements thereto supplied to the
Underwriters and such dealers as the Representative may request,
in quantities as herein above stated; (iii) the printing,
engraving, issuance and delivery of the certificates representing
the Securities; (iv) the qualification of the Securities under
state or foreign securities or "Blue Sky" laws, if legally
required, and the costs of printing and mailing the "Preliminary
Blue Sky Memorandum" and the "Supplemental Blue Sky Memorandum,"
if any, and disbursements and fees of counsel in connection
therewith, (v) advertising costs and expenses, including but not
limited to costs and expenses incurred by the Company and the
Representative in connection with the "road show," information
meetings and presentations, bound volumes and prospectus
memorabilia and "tombstone" advertisement expenses, (vi) costs
and expenses in connection with due diligence investigations,
including but not limited to the fees of any independent counsel,
expert or consultant retained, (vii) fees and expenses of the
transfer agent, registrar and custodian and all issue and
transfer taxes, if any, (viii) the fees payable to the Commission
and the NASD, and (ix) the fees and expenses incurred in
connection with the listing of the Securities on Nasdaq-NMS and
any other exchange.
(b) If this Agreement is terminated by the Underwriter in accordance
with the provisions of Section 8, Section 12 (a) or Section 13,
---------------------------------------
the Company shall reimburse and indemnify the Underwriter for all
of its actual out-of-pocket expenses on an accountable basis,
including the reasonable fees and disbursements of Underwriters'
Counsel, less any amounts already paid pursuant to Section 7(c)
------------
hereof, up to a maximum of $75,000.
(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 7, it will pay
---------
to the Representative on the Closing Date by certified or bank
cashiers check or, at the election of the Representative, by
deduction from the proceeds of the offering contemplated herein a
non-accountable expense allowance equal to 2.15% of the gross
proceeds received by the Company from the sale of the Firm
Securities, $50,000 of which has been paid to date. In the event
the Underwriters elect to exercise the over-allotment option
described in Section 3(b) hereof, the Company agrees to pay to
------------
the Representative on the Option Closing Date (by certified or
bank cashiers check or, at the Representative's election, by
deduction from the proceeds of the offering) a non-accountable
expense allowance equal to 2.15% of the gross proceeds received
by the Company from the sale of the Option Securities.
8. Conditions of the Underwriters' Obligations. The obligations of the
-------------------------------------------
Underwriters hereunder shall be subject to the continuing accuracy of
the representations and warranties of the Company and the Selling
Stockholders herein as of the date hereof and as of the Closing Date
and Option Closing Date, if any, as if they had been or have made on
and as of the Closing Date or Option Closing Date, as the case may be;
the accuracy on and as of the Closing Date or Option Closing Date, if
any, of the statements of officers of the Company (where applicable)
made pursuant to the provisions hereof; and the performance by the
Company and the Selling Stockholders on and as of the Closing Date and
Option Closing Date, if any, of its covenants and obligations
hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not later
than 12:00 noon, New York time, on the date of this Agreement or
such later date and time as shall be consented to in writing by
the Representative, and, at the Closing Date and Option Closing
Date, if any, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or shall be pending
or contemplated by the Commission and any request on the part of
the Commission for additional information shall have been
complied with to the reasonable satisfaction of Underwriter's
Counsel. If the Company has elected to rely upon Rule 430A of
the Rules and Regulations, the price of the Common Stock and
Preferred Stock to be sold hereunder and any price related
information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted
to the Commission for filing pursuant to Rule 424(b) of the Rules
and Regulations within the prescribed time period and, prior to
the Closing Date, the Company shall have provided evidence
satisfactory to the Representative of such timely filing, or a
post-effective amendment providing such information shall have
been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations.
(b) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in the Underwriter's reasonable
opinion, is material, or omits to state a fact which, in the
Representative's reasonable opinion, is material and is required
to be stated therein or is necessary to make the statements
therein not misleading, or that the Prospectus, or any supplement
thereto, contains an untrue statement of fact which, in the
Representative's reasonable opinion, is material, or omits to
state a fact which, in the Representative's reasonable opinion,
is material and is required to be stated therein or is necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) On or prior to each of the Closing Date and Option Closing Date,
if any, the Representative shall have received from Underwriters'
Counsel, such opinion or opinions with respect to the
organization of the Company, the validity of the Securities, the
Registration Statement, the Prospectus and other related matters
as the Representative may request, and Underwriters' Counsel
shall have received from the Company such papers and information
as they request to enable them to pass upon such matters.
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of Xxxx & Priest, LLP, New York, New York,
special counsel to the Company, dated the Closing Date, addressed
to the Underwriters and in form and substance satisfactory to the
Representative and Underwriters' Counsel to the effect that:
(i) the Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the
State of Delaware. Each subsidiary of the Company listed in
Exhibit 21 to the Registration Statement (the
"Subsidiaries") has been duly incorporated or formed and is
existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. The
Company and the Subsidiaries are duly qualified and in good
standing as a foreign corporation in each jurisdiction in
which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its business
makes such qualification necessary except for such
jurisdictions where the failure to so qualify would not have
a material adverse effect on the assets or properties,
business, results of operations or financial condition of
the Company or its subsidiaries, taken as a consolidated
whole. To our knowledge, the Company has no subsidiaries
other than those identified in the Registration Statement,
and the Company does not control, directly or indirectly,
any corporation, partnership, joint venture, association or
other business organization which is material to the
Business other than as described in the Registration
Statement and the Prospectus. The Company and the
Subsidiaries have all requisite corporate power and
authority to own, lease and license its assets and
properties and conduct its businesses as now being conducted
and as described in the Registration Statement and the
Prospectus; and the Company has all such corporate power and
authority, and such authorizations, approvals, consents,
orders, licenses, certificates and permits as may be
necessary to enter into, deliver and perform this Agreement
and the Representative's Warrant Agreement, and to issue and
sell the Securities (except as may be required under the
Securities Act and state and foreign Blue Sky laws) under
the terms hereof and thereof and to consummate the
transactions provided for herein and therein;
(ii) Prior to the issuance of Securities in accordance with this
Agreement, the Company had an authorized and outstanding
capital stock as set forth under the caption
"Capitalization" in the Registration Statement and the
Prospectus. All of the outstanding shares of Common Stock
have been duly and validly issued and are fully paid and
nonassessable and, to such counsel's knowledge, none of them
was issued in violation of any preemptive or other similar
right (except for any such right emanating from the
Company's Certificate of Incorporation or By-laws, for which
no knowledge criteria applies). The Securities, when issued
(in the case of the Securities to be sold by the Company)
and sold pursuant to this Agreement and the Representative's
Warrant Agreement, will be duly and validly issued, fully
paid and nonassessable, and, to such counsel's knowledge,
none of them will be issued in violation of any preemptive
or other similar right (except for any such right emanating
from the Company's Certificate of Incorporation or By-laws,
for which no knowledge criteria applies). Except as
disclosed in the Registration Statement and the Prospectus,
to such counsel's knowledge, there is no outstanding option,
warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of
Preferred Stock or Common Stock of the Company or any
security convertible into, or exercisable or exchangeable
for, such Preferred Stock or Common Stock. The Securities
conform in all material respects to all statements in
relation thereto contained in the Registration Statement and
the Prospectus. The Representative's Warrants constitute
valid and binding obligations of the Company to issue and
sell, upon exercise thereof and payment therefor, the number
and type of securities of the Company called for thereby;
(iii) To such counsel's knowledge, no holders of securities of
the Company have rights to the registration of such
securities under the Registration Statement, other than the
Selling Stockholders as identified in the Registration
Statement and the Prospectus;
(iv) this Agreement and the Representative's Warrant Agreement
have been duly and validly executed and delivered by the
Company and, assuming due authorization, execution and
delivery by the other parties thereto, constitute and will
constitute the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with
its terms, except (A) as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (B) to the
extent that rights to indemnity or contribution under this
Agreement may be limited by Federal and state securities
laws or the public policy underlying such laws.
(v) No transfer tax or duty is payable (on the assumption that
the laws of New York are applicable to such transactions) by
or on behalf of the Underwriters in connection with (A) the
issuance by the Company of the Securities, (B) the purchase
by the Underwriters of the Securities from the Company, (C)
the consummation by the Company of any of its obligations
under this Agreement, or (D) resales of the Securities in
connection with the distribution contemplated hereby;
(vi) to such counsel's knowledge, each of the Company and the
Subsidiaries is not in violation of any term or provision of
its charter or by-laws;
(vii) neither the execution, delivery and performance of
this Agreement or the Representative's Warrant
Agreement by the Company nor the consummation of any
of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale
by the Company of the Securities) will give rise to a
right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the
breach of any term or provision of, or constitute a
default (or an event which with notice or lapse of
time or both would constitute a default) under, or
require any consent or waiver under, or result in the
execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the
Company and its subsidiaries pursuant to the terms of,
(i) to such counsel's knowledge, any indenture,
mortgage, deed of trust or other agreement or
instrument to which the Company or any Subsidiary is a
party or by which it or any of its properties or
businesses is bound, (ii) any term or provision of its
charter or by-laws or (iii) any statute, rule or
regulation or, to such counsel's knowledge, any
franchise, license, permit, judgment, decree or order,
in any such case where termination, acceleration,
conflict, breach, default, event of default, lien,
charge, encumbrance, whether or not asserted or
imposed, would have a material adverse effect on the
assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a consolidated
whole;
(viii) except as disclosed in the Registration Statement and
the Prospectus, to such counsel's knowledge, there are
no pending or threatened actions, suits or proceedings
(governmental or otherwise) against or affecting the
Company, any of the Subsidiaries or any of their
respective properties that, if determined adversely to
the Company or any of the Subsidiaries, could
individually or in the aggregate have a material
adverse effect on the financial condition or business,
properties, net worth or results of operations of the
Company and the Subsidiaries taken as a consolidated
whole, or would materially and adversely affect the
ability of the Company or any of the Subsidiaries to
perform their respective obligations under this
Agreement, or which are otherwise required to be
disclosed in the Prospectus under the Rules and
Regulations;
(ix) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule
424(b); to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement
has been issued, no proceedings for that purpose have been
instituted or threatened and the Registration Statement and
the Prospectus (other than the financial statements and
other financial and statistical information contained
therein as to which such counsel need express no opinion)
comply as to form in all material respects with the
applicable requirements of the Act and the respective rules
thereunder;
(x) the Company is not a Passive Foreign Investment Company
("PFIC") within the meaning of Section 1296 of the United
States Internal Revenue Code of 1986, as amended;
(xi) the statements in the prospectus under "Business -
Partnership Offerings"; "Certain Transactions"; "Description
of Capital Stock"; "Shares Eligible For Future Sale"; and
"Certain Federal Income Tax Considerations" insofar as such
statements constitute a summary of documents referred to
therein or matters of law, are, in all material respects,
accurate summaries of the material provisions thereof and
accurately present the information required with respect to
such documents and matters. To such counsel's knowledge, all
contracts and other documents required to be filed as
exhibits to, or described in, the Registration Statement
have been so filed with the Commission or are described as
required in the Registration Statement, as the case may be.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials. Copies of such certificates shall be furnished to the
Representative and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representative and representatives of the
independent certified public accountants of the Company, at which
conferences the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing
opinion), on the basis of the foregoing no facts have come to the attention
of such counsel which have caused such counsel to believe that the
Registration Statement at the time it became effective and at each Closing
Date contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as of its date
and at each Closing Date contained any untrue statement of a material fact
or omitted 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 (it being understood that such counsel need not
express any belief with respect to the financial statements and schedules
and other financial or statistical data included in the Registration
Statement or the Prospectus).
(e) At the Closing Date, the Underwriters shall have received
the favorable opinion of Xxxx & Priest LLP, in its capacity
as special counsel for the Selling Stockholders, dated the
Closing Date, addressed to the Underwriters and in form and
substance satisfactory to Underwriters' Counsel, to the
effect that:
(i) This Agreement, the Power of Attorney with Xxxx Xxxxx and
Xxxx X. Xxxxxxx, III, or either of them, as attorney-in-fact (the
"Power of Attorney") and the Custody Agreement with First Union Bank
as custodian (the "Custody Agreement") have been duly and validly
executed and delivered by the Selling Stockholder and constitute and
will constitute the legal, valid and binding obligation of each of the
Selling Stockholders, enforceable against each of the Selling
Stockholders in accordance with its terms, except (i) as the
enforceability hereof and thereof may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles,
(ii) to the extent that rights to indemnity or contribution under this
Agreement may be limited by federal and state securities laws or the
public policy underlying such laws and (iii) no opinion is expressed
as to the enforceability of the Power of Attorney and Custody
Agreement in the event of the death of a Selling Stockholder prior to
his sale of the Firm Securities or Option Securities hereunder. To
such counsel's knowledge, none of any Selling Stockholder's delivery
and sale of the Firm Securities or Option Securities, execution or
delivery of this Agreement, the Power of Attorney or the Custody
Agreement, his performance hereunder or thereunder, or his
consummation of the transactions contemplated herein and therein,
conflicts with or results in any material breach or violation of any
of the terms or provisions of, or constitutes a material default
under, or results in the creation or imposition of any lien, charge,
claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or
assets (tangible or intangible) of any Selling Stockholder pursuant to
the terms of (i) any license, contract, indenture, mortgage, deed of
trust, lease, voting trust agreement, stockholders agreement, note,
loan or credit agreement or any other agreement or instrument of which
such counsel has knowledge and to which any Selling Stockholder is a
party or by which any Selling Stockholder is bound, or (ii) any
statute, rule or regulation, or, to such counsel's knowledge, any
decree, judgement or order, of any arbitrator, court, regulatory body
or administrative agency or other governmental agency or body having
jurisdiction over any Selling Stockholder or any of his activities or
properties (including, without limitation, those having jurisdiction
over environmental or similar matters), domestic or foreign, which is
applicable to any Selling Stockholder, and in each case where such
conflict, breach, violation or default would have a material adverse
effect on such Selling Stockholder.
(ii) To such counsel's knowledge, no consent, approval,
authorization or order of any Federal or state court or governmental
agency or body is required for the performance of this Agreement by
either Selling Stockholder or the sale by either Selling Stockholder
of the Common Stock to be sold by him hereunder, except such as have
been obtained under the Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of such shares by the several Underwriters (as to which
such counsel need express no opinion) and such as may be required
under the rules of the National Association of Securities Dealers,
Inc. with respect to the underwriting arrangements reflected in this
Agreement (as to which such counsel need express no opinion).
(iii) Except as disclosed in the Registration Statement and
the Prospectus, to such counsel's knowledge, there are no pending or
threatened actions, suits or proceedings against or affecting either
Selling Stockholder, or any of his properties that, if determined
adversely to the Selling Stockholder, would materially and adversely
affect the ability of such Selling Stockholder to perform his
obligations under this Agreement, the Power of Attorney and the
Custody Agreement, or which are otherwise required to be disclosed in
the Prospectus under the Rules and Regulations.
(iv) No transfer tax, stamp duty or other similar tax is payable
(on the assumption that the laws of the State of New York are
applicable) by or on behalf of the Underwriters in connection with (i)
the sale by the Selling Stockholders of the Firm Securities or Option
Securities, (ii) the purchase by the Underwriters of the Firm
Securities or Option Securities from the Selling Stockholders, (iii)
the consummation by the Selling Stockholders of any of their
obligations under this Agreement, or (iv) resales of the Firm
Securities or Option Securities in connection with the distribution
contemplated hereby.
(v) Each of the Underwriters has received good and valid title
to the Firm Securities and Option Securities being sold by the Selling
Stockholder hereunder, free and clear of any adverse claims; provided
that the Underwriters are purchasing such Firm Securities and Option
Securities in good faith and without notice of any adverse claims;
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company, the
Selling Stockholder and public officials. Copies of such certificates shall
be furnished to the Representative and counsel for the Underwriters.
Such counsel may assume that each Selling Stockholder has the
necessary legal capacity to execute, deliver and perform the Agreement, the
Power of Attorney and the Custody Agreement executed by him in connection
with the transactions contemplated by the Agreement.
(f) At the Option Closing Date, if any, the Representatives shall
have received the favorable opinion of Company Counsel, as both
special counsel to the Company and special counsel to the Selling
Stockholders dated the Option Closing Date, addressed to the
Underwriters and in form and substance satisfactory to the
Representative and Underwriters' Counsel confirming as of the
Option Closing Date the statements made by Company Counsel in its
opinion delivered on the Closing Date as counsel to the Company
and counsel to the Selling Stockholders.
(g) On or prior to each of the Closing Date and the Option Closing
Date, if any, Underwriters' Counsel shall have been furnished
such documents, certificates and opinions as they may reasonably
require for the purpose of enabling them to review or pass upon
the matters referred to in subsection (c) of this Section 8, or
-
in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties or conditions of the
Company and each Subsidiary, or herein contained.
(h) Prior to each of the Closing Date and the Option Closing Date, if
any (i) there shall have been no material adverse change or
development involving a prospective material change in the
condition, financial or otherwise, prospects, stockholders equity
or the business activities of the Company, whether or not in the
ordinary course of business, from the latest dates as of which
such condition is set forth in the Registration Statement and
Prospectus; (ii) except as disclosed in the Registration
Statement, there shall have been no transaction, not in the
ordinary course of business, entered into by the Company or any
Subsidiary, from the latest date as of which the financial
condition of the Company and any Subsidiary is set forth in the
Registration Statement and Prospectus which is materially adverse
to the Company or any Subsidiary; (iii) neither the Company nor
any Subsidiary, shall be in default under any provision of any
instrument relating to any outstanding indebtedness which default
has not been waived; (iv) except as disclosed in the Registration
Statement, neither the Company nor any Subsidiary shall have
issued any securities (other than the Securities) or declared or
paid any dividend or made any distribution in respect of its
capital stock of any class and there has not been any change in
the capital stock or any material change in the debt (long or
short term) or liabilities or obligations of the Company or any
Subsidiary (contingent or otherwise); (v) no material amount of
the assets of the Company or any Subsidiary shall have been
pledged or mortgaged, except as set forth in or contemplated by
the Registration Statement and Prospectus; (vi) no action, suit
or proceeding, at law or in equity, shall have been pending or
threatened (or circumstances giving rise to same) against the
Company or any Subsidiary or any of the Selling Stockholders, or
affecting any of their respective properties or businesses before
or by any Court or federal, state or foreign commission, board or
other administrative agency wherein an unfavorable decision,
ruling or finding may materially, adversely affect the Business,
or the Selling Stockholders' abilities to continue to function in
connection with the business operations of the Company or any
Subsidiary, except as set forth in the Registration Statement and
Prospectus; and (vii) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
(i) At each of the Closing Date and Option Closing Date, if any, the
Underwriters shall have received a certificate of the Company
signed by the principal executive officer and by the chief
financial or chief accounting officer of the Company, dated the
Closing Date or Option Closing Date, as the case may be, to the
effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and
that:
(i) The representations and warranties of the Company and each
Subsidiary in this Agreement are true and correct as if made
on and as of the Closing Date or the Option Closing Date, as
the case may be, and the Company has complied with all
agreements and covenants and satisfied all conditions
contained in this Agreement on its part to be performed or
satisfied at or prior to the Closing Date or Option Closing
Date, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued,
and no proceedings for that purpose have been instituted or
are pending or, to the best of each of such persons
knowledge after due inquiry, are contemplated or threatened
under the Act;
(iii) The Registration Statement and the Prospectus and, if
any, each amendment and each supplement thereto,
contain all statements and information required to be
included therein, and the Registration Statement, or
any amendment or supplement thereto, does not include
any untrue statement of a material fact or omits to
state any material fact required to be stated therein
or necessary to make the statements therein not
misleading and neither the Preliminary Prospectus, the
Prospectus, or any supplement thereto included any
untrue statement of a material fact or omitted to
state any material fact required to be stated therein
or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading; and
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus,
and except as described in or contemplated by the
Registration Statement and Prospectus, (a) neither the
Company nor any Subsidiary has incurred up to and including
the Closing Date or the Option Closing Date, as the case may
be, other than in the ordinary course of its business, any
material liabilities or obligations, direct or contingent;
(b) neither the Company nor any Subsidiary has paid or
declared any dividends or other distributions on its capital
stock; (c) neither the Company nor any Subsidiary has
entered into any transactions not in the ordinary course of
business; (d) there has not been any change in the capital
stock or material increase in long-term debt or any material
increase in the short-term borrowings (other than any
increase in the short-term borrowings in the ordinary course
of business) of the Company or any Subsidiary; (e) neither
the Company nor any Subsidiary has sustained any loss or
damage to its property or assets, whether or not insured;
(f) there is no litigation which is pending or threatened
(or circumstances giving rise to same) against the Company
or any Subsidiary or any affiliated party of any of the
foregoing which is required to be set forth in an amended or
supplemented Prospectus which has not been set forth; and
(g) there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been set
forth.
References to the Registration Statement and the Prospectus in
this subsection (g) are to such documents as amended and
supplemented at the date of such certificate.
(j) The Selling Stockholders shall have furnished to the Underwriter
such other documents and certificates as to the accuracy and
completeness of any statement in the Registration Statement or
the Prospectus as of the time of purchase and the additional time
of purchase, as the case may be, as the Representative and
Underwriters' counsel may reasonably request. Specifically, at
each of the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received a certificate from each of
the Selling Stockholders (which may be signed by the Attorney-in-
Fact), dated the Closing Date, and the Option Closing Date, if
any, to the effect that such Selling Stockholder has carefully
examined the Registration Statement, the Prospectus and this
Agreement, and that:
(A) The representations and warranties of such Selling
Stockholder in this Agreement are true and correct, as if made at
and as of the Closing Date or the Option Closing Date, as the
case may be, and such Selling Stockholder has complied with all
agreements and covenants and satisfied all conditions contained
in this Agreement to be performed or satisfied by such Selling
Stockholder at or prior to the Closing Date or the Option Closing
Date, as the case may be; and
(B) The Registration Statement and Prospectus and, if any,
each amendment and each supplement thereto, contain all
statements and information required to be included therein
regarding such Selling Stockholder, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact regarding such
Selling Stockholder or omits to state any material fact regarding
such Selling Stockholder required to be stated therein or
necessary to make the statements therein regarding such Selling
Stockholder not misleading, and neither the Preliminary
Prospectus or any supplement thereto included any untrue
statement of a material fact regarding such Selling Stockholder
or omitted to state a material fact regarding such Selling
Stockholder required to be stated therein or necessary in order
to make the statements therein regarding such Selling
Stockholder, in light of the circumstances under which they were
made, not misleading.
References to the Registration Statement and the Prospectus in
this subsection (j) are to such documents as amended and supplemented
at the date of such certificate.
(k) The Company and the Selling Stockholders shall have performed
such of their respective obligations under this Agreement as are
to be performed by the terms hereof at or before the time of
purchase and at or before the additional time of purchase, as the
case may be.
(l) By the Closing Date, the Underwriters will have received
clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriters, as described in the
Registration Statement.
(m) At the time this Agreement is executed, the Representative shall
have received a letter, dated the date hereof, addressed to the
Underwriters in form and substance satisfactory (including the
non-material nature of the changes or decreases, if any, referred
to in clause (iii) below) in all respects to the Representative
and Underwriters' Counsel from Deloitte & Touche LLP:
(i) confirming that they are independent certified public
accountants with respect to the Company and each Subsidiary
within the meaning of the Act and the applicable Rules and
Regulations;
(ii) stating that it is their opinion that the consolidated
financial statements and supporting schedules of the Company
and each Subsidiary included in the Registration Statement
comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules
and Regulations thereunder and that the Underwriter may rely
upon the opinion of Deloitte & Touch LLP, with respect to
the financial statements and supporting schedules included
in the Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited
interim consolidated financial statements of the
Company and each Subsidiary (with an indication of the
date of the latest available unaudited interim
financial statements), a reading of the latest
available minutes of the stockholders and board of
directors and the various committees of the boards of
directors of the Company and the Subsidiaries,
consultations with officers and other employees of the
Company and the Subsidiaries responsible for financial
and accounting matters and other specified procedures
and inquiries, nothing has come to their attention
which would lead them to believe that (A) the pro
forma financial information contained in the
Registration Statement and Prospectus, if any, does
not comply as to form in all material respects with
the applicable accounting requirements of the Act and
the Rules and Regulations or is not fairly presented
in conformity with generally accepted accounting
principles applied on a basis consistent with that of
the audited consolidated financial statements of the
Company or the unaudited pro forma financial
information included in the Registration Statement, if
any, (B) the unaudited financial statements and
supporting schedules of the Company and the
Subsidiaries included in the Registration Statement do
not comply as to form in all material respects with
the applicable accounting requirements of the Act and
the Rules and Regulations or are not fairly presented
in conformity with generally accepted accounting
principles applied on a basis substantially consistent
with that of the audited consolidated financial
statements of the Company and the Subsidiary included
in the Registration Statement, or (C) at a specified
date not more than five (5) days prior to the
effective date of the Registration Statement, there
has been any change in the capital stock or long-term
debt of the Company and the Subsidiaries, or any
decrease in the stockholders' equity or net current
assets or net assets of the Company and the
Subsidiaries as compared with amounts shown in the
balance sheet included in the Registration Statement,
other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or
decrease, setting forth the amount of such change or
decrease, and (D) during the period from October 31,
1996 to a specified date not more than five (5) days
prior to the effective date of the Registration
Statement, there was any decrease in net revenues, net
revenues, net earnings or increase in net earnings per
common share of the Company and the Subsidiaries, in
each case as compared with the corresponding period
beginning October 31, 1996 other than as set forth in
or contemplated by the Registration Statement, or, if
there was any such decrease, setting forth the amount
of such decrease;
(iv) setting forth at a date not later than five (5) days prior
to the date of the Registration Statement, the amount of
liabilities of the Company and the Subsidiaries (including a
break-down of commercial paper and notes payable to banks);
(v) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings,
statements and other financial information pertaining to the
Company and the Subsidiaries set forth in the Prospectus in
each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from
the general accounting records, including work sheets, of
the Company and the Subsidiaries and excluding any questions
requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures
do not constitute an examination in accordance with
generally accepted auditing standards in the United States),
set forth in the letter and found them to be in agreement;
(vi) stating that they have not during the immediately preceding
five (5) year period brought to the attention of any of the
Company's or any Subsidiary's management any "weakness", as
defined in Statement of Auditing Standard No. 60
"Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's or any
Subsidiary's internal controls;
(vii) stating that they have in addition carried out certain
specified procedures, not constituting an audit, with
respect to certain pro forma financial information
which is included in the Registration Statement and
the Prospectus, if any, and that nothing has come to
their attention as a result of such procedures that
caused them to believe such unaudited pro forma
financial information, if any, does not comply in form
in all respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that
the pro forma adjustments, if any, have not been
properly applied to the historical amounts in the
compilation of that information; and
(viii) statements as to such other matters incident to the
transaction contemplated hereby as the Representative
may request.
(n) At the Closing Date and the Option Closing Date, if any, the
Representative shall have received from Deloitte & Touche LLP, a
letter, dated as of the Closing Date or the Option Closing Date,
as the case may be, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection
(l) of this Section, except that the specified date referred to
shall be a date not more than five days prior to Closing Date or
the Option Closing Date, as the case may be, and, if the Company
has elected to rely on Rule 430A of the Rules and Regulations, to
the further effect that they have carried out procedures as
specified in clause (v) of subsection (l) of this Section with
respect to certain amounts, percentages and financial information
as specified by the Underwriter and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and have found
such amounts, percentages and financial information to be in
agreement with the records specified in such clause (v).
(o) On each of the Closing Date and the Option Closing Date, if any,
there shall have been duly tendered to the Representative for the
Underwriters' account, the appropriate number of Securities.
(p) No order suspending the sale of the Securities in any
jurisdiction designated by the Representative pursuant to
subsection (e) of Section 5 hereof shall have been issued on
----------------
either the Closing Date or the Option Closing Date, if any, and
no proceedings for that purpose shall have been instituted or
shall be contemplated.
(q) On or before the Closing Date, the Company shall have executed
and delivered to the Representative (i) the Representative's
Warrant Agreement substantially in the form filed as Exhibit 1.2
-----------
to the Registration Statement in final form and substance
satisfactory to the Representative, and (ii) the Representative's
Warrants in such denominations and to such designees as shall
have been provided to the Company.
(r) On or before the Closing Date, the Common Stock and Preferred
Stock shall have been duly approved for inclusion and quotation
on Nasdaq-NMS, subject to official notice of issuance.
(s) On or before the Closing Date, there shall have been delivered to
the Representative all of the duly executed Lock-up Agreements,
in form and substance satisfactory to Underwriters' Counsel.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Option
Closing Date, as the case may be, is not so fulfilled, the
Underwriters may terminate this Agreement or, if the Underwriters so
elects, they may waive any such conditions which have not been
fulfilled or extend the time for their fulfillment by written action
of the Representative on behalf of the several Underwriters.
9. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless the
Underwriters (for purposes of this Section 9, "Underwriter" shall
---------
include the officers, directors, stockholders, partners,
employees, agents, including specifically each person who may be
substituted for an Underwriter as provided in Section 13 hereof),
and each person, if any, who controls the Underwriter (a
"controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and
all losses, claims, damages, expenses or liabilities, joint or
several (and actions in respect thereof), whatsoever (including
but not limited to any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever), as
such are incurred, to which the Underwriter or such controlling
person may become subject under the Act, the Exchange Act or any
other statute or at common law or otherwise or under the laws of
foreign countries, arising out of or based (A) upon any untrue
statement or alleged untrue statement of a material fact
contained (i) in any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time amended and
supplemented); (ii) in any post effective amendment or amendments
or any new registration statement and prospectus in which is
included securities of the Company issued or issuable upon
exercise of the Securities; or (iii) in any application or other
document or written communication (in this Section 9 collectively
called "application") executed by the Company or based upon
written information furnished by the Company or any Selling
Stockholder in any jurisdiction in order to qualify the
Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq-NMS
or any other securities exchange; (B) the omission or alleged
omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not
misleading (in the case of the Prospectus, in the light of the
circumstances under which made), or (C) any breach of any
representation, warranty or covenant or agreement of the Company
or any Selling Stockholder contained herein or in any certificate
by or on behalf of the Company or any of its officers or the
Selling Stockholders delivered pursuant hereto, unless, in the
case of clause (A) or (B) such statement or omission (i) was made
in reliance upon and in conformity with written information
furnished to the Company with respect to any Underwriter by or on
behalf of such Underwriter expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, or in any application,
as the case may be, or (ii) if a copy of the Preliminary
Prospectus or Prospectus in which such untrue statement or
alleged untrue statement or omission or alleged omission was
corrected had not been sent, distributed or property recirculated
by the Underwriters within the time required by the Act and the
Rules and Regulations and such failure directly resulted in the
otherwise indemnifiable losses, claims, damages, or expenses of
the Underwriters (as defined herein) and each controlling person
thereof.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company or the Selling
Stockholders may have at common law or otherwise.
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless the Underwriters (as defined in this
Section 9(a) above) and each controlling person within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several (and actions in respect
thereof), whatsoever (including but not limited to any and all
reasonable expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever), as such are incurred, to
which the Underwriter or such controlling person may become
subject under the Act, the Exchange Act or any other statute or
at common law or otherwise or under the laws of foreign
countries, arising out of or based (A) upon any untrue statement
or alleged untrue statement of a material fact contained (i) in
any Preliminary Prospectus, the Registration Statement or the
Prospectus (as from time to time amended and supplemented); (ii)
in any post effective amendment or amendments or any new
registration statement and prospectus in which is included
securities of the Company issued or issuable upon exercise of the
Securities; or (iii) in any application or other document or
written communication (in this Section 9 collectively called
"application") based upon written information furnished by such
Selling Stockholder in any jurisdiction in order to qualify the
Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq-NMS
or any other securities exchange; or (B) any breach of any
representation, warranty or covenant or agreement of such Selling
Stockholder contained herein or in any certificate by or on
behalf of such Selling Stockholders delivered pursuant hereto,
unless, in the case of clause (A) such statement or omission was
made (i) in reliance upon and in conformity with written
information furnished to such Selling Stockholder with respect to
any Underwriter by or on behalf of such Underwriter expressly for
use in any Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment thereof or supplement thereto, or in
any application, as the case may be or (ii) if a copy of the
Preliminary Prospectus or Prospectus in which such untrue
statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent, given, distributed or
properly recirculated by the Underwriters within the time
required by the Act and the Rules and Regulations and such
failure directly resulted in the otherwise indemnifiable losses,
claims, damages, or expenses of the Underwriters as defined
herein) and each controlling person thereof.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which the Company may have at common
law or otherwise.
(c) The Underwriters agree severally, but not jointly, to indemnify
and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each
other person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act,
and the Selling Stockholders, to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to the
Underwriters but only with respect to statements or omissions, if
any, made in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in
strict conformity with, written information furnished to the
Company with respect to any Underwriter by such Underwriter
expressly for use in such Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such application. Each of the
Company and each of the Selling Stockholders acknowledges that
the statements with respect to the public offering of the
Securities set forth under the heading "Underwriting," the Risk
Factor entitled "Limited Underwriting History" and the
stabilization and passive market making legends in the
Prospectus have been furnished by the Underwriters expressly
for use therein and constitute the only information furnished
in writing by or on behalf of the Underwriters for inclusion
in the Prospectus.
The indemnity agreement in this subsection (c) shall be in
addition to any liability which each Underwriter may have at
common law or otherwise.
(d) Promptly after receipt by an indemnified party under this Section
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9 of notice of the commencement of any action, suit or
--
proceeding, such indemnified party shall, if a claim in respect
thereof is to be made against one or more indemnifying parties
under this Section 9, notify each party against whom
indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this
Section 9 except to the extent that it has been prejudiced in any
---------
material respect by such failure or from any liability which it
may have otherwise). In case any such action is brought against
any indemnified party, and it notifies an indemnifying party or
parties of the commencement thereof, the indemnifying party or
parties will be entitled to participate therein, and to the
extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties
shall have the right to employ its or their own counsel in any
such case but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing
by the indemnifying party in connection with the defense of such
action at the expense of such indemnifying party, (ii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the
defense of such action within a reasonable period of time after
notice of commencement of the action, or (iii) such indemnified
party or parties shall have been advised in a written opinion by
counsel to the indemnified party that a conflict of interest
exists between the indemnifying party and the indemnified
parties, making representation of such parties by the same
counsel inappropriate (in which case the indemnifying parties
shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which
events the reasonable fees and expenses of additional counsel
shall be borne by the indemnifying parties. Anything in this
Section 9 to the contrary notwithstanding, an indemnifying party
---------
shall not be liable for any settlement of any claim or action
effected without its written consent; provided, however, that
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such consent was not unreasonably withheld or delayed. An
indemnifying party will not, without the prior written consent of
the indemnified parties, settle, compromise or consent to the
entry of any judgement with respect to any pending or threatened
claim, action, suit, investigation, inquiry, proceeding or
litigation in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim, action, suit,
investigation, inquiry, proceeding or litigation), unless such
settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out
of such claim, action, suit, investigation, inquiry, proceeding
or litigation and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on
behalf of any indemnified party.
(e) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes a claim for
indemnification pursuant to this Section 9, but it is judicially
---------
determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 9 provide for
---------
indemnification in such case, or (ii) contribution under the Act
may be required on the part of any indemnified party, then each
indemnifying party shall contribute to the amount paid as a
result of such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of
the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the
Securities or (B) if the allocation provided by clause (A) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above, but also the relative fault of each of the
contributing parties, on the one hand, and the party to be
indemnified on the other hand, in connection with the statements
or omissions that resulted in such losses, claims, damages,
expenses or liabilities, as well as any other relevant equitable
considerations. In any case where the Company and/or any Selling
Stockholder is the contributing party and the Underwriters are
the indemnified party, the relative benefits received by the
Company and/or any Selling Stockholder on the one hand, and the
Underwriters on the other, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the
Securities (before deducting expenses other than underwriting
discounts and commissions) bears to the total underwriting
discounts and non-accountable expense allowance and any amounts
realized from the sale of Representative Securities received by
-------------- ----------
the Underwriters hereunder, in each case as set forth in the
table on the cover page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Stockholders, or
by the Underwriters, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified
any such action or claim. Notwithstanding the provisions of this
subsection (d), the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount
applicable to the Firm Securities and Options Securities
purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For
purposes of this Section 9, (i) each person, if any, who controls
---------
the Company within the meaning of the Act, each officer of the
Company who has signed the Registration Statement, and each
director of the Company shall have the same rights to
contribution as the Company and (ii) each person, if any, who
controls an Underwriter within the meaning of the Act shall have
the same rights to contribution as such Underwriter, subject in
each case to this subsection (d). Any party entitled to
contribution will, promptly after receipt of notice of claim of
any action, suit or proceeding against such party in respect to
which a claim for contribution may be made against another party
or parties under this subsection (d), notify such party or
parties from whom contribution may be sought, but the omission so
to notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation
it or they may have hereunder or otherwise than under this
subsection (d), or to the extent that such party or parties were
not adversely affected by such omission. The contribution
agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
10. Representations and Agreements to Survive Delivery. All
--------------------------------------------------
representations, warranties and agreements contained in this Agreement
or contained in certificates of officers of the Company or of the
Selling Stockholders submitted pursuant hereto, shall be deemed to be
representations, warranties and agreements at the Closing Date and the
Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and of the Selling
Stockholders, and the indemnity agreements contained in Section 9
---------
hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter, the
Company, any Selling Stockholder, or any controlling person of any
Underwriter or the Company, and shall survive termination of this
Agreement or the issuance and delivery of the Securities to the
Underwriters and the Representative, as the case may be.
11. Effective Date. This Agreement shall become effective at 10:00 a.m.,
--------------
New York City time, on the next full business day following the date
------------------------------------------------
hereof, or at such earlier time after the Registration Statement
------
becomes effective as the Representative, in its discretion, shall
release the Firm Securities and Option Securities for the sale to the
public; provided, however, that the provisions of Sections 7, 9 and 12
-------- ------- --------
of this Agreement shall at all times be effective. For purposes of
this Section 11, the Firm Securities and the Option Securities to be
----------
purchased hereunder shall be deemed to have been so released upon the
earlier of dispatch by the Representative of telegrams to securities
dealers releasing such securities for offering or the release by the
Representative for publication of the first newspaper advertisement
which is subsequently published relating to the Firm Securities and
the Option Securities.
12. Termination.
-----------
(a) Subject to subsection (b) of this Section 12, the Representative shall
-------
have the right to terminate this Agreement between the date of this
Agreement and the Closing Date or the Option Closing Date, as the case
may be, (i) if any domestic or international event or act or
occurrence has materially disrupted, or in the Underwriter's opinion
will in the immediate future materially disrupt the financial markets;
or (ii) if any material adverse change in the financial markets shall
have occurred; or (iii) if trading generally shall have been suspended
or materially limited on or by the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities
Dealers Automated Quotation System, the NASD, the Commission or any
other government authority having jurisdiction over such matters; or
(iv) if trading of any of the securities of the Company shall have
been suspended, or any of the securities of the Company shall have
been delisted, on any exchange or in any over-the-counter market; or
(v) if the United States shall have become involved in a war or major
hostilities, or if there shall have been an escalation in an existing
war or major hostilities or a national emergency shall have been
declared in the United States; or (vi) if a banking moratorium has
been declared by any state or by federal authority; or (vii) if the
Company shall have sustained a loss material to the Company by fire,
flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have
been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the offering, sale and/or delivery of the
Firm Securities and the Option Securities; or (viii) if there shall
have been (a) such a material adverse change in the Business, or (b)
such material adverse change in the general market, political or
economic conditions, in the United States or elsewhere, which, in each
case, in the Representative's judgment, would make it inadvisable to
proceed with the offering, sale and/or delivery of the Firm Securities
and the Option Securities; or (ix) if either of Messrs. Xxxxxxx X.
Xxxxx or Xxxx Xxxxxxx no longer serves the Company in his present
capacity.
(b) If this Agreement is terminated by the Representative in accordance
with the provisions of Section 12(a), the Company shall promptly
-------
reimburse and indemnify the Representative for all of its actual
out-of-pocket expenses (on an accountable basis), including the
reasonable fees and disbursements of counsel for the Underwriter (less
amounts previously paid pursuant to Section 7(c) above), up to a
------------
maximum of $75,000. Notwithstanding any contrary provision contained
-------
in this Agreement, if this Agreement shall not be carried out within
the time specified herein, or any extension thereof granted by the
Representative, by reason of any failure on the part of the Company or
any Selling Stockholder to perform any undertaking or satisfy any
condition of this Agreement by it to be performed or satisfied
(including, without limitation, pursuant to Section 8 or Section 13)
--------- ----------
then, the Company shall promptly reimburse and indemnify the
Representative for all of its actual out-of-pocket expenses (on an
accountable basis), including the reasonable fees and disbursements of
Underwriters counsel (less amounts previously paid pursuant to Section
-------
7(c) above), up to a maximum of $75,000. In addition, the Company
---
shall remain liable for all Blue Sky counsel fees and disbursements,
expenses and filing fees. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any termination
of this Agreement (including, without limitation, pursuant to Sections
--------
8, 12, and 13 hereof), and whether or not this Agreement is otherwise
carried out, the provisions of Section 7 and Section 9 shall not be in
------- -------
any way affected by such election or termination or failure to carry
out the terms of this Agreement hereof.
13. Substitution of the Underwriters; Default by the Company.
--------------------------------------------------------
(a) If one or more of the Underwriters shall fail (otherwise
than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 8, Section 12 or Section 13
------- ------- -------
hereof) to purchase the Securities which it or they are obligated to
purchase on such date under this Agreement (the "Defaulted
Securities"), the Representative shall have the right, within twenty-
four (24) hours thereafter, to make arrangement for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon the terms herein set forth; if, however,
the Representative shall not have completed such arrangements within
such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed
10% of the total number of Firm Securities to be purchased on
such date, the non-defaulting Underwriters shall be obligated to
purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of
the total number of Firm Securities, this Agreement shall
terminate without liability on the part of any non-defaulting
Underwriters (or, if such default shall occur with respect to any
Option Securities to be purchased on an Option Closing Date, the
Underwriters may at the Representative's option, by notice from
the Representative to the Company and the Selling Stockholders,
terminate the Underwriters' obligation to purchase Option
Securities from the Company and/or the Selling Stockholders, as
the case may be, on such date).
No action taken pursuant to this Section 13 shall relieve any
-------
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Representative shall have the right to
postpone the Closing Date or the Option Closing Date, as the case may be,
for a period not exceeding seven (7) days in order to effect any required
changes in the Registration Statement or Prospectus or in any other
documents or arrangements.
(b) If either the Company or any Selling Stockholder shall fail
at the Closing Date or any Option Closing Date, as applicable, to sell
and deliver the number of Securities which it or he is obligated to
sell hereunder on such date, then this Agreement shall terminate (or,
if such default shall occur with respect to any Option Securities to
be purchased on an Option Closing Date, the Underwriters may, at the
Representative's option, by notice from the Representative to the
Company and the Selling Stockholders, terminate the Underwriters'
obligation to purchase Option Securities from the Company and/or the
Selling Stockholders, as the case may be, on such date) without any
liability on the part of any non-defaulting party other than pursuant
to Section 7, Section 9 and Section 12 hereof. No action taken
pursuant to this Section 13 shall relieve the Company and/or the
Selling Stockholders from liability, if any, in respect of such
default.
14. Notices. All notices and communications hereunder, except as herein
-------
otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Underwriter at
National Securities Corporation, 0000 Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx, Chairman,
with a copy to Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Xxxxxxx,
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.
Xxxxx, Esq. Notices to the Company and to the Selling Stockholders
shall be directed to the Company, and to the Selling Stockholders in
care of the Company, at 0000 X. Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx,
XX 00000, Attention: Xxxx Xxxxxxx, III, Executive Vice President,
with a copy to Xxxx & Priest, LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxx X. Xxxx, Esq.
15. Parties. This Agreement shall inure solely to the benefit of and
-------
shall be binding upon, the Underwriter, the Company, the Selling
Stockholders and the controlling persons, directors and officers
referred to in Section 9 hereof, and their respective successors,
-------
legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any
provisions herein contained. No purchaser of Securities from the
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
16. Construction. This Agreement shall be governed by and construed and
------------
enforced in accordance with the laws of the State of New York without
giving effect to its choice of law or conflict of laws principles.
17. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, and all
of which taken together shall be deemed to be one and the same
instrument.
18. Entire Agreement: Amendments. This Agreement and the Representative's
----------------------------
Warrant Agreement constitute the entire agreement of the parties
hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter
hereof. This Agreement may not be amended except in a writing, signed
by the Underwriter, the Company and the Selling Stockholders.
If the foregoing correctly sets forth the understanding among the
Underwriter, the Company and the Selling Stockholders, please so indicate
in the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among the Underwriter, the Company and the
Selling Stockholders, severally.
Very truly yours,
GRAND COURT LIFESTYLES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE A HERETO
----------------------------------------
Xxxxxxx X. Xxxxx
----------------------------------------
Xxxx Xxxxxxx
CONFIRMED AND ACCEPTED AS OF
THE DATE FIRST ABOVE WRITTEN:
----------------------------
NATIONAL SECURITIES CORPORATION
For itself and as Representative of the several Underwriters named in
Schedule B hereto.
By:
-----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman
SCHEDULE A
NUMBER OF
NAME FIRM SECURITIES
---- ---------------
Xxxxxxx X. Xxxxx 150,000 Shares of
-----------------
Common Stock
-------------
Xxxx Xxxxxxx 150,000 Shares of
-----------------
Common Stock
------------
TOTAL . . . . . . . . . . . . . . . . . 300,000 Shares of
Common Stock
=================
NUMBER OF
NAME OPTION SECURITIES
---- -----------------
Xxxxxxx X. Xxxxx 22,500 Shares of
---------------
Common Stock
------------
Xxxx Xxxxxxx 22,500 Shares of
----------------
Common Stock
------------
TOTAL . . . . . . . . . . . . . . . . . 45,000 Shares of
Common Stock
=================
SCHEDULE B
NUMBER OF
NAME FIRM SECURITIES
---- ---------------
Common Stock Preferred
National Securities ------------ ---------
Corporation Stock
-----
TOTAL . . . . . . . . . 1,500,000 Shares 1,500,000 Shares
================ ==================
SCHEDULE C
STOCKHOLDERS WHO HAVE EXECUTED LOCK-UP AGREEMENTS
