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EXHIBIT 1.1
DRAFT
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 terms and conditions of this
Underwriting Agreement (the
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"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 (120% 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 that such issuances would not violate
the interpretations of the National Association of Securities Dealers, Inc. (the
"NASD")
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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
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
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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 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
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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." 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."
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(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
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
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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.
(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,
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(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 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
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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 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
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 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
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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 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
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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 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
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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 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
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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 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,
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14
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.
(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).
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15
(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).
(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.
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16
(ad) 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.
(ae) 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
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17
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 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.
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18
(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, 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), 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
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19
statements audited by independent public accountants) and 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 as
contemplated by 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 printing 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 with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be
- 20 -
21
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 $250,000, 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
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
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22
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);
(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
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23
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; the descriptions contained in the Registration
Statement and the Prospectus of contracts and other documents are accurate
and fairly represent in all material respects the information required to
be shown by 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," "Management - Limitation of
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24
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 the best of 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 Governmental Body having such
jurisdiction. No consent,
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26
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 or, to such counsel's knowledge, any other liens, encumbrances,
claims or security interests. 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 and as of the Closing Date and
any Option Closing Date 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 not
misleading (it being understood that such counsel need not express any opinion
with respect to the financial statements, schedules and other financial or
statistical data included in the Registration Statement or the Prospectus).
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27
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, of 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 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,
- 27 -
28
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.
(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
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29
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, each beneficial owner of the outstanding shares of
Class A Common Stock or Class B Common Stock and each beneficial owner of
options to purchase shares of Class A Common Stock or Class B Common Stock
listed on Exhibit ____ hereto 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(f) 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 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
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30
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
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
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31
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 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
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32
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, 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
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33
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 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
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34
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 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
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35
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
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.
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36
(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 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
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37
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 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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38
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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39
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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