EXHIBIT 1.1
EXECUTION COPY
Tejas Incorporated
1,600,000 Shares *
Common Stock
($0.001 par value)
Underwriting Agreement
New York, New York
February 2, 2005
X.X. Xxxxxxxxx, Towbin LLC
As Representative of the several Underwriters,
c/o X.X. Xxxxxxxxx, Towbin LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Ladies and Gentlemen:
Tejas Incorporated, a Delaware corporation (the "Company"), proposes
to issue and sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representative") are acting as
representative, 1,600,000 shares of Common Stock, $0.001 par value ("Common
Stock") of the Company, (said shares to be issued and sold by the Company being
hereinafter called the "Underwritten Securities"). The Company also proposes to
grant to the Underwriters an option to purchase up to 60,000 additional shares
of Common Stock (the "Company Option Securities"). The stockholder listed in
Schedule II hereto (the "Selling Stockholder") proposes to grant to the
Underwriters an option to purchase up to an aggregate of 180,000 shares of
Common Stock (the "Selling Stockholder Option Securities" and together with the
Company Option Securities, hereinafter called the "Option Securities"; and the
Option Securities, together with the Underwritten Securities hereinafter called
the "Securities"). To the extent there are no additional Underwriters listed on
Schedule I other than you, the term Representative as used herein shall mean
you, as Underwriter, and the terms Representative and Underwriters shall mean
either the singular or plural as the context requires.
--------------------------------
*Plus an option to purchase from the Company up to 60,000 additional
shares and from the Selling Stockholder 180,000 additional shares to cover
over-allotments.
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The terms which follow, when used in this Agreement, shall have the
meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder
"Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration Statement at
the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a), including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration Statement
becomes effective prior to the Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended or any Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A Information
deemed to be included therein at the Effective Date as provided by Rule 430A.
"Rule 424," "Rule 430A" and "Rule 462(b)" refer to such rules under
the Act.
"Rule 430A Information" means information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A. "Rule
462(b) Registration Statement" shall mean a registration statement and any
amendments thereto filed pursuant to Rule 462(b)
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relating to the offering covered by the registration statement referred to in
Section 1(a) hereof.
1. Representations and Warranties. (a) The Company represents and
warrants to, and agrees with, each Underwriter that:
(i) The Company has prepared and filed with the Commission a
registration statement (file number 333-12521) on Form S-1, including a
related preliminary prospectus, for the registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus, each
of which has previously been furnished to you. The Company will next file
with the Commission either (i) prior to the Effective Date of such
registration statement, a further amendment to such registration statement
(including the form of final prospectus) or (ii) after the Effective Date
of such registration statement, a final prospectus in accordance with
Rules 430A and 424(b). In the case of clause (ii), the Company has
included in such registration statement, as amended at the Effective Date,
all information (other than Rule 430A Information) required by the Act and
the rules thereunder to be included in such registration statement and the
Prospectus. As filed, such amendment and form of final prospectus, or such
final prospectus, shall contain all Rule 430A Information, together with
all other such required information, and, except to the extent the
Representative shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company has advised
you, prior to the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date and on any date on which Option
Securities are purchased, if such date is not the Closing Date (a
"settlement date"), the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the
Act and the rules thereunder; on the Effective Date and at the Execution
Time, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein
not misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to the
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information contained in or omitted from the Registration Statement, or
the Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Representative specifically for
inclusion in the Registration Statement or the Prospectus.
(iii) Each of the Company and Tejas Securities Group, Inc., a
Texas corporation, (the "Subsidiary") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate
power and authority to own its properties and conduct its business as
described in the prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the failure
to so qualify would not, individually or in the aggregate, have a material
adverse effect on the prospects, earnings, business or properties of the
Company and the Subsidiary, taken as a whole.
(iv) The Subsidiary is the only subsidiary of the Company
within the meaning of Rule 405 under the Securities Act and is the only
significant subsidiary of the Company as defined by Rule 1-02 of
Regulation S-X. All the outstanding shares of capital stock of the
Subsidiary have been duly and validly authorized and issued and are fully
paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the Subsidiary are
owned by the Company directly, free and clear of any perfected security
interest and any other security interests, claims, liens or encumbrances.
(v) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus;
the outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable; the Securities
being sold hereunder have been duly and validly authorized, and, when
issued and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the certificates for the
Securities are in valid and sufficient form; the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Securities and, except as set forth in
the Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital stock
of or ownership interests in the Company are outstanding.
(vi) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not described
or filed as required; and the statements in the Prospectus under the
heading
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"Description of Capital Stock" fairly summarize the matters therein described.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms.
(viii) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940, as amended.
(ix) No consent, approval, authorization, filing with or order of
any court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under the
Act and such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Prospectus.
(x) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or the Subsidiary pursuant to (i) the charter or by-laws
of the Company or the Subsidiary or (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the Company or
the Subsidiary is a party or bound or to which its or their property is subject,
except where such conflict, breach violation or imposition of any such lien,
charge or encumbrance would not, individually or in the aggregate, have a
material adverse effect on the prospects, earnings, business or properties of
the Company and the Subsidiary, taken as a whole, or (iii) any statute, law,
rule, regulation, judgment, order or decree applicable to the Company or the
Subsidiary of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or the
Subsidiary or any of their respective properties.
(xi) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement except for such
rights of Xxxxxx Family Partnership, Ltd. as have been effectively waived.
(xii) The consolidated financial statements and schedules of the
Company and the Subsidiary included in the Prospectus and the Registration
Statement present fairly in all material respects the financial condition,
results of operations, cash flows and stockholders' equity of the Company as of
the dates and for the periods indicated, comply as to form with the applicable
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accounting requirements of the Act and the rules and regulations thereunder and
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein). The selected financial data set forth under the
caption "Selected Financial Information" and the summary financial data set
forth under the caption "Summary Financial Data", each in the Prospectus and
Registration Statement fairly present, on the basis stated in the Prospectus and
the Registration Statement, the information included therein.
(xiii) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or the Subsidiary or their respective property is pending or, to the best
knowledge of the Company, threatened that (A) could reasonably be expected to
have a material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (B) could
reasonably be expected to have a material effect on in the condition (financial
or otherwise), prospects, earnings, business or properties of the Company and
the Subsidiary, taken as a whole, except as set forth in or contemplated in the
Prospectus (except, in the case of this clause (B), for those that have been
disclosed in the Prospectus); and no labor disturbance by or dispute with the
employees of the Company exists or is threatened or is imminent that could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the
Company and the Subsidiary, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus.
(xiv) Each of the Company and the Subsidiary, owns or leases all
such properties as are necessary to the conduct of its operations as presently
conducted; neither the Company nor the Subsidiary is in violation of any law,
rule or regulation of any Federal, state or local governmental or regulatory
authority applicable to it or is in non-compliance with any term or condition
of, or has failed to obtain and maintain in effect, any license, certificate,
permit or other governmental authorization required for the ownership or lease
of its property or the conduct of its business, which violation, non-compliance
or failure would individually or in the aggregate have a material adverse effect
on the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiary, taken as a whole, except as set
forth in or contemplated in the Prospectus; and the Company has not received
written notice of any proceedings relating to the revocation or material
modification of any such license, certificate, permit or other authorization.
(xv) Neither the Company nor the Subsidiary is in violation or
default of (i) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation,
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condition, covenant or instrument to which it is a party or bound or to which
its property is subject, except where such violation or default, individually or
in the aggregate would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the
Company and the Subsidiary, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectus and (ii) any provision of its charter or bylaws.
(xvi) Each of Helin, Donovan, Xxxxxx & Xxxxxxxxx, LLP, Xxxxx & Xxxxx
LLP and KPMG LLP, who have certified certain financial statements of the Company
and the Subsidiary and delivered their respective reports with respect to the
audited consolidated financial statements and schedules included in the
Prospectus, are independent public accountants with respect to the Company
within the meaning of the Act and the applicable published rules and regulations
thereunder.
(xvii) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance by the Company or sale by the Company of the
Securities.
(xviii) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and the Subsidiary, taken as a whole,
whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested in
good faith or as described in or as would not have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiary, taken as a whole, except as set
forth in or contemplated in the Prospectus.
(xix) The Company and the Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor the Subsidiary has been refused any insurance
coverage which (A) the Company or the Subsidiary sought or applied for and (B)
is material to the business of the Company and Subsidiary, taken as a whole; and
neither the Company nor the Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost
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that would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and the
Subsidiary, taken as a whole.
(xx) The Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on the Subsidiary's capital stock, from repaying to the Company any
loans or advances to the Subsidiary from the Company or from transferring any of
the Subsidiary's property or assets to the Company, except as described in or
contemplated by the Prospectus.
(xxi) The Company and the Subsidiary are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have not
received notice of any actual or potential liability under any environmental
law, except where such non-compliance with Environmental Laws, failure to
receive required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a material adverse change in the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company and the Subsidiary, taken as a whole, except as set forth in or
contemplated in the Prospectus. Except as set forth in the Prospectus, neither
the Company nor the Subsidiary has been named as a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
(xxii) The Company and the Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxiii) The Company and the Subsidiary own, possess, license or have
other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property") necessary for
the conduct of the Company's business as now conducted or as proposed in the
Prospectus to be conducted. Except as set
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forth in the Prospectus (a) there are no rights of third parties to any such
Intellectual Property; (b) there is no material infringement by third parties of
any such Intellectual Property; (c) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company's rights in or to any such Intellectual Property, and the Company is
unaware of any facts which would form a reasonable basis for any such claim; (d)
there is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such
Intellectual Property, and the Company is unaware of any facts which would form
a reasonable basis for any such claim; (e) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others that
the Company infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any other fact which would form a reasonable basis for any such claim; (f) to
the Company's knowledge, there is no U.S. patent or published U.S. patent
application which contains claims that dominate or may dominate any Intellectual
Property described in the Prospectus as being owned by or licensed to the
Company or that interferes with the issued or pending claims of any such
Intellectual Property; and (g) there is no prior art of which the Company is
aware that may render any U.S. patent held by the Company invalid or any U.S.
patent application held by the Company unpatentable which has not been disclosed
to the U.S. Patent and Trademark Office. Each of the Company and the Subsidiary
owns the Intellectual Property or has the rights to the Intellectual Property
that is necessary to conduct its business as described in the Prospectus.
(xxiv) The minimum funding standard under Section 302 of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
and published interpretations thereunder ("ERISA"), has been satisfied by each
"pension plan" (as defined in Section 3(2) of ERISA) which has been established
or maintained by the Company and/or the Subsidiary, and the trust forming part
of each such plan which is intended to be qualified under Section 401 of the
Code is so qualified; each of the Company and the Subsidiary has fulfilled its
obligations, if any, under Section 515 of ERISA; neither the Company nor the
Subsidiary maintains or is required to contribute to a "welfare plan" (as
defined in Section 3(1) of ERISA) which provides retiree or other
post-employment welfare benefits or insurance coverage (other than "continuation
coverage" (as defined in Section 602 of ERISA)); each pension plan and welfare
plan established or maintained by the Company and/or the Subsidiary is in
compliance in all material respects with the currently applicable provisions of
ERISA; and neither the Company nor the Subsidiary has incurred or could
reasonably be expected to incur any material withdrawal liability under Section
4201 of ERISA, any liability under Section 4062, 4063, or 4064 of ERISA, or any
other liability under Title IV of ERISA.
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(xxv) There is and has been no failure on the part of the Company
and any of the Company's directors or officers, in their capacities as such, to
comply with any provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated in connection therewith (the "Xxxxxxxx-Xxxxx Act"),
including Section 402 related to loans and Sections 302 and 906 related to
certifications.
(xxvi) The Company is in compliance with all the applicable
provisions of the Xxxxxxxx-Xxxxx Act that are currently in effect and require
compliance on or before the date hereof. The Company is taking commercially
reasonable steps it deems appropriate to ensure that it will be in compliance
with other applicable provisions of the Xxxxxxxx-Xxxxx Act that are not
currently in effect upon the effectiveness of such provisions.
(xxvii) The statistical, industry-related and market-related data
included in the Registration Statement and the Prospectus are based on or
derived from sources which the Company in good faith believes are reliable and
accurate, and such data agree in all material respects with the sources from
which they are derived.
(xxviii) Neither the Company nor the Subsidiary nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of
the Company or the Subsidiary is aware of or has taken any action, directly or
indirectly, that would result in a violation by such Persons of the Foreign
Corrupt Practice Act of 1977, as amended and the rules and regulations
thereunder ("FCPA"), including, without limitation, making use of the mails or
any means or instrumentality of interstate commerce corruptly in furtherance of
an offer, payment, promise to pay or authorization of the payment of any money,
or other property, gift, promise to give, or authorization of the giving of
anything of value to any "foreign official" as such term is defined in the FCPA
or any foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA and the Company, the Subsidiary
and, to the knowledge of the Company, its affiliates have conducted their
businesses in compliance with the FCPA and have instituted and maintain policies
and procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith.
(xxix) The Company and the Subsidiary are in compliance with all
applicable rules and regulations promulgated by the National Association of
Broker Dealers, Inc. (the "NASD"), except where such non-compliance would not
would not, individually or in the aggregate, have a material adverse effect on
the prospects, earnings, business or properties of the Company and the
Subsidiary, taken as a whole, and the Company and the Subsidiary have instituted
and maintain policies and procedures designed to ensure, and which are
reasonably expected to continue to ensure, continued compliance therewith.
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Any certificate signed by any officer of the Company and delivered
to the Representative or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
(b) The Selling Stockholder represents and warrants to, and
agrees with, each Underwriter that:
(i) The Selling Stockholder shall have, immediately prior to
the Closing Date, good and valid title to the Securities to be sold by the
Selling Stockholder hereunder, free and clear of all liens, encumbrances,
equities or claims; and, upon delivery of such Securities and payment
therefor pursuant hereto, good and valid title to such Securities, free
and clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters.
(ii) The Selling Stockholder has not taken, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(iii) No consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in
connection with the sale of Securities by the Selling Stockholder, except
such as have been obtained under the Act and such as may be required under
the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus.
(iv) Neither the sale of the Securities by the Selling
Stockholder nor the fulfillment of the terms hereof by the Selling
Stockholder will conflict with, result in a breach or violation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Selling Stockholder pursuant to (A) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or instrument to which
the Selling Stockholder is a party or bound or to which his property is
subject, or (B) any statute, law, rule, regulation, judgment, order or
decree applicable to the Selling Stockholder of any court, regulatory
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Selling Stockholder or his
properties.
(v) The sale of Securities by the Selling Stockholder pursuant
hereto is not prompted by any information concerning the Company or the
Subsidiary which is not set forth in the Prospectus or any supplement
thereto.
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(vi) This Agreement has been duly authorized, executed and
delivered by the Selling Stockholder and constitutes a valid and binding
obligation of the Selling Stockholder enforceable in accordance with its
terms.
(vii) In respect of any statements in or omissions from the
Registration Statement of the Prospectus or any supplements thereto, in
each case made in reliance upon and in conformity with information
furnished in writing to the Company by the Selling Stockholder
specifically for use in connection with the preparation thereof, such
statements comply in all material respects with the applicable
requirements of the Act and the rules thereunder; and, on the Effective
Date, the Prospectus, if not filed pursuant to Rule 424(b), will not, and
on the date of any filing pursuant to Rule 424(b) and on the Closing Date
and any settlement date, the such statements will not, include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
Any certificate signed by the Selling Stockholder and delivered to
the Representative or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Selling Stockholder, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $14.805 per
share, the amount of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Selling
Stockholder hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 180,000 shares
of Selling Stockholder Option Securities at the same purchase price per
share as the Underwriters shall pay for the Underwritten Securities. Said
option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be exercised
in whole or in part at any time on or before the 30th day after the date
of the Prospectus upon written or telegraphic notice by the Representative
to the Selling Stockholder setting forth the number of shares of the
Selling Stockholder Option Securities as to which the several Underwriters
are exercising the option and the settlement date. Delivery of
certificates for the shares of Selling Stockholder Option Securities, and
payment therefor, shall be made as provided in Section 3 hereof. The
number of shares of
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the Selling Stockholder Option Securities to be purchased by each
Underwriter shall be the same percentage of the total number of shares of
the Selling Stockholder Option Securities to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten
Securities, subject to such adjustments as you in your absolute discretion
shall make to eliminate any fractional shares.
(c) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby
grants an option to the several Underwriters to purchase, severally and
not jointly, up to 60,000 shares of the Company Option Securities at the
same purchase price per share as the Underwriters shall pay for the
Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Securities by the
Underwriters. Said option may be exercised in whole or in part at any time
on or before the 30th day after the date of the Prospectus upon written or
telegraphic notice by the Representative to the Company setting forth the
number of shares of the Company Option Securities as to which the several
Underwriters are exercising the option and the settlement date. Delivery
of certificates for the shares of Company Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof. The number of
shares of the Company Option Securities to be purchased by each
Underwriter shall be the same percentage of the total number of shares of
the Company Option Securities to be purchased by the several Underwriters
as such Underwriter is purchasing of the Underwritten Securities, subject
to such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
(d) Prior to or concurrently with the exercise of the
Underwriters' option granted by the Company with respect to the Company
Option Securities, the Underwriters must exercise in whole their option
granted by the Selling Stockholder with respect to the Selling Stockholder
Securities.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) and/or (c) hereof shall have been exercised on or before the third
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York City
time, on February 8, 2005, or such time on such later date not more than three
Business Days after the foregoing date as the Representative shall designate,
which date and time may be postponed by agreement between the Representative and
the Company or as provided in Section 9 hereof (such date and time of delivery
and payment for the Securities being herein called the "Closing Date"). Delivery
of the Securities shall be made to the Representative for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the Representative of the purchase price thereof to or upon the order of
the Company by wire transfer payable in same day funds to an account specified
by the Company. Delivery of the Underwritten Securities and the Option
Securities shall be
14
made through the facilities of The Depository Trust Company unless the
Representative shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Selling Stockholder will
deliver the Option Securities (at the expense of the Company) to the
Representative on the date specified by the Representative (which shall be
within three Business Days after exercise of said option), for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the Representative of the purchase price thereof to or upon the order of
the Selling Stockholder by wire transfer payable in same day funds to accounts
specified by the Selling Stockholder. Delivery of the Option Securities shall be
made through facilities of the Depository Trust Company unless the
Representative shall otherwise instruct.
If the option provided for in Section 2(c) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representative on the
date specified by the Representative (which shall be within three Business Days
after exercise of said option), for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representative of the purchase price thereof to or upon the order of the Company
by wire transfer payable in same day funds to an account specified by the
Company. Delivery of the Option Securities shall be made through facilities of
the Depository Trust Company unless the Representative shall otherwise instruct.
If settlement for the Option Securities occurs after the Closing
Date, the Company and the Selling Stockholder will deliver to the Representative
on the settlement date for the Option Securities, and the obligation of the
Underwriters to purchase the Option Securities shall be conditioned upon receipt
of, supplemental opinions, certificates and letters confirming as of such date
the opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. (a) The Company agrees with the several Underwriters
that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus or any Rule 462(b)
Registration Statement unless the Company has furnished you a copy for
your review prior to filing and will not file any such proposed amendment
or supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
15
pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will cause the Prospectus,
properly completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to the Representative of such timely filing. The
Company will promptly advise the Representative (i) when the
Registration Statement, if not effective at the Execution Time,
shall have become effective, (ii) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b) or when any Rule 462(b)
Registration Statement shall have been filed with the Commission,
(iii) when, prior to termination of the offering of the Securities,
any amendment to the Registration Statement shall have been filed or
become effective, (iv) of any request by the Commission or its staff
for any amendment of the Registration Statement, or any Rule 462(b)
Registration Statement, or for any supplement to the Prospectus or
for any additional information, (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (vi) of the receipt by the Company
of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any
such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event
occurs as a result of which the Prospectus as then supplemented
would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in
the light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the
rules thereunder, the Company promptly will (i) notify the
Representative of any such event, (ii) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this
Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance and (iii) supply any
supplemented Prospectus to you in such quantities as you may
reasonably request.
(iii) As soon as practicable, the Company will make
generally available to its security holders and to the
Representative an earnings statement or statements of the Company
and the Subsidiary which will satisfy the provisions of Section
11(a) of the Act and Rule 158 under the Act.
(iv) The Company will furnish to the Representative and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each
other
16
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter
or dealer may be required by the Act, as many copies of each
Preliminary Prospectus and the Prospectus and any supplement thereto
as the Representative may reasonably request.
(v) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representative may designate, will maintain
such qualifications in effect so long as required for the
distribution of the Securities; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would
subject it to service of process in suits, other than those arising
out of the offering or sale of the Securities, in any jurisdiction
where it is not now so subject.
(vi) The Company will not, for a period of 180 days
following the Execution Time, without the prior written consent of
X.X. Xxxxxxxxx, Towbin LLC, offer, sell or contract to sell, pledge,
or otherwise dispose of (or enter into any transaction which is
designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or
any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company) directly or indirectly,
including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16
of the Exchange Act, any other shares of Common Stock or any
securities convertible into, or exercisable, or exchangeable for,
shares of Common Stock, or publicly announce an intention to effect
any such transaction, provided, however, that the Company may issue
and sell Common Stock pursuant to any employee stock option plan,
stock ownership plan or dividend reinvestment plan of the Company in
effect at the Execution Time and the Company may issue Common Stock
issuable upon the conversion of securities or the exercise of
warrants outstanding at the Execution Time.
(vii) The Company will comply with all applicable
securities and other applicable laws, rules and regulations,
including, without limitation, the Xxxxxxxx-Xxxxx Act, and to use
its best efforts to cause the Company's directors and officers, in
their capacities as such, to comply with such laws, rules and
regulations, including, without limitation, the provisions of the
Xxxxxxxx-Xxxxx Act.
(viii) The Company will not take, directly or
indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, under the
Exchange Act or otherwise,
17
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(ix) The Company agrees to pay the costs and expenses
relating to the following matters: (i) the preparation, printing or
reproduction and filing with the Commission of the Registration
Statement (including financial statements and exhibits thereto),
each Preliminary Prospectus, the Prospectus, and each amendment or
supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for
counting and packaging) of such copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and all
amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and
sale of the Securities; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the
Securities, including any stamp or transfer taxes in connection with
the original issuance and sale of the Securities; (iv) the printing
(or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the
Securities; (v) the registration of the Securities under the
Exchange Act and the listing of the Securities on the Nasdaq
SmallCap Market; (vi) any registration or qualification of the
Securities for offer and sale under the securities or blue sky laws
of the several states (including filing fees and the reasonable fees
and expenses of counsel for the Underwriters relating to such
registration and qualification); (vii) any filings required to be
made with the National Association of Securities Dealers, Inc.
(including filing fees and the reasonable fees and expenses of
counsel for the Underwriters relating to such filings); (viii) the
transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses
of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; and (x) all
other costs and expenses incident to the performance by the Company
of its obligations hereunder.
(b) The Selling Stockholder agrees with the several
Underwriters that:
(i) The Selling Stockholder will not, for a period of
180 days following the Execution Time, without the prior written
consent of X.X. Xxxxxxxxx, Towbin LLC, offer, sell or contract to
sell, pledge, or otherwise dispose of (or enter into any transaction
which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Selling
Stockholder or any affiliate of the Selling Stockholder or any
person in privity with such Stockholder or any affiliate of the
Selling Stockholder) directly or indirectly, including the filing
(or participation in the filing) of a registration statement with
the Commission in respect of, or establish or increase a put
equivalent position or liquidate or
18
decrease a call equivalent position within the meaning of Section 16
of the Exchange Act, any other shares of Common Stock or any
securities convertible into, or exercisable, or exchangeable for,
shares of Common Stock, or publicly announce an intention to effect
any such transaction, provided, however, that nothing in this clause
(i) shall prohibit the Selling Stockholder from disposing any shares
of Common Stock (x) as contemplated by this Agreement; (y) as a bona
fide gift or gifts, provided the donee or donees thereof agree in
writing to be bound by this restriction; or (z) as a distribution to
members, partners or shareholders of such person, provided that the
distributees thereof agree in writing to be bound by the terms of
this restriction;
(ii) The Selling Stockholder will not take, directly or
indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Securities.
(iii) The Selling Stockholder will advise the
Representative promptly, and if requested by the Representative,
will confirm such advice in writing, so long as delivery of a
prospectus relating to the Securities may be required under the Act,
of any change in information in the Registration Statement or
Prospectus relating to the Selling Stockholder.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and on the part of the
Selling Stockholder contained herein as of the Execution Time, the Closing Date
and any settlement date pursuant to Section 3 hereof, to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representative agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time on the date
of determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or
(ii) 9:30 AM on the Business Day following the day on which the
public offering price was determined, if such determination occurred
after 3:00 PM New York City time on such date; if filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule
424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall have been instituted or threatened.
19
(b) The Company shall have requested and caused Xxxxxxxx &
Xxxxxxxx LLP to have furnished to the Representative their
opinion, dated the Closing Date and addressed to the
Representative, to the effect that:
(i) each of the Company and the Subsidiary is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation; each of the Company and the
Subsidiary has full corporate power and authority to own or lease,
as the case may be, and to operate its properties and conduct its
business as described in the Prospectus, and, to such counsel's
knowledge, is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction which
requires such qualification wherein (A) (based solely upon a
certificate of an officer of the Company) the Company or the
Subsidiary owns or leases material properties or conducts material
business and (B) where the failure to be so qualified would,
individually or in the aggregate, have a material adverse effect on
the Company and the Subsidiary, taken as a whole, except as set
forth in or contemplated in the Prospectus; notwithstanding the
foregoing, the Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of Texas;
(ii) all the outstanding shares of capital stock of the
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of the
Subsidiary are owned by the Company directly, free and clear of any
perfected security interest and, to the knowledge of such counsel,
any other security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization is
as set forth in the Prospectus; the capital stock of the Company
conforms in all material respects to the description thereof
contained in the Prospectus; the Securities have been duly and
validly authorized, and, when issued and delivered to and paid for
by the Underwriters pursuant to this Agreement, will be fully paid
and nonassessable; the certificates for the Securities are in valid
and sufficient form; and the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or, to
such counsel's knowledge, other rights to subscribe for the
Securities; and except as set forth in the Prospectus, to such
counsel's knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares
of capital stock of or ownership interests in the Company issued by
the Company are outstanding;
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving the Company or the Subsidiary or their respective property
of a character required to be disclosed
20
in the Registration Statement which is not adequately disclosed in
the Prospectus, and there is no franchise, contract or other
document of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit thereto, which
is not described or filed as required; and the statements included
in the Prospectus under the heading "Description of Capital Stock"
insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate and fair
summaries of such legal matters, agreements, documents or
proceedings;
(v) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the Prospectus (in each case, other than the financial
statements, supporting schedules, footnotes to financial statements
and other financial and statistical information contained therein,
as to which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of the Act
and the rules thereunder;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of
1940, as amended;
(viii) no consent, approval, authorization, filing with or
order of any court or governmental agency or authority is required
in connection with the consummation of the transactions contemplated
herein, except such as have been obtained under the Act and such as
may be required under the blue sky laws of any jurisdiction or with
the NASD in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated in this
Agreement and in the Prospectus;
(ix) the issue and sale of the Securities, the consummation of
any other of the transactions herein contemplated and the
performance by the Company of the terms hereof will not violate,
result in a violation, or (in the case of clause (B)) result in a
breach or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or the Subsidiary pursuant to, (A)
the charter or by-laws of the Company or the Subsidiary or (B) to
such counsel's knowledge, the terms of any material indenture,
contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition or covenant or
instrument to which the
21
Company or the Subsidiary is a party or bound or any of their
respective properties is subject, including, but not limited to,
those agreements of the Company and the Subsidiary required to be
filed with the Commission as exhibits to the Registration Statement
pursuant to the Act, or (C) any federal or New York or Delaware
state statute, law, rule, regulation, judgment, order or decree
applicable to the Company or the Subsidiary, known to such counsel,
of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the
Company or the Subsidiary or any of their respective properties is
subject, which violation or default would, in the case of clause (C)
above, either individually or in the aggregate with all other
violations and defaults referred to in this paragraph (ix) (if any),
have a material adverse effect on the Company and the Subsidiary,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated
in the Prospectus, and in the case of clause (B), as to such
agreements which by their terms are or may be governed by the laws
of a jurisdiction other than those of the State of New York, such
counsel may assume such agreements are governed by the laws of the
State of New York and may exclude from the scope of such opinion any
covenants requiring specified levels of financial performance,
including, but not limited to, covenants which require that the
Company maintain a minimum net worth or prohibit the Company from
assuming liabilities beyond a certain defined maximum, the failure
to achieve or maintain or the exceeding of which will result in a
default under any such indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement,
obligation, condition or covenant or instrument;
(x) to such counsel's knowledge, no holders of securities of
the Company have rights to the registration of such securities under
the Registration Statement as a result of the filing of the
Registration Statement except for such rights of Xxxxxx Family
Partner, Ltd. as have been waived in writing; and
(xi) such counsel has participated in conferences with
representatives of the Company and its accountants concerning the
Registration Statement and the Prospectus and has considered the
matters required to be stated therein and the statements contained
therein, although such counsel has not verified the accuracy,
completeness or fairness of such statements; based upon and subject
to the foregoing, nothing has come to such counsel's attention that
leads it to believe that on the Effective Date, the Registration
Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus at the time it was filed with the Commission pursuant to
Rule 424(b) and on the Closing Date contained or contains any untrue
statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading
22
(in each case, other than the financial statements, supporting
schedules, footnotes to financial statements and other financial and
statistical INFORMATION contained therein, as to which such counsel
need express no opinion).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of New York or Delaware or the Federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectus in this paragraph (b)
shall also include any supplements thereto at the Closing Date.
(c) The Selling Stockholder shall have requested and caused
counsel for the Selling Stockholder to have furnished to the
Representative their opinion, dated the Closing Date or
applicable settlement date, as the case may be, and addressed to
the Representative, to the effect that:
(i) immediately prior to the Closing Date, or applicable
settlement date, as the case may be, the Selling Stockholder is the
sole record owner of the Selling Stockholder Option Securities and
based solely upon (A) such counsel's review of the stock
certificates representing the Selling Stockholder Option Securities,
(B) a search of filed and recorded liens or other encumbrances and
(C) a certificate provided by the Selling Stockholder, the Selling
Stockholder's title to the Selling Stockholder Option Securities is
free and clear of all liens, encumbrances or claims;
(ii) upon the sale of the Selling Stockholder Option
Securities to the Underwriters in accordance with this Agreement, no
action based on an adverse claim (as such term is defined in Section
8-102 of the New York Uniform Commercial Code (the "UCC Section"))
to the Selling Stockholder Option Securities, whether framed in
conversion, replevin, constructive trust, equitable lien or other
theory, may be asserted against the Underwriters, assuming that the
Underwriters acquire the Selling Stockholder Option Securities
without notice of any adverse claim (as such term is defined in the
UCC Section);
(iii) no consent, approval, authorization, filing with or
order of any court or governmental agency or authority is required
in connection with the sale of the Selling Stockholder Option
Securities, except such as have been obtained under the Act and such
as may be required under the blue sky laws of any jurisdiction or
with the NASD in connection with the purchase and distribution of
the Securities by the Underwriters in the manner contemplated in
this Agreement and in the Prospectus;
23
(iv) the issue and sale of the Selling Stockholder Option
Securities by the Selling Stockholder and the performance by the
Selling Stockholder of the terms hereof will not violate, result in
a violation, or (in the case of clause (A)) result in a breach or
imposition of any lien, charge or encumbrance upon any property or
assets of the Selling Stockholder pursuant to, (A) to such counsel's
knowledge, the terms of any material indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition or covenant or instrument to which
the Selling Stockholder is a party or bound or any of his properties
is subject, or (B) any federal or New York or Delaware state
statute, law, rule, regulation, judgment, order or decree applicable
to the Selling Stockholder, known to such counsel, of any court,
regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Selling
Stockholder or any of his properties is subject; and in the case of
clause (A), as to such agreements which by their terms are or may be
governed by the laws of a jurisdiction other than those of the State
of New York, such counsel may assume such agreements are governed by
the laws of the State of New York and may exclude from the scope of
such opinion any covenants requiring specified levels of financial
performance, including, but not limited to, covenants which require
that the Selling Stockholder maintain a minimum net worth or
prohibit the Selling Stockholder from assuming liabilities beyond a
certain defined maximum, the failure to achieve or maintain or the
exceeding of which will result in a default under any such
indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition or covenant
or instrument; and
(v) this Agreement has been executed and delivered by the
Selling Stockholder.
In rendering the opinion in paragraph (i), such counsel may rely
upon a certificate of the Selling Stockholder in respect of matters of fact as
to ownership of, and liens, encumbrances or claims on, the Securities sold by
the Selling Stockholder, provided that such counsel shall state that they
believe that both the Underwriters and they are justified in relying upon such
certificate.
(d) The Representative shall have received from Xxxxxx Xxxxx
Xxxxxxxx and Xxxxxxx LLP, counsel for the Underwriters, such
opinion or opinions, dated the Closing Date and addressed to the
Representative, with respect to the issuance and sale of the
Securities, the Registration Statement, the Prospectus (together
with any supplement thereto) and other related matters as the
Representative may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representative a
certificate of the Company, signed by the Chairman of the Board
or the
24
President and the principal financial or accounting officer of
the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the
Registration Statement, the Prospectus, any supplements to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with
the same effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse
effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and the Subsidiary,
taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated
in the Prospectus.
(f) The Selling Stockholder shall have furnished to the
Representative a certificate, signed by the Selling Stockholder
dated the Closing Date, to the effect that the representations
and warranties of the Selling Stockholder in this Agreement are
true and correct in all material respects on and as of the
Closing date or applicable settlement date, as the case may be,
to the same effect as if made on such date.
(g) The Company shall have requested and caused Helin, Xxxxxxx
Xxxxxx & Xxxxxxxxx LLP to have furnished to the Representative,
at the Execution Time and at the Closing Date, letters, dated
respectively as of the Execution Time and as of the Closing Date,
in form and substance satisfactory to the Representative,
confirming that they are independent accountants within the
meaning of the Act and the applicable rules and regulations
adopted by the Commission thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations adopted by the
Commission;
(ii) on the basis of carrying out certain specified procedures
(but not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters of
significance with
25
respect to the comments set forth in such letter; a reading of the
minutes of the meetings of the stockholders, directors and audit and
compensation committees of the Company and the Subsidiary; and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
and the Subsidiary as to transactions and events subsequent to
September 30, 2004, nothing came to their attention which caused
them to believe that:
(1) with respect to the period subsequent to September 30,
2004, there were any changes, at a specified date not more than five
days prior to the date of the letter, in the notes payable and notes
payable to stockholder and the Subsidiary or capital stock of the
Company, decreases in the total stockholders' equity of the Company
or decreases in securities owned, at market value as compared with
the amounts shown on the September 30, 2004, consolidated balance
sheet included in the Registration Statement and the Prospectus, or
for the period from October 1, 2004 to such specified date there
were any decreases, as compared with the corresponding period in the
preceding year or, in total revenues, net income or per share
amounts of net income of the Company and the Subsidiary, except in
all instances for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by the
Company as to the significance thereof unless said explanation is
not deemed necessary by the Representative; or
(2) the information included in the Registration Statement and
Prospectus in response to Regulation S-K, Item 301 (Selected
Financial Data), Item 302 (Supplementary Financial Information) and
Item 402 (Executive Compensation) is not in conformity with the
applicable disclosure requirements of Regulation S-K;
(3) the unaudited amounts of total revenue and net income, for
the three months ended December 31, 2004 as stated in the Prospectus
and the Registration Statement under the heading "Recent Financial
Results" do not agree with the amounts set forth in the unaudited
financial statements for the same period or were not determined on a
basis substantially consistent with that of the corresponding
amounts in the audited financial statements included in the
Registration Statement and the Prospectus;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and the Subsidiary) set
forth in the Registration Statement and the Prospectus agrees with
the accounting records of the Company and the Subsidiary, excluding
any questions of legal interpretation.
26
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
The Company shall have received from Helin, Xxxxxxx Xxxxxx &
Xxxxxxxxx LLP (and furnished to the Representative) a report with respect to a
review of unaudited interim financial information of the Company for the
three-month period ended September 30, 2004 in accordance with Statement on
Auditing Standards No. 100.
(h) The Company shall have requested and caused Ernst & Young
LLP to have furnished to the Representative, at the Execution Time
and at the Closing Date, letters, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representative, confirming that they are
independent accountants within the meaning of the Act and the
applicable rules and regulations adopted by the Commission
thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations adopted by the
Commission; and
(ii) on the basis of their limited review, in accordance with
standards established under Statement on Auditing Standards No. 100
or Statement on Auditing Standards No. 71, as the case may be, of
the unaudited interim financial information for the for each of the
three-month periods ended March 31, 2003, June 30, 2003, September
30, 2003, December 31, 2003, March 31, 2003 and June 30, 2003,
respectively; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such letter;
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
and its subsidiaries as to whether such unaudited financial
statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related rules
and regulations adopted by the Commission; nothing came to their
attention which caused them to believe that:
(1) any such unaudited financial statements do not comply as
to form in all material respects with applicable accounting
requirements of the Act and with the related rules and regulations
adopted by the Commission; and said unaudited financial statements
are not in conformity with accounting principles generally accepted
in the United States.
(i) The Company shall have requested and caused KPMG LLP to
have furnished to the Representative, at the Execution Time and at
the
27
Closing Date, letters, dated respectively as of the Execution Time
and as of the Closing Date, in form and substance satisfactory to
the Representative, confirming that they are independent accountants
within the meaning of the Act and the applicable rules and
regulations adopted by the Commission thereunder and stating in
effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations adopted by the
Commission; and
(ii) on the basis of their limited review, in accordance with
standards established under Statement on Auditing Standards No. 100
or Statement on Auditing Standards No. 71, as the case may be, of
the unaudited interim financial information for the for each of the
three month periods ended March 31, 2002, June 30, 2002, September
30, 2003 and December 31, 2003; carrying out certain specified
procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in
such letter; inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
and its subsidiaries as to whether such unaudited financial
statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related rules
and regulations adopted by the Commission; nothing came to their
attention which caused them to believe that:
(1) any such unaudited financial statements do not comply as
to form in all material respects with applicable accounting
requirements of the Act and with the related rules and regulations
adopted by the Commission; and said unaudited financial statements
are not in conformity with accounting principles generally accepted
in the United States.
(j) Prior to the Closing Date, the Company shall have
furnished to the Representative a letter substantially in the form
of Exhibit A hereto from each officer and director of the Company
and shareholders who beneficially own more than five percent of the
Company's outstanding Common Stock addressed to the Representative.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representative and counsel
for the Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representative. Notice of
28
such cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
(k) Prior to the Closing Date, the Company and the Selling
Stockholder shall have furnished to the Representative such further
customary information, certificates and documents as the
Representative may reasonably request.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx, LLP, counsel for the
Underwriters, at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through X.X. Xxxxxxxxx, Towbin LLC on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities.
8.Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter and the
within the meaning of either the Act or the Exchange Act and the
Selling Stockholder against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained
in the registration statement for the registration of the Securities
as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment
thereof or supplement thereto, arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or arise out of or are based upon any breach
of any representation, warranty or covenant contained in this
Agreement and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
Company will not be liable to any Underwriter in any such case to
the extent that any such loss, claim,
29
damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter through the Representative specifically for inclusion
therein; and provided further that the Company will not be liable to
the Selling Stockholder in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of
the Selling Stockholder specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) The Selling Stockholder agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers
who signs the Registration Statement, each Underwriter, the
directors, officers, employees and agents of each Underwriter and
each person who controls the Company or any Underwriter within the
meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but
only with reference to written information furnished to the Company
by or on behalf of the Selling Stockholder specifically for
inclusion in the documents referred to in the foregoing indemnity.
This indemnity will be in addition to any liability which the
Selling Stockholder may otherwise have.
(c) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each
of its officers who signs the Registration Statement, each person
who controls the Company within the meaning of either the Act or the
Exchange Act and the Selling Stockholder, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only
with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through
the Representative specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which any Underwriter may
otherwise have. The Company and the Selling Stockholder acknowledge
that (i) the statements set forth in the last paragraph of the cover
page regarding delivery of the Securities and (ii) under the heading
"Plan of Distribution", (A) the list of Underwriters and their
respective participation in the sale of the securities, (ii) the
sentences related to concessions and reallowances and (iii) the
paragraph related to stabilization syndicate covering transactions
and penalty bids in any Preliminary Prospectus and the Prospectus,
in sum, constitute the only information furnished in writing by or
on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus.
30
(d) The Company hereby confirms that at its request X.X.
Xxxxxxxxx Towbin LLC has acted as "qualified independent
underwriter" (in such capacity, the "QIU") within the meaning of
Rule 2720 of the Conduct Rules of the NASD in connection with the
offering of the Securities. Without limitation of and in addition to
its obligations under the other paragraphs of this Section 8, the
Company agrees to indemnify and hold harmless the QIU, including its
officers and employees and each person, if any, who controls the QIU
within the meaning of the Act or the Exchange Act (collectively with
the QIU, the "QIU Entities") from and against any and all losses,
claims, damages or liabilities, joint or several, to which any of
the QIU Entities may become subject, under the Act, the Exchange Act
or other Federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon the
QIU's acting, or any alleged failing to act, as such "qualified
independent underwriter" and agrees to reimburse each of the QIU
Entities for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company
shall not be liable under this paragraph (d) to the extent that any
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or result from the gross negligence, willful
misconduct or fraud of a QIU Entity as finally adjudicated by a
court of competent jurisdiction.
(e) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a), (b) or (c) above unless and to
the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided
in paragraph (a), (b) or (c) above. The indemnifying party shall be
entitled to appoint counsel of the indemnifying party's choice at
the indemnifying party's expense to represent the indemnified party
in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that
such counsel shall be reasonably satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including one local counsel), and the indemnifying party shall bear
the reasonable fees, costs and expenses of such separate counsel if
(i) the use
31
of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of
interest, as determined by counsel chosen by the indemnified party,
(ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party
and counsel chosen by the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of
the indemnified parties, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or
not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(f) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 8 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, the Company, the
Selling Stockholder and each of the Underwriters severally agree to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to
which the Company, the Selling Stockholder and one or more of the
Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company, by the
Selling Stockholder and by each of the Underwriters from the
offering of the Securities; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or
commission applicable to the Securities purchased by such
Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company, the
Selling Stockholder and each of the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company,
of the Selling Stockholder and each of the Underwriters in
connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the
total net proceeds from the offering (before deducting expenses)
received by it, benefits received by the Selling
32
Stockholder shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by the
Selling Stockholder and benefits received by the Underwriters shall
be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the
Prospectus. Relative fault shall be determined by reference to,
among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information provided by the
Company, by the Selling Stockholder or each of the Underwriters, the
intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue
statement or omission. The Company, the Selling Stockholder and each
of the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (e), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each
person who controls an Underwriter within the meaning of either the
Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution
as such Underwriter, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, each officer of
the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (e).
(g) The liability of the Selling Stockholder under such
Selling Stockholder's representations and warranties contained in
Section 1 hereof and under the indemnity and contribution agreements
contained in this Section 8 shall be limited to an amount equal to
the aggregate gross proceeds, net of underwriting discounts,
received by the Selling Stockholder from the sale of Securities by
the Selling Stockholder to the Underwriters. The Company and the
Selling Stockholder may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to
the respective amounts of such liability for which they each shall
be responsible.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining
33
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of
Securities set forth in Schedule I hereto, the remaining Underwriters shall have
the right to purchase all, but shall not be under any obligation to purchase
any, of the Securities, and if such nondefaulting Underwriters do not purchase
all the Securities, this Agreement will terminate without liability to any
nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representative shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company and any nondefaulting Underwriter for
damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representative, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the Nasdaq SmallCap Market or trading in securities generally
on the New York Stock Exchange or the Nasdaq SmallCap Market shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchange or SmallCap Market, (ii) a banking moratorium shall have been
declared either by Federal, New York State or Texas State authorities or (iii)
there shall have occurred any outbreak or escalation of hostilities, declaration
by the United States of a national emergency or war or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representative, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telefaxed and confirmed to them, care of X.X. Xxxxxxxxx, Towbin
LLC, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000; if sent to the Company, will
be mailed, delivered or telefaxed and confirmed to it at 0000 Xxx Xxxxxxx, Xxxxx
000, Xxxxxx, Xxxxx 00000, attention of Chief Operating Officer; or if sent to
the Selling Stockholder, will be mailed, delivered or telefaxed and confirmed to
it in accordance with the contact information provided in Schedule II hereto.
34
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.
[Remainder of the page intentionally left blank]
35
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
Tejas Incorporated
By: /s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx
President and Chief
Operating Officer
Selling Stockholder
By: /s/ Xxxxxx X. Xxxxx
--------------------
Xxxxxx X. Xxxxx
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
X.X. Xxxxxxxxx, Towbin LLC
By: /s/ Xxxx Xxxxxx
---------------
Xxxx Xxxxxx
Managing Director
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
SCHEDULE I
NUMBER OF SHARES
UNDERWRITERS TO BE PURCHASED
------------ ---------------
X.X. Xxxxxxxxx, Towbin, LLC.. 1,600,000
---------
Total........................ 1,600,000
=========
37
SCHEDULE II
Xxxxxx X. Xxxxx
38
Exhibit A
Lock-Up Agreement
January __, 2005
X.X. XXXXXXXXX, TOWBIN
000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Re: Tejas Incorporated
Ladies and Gentlemen:
In consideration of and as an inducement to the several
Underwriters, for which X.X. Xxxxxxxxx, Towbin intends to act as Representative,
agreeing to underwrite the proposed follow-on offering (the "Offering") of
shares of common stock, par value $.001 per share (the "Common Stock"), of Tejas
Incorporated, a corporation organized under the laws of the State of Delaware
(the "Company"), as contemplated by a registration statement with respect to
such shares of Common Stock to be filed with the Securities and Exchange
Commission on Form S-1, the undersigned hereby (i) agrees that the undersigned
will not, directly or indirectly, during a period of 180 days from the date of
the final prospectus for the Offering (the "Lock-Up Period"), without the prior
written consent of X.X. Xxxxxxxxx, Towbin, issue, sell, offer, agree to sell,
grant any option or contract for the sale of, pledge, make any short sale of,
maintain any short position with respect to, establish or maintain a "put
equivalent position" (within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended) with respect to, enter into any swap,
derivative transaction or other arrangement (whether any such transaction is to
be settled by delivery of Common Stock, other securities, cash or other
consideration) that transfers to another, in whole or in part, any of the
economic consequences of ownership, or otherwise dispose of, any shares of
capital stock of the Company (or any securities convertible into, exercisable
for or exchangeable for shares of capital stock of the Company) or interest
therein, or any capital stock of any of the Company's subsidiaries, otherwise
than (a) as sales included in the Offering; (b) as a bona fide gift or gifts,
provided the donee or donees thereof agree in writing to be bound by this
restriction; or (c) as a distribution to members, partners or shareholders of
such person, provided that the distributees thereof agree in writing to be bound
by the terms of this restriction, and (ii) authorizes the Company during the
Lock-Up Period to cause the transfer agent for the Common Stock to decline to
transfer, or to note stop transfer restrictions on the transfer books and
records of the Company with respect to, any shares of capital stock of the
Company and any securities convertible into, or exercisable for or exchangeable
for capital stock of the Company for which the undersigned is the record
39
holder, and, in the case of any such shares or securities for which the
undersigned is the beneficial but not the record holder, agrees to cause the
record holder thereof to cause the transfer agent to decline to transfer or to
note stop transfer restrictions on such books and records with respect to such
shares or securities.
In the event that (a) the registration statement relating to the
Offering has not been declared effective by the United States Securities and
Exchange Commission on or before March 31, 2005, or (b) subsequent to filing,
such registration statement is withdrawn by the Company, this Lock-Up Agreement
shall be of no further force or effect.
The undersigned further agrees, from the date hereof until the end
of the Lock-Up Period, that the undersigned will not exercise, and will waive
his, her or its rights, if any, to require the Company to register any shares of
capital stock of the Company beneficially owned by the undersigned.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into the agreements set forth herein, and
that, upon request, the undersigned will execute any additional documents
necessary in connection with any enforcement hereof. The obligations of the
undersigned hereunder shall be binding upon the successors, assigns and heirs of
the undersigned.
Very truly yours,
_______________________________
(signature)
Name: ______________________
Address: ______________________
______________________
