Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2/A Pre-Effective Amendment to Registration of 142 740K
Securities by a Small-Business Issuer
2: EX-1 Underwriting Agreement 54 225K
3: EX-4.2 Instrument Defining the Rights of Security Holders 31 107K
4: EX-4.3 Instrument Defining the Rights of Security Holders 38 141K
5: EX-4.4 Instrument Defining the Rights of Security Holders 9 46K
6: EX-5 Opinion re: Legality 3 14K
7: EX-9.1 Voting Trust Agreement 6 27K
8: EX-9.2 Voting Trust Agreement 1 10K
9: EX-9.3 Voting Trust Agreement 1 10K
10: EX-9.4 Voting Trust Agreement 1 10K
11: EX-10.1 Material Contract 17 57K
12: EX-10.2 Material Contract 16 57K
13: EX-10.3 Material Contract 13 47K
14: EX-10.35 Material Contract 12 55K
15: EX-10.36 Material Contract 12 55K
16: EX-10.37 Material Contract 12 55K
17: EX-10.38 Material Contract 11 45K
18: EX-10.39 Material Contract 10 40K
19: EX-10.40 Material Contract 1 10K
20: EX-10.41 Material Contract 23 81K
21: EX-10.42 Material Contract 6 22K
22: EX-10.43 Material Contract 5 23K
23: EX-10.44 Material Contract 6 25K
24: EX-10.45 Material Contract 7 30K
25: EX-10.46 Material Contract 2 11K
26: EX-23.1 Consent of Experts or Counsel 1 8K
EX-1 — Underwriting Agreement
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PROOF OF MAY 1, 1996
2,400,000 Shares of Common Stock
and 1,200,000 Redeemable Warrants
SOUND SOURCE INTERACTIVE, INC.
UNDERWRITING AGREEMENT
Los Angeles, California
, 1996
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THE BOSTON GROUP, L.P. and
JOSEPH STEVENS & COMPANY, L.P.
As Representatives of the
Several Underwriters
Named in Schedule I Hereto
c/o 1999 Avenue of the Stars, Suite 2550
Los Angeles, California 90067
Ladies and Gentlemen:
Sound Source Interactive, Inc., a Delaware corporation (the
"Company"), Vincent J. Bitetti ("Bitetti") and Eric H. Winston ("Winston")
confirm their agreement with the several Underwriters named in Schedule I
("Schedule I") attached hereto and incorporated herein by this reference (the
"Underwriters") with respect to the sale by the Company and the purchase by the
Underwriters, severally and not jointly, of an aggregate of two million four
hundred thousand (2,400,000) shares ("Firm Shares") of the Company's common
stock, no par value (the "Common Stock") and one million two hundred thousand
(1,200,000) redeemable warrants (the "Redeemable Warrants"), each Redeemable
Warrant to purchase one (1) additional share of Common Stock. The public
offering price per share of Common Stock is $4.00 and the public offering price
per Redeemable Warrant is $.25. Each Redeemable Warrant is exercisable
commencing on ____________, 1997 until ______________, 2001, unless previously
redeemed by the Company, at an initial exercise price equal to $4.40 per share,
subject to adjustment. The Redeemable Warrants may be redeemed by the Company
at a redemption price of twenty-five cents ($.25) per Redeemable Warrant at any
time commencing _________, 1997, subject to earlier redemption with the consent
of the Representatives, provided that the average closing bid price of the
Common Stock equals or exceeds $5.60 per share for any twenty (20) trading days
within a period of thirty (30) consecutive trading days ending on the fifth
trading day prior to the date of the notice of redemption. Such Shares and
Redeemable Warrants
are hereinafter referred to collectively as the "Firm Securities." Upon notice
by the Representatives (as defined below), as provided in Section 3(b) hereof,
the Company shall also issue and sell to the Underwriters, severally and not
jointly, an aggregate of up to an additional three hundred forty thousand
(340,000) shares of Common Stock and/or one hundred eighty thousand (180,000)
Redeemable Warrants, and Bitetti and Winston shall each sell to the
Underwriters, severally and not jointly, ten thousand (10,000) shares of Common
Stock, for the purpose of covering over-allotments, if any. Such 360,000
additional shares of Common Stock and/or 180,000 additional Redeemable Warrants
are hereinafter referred to as the "Option Securities." The Firm Securities and
the Option Securities are hereinafter referred to collectively as the
"Securities" and are more fully described in the Registration Statement and the
Prospectus referred to below. The Company also proposes to issue and sell to
The Boston Group, L.P. and Joseph Stevens & Co., L.P. (the "Representatives"),
individually and not in their capacities as Representatives, or their designees
a warrant (the "Representatives' Warrant") pursuant to the Representatives'
Warrant Agreement (the "Representatives' Warrant Agreement"), for the purchase
of an additional two hundred forty thousand (240,000) shares of Common Stock
(the "Representatives' Shares") and one hundred twenty thousand (120,000)
Redeemable Warrants. The shares of Common Stock issuable upon exercise of the
Redeemable Warrants (including the Redeemable Warrants issuable upon exercise of
the Representatives' Warrants) are hereinafter referred to as the "Warrant
Shares." Further, the following additional securities are being registered in
connection with this offering, but are not being underwritten by the
Underwriters, for the account of certain non affiliated selling security holders
and one selling director (collectively, the "Non-Affiliated Selling Security
Holders"): (i) one hundred seven thousand five hundred (107,500) shares of
Common Stock (the "Non-Affiliated Shares"); (ii) five million six hundred eighty
nine thousand six hundred sixty five (5,689,665) previously issued redeemable
warrants (the "Non-Affiliated Warrants"); (iii) five million six hundred eighty
nine thousand six hundred sixty five (5,689,665) shares of Common Stock issuable
upon exercise of the Non-Affiliated Warrants (the "Non-Affiliated Warrant
Shares"); and (iv) two million (2,000,000) shares of Common Stock issuable upon
exercise of warrants granted to ASSI, Inc. ("ASSI Warrants"). The Non-
Affiliated Shares, Non-Affiliated Warrants and Non-Affiliated Warrant Shares are
sometimes collectively referred to herein as the "Non-Affiliated Securities").
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and covenants and agrees with, each of the
Underwriters as of the date hereof, and as of the Closing Date and each option
Closing Date (as such terms are defined below), if any, as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a
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registration statement, and amendments thereto, on Form SB-2 (Registration No.
33-80827), including any related preliminary prospectus (the "Preliminary
Prospectus"), for the registration of the Shares under the Securities Act of
1933, as amended (the "Act"). After the date hereof, the Company shall not file
any other amendment to such registration statement which the Representatives
shall have reasonably objected to after having been furnished with a copy
thereof unless the Company's outside counsel reasonably determines in a written
opinion that such amendment or supplement is required to be filed pursuant to
applicable law. Except as the context may otherwise require, such registration
statement, as amended, on file with the Commission at the time it becomes
effective (including the prospectus, financial statements, schedules, exhibits
and all other documents filed as a part thereof or incorporated therein
(including, but not limited to, those documents or that information incorporated
by reference therein) and all information deemed to be a part thereof as of such
time pursuant to Rule 430A promulgated under the Act and any information
included in a term sheet (the "Term Sheet") as described in Rule 434 promulgated
under the Act), is hereinafter called the "Registration Statement," and the form
of prospectus in the form first filed with the Representatives' consent with the
Commission pursuant to Rule 424(b) promulgated under the Act and including any
information included in the Term Sheet, after the Registration Statement shall
have been declared effective by the Commission, is hereinafter called the
"Prospectus." For purposes hereof, "Rules and Regulations" means the rules and
regulations adopted by the Commission under the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority
has issued any order preventing or suspending the use of any Preliminary
Prospectus, the Registration Statement or the Prospectus or any part of any of
the foregoing, and no proceedings for a stop order suspending the effectiveness
of the Registration Statement or any part thereof have been initiated or are
pending, contemplated or threatened. Each Preliminary Prospectus and the
Registration Statement (including each amendment thereto), at the time of filing
thereof, complied with the requirements of the Act and the Rules and
Regulations, and neither any Preliminary Prospectus nor the Registration
Statement, at the time of filing thereof, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; PROVIDED, HOWEVER, that the foregoing
shall not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company by the
Representatives with respect to any Underwriter expressly for use in any
Preliminary Prospectus or the Registration Statement.
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(c) When the Registration Statement becomes effective and at all
times subsequent thereto up to and including the Closing Date and each Option
Closing Date, if any, and during such other periods as a prospectus may be
required to be delivered in connection with sales by any Underwriter or a
dealer, the Registration Statement and the Prospectus will contain all
statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations, and will comply with the requirements of the Act
and the Rules and Regulations, and at and through such dates, neither the
Registration Statement, the Prospectus nor any amendment thereof or supplement
thereto will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, PROVIDED, HOWEVER, that the foregoing shall not apply to statements
made or statements omitted in reliance upon and in conformity with written
information furnished to the Company by the Representatives with respect to any
Underwriter expressly for use in the Registration Statement or the Prospectus or
any amendment thereof or supplement thereto.
(d) Except for Sound Source Interactive, Inc., a California
corporation ("SSI California" or the "Subsidiary") the Company does not own an
interest in any corporation, partnership, trust, joint venture or other entity.
SSI California is a wholly-owned subsidiary of the Company. Each of the Company
and the Subsidiary has been duly organized and is validly existing as a
corporation in good standing under the laws of the respective jurisdiction of
its incorporation, as applicable. Each of the Company and the Subsidiary is
duly qualified and licensed and in good standing as a foreign corporation, in
each jurisdiction in which it owns or leases property or in which the conduct of
its business, as currently being conducted, requires such qualification or
licensing. Each of the Company and the Subsidiary has all requisite power and
authority (corporate, if applicable, and other), and has obtained any and all
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials, agencies,
authorities and bodies (including, without limitation, those having jurisdiction
over environmental, health or similar matters) necessary to own or lease its
properties and conduct its business as described in the Prospectus other than
those authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials, agencies,
authorities and bodies (including, without limitation, those having jurisdiction
over environmental, health or similar matters) which, singularly or in the
aggregate, the failure to obtain would not materially and adversely affect the
condition (financial or otherwise), earnings, business affairs, position,
prospects, shareholders' equity, operations, properties, businesses or results
of operations of the Company and the Subsidiary taken as a whole. Each of the
Company and the Subsidiary is and has been doing business in substantial
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compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state and local laws,
rules, regulations and orders; and neither the Company nor the Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such authorizations, approvals, orders, licenses, certificates, franchises
or permits which, singularly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition (financial or otherwise), earnings, business affairs, position,
prospects, shareholders' equity, operations, properties, businesses or results
of operations of the Company or the Subsidiary. The disclosure in the
Registration Statement concerning the effects of federal, state and local laws,
rules, regulations and orders on the Company's and the Subsidiary's businesses
as currently conducted and as contemplated are correct in all material respects
and do not omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any amendment or supplement
thereto, under "Capitalization" and "Description of Securities" and will have
the adjusted capitalization set forth therein on the Closing Date and each
Option Closing Date, if any, based upon the assumptions set forth therein.
Neither the Company nor the Subsidiary is a party to or bound by any instrument,
agreement or other arrangement or understanding providing for or requiring it to
issue any capital stock, rights, warrants, options or other securities, except
for this Agreement, the Representatives' Warrant Agreement, options previously
issued under the Company's 1992 Stock Option Plan (the "1992 Plan") and the
Company's 1995 Stock Option Plan (the 1995 Plan"), options granted by the
Company to Eric Winston for 200,000 shares of Common Stock, and the ASSI
Warrants for 2,000,000 shares, all as described in the Registration Statement.
The Securities and all other securities issued or issuable by the Company
conform or, when issued and paid for, will conform, in all respects to the
description thereof contained in the Registration Statement and the Prospectus.
All issued and outstanding securities of the Company and the Subsidiary have
been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto, and the
holders of ownership interests in the Company and the Subsidiary are not subject
to personal liability by reason of being such holders; and none of such
securities was issued in violation of the preemptive rights or other similar
rights of any holders of any security of either the Company or the Subsidiary.
Except as provided in that certain Confidential Offering Memorandum dated
September 18, 1995 with respect to certain shares of the Company which may,
under certain conditions, convert to shares of common stock of the Subsidiary
and certain warrants to purchase Common Stock of the Company
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which may, under certain conditions, convert to warrants to purchase Stock of
the Subsidiary, the Company has not entered into any agreements, arrangements or
understandings pursuant to which any third party has the right to acquire from
the Company any securities of the Subsidiary owned by the Company. The
Securities are not and will not be subject to any preemptive or other similar
rights of any shareholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable; the holders thereof will not be subject to any
liability solely as such holders; all corporate action required to be taken for
the authorization, issue and sale of the Securities has been duly and validly
taken; and the certificates representing the Shares, when delivered by the
Company, will be in due and proper form. Upon the issuance and delivery
pursuant to the terms hereof and the Representatives' Warrant Agreement of the
Securities to be sold by the Company hereunder and thereunder, respectively, the
Underwriters and the Representatives, respectively, will acquire good and
marketable title to such Securities, free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity of
any kind whatsoever.
(f) The combined financial statements of the Company and the
notes thereto included in the Registration Statement, each Preliminary
Prospectus and the Prospectus fairly present the financial position, results of
operations and cash flow and changes in financial position and shareholders'
equity of the Company and its Subsidiary at the respective dates and for the
respective periods to which they apply, and such financial statements have been
prepared in conformity with generally accepted accounting principles and the
Rules and Regulations, consistently applied throughout the periods involved. The
as adjusted and/or pro forma combined financial information included in each
Preliminary Prospectus, the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in conformity with the
Rules and Regulations and have been properly compiled on the basis described
therein consistent with the historical financial statements included in the
Registration Statement, each Preliminary Prospectus and the Prospectus. The
assumptions underlying such as adjusted and/or pro forma financial information
are reasonable, and the adjustments made therein are appropriate to give effect
to the transactions or circumstances referred to therein. There has been no
material adverse change, or development involving a material prospective change,
in the condition (financial or otherwise), earnings, business affairs, position,
prospects, shareholders, equity, operations, obligations, properties, businesses
or results of operations of the Company and the Subsidiary taken as a whole,
whether or not arising in the ordinary course of business, since the date of the
financial statements included in the Registration Statement and the Prospectus.
The outstanding debt, the property and assets (both tangible and intangible) and
the businesses of the Company and
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the Subsidiary conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. The financial
information set forth in the Prospectus under the headings "Prospectus Summary -
Summary Financial Data," "Dilution," "Capitalization," "Selected Financial Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" fairly presents the information set forth therein and such financial
information has been derived from or compiled on a basis consistent with that of
the audited combined financial statements included in the Registration
Statement, each Preliminary Prospectus and the Prospectus as described above.
(g) The Company and the Subsidiary (i) have paid all federal,
state and local taxes for which it is liable, including, but not limited to,
withholding taxes and amounts payable under Chapters 21 through 24 of the
Internal Revenue Code of 1986, as amended (the "Code"), and any other
assessments, fines or penalties leveled against any of them and have furnished
all information returns any of them are required to furnish pursuant to the Code
or otherwise, (ii) have established adequate reserves for such taxes,
assessments, fines or penalties which are not due and payable and (iii) does not
have any tax deficiency or claims outstanding, proposed or assessed against any
of them.
(h) No transfer tax, stamp duty or other similar tax, fee or
duty is payable by or on behalf of the Underwriters or the Representatives, as
applicable, in connection with (i) the issuance by the Company of the
Securities, (ii) the purchase by the Underwriters of the Securities or (iii) the
consummation of any of the transactions contemplated by this Agreement, the
Representatives' Warrant Agreement, the Registration Statement or the
Prospectus.
(i) The Company and the Subsidiary maintains insurance policies,
including, without limitation, general liability, property and personal
liability insurance, and surety bonds which insure such entities, their
employees and patrons and such other persons to whom such entities may become
liable against such losses and risks generally insured against by comparable
businesses.
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental or other proceeding (including,
without limitation, those pertaining to environmental, health or similar
matters) pending, contemplated or threatened (or circumstances that may give
rise to the same), to which the Company or the Subsidiary is subject or to which
any property or assets (tangible or intangible) of the Company or the Subsidiary
is subject (or circumstances that may give rise to the same) which (i) questions
the validity of the capital stock of the Company or the Subsidiary, of this
Agreement, of the Representatives' Warrant Agreement or of any
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action or transaction contemplated by this Agreement, the Representatives'
Warrant Agreement, the Registration Statement or the Prospectus, (ii) is
required to be disclosed in the Registration Statement which is not so disclosed
(and such proceedings as are summarized in the Registration Statement are
accurately summarized in all respects) or (iii) might, if adversely determined,
materially and adversely affect the condition (financial or otherwise),
earnings, business affairs, position, prospects, shareholders' equity,
operations, properties, businesses or results of operations of the Company or
the Subsidiary taken as a whole.
(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, to enter into this Agreement,
the Warrant Agreement and the Representatives' Warrant Agreement and to
consummate the transactions contemplated in such agreements, the Registration
Statement and the Prospectus; and this Agreement, the Warrant Agreement and the
Representatives' Warrant Agreement have each been or will each be duly and
properly authorized, executed and delivered by the Company. Each of this
Agreement, the Warrant Agreement and the Representatives' Warrant Agreement
constitutes or will constitute 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 enforcement of creditors, rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law).
(l) Neither the issuance, delivery and sale of the Securities,
the execution, delivery or performance of this Agreement, the Warrant Agreement
and Representatives' Warrant Agreement, the consummation of the transactions
contemplated herein, therein, in the Registration Statement and in the
Prospectus, or the conduct of the Company's or the Subsidiary's business as
described in the Registration Statement, the Prospectus and any amendments
thereof or supplements thereto, conflicts or will conflict with, or results or
will result in any breach or violation of any of the terms, covenants,
conditions or provisions of, or constitutes or will constitute (with notice, the
lapse of time or both) a default under, or results or will result in the
creation or imposition of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever upon any
property or assets (tangible or intangible) of the Company or the Subsidiary
(except as described in the Prospectus) pursuant to the terms of, (i) the
certificate of incorporation or bylaws of the Company or the Subsidiary, (ii)
any license, contract, indenture, mortgage, installment sale agreement, lease,
deed of trust, voting trust agreement, shareholders, agreement, purchase order,
note, loan or credit agreement or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other
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material agreement or instrument to which the Company or the Subsidiary is a
party or by which they are or may be bound or to which any of their properties
or assets (tangible or intangible) are or may be subject or (iii) any law,
statute, judgment, decree, order, rule or regulation applicable to the Company
or the Subsidiary of any arbitrator, court, administrative agency or other
governmental or regulatory official, agency authority or body (including,
without limitation, those having jurisdiction over environmental, health or
similar matters) having jurisdiction over the Company or the Subsidiary or any
of their activities or properties.
(m) No consent, approval, authorization, registration,
qualification, or order of, and no filing with, any court, administrative agency
or other government or regulatory official, agency, authority or body is
required for the issuance, delivery and sale of the Securities pursuant to this
Agreement, the Prospectus and the Registration Statement, the performance of
this Agreement, the Warrant Agreement and the Representatives' Warrant Agreement
and the consummation of the transactions contemplated hereby, thereby, by the
Registration Statement and by the Prospectus, except such as have been or may be
obtained under the Act, state securities or "blue sky" laws and the rules of the
National Association of Securities Dealers, Inc. (the "NASD") in connection with
the Underwriters' purchase and distribution of the Securities.
(n) All material agreements, contracts or other documents or
copies of executed agreements, contracts or other documents filed or required to
be filed as exhibits to the Registration Statement to which the Company or the
Subsidiary is a party or by which it may be bound are accurately described and
fairly present the information required to be shown with respect thereto by Form
SB-2; there are no agreements, contracts or other documents which are required
by the Act 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
agreements, contracts or other documents of which they purport to be copies.
(o) Subsequent to the respective dates as of which information
is set forth in the Registration Statement and the Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, neither the Company,
nor the Subsidiary has done, or has agreed to do, any of the following, (i)
issued any securities or incurred any liability or obligation, direct, indirect
or contingent, for borrowed money, (ii) entered into any transaction other than
in the ordinary course of business or (iii) declared or paid any dividend or
made any other distribution on or in respect of any class of its capital stock;
and, subsequent to such dates, there has not been any change in the capital
stock or any change in the debt (long- or short-term) or liabilities or
obligations or any material
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change in the condition (financial or otherwise), earnings, business affairs,
position, prospects, shareholders, equity, operations, properties, businesses or
results of operations of the Company or the Subsidiary except for debt,
liabilities and obligations incurred in the normal course of business consistent
with past practices.
(p) No material default exists, and no event has occurred which,
with notice, lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant, condition or provision of any
license, contract, indenture, mortgage, installment sale agreement, lease, deed
of trust, voting trust agreement, shareholders' agreement, purchase order, note,
loan or credit agreement or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which the Company or the Subsidiary is a party or by which it is
or may be bound or its properties or assets (tangible or intangible) are or may
be subject.
(q) The Company and the Subsidiary have generally enjoyed a
satisfactory employer-employee relationship with their employees and they are in
substantial compliance with all federal, state and local laws, rules,
regulations and orders respecting employment and employment practices,
including, without limitation, terms and conditions of employment and wages and
hours. There are no pending investigations involving the Company or the
Subsidiary by the U.S. Department of Labor, the Department of Justice -
Immigration and Naturalization Service or any other governmental or regulatory
official, agency, authority or body responsible for the enforcement of such
federal, state or local laws, rules, regulations and orders except as previously
disclosed in writing to the Representatives or the Underwriters' Counsel, which
matters are not required to be disclosed in the Registration Statement. There
is no unfair labor practice charge or complaint pending, threatened or
contemplated against the Company or the Subsidiary before the National Labor
Relations Board or any strike, picketing, boycott, dispute, slowdown or stoppage
pending, threatened or contemplated against or involving the Company or the
Subsidiary and none has ever occurred. There are no existing collective
bargaining agreements with the Company or the Subsidiary. No representation
question exists respecting the employees of the Company or the Subsidiary, and
no collective bargaining agreement or modification thereof is currently being
negotiated by or on behalf of the Company or the Subsidiary. No grievance or
arbitration proceeding is pending, threatened or contemplated under any expired
collective bargaining agreements of the Company or the Subsidiary. No labor
dispute with the employees of the Company or the Subsidiary is pending,
threatened or contemplated.
(r) Neither the Company nor the Subsidiary maintains, sponsors,
contributes, has any obligation to contribute or has any obligation with respect
to, or at any time
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previously maintained, sponsored, contributed, had any obligation to contribute
or had any obligation with respect to, any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan" or a "multi-
employer plan" (each an "ERISA Plan"), as such terms are defined in Sections
3(2), 3(l) and 3(37), respectively, of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), other than as previously disclosed in writing
to the Representatives or to the Underwriters' Counsel. Neither the Company nor
the Subsidiary maintains, sponsors, contributes, has any obligation to
contribute or has any obligation with respect to or at any time previously has
maintained, sponsored, contributed, had any obligation to contribute or had any
obligation with respect to, a "defined benefit plan," as defined in section
3(35) of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in
a "prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the code which could subject the Company or the Subsidiary to any tax
penalty on prohibited transactions and which has not adequately been corrected.
Each ERISA Plan is in compliance with all material reporting, disclosure and
other requirements of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue Service with
respect to each ERISA Plan which is intended to comply with Code Section 401(a),
stating that such ERISA Plan and the attendant trust are qualified thereunder.
Neither the Company nor the Subsidiary is in any way liable in connection with a
"multiemployer plan" from which it has ever completely or partially withdrawn.
(s) Neither the Company nor the Subsidiary, nor any of their
employees, directors, shareholders or affiliates (within the meaning of the
Rules and Regulations) of any of the foregoing, has taken or will take, directly
or indirectly, any action designed to or which has constituted or which might be
expected to cause or result in, under the Exchange Act or otherwise, the illegal
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or otherwise.
(t) Each of the Company and the Subsidiary own all trademarks,
trade names, service marks, service names, copyrights, patents and patent
applications or any licenses or rights to the foregoing, which, individually or
in the aggregate, are material to its condition (financial or otherwise),
earnings, business affairs, position, prospects, shareholders, equity,
operations, properties, businesses or results of operations, and, no such used
trademarks, trade names, service marks, service names, copyrights or patents are
in dispute or are in conflict with any right of any other person or entity.
(u) Each of the Company and the Subsidiary has the unrestricted
right to use all trade secrets, know-how (including, without limitation, all
unpatented and/or unpatentable proprietary or confidential information, systems
or
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procedures), inventions, technology, designs, processes, works of authorship,
computer programs and technical data and information that are material to the
development, manufacture, operation and sale of all products and services sold
or proposed to be sold by the Company and the Subsidiary, free and clear of and
without violating any right, lien or claim of others, including, without
limitation, former employers of their employees.
(v) The Company and the Subsidiary have good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property owned or leased, by them.
(w) Corbin & Wertz, whose report is filed with the Commission as
a part of the Registration Statement, each Preliminary Prospectus and the
Prospectus, is an accounting firm of independent certified public accountants as
required by the Act and the Rules and Regulations.
(x) The Company has caused to be executed agreements pursuant to
which each of Vincent J. Bitetti and Eric H. Winston has agreed, for a period of
eighteen (18) months following the effective date of the Registration Statement,
not to, directly or indirectly, offer, offer to sell, sell, grant an option for
the purchase or sale of, transfer, assign, pledge, hypothecate or otherwise
encumber (whether pursuant to Rule 144 under the Act or otherwise) any
securities issued or issuable by the Company, whether or not owned by or
registered in the name of such person, or dispose of any interest therein,
without the prior written consent of the Representatives (collectively, the
"Lock-Up Agreements"). The Company will cause its transfer agent to mark an
appropriate legend on the face of the stock certificates representing all of
such securities and to place "stop transfer" orders on the Company's stock
ledgers.
(y) There are no claims, payments, issuances, agreements,
arrangements or understandings, whether oral or written, for services in the
nature of a finder's fee, brokerage fee, origination fee or otherwise with
respect to the offerings contemplated by this Agreement, the Representatives'
Warrant Agreement, the Registration Statement and the Prospectus or any other
arrangements, agreements, understandings, payments or issuances that may affect
the Underwriters' compensation as determined by the NASD other than as disclosed
in the Registration Statement and Prospectus and other than as the
Representatives may itself have agreed to with third parties.
(z) The Securities have been approved for quotation on the
NASDAQ SmallCap Market (the "SCM"), which has approved the Company's right to
delay the trading of the shares for two days after the Closing Date.
(aa) Neither the Company nor the Subsidiary, nor any officer,
shareholder, employee, agent nor any other person
-12-
acting on behalf of the Company or the Subsidiary has, directly or indirectly,
given or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or any official
or employee of any governmental agency or instrumentality of any government or
any political party or candidate for office or any other person who was, is or
may be in a position to help or hinder the business of the Company or the
Subsidiary (or assist them in connection with any actual or proposed
transactions) which might subject the Company or the Subsidiary, or any other
such person to any damage or penalty in any civil, criminal or governmental
action, suit, inquiry, investigation, litigation or proceeding.
(ab) Except as set forth in the Prospectus under "Certain
Transactions," no officer, director or shareholder of the Company or the
Subsidiary, and no affiliate or associate (as those terms are defined in the
Rules and Regulations) of any of the foregoing persons or entities, has or has
had, either directly or indirectly, (i) an interest in any person or entity
which (A) furnishes or sells services or products which are furnished or sold or
are proposed to be furnished or sold by the Company or the Subsidiary or (B)
purchases from or sells or furnishes to the Company or the Subsidiary any
products or services or (ii) a beneficial interest in any contract, arrangement,
understanding or agreement to which the Company or the is a party or by which
the Company or the Subsidiary or any of its property or assets (tangible or
intangible) may be bound or affected. Except as set forth in the Prospectus
under "Certain Transactions," there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company or the Subsidiary
and any officer or director of the Company or the Subsidiary or any person
listed in the "Principal Shareholders" section of the Prospectus, or any
affiliate or associate of any of the foregoing persons or entities.
(ac) The minute books of the Company and the Subsidiary have been
made available to the Representatives, contain a complete summary of all
meetings and actions of the directors, including any committee thereof, and
shareholders of the Company and the Subsidiary since the time of their
incorporation or formation, as applicable, and reflect all transactions referred
to in such minutes accurately in all material respects.
(ad) Except as described in the Registration Statement, no
person, corporation, trust, partnership, association or other entity has the
right to include or register any securities of the Company in the Registration
Statement or to require that any registration statement be filed by the Company
or, if filed, to include any security in such registration statement. No
person, corporation, trust, partnership,
-13-
association or other entity holds any antidilution rights with respect to any
securities of the Company.
(ae) Any certificate signed by any officer of the Company or the
Subsidiary, and delivered to the Representatives or to the Underwriters' Counsel
shall be deemed a representation and warranty by the Company to the Underwriters
as to the matters covered thereby.
(af) The Company has (i) entered into an employment agreement
with each of Vincent J. Bitetti, Eric H. Winston and Ulrich Gottschling in the
forms filed as Exhibits 10.1, 10.2 and 10.3, respectively, to the Registration
Statement, and (ii) purchased key-man life insurance on the life of each of
Vincent J. Bitetti, Eric H. Winston and Ulrich Gottschling in the amounts of
$5,000,000, $2,000,000 and $500,000, respectively, which policies name the
Company as the sole beneficiary thereof.
(ag) The Company has entered into a warrant agreement
substantially in the form filed as Exhibit 4.2 to the Registration Statement
(the "Warrant Agreement") with Corporate Stock Transfer Company in form and
substance satisfactory to the Representatives, with respect to the Redeemable
Warrants and providing for the payment of commissions contemplated by Section
4(ab) hereof. The Warrant Agreement has been duly and validly authorized by the
Company and, assuming due execution by the parties thereto other than the
Company, constitutes a valid and legally 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 enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law).
(ah) Each Redeemable Warrant that is a Non-Affiliated Warrant has
been automatically converted into a Redeemable Warrant without any action by the
holder thereof and all of such Redeemable Warrants, as converted (and the shares
of Common Stock underlying such Redeemable Warrants, as converted), have been
registered in the Registration Statement.
(ai) The Company has entered or will enter into the
Representatives' Warrant Agreement, substantially in the form filed as Exhibit
4.3 to the Registration Statement, with the Representatives. The
Representatives' Warrant Agreement has been duly and validly authorized by the
Company and, assuming due execution by the Representatives, constitutes or will
constitute a valid and legally 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 enforcement of
creditors'
-14-
rights and the application of equitable principles in any action, legal or
equitable, and except as rights to indemnity or contribution may be limited by
applicable law). The Company shall at all times following the Closing Date have
reserved and available for issuance a sufficient number of shares of Common
Stock to be issued upon exercise of the Representatives' Warrant.
(aj) The Company will apply the proceeds from the sale of the
Securities in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(ak) The Company is familiar with the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and regulations thereunder, and
has in the past conducted, and intends in the future to conduct, its affairs in
such a manner as to ensure that it will not become an "investment company"
within the meaning of the 1940 Act and such rules and regulations.
(al) The books, records and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions and dispositions of
the assets of the Company and the Subsidiary. The system of internal accounting
controls maintained by the Company and the Subsidiary is sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary (A) to permit preparation of financial statements and (B) to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
difference.
2. REPRESENTATIONS AND WARRANTIES OF BITETTI AND WINSTON.
Each of Bitetti and Winston, with respect to the shares (the "Shares")
to be sold by him, represent and warrant to, and covenant and agree with, each
of the Underwriters as of the date hereof, and as of the Option Closing Date in
which his Shares are sold, as follows:
(a) He has full legal right, power and authority to enter into
this Agreement and to sell and deliver his Shares to the Underwriters. This
Agreement constitutes his legal, valid and binding agreement enforceable against
him 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 enforcement of creditors' rights
and the application of equitable principles in any action legal or equitable,
and except as rights to indemnity or contribution may be limited by applicable
law).
-15-
(b) He has, and on the applicable Option Closing Date will have,
good, valid and marketable title to the Shares; and upon the delivery of and
payment for the Shares, good, valid and marketable title thereto, free and clear
of all liens, charges, claims, encumbrances, pledges, security interests,
defects or other restrictions or equities of any kind whatsoever, will pass to
the Underwriters.
(c) Neither the execution, delivery or performance of this
Agreement, the delivery and sale of the Shares nor the consummation of the
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus conflicts or will conflict with or results or will result in any
breach or violation of any of the terms, covenants, conditions or provisions of,
or constitutes or will constitute (with notice, the lapse of time or both) a
default under, or results or will result in the creation or imposition of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon any of his property or assets
(tangible or intangible) of _____________ pursuant to the terms of, (i) any
agreement, (ii) any license, contract, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement, purchase order, note,
loan or credit agreement or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which he is a party or by which he is or may be bound or to which
any of his properties or assets (tangible or intangible) is or may be subject or
(iii) any law, statute, judgment, decree, order, rule or regulation applicable
to him of any arbitrator, court, administrative agency or other governmental
official, agency, authority or body (including, without limitation, those having
jurisdiction over environmental, health or similar matters) having jurisdiction
over him or any of his activities or properties.
(d) Neither he nor any of his affiliates (within the meaning of
the Rules and Regulations) have taken, or will take, directly or indirectly, any
action designed to or which has constituted or which might be expected to cause
or result in, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares or otherwise.
(e) He has duly delivered to the Company as his attorney-in-
fact, certificates evidencing the Shares, duly executed blank stock powers with
respect thereto and a duly executed power of attorney authorizing the Company to
deliver such certificates as part of, and in accordance with, the transactions
contemplated hereby. Such stock powers and powers of attorney are in form and
substance satisfactory to the Representatives.
(f) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental
-16-
or other proceeding pending, contemplated or threatened (or circumstances that
may give rise to the same), to which he is subject or to which any of his
property or assets (tangible or intangible) is subject (or circumstances that
may give rise to the same) which questions the validity of this Agreement or of
any action or transaction contemplated by this Agreement, the Registration
Statement or the Prospectus.
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the Underwriters the Firm Securities,
and each of the Underwriters agrees, severally and not jointly, to purchase from
the Company that number of the Firm Securities set forth opposite such
Underwriter's name, in Schedule I at a price equal to $3.60 per share of Common
Stock and $.125 per Redeemable Warrant.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company and Bitetti and Winston hereby
grant an option to the Underwriters to purchase all or any part of their
respective Option Securities at a price equal to $3.60 per share of Common Stock
and $.125 per Redeemable Warrant. The Option Securities shall be purchased, if
the Option is exercised as provided herein, from the Company and/or Winston and
Bitetti for the accounts of the several Underwriters, severally and not jointly,
in proportion to the aggregate number of Firm Securities set forth opposite such
Underwriter's name in Schedule I, except that the respective purchase
obligations of each Underwriter may be adjusted by the Representatives so that
no Underwriter shall be obligated to purchase fractional Option Securities. The
option granted hereby will expire, to the extent unexercised, forty-five (45)
days after the date hereof, and may be exercised, in the Representatives' sole
discretion, in whole or in part from time to time, only for the purpose of
covering overallotments which may be made in connection with the offering and
distribution of the Firm Securities, upon notice by the Representatives to the
Company, Bitetti and Winston setting forth the number of Option Securities as to
which the Underwriters are then exercising the option and the time and date of
payment for and delivery of any such Option Securities. Any such time and date
of delivery (an "Option Closing Date") shall be determined by the
Representatives, but shall not be later than five (5) full business days after
the exercise of said option, or in any event prior to the Closing Date, unless
otherwise agreed upon by the Representatives and the Company. Nothing herein
contained shall in any way obligate the Underwriters to exercise the option
granted hereby. No Option Securities shall be delivered unless the Firm
Securities shall be simultaneously delivered or shall theretofore have been
delivered as herein provided.
-17-
(c) Payment of the purchase price for, and delivery of
certificates evidencing, the Firm Securities shall be made at the offices of The
Boston Group, L.P. at 1999 Avenue of the Stars, Suite 2550, Los Angeles,
California, or at such other place as shall be agreed upon by the
Representatives and the Company. Such delivery and payment shall be made at
9:30 a.m. (Los Angeles time) on ________________, 1996 or at such other time and
date as shall be agreed upon by the Representatives and the Company (such time
and date of payment and delivery being herein called the "Closing Date"). In
addition, in the event that any or all of the Option Securities are purchased by
the Underwriters, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at the above-mentioned
office of The Boston Group, L.P. or at such other place as shall be agreed upon
by the Representatives and the Company with respect to each applicable Option
Closing Date as specified in the relevant notice from the Representatives to the
Company. Delivery of the certificates representing the Firm Securities and the
Option Securities, if any, shall be made to the Representatives against payment
by the Underwriters of the purchase price for the Firm Securities and the Option
Securities, if any, respectively, to the order of the Company, or to the order
of Bitetti or Winston with respect to the Shares sold by them, by certified or
official bank checks payable in Los Angeles Clearing House funds (next day
funds). Certificates representing the Firm Securities and the Option
Securities, if any, respectively, shall be in definitive, fully registered form,
shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Representatives may request in writing at least
two (2) business days prior to the Closing Date or the relevant Option Closing
Date, as the case may be. The certificates representing the Firm Securities and
the Option Securities, if any, shall be made available to the Representatives at
such offices or such other place as the Representatives may designate for
inspection, checking and packaging no later than 9:30 a.m. Los Angeles time on
the last business day prior to the Closing Date or the relevant Option Closing
Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to
each of you, individually and not in your capacities as the Representatives, or
to your designees, the Representatives' Warrants for an aggregate purchase price
of fifty dollars ($50), which warrants shall entitle the holders thereof to
purchase an aggregate of an additional two hundred forty thousand (240,000)
shares of Common Stock and one hundred twenty thousand (120,000) Redeemable
Warrants. The Representatives' Warrants shall be issued pursuant to the
Representatives' Warrant Agreement, substantially in the form filed as Exhibit
4.3 to the Registration Statement. Payment for the Representatives' Warrants
shall be made on the Closing Date. The Representatives' Warrants and the
Securities underlying them shall be registered in the Registration Statement and
such
-18-
Registration Statement shall be kept effective as required by the
Representatives' Warrant Agreement.
4. PUBLIC OFFERING OF THE SECURITIES. As soon after the
Registration Statement becomes effective as the Representatives deems advisable,
the Underwriters shall make a public offering of the Firm Securities and such of
the Option Securities as the Representatives may determine at the initial price
and upon the other terms set forth in the Prospectus. The Underwriters may from
time to time increase or decrease the public offering price of the Securities to
such extent as the Representatives, in their sole discretion, deem advisable.
The Underwriters may enter into one or more agreements as they, in their sole
discretion, deem advisable with one or more broker-dealers who shall act as
dealers in connection with such public offering.
5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company, Bitetti
and Winston jointly and severally, covenant and agree with each of the
Underwriters as follows:
(a) The Company, Bitetti and Winston shall use their best
efforts to cause the Registration Statement and any amendments thereto to become
effective as promptly as practicable and will not at any time, whether before or
after the effective date of the Registration Statement, file any amendment to
the Registration Statement or supplement to the Prospectus or file any document
under the Act or the Exchange Act before termination of the offering of the
Securities to the public by the Underwriters of which the Representatives shall
not previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected (unless the Company's outside
counsel reasonably determines in a written opinion that such amendment or
supplement is required to be filed pursuant to applicable law) or which is not
in compliance with the Act, the Exchange Act or the Rules and Regulations. The
Company, Bitetti and Winston shall use their best efforts to maintain the
effectiveness of the Registration Statement (by filing supplements or post-
effective amendments or as otherwise may be required under the Act and the Rules
and Regulations) until the earlier of (i) the date that all Redeemable Warrants
have either been exercised or redeemed and all of the Non-Affiliated Securities
have been sold; and (ii) the date which is five years after the Effective Date.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representatives and confirm the same in
writing (i) when the Registration Statement, as amended, becomes effective, when
any post-effective amendment to the Registration Statement becomes effective
and, 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, (ii)
of the issuance by the Commission or any State or other regulatory body of any
stop order or other
-19-
order, or of the initiation or the threat or contemplation of any proceeding,
the outcome of which may result in the suspension of the effectiveness of the
Registration Statement or any order preventing or suspending the use of the
Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or the institution of any proceedings for that purpose, (iii) of the
issuance by the Commission or any State or other regulatory body of any
proceedings for the suspension of the qualification of any of the Securities for
offering or sale in any jurisdiction or of the initiation or the threat or
contemplation of any proceeding for that purpose, (iv) of the receipt of any
comments from the Commission and (v) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information. If the Commission or any state or
other regulatory body shall enter a stop order or other order suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of the Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or suspend such qualification at any time, the Company will make every
effort to obtain promptly the lifting of such order or suspension.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representatives) with the Commission, or transmit the
Prospectus by a means reasonably calculated to result in filing the same with
the Commission, pursuant to Rule 424(b)(1) under the Act (or, if applicable and
if consented to by the Representatives, pursuant to Rule 424(b)(4)) within the
time period specified in Rule 424(b)(1) (or if applicable, Rule 424(b)(4)) or
shall deliver and shall file with the Commission a Term Sheet (in form and
substance satisfactory to the Representatives) in accordance with Rule 434 under
the Act.
(d) The Company will give the Representatives notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendments) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
in connection with the offering of any of the Securities which differs from the
corresponding prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) under the Act), and will furnish the
Representatives with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file any such amendment or supplement to which the Representatives or
Jeffer, Mangels, Butler & Marmaro, LLP, the Underwriters' counsel (the
"Underwriters' Counsel"), shall reasonably object unless the Company's outside
counsel reasonably determines in a written opinion that such amendment or
supplement is required to be filed pursuant to applicable law.
-20-
(e) The Company shall use its best efforts, at or prior to the
time the Registration Statement becomes effective, to qualify the Securities for
offering and sale under the securities or "blue sky" laws of such jurisdictions
as the Representatives may reasonably designate to permit the continuance of
sales and dealings therein for as long as may be necessary to complete the
distribution, and shall make such applications, file such documents and furnish
such information as may be required for such purpose; PROVIDED, HOWEVER, the
Company shall not be required to qualify as a foreign corporation or to execute
a general consent to service of process in any such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will use
its best efforts to file and make such statements or reports at such times as
are or may be required by the laws of such jurisdiction to continue such
qualification.
(f) During the time when a prospectus is required to be
delivered under the Act, the Company shall comply with all requirements imposed
upon it by the Act and the Exchange Act, as now and hereafter amended, and by
the Rules and Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Securities in accordance
with the provisions hereof and the Prospectus, or any amendments or supplements
thereto. If at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event shall have occurred as a
result of which, in the opinion of the Company or counsel for the Company or the
Representatives or the Underwriters' Counsel, the Prospectus, as then amended or
supplemented, would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading, or if it is necessary at any time to amend or supplement the
Prospectus to comply with the Act, the Company will promptly notify the
Representatives and prepare and file, at the Company's expense, with the
Commission an appropriate amendment or supplement to the Registration Statement
or an amendment or supplement to the Prospectus which will correct such
statement or omission, or effect such compliance, each such amendment or
supplement to be reasonably satisfactory to the Representatives and the
Underwriters' Counsel, and the Company will furnish to the Underwriters copies
of such amendment or supplement as soon as available and in such quantities as
the Underwriters may request.
(g) As soon as practicable, but in any event not later than
forty-five (45) days after the end of the twelve (12) month period beginning
after the effective date of the Registration Statement occurs, the Company shall
make generally available to its security holders, in the manner specified in
Rule 158(b) under the Act, and to the Representatives, an earnings statement
which will comply with the provisions of
-21-
Section 11(a) of the Act and Rule 158(a) promulgated under the Act.
(h) During the five (5) year period commencing on the date
hereof, so long as the Company has securities which are registered under the Act
or the Exchange Act or otherwise publicly tradeable and Common Stock continues
to be outstanding, the Company, at its expense, will furnish to its
shareholders, as soon as practicable, annual reports (including financial
statements audited by independent certified public accountants) and unaudited
quarterly reports for each of the first three (3) fiscal quarters of the Company
(such reports, whether or not the Company is then subject to the periodic
reporting requirements of the Exchange Act, are to be in conformity with the
requirements of the Exchange Act) and will deliver to the Representatives:
(i) concurrently with furnishing such quarterly reports to
its shareholders, statements of income of the Company for such quarter in the
form furnished to the Company's shareholders and certified by the Company's
principal financial or accounting officer;
(ii) 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 certified public accountants;
(iii) as soon as they are available, copies of all reports
(financial or other) mailed to shareholders;
(iv) as soon as they are available, copies of all reports
and financial statements furnished to or filed with the Commission, the NASD,
Nasdaq or any securities exchange;
(v) as soon as they are available, all press releases,
material news items or articles of interest to the financial community in
respect of the Company or the Subsidiary or their affairs which are released or
prepared by or on behalf of the Company or the Subsidiary; and
(vi) any additional information of a public nature
concerning the Company and the Subsidiary or their businesses which the
Representatives may request.
During such five (5) year period, if the Company has active
subsidiaries or is a partner in any venture, the foregoing financial statements
will be on a consolidated basis to the extent that the accounts of the Company
and its subsidiaries (including any venture of which it is a partner) are
consolidated, and will be accompanied by similar financial statements for any
significant subsidiary (as defined in the Rules and Regulations) which is not so
consolidated.
-22-
(i) The Company will maintain a transfer and warrant 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 the Common Stock.
(j) The Company will furnish to the Representatives, without
charge and at such place as the Representatives may designate, copies of each
Preliminary Prospectus, the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which will be signed and will include
all financial statements and exhibits, one for the Representatives and one for
the Underwriters' Counsel), the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective date of the
Registration Statement and any Term Sheet, in each case as soon as available and
in such quantities as the Representatives may request.
(k) On or before the effective date of the Registration
Statement, the Company shall provide the Representatives with true copies of
valid, duly executed, legally binding and enforceable Lock-Up Agreements. On or
before the Closing Date, the Company shall deliver instructions to its transfer
agent authorizing such transfer agent to place appropriate legends on the
certificates representing the securities subject to the Lock-Up Agreements and
to place appropriate stop transfer orders on the Company's ledgers. The Company
agrees that, for a period of twelve (12) months commencing with the effective
date of the Registration Statement, except as contemplated hereby, it shall not,
without the prior written consent of the Representatives, issue, sell, grant an
option for the sale of, assign, transfer, pledge, distribute or otherwise
dispose of, directly or indirectly, or agree or offer to do any of the
foregoing, any shares of Common Stock or any option, warrant or other contract
right or security convertible, directly or indirectly, into shares of Common
Stock, other than grants of options under the 1995 Plan as described (including,
without limitation, as to the maximum number of shares of Common Stock issuable
thereunder) in the Registration Statement and the issuance of shares of Common
Stock upon the exercise of options granted under the 1995 Plan.
(l) Neither the Company nor any of its officers, directors,
shareholders or affiliates (within the meaning of the Rules and Regulations)
will take, directly or indirectly, any action designed to illegally stabilize or
manipulate the price of any securities of the Company or which might be expected
to cause or result in, under the Exchange Act or otherwise, the illegal
stabilization or manipulation of the price of any security of the Company.
(m) The Company shall apply the net proceeds from the sale of
the Securities offered to the public in the manner set forth under the caption
"Use of Proceeds" in the Prospectus.
-23-
No portion of the net proceeds will be used, directly or indirectly, to acquire
any securities issued by the Company.
(n) The Company shall timely file all registrations, reports,
forms or other documents as may be required (including, without limitation, any
Form SR required by Rule 463 under the Act) from time to time under the Act, the
Exchange Act and the Rules and Regulations, all such registrations, reports,
forms and other documents shall comply as to form and substance with the
applicable requirements under the Act, the Exchange Act and the Rules and
Regulations. The Company shall promptly provide to the Representatives and,
upon request, the Underwriters copies of such registrations, regulations,
reports, forms or other documents.
(o) The Company shall furnish to the Representatives as early as
practicable prior to the date hereof, the Closing Date and each Option Closing
Date, if any, but no later than two (2) full business days prior thereto, a copy
of the latest available unaudited combined interim financial statements of the
Company (which in no event shall be as of a date more than forty-five (45) days
prior to the date hereof, the Closing Date or the relevant Option Closing Date,
as the case may be) which have been read by the Company's independent certified
public accountants, as stated in their letters to be furnished pursuant to
Sections 7(i) and 7(k) hereof.
(p) The Company shall cause the Securities to be quoted on the
SCM or some other nationally recognized stock exchange immediately upon issuance
of the Securities. Promptly upon becoming eligible for listing on the Pacific
Stock Exchange or on the Nasdaq National Market, the Company will apply for
listing the Securities on either the Pacific Stock Exchange or the Nasdaq
National Market, as determined by the Representatives. For a period of five (5)
years from the date hereof, the Company shall maintain the appropriate Nasdaq or
stock exchange listing of the Securities so long as the Company continues to
have securities registered under the Act or the Exchange Act or otherwise
publicly tradeable and Securities Stock continue to be outstanding and shall
comply with all registration, filing, reporting and other requirements of Nasdaq
or such stock exchange, which may from time to time be applicable to the
Company.
(q) For a period of five (5) years from the Closing Date, the
Company shall furnish or cause to be furnished to the Representatives, upon any
and all reasonable requests of the Representatives and at the Company's sole
expense, (i) daily consolidated transfer sheets relating to the Common Stock and
(ii) a list of holders of all of the Company's securities.
(r) For a period of five (5) years from the Closing Date, so
long as the Company continues to have securities registered under the Act or the
Exchange Act or otherwise
-24-
publicly tradeable and Common Stock continues to be outstanding, the Company
shall, at the Company's sole expense, (i) provide the Representatives, upon any
and all reasonable requests of the Representatives, with a "blue sky trading
survey" for secondary sales of the Company's securities prepared by counsel to
the Company, and (ii) take all necessary and appropriate actions to further
qualify the Company's securities in all jurisdictions of the United States in
order to permit secondary sales of such securities pursuant to the securities or
"blue sky" laws of those jurisdictions, PROVIDED, HOWEVER, that the Company
shall not be required to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction. In the event that
the Company does not comply with the provisions of this Section 5(r), the
Company authorizes the Underwriters' Counsel to take all necessary and
appropriate actions to comply with the provisions of this section 5(r), at the
company's sole expense payable in advance, provided that in no event shall the
Company be obligated for expenses in excess of five thousand dollars ($5,000).
(s) As soon as practicable, (i) but in no event more than five
(5) business days before the effective date of the Registration Statement, the
Company shall file a Form 8-A with the Commission providing for the registration
under the Exchange Act of the Securities, which registration shall become
effective concurrently on such effective date, and (ii) but in no event more
than one hundred twenty (120) days after the effective date of the Registration
Statement, the Company shall take all necessary and appropriate actions to be
included in Standard & Poor's Corporation Manual and Moody's Investors Services,
Inc. Manual and to continue such inclusion for a period of not less than seven
(7) years so long as the Company has securities which are registered under the
Act or the Exchange Act or otherwise publicly tradeable and Common Stock
continues to be outstanding.
(t) The Company hereby agrees that it will not, for a period of
thirty six (36) months commencing with the effective date of the Registration
Statement, without the Representatives' written approval, (i) adopt, propose to
adopt or otherwise permit to exist any employee, officer, director, consultant
or compensation plan, agreement, understanding or arrangement permitting the
grant, issue, sale or entry into any agreement, understanding or arrangement to
grant, issue or sell any option, warrant or other contract right (x) at an
exercise price that is less than the greater of the initial public offering
price of the Securities as set forth herein and the fair market value per share
of Common Stock on the date of grant or sale or (y) to any of its executive
officers or directors or to any holder of five percent (5%) or more of the
Common Stock or any holder of five percent (5%) or more of the Common Stock as
the result of the exercise or conversion of equivalent securities, including,
without limitation, options, warrants or other contract rights or securities
convertible, directly or indirectly, into shares of Common Stock; (ii) permit
the maximum
-25-
number of shares of Common Stock or other securities of the Company purchasable
at any time pursuant to options, warrants or other contract rights or securities
convertible, directly or indirectly, into shares of Common Stock to exceed ten
percent (10%) of the outstanding shares unless such action is approved by at
least three independent directors of the Company; (iii) permit the payment for
such securities, including, without limitation, upon the exercise of any option,
warrant or other contract right upon the conversion of any security convertible,
directly or indirectly, into shares of Common Stock, with any form of
consideration other than cash (other than payments made pursuant to, and in
accordance with, the 1995 Plan); or (iv) permit the existence of stock
appreciation rights, phantom options or similar arrangements. The provisions of
this Section 5(t) shall not apply to grants, issuances or sales to, or
agreements with, the Underwriters or you, individually and not in your
capacities as the Representatives, or grants to members of the Company's Stock
Option Committee pursuant to, and in accordance with, the 1995 Plan.
(u) Until the completion of the distribution (as such term would
be applied under Rule 10b-6 promulgated under the Exchange Act) of the Firm
Securities and, if applicable, the Option Securities to the public, the Company
shall not, without the prior written consent of the Representatives, issue,
directly or indirectly, any press release or other communication or hold any
press conference with respect to the Company or its activities or the offering
contemplated hereby, other than trade releases issued in the ordinary course of
the Company's business consistent with past practices with respect to the
Company's operations or except as required by law as advised to the Company by
its outside counsel.
(v) Prior to the earlier of (i) the date which is seven (7)
years from the date hereof and (ii) the date of the completion of the sale to
the public of all of the Representatives' Securities, the Company will not take
any action or actions which may prevent or disqualify the Company's use of Form
S-1 (or other appropriate form) for the registration under the Act of the
Representatives' Securities.
(w) For a period of five (5) years after the effective date of
the Registration Statement, the Company shall cause one (1) individual selected
from time-to-time by The Boston Group, L.P. and one (1) individual selected from
time to time by Joseph Stevens & Company, L.P., to be nominated as directors of
the Company, if requested by you. Vincent J. Bitetti and Eric H. Winston hereby
agree to vote all shares of Common Stock held of record or beneficially by
either of them in favor of each of your nominees. The Company shall provide you
with reasonable notification of any meeting of the Company's board of directors
held expressly for the purpose of nominating directors to the Company's board of
directors so as to allow each of you adequate time to select, if desired, an
individual to be nominated as a
-26-
director of the Company. In the event that either of you shall not have
designated such individual at the time of any meeting of the Company's board of
directors held expressly for the purpose of nominating directors to the
Company's board of directors or in the event that such individual has not been
elected or is unavailable to serve, the Company shall provide you with
reasonable notification of each meeting of its board of directors and, in such
event, an individual selected by you shall be permitted to attend all meetings
of the Company's board of directors as a non-voting advisor and to receive all
notices and other correspondence and communications sent by the Company to
members of its board of directors. Such director or advisor shall receive no
more or less compensation than is paid to other non-officer directors of the
Company for attendance at meetings of the Company's board of directors, and such
director or advisor shall be entitled to receive reimbursement for all
reasonable costs incurred in attending such meetings, including, without
limitation, food, lodging and transportation in accordance with the policy
established by the independent members of the Board of Directors. The Company
hereby agrees to indemnify and hold such director or advisor harmless, to the
maximum extent permitted by law, against any and all actions, suits,
proceedings, inquiries, arbitrations, investigations, litigation, governmental
or other proceedings and awards and judgments arising out of such individual's
service as a director or advisor and, in the event the Company maintains a
liability insurance policy affording coverage for the acts of its officers or
directors, and/or in the event that the Company has entered into an
indemnification agreement with any of its officers or directors, the Company
agrees to include such director or advisor as an insured under such insurance
policy and/or to enter into an indemnification agreement with such director or
advisor which is at least as favorable to such individual as any indemnification
agreement that the Company has entered into with any of its officers or
directors. The rights and benefits of such indemnification and the benefits of
such insurance shall, to the maximum extent possible, extend to you insofar as
you may be or may be alleged to have any obligation or liability in connection
with an action or inaction of such director or advisor.
(x) For a period of thirty-six (36) months after the effective
date of the Registration Statement, the Company shall not, without the written
consent of the Representatives, restate, amend, modify or otherwise alter any
term of any written employment, consulting or similar agreement entered into
between the Company and any officer, director or key employee as of the
effective date of the Registration Statement in a manner which is more favorable
to such officer, director or key employee. For a period of thirty-six (36)
months from the effective date of the Registration
-27-
Statement, neither the Company nor the Subsidiary shall enter into a written
employment, consulting or similar agreement with any officer, director or key
employee with whom the Company has entered into a written employment, consulting
or similar agreement as of the effective date of the Registration Statement
other than the renewal of such agreement on terms which are no more favorable to
such officer, director or key employee unless agreed upon in writing by the
Representatives.
(y) For a period of seven (7) years from the effective date of
the Registration Statement, the Company and all of its subsidiaries shall obtain
and maintain insurance policies, including, without limitation, general
liability, property, and personal liability insurance, and surety bonds which
insure such entities, their employees and patrons and such other persons to whom
such entities may become liable against such losses and risks generally insured
against by comparable businesses.
(z) For a period of five (5) years from the date hereof, the
Company will retain Corbin & Wertz (or such other nationally-recognized
accounting firm qualified to practice in front of the Commission as is
reasonably acceptable to the Representatives) as its independent certified
public accountants and, during such period, the Company will promptly submit to
the Representatives copies of all accountant's management reports, Company
representation letters and similar correspondence between the Company's
accountants and the Company.
(aa) The Company hereby grants to the Representatives a
preferential right, on the terms and subject to the conditions set forth in this
paragraph, during the period beginning on the date hereof and ending on
__________, 1999 (the "Preference Period"), to purchase for its account, or to
sell for the account of the Company or its present or future affiliates or
subsidiaries, any debt or equity securities of the Company or any of its present
or future affiliates or subsidiaries, with respect to which the Company or any
of its present or future affiliates or subsidiaries may seek to sell in a public
or private offering for cash (a "Covered Offering"). The term "Covered
Offering" shall not include public or private offerings of securities of the
Company or any of its present or future affiliates or subsidiaries in exchange
for properties, assets or stock of other individuals or corporations, borrowings
from banks and institutional lenders, or equipment lease financing. The Company
will consult the Representatives with regard to any Covered Offering, and will
offer, or cause any of its present or future affiliates or subsidiaries to
offer, to the Representatives the opportunity, on terms not more favorable to
the Company or such present or future affiliate or subsidiary than they can
secure elsewhere, to purchase or sell any such securities. The Company shall
provide written notice to the Representatives of the terms offered to the
Representatives to participate in the Covered Offering. The Representatives
shall have a period of 30 days from the date of such notice to notify the
Company in writing of its decision to accept or reject such offer. If the
Representatives rejects the offer, then the Company may proceed with the Covered
Offering with any other third party. However, if the Company proceeds with a
Covered Transaction on terms materially different from those offered to the
Representatives,
-28-
the Company shall be required to provide written notice to the Representatives
of the revised terms, and to offer the Representatives the right to participate
in the Covered Offering on such revised terms. The Representatives shall have a
period of 30 days from the date of such notice to notify the Company in writing
of its decision to accept or reject the offer on such revised terms.
(ab) The Company hereby appoints the Representatives as the
exclusive solicitation agent for the Redeemable Warrants, and hereby agrees to
pay the Representatives a commission equal to five percent (5%) of the exercise
price of the Redeemable Warrants, payable on the date of the exercise thereof on
terms provided in the Warrant Agreement. The Company will not solicit the
exercise of the Redeemable Warrants other than through the Representatives.
6. PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay (such payment to be made on
the Closing Date as part of the closing on such date and on each Option Closing
Date as part of the closing on such date (to the extent not paid on the Closing
Date or a previous Option Closing Date)) all expenses and fees (other than fees
of the Underwriters' Counsel not specifically provided for in this Section 6)
incident to the issuance, offer, sale and delivery of the Securities and the
performance of the obligations of the Company under this Agreement, the Warrant
Agreement and the Representatives' Warrant Agreement, including, without
limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing (including mailing and handling charges),
filing, delivery and mailing (including the payment of postage with respect
thereto) of each Preliminary Prospectus, the Registration Statement and the
Prospectus and any amendments and supplements thereto and the printing, mailing
(including the payment of postage with respect thereto) and delivery of this
Agreement, the Warrant Agreement, all other underwriting documents, the
Representatives' Warrant Agreement and agreements with selected dealers, and
related documents, including the cost of all copies thereof and of each
Preliminary Prospectus and of the Prospectus and any amendments thereof or
supplements thereto supplied to each of the Underwriters and such dealers as the
Underwriters may request, in such quantities as the Underwriters may reasonably
request, (iii) all costs and expenses (including issue and transfer taxes)
incurred in connection with the printing, engraving, issuance, sale and delivery
of the shares, including (x) the purchase by each of the Underwriters, severally
and not jointly, of the number of the Securities from the Company set forth
opposite its name on Schedule I, (y) the consummation by the Company of any of
its obligations under this Agreement, the Warrant Agreement and the
Representatives' Warrant Agreement and (z) the resale of the Securities by each
of the Underwriters in connection with the
-29-
distribution contemplated hereby, (iv) all costs and expenses incurred in
connection with the qualification of the Securities under state securities or
"blue sky" laws and the determination of the status of such securities under
legal investment laws, including the costs of printing and mailing the
"Preliminary Blue Sky Memorandum," the "Supplemental Blue Sky Memorandum" and
the "Legal Investments Survey," if any, (v) the fees, costs and expenses
incurred in connection with any required filing with the NASD and obtaining a
determination from the NASD with respect to the fairness and reasonableness of
the underwriting terms and arrangements and disbursements and fees of Jeffer,
Mangels, Butler & Marmaro, LLP in connection with such determinations, filings,
documents and qualifications of the Securities, (v) all advertising costs and
expenses, including costs and expenses in connection with "road shows,"
information meetings and presentations, bound volumes and prospectus memorabilia
and "tombstone" advertisements, (vi) all costs and expenses incurred in
connection with due diligence investigations by an independent third party,
subject to the Company's prior approval which shall not be unreasonably
withheld, including the fees of any independent counsel (other than Jeffer,
Mangels, Butler & Marmaro, LLP) or consultants, (vii) the fees and expenses of a
transfer agent and registrar for the Securities, (viii) the fees payable to the
Commission and (ix) the fees and expenses incurred in connection with the
listing of the Securities on the SCM and any other exchange.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 6 or 11 hereof, by the Underwriters in
accordance with a reasonable application of Section 10(a) hereof or the
transactions contemplated hereby are not consummated by the Company for any
reason, the Company shall reimburse and indemnify the Underwriters for all of
their actual out-of-pocket expenses, including, without limitation, all of the
fees and disbursements of Underwriters' Counsel (including, without limitation,
the fees of the Underwriters' Counsel specifically provided for herein).
(c) The Company further agrees that, in addition to the expenses
payable pursuant to Section 6(a) hereof, it will pay to each of you,
individually and not in your capacities as the Representatives, on the Closing
Date by certified or bank cashier's check, or, at your election, by deduction
from the proceeds of the offering of the Firm Securities, a non-accountable
expense allowance equal to an aggregate of three percent (3%) of the gross
proceeds received by the Company from the sale of the Firm Securities. In the
event the Underwriters elect to exercise all or any part of the over-allotment
option described in Section 3(b) hereof, the Company (and Bitetti and Winston
with respect to the Shares sold by each of them) further agrees to pay to each
of you, individually and not in your capacities as the Representatives, on each
Option Closing Date, by certified or bank cashier's check, or, at your election,
by deduction from the proceeds of the Option Securities purchased on
-30-
such Option Closing Date, a non-accountable expense allowance equal to an
aggregate of three percent (3%) of the gross proceeds received by the Company
(or Bitetti and Winston with respect to the Shares sold by each of them) from
the sale of such Option Securities.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
each of the Underwriters hereunder shall be 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 and each Option Closing Date, if any, as if
they had been made on and as of the Closing Date or each Option Closing Date, as
the case may be; the accuracy on and as of the Closing Date and each Option
Closing Date, if any, of the statements of officers of the Company made and
certificates of officers of the Company delivered pursuant to the provisions
hereof; and the performance by the Company on and as of the Closing Date and
each Option Closing Date, if any, of all of its covenants and obligations
hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m., New York time, on the date of this Agreement or such later
date and time as shall be consented to in writing by the Representatives, and,
at the Closing Date and each Option Closing Date, if any, no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceedings for that purpose shall have been
initiated or shall be pending, threatened or contemplated by the Commission or
any State or other regulatory body and any request on the part of the Commission
or any State or other regulatory body for additional information shall have been
complied with to the reasonable satisfaction of the Representatives and the
Underwriters' Counsel. If the Company has elected to rely upon Rule 430A under
the Act, the price of the Securities and any price-related information
previously omitted from the effective Registration Statement pursuant to such
Rule 430A shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) under the Act within the prescribed time period or shall have been
delivered and shall have been filed with the Commission as required by Rule 434
under the Act, as applicable, and, prior to the Closing Date, the Company shall
have provided evidence satisfactory to the Representatives of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A under the Act. Neither the Registration Statement nor the Prospectus
nor any amendment thereto or supplement thereof (including a Term Sheet) shall
have been filed to which the Representatives shall have reasonably objected
after it shall have had the chance to review such amendment or supplement unless
the Company's outside counsel reasonably determines in a written opinion that
such amendment or supplement is required to be filed pursuant to applicable law.
-31-
(b) No Underwriter shall have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representatives' opinion, is material, or omits to state a
fact which, in the Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or that the Prospectus,
or any amendment or supplement thereto, contains an untrue statement of fact
which, in the Representatives' opinion, is material, or omits to state a fact
which, in the Representatives' opinion, is material and is required to be stated
therein or is necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(c) On or prior to the Closing Date, the Representatives shall
have received from the Underwriters' Counsel such opinion or opinions with
respect to the organization of the Company, the validity of the Securities, the
Registration Statement, the Prospectus and such other related matters as the
Representatives may request and the Underwriters' Counsel shall have received
such papers and information as it may request in order to enable it to pass upon
such matters.
(d) At the Closing Date, the Representatives shall have received
the favorable opinion of McDermott, Will & Emery, counsel to the Company, dated
the Closing Date, addressed to the Representatives, in form and substance
satisfactory to the Underwriters' Counsel and subject to customary
qualifications and conditions, to the effect that:
(i) each of the Company and the Subsidiary (A) has been
duly organized and is validly existing as a corporation in good standing under
the laws of the respective jurisdiction of its incorporation or formation, (B)
is duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which it owns or leases property or in which the conduct of
its business requires such qualification or licensing, and (C) has all requisite
power and authority (corporate, if applicable, and other) to own or lease its
properties and conduct its business as described in the Prospectus;
(ii) to such counsel's knowledge, (A) the Company and the
subsidiaries are doing business in compliance with all authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from
all governmental or regulatory officials, agencies, authorities and bodies
necessary to own or lease its properties and conduct its business as described
in the Prospectus other than those authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or regulatory
officials, agencies, authorities and bodies which, singularly or in the
aggregate, the failure to obtain would not materially and adversely affect the
-32-
condition (financial or otherwise), earnings, business affairs, position,
prospects, shareholders' equity, operations, properties, businesses or results
of operations of the Company and the Subsidiary taken as a whole; (B) are and
have been operating their business in compliance with all such authorizations,
approvals, orders, licenses, certificates, franchises and permits and all
federal, state and local laws, rules, regulations and orders; and (C) neither
the Company nor any Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such authorization, approval, order,
license, certificate, franchise or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the condition (financial or otherwise), earnings, business
affairs, position, prospects, shareholders' equity, operations, properties,
businesses or results of operation of the Company and the Subsidiary taken as a
whole.
(iii) To such counsel's knowledge, the statements in the
Registration Statement concerning the effects of federal, state and local laws,
rules, regulations and orders on the Company's and the Subsidiary's businesses
as currently conducted and as contemplated are correct in all respects and do
not omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading;
(iv) the Company owns of record one hundred percent (100%)
of the outstanding capital stock of the Subsidiary; and neither the Company nor
the Subsidiary owns any other interest in any corporation, partnership, joint
venture, trust or other business entity;
(v) the Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and any amendment or
supplement thereto, under "Capitalization" and "Description of Securities" and
will have the adjusted capitalization set forth therein in the Closing Date and
the Option Closing Date, if any, based upon the assumptions set forth therein;
and, neither the Company nor any Subsidiary is a party to or bound by any
instrument, agreement or other arrangement or understanding providing for or
requiring it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Representatives' Warrant Agreement
and the 1995 Plan as described in the Prospectus. The Securities and all other
securities issued or issuable by the Company conform in all respects to all
statements with respect thereto contained in the Registration Statement and the
Prospectus. All issued and outstanding securities (including, without
limitation, any ownership interest in the Subsidiary) of the Company and the
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission with respect
thereto and are not subject to personal liability by
-33-
reason of being such holders; and none of such securities was issued in
violation of the preemptive or other similar rights of any holders of any
security of either the Company or the Subsidiary. The Company has not entered
into any agreements or understandings pursuant to which any third party has the
right to acquire from the Company any securities of the Subsidiary owned by the
Company. The Securities are not and will not be subject to any preemptive or
other similar rights of any shareholder, have been duly authorized and, when
issued, paid for and delivered, or when paid for and delivered, as applicable,
in accordance with the terms hereof, the Warrant Agreement or the
Representatives' Warrant Agreement, as applicable, will be validly issued, fully
paid and non-assessable and conform to the description thereof contained in the
Prospectus; the holders thereof will not be subject to any liability solely as
such holders; all corporate action required to be taken for the authorization,
issue, sale and delivery of the Securities has been duly and validly taken; and
the certificates representing the Securities are in due and proper form. The
Representatives' Warrants constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment therefor, the
number and type of securities of the Company called for thereby, which
obligations are 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 enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable principles in any action,
legal or equitable, and except as rights to indemnity or contribution may be
limited by applicable law). Upon the issuance and delivery pursuant to the
terms hereof, the terms of the Warrant Agreement and the terms of the
Representatives' Warrant Agreement of the Securities to be sold by the Company
hereunder and thereunder, the Underwriters and the Representatives, as
applicable, will acquire good and marketable title to such Securities and
Representatives' Warrants, free and clear of any lien, charge, claim,
encumbrance, pledge, security, interest, defect or other restriction or equity
of any kind whatsoever. No transfer tax, stamp duty or other similar tax, fee
or duty is payable by or on behalf of any of the Underwriters or the
Representatives, as applicable, in connection with (A) the issuance by the
Company of the Securities, (B) the purchase by the Underwriters of the
Securities from the Company or (C) the consummation of any of the transactions
contemplated by this Agreement, the Warrant Agreement, the Representatives'
Warrant Agreement, the Registration Statement or the Prospectus;
(vi) the Registration Statement is effective under the Act,
and, if applicable, filing of all pricing information has been timely made in
the appropriate form under Rule 430A under the Act or under Rule 434 under the
Act, and no stop order suspending the use of the Preliminary Prospectus, the
Registration Statement or the Prospectus or any part of any thereof or
suspending the effectiveness of the Registration
-34-
Statement has been issued and no proceedings for that purpose have been
instituted or are pending, threatened or contemplated under the Act;
(vii) each Preliminary Prospectus, the Registration
Statement and the Prospectus, and any amendments or supplements thereto (other
than the financial statements and schedules and other financial and statistical
data included therein or omitted therefrom, as to which no opinion need be
rendered), comply as to form in all material respects with the requirements of
the Act and the Rules and Regulations;
(viii) to such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be described in
the Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement (or required to be filed under the Exchange Act if upon
such filing they would be incorporated, in whole or in part, by reference
therein) other than those described in the Registration Statement and the
Prospectus and filed as exhibits to the Registration Statement; (B) the
descriptions in the Registration Statement and the Prospectus, and any
supplement or amendment thereto, of agreements, contracts and other documents to
which the Company or any Subsidiary is a party or by which any of them are bound
are accurate and fairly represent the information required to be shown by Form
SB-2; (C) there is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental or other proceeding (including,
without limitation, those pertaining to environmental, health or similar
matters) pending, contemplated or threatened to which the Company or the
Subsidiary is subject or to which any property or assets (tangible or
intangible) of the Company or the Subsidiary is subject, which (x) is required
to be disclosed in the Registration Statement which is not so disclosed (and
such proceedings as are summarized in the Registration Statement are accurately
summarized in all respects) or (y) questions the validity of the capital stock
of the Company or any Subsidiary or of this Agreement, the Warrant Agreement or
the Representatives' Warrant Agreement or of any actions or transactions
contemplated by this Agreement, the Warrant Agreement, the Representatives'
Warrant Agreement, the Registration Statement or the Prospectus or (z) might
materially and adversely effect the condition (financial or otherwise),
earnings, business affairs, position, property, shareholders, equity,
operations, properties, businesses or results of operations of the Company or
the Subsidiary or the ability of the Company to perform its obligations under
this Agreement, the Warrant Agreement and the Representatives' Warrant
Agreement; and (D) no law, statute, judgment, decree, rule, regulation or order
or legal or governmental proceeding required to be described in the Prospectus
is not described as required;
(ix) the Company has full legal right, power and authority
under its articles of incorporation and bylaws, to
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authorize, issue, deliver and sell the Securities, to enter into each of this
Agreement, the Warrant Agreement and the Representatives' Warrant Agreement, and
Bitetti and Winston have full legal right, power and authority to enter into
this Agreement, and to consummate the transactions contemplated herein, therein,
in the Registration Statement and in the Prospectus; and each of this Agreement,
the Warrant Agreement and the Representatives' Warrant Agreement has been duly
authorized, executed and delivered by the Company and Bitetti and Winston, as
applicable. Each of this Agreement, the Warrant Agreement and the
Representatives' Warrant Agreement, assuming due authorization, execution and
delivery by the parties thereto other than the Company, constitutes a legal,
valid and binding agreement of the Company and Bitetti and Winston, as
applicable, enforceable against the Company, Bitetti and Winston, as applicable,
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 enforcement of creditors, rights
and the application of equitable principles in any action, legal or equitable,
and except as rights to indemnity or contribution may be limited by applicable
law). Neither the issuance, delivery and sale of the Securities, execution,
delivery or performance of this Agreement, the Warrant Agreement and the
Representatives' Warrant Agreement, the consummation of the transactions
contemplated herein, therein, in the Registration Statement and in the
Prospectus, or the conduct of the Company's business as described in the
Registration Statement, the Prospectus and any amendments or supplements
thereto, conflicts or will conflict with, or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or will
constitute (with notice, the lapse of time or both) a default under, or results
in or will result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity of
any kind whatsoever upon any property or assets (tangible or intangible) of the
Company or the Subsidiary pursuant to the terms of (A) the certificate of
incorporation or bylaws of the Company or the Subsidiary, (B) any material
license, contract, indenture, mortgage, installment sale agreement, lease, deed
of trust, voting trust agreement, shareholders, agreement, purchase order, note,
loan or credit agreement or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which the Company or the Subsidiary is a party or by which either
of them is or may be bound or to which any of its properties or assets (tangible
or intangible) are or may be subject or (C) any law, statute, judgment, decree,
order, rule or regulation applicable to the Company or the Subsidiary of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body having jurisdiction over the Company or the
Subsidiary or any of their respective activities or properties;
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(x) no consent, approval, authorization, registration,
qualification or order of, and no filing with, any court, administrative agency
or other government or regulatory official, agency, authority or body is
required in connection with the issuance, delivery and sale of the Securities,
the performance of this Agreement, the Warrant Agreement and the
Representatives' Warrant Agreement or the consummation of the transactions
contemplated hereby, thereby, by the Registration Statement and by the
Prospectus, other than such as may be required under the securities or "blue
sky" laws of any State and the rules and regulations of the NASD and the
Commission, as to which no opinion need be rendered;
(xi) the properties and businesses of the Company and the
Subsidiary conform in all material respects to the description thereof contained
in the Registration Statement and the Prospectus;
(xii) to such counsel's knowledge, neither the Company nor
the Subsidiary is in breach of, or in default under, and no event has occurred
which, with notice, lapse of time or both, would constitute a material default
of, any term, covenant, condition or provision of any material license,
contract, indenture, mortgage, installment sale agreement, lease, deed of trust,
voting trust agreement, shareholders' agreement, purchase order, note, loan or
credit agreement or any other material agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or instrument to
which the Company or the Subsidiary is a party or by which it is or may be bound
or to which its properties or assets (tangible or intangible) are or may be
subject; and neither the Company nor any Subsidiary is in violation of any term,
covenant, condition or provision of its certificate of incorporation or bylaws
or in material violation of any franchise, license, permit, judgment, decree,
order, law, statute, rule or regulation to which it or any of its properties or
assets (tangible or intangible) are subject;
(xiii) the statements in the Prospectus under "Prospectus
Summary," "Risk Factors," "Business," "Management," "Principal Shareholders,"
"Resales of Outstanding Securities," "Certain Transactions," "Description of
Capital Stock," "Shares Eligible for Future Sale" and "Underwriting" have been
reviewed by such counsel, and insofar as they refer to statements of law,
descriptions of statutes, licenses, rules, regulations or legal conclusions, are
correct in all material respects;
(xiv) the Company and the Subsidiary own or possess, free
and clear of all liens or encumbrances and rights thereto or therein by third,
the requisite licenses or other rights to use all trademarks, trade names,
service marks, service names, copyright or patents which, individually or in the
aggregate, are material to its condition (financial or
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otherwise), earnings, business affairs, position, prospects, shareholders,
equity, operations, properties, businesses or results of operations, and there
is no claim or action by any person pertaining to, or proceeding, pending, or
threatened, which challenges the rights of the Company with respect to any
trademarks, service marks, copyrights, service names, trade names, patents,
patent applications and licenses used in the conduct of the Company's business
(including, without limitation, any such licenses or rights described in the
Prospectus as being owned or possessed by the Company), and the Company's
current products, services and processes do not and will not infringe on the
trademarks, service marks, copyrights, service names, trade names, patents,
patent applications or licenses held by any third party;
(xv) to such counsel's knowledge, no person, corporation,
trust, partnership, association or other entity has the right to include or
register any securities of the Company in the Registration Statement, require
the Company to file any registration statement or, if filed, to include any
security in such registration statement; and no person, corporation, trust,
partnership, association or other entity holds any antidilution rights with
respect to any securities of the Company;
(xvi) to such counsel's knowledge, except as described in
the Registration Statement and the Prospectus, there are no claims, payments,
arrangements or understandings, whether oral or written, for services in the
nature of a finder's fee, brokerage fee, origination fee or otherwise with
respect to the offerings contemplated by the Agreement, the Warrant Agreement,
the Representatives' Warrant Agreement, the Registration Statement and the
Prospectus or any other arrangements, agreements, understandings, payments or
issuances that may affect the Representatives' compensation, as determined by
the NASD other than as the Representatives itself may have agreed to with third
parties;
(xvii) to such counsel's knowledge, except as set forth in
the Prospectus under "Certain Transactions," no officer, director or shareholder
of the Company or the Subsidiary, and no affiliate or associate (as those terms
are defined in the Rules and Regulations) of any of the foregoing persons or
entities, has or has had, either directly or indirectly, (A) an interest in any
person or entity which (x) furnishes or sells services or products which are
furnished or sold or are proposed to be furnished or sold by the Company or the
Subsidiary or (y) purchases from or sells or furnishes to the Company or the
Subsidiary any products or services or (B) a beneficial interest in any contract
or agreement to which the Company or the Subsidiary is a party or by which the
Company or the Subsidiary or any property or asset (tangible or intangible) of
the Company or the Subsidiary may be bound or affected. To such counsel's
knowledge, except as set forth in the Prospectus, there are no existing
agreements, arrangements, understandings or
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transactions, or proposed agreements, arrangements, understandings or
transactions, between or among the Company or the Subsidiary and any officer,
director of the Company or the Subsidiary or any person listed in the "Principal
Shareholder" section of the Prospectus, or any affiliate or associate of any of
the foregoing persons or entities;
(xviii) the minute books of the Company and the Subsidiary
have been made available to the Representatives and, to such counsel's
knowledge, contain a complete summary of all meetings and actions of the
directors, including any committee thereof, and shareholders of the Company and
the Subsidiary since the time of their incorporation or formation and reflect
all transactions referred to in such minutes accurately in all respects.
(xix) assuming due execution by the parties thereto other
than the Company, the Lock-Up Agreements are legal, valid and binding
obligations of the parties thereto, enforceable against the parties thereto and
any subsequent holder of the securities subject thereto in accordance with its
terms; and
(xx) to such counsel's knowledge, the Company does not (i)
maintain, sponsor or contribute to any ERISA Plans, (ii) maintain or contribute,
now or at any time previously, to a defined benefit plan, as defined in Section
3(35) of ERISA, and (iii) has never completely or partially withdrawn from a
"multiemployer plan."
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and the
Subsidiary, representatives of the independent certified public accountants for
the Company, representatives of the Representatives and representatives of the
Underwriters' Counsel, at which conferences such counsel made inquires of such
officers, such other representatives of the Company and the Subsidiary and
representatives of such accountants and discussed the contents of each
Preliminary Prospectus, the Registration Statement, the Prospectus and related
matters and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus (except as and to the extent stated in (xiii) above), on the basis of
the foregoing and such counsel's participation in the preparation of each
Preliminary Prospectus, the Registration Statement and the Prospectus, no facts
have come to the attention of such counsel which leads it to believe that either
the Registration Statement or any amendment thereto, at the time such
Registration Statement or amendment became effective or as of the Closing Date
(or the Option Closing Date, as the case may be) contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
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Prospectus or any supplement thereto, at the date of each such Prospectus or
supplement and at the Closing Date (or the Option Closing Date, as the case may
be) contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial and statistical data
included in or omitted therefrom in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any supplements or amendments thereto).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which it is admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance satisfactory to the Underwriters'
Counsel) of other counsel, acceptable to the Underwriters' Counsel, familiar
with the applicable laws; and (B) as to matters of fact, to the extent it deems
proper, on certificates and written statements of responsible officers of the
Company and certificates or other written statement of officers of departments
of various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company or the Subsidiary, provided that
copies of any such opinions, statements or certificates shall be delivered to
the Representatives and the Underwriters' Counsel. The opinion of such counsel
for the Company shall state that the opinion of any such other counsel is in
form satisfactory to such counsel and that the Underwriters and the
Underwriters' Counsel are justified in relying thereon.
At each Option Closing Date, if any, the Representatives shall
have received the favorable opinion of McDermott, Will & Emery, counsel to the
Company, dated such Option Closing Date, addressed to the Representatives and in
form and substance satisfactory to Underwriters' Counsel confirming as of such
option Closing Date the statements made by McDermott, Will & Emery in its
opinion delivered on the Closing Date.
(e) on or prior to each of the Closing Date and each Option
Closing Date, if any, the Underwriters' Counsel shall have been furnished with
such documents, certificates and opinions as it may reasonably require for the
purpose of enabling it to review or pass upon the matters referred to in Section
7(c) hereof, or in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties or conditions of the company or the
subsidiaries herein contained.
(f) Prior to the Closing Date and each Option Closing Date, if
any, (i) there shall have been no adverse change or development involving a
prospective adverse change in the
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condition (financial or otherwise), earnings, business affairs, position,
prospects, shareholders' equity, operations, properties, businesses or results
of operations of the Company or the Subsidiary from the latest dates as of which
such matters are set forth in the Registration Statement and the Prospectus;
(ii) there shall have been no transaction, not in the ordinary course of
business and consistent with past practices, entered into by the Company or the
Subsidiary, from the latest date as of which the financial condition of the
Company or the Subsidiary is set forth in the Registration Statement and the
Prospectus, which may in any way be adverse to the Company or the Subsidiary;
(iii) neither the Company nor the Subsidiary shall be in default, and no event
shall have occurred which, with notice, lapse of time or both, would constitute
a default, under any provision of any agreement, instrument or other document
relating to any outstanding indebtedness; (iv) neither the Company nor the
Subsidiary shall have issued any securities (other than the Securities) or
declared or paid any dividend or made any distribution in respect of its capital
stock of any class, and there shall not have been any change in the capital
stock, or any change in the debt (long- or short-term) or liabilities or
obligations (contingent or otherwise), of the Company or the Subsidiary; (v) no
material amount of the property or assets (tangible or intangible) of the
Company or the Subsidiary shall have been pledged, mortgaged or otherwise
encumbered; and (vi) no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental or other proceeding (including,
without limitation, those pertaining to environmental, health or similar
matters) shall be pending, contemplated or threatened (or circumstances giving
rise to same) to which the Company or the Subsidiary is subject or to which any
property or assets (tangible or intangible) of the Company or the Subsidiary are
subject wherein an unfavorable decision, ruling or finding may materially
adversely affect the condition (financial or otherwise), earnings, business
affairs, position, prospects, shareholders' equity, operations, properties,
businesses or results of operations of the Company and the Subsidiary taken as a
whole, except as set forth in the Registration Statement and Prospectus and
except for debts, liabilities and obligations incurred in the normal course of
business consistent with past practices.
(g) At the Closing Date and each Option Closing Date, if any,
the Representatives shall have received a certificate of the Company signed by
the principal executive officer and by the chief financial or chief accounting
officer of the Company, dated the Closing Date or such Option Closing Date, as
the case may be, to the effect that each of such persons has carefully examined
the Registration Statement, the Prospectus 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 or
such Option Closing Date, as the
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case may be, and the Company and the Subsidiary have complied with all
agreements and covenants and satisfied all conditions contained in this
Agreement on their part to be performed or satisfied at or prior to the Closing
Date or such Option Closing Date, as the case may be;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been initiated or are pending, contemplated or threatened;
(iii) the Registration Statement, the Prospectus and each
amendment and supplement thereto, if any, contain all statements and information
required to be included therein, and neither the Registration Statement nor any
amendment thereto, at the time such Registration Statement or amendment became
effective and as of the date of such certificate included any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and neither
any Prospectus nor any supplement thereto, at the date of such Prospectus or
supplement thereto and at the date of such certificate, included any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; and
(iv) subsequent to the latest respective dates as of which
information is given in the Registration Statement and the Prospectus, (A)
neither the Company nor the Subsidiary has incurred any liabilities or
obligations, direct, indirect or contingent, other than in the ordinary course
of business; (B) neither the Company nor the Subsidiary paid or declared any
dividends or other distributions on its capital stock or other ownership
interests; (C) neither the Company nor the Subsidiary has entered into any
transactions not in the ordinary course of business; (D) there has not been any
change in the capital stock, long-term debt or short-term debt (other than any
increase in short-term debt in the ordinary course of business) of the Company
or the Subsidiary; (E) other than ordinary wear and tear, neither the Company
nor the Subsidiary has sustained any material loss or damage to its property or
assets (tangible and intangible), whether or not insured; (F) there is no
litigation which is pending, threatened or contemplated (or circumstances giving
rise to same) against the Company or the Subsidiary which is required to be set
forth in an amended or supplemented Prospectus which has not been so set forth;
and (G) there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth.
References to the Registration Statement and the Prospectus in this Section 6(g)
are to such documents as amended and supplemented at the date of such
certificate.
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(h) By the Closing Date, the Representatives shall have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriters, in the amount as described in the Registration Statement.
(i) At or prior to the time this Agreement is executed, the
Representatives shall have received a letter, dated such date, addressed to the
Representatives and in form and substance satisfactory in all respects to the
Representatives from Corbin & Wertz:
(i) confirming that it is an accounting firm of independent
certified public accountants with respect to the Company and the Subsidiary
within the meaning of the Act and the Rules and Regulations;
(ii) stating its opinion that the combined financial
statements and schedules of the Company and the Subsidiary included in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations and
that each of the Underwriters may rely upon the opinion of Corbin & Wertz with
respect to such combined financial statements and schedules included in the
Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited combined interim financial
statements of the Company and the Subsidiary (with an indication of the date of
the latest available unaudited combined interim financial statements), a reading
of the latest available minutes of the shareholders and the board of directors,
including any committees of the board of directors, of the Company and the
Subsidiary, consultations with officers and other employees of the Company and
the Subsidiary responsible for financial and accounting matters and other
specified procedures and inquiries, nothing has come to its attention which
would lead it to believe that (A) the unaudited combined financial statements
and schedules of the Company and the Subsidiary included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations or are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited combined
financial statements of the Company and the Subsidiary included in the
Registration Statement or (B) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there has been any
change in the capital stock, short-term debt or long-term debt of the Company
and the Subsidiary, or any decrease in the shareholders, equity or net current
assets or net assets of the Company and the Subsidiary as compared with amounts
shown in the ________________ balance sheet included in the Registration
Statement or, if there was any change or decrease, setting forth the amount of
such change or decrease, or (C) during the period
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from _____________ to a specified date not more than five (5) days prior to the
effective date of the Registration Statement, there was any decrease in
revenues, net income or net earnings per share of Common Stock, in each case as
compared with the corresponding period beginning ____________________, or, if
there was any such decrease, setting forth the amount of such decrease;
(iv) stating that it has compared specific dollar amounts,
numbers of shares, percentages, statements and other financial information
pertaining to the Company and the Subsidiary set forth in the Registration
Statement, in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting records,
including work sheets or analysis, of the Company and the Subsidiary, with the
results obtained from the application of specific readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(v) stating it has reviewed the internal controls of the
Company and the Subsidiary and that, since _________________, it has not noted
or brought to the attention of any of the management of the Company or the
Subsidiary any "weakness," as defined in Statement of Auditing Standard No. 60
(entitled "Communication of Internal Control Structure Related Matters Noted in
an Audit"), in any of the Company's or the Subsidiary's internal controls;
(vi) stating it has read the unaudited combined financial
statements referred to in Section 5(o) hereof; and
(vii) statements as to such other matters as the
Representatives may request.
(j) At the Closing Date and each Option Closing
Date, if any, the Representatives shall have received from Corbin & Wertz a
letter, dated as of the Closing Date or such Option Closing Date, as the case
may be, to the effect that (i) it reaffirms that statements made in the letter
furnished pursuant to Section 7(i) hereof, (ii) if the Company has elected to
rely on Rule 430A under the Act, to the further effect that it has carried out
procedures as specified in clause (iv) of such Section 7(i) with respect to
certain amounts, numbers, percentages, statements and other financial
information as specified by the Representatives and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and has found such amounts,
numbers, percentages, statements and other financial information to be in
agreement with the documents specified in such clause (iv); and (iii) it has
read the unaudited combined financial statements referred to in Section 5(o)
hereof.
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(k) On the Closing Date and each Option Closing Date, if any,
there shall have been duly tendered to the Representatives the appropriate
number of Securities.
(l) No order suspending the sale of the shares in any
jurisdiction designated by the Representatives pursuant to Section 5(e) hereof
shall have been issued on either the Closing Date or any Option Closing Date,
and no proceedings for that purpose shall have been initiated or shall be
pending, contemplated or threatened.
(m) On or before the Closing Date, the Company shall have
executed and delivered to you, individually and not in your capacity as the
Representatives, the Representatives' Warrant Agreement, substantially in the
form filed as Exhibit 4.3 to the Registration Statement. The executed version
of the Representatives' Warrant Agreement shall be satisfactory to you.
(n) On or before the effective date of the Registration
Statement, the Securities shall have been duly approved for quotation on the SCM
and a delay of trading of the Securities for two days after the Closing Date
shall have been approved by the SCM.
(o) On or before the effective date of the Registration
Statement, there shall have been delivered to the Representatives all of the
Lock-Up Agreements, in form and substance satisfactory to the Underwriters'
Counsel.
(p) The Company and the Subsidiary shall provide the
Representatives with such additional documents and certificates as the
Representatives may reasonably request.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or at any Option Closing Date, as the
case may be, is not so fulfilled, the Underwriters may terminate this Agreement,
without liability to any of the Underwriters, or, if the Representatives so
elects in its sole discretion, it may waive any such conditions which have not
been fulfilled or extend the time for their fulfillment.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter (for purposes of this Section 8, "Underwriters" shall include the
officers, directors, partners, employees, agents and counsel of each
Underwriter), and each person, if any, who controls any of the Underwriters, as
applicable ("controlling person"), within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims, damages, expenses (including, without limitation, reasonable attorneys,
fees and expenses) or liabilities and all actions, suits, proceedings,
inquiries, arbitrations, investigations, litigation or governmental or other
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proceedings (in this Section 8, collectively, "actions") in respect thereof,
whatsoever (including, without limitation, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any action,
commenced or threatened, or any claim whatsoever), as such are incurred, to
which any Underwriter or such controlling person may become subject under the
Act, the Exchange Act or any other statute or at common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained (i) in any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented);
(ii) in any post-effective amendment or amendments or any new registration
statement and prospectus in which is included securities of the Company issued
or issuable upon exercise of the Securities; (iii) in any application or other
document or written communication (in this Section 8, collectively,
"application") executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Securities
under the securities or "blue sky" laws thereof or filed with the Commission,
any state securities commission or agency, the NASD or the SCM or any other
securities exchange; or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus, in light of the circumstances in
which they were made), unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company by the
Representatives with respect to an Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be. In addition to its other obligations under this Section 8(a), the Company
agrees that, as an interim measure during the pendency of any action arising out
of or based upon any untrue statement or omission, or alleged untrue statement
or alleged omission as described in this Section 8(a), it will reimburse each
Underwriter (and, to the extent applicable, each controlling person), on a
monthly basis for all reasonable legal or other expenses incurred in connection
with investigating or defending any such action, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the Company's
obligations to reimburse each Underwriter and (and, to the extent applicable,
each controlling person), for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement is so held to
have been improper as to the Company, each Underwriter (and, to the extent
applicable, each controlling person), shall promptly return it to the Company
together with interest compounded daily, based on the "reference rate" announced
from time to time by Bank of American N.T. & S.A. (the "Prime Rate"). Any such
interim reimbursement payments which are not made to an Underwriter, or a
controlling person, as applicable, within thirty (30) days of a
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request for reimbursement shall bear interest at the Prime Rate from the date of
such request.
The indemnity agreement in this Section 8(a) shall be in addition to
any liability which the Company may have at common law or otherwise.
(b) Each Underwriter severally, but not jointly, agrees to
indemnity and hold harmless the Company (for purposes of this Section 8,
"Company" shall include the officers, directors, partners, employees, agents and
counsel of the Company), and each other person, if any, who control the Company
("controlling person") within the meaning of the Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with respect
to statements or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in strict conformity
with, written information furnished to the Company by the Representatives with
respect to such Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto or in any application, provided that such written information or
omissions only pertain to disclosures in any Preliminary Prospectus, the
Registration Statement or the Prospectus directly relating to the transactions
effected by such Underwriter or the Underwriters as a group in connection with
the offering contemplated hereby. The Company acknowledges that the statements
with respect to the Underwriters and the public offering of the Securities set
forth under the heading "Underwriting" and the stabilization legend in the
Prospectus have been furnished by the Representatives with respect to the
Underwriters expressly for use therein and constitute the only information
furnished in writing by the Representatives with respect to the Underwriters for
inclusion in any Preliminary Prospectus, the Registration Statement or the
Prospectus. In addition to its other obligations under this Section 8(b), each
Underwriter severally, but not jointly, agrees that, as an interim measure
during the pendency of any action arising out of or based upon any untrue
statement or omission, or alleged untrue statement or alleged omission as
described in this Section 8(b), it will reimburse Company and (and, to the
extent applicable, each controlling person) on a monthly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such action, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of such Underwriter's
obligations to reimburse the Company (and, to the extent applicable, each
controlling person) for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement is so held to have been
improper as to such Underwriter, such Underwriter (and, to the extent
applicable, each controlling person) shall promptly return it to the Company,
together with interest compounded
-47-
daily, based on the "prime rate" announced from time to time by Bank of American
NTSA (the "Prime Rate"). Any such interim reimbursement payments which are not
made to the Company within thirty (30) days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request. Notwithstanding
the provisions of this Section 8(b), no Underwriter shall be required to
indemnify or hold harmless the Company, or any controlling person for, in the
aggregate, any amounts in excess of the underwriting discount applicable to the
Securities purchased by such Underwriter hereunder.
The indemnity agreement in this Section 8(b) shall be in addition to
any liability which each Underwriter severally, but not jointly, 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
shall notify each party against whom indemnification is to be sought in writing
of the commencement thereof (but the failure to so notify an indemnifying party
shall not relieve it from any liability which it may have under this Section 8
except to the extent that it has been materially prejudiced by such failure).
In case any such action is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties shall be entitled to participate therein, and to
the extent it or they may elect by written notice delivered to the indemnified
party or parties promptly after receiving the aforesaid notice from such
indemnified party or parties, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, an indemnified party shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party or parties in
connection with the defense of such action at the expense of the indemnifying
party or parties, (ii) the indemnifying party or parties shall not have employed
counsel reasonably satisfactory to such indemnified party to have charge of the
defense of such action within a reasonable time after notice of commencement of
the action or (iii) such indemnified party shall have reasonably concluded that
there may be one or more defenses available to it which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel (in addition to
appropriate local counsel) shall be borne by the indemnifying parties. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to appropriate local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related
-48-
actions in the same jurisdiction arising out of the same general allegations or
circumstances. Anything in this Section 8 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent; PROVIDED, HOWEVER, that such consent may
not be unreasonably withheld.
(d) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes a claim for indemnification
pursuant to this Section 8, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 8 provide for indemnification in such
case or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) 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 Securities or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (A) 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, expenses or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities (before
deducting expenses) bear to the total underwriting discounts received by the
Underwriters hereunder, in each case as set forth in the table on the cover page
of the Prospectus. Relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Representatives with respect to an
Underwriter, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred to in the first
sentence of this Section 8(e) 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 Section 8(e), no Underwriter shall be required to contribute
any amount in excess of the underwriting discount applicable to the
-49-
Securities purchased by such Underwriter hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act and
the cases and promulgations thereunder) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 8(e), each person, if any, who controls the Company, or
an Underwriter within the meaning of the Act, each officer of the Company who
has signed the Registration Statement and each director of the Company shall
have the same rights to contribution as the Underwriters, or the Company, as the
case may be, subject in each case to the provisions of this Section 8(e). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action against such party in respect to which a claim for
contribution may be made against another party or parties under this Section
8(e), notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have hereunder or otherwise than under this Section 8(e) except to the extent it
has been materially prejudiced by such failure. 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. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties, covenants and agreements contained in this
Agreement, or contained in certificates of officers of the Company delivered
pursuant hereto, shall be deemed to be representations, warranties, covenants
and agreements at the Closing Date and at each Option Closing Date, as the case
may be, and such representations, warranties, covenants and agreements of the
Company, and the respective indemnity and contribution agreements contained in
Section 8 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the Representatives, any of the
Underwriters or the Company, and shall survive the termination of this Agreement
and the issuance, sale and delivery of the Securities to the Underwriters.
10. EFFECTIVE DATE. This Agreement shall become effective at 10:00
a.m., New York City time, on the date one (1) business day following the date
hereof, or at such earlier time after the Registration Statement becomes
effective as the Representatives, in their sole discretion shall release the
Securities for sale to the public; PROVIDED, HOWEVER, that the provisions of
Sections 6, 8 and 11 hereof shall at all times be effective. For purposes of
this Section 10, the Securities to be purchased hereunder shall be deemed to
have been so released upon the earlier of dispatch by the Representatives of
telegrams to securities dealers releasing such Securities for offering or the
release by the Representatives for publication of the first newspaper
advertisement which is subsequently published relating to the Securities.
-50-
11. TERMINATION.
(a) The Representatives shall have the right to terminate this
Agreement after it becomes effective, the exercise of which shall be determined
in the Representatives' sole discretion, if: (i) any domestic or international
event or act or occurrence has, as determined in the Representatives' sole
judgment, disrupted, or in the Representatives' sole judgment will in the
immediate future materially disrupt, the financial markets; or (ii) any material
adverse change, as determined in the Representatives' sole judgment, in the
financial markets shall have occurred; or (iii) trading on the New York Stock
Exchange, the American Stock Exchange, the SCM or the over-the-counter market
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been required
on the over-the-counter market by the NASD or the Commission or any other
governmental authority having jurisdiction; or (iv) the United States shall have
become involved in a war or in hostilities, or there shall have been an
escalation in an existing war or hostilities or a national emergency shall have
been declared in the United States; or (v) a banking moratorium shall have been
declared by any state or federal authority or body; or (vi) a moratorium in
foreign exchange trading shall have been declared; or (vii) the Company and the
Subsidiary taken as a whole shall have sustained a material or substantial loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in the Representatives' sole judgment, make it inadvisable to
proceed with the offering, sale or delivery of the Securities; or (viii) there
shall have been a material adverse change or development involving a material
prospective change, in the condition (financial or otherwise), earnings,
business affairs, position, prospects, shareholders, equity, operations,
obligations, properties, businesses or results of operations of the Company and
the Subsidiary taken as a whole, whether or not arising in the ordinary course
of business, or if there shall have been a material adverse change in the
general market, political or economic conditions, whether in the United States
or elsewhere, as in the Representatives' sole judgment would make it inadvisable
to proceed with the offering, sale or delivery of the Securities.
(b) Notwithstanding any contrary provision contained in this
Agreement, in the event of any termination of this Agreement (including, without
limitation, pursuant to Sections 7, 11(a) or 12 hereof), and whether or not this
Agreement is otherwise carried out, the provisions of Sections 6 and 8 hereof
shall remain effective and shall not in any way be affected by such termination
or failure to carry out the terms of this Agreement or any part hereof.
12. DEFAULT BY THE COMPANY. If the Company shall fail at the Closing
Date or any Option Closing Date, as applicable, to
-51-
sell and deliver the number of Securities which it is obligated to sell and
deliver hereunder on such date, then this Agreement shall terminate (or, if such
default shall occur with respect to any Option Securities to be purchased on an
Option Closing Date, the Underwriters may, in the Representatives' sole
discretion, by notice from the Representatives to the Company, terminate the
Underwriters' obligation to purchase such Option Securities from the Company on
such date) with no liability whatsoever on the part of any non-defaulting party
other than pursuant to Sections 6, 8 and 11 hereof. No action taken pursuant to
this Section 12 shall relieve the Company from liability, if any, in respect of
such default.
13. SUBSTITUTION OF UNDERWRITERS. If any Underwriter defaults in its
obligation to purchase the number of Securities which it has agreed to purchase
under this Agreement, the non-defaulting Underwriters shall be obligated to
purchase (in the respective proportions which the number of Securities set forth
opposite the name of each non-defaulting Underwriter in Schedule I bears to the
total number of Securities set forth opposite the names of all the non-
defaulting Underwriters in Schedule I) the Securities which the defaulting
Underwriter agreed but failed to purchase; except that the non-defaulting
Underwriters shall not be obligated to purchase any of the Securities if the
total number of Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase exceeds 10% of the total number of Securities, and
any non-defaulting Underwriter shall not be obligated to purchase more than 110%
of the number of Securities set forth opposite its name in Schedule I plus the
total number of Option Securities purchasable by it pursuant to the terms of
Section 3(b) hereof. If the foregoing maximums are exceeded, the non-defaulting
Underwriters, and any other underwriters satisfactory to you who so agree, shall
have the right, but shall not be obligated, to purchase (in such proportions as
may be agreed upon among them) all the Securities. If the non-defaulting
Underwriters or the other underwriters satisfactory to you do not elect to
purchase the Securities which the defaulting Underwriter or Underwriters agreed
but failed to purchase, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter, the Company except for the payment of
expenses to be borne by the Company as provided in Section 6(a) hereof and the
indemnify and contribution agreements of the Company and the Underwriters
contained in Section 8 hereof; PROVIDED, HOWEVER, that this provision shall not
affect any Closing which at the time of such termination already shall have
taken place.
Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have for damages caused by its default. If the other
underwriters satisfactory to you are obligated or agreed to purchase the
Securities of a defaulting Underwriter, either you or the Company may postpone
the Closing Date for up to seven full Business Days in order to effect any
changes that may be necessary in the Registration
-52-
Statement, the Prospectus or in any other document or agreement, and to file
promptly any amendments or any supplements to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary.
14. NOTICES. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be deemed
to have been duly given if mailed, delivered by hand or transmitted by any
standard form of telecommunication. Notices to the Underwriters shall be
directed to The Boston Group, L.P. at 1999 Avenue of the Stars, Suite 2550, Los
Angeles, California 90067, Attention: Mr. Robert A. DiMinico, with a copy to
Jeffer, Mangels, Butler & Marmaro, LLP, 2121 Avenue of the Stars, 10th Floor,
Los Angeles, California 90067, Attention: Steven J. Insel, Esq. Notices to the
Company shall be directed to the Company at 2985 E. Hillcrest Drive, Suite A,
Westlake Village, California 91362, Attention: Vincent J. Bitetti and Eric H.
Winston, with a copy to McDermott, Will & Emery, 1850 K. Street, N.W., Suite
500, Washington, D.C. 20006, Attention: Robert Kalik, Esq.
15. PARTIES. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company, and the controlling
persons, officers, directors and others referred to in Section 8 hereof, and
their respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein contained. No purchaser of Securities from an Underwriter shall be
deemed to be a successor merely by reason of such purchase.
16. CONSTRUCTION. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California, without
giving effect to conflict of laws principles thereof.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to he one and the same instrument.
18. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the Warrant
Agreement and the Representatives' Warrant Agreement constitute the entire
agreement of the parties hereto concerning the subject matter hereof and
supersede all prior written or oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may not be amended,
modified or altered except in a writing signed by the Representatives and the
Company.
If the foregoing correctly sets forth the understanding among the
parties hereto, please so indicate in the space
-53-
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
SOUND SOURCE INTERACTIVE, INC.
By:
-----------------------------
Name: Vincent J. Bitetti
--------------------------
Vincent J. Bitetti
--------------------------
Eric H. Winston
Confirmed and accepted as of
the date first above written.
THE BOSTON GROUP, L.P.
AS REPRESENTATIVE FOR THE
SEVERAL UNDERWRITERS NAMED
IN SCHEDULE I ATTACHED HERETO
By:
---------------------------
Name: Robert A. DiMinico
Title: Chairman
JOSEPH STEVENS & COMPANY, L.P.
AS REPRESENTATIVE FOR THE
SEVERAL UNDERWRITERS NAMED
IN SCHEDULE I ATTACHED HERETO
By:
---------------------------
Name:
Title:
-54-
Dates Referenced Herein
| Referenced-On Page |
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This ‘SB-2/A’ Filing | | Date | | First | | Last | | | Other Filings |
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| | |
Filed on: | | 5/9/96 | | | | | | | None on these Dates |
| | 5/1/96 | | 1 |
| | 9/18/95 | | 5 |
| List all Filings |
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