1
EXHIBIT 1.1
DRAFT
6/06/97
1,300,000 Shares
Jaymark, Inc.
Class A Common Stock
(Par Value $0.001 Per Share)
UNDERWRITING AGREEMENT
----------------------
_____________, 1997
XXXXX XXXXXX & CO., INC.
As Representative of the
several Underwriters
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Jaymark, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell an aggregate of 1,300,000 shares (the
"Firm Shares") of the Company's Class A Common Stock, par value $0.001 per share
(the "Class A Common Stock"), to you and the other underwriters named in
Schedule I hereto (collectively, the "Underwriters"), for whom you are acting as
representative (the "Representative"). The Company also has agreed to grant to
you and the other Underwriters an option ("the Option") to purchase up to an
additional 195,000 shares of Class A Common Stock (the "Option Shares"), on the
terms and for the purposes set forth in Section 1(b) hereto. The Firm Shares and
the Option Shares are collectively referred to herein as the "Shares." The
Company has also agreed to issue and sell to you Warrants (as defined below) to
purchase up to 130,000 shares of Class A Common Stock. The words "you" and
"your" refer to the Representative of the Underwriters.
The Company hereby confirms as follows its agreements with the
Representative and the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained and subject to all the
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terms and conditions of this Underwriting Agreement (the "Agreement"), the
Company agrees to sell to each Underwriter and each Underwriter, severally and
not jointly, agrees to purchase from the Company at a purchase price of $[ ] per
Share, the number of Firm Shares set forth opposite the name of such Underwriter
on Schedule I hereto, plus such additional number of Firm Shares which such
Underwriter may become obligated to purchase pursuant to Section 11 hereof.
(b) Subject to all the terms and conditions of this Agreement,
the Company grants the Option to the several Underwriters to purchase, severally
and not jointly, the Option Shares at the same price per share as the
Underwriters shall pay for the Firm Shares. The Option may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters and may
be exercised in whole or in part at any time and from time to time on or before
the 30th day after the date of this Agreement (or on the next business day if
the 30th day is not a business day), upon notice (the "Option Shares Notice") in
writing or by telephone (confirmed in writing) by the Representative to the
Company no later than 5:00 p.m., New York City time, at least two and no more
than five business days before the date specified for closing in the Option
Shares Notice (the "Option Closing Date") setting forth the aggregate number of
Option Shares to be purchased and the time and date for such purchase. On the
Option Closing Date, the Company will issue and sell to the Underwriters the
number of Option Shares set forth in the Option Shares Notice and each
Underwriter will purchase such percentage of the Option Shares as is equal to
the percentage of Firm Shares that such Underwriter is purchasing, as adjusted
by the Representative in such manner as it deems advisable to avoid fractional
shares.
(c) Subject to the terms and conditions of this Agreement, the
Company will, at the Closing Date (as defined below), further issue and sell to
you or, at your direction, to your bona fide officers, for a total purchase
price of $100, warrants entitling the holders thereof to purchase up to an
aggregate of 130,000 shares of Class A Common Stock (the "Warrant Shares") at a
price of $____ per share (130% of the initial per share public offering price on
the Effective Date of the Registration Statement, as defined below) (the
"Warrants") for a period of four years, such period to commence one year after
the effective date of the Registration Statement. Such Warrants shall contain
such other terms and provisions as may be set forth in an agreement with respect
thereto (the "Warrant Agreement") executed and delivered by the Company and you
simultaneously with the execution and delivery of this Agreement. As provided in
the Warrant Agreement, you may designate that the Warrants be issued in varying
amounts directly to your bona fide officers and not to you. Such designation
will be made by you only if you determine
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that such issuances would not violate the interpretations of the National
Association of Securities Dealers, Inc. (the "NASD") relating to the review of
corporate financing arrangements. As further provided in the Warrant Agreement,
no sale, transfer, assignment or hypothecation of the Warrants shall be made for
a period of five (5) years from the effective date of the Registration Statement
except to bona fide officers of the Representative and officers or partners of
selected dealers. The holders of the Warrants will be entitled to the
registration rights set forth in the Warrant Agreement.
2. Delivery and Payment.
(a) Delivery of the Firm Shares shall be made to the Representative for
the accounts of the Underwriters against payment of the purchase price by
certified or official bank checks payable in New York Clearing House funds drawn
to the order of the Company (the "Closing") at the office of Xxxxx Xxxxxx & Co.,
Inc. at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other location
as shall be agreed upon by the Company and the Representative. Such payment
shall be made at 10:00 a.m., New York City time, on the third full business day
following the date of this Agreement, or at such other time and date not more
than seven business days after the date of this Agreement, as may be agreed upon
by the Representative and the Company (such date is hereinafter referred to as
the "Closing Date"). Time shall be of the essence and delivery at the time and
place specified in this Agreement is a further condition of the obligation of
each Underwriter hereunder.
(b) To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
(c) Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representative shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
(d) The cost of original issue tax stamps, if any, in connection with
the issuance, sale and delivery of the Firm Shares, the Option Shares and the
Warrant Shares by the Company to the respective Underwriters shall be borne by
the Company. The Company will pay and save each Underwriter and any subsequent
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holder of the Shares harmless from any and all liabilities with respect to or
resulting from any failure or delay in paying Federal or state stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance, sale or delivery to such Underwriter of
the Firm Shares, the Option Shares and the Warrant Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) A registration statement on Form S-1 (No. 333-[ ]) relating to the
Shares and the Warrants (collectively, the "Securities"), including a
preliminary prospectus relating to the Securities and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company under the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations (collectively referred to as the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. The Commission
has not issued any order preventing or suspending the use of the Prospectus (as
defined below) or any Preliminary Prospectus (as defined below) or instituted
or, to the knowledge of the Company, threatened any proceeding for that purpose.
The term "Preliminary Prospectus" as used herein means a preliminary prospectus
relating to the Securities included at any time as part of the foregoing
registration statement or any amendment thereto before it became effective under
the Act and any prospectus filed with the Commission by the Company pursuant to
Rule 424(a) of the Rules and Regulations. Copies of such registration statement
and amendments and of each related Preliminary Prospectus have been delivered to
the Representative. If such registration statement has not become effective, a
further amendment to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to become effective
will be filed promptly by the Company with the Commission. If such registration
statement has become effective, a final prospectus relating to the Securities
containing information permitted to be omitted at the time of effectiveness by
Rule 430A will be filed by the Company with the Commission in accordance with
Rule 424(b) of the Rules and Regulations promptly after execution and delivery
of this Agreement. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective (the "Effective
Date"), including all financial statements and schedules and all exhibits,
documents incorporated therein by reference and all information contained in any
final prospectus filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations or in a term sheet described in Rule 434 of the Rules and
Regulations in accordance with Section 5 hereof and deemed to be included
therein as of the Effective Date by Rule
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430A of the Rules and Regulations. The term "Prospectus" means the prospectus
relating to the Shares as first filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations or, if no such filing is required, the form
of final prospectus relating to the Shares included in the Registration
Statement at the Effective Date.
(b) On the date that any Preliminary Prospectus was filed with the
Commission, the date the Prospectus is first filed with the Commission pursuant
to Rule 424(b) (if required), at all times subsequent to and including the
Closing Date and, if later, the Option Closing Date and when any post-effective
amendment to the Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the Commission, the Registration
Statement, each Preliminary Prospectus and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto), including the financial statements included in the
Prospectus, did or will comply with all applicable provisions of the Act and the
Rules and Regulations and did or will contain all statements required to be
stated therein in accordance with the Act and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement or any such
amendment did or will contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if later, the Option Closing Date, the
Prospectus did not or will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(b) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representative specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto.
(c) At or prior to the Closing Date, the Company will complete a series
of transactions as referred to under the caption "Business - Company History" in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), including the following:
The transactions contemplated under the caption "Business Company
History" in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) are collectively referred to as the
"Reorganization Transactions."
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All agreements entered into or to be entered into by the Company or the
Subsidiaries (as defined below) in connection with the Reorganization
Transactions are collectively referred to as the "Reorganization Agreements."
(d) The only subsidiaries of the Company are listed on Exhibit A hereto
(each, a "Subsidiary," and, collectively, the "Subsidiaries"). The Company and
each of its Subsidiaries are, and at the Closing Date and the Option Closing
Date will be, duly organized, validly existing corporation and in good standing
under the laws of their respective jurisdictions of incorporation or
organization. The Company and each Subsidiary have, and at the Closing Date and
the Option Closing Date will have, full power and authority to conduct all the
activities conducted by them, to own or lease all the assets owned or leased by
them and to conduct their respective businesses as described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus). The Company and each of the Subsidiaries
are, and at the Closing Date and the Option Closing Date will be, duly licensed
or qualified to do business as a foreign corporation and are in good standing in
all jurisdictions in which the nature of the activities conducted by them or the
character of the assets owned or leased by them makes such licensing or
qualification necessary, except where the failure to be so qualified does not
and, upon consummation of the Reorganization Transactions will not, have a
material adverse effect, singly or in the aggregate, on the business,
properties, prospects, assets, condition (financial or otherwise), net worth or
results of operations of the Company and its Subsidiaries taken as a whole (a
"Material Adverse Effect"). Except as described in the Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus), the
Company does not own, and at the Closing Date will not own, directly or
indirectly, any shares of stock or any other equity or long-term debt securities
of any corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity. Complete and correct copies of the
articles (or certificates) of incorporation and the bylaws, operating agreements
or partnership agreements or other governing documents of the Company and each
Subsidiary, and all amendments thereto, have been delivered to the
Representative or its counsel, and no changes therein will be made subsequent to
the date hereof and prior to the Closing Date or, if later, the Option Closing
Date, except as contemplated by the Reorganization Transactions or the
Registration Statement.
(e) The outstanding shares of capital stock of each of the
Company and its Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are not subject to any preemptive or similar
rights. The issued shares of the Subsidiaries are owned by the Company free and
clear of
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any perfected security interest or any liens, encumbrances, claims or other
security interests, other than as described in the Registration Statement. The
Shares and the Warrant Shares to be issued and sold by the Company will be, upon
such issuance and payment therefor, duly authorized, validly issued, fully paid
and nonassessable and will not be subject to any preemptive or similar rights.
The Company has, and, upon completion of the sale of the Shares and the
Reorganization Transactions, will have, a duly authorized, issued and
outstanding capitalization as set forth under the caption "Capitalization" in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) as of the date of the table thereunder and on the
Closing Date and the Option Closing Date will have the adjusted capitalization
set forth therein as of the date of the table thereunder, based on the
assumptions set forth therein. The securities of the Company conform in all
material respects to the descriptions thereof contained in the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus).
Except as set forth or contemplated in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), the Company does not have outstanding, and at the
Closing Date and, if later, the Option Closing Date will not have outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any shares of its capital stock or any such warrants, convertible
securities or obligations.
(f) The consolidated financial statements and the related notes
and schedules thereto included in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present the consolidated financial condition, results of
operations, shareholders' equity and cash flows of the Company and its
Subsidiaries at the dates and for the periods specified therein. Such financial
statements and the related notes and schedules thereto have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein) and such
financial statements as are audited have been examined by Price Waterhouse LLP
who are independent public accountants within the meaning of the Act and the
Rules and Regulations, as indicated in their reports filed therewith. The
selected financial information and statistical data set forth under the captions
"Prospectus Summary - Summary Consolidated Financial Information" and "Selected
Consolidated Financial Data" in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) have been prepared on a basis
consistent with the financial statements of the Company and its Subsidiaries.
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(g) Each of the Company and the Subsidiaries maintains a system
of internal accounting control sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(h) The Company is not required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(i) Except as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), there are no actions, suits, arbitrations, claims,
governmental or other proceedings pending or threatened against or affecting the
Company, any Subsidiary or any respective directors, officers, or, to the
Company's knowledge, stockholders of any of the foregoing in their capacity as
such before or by any court, regulatory body or administrative agency or any
other governmental agency or body, domestic or foreign (collectively,
"Governmental Body"), wherein an unfavorable ruling, decision or finding might
have a Material Adverse Effect. Neither the Company nor its Subsidiaries is in
violation of, or in default with respect to, any law, rule, or regulation, or
any order, judgment, or decree, except as described in the Prospectus (or if the
Prospectus is not in existence, in the most recent Preliminary Prospectus) or
such as in the aggregate do not now have and can reasonably be expected in the
future not to have a Material Adverse Effect; nor is the Company or its
Subsidiaries presently required under any order, judgment or decree to take any
action in order to avoid any such violation or default.
(j) Each of the Company and the Subsidiaries has, and at the
Closing Date, the Option Closing Date (if any) and upon consummation of the
Reorganization Transactions will have, all governmental licenses, permits,
consents, orders, approvals, franchises, certificates and other authorizations
(collectively, "Licenses") necessary to carry on its business and lease or own
its properties as contemplated in the Prospectus (or, if the Prospectus is not
in existence, in the most recent Preliminary Prospectus), except in such case
where the failure to have such Licenses will not have a Material Adverse Effect.
Each of the Company and the Subsidiaries has, and at the Closing Date and the
Option Closing Date (if any) and upon consummation of the
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Reorganization Transactions will have, complied in all material respects with
all laws, regulations and orders applicable to it or its business and
properties, except where the failure to so comply will not have a Material
Adverse Effect. None of the Company or the Subsidiaries is, and, at the Closing
Date and the Option Closing Date (if any), none of them will be, in default (nor
has any event occurred which, with notice or lapse of time or both, would
constitute a default) in the due performance and observation of any term,
covenant or condition of any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which any of them is, or will be, a party or
by which any of their respective properties is, or will be, bound or affected,
which default would have a Material Adverse Effect. To the best knowledge of the
Company, no other party under any such contract or other agreement is, or will
be, in default in any material respect thereunder. There are no governmental
proceedings or actions pending or overtly threatened in writing for the purpose
of suspending, modifying or revoking any License held, or to be held, by the
Company or any Subsidiary. None of the Company or the Subsidiaries is in
violation of any provision of its articles of incorporation or bylaws, operating
agreement or other governing instrument, except where such violation will not
have a Material Adverse Effect.
(k) No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the
performance of this Agreement, the Warrant Agreement or the Reorganization
Agreements or the consummation of the transactions contemplated hereby or
thereby, except such as have been obtained under the Act or the Rules and
Regulations (or with respect to the Warrant Shares, as may be required under the
Act) and such as may be required under state securities or Blue Sky laws or the
bylaws and rules of the NASD in connection with the purchase and distribution by
the Underwriters of the Shares or the Warrant Shares. All approvals of the
stockholders of the Company and any Subsidiaries required for the consummation
of the Reorganization Transactions were duly and validly obtained at meetings
held for that purpose or pursuant to written consents prior to ____________,
1997, have not been revoked and remain in full force and effect; such approvals
were solicited on the basis of information supplied by such entities, and such
information did not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
(l) Neither the Company nor any Subsidiary has received from a
Governmental Body any of the following written
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instruments with regard to matters that have not been finally resolved: (i) any
cure or show cause notice or notice of default; (ii) any notice of contract
termination of any kind (exclusive of expiration and non-renewal); (iii) any
final decision subject to any applicable disputes clause or unilateral contract
modification assessing a material penalty or material damages; (iv) any
assertion of a claim of violations of the Cost Accounting Standards ("CAS") at
48 Code of Federal Regulations ("CFR") 9900 et seq. or defective pricing; (v)
any notice of a proposed disallowance of indirect cost claims in excess of
reserves therefor; (vi) any subpoena or notice signifying the initiation of an
investigation by a governmental investigative or enforcement agency or body
other than normal audits in the ordinary course of business; or (vii) with
respect to contracts with any Governmental Body, whether direct or indirect, any
other notice from a government contracting officer alleging the failure by the
Company or any Subsidiary to provide goods or services fully in conformity to,
or otherwise to comply in any material way with, any applicable contract
provision, specification or regulation. The Company is not aware that any
Governmental Body has initiated a debarment or suspension proceeding against the
Company or any Subsidiary and has not received any written notice of such a
proceeding or proposed proceeding. Neither the Company nor any Subsidiary has
made disclosures to a Governmental Body pursuant to any voluntary disclosure
agreement. The Company and its Subsidiaries have, and will have, made all
material payments which are required to have been made through the Closing Date
to any lower-tier subcontractors.
In connection with each proposal relating to goods and/or services
proposed to be provided to any Governmental Body by the Company or any
Subsidiary: (i) as to any such proposal which would result in a contract which
would contain a clause relating to CAS and for which the Company or a Subsidiary
has secured price quotations from lower-tier subcontractors, the Company will,
to the extent required by the Governmental Body, cause such clause to flow down
to all lower-tier non-exempt subcontractors; (ii) to the best of the Company's
knowledge all cost or pricing data submitted by the Company or any of its
Subsidiaries will be accurate, complete and current as of the date of the final
agreement on price with the contracting agency if such final agreement is or has
been reached prior to the Closing Date; and (iii) in all cases where the Company
or any of its Subsidiaries secured cost or pricing data for such proposals from
lower-tier subcontractors, to the extent required by the Governmental Body, the
Company or any of its Subsidiaries secured a certificate of current cost and
pricing data from such lower-tier subcontractors.
(m) The Company and its Subsidiaries are in compliance in all material
respects with applicable government regulations
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regarding the disclosure of their cost accounting practices and procedures,
including without limitation the submission of disclosure statements pursuant to
Federal Acquisition Regulation, Subpart 30.2 et seq. (48 CFR Exhibit 30.201 et
seq.) or comparable regulations; the accounting practices and procedures of the
Company and its Subsidiaries were at the time of submission, are as of the date
hereof and will be on the Effective Date in accordance with its disclosure
statements in all material respects; and neither the Company nor any Subsidiary
believes that any governmental agency or body has a justifiable basis to (i)
challenge or seek material modifications of such accounting practices and
procedures or (ii) seek recovery of amounts paid or payable to the Company or
any Subsidiary materially in excess of reserves therefor by reason of changes to
such accounting practices and procedures or otherwise.
(n) The Company has full power (corporate and other) and
authority to enter into and consummate the transactions provided for in this
Agreement, the Reorganization Agreements and the Warrant Agreement. Each of this
Agreement and the Warrant Agreement has been duly authorized, executed and
delivered by the Company and, assuming that each of this Agreement and the
Warrant Agreement is a binding agreement of yours, constitutes a legal, valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting the enforcement of creditors'
rights and the application of equitable principles relating to the availability
of remedies and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws).
None of the Company's execution, delivery or performance of this
Agreement or the Warrant Agreement, its consummation of the Reorganization
Transactions and the transactions contemplated herein, its application of the
net proceeds of the offering in the manner set forth under the caption "Use of
Proceeds" or the conduct of its business as described in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus),
does now or will in the future conflict with, result in any breach or violation
of any of the terms or provisions of, or constitute a default under, cause (or
permit) the maturation or acceleration of any liability or obligation or the
termination of any right under, or result in the creation or imposition of any
lien, charge, or encumbrance upon, any property or assets of the Company or its
Subsidiaries pursuant to the terms of (A) the charter or by-laws of the Company
or its Subsidiaries (B) any indenture, mortgage, deed of trust, voting trust
agreement, shareholders' agreement, note agreement or other agreement or
instrument to which the Company or its Subsidiaries is a party or
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by which any of them may be bound or to which any of their property is or may be
subject or (C) any statute, judgment, decree, order, rule or regulation
applicable to the Company or its Subsidiaries of any government, arbitrator,
court, regulatory body or administrative agency or other governmental agency or
body, domestic or foreign, having jurisdiction over the Company or its
Subsidiaries, or any of their activities or properties.
(o) All executed agreements or copies of executed agreements,
including but not limited to the Reorganization Agreements, filed as exhibits to
the Registration Statement to which the Company or any of its Subsidiaries is a
party or by which any of them is or may be bound or to which any of their
assets, properties or businesses are or may be subject have been duly and
validly authorized, executed and delivered by the Company or any such
Subsidiary, as the case may be, and constitute the legal, valid and binding
agreements of the Company or such Subsidiaries, as the case may be, enforceable
against each in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of creditors'
rights generally, and general equitable principles relating to the availability
of remedies, and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws).
The descriptions in the Registration Statement of the Reorganization
Transactions, contracts and other documents are accurate in all material
respects and fairly present the information required to be shown with respect
thereto by the Act and the Rules and Regulations, and there are no transactions,
contracts or other documents which are required by the Act or the Rules and
Regulations to be described in the Registration Statement or filed as exhibits
to the Registration Statement which are not described or filed as required, and
the exhibits which have been filed are complete and correct copies of the
documents of which they purport to be copies.
(p) Except as set forth in or contemplated by the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus),
including the section therein describing the Reorganization Transactions,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and prior to the Closing Date
and, if later, the Option Closing Date: (i) there has not been, and will not
have been, any change in the capitalization of the Company or any material
adverse change in the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company arising for any
reason whatsoever; (ii) the Company has not incurred, and will not have incurred
any material liabilities or
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obligations, direct or contingent; (iii) the Company has not and will not have
entered into any material transactions other than pursuant to this Agreement;
(iv) the Company has not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital stock; (v) there has
not and will not have been any change in the capitalization of any Subsidiary or
any material adverse change in the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of any of them, in
any case arising for any reason whatsoever; (vi) none of the Subsidiaries has or
will have incurred any material liabilities or obligations, direct or
contingent, (vii) none of the Subsidiaries has or will have entered into any
material transactions other than as contemplated by this Agreement; and (viii)
none of the Subsidiaries has or will have paid or declared any dividends or
other distributions of any kind on any class of its capital stock, partnership
interests or other equity securities.
(q) No labor disturbance by the employees of the Company or any
of its Subsidiaries exists or, to the Company's knowledge, is imminent which may
have a Material Adverse Effect.
(r) Since its inception, neither the Company nor any of its
Subsidiaries has incurred any material liability arising under or as a result of
the application of the provisions of the Act or any state securities or Blue Sky
laws.
(s) Each of the Company and its Subsidiaries owns, or is licensed
or otherwise has sufficient right to use, the proprietary knowledge, inventions,
patents, trademarks, service marks, trade names, logo marks and copyrights used
in or necessary for the conduct of its business (collectively "Rights") as
described in the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus). No claims have been asserted against the Company
or its Subsidiaries by any person with respect to the use of any such Rights or
challenging or questioning the validity or effectiveness of any such Rights. The
use, in connection with the business and operations of the Company of such
Rights does not, to the Company's best knowledge, infringe on the rights of any
person.
(t) There are no contracts, agreements or understandings between
the Company or any of its Subsidiaries and any person granting such person the
right to require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such person or
to require the Company to include such securities under the Registration
Statement (other than those that have been disclosed in the Prospectus or, if
the Prospectus is not in existence, the
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14
most recent Preliminary Prospectus), that have not been waived with respect to
the Registration Statement.
(u) Neither the Company nor any of its officers, directors or
affiliates (within the meaning of the Rules and Regulations) has taken, directly
or indirectly, any action designed to stabilize or manipulate the price of any
security of the Company, or which has constituted or which might in the future
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company, to facilitate the sale or resale of
the Shares or otherwise.
(v) Each of the Company and its Subsidiaries has good and
marketable title to, or valid and enforceable leasehold interests in, all
properties and assets owned or leased by it, free and clear of all liens,
encumbrances, security interests, claims, restrictions, equities, claims and
defects, except (A) such as are described in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), or such as do not materially adversely affect the value
of any of such properties or assets taken as a whole and do not materially
interfere with the use made and proposed to be made of any of such properties or
assets, and (B) liens for taxes not yet due and payable as to which appropriate
reserves have been established and reflected in the financial statements
included in the Registration Statement. The Company and its Subsidiaries own or
lease all such properties as are necessary to its operations as now conducted,
and as proposed to be conducted as set forth in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus); and the properties and business of the Company and its
Subsidiaries conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus). All the
material leases and subleases of the Company and its Subsidiaries and under
which the Company or its Subsidiaries holds properties or assets as lessee or
sublessee, constitute valid leasehold interests of the Company or such
Subsidiaries free and clear of any lien, encumbrance, security interest,
restriction, equity, claim or defect, are in full force and effect, and neither
the Company nor any of its Subsidiaries is in default in respect of any of the
terms or provisions of any such material leases or subleases, and neither the
Company nor any of its Subsidiaries has notice of any claim which has been
asserted by anyone adverse to the Company's or any of its Subsidiaries' rights
as lessee or sublessee under either the material lease or sublease, or affecting
or questioning the Company's or any of its Subsidiaries' right to the continued
possession of the leased or subleased premises under any such material lease or
sublease, which may have a Material Adverse Effect.
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15
(w) The Class A Common Stock and the Shares have been accepted
for listing, subject only to notice of issuance, on The Nasdaq Stock Market
National Market ("NMS").
(x) None of the Subsidiaries are currently, and after giving
effect to the Reorganization Transactions will not be, prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on any such Subsidiary's capital stock from repaying to the Company
any loans or advances to such Subsidiaries from the Company or from transferring
any of such Subsidiaries's property or assets to the Company, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(y) Neither the Company nor any of its Subsidiaries nor any of
their respective employees or agents has made any payment of funds of the
Company or any of its Subsidiaries or received, or retained any funds in
violation of any law, rule or regulation of a character required to be disclosed
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(z) The business, operations and facilities of the Company and
the Subsidiaries have been, are being and, upon consummation of the
Reorganization Transactions, will be conducted in compliance with all applicable
laws, ordinances, rules, regulations, licenses, permits, approvals, plans,
authorizations or requirements relating to occupational safety and health, or
pollution, or protection of health or the environment (including, without
limitation, those relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants or hazardous or toxic substances, materials
or wastes into ambient air, surface water, groundwater or land, or relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto; and none of the Company or the Subsidiaries has received any
notice from any governmental instrumentality or any third party alleging any
violation thereof or liability thereunder (including, without limitation,
liability for costs of investigating or remediating sites containing hazardous
substances and/or damages to natural resources).
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16
(aa) Each of the Company and its Subsidiaries has filed all
necessary federal, state and local and other material tax returns that are
required to be filed or has requested extensions thereof 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.
(ab) Each of the Company and the Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks as
are prudent and customary in the business in which the Company or such
Subsidiary is engaged; none of the Company or the Subsidiaries has been refused
any insurance coverage sought or applied for; and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage (or
such coverage as will be in effect upon consummation of the Reorganization
Transactions) as and when such coverage expires.
(ac) Each certificate signed by any officer of the Company and
delivered to the Representative or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(ad) The Company has prepared and filed with the Commission
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") an appropriate registration statement form to register the
Class A Common Stock under the Exchange Act effective upon the effectiveness of
the Registration Statement.
4. Public Offering of the Shares. It is understood that
the Underwriters will make a public offering of the Shares and at
the price and upon the other terms set forth in the Prospectus
and subject to the terms and conditions hereunder.
5. Agreements of the Company. The Company covenants and
agrees with each of the Underwriters as follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto, to become effective as
promptly as practicable. If required, the Company will file the
Prospectus and any amendment or supplement thereto with the Commission
in the manner and within the time period required by Rule 424(b) under
the Act. During any time when a prospectus relating to the Shares is
required to be delivered under the Act, the Company (A) will comply with
all requirements imposed upon it by the Act and the Rules and
Regulations to the extent necessary to permit the continuance of sales
of or dealings
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17
in the Shares in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (B) will not file with
the Commission the prospectus, any amendment or supplement to such
prospectus or any amendment to the Registration Statement of which the
Representative shall not previously have been advised and furnished with
a copy a reasonable period of time prior to the proposed filing and as
to which filing the Representative shall not have given its consent,
such consent to not be unreasonably withheld.
(ii) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representative (A) when the
Registration Statement, as amended, has become effective; if the
provisions of Rule 430A promulgated under the Act will be relied upon,
when the Prospectus has been filed in accordance with said Rule 430A and
when any post-effective amendment to the Registration Statement becomes
effective; (B) of any request made by the Commission for amending the
Registration Statement, for supplementing any Preliminary Prospectus or
the Prospectus or for additional information, or (C) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or any
order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto or the institution
or threat of any investigation or proceeding for that purpose, and will
use its best efforts to prevent the issuance of any such order and, if
issued, to obtain the lifting thereof as soon as possible.
(iii) The Company will (A) take or cause to be taken all
such actions and furnish all such information as the Representative may
reasonably require in order to qualify the Shares for offer and sale
under the state securities or Blue Sky laws of such jurisdictions as the
Representative may designate, (B) continue such qualifications in effect
for as long as may be necessary to complete the distribution of the
Shares but not to exceed one year from the date of this Agreement, and
(C) make such applications, file such documents and furnish such
information as may be required for the purposes set forth in clauses (A)
and (B); provided, however, that the Company shall not be required to
qualify as a foreign corporation or file a general or unlimited consent
to service of process in any such jurisdiction.
(iv) The Company consents to the use of the Prospectus
(and any amendment or supplement thereto) by the Underwriters and all
dealers to whom the Shares may be sold,
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18
in connection with the offering or sale of the Shares and for such
period of time thereafter as the Prospectus is required by law or the
Rules and Regulations to be delivered in connection therewith. If, at
any time when a prospectus relating to the Shares is required to be
delivered under the Act or the Rules and Regulations, any event occurs
as a result of which the Prospectus, as then amended or supplemented,
would include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading,
or if it becomes necessary at any time to amend or supplement the
Prospectus to comply with the Act or the Rules and Regulations, the
Company promptly will so notify the Representative and, subject to
Section 5(i) hereof, will prepare and file with the Commission an
amendment to the Registration Statement or an amendment or supplement to
the Prospectus which will correct such statement or omission or effect
such compliance.
(v) As soon as practicable, but in any event not later
than 45 days after the end of the 12-month period beginning on the day
after the end of the fiscal quarter of the Company during which the
effective date of the Registration Statement occurs (90 days in the
event that the end of such fiscal quarter is the end of the Company's
fiscal year), the Company will make generally available to its security
holders, in the manner specified in Rule 158(b) of the Rules and
Regulations, and to the Representative, an earnings statement which will
be in the detail required by, and will otherwise comply with, the
provisions of Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations, which statement need not be audited unless required by the
Act or the Rules and Regulations, covering a period of at least 12
consecutive months after the effective date of the Registration
Statement.
(vi) The Company will timely file all such reports, forms
or other documents as may be required from time to time under the Act
(including a report on Form SR, if required), the Rules and Regulations,
the Exchange Act, and the rules and regulations thereunder, and all such
reports, forms and documents filed will comply in all material respects
as to form and substance with the applicable requirements under the Act,
the Rules and Regulations, the Exchange Act and the rules and
regulations thereunder.
(vii) During a period of five years after the date hereof,
the Company will furnish to its shareholders, as soon as practicable,
annual reports (including financial statements audited by independent
public accountants) and
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19
unaudited quarterly reports of earnings, and will deliver to the
Representative:
(A) concurrently with furnishing such quarterly
reports to its shareholders, statements of income of the Company
for each quarter in the form furnished to the Company's
shareholders and certified by the Company's principal financial
or accounting officer;
(B) concurrently with furnishing such annual
reports to its shareholders, a balance sheet of the Company as at
the end of the preceding fiscal year, together with statements of
operations, shareholders' equity, and cash flows of the Company
for such fiscal year, accompanied by a copy of the report thereon
of independent public accountants;
(C) as soon as they are available, copies of
all information (financial or other) mailed to
shareholders;
(D) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the
Commission, the NASD or any securities exchange;
(E) every press release and every material news
item or article of interest to the financial community in respect
of the Company or its affairs which was released or prepared by
the Company; and
(F) any additional information of a public nature
concerning the Company or its business which the Representative
may reasonably request.
During such five-year period, if the Company
has active subsidiaries, the foregoing financial statements will be on a
consolidated basis to the extent that the accounts of the Company and
its subsidiaries are consolidated, and will be accompanied by similar
financial statements for any significant subsidiary which is not so
consolidated.
(viii) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a
Registrar (which may be the same entity as the Transfer Agent) for its
Class A Common Stock.
(ix) The Company will furnish, without charge, to the
Representative or on the Representative's order, at such
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20
place as the Representative may designate, copies of each Preliminary
Prospectus, the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies will be signed
and will include all financial statements and exhibits) and the
Prospectus, and all amendments and supplements thereto, in each case as
soon as available and in such quantities as the Representative may
reasonably request.
(x) The Company will not, directly or indirectly, without
the prior written consent of the Representative, offer, sell, grant any
option to purchase or otherwise dispose (or announce any offer, sale,
grant of any option to purchase or other disposition) of any shares of
Class A Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Class A Common Stock for a period of 180
days after the date hereof, except pursuant to this Agreement and except
pursuant to employee benefit plans discussed in the Prospectus.
(xi) Neither the Company nor any of its officers or
directors, nor affiliates of any of them (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action
designed to, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any
securities of the Company.
(xii) The Company will apply the net proceeds of the
offering received by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.
6. Expenses.
(a) Whether or not the transactions contemplated in this
Agreement are consummated, or for any reason this Agreement is terminated, the
Company will pay, or reimburse if paid by the Representative, all fees and
expenses incident to the performance of the obligations of the Company under
this Agreement, including, but not limited to, (i) the preparation, printing and
filing of the Registration Statement and exhibits thereto, each Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Registration
Statement or the Prospectus, (ii) the preparation and delivery of certificates
representing the Shares, (iii) the reproduction and distribution of this
Agreement, the Warrant Agreement, the Agreement among Underwriters, any Dealer
Agreements and any Underwriters' Questionnaire, (iv) furnishing (including costs
of shipping and mailing) such copies of the Registration Statement, the
Prospectus and any Preliminary Prospectus, and all amendments and supplements
thereto, as may be requested for use in connection
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21
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (v) the quotation of the Shares on the NMS, (vi) any
filings required to be made by the Underwriters with the NASD, (vii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions designated pursuant to Section
5(g), including the reasonable fees, disbursements and other charges of counsel
to the Underwriters in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda, (viii) counsel and
accountants to the Company and (ix) the transfer agent for the Shares.
(b) Whether or not the transactions contemplated by this
Agreement are consummated or if this Agreement shall be terminated by the
Company pursuant to any of the provisions hereof, the Company will reimburse the
Representative for all of its accountable out-of-pocket fees and expenses
(including the fees, disbursements and other charges of its counsel) incurred by
it in connection herewith, up to an aggregate amount of $175,000,
which amount excludes the expenses to be paid by the Company relating to
sub-sections (vi) and (vii) of paragraph (a) above.
7. Conditions of the Underwriters' Obligations. The obligation of each
Underwriter to purchase and pay for the Shares set forth opposite the name of
such Underwriter in Schedule I is subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date as if they had been made on and as of the Closing Date;
the accuracy on and as of the Closing Date of the statements of officers of the
Company made pursuant to the provisions hereof; the performance by the Company
on and as of the Closing Date of its covenants and agreements hereunder; and the
following additional conditions:
(a) If the Company has elected to rely on Rule 430A under the
Act, the Registration Statement shall have been declared effective, and the
Prospectus (containing the information omitted pursuant to Rule 430A) shall have
been filed with the Commission not later than the Commission's close of business
on the second business day following the date hereof or such later time and date
to which the Representative shall have consented; if the Company does not elect
to rely on Rule 430A, the Registration Statement shall have been declared
effective not later than 9:00 A.M., New York time, on the date hereof or such
later time and date to which the Representative shall have consented; if
required, in the case of any changes in or amendments or supplements to the
Prospectus in addition to those contemplated above, the Company shall have filed
such Prospectus as amended or supplemented with the Commission in the manner and
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22
within the time period required by Rule 424(b) under the Act; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto shall have been issued, and no proceedings for that purpose shall have
been instituted or threatened or, to the knowledge of the Company or the
Representative, shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise).
(b) The Company shall not have advised the Representative that
the Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Representative's opinion, is material, or omits
to state a fact which, in the Representative's opinion, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Representative's opinion, is material, or
omits to state a fact which, in the Representative's opinion, is material and is
required to be stated therein or is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representative shall
have received from counsel to the Underwriters, such opinion or opinions with
respect to the issuance and sale of the Firm Shares, the Registration Statement
and the Prospectus and such other related matters as the Representative
reasonably may request and such counsel shall have received such documents and
other information as they reasonably request to enable them to pass upon such
matters.
(d) On the Closing Date the Underwriters shall have received the
opinion, dated the Closing Date, of Xxxx Xxxx Xxxx & Freidenrich, counsel to the
Company ("Company Counsel"), to the effect set forth below:
(i) Each of the Company and its Subsidiaries is a duly
incorporated and validly existing corporation in good standing under the
laws of its jurisdiction of incorporation with the corporate power and
authority to own or lease its properties and to conduct its business as
described in the Prospectus. Each of the Company and its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or leasing of
property or conduct of its business requires such qualification (except
for those jurisdictions in which the failure so to qualify can be cured
without having a Material Adverse Effect);
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23
(ii) The Company has authorized capital stock as set forth
in the Prospectus; the securities of the Company conform in all material
respects to the description thereof contained in the Prospectus; the
outstanding shares of Class A and Class B Common Stock have been duly
authorized and validly issued by the Company, are fully paid and
non-assessable, and are free of any preemptive or, to the knowledge of
such counsel, other rights to subscribe for any of the Shares; the
Company has duly authorized the issuance and sale of the Shares to be
sold by it hereunder; the Shares, when issued by the Company and paid
for in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable and will conform in all material respects to the
description thereof contained in the Prospectus and will not be subject
to any preemptive or, to the knowledge of such counsel, subscription or
other similar rights; and the Shares have been duly authorized for
quotation, subject only to notice of issuance, on the NMS;
(iii) The Registration Statement is effective under the
Act; any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement or any amendment thereto
has been issued, and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of such counsel, are
threatened or contemplated under the Act; the Registration Statement, as
of the effective date, and the Prospectus, as of the date thereof, and,
if any, each amendment and supplement thereto (except for the financial
and statements, schedules and other financial and statistical data
included therein, as to which such counsel need not express any
opinion), complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations; to the knowledge
of such counsel, there are no contracts or documents which are required
by the Act to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
which are not described or filed as required by the Act and the Rules
and Regulations; to the knowledge of such counsel, there is not pending
or threatened against the Company any action, suit, proceeding or
investigation before or by any court, regulatory body, or administrative
agency or any other governmental agency or body, domestic or foreign, of
a character required to be disclosed in the Registration Statement or
the Prospectus which is not so disclosed therein; and the statements set
forth under the headings "Business - Company History," "- Proprietary
Rights and Licenses," "- Government Regulations," "- Litigation,"
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24
"Management - Limitation of Liability and Indemnification," "- Benefit
Plans," "Certain Transactions," "Shares Eligible for Future Sale," and
"Description of Capital Stock," in the Prospectus, insofar as such
statements constitute a summary of legal matters, documents or
proceedings referred to therein, provide an accurate summary in all
material respects of such legal matters, documents and proceedings;
(iv) The Company has full corporate right, power, and
authority to enter into this Agreement and the Warrant Agreement and to
consummate the transactions provided for herein and therein; each of
this Agreement and the Warrant Agreement has been duly authorized,
executed and delivered by the Company; and each of this Agreement and
the Warrant Agreement, assuming due authorization, execution and
delivery by each other party hereto, is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws now or hereafter in effect relating to or affecting
creditors' rights generally or by general principles of equity relating
to the availability of remedies and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the
public policy underlying such laws. None of the Company's execution,
delivery or performance of each of this Agreement and the Warrant
Agreement, its consummation of the transactions contemplated herein and
therein, conflicts or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon, any property or assets of the
Company or any of its Subsidiaries pursuant to the terms of the charter
or by-laws of the Company or any of its Subsidiaries; the terms of any
indenture, mortgage, deed of trust, voting trust agreement,
stockholder's agreement, note agreement or other agreement or instrument
filed as an exhibit to the Registration Statement to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is or may be bound or to which any of its properties
may be subject; any statute, rule or regulation of any regulatory body
or administrative agency or other governmental agency or body, domestic
or foreign, having jurisdiction over the Company or any of its
Subsidiaries any of their respective activities or properties; or any
judgment, decree or order, known to such counsel after reasonable
investigation, of any Governmental Body; and no consent, approval,
authorization or order of any Governmental Body, has been or is required
for the Company's performance of this Agreement or the consummation of
the transactions contemplated hereby, except under the
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25
Act or as may be required under state securities or Blue Sky laws;
(v) To such counsel's knowledge, except as described in
the Prospectus, no claims have been asserted against the Company or any
of its Subsidiaries by any person to the use of any rights or
challenging or questioning the validity or effectiveness of any such
rights. The use, in connection with the business and operations of the
Company and its Subsidiaries of such rights does not, to the best of
such counsel's knowledge, infringe on the rights of any person;
(vi) Each of the Company and the Subsidiaries has full legal
right, power, and authority to enter into the agreements that it has
entered, or will enter, into in connection with the Reorganization
Transactions (collectively, the "Reorganization Agreements") to which it
is a party and to consummate the transactions provided for in each
thereof. Each Reorganization Agreement has been duly authorized,
executed and delivered by the Company and each other party thereto; each
Reorganization Agreement is a valid and binding agreement of the Company
and each other party thereto, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to or
affecting creditors' rights generally or by general principles of equity
relating to the availability of remedies. None of the execution or
delivery of any Reorganization Agreement by any party thereto, the
performance by any thereof of its obligations thereunder, the
consummation by any thereof of the transactions contemplated therein or
of any other Reorganization Transaction, conflicts or will conflict with
or results or will result in any breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon, any
property or assets of any of them pursuant to (A) the terms of the
articles of incorporation or bylaws or partnership or operating
agreement or other governing instruments or documents of any of them;
(B) the terms of any contract or other agreement known to such counsel
after reasonable investigation to which any of them is (or, upon
consummation of the Reorganization Transactions, will be) a party or by
which any of them is or may be bound or to which any of their respective
properties is or may be subject; (C) any statute, rule or regulation of
any Governmental Body having jurisdiction over any of them or any of
their respective activities or properties; or (D) the terms of any
judgment, decree or order, known to such counsel after reasonable
investigation, of any arbitrator or
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26
Governmental Body having such jurisdiction. No consent, approval,
authorization or order of any Governmental Body has been or is required
for the performance of any Reorganization Agreement or the consummation
of the transactions contemplated thereby or the consummation of any
other Reorganization Transaction in each case by any of the Company or
the Subsidiaries, except such as have been obtained. All of the
Reorganization Transactions have been consummated to the full extent
contemplated by the Reorganization Agreements as of the date of this
Agreement;
(vii) The Company is not required to be registered under
the Investment Company Act;
(viii) The outstanding shares of capital stock of the
Subsidiaries are duly authorized, validly issued and fully paid; such
shares are owned by the Company free and clear of any perfected security
interest. No Subsidiary of the Company is currently prohibited, directly
or indirectly, by its charter documents or, to such counsel's knowledge,
any contract or agreement to which such subsidiary is a party from
paying any dividends to the Company, from making any other distribution
on such Subsidiary's capital stock, from repaying to the Company or from
transferring any of such Subsidiary's property or assets to the Company
or any other Subsidiary of the Company, except as described or
contemplated by the Prospectus.
In addition, such counsel shall state that in the
course of the preparation of the Registration Statement and the Prospectus, such
counsel has participated in conferences with officers and representatives of the
Company, with the Representative and its counsel and with the Company's
independent public accountants, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed and
(without taking any further action to verify independently the statements made
in the Registration Statement and the Prospectus and, except as stated in the
foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel to believe that either the Registration
Statement as of the date it is declared effective or the Prospectus as of the
date thereof and as of the Closing Date and any Option Closing Date contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading
(it being understood that such counsel need not express any opinion with respect
to the financial statements, schedules and other financial or
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27
statistical data included in the Registration Statement or the Prospectus).
In rendering any such opinion, such counsel may
rely, as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and public officials.
References to the Registration Statement and the
Prospectus in this paragraph (d) shall include any amendment or supplement
thereto at the date of such opinion.
(e) On or prior to the Closing Date, counsel to the Underwriters
shall have been furnished such documents, certificates and opinions as they may
reasonably require in order to evidence the accuracy, completeness or
satisfaction of any of the representations or warranties of the Company, or
conditions herein contained.
(f) At the time that this Agreement is executed by the Company,
the Underwriters shall have received from Price Waterhouse LLP a letter as of
the date of this Agreement in form and substance satisfactory to you (the
"Original Letter"), and on the Closing Date the Underwriters shall have received
from such firm a letter dated the Closing Date stating that, as of a specified
date not earlier than three (3) days prior to the Closing Date, nothing has come
to the attention of such firm to suggest that the statements made in the
Original Letter are not true and correct.
(g) On the Closing Date, the Underwriters shall have received a
certificate, dated the Closing Date, on behalf of the Company the principal
executive officer and the principal financial or accounting officer of the
Company to the effect that each of such persons has carefully examined the
Registration Statement and the Prospectus and any amendments or supplements
thereto and this Agreement, and that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, as if made on and as of the Closing
Date, and the Company has complied with all agreements and covenants and
satisfied all conditions contained in this Agreement on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of each
of such persons are contemplated or threatened under the Act and any and
all
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28
filings required by Rule 424 and Rule 430A have been timely made;
(iii) The Registration Statement and Prospectus and, if
any, each amendment and each supplement thereto, contain all statements
and information required to be included therein, and neither the
Registration Statement nor any amendment thereto includes any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and neither the Prospectus (or any supplement
thereto) nor any Preliminary Prospectus includes or included any untrue
statement of a material fact or omits or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus up
to and including the Closing Date, neither the Company nor any
Subsidiaries has incurred, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent;
neither the Company nor any Subsidiaries has purchased any of its
outstanding capital stock or paid or declared any dividends or other
distributions on its capital stock; the Company nor any Subsidiaries has
entered into any transactions not in the ordinary course of business;
and there has not been any change in the capital stock or, consolidated
long-term debt or, any increase in the short-term borrowings (other than
any increase in short-term borrowings in the ordinary course of
business) of the Company or any material adverse change to the business,
properties, assets, net worth, condition (financial or other), results
of operations or prospects of the Company and its Subsidiaries taken as
a whole; neither the Company nor any Subsidiary has sustained any
material loss or damage to its property or assets, whether or not
insured; there is no litigation which is pending or threatened against
the Company or any Subsidiary which is required under the Act or the
Rules and Regulations to be set forth in an amended or supplemented
Prospectus which has not been set forth; and there has not occurred any
event required to be set forth in an amended or supplemented Prospectus
which has not been set forth.
References to the Registration Statement and the
Prospectus in this paragraph (g) are to such documents as amended and
supplemented at the date of the certificate.
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29
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus up to and including the
Closing Date there has not been (i) any adverse change or decrease specified in
the letter or letters referred to in paragraph (f) of this Section 7 or (ii) any
adverse change, or any development involving a prospective adverse change, in
the business or properties of the Company or its Subsidiaries which change or
decrease in the case of clause (i) or change or development in the case of
clause (ii) makes it impractical or inadvisable in the Representative's judgment
to proceed with the public offering or the delivery of the Shares as
contemplated by the Prospectus.
(i) No order suspending the sale of the Shares in any
jurisdiction designated by you pursuant to Section 5(iii)(A) hereof has been
issued on or prior to the Closing Date and no proceedings for that purpose have
been instituted or, to your knowledge or that of the Company, have been or are
contemplated.
(j) The Company shall have delivered to the Representative
written agreements in the form set forth in Exhibit ___ hereto with each officer
and director of the Company, and the beneficial owners of at least 1,200,000
shares of the outstanding shares of Class A Common Stock or Class B Common Stock
and beneficial owner of options to purchase shares of Class A Common Stock or
Class B Common Stock aggregating at least 1,100,000 shares to the effect that
they will not, for a period of (i) one year after the commencement of the public
offering of the Shares, if such person is an officer or director of the Company
or (ii) 180 days after the commencement of the public offering of the Shares,
without the prior written consent of the Representative, directly or indirectly,
offer to sell, sell, contract to sell, grant or transfer any option to purchase
or otherwise dispose (or announce any offer, sale, grant of any option to
purchase or other disposition) of any shares of Class A Common Stock or Class B
Common Stock, or any securities convertible into or exchangeable for shares of
Class A Common Stock or Class B Common Stock (other than pursuant to employee
stock or nonemployee director option plans). It is acknowledged that the
restriction contained in this Section 7(j) shall not be applicable to the Firm
Shares, the Option Shares or the Underwriter's Warrant Shares being sold by the
Company to the Underwriters pursuant to this Agreement.
(k) The Company shall have furnished the Underwriters with such
further opinions, letters, certificates or documents as you or counsel for the
Underwriters may reasonably request. All opinions, certificates, letters and
documents to be furnished by the Company will comply with the provisions hereof
only if they are reasonably satisfactory in all material respects to the
Underwriters and to counsel for the Underwriters. The Company
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30
shall furnish the Underwriters with conformed copies of such opinions,
certificates, letters and documents in such quantities as you reasonably
request. The certificates delivered under this Section 7 shall constitute
representations, warranties and agreements of the Company as to all matters set
forth therein as fully and effectively as if such matters had been set forth in
Section 2 of this Agreement.
(l) The Shares shall be quoted on the NMS.
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which such Underwriter or such controlling person may
become subject, under the Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or the Prospectus or any Preliminary Prospectus, or any amendment or
supplement thereto, or any blue sky application or other document executed by
the Company specifically for the purpose of qualifying, or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify, any or all of the Shares under the securities or Blue Sky laws
thereof (any such application, document or information being hereinafter called
a "Blue Sky Application"), or 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 not misleading and will reimburse, as
incurred, such Underwriter or such controlling persons for any legal or other
expenses incurred by such Underwriter or such controlling persons in connection
with investigating, defending or appearing as a third party witness in
connection with any such loss, claim, damage, liability
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31
or action; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in any of such documents in reliance upon and
in conformity with information relating to any Underwriter furnished in writing
to the Company by the Representative on behalf of any Underwriter expressly for
inclusion therein, and provided, further, that such indemnity with respect to
any Preliminary Prospectus shall not inure to the benefit of any Underwriter (or
to the benefit of any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage, liability or action purchased Shares
which are the subject thereof to the extent that any such loss, claim, damage,
liability or action (i) results from the fact that such Underwriter failed to
send or give a copy of the Prospectus (as amended or supplemented) to such
person at or prior to the confirmation of the sale of such Shares to such person
in any case where such delivery is required by the Act and (ii) arises out of or
is based upon an untrue statement or omission of a material fact contained in
such Preliminary Prospectus that was corrected in the Prospectus (as amended and
supplemented), unless such failure resulted from non-compliance by the Company
with Section 5(viii) hereof.
The indemnity agreement in this paragraph (a) shall be in
addition to any liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly,
to indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any and all losses, claims, damages or liabilities
(and actions in respect thereof) to which the Company or any such director,
officer, or controlling person may become subject, under the Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto or in any Blue
Sky Application, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
information furnished in writing by that Underwriter through the Representative
to the Company expressly for use therein; and will reimburse, as incurred, all
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. The Company acknowledges that the
statements with respect to the public offering of the Shares set forth under the
heading "Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriters to the Company expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus. The indemnity agreement contained
in this paragraph (b) shall be in addition to
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32
any liability which the Underwriters may have at common law or otherwise.
(c) 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 one or more
indemnifying parties under this Section 8, notify such indemnifying party or
parties of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under paragraph (a) or (b) of this Section
8 or to the extent that the indemnifying party was not adversely affected by
such omission. In case any such action is brought against an indemnified party
and it notifies an indemnifying party or parties of the commencement thereof,
the indemnifying party or parties against which a claim is to be made will be
entitled to participate therein and, to the extent that it or they may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party has 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, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and otherwise to participate in the defense of such action on behalf of
such indemnified party or parties, in which case the indemnifying party shall
only be responsible for the fees and expenses of one counsel (in addition
to local counsel) for all similarly situated indemnified parties. Upon receipt
of notice from the indemnifying party to such indemnified party of its election
so to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses (other than the reasonable
costs of investigation) subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party has
employed such counsel in connection with the assumption of such different or
additional legal defenses in accordance with the proviso to the immediately
preceding sentence, (ii) the indemnifying party has not employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, or
(iii) the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable to hold harmless an indemnified party under paragraph (a) or (b)
above in respect of any losses,
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33
claims, damages, expenses or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) (i) in such proportion as
is appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified, on the
other hand, from the offering of the Shares or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each of the contributing parties, on the
one hand, and the party to be indemnified, on the other hand, in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. In any case
where the Company is a contributing party and the Underwriters are the
indemnified party, the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares (before
deducting expenses) bear to the total underwriting discounts received by the
Underwriters hereunder, in each case as set forth in the table on the cover page
of the Prospectus. Relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this paragraph (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph (d), the Underwriters
shall not be required to contribute any amount in excess of the underwriting
discount applicable to the Shares purchased by the Underwriters hereunder. 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 paragraph (d),
(i) each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution
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34
as such Underwriter and (ii) each director of the Company, each officer of the
Company who has signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, shall have the same rights to contribution as the Company,
subject in each case to this paragraph (d). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the omission so to
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation (x) it or they may have
hereunder or otherwise than under this paragraph (d) or (y) to the extent that
such party or parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
9. Right to Increase Offering. At anytime during a period of 30 days from the
date of the Prospectus, the Underwriters, by no less than two business days'
prior notice to the Company, may designate a closing (which may be concurrent
with, and part of, the closing on the Closing Date with respect to the Firm
Shares or may be a second closing held on a date subsequent to the Closing Date,
in either case such date shall be referred to herein as the "Option Closing
Date") at which the Underwriters may purchase all or less than all of the Option
Shares in accordance with the provisions of this Section 9 at the purchase price
per share to be paid for the Firm Shares. In no event shall the Option Closing
Date be later than 10 business days after written notice of election to purchase
Option Shares is given.
The Company agrees to sell to the several Underwriters on the
Option Closing Date the number of Option Shares specified in such notice and the
Underwriters agree, severally and not jointly, to purchase such Option Shares on
the Option Closing Date. Such Option Shares shall be purchased for the account
of each Underwriter in the same proportion as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I bears to the total
number of Firm Shares (subject to adjustment by you to eliminate fractions) and
may be purchased by the Underwriters only for the purpose of covering
over-allotments made in connection with the sale of the Firm Shares.
No Option Shares shall be sold or delivered unless the Firm
Shares previously have been, or simultaneously are, sold and delivered. The
right to purchase the Option Shares or any portion thereof may be surrendered
and terminated at any time upon notice by you to the Company.
Except to the extent modified by this Section 9, all provisions
of this Agreement relating to the transactions contemplated to occur on the
Closing Date for the sale of the
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35
Firm Shares shall apply, mutatis mutandis, to the Option Closing Date for the
sale of the Option Shares.
10. Effective Date and Termination.
(a) This Agreement shall become effective at 9:00 A.M., New York
time, on the date hereof, or at such later time after the Registration Statement
becomes effective as the Representative, in its sole discretion, shall release
the Shares for the sale to the public unless prior to such time the
Representative shall have received written notice from the Company that it
elects that this Agreement shall not become effective, or the Representative
shall have given written notice to the Company that the Representative on behalf
of the Underwriters elects that this Agreement shall not become effective;
provided, however, that the provisions of this Section and of Section 6 and
Section 8 hereof shall at all times be effective; provided, further, that this
Agreement shall terminate if the Registration Statement is not declared
effective. For purposes of this Section 11(a), the Shares to be purchased
hereunder shall be deemed to have been so released upon the earlier of
notification by the Representative to securities dealers releasing such Shares
for offering or the release by the Representative for publication of the first
newspaper advertisement which is subsequently published relating to the Shares.
(b) This Agreement (except for the provisions of Sections 6 and 8
hereof) may be terminated by the Representative by notice to the Company in the
event that the Company has failed to comply in any respect with any of the
provisions of this Agreement required on its part to be performed at or prior to
the Closing Date or the Option Closing Date, or if any of the
representations or warranties of the Company are not accurate in any respect or
if the covenants, agreements or conditions of, or applicable to the Company
herein contained have not been complied with in any respect or satisfied within
the time specified on the Closing Date or the Option Closing Date, respectively,
or if prior to the Closing Date or the Option Closing Date:
(i) the Company shall have sustained a loss by strike,
fire, flood, accident or other calamity of such a character as to
interfere materially with the conduct of the business and operations of
the Company regardless of whether or not such loss was insured;
(ii) trading in the Class A Common Stock shall have been
suspended by the Commission or the NMS or trading in securities
generally on the New York Stock Exchange or the NMS shall have been
suspended or a material limitation on such trading shall have been
imposed or minimum or
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36
maximum prices shall have been established on either any such exchange
or market system;
(iii) a banking moratorium shall have been
declared by New York, California or United States
authorities;
(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an
outbreak or escalation of any other insurrection or armed conflict
involving the United States; or
(v) there shall have been a material adverse change in (A)
general economic, political or financial conditions or (B) the present
or prospective business or condition (financial or other) of the Company
and its Subsidiaries taken as a whole that, in each case, in the
Representative's judgment makes it impracticable or inadvisable to make
or consummate the public offering, sale or delivery of the Company's
Shares on the terms and in the manner contemplated in the Prospectus and
the Registration Statement.
(c) Termination of this Agreement under this Section 11 or
Section 12 after the Firm Shares have been purchased by the Underwriters
hereunder shall be applicable only to the Option Shares. Termination of this
Agreement shall be without liability of any party to any other party other than
as provided in Sections 6 and 8 hereof.
11. Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Shares or Option Shares hereunder and the aggregate
number of such Shares that such defaulting Underwriter or Underwriters agreed
but failed to purchase is ten percent or less of the aggregate number of Firm
Shares or Option Shares to be purchased by all of the Underwriters at such time
hereunder, the other Underwriters may make arrangements satisfactory to the
Representatives for the purchase of such Shares by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Representatives), but if no such arrangements are made by the Firm Closing Date
or the related Option Closing Date, as the case may be, the other Underwriters
shall be obligated severally in proportion to their respective commitments
hereunder to purchase the Firm Shares or Option Shares that such defaulting
Underwriter or Underwriters agreed but failed to purchase. If one or more
Underwriters so default with respect to an aggregate number of Shares that is
more than ten percent of the aggregate number of Firm Shares or Option Shares,
as the case may be, to be purchased by all of the Underwriters at such time
hereunder, and if
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37
arrangements satisfactory to the Representatives are not made within 36 hours
after such default for the purchase by other persons (who may include one or
more of the non-defaulting Underwriters, including the Representatives) of the
Shares with respect to which such default occurs, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company
other than as provided in Section 11 hereof. In the event of any default by one
or more Underwriters as described in this Section 11, the Representatives shall
have the right to postpone the Firm Closing Date or the Option Closing Date, as
the case may be, established as provided in Section 1 hereof for not more than
seven business days in order that any necessary changes may be made in the
arrangements or documents for the purchase and delivery of the Firm Shares or
Option Shares, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 11. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
12. Survival. The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Company, its officers and the several
Underwriters set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, any Underwriter or any controlling person referred to
in Section 8 hereof and (ii) delivery of and payment for the Shares. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 6 and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
13. Notices. Notice shall be given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered or telegraphed and confirmed by letter or telecopied and confirmed
by letter (a) if to the Underwriters, to the Representative at the office of
Xxxxx Xxxxxx & Co., Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000,
Attention: A. Xxxxx Xxxxxx or, if sent to the Company, shall be mailed or
delivered or telegraphed and confirmed to the Company at 0000 Xxxxx Xxxxxx
Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: President, with a copy to Xxxx
Xxxx Xxxx & Freidenrich, 000 X Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx
00000-0000, Attention: Cameron Xxx Xxxxx, Esq.
14. Successors. This Agreement shall inure to the benefit of and be binding upon
the Company and each Underwriter and the Company's and each Underwriter's
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in
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38
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person, except that the representations, warranties, indemnities and
contribution agreements of the Company contained in this Agreement shall also be
for the benefit of any person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and except that the Underwriters' indemnity and contribution agreements shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement, and any person or persons,
if any, who control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Shares from the Underwriters
will be deemed a successor because of such purchase. This Agreement shall not be
assignable by either party hereto without the prior written consent of the other
party.
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39
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE
TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
PROVISIONS RELATING TO CONFLICTS OF LAWS.
16. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
JAYMARK, INC.
By:
--------------------------
Name:
Title:
Confirmed as of the date first above mentioned:
XXXXX XXXXXX & CO., INC.
By: Xxxxx Xxxxxx & Co., Inc.
Acting on its own behalf and as
the Representative of the several
Underwriters referred to in the
foregoing Agreement
By:
----------------------------------------
Name:
Title:
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40
SCHEDULE I
UNDERWRITERS
Underwriting Agreement dated ________, 1997
Number of Firm
Shares to be
Purchased from
Name the Company
Xxxxx Xxxxxx & Co., Inc..............................
---------
Total........................................... 1,300,000
=========
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