U S LIQUIDS INC.
UNDERWRITING AGREEMENT
August 19, 1997
▇▇▇ ▇▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ INC.
As Representatives of the
Several Underwriters
c/o ▇▇▇ ▇▇▇▇▇▇ & Company
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
U S Liquids Inc., a Delaware corporation (the "Company"), proposes to issue
and sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 1,500,000 shares (the "Firm Shares") of its
authorized but unissued Common Stock, par value $0.01 per share (the "Common
Stock"). The Company also proposes to grant to the Underwriters an option to
purchase up to 225,000 additional shares of Common Stock (the "Option Shares")
for the sole purpose of covering over-allotments, if any, in connection with the
sale of the Firm Shares. The Firm Shares and any Option Shares purchased
pursuant to this Agreement are referred to below as the "Shares." ▇▇▇ ▇▇▇▇▇▇ &
Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Inc. are acting as representatives of the
several Underwriters and in that capacity are referred to in this Agreement as
the "Representatives."
The Company hereby confirms its agreement with the several Underwriters as
follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to and agrees with each Underwriter as follows:
(a) A registration statement (Registration No. 333-30065) on Form S-1
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
the Shares, including such amendments to such registration statement as may have
been required to the date of this Agreement, has been prepared by the Company
under and in conformity with the provisions of the Securities Act and the rules
and regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed with the Commission.
After the execution of this Agreement, the Company will file with the Commission
either (i) if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Securities Act, either (A)
if the Company relies on Rule 434 under the Securities Act, a Term Sheet
(defined below) relating to the Shares, that identifies the Preliminary
Prospectus (defined below) that it
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supplements and contains such information as is required or permitted by Rules
434, 430A and 424(b) of the Rules and Regulations or (B) if the Company does not
rely on Rule 434 under the Securities Act, a prospectus in the form most
recently included in an amendment to such registration statement (or, if no such
amendment has been filed, in such registration statement), with such changes or
insertions as are required by Rule 430A of the Rules and Regulations or
permitted by Rule 424(b) of the Rules and Regulations, and in the case of either
(i)(A) or (i)(B) of this sentence, as has been provided to and approved by the
Representatives prior to the execution of this Agreement, or (ii) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Securities Act, an amendment to such
registration statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by the Representatives prior to the
execution of this Agreement. As used in this Agreement, the term "Registration
Statement" means such registration statement, as amended at the time when it was
or is declared effective, including all financial schedules and exhibits
thereto, any information omitted therefrom pursuant to Rule 430A of the Rules
and Regulations and included in the Prospectus (defined below) and further
including all filings or other documents incorporated therein, as well as any
additional registration statement filed in connection with the offering of the
Shares pursuant to Rule 462(b) under the Securities Act; the term "Preliminary
Prospectus" means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective and further
including all filings or documents incorporated therein); and the term
"Prospectus" means the following, including any filings or documents
incorporated therein:
(A) if the Company relies on Rule 434 under the Securities Act, the
Term Sheet relating to the Securities that is first filed
pursuant to Rule 424(b)(7) under the Securities Act, together
with the Preliminary Prospectus identified therein that such Term
Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Securities
Act, the prospectus first filed with the Commission pursuant to
Rule 424(b) under the Securities Act; or
(C) if the Company does not rely on Rule 434 under the Securities Act
and if no prospectus is required to be filed pursuant to Rule
424(b) under the Securities Act, the prospectus included in the
Registration Statement;
provided that if any revised prospectus that is provided to the Underwriters by
the Company for use in connection with the offering of the Shares differs from
the prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective, whether or not the
revised prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations, the term "Prospectus"
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shall mean such revised prospectus (including all filings and documents
incorporated therein) from and after the time it is first provided to the
Underwriters for such use. The term "Term Sheet" as used in this Agreement
means any term sheet that satisfies the requirements of Rule 434 under the
Securities Act. Any reference in this Agreement to the "date" of a Prospectus
that includes a Term Sheet means the date of such Term Sheet.
(b) No order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary Prospectus or
the Prospectus has been issued and no proceedings for that purpose are pending
or, to the best knowledge of the Company, threatened or contemplated by the
Commission; no stop order suspending the sale of the Shares in any jurisdiction
has been issued and no proceedings for that purpose are pending or, to the best
knowledge of the Company, threatened or contemplated, and any request of the
Commission for additional information (to be included in the Registration
Statement, any Preliminary Prospectus or the Prospectus or otherwise) has been
complied with.
(c) Each of the Company and its direct and indirect subsidiaries has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full power
(corporate and other) and authority to own or lease its properties and conduct
its business as described in the Registration Statement and the Prospectus and
as is currently being conducted by it and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which the character of
the property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so qualified would
not have a material adverse effect on the business, properties, condition
(financial or otherwise), results of operations or prospects of the Company and
its direct and indirect subsidiaries, taken as a whole (a "Consolidated Material
Adverse Effect")). The Company and each of its direct and indirect subsidiaries
is in possession of and operating in compliance with all authorizations,
licenses, certificates, consents, orders and permits from federal, state, local
and other governmental or regulatory authorities that are material to the
conduct of its or their business, all of which are valid and in full force and
effect. Except as disclosed in the Registration Statement, the Company owns
directly or indirectly all of the outstanding capital stock or other equity
interests of each of its direct or indirect subsidiaries, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest of any
type, kind or nature. As used in this Agreement, the word "subsidiary" means
any corporation, partnership, limited liability company or other entity of which
the Company directly or indirectly owns 50% or more of the equity or that the
Company directly or indirectly controls. So long as the Company owns directly
or indirectly no more than 49% of Grasas Alimenticias Premezclades S.A. de C.Z.,
that entity shall not be deemed a subsidiary for purposes of this Agreement.
(d) When any Preliminary Prospectus was filed with the Commission it
(i) contained all statements required to be contained therein and complied in
all respects with the requirements of the Securities Act, the Rules and
Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations of the Commission
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thereunder (the "Exchange Act Rules and Regulations") and (ii) did not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When the Registration
Statement or any amendment thereto was or is declared effective (the "Effective
Date"), it (i) contained or will contain all statements required to be contained
therein and complied or will comply in all respects with the requirements of the
Securities Act, the Rules and Regulations, the Exchange Act and the Exchange Act
Rules and Regulations and (ii) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any Term Sheet that
is a part thereof or any amendment or supplement to the Prospectus is filed with
the Commission pursuant to Rule 424(b) (or, if the Prospectus or part thereof or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective) and on the Closing
Date (defined below) and any date on which Option Shares are to be purchased,
the Prospectus, as amended or supplemented at any such time, (i) contained or
will contain all statements required to be contained therein and complied or
will comply in all respects with the requirements of the Securities Act, the
Rules and Regulations and the Exchange Act Rules and Regulations and (ii) did
not or will not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (d) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement or any
amendment thereto or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein.
(e) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), there has not been any
material loss or interference with the business of the Company or any of its
direct or indirect subsidiaries from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any court or governmental action,
order or decree, or any changes in the capital stock or long-term debt of the
Company or any of its direct or indirect subsidiaries, or any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, or any material change, or a development known to the Company that
might cause or result in a Consolidated Material Adverse Effect, whether or not
arising from transactions in the ordinary course of business, in each case other
than as may be set forth in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus),
and since such dates, except in the ordinary course of business, neither the
Company or any of its direct or indirect subsidiaries has entered into any
material transaction not described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(f) There is no agreement, contract, license, lease or other document
required to be described in the Registration Statement or the Prospectus (or, if
the Prospectus
-4-
is not in existence, the most recent Preliminary Prospectus) or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required. All contracts described in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), if any, are in full
force and effect on the date hereof, and neither the Company or any of its
direct or indirect subsidiaries nor, to the best knowledge of the Company, any
other party, is in material breach of or default under any such contract.
(g) The authorized and outstanding capital stock of the Company is
set forth in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), and the description of the capital stock therein
conforms with and accurately describes the rights set forth in the instruments
defining the same. The Shares are duly authorized and will, when issued in
accordance with the terms of this Agreement and against payment therefor, be
validly issued, fully paid and non-assessable, and the issuance of the Shares is
not subject to any preemptive or similar rights.
(h) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities. All
of the issued shares of capital stock or other equity interests of each direct
or indirect subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are directly or indirectly owned
by the Company. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted or
exercised thereunder, set forth in the Prospectus (or, if the Prospectus is not
in existence, in the most recent Preliminary Prospectus), accurately and fairly
present the information required to be shown with respect to such plans,
arrangements, options and rights. Other than this Agreement, the "Warrant
Agreement" (as defined in Section 1(ab) below) and the options and warrants to
purchase Common Stock described in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), there are no options,
warrants or other rights outstanding to subscribe for or purchase any shares of
the Company's capital stock. There are no preemptive rights applicable to any
shares of capital stock of the Company. There are no restrictions upon the
voting or transfer of any of the Firm Shares or Option Shares pursuant to the
Company's certificate of incorporation, as amended to date ("Certificate of
Incorporation"), bylaws or other governing documents or any agreement to which
the Company is a party or by which it may be bound. Except as is provided in the
Warrant Agreement and for the Shares, neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have been waived, for
or relating to the registration of any securities (other than the Shares) of or
issued by the Company.
(i) The Company has full right, power and authority to enter into and
perform its obligations under this Agreement and the Warrant Agreement and to
issue, sell and deliver the Shares. This Agreement and the Warrant Agreement
have each been duly
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authorized, executed and delivered by the Company and constitute the valid and
binding agreements of the Company, and each is enforceable against the Company
in accordance with its terms except insofar as enforceability may be affected by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except insofar as the indemnification and
contribution provisions of Section 7 of this Agreement and Section 3(f) of the
Warrant Agreement hereof may be affected by public policy concerns.
(j) Neither the Company or any of its direct or indirect subsidiaries
is, nor with the giving of notice or lapse of time or both would be, in
violation of or in default under, nor will the execution or delivery of this
Agreement or the Warrant Agreement or the consummation of the transactions
contemplated by this Agreement or the Warrant Agreement result in a violation of
or constitute a breach of or a default (including without limitation with the
giving of notice, the passage of time or otherwise) under the Certificate of
Incorporation, bylaws or other governing documents of the Company or any of its
direct or indirect subsidiaries or any obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any contract, indenture, mortgage, deed of trust, loan
agreement, lease, license, joint venture or other agreement or instrument to
which the Company or any of its direct or indirect subsidiaries is a party or by
which any of its or their properties may be bound or affected. The Company has
not incurred any liability, direct or indirect, for any finders' or similar fees
payable on behalf of the Company or the Underwriters in connection with the
transactions contemplated by this Agreement. The performance by the Company of
its obligations under this Agreement and the Warrant Agreement will not violate
any law, ordinance, rule or regulation (provided that no representation or
warranty is made hereby with respect to the effect, if any, of public policy
concerns on the indemnification and contribution provisions of Section 7 hereof
and Section 3(f) of the Warrant Agreement), or any order, writ, injunction,
judgment or decree of any governmental agency or body or of any court having
jurisdiction over the Company or any of its direct or indirect subsidiaries or
any of its or their properties, or result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or asset of the Company or
any of its direct or indirect subsidiaries. Except for permits and similar
authorizations required under the Securities Act, the Exchange Act or under
state securities or Blue Sky laws and for such permits and authorizations that
have been obtained, no consent, approval, authorization or order of any court,
governmental agency or body, financial institution or any other person is
required in connection with the consummation of the transactions contemplated by
this Agreement or the Warrant Agreement.
(k) Each of the Company and its direct and indirect subsidiaries
owns, or has valid rights to use, all items of real and personal property which
are material to the business of the Company and its direct and indirect
subsidiaries, taken as a whole, free and clear, except as described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), of all liens, encumbrances
and claims that might materially interfere with the business, properties,
condition (financial or otherwise), results of operations or prospects of the
Company and its direct and indirect subsidiaries, taken as a whole.
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(l) Each of the Company and its direct and indirect subsidiaries,
taken as a whole, owns or possesses adequate rights to use all material patents,
patent rights, inventions, trade secrets, know-how, trademarks, service marks,
tradenames and copyrights described or referred to in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) as owned by or used by any of them, or which are
necessary for the conduct of its or their business as described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus); and the Company has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, tradenames or copyrights which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
might have a Consolidated Material Adverse Effect.
(m) There is no litigation or governmental proceeding to which the
Company or any of its direct or indirect subsidiaries is a party or to which any
property of the Company or any of its direct or indirect subsidiaries is subject
which is pending or, to the best knowledge of the Company, is threatened or
contemplated against the Company or any of its direct or indirect subsidiaries
that might have a Consolidated Material Adverse Effect, that might prevent
consummation of the transactions contemplated by this Agreement or the Warrant
Agreement or that is required to be disclosed in the Registration Statement or
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and is not so disclosed.
(n) Neither the Company or any of its direct or indirect subsidiaries
is in violation of any law, order, ordinance, rule or regulation, or any order,
writ, injunction, judgment or decree of any governmental agency or body or of
any court, to which it or its properties (whether owned or leased) may be
subject, which violation might have a Consolidated Material Adverse Effect.
(o) The Company has not taken and shall not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to cause or result in, under the Exchange
Act, the Exchange Act Rules and Regulations or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares. No bid or purchase by the Company and, to the best
knowledge of the Company, no bid or purchase that could be attributed to the
Company (as a result of bids or purchases by an "affiliated purchaser" within
the meaning of Regulation M under the Exchange Act) for or of the Common Stock,
any securities of the same class or series as the Common Stock or any securities
convertible into or exchangeable for or that represent any right to acquire the
Common Stock is now pending or in progress or will have commenced at any time
prior to the completion of the distribution of the Shares.
(p) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, whose report appears in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent
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Preliminary Prospectus) is, and during the periods covered by its report in the
Registration Statement was, independent accountants as required by the
Securities Act and the Rules and Regulations. The historical and pro forma
financial statements and schedules included in the Registration Statement, each
Preliminary Prospectus and the Prospectus present fairly (or, if the Prospectus
has not been filed with the Commission, as to the Prospectus, will present
fairly) the financial condition, results of operations, cash flows and changes
in stockholders' equity of the Company and its subsidiaries at the dates and for
the periods indicated, and the historical and pro forma financial statements and
schedules included in the Registration Statement present fairly the information
required to be stated therein. Such financial statements and schedules have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods presented, except as may be
stated therein. The selected and summary financial and statistical data
included in the Registration Statement and the Prospectus present fairly (or, if
the Prospectus has not been filed with the Commission, as to the Prospectus,
will present fairly) the information shown therein and have been compiled on a
basis consistent with the audited financial statements presented therein. No
other financial statements or schedules are required to be included in the
Registration Statement.
(q) Any pro forma financial or other information and related notes
included in the Registration Statement, each Preliminary Prospectus and the
Prospectus comply (or, if the Prospectus has not been filed with the Commission,
as to the Prospectus, will comply) in all material respects with the
requirements of the Securities Act and the Rules and Regulations and present
fairly the pro forma information shown, as of the dates and for the periods
covered by such pro forma information. Such pro forma information, including
any related notes and schedules, has been prepared on a basis consistent with
the historical financial statements and other historical information, as
applicable, included in the Registration Statement, the Preliminary Prospectus
and the Prospectus (if filed with the Commission), except for the pro forma
adjustments specified therein, and give effect to assumptions made on a
reasonable basis to give effect to historical and, if applicable, proposed
transactions described in the Registration Statement, each Preliminary
Prospectus and the Prospectus (if filed with the Commission).
(r) The books, records and accounts of the Company and its direct and
indirect subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in and dispositions of the assets of the Company and its direct and
indirect subsidiaries. The systems of internal accounting controls maintained
by the Company and its direct and indirect subsidiaries are sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary (x) to permit preparation of financial statements in
conformity with generally accepted accounting principles and (y) to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(s) The Company has delivered to ▇▇▇ ▇▇▇▇▇▇ & Company the written
agreement of each of its officers and directors and, to the knowledge of the
Company at the date of this Agreement, the beneficial owners of one percent or
more of the Common Stock (assuming for this purpose that all options and
convertible securities held by each beneficial owner, but not by any other
person, have been exercised or exchanged for or converted into Common Stock)
(collectively, "Material Holders"), and certain other persons (collectively with
the Material Holders, the "Holders") to the effect that each of the Holders will
not, for a period of 180 days following the date of this Agreement, without the
prior written consent of ▇▇▇ ▇▇▇▇▇▇ & Company, offer, sell, grant any option to
purchase, contract to sell, or otherwise dispose of any Common Stock or options
or convertible securities exercisable or exchangeable for, or convertible into,
Common Stock or any rights to purchase or acquire Common Stock, or announce any
offer to do so.
(t) No labor disturbance by the employees of the Company or any of
its direct or indirect subsidiaries exists, is imminent or, to the knowledge of
the Company, is contemplated or threatened; and the Company is not aware of an
existing, imminent or threatened labor disturbance by the employees of any
principal suppliers, manufacturers, contractors or others that might be expected
to result in any Consolidated Material Adverse Effect. No collective bargaining
agreement exists with any of the Company's employees or those of its direct or
indirect subsidiaries and, to the best knowledge of the Company, no such
agreement is imminent.
(u) Each of the Company and its direct and indirect subsidiaries has
filed all federal, state, local and foreign tax returns which are required to be
filed or has requested extensions thereof and has paid all taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
to the extent that the same have become due and payable. No tax assessment or
deficiency has been made or proposed against the Company or any of its direct or
indirect subsidiaries nor has the Company or any of its direct or indirect
subsidiaries received any notice of any proposed tax assessment or deficiency.
All tax liabilities of the Company and its direct and indirect subsidiaries are
adequately provided for on the books of the Company.
(v) Except as set forth in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no
outstanding loans, advances or guaranties of indebtedness by the Company or any
of its direct or indirect subsidiaries to or for the benefit of any of (i) its
"affiliates," as such term is defined in the Rules and Regulations, (ii) except
for immaterial advances in the ordinary course of business, any of the officers
or directors of any of its direct or indirect subsidiaries, or (iii) any of the
members of the families of any of them.
(w) Neither the Company or any of its direct or indirect subsidiaries
has directly or indirectly, at any time: (i) made any contributions to any
candidate for political office, or failed to disclose fully any such
contribution, in violation of law; (ii) made any payment to any local, state,
federal or foreign governmental officer or official, or other
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person charged with similar public or quasi-public duties, other than payments
required or allowed by all applicable laws; or (iii) violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended.
(x) Neither the Company or any of its direct or indirect subsidiaries
has any liability, absolute or contingent, relating to: (i) public health or
safety; (ii) worker health or safety; or (iii) product defect or warranty (all
except as would not reasonably be expected to have a Consolidated Material
Adverse Effect or as are disclosed in the Registration Statement and Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus)).
(y) The Company has not distributed and will not distribute prior to
the Closing Date or on or prior to any date on which the Option Shares are to be
purchased, as the case may be, any prospectus or other offering material in
connection with the offering and sale of the Shares other than the Preliminary
Prospectus(es), the Prospectus, the Registration Statement and any other
material which may be permitted by the Securities Act and the Rules and
Regulations.
(z) Subject to official notice of issuance, the Shares have been
approved for listing on the American Stock Exchange ("AMEX").
(aa) The Company is not now, and intends to conduct its affairs in the
future in such a manner so that it will not become, an investment company within
the meaning of the Investment Company Act of 1940, as amended.
(ab) The "Warrants" (as defined in the Warrant Agreement, dated as of
August 25, 1997, among the Company, ▇▇▇ ▇▇▇▇▇▇ & Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ Inc. (the "Warrant Agreement")) have been duly and validly authorized by
all requisite corporate action of the Company and, when issued and delivered
against payment therefor as provided in Section 3(l) below, will be valid and
binding obligations of the Company in accordance with their terms; the "Warrant
Shares" (as defined in the Warrant Agreement) have been duly and validly
reserved and authorized for issuance upon exercise of the Warrants and when so
issued against payment therefor as provided in the Warrant Agreement will be
validly issued, fully paid and non-assessable; and no person has any preemptive
rights with respect to the Warrants or the Warrant Shares.
(ac) The Company and each of its direct and indirect subsidiaries is
in compliance in all material respects with all presently applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) for which the Company or any of its
direct or indirect subsidiaries would have any liability has occurred; neither
the Company nor any of its direct or indirect subsidiaries has incurred or
expects to incur liability under (1) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (2) Sections 412 or
4971 of the Internal Revenue
-10-
Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company or any of its direct or indirect subsidiaries would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(ad) Except as set forth in the Prospectus (or if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there has to the best
knowledge of the Company been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, hazardous
wastes or hazardous substances by the Company or any of its direct or indirect
subsidiaries (or any of their predecessors in interest) at, upon or from any of
the property now or previously owned or leased by the Company or its direct or
indirect subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit; there has to the best knowledge of the Company been no
material spill, discharge, leak, emission, injection, escape, dumping or release
of any kind onto such property or into the environment surrounding such property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its direct or indirect
subsidiaries or with respect to which the Company or any of its direct or
indirect subsidiaries have knowledge; and the terms "hazardous wastes," "toxic
wastes" and "hazardous substances" shall have the meanings specified in any
applicable local, state, federal and foreign laws or regulations with respect to
environmental protection.
(ae) The Company and each of its direct and indirect subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in
which they are engaged; neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for; and neither the Company
nor any such subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not cause a Consolidated Material Adverse
Effect, except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(af) Each certificate signed by any officer of the Company or any of
its direct or indirect subsidiaries and delivered to the Representatives or
Underwriters' counsel shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
-11-
2. PURCHASE, SALE AND DELIVERY OF SHARES.
(a) On the basis of the representations, warranties, covenants and
agreements of the Company contained in this Agreement and subject to the terms
and conditions set forth in this Agreement, the Company agrees to sell to the
several Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $___ per share
[7.25% DISCOUNT], the respective number of Firm Shares set forth opposite the
name of such Underwriter on Schedule I to this Agreement (subject to adjustment
as provided in Section 8 of this Agreement).
(b) On the basis of the several (and not joint) covenants and
agreements of the Underwriters contained in this Agreement and subject to the
terms and conditions set forth in this Agreement, the Company grants an option
to the several Underwriters to purchase from the Company, severally and not
jointly, all or any portion of the Option Shares at the same price per share as
the Underwriters are to pay for the Firm Shares. This option may be exercised
only to cover over-allotments in the sale of the Firm Shares by the Underwriters
and may be exercised in whole or in part at any time (but not more than once) on
or before the 45th day after the date of the Prospectus upon written or
telecopied notice by the Representatives (or either of them) to the Company
setting forth the aggregate number of Option Shares as to which the several
Underwriters are exercising the option and the settlement date. The Option
Shares shall be purchased severally, and not jointly, by each Underwriter, if
purchased at all, in the same proportion that the number of Firm Shares set
forth opposite the name of the Underwriter in Schedule I to this Agreement bears
to the total number of Firm Shares to be purchased by the Underwriters under
Section 2(a) above, subject to such adjustments as the Representatives in their
absolute discretion shall make to eliminate any fractional shares. Delivery of
certificates for the Option Shares, and payment therefor, shall be made as
provided in Section 2(c) and Section 2(d) below.
(c) Delivery of the Firm Shares and payment therefor, less the
nonaccountable expense allowance provided for in Section 4(a)(ii) of this
Agreement, shall be made at the office of ▇▇▇ ▇▇▇▇▇▇ & Company, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other location
as is agreed by the parties), at 6:30 a.m., Los Angeles time, on August 25,
1997, or at such time on such other day, not later than seven full business days
after such date, as shall be agreed upon in writing by the Company and the
Representatives, or as provided in Section 7(h) of this Agreement. The date and
hour of delivery and payment for the Firm Shares are referred to in this
Agreement as the "Closing Date." As used in this Agreement, "business day" means
a day on which AMEX is open for trading and on which banks in New York and
California are open for business and not permitted by law or executive order to
be closed.
(d) If the option granted by the Company in Section 2(b) above is
exercised, delivery of the Option Shares and payment therefor, less the
applicable portion, if any, of the nonaccountable expense allowance provided for
in Section 4(a)(ii) of this Agreement, shall be made at the office of ▇▇▇ ▇▇▇▇▇▇
& Company, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other location
as is agreed by the parties), at 6:30 a.m., Los Angeles time, on the date
specified by the Representatives (which shall be three business days after the
exercise of the option, but not in excess of the period of time specified in the
Rules and Regulations).
(e) Payment of the purchase price for the Shares by the several
Underwriters shall be made by certified or official bank check or checks drawn
in next-day funds, payable to the order of the Company. Such payment shall be
made upon delivery of certificates for the Shares to the Representatives for the
respective accounts of the several Underwriters. Certificates for the Shares to
be delivered to the Representatives shall be registered in such name or names
and shall be in such denominations as the Representatives may request at least
two business days before the Closing Date, in the case of Firm Shares, and at
least one business day prior to the purchase of the Option Shares, in the case
of the Option Shares. Such certificates will be made available to the
Underwriters for inspection, checking and packaging at the offices of Alex.
▇▇▇▇▇ & Sons, New York, New York, not less than one full business day prior to
the Closing Date or, in the case of the Option Shares, by 3:00 p.m., New York
time, on the first business day preceding the date of purchase.
It is understood that the Representatives or either of them,
individually and not on behalf of the Underwriters, may (but shall not be
obligated to) make payment to the Company for Shares to be purchased by any
Underwriter whose check shall not have been received by the Representatives on
the Closing Date or any later date on which Option Shares are purchased for the
account of such Underwriter. Any such payment shall not relieve such
Underwriter from any of its obligations hereunder.
(f) It is understood that the several Underwriters propose to offer
the Shares for sale to the public as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the public
at the public offering price set forth (or to be set forth) in the Prospectus.
The Representatives may from time to time thereafter change the public offering
price and other selling terms.
(g) The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), the legend
respecting stabilization set forth on the inside front cover page and the
statements set forth under the caption "Underwriting" in any Preliminary
Prospectus and in the final form of Prospectus filed pursuant to Rule 424(b)
constitute the only information furnished by the Underwriters to the Company for
inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement.
3. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees
with the several Underwriters as follows:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the time of execution
of this
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Agreement, to become effective as promptly as possible. If the Registration
Statement has become or becomes effective pursuant to Rule 430A, or filing of
the Prospectus is otherwise required under Rule 424(b), the Company will file
the Prospectus, properly completed (and in form and substance reasonably
satisfactory to the Underwriters) pursuant to Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives of such
timely filing. The Company will not file the Prospectus, any amended
Prospectus, any amendment (including post-effective amendments) to the
Registration Statement or any supplement to the Prospectus without (i) advising
the Representatives of and, a reasonable time prior to the proposed filing of
such amendment or supplement, furnishing the Representatives with copies thereof
and (ii) obtaining the prior consent of the Representatives to such filing. The
Company will prepare and file with the Commission, promptly upon the request of
the Representatives, any amendment to the Registration Statement or supplement
to the Prospectus that may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters and use its best efforts to cause
the same to become effective as promptly as possible.
(b) The Company will promptly advise the Representatives (i) when the
Registration Statement becomes effective, (ii) when any post-effective amendment
thereof becomes effective, (iii) of any request by the Commission for any
amendment of or supplement to the Registration Statement or the Prospectus or
for any additional information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (v) of the
receipt by the Company of any notification with respect to the suspension of the
registration, qualification or exemption from registration or qualification of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order or suspension and, if issued, to obtain as
soon as possible the withdrawal thereof.
(c) The Company will (i) on or before the Closing Date, deliver to
each of the Representatives and to Underwriters' counsel a signed copy of the
Registration Statement as originally filed and of each amendment thereto filed
prior to the time the Registration Statement becomes effective and, promptly
upon the filing thereof, a signed copy of each post-effective amendment, if any,
to the Registration Statement (together with, in each case, all exhibits thereto
unless and to the extent previously furnished to the Representatives) and all
documents filed by the Company with the Commission under the Exchange Act and
deemed to be incorporated by reference into any Preliminary Prospectus or the
Prospectus and will also deliver to the Representatives, for distribution to the
several Underwriters, a sufficient number of additional conformed copies of each
of the foregoing (excluding exhibits) so that one copy of each may be
distributed to each Underwriter, (ii) as promptly as possible deliver to each of
the Representatives and send to the several Underwriters, at such office or
offices as the Representatives may designate, as many copies of the Prospectus
as the Representatives may reasonably request and (iii) thereafter from time to
time during the period in which a prospectus is required by law to be delivered
by an Underwriter or a dealer, likewise send to the Underwriters as many
additional copies of the Prospectus and as
-14-
many copies of any supplement to the Prospectus and of any amended Prospectus,
filed by the Company with the Commission, as the Representatives may reasonably
request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or a dealer any event shall
occur as a result of which it is necessary to supplement or amend the Prospectus
in order to make the Prospectus not misleading or so that the Prospectus will
not omit to state a material fact necessary to be stated therein, in each case
at the time the Prospectus is delivered to a purchaser of the Shares, or if it
shall be necessary to amend or to supplement the Prospectus to comply with the
Securities Act or the Rules and Regulations, the Company will forthwith prepare
and file with the Commission a supplement to the Prospectus or an amended
Prospectus so that the Prospectus as so supplemented or amended will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading and so that it
then will otherwise comply with the Securities Act and the Rules and
Regulations. If, after the public offering of the Shares by the Underwriters
commences and during such period, the Underwriters propose to vary the terms of
offering thereof by reason of changes in general market conditions or otherwise,
the Representatives will advise the Company in writing of the proposed variation
and if, in the opinion either of counsel for the Company or counsel for the
Underwriters, such proposed variation requires that the Prospectus be
supplemented or amended, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended Prospectus setting forth
such variation. The Company authorizes the Underwriters and all dealers to whom
any of the Shares may be sold by the Underwriters to use the Prospectus, as from
time to time so amended or supplemented, in connection with the sale of the
Shares in accordance with the applicable provisions of the Securities Act and
the Rules and Regulations for such period.
(e) The Company will cooperate with the Representatives and
Underwriters' counsel in the qualification or registration of the Shares for
offer and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and, if applicable, in connection with
exemptions from such qualification or registration and, during the period in
which a Prospectus is required by law to be delivered by an Underwriter or a
dealer, in keeping such qualifications, registrations and exemptions in effect;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports and other
documents as are or may be required to continue such qualifications,
registrations and exemptions in effect for so long a period as the
Representatives may reasonably request for the distribution of the Shares.
(f) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to the Representatives and to each
Underwriter who may so request in writing copies of (i) all periodic and special
reports furnished by it to shareholders of the Company, (ii) all information,
documents and reports
-15-
filed by it with the Commission, Nasdaq National Market, any securities exchange
or the NASD, (iii) all press releases and material news items or articles in
respect of the Company, its products or affairs released or prepared by the
Company (other than promotional and marketing materials disseminated solely to
customers and potential customers of the Company in the ordinary course of
business) and (iv) any additional information concerning the Company or its
business which the Representatives may reasonably request.
(g) As soon as practicable, but not later than the 45th day following
the end of the fiscal quarter first ending after the first anniversary of the
Effective Date, the Company will make generally available to its securities
holders and furnish to the Representatives an earnings statement or statements
in accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(h) The Company agrees that, without ▇▇▇ ▇▇▇▇▇▇ & Company's prior
written consent, the Company will not, and will not allow the Holders to, in
each case directly or indirectly, issue, sell, offer, contract to sell, grant
any option to purchase or otherwise dispose of any shares of Common Stock, or
any securities convertible into, exchangeable for or exercisable for Common
Stock or any rights to purchase or acquire Common Stock, for a period of 180
days following the date of this Agreement, excluding only (i) the sale of the
Shares to be sold to the Underwriters pursuant to this Agreement, (ii) the grant
of options to purchase Common Stock (provided that none of such options are or
become exercisable during such 180-day period) or the issuance of shares of
Common Stock upon the exercise in accordance with of options previously granted
under the Company's presently authorized stock option plans as described in the
Prospectus or in documents incorporated therein, or upon the exercise in
accordance with their terms of previously granted warrants which are described
in the Prospectus or in documents incorporated therein, (iii) securities issued
in future acquisitions accounted for as a purchase (provided that each recipient
of such acquisition securities enters into and delivers to ▇▇▇ ▇▇▇▇▇▇ & Company
a lock-up agreement of the kind described in Section 1(s) of this Agreement, but
with a 180-day period beginning on the date of such acquisition), and
(iv) securities issued in future acquisitions accounted for as a pooling of
interests (provided that each recipient of such acquisition securities agrees
not to dispose of such securities in such a manner or at such a time as would
disqualify the transaction for pooling-of-interests accounting treatment).
(i) The Company will establish and maintain all financial control and
financial reporting systems customary for well-established public companies,
including but not limited to adequate management information and reporting
systems, and will employ and maintain, with adequate staffing levels at
headquarters and at each functional division, and at each level of
responsibility, an employee staff of well trained and highly qualified financial
professionals.
(j) The Company will apply the net proceeds from the offering
received by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
-16-
(k) The Company will, and at all times for a period of at least five
years after the date of this Agreement, unless such securities are then listed
on a national securities exchange, use its best efforts to cause the Common
Stock (including the Shares) to be included for quotation on the Nasdaq National
Market, and the Company will comply with all registration, filing, reporting and
other requirements of the Exchange Act, the national securities exchange, and
the Nasdaq National Market which may from time to time be applicable to the
Company.
(l) The Company will use its best efforts to maintain insurance of
the types and in the amounts which it deems adequate for its business consistent
with insurance coverage maintained by companies of similar size and engaged in
similar businesses including, but not limited to, general liability insurance
covering all real and personal property owned or leased by the Company against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against.
(m) In accordance with the Warrant Agreement, which the Company has
executed and delivered, the Company agrees, upon its receipt of the purchase
price therefor (as specified in the Warrant Agreement), to deliver to ▇▇▇ ▇▇▇▇▇▇
& Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Inc. (individually and not as the
Representatives of the Underwriters) on the Closing Date and simultaneously with
completion of the purchase and sale of the Firm Shares, Warrants (in the form
attached as Exhibit A to the Warrant Agreement) representing the right to
purchase 112,500 shares of Common Stock at a price equal to 120% of the offering
price per share to the public as set forth or to be set forth on the Cover Page
of the Prospectus or in the Term Sheet.
(n) The Company will issue no press release prior to or within 70
days after the Closing Date without the Representatives' prior written consent.
(o) Within a reasonable time after the Closing Date, not to exceed
90 days, the Company shall supply to the Representatives and the Underwriters'
counsel, at the Company's cost, such number of bound volumes as may be
reasonably requested by such counsel each containing all material documents
relating to the offering of the Shares.
4. FEES AND EXPENSES.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and expenses in
connection with: the preparation, printing and filing of
the Registration Statement (including financial
statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus, any drafts of each of
them and any amendments or supplements to any of them;
the duplication or, if applicable, printing (including
all drafts thereof) of this Agreement, the Agreement
Among
-17-
Underwriters, any Selected Dealer Agreements, the Warrant
Agreement, the Preliminary Blue Sky Survey and any
Supplemental Blue Sky Survey, the Underwriters'
Questionnaire and the Power of Attorney and the
duplication and printing (including of drafts thereof) of
any other underwriting documents and material (including
but not limited to marketing memoranda and other
marketing material) in connection with the offering,
purchase, sale and delivery of the Shares; the issuance
and delivery of the Shares under this Agreement to the
several Underwriters, including all expenses, taxes,
duties, fees and commissions on the purchase and sale of
the Shares and AMEX, brokerage and transaction levies
with respect to the purchase and, if applicable, the sale
of the Shares (x) incident to the sale and delivery of
the shares by the Company to the Underwriters and (y)
incident to the sale and delivery of the Shares by the
Underwriters to the initial purchasers thereof; the cost
of printing all stock certificates; the Transfer Agent's
and Registrar's fees; the fees and disbursements of
counsel for the Company; all fees and other charges of
the Company's independent public accountants and any
other experts named in the Prospectus; the cost of
furnishing to the several Underwriters copies of the
Registration Statement (including appropriate exhibits),
Preliminary Prospectus(es) and the Prospectus, the
agreements and other documents and instruments referred
to above and any amendments or supplements to any of the
foregoing; NASD filing fees; the cost of qualifying or
registering the Shares (or obtaining exemptions from
qualification or registration) under the laws of such
jurisdictions as the Representatives may designate
(including filing fees and fees and disbursements of
Underwriters' counsel in connection with such state
securities or Blue Sky qualifications, registrations and
exemptions) and preparing the preliminary and any final
Blue Sky Memorandum (which cost, filing fees, fees and
disbursements shall not exceed $15,000 without prior
approval of the Company and shall be paid on or prior to
the Closing Date); all fees and expenses in connection
with application for qualification of the Shares for
inclusion for quotation on the Nasdaq National Market;
all fees and expenses in connection with listing the
Shares on AMEX; the Company's share of roadshow expenses;
and all other expenses incurred by the Company in
connection with the performance of its obligations
hereunder.
-18-
(ii) In addition to its obligations under Section 4(a)(i)
above, the Company agrees to pay the Representatives a
non-accountable expense allowance equal to 1.0% of the
public offering price of the Shares. Such allowance
shall be paid to the Representatives as provided in
Sections 2(c) and 2(d) of this Agreement.
(iii) In addition to its obligations under Section 7(a) of this
Agreement, the Company agrees that, as an interim measure
during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon
any loss, claim, damage or liability described in Section
7(a) of this Agreement, it will reimburse or advance to
or for the benefit of the Underwriters, and each of them,
on a monthly basis (or more often, if requested) for all
legal and other expenses incurred in connection with
investigating or defending any such claim, action,
investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination
as to the propriety and enforceability of the Company's
obligation to reimburse or advance for the benefit of the
Underwriters for such expenses or the possibility that
such payments might later be held to have been improper
by a court of competent jurisdiction. To the extent that
any portion, or all, of any such interim reimbursement
payments or advances are so held to have been improper,
the Underwriters receiving the same shall promptly return
such amounts to the Company together with interest,
compounded daily, at the prime rate (or other commercial
lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America,
NT&SA, San Francisco, California (the "Prime Rate"), but
not in excess of the maximum rate permitted by applicable
law. Any such interim reimbursement payments or advances
that are not made to or for the Underwriters within 30
days of a request for reimbursement or for an advance
shall bear interest at the Prime Rate, but not in excess
of the maximum rate permitted by applicable law, from the
date of such request until the date paid.
(b) In addition to their obligations under Section 7(b) of this
Agreement, the Underwriters severally and in proportion to their obligation to
purchase Firm Shares as set forth on Schedule I hereto, agree that, as an
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any loss, claim, damage or
liability described in Section 7(b) of this Agreement, they will reimburse or
advance to or for the benefit of the Company on a monthly basis (or more often,
if requested) for all legal and other expenses incurred by the Company in
connection with investigating or defending any such claim, action,
investigation, inquiry or other
-19-
proceeding, notwithstanding the absence of a judicial determination as to the
propriety or enforceability of the Underwriters' obligation to reimburse or
advance for the benefit of the Company for such expenses and the possibility
that such payments or advances might later be held to have been improper by a
court of competent jurisdiction. To the extent that any portion, or all, of any
such interim reimbursement payments or advances are so held to have been
improper, the Company shall promptly return such amounts to the Underwriters
together with interest, compounded daily, at the Prime Rate, but not in excess
of the maximum rate permitted by applicable law. Any such interim reimbursement
payments or advances that are not made to the Company within 30 days of a
request for reimbursement or for an advance shall bear interest at the Prime
Rate, but not in excess of the maximum rate permitted by applicable law, from
the date of such request until the date paid.
(c) It is agreed that any controversy arising out of the operation of
the interim reimbursement and advance arrangements set forth in Sections
4(a)(iii) and 4(b) above, including the amounts of any requested reimbursement
payments or advance, the method of determining such amounts and the basis on
which such amounts shall be apportioned among the indemnifying parties, shall be
settled by arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of the New York Stock Exchange, Inc. or pursuant
to the Code of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or a written notice of
intention to arbitrate, therein electing the arbitration tribunal. If the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to the demand or notice is
authorized to do so. Any such arbitration will be limited to the interpretation
and obligations of the parties under the interim reimbursement and advance
provisions contained in Sections 4(a)(iii) and 4(b) above and will not resolve
the ultimate propriety or enforceability of the obligation to indemnify for or
contribute to expenses that is created by the provisions of Section 7 of this
Agreement.
(d) If the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 5 of this Agreement is not satisfied, or because of any termination
pursuant to Section 8(b) of this Agreement, or because of any refusal, inability
or failure on the part of the Company to perform any covenant or agreement set
forth in this Agreement or to comply with any provision of this Agreement other
than by reason of a default by any of the Underwriters, the Company agrees to
reimburse the Representatives upon demand for, or pay directly, all
out-of-pocket expenses (including fees and disbursements of counsel) that shall
have been incurred by the Representatives in connection with investigating,
preparing to market or marketing the Shares or otherwise in connection with this
Agreement or the offering of the Shares; provided that such accountable expense
reimbursement shall not exceed $150,000.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase and pay for the Shares shall be subject, in the
sole discretion of the Representatives, to the accuracy as of the date of
execution of this Agreement, the Closing
-20-
Date and the date on which the Option Shares are to be purchased, as the case
may be, of the representations and warranties of the Company set forth in this
Agreement, to the accuracy of the statements of the Company and its officers
made in any certificate delivered pursuant to this Agreement, to the performance
by the Company of all of its obligations to be performed under this Agreement at
or prior to the Closing Date or any later date on which Option Shares are to be
purchased, as the case may be, to the satisfaction of all conditions to be
satisfied or performed by the Company at or prior to that date and to the
following additional conditions:
(a) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A under the
Act, such post-effective amendment shall become effective and the Company shall
have provided evidence satisfactory to the Representatives of such filing and
effectiveness) not later than 5:00 p.m., New York time, on the date of this
Agreement or at such later date and time as the Representatives may approve in
writing and, at the Closing Date or, with respect to the Option Shares, the date
on which such Option Shares are to be purchased; no stop order suspending the
effectiveness of the Registration Statement or any qualification, registration
or exemption from qualification or registration for the sale of the Shares in
any jurisdiction shall have been issued and no proceedings for that purpose
shall have been instituted or threatened; and any request for additional
information on the part of the Commission shall have been complied with to the
reasonable satisfaction of the Representatives and their counsel.
(b) The Representatives shall have received from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, an opinion, dated the Closing Date,
with respect to the issuance and sale of the Shares and such other related
matters as the Representatives may reasonably require, and the Company shall
have furnished such counsel with all documents which they may request for the
purpose of enabling them to pass upon such matters.
(c) The Representatives shall have received on the Closing Date and
on any later date on which Option Shares are purchased, as the case may be, the
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company, addressed to the
Underwriters and dated the Closing Date or such later date, with reproduced
copies or signed counterparts thereof for each of the Underwriters, covering the
matters set forth in Annex A to this Agreement and in form and substance
satisfactory to the Representatives.
(d) The Representatives shall be satisfied that there has not been
any material change in the market for securities in general or in political,
financial or economic conditions as to render it impracticable in the
Representatives' sole judgment to make a public offering of the Shares, or a
material adverse change in market levels for securities in general (or those of
environmental companies in particular) or financial or economic conditions which
render it inadvisable to proceed.
-21-
(e) The Representatives shall have received on the Closing Date and
on any later date on which Option Shares are purchased a certificate, dated the
Closing Date or such later date, as the case may be, and signed by the President
and the Chief Financial Officer of the Company stating that:
(i) the representations and warranties of the Company set
forth in Section 1 of this Agreement are true and correct
with the same force and effect as if expressly made at
and as of the Closing Date or such later date, and the
Company has complied with all the agreements and
satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date or such
later date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no
proceedings for that purpose have been instituted or are
pending or are threatened under the Securities Act; and
(iii) (A) the respective signers of the certificate have
carefully examined the Registration Statement in the form
in which it originally became effective and the
Prospectus and any supplements or amendments to any of
them and, as of the Effective Date, the statements made
in the Registration Statement and the Prospectus were
true and correct in all material respects and neither the
Registration Statement nor the Prospectus omitted to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading, (B) since the Effective Date, no event has
occurred that should have been set forth in an amendment
to the Registration Statement or a supplement or
amendment to the Prospectus that has not been set forth
in such an amendment or supplement, (C) since the
respective dates as of which information is given in the
Registration Statement in the form in which it originally
became effective and the Prospectus contained therein,
there has not been any Consolidated Material Adverse
Effect or any development involving a prospective
Consolidated Material Adverse Effect, whether or not
arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary
course of business, neither the Company or any of its
direct or indirect subsidiaries has entered into any
material transaction not referred to in the Registration
Statement in the form in which it originally became
effective and the Prospectus contained therein, (D) there
are not any pending or known threatened legal proceedings
to which the
-22-
Company or any of its direct or indirect subsidiaries is
a party or of which property of the Company or any of its
direct or indirect subsidiaries is the subject which are
material and which are not disclosed in the Registration
Statement and the Prospectus and (E) there are not any
license agreements, contracts, leases or other documents
that are required to be filed as exhibits to the
Registration Statement that have not been filed as
required.
(f) The Representatives shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
a letter or letters, addressed to the Underwriters and dated the Closing Date
and any later date on which Option Shares are purchased, confirming that they
are independent accountants with respect to the Company within the meaning of
the Securities Act and the applicable Rules and Regulations thereunder and,
based upon the procedures described in their letter, referred to below,
delivered to the Representatives concurrently with the execution of this
Agreement (the "Original Letter"), but carried out to a date not more than five
business days prior to the Closing Date or such later date on which Option
Shares are purchased, (i) confirming, to the extent true, that the statements
and conclusions set forth in the Original Letter are accurate as of the Closing
Date or such later date, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter that are necessary to reflect any changes in the facts described
in the Original Letter since the date of the Original Letter or to reflect the
availability of more recent financial statements, data or information. Such
letters shall not disclose any change, or any development involving a
prospective change, in or affecting the business, properties or condition
(financial or otherwise), results of operations or prospects of the Company or
any of its direct or indirect subsidiaries which, in the Representatives' sole
judgment, makes it impractical or inadvisable to proceed with the public
offering of the Shares or the purchase of the Option Shares as contemplated by
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). In addition, the Representatives shall have received
from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, on or prior to the Closing Date, a letter addressed to
the Company and made available to the Representatives for the use of the
Underwriters stating that their review of the Company's system of internal
controls, to the extent they deemed necessary in establishing the scope of their
examination of the Company's consolidated financial statements as of December
31, 1996 or in delivering their Original Letter, did not disclose any weaknesses
in internal controls that they considered to be a material weaknesses.
(g) Prior to the Closing Date, the Shares shall have been listed on
AMEX subject to official notice of issuance.
(h) On or prior to the Closing Date, you shall have received from all
Material Holders executed agreements covering the matters described in
Section 1(s) of this Agreement.
-23-
(i) On or prior to the Closing Date, the Company shall have entered
into the Warrant Agreement, substantially in the form filed as Exhibit 10.33 to
the Registration Statement; and on the Closing Date, concurrently with the
purchase and sale of the Firm Shares pursuant to this Agreement, the Company
shall have issued, sold and delivered the Warrants to the Representatives.
(j) The Company shall have furnished to the Representatives such
further certificates and documents as the Representatives shall reasonably
request (including certificates of officers of the Company), as to the accuracy
of the representations and warranties of the Company set forth in this
Agreement, the performance by the Company of its obligations under this
Agreement and the other conditions concurrent and precedent to the obligations
of the Underwriters under this Agreement.
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement will be in compliance with the provisions of this
Agreement only if they are reasonably satisfactory to the Representatives. The
Company will furnish the Representatives with such number of conformed copies of
such opinions, certificates, letters and documents as the Representatives shall
reasonably request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
time being of the essence, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and
Underwriters' counsel, this Agreement and all obligations of the Underwriters
hereunder may be canceled by the Representatives at, or at any time prior to,
the Closing Date or (with respect to the Option Shares) prior to the date upon
which the Option Shares are to be purchased, as the case may be. Notice of such
cancellation shall be given to the Company in writing or by telephone or
telecopy confirmed in writing. Any such termination shall be without liability
of the Company to the Underwriters (except as provided in Section 4 or Section 7
of this Agreement) and without liability of the Underwriters to the Company
(except to the extent provided in Section 7 of this Agreement).
6. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell and deliver the Shares required to be delivered as and when
specified in this Agreement shall be subject to the condition that, at the
Closing Date or (with respect to the Option Shares) the date upon which the
Option Shares are to be purchased, no stop order suspending the effectiveness of
the Registration Statement shall be in effect and no proceedings therefor shall
be pending or threatened by the Commission.
-24-
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statute,
law or regulation, at common law or otherwise, specifically including but not
limited to losses, claims, damages or liabilities (or actions in respect
thereof) related to negligence on the part of any Underwriter, and the Company
agrees to reimburse each such Underwriter and controlling person for any legal
or other expenses (including, except as otherwise provided below, settlement
expenses and fees and disbursements of counsel) incurred by the respective
indemnified parties in connection with defending against any such losses,
claims, damages or liabilities or in connection with any investigation or
inquiry of, or other proceeding that may be brought against, the respective
indemnified parties, in each case insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon, in
whole or in part, (i) any breach of any representation, warranty, covenant or
agreement of the Company in this Agreement, (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement in
the form originally filed or in any amendment thereto (including the Prospectus
as part thereof) or any post-effective amendment thereto, or the omission or
alleged omission to state therein a 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 or (iii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (iv) any untrue
statement or alleged untrue statement of a material fact contained in any
application or other document, or any amendment or supplement thereto, executed
by the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify or register the Shares
under the securities or Blue Sky laws thereof or to obtain an exemption from
such qualification or registration or filed with the Commission or any
securities association, the Nasdaq National Market, or any securities exchange,
or the omission or alleged omission to state therein a 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; provided, however,
that (1) the indemnity agreements of the Company contained in this Section 7(a)
shall not apply to any such losses, claims, damages, liabilities or expenses if
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any such amendment
thereof or supplement thereto and (2) the indemnity agreement contained in this
Section 7(a) with respect to any Preliminary Prospectus shall not
-25-
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages, liabilities or expenses purchased the Shares that are
the subject thereof (or to the benefit of any person controlling such
Underwriter) if the Company can demonstrate that at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) (excluding the documents incorporated
therein by reference) was not sent or delivered to such person and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented), unless the failure is the result of noncompliance by the Company
with Section 3 of this Agreement. The indemnity agreements of the Company
contained in this Section 7(a) and the representations and warranties of the
Company contained in Section 1 of this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the delivery of and payment for the
Shares. This indemnity agreement shall be in addition to any liabilities which
the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of its officers who signs the Registration
Statement, each of its directors, each other Underwriter and each person
(including each partner or officer thereof) who controls the Company or any such
other Underwriter within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act, or other federal or state statute,
law or regulation or at common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, settlement expenses and fees and disbursements of counsel) incurred by
the respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding that may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any breach of
any representation, warranty, covenant or agreement of the indemnifying
Underwriter in this Agreement, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (including
the Prospectus as part thereof) or any post-effective amendment thereto, or the
omission or alleged omission to state therein a 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 (iii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case under clauses (ii) and (iii) above, as the case may
be, only if such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of such indemnifying Underwriter through the Representatives specifically for
use in the Registration
-26-
Statement, in any Preliminary Prospectus or the Prospectus or any such amendment
thereof or supplement thereto. The Company acknowledges and agrees that the
matters described in Section 2(g) of this Agreement constitute the only
information furnished in writing by or on behalf of the several Underwriters for
inclusion in the Registration Statement, any Preliminary Prospectus or the
Prospectus. The indemnity agreement of each Underwriter contained in this
Section 7(b) shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any indemnified party and shall
survive the delivery of and payment for the Shares. This indemnity agreement
shall be in addition to any liabilities which each Underwriter may otherwise
have.
(c) Each person or entity indemnified under the provisions of
Sections 7(a) and 7(b) above agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
Sections, it will, if a claim in respect thereunder is to be made against the
indemnifying party or parties under this Section 7, promptly give written notice
(the "Notice") of such service or notification to the party or parties from whom
indemnification may be sought hereunder. No indemnification provided for in
Sections 7(a) or 7(b) above shall be available to any person who fails to so
give the Notice if the party to whom such Notice was not given was unaware of
the action, suit, investigation, inquiry or proceeding to which the Notice would
have related, but only to the extent such party was materially prejudiced by the
failure to receive the Notice, and the omission so to notify such indemnifying
party or parties shall not relieve such indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of Sections 7(a) and 7(b). Any indemnifying party
shall be entitled at its own expense to participate in the defense of any
action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(the "Notice of Defense") to the indemnified party, to assume (alone or in
conjunction with any other indemnifying party or parties) the entire defense of
such action, suit, investigation, inquiry or proceeding, in which event such
defense shall be conducted, at the expense of the indemnifying party or parties,
by counsel chosen by such indemnifying party or parties and reasonably
satisfactory to the indemnified party or parties; provided, however, that (i) if
the indemnified party or parties reasonably determine that there may be a
conflict between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses or
rights available to such indemnified party or parties different from or in
addition to those available to the indemnifying party or parties, then separate
counsel for and selected by the indemnified party or parties shall be entitled
to conduct, at the expense of the indemnifying parties, the defense of the
indemnified parties to the extent determined by such counsel to be necessary to
protect the interests of the indemnified party or parties, and (ii) provided,
further, that the indemnifying party shall not be liable for the fees and
expenses of more than one separate counsel, reasonably approved by the
indemnifying party, for all of the indemnified parties,
-27-
plus, if applicable, local counsel in each jurisdiction. In addition, in any
event, the indemnified party or parties shall be entitled to have counsel
selected by such indemnified party or parties participate in, but not conduct,
the defense. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and, unless separate counsel is to
be chosen by the indemnified party or parties as provided above, the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
indemnified party or parties, the indemnifying party or parties will not be
liable under Sections 7(a) through 7(c) for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear and pay the legal and other
expenses incurred in connection with the conduct of the defense as referred to
in clause (i) of the proviso to the preceding sentence and (B) the indemnifying
party or parties shall bear and pay such other expenses as it or they have
authorized to be incurred by the indemnified party or parties. If, within a
reasonable time after receipt of the Notice, no Notice of Defense has been
given, the indemnifying party or parties shall be responsible for any legal or
other expenses incurred by the indemnified party or parties in connection with
the defense of the action, suit, investigation, inquiry or proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 7
but 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 to appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 7 provides for
indemnification in such case, each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in Section 7(a) or 7(b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by each indemnifying party from the offering of the Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Underwriters shall be deemed to be in the same respective
proportions as the total proceeds from the offering of the Shares, net of the
underwriting discounts, received by the Company and the total underwriting
discount retained by the Underwriters bear to the aggregate public offering
price of the Shares. 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 a party and the party's relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of
-28-
allocation which does not take into account the equitable considerations
referred to in the first sentence of this Section 7(d) and to the considerations
referred to in the third sentence of the first paragraph of this Section 7(d).
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof, referred to in the first
sentence of this Section 7(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any action or claim
which is the subject of this Section 7(d). Notwithstanding the provisions of
this Section 7(d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Shares purchased by that
Underwriter. For purposes of this Section 7(d), each person who controls an
Underwriter within the meaning of the Securities Act shall have the same rights
to contribution as such Underwriter, and each person who controls the Company
within the meaning of the Securities Act, each officer of the Company who signed
the Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the immediately
preceding and immediately following sentences. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint.
Each party or other entity entitled to contribution agrees that upon
the service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in Section 7(c) above). This Section 7(d) shall not be
operative as to any Underwriter to the extent that the Company is entitled to
receive or has received indemnity under this Section 7.
(e) The Company shall not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not such
Underwriter or any person who controls such Underwriter within the meaning of
Section 15 of the Securities Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each such Underwriter and each such controlling person
from all liability arising out of such claim, action, suit or proceeding.
(f) No Underwriter shall, without the consent of the Company, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the Company is a party
to such claim, action, suit or proceeding),
-29-
which consent shall not be unreasonably withheld, unless such settlement,
compromise or consent includes an unconditional release of the Company, each of
its officers who signed the Registration Statement, each of its directors and
each person who controls the Company within the meaning of Section 15 of the
Securities Act, from all liability arising out of such claim, action, suit or
proceeding.
(g) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of Sections 4(a)(iii), 4(b) and 4(c) and this Section
7 of this Agreement and that they are fully informed regarding all such
provisions. They further acknowledge that the provisions of Sections 4(a)(iii),
4(b) and 4(c) and this Section 7 of this Agreement fairly allocate the risks in
light of the ability of the parties to investigate the Company and its business
in order to assure that adequate disclosure is made in the Registration
Statement, each Preliminary Prospectus and the Prospectus as required by the
Securities Act, the Rules and Regulations, the Exchange Act and the rules and
regulations of the Commission under the Exchange Act. The parties are advised
that federal or state policy, as interpreted by the courts in certain
jurisdictions, may be contrary to certain provisions of Sections 4(a)(iii), 4(b)
and 4(c) and this Section 7 of this Agreement and, to the extent permitted by
law, the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under Sections
4(a)(iii), 4(b) or 4(c) or this Section 7 of this Agreement and further agree
not to attempt to assert any such defense.
(h) SUBSTITUTION OF UNDERWRITERS. If for any reason one or more of
the Underwriters fails or refuses (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 5 or
Section 9 of this Agreement) to purchase and pay for the number of Firm Shares
agreed to be purchased by such Underwriter or Underwriters, the Company shall
immediately give notice thereof to the Representatives and the non-defaulting
Underwriters shall have the right within 24 hours after the receipt by the
Representatives of such notice to purchase, or procure one or more other
Underwriters to purchase, in such proportions as may be agreed upon among the
Representatives and such purchasing Underwriter or Underwriters and upon the
terms set forth herein, all or any part of the Firm Shares that such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail to make such arrangements with respect to all such Shares, the
number of Firm Shares that each non-defaulting Underwriter is otherwise
obligated to purchase under this Agreement shall be automatically increased on a
pro rata basis to absorb the remaining Shares that the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the Shares that the defaulting
Underwriter or Underwriters agreed to purchase if the aggregate number of such
Shares exceeds 10% of the total number of Firm Shares that all Underwriters
agreed to purchase under this Agreement. If the total number of Firm Shares
that the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the first 24-hour
period above referred to, to
-30-
make arrangements with other underwriters or purchasers satisfactory to the
Representatives for purchase of such Shares on the terms set forth in this
Agreement. In any such case, either the Representatives or the Company shall
have the right to postpone the Closing Date determined as provided in Section
2(c) of this Agreement for not more than seven business days after the date
originally fixed as the Closing Date pursuant to said Section 2(c) in order that
any necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made.
If neither the non-defaulting Underwriters nor the Company makes
arrangements within the time periods provided in the first three sentences of
the first paragraph of this Section 7(h) for the purchase of all the Firm Shares
that the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter (except
as provided in Section 4 or Section 7 of this Agreement) and without any
liability on the part of any non-defaulting Underwriter to the Company (except
to the extent provided in Section 7 of this Agreement). Nothing in this Section
7(h), and no action taken hereunder, shall relieve any defaulting Underwriter
from liability, if any, to the Company or any non-defaulting Underwriter for
damages occasioned by its default under this Agreement. The term "Underwriter"
in this Agreement shall include any persons substituted for an Underwriter under
this Section 7(h).
8. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) If the Registration Statement has not been declared effective
prior to the date of this Agreement, this Agreement shall become effective at
such time, after notification of the effectiveness of the Registration Statement
has been released by the Commission, as the Representatives and the Company
shall agree upon the public offering price and the purchase price of the Shares.
If the public offering price and the purchase price of the Shares shall not have
been determined prior to 5:00 p.m., New York time, on the fifth full business
day after the Registration Statement has become effective, this Agreement shall
thereupon terminate without liability on the part of the Company to the
Underwriters (except as provided in Section 4 or Section 7 of this Agreement) or
the Underwriters to the Company (except as set forth in Section 7 of this
Agreement). By giving notice before the time this Agreement becomes effective,
the Representatives may prevent this Agreement from becoming effective without
liability of any party to the other party, except that the Company shall remain
obligated to pay costs and expenses to the extent provided in Section 4 and
Section 7 of this Agreement. If the Registration Statement has been declared
effective prior to the date of this Agreement, this Agreement shall become
effective upon execution and delivery by the Representatives and the Company.
(b) This Agreement may be terminated by the Representatives in their
absolute discretion by giving written notice to the Company at any time on or
prior to the Closing Date or, with respect to the purchase of the Option Shares,
on or prior to any later date on which the Option Shares are to be purchased, as
the case may be, if prior to such
-31-
time any of the following has occurred or, in the Representatives' opinion, is
likely to occur: (i) after the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse change or
development involving a prospective adverse change in or affecting particularly
the business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its direct and indirect subsidiaries,
taken as a whole, whether or not arising in the ordinary course of business,
occurs which would, in the Representatives' sole judgment, make the offering or
the delivery of the Shares impracticable or inadvisable; or (ii) if there shall
have been the engagement in hostilities or an escalation of major hostilities by
the United States or the declaration of war or a national emergency by the
United States on or after the date hereof, or any outbreak of hostilities or
other national or international calamity or crisis or change in economic or
political conditions, if the effect of such outbreak, calamity, crisis or change
in economic or political conditions on the financial markets of the United
States would, in the Representatives' sole judgment, make the offering or
delivery of the Shares impracticable or inadvisable; or (iii) if there shall
have been suspension of trading in securities generally or a material adverse
decline in value of securities generally on the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market, or limitations on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such exchange or system; or (iv) if there shall have been the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of, or commencement of any proceeding or
investigation by, any court, legislative body, agency or other governmental
authority which in the Representatives' sole judgment has or may have a
Consolidated Material Adverse Effect; or (v) if there shall have been the
declaration of a banking moratorium by federal, New York, California or Texas
state authorities; or (vi) if there shall have been the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the Representatives' sole judgment has a material
adverse effect on the securities markets in the United States; or (vii) existing
international monetary conditions shall have undergone a material change which,
in your sole judgment, makes the offering or delivery of the Shares
impracticable or inadvisable. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company to the Underwriters
(except pursuant to Section 4 and Section 7 of this Agreement) and no liability
of the Underwriters to the Company (except to the extent provided
in Section 7 of this Agreement).
9. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing and, if to the Underwriters, shall be mailed,
telecopied or delivered to ▇▇▇ ▇▇▇▇▇▇ & Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Manager
(telecopier: (▇▇▇) ▇▇▇-▇▇▇▇); and if to the Company, shall be mailed,
telecopied or delivered to it at its office at U S Liquids Inc., ▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (telecopier: (281)
272-4545) Attention: President. All notices given by telecopy shall be
promptly confirmed by letter.
10. PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT. This Agreement
shall inure to the benefit of the Company and the several Underwriters and, with
respect to the
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provisions of Section 4 and Section 7 of this Agreement, the several parties (in
addition to the Company and the several Underwriters) indemnified under the
provisions of Section 4 and Section 7, and their respective personal
representatives, successors and assigns. Nothing in this Agreement is intended
or shall be construed to give to any other person, firm or corporation any legal
or equitable remedy or claim under or in respect of this Agreement or any
provision contained herein. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Shares from
the several Underwriters.
11. GENERAL. Notwithstanding any provision of this Agreement to the
contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties, covenants and
agreements in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof or by or on behalf of
the Company or their respective directors or officers and (c) delivery and
payment for the Shares under this Agreement; provided, however, that if this
Agreement is terminated prior to the Closing Date, the provisions of
Sections 3(f)-3(n) of this Agreement shall be of no further force or effect.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which together shall constitute one and
the same instrument, and may be delivered by facsimile transmission.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS, OF THE
STATE OF CALIFORNIA.
12. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement,
the Representatives will act for and on behalf of the several Underwriters, and
any action taken under this Agreement by the Representatives, as representatives
of the several Underwriters, will be binding on all the Underwriters.
If the foregoing correctly sets forth your understanding, please so
indicate by signing in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among the Company and the several
Underwriters.
Very truly yours,
U S LIQUIDS INC.
By:
-----------------------------------------
Its:
----------------------------------------
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The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
On their own behalf and on behalf of each of
the several Underwriters named in Schedule I
hereto
▇▇▇ ▇▇▇▇▇▇ & COMPANY
By:
--------------------------------
Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ INC.
By:
--------------------------------
Authorized Signatory
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SCHEDULE I
UNDERWRITERS
Number of Firm
Underwriters Shares to be Purchased
------------ ----------------------
▇▇▇ ▇▇▇▇▇▇ & Company. . . . . . . . . . . . . .
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Inc. . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . 1,500,000
---------
---------
I-1
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE COMPANY
(i) Each of the Company, MBO Inc. and US Liquids LP Holding Co.
has been duly organized and is validly existing as a
corporation in good standing under the laws of Delaware; each
of American WasteWater Inc., Mesa Processing, Inc., T&T
Grease Service, Inc., Phoenix Fats & Oils, Inc., South Texas
By-Products, Inc., Imperial Services, Inc., and National
Enviro Waste Company, Inc. has been duly organized and is
validly existing as a corporation in good standing under the
laws of Texas; and US Liquids of La., L.P. has been duly
organized and is validly existing as a limited partnership
under the laws of Delaware;
(ii) Each of the Company and each of its direct and indirect
subsidiaries has the corporate power or partnership power, as
the case may be, to own, lease and operate its properties and
to conduct its business as described in the Prospectus;
(iii) Each of the Company and each of its direct and indirect
subsidiaries is duly qualified to do business as a foreign
corporation (or, in the case of US Liquids of Louisiana,
L.P., as a foreign limited partnership) and is in good
standing in all jurisdictions in the United States, if any,
in which the ownership or leasing of its properties or the
conduct of its business requires such qualification, except
where the failure so to qualify would not have a material
adverse effect on the business, properties, condition
(financial or otherwise), results of operations or prospects
of such entity;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein; the issued
and outstanding shares of capital stock (or other equity
interests) of the Company and each of its direct and indirect
subsidiaries have been duly and validly authorized and
issued, are fully paid and nonassessable and, to the best
knowledge of such counsel, have not been issued in violation
of any preemptive right or other rights to subscribe for or
purchase securities or in violation of any applicable federal
or state securities laws; and the Company directly or
indirectly owns all of the issued and outstanding equity
securities of each of its direct and indirect subsidiaries
and, to such counsel's best knowledge, there are no
outstanding options, warrants or other rights to acquire any
equity securities of any such subsidiary;
A-1
(v) The Shares will, upon issuance and delivery against payment
therefor in accordance with the terms of the Agreement, be
duly authorized, validly issued, fully paid and nonassessable
and, to the best knowledge of such counsel, will not have
been issued in violation of any preemptive right or other
rights to subscribe for or purchase securities;
(vi) The Company has corporate power and authority to enter into
the Agreement and to issue, sell and deliver the Shares to
the Underwriters and carry out all the other terms and
provisions thereof;
(vii) The Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly
executed and delivered by the Company and, assuming its due
authorization, execution and delivery by the Representatives,
is the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except insofar as the indemnification and contribution
provisions of the Agreement may be limited by public policy
concerns and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by general
equitable principles;
(viii) The Registration Statement has become effective under the
Securities Act and, to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the
Securities Act;
(ix) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial
statements, financial data and supporting schedules included
therein, as to which such counsel need express no opinion),
as of the effective date of the Registration Statement,
complied as to form in all material respects with the
requirements of the Securities Act and the applicable Rules
and Regulations;
(x) The terms and provisions of the capital stock of the Company
conform in all material respects to the description thereof
contained in the Registration Statement and Prospectus, and
the forms of certificates evidencing the Common Stock comply
with Delaware law;
(xi) The information in the Prospectus under the caption "Risk
Factors -- NOW Business Dependent Upon Exemption Under RCRA
and Other Environmental Regulations," "Risk
Factors--Potential Anti-Takeover Effect of Certain Charter
Provisions," "Business--The Nonhazardous
A-2
Liquid Waste Industry--NCW," "Business--The Nonhazardous
Liquid Waste Industry--NOW," "Business--Regulatory
Background," "Management--Amended and Restated 1996 Stock
Option Plan" and "Description of Securities," to the extent
it constitutes matters of law or legal conclusions, has been
reviewed by such counsel and is correct in all material
respects;
(xii) The description in the Registration Statement and the
Prospectus of the Certificate of Incorporation and bylaws of
the Company and of statutes and contracts are accurate in all
material respects and fairly present in all material respects
the information required to be presented by the Securities
Act and the Rules and Regulations;
(xiii) To the best knowledge of such counsel, there are no
agreements, contracts, licenses, leases or documents of a
character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement that are not described
or referred to therein and filed as required;
(xiv) The execution and delivery of the Agreement and the Warrant
Agreement do not, and the Company's performance of the
Agreement and the Warrant Agreement and the consummation of
the transactions contemplated by each of them will not,
conflict with, violate or result in the breach of or a
default (including without limitation with the giving of
notice, the passage of time or otherwise) under any of the
terms and provisions of the Company's Certificate of
Incorporation or Bylaws or any contract, indenture, mortgage,
deed of trust, loan agreement, lease, license, joint venture
or, without limitation, other agreement or instrument known
to such counsel to which the Company or any of its direct or
indirect subsidiaries is a party or by which any of its or
their properties are bound or any law, ordinance, rule or
regulation or, to the best knowledge of such counsel, any
order, writ, injunction, judgment or decree of any
governmental agency or body or of any court or arbitration
tribunal having jurisdiction over the Company or any of its
direct or indirect subsidiaries or over any of its or their
properties; provided, however, that no opinion need be
rendered concerning state securities or Blue Sky laws;
(xv) No authorization, approval or consent or other order of any
governmental authority or agency is necessary in connection
with the consummation of the transactions contemplated by the
Agreement or the Warrant Agreement, except such as have been
obtained under the Securities Act, are necessary under the
Securities Act in connection with the registration for resale
of the Warrant Shares or as may be
A-3
required under state securities or Blue Sky laws in
connection with the purchase and the distribution of the
Shares by the Underwriters or the registration and sale of
the Warrant Shares;
(xvi) To the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the
Company or any of its direct or indirect subsidiaries of a
character which are required to be disclosed in the
Registration Statement or the Prospectus by the Securities
Act or the applicable Rules and Regulations, other than those
described therein;
(xvii) To the best knowledge of such counsel, neither the Company or
any of its direct or indirect subsidiaries is presently in
breach of, or in default under, any bond, debenture, note or
other evidence of indebtedness or any contract, indenture,
mortgage, deed of trust, loan agreement, lease, license or,
without limitation, other agreement or instrument to which
the Company or any of its direct or indirect subsidiaries is
a party or by which any of its or their properties are bound
which is material to the business, properties, condition
(financial or otherwise), prospects or results of operations
or prospects of such entity;
(xviii) To the best knowledge of such counsel, except as set forth in
the Registration Statement and Prospectus, no holders of
Common Stock or, except as is provided in the Warrant
Agreement, other securities of the Company have unexercised
registration rights with respect to any securities of the
Company;
(xix) The Warrant Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has
been duly executed and delivered by the Company and, assuming
due authorization, execution and delivery by the
Representatives, is the valid and binding agreement of the
Company, enforceable against the Company in accordance with
its terms, except insofar as the indemnification and
contribution provisions of the Warrant Agreement may be
limited by public policy concerns and except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable
principles;
(xx) The Warrants have been duly and validly authorized and
constitute valid and binding obligations of the Company
enforceable in accordance with their terms (except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable
principles);
A-4
the Warrant Shares have been duly and validly reserved and
authorized for issuance upon exercise of the Warrants against
payment therefor as provided in the Warrant Agreement
(including, as provided in the Warrant Agreement, by
surrender of Warrants) and, when so issued, will be validly
issued, fully paid and nonassessable; and to the best
knowledge of such counsel no stockholder has any preemptive
rights or other rights to subscribe for or purchase with
respect to the Warrants or the Warrant Shares;
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company, the
independent public accountants of the Company, the Representatives and counsel
to the Underwriters, at which conferences the contents of the Registration
Statement and the Prospectus and related matters were discussed and, although
they have not independently verified the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel that caused them to believe
that, at the time the Registration Statement became effective, the Registration
Statement (except as to financial statements, financial data and supporting
schedules contained therein, as to which such counsel need express no opinion)
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 at the Closing Date or any later date on which the Option
Shares are to be purchased, as the case may be, the Prospectus 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, in light of
the circumstances under which they were made, not misleading.
A-5
