2,000,000 Shares
The Source Information Management Company
Common Stock
UNDERWRITING AGREEMENT
___________, 1997
Xxxxxx & Co. Securities Inc.
As Representative of the Underwriters
named in Schedule I hereto
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The Source Information Management Company, a Missouri corporation (the
"Company"), hereby confirms its agreement with Xxxxxx & Co. Securities Inc.
(being referred to herein variously as "you" or the "Representative") and the
other underwriters named in Schedule I hereto (the "Representative" and the
other underwriters being collectively called the "Underwriters") as follows:
1. Introductory. Pursuant to the terms of this Underwriting Agreement (this
"Agreement"), the Company proposes to issue and sell, severally and not jointly,
to the Underwriters 2,000,000 shares of Common Stock, $.01 par value, of the
Company (the "Common Stock"). In addition, solely for the purpose of covering
over-allotments, the shareholders of the Company named in Schedule II hereto
(the "Selling Shareholders") propose to grant to the Representative the option
to purchase up to an additional 300,000 shares of
Common Stock ("Additional Stock"). The Common Stock to be sold by the Company,
excluding the Additional Stock, is herein called the "Firm Stock". The Common
Stock is more fully described in the Prospectus referred to below.
2. Representations and Warranties
The Company represents and warrants to the Underwriters that:
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, and amendments thereto, on Form SB-2
(File No. 333-___), including any related preliminary prospectus ("Preliminary
Prospectus"), for the registration of the Firm Stock and the Additional Stock
under the Securities Act of 1933, as amended (the "Act"). The Company will not,
before the registration statement becomes effective (the "Effective Date"), file
any other amendment to said registration statement to which you shall reasonably
object in writing after being furnished with a copy thereof. Copies of such
registration statement and all amendments thereto, and all forms of the related
Preliminary Prospectus contained therein, previously filed by the Company with
the Commission, have heretofore been delivered to you. 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, exhibits and all other documents filed as
a part thereof and all information deemed to be a part thereof as of such time
pursuant to paragraph (b) of Rule 430A of the General Rules and Regulations of
the Commission under the Act (the "Regulations")) is herein called the
"Registration Statement". The prospectus in the form filed with the Commission
pursuant to Rule 424(b) of the Regulations is herein called the "Prospectus".
(1) Neither the Commission nor any "Blue Sky" or securities authority
of any jurisdiction has issued an order preventing or suspending the use of any
Preliminary Prospectus relating to the proposed offering of the Stock and
Additional Stock or has instituted proceedings for that purpose. Each
Preliminary Prospectus, at the time of filing with the Commission, contained all
material statements which are required to be stated therein in accordance with
the Act and the Regulations, and conformed in all material respects with the
requirements of the Act and the Regulations and did not include 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 the light of the
circumstances under which they were made, not misleading. The Registration
Statement at the time it becomes effective and the Prospectus at the time it is
filed with the Commission pursuant to Rule 424(b) and on the Closing Date (and
the Additional Closing Date, if any, determined as hereinafter provided in
Section 3) will contain all material statements which are required to be stated
therein in accordance with the Act and the Regulations, and will in all material
respects conform to the requirements of the Act and the Regulations, and the
Registration Statement and the Prospectus will not, on such dates, include 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 they were made, not misleading, except that no
representations or warranties are made with respect to statements or omissions
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representative
expressly for use in the Registration Statement or Prospectus or any amendment
or supplement thereto.
(2) 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 of
K-Sub, Inc., L- Sub, Inc., Readers Choice, Inc., Magazine Marketing, Inc., The
Source-Canada Corp. and Xxxx Xxxxxxx and Associates, Inc. is a subsidiary of the
Company (collectively, the "Subsidiaries") and 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 owns, directly or indirectly, all
of the capital stock of each of the Subsidiaries. All such shares of capital
stock so owned are validly issued and outstanding, fully paid and nonassessable
and are owned free and clear of any liens, encumbrances or other restrictions.
The Company and each of the Subsidiaries are duly qualified and in good standing
as foreign corporations in all jurisdictions where the character or location of
their properties (owned or leased) or the nature of their business makes such
qualification necessary, except where the failure so to qualify would not have a
material adverse effect on the business, properties, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and the
Subsidiaries, taken as a whole (a "Material Adverse Effect"). The Company and
each of the Subsidiaries have all requisite corporate power and authority, and
all necessary authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory officials and bodies, to own
their respective properties and conduct their respective businesses as described
in the Prospectus, and the Company has all such power, authority,
authorizations, approvals, orders, licenses, certificates and permits to enter
into this Agreement and to carry out the provisions and conditions hereof. The
Company and each of the Subsidiaries own, or possess adequate rights to use, all
patents, trademarks, service marks and other rights necessary for the conduct of
their business as described in the Prospectus and neither the Company, nor any
of the Subsidiaries nor any officer or director of the Company or any of the
Subsidiaries has received any notice of conflict with the asserted rights of
others in any respect which would have a Material Adverse Effect, and none knows
any basis therefor. The Company has no subsidiaries other then the Subsidiaries.
(3) The Company and the Subsidiaries have either good and marketable
title in fee simple to, or valid and enforceable leasehold estates in, all items
of real property and personal property which are stated in the Prospectus to be
owned or leased by it, in each case free and clear of all liens, encumbrances,
claims, security interests, subleases and defects, other than those referred to
in the Prospectus and those which do not have a Material Adverse Effect. Each of
the Company and the Subsidiaries has the right to operate all of its facilities
in their present locations and the operation of such facilities does not violate
in any material respect the provisions of any lease with respect thereto which
the Company, any of the Subsidiaries or any third party is a party.
(4) There is no litigation or governmental proceeding pending or, to
the knowledge of the Company or any of the Subsidiaries, threatened against, or
involving the properties or business of, the Company or any of the Subsidiaries,
nor are there any actions, suits or proceedings related to environmental matters
or related to discrimination on the basis of age, sex, religion or race and no
labor disturbance by the employees of the Company exist, which could have a
Material Adverse Effect, except as referred to in the Prospectus.
(5) All contracts, agreements, documents and other instruments
required to be filed as exhibits to the Registration Statement have been filed
with the Commission as exhibits thereto.
(6) The consolidated financial statements together with the related
notes of the Company and the Subsidiaries included in the Registration Statement
and Prospectus present fairly the consolidated financial position and the
consolidated results of operations of the Company and the Subsidiaries at the
respective dates and for the respective periods to which they apply; and such
financial statements and related schedules have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout the
periods involved. The capitalization of the Company, as set forth under the
caption "Capitalization" in the Prospectus, was as so described on the date of
which it is set forth therein.
(7) BDO Xxxxxxx, LLP, whose reports are filed with the Commission as a
part of the Registration Statement, are independent accountants as required by
the Act and the Regulations.
(8) Except for the shares of capital stock of the Subsidiaries,
neither the Company nor any of the Subsidiaries owns, directly or indirectly,
any shares of stock or any other securities of any corporation nor does the
Company or any of the Subsidiaries have any equity interest in any firm,
partnership, joint venture, association or other entity, except as referred to
in the Prospectus.
(9) Subsequent to the respective dates as of which information is set
forth in the Registration Statement and the Prospective, there has been no
material adverse change in the business, properties, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and the
Subsidiaries, taken as a whole, except as referred to therein; and the
outstanding debt, the property and the business of the Company and each of the
Subsidiaries conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(10) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default, in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, note, bank loan or credit agreement or any other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their property may be bound or affected, which
default would have a Material Adverse Effect.
(11) Neither the Company nor any of the Subsidiaries is in breach of
any term or provision of its Certificate of Incorporation, by-laws or other
charter documents and in violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, which violation is a Material
Adverse Effect. Neither the Company nor any of the Subsidiaries is in violation
of any laws, ordinances, governmental rules or regulations to which any of them
is subject, which violation is a Material Adverse Effect. Neither the Company
nor any of the Subsidiaries has not failed to obtain any licenses, permits,
franchises or other governmental authorizations materially necessary to the
ownership of its property or to the conduct of its business.
(12) Neither the execution and delivery of this Agreement, the
Representative's Warrant Agreement (as defined in Section 3(h) hereof) and the
Financial Consulting Agreement (as defined in Section 5(t) hereof), the
consummation of the transactions herein or therein contemplated, nor compliance
with the terms and provisions hereof or thereof will conflict with, or result in
a breach of any of the terms, provisions or conditions of the Certificate of
Incorporation, by-laws or other charter documents of the Company or any of the
Subsidiaries. The execution and delivery of this Agreement, the Representative's
Warrant Agreement and the Financial Consulting Agreement, the consummation of
the transactions herein or therein contemplated, and compliance with the terms
and provisions hereof or thereof will not conflict with, or result in a breach
of, or constitute a default under any of the terms, provisions or conditions of
any agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their properties is bound, except where
such conflict, breach or default would not have a Material Adverse Effect, or
violate any franchise, license, permit, judgment, decree, order, statute, rule
or regulation of any government, governmental authority or court having
jurisdiction over the Company or any of its Subsidiaries, except where such
violation would not have a Material Adverse Effect.
(13) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Representative's Warrant Agreement and the Financial Consulting Agreement and
this Agreement, the Representative's Warrant Agreement and the Financial
Consulting Agreement have been duly authorized, executed and delivered by the
Company and constitute legal, valid and binding agreements of the Company and
are enforceable against the Company in accordance with their respective terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, and
except insofar as the enforceability of the indemnification and contribution
terms may be limited by applicable law or public policy.
(14) All of the issued shares of Common Stock, including the
Additional Stock, have been duly authorized and validly issued and are fully
paid and nonassessable and free of preemptive rights; the Firm Stock has been
duly authorized and, when issued and delivered in accordance with this
Agreement, will be validly issued, fully paid and nonassessable and free of
preemptive rights. The Company's capital stock conforms in all material respects
to all statements in relation thereto contained in the Registration Statement
and Prospectus. The holders of all outstanding preferred stock of the Company
have agreed to convert such preferred stock into Common Stock prior to the
Effective Date. Any provision in the Certificate of Incorporation, the by-laws,
any contract or other instrument regarding the preemptive rights of the Common
Stock has been waived and will be terminated as of the Closing Date.
(15) The warrants that will be issued pursuant to the terms of the
Representative's Warrant Agreement (the "Representative's Warrants") have been
duly and validly authorized by the Company and upon delivery to you against
payment therefore and otherwise in accordance with this Agreement and the
Representative's Warrant Agreement will be duly issued and legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally.
(16) The Common Stock underlying the Representative's Warrants (the
"Representative's Warrant Stock") has been duly authorized and reserved for
issuance upon exercise of the Representative's Warrants, and, when issued upon
payment of the exercise price therefor, will be validly issued, fully paid and
nonassessable shares of Common Stock and free of pre-emptive rights.
(1) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, neither the Company nor any of the
Subsidiaries has (i) issued any securities except securities issued under the
Company's employee benefit plans and as provided herein or in the Registration
Statement, or incurred any liability or obligation, direct or contingent, for
borrowed money, (ii) entered into any material transaction not in the ordinary
course of business, (iii) entered into any transaction with an affiliate of the
Company other than one or more of the Subsidiaries, or (iv) declared or paid any
dividend on its shares of Common Stock.
(1) The Company has obtained as of the date hereof lock-up
agreements, satisfactory to the Representative, with respect to the Common Stock
from all of the Company's directors, executive officers and stockholders who
beneficially own five percent (5%) or more of the Company's outstanding Common
Stock.
(2) No consent, authorization or approval is required to be
obtained by the Company from any Federal, state or local governmental agency or
body in order to consummate the transactions contemplated herein or in the
Registration Statement, other than such consents, authorizations or approvals as
have been obtained.
(3) No person holds a right to require or participate in the
registration under the Act of any securities of the Company to be effected by
the Registration Statement, which right has not been duly waived by the holder
thereof as of the date hereof. The Company does not have outstanding, and at the
Closing Date and the Additional Closing Date, if any, will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its Common Stock or any such warrants, convertible
securities or obligations, except as referred to in the Prospectus.
(4) The Company and each of the Subsidiaries has timely filed all
Federal, state, and local tax returns which are required to be filed and has
paid all taxes shown on such returns and all assessments received by it to the
extent that the same have become due, except any being contested in good faith.
(2) To the knowledge and belief of the Company's officers and
directors (such officers and directors having made reasonable investigation with
respect thereto), neither the Company, nor any of the Subsidiaries nor any
officer, director or employee of the Company or any of the Subsidiaries has made
any payment of funds of the Company or any of the Subsidiaries or purchased any
property with funds of the Company or any of the Subsidiaries in a manner
prohibited by law, and no funds of the Company or any of the Subsidiaries or
property purchased with funds of the Company or any of the Subsidiaries has been
set aside to be used for any payment prohibited by law.
(3) Except as set forth in the Registration Statement and Prospectus,
the Company does not know of any claims for services in the nature of a finders
fee, brokerage fee or otherwise with respect to this offering for which the
Company, any of the Subsidiaries or you may be responsible.
(1)The Company has obtained from such key executives as are
designated by the Representative (the "Key Employees") new or modified
employment agreements upon terms agreeable to the Company and the
Representative, including, without limitation, the term, compensation,
arrangement and restrictive covenants. The Company has obtained key man life
insurance upon the lives of the Key Employees in face amounts mutually agreeable
to the Company and the Representative.
(4) Application for quotation of the Common Stock on The Nasdaq
SmallCap Market and application for listing on the Boston Stock Exchange and the
Pacific Stock Exchange have each been approved, subject to notice of issuance.
(b) Each of the Selling Shareholders, severally and not jointly,
represents and warrants to the Representative and the Company that:
(5) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Shareholder of this Agreement and the
Power of Attorney (the "Power of Attorney") and the Custody Agreement (the
"Custody Agreement") hereinafter referred to, and for the sale and delivery of
the Additional Stock to be sold by such Selling Shareholder hereunder, have been
obtained; and such Selling Shareholder has full right, power and authority to
enter into this Agreement, the Power of Attorney and the Custody Agreement and
to sell, assign, transfer and deliver the Additional Stock to be sold by such
Selling Shareholder hereunder.
(6) The sale of the Additional Stock to be sold by such Selling
Shareholder hereunder and the performance of this Agreement, the Power of
Attorney and the Custody Agreement and the consummation of the transactions
herein and therein contemplated do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under or give rise to rights of termination under, any indenture,
mortgage, deed of trust, voting agreement, loan agreement, note or other
evidence of indebtedness, lease, sublease, contract or other agreement or
instrument to which such Selling Shareholder is a party or by which such Selling
Shareholder or any of such Selling Shareholder's properties is bound, the
certificate or articles of incorporation and by-laws of such Selling Shareholder
if such Selling Shareholder is a corporation, the partnership agreement of such
Selling Shareholder if such Selling Shareholder is a partnership, or any
applicable law, rule, regulation, judgment, order or decree of any court,
government or governmental instrumentality, domestic or foreign, having
jurisdiction over such Selling Shareholder or the property of such Selling
Shareholder.
(7) Such Selling Shareholder has, and at the Additional Closing Date
(as defined in Section 3 hereof), such Selling Shareholder will have, good and
valid title to the Additional Stock to be sold by such Selling Shareholder
hereunder, free and clear of all liens, encumbrances, equities or claims; and,
upon delivery of such Additional Stock and payment therefor pursuant hereto,
good and valid title to such Additional Stock free and clear of all liens,
encumbrances, equities or claims, will pass to the Representative.
(8) Such Selling Shareholder has delivered to the Representative on or
before the date of this Agreement, an agreement satisfactory in form and
substance to the Representative, whereby such Selling Shareholder agrees, for a
period of _____ days after the commencement of the public offering of the Stock,
not to offer, sell, contract to sell or grant an option relating to, or
otherwise dispose of any shares of Common Stock, directly or indirectly, without
the Representative's prior written consent.
(9) Such Selling Shareholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Additional Stock.
(10) All information regarding such Selling Stockholder contained in
the Registration Statement and the Prospectus and any amendment or supplement
thereto does not and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
In order to document the Representative's compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, each of
Selling Shareholders agree to deliver to the Representatives prior to or at the
Additional Closing Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
Each of the Selling Shareholders represents and warrants that
certificates in negotiable form representing all of the Additional Stock to be
sold by such Selling Shareholder hereunder have been placed in custody under a
Custody Agreement, in the form heretofore furnished to the Representative, duly
executed and delivered by such Selling Shareholder to
__________________________, as custodian (the "Custodian"), and that such
Selling Shareholder has duly executed and delivered a Power of Attorney, in the
form heretofore furnished to the Representative, appointing the persons
indicated in Schedule II hereto, and each of them, as such Selling Shareholder's
attorneys-in-fact (the "Attorneys-in-Fact") with authority to execute and
deliver this Agreement on behalf of such Selling Shareholder, to determine the
purchase price to be paid by the Representative to the Selling Shareholders as
provided in Section 3 hereof, to authorize the delivery of the Additional Stock
to be sold by such Selling Shareholder hereunder and otherwise to act on behalf
of such Selling Shareholder in connection with the transactions contemplated by
this Agreement and the Custody Agreement.
Each of the Selling Shareholders specifically agrees that the
Additional Stock represented by the certificates held in custody for such
Selling Shareholder under the Custody Agreement are subject to the interests of
the Representative hereunder, and that the arrangements made by such Selling
Shareholder for such custody and the appointment by such Selling Shareholder of
the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable.
Each of the Selling Shareholders specifically agrees that the obligations of the
Selling Shareholders hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling Shareholder or, in
the case of a corporation, partnership, joint venture or business association,
by the merger, reorganization or dissolution of such Selling Shareholder, or by
the occurrence of any other event. If any individual Selling Shareholder should
die or become incapacitated, or in the case of a Selling Shareholder which is a
corporation, partnership, joint venture or business association such Selling
Shareholder should merge, reorganize or dissolve, or if any such other event
should occur before the delivery of the Additional Stock hereunder, certificates
representing the Additional Stock shall be delivered by or on behalf of the
Selling Shareholders in accordance with the terms and conditions of this
Agreement and the Custody Agreement, and actions taken by the Attorneys-in-Fact
pursuant to the Powers of Attorney shall be as valid as if such death,
incapacity, merger, reorganization or dissolution or other event had not
occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or
any of them, shall have received notice of such death, incapacity, merger,
reorganization, dissolution or other event.
3. Purchase, Sale and Delivery of the Firm Stock and Additional Stock.
(1) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell, severally and not jointly, to the Underwriters, and the
Underwriters, severally and not jointly, agree to purchase from the Company, at
a purchase price of $_____ per share, the number of shares of Firm Stock set
forth opposite their respective names in Schedule I.
(a) Payment of the purchase price for, and delivery of, the Firm Stock
shall be made at your discretion by wire transfer or by certified or official
bank check in New York Clearing House funds or similar next day funds, payable
to the order of the Company at the offices of Xxxxxx & Co. Securities Inc., 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, through the facilities of the Depository
Trust Company, or such other place as shall be agreed upon between us. Such
delivery and payment shall be made at 9:00 A.M., New York time, on the third
business day following the Effective Date; provided, however, that such date may
be extended for not more than an additional five business days by the
Representative or in accordance with the provisions of Section 9(c) hereof. The
hour and date of such delivery and payment are herein called the "Closing Date".
(b) Certificates evidencing the Firm Stock shall be registered in such
name or names and in such authorized denominations as you may request in writing
at least two full business days prior to the Closing Date. The Company will
permit you to examine and package said certificates at least one full business
day prior to the Closing Date.
(c) In addition, on the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the
Selling Shareholders, as and to the extent indicated on Schedule II, hereby
grant, severally and not jointly, to you the option to purchase all or a portion
of the Additional Stock as may be necessary to cover over-allotments at the same
purchase price per share to be paid by the Underwriters to the Company for the
Firm Stock as determined in this Section 3. Of the aggregate number of shares of
Additional Stock the Representative may have elected to purchase, 100% of such
shares shall initially be purchased from X. Xxxxxx Xxxxxx to the extent
indicated in Schedule II and thereafter, the balance of the Additional Stock
shall be purchased from the remaining Selling Shareholders, pro rata based on
the number of shares of Additional Stock to be sold by such remaining Selling
Shareholders. This option may be exercised only to cover over-allotments in the
sale of shares of Firm Stock by the Underwriters. This option may be exercised
at any time or from time to time on or before the forty-fifth (45th) day
following the Effective Date by written notice by the Representative to the
Attorneys-in-Fact acting on behalf of the Selling Shareholders. Such notice
shall set forth the aggregate number of shares of Additional Stock as to which
the option is being exercised, the name or names in which the shares of
Additional Stock are to be registered, the denominations in which the Additional
Stock is to be issued, and the date and time, as reasonably determined by you,
when the Additional Stock is to be delivered (such date and time being herein
sometimes referred to as the "Additional Closing Date"); provided, however, that
the Additional Closing Date shall not be earlier than the Closing Date nor
earlier than the third business day after the date on which the option shall
have been exercised nor later than the eighth business day after the day on
which the option shall have been exercised.
(d) Payment of the purchase price for, and delivery of, the Additional
Stock shall be made at your discretion by wire transfer or by certified or
official bank checks in New York Clearing House funds or similar next day funds,
payable to the order of the Company with respect to the shares of Additional
Stock sold by X. Xxxxxx Xxxxxx and to the order of the Custodian with respect to
the remaining Selling Shareholders at the offices of Xxxxxx & Co. Securities
Inc., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, through the facilities of the
Depository Trust Company or such other place as shall be agreed upon between
you, the Company and the Custodian.
(e) Certificates evidencing the Additional Stock shall be registered
in such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Additional Closing Date.
The Custodian will permit you to examine and package said certificates for
delivery at least one full business day prior to the Additional Closing Date.
(f) The Company and the Selling Shareholders shall not be obligated to
sell or deliver any shares of Firm Stock or Additional Stock, as the case may
be, except upon tender of payment by the Representative for all the Firm Stock
or Additional Stock, as the case may be, agreed to be purchased from it
hereunder.
(g) On the Closing Date, the Company shall issue and sell to the
Representative, at a purchase price of $0.001 per Warrant, the Representative's
Warrants. The Representative's Warrants shall be exercisable for a period of
four (4) years commencing one (1) year from the Effective Date at an initial
exercise price equal to one hundred ______ percent (___%) of the initial public
offering price of the Firm Stock. The Representative's Warrants shall be issued
pursuant to the terms and provisions of the Representative's Warrant Agreement
substantially in the form of the Representative's Warrant Agreement filed as
Exhibit 4.4 to the Registration Statement (the "Representative's Warrant
Agreement").
4. Offering. You are to make a public offering of the Firm Stock as soon,
on or after the effective date of the Registration Statement, as you deem it
advisable so to do. The Firm Stock is to be initially offered to the public at
the initial public offering price set forth on the cover page of the Prospectus
(such price being herein called the "public offering price"). You may from time
to time increase or decrease the public offering price after the initial public
offering to such extent as you may determine.
5. Covenants of the Company.
The Company covenants that it will:
(a) Use its best efforts to cause the Registration Statement to become
effective and will notify you immediately, and confirm the notice in writing,
(i) when the Registration Statement, or any post-effective amendment thereto,
shall have become effective, (ii) of the issuance by the Commission of any stop
order or of the initiation or the threatening of any proceedings for that
purpose, and (iii) of the receipt of any comments by the Commission. The Company
will prepare and timely file with the Commission under Rule 424(b) of the
Regulations a Prospectus containing information previously omitted on the
Effective Date in reliance of Rule 430A of the Regulations. The Company will use
its best efforts to prevent the issuance of any stop order or any order
preventing or suspending the use of the Registration Statement or Prospectus
and, if such order is issued, to obtain the lifting thereof as promptly as
possible.
(b) During the time when a prospectus is required to be delivered
under the Act, comply so far as it is able with all requirements imposed upon it
by the Act, as now and hereafter amended, and by the Regulations, as from time
to time in force, so far as necessary to permit the continuance of sales or of
dealings in the Firm Stock and the Additional Stock in accordance with the
provisions hereof and the Prospectus. If at any time when a prospectus relating
to the Firm Stock or the Additional Stock is required to be delivered under the
Act any event shall have occurred as a result of which, in the reasonable
opinion of counsel for the Company or your counsel, the Registration Statement
or 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 it is necessary at any time to
amend or supplement the Registration Statement or Prospectus to comply with the
Act, the Company will notify you promptly and prepare and file with the
Commission an appropriate amendment or supplement (in form reasonably
satisfactory to you).
(c) Deliver to you such number of copies of each Preliminary
Prospectus as you may reasonably request and, deliver to you two signed copies
of the Registration Statement, including exhibits, and all post-effective
amendments thereto and such number of copies of the Prospectus, the Registration
Statement and amendments and supplements thereto, if any, without exhibits, as
you may reasonably request for the purposes contemplated by the Act.
(1) Endeavor in good faith, in cooperation with you, at or prior to
the time the Registration Statement becomes effective, to qualify the Firm Stock
and the Additional Stock for offering or sale of the Firm Stock and the
Additional Stock of such jurisdictions as you may reasonably designate; provided
that no such qualification shall be required in any jurisdiction where, as a
result thereof, the Company would be subject to service of general process or
would be required to become qualified to do business as a foreign corporation
doing business in such jurisdiction. In each jurisdiction where the
qualification of the Firm Stock and Additional Stock shall be effected, the
Company will, unless you agree that such action is not at the time necessary or
advisable, file and make such statements or reports at such times as are or may
be reasonably required by the laws of such jurisdiction.
(2) Make generally available to its security holders and to the
Representative as soon as practicable, but not later than the last day of the
fifteenth full calendar month following the Effective Date, an earnings
statement (which need not be certified by independent auditors unless required
by the Act or the Regulations, but which shall satisfy the provisions of Section
ll(a) of the Act) covering a period of at least twelve months beginning after
the Effective Date.
(d) For a period of __ days after the Effective Date, not issue, sell,
contract to sell, grant an option for the sale of or otherwise dispose of,
directly or indirectly, any shares of Common Stock of the Company (or any shares
of securities convertible into or exercisable for such Common Stock) other than
the Firm Stock and Additional Stock being sold by the Company and securities
issued pursuant to the Company's employee benefit plans or as otherwise referred
to in the Prospectus, without your prior written consent.
(3) For a period of five years from the effective date of the
Registration Statement, furnish you the following:
(i) as soon as practicable after they have been filed with the
Commission, two copies of each annual, quarterly and current report on Form
10-K, Form 10-Q or Form 8-K (to the extent the Company shall be required to file
such reports pursuant to the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (collectively the "Exchange Act") and, as
soon as practicable after they have been sent by the Company to its security
holders, two copies of any communications sent by it to its public security
holders generally;
(ii) as soon as practicable, two copies of every press release and
every material news item and article with respect to the Company or its affairs
which was released by the Company; and
(iii) such additional non-confidential documents and information with
respect to the Company and its affairs as you may from time to time reasonably
request.
(4) Apply the net proceeds from the offering received by the Company
in the manner set forth under "Use of Proceeds" in the Prospectus and comply
with Rule 463 under the Act.
(5) Furnish to you as early as practicable prior to the Closing Date
and Additional Closing Date, as the case may be, but no later than two full
business days prior thereto, a copy of the latest available unaudited interim
financial statements of the Company, if any, which have been reviewed by the
Company's independent auditors, as stated in their letters to be furnished
pursuant to Section 7(f) hereof.
(6) Not file any amendment or supplement to the Registration Statement
or Prospectus after the Effective Date to which you shall reasonably object in
writing after being furnished a copy thereof.
(e) If any action or proceeding shall be brought by you in order to
enforce any right or remedy under this Agreement, the Company hereby consents
to, and agrees that it will submit to, the jurisdiction of the courts of the
State of New York and of any Federal court sitting in the United States District
Court for the Southern District of New York. The Company agrees that process in
any such action or proceeding may be served in that manner provided by New York
law for service on foreign corporations.
(f) Comply with all registration, filing and reporting requirements of
the Exchange Act which may from time to time be applicable to the Company.
(g) Make all filings required, including registration under the
Exchange Act, to obtain and keep the quotation of its Common Stock in The Nasdaq
SmallCap Market and the listing of its Common Stock on the _______ Stock
Exchange, and effect and maintain such quotation and listing for the Common
Stock for at least five (5) years from the date of this Agreement.
(h) Use its best efforts to be included in Standard & Poors
Corporations Manual as soon as possible following the Closing Date and to
continue to be included in such Manual for at least five (5) years from the
Effective Date.
(7) Not later than three months following the date of this Agreement,
cause to be delivered to you and to your counsel, Xxxxxx Xxxxxx Xxxxxx & Xxxx,
four (4) bound volumes containing therein all filings, including exhibits, and
correspondence to and from the Commission, the National association of
Securities Dealers, Inc, ("NASD") and all states or other jurisdictions
concerning the offering of the Firm Stock, underwriting documents and closing
documents, plus any other relevant material.
(8) For a period of three (3) years from the Closing Date, engage your
designee as an advisor (the "Advisor") to the Company's Board of Directors. The
Advisor shall be permitted to attend meetings of the Board and each of its
committees and receive no more or less compensation as is equal to the
entitlement of the Directors including, without limitation, all compensation
payable to Directors as members of the committees of the Board or in connection
with any other Board activities; provided, however, that the Company may require
as a condition precedent that any such Advisor shall agree to hold in confidence
and trust and to act in a fiduciary manner with respect to all information,
including, but not limited to, trade secrets, so received during such meetings
and may require that such Advisor sign a confidentiality agreement with the
Company; and, provided, further, that the Company reserves the right not to
provide information and to exclude such Advisor from any meeting or portion
thereof if attendance at such meeting by such Advisor or dissemination of any
information at such meeting to such Advisor would compromise or adversely affect
the attorney-client privilege between the Company and its counsel, or would, in
the good faith judgment of the Board of Directors, result in a conflict of
interest situation. The Company shall use its reasonable efforts to promptly
bring to the attention of such Advisor any agenda item that, in the good faith
judgment of the Board of Directors, would result in such a trade secret,
privileged matter or conflict of interest and the Board of Directors may exclude
such Advisor (or alternatively, the Advisor shall be entitled to exclude himself
or herself) from any deliberation or discussion of the Board of Directors
concerning such trade secret (if the Advisor has not executed a confidentiality
agreement), privileged matter or conflict of interest matter and as a recipient
in the dissemination of any such information. If such Advisor in his or her good
faith judgment believes that an item to be discussed by the Board of Directors
would result in any conflict of interest, such Advisor shall promptly bring such
conflict to the attention of the Chairman of the Board. In no event shall any
provision of this paragraph waive any obligation of confidentiality to the
Company owed by any such Advisor or the Representative. In addition, the Advisor
shall be entitled to receive reimbursement for all reasonable costs incurred in
attending such meetings including, but not limited to, food, lodging, and
transportation; such costs to be subject to approval of the Company which will
not be unreasonably withheld.
(9) For a period of three (3) years from the Closing Date, there will
be no less than four (4) formal, "in person" or "telephonic" meetings, of the
Company's Board of Directors in each such year at which meetings the Advisor
shall be permitted to attend or participate, as the case may be in accordance
with the provisions of Section 5(p); said meetings shall be held quarterly each
year and ten (10) days' advance notice of such meetings shall be given to the
Advisor. The Advisor shall receive notice of special meetings of the Board of
Directors at the same time and manner as the members of the Board.
(10) Indemnify and hold the Representative and the Advisor harmless,
to the full extent allowed by applicable laws, against any and all claims,
actions, awards and judgments arising solely out of the attendance and
participation of the Advisor at any meeting described in Section 5(p) of this
Agreement. In the event the Company maintains a liability insurance policy
affording coverage for the acts of its officers and directors, the Company
agrees, if possible, to include the Representative and the Advisor as an insured
under such policy.
(11) Establish and maintain during the period that the Common Stock is
listed on The Nasdaq SmallCap Market an independent audit committee of the
Company's Board of Directors, which committee shall meet the requirements of The
Nasdaq Stock Market.
(i) On the Closing Date, enter into a two (2) year financial
consulting agreement with the Representative (the "Financial Consulting
Agreement") pursuant to which the Representative will provide the Company with
investment banking and financial consulting services at a fee of $72,000,
payable at the rate of $3,000 per month in advance of each month for the
twenty-four months subsequent to the Closing Date.
(12) For a period of three (3) years from the Closing Date, grant the
Representative a right of first refusal to act as underwriter or placement agent
on any subsequent public or private offerings of equity or debt securities
(excluding sales to employees pursuant to the Company's stock option plan,
traditional commercial financing or bank financing) of the Company or any
subsidiary or successor of the Company, or by the Company, its subsidiaries,
their affiliates or their respective officers, directors or principal
stockholders.
6. Payment of Expenses.
(a) The Company hereby agrees to pay, whether or not the transactions
contemplated hereunder are consummated, all expenses (other than fees of your
counsel, except as provided in (iv) below) in connection with (i) the
preparation, printing, filing and mailing of the Registration Statement and the
Prospectus, including the cost of all copies thereof and of the Preliminary
Prospectus and of the Prospectus and any amendments or supplements thereto
supplied to you in quantities as hereinabove stated, (ii) the issuance, transfer
and delivery of the Firm Stock and the Additional Stock, including any transfer
or other taxes payable thereon, (iii) printing of this Agreement, the Agreement
Among Underwriters, the Selected Dealer Agreement, the Underwriters'
Questionnaire, the Power of Attorney and the certificates evidencing the Common
Stock, (iv) the qualification of the Firm Stock and the Additional Stock under
state or foreign securities or Blue Sky laws, including the costs of printing
and mailing the "Blue Sky Survey," and the fees of counsel to the Underwriters,
of which $10,000 has been paid prior to the date hereof, and disbursements in
connection therewith, (v) filing fees payable to the Commission, the NASD, the
Boston Stock Exchange, the Pacific Stock Exchange and The Nasdaq SmallCap
Market, (vi) arranging and holding due diligence meetings with prospective
underwriters and selected dealers, (vii) reasonable travel and lodging incurred
by the Representative and its counsel in connection with meetings outside of New
York City, (viii) tombstone advertising and (ix) the preparation, production and
delivery of plaques and bound volumes.
(1) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 6, it will pay to the
Representative a non-accountable expense allowance equal to three percent (3%)
of the gross proceeds received by the Company from the sale of Firm Stock and
Additional Stock, of which $25,000 has been paid to date and the Company will
pay the balance on the Closing Date and any additional balance on the Additional
Closing Date by certified or bank cashier's check or, at the election of the
Representative, by deduction from the proceeds of the offering contemplated
herein.
7. Conditions of Your Obligations. The obligation of the several
Underwriters hereunder to purchase and pay for the Firm Stock and the Additional
Stock, as provided herein, shall be subject to the continuing accuracy in all
material respects of the representations and warranties of the Company as of the
date hereof and as of the Closing Date (or the Additional Closing Dare, as the
case may be), to the performance by the Company in all material respects of its
obligations hereunder and to the following conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., New York City time, on the date of this Agreement or such later
date and time as shall be consented to in writing by you and, at the Closing
Date and Additional Closing Date, no stop order suspending the effectiveness of
the Registration Statement, as amended from time to time, shall have been issued
or proceeding therefor initiated or threatened by the Commission;
(b) At the Effective Date, the Closing Date and the Additional Closing
Date, as the case may be, you shall have received the favorable opinion of
Xxxxxx, Xxxxxxx & Xxxxxx, X.X., counsel for the Company, dated the Effective
Date, the Closing Date or the Additional Closing Date, as the case may be,
addressed to the Underwriters and in form and scope satisfactory to counsel of
the Underwriters, to the effect that:
(i) each of the Company and the Subsidiaries (A) is a corporation duly
organized and validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation and (B) has full corporate power and
authority and all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials and
bodies to own its properties and to conduct its business as now being conducted
as described in the Prospectus; to the best of such counsel's knowledge, neither
the Company nor any of the Subsidiaries has received any notice of proceedings
related to the revocation or modification of any authorization, approval, order,
license, certificate, franchise, or permit issued to any of them which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect; nothing has come to the attention
of such counsel that would lead such counsel to believe that the Company and the
Subsidiaries taken as a whole are not conducting their business in all material
respects in compliance with applicable federal, state and local laws, rules and
regulations; the disclosures in the Registration Statement concerning the
effects of federal, state and local laws, rules and regulations on the Company's
and the Subsidiaries' business as currently conducted (or as proposed in the
Registration Statement or the Prospectus to be conducted) are correct in all
material respects and do not omit to state a fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made;
(ii) each of the Company and the Subsidiaries is duly qualified as a
foreign corporation and in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect;
(iii) the Company owns of record, directly or indirectly, all of the
capital stock of each of the Subsidiaries; all such shares of capital stock so
owned are validly issued and outstanding, fully paid and nonassessable and, to
the knowledge of such counsel after inquiry, are owned free and clear of any
liens, encumbrances or other claims or restrictions whatsoever;
(iv) the Company has authorized and outstanding the capital stock as
set forth in the Prospectus; all the issued shares of Common Stock of the
Company, including the Additional Stock, have been duly and validly authorized
and issued and are fully paid and nonassessable and all the issued shares of
Common Stock of the Company, including the Additional Stock, and the Firm Stock
are not subject to any preemptive rights; the Firm Stock, the Additional Stock
and the other capital stock of the Company conform as to legal matters to the
description thereof contained under the caption "Description of Securities" in
the Prospectus;
(v) the Representative's Warrant Stock has been duly authorized and
reserved for issuance and, when issued and delivered in accordance with the
terms of the Representative's Warrant Agreement will be duly and validly issued,
fully paid and nonassessable. (vi) the Company and Selling Shareholders have
conveyed to the Underwriters good and valid title to the Firm Stock and
Additional Stock, as the case may be, being sold hereunder, and to the knowledge
of such counsel after inquiry, free and clear of any liens, encumbrances,
security interests and claims whatsoever; the Firm Stock and Additional Stock as
the case may be, shall be validly issued and fully paid and nonassessable when
issued and paid for in accordance with the terms of this Agreement, and the
certificates evidencing the Firm Stock and the Additional Stock are in due and
proper form;
(vii) this Agreement, the Representative's Warrant Agreement and the
Financial Consulting Agreement have been duly and validly authorized, executed
and delivered by the Company and each is a valid and binding agreement of the
Company enforceable in accordance with its terms, except insofar as
indemnification and contribution provisions may be limited by applicable law
(including, but not limited to, Federal or state securities laws) or equitable
principles, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general equitable principles; (viii) to the knowledge of
such counsel, there are no contracts or other documents which are required to be
filed as exhibits to the Registration Statement, as it may then be amended or
supplemented, or required to be described in the Registration Statement or
Prospectus as it may then be amended or supplemented that are not filed or
described as required;
(ix) there are no legal or governmental proceedings pending or, to the
knowledge of such counsel, threatened against the Company or any of the
Subsidiaries, and no statutes or regulations applicable to the Company or any of
the Subsidiaries, of a character that are required to be disclosed in the
Registration Statement and Prospectus, which have not been so disclosed and
properly described therein;
(x) the statements in the Registration Statement and Prospectus,
insofar as they are descriptions of contracts, agreements or other documents, or
refer to statements of law or legal conclusions, are accurate in all material
respects and present fairly the information required to be shown with respect to
such contracts, agreements or other documents;
(xi) the execution and delivery of this Agreement, the
Representative's Warrant Agreement and the Financial Consulting Agreement, the
consummation of the transactions contemplated in this Agreement, the
Representative's Warrant Agreement and the Financial Consulting Agreement, and
compliance with the terms of this Agreement, the Representative's Warrant
Agreement and the Financial Consulting Agreement do not and will not (A)
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default (or an event which with notice or lapse of time or both
would constitute a default or acceleration) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any material property or
assets of the Company or any of the Subsidiaries pursuant to the terms of any
agreement or instrument known to such counsel and to which the Company or any of
the Subsidiaries is a party or by which the Company or any of the Subsidiaries
may be bound or to which any of the material properties or assets of the Company
or any of the Subsidiaries is subject, or any statute or any order, rule or
regulation applicable to the Company or any of the Subsidiaries of any court or
of any Federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company or any of the Subsidiaries (provided,
however, that such counsel may render such opinion on state (other than
Missouri), regulatory or other governmental bodies, to such counsel's knowledge)
or (B) result in any violation of provisions of the Certificate of
Incorporation, by-laws or other charter documents of the Company or any of the
Subsidiaries;
(xii) no consent, approval, authorization or order of any court or
governmental agency or body is required in connection with the consummation of
the transactions contemplated by this Agreement, the Representative's Warrant
Agreement and the Financial Consulting Agreement, except such as have been
obtained or made or as may be required under the Act or state securities or Blue
Sky laws;
(xiii) (A) neither the Company nor any of the Subsidiaries is in
violation uof any term or provision of its Certificate of Incorporation, by-laws
or other charter documents; (B) to such counsel's knowledge, neither the Company
nor any of the Subsidiaries is currently in material breach of, or in material
default (nor has an event occurred which with notice, lapse of time or both
would constitute such a material default or acceleration) under any indenture,
mortgage, deed of trust, note, bank loan or credit agreement or (in any respect
that is material in light of the financial condition of the Company and the
Subsidiaries, taken as a whole) any other agreement or instrument, known to such
counsel after inquiry, to which the Company or any of the Subsidiaries is a
party or by which either of them or any of their property may be bound or
affected, or to such counsel's knowledge, in violation of any franchise,
license, permit, judgment, decree, order, statute, rule or regulation, which
violation would have a Material Adverse Effect; and (C) to such counsel's
knowledge, neither the Company nor any of the Subsidiaries has received notice
of conflict with the asserted rights of others in respect of patents,
trademarks, service marks and rights necessary for the conduct of its business;
(xiv) the Company has the right to operate all of its facilities in
their present locations and the operation of its facilities in such locations as
described in the Prospectus does not violate the provisions of any lease with
respect thereto to which the Company is a party;
(xv) the Registration Statement and the Prospectus and any amendments
or supplements thereto (other than the financial statements and other financial
and statistical data included therein, as to which no opinion need be rendered)
comply as to form in all material respects with the requirements of the Act and
the Regulations and nothing has come to the attention of such counsel which
would lead them to believe that the Registration Statement or the Prospectus, as
amended or supplemented, if amended or supplemented (other than the financial
statements and other financial and statistical data included therein as to which
no opinion need be rendered) contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading; and
(xvi) the Registration Statement is effective under the Act, and to
the best of such counsel's knowledge, no proceedings for a stop order are
pending or threatened under the Act.
In rendering the opinions set forth above, such counsel may rely upon
certificates of officers of the Company and of public officials as to matters of
fact. In giving the foregoing opinions, such counsel may rely on such other
counsel as it deems advisable; provided that such counsel shall state that, in
such counsel's opinion, you are justified in relying on such opinions of such
other counsel. Copies of all such opinions and certificates shall be furnished
to your counsel on the Closing Date or the Additional Closing Date, as the case
may be.
(1) On or prior to the Closing Date and the Additional Closing Date,
as the case may be, you shall have been furnished such documents, certificates
and opinions as you may reasonably require for the purpose of enabling you to
review the matters referred to in subsection (b) of this Section 7, and in order
to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
(c) Prior to the Closing Date and the Additional Closing Date, as the
case may be, (i) there shall have been no material adverse change in the
business, properties, results of operations, condition (financial or otherwise),
affairs or prospects, of the Company and the Subsidiaries from that as of the
latest date as of which such condition is set forth in the Registration
Statement and Prospectus; (ii) there shall have been no transaction, not in the
ordinary course of business, entered into by the Company or the Subsidiaries,
from the latest date as of which the financial condition of the Company and the
Subsidiaries is set forth in the Registration Statement and Prospectus, other
than transactions referred to or contemplated therein or to which you have given
your written consent; (iii) neither the Company nor the Subsidiaries shall be in
default (nor shall an event have occurred which, with notice, or lapse of time
or both would constitute a default or acceleration) under any provision of, any
agreement, understanding or instrument relating to any indebtedness; (iv) no
material amount of the consolidated assets of the Company and the Subsidiaries
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus; and (v) no action, suit or proceeding, at law or in
equity, shall have been pending or, to the knowledge of the Company, threatened
against the Company or the Subsidiaries, or affecting any of their properties or
business before or by any court or federal, state or other jurisdictional
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding would materially adversely affect the business,
operations, prospects or financial condition or income of the Company and the
Subsidiaries, except as set forth in the Registration Statement and Prospectus.
(d) At the Closing Date and Additional Closing Date, as the case may
be, you shall have received a certificate of the President and the principal
financial or accounting officer of the Company, dated the Closing Date and
Additional Closing Date, as the case may be, (i) to the effect that the
conditions set forth in subsections (a) and (d) above have been satisfied and
(ii) as to the accuracy, as of the Closing Date and Additional Closing Date, as
the case may be, of the representations and warranties of the Company set forth
in Section 2 (a) hereof.
(e) At the time this Agreement is executed and at the Closing Date and
Additional Closing Date, as the case may be, you shall have received a letter,
addressed to you in form and substance satisfactory to you in all respects
(including the non-material nature of the changes or decreases, if any, referred
in to clause (iii) below), from BDO Xxxxxxx, LLP, dated as of the date of this
Agreement and as of the Closing Date and Additional Closing Date, as the case
may be:
(i) confirming that they are independent accountants with
respect to the Company within the meaning of the Act and the
applicable published Regulations;
(ii) stating that in their opinion, the financial statements
of the Company and the Subsidiaries included in the Registration
Statement examined by them comply as to form in all material
respects with the applicable accounting requirements of the Act
and the published Regulations;
(iii) stating that, on the basis of procedures (but not an
audit in accordance with generally accepted auditing standards),
which included a reading of the latest available unaudited
consolidated interim financial statements of the Company and the
Subsidiaries (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 of the Company and the Subsidiaries and committees of
such boards and inquiries to certain 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 that would cause them to
believe that (A) the unaudited consolidated financial statements
of the Company and the Subsidiaries included in the Registration
Statement (i) do not comply as to form in all material respects
with the applicable accounting requirements of the Act and
Regulations, or (ii) were not fairly presented in conformity with
generally accepted accounting principles on a basis substantially
consistent with that of the audited financial statements included
in the Registration Statement; (B) at the date of the latest
available interim financial statements and at a specified date
not more than five days prior to the date of such letter, there
was any change in long-term debt or capital stock of the Company
and its Subsidiaries, as compared with the amounts shown in the
__________, 1997 consolidated balance sheet of the Company and
its Subsidiaries, included in the Registration Statement and
Prospectus, other than as set forth in or contemplated by the
Registration Statement and Prospectus, or, if there was any
change, setting forth the amount of such change; or (C) during
the period from ___________, 1997 to a specified date not more
than five days prior to the date of such letter, there was any
decrease in revenues or in operating income, net income or net
income per share of the Company and its Subsidiaries, as compared
with the corresponding period in the preceding year, other than
as set forth in or contemplated by the Registration Statement and
Prospectus, or, if there was any decrease or increase,
respectively, setting forth the amount of such decrease or
increase; and
(iv) stating that they have compared specific dollar
amounts, numbers of shares, percentages of dollar amounts and
shares and other information pertaining to the Company set forth
in the Prospectus, which have been specified by you prior to the
date of this Agreement, to the extent that such amounts, numbers,
percentages and other information may be derived from the general
accounting records of the Company 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) set forth in the letter, and found them to be
in agreement.
(f) All proceedings taken in connection with the sale of the Firm
Stock and the Additional Stock as herein contemplated shall have been reasonably
satisfactory in form and substance to you and your counsel.
(g) The Company shall have furnished to the Representative such
further certificates and documents confirming the representations and warranties
contained herein, the performance of covenants prior to the Closing Date and the
Additional Closing Date, as the case may be, and related matters as the
Representative may reasonably have requested.
(h) There shall have been duly tendered to you certificates
representing all the Firm Stock and the Additional Stock, as the case may be,
agreed to be sold by the Company on the Closing Date and the Additional Closing
Date, as the case may be.
(i) Each Selling Shareholder shall have furnished to the
Representative at the Additional Closing Date, if any, a certificate, dated the
Additional Closing Date, signed by such Selling Shareholder in form and
substance satisfactory to the Representative, to the effect that the
representations, warranties and agreements of such Selling Shareholder in
Section 2 (b) hereof were when originally made and are at the time such
certificate is dated true and correct and such Selling Shareholder has complied
with all of such Selling Shareholder's agreements contained herein. (j) No order
suspending the sale of the Firm Stock or the Additional Stock, as the case may
be, in any jurisdiction designated by you pursuant to subsection (d) of Section
5 hereof, shall have been issued on the Closing Date or the Additional Closing
Date, as the case may be, and no proceedings for that purpose shall have been
instituted or to your knowledge or that of the Company shall be contemplated,
(k) At the Additional Closing Date, if any, you shall have received the
favorable opinion of _________________, counsel for each of the Selling
Shareholders, with respect to each of the Selling Shareholders, dated the
Additional Closing Date, if any, addressed to you and in form and scope
satisfactory to your counsel, to the effect that:
(i) A Power of Attorney and a Custody Agreement have been duly
authorized (where such Selling Shareholder is not an individual), executed and
delivered by each Selling Shareholder and constitute valid and binding
agreements of such Selling Shareholder in accordance with their respective
terms. (ii) This Agreement has been duly authorized (where such Selling
Shareholder is not an individual), executed and delivered by or on behalf of
each Selling Shareholder and constitutes a valid and binding agreement of such
Selling Shareholder enforceable in accordance with its terms, except as rights
to indemnity and contribution hereunder may be limited by the securities laws of
the United States and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws or equitable principles
affecting the enforcement of creditors' rights generally; and the sale of the
Additional Stock to be sold by each Selling Shareholder hereunder and the
performance of this Agreement, the Power of Attorney and the Custody Agreement
and the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any terms or provisions
of, or constitute a default under, or give rise to rights of termination under,
any indenture, mortgage, deed of trust, voting trust agreement, loan agreement
or other agreement or instrument known to such counsel to which such Selling
Shareholder is a party or by which such Selling Shareholder or any of such
Selling Shareholder's properties is bound, the articles or certificate of
incorporation and by-laws if such Selling Shareholder (if such Selling
Shareholder is a corporation), the partnership agreement of such Selling
Shareholder (if such Selling Shareholder is a partnership), or any applicable
law, rule or regulation, judgment, order or decree of any court, government or
governmental instrumentality having jurisdiction over such Selling Shareholder
or the property of such Selling Shareholder.
(iii) Except for the order of the Commission making the Registration
Statement effective (which is in effect) and permits or similar authorization
required under the securities or Blue Sky laws of certain jurisdictions and by
the NASD (as to which such counsel need express no opinion), no consent,
approval, authorization, license or order of any regulatory body, administrative
agency or other governmental body is legally required for the execution,
delivery and performance of this Agreement by the Selling Shareholders, other
than any such consents, approvals, authorizations, licenses, and orders as have
been obtained and are in full force and effect.
(iv) Immediately prior to the Additional Closing Date, if any, such
Selling Shareholder had good and valid title to the Additional Stock to be sold
by such Selling Shareholder under this Agreement, free and clear of all liens,
encumbrances, equities or claims, and full right, power and authority to sell,
assign, transfer and deliver the Additional Stock to be sold by such Selling
Shareholder hereunder.
(v) Good and valid title to the Additional Stock sold by the Selling
Shareholders, free and clear of all liens, encumbrances, equities or claims, has
been transferred to the Representative who has purchased such Additional Stock
in good faith and without notice of any such lien, encumbrance, equity or claim
or any other adverse claim within the meaning of the Uniform Commercial Code.
In rendering the opinion of clause (iv), such counsel may rely upon a
certificate of such Selling Shareholder as to matters of fact as to ownership of
and liens, encumbrances, equities or claims on the Additional Stock sold by such
Selling Shareholder, provided that such counsel shall state that they believe
that both the Representative and they are justified in relying upon such
certificate.
(l) Any certificate signed by any duly authorized officer of the
Company in such capacity and delivered to you or your counsel shall be deemed a
representation and warranty by the Company to you as to the statements made
therein. If any condition to your obligations hereunder to be fulfilled prior to
or at the Closing Date or the Additional Closing Date, as the case may be, is
not so fulfilled, you may terminate this Agreement or, if you so elect, waive
any such conditions which have not been fulfilled or extend the time for their
fulfillment.
8. Indemnification.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each of the Underwriters, each of the officers and
directors of the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever)("collectively,
"Damages") arising out of or based upon (i) the inaccuracy or breach of any
representation or warranty of the Company or the breach of any covenant made by
the Company in this Agreement or (ii) any untrue statement or alleged untrue
statement of a material fact contained (x) in any Preliminary Prospectus, the
Registration Statement or the Prospectus (as from time to time amended and
supplemented) or (y) in any application or other document (in this Section 8,
collectively called "Application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Firm Stock or the Additional Stock
under the Blue Sky or securities laws thereof or filed with the Commission or
any securities exchange, such as the Nasdaq SmallCap Market and the Pacific
Stock Exchange, or (iii) the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company with
respect to the Underwriters by or on behalf of any Underwriter expressly for use
in the Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment or supplement thereof, or in any Application or in any communication
to the Commission, as the case may be. With respect to any Damages arising out
of or based upon any untrue statement or alleged untrue statement made in, or
omission or alleged omission from, any Preliminary Prospectus, the indemnity
agreement contained in this Section 8(a) with respect to such Preliminary
Prospectus shall not inure to the benefit of the Underwriters (or the benefit of
any person controlling any Underwriter), if the Prospectus (or the Prospectus as
amended or supplemented if the Company shall have made any amendments thereof or
supplements thereto which shall have been furnished to you prior to the time of
confirmation of such sale) does not contain such statement, alleged statement,
omission or alleged omission, a sufficient number of copies of such Prospectus
were provided to the Underwriters and a copy of such Prospectus shall not have
been sent or given to the person asserting such Damages at or prior to the
written confirmation of such sale to such person.
(b) Each Selling Shareholder agrees, severally and not jointly, that
it will indemnify and hold harmless the Representative, each of the officers and
directors of the Representative, and each person, if any, who controls the
Representative within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and each of them, to the same extent as the foregoing indemnity
from the Company to the Underwriters, but only with respect to (i) statements or
omissions made in the Registration Statement (or any amendment thereto) or a
Preliminary Prospectus or the Prospectus (or any amendment or supplement
thereto) made in reliance on and in conformity with information relating to such
Selling Shareholder furnished to the Company by or on behalf of such Selling
Shareholder expressly for inclusion in the Registration Statement (or any
amendment thereto) or a Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto), and (ii) representations and warranties of
such Selling Shareholder contained in Section 2 (b) of this Agreement or
contained in certificates of such Selling Shareholder submitted pursuant to
Section ___ of this Agreement. Such Selling Shareholder's obligation to
indemnify the Representative shall be limited to the amount of proceeds (net of
the Representative's discount) of the sale of Additional Stock sold by such
Selling Shareholder. The Representative acknowledges that the statements set
forth under the heading "Principal and Selling Stockholders" (insofar as such
information relates to any Selling Shareholder) in any Preliminary Prospectus
and the Prospectus constitute the only information relating to such Selling
Shareholder furnished to the Company by or on behalf of such Selling Shareholder
expressly for inclusion in the Registration Statement. The indemnity agreement
contained in this Section 8(b) is in addition to any liability that each Selling
Shareholder may otherwise have to the Representative or any controlling person
of the Underwriter.
(c) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act for all Damages with
respect to statements or omissions, or alleged statements or omissions, if any,
made in any Preliminary Prospectus, Registration Statement or Prospectus or any
amendment or supplement thereto or any Application in reliance upon, and in
conformity with, written information furnished to the Company with respect to
the Underwriters by or on behalf of any Underwriter for use in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereto or in any application, as the case may be.
(d) The Representative agrees that it will indemnify and hold harmless
each Selling Shareholder against any and all loss, liability, claim, damage,
expense or action, joint or several, to the same extent as the foregoing
indemnity from the Underwriters to the Company but only with respect to
statements or omissions made in the Registration Statement (or any amendment
thereto) or a Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with information
furnished in writing by the Representative to the Company expressly for use in
the Registration Statement (or any amendment thereto). The indemnity agreement
contained in this Section 8(d) is in addition to any liability which the
Representative may otherwise have to the Selling Shareholders. The Selling
Shareholders acknowledge that the statements set forth under the heading
"Underwriting" (insofar as such information relates to the Representative) and
in the last paragraph of text on the outside front cover page of any Preliminary
Prospectus and the Prospectus constitute the only information furnished in
writing by the Representative expressly for inclusion in the Registration
Statement, any Preliminary Prospectus or the Prospectus.
(e) If any action is brought against an indemnified party under
subsection (a) or (b) above (the "Indemnified Party") in respect of which
indemnity may be sought against the indemnifying party under subsection (a) or
(b) above (the "Indemnifying Party"), such Indemnifying Party shall promptly
notify in writing the party or parties against whom indemnification is to be
sought of the institution of such action and the Indemnifying Parties shall
assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such Indemnified Party) and payment of expenses.
Such Indemnified Party shall have the right to employ it 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 unless the employment of such counsel shall have been
authorized in writing by the Indemnifying Parties in connection with the defense
of such action or the Indemnifying Parties shall not have employed counsel to
have charge of the defense of such action or such Indemnified Party or parties
shall have reasonably concluded that there may be defenses available to the
Indemnifying Parties which are different or additional to those available to the
Indemnifying Parties (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 such fees and expenses shall be borne by the
Indemnifying Parties. Anything in this paragraph to the contrary
notwithstanding, the Indemnifying Party shall not be liable for any settlement
of any such claim or action effected without its written consent. The
Indemnifying Party agrees promptly to notify the Indemnified Party of the
commencement of any litigation or proceedings against the Indemnifying Party or
any of its officers or directors in connection with the issue and sale of the
Firm Stock and the Additional Stock or in connection with such Preliminary
Prospectus, Registration Statement or Prospectus, or any amendment or supplement
thereto, or any such Application.
(f) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an Indemnified Party in respect of
any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each Indemnifying Party shall contribute to the amount
paid or payable to such Indemnified Party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other from the
offering of the Firm Stock and Additional Stock. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the Indemnified Party failed to give the notice required above in this
Section 8, then each Indemnifying Party shall contribute to such amount paid or
payable by such Indemnified Party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Selling Shareholders on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Shareholders 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 (before deducting expenses) received by the Company
and the Selling Shareholders bear to the total underwriting discounts received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue 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 and the Selling Shareholders on the one hand
or the Underwriters on the other and the parties relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this subsection
(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) the Underwriters
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Firm Stock and Additional Stock underwritten by the
Underwriters and distributed to the public were offered to the public exceeds
the amount of any damages which the Underwriters have otherwise been required to
pay by reason of such untrue statement or omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11 of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligations to purchase the Firm Stock hereunder, and if the number of shares of
Firm Stock with respect to which such default relates does not exceed in the
aggregate 10% of the number of shares of Firm Stock which all Underwriters have
agreed to purchase hereunder, then such Firm Stock to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion to their
respective commitments hereunder.
(b) In the event that such default relates to more than 10% of the
number of shares of Firm Stock, you may in your discretion arrange for yourself
or for another party or parties to purchase such Firm Stock to which such
default relates on the terms contained herein. If within one (1) business day
after such default relating to more than 10% of the number of shares of Firm
Stock, you do not arrange for the purchase of such Firm Stock, then the Company
shall be entitled to a further period of one (1) business day within which to
procure another party or parties satisfactory to you to purchase said Firm Stock
on such terms. In the event that neither you nor the Company arrange for the
purchase of the Firm Stock to which a default relates as provided in this
Section 9, this Agreement may be terminated by you or the Company (except as
provided in Section 6 and Section 8(a) hereof) or the several Underwriters, but
nothing herein shall relieve a defaulting Underwriter of its liability, if any,
to the other several Underwriters and to the Company for damages occasioned by
its default hereunder.
(c) In the event that the Firm Stock to which the default relates is
to be purchased by the non-defaulting Underwriters, or is to be purchased by
another party or parties as aforesaid, you or the Company shall have the right
to postpone the Closing Date for a reasonable period but not in any event
exceeding five (5) business days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus or in
any other documents and arrangements, and the Company agrees to file promptly
any amendment to the Registration Statement or the Prospectus which in the
opinion of counsel for the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 with like effect as if it had originally been a party to
this Agreement with respect to such Firm Stock.
10. Representations and Agreements to Survive Delivery. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Date and the Additional Closing Date, and such
representations, warranties and agreements of you and the Company, including the
indemnity and contribution agreements contained in Section 8 hereof, shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of you or any controlling person, or by or on behalf of the
Company or any controlling person, and shall survive termination of this
Agreement and/or delivery of the Firm Stock and the Additional Stock to you.
11. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 9:30 A.M., New York Time,
on the first full business day following the day on which the Registration
Statement becomes effective or at the time of the initial public offering by you
of the Firm Stock, whichever is earlier. The time of the initial public
offering, for the purpose of this Section 11, shall mean the time, after the
Registration Statement becomes effective, of the release by you for publication
of the first newspaper advertisement which is subsequently published relating to
the Firm Stock or the time, after the Registration Statement becomes effective,
when the Firm Stock is first released by you for offering by the Underwriters or
dealers by letter or telegram, whichever shall first occur. You or the Company
may prevent this Agreement from becoming effective without liability of any
party to any other party, except as noted below, by giving the notice indicated
below in Section 11(d) before the time this Agreement becomes effective.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date or the Additional closing Date, as the case may be,
if, after the date of this Agreement, any domestic or international event or act
or occurrence has materially disrupted or, in the exercise of your reasonable
judgment, will in the immediate future materially disrupt, securities markets in
the United States; or trading on the New York Stock Exchange shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required on the New
York Stock Exchange by the New York Stock Exchange or by order of the Commission
or any other governmental authority having jurisdiction; or the United States
shall have become involved in a war or major hostilities; or a banking
moratorium has been declared by a New York or Federal authority; or the Company
shall have sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether or
not said loss shall have been insured, will, in your opinion, interfere
materially and adversely with the conduct of the business and operations of the
Company; or there shall have been such material adverse change in the condition
or prospects of the Company or the market for its and similar securities as in
your judgment would make it inadvisable to proceed with the offering, sale and
delivery of the Firm Stock or Additional Stock, as the case may be.
(c) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section 11, the Company shall be
notified promptly by you by telephone or telegram, confirmed by letter. If the
Company elects to prevent this Agreement from becoming effective, you shall be
notified promptly by the Company by telephone or telegram, confirmed by letter.
(d) Anything in this Agreement to the contrary notwithstanding if this
Agreement shall not become effective by reason of an election of the Company
pursuant to this Section 11, or if this Agreement shall not be carried out
within the time specified herein by reason of any failure on the part of the
Company to perform any undertaking or satisfy any condition of this Agreement by
it to be performed or satisfied, the sole liability of the Company to you, in
addition to the obligations assumed by the Company pursuant to Section 6 hereof,
will be to reimburse you for such actual out-of-pocket expenses (including the
fees and disbursements of your counsel) as shall have been incurred in
connection with this Agreement and the proposed purchase of the Firm Stock and
Additional Stock, and upon demand the Company will pay the full amount thereof
to you. If this Agreement shall not become effective by reason of an election by
you pursuant to this Section 11 or if this Agreement shall be terminated or
otherwise not carried out within the time specified herein for any reason other
than the failure on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement by it or them to be performed or
satisfied, the Company shall have no liability to you other than for obligations
assumed by the Company pursuant to Section 6 hereof; provided, however, that you
may retain any sums heretofore paid to you by the Company as provided in Section
3 hereof to the extent that such sums are for your actual out-of-pocket expenses
(including the fees and disbursements of your counsel) as shall have been
incurred in connection with this Agreement and the proposed purchase of the Firm
Stock and Additional Stock.
Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Section 8 shall not be in any way affected by such election or
termination or failure to carry out the terms of this Agreement or any part
hereof.
12. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to any Underwriter,
shall be mailed, delivered or telegraphed and confirmed to Xxxxxx & Co.
Securities Inc., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Att: Xxxxxxx X.
Xxxx, President, with a copy to Xxxxxx Xxxxxx Xxxxxx & Xxxx, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000, Attn: Xxxxxxx XxXxxxxxxx; and if sent to the
Company, shall be mailed, delivered or telegraphed and confirmed to The Source
Information Management Company, 00000 Xxxxxxx Xxxx Xxxx, Xx. Xxxxx, Xxxxxxxx,
00000, Attn: X. Xxxxxx Xxxxxx, Chief Executive Officer, with a copy to Xxxxxx
Xxxxxxx & Xxxxxx, X.X., 000 Xxxxx Xxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attn:
Xxxxxxx X. Xxxxx, Esq.
13. Parties. This Agreement shall be binding upon, you, the Company, and
the controlling persons, directors and officers referred to in Section 8 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 provision
herein contained.
14. Construction. This Agreement shall be construed in accordance with the
laws of the State of New York.
If the foregoing correctly sets forth the understanding between you,
the Company and the Selling Shareholders, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
THE SOURCE INFORMATION MANAGEMENT
COMPANY
By:
-----------------------------------------
X. Xxxxxx Xxxxxx, Chief Executive Officer
SELLING SHAREHOLDERS
By:
-----------------------------------------
______________, As Attorney-in-Fact,
acting on behalf of each of the Selling
Shareholders named in Schedule II hereto
Accepted as of the date first above written:
XXXXXX & CO. SECURITIES INC.
As Representative of the Underwriters
named in Schedule I hereto
By:
-----------------------------------
Xxxxxxx X. Xxxx, President
SCHEDULE I
Underwriters Number of Shares of Firm Stock
------------ ------------------------------
Xxxxxx & Co. Securities Inc.
TOTAL -----------
2,000,000
SCHEDULE II
Number of Shares
Selling Shareholder (1) of Additional Stock (2)
----------------------- -----------------------
X. Xxxxxx Xxxxxx
----------------------
Total 300,000
(1) Each Selling Shareholder has appointed _______________ and
_____________ as Attorneys-in-Fact
(2) Represents the maximum number of Additional Stock to be sold by
each Selling Shareholder, assuming the exercise in full of the Representative's
over-allotment option.
