GRAND COURT LIFESTYLES, INC.
3,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
New York, New York
_______, 1998
Royce Investment Group, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
as Representative of the several Underwriters listed on Schedule B hereto
Ladies and Gentlemen:
Grand Court Lifestyles, Inc., a corporation organized under the laws of the
State of Delaware (the "Company") proposes to issue to the underwriters named in
Schedule B (collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 13 hereof), and
confirms its agreement with the Underwriters with respect to the sale by the
Company and the purchase by the Underwriters of an aggregate of three million
(3,000,000) common shares ("Shares") of the Company, par value $.01 per share
("Common Stock"), with the Shares being issued and sold to the Underwriters by
the Company. Such Shares are hereinafter referred to collectively as the "Firm
Securities." Upon your request, as provided in Section 3(b) of this Agreement,
the persons named in Schedule A (the "Selling Stockholders") propose to sell to
the Underwriters up to an additional four hundred fifty thousand (450,000)
shares of Common Stock for the purpose of covering over-allotments, if any, all
in accordance with Schedule A. Such additional shares of Common Stock are
hereinafter referred to collectively as the "Option Securities." The Company
also proposes to issue and sell to Royce Investment Group, as the Representative
of the several Underwriters (the "Representative"), warrants (the
"Representative's Warrants") pursuant to the Representative's Warrant Agreement
dated as of ______________, 1998, between the Company and the Representative
(the "Representative's Warrant Agreement"), for the purchase of an additional
three hundred thousand (300,000) shares of Common Stock. The shares of Common
Stock issuable upon exercise of the Representative's Warrants are hereinafter
referred to collectively as the "Representative's Securities." The aggregate
three million four hundred fifty thousand (3,450,000) shares of Common Stock
(including Common Stock constituting Option Securities) will be separately
tradeable upon issuance. The Firm Securities, the Option Securities, the
-1-
Representative's Warrants, and the Representative's Securities are hereinafter
collectively referred to as the "Securities" and are more fully described in the
Registration Statement and the Prospectus referred to below. The Company
confirms the agreements made by it with the Underwriters with respect to the
Securities and related matters as follows:
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Underwriters as of the date
hereof, and as of the Closing Date (as hereinafter defined) and the
Option Closing Date (as hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration
statement, and an amendment or amendments thereto, on Form S-1
(No. 43331), as well as a registration statement, and an
amendment or amendments thereto, on Form S-1 (No. 333-05955),
collectively, the "Combined Registration Statement", including
the related preliminary prospectus included therein prior to
the time such Combined Registration Statement and any
post-effective amendment to such Combined Registration
Statement becomes effective ("Preliminary Prospectus"), for
the registration of the Firm Securities, the Representative's
Securities and the Option Securities under the Securities Act
of 1933, as amended (the "Act"), which Combined Registration
Statement and amendment or amendments (including
post-effective amendments) have been prepared by the Company
in conformity with the requirements of the Act, and the Rules
and Regulations (as defined below) of the Commission under the
Act. The Company will not file any other amendment thereto to
which the Representative shall have reasonably objected in
writing after having been furnished with a copy thereof.
Except as the context may otherwise require, such Combined
Registration Statement, as amended, on file with the
Commission at the time the Combined Registration Statement
becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed
as a part thereof or incorporated therein (including, but not
limited to those documents or information incorporated by
reference therein) and all information deemed to be a part
thereof as of such time pursuant to paragraph (b) of Rule
430(A) of the Regulations), and all information included in
any post-effective amendments to such Combined Registration
Statement and such post-effective amendment on file with the
Commission at the time the post-effective amendment becomes
effective (including the prospectus, financial statements,
schedules, exhibits and all other documents filed as a part
thereof or incorporated therein (including, but not limited to
those documents or information incorporated by reference
therein) and all information deemed to be a part thereof as of
such time pursuant to paragraph (b) of Rule 430(A) of the
-2-
Regulations), is hereinafter called the "Registration
Statement," and the form of prospectus in the form first filed
with the Commission pursuant to Rule 424(b) of the
Regulations, is hereinafter called the "Prospectus." For
purposes hereof, "Rules and Regulations" mean the rules and
regulations adopted by the Commission under either the Act or
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or
Prospectus or any part of any thereof and no proceedings for a
stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been
instituted or are pending or, to the Company's knowledge, are
threatened. Each of the Preliminary Prospectus, the
Registration Statement and Prospectus at the time of filing
thereof conformed with the requirements of the Act and the
Rules and Regulations, and none of the Preliminary Prospectus,
the Registration Statement or Prospectus at the time of filing
thereof contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading,
except that this representation and warranty does not apply to
(i) statements made in reliance upon and in conformity with
written information furnished to the Company with respect to
the Underwriters by or on behalf of the Underwriters expressly
for use in such Preliminary Prospectus, Registration Statement
or Prospectus, or (ii) statements made in any Preliminary
Prospectus which were revised and/or corrected in any
subsequent Preliminary Prospectus or the Registration
Statement or Prospectus, and which subsequent Preliminary
Prospectus or Prospectus was recirculated to all recipients of
the Preliminary Prospectus which had been revised in
accordance with the Rules and Regulations.
(c) When the Registration Statement was declared effective and at
all times subsequent thereto up to the Closing Date and the
Option Closing Date, if any, and during such longer period as
the Prospectus may be required to be delivered in connection
with sales by the Underwriters or a dealer, the Registration
Statement and the Prospectus, as amended or supplemented as
required, will contain all statements which are required to be
stated therein in accordance with the Act and the Rules and
Regulations, and will conform in all material respects to the
requirements of the Act and the Rules and Regulations; neither
the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue
statement of a material fact or omit to state any material
-3-
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
the statements where made or omitted, not misleading;
provided, however, that this representation and warranty does
not apply to statements made or statements omitted in reliance
upon and in conformity with information furnished to the
Company in writing by or on behalf of the Underwriters
expressly for use in the Preliminary Prospectus, Registration
Statement or Prospectus or any amendment thereof or supplement
thereto.
(d) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation. The Company's subsidiaries are sometimes
hereafter individually referred to as a "Subsidiary" and
collectively referred to as the "Subsidiaries," and when
reference is made to a Subsidiary it also includes any general
partnership, limited partnership or limited liability company
whose financial statements have been consolidated with those
of the Company in the consolidated financial statements of the
Company that are included in each Preliminary Prospectus, the
Registration Statement or the Prospectus. Except as set forth
in the Prospectus, the Company does not own or control,
directly or indirectly, any corporation, partnership, trust,
joint venture or other business entity other than the
subsidiaries listed in Exhibit 21 of the Registration
Statement. Each of the Company and any Subsidiary is duly
qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations
require such qualification or licensing, except where the
failure to be so qualified or licensed would not have a
material and adverse effect on the condition, financial or
otherwise, or the earnings, position, business affairs,
operations, properties, or results of operations of the
Company and the Subsidiaries, taken as a whole (the
"Business"). Each of the Company and any Subsidiary has all
requisite power and authority (corporate and other), and has
obtained any and all necessary authorizations, approvals,
orders, licenses, certificates, franchises and permits of and
from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its
properties and conduct its business as described in the
Prospectus, except where the failure to have such
authorizations, approvals, orders, licenses, certificates,
franchises or permits would not have a material and adverse
effect on the Business; each of the Company and any Subsidiary
is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates,
franchises and permits and all federal, state, local and
foreign laws, rules and regulations; and neither the Company
-4-
nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such
authorization, approval, order, license, certificate,
franchise, or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the Business; the disclosures
in the Registration Statement concerning the effects of
federal, state, local, and foreign laws, rules and regulations
on each of the Company's and any Subsidiary's businesses as
currently conducted and as contemplated are correct in all
material respects and do not omit to state a material fact
necessary to make the statements contained therein not
misleading in light of the circumstances in which they were
made.
(e) At the dates as of which such information is set forth in the
Prospectus, and after giving effect to the stock split
described in the Prospectus, the Company had a duly
authorized, issued and outstanding capitalization as set forth
in the Prospectus, under the headings "Capitalization" and
"Description of Capital Stock" and will have the adjusted
capitalization set forth therein on the Closing Date and on
the Option Closing Date, if any, based upon the assumptions
set forth therein, and neither the Company nor any Subsidiary
is a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock,
rights, warrants, options or other securities, except for this
Agreement, the Representative's Warrant Agreement and as
described in the Prospectus. The Securities and all other
securities issued or issuable by the Company conform or, when
issued and paid for, will conform, in all material respects to
all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and
outstanding shares of capital stock of the Company and all
Subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable and the holders thereof have
no rights of rescission with respect thereto, and are not
subject to personal liability by reason of being such holders;
and none of such securities was issued in violation of the
preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the Company
or any Subsidiary. The Firm Securities, the Representative's
Warrant and the Option Securities are not and will not be
subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid
for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable and will conform
in all material respects to the description thereof contained
in the Prospectus; the holders thereof will not be subject to
any liability solely as such holders; all corporate action
required to be taken for the authorization, issuance and sale
-5-
of the Securities has been duly and validly taken; and the
certificates representing the Securities will be in due and
proper form.
(f) The consolidated financial statements of the Company and each
Subsidiary together with the related notes and schedules
thereto, included in the Registration Statement and the
Prospectus fairly present the consolidated financial position,
income, changes in cash flow, changes in stockholders' equity
and the results of operations of the Company and each
Subsidiary at the respective dates and for the respective
periods to which they apply and such financial statements have
been prepared in conformity with the Rules and Regulations and
with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved. Except
as disclosed in the Registration Statement and the Prospectus,
there has been no material adverse change or development
involving a material prospective change in the Business,
whether or not arising in the ordinary course of business,
since the date of the financial statements included in the
Registration Statement and the Prospectus and the outstanding
debt, the property, both tangible and intangible, and the
businesses of each of the Company and any Subsidiary taken as
a whole conform in all material respects to the descriptions
thereof contained in the Registration Statement and the
Prospectus. Financial information (including, without
limitation, any pro forma financial information) set forth in
the Prospectus under the headings "Summary Financial Data,"
"Selected Consolidated Financial Data," "Capitalization," and
"Management's Discussion and Analysis of Financial Condition
and Results of Operations," fairly present, on the basis
stated in the Prospectus, the information set forth therein,
and have been derived from or compiled on a basis consistent
with that of the audited consolidated financial statements
included in the Prospectus, and have been prepared in
accordance with the applicable requirements of Regulation S-X
promulgated under the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), and otherwise in accordance with
the Rules and Regulations.
(g) Each of the Company and any of its predecessors in interest
(i) has filed with the appropriate federal, state and local
governmental agencies, and all foreign countries and political
subdivisions thereof, all tax returns which are required to be
filed through the date hereof or has received extensions
thereof; (ii) has paid all federal, state, local, and foreign
taxes shown on such returns and all assessments received by
it, to the extent that the same are material and have become
due, except where the failure to so file or so pay could not
have a material adverse effect on the Business, including, but
not limited to, withholding taxes and amounts payable under
-6-
Chapters 21 through 24 of the Internal Revenue Code of 1986
(the "Code"), and has furnished all information returns it is
required to furnish pursuant to the Code; (iii) has
established adequate reserves for such taxes which are not due
and payable; and (iv) does not have any material tax
deficiency or claims outstanding, proposed or assessed against
it.
(h) No transfer tax, stamp duty or other similar tax is payable by
or on behalf of the Underwriters in connection with (i) the
issuance by the Company of the Securities, (ii) the purchase
by the Underwriters of the Firm Securities from the Company
and the purchase by the Representative of the Representative's
Warrants from the Company, (iii) the consummation by the
Company of any of their obligations under this Agreement, or
(iv) resales of the Firm Securities in connection with the
distribution contemplated hereby.
(i) Except for the absence of policies which are disclosed in the
Prospectus, the Company and each of the Subsidiaries maintain
insurance by insurers of recognized financial responsibility
of the types and in the amounts as the Company and each of the
Subsidiaries believe is prudent and adequate for the business
in which it is engaged and customary in the industry in which
the Company and the Subsidiaries operate, including, but not
limited to, insurance covering property liability, and
insurance covering real and personal property owned or leased
against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which
insurance is in full force and effect. The Company and each of
the Subsidiaries, has delivered to the Underwriters' Counsel
satisfactory summaries of these insurance policies. The
Company has no reason to believe that it and the Subsidiaries
will not be able to renew existing insurance coverage with
respect to the Company and the Subsidiaries as and when such
coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its and the
Subsidiaries' businesses, in either case, at a cost that would
not have a material adverse effect on the Business. None of
the Company and any Subsidiary has failed to file any material
claims, has material disputes with its insurance company
regarding any claims submitted under its insurance policies,
and has not complied in all material respects with all
material provisions contained in its insurance policies where
the failure to do so could reasonably be expected to have a
material adverse effect on the Business.
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding
(including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign,
-7-
pending or threatened against (or circumstances that may give
rise to the same), or involving the properties or business of,
the Company or any Subsidiary which (i) questions the validity
of the capital stock of the Company, this Agreement, the
Representative's Warrant Agreement, or of any action taken or
to be taken by the Company or any Selling Stockholder pursuant
to or in connection with this Agreement or the
Representative's Warrant Agreement, (ii) is required to be
disclosed in the Registration Statement which is not so
disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all
material respects), or (iii) could reasonably be expected to
materially and adversely affect the Business.
(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, to enter
into this Agreement and the Representative's Warrant Agreement
and to consummate the transactions provided for in such
agreements, as applicable; and this Agreement and the
Representative's Warrant Agreement have each been duly and
properly authorized, executed and delivered by the Company as
applicable. Each of this Agreement and the Representative's
Warrant Agreement constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms (except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law), and none of
the Company's issue and sale of the Securities, or the
execution or delivery of this Agreement or the
Representative's Warrant Agreement by the Company, the
performance hereunder and thereunder by the Company, the
consummation of the transactions contemplated herein and
therein by the Company, or the conduct of the Company's
business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto,
conflicts with or will conflict with or results or will result
in any breach or violation of any of the terms or provisions
of, or constitutes or will constitute a default under, or
result in the creation or imposition of any lien of any kind
whatsoever upon, any property or assets (tangible or
intangible) of the Company or any Subsidiary pursuant to the
terms of (i) the certificate of incorporation or by-laws or
the memorandum or articles of association, as applicable, of
the Company or any Subsidiary, (ii) any license, contract,
indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any
other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is or may be
-8-
bound or to which any of their properties or assets (tangible
or intangible) is or may be subject, or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the
Company or any Subsidiary of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or
body (including, without limitation, those having jurisdiction
over environmental or similar matters), domestic or foreign,
having jurisdiction over the Company or any Subsidiary or any
of their respective activities or properties, which could
reasonably be expected to materially and adversely affect the
Business in each of the above instances.
(l) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other
body, domestic or foreign, is required for the issuance and
sale of the Securities pursuant to the Prospectus and the
Registration Statement, the performance of this Agreement and
the Representative's Warrant Agreement and the transactions
contemplated hereby and thereby, including without limitation,
any waiver of any preemptive, first refusal or other rights
that any entity or person may have for the issue and/or sale
of any of the Securities, except such as have been or may be
obtained under the Act or may be required under state
securities or blue sky laws (collectively, "Blue Sky") in
connection with the Underwriters' purchase and distribution of
the Firm Securities and the Option Securities, if any, and the
Representative's purchase of the Representative's Warrants to
be sold by the Company hereunder.
(m) All executed agreements, contracts or other documents or
copies of executed agreements, contracts or other documents
filed as exhibits to the Registration Statement to which the
Company, any Subsidiary, or any Selling Stockholder is a party
or by which any of them may be bound or to which any of their
assets, properties or businesses may be subject, have been
duly and validly authorized, executed and delivered by the
Company, any Subsidiary, or the Selling Stockholders and
constitute the legal, valid and binding agreements of the
Company or any Subsidiary or any Selling Stockholder, as the
case may be, enforceable against the Company or any
Subsidiary, as the case may be, in accordance with their
respective terms (except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application
of equitable principles in any action, legal or equitable, and
except as rights to indemnity or contribution may be limited
by applicable law). The descriptions in the Registration
Statement of such agreements, contracts and other documents
are accurate in all material respects and fairly present the
-9-
information required to be shown with respect thereto by Form
S-1, and there are no contracts or other documents which are
required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits
to the Registration Statement which are not described or filed
as required, and the exhibits which have been filed are
complete and correct copies of the documents of which they
purport to be copies.
(n) Subsequent to the respective dates as of which information is
set forth in the Registration Statement and Prospectus, and
except as may otherwise be indicated or contemplated herein or
therein, neither the Company nor any Subsidiary has (i) issued
any securities or incurred any liability or obligation, direct
or contingent, for borrowed money except in the ordinary
course of business, (ii) entered into any transaction other
than in the ordinary course of business consistent with past
practice, or (iii) declared or paid any dividend with respect
to its capital stock, and there has not been any change in the
capital stock (other than upon the sale of the Firm
Securities), or any material change in the debt (long or short
term) or liabilities, or any material adverse change in the
Business.
(o) Except as disclosed in the Prospectus, no default exists in
the due performance and observance of any term, covenant or
condition of any material license, contract, indenture,
mortgage, installment sale agreement, lease, deed of trust,
voting trust agreement, stockholders' agreement, partnership
agreement, note, loan or credit agreement, purchase order, or
any other material agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement
or instrument to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary may be bound
or to which the property or assets (tangible or intangible) of
the Company or any Subsidiary is subject or affected, except
for such defaults, if any, which individually and in the
aggregate would not have a material adverse effect on the
Business.
(p) Each of the Company and the Subsidiaries has generally enjoyed
a satisfactory employer-employee relationship with its
employees and is in material compliance with all federal,
state, local, and foreign laws and regulations respecting
employment and employment practices, terms and conditions of
employment and wages and hours. Except as disclosed in the
Prospectus, to the Company's knowledge, there are no pending
investigations involving the Company or any Subsidiary, by the
U.S. Department of Labor, or any other foreign or domestic
governmental agency responsible for the enforcement of such
federal, state, local, or foreign laws and regulations. To the
Company's knowledge, there is no unfair labor practice charge
or complaint against the Company or any Subsidiary pending
-10-
before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or
threatened against or involving the Company or any Subsidiary,
or any predecessor entity. No representation question exists
respecting the employees of the Company or any Subsidiary, and
no collective bargaining agreement or modification thereof is
currently being negotiated by the Company or any Subsidiary.
No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of the
Company or any Subsidiary. No labor dispute with the employees
of the Company or, any Subsidiary exists, or, to its
knowledge, is imminent.
(q) Neither the Company nor any Subsidiary maintains, sponsors or
contributes to any program or arrangement that is an "employee
pension benefit plan," an "employee welfare benefit plan," or
a "multiemployer plan" as such terms are defined in Sections
3(2), 3(1) and 3(37), respectively, of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (the
foregoing are collectively, "ERISA Plans"). Neither the
Company nor any Subsidiary maintains or contributes, now or at
any time previously, to a defined benefit plan, as defined in
Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder), if any, has engaged in a "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of
the Code, which could subject the Company or any Subsidiary to
any tax penalty on prohibited transactions and which has not
adequately been corrected. Each ERISA Plan, if any, is in
compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such
ERISA Plan. Determination letters have been received from the
Internal Revenue Services with respect to each ERISA Plan
which is intended to comply with Code Section 401(a), stating
that such ERISA Plan and the attendant trust are qualified
thereunder. Neither the Company nor any Subsidiary has ever
completely or partially withdrawn from a "multiemployer plan."
(r) None of the Company, any Subsidiary, nor any of their
respective employees, directors, stockholders, partners, or
affiliates (within the meaning of the Rules and Regulations)
has taken or will take, directly or indirectly, any action
designed to or which has constituted or which might be
expected to cause or result in, under the Exchange Act, or
otherwise, unlawful stabilization or manipulation of the price
of any security of the Company to facilitate the sale or
resale of the Securities or otherwise.
(s) Except as otherwise disclosed in the Prospectus, none of the
patents, trademarks, service marks, trade names and
copyrights, and applications with respect thereto, and
-11-
licenses and rights to the foregoing presently owned or held
by the Company and any Subsidiary, are in dispute so far as
known by the Company or, are in any conflict with the right of
any other person or entity. To the Company's knowledge, each
of the Company and any Subsidiary (i) owns or has the right to
use, free and clear of all Liens of any kind whatsoever, all
patents, trademarks, service marks, trade names and
copyrights, technology and licenses and rights with respect to
the foregoing, used in the conduct of its business as now
conducted or proposed to be conducted without infringing upon
or otherwise acting adversely to the right or claimed right of
any person, corporation or other entity under or with respect
to any of the foregoing and (ii) except as set forth in the
Prospectus, is not obligated or under any liability whatsoever
to make any payment by way of royalties, fees or otherwise to
any owner or licensee of, or other claimant to, any patent,
trademark, service xxxx, trade name, copyright, know-how,
technology or other intangible asset, with respect to the use
thereof or in connection with the conduct of its business or
otherwise, except for such obligations or liabilities, if any,
which individually and in the aggregate would not have a
material adverse effect on the Business.
(t) Each of the Company and the Subsidiaries has good and
marketable title to, or valid and enforceable leasehold
estates in, all items of real and personal property stated in
the Prospectus to be owned or leased by it free and clear of
all liens, of any kind whatsoever, other than those referred
to in the Prospectus and liens for taxes not yet due and
payable, except for such liens the existence of which does not
materially affect the value of the Company and the
Subsidiaries real and personal property, taken as a whole.
(u) Deloitte & Touche LLP, whose report is filed with the
Commission as a part of the Registration Statement, are
independent certified public accountants as required by the
Act and the Rules and Regulations.
(v) [Intentionally Left Blank.]
(w) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the
nature of a finder's, consulting or origination fee with
respect to the sale of the Securities hereunder or any other
arrangements, agreements, understandings, payments or issuance
with respect to the Company, any Subsidiary or any of their
respective officers, directors, stockholders, partners,
employees or affiliates that may affect the Underwriter's
-12-
compensation, as determined by the National Association of
Securities Dealers, Inc. ("NASD"), other than as described in
the Prospectus.
(x) The Firm Securities and the Option Securities have been
approved for inclusion and quotation on the Nasdaq National
Market (the "Nasdaq NMS").
(y) Neither the Company nor any Subsidiary, nor any of their
respective officers, employees, agents or any other person
acting on behalf of the Company or any Subsidiary has,
directly or indirectly, given or agreed to give any money,
gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer,
supplier, employee or agent, governmental agency (domestic or
foreign) or instrumentality of any government (domestic or
foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be
in a position to help or hinder the business of the Company or
any Subsidiary (or assist the Company or any Subsidiary in
connection with any actual or proposed transaction) which
might subject the Company or any Subsidiary, or any other such
person to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign).
The Company's and each Subsidiary's internal accounting
controls are sufficient to cause the Company and each
Subsidiary to comply with the Foreign Corrupt Practices Act of
1977, as amended.
(z) Except as set forth in the Prospectus, no officer, director,
stockholder or partner of the Company or any Subsidiary, or
any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated under the Rules and Regulations) of any
of the foregoing persons or entities has or has had, either
directly or indirectly (i) an interest in any person or entity
which (A) furnishes or sells services or products which are
furnished or sold or are proposed to be furnished or sold by
the Company or any Subsidiary, or (B) purchases from or sells
or furnishes to the Company or any Subsidiary any goods or
services, or (ii) a beneficial interest in any contract or
agreement to which the Company or any Subsidiary is a party or
by which it may be bound or affected. Except as set forth in
the Prospectus, there are no existing agreements,
arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions,
between or among the Company or any Subsidiary, and any
officer, director, all holders of five percent (5%) or more of
the Common Stock of the Company or of the capital stock or
interests of or in any Subsidiary, or any partner, affiliate
or associate of any of the foregoing persons or entities which
are required to be disclosed in the Prospectus.
-13-
(aa) Any certificate signed by any officer of the Company or any
officer of any Subsidiary, and delivered to the Underwriters
or to the Underwriters' Counsel (as defined herein) shall be
deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(bb) Each of the minute books of the Company and each Subsidiary
has been made available to the Underwriters and contains a
complete summary of all meetings and actions of the directors
and stockholders of the Company and each Subsidiary,
respectively, since the time of its respective incorporation,
and reflects all transactions referred to in such minutes
accurately and fairly in all material respects.
(cc) Except and to the extent described in the Prospectus, no
holders of any securities of the Company or any Subsidiary or
of any options, warrants or other convertible or exchangeable
securities of the Company or any Subsidiary have the right to
include any securities issued by the Company or any Subsidiary
in the Registration Statement or any registration statement to
be filed by the Company or to require the Company to file a
registration statement under the Act and no person or entity
holds any anti-dilution rights with respect to any securities
of the Company or any Subsidiary.
(dd) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of
Florida, Chapter 92-198, An Act Relating to Disclosure of
Doing Business with Cuba, and the Company further agrees that
if it or any affiliate commences engaging in business with the
government of Cuba or with any person or affiliate located in
Cuba after the date of the Registration Statement becomes or
has become effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported or
incorporated by reference in the Prospectus, if any,
concerning the Company's, or any affiliate's, business with
Cuba or with any person or affiliate located in Cuba changes
in any material way, the Company will provide the Department
notice of such business or change, as appropriate, in a form
acceptable to the Department.
(ee) The Company is not now, and immediately after the sale of the
Firm Securities, the Option Securities, if any, and the
Representative's Warrants hereunder, and the application of
the proceeds from such sale as described under the caption
"Use of Proceeds" in the Prospectus, will not be an
"investment company" or a company "controlled by" an
"investment company" within the meaning of such terms under
-14-
the Investment Company Act of 1940, as amended, and the rules
and regulations of the Commission thereunder.
(ff) The Company, and each Subsidiary, and each facility that is
managed by the Company or any Subsidiary, is in compliance
with all federal, state, local or foreign rules, laws,
regulations, ordinances, codes, administrative orders and
common law, and has all necessary licenses and permits,
relating to pollution or protection of human health or
wildlife, the release or threatened release, the use,
distribution, manufacture, processing, storage, treatment and
disposal of toxic substances, toxic wastes, chemicals,
pollutants, contaminants, wastes, medical wastes, hazardous
wastes, hazardous substances, petroleum or petroleum products
and protection of health or the environment (including without
limitation, ambient air, surface water, groundwater,
landsurface or subsurface strata), other than such lack of
compliance or the absence of such licenses and permits the
effect of which does not and would not in the future have a
material adverse effect on the Business (collectively,
"Environmental Laws").
(gg) The Company will not, and will not permit any of its future
subsidiaries to, directly or indirectly, enter into any
transaction or series of related transactions (including, but
not limited to, the sale, purchase, exchange, lease, transfer
or other disposition of any properties, assets or services to,
or the purchase of any property, assets or services from, or
the entry into any contact, agreement, undertaking, loan,
advance or guarantee) with, or for the benefit of, an
Affiliate (an "Affiliate Transaction"), or extend, renew,
waive or otherwise modify the terms of any Affiliate
Transaction entered into prior to the date of issuance of the
Securities unless (i) such Affiliate Transaction is between or
among the Company and its wholly-owned subsidiaries, or (ii)
the terms of such Affiliate Transaction are fair and
reasonable; provided, however, notwithstanding anything to the
contrary contained herein, the Company may issue securities
pursuant to the exercise of outstanding options and warrants
on the terms in effect and described in the Prospectus
relating to the Securities. All Affiliate Transactions
approved in good faith by the Board of Directors of the
Company and a minimum of two disinterested and independent
outside directors thereof, with such approval evidenced by a
Board Resolution, which refers to the criteria set forth in
this Section 1(gg), shall be deemed to meet the criterion set
forth in (i) or (ii) above. "Affiliate" is defined in
accordance with Rule 405 promulgated under the Rules and
Regulations.
2. Representations and Warranties of the Selling Stockholders. The Selling
Stockholders, severally and not jointly, represent and warrant to, and
-15-
agree with, each of the Underwriters as of the date hereof, and as of
the Closing Date and each Option Closing Date, if any, as follows:
(a) Such Selling Stockholder has full legal right, power and
authority to enter into this Agreement, the Power of Attorney
with Xxxx X. Xxxxxxx, III and Xxxx Xxxxx, or either of them,
as attorney-in-fact (the "Attorney-in-Fact") in the form
heretofore furnished to you (the "Power of Attorney") and the
Custody Agreement with First Union National Bank as custodian
(the "Custodian") in the form heretofore furnished to you (the
"Custody Agreement"). Each Selling Stockholder has full legal
right, power and authority to deliver and sell the Option
Securities to be sold by such Selling Stockholder under this
Agreement, and to consummate the transactions provided for in
this Agreement, the Power of Attorney and the Custody
Agreement; and this Agreement, the Power of Attorney and the
Custody Agreement have each been duly and properly authorized,
executed and delivered by such Selling Stockholder. Each of
this Agreement, the Power of Attorney and the Custody
Agreement constitutes a legal, valid and binding agreement of
such Selling Stockholder enforceable against such Selling
Stockholder in accordance with its terms (except as the
enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws of general application relating to or affecting
enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and
except as rights to indemnity or contribution may be limited
by applicable law). None of such Selling Stockholder's
delivery and sale of the Option Securities, execution or
delivery of this Agreement, the Power of Attorney or the
Custody Agreement, its performance hereunder and thereunder,
or its consummation of the transactions contemplated herein
and therein, conflicts with or will conflict with or results
or will result in any breach or violation of any of the terms
or provisions of, or constitutes or will constitute a default
under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect
or other restriction or equity of any kind whatsoever upon,
any property or assets (tangible or intangible) of such
Selling Stockholder pursuant to the terms of any license,
contract, indenture, mortgage, deed of trust, lease, voting
trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the
Selling Stockholder is a party or by which the Selling
Stockholder is or may be bound or to which either of its
properties or assets (tangible or intangible) is or may be
subject, or any statute, judgement, decree, order, rule or
regulation applicable to any Selling Stockholder or any
arbitrator, court, regulatory body or administrative agency or
other governmental agency or body (including, without
limitation, those having jurisdiction over any matter),
-16-
domestic or foreign, having jurisdiction over the Selling
Stockholder or any of his activities or properties, which
could reasonably be expected to materially and adversely
affect the Business in each of the above instances. The
Attorney-in-Fact, acting alone, is authorized to authorize the
delivery of the Option Securities to be sold by such Selling
Stockholder under this Agreement and to duly endorse (in blank
or otherwise) the certificate or certificates representing
such Option Securities or a stock power or powers with respect
thereto, and otherwise to act on behalf of such Selling
Stockholder in connection with this Agreement and the Custody
Agreement.
(b) No consent, approval, authorization or order of, and no filing
with, any court regulatory body, government agency or other
body, domestic or foreign, is required for the delivery and
sale of the Option Securities to be sold by such Selling
Stockholder under this Agreement pursuant to the Prospectus
and the Registration Statement, for the performance of this
Agreement, the Power of Attorney and the Custody Agreement and
for the transactions contemplated hereby and thereby,
including without limitation, any waiver of any preemptive,
first refusal or other rights that any entity or person may
have for the delivery and sale of any of the Option Securities
to be sold by such Selling Stockholder under this Agreement,
except such as have been or may be obtained under the Act or
may be required under state securities or Blue Sky laws in
connection with the Underwriters' purchase and distribution of
the Option Securities to be sold by such Selling Stockholder
under this Agreement.
(c) At the date hereof such Selling Stockholder has, and at the
time of delivery of the Option Securities to be sold by the
Selling Stockholder to the several Underwriters, such Selling
Stockholder will have full right, power and authority to sell,
assign, transfer and deliver the Option Securities to be sold
by such Selling Stockholder hereunder. At the date hereof such
Selling Stockholder is, and at the time of delivery of the
Option Securities to be sold by such Selling Stockholder, such
Selling Stockholder will be, the lawful owner of and has and
will have, good and marketable title to such Option Securities
free and clear of any liens, charges, pledges, equities,
encumbrances, security interests, claims, community property
rights, restrictions on transfer or other defects in title.
Upon delivery of and payment for the Option Securities to be
sold by such Selling Stockholder hereunder, good and
marketable title to such Option Securities will pass to the
Underwriters, free and clear of any liens, charges, pledges,
equities, encumbrances, security interests, claims, community
property rights, restrictions on transfer or other defects in
title. Except as described in the Registration Statement and
-17-
the Prospectus or created hereby, there are no outstanding
options, warrants, rights, or other agreements or arrangements
requiring such Selling Stockholder at any time to transfer any
Common Stock to be sold hereunder by such Selling Stockholder.
The Option Securities, to be sold by such Selling Stockholder
under this Agreement, are not and will not be subject to any
preemptive or other similar rights of such stockholder.
(d) At the time when the Registration Statement becomes or became
effective, and at all times subsequent thereto up to and
including the Closing Date and the Option Closing Date, the
Registration Statement and any amendments thereto will not
contain any untrue statement of a material fact regarding such
Selling Stockholder or omit to state a material fact regarding
such Selling Stockholder required to be stated therein or
necessary in order to make the statements therein regarding
such Selling Stockholder not misleading, and the Prospectus
(and any supplements thereto) will not contain any untrue
statement of a material fact regarding such Selling
Stockholder or omit to state a material fact regarding such
Selling Stockholder required to be stated therein or necessary
in order to make the statements therein regarding such Selling
Stockholder, in light of the circumstances under which they
were made, not misleading, and such Selling Stockholder is
unaware of any material misstatement in or omission from the
Registration Statement or the Prospectus or of any material
adverse information regarding such Selling Stockholder and his
security holdings which is not set forth in the Registration
Statement and the Prospectus.
(e) Such Selling Stockholder or any of his affiliates (within the
meaning of the Rules and Regulations) has not taken or will
not take, directly or indirectly, any action designed to or
which has constituted or which might be expected to cause or
result in, under the Exchange Act, or otherwise, unlawful
stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities
or otherwise.
(f) There is not pending or, to such Selling Stockholder's
knowledge, threatened against such Selling Stockholder any
action, suit or proceeding which (i) questions the validity of
this Agreement, the Power of Attorney, the Custody Agreement
or of any action taken or to be taken by such Selling
Stockholder pursuant to or in connection with this Agreement,
the Power of Attorney, or the Custody Agreement or (ii) is
required to be disclosed in the Registration Statement which
is not so disclosed, and such actions, suits or proceedings as
are summarized in the Registration Statement, if any, are
accurately summarized.
-18-
(g) Upon executing this Agreement, certificates in negotiable form
for the Option Securities to be sold by such Selling
Stockholder under this Agreement on the Option Closing Date if
requested by the Underwriters pursuant to Section 3(b) hereof,
together with a stock power or powers duly endorsed in blank
by such Selling Stockholder, will have been placed in custody
with the Custodian for the purpose of effecting delivery
hereunder and thereunder.
(h) Such Selling Stockholders have no registration rights or other
similar rights with respect to any securities of the Company;
and such Selling Stockholders do not have any right of first
refusal or other similar right to purchase any securities of
the Company upon the issuance or sale thereof by the Company
or upon the sale thereof by any other stockholder of the
Company.
(i) Such Selling Stockholder has not since the effective date of
the Registration Statement (i) sold, bid for, purchased,
attempted to induce any person to purchase, or paid anyone any
compensation for soliciting purchases of Common Stock, or (ii)
paid or agreed to pay to any person any compensation for
soliciting another to purchase any securities of the Company
(except for the sale of the Firm Securities and Option
Securities to the Underwriters under this Agreement and except
as otherwise permitted by law).
(j) Except for the New York State transfer tax imposed by Section
270 of the New York State Tax Law on the sale of the Option
Securities by the Selling Stockholders, no transfer tax, stamp
duty or other similar tax is payable by or on behalf of the
Underwriters in connection with (i) the sale by such Selling
Stockholder of the Option Securities, (ii) the purchase by the
Underwriters of the Option Securities from such Selling
Stockholder, (iii) the consummation by such Selling
Stockholder of any of his obligations under this Agreement, or
(iv) resales of the Option Securities sold by such Selling
Stockholder in connection with the distribution contemplated
hereby.
(k) Any certificate signed by or on behalf of such Selling
Stockholder and delivered to the Underwriters shall be deemed
a representation and warranty by such Selling Stockholder to
the Underwriters as to the matters covered thereby.
-19-
3. Purchase, Sale and Delivery of the Securities and Representative's
Warrants.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and
sell to the respective Underwriters, and each of the
Underwriters agrees to purchase the Firm Securities (subject
to such adjustment as the Representative may determine to
avoid fractional shares, plus any additional numbers of Firm
Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 13 hereof)
which bears the same proportion to the number of Firm
Securities to be sold by the Company as the number of Firm
Securities set forth opposite the name of such Underwriters on
Schedule B bears to the total number of Firm Securities to be
sold by the Company, in each case on a firm commitment basis
no less than three (3) nor more than four (4) full business
days after the date of this Agreement, at a price of $_______
per share of Common Stock [_____% of the initial public
offering price].
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the
terms and conditions herein set forth, the Selling
Stockholders hereby grant an option to the several
Underwriters to purchase, and the Underwriters shall have the
right to purchase, severally and not jointly pro rata from the
Selling Stockholders, all or any part of the Option Securities
at a price of $_____ per share of Common Stock [100% of the
initial public offering price]. The option granted hereby will
expire forty-five (45) days after (i) the date the
Registration Statement becomes effective, if the Company has
elected not to rely on Rule 430A under the Rules and
Regulations, or (ii) the date of this Agreement if the Company
has elected to rely upon Rule 430A under the Rules and
Regulations, and may be exercised in whole or in part from
time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and
distribution of the Firm Securities upon notice by the
Representative to the Selling Stockholders setting forth the
number of Option Securities as to which the several
Underwriters are then exercising the option and the time and
date of payment and delivery for any such Option Securities.
Any such time and date of delivery (an "Option Closing Date")
shall be determined by the Representative, but shall not be
later than five (5) full business days after the exercise of
said option, nor in any event prior to the Closing Date, as
hereinafter defined, unless otherwise agreed upon by the
Representative and the Company. Nothing herein contained shall
obligate the Underwriters to make any over-allotments. No
-20-
Option Securities shall be delivered unless the Firm
Securities shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Securities shall be made at the
offices of the Representative at 000 Xxxxxxxxx Xxxx Xxxxx,
Xxxxxxxx, Xxx Xxxx 00000, or at such other place as shall be
agreed upon by the Representative and the Company. Such
delivery and payment shall be made at 10:00 a.m. (New York
City time) on ___________, 1998 or at such other time and date
as shall be agreed upon by the Representative and the Company,
but not less than three (3) nor more than four (4) full
business days after the date of this Agreement (such time and
date of payment and delivery being herein called "Closing
Date"). In addition, in the event that any or all of the
Option Securities are purchased by the Underwriters, payment
of the purchase price for, and delivery of certificates for,
such Option Securities shall be made at the above mentioned
office of the Representative or at such other place as shall
be agreed upon by the Representative and the Company on each
Option Closing Date as specified in the notice from the
Representative to the Company. Delivery of the certificates
for the Firm Securities and the Option Securities, if any,
shall be made to the Representative against payment by the
Underwriters of the purchase price for the Firm Securities and
the Option Securities, if any, to the order of the Company and
the Selling Stockholders, as applicable, by New York Clearing
House funds, subject in each case to such adjustments as the
Representative in its discretion shall make to eliminate any
sales or purchases of fractional shares. Certificates for the
Firm Securities and the Option Securities, if any, shall be in
definitive, fully registered form, shall bear no restrictive
legends and shall be in such denominations and registered in
such names as the Underwriters may request in writing at least
two (2) business days prior to the Closing Date or the
relevant Option Closing Date, as the case may be. The
certificates for the Firm Securities and the Option
Securities, if any, shall be made available to the
Representative at such office or such other place as the
Representative may designate for inspection, checking and
packaging no later than 9:30 a.m. on the last business day
prior to the Closing Date or the relevant Option Closing Date,
as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative, the Representative's Warrants at a purchase
price of $.0001 per warrant, which warrants shall entitle the
holder(s) thereof to purchase an aggregate of 300,000 shares
of Common Stock. The Representative's Warrants shall be
exercisable for a period of four (4) years commencing one (1)
-21-
year from the effective date of the Registration Statement at
an exercise price of $_____ per share of Common Stock [165% of
the public offering price of the Firm Securities]. The
Representative's Warrant Agreement and form of Warrant
Certificate shall be substantially in the form filed as
Exhibit 1.2 to the Registration Statement. Payment for the
Representative's Warrants shall be made on the Closing Date.
4 4. Public Offering of the Firm Securities.
As soon after the first post-effective amendment to the Registration
Statement becomes effective as the Representative deems advisable, the
Underwriters shall make a public offering of the Firm Securities at the
price and upon the other terms set forth in the Prospectus. The
Underwriters may from time to time increase or decrease the public
offering price and increase or decrease concessions and discounts to
dealers after distribution of the Firm Securities has been completed to
such extent as the Representative, in its sole discretion deems
advisable and as permitted by the Act and the Rules and Regulations.
The Underwriters may enter into one or more agreements as the
Representative, in its sole discretion deems advisable, with one or
more broker-dealers who shall act as dealers in connection with such
public offering.
5 5. Covenants and Agreements of the Company. The Company covenants and
agrees with the Underwriters as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become
effective as promptly as practicable and will not at any time,
whether before or after the effective date of the Registration
Statement, file any amendment to the Registration Statement or
supplement to the Prospectus or file any document under the
Act or Exchange Act before termination of the offering of the
Firm Securities and Option Securities by the Underwriters of
which the Underwriters shall not previously have been advised
and furnished with a copy, or to which the Underwriters shall
have reasonably objected or which is not in compliance with
the Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representative and
confirm the notice in writing (i) when the Registration
Statement, as amended, becomes effective, if the provisions of
Rule 430A promulgated under the Act will be relied upon, when
the Prospectus has been filed in accordance with said Rule
430A and when any post-effective amendment to the Registration
-22-
Statement becomes effective, (ii) of the issuance by the
Commission of any stop order or of the initiation, or the
threatening, of any proceeding, suspending the effectiveness
of the Registration Statement or any order preventing or
suspending the use of the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, or the
institution of proceedings for that purpose, (iii) of the
issuance by the Commission, or by any state securities
commission of any proceedings for the suspension of the
qualification of any of the Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of
any proceeding for that purpose, (iv) of the receipt of any
comments from the Commission, and (v) of any request by the
Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for
additional information. If the Commission, or any state
securities commission authority shall enter a stop order or
suspend such qualification at any time, the Company will use
its best efforts to obtain promptly the lifting of such order
or suspension.
(c) The Company shall file the Prospectus (in form and substance
reasonably satisfactory to the Representative) or transmit the
Prospectus by a means reasonably calculated to result in
filing with the Commission pursuant to Rule 424(b)(1) (or, if
applicable and if consented to by the Representative, pursuant
to Rule 424(b)(4)) not later than the Commission's close of
business on the earlier of (i) the second business day
following the execution and delivery of this Agreement, and
(ii) the fifteenth business day after the effective date of
the Registration Statement.
(d) The Company will give the Representative notice of its
intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any
amendment or supplement to the Prospectus (including any
revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Firm
Securities and Option Securities which differs from the
corresponding prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not
such revised prospectus is required to be filed pursuant to
Rule 424(b) of the Rules and Regulations), and will furnish
the Representative with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such
prospectus to which the Representative or Xxxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx ("Underwriters' Counsel") shall
reasonably object.
(e) The Company shall endeavor in good faith, in cooperation with
the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Firm Securities
-23-
and Option Securities for offering and sale under the
securities laws of such jurisdictions as the Representative
may reasonably designate to permit the continuance of sales
and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications,
file such documents and furnish such information as may be
required for such purpose; provided, however, the Company
shall not be required to qualify as a foreign corporation or
file a general or limited consent to service of process in any
such jurisdiction. In each jurisdiction where such
qualification shall be effected, the Company will, unless the
Representative agrees that such action is not at the time
necessary or advisable, use all reasonable efforts to file and
make such statements or reports at such times as are or may
reasonably be required by the laws of such jurisdiction to
continue such qualification.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to
comply with all requirements imposed upon it by the Act and
the Exchange Act, as now and hereafter amended and by the
Rules and Regulations, as from time to time in force, so far
as necessary to permit the continuance of sales of or dealings
in the Firm Securities and Option Securities in accordance
with the provisions hereof and the Prospectus, or any
amendments or supplements thereto. If at any time when a
prospectus relating to the Firm Securities and Option
Securities or the Representative's Securities is required to
be delivered under the Act, any event shall have occurred as a
result of which, in the opinion of counsel for the Company or
Underwriters' Counsel, the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact
or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will notify the
Representative promptly and prepare and file promptly with the
Commission an appropriate amendment or supplement in
accordance with Section 10 of the Act, each such amendment or
supplement to be satisfactory to Underwriter's Counsel and the
Company will furnish to the Underwriters copies of such
amendment or supplement as soon as available and in such
quantities as the Representative may request.
(g) As soon as practicable, but in any event not later than
forty-five (45) days after the end of the 12-month period
beginning on the day after the end of the fiscal quarter of
the Company during which the effective date of the
Registration Statement occurs (ninety (90) days in the event
-24-
that the end of such fiscal quarter is the end of the
Company's fiscal year), the Company shall make generally
available to its security holders, in the manner specified in
Rule 158(b) of the Rules and Regulations, and to the
Representative, an earnings statement which will be in the
detail required by, and will otherwise comply with, the
provisions of Section 11 (a) of the Act and Rule 158(a) of the
Rules and Regulations, which statement need not be audited
unless required by the Act, covering a period of at least
twelve (12) consecutive months after the effective date of the
Registration Statement.
(h) During a period of five (5) years after the date hereof, the
Company will furnish to its stockholders, as soon as
practicable, annual reports (including financial statements
audited by independent public accountants) and unaudited
quarterly reports of earnings, and will deliver to the
Representative:
(i) concurrently with furnishing such quarterly reports
to its stockholders, consolidated statements of
income of the Company and its consolidated
subsidiaries for each quarter in the form furnished
to the Company's stockholders;
(ii) concurrently with furnishing such annual reports to
its stockholders, a consolidated balance sheet of the
Company and its consolidated subsidiaries as at the
end of the preceding fiscal year, together with
statements of consolidated operations, stockholders
equity, and cash flows of the Company and its
consolidated subsidiaries for such fiscal year,
accompanied by a copy of the certificate thereon of
independent certified public accountants;
(iii) as soon as they are available, copies of all other
reports (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all reports
and financial statements furnished to or filed with
the Commission, the NASD or any securities exchange;
(v) every press release and every material news item or
article of interest to the financial community in
respect of the Company or its affairs which was
released or prepared by or on behalf of the Company;
(vi) any additional information of a public nature
concerning the Company or its businesses which the
Representative may request.
-25-
During such five-year period, if the Company continues to have
active subsidiaries, the foregoing financial statements will
be on a consolidated basis to the extent that the accounts of
the Company and its subsidiaries are consolidated and will be
accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(i) The Company will maintain a transfer agent (the "Transfer
Agent") and, if necessary under the jurisdiction of
incorporation of the Company, a Registrar (which may be the
same entity as the Transfer Agent) for its Common Stock, each
of which shall be satisfactory to the Representative.
(j) The Company will furnish or cause to be furnished to the
Representative without charge, at such place as the
Representative may designate, copies of each Preliminary
Prospectus, the Registration Statement and any pre-effective
or post-effective amendments thereto (two of which copies will
be manually signed and will include all financial statements
and exhibits), the Prospectus, and all amendments and
supplements thereto, including any prospectus prepared after
the effective date of the Registration Statement, in each case
as soon as available and in such quantities as the
Representative may reasonably request.
(k) During a period of thirteen (13) months following the
effective date of the Registration Statement, the Company will
not and, for a further period of six (6) months, the Company
will not without the prior written consent of the
Representative, other than as set forth in the Prospectus,
directly or indirectly, offer to sell, transfer, pledge,
assign, hypothecate or otherwise encumber or dispose of any
shares of Common Stock or securities convertible into,
exercisable or exchangeable for or evidencing any right to
purchase or subscribe for any shares of Common Stock, whether
or not owned (either pursuant to Rule 144 of the Rules and
Regulations or otherwise), dispose of any beneficial interest
therein, enter into any swap or other agreement that transfers
in whole or in part any of the economic consequences or
ownership of the shares of Common Stock, whether any such
transactions were to be settled by delivery of Common Stock,
other securities, cash or otherwise; provided, that except as
otherwise restricted under the terms of this Agreement, the
foregoing restriction, whether directly or upon the exercise
or conversion of exchangeable or convertible securities
(including options granted under the Company's Stock Option
and Performance Award Plan), shall not prohibit the issuance
of shares of Common Stock or options to purchase shares of
Common Stock in connection with the exercise of the
over-allotment option referred to in Section 1(a), mergers or
acquisitions, to effectuate estate planning by the Selling
-26-
Stockholders (subject to the restrictions set forth in Section
6(a) below), or shares of Common Stock or securities
convertible or exchangeable for shares of Common Stock which
are publicly offered by the Company. During a period of
thirteen (13) months following the effective date of the
Registration Statement, the Company will not complete an
offering pursuant to Regulation S of shares of Common Stock,
or securities convertible or exchangeable for shares of Common
Stock; provided, that shares of Common Stock, or securities
convertible or exchangeable for shares of Common Stock where
the actual offering price of the Common Stock, or the
conversion or exchange price, is specifically determined at
the time of closing of the offering, are not subject to these
restrictions. Furthermore, during a period of thirteen (13)
months following the effective date of the Registration
Statement, apart from the above referenced limitations on
Regulation S offerings, there is no restriction on private
offerings of Common Stock, or of securities convertible or
exchangeable for Common Stock, if the original offering price
of the Common Stock, or the conversion or exchange price of
the convertible or exchangeable securities, is specifically
determined at the time of closing of the private offering. The
Company will cause the Transfer Agent to xxxx an appropriate
legend in respect of the transfer restrictions set forth in
this Section 6(k) on the face of stock certificates
representing Common Stock held by the Selling Stockholders
following the sales contemplated hereby and to place "stop
transfer" orders on the Company's stock ledgers for such
shares.
(l) Each of the Company and its Subsidiaries will use its best
efforts to cause the Company and the Subsidiaries' respective
officers, directors, stockholders, and their respective
affiliates (within the meaning of the Rules and Regulations)
not to take, directly or indirectly, any action designed to,
or which might in the future reasonably be expected to cause
or result in, unlawful stabilization or manipulation of the
price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Firm Securities, if any, in the manner, and subject to the
conditions, set forth under "Use of Proceeds" in the
Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by
the Company or any Subsidiary or any affiliate of either,
except in accordance with the disclosures contained in the
Prospectus.
(n) The Company shall timely file all such reports, forms or other
documents as may be required from time to time, under the Act,
the Exchange Act, and the Rules and Regulations, and all such
reports, forms and documents filed will comply as to form and
-27-
substance with the applicable requirements under the Act, the
Exchange Act, and the Rules and Regulations.
(o) The Company shall furnish to the Representative as early as
practicable prior to each of the Closing Date and Option
Closing Date, if any, but no later than two (2) full business
days prior thereto, a copy of the latest available unaudited
interim financial statements of the Company which have been
read by the Company's independent public accountants as stated
in their letters to be furnished pursuant to Section 8(n)
hereof.
(p) The Company shall use its best efforts to cause the Common
Stock to be listed on the Nasdaq NMS and for a period of five
(5) years from the date hereof use its best efforts to
maintain the Nasdaq NMS listing of the Common Stock, to the
extent outstanding.
(q) At the request of the Representative, for a period of five (5)
years from the Closing Date, the Company shall furnish to the
Representative at the Company's sole expense (i) monthly
consolidated transfer sheets relating to the Common Stock,
(ii) the list of holders of all of the Company's Common Stock
and any securities for which the Common Stock is redeemable,
convertible or exchangeable, on a monthly basis, and (iii) a
Blue Sky "Trading Survey" for secondary sales of the Company's
securities prepared by counsel to the Company, to the extent
that the Company's securities are not eligible for solicited
and unsolicited secondary sales in all fifty (50) states of
the United States and the District of Columbia.
(r) As soon as practicable, but in no event more than thirty (30)
days from the effective date of the Registration Statement,
take all necessary and appropriate actions to be included in
Standard and Poor's Corporation Descriptions and Moodys OTC
Manual and to continue such inclusion for a period of not less
than seven (7) years, only to the extent that the Common Stock
is not included for trading on the Nasdaq NMS.
(s) The Company hereby agrees that for a period of thirteen (13)
months following the effective date of the Registration
Statement, the Company will not and, for a further period of
six (6) months, the Company will not without the prior written
consent of the Representative adopt, propose to adopt or
otherwise permit to exist any employee, officer, director,
consultant or compensation plan or arrangement permitting (i)
the grant, issue, sale or entry into any agreement to grant,
issue or sell any option, warrant or other contract right to
acquire any Common Stock (x) at an exercise price that is less
-28-
than the greater of the public offering price of the Firm
Securities set forth herein and the fair market value on the
date of grant or sale or (y) to any of its executive officers
or directors or to any holder of five percent (5%) or more of
the shares of Common Stock; provided, however that this
prohibition shall not apply to the issuance of shares of
Common Stock registered under the Act pursuant to the
Registration Statement, or pursuant to the Company's 1996
Stock Option and Performance Award Plan pursuant to which the
Company (x) may issue options for up to one million
(1,000,000) shares (of the two million five hundred thousand
(2,500,000) shares reserved for issuance under the Company's
1996 Stock Option and Performance Award Plan) prior to the
initial public offering with an exercise price equal to the
initial public offering price, (y) may issue options in the
six (6) month period following the closing of the initial
public offering with an exercise price the greater of the
initial public offering price or the then current market
price, or (z) may issue options after the six (6) month period
following the closing of the initial public offering with an
exercise price equal to the then current market price; or (ii)
the maximum number of shares of Common Stock or other
securities of the Company purchasable at any time pursuant to
options or warrants issued by the Company to exceed two
million five hundred thousand (2,500,000) shares (subject to
reasonable, customary anti-dilution adjustments) reserved for
issuance under the Company's Stock Option and Performance
Award Plan; or (iii) the payment for such securities with any
form of consideration other than cash, or (iv) the existence
of stock appreciation rights, phantom options or similar
arrangements.
(t) Until the completion of the distribution of the Firm
Securities and the Option Securities under the terms hereof,
the Company shall not, without the prior written consent of
the Representative or Underwriters' Counsel, issue, directly
or indirectly any press release or other communication or hold
any press conference with respect to the Company or its
activities or the offering contemplated hereby, other than
trade releases issued in the ordinary course of the Company's
business with respect to the Company's operations.
(u) For a period equal to the lesser of (i) seven (7) years from
the date hereof, and (ii) the sale to the public of the
Representative's Securities, the Company will not take any
action or actions which may prevent or disqualify the
Company's use of Form S-1 (or other appropriate form) for the
registration under the Act of the Representative's Securities.
-29-
(v) The Company will enter into a non-exclusive agreement with the
Representative (the "Finder's Agreement") providing for a
finder's fee payable to the Representative if the Company
enters into any transaction with a third party introduced to
the Company by the Representative during the five (5) year
period immediately following the Closing Date. The Finder's
Agreement will effectively state that the finder's fee payable
to the Representative will be five percent (5%) of the first
$1,000,000 of value of such transaction, four percent (4%) of
the second $1,000,000 of value of such transaction, and three
percent (3%) of the remaining value of such transaction.
(w) The Company will not have more than 15,000,000 shares of
Common Stock issued and outstanding prior to the initial
public offering, not including 2,500,000 shares reserved for
future issuance pursuant to the Company's 1996 Stock Option
and Performance Award Plan.
(x) During the five (5) year period immediately following the
Closing Date, the Representative will have the right, at its
discretion, to cause the Company to (i) nominate a designee
chosen by the Representative to the Company's Board of
Directors, or (ii) have such designee serve as an advisor to
the Company's Board of Directors, with such designee being
subject to the Company's reasonable approval.
6. Certain Covenants of the Selling Stockholders. Each of Selling
Stockholders covenants and agrees, severally and not jointly, with each
of the Underwriters as follows:
(a) During a period of thirteen (13) months following the
effective date of the Registration Statement, the Selling
Stockholders will not and, for a further period of six (6)
months, the Selling Stockholders will not without the prior
written consent of the Representative, other than as set forth
in the Prospectus, directly or indirectly, offer to sell,
transfer, pledge, assign, hypothecate or otherwise encumber or
dispose of any shares of Common Stock or securities
convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares
of Common Stock (either pursuant to Rule 144 of the Rules and
Regulations or otherwise), dispose of any beneficial interest
therein, enter into any swap or other agreement that transfers
in whole or in part any of the economic consequences or
ownership of the shares of Common Stock, whether any such
transactions were to be settled by delivery of Common Stock,
other securities, cash or otherwise; provided, that except as
otherwise restricted under the terms of this Agreement, the
-30-
foregoing restriction shall not prohibit the private offering
of securities convertible or exchangeable for Common Stock,
the transfer of shares of Common Stock or options to purchase
shares of Common Stock in connection with the exercise of the
over-allotment option referred to in Section 1(a), mergers or
acquisitions, the grant of options under or the exercise of
options granted under the Company's Stock Option and
Performance Award Plan, and estate planning by the Selling
Stockholders to include transfers to the estate or by the
estate of such Selling Stockholders, so long as any such
transferees agree to be bound by the restrictions set forth
herein; and such Selling Stockholder and any of his affiliates
(within the meaning of the Rules and Regulations) will not
take, directly or indirectly, any action designated to, or
which might in the future reasonably be expected to cause or
result in, unlawful stabilization or manipulation of the price
of any securities of the Company. During a period of thirteen
(13) months following the effective date of the Registration
Statement, the Selling Stockholders will not complete an
offering pursuant to Regulation S of shares of Common Stock,
or securities convertible or exchangeable for shares of Common
Stock; provided, that shares of Common Stock, or securities
convertible or exchangeable for shares of Common Stock where
the actual offering price of the Common Stock, or the
conversion or exchange price, is specifically determined at
the time of closing of the offering, are not subject to these
restrictions. Furthermore, during a period of thirteen (13)
months following the effective date of the Registration
Statement, apart from the above referenced limitations on
Regulation S offerings, there is no restriction on private
offerings of Common Stock, or of securities convertible or
exchangeable for Common Stock, if the original offering price
of the Common Stock, or the conversion or exchange price of
the convertible or exchangeable securities, is specifically
determined at the time of closing of the private offering. The
Selling Stockholders will cause the Transfer Agent to xxxx an
appropriate legend in respect of the transfer restrictions set
forth in this Section 6(a) on the face of stock certificates
representing Common Stock held by the Selling Stockholders
following the sales contemplated hereby and to place "stop
transfer" orders on the Company's stock ledgers for such
shares.
(b) Such Selling Stockholder consents to the use of the Prospectus
and any amendment or supplement thereto by the Underwriters
and all dealers to whom the Securities may be sold, both in
connection with the offering or sale of the Securities and for
such period of time thereafter as the Prospectus is required
by law to be delivered in connection therewith.
-31-
(c) Such Selling Stockholder will review the Prospectus and will
comply with all agreements and satisfy all conditions on its
part to be complied with or satisfied pursuant to this
Agreement, the Custody Agreement and the Power of Attorney at
or prior to any Option Closing Date.
(d) Prior to any Option Closing Date, as applicable, each Selling
Stockholder will pay the full amount owed by such Selling
Stockholder, as required under Section 270 of the New York
State Tax Law, with respect to his transfer under the terms of
this Agreement of Option Securities.
7. Payment of Expenses
(a) Subject to the provisions of Section 7(d) below, the Company
hereby agrees to pay on each of the Closing Date and the
Option Closing Date (to the extent not previously paid) all
expenses and fees (other than fees of Underwriters' Counsel,
except as provided in (iv) below) incident to the performance
of the obligations of the Company and the Selling Stockholders
under this Agreement and the Representative's Warrant
Agreement, including, without limitation, (i) the fees and
expenses of accountants and counsel for the Company; (ii) all
costs and expenses incurred in connection with the
preparation, duplication, printing (including mailing and
handling charges) filing, delivery and mailing (including the
payment of postage with respect thereto) of the Registration
Statement, and the Prospectus and any amendments and
supplements thereto and the printing, mailing (including the
payment of postage with respect thereto) and delivery of this
Agreement, the Representative's Warrant Agreement, selected
dealer agreements (if any) and related documents, including
the cost of all copies thereof and of the Preliminary
Prospectuses and of the Prospectus and any amendments thereof
or supplements thereto supplied to the Underwriters and such
dealers as the Representative may request, in quantities as
herein above stated; (iii) the printing, engraving, issuance
and delivery of the certificates representing the Securities;
(iv) the qualification of the Securities under state or
foreign securities or "Blue Sky" laws, if legally required,
and the costs of printing and mailing the "Preliminary Blue
Sky Memorandum" and the "Supplemental Blue Sky Memorandum," if
any, and disbursements and fees of counsel in connection
therewith, (v) advertising costs and expenses, including but
not limited to costs and expenses incurred by the Company and
the Representative in connection with the "road show,"
information meetings and presentations, bound volumes and
prospectus memorabilia and "tombstone" advertisement expenses,
(vi) costs and expenses in connection with due diligence
investigations, including but not limited to the fees of any
-32-
independent counsel, expert or consultant retained, (vii) fees
and expenses of the transfer agent, registrar and custodian
and all issue and transfer taxes, if any, (viii) the fees
payable to the Commission and the NASD, and (ix) the fees and
expenses incurred in connection with the listing of the
Securities on the Nasdaq NMS and any other exchange.
(b) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 7, it will
pay to the Representative on the Closing Date by certified or
bank cashiers check or, at the election of the Representative,
by deduction from the proceeds of the offering contemplated
herein a non-accountable expense allowance equal to 3% and a
consulting fee equal to 1% of the gross proceeds received by
the Company from the sale of the Firm Securities, $50,000 of
which has been paid to date. In the event the Underwriters
elect to exercise the over-allotment option described in
Section 3(b) hereof, the Selling Stockholders, jointly and
severally, agree to pay to the Representative on the Option
Closing Date (by certified or bank cashiers check or, at the
Representative's election, by deduction from the proceeds of
the offering) a non-accountable expense allowance equal to 3%
and a consulting fee equal to 1% of the gross proceeds
received by the Selling Stockholders from the sale of the
Option Securities.
(c) If the Company decides to terminate this Agreement for any
reason, or if the Representative chooses to terminate this
Agreement because of a breach by the Company or the Selling
Stockholders of its or their representations, warranties or
covenants in this Agreement, the Company will pay the
Representative for its accountable expenses the sum of
$100,000, inclusive of the amounts previously paid toward
expenses pursuant to Section 7(b) above. If the Representative
decides to terminate this Agreement for any reason other than
those set forth in the preceding sentence, the Company will
pay the Representative for its accountable expenses the sum of
$50,000, inclusive of the amounts previously paid toward
expenses pursuant to Section 7(b) above. In addition, the
Company will be responsible for the actual fees and expenses
of Underwriter's Counsel with respect to Blue Sky matters,
which fees shall not exceed $5,000.
8. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of
the representations and warranties of the Company and the Selling
Stockholders herein as of the date hereof and as of the Closing Date
and Option Closing Date, if any, as if they had been or have made on
and as of the Closing Date or Option Closing Date, as the case may be;
-33-
the accuracy on and as of the Closing Date or Option Closing Date, if
any, of the statements of officers of the Company (where applicable)
made pursuant to the provisions hereof; and the performance by the
Company and the Selling Stockholders on and as of the Closing Date and
Option Closing Date, if any, of its covenants and obligations hereunder
and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 12:00 noon, New York time, on the date of this
Agreement or such later date and time as shall be consented to
in writing by the Representative, and, at the Closing Date and
Option Closing Date, if any, no stop order suspending the
effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been
instituted or shall be pending or contemplated by the
Commission and any request on the part of the Commission for
additional information shall have been complied with to the
reasonable satisfaction of Underwriter's Counsel. If the
Company has elected to rely upon Rule 430A of the Rules and
Regulations, the price of the Common Stock to be sold
hereunder and any price related information previously omitted
from the effective Registration Statement pursuant to such
Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period and, prior to the Closing
Date, the Company shall have provided evidence satisfactory to
the Representative of such timely filing, or a post-effective
amendment providing such information shall have been promptly
filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations.
(b) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in the Underwriter's
reasonable opinion, is material, or omits to state a fact
which, in the Representative's reasonable opinion, is material
and is required to be stated therein or is necessary to make
the statements therein not misleading, or that the Prospectus,
or any supplement thereto, contains an untrue statement of
fact which, in the Representative's reasonable opinion, is
material, or omits to state a fact which, in the
Representative's reasonable opinion, is material and is
required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(c) On or prior to each of the Closing Date and Option Closing
Date, if any, the Representative shall have received from
Underwriters' Counsel, such opinion or opinions with respect
to the organization of the Company, the validity of the
Securities, the Registration Statement, the Prospectus and
-34-
other related matters as the Representative may request, and
Underwriters' Counsel shall have received from the Company
such papers and information as they request to enable them to
pass upon such matters.
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of Xxxx & Priest, LLP, New York, New York,
special counsel to the Company, dated the Closing Date,
addressed to the Underwriters and in form and substance
satisfactory to the Representative and Underwriters' Counsel
to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the
laws of the State of Delaware. Each subsidiary of the
Company listed in Exhibit 21 to the Registration
Statement (the "Subsidiaries") has been duly
incorporated or formed and is existing and in good
standing under the laws of the jurisdiction of its
incorporation or organization. The Company and the
Subsidiaries are duly qualified and in good standing
as a foreign corporation in each jurisdiction in
which the character or location of its assets or
properties (owned, leased or licensed) or the nature
of its business makes such qualification necessary
except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on
the assets or properties, business, results of
operations or financial condition of the Company or
its subsidiaries, taken as a consolidated whole. To
our knowledge, the Company has no subsidiaries other
than those identified in the Registration Statement,
and the Company does not control, directly or
indirectly, any corporation, partnership, joint
venture, association or other business organization
which is material to the Business other than as
described in the Registration Statement and the
Prospectus. The Company and the Subsidiaries have all
requisite corporate power and authority to own, lease
and license its assets and properties and conduct its
businesses as now being conducted and as described in
the Registration Statement and the Prospectus; and
the Company has all such corporate power and
authority, and such authorizations, approvals,
consents, orders, licenses, certificates and permits
as may be necessary to enter into, deliver and
perform this Agreement and the Representative's
Warrant Agreement, and to issue and sell the
Securities (except as may be required under the
Securities Act and state and foreign Blue Sky laws)
under the terms hereof and thereof and to consummate
the transactions provided for herein and therein;
-35-
(ii) Prior to the issuance of Securities in accordance
with this Agreement, the Company had an authorized
and outstanding capital stock as set forth under the
caption "Capitalization" in the Registration
Statement and the Prospectus. All of the outstanding
shares of Common Stock have been duly and validly
issued and are fully paid and nonassessable and, to
such counsel's knowledge, none of them was issued in
violation of any preemptive or other similar right
(except for any such right emanating from the
Company's Certificate of Incorporation or By-laws,
for which no knowledge criteria applies). The
Securities, when issued (in the case of the
Securities to be sold by the Company) and sold
pursuant to this Agreement and the Representative's
Warrant Agreement, will be duly and validly issued,
fully paid and nonassessable, and, to such counsel's
knowledge, none of them will be issued in violation
of any preemptive or other similar right (except for
any such right emanating from the Company's
Certificate of Incorporation or By-laws, for which no
knowledge criteria applies). Except as disclosed in
the Registration Statement and the Prospectus, to
such counsel's knowledge, there is no outstanding
option, warrant or other right calling for the
issuance of, and no commitment, plan or arrangement
to issue, any share Common Stock of the Company or
any security convertible into, or exercisable or
exchangeable for, such Common Stock. The Securities
conform in all material respects to all statements in
relation thereto contained in the Registration
Statement and the Prospectus. The Representative's
Warrants constitute valid and binding obligations of
the Company to issue and sell, upon exercise thereof
and payment therefor, the number and type of
securities of the Company called for thereby;
(iii) To such counsel's knowledge, no holders of securities
of the Company have rights to the registration of
such securities under the Registration Statement,
other than the Selling Stockholders as identified in
the Registration Statement and the Prospectus;
(iv) This Agreement and the Representative's Warrant
Agreement have been duly and validly executed and
delivered by the Company and, assuming due
authorization, execution and delivery by the other
parties thereto, constitute and will constitute the
legal, valid and binding obligation of the Company
enforceable against the Company in accordance with
its terms, except (A) as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium
-36-
or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles and (B) to the extent that rights to
indemnity or contribution under this Agreement may be
limited by Federal and state securities laws or the
public policy underlying such laws.
(v) No transfer tax or duty is payable (on the assumption
that the laws of New York are applicable to such
transactions) by or on behalf of the Underwriters in
connection with (A) the issuance by the Company of
the Securities, (B) the purchase by the Underwriters
of the Securities from the Company, (C) the
consummation by the Company of any of its obligations
under this Agreement, or (D) resales of the
Securities in connection with the distribution
contemplated hereby;
(vi) To such counsel's knowledge, each of the Company and
the Subsidiaries is not in violation of any term or
provision of its charter or by-laws;
(vii) Neither the execution, delivery and performance of
this Agreement or the Representative's Warrant
Agreement by the Company nor the consummation of any
of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and sale
by the Company of the Securities) will give rise to a
right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the
breach of any term or provision of, or constitute a
default (or an event which with notice or lapse of
time or both would constitute a default) under, or
require any consent or waiver under, or result in the
execution or imposition of any lien, charge or
encumbrance upon any properties or assets of the
Company and its subsidiaries pursuant to the terms
of, (i) to such counsel's knowledge, any indenture,
mortgage, deed of trust or other agreement or
instrument to which the Company or any Subsidiary is
a party or by which it or any of its properties or
businesses is bound, (ii) any term or provision of
its charter or by-laws or (iii) any statute, rule or
regulation or, to such counsel's knowledge, any
franchise, license, permit, judgment, decree or
order, in any such case where termination,
acceleration, conflict, breach, default, event of
default, lien, charge, encumbrance, whether or not
asserted or imposed, would have a material adverse
effect on the assets or properties, business, results
-37-
of operations, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken
as a consolidated whole;
(viii) Except as disclosed in the Registration Statement and
the Prospectus, to such counsel's knowledge, there
are no pending or threatened actions, suits or
proceedings (governmental or otherwise) against or
affecting the Company, any of the Subsidiaries or any
of their respective properties that could reasonably
be expected, individually or in the aggregate, to
have a material adverse effect on the financial
condition or business, properties, net worth or
results of operations of the Company and the
Subsidiaries taken as a consolidated whole, or would
materially and adversely affect the ability of the
Company or any of the Subsidiaries to perform their
respective obligations under this Agreement, or which
are otherwise required to be disclosed in the
Prospectus under the Rules and Regulations;
(ix) The Registration Statement has become effective under
the Act; any required filing of the Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has
been made in the manner and within the time period
required by Rule 424(b); to the best knowledge of
such counsel, no stop order suspending the
effectiveness of the Registration Statement has been
issued, no proceedings for that purpose have been
instituted or threatened and the Registration
Statement and the Prospectus (other than the
financial statements and other financial and
statistical information contained therein as to which
such counsel need express no opinion) comply as to
form in all material respects with the applicable
requirements of the Act and the respective rules
thereunder;
(x) The Company is not a Passive Foreign Investment
Company ("PFIC") within the meaning of Section 1296
of the United States Internal Revenue Code of 1986,
as amended;
(xi) The statements in the prospectus under "Business -
Partnership Offerings"; "Certain Transactions";
"Description of Capital Stock"; and "Shares Eligible
For Future Sale" insofar as such statements
constitute a summary of documents referred to therein
or matters of law, are, in all material respects,
accurate summaries of the material provisions thereof
and accurately present the information required with
respect to such documents and matters. To such
counsel's knowledge, all contracts and other
-38-
documents required to be filed as exhibits to, or
described in, the Registration Statement have been so
filed with the Commission or are described as
required in the Registration Statement, as the case
may be.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of responsible officers
of the Company and public officials. Copies of such
certificates shall be furnished to the Representative and
counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
Representative and representatives of the independent
certified public accountants of the Company, at which
conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although
such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the
Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing no facts have come to the attention
of such counsel which have caused such counsel to believe that
the Registration Statement at the time it became effective and
at each Closing Date contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as of its date and at
each Closing Date contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being
understood that such counsel need not express any belief with
respect to the financial statements and schedules and other
financial or statistical data included in the Registration
Statement or the Prospectus).
(e) At the Closing Date, the Underwriters shall have received the
favorable opinion of Xxxx & Priest LLP, in its capacity as
special counsel for the Selling Stockholders, dated the
Closing Date, addressed to the Underwriters and in form and
substance satisfactory to Underwriters' Counsel, to the effect
that:
(i) This Agreement and the Custody Agreement and Power of
Attorney, with Xxxx Xxxxx and Xxxx X. Xxxxxxx, III,
or either of them, as attorney-in-fact and with First
Union National Bank as custodian (the "Custody
Agreement"), have been duly and validly executed and
-39-
delivered by the Selling Stockholder and constitute
and will constitute the legal, valid and binding
obligation of each of the Selling Stockholders,
enforceable against each of the Selling Stockholders
in accordance with its terms, except (i) as the
enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights
generally and by general equitable principles, (ii)
to the extent that rights to indemnity or
contribution under this Agreement may be limited by
federal and state securities laws or the public
policy underlying such laws and (iii) no opinion is
expressed as to the enforceability of the Power of
Attorney and Custody Agreement in the event of the
death of a Selling Stockholder prior to his sale of
the Option Securities hereunder. To such counsel's
knowledge, none of any Selling Stockholder's delivery
and sale of the Option Securities, execution or
delivery of this Agreement, the Custody Agreement,
his performance hereunder or thereunder, or his
consummation of the transactions contemplated herein
and therein, conflicts with or results in any
material breach or violation of any of the terms or
provisions of, or constitutes a material default
under, or results in the creation or imposition of
any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or
equity of any kind whatsoever upon, any property or
assets (tangible or intangible) of any Selling
Stockholder pursuant to the terms of (i) any license,
contract, indenture, mortgage, deed of trust, lease,
voting trust agreement, stockholders agreement, note,
loan or credit agreement or any other agreement or
instrument of which such counsel has knowledge and to
which any Selling Stockholder is a party or by which
any Selling Stockholder is bound, or (ii) any
statute, rule or regulation, or, to such counsel's
knowledge, any decree, judgement or order, of any
arbitrator, court, regulatory body or administrative
agency or other governmental agency or body having
jurisdiction over any Selling Stockholder or any of
his activities or properties (including, without
limitation, those having jurisdiction over
environmental or similar matters), domestic or
foreign, which is applicable to any Selling
Stockholder, and in each case where such conflict,
breach, violation or default would have a material
adverse effect on such Selling Stockholder.
(ii) To such counsel's knowledge, no consent, approval,
authorization or order of any Federal or state court
or governmental agency or body is required for the
performance of this Agreement by either Selling
Stockholder or the sale by either Selling Stockholder
-40-
of the Common Stock to be sold by him hereunder,
except such as have been obtained under the Act and
such as may be required under state securities or
Blue Sky laws in connection with the purchase and
distribution of such shares by the several
Underwriters (as to which such counsel need express
no opinion) and such as may be required under the
rules of the National Association of Securities
Dealers, Inc. with respect to the underwriting
arrangements reflected in this Agreement (as to which
such counsel need express no opinion).
(iii) Except as disclosed in the Registration Statement and
the Prospectus, to such counsel's knowledge, there
are no pending or threatened actions, suits or
proceedings against or affecting either Selling
Stockholder, or any of his properties that, if
determined adversely to the Selling Stockholder,
would materially and adversely affect the ability of
such Selling Stockholder to perform his obligations
under this Agreement, the Custody Agreement, or which
are otherwise required to be disclosed in the
Prospectus under the Rules and Regulations.
(iv) No transfer tax, stamp duty or other similar tax is
payable (on the assumption that the laws of the State
of New York are applicable) by or on behalf of the
Underwriters in connection with (i) the sale by the
Selling Stockholders of the Option Securities, (ii)
the purchase by the Underwriters of the Option
Securities from the Selling Stockholders, (iii) the
consummation by the Selling Stockholders of any of
their obligations under this Agreement, or (iv)
resales of the Option Securities in connection with
the distribution contemplated hereby.
(v) Each of the Underwriters has received good and valid
title to the Option Securities being sold by the
Selling Stockholder hereunder, free and clear of any
adverse claims; provided that the Underwriters are
purchasing such Option Securities in good faith and
without notice of any adverse claims;
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of responsible officers
of the Company, the Selling Stockholder and public officials.
Copies of such certificates shall be furnished to the
Representative and counsel for the Underwriters.
Such counsel may assume that each Selling Stockholder has the
necessary legal capacity to execute, deliver and perform the
-41-
Agreement and the Custody Agreement executed by him in
connection with the transactions contemplated by the
Agreement.
(f) At the Option Closing Date, if any, the Representatives shall
have received the favorable opinion of Company Counsel, as
both special counsel to the Company and special counsel to the
Selling Stockholders dated the Option Closing Date, addressed
to the Underwriters and in form and substance satisfactory to
the Representative and Underwriters' Counsel confirming as of
the Option Closing Date the statements made by Company Counsel
in its opinion delivered on the Closing Date as counsel to the
Company and counsel to the Selling Stockholders.
(g) On or prior to each of the Closing Date and the Option Closing
Date, if any, Underwriters' Counsel shall have been furnished
such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review
or pass upon the matters referred to in subsection (c) of this
Section 8, or in order to evidence the accuracy, completeness
or satisfaction of any of the representations, warranties or
conditions of the Company and each Subsidiary, or herein
contained.
(h) Prior to each of the Closing Date and the Option Closing Date,
if any (i) there shall have been no material adverse change or
development involving a prospective material change in the
condition, financial or otherwise, prospects, stockholders
equity or the business activities of the Company, whether or
not in the ordinary course of business, from the latest dates
as of which such condition is set forth in the Registration
Statement and Prospectus; (ii) except as disclosed in the
Registration Statement, there shall have been no transaction,
not in the ordinary course of business, entered into by the
Company or any Subsidiary, from the latest date as of which
the financial condition of the Company and any Subsidiary is
set forth in the Registration Statement and Prospectus which
is materially adverse to the Company or any Subsidiary; (iii)
neither the Company nor any Subsidiary, shall be in default
under any provision of any instrument relating to any
outstanding indebtedness which default has not been waived;
(iv) except as disclosed in the Registration Statement,
neither the Company nor any Subsidiary shall have issued any
securities (other than the Securities) or declared or paid any
dividend or made any distribution in respect of its capital
stock of any class and there has not been any change in the
capital stock or any material change in the debt (long or
short term) or liabilities or obligations of the Company or
any Subsidiary (contingent or otherwise); (v) no material
amount of the assets of the Company or any Subsidiary shall
have been pledged or mortgaged, except as set forth in or
contemplated by the Registration Statement and Prospectus;
-42-
(vi) no action, suit or proceeding, at law or in equity, shall
have been pending or threatened (or circumstances giving rise
to same) against the Company or any Subsidiary or any of the
Selling Stockholders, or affecting any of their respective
properties or businesses before or by any Court or federal,
state or foreign commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding may
materially, adversely affect the Business, or the Selling
Stockholders' abilities to continue to function in connection
with the business operations of the Company or any Subsidiary,
except as set forth in the Registration Statement and
Prospectus; and (vii) no stop order shall have been issued
under the Act and no proceedings therefor shall have been
initiated, threatened or contemplated by the Commission.
(i) At each of the Closing Date and Option Closing Date, if any,
the Underwriters shall have received a certificate of the
Company signed by the principal executive officer and by the
chief financial or chief accounting officer of the Company,
dated the Closing Date or Option Closing Date, as the case may
be, to the effect that each of such persons has carefully
examined the Registration Statement, the Prospectus and this
Agreement, and that:
(i) The representations and warranties of the Company and
each Subsidiary in this Agreement are true and
correct as if made on and as of the Closing Date or
the Option Closing Date, as the case may be, and the
Company has complied with all agreements and
covenants and satisfied all conditions contained in
this Agreement on its part to be performed or
satisfied at or prior to the Closing Date or Option
Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been
issued, and no proceedings for that purpose have been
instituted or are pending or, to the best of each of
such persons knowledge after due inquiry, are
contemplated or threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if
any, each amendment and each supplement thereto,
contain all statements and information required to be
included therein, and the Registration Statement, or
any amendment or supplement thereto, does not include
any untrue statement of a material fact or omits to
state any material fact required to be stated therein
or necessary to make the statements therein not
misleading and neither the Preliminary Prospectus,
the Prospectus, or any supplement thereto included
-43-
any untrue statement of a material fact or omitted to
state any material fact required to be stated therein
or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement
and the Prospectus, and except as described in or
contemplated by the Registration Statement and
Prospectus, (a) neither the Company nor any
Subsidiary has incurred up to and including the
Closing Date or the Option Closing Date, as the case
may be, other than in the ordinary course of its
business, any material liabilities or obligations,
direct or contingent; (b) neither the Company nor any
Subsidiary has paid or declared any dividends or
other distributions on its capital stock; (c) neither
the Company nor any Subsidiary has entered into any
transactions not in the ordinary course of business;
(d) there has not been any change in the capital
stock or material increase in long-term debt or any
material increase in the short-term borrowings (other
than any increase in the short-term borrowings in the
ordinary course of business) of the Company or any
Subsidiary; (e) neither the Company nor any
Subsidiary has sustained any loss or damage to its
property or assets, whether or not insured; (f) there
is no litigation which is pending or threatened (or
circumstances giving rise to same) against the
Company or any Subsidiary or any affiliated party of
any of the foregoing which is required to be set
forth in an amended or supplemented Prospectus which
has not been set forth; and (g) there has occurred no
event required to be set forth in an amended or
supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in
this subsection (g) are to such documents as amended and
supplemented at the date of such certificate.
(j) The Selling Stockholders shall have furnished to the
Underwriter such other documents and certificates as to the
accuracy and completeness of any statement in the Registration
Statement or the Prospectus as of the time of purchase and the
additional time of purchase, as the case may be, as the
Representative and Underwriters' counsel may reasonably
request. Specifically, at each Option Closing Date, if any,
-44-
the Underwriters shall have received a certificate from each
of the Selling Stockholders (which may be signed by the
Attorney-in-Fact), dated the Option Closing Date, if any, to
the effect that such Selling Stockholder has carefully
examined the Registration Statement, the Prospectus and this
Agreement, and that:
(i) The representations and warranties of such Selling
Stockholder in this Agreement are true and correct,
as if made at and as of the Option Closing Date, as
the case may be, and such Selling Stockholder has
complied with all agreements and covenants and
satisfied all conditions contained in this Agreement
to be performed or satisfied by such Selling
Stockholder at or prior to the Option Closing Date,
as the case may be; and
(ii) The Registration Statement and Prospectus and, if
any, each amendment and each supplement thereto,
contain all statements and information required to be
included therein regarding such Selling Stockholder,
and none of the Registration Statement, the
Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact
regarding such Selling Stockholder or omits to state
any material fact regarding such Selling Stockholder
required to be stated therein or necessary to make
the statements therein regarding such Selling
Stockholder not misleading, and neither the
Preliminary Prospectus or any supplement thereto
included any untrue statement of a material fact
regarding such Selling Stockholder or omitted to
state a material fact regarding such Selling
Stockholder required to be stated therein or
necessary in order to make the statements therein
regarding such Selling Stockholder, in light of the
circumstances under which they were made, not
misleading.
References to the Registration Statement and the Prospectus in
this subsection (j) are to such documents as amended and
supplemented at the date of such certificate.
(k) The Company and the Selling Stockholders shall have performed
such of their respective obligations under this Agreement as
are to be performed by the terms hereof at or before the time
of purchase and at or before the additional time of purchase,
as the case may be. Specifically, the Selling Stockholders
shall provide such documentation to the Underwriters as is
acceptable to Underwriters' counsel to demonstrate that all
transfer tax amounts due and payable under Section 270 of the
New York State Tax Law with respect to the sale of the Option
Securities under this Agreement by the Selling Stockholders
have been paid prior to the Option Closing Date, as
applicable.
-45-
(l) By the Closing Date, the Underwriters will have received
clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriters or the Representative
in its individual capacity, as described in the Registration
Statement.
(m) At the time this Agreement is executed, the Representative
shall have received a letter, dated the date hereof, addressed
to the Underwriters in form and substance satisfactory
(including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all
respects to the Representative and Underwriters' Counsel from
Deloitte & Touche LLP:
(i) confirming that they are independent certified public
accountants with respect to the Company and each
Subsidiary within the meaning of the Act and the
applicable Rules and Regulations;
(ii) stating that it is their opinion that the
consolidated financial statements and supporting
schedules of the Company and each Subsidiary included
in the Registration Statement comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations
thereunder and that the Underwriter may rely upon the
opinion of Deloitte & Touch LLP, with respect to the
financial statements and supporting schedules
included in the Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited
interim consolidated financial statements of the
Company and each Subsidiary (with an indication of
the date of the latest available unaudited interim
financial statements), a reading of the latest
available minutes of the stockholders and board of
directors and the various committees of the boards of
directors of the Company and the Subsidiaries,
consultations with officers and other employees of
the Company and the Subsidiaries responsible for
financial and accounting matters and other specified
procedures and inquiries, nothing has come to their
attention which would lead them to believe that (A)
the pro forma financial information contained in the
Registration Statement and Prospectus, if any, does
not comply as to form in all material respects with
the applicable accounting requirements of the Act and
the Rules and Regulations or is not fairly presented
in conformity with generally accepted accounting
principles applied on a basis consistent with that of
the audited consolidated financial statements of the
Company or the unaudited pro forma financial
-46-
information included in the Registration Statement,
if any, (B) the unaudited financial statements and
supporting schedules of the Company and the
Subsidiaries included in the Registration Statement
do not comply as to form in all material respects
with the applicable accounting requirements of the
Act and the Rules and Regulations or are not fairly
presented in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of the audited
consolidated financial statements of the Company and
the Subsidiary included in the Registration
Statement, or (C) at a specified date not more than
five (5) days prior to the effective date of the
Registration Statement, there has been any change in
the capital stock or long-term debt of the Company
and the Subsidiaries, or any decrease in the
stockholders' equity or net current assets or net
assets of the Company and the Subsidiaries as
compared with amounts shown in the balance sheet
included in the Registration Statement, other than as
set forth in or contemplated by the Registration
Statement, or, if there was any change or decrease,
setting forth the amount of such change or decrease,
and (D) during the period from October 31, 1997 to a
specified date not more than five (5) days prior to
the effective date of the Registration Statement,
there was any decrease in net revenues, net revenues,
net earnings or increase in net earnings per common
share of the Company and the Subsidiaries, in each
case as compared with the corresponding period
beginning October 31, 1996 other than as set forth in
or contemplated by the Registration Statement, or, if
there was any such decrease, setting forth the amount
of such decrease;
(iv) setting forth at a date not later than five (5) days
prior to the date of the Registration Statement, the
amount of liabilities of the Company and the
Subsidiaries (including a break-down of commercial
paper and notes payable to banks);
(v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues
and earnings, statements and other financial
information pertaining to the Company and the
Subsidiaries set forth in the Prospectus in each case
to the extent that such amounts, numbers,
percentages, statements and information may be
derived from the general accounting records,
including work sheets, of the Company and the
Subsidiaries and excluding any questions requiring an
interpretation by legal counsel, with the results
obtained from the application of specified readings,
-47-
inquiries and other appropriate procedures (which
procedures do not constitute an examination in
accordance with generally accepted auditing standards
in the United States), set forth in the letter and
found them to be in agreement;
(vi) stating that they have not during the immediately
preceding five (5) year period brought to the
attention of any of the Company's or any Subsidiary's
management any "weakness", as defined in Statement of
Auditing Standard No. 60 "Communication of Internal
Control Structure Related Matters Noted in an Audit,"
in any of the Company's or any Subsidiary's internal
controls;
(vii) stating that they have in addition carried out
certain specified procedures, not constituting an
audit, with respect to certain pro forma financial
information which is included in the Registration
Statement and the Prospectus, if any, and that
nothing has come to their attention as a result of
such procedures that caused them to believe such
unaudited pro forma financial information, if any,
does not comply in form in all respects with the
applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments, if
any, have not been properly applied to the historical
amounts in the compilation of that information; and
(viii) statements as to such other matters incident to the
transaction contemplated hereby as the Representative
may request.
(n) At the Closing Date and the Option Closing Date, if any, the
Representative shall have received from Deloitte & Touche LLP,
a letter, dated as of the Closing Date or the Option Closing
Date, as the case may be, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection
(l) of this Section, except that the specified date referred
to shall be a date not more than five days prior to Closing
Date or the Option Closing Date, as the case may be, and, if
the Company has elected to rely on Rule 430A of the Rules and
Regulations, to the further effect that they have carried out
procedures as specified in clause (v) of subsection (l) of
this Section with respect to certain amounts, percentages and
financial information as specified by the Underwriter and
deemed to be a part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records
specified in such clause (v).
-48-
(o) On each of the Closing Date and the Option Closing Date, if
any, there shall have been duly tendered to the Representative
for the Underwriters' account, the appropriate number of
Securities.
(p) No order suspending the sale of the Securities in any
jurisdiction designated by the Representative pursuant to
subsection (e) of Section 5 hereof shall have been issued on
either the Closing Date or the Option Closing Date, if any,
and no proceedings for that purpose shall have been instituted
or shall be contemplated.
(q) On or before the Closing Date, the Company shall have executed
and delivered to the Representative (i) the Representative's
Warrant Agreement substantially in the form filed as Exhibit
1.2 to the Registration Statement in final form and substance
satisfactory to the Representative and (ii) the
Representative's Warrants in such denominations and to such
designees as shall have been provided to the Company.
(r) On or before the Closing Date, the Common Stock shall have
been duly approved for inclusion and quotation on the Nasdaq
NMS, subject to official notice of issuance.
(s) At the time this Agreement is executed, the Representative
shall receive a letter, addressed to the Underwriters, in form
and substance satisfactory to the Representative and the
Underwriters' Counsel, with respect to certain limited
partnerships and general partnerships identified in the
Registration Statement, as well as with respect to the
Company, from Xxxxxxx Xxxxx & Co., P.C. At the Closing Date
and each Option Closing Date, if any, the Representative shall
have received from Xxxxxxx Radin & Co., P.C., a letter, dated
as of the Closing Date or the Option Closing Date, as the case
may be, to the effect that they reaffirm the statements made
in the letter furnished above pursuant to this subprovision
(s) of Section 8.
If any condition to the Underwriters' obligations hereunder to
be fulfilled prior to or at the Closing Date or the relevant
Option Closing Date, as the case may be, is not so fulfilled,
the Underwriters may terminate this Agreement or, if the
Underwriters so elects, they may waive any such conditions
which have not been fulfilled or extend the time for their
fulfillment by written action of the Representative on behalf
of the several Underwriters.
-49-
9. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Underwriters (for purposes of this Section 9, "Underwriter"
shall include the officers, directors, stockholders, partners,
employees, agents, including specifically each person who may
be substituted for an Underwriter as provided in Section 13
hereof), and each person, if any, who controls the Underwriter
(a "controlling person") within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, from and against
any and all losses, claims, damages, expenses or liabilities,
joint or several (and actions in respect thereof), whatsoever
(including but not limited to any and all reasonable expenses
whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever), as such are incurred, to which the Underwriter or
such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out
of or based (A) upon any untrue statement or alleged untrue
statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as
from time to time amended and supplemented); (ii) in any post
effective amendment or amendments or any new registration
statement and prospectus in which is included securities of
the Company issued or issuable upon exercise of the
Securities; or (iii) in any application or other document or
written communication (in this Section 9 collectively called
"application") executed by the Company or based upon written
information furnished by the Company or any Selling
Stockholder in any jurisdiction in order to qualify the
Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, the
Nasdaq NMS or any other securities exchange; (B) the omission
or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus, in the light of
the circumstances under which made), or (C) any breach of any
representation, warranty or covenant or agreement of the
Company or any Selling Stockholder contained herein or in any
certificate by or on behalf of the Company or any of its
officers or the Selling Stockholders delivered pursuant
hereto, unless, in the case of clause (A) or (B) such
statement or omission (i) was made in reliance upon and in
conformity with written information furnished to the Company
with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus,
the Registration Statement or Prospectus, or any amendment
thereof or supplement thereto, or in any application, as the
case may be, or (ii) if a copy of the Preliminary Prospectus
or Prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected had
not been sent, distributed or property recirculated by the
Underwriters within the time required by the Act and the Rules
-50-
and Regulations and such failure directly resulted in the
otherwise indemnifiable losses, claims, damages, or expenses
of the Underwriters (as defined herein) and each controlling
person thereof.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company or the Selling
Stockholders may have at common law or otherwise.
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless the Underwriters (as defined in
this Section 9(a) above) and each controlling person within
the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all losses, claims,
damages, expenses or liabilities, joint or several (and
actions in respect thereof), whatsoever (including but not
limited to any and all reasonable expenses whatsoever incurred
in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever),
as such are incurred, to which the Underwriter or such
controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out
of or based (A) upon any untrue statement or alleged untrue
statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as
from time to time amended and supplemented); (ii) in any post
effective amendment or amendments or any new registration
statement and prospectus in which is included securities of
the Company issued or issuable upon exercise of the
Securities; or (iii) in any application or other document or
written communication (in this Section 9 collectively called
"application") based upon written information furnished by
such Selling Stockholder in any jurisdiction in order to
qualify the Securities under the securities laws thereof or
filed with the Commission, any state securities commission or
agency, the Nasdaq NMS or any other securities exchange; or
(B) any breach of any representation, warranty or covenant or
agreement of such Selling Stockholder contained herein or in
any certificate by or on behalf of such Selling Stockholders
delivered pursuant hereto, unless, in the case of clause (A)
such statement or omission was made (i) in reliance upon and
in conformity with written information furnished to such
Selling Stockholder with respect to any Underwriter by or on
behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment thereof or supplement thereto, or
in any application, as the case may be or (ii) if a copy of
the Preliminary Prospectus or Prospectus in which such untrue
statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent, given, distributed
-51-
or properly recirculated by the Underwriters within the time
required by the Act and the Rules and Regulations and such
failure directly resulted in the otherwise indemnifiable
losses, claims, damages, or expenses of the Underwriters as
defined herein) and each controlling person thereof.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which the Company may have at common
law or otherwise.
(c) The Underwriters agree severally, but not jointly, to
indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the
Registration Statement, and each other person, if any, who
controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, and the Selling
Stockholders, to the same extent as the foregoing indemnity
from the Company and the Selling Stockholders to the
Underwriters but only with respect to statements or omissions,
if any, made in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in
strict conformity with, written information furnished to the
Company with respect to any Underwriter by such Underwriter
expressly for use in such Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment thereof
or supplement thereto or in any such application. Each of the
Company and each of the Selling Stockholders acknowledges that
the statements with respect to the public offering of the
Securities set forth under the heading "Underwriting" and the
stabilization and passive market making legends in the
Prospectus have been furnished by the Underwriters expressly
for use therein and constitute the only information furnished
in writing by or on behalf of the Underwriters for inclusion
in the Prospectus.
The indemnity agreement in this subsection (c) shall be in
addition to any liability which each Underwriter may have at
common law or otherwise.
(d) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in
respect thereof is to be made against one or more indemnifying
parties under this Section 9, notify each party against whom
indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party
shall not relieve it from any liability which it may have
under this Section 9 except to the extent that it has been
prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such
action is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement
-52-
thereof, the indemnifying party or parties will be entitled to
participate therein, and to the extent it may elect by written
notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case but
the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless (i) the employment
of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such
action at the expense of such indemnifying party, (ii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the
defense of such action within a reasonable period of time
after notice of commencement of the action, or (iii) such
indemnified party or parties shall have been advised in a
written opinion by counsel to the indemnified party that a
conflict of interest exists between the indemnifying party and
the indemnified parties, making representation of such parties
by the same counsel inappropriate (in which case the
indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and
expenses of additional counsel shall be borne by the
indemnifying parties. Anything in this Section 9 to the
contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected
without its written consent; provided, however, that such
consent was not unreasonably withheld or delayed. An
indemnifying party will not, without the prior written consent
of the indemnified parties, settle, compromise or consent to
the entry of any judgement with respect to any pending or
threatened claim, action, suit, investigation, inquiry,
proceeding or litigation in respect of which indemnification
or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such
claim, action, suit, investigation, inquiry, proceeding or
litigation), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party
from all liability arising out of such claim, action, suit,
investigation, inquiry, proceeding or litigation and (ii) does
not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any
indemnified party.
(e) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes a claim for
indemnification pursuant to this Section 9, but it is
judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal)
-53-
that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of this
Section 9 provide for indemnification in such case, or (ii)
contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall
contribute to the amount paid as a result of such losses,
claims, damages, expenses or liabilities (or actions in
respect thereof) (A) in such proportion as is appropriate to
reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the
Securities or (B) if the allocation provided by clause (A)
above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault
of each of the contributing parties, on the one hand, and the
party to be indemnified on the other hand, in connection with
the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities, as well as any other
relevant equitable considerations. In any case where the
Company and/or any Selling Stockholder is the contributing
party and the Underwriters are the indemnified party, the
relative benefits received by the Company and/or any Selling
Stockholder on the one hand, and the Underwriters on the
other, shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities (before
deducting expenses other than underwriting discounts and
commissions) bears to the total underwriting discounts and
non-accountable expense allowance and any amounts realized
from the sale of Representative Securities received by the
Underwriters hereunder, in each case as set forth in the table
on the cover page of the Prospectus. Relative fault shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates
to information supplied by the Company, the Selling
Stockholders, or by the Underwriters, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified any
such action or claim. Notwithstanding the provisions of this
subsection (d), the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount
applicable to the Firm Securities and Options Securities
purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, (i) each
-54-
person, if any, who controls the Company within the meaning of
the Act, each officer of the Company who has signed the
Registration Statement, and each director of the Company shall
have the same rights to contribution as the Company and (ii)
each person, if any, who controls an Underwriter within the
meaning of the Act shall have the same rights to contribution
as such Underwriter, subject in each case to this subsection
(d). Any party entitled to contribution will, promptly after
receipt of notice of claim of any action, suit or proceeding
against such party in respect to which a claim for
contribution may be made against another party or parties
under this subsection (d), notify such party or parties from
whom contribution may be sought, but the omission so to notify
such party or parties shall not relieve the party or parties
from whom contribution may be sought from any obligation it or
they may have hereunder or otherwise than under this
subsection (d), or to the extent that such party or parties
were not adversely affected by such omission. The contribution
agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common
law or otherwise.
10. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement
or contained in certificates of officers of the Company or of the
Selling Stockholders submitted pursuant hereto, shall be deemed to be
representations, warranties and agreements at the Closing Date and the
Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and of the Selling
Stockholders, and the indemnity agreements contained in Section 9
hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter, the
Company, any Selling Stockholder, or any controlling person of any
Underwriter or the Company, and shall survive termination of this
Agreement or the issuance and delivery of the Securities to the
Underwriters and the Representative, as the case may be.
11. Effective Date. This Agreement shall become effective at 10:00 a.m.,
New York City time, on the date hereof, or at such earlier time after
the Registration Statement becomes effective as the Representative, in
its discretion, shall release the Firm Securities and Option Securities
for the sale to the public; provided, however, that the provisions of
Sections 7, 9 and 12 of this Agreement shall at all times be effective.
For purposes of this Section 11, the Firm Securities and the Option
Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representative of
telegrams to securities dealers releasing such securities for offering
or the release by the Representative for publication of the first
newspaper advertisement which is subsequently published relating to the
Firm Securities and the Option Securities.
-55-
12. Termination.
(a) Subject to subsection (b) of this Section 12, the
Representative shall have the right to terminate this
Agreement between the date of this Agreement and the Closing
Date or the Option Closing Date, as the case may be, (i) if
any domestic or international event or act or occurrence has
materially disrupted, or in the Underwriter's opinion will in
the immediate future materially disrupt the financial markets;
or (ii) if any material adverse change in the financial
markets shall have occurred; or (iii) if trading generally
shall have been suspended or materially limited on or by the
New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers Automated Quotation
System, the NASD, the Commission or any other government
authority having jurisdiction over such matters; or (iv) if
trading of any of the securities of the Company shall have
been suspended, or any of the securities of the Company shall
have been delisted, on any exchange or in any over-the-counter
market; or (v) if the United States shall have become involved
in a war or major hostilities, or if there shall have been an
escalation in an existing war or major hostilities or a
national emergency shall have been declared in the United
States; or (vi) if a banking moratorium has been declared by
any state or by federal authority; or (vii) if the Company
shall have sustained a loss material to the Company by fire,
flood, accident, hurricane, earthquake, theft, sabotage or
other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the Representative's
opinion, make it inadvisable to proceed with the offering,
sale and/or delivery of the Firm Securities and the Option
Securities; or (viii) if there shall have been (a) such a
material adverse change in the Business, or (b) such material
adverse change in the general market, political or economic
conditions, in the United States or elsewhere, which, in each
case, in the Representative's judgment, would make it
inadvisable to proceed with the offering, sale and/or delivery
of the Firm Securities and the Option Securities; or (ix) if
either of Messrs. Xxxxxxx X. Xxxxx or Xxxx Xxxxxxx no longer
serves the Company in his present capacity.
(b) If this Agreement is terminated by the Representative in
accordance with the provisions of Section 12(a), the Company
shall promptly reimburse and indemnify the Representative for
all of its actual out-of-pocket expenses (on an accountable
basis), including the reasonable fees and disbursements of
counsel for the Underwriter (less amounts previously paid
pursuant to Section 7(c) above), subject to application of the
limits identified in Section 7(c) of this Agreement. In
addition, the Company shall remain liable for all Blue Sky
counsel fees (up to a maximum of $30,000) and disbursements,
expenses and filing fees. Notwithstanding any contrary
-56-
provision contained in this Agreement, any election hereunder
or any termination of this Agreement (including, without
limitation, pursuant to Sections 8, 12, and 13 hereof), and
whether or not this Agreement is otherwise carried out, the
provisions of Section 7 and Section 9 shall not be in any way
affected by such election or termination or failure to carry
out the terms of this Agreement hereof.
13. Substitution of the Underwriters; Default by the Company.
(a) If one or more of the Underwriters shall fail (otherwise than
for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 8, Section 12 or
Section 13 hereof) to purchase the Securities which it or they
are obligated to purchase on such date under this Agreement
(the "Defaulted Securities"), the Representative shall have
the right, within twenty-four (24) hours thereafter, to make
arrangement for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts
as may be agreed upon the terms herein set forth; if, however,
the Representative shall not have completed such arrangements
within such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed
10% of the total number of Firm Securities to be
purchased on such date, the non-defaulting
Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their
respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting
Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of
the total number of Firm Securities, this Agreement
shall terminate without liability on the part of any
non-defaulting Underwriters (or, if such default
shall occur with respect to any Option Securities to
be purchased on an Option Closing Date, the
Underwriters may at the Representative's option, by
notice from the Representative to the Company and the
Selling Stockholders, terminate the Underwriters'
obligation to purchase Option Securities from the
Selling Stockholders on such date).
No action taken pursuant to this Section 13 shall relieve any
defaulting Underwriter from liability in respect of any
default by such Underwriter under this Agreement.
-57-
In the event of any such default which does not result in a
termination of this Agreement, the Representative shall have
the right to postpone the Closing Date or the Option Closing
Date, as the case may be, for a period not exceeding seven (7)
days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents
or arrangements.
(b) If either the Company or any Selling Stockholder shall fail at
the Closing Date or any Option Closing Date, as applicable, to
sell and deliver the number of Securities which it or he is
obligated to sell hereunder on such date, then this Agreement
shall terminate (or, if such default shall occur with respect
to any Option Securities to be purchased on an Option Closing
Date, the Underwriters may, at the Representative's option, by
notice from the Representative to the Company and the Selling
Stockholders, terminate the Underwriters' obligation to
purchase Option Securities from the Company and/or the Selling
Stockholders, as the case may be, on such date) without any
liability on the part of any non-defaulting party other than
pursuant to Section 7, Section 9 and Section 12 hereof. No
action taken pursuant to this Section 13 shall relieve the
Company and/or the Selling Stockholders from liability, if
any, in respect of such default.
14. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriter at Royce
Investment Group, Inc., 000 Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000, Attention: _____________, Chairman, with a copy to Xxxxxxxxx
Traurig Xxxxxxx Xxxxxx Xxxxx & Xxxxxxx, 000 Xxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxxxx, Esq. Notices to
the Company and to the Selling Stockholders shall be directed to the
Company, and to the Selling Stockholders in care of the Company, at
0000 X. Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx, XX 00000, Attention:
Xxxx Xxxxxxx, III, Executive Vice President, with a copy to Xxxx &
Priest, LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxx X. Xxxx, Esq.
15. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriter, the Company, the Selling Stockholders
and the controlling persons, directors and officers referred to in
Section 9 hereof, and their respective successors, legal
representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provisions
herein contained. No purchaser of Securities from the Underwriter shall
be deemed to be a successor by reason merely of such purchase.
-58-
16. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without
giving effect to its choice of law or conflict of laws principles.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all
of which taken together shall be deemed to be one and the same
instrument.
18. Entire Agreement: Amendments. This Agreement and the Representative's
Warrant Agreement constitute the entire agreement of the parties hereto
and supersede all prior written or oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement
may not be amended except in a writing, signed by the Underwriter, the
Company and the Selling Stockholders.
-59-
If the foregoing correctly sets forth the understanding among the Underwriter,
the Company and the Selling Stockholders, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among the Underwriter, the Company and the Selling
Stockholders, severally.
Very truly yours,
GRAND COURT LIFESTYLES, INC.
By: ________________________________________
Name: _______________________________
Title: ______________________________
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE A HERETO
___________________________________________
Xxxxxxx X. Xxxxx
___________________________________________
Xxxx Xxxxxxx
CONFIRMED AND ACCEPTED AS OF
THE DATE FIRST ABOVE WRITTEN:
ROYCE INVESTMENT GROUP, INC.
For itself and as Representative of the several Underwriters named in
Schedule B hereto.
By: ________________________________
Name: [ ]
Title: Chairman
-60-
SCHEDULE A
Number of
Name Option Securities
---- -----------------------------
Xxxxxxx X. Xxxxx 225,000 Firm Securities of
Common Stock
Xxxx Xxxxxxx 225,000 Firm Securities of
Common Stock
TOTAL.......................................... 450,000 Firm Securities of
Common Stock
-61-
SCHEDULE B
Number of
Name Firm Securities
---- ---------------
Common Stock
------------
Royce Investment Group
TOTAL...................... 3,000,000 Shares
================
