Exhibit 1.1
UNDERWRITING AGREEMENT
BY AND BETWEEN
XXXXXXXXX XXXX & CO., INC.
AND
THE PRIMA GROUP INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
SECTION 1 Description of Securities....................................1
1.1 Offering.....................................................1
1.2 Shares.......................................................1
1.3 Representative's Warrants....................................2
SECTION 2 Representations and Warranties of the Company................2
2.1 Registration Statement on Form S-1 and Related Prospectus....2
2.2 Accuracy of Registration Statement and Related Prospectus....3
2.3 Financial Statements.........................................3
2.4 Independent Public Accountants...............................4
2.5 No Material Adverse Change...................................4
2.6 No Defaults..................................................4
2.7 Incorporation and Standing...................................5
2.8 Legality of Outstanding Common Stock.........................5
2.9 Legality of Securities.......................................6
2.10 Prior Sales..................................................6
2.11 Litigation...................................................7
2.12 Representative's Warrants....................................7
2.13 Finder.......................................................7
2.14 Exhibits.....................................................7
2.15 Tax Returns..................................................8
2.16 Property.....................................................8
2.17 Use of Proceeds..............................................8
2.18 Authority....................................................8
2.19 Subsidiaries.................................................9
2.20 Availability of Information Concerning the Company...........9
2.21 Stop or Suspension Orders...................................10
2.22 Transfer Agent..............................................10
2.23 Employment Agreements; Employee Incentive Plans.............10
2.24 Intellectual Property Rights................................10
2.25 Prior Issuances.............................................11
2.26 Tax Consequences of Reorganization..........................11
2.27 Stock Incentive Plan........................................12
2.28 Florida Compliance..........................................12
2.29 Compliance with Business Advisory Letter....................12
SECTION 3 Issue, Sale and Delivery of the Shares......................12
3.1 Appointment of Representative...............................12
3.2 Default by a Member.........................................13
3.3 Offering Price..............................................14
3.4 Principal Terms of Representative's Warrants................14
3.5 Inspection of Certificates..................................15
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3.6 Closing.....................................................15
3.7 Representative's Expense Allowance..........................16
3.8 Mutual Warranty.............................................16
3.9 Sales Reports...............................................17
3.10 Re-offers By Selected Dealers...............................17
SECTION 4 Registration Statement and Prospectus.......................17
4.1 Representative's Copies.....................................17
4.2 Copies of Preliminary Prospectus and Prospectus.............17
4.3 Post-Effective Amendments...................................18
4.4 Use of Prospectus...........................................19
SECTION 5 Covenants of the Company....................................19
5.1 Filing of Amendments........................................19
5.2 Declaration of Effectiveness................................19
5.3 Amendments at the Request of the Representative.............20
5.4 Blue Sky....................................................20
5.5 Further Reports.............................................21
5.6 Reports to Representative...................................21
5.7 Expenses of Offering........................................23
5.8 Stockholder Reports.........................................23
5.9 1933 Act Reporting..........................................24
5.10 Use of Proceeds.............................................24
5.11 Transfer Sheets.............................................24
5.12 Information About the Company...............................24
5.13 Due Diligence Investigation for Offering and for Proceedings
involving the Representative................................24
5.14 Transfer Agent..............................................25
5.15 Conditions Precedent........................................25
5.16 1934 Act Registration and Reporting; Listing................25
5.17 No Material Change..........................................26
5.18 Bound Volumes...............................................26
5.19 Financial Consulting Agreement..............................26
5.20 Additional Financing........................................27
5.21 Restriction on Sale of Securities...........................28
5.22 Public Relations Firm.......................................28
5.23 Board of Directors Meetings.................................28
5.24 Fundamental Corporate Transactions..........................29
5.25 Potential Acquisition of Prima Electronics..................29
5.26 Stock Incentive Plan; Incentive Compensation................29
5.27 Composition of Board of Directors...........................30
5.28 Compliance with Business Advisory Letter....................30
5.29 Qualification of Shares in Italy............................30
SECTION 6 Indemnification.............................................30
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SECTION 7 Effectiveness of Agreement..................................34
SECTION 8 Conditions to the Representative's Obligations..............34
8.1 Effective Date..............................................34
8.2 Accuracy of Registration Statement..........................35
8.3 Casualty....................................................35
8.4 Litigation..................................................35
8.5 No Material Change..........................................35
8.6 Review by Representative's Counsel..........................35
8.7 Opinion of Company Counsel..................................36
8.8 Opinion of Italian Counsel..................................40
8.9 Opinion of Intellectual Property Counsel....................42
8.10 Opinion of Counsel for Miojusti Investments BV..............44
8.11 Auditor's Letter............................................44
8.12 Officer's Certificate.......................................45
8.13 Secretary's Certificate.....................................48
8.14 Opinion of Representative's Counsel.........................48
8.15 Opinion of Underwriters' Italian Counsel....................48
8.16 Tender of Securities........................................48
8.17 Blue Sky Qualification......................................48
8.18 Approval of Representative's Counsel........................49
8.19 Officer's Certificate as a Company Representation...........49
8.20 Exchange Listing............................................49
8.21 Board Committees............................................49
SECTION 9 Termination.................................................49
9.1 Termination by Representative...............................49
9.2 Termination by Representative--"Market Out".................49
9.3 Survival of Obligations After Termination...................50
9.4 Suspension Proceedings......................................51
SECTION 10 Representative's Representations and Warranties.............51
10.1 Registration as Broker-Dealer...............................51
10.2 No Pending Proceedings......................................51
10.3 Compliance with NASD Rules..................................51
10.4 Finder......................................................51
SECTION 11 Notices.....................................................52
SECTION 12 Miscellaneous...............................................52
12.1 Sole Benefit................................................52
12.2 Survival....................................................53
12.3 Specific Performance........................................53
12.4 Governing Law...............................................53
12.5 Jurisdiction................................................53
12.6 Waiver......................................................54
12.7 Counterparts................................................54
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UNDERWRITING AGREEMENT
Xxxxxxxxx Xxxx & Co., Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
The PRIMA Group International, Inc., a Delaware corporation (unless the
context requires otherwise, referred to herein, together with its subsidiaries,
as the "Company"), hereby confirms its agreement with Xxxxxxxxx Xxxx & Co., Inc.
a Colorado corporation (the "Representative"), and with the other members of the
Underwriting Group named in Schedule I attached hereto (individually referred to
as "Member" and collectively referred to as "Members"), including the
Representative (collectively, the "Underwriting Group") as follows (if there is
no Schedule I attached, all references in this Agreement to the Underwriting
Group shall be deemed to refer only to the Representative):
SECTION 1
Description of Securities
1.1 Offering. The Company represents, covenants, warrants and agrees
that its authorized, issued and outstanding capitalization, when the offering
(the "Offering") of the Shares (as hereinafter defined) contemplated hereby is
permitted to commence and at the Closing Date (as hereinafter defined), will be
as set forth in the Registration Statement and related Prospectus (as such terms
are hereinafter defined or described). The Company proposes to issue, offer and
sell to the Underwriting Group an aggregate of 2,000,000 shares of the Company's
Common Stock, $.01 par value per share, at an offering price of $____ per share
(the "Offering Price") and on the other terms hereinafter set forth. The
Underwriting Group shall also have an over-allotment option to purchase from the
Company up to an additional 300,000 shares, as provided in Section 3.1 hereof.
1.2 Shares. As used herein, the shares of the Company's common stock,
$.01 par value may be referred to as the "Stock" or the "Common Stock", and the
shares of the Common Stock to be registered in the Registration Statement,
including those which comprise the over-allotment option described above, but
excluding the Representative's Warrant Stock (as hereinafter defined), may
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be referred to as the "Shares."
1.3 Representative's Warrants. As partial consideration for the
services of the Representative hereunder, the Company will authorize, issue,
sell and deliver to the Representative at the Closing (as hereinafter defined)
for a purchase price of $100.00, warrants (the "Representative's Warrants") to
purchase a certain number of shares of the Common Stock (the "Representative's
Warrant Stock"), as more fully set forth at Section 3.4 of this Agreement.
SECTION 2
Representations and Warranties of the Company
In order to induce the Representative to enter into this Agreement, the
Company hereby represents and warrants to, and agrees with, the Representative
as follows:
2.1 Registration Statement on Form S-1 and Related Prospectus. The
Registration Statement on Form S-1 (File No. 333-38059) and the Prospectus in
the form specified by Form S-1 with respect to the Shares, copies of which have
been delivered heretofore by the Company to the Representative, have been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and the rules and regulations
promulgated thereunder, including, but not limited to, Regulations C and S-K
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission"), and the Registration Statement and related Prospectus, together
with all exhibits and other documents required by the Rules and Regulations,
have been filed by the Company with the Commission under the 1933 Act; and the
Company will use its best efforts to cause the Commission to declare such
Registration Statement effective as promptly as possible. The Company may file
one or more additional amendments to the Registration Statement and related
Prospectus with the Commission on or prior to the Effective Date (as hereinafter
defined), and copies of each such amendment will be delivered to the
Representative for its approval prior to such filing.
As used in this Agreement, the terms "Registration Statement on Form
S-1" and "Registration Statement" refer to and mean the Registration Statement
on Form S-1 prepared by the Company in connection with the Offering and any and
all amendments thereto, including, but not limited to, exhibits and financial
statements and, in the event of any amendment after the Effective Date, the term
"Registration Statement on Form S-1" or "Registration Statement" is inclusive of
such amendments. The term
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"Prospectus" refers to and means the Prospectus, including each Preliminary
Prospectus (as hereinafter defined) prepared by the Company in the form
specified by Form S-1, and all amendments thereto, and, in the event of any
amendment or supplement to such Prospectus after the Effective Date, the term
"Prospectus" shall refer to and mean such Prospectus inclusive of such
amendments or supplements. For purposes of this Agreement, the term "Preliminary
Prospectus" means the amended prospectus included in the Registration Statement
immediately prior to the Effective Date.
2.2 Accuracy of Registration Statement and Related Prospectus. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus with respect to the Shares, and each Preliminary
Prospectus has conformed in all material respects with the requirements of the
1933 Act and the applicable Rules and Regulations and has not included any
untrue statement of a material fact (except to the extent that the Preliminary
Prospectus anticipates facts that will be true and correct as of the Effective
Date that are not true on the date of the Preliminary Prospectus) or omitted to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. On the Effective Date
and on the Closing Date: (a) the Registration Statement and the Prospectus will
comply in all respects with the requirements of the 1933 Act and the Rules and
Regulations for the purpose of the proposed Offering of the Shares; and (b) all
statements of material fact contained in the Registration Statement and the
Prospectus will be true and correct, and neither the Registration Statement nor
the Prospectus will include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.3 Financial Statements. The audited and other financial statements of
the Company, together with related schedules and notes as set forth in the
Registration Statement and the Prospectus, present fairly and reflect correctly
the financial position and results of operations of the Company as of the
respective dates, and for the respective periods, to which they apply. Such
financial statements have been prepared in accordance with generally accepted
accounting principles (applied on a consistent basis throughout the periods
covered thereby) and the applicable rules and regulations of the Commission
relating to financial statements and are correct, complete and consistent with
the books and records of the Company (which books and records are correct and
complete). All financial statements
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filed with the Registration Statement and the Prospectus reflect all liabilities
of the Company, contingent or otherwise, required to be set forth therein under
generally accepted accounting principles in effect as of the respective dates
thereof and include adequate reserves for all federal and state tax liabilities
incurred prior to their respective dates, and the Company has no material
liabilities, contingent or otherwise, obligations or claims against it except as
set forth therein.
2.4 Independent Public Accountants. Xxxx + Associates LLP, who have
certified or will certify certain of the financial statements filed or to be
filed with the Commission as part of the Registration Statement and the
Prospectus and, as experts, have reviewed certain other information of a
financial or accounting nature contained in the Registration Statement and the
Prospectus, are independent certified public accountants as required by the 1933
Act.
2.5 No Material Adverse Change. Except as may be reflected in or
contemplated by the Registration Statement and the Prospectus, subsequent to the
dates as of which information is given therein and through the Closing Date:
(a) there has not been, and will not be, any material adverse
change in the condition, financial or otherwise, or in the results of operations
of the Company or in its business taken as a whole;
(b) there has not been, and will not be, any material
transaction entered into by the Company other than transactions in the ordinary
course of the Company's business;
(c) the Company has not, and shall not have, incurred any
material obligations, contingent or otherwise, which are not disclosed in the
Registration Statement and the Prospectus;
(d) there has not been, and will not be, any change in the
capital stock or long-term debt (except current payments thereof) of the
Company; and
(e) the Company has not, and shall not have, paid or declared
any dividends or made any other distribution in respect of the capital stock of
the Company.
2.6 No Defaults. Other than as disclosed in the Registration Statement
and the Prospectus, the Company is not in default in the performance of any
obligation, agreement or condition contained in any debenture, note or other
evidence of
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indebtedness or any indenture or loan agreement of the Company. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein, and compliance with the terms of this Agreement, will not
conflict with or result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, the Company's Certificate of
Incorporation or Bylaws (as each is currently in effect), any note, indenture,
mortgage, deed of trust or other contract, agreement or instrument to which the
Company is a party or by which it or any of its property is bound, or any
existing law, order, rule, regulation, writ, injunction or decree of any
government, governmental instrumentality, agency or body, arbitration tribunal
or court, domestic or foreign, having jurisdiction over the Company or its
property. No consent, approval, authorization or order of any court or
government instrumentality, agency or body is required for the consummation of
the transactions contemplated herein except such as may be required under the
1933 Act or under the Blue Sky, or securities laws, of any state or
jurisdiction.
2.7 Incorporation and Standing. The Company and each of its
subsidiaries: (a) is, and, at the Closing Date will be, duly incorporated and
validly existing in good standing as a corporation under the laws of its
jurisdiction of incorporation with full power and authority (corporate and
otherwise) to own its property and conduct its business, present and proposed,
as described in the Registration Statement and the Prospectus; (b) has full
power and authority to enter into this Agreement; (c) owns, free and clear of
any lien, charge or encumbrance, all of the unissued capital stock as set forth
in the Registration Statement and the Prospectus; and (d) is duly qualified and
in good standing as a foreign corporation in each jurisdiction in which it owns
or leases real property or transacts business requiring such qualification and
in which the failure to so qualify would have a material adverse effect on the
Company.
2.8 Legality of Outstanding Common Stock. The authorized, issued and
outstanding capital stock of the Company is as set forth in the Registration
Statement and the Prospectus under the heading "Capitalization." At the Closing
Date, the Company will have an authorized capitalization of (a) 14,000,000
shares of Common Stock, $.01 par value per share, of which no more than
4,700,300 shares (excluding shares issued pursuant to exercise of the
over-allotment option described in Section 3.1) will be issued and outstanding
and no shares of which will be held in the treasury of the Company; and (b)
1,000,000 shares of Preferred Stock, $.01 par value per share, of which no
shares will be issued and outstanding and no shares of which will be held in the
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treasury of the Company. At the Closing Date, the outstanding shares of Common
Stock will have been duly and validly authorized and issued and will be fully
paid and nonassessable. The outstanding shares of Common Stock conform to all
statements with regard thereto contained in the Registration Statement and the
Prospectus. No offers or sales of the Common Stock or other securities have been
made by the Company in violation of the 1933 Act. On the Effective Date, and
through and including the Closing Date, there will be no outstanding options,
warrants or other rights (however characterized or described) to purchase any
shares of the Common Stock or securities convertible into Common Stock, except
as described in the Registration Statement and the Prospectus.
2.9 Legality of Securities. The Shares, the Representative's Warrants,
and the Representative's Warrant Stock have each been duly and validly
authorized and, when issued and delivered against payment therefor as provided
in this Agreement, each of the Shares, the Representative's Warrants and the
Representative's Warrant Stock will be validly issued, fully paid and
nonassessable. Said securities, upon issuance, will not be subject to any
preemptive right of any stockholder of the Company, and no preemptive rights
will exist with respect to any securities of the Company through the Closing
Date or until the expiration of the Representative's Warrant Period (as
hereinafter defined). No stockholder of the Company is subject to personal
liability solely on the basis of his, her or its ownership of capital stock of
the Company. The Representative's Warrants, when sold and delivered, will
constitute the valid and binding obligation of the Company, enforceable against
the Company in accordance with their terms. A sufficient number of shares of the
Common Stock have been reserved for issuance as Representative's Warrant Stock
upon exercise of the Representative's Warrants. The Shares, the Representative's
Warrants and the Representative's Warrant Stock will conform to all statements
with regard thereto in the Registration Statement and the Prospectus.
2.10 Prior Sales. No shares of the Common Stock or other securities of
the Company have been sold by the Company or by or on behalf of, or for the
benefit of, any officer, director, predecessor, affiliate, promoter, associate,
principal security holder, Representative or other controlling person of the
Company during the period beginning three years (3) prior to the date hereof and
ending on the date hereof, except as set forth in the Registration Statement.
For purposes of this Agreement, an "affiliate" of a person or entity shall mean:
(a) any person or entity which directly or indirectly controls, or is controlled
6
by, or is under common control with, such person or entity; (b) any person or
entity which owns, beneficially or of record, 10% or more of any class of
capital stock of such person or entity or of which 10% or more of any class of
capital stock (or in the case of a person or entity that is not a corporation,
10% or more of the equity interest) is owned, beneficially or of record, by such
person or entity; and (c) any person or entity directly or indirectly controlled
by any of the foregoing. For purposes of this Agreement, the term "control"
means the possession, directly or indirectly, of the power to direct the
management or policies of a person or entity, whether through the ownership of
voting securities, by contract or otherwise.
2.11 Litigation. Except as set forth in the Registration Statement and
the Prospectus, there is, and, at the Closing Date, there will be, no
litigation, cause of action, suit or proceeding before any court or governmental
agency, authority, or body pending or, to the knowledge of the Company,
threatened, which might result in a judgment or judgments against the Company
not adequately covered by insurance or which collectively might result in any
material adverse change in the condition (financial or otherwise), the business
or the prospects of the Company or would, individually or collectively, have a
material adverse effect on the properties or assets of the Company.
2.12 Representative's Warrants. Upon delivery and receipt of payment
for the Representative's Warrants to be sold by the Company as set forth in
Section 3.4 of this Agreement, the Representative and its assignees will receive
good and marketable title thereto, free and clear of all liens, encumbrances,
charges and claims whatsoever. The Company will have, on the Effective Date and
the Closing Date, full legal right, power and authority to issue, sell, transfer
and deliver the Representative's Warrants in the manner provided hereunder.
2.13 Finder. No finder's fee has been or will be paid in connection
with the transactions contemplated by this Agreement. It is understood that,
should a claim be made for any finder's fee in connection with such transactions
and based upon any agreement by the Company, the Company will indemnify the
Representative with respect to any such claim in accordance with the procedures
set forth in Section 6(c) hereof.
2.14 Exhibits. There are no contracts, instruments or other documents
which are required by the 1933 Act or by the Rules and Regulations to be filed
as exhibits to the Registration Statement which have not been so filed. Each
contract or other instrument (however characterized or described) to which the
Company is a
7
party and to which reference is made in the Registration Statement and the
Prospectus has been duly and validly executed, is in full force and effect in
all material respects and is enforceable against the parties thereto in
accordance with its terms, and none of such contracts or instruments has been
assigned by the Company to any third party. The Company knows of no present
situation or condition or fact not disclosed in the Registration Statement and
the Prospectus which would prevent compliance by the parties with the terms of
such contracts or instruments as amended to date. Except for amendments or
modifications of such contracts or instruments in the ordinary course of
business, the Company has no intention of exercising any right which would cause
any other party to the contract to cancel any of their obligations under any of
such contracts or instruments, and the Company has no knowledge that any other
party to any of such contracts or instruments has any intention not to render
full performance thereunder.
2.15 Tax Returns. The Company has filed all federal, foreign, state and
local tax returns which are required to be filed and has paid all taxes shown on
such returns and on all assessments received by it to the extent such taxes have
become due. All taxes with respect to which the Company is obligated have been
paid, or adequate accruals have been established to cover any taxes which remain
unpaid.
2.16 Property. Except as otherwise set forth in, or contemplated by,
the Registration Statement and the Prospectus: (i) the Company has good title,
free and clear of all liens, encumbrances and defects, except liens for current
taxes not due and payable, to all real and personal property and assets
described in the Registration Statement and the Prospectus as being owned by the
Company, subject only to such exceptions as are not material and do not
individually or collectively affect adversely the present or prospective
business of the Company; and (ii) the properties, including equipment, referred
to in the Registration Statement and the Prospectus as being held under lease or
option by the Company, are held under valid, subsisting and enforceable leases
or options, with only such exceptions which collectively are not material and do
not affect adversely the present or prospective business of the Company.
2.17 Use of Proceeds. The Company plans to, and will, apply the
proceeds from the sale of the Shares solely and exclusively to the purposes
described in the Registration Statement and the Prospectus under the caption
"Use of Proceeds."
2.18 Authority. The execution and delivery by the Company
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of this Agreement has been duly authorized by all necessary corporate action,
and this Agreement is the valid and binding obligation of the Company,
enforceable against it in accordance with its terms.
2.19 Subsidiaries. The Company has no subsidiaries except for those
listed on Schedule 2.19 hereto (the "Subsidiaries"). The PRIMA Group
International, Inc. (the "U.S. Corporation"), directly or indirectly through one
or more Subsidiaries, owns 59.998% of the issued and outstanding capital stock
of Prima Electronics S.p.A., a societa per azioni incorporated with limited
liability under the laws of the Republic of Italy ("Prima Electronics"), and
99.98% of the issued and outstanding capital stock of each of the other
Subsidiaries. All of the Company's capital stock of Prima Industrie S.p.A., a
societa per azioni incorporated with limited liability under the laws of the
Republic of Italy ("Prima Industrie," and, together with Prima Electronics, the
"Italian Subsidiaries"), is held in the name of the U.S. Corporation. All of the
Company's capital stock of Prima Electronics is held in the name of Prima
Industrie.
2.20 Availability of Information Concerning the Company. All documents
and other information relating to the Company's affairs have been made available
upon request to the Representative and its counsel at the Representative's
office or at the office of its counsel, as the case may be, and copies of any
such documents have been furnished upon request to the Representative or its
counsel. Prior to the Effective Date, the substantive provisions of all such
documents shall be subject to the approval of the Representative and, if not so
approved, the Representative may elect not to proceed with the Offering. Notice
of disapproval of any document shall be given to the Company or counsel to the
Company within a reasonable time after the document is made available to the
Representative or its counsel. Included among the documents to be made available
to the Representative are the Company's Certificate of Incorporation, as
amended, and related charter documents, Bylaws and amendments thereto, minutes
of all meetings and other actions taken by the Company's incorporators,
directors and stockholders and committees of the Company's Board of Directors,
all financial statements, correct copies of any material contracts, licenses,
leases or agreements to which the Company is a party or by which it or any of
its assets is bound, including contracts for the sale of products or services in
the normal course of business and including any employee (including officers
and/or directors) incentive plans and any other type of fringe benefit plan, of
whatever nature, and copies of all patents, patent applications, trademarks and
trademark applications and assignments, licenses
9
or concessions of any patent, patent application, trademark or trademark
application in which the Company may have an interest.
2.21 Stop or Suspension Orders. The Company is not aware of any threat
of, or the initiation of, any steps or proceedings which would impair or prevent
the right to offer the Shares or any other securities of the Company, or the
issuance by the Commission or other regulatory authority of any stop order or
suspension order or other prohibition preventing or impairing the transactions
contemplated by this Agreement. The Company will advise the Representative
immediately, and confirm in writing, the receipt of any such threat, the
initiation of any such steps or proceedings or the issuance of any such order or
prohibition.
2.22 Transfer Agent. The Company has appointed American Securities
Transfer & Trust, Incorporated, 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx 00000, as its transfer agent (the Transfer Agent") for the Common
Stock.
2.23 Employment Agreements; Employee Incentive Plans. The Company has
entered into employment agreements with Xxxxx X. Xxxxxxx, Xx., Gianfranco
Carbonato, Xxxxxxx X. Xxxxxxx and Gianni Ciamaroni, and has no written
employment agreements with any other employee of the Company and no oral
employment agreements the termination of which would result in a material
liability for which accrual has not been made in the Company's financial
statements. The Company has previously delivered to the Representative complete
and correct copies of each of such employment agreements, and, in the case of
any oral employment agreements, written memoranda summarizing all material terms
thereof. The Company has obtained key man life insurance on the lives of
Gianfranco Carbonato and Xxxxx X. Xxxxxxx, Xx., in the amounts of $250,000 and
$1,000,000, respectively. The Company will use its best efforts to increase the
amount of key man life insurance coverage on the life of Mr. Carbonato to
$1,000,000 as soon as practicable. Except as set forth on Schedule 2.23, the
Company has no employee benefit plans. The Company has previously delivered to
the Representative complete and correct copies of each such employee benefit
plan.
2.24 Intellectual Property Rights.
(a) The Company owns or is licensed to use, in each case free
and clear of all liens or encumbrances and rights thereto or therein by third
parties, all United States or foreign patents (including rights under United
States or foreign patent applications), trade secrets, trademarks, service
marks, copyrights or other proprietary information or know-how (collectively,
"Intellectual Property Rights") necessary or advisable to conduct the business
now being, or proposed to be, conducted by the Company as described in the
Registration
10
Statement and the Prospectus. All such Intellectual Property Rights are cross-
licensed to the U.S. Corporation from the Italian Subsidiaries without the
payment of any royalties to the extent such Intellectual Property Rights are
used in the development of new products or technology pursuant to the Company's
"Laser On-Line" program. The Joint Development Agreement among the U.S.
Corporation and each of the Italian Subsidiaries provides the U.S. Corporation
with the exclusive right to use outside of Italy any Intellectual Property
Rights developed pursuant to the Company's "Laser On-Line Program."
(b) The Company is not infringing, misappropriating or
otherwise violating any Intellectual Property Rights of any person and, except
as set forth with particularity on Schedule 2.24 to this Agreement, the Company
has not received any notice of, and is not otherwise aware of, any claim or the
basis of any claim that it is infringing, misappropriating or otherwise
violating any Intellectual Property Rights of any person. In each instance set
forth on Schedule 2.24 to this Agreement in which the Company has received
notice of a claim that it is infringing, misappropriating or otherwise violating
any Intellectual Property Rights of any person, the Company has formed a good
faith belief that it is not infringing, misappropriating or otherwise violating
such Intellectual Property Rights.
(c) To the best of the Company's knowledge, no person is
infringing, misappropriating or otherwise violating any of the Company's
Intellectual Property Rights. There are no pending legal proceedings relating to
any Intellectual Property Rights of the Company.
(d) The Company has entered into appropriate non-use and non-
disclosure and assignment of inventions agreements with all persons that have
access to the Company's Intellectual Property Rights and, to the Company's
knowledge after due inquiry, no such person has violated or breached any such
agreements.
2.25 Prior Issuances. All prior offers and sales of securities of the
Company were (a) exempt from registration under the 1933 Act, (b) registered
pursuant to, or exempt from registration under, all pertinent state securities,
or Blue Sky, laws, and (c) registered pursuant to, or exempt from registration
under, all pertinent foreign securities laws.
2.26 Tax Consequences of Reorganization. The purchase by the U.S.
Corporation of all of the issued and outstanding capital
11
stock of PRIMA Industrie (a) was non-taxable to the U.S. Corporation and its
stockholders domiciled in the United States under the Internal Revenue Code of
1986, as amended; and (b) did not subject the U.S. Corporation, Prima Industrie
or any other Subsidiary to any tax under the laws of the Republic of Italy.
2.27 Stock Incentive Plan. The PRIMA Group International, Inc. 1997
Stock Incentive Plan (the "Stock Incentive Plan") permits the granting of
incentive stock options, as defined under Section 422 of the Internal Revenue
Code of 1986, as amended.
2.28 Florida Compliance. The Company has complied and will comply with
all provisions of Florida Statutes Section 517.075 (Chapter 92-198, Laws of
Florida). Neither the Company, nor any affiliate thereof, does business with the
government of Cuba or with any person or affiliate located in Cuba.
2.29 Compliance with Business Advisory Letter. The Company has provided
the Representative with a full and complete copy of the business advisory letter
received by it from Xxxx + Associates LLP, dated November 12, 1997 (the
"Business Advisory Letter"). Schedule 2.29 hereto sets forth which
recommendations contained in the Business Advisory Letter have and have not been
fully complied with as of the date hereof.
SECTION 3
Issue, Sale and Delivery of the Shares
3.1 Appointment of Representative. The Company hereby agrees to sell
2,000,000 Shares, and each Member, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
agrees, severally and not jointly, to purchase from the Company the number of
Shares set forth opposite its name in Schedule I attached hereto at a purchase
price of $____ per Share at the Closing of the Offering (the "Closing"). The
Company hereby grants to the Underwriting Group an over-allotment option for a
period of thirty (30) days after the Effective Date to purchase at a purchase
price of $____ per Share up to 300,000 additional Shares of Common Stock. Such
Shares shall be purchased for the account of each Member as nearly as
practicable in the proportion that the number of Shares set opposite the name of
each of the Members in Schedule I attached hereto bears to the 2,000,000 Shares
purchased hereunder prior to the exercise of the over-allotment option. The
obligations of the Members hereunder are subject to, among other things: (a)
notice from the Commission of effectiveness of the Registration Statement; (b)
receipt of
12
written advice from the National Association of Securities Dealers, Inc. (the
"NASD"), pursuant to Rule 2710 of the NASD's Conduct Rules, approving the
fairness and reasonableness of the underwriting arrangements in connection with
the sale of the Shares; (c) qualification of the sale of the Shares under
applicable state laws and the absence of any action by any government body,
agency or official prohibiting the sale of the Shares; (d) the exemption from
registration of the Shares under the laws of the Republic of Italy and any other
applicable foreign jurisdiction; and (e) the terms and conditions contained in
this Agreement and in the Registration Statement and the Prospectus.
3.2 Default by a Member. If for any reason one or more Members shall
fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 9 hereof) to
purchase and pay for the number of Shares agreed to be purchased by such Member,
the Company shall immediately give notice thereof to the Representative, and the
non-defaulting Members shall have the right, within twenty-four (24) hours after
the receipt by the Representative of such notice, to purchase or procure one or
more other Members to purchase, in such proportions as may be agreed upon
between the Representative and such purchasing Member or Members, and upon the
terms herein set forth, the Shares which such defaulting Member or Members
agreed to, and subsequently failed, to purchase. If the non-defaulting Members
fail to make such arrangements with respect to all such Shares, the number of
Shares which each non-defaulting Member is otherwise obligated to purchase under
the Agreement shall be automatically increased PRO RATA to absorb the remaining
Shares which the defaulting Member or Members agreed to purchase; provided,
however, that the non-defaulting Members shall not be obligated to purchase the
Shares which the defaulting Member or Members agreed to purchase if the
aggregate number of such Shares exceeds ten percent (10%) of the total number of
Shares which all Members agreed to purchase hereunder. If the total number of
Shares which the defaulting Member or Members agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within twenty-four (24) hours next succeeding the
twenty-four (24) hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to the Representative for the purchase
of such Shares on the terms herein set forth. In any such case, either the
Representative or the Company shall have the right to postpone the Closing
determined as provided in Section 3.6 hereof for not more than seven (7)
business days after the date originally fixed as the Closing pursuant to said
Section in order
13
that any necessary changes in the Registration Statement, the Prospectus or any
other documents or arrangements may be made. If neither the non-defaulting
Members nor the Company shall make arrangements within the twenty-four (24) hour
periods stated above for the purchase of all the Shares which the defaulting
Member or Members 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 Member and without any liability on the part
of any non-defaulting Member to the Company.
Nothing contained in this Section 3.2 shall relieve any defaulting
Member of its liability, if any, to the Company or to the remaining Members for
damages occasioned by its default hereunder.
3.3 Offering Price. After the Commission notifies the Company that the
Registration Statement has become effective, the Members propose to offer the
Shares to the public at an Offering Price of $ per Share as set forth in the
Prospectus. The Members may allow such concessions and discounts upon sales to
selected dealers as may be determined from time to time by the Representative.
Payment for the Shares (including Shares included in the over-allotment option)
which the Representative agrees to purchase shall be made to the Company to its
order by certified or official bank check or checks in the amount of the
purchase price by or on behalf of the Representative at the offices of Xxxxxx &
Whitney LLP in Denver, Colorado, or by wire transfer of immediately available
funds in the amount of the purchase price pursuant to instructions delivered by
the Company, against delivery to the Representative of certificates for the
Shares in definitive form in such numbers and registered in such names as the
Representative shall request in writing at least two (2) full business days
prior to such delivery.
3.4 Principal Terms of Representative's Warrants. Upon payment for the
Shares, at the Closing, the Company shall sell and deliver to the Representative
and/or its designees, the Representative's Warrants to purchase a total of
200,000 shares of Common Stock, for a purchase price of $100.00, registered in
such names and in such denominations as the Representative shall have requested.
The Representative's Warrants shall be in the form attached as Exhibit A hereto
and shall be in form and content acceptable to counsel for the Representative.
The Representative's Warrants shall evidence the right of the Representative
and/or its designees to purchase a total of 200,000 shares of the Common Stock
and shall be exercisable commencing one (1) year after the Effective Date and
for a period
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of four (4) years thereafter (such four (4) year period shall be known as the
"Representative's Warrant Period") and shall contain anti-dilution and
adjustment provisions acceptable to the Representative. The Representative's
Warrants shall be exercisable at an exercise price of $ per share (150% of the
Offering Price). On the fifth anniversary of the Effective Date, the
Representative's Warrants shall expire. The Company will not be obligated to
sell and deliver the Representative's Warrants, and the Representative will not
be obligated to purchase and pay for the Representative's Warrants, except upon
payment for the Shares. The Representative's Warrants to be acquired by the
Representative and/or its designees shall be restricted from sale, transfer,
exercise, assignment or hypothecation for twelve (12) months after the Effective
Date, except that the Representative may elect that the Representative's
Warrants be issued in varying amounts directly to its officers, and not to the
Representative, or to other Members and their designees. Such designation will
only be made at the Closing if the Representative determines that such
designation would not violate the interpretation of the Board of Governors of
the NASD relating to the review of corporate financing arrangements. The
Representative has disclosed to the Company, and the Company has agreed, that
the Representative may transfer, after twelve (12) months from the date of the
Representative's Warrants, a portion or all of the Representative's Warrants to
certain persons, including, but not limited to, the Representative's officers,
directors, stockholders, employees or registered representatives. The
Representative and the Company agree that such transfers will only be made if
they do not violate the registration provisions of the 1933 Act.
3.5 Inspection of Certificates. For the purpose of expediting the
checking and packaging of the certificates for the securities comprising the
Shares and the Representative's Warrants, the Company agrees to make the
certificates available for inspection by the Representative at the main office
of the Representative in Denver, Colorado, at least one (1) full business day
prior to the proposed delivery date.
3.6 Closing. The delivery of the Shares and payment therefor is herein
called the "Closing." The date of the Closing is herein called the "Closing
Date." The Company will deliver the certificates for the Shares to the
Representative at the offices of the Representative in Denver, Colorado or at
such other location as may be specified by the Representative, at 10:00 a.m.,
New York time, against payment of the purchase price, on the third full business
day after commencement of the Offering or, if the Offering commences after 4:30
p.m., New York time, on
15
the fourth full business day after commencement of the Offering, or such earlier
time as may be agreed upon by the Representative and the Company. In the event
that the Representative elects to exercise any part of the over-allotment option
pursuant to Section 3.1 hereof, the time and date of delivery and payment for
the Shares to be issued pursuant to said over-allotment option shall be as
mutually agreed, but not later than the thirtieth (30th) calendar day after the
Effective Date. Said date is hereinafter referred to as the "Over-allotment
Closing Date."
3.7 Representative's Expense Allowance. It is understood that the
Company will reimburse the Representative for its expenses on a non-accountable
basis in the amount of three percent (3%) of the gross proceeds from the sale of
the Shares, including proceeds from the sale of the Shares included in the
over-allotment option. In no event shall this expense allowance be refundable or
accountable, except as provided in the next paragraph.
The Company and the Representative mutually acknowledge that the
Company has heretofore paid to the Representative $50,000 towards the
Representative's nonaccountable expense allowance, and the Representative hereby
acknowledges receipt of such portion of the nonaccountable expense allowance. At
the Closing and, if applicable, on the Over- allotment Closing Date, the Company
shall pay to the Representative the unpaid balance of such expense allowance to
defray the expenses incurred by the Representative in connection with the
Offering. The Representative's expenses shall include, but are not to be limited
to, the fees of Representative's counsel, plus any additional expenses and fees,
travel expenses, postage expenses, duplication expenses, long distance telephone
expenses and other expenses incurred by the Representative in connection with
the proposed sale of the Shares. In the event that the Offering is not
consummated for any reason, the Company shall reimburse the Representative for
all of its accountable expenses; provided, however, that if such accountable
expenses are less than $50,000, any unaccounted for portion of the $50,000
advanced to the Representative for non-accountable expenses will be returned to
the Company.
3.8 Mutual Warranty. The parties represent and warrant that, as of the
date hereof and as of the Closing Date, the representations and warranties
herein contained and the statements contained in all certificates delivered by
any party to another pursuant to this Agreement shall in all respects be true
and correct.
16
3.9 Sales Reports. The Representative covenants that, reasonably
promptly after the Closing Date, it will supply the Company with all information
requested in writing by the Company and required from the Representative in
connection with its periodic reporting requirements under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and such additional
information as the Company may reasonably request to be supplied to the
securities commissions of the states in which the Shares have been qualified for
sale.
3.10 Re-offers By Selected Dealers. In connection with each sale by the
Representative of any of the Shares through such dealers and institutions
agreeing to purchase Shares under the Selected Dealers Agreement with the
Representative (each, a "Selected Dealer"), the Representative shall require the
Selected Dealer purchasing any such Shares to agree to re-offer the same on the
terms and conditions of the Offering set forth in the Registration Statement and
the Prospectus.
SECTION 4
Registration Statement and Prospectus
4.1 Representative's Copies. The Company shall deliver to the
Representative, without charge, two (2) signed copies of the Registration
Statement, including all financial statements and exhibits and amendments or
supplements thereto as filed with the Commission, and shall deliver, without
charge to the Representative, an additional seven (7) conformed copies of the
Registration Statement and any amendments or supplements thereto, including such
financial statements and exhibits. The signed copies of the Registration
Statement so furnished to the Representative shall include signed copies of any
and all consents and certificates of the independent public accountants
certifying to the financial statements included in the Registration Statement
and the Prospectus and signed copies of any and all consents and certificates of
any other person whose profession gives authority to statements made by him or
her and who is named in the Registration Statement or Prospectus as having
prepared, certified or reviewed any part thereof.
4.2 Copies of Preliminary Prospectus and Prospectus. Prior to the
Effective Date, the Company shall procure, at its sole expense, and shall
deliver to Members and to other broker/dealers, as many printed copies of each
Preliminary Prospectus filed with the Commission bearing the statement required
by Rule 481(b)(2) of Regulation C under the 1933 Act as may be required by the
Representative. The Company consents to
17
the use of the same by Members and by dealers prior to the Effective Date;
provided, however, that with respect to any preliminary prospectus that will not
be distributed publicly to potential investors in the Offering (a "Quiet Filing
Preliminary Prospectus"), the Representative will be provided with no more than
500 copies of such preliminary prospectus (excluding copies provided to the
Representative or its counsel for filing purposes) and will distribute such
copies only to originating investment bankers, potential Members in the
Underwriting Group and institutional investors. In addition, on and after the
Effective Date, the Company shall procure, at its sole expense, as many printed
copies of the Prospectus and shall deliver such copies at such business
addresses as the Representative may direct for the purposes contemplated by this
Agreement and shall deliver such printed copies of the Prospectus within one (1)
business day after the Effective Date.
4.3 Post-Effective Amendments. If, during such period of time as in the
opinion of the Representative or its counsel a Prospectus relating to the sale
of the Shares contemplated hereby is required to be delivered under the 1933
Act, any event occurs or any event known to the Company relating to or affecting
the Company shall occur as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or, if it is
necessary at any time after the Effective Date to amend or supplement the
Prospectus to comply with the 1933 Act, the Company shall forthwith notify the
Representative thereof and shall prepare and file with the Commission such
further amendment to the Registration Statement or supplemental or amended
Prospectus as may be required and shall furnish and deliver to the
Representative and to others whose names and addresses are designated by the
Representative, all at the sole expense of the Company, a reasonable number of
copies of the amended or supplemented Prospectus which, as so amended or
supplemented, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the Prospectus not
misleading in the light of the circumstances existing when it is delivered to a
purchaser or prospective purchaser and which will comply in all respects with
the 1933 Act. In the event the Representative shall be required to deliver a
Prospectus ninety (90) days or more after the Effective Date, upon request of
the Representative, the Company shall prepare promptly such Prospectus as may be
necessary to permit compliance with the requirements of Section 10 of the 1933
Act.
18
4.4 Use of Prospectus. The Company authorizes the Members, in
connection with the distribution of the Shares, and all dealers to whom any of
the Shares may be sold to or through the Members, to use the Prospectus, as from
time to time may be amended or supplemented, in connection with the Offering and
sale of the Shares and in accordance with the applicable provisions of the 1933
Act, the applicable Rules and Regulations and the applicable state securities or
Blue Sky laws; provided, however, that the Representative's use of any Quiet
Filing Preliminary Prospectus shall be made in accordance with the provisions of
Section 4.2 hereof. Each recipient shall be provided with a copy of the amended
Prospectus in the form as amended through the Effective Date.
SECTION 5
Covenants of the Company
The Company covenants and agrees with the Representative and other
Members that:
5.1 Filing of Amendments. After the date hereof, the Company will not
at any time, whether before or after the Effective Date, file with the
Commission any amendment or supplement to the Registration Statement or
Prospectus unless a copy of such amendment or supplement was previously
furnished to the Representative and its counsel a reasonable time prior to the
proposed filing thereof, and the Representative or its counsel did not
reasonably object to such proposed filing on the ground that it is not in
compliance with the 1933 Act or the Rules and Regulations. The Company agrees to
supply the Representative's counsel with the contents of any oral comments and
copies of all comments, correspondence and orders received from the Commission
or any state securities administrator in connection with the filing of any
Registration Statement or amendment or supplement thereto.
5.2 Declaration of Effectiveness. The Company shall use its best
efforts to cause the Registration Statement and any post-effective amendment
subsequently filed with the Commission to become effective as promptly as
practicable, but shall not obtain an Effective Date or allow the Registration
Statement to become effective without the approval of the Representative. The
Company will promptly advise the Representative, and will confirm such advice in
writing:
(a) of the effectiveness of the Registration Statement or any
amendment thereto and of the filing with the Commission of
19
any amendment of or supplement to the Prospectus;
(b) of any request or suggestion made by the Commission for
any amendment to the Registration Statement or the Prospectus or for additional
information and the nature and substance thereof;
(c) of the issuance by the Commission of any order suspending
the effectiveness of the Registration Statement pursuant to Section 8 of the
1933 Act or of the initiation of any proceeding for that purpose;
(d) of the happening of any event which, in the judgment of
the Company, makes any material statement in the Registration Statement or
Prospectus untrue or which requires the making of any change in the Registration
Statement or Prospectus in order to make the statements therein not misleading;
and
(e) of the failure to qualify or the suspension of the
qualification of the Shares for offering or sale in any jurisdiction or of the
institution of any proceeding for any of such purposes.
The Company shall use every reasonable effort to prevent the issuance of any
such order or of any order preventing or suspending such use, to prevent any
such failure to qualify or any such suspension and to obtain as soon as possible
a lifting of any such order, the reversal of any such failure and the
termination of any such suspension.
5.3 Amendments at the Request of the Representative. The Company shall
prepare and file promptly with the Commission, upon the request of the
Representative, such amendments or supplements to the Registration Statement and
the Prospectus, in form satisfactory to counsel to the Company as, in the
opinion of counsel to the Representative, may be necessary or advisable in
connection with the sale of the Shares, and will use its best efforts to cause
the same to become effective as promptly as possible.
5.4 Blue Sky.
(a) The Company shall, at its sole expense and when and as
requested by the Representative, apply for and qualify the sale of the Shares in
all states in which the Representative reasonably requests in order to qualify
under such state's Blue Sky laws. The Company agrees that the Representative
will instruct counsel to the Representative to make all of the appropriate
filings, and the Company agrees to advance to the
20
Representative the estimated attorneys' fees of the Representative incurred in
connection therewith and to pay any balance of such fees promptly upon the
Representative's request therefor. The maximum number of Shares to be offered in
the entire Offering shall be registered in each state (or if sales will be
permitted by exemption rather than registration, the exemption shall be obtained
for such maximum number of Shares), unless the Representative agrees otherwise
in writing. The Company will advance to the Representative all filing fees for
all state filings. The Company will continue such qualifications in effect so
long as required for the purposes of the sale of the Shares. Copies of the
applications for the registration of securities filed with the various states
shall be supplied to the Company's and Representative's counsel, and copies of
all comments and orders received from the various states will be supplied to
Company's and Representative's counsel.
(b) No less than one week prior to the expected Effective Date
of the Registration Statement, and immediately prior to the release of the
Preliminary Prospectus, Representative's counsel shall prepare and deliver to
both parties and other counsel, a preliminary Blue Sky Memorandum, including,
among other things, all states wherein the proposed Offering has been qualified
or registered for sale and the number of Shares registered in any such state,
and all states where an exemption from qualification or registration is
available and the basis therefor. Immediately prior to the Effective Date of the
Registration Statement, counsel who prepared the Blue Sky filings shall prepare
and deliver to both parties and other counsel a final Blue Sky Memorandum
(together with the preliminary Blue Sky Memorandum, the "Blue Sky Memoranda"),
including, among other things, all states wherein the Offering may be sold to
the public and all states where an exemption from qualification or registration
is available, the basis therefor, and the number of Shares which may be sold in
each such state.
5.5 Further Reports. The Company, at its sole expense, shall prepare
and give and shall continue to give such financial statements and other
information to the Commission and the proper public bodies of the states in
which the Shares may be qualified as may be required from time to time by the
Commission and such proper public bodies and will furnish the Representative
with copies thereof promptly upon the filing thereof with the Commission or such
proper public bodies.
5.6 Reports to Representative. During the period of five (5) years
after the Closing Date, the Company shall deliver to the Representative copies
of each annual report of the Company,
21
and also shall deliver to the Representative:
(a) within ninety (90) days (or such later period for filing
of the Company's Annual Report on Form 10-K as may be permitted under Rule
12b-25 or any successor rule or regulation) after the close of each fiscal year
of the Company, a financial report of the Company on a consolidated basis (if
applicable) and a similar financial report of all unconsolidated subsidiaries,
if any, all such reports to include a balance sheet as of the end of the
preceding fiscal year, an income statement, a statement of cash flow, all to be
in reasonable detail and certified by independent public accountants who may,
however, be the regularly employed independent public accountant of the Company
to the extent included in the Company's Form 10-K for such fiscal year as filed
with the SEC;
(b) within forty-five (45) days (or such later period for
filing of the Company's Quarterly Report on Form 10-Q as may be permitted under
Rule 12b-25 or any successor rule or regulation) after the end of each quarterly
fiscal period of the Company, other than the last quarterly fiscal period in any
fiscal year, copies of the consolidated (if applicable) income statement and
statement of changes in financial condition for that period and the balance
sheet as of the end of that period of the Company and the income statement,
statement of changes in financial condition and the balance sheet of each
unconsolidated subsidiary, if any, of the Company for that period, all subject
to year-end adjustment, certified by the principal financial or accounting
officer of the Company to the extent included in the Company's Form 10-Q for
such quarter as filed with the SEC;
(c) copies of all other statements, documents or other
information which the Company shall mail or otherwise make available to any
class of its security holders or shall file with the Commission pursuant to the
1933 Act, the 1934 Act or otherwise; and
(d) copies of all news, press or public information releases
when made.
If the Company shall fail to furnish the Representative financial
statements as provided in subparagraphs (a) and (b) above within the times
specified, and the Company has not received an extension of such time for filing
or is not in the immediate process of preparing such filing, the Representative
shall have the right to have such financial statements prepared by independent
public accountants of its own choosing, and the Company shall furnish such
independent public accountants such
22
data and assistance and access to such records as they may reasonably require to
enable them to prepare such statements and shall pay their reasonable fees and
expenses in preparing the same.
5.7 Expenses of Offering. The Company shall pay, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
prevented from becoming effective or is terminated, all costs and expenses
incident to the performance of its obligations under this Agreement, including
all expenses incident to the authorization, issuance and delivery of the Shares
and the Representative's Warrants, any original issue taxes in connection
therewith, all transfer taxes, if any, incident to the initial sale of the
Shares, the Representative's Warrants and Representative's Warrant Stock, if
such sales are consummated, the fees and expenses of the Transfer Agent, if any,
the fees and expenses of the Company's counsel and accountants, the costs and
expenses incident to the preparation, printing and filing under the 1933 Act and
with the NASD of the Registration Statement and the Prospectus and any
amendments or supplements thereto, the cost of preparing and filing all exhibits
to the Registration Statement, this Agreement, and the Questionnaires to
officers, directors and certain stockholders of the Company for the obtaining of
information for the Registration Statement and Preliminary and final Prospectus,
the fees of the Representative's counsel incurred in connection with the
preparation of the Blue Sky Memoranda, the cost of printing and furnishing to
the Representative copies of the Registration Statements and copies of the
Preliminary and final Prospectus as herein provided and the cost of qualifying
the Shares under the state securities or Blue Sky laws as provided in Section
5.4 herein and the laws of the Republic of Italy and any other applicable
foreign jurisdiction, including filing fees. In addition to the above, the
Company shall also pay all expenses, up to a maximum of $15,000, incurred in
connection with the placement of a "tombstone" advertisement in the national
edition of THE WALL STREET JOURNAL, INVESTOR'S BUSINESS DAILY, INVESTMENT
DEALERS DIGEST and the ROCKY MOUNTAIN NEWS or any other periodical determined
appropriate by the Representative, after the Closing. The Company, at its sole
expense, shall also make a representative of its management available for the
Representative's corporate manager's meeting after the completion of the
Offering, and the Company shall be responsible for all reasonable expenses
related to such meeting.
5.8 Stockholder Reports. The Company shall, as promptly as possible
after each annual fiscal period, render and distribute reports to its
stockholders which will include audited statements
23
of its operations and cash flow during such period and its balance sheet as of
the end of such period.
5.9 1933 Act Reporting. Within the time during which the Prospectus is
required to be delivered under the 1933 Act, the Company shall comply, at its
own expense, with all requirements imposed upon it by the 1933 Act, the Rules
and Regulations as from time to time in force and any order of the Commission,
so far as is necessary to permit the continuance of offers, sales and trading of
the Shares.
5.10 Use of Proceeds. The Company will apply the net proceeds from the
sale of the Shares solely and exclusively in the manner set forth in the
Registration Statement and the Prospectus under the caption "Use of Proceeds."
5.11 Transfer Sheets. The Company shall issue at the Closing
irrevocable instructions to the Transfer Agent to provide the Representative,
for its confidential use and at the Company's expense, reasonable access to its
daily transfer sheets for a period of three years after the Closing Date, to
forward such daily transfer sheets to the Representative bi-weekly for the 60
days following the Closing Date and monthly for the remainder of the first year
following the Closing Date, and, annually, for a period of five years after the
Closing Date, upon request of the Representative to the Transfer Agent therefor
(but more frequently in the event of an investigation requiring the same or
inquiry therefor by the Commission or other government body or agency or by the
NASD), to provide the Representative with lists of stockholders of the Company.
5.12 Information About the Company. The Company shall deliver to the
Representative the documents described in Section 2.20. In addition, at Closing,
the Company shall deliver to the Representative or its counsel, certificates of
good standing for each jurisdiction (whether foreign or domestic) where the
Company does business, certificates as to tax status, incumbency or any other
certificate or document which the Representative may reasonably require prior to
Closing.
5.13 Due Diligence Investigation for Offering and for Proceedings
involving the Representative. Prior to the Closing Date, the Company shall
cooperate with the Representative in such investigation as it may make or cause
to be made of all the properties, business and operations of the Company in
connection with the sale of the Shares, the Company shall make its officers and
directors available to the Representative for interrogation, without cost or
expense to the Representative, in connection
24
therewith, and the Company shall make available such information in its
possession as the Representative may reasonably request. Subsequent to the
Closing Date, the Company shall cooperate with the Representative in such
investigation as it may make or cause to be made of all the properties, business
and operations of the Company in connection with any proceeding in which claims
are asserted against the Representative by virtue of its participation in the
Offering or in any activities as a broker-dealer in transactions involving the
Common Stock or as a market-maker for the Common Stock, the Company shall make
its officers and directors available to the Representative for interrogation,
without cost or expense to the Representative, in connection therewith, and the
Company shall make available such information in its possession as the
Representative may reasonably request.
5.14 Transfer Agent. During the period ending three (3) years after the
Closing Date, the Company shall not change or terminate the appointment of the
Transfer Agent named in Section 2.22 hereto, without first giving notice to the
Representative.
5.15 Conditions Precedent. The Company shall use due diligence to
comply or cause to be complied with all conditions precedent to the obligations
of the Representative specified in this Agreement.
5.16 1934 Act Registration and Reporting; Listing. Simultaneously with
a declaration of effectiveness of the Registration Statement, the Company, at
its sole cost and expense, shall register the Common Stock by filing with the
Commission, pursuant to Section 12(g) of the 1934 Act, a Registration Statement
on Form 10, or Form 8-A, or other appropriate filing, containing such
information and documents as the Commission may specify (the "1934 Act
Registration Statement"). Two (2) signed copies of the 1934 Act Registration
Statement, including the certified financial statements and other required
exhibits, shall be supplied to the Representative prior to the filing thereof.
In addition, any amendments or supplements that may be made by the Company or
required by the Commission to the 1934 Act Registration Statement will be
furnished to the Representative after the filing thereof with the Commission.
The Company shall thereafter comply with all periodic reporting and proxy
solicitation requirements imposed by the Commission pursuant to the 1934 Act, so
long as the Company is legally required to do so and shall furnish the
Representative promptly with copies of all materials filed with the Commission
pursuant to the 1934 Act or otherwise furnished to stockholders of the Company.
In addition, simultaneously with a declaration of effectiveness of the
Registration Statement, the Company
25
agrees to qualify for the listing of its Common Stock on the Nasdaq National
Market and to maintain such qualification following the Closing.
5.17 No Material Change. The Company shall not, except as described in
the Prospectus or with approval of the Representative, until (a) the termination
of this Agreement prior to the Closing pursuant to Section 9.1 or Section 9.2,
or (b) the expiration of ninety (90) days after the Effective Date, whichever
occurs later:
(a) undertake or authorize any change in its capital structure
or authorize or issue or permit any public offering of any additional shares of
its capital stock, except as herein provided;
(b) authorize, create, issue or sell any funded obligations,
notes or other evidences of indebtedness, except in the ordinary course of
business and maturing not more than twelve (12) months from the date thereof
except for recorded loans between the Company and its Subsidiaries pursuant to
(i) arm's length transactions governed by credit terms consistent with typical
U.S. banking arrangements or (ii) the credit agreement between the U.S.
Corporation and its subsidiaries filed as an exhibit to the Registration
Statement; or
(c) consolidate, merge or form a joint venture with or into or
acquire any other enterprise (whether in the form of a corporation or otherwise)
or create any mortgage or lien upon any of its properties or assets other than
in the ordinary course of business.
5.18 Bound Volumes. The Company shall supply to the Representative and
the Representative's counsel, at the Company's cost, four (4) sets of bound
transcripts each containing all of the Closing materials within a reasonable
time after the Closing Date, not to exceed six (6) months.
5.19 Financial Consulting Agreement. At the time of the Closing, the
Company shall enter into a financial consulting agreement with the
Representative in the form attached hereto as Exhibit B, pursuant to which the
Representative shall receive a consulting fee of $40,000 per annum. The services
of the Representative pursuant to such agreement shall include, but shall not be
limited to, advising the Company in connection with possible acquisitions,
stockholder relations (including the preparation of the Company's annual report
to stockholders), long-term financial planning, advice relating to corporate
26
reorganizations, expansion and capital structure, and other financial
assistance. The term of the consulting agreement shall be one (1) year,
commencing on the Closing Date. The entire consulting fee shall be paid to the
Representative on the Closing Date.
5.20 Additional Financing.
(a) If, at the request of the Company, the Representative
introduces, negotiates or arranges for a non-public equity or debt financing
(including any bridge financing) for the Company, and such financing is accepted
and consummated (other than as contemplated herein) on or prior to August 7,
2000, the Company will pay a fee to the Representative for such services equal
to ten percent of the equity raised in such transaction.
(b) If, at the request of the Company, the Representative (i)
arranges for bank debt financing, and such financing is accepted and consummated
on or prior to August 7, 2000, or (ii) arranges for the purchase or sale of
assets, or for a merger, acquisition or joint venture for the Company, and such
transaction is accepted and consummated on or prior to August 7, 2000, the
Company will pay a fee to the Representative for such services, calculated as
follows:
-four percent (4%) of the value of the financing or other
transaction to the Company up to and including five million
dollars ($5,000,000);
-three percent (3%) of the value of the financing or other
transaction to the Company greater than five million dollars
($5,000,000) and up to and including six million dollars
($6,000,000);
-two percent (2%) of the value of the financing or other
transaction to the Company greater than six million dollars
($6,000,000) and up to and including seven million dollars
($7,000,000); and
-one percent (1%) of the value of the financing or other
transaction to the Company in excess of seven million dollars
($7,000,000).
Notwithstanding the foregoing, nothing in this Agreement shall be construed to
require the Company to utilize the services of the Representative for any such
additional financing or other transaction, and the Company shall be free to
obtain additional financings, and to consummate other transactions, with the
27
assistance of other investment banking firms.
5.21 Restriction on Sale of Securities. Prior to the declaration of
effectiveness of the Registration Statement, the Company will obtain from each
key officer, insider and director of the Company, and deliver to the
Representative, agreements from said persons concerning restrictions on future
sales of securities of the Company owned by them. All of said agreements shall
be in a form for which prior approval has been obtained from the Representative,
but shall include agreements that such securities and underlying securities may
not be publicly sold during the twenty-four (24) month period following the
Effective Date, without the prior written consent of the Representative and the
Company, which may be withheld in either of their sole discretion; provided,
however, that such securities may be sold during that time period, provided that
such sale or disposition is a privately negotiated transaction, that the
purchaser agrees in writing with the Representative and the Company to the
provisions of the transferor's written agreement with the Representative and the
Company and that the disposition is otherwise in accordance with applicable
securities laws; and further provided, that the Representative will waive the
restrictions contained in such agreements, on a pro rata basis to all parties
subject to such agreements, if the Company undertakes a public offering or
private placement of Common Stock and the underwriter or placement agent for
such public offering or private placement agrees that the shares of Common Stock
for which such restrictions are waived will be sold as part of the orderly
distribution of securities to be sold in such public offering or private
placement.
5.22 Public Relations Firm. The Company shall engage a public relations
firm acceptable to the Representative, for a period of one (1) year after the
Effective Date; provided, however, that the acceptance of the Representative to
such public relations firm shall not be unreasonably withheld.
5.23 Board of Directors Meetings. For the three (3) year period
commencing on the Effective Date, the Company shall give written notice to the
Representative of all Board of Directors' meetings at the time such meeting is
called and as such notice is given to the Company's directors and the
Representative shall be entitled to have an observer attend all such Board of
Directors' meetings; provided, however, that the Representative shall pay for
any travel costs associated with such observer's attendance at such meetings.
Such observer shall be an Affiliate of the Representative, shall have no right
to speak at the meetings, and will not be entitled to attend executive sessions
of the Board.
28
In addition, the Company shall promptly forward to the Representative, as
completed, minutes of each meeting of the Board of Directors of the Company, or
any committee thereof.
5.24 Fundamental Corporate Transactions. For a period of three (3)
years following the Effective Date, the Company shall not make any transfer of a
material portion of the assets or capital stock of the Company or any current or
future subsidiary (each, a "Company Entity") to any other person or entity
(including, without limitation, a Company Entity) without the prior consultation
of the Representative, and will submit any proposal for the transfer of any
material portion of the assets of the Company to a vote of the stockholders of
the Company unless the Representative concurs with the Company that stockholder
approval is not necessary.
5.25 Potential Acquisition of Prima Electronics. In the event that the
Company determines to acquire the remaining issued and outstanding capital stock
of Prima Electronics not currently held by the Company, the Company will use its
best efforts to structure such acquisition as a non-taxable transaction under of
the Internal Revenue Code of 1986, as amended, and the laws of the Republic of
Italy. In addition, the consideration paid by the Company in exchange for any
capital stock of Prima Electronics shall be (a) cash, (b) debt or equity
securities of the U.S. Corporation, or (c) some combination thereof.
5.26 Stock Incentive Plan; Incentive Compensation.
(a) Prior to the Closing, the Company shall not issue any
award under the Stock Incentive Plan to the extent that such award would cause
the aggregate number of shares of Common Stock underlying awards issued under
the Stock Incentive Plan to equal or exceed fifty-five percent (55%) of the
number of shares of Common Stock authorized for issuance pursuant to awards
granted under the Stock Incentive Plan.
(b) For the three (3) year period commencing on the Effective
Date, the Company will not grant any bonus or incentive compensation (whether in
the form of cash, awards granted under the Stock Incentive Plan, or other
securities of the Company) to any person to the extent that the aggregate of
such compensation granted by the Company to all persons during the fiscal year
in which such grant is made would decrease the Company's earnings for such
fiscal year by an amount greater than or equal to five percent (5%) of the
Company's earnings in the prior fiscal year; provided, however, that such grants
may decrease the Company's earnings for such fiscal year by an amount greater
than five
29
percent (5%), but not to exceed ten percent (10%), to the extent that, and only
to the extent that, such additional grants are made in connection with the
establishment of an employee stock ownership plan that will purchase shares of
the Company's Common Stock on the open market.
5.27 Composition of Board of Directors. For the three (3) year period
commencing on the Effective Date, the Company will use its best efforts to
insure that, at all times, at least three (3) members of the Board of the U.S.
Corporation are citizens of the United States.
5.28 Compliance with Business Advisory Letter. The Company will fully
implement all recommendations contained in the Business Advisory Letter which
have not been implemented as of the date hereof within the time frame set forth
on Schedule 5.28 hereto.
5.29 Qualification of Shares in Italy. Following the Closing, the
Company will use its best efforts to, as soon as practicable, qualify the Shares
with Italian regulatory authorities for sale to the general public in Italy.
SECTION 6
Indemnification
(a) The Company agrees to indemnify and hold harmless the
Representative and each person, if any, who controls the Representative, its
affiliated companies and each of the Representative's and such affiliated
companies' respective officers, directors, agents and controlling persons
(within the meaning of each of Section 20 of the 1934 Act and Section 15 of the
1933 Act) (each of the foregoing, including the Representative, is individually
referred to in this Section 6 as a "Representative" and collectively are
referred to as the "Representative") against any losses, claims, damages,
liabilities or expenses, joint or several, brought by a third party, to which
such Representative or each such controlling person may become subject, under
the 1933 Act, the 1934 Act, common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) arise
out of, or are based upon: (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto or made
orally or in writing to the Representative or to any representative of a Member,
or the
30
omission or alleged omission to state in the Registration Statement, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereof
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; (ii) any untrue statement or alleged untrue statement of a
material fact contained in any application or other statement executed by the
Company or based upon written information furnished by the Company and filed in
any jurisdiction in order to qualify the Shares under, or exempt the Shares or
the sale thereof from qualification under, the securities laws of such
jurisdiction, or the omission or alleged omission to state in such application
or statement 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; (iii) the breach or violation of any covenant of the
Company made in this Agreement; or (iv) the inaccuracy or failure of any
representation or warranty of the Company in this Agreement; provided, however,
that the Company will not be liable in any such case to the extent that, with
respect to clauses (i) and (ii) of this Section 6(a), any such loss, claim,
damage, liability or expense arises out of, or is based upon, an untrue
statement, or alleged untrue statement, omission or alleged omission, made in
reliance upon and in conformity with information furnished to the Company by, or
on behalf of, the Representative in writing specifically for use in the
preparation of the Registration Statement or any amendment or supplement
thereto, any such Preliminary Prospectus or the Prospectus or other application
or statement filed under any states' securities, or blue sky, law or any such
amendment thereof or supplement thereto. Subject to the provisions of this
Section 6, the Company will reimburse such Representative for any legal or other
expenses reasonably incurred by such Representative in connection with
investigating, defending or settling any such loss, claim, liability or action.
This indemnity agreement is in addition to any liability which the Company may
otherwise have at law or in equity. Any losses, claims, damages, liabilities or
expenses for which the Representative is entitled to indemnification under this
Section 6 shall be paid by the Company as such losses, claims, damages,
liabilities or expenses are incurred. At the election of the Representative, and
subject to subsection (c) below, the Representative may request, and is entitled
to receive, from the Company reimbursement for legal or other expenses
reasonably incurred on a monthly basis, with the effect that the Company will
pay in full each detailed invoice for legal or other expenses incurred by the
Representative within thirty (30) days after the date of presentation thereof by
the Representative.
31
(b) The Representative agrees to indemnify and hold harmless
the Company, each of the Company's directors, each of the Company's officers who
has signed the Registration Statement, and each person who controls the Company
within the meaning of Section 15 of the 1933 Act against any losses, claims,
damages, liabilities or expenses, joint or several, to which the Company or any
such director, officer, or controlling person may become subject, under the 1933
Act, the 1934 Act, the common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of,
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or the
omission or alleged omission to state in the Registration Statement, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
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 (ii) any untrue statement or alleged untrue statement of a
material fact contained in any application or other statement executed by the
Company or by the Representative or based upon written information furnished by
the Company or the Representative and filed in any jurisdiction in order to
qualify the Shares under, or exempt the Shares or the sale thereof from
qualification under, the securities laws of such jurisdiction, or the omission
or alleged omission to state in such application or statement 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 the Representative shall only be obligated to indemnify such
person or persons in each of the above cases only to the extent that such untrue
statement, alleged untrue statement, omission or alleged omission, was made in
reliance upon and in conformity with information contained in the material set
forth under the section entitled "Underwriting" of the Registration Statement,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto. Any losses, claims, damages, liabilities or expenses for which the
Company is entitled to indemnification under this Section 6 shall be paid by the
Representative as such losses, claims, damages, liabilities or expenses are
incurred. This indemnity agreement is in addition to any liability which the
Representative may otherwise have at law or in equity.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to
32
be made against any indemnifying party under this Section 6, notify in writing
the indemnifying party of the commencement thereof. The omission to so notify
the indemnifying party will not relieve it from any liability under this Section
6 as to the particular item for which indemnification is then being sought,
unless such omission so to notify prejudices the indemnifying party's ability to
defend such action. In case any such action is brought against any indemnified
party and the indemnified party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel who shall
be reasonably satisfactory to such indemnified party. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that if, in the reasonable
judgment of the indemnified party or parties, it is advisable for such party or
parties and any controlling persons to be represented by separate counsel by
reason of a conflict of interest of the counsel chosen by the indemnifying
party, any indemnified party shall have the right to employ separate counsel to
represent it and other parties and their controlling persons who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by any party hereunder, in which event the reasonable fees and expenses
of such separate counsel shall be borne by the indemnifying party. In any such
event, the indemnifying party will not be obligated to pay the fees and expenses
of more than one counsel for the indemnified parties with respect to such claim,
unless either (i) the nature of the claim makes it reasonable to engage counsel
in more than one jurisdiction, or (ii) in the reasonable judgment of any
indemnified party, a conflict of interest may exist between such indemnified
party and any other indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the reasonable fees and
expense of additional counsel or counsels for the indemnified parties. Any such
indemnifying party shall not be liable to any such indemnified party on account
of any settlement of any claim or action effected without the written consent of
such indemnifying party, which consent shall not be unreasonably withheld. In
the event that an indemnifying party assumes the defense of a claim in
accordance with its obligation to indemnify under this Section 6, it is
understood and agreed that the indemnifying party will thereby assume a
fiduciary duty to the indemnified party to
33
conduct the defense of such claim consistent with the interests of the
indemnified party.
SECTION 7
Effectiveness of Agreement
This Agreement shall become effective the later of (a) the
date and time that this Agreement is executed and delivered by the parties
hereto and (b) at 10:00 a.m., Eastern Daylight Time, on the first full business
day following the Effective Date, or at such earlier time after the Effective
Date as the Representative in its discretion shall first release the Shares for
offering to the public. For purposes of this Section 7, the Shares shall be
deemed to have been released to the public upon release by the Representative of
the publication of a newspaper advertisement relating to the Shares or upon
release of a telegram or a letter offering the Shares for sale to securities
dealers, whichever shall first occur.
SECTION 8
Conditions to the Representative's Obligations
The Representative's obligation to purchase the Shares and to make
payment to the Company hereunder on the Closing Date and on the Over-allotment
Closing Date shall be subject to the accuracy, as of the Closing Date and the
Over-allotment Closing Date, of the representations and warranties on the part
of the Company herein contained, to the performance by the Company of all its
agreements herein contained, to the fulfillment of or compliance by the Company
with all covenants and conditions hereof, and to the following additional
conditions specified in the subsections of this Section 8.
8.1 Effective Date. The effective date of the Registration Statement
(the "Effective Date") shall occur on or prior to 1:00 p.m., Denver, Colorado
time, on ____________ __, 1998, or such later date as the Representative may
agree to in writing. On or prior to the Closing Date, no order suspending the
effectiveness of the Registration Statement pursuant to Section 8 of the 1933
Act or otherwise shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission or any state securities
administrator; any request for additional information on the part of the
Commission, the NASD or any state securities administrator shall have been
complied with to the satisfaction of the Commission, the NASD or such state
securities administrator, as the case may be; and neither the
34
Registration Statement, the Prospectus nor any amendment thereto shall have been
filed to which counsel to the Representative reasonably shall have objected in
writing.
8.2 Accuracy of Registration Statement. The Representative shall not
have disclosed in writing to the Company that the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel to the Representative, is
material or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
8.3 Casualty. Between the date hereof and the Closing Date and
Over-allotment Closing Date, the Company shall not have sustained any loss on
account of fire, explosion, flood, accident, calamity, rebellion, civil
uprising, act of a foreign state, or any other cause of such character as
materially adversely affects its business or property considered as an entire
entity, whether or not such loss is covered by insurance.
8.4 Litigation. Except as set forth in the Registration Statement,
between the date hereof and the Closing Date and the Over-allotment Closing
Date, there shall be no litigation instituted or threatened against the Company,
and there shall be no proceeding instituted or threatened against the Company
before or by any federal or state commission, regulatory body or administrative
agency or other government body, domestic or foreign, wherein an unfavorable
ruling, decision or finding would materially adversely affect the business,
franchises, licenses, permits, operations or financial condition, income or
prospects of the Company.
8.5 No Material Change. Except as contemplated herein or as set forth
in the Registration Statement and the Prospectus, during the period subsequent
to the Effective Date, and prior to the Closing Date and the Over-allotment
Closing Date: (a) the Company shall have conducted its business in the usual and
ordinary manner as the same was being conducted on the Effective Date, and (b)
except in the ordinary course of its business, the Company shall not have
incurred any liabilities or obligations (direct or contingent) or disposed of
any of its assets or entered into any material transaction or suffered or
experienced any materially adverse change in its condition, financial or
otherwise. At the Closing Date and the Over-allotment Closing Date, the capital
stock and surplus accounts of the Company shall be substantially the same as at
the Effective Date, without
35
considering the proceeds from the sale of Shares, other than as may be set forth
in the Registration Statement and the Prospectus.
8.6 Review by Representative's Counsel. The authorization of the Shares
and the Representative's Warrants, the Registration Statement, the Prospectus
and all corporate proceedings and other legal matters incident thereto and to
this Agreement shall be reasonably satisfactory in all respects to the
Representative and its counsel, and the Company shall have furnished the
Representative and such counsel such documents as they may have requested to
enable them to evaluate the matters referred to in this Section 8.6.
8.7 Opinion of Company Counsel. The Company shall have furnished to the
Representative the opinion, dated the Closing Date or the Over-allotment Closing
Date (as the case may be), addressed to the Representative, of Xxxxxxx, Moon &
Xxxxx, P.A. and/or such other counsel as may be acceptable to the
Representative, to the effect that, based upon a review by them of the
Registration Statement, the Prospectus, the Company's articles of incorporation,
bylaws and relevant corporate proceedings, an examination of such statutes and
such other investigation by such counsel as they deem necessary to express such
opinion:
(a) The Company and each of its Subsidiaries has been duly
incorporated and is a validly existing corporation in good standing under the
laws of its respective jurisdiction of incorporation (specifying the same and
attaching a certificate of good standing for each), with full corporate power
and authority to own and operate its properties and to carry on its business as
set forth in the Registration Statement and the Prospectus.
(b) The Company and each of its Subsidiaries is duly qualified
and registered to transact the business in which it is engaged and is qualified
and in good standing in each and every foreign or domestic jurisdiction in which
its ownership of property or its conduct of business requires such qualification
or registration and in which failure to so qualify would have a material adverse
effect upon the business of the Company.
(c) The Company has an authorized and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
The Shares and the Representative's Warrants conform to the statements
concerning them in the Registration Statement and the Prospectus. The
outstanding Common Stock of the Company has been duly and validly issued and is
fully paid and
36
nonassessable and is not subject to any preemptive rights. Cumulative voting is
not permitted by the holders of any of the Company's securities. No stockholder
of the Company is subject to personal liability solely on the basis of his, her
or its ownership of capital stock of the Company. The Shares and the shares of
Representative's Warrant Stock issuable upon exercise of the Representative's
Warrants, have been duly and validly authorized and, upon issuance thereof and
payment therefor in accordance with this Agreement will be duly and validly
issued, fully paid and nonassessable, free and clear of all liens, encumbrances,
equities and claims whatsoever, and will not be subject to any preemptive
rights.
(d) The Representative's Warrants have been duly and validly
authorized and issued and are valid and binding instruments enforceable against
the Company in accordance with their terms.
(e) A sufficient number of shares of Common Stock have been
duly reserved for issuance as Representative's Warrant Stock upon exercise of
the Representative's Warrants.
(f) The holders of the issued and outstanding shares of Common
Stock are, and the holders of the Shares, Representative's Warrant Stock and
Representative's Warrants (when such securities have been issued and fully paid
for in accordance with the provisions of the Registration Statement and in the
Representative's Warrants, as applicable) will be, entitled to the rights and
preferences set forth in the certificates representing the same and in the
Representative's Warrants, as applicable.
(g) No consents, approvals, authorizations or orders of
agencies, officers or other regulatory authorities are necessary for the valid
authorization, issuance or sale of the Shares, the Representative's Warrant
Stock or the Representative's Warrants, or the other transactions contemplated
by this Agreement, except as required under the 1933 Act or state Blue Sky or
other securities laws.
(h) The issuance and sale of the Shares, the Representative's
Warrant Stock and the Representative's Warrants and the consummation of the
transactions contemplated herein, and compliance with the terms of this
Agreement, will not conflict with or result in a breach of any of the terms,
conditions, or provisions of, or constitute a default under, the Company's
Articles of Incorporation or its Bylaws (as each is currently in effect), or any
note, indenture, mortgage, lease, deed of trust,
37
bank loan or credit agreement or other agreement, instrument or undertaking
(however characterized or described) known to such counsel to which the Company
is a party or by which the Company or any of its property is bound or any
existing laws, order, rule, regulation, writ, injunction or decree known to such
counsel of any government, governmental instrumentality, agency, body,
arbitration tribunal or court, domestic or foreign, having jurisdiction over the
Company or its property.
(i) The Registration Statement and the Prospectus have become
effective under the 1933 Act and, to the knowledge of such counsel, no order
suspending the effectiveness of the Registration Statement pursuant to Section 8
of the 1933 Act or otherwise has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated by the Commission under the
1933 Act or otherwise. The Registration Statement and the Prospectus, and each
amendment and supplement thereto, comply as to form in all material respects
with the requirements of the 1933 Act and the Rules and Regulations thereunder
(except that no opinion needs to be expressed as to financial statements and
financial data contained in the Registration Statement or Prospectus).
(j) The Company owns or holds by valid lease the real and
personal properties as shown in the Registration Statement and the Prospectus
and, to the extent such properties are owned by the Company, they are owned free
and clear of all liens, encumbrances and equities of record except for those
expressly referred to in the Registration Statement and the Prospectus and
except for those as do not in the opinion of counsel adversely affect materially
the value of such assets and except for the lien of current taxes not then due.
(k) This Agreement has been duly authorized and executed by
the Company and is a valid and binding agreement of the Company, enforceable in
accordance with its terms.
(l) The U.S. Corporation, directly or indirectly through one
or more Subsidiaries, owns 59.998% of the issued and outstanding capital stock
of Prima Electronics and 99.98% of the issued and outstanding capital stock of
each of the other Subsidiaries. All of the Company's capital stock of Prima
Industrie is held in the name of the U.S. Corporation. All of the Company's
capital stock of Prima Electronics is held in the name of Prima Industrie. The
Company does not, directly or indirectly, own capital stock, or hold an
ownership interest in, any entities other than the Subsidiaries.
38
(m) The form of certificate for the Shares is in due and
proper form and complies with all applicable statutory requirements.
(n) All prior offers and sales of securities of the Company
were (i) exempt from registration under the 1933 Act, (ii) registered pursuant
to, or exempt from registration under, all pertinent state securities, or Blue
Sky, laws, and (iii) registered pursuant to, or exempt from registration under,
all pertinent foreign securities laws.
(o) The purchase by the U.S. Corporation of all of the issued
and outstanding capital stock of PRIMA Industrie constituted a non-taxable
transaction to the U.S. Corporation and to its stockholders domiciled in the
United States under the Internal Revenue Code of 1986, as amended.
(p) The Stock Incentive Plan permits the granting of incentive
stock options, as defined under Section 422 of the Internal Revenue Code of
1986, as amended.
(q) To such counsel's knowledge after due inquiry, there are
no pending legal proceedings relating to any Intellectual Property Rights of the
Company, and no such proceedings are threatened or contemplated.
Such opinion shall also cover such other matters incident to the
transactions contemplated by this Agreement in form satisfactory to the
Representative's counsel as the Representative shall reasonably request. As an
illustration of the foregoing, but not as a limitation thereof, it is expected
that such opinion will cover the ownership by the Company of all licenses
required to conduct their businesses and such matters concerning disclosure of
and compliance with applicable environmental laws or regulations as may be
deemed advisable by the Representative.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that, although such counsel is not passing
upon and does not assume any responsibility for, the accuracy, completeness or
fairness of any of the statements contained in the Registration Statement or the
Prospectus and such counsel makes no representation that it has independently
verified the accuracy, completeness or fairness of such statements, in
connection with such counsel's representation of the Company in the preparation
of the Registration Statement and the Prospectus, nothing came to the attention
of such counsel which caused it to conclude that, as of the Effective Date, the
39
Closing Date or the Over-allotment Closing Date, as the case may be, and except
to the extent that the Preliminary Prospectus anticipates facts true as of the
Effective Date, the Registration Statement or any further amendment thereto
(other than the financial statements and notes thereto and other financial and
statistical data included therein, as to which such counsel need express no
opinion), contained an 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 or that, as of its date, the Prospectus or any further amendment or
supplement thereto (other than the financial statements and notes thereto and
other financial and statistical data included therein, as to which such counsel
need express no opinion), contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
Any portion of such opinion as to the enforceability of any agreement
may be subject to the effect of (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar law of general application affecting
creditors' rights, and (ii) general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith and fair
dealing, and other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity or at
law).
8.8 Opinion of Italian Counsel. The Company shall have furnished to the
Representative the opinion, dated the Closing Date or the Over-allotment Closing
Date (as the case may be), addressed to the Representative, of Chiomente Studio
Legale and/or such other counsel as may be reasonably acceptable to the
Representative, to the effect that, based upon a review by them of the
Registration Statement, the Prospectus and such other investigation by such
counsel as they deem necessary to express such opinion:
(a) Each of the Italian Subsidiaries has been duly
incorporated and is a validly existing corporation in good standing under the
laws of the Republic of Italy (attaching a certificate of good standing for
each), with full corporate power and authority to own and operate its properties
and to carry on its business as set forth in the Registration Statement and the
Prospectus.
(b) Each of the Italian Subsidiaries is duly qualified
40
and registered to transact the business in which it is engaged and is qualified
and in good standing in each and every foreign or domestic jurisdiction in which
its ownership of property or its conduct of business requires such qualification
or registration and in which the failure to so qualify would have a material
adverse effect upon the business of the Company.
(c) The outstanding capital stock of each of the Italian
Subsidiaries has been duly and validly issued and is fully paid and
nonassessable and is not subject to any preemptive rights. Cumulative voting is
not permitted by the holders of such company's securities. No stockholder of
such company is subject to personal liability (including, without limitation,
any liability upon the insolvency of such Italian Subsidiary) solely on the
basis of his, her or its ownership of capital stock of such company.
(d) No consents, approvals, authorizations or orders of
agencies, officers or other regulatory authorities under the laws of the
Republic of Italy are necessary for the valid authorization, issuance or sale of
the Shares, the Representative's Warrant Stock, the Representative's Warrants,
or the other transactions contemplated by this Agreement.
(e) With respect to each Italian Subsidiary, the issuance and
sale of the Shares, the Representative's Warrant Stock and the Representative's
Warrants and the consummation of the transactions contemplated herein, and
compliance with the terms of this Agreement, will not conflict with or result in
a breach of any of the terms, conditions, or provisions of, or constitute a
default under, such company's Articles of Incorporation, its Bylaws or any
similar governing document or instrument (as each is currently in effect).
(f) The U.S. Corporation owns 59.998% of the issued and
outstanding capital stock of Prima Electronics and 99.98% of the issued and
outstanding capital stock of Prima Industrie.
(g) All prior offers and sales of securities of each of the
Italian Subsidiaries were registered pursuant to, or exempt from registration
under, Italian securities laws and were issued and sold in accordance with the
laws of the Republic of Italy.
(h) The purchase by the U.S. Corporation of all of the issued
and outstanding capital stock of Prima Industrie, and the granting to the U.S.
Corporation of security interests in the Intellectual Property Rights did not
subject the U.S.
41
Corporation, Prima Industrie or any Subsidiary to any tax under the laws of the
Republic of Italy.
(i) The statements in the Registration Statement and the
Prospectus that purport to describe Italian law, the recapitalization of Prima
Industrie, the corporate structure of the Italian Subsidiaries and the legal
implications thereof, provide a fair and accurate description of such matters.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that, although such counsel is not passing
upon and does not assume any responsibility for, the accuracy, completeness or
fairness of any of the statements contained in the Registration Statement or the
Prospectus and such counsel makes no representation that it has independently
verified the accuracy, completeness or fairness of such statements, in
connection with such counsel's representation of the Company in the preparation
of the Registration Statement and the Prospectus, nothing came to the attention
of such counsel which caused it to conclude that, as of the Effective Date, the
Closing Date or the Over-allotment Closing Date, as the case may be, and except
to the extent that the Preliminary Prospectus anticipates facts true as of the
Effective Date, the Registration Statement or any further amendment thereto
(other than the financial statements and notes thereto and other financial and
statistical data included therein, as to which such counsel need express no
opinion), contained an 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 or that, as of its date, the Prospectus or any further amendment or
supplement thereto (other than the financial statements and notes thereto and
other financial and statistical data included therein, as to which such counsel
need express no opinion), contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
8.9 Opinion of Intellectual Property Counsel. The Company shall have
furnished to the Representative the opinion, dated the Closing Date or the
Over-allotment Closing Date (as the case may be), addressed to the
Representative, of Xxxxx Xxxxxx & Antonielli d'Oulx and/or such other counsel as
may be reasonably acceptable to the Representative, to the effect that, based
upon a review by them of the Registration Statement, the Prospectus and such
other investigation by such counsel as they deem necessary to express such
opinion:
42
(a) The Company owns or is licensed to use, in each case free
and clear of all liens or encumbrances and rights thereto or therein by third
parties, all Intellectual Property Rights necessary or advisable to conduct the
business now being, or proposed to be, conducted by the Company as described in
the Registration Statement and the Prospectus.
(b) All of the Intellectual Property Rights are cross-licensed
to the U.S. Corporation from the Italian Subsidiaries without the payment of any
royalties to the extent such Intellectual Property Rights are used in the
development of new products or technology pursuant to the Company's "Laser
On-Line" program. The Joint Development Agreement among the U.S. Corporation and
each of the Italian Subsidiaries provides the U.S. Corporation with the
exclusive right to use outside of Italy any Intellectual Property Rights
developed pursuant to the Company's "Laser On-Line Program."
(c) To such counsel's knowledge after due inquiry, the Company
is not infringing, misappropriating or otherwise violating any Intellectual
Property Rights of any person and, except as set forth with particularity on
Schedule 2.25 to this Agreement, the Company has not received any notice of, and
is not aware of, any claim that it is infringing, misappropriating or otherwise
violating any Intellectual Property Rights of any person. As to each instance
described in Schedule 2.25 to this Agreement in which the Company has received
notice of a claim that it is infringing, misappropriating or otherwise violating
any Intellectual Property Rights of any person, the Company has a good faith
basis to believe that, and to such counsel's knowledge after due inquiry, has
formed a belief that, it is not infringing, misappropriating or otherwise
violating such Intellectual Property Rights.
(d) To such counsel's knowledge after due inquiry, no person
is infringing, misappropriating or otherwise violating any of the Company's
Intellectual Property Rights.
(e) The statements in the Registration Statement and the
Prospectus under the heading, "Risk Factors -- Uncertainty Regarding Protection
of Proprietary Technology and Patents," insofar as such statements purport to
describe the Company's Intellectual Property Rights, provide a fair and accurate
description of such Intellectual Property Rights.
(f) To such counsel's knowledge after due inquiry, there are
no pending legal proceedings relating to any
43
Intellectual Property Rights of the Company, and no such proceedings are
threatened or contemplated.
8.10 Opinion of Counsel for Miojusti Investments BV. The Representative
shall have received an opinion of counsel for Miojusti Investments BV
("Miojusti"), or other documentation that it deems satisfactory, in its sole
discretion, that there has been no violation of Section 16 of the 1934 Act as a
result of the transactions involving Miojusti described in the Registration
Statement and the Prospectus.
8.11 Auditor's Letter. On the Closing Date and the Over-allotment
Closing Date, the Representative shall have received from Xxxx + Associates LLP
an opinion letter dated the Closing Date or the Over-allotment Closing Date (as
the case may be) stating that:
(a) They are independent public accountants within the meaning
of the 1933 Act and the Rules and Regulations, and the response to Item 509 of
Regulation S-K as reflected by the Registration Statement is correct insofar as
it relates to them;
(b) In their opinion, the financial statements and supporting
schedules of the Company examined by them at all dates and for all periods
referred to in their opinion letter and included in the Registration Statement
and the Prospectus comply as to form in all material aspects with the applicable
requirements of the 1933 Act and the published Rules and Regulations with
respect to registration statements on Form S-1;
(c) On the basis of certain indicated procedures (but not
necessarily an examination in accordance with generally accepted accounting
principles), including an examination of the Company's underlying financial
books and records, debt instruments (if any) of the Company described in the
Prospectus, a reading of the latest available interim unaudited financial
statements of the Company, whether or not appearing in the Prospectus, inquiries
to the officers of the Company and other persons responsible for the Company's
financial and accounting matters, and a reading of the minute books of the
Company, nothing has come to their attention which would cause them to believe
that during the period from the date of the last audited financial statement, to
a specified date not more than five (5) days prior to the date of such opinion
letter:
(i) there has been any material change in the
financial position of the Company not contemplated by and disclosed in the
Prospectus;
44
(ii) there has been any material change in the
capital stock and surplus accounts of the Company or any payment or declaration
of any dividend or other distribution in respect thereof or exchange therefor or
in the debt of the Company from that shown in its audited balance sheet, in the
Registration Statement and the Prospectus, other than as set forth or
contemplated by the Registration Statement and the Prospectus;
(iii) there have been any material decreases in
working capital or shareholders' equity (deficit) as compared with amounts shown
in the last audited balance sheet included in the Prospectus; or
(iv) there were any material decreases, as compared
with amounts shown in the last audited balance sheet, in the cash balance,
except in all instances for changes disclosed in or contemplated by the
Registration Statements and Prospectus; and
(d) On the basis of their examinations referred to in their
opinion letter, report and consent included in the Registration Statement and
the Prospectus and the indicated procedures and discussions referred to in
clause (c) above, nothing has come to their attention which, in their judgment,
would cause them to believe or indicate that (i) the financial statements set
forth in the Registration Statement and the Prospectus do not present fairly the
financial position and results of operations of the Company, for the period
indicated, in conformity with generally accepted accounting principles applied
on a consistent basis, and are not in all material respects a fair presentation
of the information purported to be shown, and (ii) the dollar amounts,
percentages and other financial information set forth in the Registration
Statement and the Prospectus under the captions "Prospectus Summary," "Summary
Consolidated Financial Data," "Risk Factors," "Capitalization," "Dilution,"
"Selected Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are not in agreement with the Company's
general ledger, financial records or computations made by the Company therefrom.
8.12 Officer's Certificate. The Company shall have furnished to the
Representative certificates of the President and Chief Financial Officer (or the
executive officer that performs the duties typically performed by the President
or the Chief Financial Officer (as the case may be)) of each of the U.S.
Corporation, Prima Industrie and Prima Electronics, and attested
45
by the Secretary (or the executive officer that performs the duties typically
performed by the Secretary) of each such company, dated the Closing Date and the
Over- allotment Closing Date, to the effect that:
(a) There is no litigation, arbitration, claim by any current
or former employee or any form of regulatory proceeding instituted or threatened
against the Company of a character required to be disclosed in the Registration
Statement and the Prospectus which is not disclosed. There is no material
contract required to be filed as an exhibit to the Registration Statement which
has not been so filed.
(b) The representations and warranties of the Company in this
Agreement are true and correct at and as of the date of the certificate. The
Company has complied with all of its covenants and agreements herein contained.
No stop order suspending the effectiveness of the Registration Statement
pursuant to Section 8 of the 1933 Act or otherwise has been issued at or before
the date of the certificate and no proceeding for that purpose have been
initiated at or before the date of the certificate and, to the best of their
knowledge, no such proceeding has been threatened by the Commission. Any request
for additional information on the part of the Commission or NASD (to be included
in the Registration Statement or the Prospectus or any amendment or supplement
thereto or otherwise) has been complied with to the reasonable satisfaction of
counsel for the Representative and no amendment or supplement to the
Registration Statement or Prospectus has been filed to which counsel for the
Representative has reasonably objected after adequate notice.
(c) There has been no material adverse change in the general
affairs of the Company, financial or otherwise, except as disclosed or indicated
in the Registration Statement and the Prospectus.
(d) Since the Effective Date, there has not been any material
transaction entered into by the Company other than in the ordinary course of
business.
(e) There are no material direct or indirect contingent
liabilities or obligations of the Company not disclosed in the Registration
Statement and the Prospectus.
(f) Since the Effective Date, the Company has not sustained
any loss on account of fire, flood, accident or other calamity of such character
as to interfere materially with the continuous operation of the Company's
business or which
46
materially adversely affects the financial position or business of the Company
regardless of whether or not such loss shall have been insured.
(g) The Company is not delinquent in the filing of any
federal, state or municipal or other local, state or municipal taxes required to
be reported and paid; to the best of their knowledge (after diligent
investigation in connection therewith) there is no proposed redetermination or
reassessment of such taxes adverse to the Company; and the Company has paid or
provided for, by adequate reserves, all known tax liabilities.
(h) This Agreement, the consummation of the transactions
herein contemplated and the fulfillment of the terms hereof will not result in a
breach by the Company of any term of, or constitute a default under, any
indenture, mortgage, lease, deed of trust, bank loan or credit agreement or any
other agreement, instrument or undertaking (however characterized or described)
of the Company, including by way of specification but not by way of limitation,
any agreement or instrument to which the Company is now a party or pursuant to
which it has acquired any right or obligation by succession or otherwise, and
that any existing agreement materially affecting the Company has been delivered
to the Representative or its counsel.
(i) They have examined the Registration Statement and the
Prospectus and, in their opinion (i) as of the Effective Date, the statements
contained in the Registration Statement and the Prospectus are true and correct
and the Registration Statement and the Prospectus do not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading (such opinion need not be expressed, however, as to any material
contained in the Registration Statement and the Prospectus furnished by the
Representative), and (ii) since the Effective Date, no event has occurred which
should have been set forth in a supplement to or amendment of the Registration
Statement or Prospectus which has not been set forth in such supplement or
amendment.
(j) At and as of the Effective Date and the date of the
certificate, there are no agreements, understandings or negotiations in force
and effect, in process or contemplated by them or of which they are aware to the
best of their individual and collective knowledge which, if in force and effect
or in process or so contemplated would be required to be disclosed.
(k) The officers and directors of the Company have not
47
taken and will not take, directly or indirectly, any action designed to, or
which might reasonably be expected to, cause or result in the stabilization or
manipulation of the price of the Company's Common Stock to facilitate the sale
and resale of the Shares.
8.13 Secretary's Certificate. The Representative shall have received
from the Secretary (or the executive officer that performs the duties typically
performed by the Secretary) of each of the U.S. Corporation, Prima Industrie and
Prima Electronics a certificate of incumbency, dated as of the Closing Date,
certifying the names, titles and signatures of the officers authorized to
execute, deliver and perform this Agreement. Attached to such certificate shall
be a copy of the Bylaws of the Company and, in the case of the U.S. Corporation,
the resolutions of the Board of Directors of the Company authorizing the
execution, delivery and performance of this Agreement. Such certificate shall
also certify that the Articles of Incorporation of the Company, the Bylaws of
the Company and, in the case of the U.S. Corporation, such resolutions have been
validly adopted and have not been amended or modified, except as described in
the Prospectus.
8.14 Opinion of Representative's Counsel. The Representative shall have
received from Xxxxxx & Xxxxxxx LLP, counsel for the Representative, a
satisfactory opinion dated the Closing Date or the Over-Allotment Closing Date
(as the case may be), with respect to the incorporation of the Company, the
validity of the Shares, the Registration Statement, the Prospectus, and other
related matters as the Representative may reasonably request, and such counsel
shall have received such papers and information as they may reasonably request
to enable them to pass upon such matters.
8.15 Opinion of Underwriters' Italian Counsel. The Representative shall
have received from such counsel as it may choose, a satisfactory opinion dated
the Closing Date or the Over-Allotment closing Date (as the case may be) to the
effect that the sale of the Shares to investors in Italy, as described in the
Registration Statement and the Prospectus, may be made pursuant to an exemption
from registration under the laws of the Republic of Italy.
8.16 Tender of Securities. All the Shares being offered by the Company
and the Representative's Warrants shall be tendered for delivery in accordance
with the terms and provisions of this Agreement.
48
8.17 Blue Sky Qualification. The Shares shall be qualified in such
states as determined under Section 5.4 hereof, and each qualification shall be
in effect and not subject to any stop order or other proceeding on the Closing
Date.
8.18 Approval of Representative's Counsel. All opinions, letters,
certificates and documents mentioned above or elsewhere in this Agreement shall
be deemed to be in compliance with the provisions hereof only if they are in
form and substance satisfactory to counsel to the Representative, whose approval
shall not be unreasonably withheld.
8.19 Officer's Certificate as a Company Representation. Any certificate
signed by an officer of the Company and delivered to the Representative or to
counsel for the Representative will be deemed a representation and warranty by
the Company to the Representative as to the statements made therein.
8.20 Exchange Listing. The Company's Shares must be qualified for
listing on the Nasdaq National Market (the "Exchange") on the Effective Date of
the Registration Statement.
8.21 Board Committees. A compensation committee, which shall consist of
at least two (2) independent outside board members, shall be in place to review
executive compensation and make recommendations to the Board of Directors on an
as needed basis. An audit committee of the Board of Directors shall be in place
consisting of at least two (2) independent outside directors. Such audit
committee shall be charged with reviewing all systems and making recommendations
for corrective actions to the Board of Directors on an as needed basis.
SECTION 9
Termination
9.1 Termination by Representative. This Agreement may be terminated by
the Representative by notice to the Company in the event the Company shall have
failed or been unable to comply with any of the terms, conditions,
representations, warranties, covenants or other provisions of this Agreement on
the part of the Company to be performed, complied with or fulfilled within the
respective times herein provided for, unless compliance therewith or performance
or satisfaction thereof shall have been expressly waived by Representative in
writing.
9.2 Termination by Representative--"Market Out". This
49
Agreement may be terminated by Representative by notice to the Company at any
time if, in the sole judgment of the Representative, payment for and delivery of
the Shares is rendered impracticable or inadvisable because of: (a) material
adverse changes in the Company's business, business prospects, management,
earnings, properties or conditions, financial or otherwise; (b) any action, suit
or proceedings, threatened or pending, at law or equity against the Company, or
by any federal, state or other commission, board or agency wherein any
unfavorable result or decision could materially adversely affect the business,
business prospects, properties, financial condition, income or earnings of the
Company; (c) additional material governmental restrictions not in force and
effect on the date hereof shall have been imposed upon the trading in securities
generally, or minimum or maximum prices shall have been generally established on
a registered securities exchange, or trading in securities generally on any such
exchange shall have been suspended, or a general moratorium upon the trading in
securities shall have been established by federal or state authorities; (d)
substantial and material changes in the condition of the market beyond normal
fluctuations are such that it would be undesirable, impracticable or inadvisable
in the judgment of the Representative to proceed with this Agreement or with the
offering; (e) any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the judgment
of the Representative, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Shares; (f) the Company is
notified that the Shares will not be listed for trading on the Exchange as
required under this Agreement; or (g) any suspension of trading in the Common
Stock in the over-the-counter market or the interruption or termination of
quotations of the Shares on the Exchange.
9.3 Survival of Obligations After Termination. Any termination of this
Agreement under Section 9.1 or Section 9.2 hereof shall be without liability of
any nature whatsoever (including, but not limited to, loss of anticipated
profits or consequential damages) on the part of either party hereto, except
that the Company shall remain obligated to pay the costs and expenses provided
to be paid by it specified in Section 5.7 (subject to the limitation which
entitles the Representative to return or be paid only the accountable
out-of-pocket expenses described therein); and the Company and the
Representative shall be obligated to pay, respectively, all losses, claims,
demands, liabilities and expenses under Section 6.
50
9.4 Suspension Proceedings. It is understood that the Company and the
Representative will each advise the other party immediately and confirm in
writing the receipt of any threat of or the initiation of any steps or
procedures which would impair or prevent the right to offer any of the Company's
Shares or the issuance of any "suspension orders," "stop orders" or other
prohibitions preventing or impairing the proposed offering by the Commission or
other regulatory authority.
SECTION 10
Representative's Representations and Warranties
The Representative represents, warrants and agrees with the Company
that:
10.1 Registration as Broker-Dealer. The Representative is registered as
a Broker/Dealer with the Commission and in the State of Colorado and are members
in good standing of the NASD.
10.2 No Pending Proceedings. Except as otherwise disclosed in the
Registration Statement, there is not now pending or threatened against the
Representative any material action or proceeding of which the Representative has
been advised, either in any court of competent jurisdiction, before the
Commission or before any state securities commission concerning the
Representative's activities as a broker or dealer that is material to this
offering, nor has the Representative been named as a "cause" in any such action
or proceeding.
10.3 Compliance with NASD Rules. Assuming that each of the
representations and warranties of the Company contained in Section 2 hereof is
true, complete and correct, all selling activities of the Representative with
respect to the Offering will be conducted in accordance with the rules of the
NASD and the SEC.
10.4 Finder. The Representative represents that no finder's fee has
been or will be paid in connection herewith. It is understood that should a
claim be made for any finder's fee in connection with the sale of the Shares and
based upon any agreement by the Representative, the Representative will
indemnify the Company with respect to any such claim in accordance with the
procedures set forth in Section 6(c) hereof.
SECTION 11
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Notices
All notices, demands or requests required or authorized hereunder shall
only be deemed given sufficiently if in writing and hand delivered by messenger
or courier service or sent by registered mail or certified mail, return receipt
requested and postage prepaid, in the case of the Representative:
Xxxxxxxxx Xxxx & Co., Inc.
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, President
with a copy to:
Xxxxxx & Whitney LLP
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
, and, in the case of the Company:
The PRIMA Group International, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, President
with a copy to:
Xxxxxxx, Moon & Xxxxx, P.A.
The Carillion
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: C. Xxxxxxx Xxxxxxx, Xx., Esq.
Any such notice shall be deemed effectively given on the earlier of the
date of actual receipt or the third (3rd) business day after delivered,
telecopied, or deposit of the notice with the United States Postal Service.
SECTION 12
Miscellaneous
12.1 Sole Benefit. This Agreement is made solely for the benefit of the
Company, the Representative, other Members, their respective officers and
directors and any controlling person
52
thereof (within the meaning of Section 15 of the 0000 Xxx) and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The terms "successors" or "successors and
assigns" shall not under any circumstance include any purchaser, as such
purchaser, of the Shares from any person or of any of the Representative's
Warrants or shares of the Representative's Warrant Stock from any person unless
otherwise expressly provided herein. This Agreement constitutes the entire
agreement between the parties concerning the subject matter hereof, and
supersedes all prior agreements and understandings, including, but not limited
to, the Letter of Intent by and between the Company and the Representative dated
August 7, 1997.
12.2 Survival. The respective indemnities, agreements, representations,
warranties, covenants and other statements of the Company or its officers or
directors and the Representative as set forth in or made pursuant to this
Agreement, and the indemnity agreements of the Company and the Representative
contained in Section 6 hereof shall survive and remain in full force and effect
regardless of: (a) any investigation or inspection made by or on behalf of the
Company or the Representative or any such officer or director of either of them
or any controlling person (within the meaning of Section 15 of the 0000 Xxx) of
the Company or of the Representative; (b) delivery of or payment for the Shares;
and (c) the Closing Date.
12.3 Specific Performance. The Company hereby acknowledges that any
breach of the covenants contained in Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.8,
5.9, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16, 5.17, 5.19, 5.21, 5.22, 5.23,
5.24, 5.25, 5.26, 5.27, 5.28 and 5.29 of this Agreement by the Company would
cause the Representative irreparable harm and that a remedy at law for such
breach would be inadequate. The Company therefore hereby agrees that, in
addition to any other available remedy at law or in equity, injunctive relief
and specific performance may be granted in any proceeding commenced by the
Representative to enforce this Agreement without the necessity of proof that any
other remedy at law is inadequate.
12.4 Governing Law. This Agreement and all instruments, if any,
delivered in connection herewith or pursuant hereto shall be governed by and
construed in accordance with the substantive laws of the State of Colorado,
without regard to conflicts of law principles.
12.5 Jurisdiction. The parties hereto (a) agree that any action, suit
or proceeding arising in connection with this
53
Agreement or the transactions contemplated hereby will be brought only in the
federal or state courts sitting in Denver County, Colorado, (b) hereby
irrevocably submit to the jurisdiction of such courts for purposes of
adjudicating any such action, suit or proceeding, and (c) waive any objection
based on lack of personal jurisdiction, FORUM NON CONVENIENS or any other
objection to venue in such courts.
12.6 Waiver. All the rights and remedies of any party under this
Agreement are cumulative and are not exclusive of any other rights and remedies
provided by law. Unless expressly stated to the contrary elsewhere herein, no
delay or failure on the part of either party in the exercise of any right or
remedy arising from a breach of this Agreement or any agreement or instrument
executed in connection with this Agreement shall operate as a waiver of any
subsequent right or remedy arising from a subsequent breach of this Agreement or
any agreement or instrument executed in connection with this Agreement. The
consent of any party where required hereunder to any act or occurrence shall not
be deemed to be a consent to any other act or occurrence.
12.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original, but all of which together
shall constitute one and the same instrument.
54
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose
wherein this letter and your acceptance shall become and evidence a binding
contract between us.
Very truly yours,
The PRIMA Group International, Inc.,
a Delaware corporation
By:
Xxxxx X. Xxxxxxx, President
ACCEPTED AND CONFIRMED AS OF THE ___ DAY OF _______, 1998:
Xxxxxxxxx Xxxx & Co., Inc. (for itself and
as representative of Members of the
Underwriting Group)
By:___________________________
Xxxxxxx X. Xxxxxxxxx
Vice President
Corporate Finance
Mergers and Acquisitions
55
THE PRIMA GROUP INTERNATIONAL, INC.
SCHEDULE I
This Schedule sets forth the name of each Member referred to in the
above Agreement and the number of Shares to be purchased by each Member.
Name Number of Shares
---- ----------------
Total
============= ================
56
THE PRIMA GROUP INTERNATIONAL, INC.
SCHEDULE 2.19
SUBSIDIARIES
57
THE PRIMA GROUP INTERNATIONAL, INC.
SCHEDULE 2.23
EMPLOYEE BENEFIT PLANS
58
THE PRIMA GROUP INTERNATIONAL, INC.
SCHEDULE 2.24
NOTICES OF INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS
59
THE PRIMA GROUP INTERNATIONAL, INC.
SCHEDULE 2.29
COMPLIANCE WITH BUSINESS ADVISORY LETTER AS OF THE DATE HEREOF
60
THE PRIMA GROUP INTERNATIONAL, INC.
SCHEDULE 6.28
TIME FRAME FOR FULL COMPLIANCE WITH BUSINESS ADVISORY LETTER
61
