UNDERWRITING AGREEMENT
_______________, 1997
Cohig & Associates, Inc.
As Representative of the Several
Underwriters Named in Schedule I Hereto
0000 Xxxxx Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
Premier Concepts, Inc., a Colorado corporation (the "Company"), hereby
confirms its agreement with you (the "Representative") and with the other
Underwriters, including the Representative, named in Schedule I hereto
(hereinafter "the Underwriters") as follows:
SECTION 1
DESCRIPTION OF SECURITIES
The Company proposes to issue and sell to the Underwriters shares (the
"Shares") of Common Stock, $.002 par value per share, and Redeemable Common
Stock Purchase Warrants (the "Warrants") (the Shares and the Warrants shall
collectively be referred to as the "Securities"). The Underwriters propose
to purchase 1,100,000 Shares ("Firm Shares") and 1,100,000 Warrants ("Firm
Warrants") (collectively, the "Firm Securities") at a purchase price of
$_______ PER SHARE and $______ PER WARRANT. The Shares and the Warrants may
be purchased by the Underwriters only together on the basis of one Share and
one Warrant. The Underwriters shall also have options (the "Over-allotment
Options") to purchase up to an additional 165,000 Shares ("Over-allotment
Shares") and/or 165,000 Warrants ("Over-allotment Warrants") (collectively,
the "Over-allotment Securities"), as provided in Section 3.1 hereof.
Each Warrant shall entitle the holder to purchase one share of Common
Stock at $______ PER SHARE UNTIL __________ __, 2000. The Company may redeem
the Warrants on forty-five (45) days' written notice at a price of $.05 per
Warrant at such time as the market price of the Common Stock exceeds $
_______ PER SHARE for 20 of the 30 trading days ending within 30 days
preceding the date of the notice of redemption. To redeem the Warrants, the
Company must have in effect a current registration statement registering the
Common Stock issuable upon exercise of the Warrants. The shares of Common
Stock underlying the Warrants are referred to herein as the "Warrant Shares."
The Company proposes to issue and sell to the Representative and its
designees on the Closing Date (hereinafter defined) for an aggregate purchase
price of $100, options ("Share Options") to purchase 110,000 shares of Common
Stock and options ("Warrant Options") to purchase 110,000 Warrants. Each
Share Option shall be exercisable at $______ PER SHARE; and each Warrant
Option is exercisable at $______ PER WARRANT. The Share Options and the
Warrant Options are collectively referred to as the "Representative's
Options." The terms of the warrants receivable upon exercise of the Warrant
Options (the "Representative's Warrants"), including the exercise price,
shall be identical to the terms of the Warrants.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Underwriters to enter into this Agreement, the
Company hereby represents and warrants to and agrees with each Underwriter that:
2.1 REGISTRATION STATEMENT AND PROSPECTUS. A registration statement on
Form SB-2 (File No. 333-19901) has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations of the Securities and Exchange Commission
(the "Commission") thereunder, and said registration statement has been filed
with the Commission. Copies of such registration statement and any amendments,
and all forms of the related prospectuses contained therein, have been delivered
to the Representative. Such registration statement, including the prospectus,
Part II, and documents incorporated by reference therein and financial schedules
and exhibits thereto, as amended at the time when it shall become effective, is
herein referred to as the "Registration Statement," and the prospectus included
as part of the Registration Statement on file with the Commission when it shall
become effective or, if the procedure in Rule 430A of the Rules and Regulations
(as defined below) under the Securities Act is followed, the prospectus that
discloses all the information that was omitted from the prospectus on the
effective date pursuant to such Rule, and in either case, together with any
changes contained in any prospectus filed with the Commission by the Company
with your consent after the effective date of the Registration Statement, is
herein referred to as the "Final Prospectus." If the procedure in Rule 430A is
followed, the prospectus included as part of the Registration Statement on the
date when the Registration Statement became effective is referred to herein as
the "Effective Prospectus." Any prospectus included in the Registration
Statement and in any amendments thereto prior to the effective date of the
Registration Statement is referred to herein as a "Preliminary Prospectus." For
purposes of this Agreement, "Rules and Regulations" mean the rules and
regulations adopted by the Commission under the Securities Act.
Included in the Registration Statement are the Firm Securities and the
Over-allotment Securities; 632,500 shares of Common Stock reserved against
exercise of the Firm Warrants and the Over-allotment Warrants; 165,000 shares
of Common Stock and 110,000 Warrants reserved against exercise of the
Representative's Options; 102,041 shares of Common Stock to be issued upon
conversion of 416,670 shares of Series A Preferred Stock; and 483,334
Warrants reoffered by certain Selling Shareholders, including 241,667 shares
of Common Stock underlying such Warrants.
As used in this Agreement, the term "Effective Date" refers to the date
the Commission declares the Registration Statement effective pursuant to
Section 8 of the Securities Act.
2.2 ACCURACY OF REGISTRATION STATEMENT AND PROSPECTUS. The Commission
has not issued any order preventing or suspending the use of any Preliminary
Prospectus with respect to the Securities, and each Preliminary Prospectus
has conformed in all material respects with the requirements of the
Securities Act and the applicable Rules and Regulations and to the best of
the Company's knowledge has not included at the time of filing any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
except that the foregoing shall not apply to statements in or
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omissions from any Preliminary Prospectus in reliance upon, and in conformity
with, written information furnished to the Company by the Representative, or
from any Underwriter through the Representative, specifically for use in the
preparation thereof.
When the Registration Statement becomes effective and on the Closing Date
(hereinafter defined), the Registration Statement, the Effective Prospectus
(and on the Closing Date, the Final Prospectus) will contain all statements
which are required to be stated therein in accordance with the Securities Act
and the Rules and Regulations. No such document will contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading;
except that the foregoing does not apply to information contained in or
omitted from the Registration Statement or the Effective Prospectus or Final
Prospectus in reliance upon written information furnished by the
Representative, or by any Underwriter through the Representative,
specifically for use in the preparation thereof. The Company will not at any
time hereafter file any amendments to the Registration Statement or in
accordance with Rule 424(b) of the Rules and Regulations of which the
Representative shall not have been previously advised in advance of filing or
to which the Representative shall reasonably object in writing.
2.3 FINANCIAL STATEMENTS. Xxxx + Associates, LLP, whose reports appear
in the Effective Prospectus and the Final Prospectus, are, and during the
periods covered by their reports were, independent accountants as required by
the Securities Act and the applicable Rules and Regulations. The financial
statements and schedules (including the related notes) included in the
Registration Statement, any Preliminary Prospectus or the Effective
Prospectus or the Final Prospectus, present fairly the financial position,
the results of operations, and changes in financial position of the entities
purported to be shown thereby at the dates and for the periods indicated; and
such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
indicated.
The financial information and related notes and schedules included in the
Registration Statement, any Preliminary Prospectus or the Final Prospectus
comply in all material respects with the requirements of the Securities Act
and the Rules and Regulations and present fairly the financial position of
the Company and its subsidiaries as of the dates indicated, and the results
of operation for the periods therein specified. Such financial information,
including the related notes and schedules, have been prepared on a basis
consistent with the historical financial statements included in the
Registration Statement, the Preliminary Prospectus and the Final Prospectus,
except for the adjustments specified herein, and give effect to assumptions
made on a reasonable basis to give effect to historical and proposed
transactions described in the Registration Statement, any Preliminary
Prospectus and the Final Prospectus. The financial information and
statistical data, and other data, set forth in the Final Prospectus under the
captions "Prospectus Summary--Financial and Operating Data," "Selected
Financial Data," "Dilution" and "Capitalization" are derived from and
prepared on a basis consistent with such financial information.
2.4 NO MATERIAL ADVERSE CHANGE. Except as may be reflected in or
contemplated by the Effective Prospectus or the Final Prospectus, subsequent
to the dates as of which information is given in the Effective Prospectus or
the Final Prospectus, and prior to the Closing Date, (a) there shall not have
been any material adverse change in the condition, financial or otherwise, of
the Company or in its business taken as a whole; (b) there shall not have
been any material transaction
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entered into by the Company other than transactions in the ordinary course of
business; (c) the Company shall not have incurred any material liabilities,
obligations or claims, contingent or otherwise, which are not disclosed in
the Effective Prospectus or the Final Prospectus; (d) except in the ordinary
course of business and with the consent of the Representative, there shall
not have been nor will there be any change in the capital stock or long-term
debt (except current payments) of the Company; and (e) the Company has not
and will not have paid or declared any dividends or other distributions on
its capital stock.
2.5 NO DEFAULTS. Other than as disclosed in the Effective Prospectus or
the Final Prospectus, the Company is not in any default (which has not been
waived) in the performance of any obligation, agreement or condition
contained in any debenture, note or other evidence of indebtedness or any
indenture or loan agreement. The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated, and compliance
with the terms of this Agreement will not conflict with or result in a breach
of any of the terms, conditions or provisions of, or constitute a default
under, the articles of incorporation, as amended, or by-laws of the Company;
any note, indenture, mortgage, deed of trust, or other material agreement or
instrument to which the Company is a party or by which it or any of its
property is bound, other than for which the Company has received a consent or
waiver of such conduct, breach or default or except where such default would
not have a material adverse effect on the business of the Company; or any
existing law, order, rule, regulation, writ, injunction, or decree of any
government, governmental instrumentality, agency or body, arbitration
tribunal or court, domestic or foreign, having jurisdiction over the Company
or its property. The consent, approval, authorization, or order of any court
or governmental instrumentality, agency or body is not required for the
consummation of the transactions herein contemplated except such as may be
required under the Securities Act or under the securities laws of any state
or jurisdiction.
2.6 INCORPORATION AND STANDING. Each of the Company and its
Subsidiaries (as defined in Section 12.7 hereof) is, and at the Closing Date
(hereinafter defined) and the Over-allotment Closing Date (hereinafter
defined) will be, duly incorporated and validly existing in good standing as
a corporation under the laws of the jurisdiction of its organization, with
full power and authority (corporate and other) to own its property and
conduct its business, present and proposed, as described in the Effective
Prospectus and the Final Prospectus; the Company has full power and authority
to enter into this Agreement; is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the character or location
of its properties (owned or leased) or the nature of its business makes such
qualification necessary except where the failure to be so qualified would not
have a material adverse effect on the Company; and each of the Company and
its Subsidiaries holds all material licenses, certificates, and permits from
governmental authorities necessary for the conduct of its business as
described in the Effective Prospectus and Final Prospectus.
2.7 CAPITALIZATION. The Company's authorized and outstanding
capitalization on the Effective Date and on the Closing Date (hereinafter
defined), and on the Over-allotment Closing Date (hereinafter defined) are
and will be as set forth under the caption "Capitalization" in the Effective
Prospectus and the Final Prospectus. The Common Stock, the Warrants, and the
Representative's Options conform to the description thereof contained under
the captions "Description of Securities" and "Underwriting" in the Effective
Prospectus and the Final Prospectus.
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The outstanding shares of Common Stock have been, and the Securities, upon
issuance and delivery against payment therefor in the manner described
herein, will be, duly authorized and validly issued, fully paid and
nonassessable. No sales of securities have been made by the Company in
violation of the registration or anti-fraud provisions of the Securities Act
or in violation of any other federal law or laws of any state or jurisdiction.
2.8 LEGALITY OF SECURITIES. The Shares, the Warrants, the
Representative's Options, and the Common Stock and Representative's Warrants
issuable upon the exercise of the Representative's Options have been duly and
validly authorized and, when issued and delivered against payment therefor as
provided in this Agreement, will be validly issued, fully paid and
nonassessable. There are no preemptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company's articles of incorporation,
by-laws or other governing documents or any agreement or other instrument to
which the Company or any of its Subsidiaries is a party or by which any of
them may be bound. Neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or satisfied, for
or relating to the registration of any shares of Common Stock. All of the
outstanding shares of capital stock of each Subsidiary of the Company are
owned directly or indirectly by the Company, free and clear of any claim,
lien, encumbrance or security interest. The Warrants and the
Representative's Options, when sold and delivered, will constitute valid and
binding obligations of the Company enforceable in accordance with the terms
thereof. A sufficient number of shares of Common Stock of the Company has
been reserved for issuance upon exercise of the Warrants, the
Representative's Options and the Representative's Warrants.
2.9 PRIOR SALES. No unregistered securities of the Company, of an
affiliate or of a predecessor of the Company have been sold within three
years prior to the date hereof, except as disclosed in the Registration
Statement.
2.10 LITIGATION. Except as set forth in the Effective Prospectus and the
Final Prospectus, there is, and at the Closing Date there will be, no action,
suit or proceeding before any court, arbitration tribunal or governmental
agency pending, or to the knowledge of the Company, threatened, which might
result in judgments against the Company not adequately covered by insurance
or which collectively might result in any material adverse change in the
condition (financial or otherwise), the business or the prospects of the
Company, or which would materially affect the properties or assets of the
Company.
2.11 REPRESENTATIVE'S OPTIONS. Upon delivery of and payment for the
Representative's Options to be sold by the Company as set forth in Section
3.4 of this Agreement, the Representative and designees of the Representative
will receive good and marketable title thereto, free and clear of all liens,
encumbrances, charges and claims whatsoever; and the Company will have on the
Effective Date and at the time of delivery of such Representative's Options
the requisite power and authority to sell, transfer and deliver such
Representative's Options in the manner provided hereunder.
2.12 FINDER. The Company knows of no outstanding claims against it for
compensation for services in the nature of a finder's fee, origination fee or
financial consulting fee with respect to
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the offer and sale of the Securities hereunder except as previously disclosed
in writing to the Representative.
2.13 EXHIBITS; CONTRACTS; AGREEMENTS. There are no contracts or other
documents which are required to be filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have
not been so filed and each contract to which the Company is a party and to
which reference is made in the Effective Prospectus and the Final Prospectus
has been duly and validly executed by the Company and, to the best of the
Company's knowledge, is in full force and effect in all material respects in
accordance with its terms, and none of such contracts have been assigned by
the Company; and the Company knows of no present situation or condition or
fact which would prevent compliance with the terms of such contracts, as
amended to date. Except for amendments or modifications of such contracts in
the ordinary course of business, the Company has no intention of exercising
any right which it may have to cancel any of its obligations under any of
such contracts, and has no knowledge that any other party to any of such
contracts has any intention not to render full performance under such
contracts. All material terms of each contract, agreement, plan, arrangement
or understanding to which the Company is a party, or to which it may
reasonably be expected to become a party, have been fully disclosed in the
Effective Prospectus and Final Prospectus.
2.14 TAX RETURNS. The Company has filed all federal and state tax
returns which are required to be filed by it and has paid all taxes shown on
such returns and on all assessments received by it to the extent such taxes
have become due. All taxes with respect to which the Company is obligated
have been paid or adequate accruals have been set up to cover any such unpaid
taxes.
2.15 PROPERTY. Except as otherwise set forth in or contemplated by the
Effective Prospectus and the Final Prospectus, the Company and its
Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects,
except such as are described in the Effective Prospectus and the Final
Prospectus or such as do not materially effect the value of such property and
do not interfere with the use made or proposed to be made of such property by
the Company or such Subsidiaries; and any real property and buildings held
under lease by the Company and its Subsidiaries are held by them under valid,
existing, and enforceable leases with such exceptions as are not material and
do not interfere with the use made or proposed to be made of such property
and buildings by the Company and such Subsidiaries.
2.16 AUTHORITY. The execution and delivery by the Company of this
Agreement has been duly authorized by all necessary corporate action and this
Agreement is the valid, binding and legally enforceable obligation of the
Company, except as rights to indemnity hereunder may be limited by federal or
state securities laws or public policy and except as enforceability may be
limited by bankruptcy, insolvency, or similar laws affecting creditors rights
generally and by general equitable principles.
2.17 LOCK-UP. The Company has obtained from each of its officers, his or
her written agreement that for a period of one year from the Effective Date
he/she will not, without the prior
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written consent of the Representative, sell or otherwise dispose of any
shares of Common Stock of the Company owned directly or indirectly or
beneficially by him/her.
2.18 USE OF FORM SB-2. The Company is eligible to use Form SB-2 for the
offer and sale of the Securities.
2.19 GOVERNMENTAL COMPLIANCE. Neither the Company nor any Subsidiary is
in violation of any law, ordinance, governmental rule or regulation or court
decree to which it may be subject which violation might reasonably be
expected to have a material adverse effect on the condition (financial or
other), properties, prospective results of operations or net worth of the
Company and its Subsidiaries.
2.20 STABILIZATION. The Company has not taken and may not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares or the Warrants.
2.21 CUSIP NUMBER. The Company has obtained CUSIP numbers for the Common
Stock and the Warrants.
2.22 SUBSIDIARIES. The Company has no Subsidiaries and it has no present
intention of acquiring or forming any subsidiaries, except as disclosed in
the Effective Prospectus or the Final Prospectus.
2.23 BOOKS AND ACCOUNTS. The books, records and accounts of the Company
and each of its subsidiaries accurately and fairly reflect, in reasonable
detail, the transactions in and dispositions of the assets of the Company and
each of its subsidiaries. The systems of internal accounting controls
maintained by the Company and each of its subsidiaries are sufficient to
provide reasonable assurances that (w) transactions are executed in
accordance with management's general or specific authorization; (x)
transactions are recorded as necessary (A) to permit preparation of financial
statements in conformity with generally accepted accounting principles and
(B) to maintain accountability for assets; and (z) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
2.24 EMPLOYEES. No labor disturbance by the employees of the Company or
any of its subsidiaries exists or is imminent; and the Company is not aware
of any existing or imminent labor disturbance by the employees of any
principal suppliers, contract manufacturing organizations, manufacturers,
authorized dealers or distributors that might be expected to result in any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or prospects of the Company and its subsidiaries,
considered as a whole. No collective-bargaining agreement exists with any of
the Company's or any of the Company's subsidiaries' employees and, to the
best knowledge of the Company, no such agreement is imminent.
2.25 POLITICAL CONTRIBUTIONS. Neither the Company nor any of its
subsidiaries has, directly or indirectly, at any time (x) made any
contributions to any candidate for political office, or
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failed to disclose fully any such contribution, in violation of law; (y) made
any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by all applicable laws; or (z)
violated nor is it in violation of any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
2.26 ENVIRONMENTAL LIABILITIES. Neither the Company nor any of its
subsidiaries has any liability, known or unknown, matured or not matured,
absolute or contingent, assessed or unassessed, imposed or based upon any
provision of, or has received notice of any potential liability under, any
foreign, federal, state or local law, rule or regulation or the common law,
or any tort, nuisance or absolute liability theory, or under any code, order,
decree, judgment or injunction applicable to the Company or any of its
subsidiaries relating to public health or safety, worker health or safety or
pollution, damage to or protection of the environment, including, without
limitation, laws relating to damage to natural resources, emissions,
discharges, releases or threatened releases of hazardous materials into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), or otherwise relating to
the manufacture, processing, use treatment, storage, generation, disposal,
transport or handling of hazardous materials. As used herein, "hazardous
material" includes chemical substances, wastes, pollutants, contaminants,
hazardous or toxic substances, constituents, materials or wastes, whether
solid, gaseous or liquid in nature.
2.27 INVESTMENT COMPANY ACT. The Company is familiar with the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and intends in the
future to conduct, its affairs in such a manner as to ensure that it will not
become an "investment company" within the meaning of the 1940 Act and such
rules and regulations.
2.28 PROPRIETARY RIGHTS. Each of the Company and each of its
Subsidiaries owns or possesses adequate rights to use all material trade
secrets, know-how, trademarks, service marks, trade names and copyrights
described or referred to in the Final Prospectus as owned by or used by any
of them, or which are necessary for the conduct of their business as
described in the Final Prospectus; and neither the Company nor any of its
Subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, tradenames or
copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a material adverse effect
on the business, properties, condition (financial or otherwise), prospects or
results of operations of the Company and its Subsidiaries, taken as a whole.
SECTION 3
PURCHASE AND SALE OF THE SECURITIES
3.1 PURCHASE OF SECURITIES AND OVER-ALLOTMENT OPTION. Subject to the
terms and conditions and upon the basis of the representations and warranties
herein set forth, the Company agrees to issue and sell to the Underwriters,
and each of the Underwriters agrees to purchase from the Company at a price
of $_____ PER SHARE AND $______ PER WARRANT, severally and not jointly, the
number of Shares and Warrants set forth opposite their respective names in
Schedule I hereto. The Underwriters agree to offer the Shares and Warrants
to the public as set forth in the Final Prospectus.
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The Company hereby grants to the Underwriters an option to purchase from
the Company, solely for the purpose of covering over-allotments in the sale
of Firm Securities, all or any portion of the Over-allotment Shares and/or
the Over-allotment Warrants for a period of forty-five (45) days after the
Effective Date at the purchase price set forth above. The Representative
shall notify the Company of its intention to exercise the Over-allotment
Option at least three (3) days prior to such exercise or exercises.
3.2 SUBSTITUTION OF UNDERWRITERS. If any Underwriter defaults in its
obligation to purchase the number of Securities which it has agreed to
purchase under this Agreement, the non-defaulting Underwriters shall be
obligated to purchase (pro rata in proportion to the number of Securities set
forth opposite the name of each non-defaulting Underwriter in Schedule I
hereto) the total number of Securities which the defaulting Underwriter
agreed but failed to purchase; except that the non-defaulting Underwriters
shall not be obligated to purchase any of the Securities if the total number
of Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase exceeds 9.09% of the total number of Securities, and any
non-defaulting Underwriter shall not be obligated to purchase more than 110%
of the number of Securities set forth opposite its name in Schedule I hereto
purchasable by it pursuant to the terms of Section 3.1; and provided further
that the non-defaulting Underwriters shall not be obligated to purchase any
Securities which the defaulting Underwriter or Underwriters agreed to
purchase if such additional purchase would cause the Underwriter to be in
violation of the net capital rule of the Commission or other applicable law.
If the foregoing maximums are exceeded, the non-defaulting Underwriters, and
any other underwriters satisfactory to the Representative who so agree, shall
have the right, but will not be obligated, to purchase (in such proportions
as may be agreed upon among them) all the Securities. In any such case, the
Representative shall have the right to postpone the Closing determined as
provided in Section 3.3.2 hereof for not more than seven Business Days after
the date originally fixed as the Closing pursuant to said Section 3.3.2 in
order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made. If the
non-defaulting Underwriters or the other underwriters satisfactory to the
Representative do not elect to purchase the Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase, this Agreement
shall terminate without liability on the part of any non-defaulting
Underwriter or the Company except for the payment of expenses to be borne by
the Company and the Underwriters as provided in Section 3.5 and the indemnity
and contribution agreements of the Company and the Underwriters contained in
Section 6 hereof.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or to the non-defaulting Underwriters
for damages caused by its default hereunder.
3.3 PUBLIC OFFERING PRICE. After the Commission notifies the Company
that the Registration Statement has become effective, the Underwriters
propose to offer the Firm Securities to the public at an initial public
offering price of $_______ PER SHARE AND $______ PER WARRANT as set forth in
the Final Prospectus. The Underwriters may allow such discounts and
concessions upon sales to selected dealers as may be determined from time to
time by the Representative.
3.3.1 PAYMENT FOR SECURITIES. Payment for the Securities
(including any Securities included in the Over-allotment Option which the
Underwriters agree to purchase) shall be made to the Company or its order
by certified or official bank check or checks, in the amount of the
purchase price by or on behalf of the Underwriters at the offices of the
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Representative in Englewood, Colorado, upon delivery to the Representative
or its designee of certificates for the Shares and Warrants in definitive
form in such numbers and registered in such names as the Representative
requests in writing at least three full business days prior to such
delivery. At the request of the Representative, the Company shall deliver
the Securities to the Underwriters through the facilities of The Depository
Trust Company or as otherwise directed.
3.3.2 CLOSING. The time and date of delivery and payment
hereunder is herein called the "Closing Date" and shall take place at the
office of the Representative in Englewood, Colorado, or at such other
location as may be specified by the Representative, on the fourth Business
Day (as hereinafter defined) following the Effective Date; provided,
however, that such date may be extended for not more than an additional
seven business days by the Representative. Should the Underwriters elect
to exercise any part of the Over-allotment Option pursuant to Section 3.1
above, the time and date of delivery and payment for such Over-allotment
Shares and/or Over-allotment Warrants shall be the third Business Day
following such exercise of the Over-allotment Option, or each earlier date
as may be agreed upon by the Representative and the Company. Said date is
referred to as the "Over-allotment Closing Date."
3.3.3 INSPECTION OF CERTIFICATES. For the purpose of expediting
the checking and packaging of the certificates for the Securities, if
requested by the Representative, the Company agrees to make the
certificates available for inspection by the Representative at the main
office of the Representative in Englewood, Colorado, at least two full
business days prior to the proposed delivery date.
3.4 SALE OF REPRESENTATIVE'S OPTIONS. On the Closing Date the Company
will sell and deliver to the Representative and its designees, for a purchase
price of $100, Share Options and Warrant Options dated as of the date of the
Prospectus substantially in the form filed as an Exhibit to the Registration
Statement with such changes therein, if any, as may be agreed upon by the
Company and the Representative, to purchase 110,000 SHARES AT $______ PER
SHARE AND 110,000 Underwriters' WARRANTS AT $______ PER WARRANT. The Company
shall not be obligated to sell and deliver the Representative's Options, and
the Representative will not be obligated to purchase and pay for the
Representative's Options, except upon payment for the Securities pursuant to
Subsection 3.3.1 hereof.
The Representative's Options shall be non-transferable for a period of
one (1) year following the Effective Date except to the Underwriters and
their respective officers or partners. The Representative's Options shall
also contain anti-dilution provisions for stock splits, recombinations and
reorganizations, a one-time demand registration provision, customary
piggyback registration rights, a right to convert the options to shares in a
"cashless exercise," and shall otherwise be in form and substance
satisfactory to the Representative. The Representative's Options will be
exercisable during the four year period commencing one (1) year after the
Effective Date.
3.5 REPRESENTATIVE'S EXPENSE ALLOWANCE. It is understood that the
Company shall reimburse the Representative, for itself alone and not on
behalf of the other Underwriters, for its expenses on a nonaccountable basis
in the amount of 3% ($__________) of the gross proceeds from the sale of the
Shares and the Warrants ($_____ PER SHARE AND $______ PER WARRANT)
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including proceeds from the sale of the Over-allotment Shares and/or the
Over-allotment Warrants (hereinafter the "Expense Allowance"). The
Representative acknowledges receipt of $30,000 paid pursuant to a corporate
consulting agreement, which will be deducted from the Expense Allowance. On
the Closing Date and, if applicable, on the Over-allotment Closing Date, the
Representative shall be entitled to withhold the unpaid balance of such
Expense Allowance. The Representative shall be solely responsible for all
expenses incurred by it in connection with the offering including, but not
limited to, the expenses of its own counsel except as set forth in Section
5.7 hereof. Notwithstanding the foregoing, if the Registration Statement
does not become effective, or the offering is never commenced after it
becomes effective, or if this Agreement is terminated as provided herein, the
Representative will retain so much of the Expense Allowance which has been or
should have been received by the Representative from the Company as is equal
to its actual accountable out-of-pocket expenses and reimburse the remainder,
if any, to the Company, provided that the amount to be reimbursed will not
exceed $30,000. The Representative's expenses shall include, but are not to
be limited to, a fee to compensate the Representative for the services and
time of Representative's counsel (internal and external), plus any additional
expenses and fees, including but not limited to, travel expenses, postage
expenses, duplication expenses, confirmation and other record preparation
expenses, long-distance telephone expenses, consultant and investigator
expenses and other expenses incurred by the Representative in connection with
the proposed offering.
3.6 REPRESENTATIONS OF THE PARTIES. The parties hereto respectively
represent that as of the Closing Date the representations herein contained
and the statements contained in all the certificates theretofore or
simultaneously delivered by any party to another, pursuant to this Agreement,
shall in all material respects be true and correct.
3.7 POST-CLOSING INFORMATION. The Representative covenants that
reasonably promptly after the Closing Date, it will supply the Company with
all information required from the Representative which must be supplied to
the Commission, if any, and such additional information as the Company may
reasonably request to be supplied to the securities authorities for such
states in which the Securities have been qualified for sale.
3.8 RE-OFFERS BY SELECTED DEALERS. On each sale by the Underwriters of
any of the Securities to selected dealers, the Representative shall require
the selected dealer purchasing any such Securities to agree to re-offer the
same on the terms and conditions of the offering set forth in the Final
Prospectus.
3.9 RIGHT OF FIRST REFUSAL. If the Offering is consummated and subject
to the conditions set forth below, the Company will grant to the
Representative the right to act as managing underwriter for any public
offering of its securities contemplated by the Company or any of its
Subsidiaries during the three (3) year period commencing on the Effective
Date. The right shall continue in effect during the entire 3-year period or
until the Representative declines to accept the right of first refusal for a
transaction that is ultimately completed on the general terms presented to
the Representative despite the exercise of the right or the refusal to
exercise the right during the period. The Representative shall have 30 days
within which to determine whether to exercise the right.
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In addition, if the Representative determines not to exercise the right
provided in the preceding paragraph, upon the request of the Representative
the Company agrees that it will use its best efforts to have the
Representative designated as a co-manager of the public offering of its
securities and to receive at least 20% of the management fee for acting in
such capacity. If the Representative determines not to co-manage the
proposed transaction or if the Company is unable or unwilling to cause the
Representative to be designated a co-manager, then the Company agrees to pay
the Representative an amount equivalent to the greater of 1% of the gross
proceeds from the sales of the Shares in this Offering; or 5% of the
underwriting discount or commission paid in connection with such future
financing (including any overallotment option that may be exercised).
The rights granted to the Representative hereby are subject to the
following conditions: (a) that the terms of any such underwriting are
competitive with those otherwise available to the Company; (b) that the
Representative shall have presented evidence reasonably satisfactory to the
Company's board of directors of its ability, alone or with a co-manager that
has agreed to participate in that capacity, to consummate the offering; and
(c) that the Representative shall agree to any reasonable request by the
Company to include one co-manager in the Offering.
3.10 FINANCIAL CONSULTING AGREEMENT. Upon the closing of the proposed
offering, the Company shall enter into a Financial Consulting Agreement with
the Representative pursuant to which the Representative shall receive a
consulting fee of $2,500 per month, payable in advance at the time of
closing, for twelve (12) months from the Closing Date, for services which
shall include, but are not limited to, advising the Company in connection
with financial planning, corporate organization and structure, financial
matters in connection with the operation of the business of the Company,
private and public equity and debt refinancing, the Company's relations with
its securities holders, and the preparation and distribution of periodic
reports; and the Representative shall periodically provide to the Company an
analysis of the Company's financial statements.
SECTION 4
REGISTRATION STATEMENT AND PROSPECTUS
4.1 DELIVERY OF REGISTRATION STATEMENTS. The Company shall deliver to
the Representative without charge two (2) manually signed copies of the
Registration Statement, including all financial statements and exhibits filed
therewith and any amendments or supplements thereto, and shall deliver
without charge to the Representative ten (10) conformed copies of the
Registration Statement and any amendment or supplement thereto, including
such financial statements and exhibits. The signed copies of the
Registration Statement so furnished to the Representative will include
manually signed copies of any and all consents and certificates of the
independent public accountant certifying to the financial statements included
in the Registration Statement and signed copies of any and all opinions,
consents and certificates of any other persons whose profession gives
authority to statements made by them and who are named in the Registration
Statement as having prepared, certified, or reviewed any part thereof.
4.2 DELIVERY OF PRE-EFFECTIVE PROSPECTUS. The Company will cause to be
delivered to the Underwriters and to other broker-dealers, without charge,
prior to the Effective Date, as many copies of each Preliminary Prospectus
filed with the Commission bearing in red ink the statement required by Item
501(c)(8) of Regulation S-K (Reg. 229.501(c)(8)) as may be required
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by the Representative. The Company consents to the use of such documents by
the Underwriters and by selected dealers prior to the Effective Date of the
Registration Statement.
4.3 DELIVERY OF PROSPECTUS. The Company will deliver, without charge,
copies of the Effective Prospectus and the Final Prospectus at such addresses
and in such quantities as may be required by the Underwriters for the
purposes contemplated by this Agreement and shall deliver said printed copies
of the Effective Prospectus and the Final Prospectus to the Underwriters and
to selected dealers within one business day after the Effective Date.
4.4 FURTHER AMENDMENTS AND SUPPLEMENTS. If during such period of time
as in the opinion of the Representative or its counsel the Final Prospectus
is required to be delivered under the Securities Act, any event occurs or any
event known to the Company relating to or affecting the Company shall occur
as a result of which the Final Prospectus as then amended or supplemented
would include an untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time after the Effective Date to amend or supplement the
Final Prospectus to comply with the Securities Act, the Company will
forthwith notify the Representative thereof and prepare and file with the
Commission such further amendment to the Registration Statement or supplement
the Final Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance. The Company shall furnish
and deliver to the Representative and to others whose names and addresses are
designated by the Representative, all at the cost of the Company, a
reasonable number of copies of the amended or supplemented Prospectus which
as so amended or supplemented will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the Prospectus not misleading in the light of the circumstances as of the
date of such Prospectus, amendment, or supplement, and which will comply in
all respects with the Securities Act. In the event the Underwriters are
required to deliver a Prospectus beyond completion of their participation in
the public offering, upon request the Company will prepare promptly such
Prospectus or Prospectuses as may be necessary to permit continued compliance
with the requirements of Section 10 of the Securities Act.
4.5 USE OF PROSPECTUS. The Company authorizes the Underwriters and all
selected dealers to whom any of the Securities may be sold to use the
Effective Prospectus and the Final Prospectus, as from time to time amended
or supplemented, in connection with the offer and sale of the Securities and
in accordance with the applicable provisions of the Securities Act, the Rules
and Regulations and state Blue Sky or securities laws.
SECTION 5
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Underwriters that:
5.1 OBJECTION OF REPRESENTATIVE TO AMENDMENTS OR SUPPLEMENTS. The
Company will not at any time, whether before or after the Effective Date,
file any amendment or supplement to the Registration Statement or Prospectus,
unless and until a copy of such amendment or supplement has been furnished
to the Representative a reasonable period of time prior to the proposed
filing thereof; or to which the Representative or counsel for the
Representative have
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reasonably objected, in writing, on the ground that such amendment or
supplement is not in compliance with the Securities Act or the Rules and
Regulations.
5.2 COMPANY'S BEST-EFFORTS TO CAUSE REGISTRATION STATEMENT TO BECOME
EFFECTIVE. The Company will use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the Rules
and Regulations is followed, comply with the provisions of and make all
requisite filings with the Commission pursuant to such Rule and to notify the
Representative promptly (in writing, if requested) of all such filings. The
Company shall promptly advise the Representative, and will confirm such
advice in writing (a) when the Registration Statement shall become effective
and when any amendment thereto shall have become effective and when any
amendment of or supplement to the Effective Prospectus or the Final
Prospectus shall be filed with the Commission; (b) when the Commission makes
a request or suggestion for any amendment to the Registration Statement or
the Effective Prospectus or the Final Prospectus or for additional
information and the nature and substance thereof; and (c) of the happening of
any event which in the judgment of the Company makes any material statement
in the Registration Statement or Effective Prospectus or the Final Prospectus
untrue or which requires the making of any changes in the Registration
Statement or the Effective Prospectus or Final Prospectus in order to make
the statements therein not misleading. The Company shall also promptly
notify the Representative, and confirm such notice in writing, when the
Company has knowledge of the issuance by the Commission of an order
suspending the effectiveness of the Registration Statement pursuant to
Section 8 of the Securities Act, suspending or preventing the use of any
Preliminary Prospectus or the Effective Prospectus or Final Prospectus or
suspending the qualification of the Securities for offering or sale in any
jurisdiction, or of the institution of any proceedings for any such purpose.
The Company will use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or refusing
or suspending the qualification of the Securities, and to obtain as soon as
possible a lifting of any such suspension order, the reversal of any such
refusal to qualify, and the termination of any such suspension.
5.3 PREPARATION AND FILING OF AMENDMENTS AND SUPPLEMENTS. The Company
agrees to prepare and file promptly with the Commission, upon request of the
Representative, such amendments or supplements to the Registration Statement
or Final Prospectus, in form satisfactory to counsel to the Company, as may
be necessary, in the opinion of counsel to the Representative and of counsel
to the Company; and it shall use its best efforts to cause the same to become
effective as promptly as possible.
5.4 BLUE SKY QUALIFICATION. The Company has used and will use its best
efforts to qualify (blue-sky) the sale of the Securities in those states as
may be agreed upon by the Company and the Representative. Copies of all
applications for the registration of securities and related documents (except
for the Registration Statement and Preliminary or Final Prospectus) filed by
the Representative's counsel with the various states have been supplied to
the Company's counsel, concurrently with their transmission to the various
states, and copies of all comments and orders received from the various
states have been and shall be immediately supplied to the Company's counsel.
Immediately prior to the Effective Date, counsel for the Representative shall
advise the Representative in writing of all states wherein the offering is
exempt or has been registered for sale, canceled, withdrawn or denied, the
date of such event(s) and the number of Securities
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registered for sale in each such state. After settlement and closing, the
Representative shall notify its counsel of the number of Securities sold in
each such jurisdiction.
5.5 FINANCIAL STATEMENTS. The Company at its own expense will prepare
and give such financial statements and other information to the Commission,
or the proper public bodies of the states in which the Securities may be
registered or qualified, as may be required by them.
5.6 REPORTS AND FINANCIAL STATEMENTS TO THE REPRESENTATIVE. During the
period ending three years from the Closing Date, the Company will deliver to
the Representative copies of each annual report of the Company, and will
deliver to the Representative, within 90 days after the close of each fiscal
year of the Company, a financial report of the Company and its Subsidiaries,
if any, on a consolidated basis, and a similar financial report of all
unconsolidated Subsidiaries, if any. All such reports will include a balance
sheet as of the end of the preceding fiscal year, a statement of operations,
a statement of cash flows and an analysis of shareholders' equity covering
such fiscal year, and all will be in reasonable detail and certified by
independent public accountants for the Company. These requirements will be
satisfied if the Company provides to the Representative copies of its Forms
10-K, Forms 10-Q and Forms 8-K (or other appropriate forms) when they are
filed with the Commission.
If the Company shall fail to furnish the Representative with financial
statements as herein provided, within the times specified herein, the
Representative, after giving reasonable notice of not less than 30 days (and
if the financial statements are not provided within such 30 day period),
shall have the right to have such financial statements prepared by
independent public accountants of its own choosing and the Company agrees to
furnish such independent public accountants such data and assistance and
access to such records as they may reasonably require to enable them to
prepare such statements and to pay their reasonable fees and expenses in
preparing the same.
During the period ending three years from the Closing Date the Company
shall also provide to the Representative copies of all other statements,
documents, or other information which the Company shall mail or otherwise
make available to any class of its security holders, or which it shall file
with the Commission; and, upon request in writing from the Representative,
the Company shall furnish to the Representative such other information as may
reasonably be requested and which may be properly disclosed to the
Representative with reference to the property, business and affairs of the
Company and its Subsidiaries, if any; provided such written request includes
an agreement to keep confidential any information which should not be
disclosed to the public.
5.7 EXPENSES PAID BY THE COMPANY. The Company will pay or cause to be
paid, whether or not the transactions contemplated hereunder are consummated
or the Registration Statement is prevented from becoming effective or this
Agreement is terminated, (a) all expenses (including stock transfer taxes)
incurred in connection with the delivery to the several Underwriters of the
Securities; (b) all fees and expenses (including, without limitation, fees
and expenses of the Company's accountants and counsel, but excluding fees and
expenses of counsel for the Underwriters other than those described in (9)
below) in connection with the preparation, printing, filing, delivery and
shipping of
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the Registration Statement (including financial statements therein and all
amendments and exhibits thereto), each Preliminary Prospectus, the Effective
Prospectus and the Final Prospectus as amended or supplemented, and the
printing, delivery and shipping of this Agreement and other underwriting
documents, including Underwriter's Questionnaires, Underwriters' Powers of
Attorney, Blue Sky Memoranda, Agreements Among Underwriters, and Selected
Dealer Agreements; (c) the filing fee of the National Association of
Securities Dealers, Inc.; (d) any applicable listing fees; (e) the cost of
printing certificates representing the Shares and Warrants; (f) the cost and
charges of any transfer agent or registrar, and the Warrant agent; (g) the
fees and expenses of the Representative's counsel for qualifying the
Securities under the blue sky laws of various jurisdictions; and (h) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise provided for in this Section. It is
understood, however, that, except as provided in this Section, the
Underwriters shall pay all of their own costs and expenses, including the
fees of their counsel, stock transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers
they may make.
5.8 REPORTS TO SHAREHOLDERS. During the period ending five years from
the Closing Date the Company will, as promptly as possible, but not later
than 180 days after the end of its annual fiscal year, render and distribute
reports to its shareholders which will include audited statements of its
operations and cash flows during such period and its balance sheet as of the
end of such period, as to which statements the Company's independent
certified public accountants shall have rendered an opinion.
5.9 SECTION 11(a) FINANCIALS. The Company will make generally available
to its security holders and will deliver to the Representative, as soon as
practicable, an earnings statement (as to which no opinion need be rendered
but which will satisfy the provisions of Section 11(a) of the Securities Act)
covering a period of at least 12 months beginning after the Effective Date.
Compliance by the Company with Rule 158 promulgated under the Securities Act
shall satisfy the requirements of this Section 5.9.
5.10 POST-EFFECTIVE AVAILABILITY OF PROSPECTUS. The Company will comply,
at its own expense, with all requirements imposed upon it by the Securities
Act, as now or hereafter amended, by the Rules and Regulations, as from time
to time may be in force, and by any order of the Commission, so far as
necessary to permit the continuance of sales or dealings in the Shares and
the Warrants and the exercise of the Warrants.
5.11 APPLICATION OF PROCEEDS. The Company will apply the net proceeds
from the sale of the Securities substantially in the manner specifically set
forth in the Final Prospectus. Any deviation from such application must be in
accordance with the Final Prospectus and may occur only after approval by the
board of directors of the Company and then only after the board of directors
has obtained the written opinion as to the propriety of any such deviation
provided by recognized legal counsel well versed in the federal and state
securities laws .
5.12 AGREEMENTS OF CERTAIN SHAREHOLDERS. The Company has delivered to
the Representative, prior to the execution of this Agreement, the agreement
of each officer, that for a period of one year from the Effective Date such
persons shall not sell, contract to sell, pledge, hypothecate, grant any
option to purchase or otherwise dispose of any portion of the shares of
Common Stock owned directly, indirectly or beneficially by such person prior
to the Effective Date, without the Representative's prior written consent.
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5.13 DELIVERY OF DOCUMENTS. At the Closing, the Company has delivered to
the Representative true and correct copies of the articles of incorporation
of the Company and all amendments thereto; true and correct copies of the
by-laws of the Company and of the minutes of all meetings of the directors
and shareholders of the Company held prior to the Closing Date which in any
way relate to the subject matter of this Agreement. All such copies shall be
certified by the Secretary of the Company.
5.14 COOPERATION WITH REPRESENTATIVE'S DUE DILIGENCE. At all times prior
to the Closing Date, the Company will cooperate with the Representative in
such investigation as the Representative may make or cause to be made of all
the properties, management, business and operations of the Company, and the
Company will make available to the Representative in connection therewith
such information in its possession as the Representative may reasonably
request.
5.15 APPOINTMENT OF TRANSFER AGENT AND WARRANT AGENT. The Company has
appointed Corporate Stock Transfer, Inc., as Transfer Agent for the Common
Stock and Warrant Agent for the Warrants, subject to the closing of the
offering. The Company will not change or terminate such appointment for a
period of three years from the Effective Date without first obtaining the
written consent of the Representative, which consent shall not be
unreasonably withheld.
5.16 COMPLIANCE WITH CONDITIONS PRECEDENT. The Company will use all
reasonable efforts to comply or cause to be complied with the conditions
precedent to the several obligations of the Underwriters in Section 8 hereof.
5.17 FILING OF FORM SR. If required under the Securities Act, the
Company agrees to file with the Commission all required reports on Form SR in
accordance with the provisions of Rule 463 promulgated under the Securities
Act and to provide a copy of such reports to the Representative and its
counsel.
5.18 BOUND VOLUME. The Company shall supply to the Representative and
the Representative's counsel, at the Company's cost, three bound volumes each
of all of the public offering materials within a reasonable time after the
closing, not to exceed three months.
5.19 LISTING IN XXXXX'X AND STANDARD & POOR'S. The Company is listed in
Xxxxx'x Over-The-Counter Manual or Standard & Poor's Standard Corporation
Records, and it agrees to maintain such listings.
5.20 NASDAQ. The Company has applied to have the Common Stock and
Warrants quoted on NASDAQ on the Effective Date and it shall continue such
listing on NASDAQ or on a national securities exchange during the entire
period each such security is outstanding; provided that the Company is in
compliance with NASDAQ maintenance requirements. The NASDAQ symbols shall be
mutually agreeable to the Company and the Representative.
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5.21 SECONDARY TRADING QUALIFICATION. The Company agrees to use its best
efforts to qualify the Common Stock and Warrants for secondary trading as
soon as legally possible in such states as are requested by the
Representative from time to time, including, without limitation, California
and Texas.
5.22 RIGHT OF INSPECTION. For a period of three years after the
Effective Date, the Representative, at the Representative's expense, will
have the right to have a person or persons selected by the Representative
review the books and records of the Company upon seven days' written notice
and at reasonable times. Such person or persons will be required to execute a
confidentiality agreement which will, in part, prohibit disclosure of
information to any party except the Representative, which information shall
be held in confidence unless otherwise specifically agreed to by the Company
in writing.
5.23 OUTSIDE DIRECTORS, COMMITTEES, EXECUTIVE COMPENSATION. The Company
shall use its best efforts to have at least two members elected to its board
of directors who are not officers or employees of the Company ("outside
directors") on the Effective Date of the Registration Statement, and to cause
two such outside directors to be nominated as directors for two additional
one-year terms. The Company will form independent audit and compensation
committees which shall be comprised of at least three of the Company's
directors, at least a majority of whom shall be outside directors.
5.24 REGISTRATION UNDER THE EXCHANGE ACT. The Common Stock is registered
under Section 12(g) of the Exchange Act. The Company has filed a
Registration Statement under Section 12(g) of the Exchange Act with respect
to the Warrants. The Company has delivered a copy of such filing to the
Representative and to legal counsel for the Representative. The Company
shall use its best efforts to cause the registration statement under the
Exchange Act to become effective not later than the Effective Date, or as
soon thereafter as possible.
SECTION 6
INDEMNIFICATION AND CONTRIBUTION
6.1 INDEMNIFICATION BY COMPANY. The Company shall indemnify and hold
harmless each Underwriter against any and all loss, claim, damage or liability,
joint or several, to which such Underwriter may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, or liability
(or action with respect thereto) arises out of or is based upon (a) any
violation of any registration requirements; (b) any improper use of sales
literature by the Company; (c) any untrue statement or alleged untrue statement
made by the Company in Section 2 hereof; (d) any untrue statement or alleged
untrue statement of a material fact contained (i) in the Registration Statement,
any Preliminary Prospectus, the Effective Prospectus, or the Final Prospectus or
any amendment or supplement thereto, or (ii) in any application or other
document, executed by the Company specifically for such application or based
upon written information furnished by the Company, filed in order to qualify the
Securities under the securities laws of the states where filings were made (any
such application, document, or information being hereinafter called "Blue Sky
Application"); or (e) the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, the Effective Prospectus, or
the Final Prospectus or any amendment or supplement thereto or in any Blue Sky
Application a material fact required to be
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stated therein or necessary to make the statements therein not misleading;
and shall reimburse each Underwriter for any legal or other reasonable
expenses incurred by such Underwriter in connection with investigating or
defending against or appearing as a third-party witness in connection with
any such loss, claim, damage, liability or action, notwithstanding the
possibility that payments for such expenses might later be held to be
improper, in which case the person receiving them shall promptly refund them;
except that the Company shall not be liable in any such case to the extent,
but only to the extent, that any such loss, claim, damage, or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company through the
Representative by or on behalf of any Underwriter specifically for use in the
preparation of the Registration Statement, any Preliminary Prospectus, the
Effective Prospectus and the Final Prospectus or any amendment or supplement
thereto, or any Blue Sky Application.
6.2 INDEMNIFICATION BY UNDERWRITERS. Each Underwriter severally, but
not jointly, shall indemnify and hold harmless the Company against any and
all loss, claim, damage or liability, joint or several, to which the Company
may become subject under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability (or action in respect thereto) arises out of
or are based upon (a) any untrue statement or alleged untrue statement of a
material fact contained (i) in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or the Final Prospectus or any amendment
or supplement thereto or (ii) in any Blue Sky Application; or (b) the
omission or alleged omission to state in the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or the Final Prospectus or
any amendment or supplement thereto or in any Blue Sky Application a material
fact required to be stated therein or necessary to make the statements
therein not misleading; except that such indemnification shall be available
in each such case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in reliance upon information and in conformity with written information
furnished to the Company through the Representative or on behalf of such
Underwriter specifically for use in the preparation thereof; and shall
reimburse any legal or other expenses reasonably incurred by the Company in
connection with the investigation or defending against any such loss, claim,
damage, liability, or action.
6.3 RIGHT TO PROVIDE DEFENSE. Promptly after receipt by an indemnified
party under Section 6.1 or 6.2 above of written notice of the commencement of
any action, the indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under such section, notify the
indemnifying party in writing of the claim or the commencement of that
action; the failure to notify the indemnifying party shall not relieve it of
any liability which it may have to an indemnified party, except to the extent
that the indemnifying party did not otherwise have knowledge of the
commencement of the action and the indemnifying party's ability to defend
against the action was prejudiced by such failure. Such failure shall not
relieve the indemnifying party from any other liability which it may have to
the indemnified party or any person identified in Section 6.4 below. If any
such claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election
to assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under
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such section for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; except that the Representative shall have
the right to employ counsel to represent the Representative and those other
Underwriters who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against the
Company under such section if, in the Representative's reasonable judgment,
it is advisable for the Representative and those Underwriters to be
represented by separate counsel, and in that event the fees and expenses of
such separate counsel shall be paid by the Company.
6.4 CONTRIBUTION. If the indemnification provided for in Sections 6.1
and 6.2 of this Agreement is unavailable or insufficient to hold harmless an
indemnified party, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, or liabilities referred to in Sections 6.1 or 6.2 above (a)
in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other
from the offering of the Securities; or (b) if the allocation provided by
clause (a) above is not permitted by applicable law, in such proportion as is
appropriate to reflect the relative benefits referred to in clause (a) above
but also the relative fault of the Company 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, as well as
any other relevant equitable considerations. The relative benefits received
by the Company and the Underwriters shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and un-itemized expenses received by the Underwriters, in each case as set
forth in the table on the cover page of the Final Prospectus. Relative fault
shall be determined by reference to, among other things, whether the untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Company or the Underwriter and the parties'
relative intent, knowledge, access to information, and opportunity to correct
or prevent such untrue statement or omission. For purposes of this Section
6.4, the term "damages" shall include any counsel fees or other expenses
reasonably incurred by the Company or the Underwriters in connection with
investigating or defending any action or claim which is the subject of the
contribution provisions of this Section 6.4. Notwithstanding the provisions
of this Section 6.4, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of any such untrue statements or
omissions. No person adjudged guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Under this Section 6.4, each Underwriter's obligations to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it shall promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in Section 6.4 hereof).
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6.5 EXTENSION OF OBLIGATIONS. The obligations of the Company under this
Section 6 shall be in addition to any other liability which the Company may
otherwise have, and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the
Securities Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability that the respective Underwriters may
otherwise have, and shall extend, upon the same terms and conditions, to each
director of the Company (including any person who, with his consent, is named
in the Registration Statement as about to become a director of the Company),
to each officer of the Company who has signed the Registration Statement, and
to each person, if any, who controls the Company within the meaning of the
Securities Act.
6.6 REIMBURSEMENT OF UNDERWRITERS. In addition to its obligations under
Section 6.1 of this Agreement, the Company agrees that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any loss, claim, damage, or liability
described in Section 6.1 of this Agreement, it will reimburse the
Underwriters, and each of them, on a monthly basis (or more often, if
requested) for all reasonable legal or other expenses incurred in connection
with investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's
obligation to reimburse the Underwriters for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any portion, or all, of
any such interim reimbursement payments are so held to have been improper,
the Underwriters receiving the same shall promptly return such amounts to the
Company together with interest, compounded daily, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the highest
credit rating) announced from time to time by Norwest Bank of Denver, Denver,
Colorado (the "Prime Rate"). Any such interim reimbursement payments that
are not made to the Underwriters within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request until the date paid.
6.7 REIMBURSEMENT OF THE COMPANY. In addition to their obligations
under Section 6.2 of this Agreement, the Underwriters agree that, as an
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any loss, claim,
damage or liability described in Section 6.2 of this Agreement, they will
reimburse the Company on a monthly basis (or more often, if requested) for
all reasonable legal or other expenses incurred by the Company in connection
with investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Underwriters'
obligation to reimburse the Company for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any portion, or all, of any such
interim reimbursement payments are so held to have been improper, the Company
shall promptly return such amounts to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any
such interim reimbursement payments that are not made to the Company within
30 days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request until the date paid.
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SECTION 7
EFFECTIVENESS OF AGREEMENT
This Agreement shall become effective (a) at 10:00 a.m., Colorado time,
on the first full business day after the Effective Date, or (b) upon release
by the Representative of the Securities for sale after the Effective Date,
whichever shall first occur. The Representative shall notify the Company
immediately after the Representative shall have taken any action, by release
or otherwise, whereby this Agreement shall have become effective. For
purposes of this Agreement, the release of the initial public offering of the
Firm Securities for sale to the public shall be deemed to have been made when
the Representative releases, by telegram or otherwise, firm offers of the
Firm Securities to securities dealers or release for publication of a
newspaper advertisement relating to the Firm Securities, whichever occurs
first. This Agreement shall, nevertheless, become effective at such time
earlier than the time specified above, after the Effective Date, as the
Representative may determine by notice to the Company.
SECTION 8
CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS
The obligations of the several Underwriters hereunder to purchase the
Securities and to make payment to the Company hereunder on the Closing Date
and on the Over-allotment Closing Date, if any, shall be subject to the
accuracy, as of the Closing Date and the Over-allotment Closing Date, of each
of the representations and warranties on the part of the Company herein
contained, to the performance by the Company of all its agreements herein
contained, to the fulfillment of or compliance by the Company with all
covenants and conditions hereof, and to the following additional conditions:
8.1 EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement
and all post-effective amendments thereto filed with the Commission prior to
the Closing Date or the Over-allotment Closing Date shall have become
effective and any and all filings required by Rule 424 and Rule 430A of the
Rules and Regulations shall have been made; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceeding for that purpose shall have
been initiated or threatened by the Commission or be pending; any request for
additional information on the part of the Commission (to be included in the
Registration Statement or Final Prospectus or otherwise) shall have been
complied with to the satisfaction of the Commission; and neither the
Registration Statement, the Effective Prospectus or Final Prospectus, nor any
amendment thereto shall have been filed to which counsel to the
Representative shall have reasonably objected in writing or have not given
their consent.
8.2 ACCURACY OF REGISTRATION STATEMENT. The Representative shall not
have advised the Company that the Registration Statement or the Effective
Prospectus or Final Prospectus or any amendment thereof or supplement thereto
contains an untrue statement of a fact which, in the opinion of counsel to
the Representative, is material, or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein, or
is necessary to make the statements therein not misleading.
-22-
8.3 CASUALTY AND OTHER CALAMITY. Since the Effective Date the Company
shall not have sustained any loss on account of fire, explosion, flood,
accident, calamity or any other cause, of such character as materially
adversely affects its business or property considered as an entire entity,
whether or not such loss is covered by insurance, and no officer or director
of the Company shall have suffered any injury, sickness or disability of a
nature which would materially adversely affect his or her ability to properly
function as an officer or director of the Company.
8.4 LITIGATION AND OTHER PROCEEDINGS. Other than as disclosed in the
Registration Statement or Prospectus, there shall be no litigation instituted
or threatened against the Company and there shall be no proceeding instituted
or threatened against the Company before or by any federal or state
commission, regulatory body or administrative agency or other governmental
body, domestic or foreign, wherein an unfavorable ruling, decision or finding
would materially adversely affect the business, management, licenses,
operations or financial condition or income of the Company considered as an
entity.
8.5 LACK OF MATERIAL CHANGE. Except as contemplated herein or as set
forth in the Registration Statement and Final Prospectus, during the period
subsequent to the date of the last audited balance sheet included in the
Registration Statement, the Company (a) shall have conducted its business in
the usual and ordinary manner as the same was being conducted on the date of
the last audited balance sheet included in the Registration Statement, and
(b) except in the ordinary course of its business, the Company shall not have
incurred any liabilities, claims or obligations (direct or contingent) or
disposed of any of its assets, or entered into any material transaction or
suffered or experienced any substantially adverse change in its condition,
financial or otherwise. The capital stock and surplus accounts of the
Company shall be substantially the same as at the date of the last audited
balance sheet included in the Registration Statement, without considering the
proceeds from the sale of the Securities, other than as may be set forth in
the Final Prospectus, and except as the surplus reflects the result of
continued profits or losses from operations consistent with prior periods.
8.6 REVIEW BY REPRESENTATIVE'S COUNSEL. The authorization of the
Shares, the Warrants, the Warrant Shares, the Representative's Options and
the Common Stock and Warrants issuable upon the exercise of the
Representative's Options, the Registration Statement, the Effective
Prospectus and the Final Prospectus and all corporate proceedings and other
legal matters incident thereto and to this Agreement shall be reasonably
satisfactory in all respects to counsel to the Representative.
8.7 OPINION OF COUNSEL. The Company shall have furnished to the
Representative the opinion, dated the Closing Date and, if applicable, the
Over-allotment Closing Date, addressed to the Representative, from Xxxxxx &
Xxxx, counsel to the Company, to the effect that based upon a review by them
of the Registration Statement, Effective Prospectus and the Final Prospectus,
the Company's articles of incorporation, by-laws, and relevant corporate
proceedings and contracts, and examination of such statutes they deem
necessary and such other investigation by such counsel as they deem necessary
to express such opinion:
-23-
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Colorado, and
has the corporate power and authority to own its properties and to carry on
its business as described in the Registration Statement and Effective
Prospectus and the Final Prospectus.
(b) The Company is duly qualified and in good standing as a foreign
corporation authorized to do business in all jurisdictions in which the
character of the properties owned or held under lease or the nature of the
business conducted requires such qualification except where the failure to
qualify would not have a material adverse effect on the business of the
Company.
(c) The authorized and outstanding capital stock of the Company is as
set forth in the Effective Prospectus and Final Prospectus; the Common
Stock of the Company, the Warrants, and the Representative's Options
conform in all material respects to the statements concerning them in the
Effective Prospectus and Final Prospectus; the outstanding Common Stock of
the Company contains no preemptive rights; the Shares, the Warrants, and
the Representative's Options have been, and the Common Stock issuable upon
exercise of the Share Options and the Representative's Options, will be,
duly and validly authorized and, upon issuance thereof and payment therefor
in accordance with this Agreement, validly issued, fully paid and
nonassessable, and will not be subject to the preemptive rights of any
shareholder of the Company.
(d) A sufficient number of shares of Common Stock have been duly
reserved for issuance upon the exercise of the Warrants, the
Representative's Options and the Warrants issuable upon exercise of the
Representative's Options.
(e) To such counsel's knowledge, no consents, approvals,
authorizations or orders of agencies, officers or other regulatory
authorities are required for the valid authorization, issuance or sale of
the Common Stock, the Warrants and the Representative's Options
contemplated by this Agreement, except for those consents, approvals,
authorizations, and orders which the Company has obtained and which are in
full force and effect under the Securities Act, the Exchange Act, and under
applicable state securities laws in connection with the purchase and
distribution of such securities by the Underwriters, and the clearance of
the underwriting compensation by the NASD.
(f) The issuance and sale of the Securities and the Representative's
Options, the consummation of the transactions herein contemplated, and the
compliance with the terms of this Agreement will not conflict with or
result in a breach of any of the terms, conditions, or provisions of or
constitute a default under the articles of incorporation or by-laws of the
Company; nor, to such counsel's knowledge, will they conflict with or
result in a breach of any of the terms, conditions, or provisions of any
note, indenture, mortgage, deed of trust, or other agreement or instrument
to which the Company is a party or by which the Company or any of its
property is bound, other than for which the Company has received a consent
or waiver of such conflict, breach or default, or where such conflict or
breach would not have a material adverse effect on the business of the
Company; or any existing law (provided this paragraph shall not relate to
federal or state securities laws), order, rule, regulation, writ,
injunction, or decree known to such counsel of any government,
-24-
governmental instrumentality, agency, body, arbitration tribunal, or
court, domestic or foreign, having jurisdiction over the Company or
its property.
(g) On the basis of a reasonable inquiry by such counsel, including
participation in conferences with representatives of the Company and its
accountants at which the contents of the Registration Statement and the
Effective Prospectus and the Final Prospectus and related matters were
discussed, and without expressing any opinion as to the financial
statements or other financial data contained therein: (i) nothing has come
to such counsel's attention which leads them to believe that the
Registration Statement and the Final Prospectus, as amended or supplemented
by any amendments or supplements thereto made by the Company prior to the
Closing Date, do not comply as to form in all material respects with the
requirements of the Securities Act; (ii) nothing has come to their
attention which leads them to believe that the Registration Statement or
the Final Prospectus, as amended or supplemented by any such amendments or
supplements thereto, contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; (iii) they do not know of any contract or
other document required to be described in or filed as an exhibit to the
Registration Statement which is not so described or filed; and (iv) the
Registration Statement has become effective under the Securities Act, and,
to the best of their knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated by the
Commission.
(h) This Agreement has been duly authorized and executed by the
Company and is a valid and binding agreement of the Company, except as
rights to indemnity hereunder may be limited by federal or state securities
laws or public policy and except as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting creditors rights
generally and by general equitable principles.
(i) Except as disclosed in the Registration Statement, the Effective
Prospectus, and the Final Prospectus, the Company is not in default of any
of the material contracts, licenses, leases or agreements to which it is a
party, and the offering of the Shares, the Warrants and the
Representative's Options will not cause the Company to become in default of
any of its material contracts, licenses, leases or agreements.
(j) To such counsel's knowledge the Company is not currently offering
any securities for sale except as described in the Registration Statement.
(k) Counsel has no knowledge of any promoter, affiliate, parent or
subsidiaries of the Company except as are described in the Registration
Statement and Final Prospectus.
(l) To the knowledge of counsel, and without making any statement as
to title, except as described in the Registration Statement, the Company
owns all properties described in the Registration Statement as being owned
by it; the properties are free and clear of all liens, charges,
encumbrances or restrictions; all of the leases, subleases and other
agreements under which the Company holds its properties are in full force
and effect;
-25-
the Company is not in default under any of the material terms or
provisions of any of the leases, subleases or other agreements; and
there are no claims against the Company concerning its rights under
the leases, subleases and other agreements and concerning its right
to continued possession of its properties.
(m) To the knowledge of counsel, the Company has been issued by the
appropriate federal, state and local regulatory authorities the required
licenses, certificates, authorizations or permits necessary to conduct its
business as described in the Registration Statement and to retain
possession of its properties. Counsel is unaware of any notice of any
proceeding relating to the revocation or modification of any of these
certificates or permits.
(n) To the knowledge of counsel, the Company has paid all taxes which
are shown as due and owing on the financial statements included in the
Registration Statement and Final Prospectus.
As to all factual matters, including without limitation the issuance of
stock certificates and receipt of payment therefor, the states in which the
Company transacts business, and the adoption of resolutions reflected by the
Company's minute book, such counsel may rely on the certificate of an
appropriate officer of the Company. Counsel's opinion as to the validity and
enforceability of any and all contracts and agreements referenced herein may
exclude any opinion as to the validity or enforceability of any
indemnification or contribution provisions thereof, or as the validity or
enforceability of any such contract or agreement may be limited by bankruptcy
or other laws relating to or affecting creditors' rights generally and by
equitable principles.
8.8 ACCOUNTANT'S LETTER. The Representative shall have received letters
addressed to it dated the Effective Date, the Closing Date and, if
applicable, the Over-allotment Closing Date, respectively, and a draft of
such letter at least five days prior to the Effective Date, the Closing Date
and, if applicable, the Over-allotment Closing Date, from Xxxx + Associates,
L.L.C., confirming that they are independent public accountants with respect
to the Company within the meaning of the Act and the published Rules and
Regulations. In the letter dated the date of this Agreement, they shall state
their conclusions and findings with respect to such financial, accounting,
and statistical information and other matters contained in the Registration
Statement as have been approved by the Representative prior to the execution
of this Agreement. In the letter dated the Closing Date (and if applicable,
the Over-allotment Closing Date), they shall state as of such date (or, with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Final
Prospectus, as of a date not more than five days prior to the date of such
letter) their conclusions and findings with respect to the financial
information and other matters covered by their letter dated the date of this
Agreement, the purpose of the letter to be delivered on the Closing Date
(and, if applicable, the Over-allotment Closing Date) being to update in all
respects the conclusions and findings set forth in the prior letter or
letters. The Representative shall be furnished without charge, in addition to
the original signed copies, such number of signed or photostatic or conformed
copies of such letters as the Representative shall reasonably request.
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8.9 OFFICER'S CERTIFICATE. The Company shall furnish to the
Representative certificates, each signed by the President and Chief Financial
Officer of the Company, one dated as of the Effective Date, one dated as of
the Closing Date, and, if applicable, one dated as of the Over-allotment
Closing Date, to the effect that:
(a) The representations and warranties of the Company in this
Agreement are true and correct at and as of the date of the certificate, and
the Company has complied with all the agreements and has satisfied all the
conditions on its part to be performed or satisfied at or prior to the date
of the certificate.
(b) The Registration Statement has become effective and to the best
of the knowledge of the respective signers no order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been initiated or is threatened by the Commission.
(c) The respective signers have each examined the Registration
Statement and the Final Prospectus and any amendments and supplements
thereto, and to the best of their knowledge the Registration Statement and
the Final Prospectus and any amendments and supplements thereto contain all
statements required to be stated therein, do 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 not misleading and, since
the Effective Date, there has occurred no event required to be set forth in
an amended or a supplemented Prospectus which has not been so set forth.
8.10 TENDER OF DELIVERY OF SECURITIES. All of the Securities being
offered by the Company and being purchased from the Company by the
Underwriters, and the Representative's Options being purchased from the
Company by the Representative, shall be tendered for delivery in accordance
with the terms and provisions of this Agreement.
8.11 BLUE-SKY REGISTRATION OR QUALIFICATION. The Shares and the Warrants
shall be registered or qualified in such states as the Representative and the
Company may agree pursuant to Section 5.4, and each such registration or
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date or the Over-allotment Closing Date. On the
Effective Date, on the Closing Date and, if applicable, the Over-allotment
Closing Date, the Representative shall receive from counsel for the
Representative, written information which contains the following:
(a) the names of the states in which applications to register or
qualify the Shares, the Warrants and the Warrant Shares have been filed;
(b) the status of such registrations or qualifications in such
states as of the date of such letter;
(c) a list containing the name of each such state in which the
Shares, the Warrants and the Warrant Shares may be legally offered and sold
by a dealer licensed in such state and the number of each which may be
legally offered and sold in the offering in each such state as of the date of
such letter;
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(d) with respect to the written information provided on the Effective
Date, a representation that such counsel will promptly update such written
information if counsel receives actual notice of any material changes in the
information provided therein between the Effective Date and the Closing Date
and, if applicable, Over-allotment Closing Date;
(e) the names of the states in which the offer and sale of the Shares
and Warrants in the offering is exempt from registration or qualification; and
(f) a statement that the Underwriters and selected dealers in the
offering may rely upon the information contained therein.
8.12 APPROVAL OF REPRESENTATIVE'S COUNSEL. All opinions, letters,
certificates and evidence mentioned above or elsewhere in this Agreement shall
be deemed to be in compliance with the provisions hereof only if they are in
form and substance satisfactory to counsel to the Representative, whose approval
shall not be unreasonably withheld. The suggested form of such documents shall
be provided to the counsel for the Representative at least three business days
before the dates they are to be provided, that is, the Effective Date, the
Closing Date, and the Over-allotment Closing Date, if applicable.
8.13 OFFICERS' CERTIFICATE AS A COMPANY REPRESENTATION. Any certificate
signed by an officer of the Company and delivered to the Representative or
counsel for the Representative shall be deemed a representation and warranty by
the Company to the Underwriters as to the statements made therein.
8.14 OPINION OF REPRESENTATIVE'S COUNSEL. The Representative shall have
received from Xxxxx & Xxxxxx, P.C., counsel for the Representative, an opinion
dated the Closing Date, with respect to the issuance and sale of the Securities,
and such other related matters as the Representative may reasonably require, and
the Company shall have furnished such counsel with all documents which they may
request for the purpose of enabling them to pass upon such matter.
SECTION 9
TERMINATION
9.1 TERMINATION BECAUSE OF NONCOMPLIANCE. This Agreement may be
terminated in its entirety by the Representative by notice to the Company
prior to its effectiveness in the event that the Company shall have failed or
been unable to comply with any of the terms, conditions or provisions of this
Agreement which the Company is required by this Agreement to be performed,
complied with or fulfilled (including but not limited to those specified in
Sections 2, 3, 4, 5, and 8 hereof) within the respective times herein
provided for, unless compliance therewith or performance or satisfaction
thereof shall have been expressly waived by the Representative in writing.
9.2 MARKET OUT TERMINATION. This Agreement may be terminated by the
Representative by notice to the Company at any time if, in the sole judgment
of the Representative, payment for and delivery of the Securities is rendered
impracticable or inadvisable because of:
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(a) Material adverse changes in the Company's business, business
prospects, management, earnings, properties or conditions, financial or
otherwise, which are outside the ordinary course of business;
(b) Any action, suit, or proceedings, at law or in equity, hereafter
threatened or filed against the Company by any person or entity, or by any
federal, state or other commission, board or agency wherein any unfavorable
result or decision could materially adversely affect the business, business
prospects, properties, financial condition or income or earnings of the Company;
(c) Additional material governmental restrictions not in force and
effect on the date hereof shall have been imposed upon the trading in securities
generally, or new offering or trading restrictions shall have been generally
established by a registered securities exchange, the Commission, NASD or other
applicable regulatory authority, or trading in securities generally on any such
exchange, NASDAQ or otherwise, shall have been suspended, or a general
moratorium shall have been established by federal or state authorities;
(d) Substantial and material changes in the condition of the market
beyond normal fluctuations such that it would be undesirable, impracticable or
inadvisable in the judgment of the Representative to proceed with this Agreement
or with the public offering of the Securities;
(e) Any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the judgment
of the Representative, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Securities; or
(f) Any suspension of trading in the securities of the Company in the
over-the-counter market or the interruption or termination of quotations of any
security of the Company on the NASDAQ System.
9.3 EFFECT OF TERMINATION HEREUNDER. Any termination of this Agreement
pursuant to this Section 9 shall be without liability of any character
(including, but not limited to, loss of anticipated profits or consequential
damages) on the part of any party hereto, except that the Company shall remain
obligated to pay the costs and expenses provided to be paid by it specified in
Sections 3.5 and 5.7; and the Company and the Underwriters shall be obligated to
pay, respectively, all losses, claims, damages or liabilities, joint or several,
under Sections 6.1 or 6.4 in the case of the Company and Sections 6.2 or 6.4 in
the case of the Underwriters .
SECTION 10
REPRESENTATIVE'S REPRESENTATIONS AND WARRANTIES
The Representative represents and warrants to and agrees with the Company
that:
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10.1 REGISTRATION AS BROKER-DEALER AND MEMBER OF NASD. The
Representative is registered as a broker-dealer with the Commission and is
registered as a securities broker-dealer in all states in which it will sell
Securities and is a member in good standing of the National Association of
Securities Dealers, Inc.
10.2 NO PENDING PROCEEDINGS. There is not now pending or threatened
against the Representative any action or proceeding of which it has been
advised, either in any court of competent jurisdiction, before the Commission
or any state securities regulatory authority concerning activities as a
broker or dealer which are foreseen as affecting the Representative's
capacity to complete the terms of this Agreement.
10.3 COMPANY'S RIGHT TO TERMINATE. In the event any action or proceeding
of the type referred to in Section 10.2 above shall be instituted or
threatened against the Representative at any time prior to the Effective Date
hereunder, or in the event there shall be filed by or against the
Representative in any court pursuant to any federal, state, local or
municipal statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of its assets
or if it makes an assignment for the benefit of creditors, the Company shall
have the right on three days' written notice to the Representative to
terminate this Agreement without any liability to the Representative or the
Company of any kind except for the payment of all expenses as provided herein.
10.4 REPRESENTATIVE'S COVENANTS. The Representative covenants and agrees
with the Company that (a) it will not offer or sell the Securities in any
state or other jurisdiction where it has not been advised in writing by legal
counsel for the Company that the Securities are qualified for the offer and
sale therein or exempt from such requirements; (b) it will not make any
representation to any person in connection with the offer and sale of the
Securities covered hereby except as set forth in the Registration Statement
or as authorized in writing by the Company and the Representative; (c) it
will comply in good faith with all laws, rules and regulations applicable to
the distribution of the securities, including the Conduct Rules of the NASD;
and (d) the Representative has the authority to execute this Agreement on
behalf of all of the Underwriters.
SECTION 11
NOTICE
Except as otherwise expressly provided in this Agreement:
11.1 NOTICE TO THE COMPANY. Whenever notice is required by the
provisions of this Underwriting Agreement to be given to the Company,
such notice shall be in writing addressed to the Company as follows:
Premier Concepts, Inc.
0000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, President
with a copy to:
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Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
Xxxxxx & Xxxx
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
11.2 NOTICE TO THE REPRESENTATIVE. Whenever notice is required by the
provisions of this Agreement to be given to the Representative, such notice
shall be given in writing addressed to the Representative as follows:
Cohig & Associates, Inc.
0000 Xxxxx Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Executive Vice President
with a copy to:
Xxxxxx X. Xxxx, Esq.
Xxxxx & Xxxxxx, P.C.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
11.3 EFFECTIVE DATE OF NOTICES. Such notices shall be effective on the
date of delivery set forth on the receipt if the notice is sent by registered or
certified mail or any expedited delivery, or, if sent regular mail, three days
from the day of mailing.
SECTION 12
MISCELLANEOUS
12.1 BENEFIT. This Agreement is made solely for the benefit of the
Representative, other Underwriters , the Company, their respective officers,
directors and controlling persons referred to in Section 15 of the Securities
Act and such other persons as are identified in this Agreement, and their
respective successors and assigns, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successor" or the
term "successors and assigns" as used in this Agreement shall not include any
purchasers, as such, of any of the Securities.
12.2 SURVIVAL. The respective indemnities, agreements, representations,
warranties, and covenants of the Company or its officers and the Representative
or the Underwriters as set forth in or made pursuant to this Agreement and the
indemnity and contribution agreements contained in Section 6 hereof of the
Company and the Underwriters (as defined in Section 6) shall survive and remain
in full force and effect, regardless of (a) any investigation made by or on
behalf of the Company or the Underwriters or any such officer or director
thereof or any controlling person of the Company or of the Underwriters, (b)
delivery of or payment for the Securities, and (c) the Closing Date and, if
applicable, the Over-allotment Closing Date, and any successor of the Company or
the Underwriters or any controlling person, officer or director thereof, as the
case may be, shall be entitled to the benefits hereof.
-31-
12.3 GOVERNING LAW. The validity, interpretation and construction of this
Agreement and of each part hereof will be governed by the laws of the State of
Colorado.
12.4 ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties hereto, and supersedes all agreements and
understandings including, but not limited to, the Letter of Intent dated April
29, 1996.
12.5 REPRESENTATIVE'S INFORMATION. The statements with respect to the
public offering of the Securities on the inside and outside of both the front
and back cover pages of the Prospectus and under the caption "Underwriting" in
the Final Prospectus constitute the written information furnished by or on
behalf of the Representative referred to in Section 2.2 hereof, in Section 6.1
hereof and Section 6.2 hereof.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together will constitute one and the same instrument.
12.7 DEFINITION OF "BUSINESS DAY" AND "SUBSIDIARY". For purposes of this
Agreement, (a) "Business Day" means any day on which the New York Stock
Exchange, Inc. is open for trading and (b) "Subsidiary" has the meaning set
forth in Rule 405 of the Rules and Regulations.
Please confirm that the foregoing correctly sets forth the Agreement
between you and the Company.
Very truly yours,
ATTEST:
PREMIER CONCEPTS, INC.
By By
--------------------------- -----------------------------
Secretary Xxxxxx X. Xxxxxxxxx, President
WE HEREBY CONFIRM AS OF THE DATE HEREOF THAT THE ABOVE SETS FORTH THE
AGREEMENT BETWEEN THE COMPANY AND US.
COHIG & ASSOCIATES, INC.
(for itself and as Representative of
the several Underwriters named in
Schedule I hereto)
By
---------------------------------
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PREMIER CONCEPTS, INC.
(A Colorado Corporation)
SCHEDULE I
This Schedule sets forth the name of each Underwriter referred to in the
Underwriting Agreement and the number of Shares and Warrants to be purchased
by each Underwriter.
Number
Name of Shares and Warrants
---- ----------------------
Cohig & Associates, Inc.
Total
----------
1,100,000
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UNDERWRITERS' QUESTIONNAIRE
Each Underwriter should deliver four (4) executed Questionnaires to Cohig &
Associates, Inc., 0000 Xxxxx Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000, Attention: Syndicate Department.
PREMIER CONCEPTS, INC.
1,100,000 Shares
1,100,000 Warrants
Cohig & Associates, Inc.
0000 Xxxxx Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs and Madames:
In connection with the proposed public offering by Premier Concepts, Inc.
(the "Company") of 1,100,000 Shares of $.002 par value common stock, ("Common
Stock") and 1,100,000 common stock purchase warrants ("Warrant") (hereinafter
referred to as the "Securities"), and for use in the Registration Statement on
Form SB-2 (or other appropriate form) and related Prospectus which the Company
has filed or will file covering the Securities, the undersigned, as one of the
prospective Underwriters, furnishes the following information:
Our name, exactly as it should appear in the Underwriting Agreement and the
Prospectus, and our address (including punctuation, abbreviations and zip code)
are as follows:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
(Check one): We are a corporation ( ) partnership ( )
sole proprietorship ( ).
(Check one): We are ( ) are not ( ) registered as a broker or dealer under
the Securities Exchange Act of 1934.
Except as indicated below:
other than in our capacity as an Underwriter neither we nor any of
our directors, officers or partners has a "material" relationship (as
the term "material" is defined in the Rules and Regulations ("Rules and
Regulations") promulgated under the Securities Act of 1933, as amended
("1933 Act")), with the Company;
neither we nor any of our directors, officers or partners is now or was at
any time during the past three years an "associate" (as "associate"
is defined in the Rules and Regulations) of the Company, or of any
person who, to our knowledge or as set forth in the Registration
Statement, now owns, or owned as of the latest practicable date for
such purpose set forth in the Registration Statement, of record or
beneficially, more than 5% of the outstanding Common Stock or other
securities of the Company;
neither we nor any of our directors, officers or partners now owns or owned
in the aggregate as of the latest practicable date for such purpose
set forth in the Registration Statement either of record or
beneficially, more than 5% of the outstanding Common Stock or other
securities of the Company;
we have no knowledge that more than 5% of any of the outstanding
Common Stock or other securities of the Company is held or is to be
held subject to any voting trust or other similar arrangement;
(a) neither we nor any of our directors, officers or partners is an
"affiliate" (as "affiliate" is defined in the Rules and Regulations and
in Schedule E of the By-Laws of the National Association of Securities
Dealers, Inc. ("NASD")) of the Company;
other than as may be stated in the proposed Agreement Among Underwriters,
Underwriting Agreement, Selected Dealer Agreement or in the
Prospectus, we do not know of any discounts or commissions to
be allowed or paid to underwriters or dealers or arrangements
therefor (including all cash, securities, contracts or other
consideration to be received by any underwriter or dealer in
connection with the sale of the Securities) or of any arrangement
designed to limit or restrict the sale (or other disposition) of, or
to stabilize the market for the Securities, Common Stock or Warrants
or to withhold commissions or otherwise to hold each underwriter or
dealer responsible for the distribution of his participation;
we are familiar with applicable Securities Act Releases, including
Nos. 3844, 5009 and 5101, issued by the Securities and
Exchange Commission and we have not disseminated any written
information outside of our organization relating to the Company or
its securities other than in accordance with such releases;
neither we nor any of our directors, officers, partners or
persons associated with us (as defined in the By-Laws of the NASD),
nor, to our knowledge any "related person" (defined by the NASD
to include our counsel, financial consultants and advisors,
finders, members of the selling or distribution groups and any
other persons associated with or related to any of the foregoing
persons) or any other broker-dealer (1) within the last 18 months
has purchased in private transactions, or intends before, at
or within six months after the commencement of the public
offering to purchase in private transactions, any outstanding
Common Stock or other securities of the Company, or (2) within
the last 12 months had any dealings with the Company or any
controlling shareholder thereof (other than relating to the proposed
Underwriting Agreement, Agreement Among Underwriters and
selling arrangements) as to which documents or information are
required to be filed with the NASD pursuant to its Interpretation
With Respect to Review of Corporate Financing; and
we have not within the past 12 months prepared or had prepared
for us any engineering, management or similar report or memorandum
relating to the broad aspects of the business, operations or products
of the Company, nor has any report or memorandum been prepared for
external use by us in connection with the proposed offering.
-2-
(Xxxx "No Exceptions" below or xxxx "Exception(s)", if any, and
give details. If an exception is to be made with respect to material
of the type referred to in paragraph 3 (i) above, attach four copies
of any such document for transmittal to counsel together with a
statement as to the actual or proposed use and distribution of each
such document, including the date of distribution and identifying
each class of persons who has received or will receive the report or
memorandum and stating the number of copies distributed to each such
class. The undersigned understands that such material and statement
may be required to be submitted to the Securities and Exchange
Commission and authorizes such submissions.)
( ) No Exceptions
( ) Exception(s)
The answers to the foregoing questions are correctly stated, to the best of
our knowledge, information, and belief. We will notify you immediately of any
developments which may occur prior to or after the effective date of the
Registration Statement covering the Securities which makes untrue or incomplete
any of the above statements as of such effective date.
We will keep an accurate record of the names and addresses of all persons
to whom we furnish copies of the Registration Statement, the Preliminary
Prospectus (in each case as defined in the proposed Underwriting Agreement) or
of any summary prospectus or copies of any amendments to any of them, and when
we are furnished with copies of any subsequent amendment to the Registration
Statement, any subsequent Preliminary Prospectus or the Final Prospectus, or of
any memorandum outlining changes in the Registration Statement or in any
Preliminary or Final Prospectus we will promptly forward copies of the
Preliminary or Final Prospectus or copies of any amendments to any of such
persons in the quantities previously given.
The undersigned agrees not to distribute any written information outside of
its organization relating to the Company or its securities except in accordance
with applicable law, including Securities Act Releases Nos. 3844, 5009 and 5101,
and further agrees to comply with the prospectus delivery requirements of Rule
15c2-8 under the Securities Exchange Act of 1934.
In the event our name is included in any advertising of the Securities, it
should appear in the form set forth in paragraph 1 hereof.
Very truly yours,
For Partnership Signature:
----------------------------------------
(Partnership Name)
For Corporation Signature: By:
-----------------------------------
(Partner)
-----------------------------------
(Name of Corporation)
-3-
By:
-----------------------------------
(Signature and Title
of Authorized Officer)
For Sole Proprietorship Signature:
-----------------------------------
(Name under which the Business of
the Sole Proprietorship is Conducted)
By:
-----------------------------------
(Individual Signature of
the Sole Proprietor)
-4-
