EXHIBIT 1.22
UNDERWRITING AGREEMENT
CLUCKCORP INTERNATIONAL, INC.
500,000 Shares of 12%
Convertible Redeemable Preferred Stock
(Liquidation Preference $10.00 per Preferred Security)
and
1,500,000 Redeemable Preferred Stock Purchase Warrants
May____, 1997
GLOBAL EQUITIES GROUP, INC.
As Representative of the several
Underwriters named in Schedule 1
0 Xxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
CluckCorp International, Inc. a Texas corporation proposes to sell an
aggregate of 500,000 shares (the "Firm Stock") of the Company's Series A
Redeemable Convertible Preferred Stock par value $1.00 per share (the "Preferred
Stock") and 1,500,000 Redeemable Preferred Stock Purchase Warrants (the
"Warrants"). The Preferred Stock and the Warrants are hereinafter collectively
referred to as the Securities. In addition, the Company proposes to grant to the
Underwriters named in Schedule 1 hereto (the "Underwriters") an option to
purchase up to an additional 75,000 shares of Preferred Stock and/or 225,000
Warrants on the terms and for the purposes set forth in Section 2 (the "Option
Stock"). The Firm Stock and the Option Stock, if purchased, are hereinafter
collectively called the "Stock." This is to confirm the agreement concerning the
purchase of the Stock from the Company by the Underwriters named in Schedule 1
hereto (the "Underwriters") in the amounts set forth opposite their respective
names.
1. Representations, Warranties and Agreements of the Company. The Company
represents, warrants, and agrees that:
(a) A registration statement on Form SB-2 (No. 333- 21067), and an
amendment thereto, with respect to the Stock have (i) been prepared by
the Company in conformity with the requirements of the Securities Act
of 1933 (the "Securities Act") and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the
Securities Act; and a second registration statement on Form SB-2 with
respect to the Stock (i) may also be prepared by the Company in
conformity with the requirements of the Securities Act and the Rule
and Regulations and (ii) if to be so prepared, will be filed with the
Commission under the Securities Act pursuant to Rule 462(b) of the
Rules and Regulations on the date hereof. Copies of the first such
registration statement and the amendment to such registration
statement, together with the form of any such second registration
statement, have been delivered by the Company to you as the
representative (the "Representative") of the Underwriters. As used in
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this Agreement, "Effective Time" means (i) with respect to the first
such registration statement, the date and the time as of which such
registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission and (ii)
with respect to any second registration statement, the date and time
as of which such second registration statement is filed with the
Commission, and "Effective Times" is the collective reference to both
Effective Times; "Effective Date" means (i) with respect to the first
such registration statement, the date of the Effective Time of such
registration statement and (ii) with respect to any second
registration statement, the date of the Effective Time, and "Effective
Dates" is collective reference to both Effective Dates; "Preliminary
Prospectus" means such prospectus included in any such registration
statement, or amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by the
Company with the consent of the Representative pursuant to Rule 424(a)
of the Rules and Regulations; "Primary Registration Statement" means
the first registration statement referred to in this Section 1(a), as
amended as its Effective Time, "Rule 462(b) Registration Statement"
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means the second registration Statement, if any, referred to in this
Section 1(a), as filed with the Commission, and "Registration
Statements" means both the Primary Registration Statement and any Rule
462(b) Registration Statement, including in each case all information
contained in the final prospectus filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations in accordance with Section
6(a) hereof and deemed to be a part of the Registration Statement
pursuant to paragraph (b) of Rule 430A of the Rules and Regulations;
and "Prospectus" means such final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Rules and Regulations. The Commission has not issued any order
preventing or suspending these of any Preliminary Prospectus.
(b) The Primary Registration Statement conforms (and the Rule 462(b)
Registration Statement, if any, the Prospectus and any further
amendments or supplements to the Registration Statements or the
Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform) in all respects to the
requirements of the Securities Act and the Rules and Regulations and
do not and will not, as of the applicable effective date (as to the
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Registration Statements and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) 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; provided that
no representation or warranty is made as to information contained in
or omitted from the Registration Statements or the Prospectus 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 inclusion therein.
(c) The Company and each of its subsidiaries (as defined in Section 15)
have been duly incorporated and are validly existing as corporations
in good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power
and authority necessary to own or hold their respective properties and
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to conduct the businesses in which they are engaged; and one of the
subsidiaries of the Company is a "significant subsidiary", as such
term is defined in Rule 405 of the Rules and Regulations.
(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, and fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable and
(except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(e) The unissued shares of the Stock to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein will be duly and validly issued, fully paid and non-assessable;
and the Stock will conform to the description thereof contained in the
Prospectus.
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(f) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the company or any of is subsidiaries is bound or to
which any of the properties or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets; and except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no
consent, approval, authorization or order or, or filing or
registration with, any such court or governmental agency or body is
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required for the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated
hereby.
(g) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statements or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
(h) The Company has not sold or issued any shares of Common or Preferred
Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A, or Regulations
D or S of, the Securities Act.
(i) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
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insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since such date, there has not been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders, equity
or results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus.
(j) The financial statements (including the related notes and supporting
schedules) filed as part of the Registration Statements or included in
the Prospectus present fairly the financial condition and results of
operations of the entities purported to be shown thereby, at the dates
and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis throughout the periods involved.
(k) Akin, Doherty, Xxxxx & Xxxxx, P.C. who have certified certain
financial statements of the Company, whose report appears in the
Prospectus and who have delivered the initial letter referred to in
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in Section 7(e) hereof, are independent public accountants as required
by the Securities Act and the Rules and Regulations.
(l) There are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property
or asset of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, might have a material adverse effect on the consolidated
financial position, stockholders' equity, rules of operations,
business or prospects of the Company and its subsidiaries; and to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(m) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to either of the
Registration Statements by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed
as exhibits to the either of the Registration Statements or
incorporated therein by reference as permitted by the Rules and
Regulations.
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(n) The warrants (the "Underwriters' Warrants") to be issued to the
Representative hereunder will be, when issued, duly and validly
authorized and executed by the Company and will constitute valid and
binding obligations of the Company, legally enforceable in accordance
with their terms, and the Company will have duly authorized, reserved
and set aside the shares of its Preferred Stock and Warrants issuable
upon exercise of the Underwriters' Warrants and such stock, when
issued and paid for upon exercise of the Underwriters' Warrants in
accordance with the provisions thereof, will be duly and validly
registered, authorized and issued, fully-paid and non-assessable.
(o) The Company represents that no person has acted as a finder in
connection with the transactions contemplated herein except as set
forth in the registration statement. The Company will indemnify the
Underwriters with respect to any claim for finder's fees in connection
herewith. Except as set forth in the registration statement, the
Company further represents that it has no management or financial
consulting agreements with any person and that, except as set forth in
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the Registration statement and in the Prospectus or otherwise
disclosed to the Representative in writing prior to the date hereof,
no promoter, officer, director, consultant or shareholder of the
Company is directly or indirectly, affiliated or associated with an
NASD member broker-dealer.
2. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 500,000 shares of
Preferred Stock and 1,500,000 Warrants severally and not jointly, to the several
underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase the number of shares of the Firm Stock set opposite that Underwriter's
name in Schedule 1 hereto. Each Underwriter shall be obligated to purchase from
the Company that number of shares of the Firm Stock which represents the same
proportion of the number of shares of the Firm Stock to be sold by the Company,
as the number of shares of the Firm Stock set forth opposite the name of such
Underwriter in Schedule 1 represents of the total number of shares of the Firm
Stock to be purchased by all of the Underwriters pursuant to this Agreement. The
respective purchase obligations of the Underwriters with respect to the Firm
Stock shall be rounded among the Underwriters to void fractional shares, as the
Representative may determine.
In addition, the Company grants to the Underwriters an option to purchase
up to 75,000 shares of the Preferred Stock and 225,000 Warrants (the "Option
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Stock", as previously defined). Such option is granted solely for the purpose of
covering over-allotments in the sale of Firm Stock and is exercisable as
provided in Section 4 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set opposite the name of such Underwriters in Schedule 1
hereto. The respective purchase obligations of each Underwriters with respect to
the Option Stock shall be adjusted by the Representative so that no Underwriter
shall be obligated to purchase Option Stock other than 100 share amounts. The
price of both the Firm Stock and any Option Stock shall be $9.00 per share of
Preferred Stock and $0.09 Per Warrant which represents the public offering price
of $10.00 per share of Preferred Stock and $0.10 per Warrant less an
underwriting discount of ten percent. All or any portion of such discount may be
reallowed by you for sale through licensed securities dealers who are members in
good standing of the NASD. Notwithstanding anything contained herein to the
contrary, Global individually and not as Representative, may purchase all or any
part of the Option Stock and is not obligated to offer the Option Stock to the
other Underwriters.
The Company is not obligated to deliver any of the Stock to be delivered on
the First Delivery Date or the Second Delivery Date (as hereinafter defined), as
the case may be, except upon payment for all the Stock to be purchased on such
Delivery Date as provided herein.
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3. Offering of Stock by the Underwriters. Upon authorization by the
Representative of the release of the Firm Stock, the several Underwriters
proposed to offer the Firm Stock for sale upon the terms and conditions set
forth in the Prospectus; provided, however, that no Stock registered pursuant to
the Rule 462(b) Registration Statement, if any, shall be offered prior to the
Effective Time thereof.
4. Delivery of and Payment for the Stock. Delivery of and payment for the
Firm Stock shall be made at the office of counsel for the Representative, Mound,
Cotton & Xxxxxx, at Xxx Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
A.M., New York City time, on the third full business day following the date of
this Agreement or at such other date or place as shall be determined by
agreement between the Representative and the Company. This date and time are
sometimes referred to as the "First Delivery Date." On the First Delivery Date,
the Company shall deliver or cause to be delivered certificates representing the
Firm Stock to the Representative for the account of each Underwriter against
payment to or upon the order of the Company of the purchase price by bank wire,
certified or official bank check or checks payable in New York Clearing House
(same-day) funds. In making payment to the Company, the Representative may first
deduct all sums due to it for the balance of the non-accountable expense
allowance and under the Financial Consulting Agreement entered into between the
Company and Representative in November 1996. Time shall be of the essence, and
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delivery at the time and place specified pursuant to this Agreement is further
condition of the obligation of each Underwriter hereunder. On the First Delivery
Date, the Company shall deliver in respect of the Firm Stock one certificate
evidencing all of the shares of such series of securities being sold on the
First Delivery Date registered in the name of _____________________, as nominee
for The Depository Trust Company ("DTC"). Interests in the Firm Stock will be
represented by book entries on the records of DTC as the Underwriters may
request not less than two full business days in advance of the First Delivery
Date. For the purpose of expediting the checking and packaging of the
certificates for the Firm Stock, the Company and the Selling Stockholders shall
make the certificates representing the Firm Stock available for inspection by
the Representative in New York, New York, not later than 2:00 P.M., New York
City time, on the business day prior to the First Delivery Date.
At any time on or before the forty-fifth day after the date of this
Agreement the option granted in Section 2 may be exercised by written notice
being given to the Company by the Representative. Such notice shall set forth
the aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representative, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
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be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes each referred to as a "Delivery Date".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the Representative
and the Company) at 10:00 A.M., New York City time, on the Second Delivery Date.
On the Second Delivery Date, the Company shall deliver or cause to be delivered
the certificates representing the Option Stock to the Representative for the
account of each Underwriter against payment to or upon the order of the Company
of the purchase price by bank wire, certified or official bank check or checks
payable in New York Clearing House (same-day) funds. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. On the
Second Delivery Date, the Company shall deliver in respect of the Option Stock
one certificate evidencing all of the shares of such series of securities being
sold on the Second Delivery Date registered in the manme of _______________as
nominee for DTC. For the purpose of expediting the checking and packaging of the
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certificates for the Option Stock, the Company shall make the certificates
representing the Option Stock available for inspection by the Representative in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the Second Delivery Date.
(e) At the time of making payment for the Firm stock, the Company also
hereby agrees to sell to the Representative Underwriters' Warrants to purchase
up to 50,000 shares of Preferred Stock and 150,000 Warrants at an aggregate
purchase price of $10.00. Each Underwriters' Warrant shall entitle the owner
thereof to purchase one Preferred Stock of the Company at an exercise price of
$13.00 and one Warrant at $0.13 per Warrant. The Preferred Stock and Warrants
shall be similar in all respects to the Preferred Stock and Warrants sold to the
public. Such Underwriters' Warrants are to become exercisable upon the
expiration of one year from the Effective Date, and shall remain exercisable for
four years thereafter, such warrants may be transferred only to officers of
partners of the Underwriters and selling group members and their officers or
partners. The Underwriters' Warrants shall contain such other terms and
provisions as may be set forth in agreements with respect thereto (the
"Underwriters' Warrants Agreements") executed and delivered by the Company and
you simultaneously with the execution and delivery of this Agreement. The
Underwriters' Warrant Agreements shall provide that the exercise price and the
number and type of securities issuable upon exercise thereof shall be adjusted
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upon the occurrence of certain events. As provided in the Underwriters' Warrant
Agreements, you may designate that the Underwriters' Warrants be issued in
varying amounts directly to your bona fide officers and not to you. Such
designation will be made by you only if you determine that such issuances would
not violate the interpretations of the NASD relating to the review of corporate
financing arrangements. The holders of the Underwriters' Warrants will be
entitled to the registration rights set forth in the Underwriters' Warrant
Agreements.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Rule 462(b) Registration Statement, if necessary, in a
form approved by the Representative and to file such Rule 462(b)
Registration Statement with the Commission on the date hereof; to
prepare the Prospectus in a form approved by the Representative and to
file such Prospectus pursuant to Rule 424(b) under the Securities Act
not later than 10:00 A.M., New York City time, the day following the
execution and delivery of this Agreement; to make no further amendment
or any supplement to the Registration Statements or to the Prospectus
prior to the Second Delivery Date except as permitted herein; to
advise the Representative, promptly after it receives notice thereof,
of the time when any amendment to either Registration Statement has
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been filed or becomes effective or any supplement to the Prospectus or
any amended Prospectus has been filed and to furnish the
Representative, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospects, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statements or the Prospectus or for additional information; and, in
the event of the issuance of any stock order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification, to use promptly its
best efforts to obtain its withdrawal;
(b) To furnish promptly to the Representative and to counsel for the
Underwriters a signed copy of each of the Registration Statements as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed
therewith;
(c) To deliver promptly to the Representative in New York City such number
of the following documents as the Representative shall request: (i)
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conformed copies of the Registration Statements as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits other than this Agreement and the computation of per share
earnings) (ii) each Preliminary Prospectus, the Prospectus (not later
than 10:00 A.M., New York City time, of the day following the
execution and delivery of this Agreement) and any amended or
supplemented Prospectus (not later than 10:00 A.M., New York City
time, on the day following the date of such amendment or supplement)
prior to the expiration of nine months after the Effective Time of the
Primary Registration Statement in connection with the offering or sale
of the Stock (or any other securities relating thereto) and if at such
time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the
Prospectus in order to comply with the Securities Act, to notify the
Representative and, upon its request, to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
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copies as the Representative may from time to time reasonably request
of an amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with
sales of any of the Stock at any time nine months or more after the
Effective Time of the Primary Registration Statement upon the request
of the Representative but at the expense of such Underwriter, to
prepare and deliver to such Underwriter as many copies as the
Representative may from time to time reasonably request of an amended
or supplemented Prospectus complying with Section 10(a)(3) of the
Securities Act; (d) To file promptly with the Commission any amendment
to the Registration Statements or the Prospectus or any supplement to
the Prospectus that may, in the judgment of the Company or the
Representative, be required by the Securities Act or requested by the
Commission; (e) Prior to filing with the Commission any (i) amendment
to either of the Registration Statements or supplement to the
Prospectus or (ii) any Prospectus pursuant to Rule 424 of the Rules
and Regulations, to furnish a copy thereof to the Representative and
counsel for the Underwriters and obtain the consent of the
Representative to the filing:
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(f) As soon as practicable after the Effective Date of the Primary
Registration Statement, to make generally available to the Company's
security holders and to deliver to the Representative an earnings
statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule
158); (g) For a period of five years following the Effective Date of
the Primary Registration Statement, to furnish to the Representative
copies of all materials furnished by the Company to its shareholders
and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange
upon which the Common, Preferred Stock or Warrants may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder; (h) Promptly from time to time to take such
action as the Representative may reasonably request to qualify the
Stock for offering and sale under the securities laws of such
jurisdictions as the Representative may request and to comply with
such laws so as to permit the continuance of sales and dealings
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therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; (i) For a period of two years
from the date of the Prospectus, not to offer for sale, sell or
otherwise dispose of (or enter into any transaction which is designed
to, or could be expected to, result in the disposition or purchase by
any person of), directly or indirectly, any shares of Preferred Stock,
Common Stock or Warrants (other than the Stock and shares issued
pursuant to employee benefit plans, qualified stock option plans or
other employee compensation plans existing on the date hereof or
pursuant to currently outstanding options, warrants or rights), or
sell or grant options, rights or warrants with respect to any shares
of Common Stock or preferred stock (other than the grant of options
pursuant to option plans existing on the date hereof), without the
prior written consent of the Representative; and to cause each officer
and director of the Company to furnish to the Representative, prior to
the First Delivery Date, a letter or letters, in form and substance
satisfactory to counsel for the Underwriters, pursuant to which each
person shall agree not to offer for sale, sell or otherwise dispose of
(or enter into any transaction which is designed to, or could be
expected to, result in the disposition or purchase by any person of),
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directly or indirectly, any shares of Preferred Stock, Common Stock or
Warrants for a period of two years from the date of the Prospectus,
without the prior written consent of the Representative; (j) Prior to
filing with the Commission any reports on Form SR pursuant to Rule 463
of the Rules and Regulations, to furnish a copy thereof to the counsel
for the Underwriters and receive and consider its comments thereon,
and to deliver promptly to the Representative a signed copy of each
report on Form SR filed by it with the Commission; (k) To apply the
net proceeds from the sale of the Stock being sold by the Company as
set forth in the Prospectus; and (l) To take such steps as shall be
necessary to ensure that neither the Company nor any subsidiary shall
become an "investment company" within the meaning of such term under
the Investment Company Act of 1940 and the rules and regulations of
the Commission thereunder. (m) For a period of five years from the
Effective Date of the Registration Statement, the Representative shall
have the right to designate one person as a member to the Board of
Directors of the Company, who shall be invited to and have the right
to attend every meeting of the Board of Directors together with the
right to vote. Such member will be reimbursed for expenses, including
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travel, and receive compensation in the same amount as any other
member of the Board of Directors and will be indemnified by the
Company against any claims arising out of his participation at
meetings of the Board of Directors. During such period, the Company
will hold at least four meetings per year of its Board of Directors.
(n) Until such time as the securities of the Company are listed on the
New York Stock Exchange or the American Stock Exchange (not including
The Emerging Growth Company List) but in no event more than three
years from the Effective Date, the Company shall retain a company
reasonably acceptable to the Representative, to prepare a post
registration blue sky market survey for the Representative for
distribution to market makers. Such survey shall be provided to the
Representative monthly with the first survey delivered to it as soon
as practicable after the completion of the public offering. The cost
of the first year's survey will not exceed $5,000. In lieu of the
foregoing, the Company may cause its legal counsel to provide the
Representative with a survey to be updated at least monthly. (o) The
Company will use its best efforts to obtain liability insurance at
reasonable costs insuring its directors and officers against any
liabilities asserted against them in connection with the preparation
for and the closing of the public offering which is the subject of
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this Agreement and the initial public offering which transpired in
July 1996. (p) The Company, for a period of at least three years
following the public offering, shall retain the services of a
financial public relations firm(s) reasonably satisfactory to the
Representative, said agreement(s) to commence no later than 90 days
after the Closing of the public offering. During this time period, the
Company and its officers and directors will not hold discussions with
any member of the news media, issue news releases or permit other
publicity about the Company concerning financial information or the
occurrence of material events without the approval of the Company's
counsel and for the period from the date hereof and ending at the end
of the period for which a prospectus must be delivered, the Company
will obtain the approval of the Underwriters' counsel concerning all
of the above matters. During such period, the Company will deliver to
the Representative all press releases in advance to your Investment
Banking Department (Attention: Xxxxxx XxXxxxxxx) and once released,
final copies of such news releases or other publicity, in any medium,
related to the Company will be delivered to you.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
-26-
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statements and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statements as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of reproducing and distributing this Agreement;
(e) the costs of distributing the terms of agreement relating to the
organization of the underwriting syndicate and selling group to the members
thereof by mail, telex or other means of communication; (f) the costs of
delivering and distributing the Custody Agreements and the Powers of Attorney,
if any; (g) the filing fees incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of sale of the
Stock; (h) the fees and expenses of qualifying the Stock under the securities
laws of the several jurisdictions as provided in Section 5(h) and of preparing,
printing and distributing a Blue Sky Memorandum (including related fees and
expenses of counsel to the Underwriters) (i) the expense of placing one or more
"tombstone" advertisements or promotional materials as directed by you
(provided, however, that the aggregate amount thereof shall not exceed $20,000)
and of offering memorabilia; (j) all costs and expenses associated with due
diligence meetings and presentations (including the payment for road show
-27-
conference centers). Further, the Company shall be responsible for all legal
fees and expenses incurred with regard to the post registration Blue Sky Market
Survey and qualification process; and (i) all other costs and expenses incident
to the performance of the obligations of the Company.
In addition, the Company will pay to the Underwriters a non-accountable
expense allowance in an amount equal to 3% of the gross proceeds derived from
the sale of the Stock, of which $50,000 has been paid and the balance of which
shall be payable at the First Delivery Date provided, however, that in the event
that no First Delivery Date shall be held, the Company in lieu of such payment
shall reimburse the Representative in full (up to a maximum of $90,000) for its
reasonable out-of-pocket expense, including, without limitation, its legal fees
and disbursements, and the Underwriters shall reimburse the Company if and to
the extent that such expenses are less than the $50,000 previously
advanced amount with respect to such expenses. The non-accountable expense
allowance shall be payable to the Underwriters based on their pro rata
participation in the offering which is Ninety (90%) to Global and
ten percent (10%) to Suncoast Capital Corp., the Co-Manager.
7. Conditions of Underwriters' Obligations. The respective obligations of
the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the Company its respective obligations hereunder,
and to each of the following additional terms and conditions:
-28-
(a) The Rule 462(b) Registration Statement, if any, and the Prospectus
shall have been timely filed with the Commission in accordance with
Section 6(a); no stop order suspending the effectiveness of either of
the Registration Statements or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for
inclusion of additional information in either of the Registration
Statements or the Prospectus or otherwise shall have been complied
with.
(b) No Underwriter shall have discovered and disclosed to the Company on
or prior to such Delivery Date that the Registration Statement either
of the Registration Statements or the Prospectus or any amendment or
supplement thereto contains any untrue statement of a fact which, in
the opinion of counsel for the Underwriters, is material or omits to
state any 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.
-29-
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Custody
Agreements, the Powers of Attorney, the Stock, the Registration
Statements and the Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all respects to counsel for the
Underwriters and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable
them to pass upon such matters. (d) Xxxx X. Agron, Esq. shall have
furnished to the Representative his written opinion, as counsel to the
Company, addressed to the Underwriters and dated such Delivery Date,
in form and substance satisfactory to the Representative, to the
effect that:
(i) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which
-30-
their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and have
all power and authority necessary to own or hold their respective
properties and conduct the businesses in which they are engaged;
(ii) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the
Company (including the shares of Stock being delivered on such
Delivery Date) have been duly and validly authorized and issued,
are fully paid and non-assessable and conform to the description
thereof contained in the Prospectus; and all of the issued shares
of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued and are fully paid,
non-assessable and (except for directors' qualifying shares) are
owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims;
(iii)There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any
shares of the Stock pursuant to the Company's charter or by-laws
or any agreement or other instrument known to such counsel;
-31-
(iv) The Company and each of its subsidiaries have good and marketable
title in fee simple to all real property owned by them, in each
case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus or such as do not
materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries; and all real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries;
(v) To the best of such counsel's knowledge, there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or asset of
the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
might have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations,
-32-
business or prospects of the Company and its subsidiaries; and,
to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;
(vi) The Primary Registration Statement was declared effective under
the Securities Act as of the date and time specified in such
opinion, the Rule 462(b) Registration Statement, if any, was
filed with the Commission on the date specified therein, the
Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and no
stop order suspending the effectiveness of either of the
Registration Statements has been issued and, to the knowledge of
such counsel, no proceeding for that purpose is pending or
threatened by the Commission;
(vii)The Registration Statements, as of their respective Effective
Dates, and the Prospectus, as of its date, and any further
amendments or supplements thereto, as of their respective dates,
make by the Company prior to such Delivery Date (other than the
financial statements and other financial data contained therein,
-33-
as to which such counsel need express no opinion) complied as to
form in all material respects with the requirements of the
Securities Act and the Rules and Regulations;
(viii) To the best of such counsel's knowledge, there are no contracts
or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statements by
the Securities Act or by the Rules and Regulations which have not
been described or filed as exhibits to the Registration
Statements or incorporated therein by reference as permitted by
the Rules and Regulations;
(ix) This Agreement has been duly authorized, executed and delivered
by the Company;
(x) The issue and sale of the shares of Stock being delivered on such
Delivery Date by the Company and the compliance by the Company
with all of the provisions of this Agreement and the consummation
of the transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its subsidiaries
-34-
is a party or by which the Company or any of its subsidiaries is
bound or to which any of the properties or assets of the Company
or any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries or any statute
or any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets; and, except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act and applicable state securities laws in connection
with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby; and
(xi) To the best of such counsel's knowledge, there are no contracts,
agreements or understandings between the Company and any person
-35-
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to
any securities of the Company owned or to be owned by such person
or to require the Company to include such securities in the
securities registered pursuant to the Registration Statements or
in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities
Act.
In rendering such opinion, such counsel may (i) state that their opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Texas and that such counsel is not admitted in the State of Texas and (ii) in
giving the opinion referred to in Section 9(d)(iv), state that no examination of
record titles for the purpose of such opinion has been made, and that they are
relying upon a general review of the titles of the Company and its subsidiaries,
upon opinions of local counsel and abstracts, reports and policies of title
companies rendered or issued at or subsequent to the time of acquisition of such
property by the Company or its subsidiaries, upon opinions of counsel to the
lessors of such property and, in respect of matters of fact, upon certificates
or officers of the Company or its subsidiaries, provided that such counsel shall
state that they believe that both the Underwriters and they are justified in
-36-
relying upon such opinions, abstracts, reports, policies and certificates. Such
counsel shall also have furnished to the Representative a written statement,
addressed to the Underwriters and dated such Delivery Date, in form and
substance satisfactory to the Representative, to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis (although the
Company is also represented by its General Counsel, has acted as counsel to the
Company in connection with previous financing transactions and has acted as
counsel to the Company in connection with the preparation of the Registration
Statements, and (y) based on the foregoing, no facts have come to the attention
of such counsel which lead them to believe that the Registration Statements, as
of their respective Effective Dates, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading, or
that the Prospectus contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statement therein, in light of the circumstances under which they were
made, not misleading. The foregoing opinion and statement may be qualified by a
statement to the effect that such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statements or the Prospectus except for that statements made in the
Prospectus under the caption, "Description of Preferred Stock", insofar as such
statements relate to the Stock and concern legal matters.
-37-
(e) At the time this Agreement is executed, and on the First and Second
Delivery Dates you shall have received letters from Akin, Doherty, Xxxxx &
Xxxxx, P.C. independent public accountants for the Company addressed to
you, as Representative of the Underwriters, and dated, respectively, as of
the date of this Agreement and as of the First or Second Delivery Date, in
form and substance satisfactory to the Representative, to the effect that:
(i) They are independent public accountants with respect to the Company
within the meaning of the Act and the applicable published Rules and
Regulations of the Commission thereunder;
(ii) Stating that in their opinion, the financial statements and schedules
of the Company included in the Registration Statement and Prospectus
and covered by their report therein comply as to form in all material
respects with the applicable accounting requirements of the Act and
the 1934 Act and the applicable published Rules and Regulations of the
Commission issued thereunder;
(iii)On the basis of the procedures (but not an audit made in accordance
with generally accepted auditing standards) (1) consisting of a
reading of the latest available interim financial statements of the
-38-
Company (a copy of which shall be attached to such letter), (2) a
reading of the minutes of meetings and consents of the stockholders
and the Board of Directors of the Company and the Committees of such
boards subsequent to the date of the most recent audited balance sheet
of the Company and included in the Registration Statement and the
Prospectus, as set forth in the minute books of the Company, (3)
inquiries of officers and other employees of the Company responsible
for financial and accounting matters of the Company, with respect to
transactions and events subsequent to the date of the most recent
audited balance sheet of the Company included in the Registration
Statement and the Prospectus, and other specified procedures and
inquiries to a date not more than five days prior to the date of such
letter, nothing has come to their attention that would cause them to
believe that (a) the unaudited financial statements and schedules of
the Company included in the Registration Statement and Prospectus do
not comply as to form in all material respects with the applicable
-39-
accounting requirements of the Act and the Exchange Act and the
applicable published Rules and Regulations of the Commission
thereunder, or that such unaudited financial statements are not fully
presented in accordance with generally accepted accounting principles
except to the extent that certain footnote disclosures have been
omitted in accordance with applicable rules of the Commission under
the Exchange Act applied on a basis substantially consistent with that
Statement and the Prospectus; (b) with respect to the period
subsequent to the date of the most recent balance sheet of the Company
included in the Registration Statement and the Prospectus, there were,
as of the date of the most recent available monthly financial
statements of the Company and its subsidiaries, if any, and as of a
specified date not more than five days prior to the date of such
letter, any changes in the capital or long-term indebtedness of the
Company or any decrease in the net current assets or increase in
shareholders' deficit of the Company, in each case as compared with
the amounts shown in the most recent balance sheet included in the
Registration Statement and the Prospectus, except for changes, or
-40-
decreases or increases that the Registration Statement and the
Prospectus disclose have occurred or may occur or which are set forth
in such letter; or (c) that during the period from the date following
the date of the most recent balance sheet of the Company and its
subsidiaries included in the Registration Statement and the Prospectus
to the Date of the most recent available monthly financial statements
of the Company, if any, and to a specified date not more than five
days prior to the date of such letter, there was any decrease, as
compared with the corresponding period in the prior fiscal year, in
total revenues, or total or per share net income, except for decreases
which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter and (d)
stating percentages of revenues and earnings, and other financial
information pertaining to the Company set forth in the Registration
Statement and the Prospectus, which have been specified by you prior
to the date of this Agreement, to the extent that such amounts,
numbers, percentages and information may be derived from the general
-41-
accounting and financial records of the Company or from schedules
furnished by the Company, and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate
procedures specified by you (which procedures do not constitute an
audit in accordance with generally accepted auditing standards) set
forth in such letter, and found them to be in agreement.
(iv) In addition to the examination referred to in their reports included
in the Registration Statement and the Prospectus and the limited
procedures referred to in clause (iii) above, they have carried out
certain specified procedures, not constituting an audit, with respect
to certain amounts, percentages and financial information which are
under the captions "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Management-Executive
Compensation," "Certain Transactions," "Selected Financial Data,"
"Dilution," and "Risk Factors, " as well as such other financial
-42-
information as may be specified by the Representative, and that they
have compared such amounts, percentages and financial information with
the accounting records of the Company and have found them to be in
agreement.
(f) The Company and the Representative shall be in compliance with an agreement
(the "Financial Consulting Agreement") retaining the Representative to act
as a management and financial consultant to the Company for a one-year
period commencing as of November 1996. The Company has agreed to pay to the
Representative for such consulting services a fee of $75,000 of which
$50,000 has been paid.
(g) The Company shall have furnished to the Representative a certificate, dated
such Delivery Date, of its Chairman of the Board, its President or a Vice
President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the Company in
Section 1 are true and correct as of such Delivery date; the Company
has complied with all its agreements contained herein; and the
conditions set forth in Sections 9(a) and 9(i) have been fulfilled;
and
(ii) They have carefully examined the Registration Statements and the
Prospectus and, in their opinion (A) the Registration Statements, as
-43-
of their respective Effective Dates, and the Prospectus, as of each of
the Effective Dates, did not include any untrue statement of a
material fact and did not omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date of the Primary
Registration Statement, no event has occurred which should have been
set forth in a supplement or amendment to either of the Registration
Statements or the Prospectus.
(h) Neither the Company nor any of its subsidiaries shall have sustained since
the date of the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (ii) since such date
there shall not have been any change in the capital stock or long-term debt
of the Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
-44-
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Representative,
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Stock being
delivered on such Delivery Date on the terms and in the manner contemplated
in the Prospectus. (i) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i) trading
in securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal
or state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
-45-
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States) which has a material and adverse effect on
the securities markets generally as to make it, in the judgment of a
majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Stock
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
All opinions, letters, evidence and certificates 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 for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers and employees and each person, if any, who controls any
Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Stock), to which
that Underwriter, officer, employee or controlling person may become
-46-
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained
(A) in any Preliminary Prospectus, either of the Registration Statements or
the Prospectus, or in any amendment or supplement thereto, or (B) in any
blue sky application or other documents prepared or executed by the Company
(or based upon any written information furnished by the Company)
specifically for the purpose of qualifying any or all of the Stock under
the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any
Preliminary Prospectus, either of the Registration Statements or the
Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to
make the statements therein not misleading or (iii) any act or failure to
act, or any alleged act or failure to act, by an Underwriter in connection
with, or relating in any manner to, the Stock or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters covered by
-47-
clause (i) or (ii) above, and shall reimburse each Underwriter and each
such officer, employee and controlling person promptly upon demand for any
legal or other expenses reasonably incurred by that Underwriter, officer,
employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Company and the Principal Stockholder shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application 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
inclusion therein; and provided further that the Company shall not be
liable in the case of any matter covered by clause (iii) above to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such act or failure to act undertaken or omitted to be
taken by such Underwriter through its gross negligence or wilful
-48-
misconduct. The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to any Underwriter or to any
officer,employee or controlling person of that Underwriter. (c) Each
Underwriter, severally and not jointly, shall indemnify and hold harmless
the Company, its officers and employees, each of its directors and each
person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or
any such director, officer or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, either of the Registration Statements or the
Prospectus, or in any amendment or supplement thereto, or (B) in any Blue
Sky Application or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, either of the Registration Statements or the
Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the
-49-
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company through the Representative by or on
behalf of that Underwriter specifically for inclusion therein, and shall
reimburse the Company and any such director, officer or controlling person
for any legal or other expenses reasonably incurred by the Company or any
such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company or any such director, officer
or controlling person.
(d) Promptly after receipt by an indemnified party under this Section 10 of
notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 10 except to the extent it has been materially prejudiced by such
failure and, provided further, that the failure to notify the indemnifying
-50-
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 10. 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 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 this Section 10 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Representative shall have the
right to employ counsel to represent jointly the Representative and those
other Underwriters and their respective officers, employees and controlling
persons 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 this Section 10 if, in the reasonable judgment of the Representative,
it is advisable for the Representative and those Underwriters, officers,
-51-
employees and controlling persons to be jointly represented by separate
counsel, and in that event the fees and expenses of such separate counsel
shall be paid by the Company. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 10(a), 10(b) and 10(c), shall
use its best efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall (i)
without the prior written consent of the indemnified withheld), settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss of liability by reason of
such settlement or judgment.
-52-
(e) If the indemnification provided for in this Section 10 shall for any reason
be unavailable to or insufficient to hold harmless an indemnified party
under Section 10(a), 10(b) or 10(c) in respect to any loss, claim, damage
or liability, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be 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 Stock or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) about but also the relative fault of the
Company on the one hand and the Underwriters on the other with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement
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(before deducting expenses) received by the Company on the one hand, and
the total underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Stock purchased under this
Agreement, on the other hand, bear to the total gross proceeds from the
offering of the shares of the Stock under this Agreement in each case as
set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 10(e) were to
be determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above
in this Section 10(e) shall be deemed to include, for purposes of this
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Section 10(e), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10(e), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Stock underwritten by it and
distributed to the public was offered to the public exceeds the amount of
any damages which such Underwriter has otherwise paid or become liable to
pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person 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. The Underwriters' obligations to contribute as provided
in this Section 10(e) are several in proportion to their respective
underwriting obligations and not joint.
(f) The Underwriters severally confirm that the statements with respect to the
public offering of the Stock set forth on the cover page of, and under the
caption "Underwriting" in, the Prospectus are correct and constitute the
only information furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statements and
the Prospectus.
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9. Defaulting Underwriters. If, on either Delivery Date, any Underwriter
defaults in the performance of its obligations under this Agreement, the
remaining non-defaulting Underwriters shall be obligated to purchase the Stock
which the defaulting Underwriter agreed but failed to purchase on such Delivery
Date in the respective proportions which the number of shares of the Firm Stock
set opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 3. If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representative who so agree, shall have the right, but shall
not be obligated, to purchase, in such proportion as may be agreed upon among
them, all the Stock to be purchased on such Delivery Date. If the remaining
Underwriters or other underwriters satisfactory to the Representative do not
elect to
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purchase the shares which the defaulting Underwriter or Underwriters agreed but
failed to purchase on such Delivery date, this Agreement (or, with respect to
the Second Delivery Date, the obligation of the Underwriters to purchase, and of
the Company to sell, the Option Stock) shall terminate without liability on the
part of any non-defaulting Underwriter or the Company except that the Company
will continue to be liable for the payment of expenses to the extent set forth
in Section 6 and 11. As used in this Agreement, the term "Underwriter" includes,
for all purposes of this Agreement unless the content requires otherwise, any
party not listed in Schedule 1 hereto who, pursuant to this Section 11,
purchases Firm Stock which a defaulting Underwriter agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representative or the Company may postpone
the First Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representative by notice given to and received by the Company
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prior to delivery of and payment for the Firm Stock if, prior to that time, any
of the events described in Sections 7(h) or 9(i) shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the Company shall fail
to tender the Stock for delivery to the Underwriters for any reason permitted
under this Agreement, or (b) the Underwriters shall decline to purchase the
Stock for any reasons permitted under this Agreement (including the termination
of this Agreement pursuant to Section 10), the Company shall reimburse the
Underwriters for the fees and expenses of their counsel and for such other
out-of-pocket expenses as shall have been incurred by them in connection with
this Agreement and the proposed purchase of the Stock, and upon demand the
Company shall pay the full amount thereof to the Representative. If this
Agreement is terminated pursuant to Section 9 by reason of the default of one or
more Underwriters, the Company shall not be obligated to reimburse any
defaulting Underwriter on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to Global Equities Group, Inc., Five Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxxx Xxxxxxx and Xxxxxx
XxXxxxxxx;
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(b) if to the Company, shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Primary
Registration Statement, Attention: Xxxxxxx Xxxxxxxx, Chairman and Chief
Executive Officer; provided, however, that any notice to an Underwriter
pursuant to Section 8(d) shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
acceptance telex to the Representative, which address will be supplied to
any other party hereto by the Representative upon request. Any such
statements, requests, notices or agreements shall take effect at the time
of receipt thereof. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the
Underwriters by the Representative.
13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the Underwriters, the Company and their
respective personal representatives and successors. This Agreement and the terms
and provisions hereof are for the sole benefit of only those persons, except
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that (A) the representations, warranties, indemnities and agreements of the
Company contained in this Agreement shall also be deemed to be for the benefit
of the officers and employees of each Underwriter and the person or persons, if
any, who control each Underwriter within the meaning of Section 15 of the
Securities Act and (B) the indemnity agreement of the Underwriters contained in
Section 8(c) of this Agreement shall be deemed to be for the benefit of
directors, officers and employees of the Company and any person controlling the
Company within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to given any person, other than the
persons referred to in this Section 15, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations, warrants and
agreements of the Company and the Underwriters contained in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Stock and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any of them
or any person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary". For purposes
of this Agreement, (a) "business day" means any day on which the NASDAQ Stock
Market is open for trading and (b) "subsidiary" has the meaning set forth in
Rule 405 of the Rules and Regulations.
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16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between the Company and
the Underwriters, please indicate your acceptance in the space provided for the
purpose below.
Very truly yours,
CLUCKCORP INTERNATIONAL, INC.
By_____________________________
President
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Accepted:
GLOBAL EQUITIES GROUP, INC.
By_____________________________
Xxxxxxx Xxxxxx, President
For itself and as Representative
of the several Underwriters named
in Schedule 1 hereto
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SCHEDULE 1
Shares of
Underwriters Preferred Stock Number of Warrants
Global Equities
Group, Inc.
Co-Manager................
Suncoast Capital
Corp......................
Total 500,000 $1,500,000
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