EXHIBIT 1.1
UNDERWRITING AGREEMENT (FORM)
UNDERWRITING AGREEMENT
_________, 1997
VEERA CAPITAL CORPORATION
00 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Dear Ladies and Gentlemen:
Mirage Holdings, Inc., a Nevada corporation (the "Company"), proposes to
issue and sell a minimum of 240,000 Units and a maximum of 342,857 Units for
$5.25 per Unit, each Unit consisting of one share of the Company's Common Stock
and one warrant to purchase one share of the Company's Common Stock for $4.50,
on a best-efforts basis. The Company confirms as follows its agreement with
you.
1. Registration Statement and Prospectus: The Company has prepared and
--------------------------------------
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the Securities Act of 1933, as amended (the "Act") and the rules
and regulations of the Commission promulgated thereunder (the "Rules and
Regulations"), a registration statement on Form SB-2, including a preliminary
prospectus, relating to the Securities. As used in this Agreement, the term
"Registration Statement" means such registration statement, including exhibits,
financial statements and schedules, as amended, when it becomes effective and
any information (if any) contained in the prospectus subsequently filed with the
Commission pursuant to Rule 424(b) under the Act, and the term "Prospectus"
means such prospectus in the final form filed on behalf of the Company with the
Commission pursuant to Rule 424(b) under the Act.
2. Agreement to Sell and Purchase: Upon the basis of the
-------------------------------
representations, warranties and agreements herein contained and subject to all
the terms and conditions of this Agreement, the Company agrees to sell to you
and you agree to purchase from the Company the aggregate principal amount of
Securities which are sold in this Offering at a 10% discount from the purchase
price provided, however, that if the Company fails to receive subscriptions for
a minimum of 350,000 Units within 120 days from the date of the final Prospectus
(or 150 days, if extended by the Company), the Offering will be terminated and
any subscriptions received will be promptly refunded within 5 days to
subscribers, without any deduction therefrom or any interest thereon and this
Agreement shall terminate.
It is understood that you currently intend to execute an Agreement Among
Underwriters providing for the purchase of a portion of the principal amount, at
whatever price you may elect, at your own discretion (the "Agreement Among
Underwriters").
The Company agrees to pay to you a non-accountable expense allowance equal
to 3% of the aggregate principal amount of Securities sold. In the event that
the Company's public offering of the Securities is terminated for any reason,
the Company shall pay you for any reasonable accountable expenses you have
incurred.
In addition to the sums payable to you, as provided elsewhere herein, Veera
Capital Corporation, in its individual capacity and not as representative of the
several Underwriters, shall be entitled to receive, as partial compensation for
its services, warrants (the "Warrants") for the purchase of an amount of shares
of Common Stock of the Company equal to 10% of the number of Units issued in the
public offering. The Warrants shall be issued pursuant to the Underwriter's
Warrant in the form of Exhibit B attached hereto and shall be exercisable, in
whole or in part, for a period of four years commencing one year from the date
of the completion of the Offering at an exercise price of $4.32 per share. The
Warrants shall be non-exercisable for one year from the issuance of the
Warrants, and non-transferable (whether by sale, transfer, assignment, or
hypothecation) except for (i) transfers to officers of Veera
1
Capital Corporation who are also shareholders of Veera Capital Corporation; and
(ii) transfers occurring by operation of law.
3. Delivery and Payment: Delivery of and payment for any securities
---------------------
purchased in the Offering shall be made at 10:00 A.M., Eastern time, on [____],
1997 or at such other time and date as may be agreed between you and the
Company, but not less than seven nor more than ten full business days after the
effective date of the Registration Statement (such time and date are referred to
herein as the "Closing Date"). Delivery of and payment for the Securities shall
take place at the office of Veera Capital Corporation, 00 Xxxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, XX, 00000. The Closing Date and the place of delivery of and
payment for the Securities may be varied by agreement between you and the
Company.
Delivery of the Securities (in temporary or definitive form and registered
in such names and in such denominations as you shall request at least two
business days prior to the Closing Date by written notice to the Company) shall
be made to you against payment of the purchase price therefor in good (same day)
funds, to the order of the Company. For the purpose of expediting the checking
and packaging of the Securities, the Company agrees to make such Securities
available for inspection at least 24 hours prior to the Closing Date.
4. Agreements of the Company: The Company agrees with you as follows:
--------------------------
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments 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 the
Securities Exchange Act of 1934, as amended (the "Exchange Act") before
termination of the offering of the Securities by you of which you and your
counsel shall not previously have been advised and furnished with a copy, or to
which you or your counsel shall have objected (except if deemed necessary by
counsel for the Company, in which case you shall have the right to terminate
this Agreement upon prompt notice to the Company), or which is not in compliance
with the Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the Rules and Regulations.
As soon as the Company is advised or obtains knowledge thereof, the
Company will advise you, and as soon as practicable, confirm in writing, (i)
when the Registration Statement, as amended, becomes effective and, if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and when any post-
effective amendment to the Registration Statement becomes effective, (ii) of the
issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of any 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 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 shall enter a stop order or
suspend such qualification at any time, the Company will make every effort to
obtain promptly the lifting of such order or suspension.
(b) The Company will furnish to you, without charge, three signed copies of
the Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and all exhibits.
(c) The Company will give you advance notice of its intention to file any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus, and will not file any such amendment or supplement to which you
shall reasonably object in writing or which is not in compliance with the Act.
(d) From the date hereof, and thereafter from time to time, the Company
will deliver to you, without charge, as many copies of the Prospectus, or any
amendment or supplement thereto as you may reasonably request.
2
The Company consents to the use of the Prospectus or any amendment or supplement
thereto by you and by 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 to be delivered under the Act in
connection therewith. If during such period of time any event shall occur which
in the reasonable judgment of the Company or your counsel should be set forth in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto and will deliver to you, without charge, such number of copies
thereof as you may reasonably request.
(e) Prior to any public offering of the Securities by you, the Company will
cooperate with you and your counsel in connection with the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions as you request. The Company will pay all
reasonable fees and expenses (including reasonable fees and expenses of counsel)
relating to qualification of the Securities under such securities or Blue Sky
laws and in connection with the determination of the eligibility of the
Securities for investments under the laws of such jurisdictions as you may
designate, including the reasonable expenses of any opinion of local counsel
required by any state securities or Blue Sky authorities.
(f) So long as any of the Securities remain outstanding, the Company will
furnish to its securityholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants), and
will deliver to you, as representative for the underwriters:
(i) concurrently with furnishing such quarterly reports to its
securityholders, statements of income of the Company for each quarter in the
form furnished to the Company's securityholders and certified by the Company's
principal financial or accounting officer;
(ii) concurrently with furnishing such annual reports to its
securityholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with statements of operations, stockholders' equity and
cash flows of the Company for such fiscal year, accompanied by a copy of the
report thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all 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, any state
securities commission, NASDAQ/SCMS, the NASD or any securities exchange;
(v) every press release and every material news item regarding each of
the Company and the Subsidiaries or their respective affairs which were released
or prepared by or on behalf of the Company or any of the Subsidiaries; and
(vi) any additional information of a public nature concerning the
Company or any of the Subsidiaries (and any future subsidiaries) or their
respective businesses which you may request.
During such period, if the Company has 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.
(g) The Company will pay all expenses in connection with (1) the
preparation, printing and filing of the Registration Statement, each preliminary
prospectus, the Prospectus, any legal investment memoranda and the Blue Sky
Survey, (2) the issuance and delivery of the Securities (other than transfer
taxes), (3) the rating of the Securities by rating agencies, (4) furnishing such
copies of the Registration Statement, the Prospectus and any preliminary
prospectus, all amendments and supplements thereto, as may reasonably be
requested for use in connection with the
3
offering and sale of the Securities by you or by dealers to whom Securities may
be sold, and (5) filings with the National Association of Securities Dealers,
Inc. ("NASD").
(h) The Company will use the net proceeds from the sale of the Securities
in the manner specified in the Prospectus under the caption "Use of Proceeds."
No portion of the net proceeds will be used, directly or indirectly, to acquire
or redeem any securities issued by the Company.
(i) The Company will appoint and retain, while any of the Securities remain
outstanding, a transfer agent for the Securities, and, if necessary, a registrar
for the Securities (who may be the transfer agent), and will make arrangements
to have available at the offices of the transfer agent certificates for the
Securities in such quantities as may, from time to time, be necessary. As of
the date of this Agreement, the transfer agent for the securities of the
Company.
(j) For a period of five years from the date hereof, the Company shall use
its best efforts to maintain the listing of its common stock on the National
Association of Securities Dealers, Inc. ("NASD") over-the-counter market.
(k) Neither the Company nor any of the Subsidiaries nor any of their
respective executive officers, directors, principal stockholders or affiliates
(within the meaning of the Rules and Regulations) will take, directly or
indirectly, any action designed to, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any securities of the Company in violation of the Exchange Act.
(l) Until the completion of the distribution of the Securities, neither the
Company nor any of the Subsidiaries shall, without prior written consent of you
and your counsel, issue, directly or indirectly, any press release or other
communication or hold any press conference with respect to the Company, any of
the Subsidiaries, their respective activities or the offering contemplated
hereby, other than trade releases issued in the ordinary course of the Company's
business consistent with past practices with respect to the Company's
operations.
5. Representations and Warranties of the Company: The Company
----------------------------------------------
represents and warrants to you that:
(a) Each preliminary prospectus filed as part of any Registration Statement
as originally filed or as part to any amendment thereto, or filed pursuant to
Rule 424 under the Act, complied when so filed in all material respects with the
Act, and when the Registration Statement becomes effective and at all times
subsequent thereto up to the Closing Date, the Registration Statement and the
Prospectus, and any supplements or amendments thereto, will comply in all
material respects with the provisions of the Act and the Registration Statement
and the Prospectus, and any such supplement or amendment thereto, at all such
times will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated herein or necessary to make the statements
therein not misleading, except that this representation and warranty does not
apply to statements or omissions in the Registration Statement or the
Prospectus or any preliminary prospectus made in reliance upon information
furnished to the Company in writing by you expressly for use therein.
(b) This Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company, enforceable in accordance with its terms, except that (i) the
enforceability hereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect, relating to
creditors' rights generally, (ii) the enforceability thereof may be limited by
the application of equitable principles (whether such enforceability is
considered in a proceeding at law or in equity) and (iii) rights to indemnity
and contribution hereunder may be limited by Federal or state securities laws.
(c) The Securities have been duly authorized, validly issued, fully paid
and nonassessable, and the Company has duly authorized and reserved for issuance
the number of shares of common stock required for the firm commitment offering
and the over-allotment option. The Securities are not and will not be subject to
any preemptive or other similar rights of any security holder of the Company or
any of the Subsidiaries (as defined below); the holders
4
thereof will not be subject to any liability for the Company's acts or omissions
solely as such holders; all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken; and the certificates representing the Securities will be in due and
proper form. Upon the issuance and delivery of the Securities pursuant to the
terms of this Agreement, you will acquire good and marketable title thereto free
and clear of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever resulting from the
affirmative act of the Company or from a judgment or nonconsensual lien rendered
against the Company.
(d) The Company is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Nevada. The Company and each of
its subsidiaries listed on Exhibit A hereto (the "Subsidiaries") have full
corporate power and authority to own and occupy its properties and carry on its
business as presently conducted and as described in the Prospectus and holds all
licenses and permits and is duly registered or qualified to conduct business,
and is in good standing, in each jurisdiction in which it owns or leases
property or transacts business and in which such licensing, registration or
qualification is necessary except where the failure to be so licensed,
registered or qualified would not have a material adverse effect on the Company
and its Subsidiaries, taken as a whole. The Company has a duly authorized,
issued and outstanding capitalization as set forth in the Registration
Statement. All of the outstanding capital stock or other equity securities of
the Company and each of the Subsidiaries has been duly and validly authorized
and issued, is fully paid and nonassessable; the holders thereof have no rights
of rescission with respect thereto and are not subject to personal liability for
the Company's acts or omissions solely by reason of being such holders; and none
of such securities were issued in violation of the preemptive rights of any
security holder of the Company or any of the Subsidiaries or similar contractual
rights granted by the Company or any of the Subsidiaries. There are no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, or agreements or understandings with respect to the
sale or issuance of, any shares of capital stock or other equity interest in any
Subsidiary. Neither the Company nor any of the Subsidiaries is a party to or
bound by any material instrument, agreement or other arrangements, including,
but not limited, to any voting trust agreement, stockholders' agreement or other
agreement or instrument, affecting the securities or options, warrants or rights
or obligations of security holders of the Company or any of the Subsidiaries or
providing for any of them to issue, sell, transfer or acquire any capital stock,
rights, warrants, options or other securities of the Company or any of the
Subsidiaries, except for this Agreement and as described or referred to in the
Registration Statement and the Prospectus.
(e) There are no legal or governmental proceedings pending, or to the
knowledge of the Company, threatened or contemplated to which the Company or any
of its Subsidiaries is a party or of which the business or property of the
Company or any of its Subsidiaries is the subject which are material to the
Company and its Subsidiaries, taken as whole and which are not disclosed in the
Registration Statement and the Prospectus, and there is no contract or document
concerning the Company or any of its Subsidiaries of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required.
(f) Neither the Company nor any of its Subsidiaries is in violation of its
charter or bylaws or is in default in any respect in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any indenture, mortgage, deed of trust or
any other agreement or instrument of the Company or of any such Subsidiary,
which default would be material to the Company and its Subsidiaries, taken as a
whole and there exists, and at the Closing Date shall exist, no condition which,
with the passage of time or otherwise, would constitute a default under any such
document or instrument or result in the imposition of any penalty or
acceleration of any indebtedness which would be material to the Company and its
Subsidiaries, taken as a whole. The execution and delivery by the Company of
this Agreement, the authorization, issuance and sale of the Securities, the
fulfillment by the Company of this Agreement and the consummation by the Company
of the transactions contemplated by this Agreement will not conflict with or
constitute a breach of, or default (with the passage of time or otherwise)
under, or result in the imposition of a lien on any properties of the Company or
its Subsidiaries or an acceleration of indebtedness pursuant to, the certificate
of incorporation or bylaws of the Company or any of
5
its Subsidiaries, or any bond, debenture, note or any other evidence of
indebtedness or any indenture, mortgage, deed of trust or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party to or by which it or any of them is bound or to which any of the property
or assets of the Company or any of its Subsidiaries is subject, or any law,
administrative regulation or order of any court or governmental agency or
authority applicable to the Company or any of its Subsidiaries which in any
event would be material to the Company and its Subsidiaries, taken as a whole.
No consent, approval, authorization or other order of any regulatory body,
administrative agency, or other governmental body is legally required by the
Company or its Subsidiaries for the valid issuance and sale of the Securities,
except such as may be required by the NASD or under the Act or the securities or
blue sky laws of any jurisdiction.
(g) The consolidated financial statements of the Company and its
Subsidiaries together with the related notes and schedules included in the
Registration Statement and Prospectus comply in all material respects with the
requirements of the Act and fairly present the financial position, income,
change in stockholder's equity, cash flow and the results of operations of the
Company and the Subsidiaries at the respective dates and for the respective
periods to which they apply. There has been no adverse change or development
involving a material prospective change in the condition, financial or
otherwise, or in the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of the Company or any
of the Subsidiaries, 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, except as set forth 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 the Subsidiaries
described in the Registration Statement and the Prospectus conform in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus. Such consolidated financial statements (including
the related notes and schedules) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved except as otherwise stated therein.
(h) Each of the Company and the Subsidiaries (i) has paid all federal,
state and local taxes for which it is currently liable, including, but not
limited to, withholding taxes and amounts payable under Chapters 21 through 24
of the Internal Revenue Code of 1986, as amended (the "Code"), and has furnished
all information returns it is required to furnish pursuant to the Code, (ii) has
established adequate reserves for such taxes that are not due and payable and
(iii) does not have any tax deficiency or claims outstanding, proposed or
assessed against its respective business or assets.
(i) Each of the Company and the Subsidiaries maintains insurance policies,
including, but not limited to, general liability, property and product liability
insurance and surety bonds which insures the Company and the Subsidiaries and
their respective professional staffs against such losses and risks generally
insured against by comparable businesses. Neither the Company nor any of the
Subsidiaries (A) has failed to give notice or present any insurance claim with
respect to any matter, including, but not limited to, the Company's or any of
the Subsidiaries' businesses, property or professional staff under any insurance
policy or surety bond in a due and timely manner, (B) has any disputes or claims
against any underwriter of such insurance policies or surety bonds or has failed
to pay any premiums due and payable thereunder or (C) has failed to comply with
all conditions contained in such insurance policies and surety bonds. The
Company has not received notice or facts or circumstances under any insurance
policy or surety bond which would relieve any insurer of its obligation to
satisfy in full any valid claim of the Company or any of the Subsidiaries.
(j) 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 of the
Subsidiaries has (i) entered into any material transaction other than in the
ordinary course of business or (ii) declared or paid any dividend or made any
other distribution on or in respect of its capital stock of any class and there
has not been any change in the capital stock, debt (long or short term) or
liabilities or any material change in or affecting the general affairs,
management, financial operations, stockholders' equity or results of operations
of the Company or any of the Subsidiaries.
(k) Each of the Company and its Subsidiaries is in material compliance with
all federal, state, local and foreign laws and regulations respecting employment
and employment practices, terms and conditions or employment and wages and
hours. The Company has not received notice of any pending investigations
involving the Company or
6
any of the Subsidiaries by the U.S. Department of Labor or any other
governmental agency responsible for the enforcement of such federal, state,
local or foreign laws and regulations. The Company has not received notice of
any unfair labor practice charge or complaint against the Company or any of the
Subsidiaries pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company or any of the subsidiaries or any predecessor entity of
the Company or any of the Subsidiaries, and none has ever occurred. No
collective bargaining agreement or modification thereof is currently being
negotiated by the Company or any of the Subsidiaries. No material labor dispute
with the employees of the Company or any of the Subsidiaries exists, or to the
best of the Company's knowledge, is imminent.
(l) The Company hereby agrees that it will not nor shall it permit any of
the Subsidiaries to, for a period of twelve months from the effective date of
the Registration Statement, adopt, propose to adopt or otherwise permit to exist
any employee, officer, director, consultant or other benefit or compensation
plan or arrangement (i) permitting the grant, issue, sale or entry into any
agreement to grant, issue or sell any capital stock at a price that is less
than, or permitting the grant, issue, sale or entry into any agreement to grant,
issue or sell any option, warrant or other contract right with respect to
capital stock at an exercise price that is less than, the greater of (x) the
market price of the Company's common stock on the effective date of the
Registration Statement (being $3.60 per share) and (y) the fair market value
per share of common stock on the date of grant or sale or to any of its or the
Subsidiaries' executive officers or directors or to any holder of five percent
or more of the common stock; (ii) permitting the maximum number shares of common
stock or other securities of the Company purchasable at any time pursuant
options, warrants or other contract rights issued or granted by the Company to
exceed shares of common stock; (iii) permitting the payment for the securities
covered thereby with any form of consideration other than cash; or (iv)
permitting the existence of stock appreciation rights, phantom options or
similar arrangements.
(m) Each of the Company and the Subsidiaries (i) has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any copyrights, trademarks, service marks and trade names, together
with all applications for any of the foregoing, presently used or held for use
by it in connection with its businesses as described in the Registration
Statement, which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might have a material adverse effect on the
condition, financial or otherwise, or the business taken as a whole, and (ii) is
not obligated or under any liability whatsoever to make any material payments by
way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any trademark, service xxxx, trade name or copyright or other
intangible asset with respect to the use thereof or in connection with the
conduct of its business or otherwise.
(n) The Company is not an "investment company" within the meaning of the
Investment Company Act of 1940.
6. Indemnification: The Company agrees to indemnify you and hold you
----------------
harmless, and each person, if any, who controls you, within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act from and against
any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated herein or necessary to make the statements therein not misleading.
If any action or proceeding (including any governmental investigation)
shall be brought or asserted against you or any person controlling you in
respect of which indemnity may be sought from the Company, you or such
controlling person shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to you or such controlling person, as the case may be and the
payment of all expenses. You or any such controlling person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof at your own cost. The Company shall not be liable for any
settlement of any such action or proceeding effected without its written
consent, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the Company agrees
as provided in
7
the preceding paragraph to indemnify you and hold you or such controlling person
harmless from and against any loss or liability by reason of such settlement or
judgment.
You agree, severally and not jointly, to indemnify and hold harmless the
Company, its directors and officers, and each person, if any, who controls the
Company within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
you, but only with respect to information furnished in writing by you or on your
behalf expressly for use in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its directors or
officers or any such controlling person, in respect of which indemnity may be
sought against you, you shall have the rights and duties given to the Company,
and the Company or its directors or officers or such controlling person shall
have the rights and duties given to you, by the preceding paragraph.
7. Conditions of Your Obligations: Your obligations hereunder shall be
-------------------------------
subject to the continuing accuracy of the representations and warranties of the
Company herein as of the date hereof and as of the Closing Date as if they had
been made on and as of the Closing Date; the accuracy on and as of the Closing
Date of the statements of officers of the Company made pursuant to the
provisions hereof; and the performance by the Company on and as of the Closing
Date of its covenants and obligations hereunder and to the following further
conditions:
(a) Notification that the Registration Statement has become effective and
that the Prospectus has been filed with the Commission on a timely basis
pursuant to Rule 424(b) under the Act shall be received by you;
(b) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or contemplated by the Commission; and you shall have received a
certificate, dated the Closing Date and signed by the Chairman or President of
the Company (who may, as to proceedings contemplated, rely upon the best of his
information and belief), to that effect and to the effect set forth in clause
(g) of this Section 7;
(c) On or prior to the Closing Date, you shall have received from
Underwriter's Counsel, such opinion or opinions with respect to the organization
of the Company, the validity of the Securities, the Registration Statement, the
Prospectus and other related xxxxxx as you may request and Underwriter's Counsel
shall have received such papers and information as they request to enable them
to pass upon such matters.
(d) At Closing Date, you shall have received from counsel to the Company,
dated the Closing Date, addressed to the Underwriters an opinion in the form
attached hereto as Exhibit C. In rendering such opinion, such counsel may rely:
(A) as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent such
counsel deems proper and to the extent specified in such opinion, if at all,
upon an opinion or opinions (in form and substance satisfactory to Underwriters'
Counsel) of other counsel acceptable to Underwriters' Counsel, familiar with the
applicable laws; and (B) as to matters of facts, to the extent they deem proper,
on certificates and written statements of responsible officers of the Company
and certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and the Subsidiaries, provided copies
of any such statements or certificates shall be delivered to Underwriters'
Counsel if requested. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and that the Underwriters and they are justified in relying thereon.
(e) At the time this Agreement is executed, you shall have received a
letter, dated such date, addressed to you in form and substance satisfactory in
all respects (including the nonmaterial nature of the changes or decreases, if
any, referred to in clause (iii) below) to you and your counsel, from Hoffski &
Xxxxxx, Certified Public Accountants:
(i) confirming that they are independent certified public accountants
with respect to the Company within the meaning of the Act and the Exchange Act
and the applicable Rules and Regulations;
8
(ii) stating that it is their opinion that the consolidated financial
statements and supporting schedules of the Company and the Subsidiaries, as
applicable, included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act and the
Exchange Act and the Rules and Regulations thereunder;
(iii) and 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 the Subsidiaries, as applicable, (with
an indication of the date of the latest available unaudited interim consolidated
financial statements of the Company and the Subsidiaries, as applicable), a
reading of the latest available minutes of the stockholders and board of
directors and the various committees of the board of directors or each of the
Company and the Subsidiaries, consultations with officers and other employees of
each 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 unaudited
consolidated financial statements and supporting schedules of the Company and
the Subsidiaries, as applicable, 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 Exchange 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 and supporting schedules of the Company and
the Subsidiaries, as applicable, included in the Registration Statements, (B) at
a specified date not more than five days prior to the later of the date of this
Agreement or the effective date of the Registration Statement, there has been
any change in the capital stock or long-term debt of the Company or any of the
Subsidiaries, or any decrease in the stockholders' equity or net current assets
or net assets of the Company, as compared with amounts shown in the December 31,
1996 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 (C)
during the period from December 31, 1996 to a specified date not more than five
days prior to the later of the date of this Agreement or the effective date of
the Registration Statement, there was any decrease in net revenues, net earnings
or net earnings per common share of the Company and its consolidated
Subsidiaries or any of the Company's unconsolidated Subsidiaries, in each case
as compared with the corresponding period beginning December 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) stating that they have compared specific dollar amounts, numbers
of shares, percentages of revenues and earnings, statements and/or 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/or the
Subsidiaries and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures need not constitute
an examination in accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement; and
(v) statements as to such other matters incident to the transaction
contemplated hereby as you may reasonably request.
(f) At the Closing Date you shall have received from Hoffski & Xxxxxx,
Certified Public Accountants, a letter, dated as of the Closing Date to the
effect that they reaffirm that statements made in the letter furnished pursuant
to subsection (f) of this Section 7, except that the specified date referred to
shall be a date not more than five days prior to the Closing Date 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 (f) of this Section 7 with respect to certain amounts, percentages
and financial information as specified by you 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).
(g) At the Closing Date you 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, to
9
the effect that each of such persons has examined the Registration Statement,
the Prospectus, and this Agreement, and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date 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;
(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
person's 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 none of the Registration Statement, the
Prospectus or any amendment or supplement thereto includes 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 none of
the Preliminary Prospectus or any supplement thereto included any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(iv) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus: (a) neither the Company
nor any of the Subsidiaries has incurred up to and including the Closing Date,
other than in the ordinary course of its business, any material liabilities or
obligations, direct or contingent (except as otherwise contemplated in subclause
(d) of this clause (iv)); (b) neither the Company nor any of the Subsidiaries
has paid or declared any dividends or other distributions on its capital stock;
(c) neither the Company nor any of the Subsidiaries has entered into any
material transactions not in the ordinary course of business (except as
otherwise contemplated in subclause (d) of this clause (iv)); (d) there has not
been any material change in the capital stock or long-term debt or any 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 of the
Subsidiaries; (e) neither the Company nor any of the Subsidiaries has sustained
any material loss or damage to its property or assets, whether or not insured;
(f) there is no material litigation which is pending or, to the best of the
Company's knowledge, threatened against the Company, any of the Subsidiaries 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 (h) are to such documents as amended and supplemented at the date of
such certificates.
(h) The Company shall maintain its Board of Directors to at least three of
which one director shall be an outside director. The Company shall cause such
persons to be nominated, and to use its best efforts to cause them to be elected
to its Board. The Company will have an authorized number of directors totaling
three as of the date of the filing of the Registration Statement. All directors
must have such qualifications as would generally be found for directors of
similarly situated public companies.
(i) Prior to the Closing Date: (i) there shall have been no materially
adverse change nor development involving a prospective change in the condition,
financial or otherwise, prospects, stockholders' equity or the business
activities of the Company and the Subsidiaries taken as a whole, 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) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company or any of the Subsidiaries, from the latest date as of which
the financial condition of the Company and the Subsidiaries is set forth in the
Registration Statement and Prospectus which is adverse to the Company and the
Subsidiaries taken as a whole; (iii) neither the Company nor any of the
Subsidiaries shall be in material default under any provision of any instrument
relating to any outstanding indebtedness; (iv) neither the Company nor any of
the Subsidiaries shall have issued any
10
securities (other than the Securities or underlying common stock from the
exercise of options or warrants) 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 change in the debt (long or short term)
or liabilities or obligations (contingent or otherwise) of the Company or any of
the Subsidiaries; (v) no material amount of the assets of the Company or any of
the Subsidiaries shall have been pledged or mortgaged other than in the ordinary
course of the Company's business, except as set forth in the Registration
Statement and Prospectus; (vi) no action, suit or proceeding, at law or in
equity, shall have been pending or, to the best of the Company's knowledge,
threatened against the Company or any of the Subsidiaries, 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, operations, prospects, financial condition or income of the Company
and the Subsidiaries taken as a whole, 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 or any state regulatory authority.
(j) At the Closing Date, you shall have received a letter from Hoffski &
Xxxxxx, Certified Public Accountants, dated as of the Closing Date,
substantially in the form heretofore approved by you.
If any condition to your obligations hereunder to be fulfilled prior to or
at the Closing Date, is not so fulfilled you may terminate this Agreement or, if
you so elect, you may waive any such conditions which have not been fulfilled or
extend the time for their fulfillment. In the event you so elect to terminate,
you shall have no recourse against the Company for any expenses incurred by
you. However, the Company shall remain liable for all reasonable Blue Sky
counsel fees of the Company and expenses and Blue Sky filing fees of the
Company.
8. Effective Date of Agreement: This Agreement shall become effective
----------------------------
(i) if Rule 430A under the Act is not used, when you shall have received
notification of the effectiveness of the Registration Statement or (ii) if Rule
430A under the Act is used, when the parties hereto have executed and delivered
this Agreement.
9. Notice: Notice given pursuant to any of the provisions of this
------
Agreement shall be in writing and shall be mailed or delivered (a) to the
Company at its office at 000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxxxx,
XX, 00000, Attention: Xxxxxx X. Xxxxxx; and (b) to you, at 00 Xxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, XX, 00000, Attention: Xxxxxx X. Xxxxx. Any notice under
Section 7(a) hereof may be given by facsimile or telephone, but if so given
shall be subsequently confirmed in writing.
10. Termination.
-----------
(a) Subject to Subsection (b) of this Section 10, you shall have the right
to terminate this Agreement (i) if any domestic or international event or act or
occurrence has or in your reasonable opinion will in the immediate future have a
material adverse effect on the Company or the securities market in general or
(ii) if trading on the New York Stock Exchange, the American Stock Exchange or
in the over-the-counter market shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required on the over-the-counter market by the NASD
or by order of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become involved in a war
or major hostilities, or 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 (iv) if a banking moratorium has been declared by a state or
federal authority; or (v) if a moratorium in foreign exchange trading has been
declared; or (vi) if the Company or any of the Subsidiaries shall have sustained
a loss material or substantial to the Company or any of the Subsidiaries 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 your reasonable opinion, make it inadvisable to proceed with the delivery of
the Securities; or (vii) if there shall have been such a material adverse change
in the conditions or prospects of the Company or any of the Subsidiaries, or
such material adverse change in the general market, political or economic
conditions in the United States or elsewhere, as in your judgment would make it
inadvisable to proceed with the offering, sale and/or delivery of the
Securities.
11
(b) If this Agreement is terminated by you in accordance with the
provisions of Section 4(a), Section 10(a)(i), 10(a)(ii), Section 10(a)(iii),
Section 10(a)(iv), Section 10(a)(v), Section 10(a)(vi), Section 10(a)(vii), or
Section 11 or if this Agreement shall not be carried out within the time
specified herein, or any extension thereof granted to you, by reason of any
failure on the part of the Company to perform any material undertaking or
satisfy any material condition of this Agreement by it to be performed or
satisfied (including without limitation, pursuant to Section 7, Section 10(a) or
Section 11), then you shall not be entitled to any compensation. However, the
Company shall remain liable for all reasonable Blue Sky counsel fees of the
Company and expenses and Blue Sky filing fees of the Company. Notwithstanding
any contrary provision contained in this Agreement, any election hereunder or
any termination of this Agreement (including, without limitation, pursuant to
Sections 7, 10 and 11 hereof), and whether or not this Agreement is otherwise
carried out, the provisions of Section 6 shall not be in any way affected by
such election or termination or failure to carry out the terms of this Agreement
or any part hereof.
11. Default by the Company. If the Company shall fail at the Closing Date
----------------------
to sell and deliver the number of Securities which it is obligated to sell
hereunder on such date, then this Agreement shall terminate, you may, at your
option, by notice from you to the Company, terminate your obligation to purchase
the Securities from the Company on such date without any liability on the part
of any non-defaulting party other than pursuant to Sections 5, 7 and 10 hereof.
No action taken pursuant to this Section 11 shall relieve the Company from
liability, if any, in respect of such default.
12. Representations and Agreements to Survive Delivery. All
--------------------------------------------------
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall be deemed to be representations, warranties and agreements at the Closing
Date, and such representations, warranties and agreements of the Company and the
respective indemnity agreements contained in Section 6 hereof shall remain
operative and in full force and effect as of such dates, regardless of any
investigation made by or on behalf of you, the Company, any of the Subsidiaries
or any controlling person, and shall survive termination of this Agreement or
the issuance and delivery of the Securities to you.
13. Entire Agreement; Amendments. This Agreement constitutes the entire
----------------------------
agreement of the parties hereto and supersedes 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 you and
the Company.
14. Miscellaneous. This Agreement has been and is made solely for the
-------------
benefit of you and the Company and of the controlling persons, directors and
officers referred to in Section 6 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" as used in this Agreement
shall not include a purchaser, as such purchaser, of Securities from you.
This Agreement may be signed in various counterparts which together shall
constitute one and the same agreement.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
12
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
MIRAGE HOLDINGS, INC.
-----------------------------------------------
By: Xxxxxx X. Xxxxxx
Its: President
Confirmed as of the date first above mentioned:
VEERA CAPITAL CORPORATION
----------------------------------
By: Xxxxxx X. Xxxxx
Its: President
13
EXHIBIT A
SUBSIDIARIES
------------
STATE OR COUNTRY IN WHICH PERCENTAGE OF CAPITAL STOCK
NAME INCORPORATED OWNED BY MIRAGE HOLDINGS, INC.
---- ------------------------- -------------------------------
Mirage Collection, Inc. Nevada, U.S. 100%
A-1
EXHIBIT B
MIRAGE HOLDINGS, INC.
(A NEVADA CORPORATION)
UNDERWRITERS WARRANT ("WARRANT") TO PURCHASE
SHARES OF COMMON STOCK
NEITHER THIS WARRANT NOR THE COMMON STOCK UNDERLYING THIS WARRANT HAVE BEEN
REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE. CONSEQUENTLY, NEITHER THIS WARRANT NOR THE COMMON STOCK UNDERLYING THIS
WARRANT MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE APPLICABLE
SECURITY OR AN EXEMPTION THEREFROM, ACCOMPANIED BY AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
1. Grant of Warrant. For value received in connection with the offering
----------------
(the "Offering") of a minimum of 240,000 Units and a maximum of 342,857 Units
for $5.25 per Unit, each Unit consisting of one share of the Company's Common
Stock and one warrant to purchase one share of the Company's Common Stock for
$4.50, on a best-efforts basis. Mirage Holdings, Inc., a Nevada corporation
(the "Company"), hereby grants to Veera Capital Corporation, a corporation, or
its registered assigns ("Holder"), the right to purchase from the Company
("Warrant") an amount of shares of Common Stock of the Company (the "Shares"),
no par value, equal to 10% of the number of Units issued in the public offering
("Common Stock") upon the Closing Date (as defined in Section 3 of the
Underwriting Agreement, dated ___________, 1997, between the Company and Veera
Capital Corporation) of the Offering on the terms and conditions set forth
herein. The Exercise Price for such Warrant shall be $6.30 per share. The
Exercise Price is subject to adjustment as provided in Section 6 below.
2. Right and Manner of Exercise. This Warrant shall be exercisable at
----------------------------
any time from and after the first anniversary of the date hereof and ending at
5:00 p.m. California time on the fifth anniversary of the date hereof (the
"Exercise Period"). The Holder may elect to exercise this Warrant anytime
during the Exercise Period as to any or all of the Shares by delivering written
notice, or successive written notices, of exercise to the Company (as provided
in Section 11) in the form attached hereto as Exhibit A accompanied by payment
of an amount equal to the product of (i) the number of Shares being purchased
and (ii) the Exercise Price, as each may have been adjusted pursuant to the
terms of this Agreement.
3. Issuance of Shares and New Warrant. If the purchase rights evidenced
----------------------------------
by this Warrant are exercised in whole or in part, one or more certificates for
the Shares so purchased shall be issued at the Company's expense as soon as
practicable thereafter to the Holder exercising such rights. Such Holder shall
also be issued at such time at the Company's expense a new Warrant on the same
terms and conditions as this Warrant, but representing the number of Shares (if
any) for which the purchase rights under this Warrant remain unexercised.
4. Privilege of Stock Ownership. The Holder shall for all purposes be
----------------------------
deemed to have become the holder of record of Shares issued upon an exercise of
this Warrant on, and the certificate evidencing such Shares shall be dated, the
date upon which the Holder presents to the Company each of notice of an intent
to exercise this Warrant pursuant to Section 2 and payment of the Exercise
Price. Holder shall receive good and marketable title to all Shares that Holder
purchases and the Company delivers upon the exercise of any or all of the
Warrants. Prior to exercise of this Warrant, the Holder shall not be entitled
to any rights as a shareholder of the Company, including (without limitation)
the right to vote, receive dividends or other distributions, exercise preemptive
rights or be notified of shareholder meetings, and such Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company except as otherwise provided herein.
5. Reservation and Availability of Shares. The Company will at all times
--------------------------------------
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued shares of Stock for the purpose of
B-1
enabling it to satisfy any obligation to issue Shares upon exercise of this
Warrant, the full number of Shares deliverable upon the exercise or conversion
of the entire outstanding amount of this Warrant. Before taking any action which
would cause an adjustment pursuant to Section 6 reducing the Exercise Price, the
Company will take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and non-assessable Shares at the Exercise Price as to adjusted. The Company
covenants that all Shares which may be issued upon exercise of this Warrant
will, upon issue, be fully paid and non-assessable, free and clear of all voting
and other trust arrangements, liens, encumbrances, equities and claims
whatsoever, and the Company shall have paid all taxes, if any, in respect of the
issuance thereof.
6. Adjustment of Exercise Price/Anti-Dilution. The Exercise Price and
------------------------------------------
the number and kind of securities purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of the
events enumerated in this Section 6.
6.1 Stock Splits and Combinations. If the Company shall at any time
-----------------------------
subdivide or combine its outstanding Common Stock, or fix a record date for
payment of a dividend in Common Stock or other securities of the Company
exercisable, convertible or exchangeable for Common Stock (in which latter event
the maximum number of shares of Common Stock issuable upon the exercise,
conversion or exchange of such securities shall be deemed to have been
distributed), after that subdivision, combination or dividend, the number of
Shares subject to purchase shall be adjusted to that number of Shares which is
determined by (A) multiplying the number of shares of Common Stock purchasable
immediately prior to such adjustment by the Exercise Price in effect immediately
prior to such adjustment, and then (B) dividing that product by the Exercise
Price in effect immediately after such adjustment. If the Company shall at any
time subdivide the outstanding shares of Common Stock or fix a record date for
payment of a dividend in Common Stock or other securities exercisable,
convertible or exchangeable into Common Stock, the Exercise Price then in effect
immediately before that subdivision or dividend shall be proportionately
decreased, and, if the Company shall at any time combine the outstanding shares
of Common Stock, then the Exercise Price in effect immediately before that
combination shall be proportionately increased. Any adjustment under this
Section 6.1 shall become effective at the close of business on the date the
subdivision or combination becomes effective or the dividend is distributed.
6.2 Reclassification, Exchange and Substitution. If the Shares
-------------------------------------------
issuable upon exercise of the Warrant shall be changed into the same or a
different number of shares of any other class or classes of securities, whether
by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination or payment of dividend of securities provided for
above), the Holder of this Warrant shall, on its exercise, be entitled to
purchase for the same aggregate consideration, in lieu of the Shares which the
Holder would have become entitled to purchase but for such change, a number of
shares of such other class or classes of securities which such Holder would have
been entitled to receive as the holder of that number of Shares subject to
purchase by the Holder on exercise of this Warrant immediately before that
change.
6.3 Reorganizations, Mergers, Consolidations or Sales of Assets. If
------------------------------------------------------------
at any time there shall be a capital reorganization of the Common Stock (other
than a subdivision, combination, payment of dividend, reclassification or
exchange of Common Stock provided for above), or merger or consolidation of the
Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation or sale, lawful
provision shall be made so that the Holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, during the period specified
in this Warrant and upon payment of the Exercise Price then in effect, the
number of Shares or other securities or property of the Company, or of the
successor corporation resulting from such merger or consolidation, to which a
Holder of the Shares issuable upon exercise of this Warrant would have been
entitled in such capital reorganization, merger, or consolidation or sale if
this Warrant had been exercised immediately before that capital reorganization,
merger, consolidation, or sale. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant with respect to the rights and
interests of the Holder of this Warrant after the reorganization, merger,
consolidation, or sale such that the provisions of this Warrant (including
adjustment of the Exercise Price then in effect and number and kind of
B-2
securities purchasable upon exercise of this Warrant) shall be applicable after
that event in relation to any securities purchasable after that event upon
exercise of this Warrant.
6.4 Minimum Exercise Price Adjustment. No adjustment in the Exercise
---------------------------------
Price shall be required unless such adjustment would require in increase or
decrease of at least one-half of one percent (0.5%) or more of the Exercise
Price, provided, however, that any adjustments which by reason of this
Subsection 6.4 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
6 shall be made to the nearest cent or to the nearest one-hundredth of a Share
as the case may be.
7. Notices to Holder. Upon any adjustment of the Exercise Price pursuant
-----------------
to Section 6, the Company within 20 days thereafter shall cause to be given to
the Holder pursuant to Section 11 hereof written notice of such adjustment,
which notice shall set forth in a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.
Where appropriate, such notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 7.
In the event of any of the following:
7.1 the Company shall authorize the issuance of its holders of shares
of Common Stock of rights or warrants to subscribe for or purchase shares of
Common Stock or of any other subscription rights or warrants; or
7.2 the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends not exceeding [$_________] per share of Common Stock payable
during any three-month period or distributions or dividends payable in shares of
Common Stock); or
7.3 any consolidation or merger to which the Company is a party and
for which approval of any shareholder of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company as, or
substantially as, en entirety, or of any reclassification or change of
outstanding shares of Common Stock issuable upon exercise of this Warrant (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination); or
7.4 the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
7.5 the Company proposes to take any action (other than actions of
the character described in Subsection 6.1 except as required under Subsection
7.3 above) which would require an adjustment of the Exercise Price pursuant to
Section 6;
then the Company shall cause to be given to the Holder, at least 20 days (or ten
days in any case specified in Subsections 7.1 and 7.2 above) prior to the
applicable record date hereinafter specified, a written notice stating (i) the
date as of which the holders of record of shares of Common Stock to be entitled
to receive any such rights, warrants, or distribution are to be determined, or
(ii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation, or winding up is expected to become effective, and the
date as of which it is that holders of record of shares of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation, or winding up. The failure to
give the notice required by this Section 7 or any defect therein shall not
affect the legality or validity of any distribution, right, warrant,
consolidation, merger, conveyance, merger, dissolution, liquidation, or winding
up, or the vote upon any such action.
8. Transfers. The Holder acknowledges and agrees that this Warrant and
---------
the Common Stock underlying this Warrant may not be sold, pledged, assigned,
transferred or otherwise hypothecated without registration under the Act except
in certain limited circumstances where an exemption from registration exists,
supported by an opinion of counsel satisfactory to the Company and its counsel
that registration is not required thereunder. The Warrants are non-transferable
(whether by sale, transfer, assignment or hypothecation) except for (i)
transfers to
B-3
officers of Veera Capital Corporation who are also shareholders of Veera Capital
Corporation, (ii) transfers occurring by operation of law.
9. Fractional Shares. No fractional shares of Common Stock shall be
-----------------
issued in connection with any exercise of this Warrant. In lieu of the issuance
of such fractional share, the Company shall make a cash payment equal to the
then fair market value of such fractional share as determined in good faith by
the Company's Board of Directors.
10. Successors and Assign. The terms and provisions of this Warrant shall
---------------------
inure to the benefit of, and be binding upon the Company and the Holder hereof
and their respective successors and assigns.
11. Notices. All notices, requests, demands and other communications
-------
(collectively, "Notices") under this Warrant shall be in writing and shall be
deemed to have been duly given on the date of service if served personally on
the party to whom Notice is to be given, or on the third business day after the
date of mailing if mailed to the party to whom Notice is to be given, by first
class mail, registered to the Holder, at his address as shown in the Company
records; and if to the Company, at its principal office. Any party may change
its address for purposes of this Section by giving the other party written
Notice of the new address in the manner set forth above.
12. Governing Law. This Warrant shall be governed by and construed in
-------------
accordance with the laws of the State of California without regard to principles
of conflicts of laws.
13. Loss or Mutilation of Warrant. Upon receipt of evidence reasonably
-----------------------------
satisfactory to the Company regarding the loss, theft, mutilation or destruction
of this Warrant and upon delivery of appropriate indemnification with respect
thereto or upon surrender or cancellation of the mutilated Warrant, the Company
will make and deliver to the Holder a new Warrant of like tenor.
MIRAGE HOLDINGS, INC.
______________________________________
By: Xxxxxx X. Xxxxxx
Its: President
Attest:
______________________________
By: Xxxxxx X. Xxxxxx
Its: Secretary
B-4
ASSIGNMENT
FOR VALUE RECEIVED, _____________________ hereby sell(s), assign(s), and
transfer(s) unto _________________, of _________________, the right to purchase
Shares evidenced by the within Warrant, and does hereby irrevocable constitute
and appoint ________________ to transfer such right on the books on the Company,
with full power of substitution.
DATED: ______________, 199__
_____________________________
SIGNATURE
_____________________________
NOTICE:
This Warrant or the Common Stock underlying the Warrant, have not been
registered under the Securities Act of 1933 (the "Act") or any states'
securities laws (the "laws") and may not be sold, pledged, transferred or
otherwise disposed of in the absence of an effective registration statement
covering these securities under the Act or laws, or an available exemption
therefrom, accompanied by an opinion of counsel satisfactory to the Company and
its counsel that registration is not required thereunder.
The signature to this Assignment must correspond with the name as written upon
the fact of the within Warrant, in every particular, without alteration or
enlargement, or any change whatsoever.
B-5
EXHIBIT A
EXERCISE NOTICE
Mirage Holdings, Inc.
000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Ladies and Gentlemen:
________________________ (the "Undersigned") hereby elects to purchase,
pursuant to the provisions of the Mirage Holdings, Inc. Underwriter's Warrant
dated __________________, held by the undersigned, ______ shares of the Common
Stock of Mirage Holdings, Inc.
As an inducement to your acceptance hereunder, the undersigned certifies
that the Common Stock is being purchased for the undersigned's own account, for
investment purposed, and not with a view toward a public distribution in
violation of the registration requirements of the Securities Act of 1933, as
amended.
Payment of the purchase price of $6.30 per share of Common Stock is being
purchased for the undersigned's own account, for investment purposed, and not
with a view toward a public distribution in violation of the registration
requirements of the Securities Act of 1933, as amended.
Payment of the purchase price of $6.30 per share of Common Stock in U.S.
funds required under such Warrant accompanies this subscription.
DATED: _______________, 199__
Company: _________________________________
Signature: _______________________________
Address: _________________________________
_________________________________
