EXHIBIT 1.24
CLUCKCORP INTERNATIONAL, INC.
AND
GLOBAL EQUITIES GROUP, INC.
REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of ___, 1997
REPRESENTATIVE'S WARRANT AGREEMENT dated as of , 1997 between CLUCKCORP
INTERNATIONAL, INC., a Texas corporation (the "Company"), and GLOBAL EQUITIES
GROUP, INC. (hereinafter referred to variously as the "Holder" or the
"Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative warrants
("Warrants") to purchase up to 50,000 shares of the Company's Series A
Redeemable Convertible Preferred Stock, (the "Preferred Stock") and 150,000
Redeemable Class A Preferred Stock Purchase Warrants (the "Redeemable Warrants")
of the Company; and WHEREAS, the Representative has agreed pursuant to the
underwriting agreement (the "Underwriting Agreement") dated as of the date
hereof between the Company and the several Underwriters listed therein to act as
the Representative in connection with the Company's proposed public offering of
up to 500,000 shares of Preferred Stock at a public offering price of $10.00 per
share and 1,500,000 Warrants at a public offering price of $.10 per Warrant (the
"Public Offering"); and WHEREAS, the Warrants to be issued pursuant to this
Agreement will be issued on the First Delivery Date (as such term is defined in
the Underwriting Agreement) by the Company to the Representative in
consideration for, and as part of the Representative's compensation in
connection with, the Representative acting as the Representative pursuant to the
Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of an aggregate ten dollars ($10.00), the
agreements herein set forth and other good and valuable consideration, hereby
acknowledged, the parties hereto agree as follows:
1. Grant. The Representative (or its designees) is hereby granted the right
to purchase, at any time from , 1998, until 5:30 P.M., New York time, on , 2002,
up to an aggregate of 50,000 shares of Preferred Stock at an initial exercise
price (subject to adjustment as provided in Section 8 hereof) of $13.00 per
share and 150,000 Redeemable Warrants at an initial exercise price, subject
to adjustment, of $.13 per Warrant. Each Redeemable Warrant is exercisable to
purchase one addition share of Preferred Stock at an initial exercise price of
$10.50 from _________, 1998 until 5:30 p.m. New York time on _____________,
2002, at which time the Redeemable Warrants shall expire. Except as set forth
herein, the shares of Preferred Stock and the Redeemable Warrants issuable upon
exercise of the Warrants are in all respects identical to the shares of
Preferred Stock and Redeemable Warrants being purchased by the Underwriters for
resale to the public pursuant to the terms and provisions of the Underwriting
Agreement. The shares of Preferred Stock and the Redeemable Warrants issuable
upon exercise of the Warrants are sometimes hereinafter referred to collectively
as the "Securities."
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
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3. Exercise of Warrant. Section 3.1 Method of Exercise. The Warrants
initially are exercisable at the respective initial exercise price (subject to
adjustment as provided in Section 8 hereof) per share of Preferred Stock and
Redeemable Warrants set forth in Section 6 hereof payable by certified or
official bank check in New York Clearing House funds, subject to adjustment as
provided in Section 8 hereof. Upon surrender of a Warrant Certificate with the
annexed Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Securities purchased at the
Company's principal executive offices in San Antonio, Texas (presently located
at 0000 X.X. Xxxx 000, Xxxxx 000, Xxx Xxxxxxx, Xxxxx 78209) the registered
holder of a Warrant Certificate ("Holder" or "Holders") shall be entitled to
receive a certificate or certificates for the shares of Preferred Stock
purchased and a certificate or certificates for the Redeemable Warrants
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Preferred Stock and Redeemable Warrants underlying
the Warrants). Warrants may be exercised to purchase all or part of the
Securities. In the case of the purchase of less than all the Securities
purchasable under any Warrant Certificate, the Company shall cancel said Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Warrant Certificate of like tenor for the balance of the Securities.
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Section 3.2 Definition of Market Price. As used herein, the phrase "Market
Price" at any date shall be deemed to be (i) when referring to the Preferred
Stock, the last reported sale price, or, in case no such reported sale takes
place on such day, the average of the last reported sale prices for the last
three (3) trading days, in either case as officially reported by the principal
securities exchange on which the Preferred Stock is listed or admitted to
trading or by the Nasdaq National Market ("Nasdaq/NM"), or, if the Preferred
Stock is not listed or admitted to trading on any national securities exchange
or quoted by the National Association of Securities Dealers Automated Quotation
System ("Nasdaq"), the average closing bid price as furnished by the National
Association of Securities Dealers, Inc. ("NASD") through Nasdaq or similar
organization if Nasdaq is no longer reporting such information, or if the
Preferred Stock is not quoted on Nasdaq, as determined in good faith (using
customary valuation methods) by resolution of the members of the Board of
Directors of the Company, based on the best information available it or (ii)
when referring to the Redeemable Warrant, the last reported sales price, or, in
the case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Redeemable
Warrants are listed or admitted to trading or by Nasdaq/NM, or, if the
Redeemable Warrants are not listed or admitted to trading on any national
securities exchange or quoted by Nasdaq, the average closing bid price as
furnished by the NASD through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Redeemable Warrants are not quoted
by Nasdaq or are no longer outstanding, the Market Price of a Redeemable Warrant
shall equal the difference between the market Price of the Preferred Stock and
the Exercise Price of the Redeemable Warrant.
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4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Preferred Stock and/or Warrants and/or
other Securities, properties or rights underlying such Warrants shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder thereof including, without limitation, any tax which may be
payable in respect of the issuance thereof, and such certificates shall (subject
to the provisions of Sections 5 and 7 hereof) be issued in the name of, or in
such names as may be directed by, the Holder thereof; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder, and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The Warrant Certificates and the certificates representing
the shares of Preferred Stock and Redeemable Warrants underlying the Warrants
(and/or other Securities, properties or rights issuable upon the exercise of the
Warrants ) shall be executed on behalf of the Company by the manual or facsimile
signature of the then Chairman or Vice Chairman of the Board of Directors or
President or Vice President of the Company. Warrant Certificates shall be dated
the date of execution by the Company upon initial issuance, division, exchange,
substitution or transfer. Certificates representing the shares of Preferred
Stock and Redeemable Warrants and the shares of Preferred Stock underlying each
Redeemable Warrant (and/or other Securities, properties or rights issuable upon
exercise of the Warrants) shall be dated as of the Notice Date (regardless of
when executed or delivered) and dividend bearing Securities so issued shall
accrue dividends from the date of issuance.
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5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof; that the Warrants may not be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, for a period of one (1) year from
the date hereof, except to officers of the Representative.
6. Exercise Price. Section 6.1 Initial and Adjusted Exercise Price. Except
as otherwise provided in Section 8 hereof, the initial exercise price of each
Warrant shall be $13.00 per share of Preferred Stock and $0.13 per Redeemable
Warrant. The adjusted exercise price shall be the price which shall result from
time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof. Any transfer of a Warrant
shall constitute an automatic transfer and assignment of the registration rights
set forth in Section 7 hereof with respect to the Securities or other
Securities, properties or rights underlying the Warrants. Section 6.2 Exercise
Price. The term "Exercise Price" herein shall mean the initial exercise price or
the adjusted exercise price, depending upon the context or unless otherwise
specified.
7. Registration Rights. Section 7.1 Registration Under the Securities Act
of 1933. The Warrants, the shares of Preferred Stock and any other Securities
issuable upon exercise of the Warrants have not been registered under the
Securities Act of 1933 as amended (the "Act"). Upon exercise, in whole or in
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part, of the Warrants, certificates representing the Preferred Stock underlying
the Warrants and any of the other Securities issuable upon exercise of the
Warrants (collectively, the "Warrant Securities") shall bear the following
legend.
The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"),
and may not be offered or sold except pursuant to (i) an
effective registration statement under the Act, (ii) to the
extent applicable, Rule 144 under the Act (or any similar rule
under such Act relating to the disposition of Securities), or
(iii) an opinion of counsel, if such opinion shall be reasonably
satisfactory to counsel to the issuer, that an exemption from
registration under such Act is available.
Section 7.2 Piggyback Registration. If, at any time commencing after the
date hereof and expiring five (5) years thereafter, the Company proposes to
register any of its Securities under the Act (other than pursuant to Form X-0,
Xxxx X-0 or a comparable registration statement) it will give written notice by
registered mail, at least thirty (30) days prior to the filing of each such
registration statement, to the Representative and to all other Holders of the
Warrants and/or the Warrant Securities of its intention to do so. If the
Representative or other Holders of the Warrants and/or Warrant Securities notify
the Company within twenty (20) business days after receipt of any such notice of
its or their desire to include any such Securities in such proposed registration
statement, the Company shall afford the Representative and such Holders of the
Warrants and/or Warrant Securities the opportunity to have any such Warrant
Securities registered under such registration statement.
Notwithstanding the provisions of this Section 7.2, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 7.2 (irrespective of whether a written request for inclusion of any such
Securities shall have been made) to elect
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not to file any such proposed registration statement, or to withdraw the same
after the filing but prior to the effective date thereof.
Section 7.3 Demand Registration.
(a) At any time commencing one year from the date hereof and expiring four
(4) years thereafter, the Holders of the Warrants and/or Warrant Securities
representing a "Majority" (as hereinafter defined) of such Securities (assuming
the exercise of all of the Warrants) shall have the right (which right is in
addition to the registration rights under Section 7.2 hereof), exercisable by
written notice to the Company, to have the Company prepare and file with the
Securities and Exchange Commission (the "Commission"), on one occasion, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Representative and Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Warrant
Securities for nine (9) consecutive months by such Holders and any other Holders
of the Warrants and/or Warrant Securities who notify the Company within ten (10)
days after receiving notice from the Company of such request, provided that the
holders of the Warrants and/or Warrant Securities have purchased the Warrant
Securities prior to any such registration statement being filed.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by any Holder or Holders to all
other registered Holders of the Warrants and the Warrant Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) Notwithstanding anything to the contrary contained herein, if the
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Company shall not have filed a registration statement for the Warrant Securities
within the time period specified in Section 7.4(a) hereof pursuant to the
written notice specified in Section 7.3(a) of a Majority of the Holders of the
Warrants and/or Warrant Securities, the Company may, at its option, upon the
written notice of election of a Majority of the Holders of the Warrants and/or
Warrant Securities requesting such registration, repurchase (i) any and all
Warrant Securities of such Holders at the higher of the Market Price per share
of Preferred Stock on (x) the date of the notice sent pursuant to Section 7.3(a)
or (y) the expiration of the period specified in Section 7.4(a) and (ii) any and
all Warrants of such Holders at such Market Price less the Exercise Price of
such Warrant. Such repurchase shall be in immediately available funds and shall
close within two (2) days after the later of (i) the expiration of the period
specified in Section 7.4(a) or (ii) the delivery of the written notice of
election specified in this Section 7.3(d).
Section 7.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 7.2 or 7.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration statement
within sixty (60) days of receipt of any demand therefor, shall use its best
efforts to have any registration statements declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell Warrant Securities
such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3 hereof including, without limitation, the Company's legal
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and accounting fees, printing expenses, blue sky fees and expenses. If the
Company shall fail to comply with Section 7.4(a), the Company shall, in addition
to any other equitable or other relief available to the Holder(s), be liable for
any and all incidental or special damages sustained by the Holder(s) requesting
registration of its or their Warrants and/or Warrant Securities.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant Securities to
be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement but only to the same
extent and with the same effect as the provisions pursuant to which the Company
has agreed to indemnify each of the Underwriters contained in Section 8 of the
Underwriting Agreement.
(e) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
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if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 8 of the Underwriting
Agreement pursuant to which the Underwriters have agreed to indemnify the
Company.
(f) The Company shall not permit the inclusion of any Securities other than
the Warrant Securities to be included in any registration statement filed
pursuant to Section 7.3 hereof, or permit any other registration statement to be
or remain effective during the effectiveness of a registration statement filed
pursuant to Section 7.3 hereof, without the prior written consent of the Holders
of the Warrants and Warrant Securities representing a Majority of such
Securities.
(g) The Company shall furnish to each Holder participating in the offering
and to each underwriter, if any, a signed counterpart, addressed to such Holder
or underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), and (ii) a "cold comfort" letter dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants who have
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issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of Securities.
(h) The Company shall as soon as practicable after the effective date of
the registration statement, and in any event within 15 months thereafter, make
"generally available to its security holders" (within the meaning of Rule 158
under the Act) an earnings statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least 12 consecutive months
beginning after the effective date of the registration statement.
(i) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence and memoranda described below and to the
managing underwriters, copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the registration statement and
permit each Holder and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
or underwriter shall reasonably request.
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(j) The Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested to be included in such
underwriting, which may be the Representative. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and such managing
underwriter(s), and shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily contained in agreements
of that type used by the managing underwriter(s). The Holders shall be parties
to any underwriting agreement relating to an underwritten sale of their Warrant
Securities and may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or for the benefit
of such underwriter(s) shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make any representations or
warranties to or agreements with the Company or the underwriter(s) except as
they may relate to such Holders and their intended methods of distribution.
(k) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Warrants or Warrant Securities, shall mean in excess of fifty percent
(50%) of the then outstanding Warrants or Warrant Securities that (i) are not
held by the Company, an affiliate, officer, creditor, employee or agent thereof
or any of their respective affiliates, members of their family, persons acting
as nominees or in conjunction therewith and (ii) have not been resold to the
public pursuant to a registration statement filed with the Commission under the
Act.
8. Adjustments to Exercise Price and Number of Securities.
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Section 8.1 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Preferred Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
Section 8.2 Stock Dividends and Distributions. In case the Company shall
pay a dividend in, or make a distribution of, shares of Preferred Stock or of
the Company's capital stock convertible into Preferred Stock, the Exercise Price
shall forthwith be proportionately decreased. An adjustment made pursuant to
this Section 8.2 shall be made as of the record date for the subject stock
dividend or distribution.
Section 8.3 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities issuable upon the exercise at the adjusted exercise price of
each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
Section 8.4 Definition of Preferred Stock. For the purpose of this
Agreement, the term "Preferred Stock" shall mean (i) the class of stock
designated as Series A Redeemable Convertible Preferred Stock in the Certificate
or Articles of Incorporation or (ii) any other class of stock resulting from
successive changes or reclassifications of such Preferred Stock consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value.
Section 8.5 Merger or Consolidation. In case of any consolidation of the
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Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Preferred Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of Securities of the Company for which such Warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
Section 8.6 No Adjustment of Exercise Price in Certain Cases. No adjustment
of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the Warrant Securities
issuable upon the exercise of the Warrants;
(b) If the amount of said adjustment shall be less than two cents (2(cent))
per Warrant Security, provided, however, that in such case any adjustment that
would otherwise be required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to at least two
cents (2(cent)) per Warrant Security.
9. Exchange and Replacement of Warrant Certificates. Each Warrant
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Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Preferred Stock upon
the exercise of the Warrants, nor shall it be required to issue scrip or pay
cash in lieu of fractional interests, it being the intent of the parties that
all fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Preferred Stock or Redeemable Warrants or
other Securities, properties or rights.
11. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Preferred Stock,
solely for the purpose of issuance upon the exercise of the Warrants and the
Redeemable Warrants, such number of shares of Preferred Stock or other
Securities, properties or rights as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Warrants and payment
of the Exercise Price therefor, all shares of Preferred Stock and the Redeemable
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Warrants and other Securities issuable upon such exercise shall be duly and
validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. The Company further covenants and agrees that upon
exercise of the Redeemable Warrants underlying the Warrants and payment of the
respective Redeemable Warrant exercise price therefor, all shares of Preferred
Stock and other Securities issuable upon such exercises shall be duly and
validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Preferred Stock
issuable upon the exercise of the Warrants to be listed (subject to official
notice of issuance) on all securities exchanges on which the Preferred Stock
issued to the public in connection herewith may then be listed and/or quoted.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur: (a) the Company shall take a record of the holders of its shares of
Preferred Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings or capital surplus
(in accordance with applicable law), as indicated by the accounting treatment of
such dividend or distribution on the books of the Company; or
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(b) the Company shall offer to all the holders of its Preferred Stock any
additional shares of capital stock of the Company or Securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of its property, assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least thirty (30) days prior to the date fixed as a record date
or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable Securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable Securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Redeemable Warrants. The form of the certificate representing
redeemable warrants (and the form of election to purchase shares of preferred
stock upon the exercise of redeemable warrants and the form of assignment
printed on the reverse thereof) shall be substantially as set forth in Exhibit
"A" to the Warrant Agreement dated as of the date hereof by and between the
Company, and Corporate Stock
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Transfer, Inc. as warrant agent (the "Redeemable Warrant Agreement"). Each
Redeemable Warrant issuable upon exercise of the Warrants shall evidence the
right to initially purchase a fully paid and non-assessable share of Preferred
Stock at an initial purchase price of $10.50 from __________, 1998 until 5:30
p.m. New York time _____, 2002 at which time the Redeemable Warrants, unless the
exercise period has been extended shall expire. The exercise price of the
Redeemable Warrants and the number of shares of Preferred Stock issuable upon
the exercise of the Redeemable Warrants are subject to adjustment, whether or
not the Warrants have been exercised and the Redeemable Warrants have been
issued, in the manner and upon the occurrence of the event set forth in Section
of the Warrant Agreement, which is hereby incorporated herein by reference and
made a part hereof as if set forth in its entirety herein. Subject to the
provisions of this Agreement and upon issuance of the Redeemable Warrants
underlying the Warrants, each registered holder of such Redeemable Warrant shall
have the right to purchase from the Company (and the Company shall issue to such
registered holders) up to the number of fully paid and non-assessable shares of
Preferred Stock (subject to adjustment as provided herein and in the Warrant
Agreement), free and clear of all preemptive rights of stockholders, provided
that such registered holder complies with the terms governing exercise of the
Redeemable Warrant set forth in the Warrant Agreement, and pays the applicable
exercise price, determined in accordance with the terms of the Warrant
Agreement. Upon exercise of the Redeemable Warrants, the Company shall forthwith
issue to the registered holder of any such Redeemable Warrant in his name or in
such name as may be directed by him, certificates for the number of shares of
Preferred Stock so purchased. Except as otherwise provided in this Agreement,
the Warrants underlying the Warrants shall be governed in all respects by the
20
terms of the Warrant Agreement. The Redeemable Warrants shall be transferrable
in the manner provided in the Warrant Agreement, and upon any such transfer, a
Redeemable Warrant Certificate shall be issued promptly to the transferee. The
Company covenants to, and agrees with, the Holder(s) that without the prior
written consent of the Holder(s), which will not be unreasonably withheld, the
Warrant Agreement will not be modified, amended, canceled, altered or
superseded, and that the Company will send to each Holder, irrespective of
whether or not the Warrants have been exercised, any and all notices required by
the Redeemable Warrant Agreement to be sent to holders of Redeemable Warrants.
14. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or to
such other address as the Company may designate by notice to the Holders.
15. Supplements and Amendments. The Company and the Representative may from
time to time supplement or amend this Agreement without the approval of any
Holders of Warrant Certificates (other than the Representative) in order to cure
any ambiguity, to correct or supplement any provision contained herein which may
be defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Representative may deem necessary or desirable and which the Company and
the Representative deem shall not adversely affect the interests of the Holders
of Warrant Certificates.
21
16. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of business on
, 2004. Notwithstanding the foregoing, the indemnification provisions of Section
7 shall survive such termination until the close of business on _________, 2010.
18. Governing Law; Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Representative and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Representative and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the Representative
and the Holders (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
22
set forth in Section 14 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company, the Representative and the Holders agree that
the prevailing party(ies) in any such action or proceeding shall be entitled to
recover from the other party(ies) all of its/their reasonable legal costs and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
19. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement and the Warrant Agreement to the extent portions thereof
are referred to herein) contains the entire understanding between the parties
hereto with respect to the subject matter hereof and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Representative and any other registered Holder(s) of the Warrant Certificates or
Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole benefit of the Company and
the Representative and any other registered Holders of Warrant Certificates or
Warrant Securities.
23
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
CLUCKCORP INTERNATIONAL, INC.
By:_________________________________
Attest:
---------------------------------------
Name:
Title:
GLOBAL EQUITIES GROUP, INC.
By:_________________________________
24
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, , 2002
No. W- Warrants to Purchase
50,000 shares of
Preferred Stock and
150,000 Redeemable Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of Warrants to purchase initially, at any time from , 1998
until 5:30 p.m. New York time on , 2002 ("Expiration Date"), up to 50,000 shares
of Preferred Stock, $1.00 par value ("Preferred Stock"), of CLUCKCORP
INTERNATIONAL, INC., a Texas corporation (the "Company"), 150,000 Redeemable
Warrants of the Company (one Redeemable Warrant entitling the owner to purchase
one fully-paid and non-assessable share of Preferred Stock) at the initial
exercise price, subject to adjustment in certain events (the "Exercise Price"),
of $13.00 per share and $0.13 per Warrant upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the
Representative's Warrant Agreement dated as of _______________, 1997 between the
Company and GLOBAL EQUITIES GROUP, INC. (the "Warrant Agreement"). Payment of
the Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company or by surrender of this
A-1
Warrant Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
The Warrants may be exercised in whole or in part for shares of Preferred
Stock and/or Redeemable Warrants. Upon the exercise of less than all of the
Warrants evidenced by this Certificate, the Company shall forthwith issue to the
holder hereof a new Warrant Certificate representing such number of unexercised
Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
A-2
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of ___________, 1997
CLUCKCORP INTERNATIONAL, INC.
By:_______________________________
A-3
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
|_| Shares of Preferred Stock and
Redeemable Warrants
|-|
|-|
|-|
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House funds to the order of CLUCKCORP
INTERNATIONAL, INC. in the amount of $_______________all in accordance with the
terms of Section 3.1 of the Representative's Warrant Agreement dated as of
___________________, 1997 between Cluckcorp International, Inc. and Global
Equities Group, Inc. The undersigned requests that a certificate for such
securities be registered in the name of whose address is________________________
_____________ and that such Certificate be delivered to ____________________
whose address is .
Dated: Signature:
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Assignee)
A-4
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
|_| Shares of Preferred Stock and
Redeemable Warrants
|-|
|-|
|-|
|-|
and herewith tenders in payment for such securities Warrants all in accordance
with the terms of Section 3.2 of the Representative's Warrant Agreement dated as
of ________________, 1997 between Cluckcorp International Inc. and Global
Equities Group, Inc. The undersigned requests that a certificate for such
securities be registered in the name of _________________ whose address is
_______________________________ and that such Certificate be delivered to whose
address is _________________________.
Dated: Signature:
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Assignee)
A-5
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such
holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _______________________ hereby sells, assigns and transfers
unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer the
within Warrant Certificate on the books of the within-named Company, with full
power of substitution.
Dated: Signature:
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Assignee)
A-6
EXHIBIT 1.25
CLUCKCORP INTERNATIONAL, INC.
500,000 Shares of Convertible Redeemable Securities
$10.00 per share
and
1,500,000 Redeemable Preferred Stock Purchase Warrants
AGREEMENT AMONG UNDERWRITERS
As of May___, 1997
Global Equities Group, Inc.
As Lead Managing Underwriter and
the Representative of the Underwriters
0 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx XxXxxxxxx, Vice President
Investment Banking
Dear Sirs:
We hereby agree with you as follows with respect to (i) the purchase and
offering by Global Equities Group, Inc. as the lead managing underwriter and the
representative (the "Representative") and Suncoast Capital Corp. as the
co-managing underwriter ("Suncoast" and collectively with the Representative,
the "Underwriters") of an aggregate of 500,000 shares of $1.00 par value Series
A Redeemable Convertible Securities (the "Securities") at $10.00 per share and
1,500,000 Redeemable Class A Securities Purchase Warrants (the "Redeemable
Warrants") at a public offering price of $.10 per Warrant of CluckCorp
International, Inc. (the "Company"). The Preferred Stock and Warrants are
hereinafater collectively referred to as the "Securities".
1. Registration Statement. We confirm that we have examined the
registration statement (including the prospectus) relating to the Securities as
amended to the date of this agreement and we are familiar with the terms of the
Securities to be offered and the other terms of the offering which are to be
reflected in the proposed pricing amendment to the registration statement. The
registration statement as amended at the time it becomes effective, including
financial statements and exhibits, is referred to in this agreement as the
Registration Statement, and the prospectus in the form first filed with the
Securities and Exchange Commission (the "Commission") pursuant to its Rule
424(b) is referred to as the Prospectus.
We further confirm that:
Global Equities
May 13, 1997
2
(a) Insofar as it relates to us, the information in the Registration
Statement as amended to this date and in the proposed amendment is correct and
complete and is not misleading.
(b) We are aware of and are willing to accept our responsibilities under
the Securities Act of 1933 as an Underwriter and Co-Manager of the offering to
be named in the Registration Statement.
(c) We are willing to proceed with the underwriting of the Securities in
the manner contemplated in the Underwriting Agreement.
(d) You are authorized, in your discretion and on our behalf, with approval
of counsel for the Representative of the Underwriters, Mound, Cotton & Xxxxxx,
to approve any proposed amendment and the Prospectus and to approve of or to
object to any further amendments to the Registration Statement, or amendments or
supplements to the Prospectus.
2. Underwriting Agreement.
(a) We authorize you to execute and deliver on our behalf the Underwriting
Agreement in substantially the form annexed hereto as Exhibit A. The number of
Securities set forth opposite each Underwriter's name in Schedule I to the
Underwriting Agreement, or such number increased as set forth in Section 9 of
the Underwriting Agreement, is referred to in this agreement as the original
underwriting commitment of such Underwriter, and the ratio which such original
underwriting commitment bears to the total number of Securities is referred to
in this agreement as the underwriting proportion of such Underwriter.
(b) Our firms have also agreed that in addition to the ten percent (10%)
underwriters' discount payable to each firm with respect to the Securities which
it underwriters, the three percent (3%) non-accountable expense allowance will
be paid 90 percent (90%) to Global and ten percent (10%) to Suncoast.
(c) In connection with the subject underwriting, the Representative will
receive Securities Purchase Warrants (the "Representative's Warrants") to
purchase up to fifty thousand (50,000) shares of Securities for $13.00 per share
and/or 150,000 Warrants at an initial exercise price, subject to adjustment, of
$.13 per warrant.
3. Authorization Under Underwriting Agreement. The Under- writing Agreement
provides that the obligations of the Underwriters thereunder are subject, among
other things, to the condition that the Registration Statement shall have become
effective no later than 5:00 P.M., New York time, on the date of the
Underwriting Agreement. You are hereby authorized, in your discretion, to extend
Global Equities
May 13, 1997
3
such time to not later than 1:00 P.M., New York time, on the date following such
date and, with the consent of Underwriters, including yourselves, who have
agreed to purchase in the aggregate at least a majority of the Securities, to
agree to one or more subsequent extensions of such date and to take on our
behalf any action that may be necessary for such purposes.
You are also authorized in your sole discretion to take the following
action with respect to the Underwriting Agreement:
(a) To postpone the Effective Date or the First Delivery Date (as such
terms are defined in the Underwriting Agreement) or, except as provided above,
to extend any other date specified in the Underwriting Agreement.
(b) To exercise any right of cancellation or termina- tion.
(c) To arrange for the purchase by other persons (including yourselves or
any other Underwriter) of any of the Securities not taken up by any defaulting
Underwriter or by the other Underwriters as provided in Section 12 of the
Underwriting Agreement.
(d) To consent to such other changes in or waivers of provisions of the
Underwriting Agreement as in your judgment do not materially and adversely
affect our rights and obligations.
4. Method of Offering. We agree, jointly with you, to manage the
underwriting and the public offering of the Securities and to take such action
in connection therewith and in connection with the purchase, carrying and resale
of the Securities, including without limitation the following, as you in your
sole discretion deem appropriate or desirable:
(a) To determine the time of the initial public offering of the Securities
and the Underwriters' gross spread.
(b) To make any changes in the terms of the offering.
(c) To make changes in those who are to be Underwriters and in the
respective numbers of the Securities to be purchased by them, provided that our
original underwriting commitment shall not be changed without our consent.
(d) To determine all matters relating to advertising and communications
with dealers or others.
(e) To reserve for sale and to sell to institutions or other retail
purchasers, for the Underwriters account, such number of shares of Securities as
the Underwriters may determine; provided, however, that such reservations and
Global Equities
May 13, 1997
4
sales shall be made for the respective accounts of the several Underwriters as
nearly as practicable in their respective underwriting proportions, except for
such sales for the account of a particular Underwriter designated by such a
purchaser.
(f) To reserve for sale and to sell to dealers, for the Underwriters
account, such of the Underwriters Securities as the Underwriters may determine;
provided, however, that such dealers shall be members in good standing of the
National Association of Securities Dealers, Inc. (the "NASD") or foreign banks
or dealers not eligible for membership in the NASD who (A) agree that they will
make no sales of shares of Securities within the United States, its territories
or its possessions or to persons who are citizens thereof or resident therein
and (B) agree that in making sales of such Securities outside the United States,
its territories or possessions they will comply with the requirements of the
NASD's Interpretation with Respect to Free-Riding and Withholding and with
Sections 8, 24 and 36 of Article III of the NASD's Rules of Fair Practice as
though they were such a member and will comply with Section 25 of such Article
as it applies to a non-member broker or dealer in a foreign country, and (C) may
include any of the Underwriters. Such sales shall be made pursuant to Dealer
Agreements substantially in the form set forth as Exhibit B hereto.
(g) To apportion such sales to dealers among the Underwriters as nearly as
practicable in the ratio that the Securities of each Underwriter so reserved
bears to the total number of Securities of all Underwriters so reserved;
provided, however, that if such ratio is to be revised by reasons of the release
of any of the Securities for direct sale as hereinafter provided, sales may be
apportioned by you from day to day on the basis of the ratio existing at the end
of the preceding day.
(h) To fix the concession to dealers and the reallowance to dealers and,
after the initial public offering of the Securities to make changes in the
concession and reallowance.
(i) At any time with respect to unsold Securities retained by an
Underwriter: (A) to reserve any such Securities for sale by the other
Underwriter for the account of the Underwriters or (B) to purchase any such
Securities which in the Representative's opinion are needed to enable you to
make deliveries for the accounts of the several Underwriters pursuant to this
agreement. Such purchases may be made at the public offering price, or at the
Underwriters' option, at such price less all or any part of the concession to
dealers.
We understand that you will advise us when the shares of Securities are
released for public offering and of the number of shares of Securities sold or
reserved for sale for our account. We shall retain for direct sale any
Global Equities
May 13, 1997
5
Securities purchased by us and not so sold or reserved. Direct sales shall be
made in accordance with the terms of offering set forth in the Prospectus. With
your consent, we may obtain release from you for the direct sale of the
Securities held by you for sale pursuant to subparagraphs (e) and (f) above but
not sold and paid for. To the extent Securities so released had been reserved
for sale to dealers, the number of Securities reserved for our account for sale
to dealers shall be correspondingly reduced. We will advise you from time to
time, at your request, of the number of Securities retained by us which remain
unsold and of the number of Securities remaining unsold which were delivered to
us pursuant to the last paragraph of this Section 4.
If, prior to the termination of this agreement, you shall purchase or
contract to purchase any of the Securities sold directly by us, in your
discretion you may (i) sell for our account the Securities so purchased and
debit or credit our account for the loss or profit resulting from such sale,
(ii) charge our account with an amount equal to the concession to dealers with
respect thereto and credit such amount against the cost thereof or (iii) require
us to purchase such Securities at a price equal to the total cost of such
purchase including commissions and transfer taxes on redelivery. Certificates
for the Securities delivered on such repurchase need not be identical to the
certificates for the Securities so purchased by you.
5. Trading Authorizations. We authorize you, during the term of this
agreement in your discretion:
To make purchases and sales of the Securities, in the open market or
otherwise (in addition to purchases and sales made under the authority of
Section 4), either for long or short account, on such terms and at such prices
as you may determine.
All such purchases and sales shall be made for the respective accounts of
the several Underwriters as nearly as practicable in their respective
underwriting proportions; provided, however, that at no time shall our net
commitment resulting from such purchases and sales, either for long or short
account, exceed 15% of our original underwriting commitment and provided that in
determining our net commitment for short account there shall be subtracted the
maximum number of Option Stock (as defined in the Underwriting Agreement) which
we are entitled to purchase. We agree to take up at cost on demand any
Securities so purchased for our account and to deliver on demand any Securities
so sold. Without limiting the generality of the foregoing, you may buy or take
over for the respective accounts of the several Underwriters, all in the
proportion and within the limits set forth, at the price at which reserved, any
of the Securities reserved for sale by you but not sold and paid for, for such
Global Equities
May 13, 1997
6
purposes as you may determine, including, but not limited to, the covering of
short sales.
We agree to maintain any records required of us pursuant to Rule 17a-2
under the Securities Exchange Act of 1934.
6. Limitation on Transactions by Underwriters. Except as permitted by you,
we will not during the term of this agreement bid for, purchase, sell or attempt
to induce others to purchase or sell, directly or indirectly, any shares of
Securities other than (i) as provided in the Underwriting Agreement and this
agreement, (ii) purchases from or sales to dealers of the Securities at the
public offering price less all or any part of the reallowance to dealers or
(iii) purchases or sales by us of any securities as broker on unsolicited orders
for the account of others.
We represent that we have not participated in any transaction prohibited by
the preceding paragraph and that we have at all times complied with the
provisions of Regulation M of the Commission applicable to this offering.
We may, with your prior consent, make purchases of the Securities from and
sales to other Underwriters at the public offering price, less all or any part
of the concession to dealers.
We agree not to sell to any account over which we exercise discretionary
authority, without the prior written consent of the customer, any of the
Securities which we purchase and which are subject to the terms of this
agreement.
7. Delivery and Payment. At 9:00 A.M., New York time on the Effective Date,
we will deliver to you at your office a certified or official bank check,
payable in New York Clearing House funds, to the order of Global Equities Group,
Inc. or otherwise as you may direct, for either (a) an amount equal to the
public offering price less the selling concession in respect of the Securities
to be purchased by us or (b) an amount equal to the public offering price less
the selling concession in respect of such of the Securities to be purchased by
us as shall have been retained by or released to us for direct sale, as you
shall direct. You shall use such funds to make payment on our behalf to the
Company of the purchase price for our portion of the Securities. Any balance
shall be held by you for our account. If you have not received our funds as
requested, you may in your discretion make any such payment on our behalf and we
will promptly deliver funds to you in the amount so requested. Any such payment
by you will not relieve us from any of our obligations under this agreement or
under the Underwriting Agreement.
We authorize you, in carrying out the provisions of this agreement, in your
discretion, to arrange loans for our account, to advance your funds for our
Global Equities
May 13, 1997
7
account, charging current interest rates, and to hold or pledge as security
therefor all or any part of the Securities which you may be holding for our
account. Any lender is hereby authorized to accept your instructions with
respect to such loans, and we authorize you to execute and deliver notes or
other instruments in connection therewith.
You shall promptly remit to us or credit to your account (i) the proceeds
of any loan taken down on our behalf and (ii) upon payment to you for any
Securities sold for our account, an amount equal either to the purchase price
paid by us or the price received by you therefor, as you may determine.
We authorize you to take delivery of certificates for the Securities,
registered as you may direct in order to facilitate deliveries, and to deliver
any Securities reserved for us against sales. You will deliver to us
certificates for the unreserved Securities and certificates for the reserved but
unsold Securities as soon as practicable after the termination of the provisions
referred to in Section 10.
Certificates for all other Securities which you then hold for our account
shall be delivered to us upon termination of this agreement, or prior thereto in
your discretion, and certificates for any Securities may at any time be
delivered to us for carrying purposes only, subject to redelivery upon demand.
If, upon termination of this agreement, an aggregate of not more than 10% of the
Securities remains unsold, you may, in your discretion, sell such Securities at
such prices as you may determine.
8. Blue Sky Qualification. Upon request, you will inform us as to the
jurisdictions in which you have been advised by counsel that the Securities have
been registered or qualified for sale under the respective securities or Blue
Sky laws, but you do not assume any responsibility or obligation as to our right
to sell the Securities in any jurisdiction.
9. Indemnification and Certain Claims. Each Underwriter, including
yourselves, agrees to indemnify and hold harmless each of the other
Underwriters, and each person, if any, who controls any other Underwriter within
the meaning of Section 15 of the Securities Act of 1933 and to reimburse their
expenses, all to the extent, if any, and upon the terms that we agree to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and any person controlling the Company to reimburse
their expenses, as set forth in the Underwriting Agreement.
We agree that in respect of any matters connected with or action taken by
you pursuant to this agreement you shall act only as agent of the Underwriters
and you shall be under no liability to us in any such respect or in respect of
Global Equities
May 13, 1997
8
the form of, or the statements contained in, or the validity of, any preliminary
prospectus or the Registration Statement or Prospectus, or any amendment or
supplement with respect thereto, or for any report or other filing made by you
for us on our behalf under this agreement, except for want of good faith and for
obligations expressly assumed by you herein and no obligation on you part will
be implied or inferred from confirmation or acceptance of this agreement.
We will pay our proportionate share (based on our underwriting proportion)
of (a) all expenses incurred by you in investigating or defending against any
claim or proceeding which is asserted or instituted by any party (including any
governmental or regulatory body) other than an Underwriter based upon the claim
that the Underwriters constitute an association, unincorporated business or
other separate entity, or relating to the Registration Statement or Prospectus
(or any amendment or supplement thereto) or any preliminary prospectus and (b)
any liability incurred by you in respect of any such claim or proceeding,
whether such liability shall be the result of a judgment or the result of any
settlement agreed to by you, other than any such liability as to which you
actually receive indemnity pursuant to the first paragraph of this Section 9 or
indemnity or contribution pursuant to Section 8 of the Underwriting Agreement.
Upon termination of this Agreement, all authorizations, rights and
obligations hereunder shall cease except (i) the mutual obligations to settle
accounts hereunder, (ii) our obligations to pay any transfer taxes which may be
assessed and paid on account of any sales hereunder for our account, (iii) our
obligation with respect to purchases which may be made by you from time to time
thereafter to cover any short position incurred under this agreement, (iv) our
agreements contained in the first and third paragraphs of Section 9 hereof and
(v) the obligations of any defaulting Underwriter, all of which shall continue
until fully discharged. If any other Underwriter defaults in its obligations
under this agreement we will assume our proportionate share (determined on the
basis of the respective underwriting proportions of the non-defaulting
Underwriters) of such obligations without relieving the defaulting Underwriter
from liability.
The accounts arising pursuant to this Agreement shall be settled and paid
as soon as practicable after termination, except that you may reserve such
amount as you deem advisable to cover any additional contingent expenses.
You are authorized at any time:
(a) To make partial distributions of credit balances or call for the
payment of debit balances.
Global Equities
May 13, 1997
9
(b) To determine the amounts to be paid to or by us, which determination
shall be final and conclusive.
(c) To charge our account with (i) all transfer taxes on sales made for our
account and (ii) our underwriting proportion of all expenses (other than
transfer taxes) incurred by you, as Representative of the several Underwriters,
in connection with the transactions contemplated by this agreement.
(d) To maintain any of our funds at any time with your general funds
without accountability for interest.
10. Miscellaneous. Nothing in this agreement shall constitute us partners
with you and the obligations of ourselves and you are several and not joint.
Each Underwriter elects to be excluded from the application of Subchapter K,
Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as amended. Default
by any Underwriter with respect to the Underwriting Agreement shall not release
us from any of our obligations thereunder or hereunder.
Your authority under this agreement and under the Underwriting Agreement
may be exercised solely by you.
Any notice from you to us shall be deemed to have been given if mailed,
telegraphed or hand delivered, or telephoned and subsequently confirmed in
writing, to our address stated in the Underwriting Agreement which we have
furnished to you for transmittal to the Company.
We confirm that we are a member in good standing of the NASD and that, in
making sales of the Securities, we agree to comply with all applicable rules of
the NASD, including, without limitation, the NASD's Interpretation with Respect
to Free-Riding and Withholding and Section 24 of Article III of the NASD' Rules
of Fair Practice. We also confirm that our commitment to purchase Securities
pursuant to the Underwriting Agreement will not result in a violation of Rule
15c3-1 under the Securities Exchange Act of 1934 or of any similar provisions of
any applicable rules of any securities exchange to which we are subject or of
any restriction imposed upon us by any such exchange or any governmental
authority.
This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Global Equities
May 13, 1997
10
This agreement is being executed by us and delivered to you in
duplicate.
Very truly yours,
Suncoast Capital Corp.
By____________________________
Authorized Signatory or
Attorney-In-Fact
Confirmed as of the date first above mentioned.
GLOBAL EQUITIES GROUP, INC.
As Lead Managing Underwriter and
the Representative of the Underwriters
named in Schedule I
By____________________________
Global Equities
May 13, 1997
11
SCHEDULE I
Shares of Number of
Underwriters Securities Warrants
GLOBAL EQUITIES GROUP, INC. . . . . .
Suncoast Capital Corp.
Total . . . . . . . . . . . . . . . .
500,000 1,500,000
