1
EXHIBIT 1.1
1,500,000 Shares
T-HQ, Inc.
Common Stock
UNDERWRITING AGREEMENT
February 11, 1997
WEDBUSH XXXXXX SECURITIES INC.
As Representative of the several Underwriters
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Gentlemen:
T-HQ, Inc., a New York corporation (the "Company"), proposes
to issue and sell to you and other firms and corporations named in Schedule A
attached hereto (the "Underwriters," which term shall also include any
underwriter substituted as provided in Section 9 hereof), for which you are
acting as representative ("Representative"), 1,500,000 shares of the Company's
Common Stock (the "Primary Shares"). In addition, the Company proposes to grant
to the Underwriters an option to purchase, for the purpose of covering
over-allotments, up to an additional 225,000 shares of the Company's Common
Stock (the "Over-Allotment Shares"). The Primary Shares and the Over-Allotment
Shares are collectively referred to below as the "Shares." The Company agrees
with the several Underwriters as set forth below.
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1. Representations, Warranties and Certain Covenants of the
Company. The Company represents and warrants to, and the Company also covenants
and agrees with, each of the Underwriters as follows:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form
S-2 (No. 333-18641), including a preliminary prospectus, relating to
the Shares and such amendments to the registration statement and
prospectus included therein as may have been required to the date
hereof. The Company will file with the Commission either: (i) prior to
effectiveness of such registration statement, a further amendment
thereto, including a form of prospectus, and if required after
effectiveness of such registration statement, a final prospectus in
accordance with Rule 424(b) of the rules and regulations ("Rules and
Regulations") under the Securities Act of 1933, as amended (the "Act"),
or (ii) after effectiveness of such registration statement, a final
prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations (a "Rule 430A Filing"). Any such preliminary prospectus and
any prospectus included in the registration statement at the time it
becomes effective that omits information pursuant to Rule 430A of the
Rules and Regulations, is referred to herein as a "preliminary
prospectus"; such registration statement, as it may have been amended
at the time when it becomes effective, including financial statements,
exhibits, and the information, if any, deemed to be a part of such
registration statement by virtue of Rule 430A of the Rules and
Regulations, is referred to herein as the "Registration Statement"; and
such final form of prospectus, in the form in which it was first filed
pursuant to Rule 424(b) of the Rules and Regulations or, if no filing
pursuant to Rule 424(b) of the Rules and Regulations is made, in the
form included in the Registration Statement at the time it becomes
effective, is referred to herein as the "Prospectus."
(b) The Commission has not issued, nor has it had cause
to issue, an order preventing or suspending the use of any preliminary
prospectus and each such preliminary prospectus has conformed in all
material respects to the requirements of the Act and the Rules and
Regulations and has not included any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. At the date
of this Agreement, when the Registration Statement becomes effective
and at the Closing Date (as defined below) (i) the
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Registration Statement and Prospectus and any amendments or supplements
thereto will contain all statements that are required to be stated
therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules
and Regulations, (ii) the Registration Statement will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, and (iii) the Prospectus will not
include any untrue statement of a material fact and will not omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
Company makes no representations, warranties or agreements as to
information contained in or omitted from the Registration Statement or
Prospectus or any such amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by the
Underwriters expressly for use therein.
(c) The consolidated financial statements of the Company
set forth in the Registration Statement and Prospectus present fairly,
in all material respects, the financial condition of the Company and
its Subsidiaries (as herein defined) as of the dates indicated and the
results of operations and cash flows for the periods therein specified
in conformity with generally accepted accounting principles
consistently applied throughout the periods involved (except as
otherwise stated therein). As used in this Agreement, the term
"Subsidiary" shall mean a corporation or other entity of which the
Company owns, directly or indirectly, more than 50% of the voting stock
or the capital or equity.
(d) Each of the Company and its Subsidiaries has been
duly organized and is validly existing in good standing under the laws
of its jurisdiction of incorporation. Each of the Company and its
Subsidiaries has all requisite power and authority to own, lease and
operate its properties and to conduct its business as is 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 such qualification is required
except where the failure to so qualify or be in good standing will not
have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
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(e) Assuming that no warrants or options to purchase the
Company's Common Stock are exercised after the respective dates set
forth in the Prospectus, the authorized, issued and outstanding capital
stock of the Company is as set forth under the caption "Capitalization"
in the Prospectus and the issued and outstanding shares of Common Stock
of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. The sale of the Shares has been duly
authorized and after issuance of and payment for the Shares in
accordance with this Agreement, the Shares will be validly issued,
fully paid and nonassessable, and will be sold free of any pledge,
lien, claim or equitable interest, and the holders of the Common Stock
of the Company are not entitled to any preemptive rights. The issued
and outstanding shares of the capital stock of each of the Subsidiaries
of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and are owned beneficially and of record by the
Company free and clear of all liens, claims or encumbrances whatsoever.
Except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company, and the related notes thereto,
included in the Prospectus, neither the Company nor any of its
Subsidiaries has outstanding any options or warrants to purchase, any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such
options, warrants, rights, convertible securities or obligations. Other
than agreements between the Company and (i) Inland Productions, Inc.,
(ii) Frost Capital Management, (iii) Xxxxx X. Xxxxxxx, (iv) Xxx Xxxxxxx
(warrant holder), (v) Sovereign Equity Management Corp. (warrant
holder), (vi) Broad Capital Associates, Inc. (warrant holder), (vii)
Neidiger and Xxxxxx, as Placement Agents (warrant holders), (viii)
Grand Group Inc. (warrant holders), (ix) holders of American Stock
Transfer & Trust Company warrants, (x) holders of warrants issued in
the Company's June 1994 private placement, and (xi) holders of warrants
issued in the Company's December 1994 private placement, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act or to participate in a
registration statement filed by the Company under the Act. The
Company's Common Stock has been approved for inclusion in the NASDAQ
National Market System ("NASDAQ/NMS") upon completion of the sale of
the Primary Shares.
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(f) Except as contemplated in the Prospectus, subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, neither the Company nor any
of its Subsidiaries has incurred any liabilities or obligations, direct
or contingent, or entered into any transactions, not in the ordinary
course of business, that are material to the Company and its
Subsidiaries taken as a whole, and there has not been any material
change in the capital stock, short-term debt or long-term debt of the
Company, or any material adverse change in the condition (financial or
other), business, properties, prospects, net worth or results of
operations of the Company and its Subsidiaries taken as a whole.
(g) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Company, threatened, any action,
suit or proceeding of which the Company or any of its Subsidiaries is a
party, before or by any court or governmental agency or body, that
would result in any material adverse change in the condition (financial
or other), business, properties, prospects, net worth or results of
operations of the Company and its Subsidiaries taken as a whole, or
might materially and adversely affect the properties or assets thereof.
(h) There are no statutes, regulations, contracts or
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations that
are not described or have not been filed as required.
(i) Except as set forth in the Prospectus, the Company
and its Subsidiaries owns or has valid leasehold interests in all
properties and assets required for the operation of their business as
now conducted or as proposed to be conducted, including those described
in the Registration Statement and the Prospectus as being owned by
them; and each of the Company and its Subsidiaries has good title to
all properties and assets owned by it material to its business. All
material leases to which the Company or any of its Subsidiaries is a
party are valid, subsisting and enforceable and no default by the
Company or any of its Subsidiaries has occurred and is continuing
thereunder; and each of the Company and its Subsidiaries enjoys
peaceful and undisturbed possession under all such material leases to
which it is a party as lessee.
(j) The Company has full right, power and authority to
enter into this Agreement and to perform all of its obligations
hereunder. The
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execution, delivery and performance of this Agreement by the Company
does not and will not violate, breach or conflict with the Articles or
Certificate of Incorporation or bylaws of the Company or any of its
Subsidiaries or any agreement to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their properties is bound or any statute or
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its Subsidiaries or any
of their properties; and no consent, approval, authorization or order
of, or filing with, any court or governmental agency or body is
required in connection with the transactions contemplated hereby except
as may be required under the Act or state securities or "Blue Sky"
laws. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company in accordance with its terms, except as the enforceability
thereof may be limited (i) by the effect of bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting the rights and
remedies of creditors, (ii) by the effect of general principles of
equity, whether enforcement is considered in a proceeding in equity or
law, and the discretion of the court before which any proceeding
therefor may be brought, and (iii) to the extent that rights to
indemnification and contribution thereunder may be limited by federal
or state securities laws or public policy relating thereto.
(k) Neither the Company nor any of its Subsidiaries is
(i) in violation of its articles of incorporation or bylaws or (ii) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan, credit or factoring agreement, note, lease or other agreement or
instrument to which the Company or any Subsidiary is a party or by
which it may be bound, or to which any of the property or assets of the
Company or such Subsidiary is subject, excluding in each case in this
clause (ii), breaches or defaults which could not reasonably be
expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(l) The Company and its Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by them, or presently employed by them,
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and have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
(m) Except for its Subsidiaries and Inland Productions,
Inc., the Company does not own any shares of capital stock or any other
securities of any corporation or have any equity interest in any firm,
partnership, association or other entity or subsidiary.
(n) The Company has not done, and is not presently doing,
business with the government of Cuba or with any person or any
affiliate located in Cuba.
(o) Except as disclosed in the Prospectus, neither the
Company nor any of its Subsidiaries is in violation of any statute,
rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substance or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws"), owns or operates
any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or in the
aggregate have a material adverse effect on the Company and its
Subsidiaries taken as a whole; and the Company is not aware of any
pending investigation which might lead to such a claim.
(p) The Company maintains insurance of the types and in
the amounts generally deemed adequate for its business, all of which
insurance is in full force and effect. The Company has no reason to
believe that it will not be able to renew existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business.
(q) There are no outstanding loans, advances or
guarantees of indebtedness by the Company to or for the benefit,
directly or indirectly, of any
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of the officers or directors of the Company or any other related party
transactions required to be disclosed in the Registration Statement,
except as disclosed in the Registration Statement.
2. Sale and Purchase of the Shares.
(a) The Company hereby agrees to sell the Primary Shares
to the several Underwriters as set forth in Schedule A attached hereto,
and the several Underwriters, in reliance upon the representations,
warranties and agreements herein contained, but subject to the
conditions hereinafter stated, agree, severally and not jointly, to
purchase from the Company, at the place and the time specified below,
the respective aggregate numbers of Primary Shares set forth in
Schedule A opposite their respective names, plus any additional Shares
which such Underwriters may become obligated to purchase pursuant to
the provisions of Section 2(b) hereof, at a price of $7.0125 per Share.
(b) In addition, on the basis of the representations and
warranties herein contained, upon not less than five days' notice from
the Representative to the Company, or its counsel, the Company agrees
to sell to the Underwriters (but only for the purpose of covering
over-allotments in the sale of the Primary Shares), all or any portion
of the Over-Allotment Shares, as specified by the Representative in
such Notice, at the purchase price stated in Section 2(a) hereof. The
Over-Allotment Shares may be purchased on the Closing Date or at any
one time thereafter so long as the notice to purchase is given within a
period of 30 days following the effective date of the Registration
Statement. Over-Allotment Shares shall be purchased by each Underwriter
in the proportion which the number of Primary Shares set opposite the
name of each Underwriter in Schedule A hereto bears to the total number
of Primary Shares. No Over-Allotment Shares shall be delivered to or
for the accounts of the Underwriters unless the Primary Shares shall be
simultaneously delivered and paid for or shall theretofore have been
delivered and paid for as herein provided.
(c) The respective purchase obligation of each
Underwriter shall be subject to such adjustments as the Representative
may in its absolute discretion make so long as the Underwriters'
aggregate purchase obligation vis-a-vis the Company remains the same.
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3. Terms of Offering and Authority to Use Prospectus. The
terms of the initial public offering by the Underwriters of the Shares to be
purchased by them shall be as set forth in the Registration Statement and the
Prospectus.
The Company has authorized the Representative to use
preliminary prospectuses and to make them available for use by prospective
Underwriters and dealers and authorize the Underwriters and all dealers
acquiring Shares from an Underwriter to use the Prospectus (as amended or
supplemented, if the Company shall have furnished any amendments or supplements
thereto) in connection with the sale of the Shares until the earlier of
completion of the public offering or the 90th day following effectiveness of the
Registration Statement.
4. Payment and Delivery.
(a) Payment for the Primary Shares which the Underwriters
agree to purchase hereunder shall be made to the Company by wire
transfer at the offices of Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP, or
at such other place as shall be agreed upon by the Representative and
the Company, at 7:00 a.m., Pacific Time, on the third (fourth, if the
pricing occurs after 4:30 p.m. New York time) business day after the
date hereof (unless postponed in accordance with the provisions of
Section 9 hereof), or at the time, date (not later than seven full
business days thereafter) and place agreed upon by the Representative
and the Company, against delivery to the Representative for the
respective accounts of the several Underwriters of the Primary Shares
in the form of certificates for the securities comprising the Primary
Shares. The date and time of this payment and delivery (which may be
postponed as provided in Section 10 hereof) are sometimes referred to
below as the "First Closing Date."
(b) Payment for the Over-Allotment Shares which the
Underwriters purchase hereunder shall be made to the Company by wire
transfer at the office specified in the immediately preceding paragraph
at the time or times and on the date or dates specified in the notice
or notices delivered by the Representative against delivery for the
respective accounts of the several Underwriters of the Over-Allotment
Shares in the form of certificates for the securities comprising the
Over-Allotment Shares. The dates and times of these payments and
deliveries are herein singularly or collectively sometimes referred to
as the "Second Closing Date." The term "Closing Date" refers to both
the First Closing Date and the Second Closing Date.
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(c) You, individually and not as Representative of the
Underwriters, may (but shall not be obligated to) make payment to the
Company for Shares to be purchased by any Underwriter whose wire
transfer shall not have been received by you at the date of payment
therefor for the account of that Underwriter. Any payment by you shall
not relieve that Underwriter from any of its obligations hereunder.
(d) The certificates for the Shares shall be registered in
the name or names and shall be in the denominations you, as
Representative, at least two full business days prior to the First
Closing Date, in the case of the Primary Shares, and at least two full
business days prior to the Second Closing Date, in the case of the
Over-Allotment Shares, may request. The Company agrees to cause
certificates for the Shares to be delivered pursuant to this Agreement
at your offices, at the offices of The Depositary Trust Company, New
York, New York, or at such other places as may be designated by you as
Representative, and to be made available for checking and packaging at
one of the above offices or such other places as may be designated by
you as the Representative at least one full business day prior to the
First Closing Date in the case of the Primary Shares, and at least one
full business day prior to the Second Closing Date, in the case of the
Over-Allotment Shares.
5. Conditions of the Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the following
conditions:
(a) The Registration Statement shall have become effective
under the Act not later than (i) 2:00 p.m., Pacific Time, on the day
following the date of this Agreement or (ii) such other time and date,
but not later than 2:00 p.m, Pacific Time, on the second day following
the date of this Agreement, as may be approved by the Underwriters
(including the Representative) that are obligated to purchase an
aggregate of more than 50% of the Shares; and, at the Closing Date, no
stop order suspending the effectiveness of the Registration Statement
or the qualifications of the Shares shall have been issued and no
proceedings for that purpose shall be pending before or threatened by
the Commission or any state securities or "Blue Sky" commissioner or
authority.
(b) At each Closing Date, (i) the representations and
warranties of the Company contained in this Agreement shall be true and
correct with the same effect as if made on and as of such Closing Date
and the
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Company shall have performed all of the obligations and complied with
all of the conditions hereunder on its part to be performed or complied
with on or prior to the Closing Date; (ii) the Registration Statement
and the Prospectus and any amendments or supplements thereto shall
contain all statements required to be stated therein in accordance with
the Act and the Rules and Regulations and shall in all material
respects conform to the requirements thereof, and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading; (iii)
there shall have been, since the respective dates as of which
information is given, no material adverse change in the business,
properties or condition (financial or otherwise), results of
operations, properties, prospects, capital stock, long-term debt or
general affairs of the Company from that set forth in the Registration
Statement and the Prospectus, except changes which the Registration
Statement indicates might occur after the effective date of the
Registration Statement, and neither the Company nor any of its
Subsidiaries shall have incurred any material liabilities or material
obligations, direct or contingent, or entered into any material
transaction, contract or agreement not in the ordinary course of
business other than as referred to or contemplated in the Registration
Statement; and, (iv) except as set forth in the Prospectus, no action,
suit or proceeding at law or in equity shall be pending or threatened
against the Company or any of its Subsidiaries which would be required
to be set forth in the Registration Statement, and no proceedings shall
be pending or threatened against the Company or any of its Subsidiaries
before or by any commission, board or administrative agency in the
United States or elsewhere, wherein an unfavorable decision, ruling or
finding would materially and adversely affect the business, property,
condition (financial or otherwise), results of operations, properties,
prospects, or general affairs of the Company and its Subsidiaries
considered as a whole; and you shall have received at each Closing
Date, a certificate of the principal executive officer and the
principal financial or accounting officer of the Company, dated as of
such Closing Date, evidencing compliance with the provisions of this
subsection (b), and confirming the accuracy of the representations of
the Company set forth in Section 1 hereof and confirming that all
conditions set forth herein have been met as of such date.
(c) No Underwriter shall have discovered and disclosed to
the Company prior to either Closing Date that the Registration
Statement or the
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Prospectus or any amendment or supplement thereto, contains an untrue
statement of a fact that in the reasonable opinion of the
Representative is material, or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, not misleading.
(d) On each Closing Date you shall have received a signed
opinion, dated as of such date, of Sheppard, Mullin, Xxxxxxx & Hampton
LLP, counsel to the several Underwriters, with respect to the
sufficiency of all corporate proceedings and other legal matters
relating to this Agreement and the transactions contemplated hereby,
and the Company shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon
such matters.
(e) On each Closing Date you shall have received the
signed opinion, dated as of such date, of Sidley & Austin, counsel to
the Company, in form reasonably satisfactory to counsel for the
Underwriters, together with signed or photostatic copies thereof for
each of the other Underwriters to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business
as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole;
(ii) each Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own
the property and to conduct the business described in the
Prospectus, and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to
be so qualified or be in good standing would
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not have a material adverse effect on the Company and its
Subsidiaries taken as a whole;
(iii) the Shares have been duly authorized and, when
issued and delivered against payment therefor in accordance
with the terms of this Agreement, will be validly issued,
fully paid and nonassessable, and will not to our actual
knowledge have been issued in violation of any preemptive or
similar rights;
(iv) this Agreement has been duly authorized, executed
and delivered by the Company;
(v) the execution and delivery by the Company of, and
the performance by the Company of its obligations under, this
Agreement will not (a) contravene any provision of any law,
rule or regulation applicable to general business corporations
engaged in the type of business described in the Registration
Statement (provided, however, that in rendering such opinion
such counsel need express no opinion with respect to the
indemnification and contribution obligations contained herein
or the anti-fraud provisions of federal or state securities
laws), (b) result in any violation of the articles of
incorporation or by-laws of the Company, (c) to such counsel's
actual knowledge, result in the material breach or violation
of any of the terms and provisions of any agreement or other
instrument binding upon the Company or any of its Subsidiaries
that is material to the Company and its Subsidiaries, taken as
a whole, or (d) to such counsel's actual knowledge, result in
the material breach or violation of any judgment or decree of
any governmental body, agency or court having jurisdiction
over the Company or any of its Subsidiaries; and to such
counsel's actual knowledge, no consent, approval,
authorization or order of or qualification with any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, except
such as may be required by the securities or "blue sky" laws
of the various states in connection with the offer and sale of
the Shares by the Underwriters;
(vi) to such counsel's actual knowledge, (a) there are
no legal or governmental proceedings pending or threatened to
which the
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Company or any of its Subsidiaries is a party or to which any
of the properties of the Company or any of its Subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus by the Act or the applicable Rules
and Regulations and are not so described, and (b) there are no
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(vii) the Company is not an "investment company" or an
entity "controlled" by an investment company," as such terms
are defined in the Investment Company Act of 1940, as amended;
(viii) at the time the Registration Statement becomes
effective (but after giving effect to the Rule 430A Filing, if
any), the Registration Statement (except for financial
statements and schedules included therein as to which such
counsel need not express any opinion) complied as to form in
all material respects with the Act and the Rules and
Regulations;
(ix) the form of the certificates for the Shares
comply with the requirements of New York corporate law, the
requirements of the NASDAQ/NMS and the Company's articles of
incorporation and bylaws and has been duly approved by the
Board of Directors of the Company;
(x) the Registration Statement has become 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 such counsel's actual
knowledge, no stop order proceedings suspending the
effectiveness of the Registration Statement have been
instituted or threatened or are pending under the Act.
In addition, such counsel shall state that although such
counsel is not passing upon, and do not assume responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus, nothing has come to their
attention that causes them to believe that
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(a) the Registration Statement (except for the financial statements,
financial schedules and accounting data, and the other financial and
statistical information derived therefrom and included therein, as to
which such counsel need express no statement), at the time it became
effective (but after giving effect to the Rule 430A Filing, if any),
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, including the occurrence of any
default by the Company in the due performance or observance of any
agreement or instrument filed as an exhibit to the Registration
Statement that would have a material adverse effect on the Company and
its Subsidiaries taken as a whole, or (b) the Prospectus or any
amendment or supplement thereto (except for the financial statements,
financial schedules and accounting data, and the other financial and
statistical information derived therefrom and included therein, as to
which such counsel need express no statement), at the time the
Prospectus was issued, at the time any such amended or supplemental
prospectus was issued or on the Closing Date, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
light of the circumstance under which they were made, not misleading,
including the occurrence of any default by the Company in the due
performance or observance of any agreement or instrument filed as an
exhibit to the Registration Statement that would have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
(f) On each Closing Date, you shall have received the
signed opinion, dated as of such date, of Feder, Kaszovitz, Isaacson,
Weber, Xxxxx & Bass LLP, counsel to the Company, in form reasonably
satisfactory to counsel for the Underwriters, together with signed or
photostatic copies thereof for each of the other Underwriters, to the
effect that:
(i) assuming that no warrants or options to purchase
the Company's Common Stock are exercised after the respective
dates set forth in the Prospectus, the authorized, issued and
outstanding capital stock of the Company is as set forth under
the caption "Capitalization" in the Prospectus; and none of
the outstanding shares of capital stock of the Company was
issued in violation of preemptive or similar rights of any
stockholder of the Company arising by operation of law, under
the
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articles of incorporation or bylaws of the Company or, to such
counsel's actual knowledge, under any agreement to which the
Company is a party;
(ii) the shares of the Company's Common Stock out
standing prior to the issuance of the Shares have been duly
authorized and are validly issued, fully paid and
nonassessable;
(iii) the statements (a) in the Prospectus under the
captions "Description of Securities" and "Shares Eligible for
Future Sale" and (b) in the Registration Statement in Item 15,
in each case insofar as such statements constitute summaries
of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein; and
(iv) to the best of such counsel's knowledge, there
are no outstanding options, warrants or other rights calling
for the issuance of, and no commitments, plans or arrangements
to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable for capital stock of
the Company, except as disclosed in the Prospectus.
(g) At the time of the signing of this Agreement and on
each Closing Date, you shall have received a signed letter, dated,
respectively, as of each such date, from Deloitte & Touche LLP in form
and substance satisfactory to you, together with, in each case, signed
or photostatic copies thereof for each of the other Underwriters, to
the effect that:
(i) they are independent auditors with respect to the
Company within the meaning of the Act and the published Rules
and Regulations thereunder;
(ii) in their opinion, the financial statements and
schedules audited by them and included in the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the
published Rules and Regulations thereunder;
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17
(iii) on the basis of procedures referred to in such
letter, including a reading of the latest available interim
financial statements of the Company, inquiries of officials of
the Company responsible for financial and accounting matters
and the performance of procedures specified by the American
Institute of Certified Public Accountants for a review of
interim financial statements as described in SAS No. 71,
Interim Financial Information, nothing caused them to believe
that:
(A) the unaudited financial statements as at
September 30, 1996, and for the nine months then ended
included in the Registration Statement, do not comply in
form in all material respects with the applicable accounting
requirements of the Act and the published Rules and
Regulations thereunder;
(B) at the date of the latest available internal
balance sheet of the Company and at a subsequent specified
date not more than five days prior to the date of such
letter, there was any change in the capital stock or
long-term debt of the Company or any decrease in net current
assets or net assets as compared with amounts shown in the
September 30, 1996 unaudited balance sheet included in the
Registration Statement, except in all instances for changes
or decreases that the Registration Statement discloses have
occurred or may occur or as may be set forth in such letter;
or
(C) the period from the date of the latest
available internal balance sheet of the Company to a
subsequent specified date not more than five days prior to
the date of such letter, there was any decrease, as compared
with the corresponding period in the previous year, in sales
or in the total net income or net income per share, except
in all instances for decreases that the Registration
Statement discloses have occurred or may occur or as may be
set forth in such letter;
(iv) they shall have carried out certain procedures
specified by you and shall have disclosed to you their
findings with respect to the amounts, percentages and
financial information specified
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by you and set forth in the Registration Statement and the
Prospectus and derived from general accounting and financial
records of the Company.
Any changes (increases or decreases) in the items set forth in these
letters which, in the reasonable judgment of the Representative, are
materially adverse with respect to the financial position or results of
operations of the Company and its Subsidiaries taken as a whole shall
be deemed to constitute a failure of the Company to comply with the
conditions to the obligations of the Underwriters hereunder.
(h) On or prior to the effective date of the Registration
Statement, the Common Stock of the Company shall have been designated
NASDAQ/NMS securities and shall have been duly authorized for inclusion
in the NASDAQ/NMS and, as of the effective date of the Registration
Statement, the Common Stock shall be registered under the Securities
Exchange Act of 1934, as amended.
(i) All proceedings taken at or prior to each Closing Date
in connection with the sale of the Shares shall be satisfactory in form
and substance to you and Sheppard, Mullin, Xxxxxxx & Hampton LLP,
counsel to the several Underwriters, and at the time of signing this
Agreement and on the Closing Date, you and such counsel shall have
received each and every additional document, letter, opinion,
certificate or other item dated and executed in a manner reasonably
satisfactory to you and such counsel, as you or such counsel may
reasonably request in connection with the Prospectus, the Registration
Statement, the offer and sale of the Shares hereunder, or proceedings
at the Closing Date.
If any of the conditions herein provided for in this Section
shall not have been fulfilled as of the date indicated, all obligations of the
several Underwriters under this Agreement may be canceled by the Representative
by notifying the Company of such cancellation on or prior to the applicable
Closing Date.
6. Covenants of the Company.
6.1 The Company covenants and agrees as follows:
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(a) To use its best efforts to bring about the
effectiveness of the Registration Statement and not, at any time,
whether before or after the effective date, file any amendment to the
Registration Statement or Prospectus or supplement thereto of which you
shall not previously have been advised and furnished with a copy or to
which you or your counsel reasonably shall have objected or which is
not in compliance with the Act and the Rules and Regulations, and as
soon as the Company is advised thereof, to advise the Representative
and confirm this advice in writing (i) when the Registration Statement
has become effective and (ii) of the issuance by the Commission or any
state securities or "blue sky" commissioner or authority of any order
suspending the effectiveness of the Registration Statement or any
qualification of the Shares or prohibiting the sale of the Shares or
the initiation or threatening of any proceedings for any such purpose.
(b) To deliver, during the period when such documents are
required to be delivered under the Act or the Securities Exchange Act
of 1934, as amended, without charge, to the Representative and the
several Underwriters, at such office or offices as the Representative
may designate, as many copies of the preliminary prospectus and
Prospectus as the Representative may reasonably request.
(c) To furnish the Representative, without charge, one
executed copy of the Registration Statement (including exhibits) and of
any amendments thereto and to furnish the Representative, without
charge, a reasonable number of conformed copies of the Registration
Statement (excluding exhibits) and of any amendments thereto.
(d) To furnish the Representative with a copy of each
proposed amendment or supplement before amending or supplementing the
Registration Statement or the Prospectus.
(e) Until the completion of the offering, if any event
shall occur as a result of which it shall be necessary to amend or
supplement the Prospectus in order to make the statements therein, in
light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, forthwith to prepare and furnish, at its own
expense, to the Underwriters and to dealers (whose names and addresses
the Representative will furnish to the Company) to whom Shares may have
been sold by the Representative and to any other
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dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not, in light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading.
(f) To make generally available to the Company's security
holders, as soon as practicable, but not later than fifteen months
after the end of the Company's current fiscal quarter, an earnings
statement (which need not be audited) covering a period of twelve
months beginning after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of the
last paragraph of Section 11(a) of the Act.
(g) For a period of three years following the date of this
Agreement, to supply to the Representative, and to each other
Underwriter who may so request in writing, copies of such financial
statements and other periodic and special reports as the Company may
from time to time furnish generally to holders of any class of its
securities, and to furnish the Representative a copy of each annual
report on Form 10-K which it files with the Commission.
(h) To cooperate with the Representative in an endeavor to
qualify the Shares for offer and sale under the "blue sky" laws of such
jurisdic tions of the United States as the Representative may request,
and to pay, or reimburse if paid by the Representative, fees and
disbursements of counsel for the Underwriters and all other expenses
and filing fees in connection therewith; provided, however, that the
Company shall not be required to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation as doing business in any jurisdiction.
(i) To comply to the best of its ability with the Act, the
Rules and Regulations and the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
(j) To apply the net proceeds from the sale of the Shares
in accordance with the statement made under "Use of Proceeds" in the
Prospectus.
(k) To supply the Representative with copies of all
correspondence to and from and all documents issued to and by the
Commission in connection with the registration of the Shares under the
Act.
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6.2 The Company covenants and agrees to pay, or
reimburse if paid by the Representative, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated, all
costs and expenses incident to the entry into and performance under this
Agreement by the Company, and without limiting the generality of the foregoing,
all costs and expenses incident to (a) the issuance, purchase, sale and delivery
of the Shares to the Underwriters, (b) the registration of the Shares and
preparing, printing and shipping the Registration Statement and the underwriting
documents, (c) the filing fees of the Commission, the National Association of
Securities Dealers, Inc. (including fees for NASDAQ/NMS) and state securities
and "blue sky" commissioners and authorities in connection with the Registration
Statement and this Agreement, and the fees, disbursements and expenses of
counsel in connection with state securities or "blue sky" matters, (d) the fees
and disbursements of counsel and accountants for the Company, (e) the furnishing
to the Representative and the other Underwriters of copies of the Registration
Statement, any preliminary prospectus, the Prospectus, this Agreement, the Blue
Sky Survey (preliminary and final), and of the documents required by paragraphs
(b), (c), (d) and (e) of Section 6.1, to be so furnished, including costs of
preparing, printing and shipment, (f) the preparation, printing, mailing,
delivery, filing and distribution by the Company of all supplements and
amendments to the Prospectus required by paragraph (e) of Section 6.1, (g) the
furnishing to the Representative and the other Underwriters of all reports and
financial statements required by paragraphs (f) and (g) of Section 6.1, and (h)
the holding of informational meetings related to the offer and sale of the
Shares, other than the Underwriters' expenses for air transportation and hotel
accommodations. Except as set forth above, the Representative will pay the fees
and costs of its counsel and the costs of "tombstone" advertisements. If the
sale of any of the Shares to the several Underwriters pursuant to this Agreement
is not consummated for any reason, other than as a result of the termination of
this Agreement pursuant to Section 9, the Company will reimburse the
Representative for all of its out-of-pocket expenses (including fees and
expenses of counsel) incurred by the Representative in connection with this
Agreement or in investigating, preparing to market or marketing the Shares.
6.3 The Company covenants and agrees that it will not
offer to sell, sell or otherwise dispose of any shares of Common Stock of the
Company, or securities convertible or exchangeable for, or any rights to
purchase or acquire, Common Stock, other than as provided in this Agreement or
as disclosed in or contemplated by the Registration Statement, for a period of
90 days after the effective
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date of the Registration Statement, without the prior written consent of the
Representative; provided, however, that nothing in this Section 6.3 shall
prohibit (a) the exercise of currently outstanding warrants or options to
purchase the Company's Common Stock, (b) the granting of new options to purchase
the Company's Common Stock pursuant to the Company's Amended and Restated 1990
Stock Option Plan or any similar successor employee stock option plan, or (c)
the granting of options to purchase the Company's Common Stock to Frost Capital
Management in consideration of the closing of certain business acquisitions by
the Company and the exercise of such options. The Company also will, at or prior
to the First Closing Date, furnish you with a written agreement of each of the
persons listed on Schedule B hereto to the effect that they will not offer to
sell, sell or otherwise dispose of any shares of Common Stock or securities
convertible into or exchangeable for, or any rights to purchase or acquire,
Common Stock, for a period of 180 days after the effective date of the
Registration Statement, without the prior written consent of the Representative.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each
Underwriter (including specifically each person who may be substituted
for an Underwriter as provided in Section 9 hereof) and each person, if
any, who controls any Underwriter within the meaning of Section 15 of
the Act, from and against any and all losses, claims, damages, expenses
or liabilities, joint or several, to which they or any of them may
become subject under the Act or any other statute or at common law or
otherwise, and except as provided below, will reimburse each of the
Underwriters and each such controlling person, if any, for any legal or
other expenses incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment or supplement thereto, or
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectus, or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
unless the untrue statement or omission or alleged untrue statement or
omission was made in such Registration Statement,
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preliminary prospectus or Prospectus in reliance upon and in conformity
with information furnished in writing to the Company by you or any
Underwriter through you expressly for use therein. Promptly after
receipt by any Underwriter or any person controlling the Underwriter of
notice of the commencement of any action in respect of which indemnity
may be sought against the Company under this Section 7, the Underwriter
will notify the Company in writing of the commencement thereof, and,
subject to the provisions stated below, the Company shall assume the
defense of the action (including the employment of counsel, who shall
be counsel reasonably satisfactory to such Underwriter or such person,
as the case may be, and the payment of expenses) insofar as such action
shall relate to any alleged liability in respect of which indemnity may
be sought against it. Any Underwriter or any controlling person shall
have the right to employ separate counsel in the action and to
participate in the defense thereof, but the fees and expenses of its
counsel shall not be at the expense of the Company unless the
employment of that counsel has been specifically authorized by the
Company. The Company shall not be liable to indemnify any person for
any settlement of any action effected without the Company's consent.
(b) Each Underwriter will severally, and not jointly,
indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the Registration Statement, each person,
if any, who controls the Company within the meaning of Section 15 of
the Act from and against any and all losses, claims, damages, expenses
or liabilities, joint or several, to which they or any of them may
become subject under the Act or any other statute or at common law or
otherwise, and, except as provided below, will reimburse the Company
and each such director, officer or controlling person for any legal or
other expenses incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment or supplement thereto, or
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectus, or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were
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made, not misleading, but only insofar as any such untrue statement or
omission or alleged untrue statement or omission was made in reliance
upon and in conformity with information furnished in writing to the
Company by you or any Underwriter through you expressly for use
therein. Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against one or more
Underwriters under this Section 7, the indemnified party will notify
the Representative in writing of the commencement thereof, and the
Underwriter or Underwriters against whom indemnity may be sought shall,
subject to the provisions stated below, assume the defense of the
action (including the employment of counsel, who shall be counsel
reasonably satisfactory to the Company, and the payment of expenses)
insofar as such action shall relate to any alleged liability in respect
to which indemnity my be sought against the Underwriter or
Underwriters. The Company and each director, officer or controlling
person shall have the right to employ separate counsel in any action
and to participate in the defense thereof, but the fees and expenses of
their counsel shall not be at the expense of any Underwriter unless the
employment of that counsel has been specifically authorized by the
Underwriter or Underwriters obligated to defend the action. The
Underwriter against whom indemnity may be sought shall not be liable to
indemnify any person for any settlement of any action effected without
the Underwriter's consent.
(c) It is agreed that the only information supplied
by the Underwriters in writing for use in the Registration Statement,
the preliminary prospectus or the Prospectus are set forth in the last
paragraph on the cover of the Prospectus and in the table and the first
paragraph under the table under the heading "Underwriting" in the
Prospectus.
(d) In order to provide for just and equitable
contribution under the Act in any case in which (i) any indemnified
party makes claim for indemnification pursuant to this Section 7, but
it is judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the
fact that the express provisions of this Section 7 provide for
indemnification in such case, or (ii) contribution under the Act may be
required on the part of any indemnified party; then the Company and any
such Underwriter shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be
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subject (which shall, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all
attorneys' fees) in either such case (after contribution from others)
in such proportions so that all such Underwriters are responsible in
the aggregate for that portion of such losses, claims, damages or
liabilities as is determined by multiplying the total amount of such
losses, claims, damages or liabilities times the difference between the
public offering price and the purchase price to the Underwriter and
dividing the product thereof by the public offering price, and the
Company shall be responsible for the portion of such losses, claims,
damages or liabilities as determined by multiplying the total amount of
such losses, claims, damages or liabilities times the purchase price to
the Underwriters and dividing the product thereof by the public
offering price; provided, however, that the contribution of each
contributing Underwriter shall not be in excess of its proportionate
share (based on the ratio of the number of Shares purchased by such
Underwriter to the number of Shares purchased by all contributing
Underwriters) of the portion of such losses, claims, damages or
liabilities for which the Underwriters are responsible and the
contribution of the Company shall not be in excess of its proportionate
share (based on the ratio of the number of Shares sold by the Company
to the total number of Shares sold) of the portion of such losses,
claims, damages or liabilities for which the Company is responsible. No
person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. The
foregoing contribution agreement shall in no way affect the
contribution liabilities of any person having liability under Section
11 of the Act other than the Company and the Underwriters. If the full
amount of the contribution specified in this paragraph is not permitted
by law, then the Company and any Underwriter, as the case may be, shall
be entitled to contribution from the Company and/or the Underwriters,
as the case may be, to the full extent permitted by law.
8. Termination.
(a) This Agreement, except for Sections 6.2, 7, 10,
11 and 12, may be terminated by the Representative by notifying the
Company at any time at or prior to the First Closing Date, and the
option referred to in Section 2(b) hereof, if exercised, may be
canceled at any time prior to the Second Closing Date, if, in the
Representative's judgment, payment for and delivery of the Shares is
rendered impracticable or inadvisable by reason of (i) the Company
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having sustained a material loss, whether or not insured, by reason of
fire, earthquake, flood, accident or other calamity, or from any labor
dispute or court or government action, order or decree, (ii) trading in
securities on the NASDAQ/NMS having been suspended or limited, (iii)
material governmental restrictions having been imposed on trading in
securities generally, (iv) a banking moratorium not in force or effect
on the date hereof having been declared by Federal or California or New
York state authorities, (v) an outbreak of major international
hostilities or other national or international calamity having occurred
which, in the reasonable opinion of the Representative, makes it
impracticable to offer or sell the Shares, (vi) the passage by the
Congress of the United States or by any state legislative body, of any
act or measure, or the adoption or proposed adoption of any orders,
rules, legislation or regulations by any governmental body or any
authoritative accounting institute or board, or any governmental
executive, which is believed likely by the Representative to have a
material adverse impact on the business, financial condition or
financial statements of the Company or the market for the securities
offered hereby, (vii) any material adverse change having occurred,
since the respective dates as of which information is given in the
Registration Statement and Prospectus, in the condition of the Company,
financial or otherwise, or in the earnings, affairs or business
prospects of the Company, whether or not arising in the ordinary course
of business which, in your judgment, makes it impracticable or
inadvisable to offer or deliver the Shares on the terms contemplated by
the Prospectus, or (viii) any of the conditions specified in Section 5
hereof not having been fulfilled or waived in writing by the
Representative, at or prior to the Closing Date, when and as required
by this Agreement to be fulfilled.
(b) If this Agreement shall be terminated pursuant to
any of the provisions hereof, except as provided in Sections 6.2 and 7,
the Company shall not be under any liability to any Underwriter nor
shall any Underwriter be under any liability to the Company, except
that no Underwriter which shall have failed or refused to purchase the
Shares agreed to be purchased by it hereunder, other than as a result
of the termination of this Agreement pursuant to Section 8(a), shall be
relieved of liability to the Company or to the other Underwriters for
damages occasioned by its default.
9. Default of Underwriters. If one or more of the
Underwriters shall fail or refuse (other than as a result of the termination of
this Agreement pursuant to Section 8(a)) to purchase on the First Closing Date
or the Second Closing Date the
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aggregate number of Primary Shares or Over-Allotment Shares agreed to be
purchased by such Underwriter or Underwriters and the aggregate number of
Primary Shares or Over-Allotment Shares agreed to be purchased by such
defaulting Underwriter or Underwriters does not exceed 10% of the total number
of Primary Shares or Over-Allotment Shares (as the case may be) to be sold
hereunder to the Underwriters, then each of the non-defaulting Underwriters
shall be obligated to purchase these Primary Shares or Over-Allotment Shares on
the terms herein set forth in proportion to their respective obligations
hereunder. In that case, the Representative and the Company shall have the right
to postpone the First Closing Date or the Second Closing Date (as the case may
be) for a period of not more than seven days in order that necessary changes and
arrangements may be effected.
If one or more of the Underwriters shall fail or refuse (other
than as a result of the termination of this Agreement pursuant to Section 8(a))
to purchase on the First Closing Date or the Second Closing Date the aggregate
number of Primary Shares or Over-Allotment Shares agreed to be purchased by such
Underwriter or Underwriters and the aggregate number of Primary Shares or
Over-Allotment Shares agreed to be purchased by such defaulting Underwriter or
Underwriters shall exceed 10% of the total number of Primary Shares or
Over-Allotment Shares (as the case may be) to be sold hereunder to the
Underwriters, then the non-defaulting Underwriters have the right to purchase,
or procure one or more Underwriters reasonably acceptable to the Company, to
purchase, in such proportions as they may agree upon and upon the terms herein
set forth, the Primary Shares or Over-Allotment Shares which such defaulting
Underwriter or Underwriters agreed to purchase, and this Agreement shall be
carried out accordingly. If such other Underwriters do not exercise this right
within twenty-four hours after receiving notice of the default, then the Company
shall be entitled to an additional period of twenty-four hours within which to
procure another party or parties satisfactory to the Representative to purchase
or agree to purchase these Primary Shares or Over-Allotment Shares on the terms
herein set forth. In any such case, the Representative and the Company shall
have the right to postpone the First Closing Date or the Second Closing Date (as
the case may be) for a period of not more than seven days in order that
necessary changes and arrangements may be effected. If this paragraph becomes
applicable and neither the non-defaulting Underwriters nor the Company shall
make arrangements within the period stated for the purchase of the Primary
Shares or Over-Allotment Shares which the defaulting Underwriter or Underwriters
agreed to purchase, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter to the Company and without liability on the
part of the Company except as provided in Sections 6.2 and 7. The provisions of
this
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Section 9 shall not in any way affect the liability of any defaulting
Underwriter to the Company arising out of the default.
10. Representations and Agreement to Remain in Effect. The
expense, reimbursement and indemnification agreements contained in Sections 6, 7
and 8 shall survive any termination of this Agreement; and the representations,
warranties and covenants of the Company set forth in this Agreement shall remain
operative and in full force and effect regardless of (i) any investigation made
by or on behalf of any of the Underwriters, the Company, any controlling person,
director or officer of the Company or the Underwriters, and (ii) delivery,
acceptance of and payment for the Shares under this Agreement.
11. Parties in Interest. This Agreement has been and is
made solely for the benefit of the Underwriters, the Company and their
respective successors and assigns, to the extent expressed herein, for the
benefit of persons controlling any of the Company or any of the Underwriters,
directors and officers of the Company and their respective successors and
assigns, and no other person, partnership, association or corporation shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser of Shares from any
Underwriter merely because of such purchase.
12. Notices, Headings, Applicable Law. Except as otherwise
provided in this Agreement, all statements, requests, notices and other
communications hereunder shall be in writing and shall be mailed, delivered,
telegraphed or sent by facsimile transmission and confirmed to the
Representative at the address set forth above, attention: Investment Banking
(facsimile number: (000) 000-0000); and if to the Company to T-HQ, Inc., 0000
Xxxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxx, XX 00000, attention: President (facsimile
number: (000) 000-0000), with a copy to Sidley & Austin, 000 Xxxx Xxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxxxxx, Xx. 90013, attention: Xxxxxxx X. Xxxxx (facsimile
number (000) 000-0000). Any party may change the address at which it is to
receive communications hereunder upon notice to the other parties as provided
above. The headings in this Agreement have been inserted as a matter of
convenience and reference and are not a part of this Agreement. The Agreement
shall be construed in accordance with the internal laws, and not the laws
pertaining to choice or conflict of laws, of the State of California.
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Please confirm that the foregoing correctly sets forth the
agreement among us.
Sincerely yours,
T-HQ, Inc.
By /s/ XXXXX X. XXXXXXX
--------------------------------
Title: President
Confirmed and Accepted as of the
date first above written.
WEDBUSH XXXXXX SECURITIES Inc.
By /s/ M. XXXX XXXX
-------------------------------
For itself and as the Representative
of the several Underwriters.
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SCHEDULE A
UNDERWRITERS
Number of
Underwriter Shares
----------- ------
Wedbush Xxxxxx Securities Inc................................................... 800,000
Xxxxx & Company................................................................. 40,000
Xxxxxxxxxx Securities........................................................... 40,000
Xxxxxxxxxxx & Co., Inc.......................................................... 40,000
Advest, Inc..................................................................... 25,000
Xxxxxx X. Xxxxx & Co. Incorporated.............................................. 25,000
Black & Company Inc............................................................. 25,000
Xxxxxxx, Xxxxxx & Co............................................................ 25,000
Cruttenden Xxxx Incorporated.................................................... 25,000
Xxxx Xxxxxxxx Incorporated...................................................... 25,000
Xxxxx Securities Corporation.................................................... 25,000
EVEREN Securities, Inc.......................................................... 25,000
Xxxxxx Xxxx LLC................................................................. 25,000
Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc............................................... 25,000
Xxxxxxx, Xxxxxx Inc............................................................. 25,000
Interstate/Xxxxxxx Lane Corporation............................................. 25,000
Xxxxxxxxx & Company, Inc........................................................ 25,000
Xxxxxxx & Company, Inc.......................................................... 25,000
Xxxxx Xxxxxxx Inc............................................................... 25,000
Xxxxx XxxXxxxxx Incorporated.................................................... 25,000
Sands Brothers & Co., Ltd....................................................... 25,000
The Xxxxxxx Companies Incorporated.............................................. 25,000
Southwest Securities, Inc....................................................... 25,000
Xxxxxx, Xxxxxxxx & Company, Incorporated........................................ 25,000
Sutro & Co. Incorporated........................................................ 25,000
Xxx Xxxxxx & Company............................................................ 25,000
GBS Financial Corp.............................................................. 10,000
TriQuest Financial Inc.......................................................... 10,000
Xxxxxxx & Company, Inc.......................................................... 10,000
Total....................................................................... 1,500,000
=========
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SCHEDULE B
LIST OF SHAREHOLDERS AND OPTION HOLDERS
Xxxxx X. Xxxxxxx
Xxxxxxx X. Lake
L. Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxxx X. Xxxxx
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