Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amend #4 to Form S-1 for Securacom, Incorporated 68 370K
2: EX-1.1 Securacom Inc. Common Stock Underwriting Agreement 38 187K
3: EX-1.2 Warrant Agreement 23 97K
4: EX-10.7 Agreement to Redeem Limited Partnership Interest 1 6K
5: EX-23.1 Consent of Grant Thornton LLP 1 5K
6: EX-23.2 Consent of Amper, Politziner & Mattia 1 6K
7: EX-27 Financial Data Schedule 1 6K
EX-1.1 — Securacom Inc. Common Stock Underwriting Agreement
| EX-1.1 | 1st Page of 38 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
|---|
EXHIBIT 1.1
1,600,000 SHARES(1)
SECURACOM, INCORPORATED
COMMON STOCK
UNDERWRITING AGREEMENT
September __, 1997
CRUTTENDEN ROTH INCORPORATED
SCOTT & STRINGFELLOW, INC.
As Representatives of the several Underwriters
18301 Von Karman, Suite 100
Irvine, California 92715
Dear Sirs:
Securacom, Incorporated., a Delaware corporation (the "COMPANY"), and
the Stockholder named on Schedule B address you as the Representatives of each
of the parties listed in Schedule A hereto (herein collectively called the
"UNDERWRITERS") and hereby confirm their agreements with the several
Underwriters as follows:
1. Description of Shares. The Company proposes to issue and sell
1,400,000 shares of its authorized and unissued Common Stock, par value $0.01
per share (the "COMPANY FIRM SHARES"), to the several Underwriters. Moreover,
a certain stockholder of the Company named in Schedule B hereto (the "SELLING
STOCKHOLDER") proposes to sell to the several Underwriters 200,000 shares of
the Company's Common Stock, par value $0.01 per share (the "STOCKHOLDER FIRM
SHARES"). The Company Firm Shares and the Stockholder Firm Shares are
hereinafter collectively referred to as the "Firm Shares." The Selling
Stockholder also proposes to grant to the several Underwriters an option to
purchase up to 240,000 additional shares of the Company's Common Stock, par
value $0.01 per share (the "OPTION SHARES"), as provided in Section 7. The
Company also proposes to sell to the Representatives, at a purchase price of
$0.001 per warrant, warrants exercisable for a period of three years commencing
one year after the effective date of the Registration Statement (as defined
below) to purchase up to an aggregate of 140,000 shares of Common Stock at a
price of $[price x 120%] per share (the "REPRESENTATIVES' WARRANTS"),
----------------------------------
(1) Plus an option to purchase up to 240,000 additional shares from the
Selling Shareholder to cover over-allotments.
which exercise and purchase shall be effected in accordance with the
Representatives' Warrant Agreement in the form attached hereto as Exhibit A and
entered into between the Company and you concurrently herewith (the
"REPRESENTATIVES' WARRANT AGREEMENT"). As used in this Agreement, the term
"SHARES" shall include the Firm Shares and the Option Shares. All shares of
Common Stock, par value $0.01 per share, of the Company, including the Shares,
are hereinafter referred to as "COMMON STOCK."
2. Representations, Warranties and Agreements. The Selling
Stockholder represents and warrants to and agrees with each Underwriter that:
(a) the Selling Stockholder now has valid marketable
title to such number of shares of the Common Stock as are to be sold by the
Selling Stockholder pursuant to this Agreement (the "Stockholder Shares"), and
on each Closing Date on which the Selling Stockholder will sell Common Stock
will have valid and marketable title to the Stockholder Shares free and clear
of any security interests, claims, liens, equities and other encumbrances, (b)
the Stockholder Shares, when delivered, will have been duly authorized and will
be validly issued, fully paid and nonassessable, (c) the Selling Stockholder
now has, and on each Closing Date on which the Selling Stockholder will sell
Common Stock, will have, the legal right and power, and all consents, approvals
and authorizations required by law, to enter into this Agreement and to sell,
transfer and deliver the Stockholder Shares in the manner provided in this
Agreement and that no such action will contravene any provision of applicable
law or, if the Selling Stockholder is a partnership, the partnership agreement
or any other agreement or other instrument binding upon the Selling
Stockholder, (d) all information furnished in writing by or on behalf of such
Selling Stockholder expressly for use in the Registration Statement and
Prospectus is, and on each Closing Date will be, true, correct and complete,
and does not, and on each Closing Date will not, contain any untrue statement
of a material fact or omit to state any material fact necessary to make such
information not misleading, (e) this Agreement has been duly and validly
authorized, executed and delivered by the Selling Stockholder and constitutes a
legal, valid and binding agreement of the Selling Stockholder, enforceable
against it in accordance with its terms, and (f) all transactions between the
Company and the Selling Stockholder have been (i) on terms which were fair to
and in the best interest of the Company, (ii) approved by a majority of the
Company's directors who did not have an interest in such transaction and (iii)
disclosed in the Prospectus to the extent required under the Act or the Rules
and Regulations.
The Company represents and warrants to and agrees with each
Underwriter that:
(a) A registration statement on Form S-1 (File No.
333-26439) with respect to the Shares, including a prospectus, has been
prepared by the Company in material conformity with the requirements of the
Securities Act of 1933, as amended (the "ACT"), and the applicable rules and
regulations (the "RULES AND REGULATIONS") of the Securities and Exchange
Commission (the "COMMISSION") under the Act and has been filed with the
Commission; such amendments to such registration statement, such amended
prospectuses and such abbreviated registration statements pursuant to Rule
462(b) of the Rules and Regulations as may have been required prior to the date
hereof have been similarly prepared and filed with the Commission; and the
Company will file such additional amendments to such registration statement,
such amended prospectuses and such abbreviated registration statements as may
hereafter be required. Copies of such registration
2
statement and amendments together with each exhibit filed therewith, of each
related prospectus (the "PRELIMINARY PROSPECTUSES") and of any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and Regulations
have been delivered to you.
If the registration statement relating to the Shares has been
declared effective under the Act by the Commission, the Company will prepare
and promptly file with the Commission, pursuant to Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to the registration
statement (including a final form of prospectus), the information omitted from
the registration statement pursuant to Rule 430A(a) of the Rules and
Regulations or, if Cruttenden Roth Incorporated, on behalf of the several
Underwriters, shall agree to the utilization of Rule 434 of the Rules and
Regulations, the information required to be included in any term sheet filed
pursuant to Rule 434(b) or (c), as applicable, of the Rules and Regulations.
If the registration statement relating to the Shares has not been declared
effective under the Act by the Commission, the Company will prepare and
promptly file an amendment to the registration statement, including a final
form of prospectus, or, if Cruttenden Roth Incorporated, on behalf of the
several Underwriters, shall agree to the utilization of Rule 434 of the Rules
and Regulations, the information required to be included in any term sheet
filed pursuant to Rule 434(b) or (c), as applicable, of the Rules and
Regulations.
The term "REGISTRATION STATEMENT" as used in this Agreement
shall mean such registration statement, including financial statements,
schedules and exhibits (including exhibits incorporated by reference), in the
form in which it became or becomes, as the case may be, effective (including,
if the Company omitted information from the registration statement pursuant to
Rule 430A(a) of the Rules and Regulations or files a term sheet pursuant to
Rule 434 of the Rules and Regulations, the information deemed to be a part of
the registration statement at the time it became effective pursuant to Rule
430A(b) or Rule 434(d) of the Rules and Regulations) and, in the event of any
amendment thereto or the filing of any abbreviated registration statement
pursuant to Rule 462(b) of the Rules and Regulations relating thereto after the
effective date of such registration statement, shall also mean (from and after
the effectiveness of such amendment or the filing of such abbreviated
registration statement) such registration statement as so amended, together
with any such abbreviated registration statement. The term "PROSPECTUS" as
used in this Agreement shall mean the prospectus relating to the Shares as
included in such Registration Statement at the time it becomes effective
(including, if the Company omitted information from the Registration Statement
pursuant to Rule 430A(a) of the Rules and Regulations, the information deemed
to be a part of the Registration Statement at the time it became effective
pursuant to Rule 430A(b) of the Rules and Regulations); provided, however, that
if in reliance on Rule 434 of the Rules and Regulations and with the consent of
Cruttenden Roth Incorporated, on behalf of the several Underwriters, the
Company shall have provided to the Underwriters a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Act, the term "Prospectus" shall
mean the "prospectus subject to completion" (as defined in Rule 434(g) of the
Rules and Regulations) last provided to the Underwriters by
3
the Company and circulated by the Underwriters to all prospective purchasers of
the Shares and the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 434(d) of the Rules
and Regulations, and such Prospectus will not be materially different from such
prospectus subject to completion. Notwithstanding the foregoing, if any
revised prospectus shall be provided to the Underwriters by the Company for use
in connection with the offering of the Shares that differs from the prospectus
referred to in the immediately preceding sentence (whether or not such revised
prospectus is required to be filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations), the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to the
Underwriters for such use.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings for
that purpose, and each such Preliminary Prospectus has conformed in all
material respects to the requirements of the Act and the Rules and Regulations
and, as of its date, has not included any untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and at the time the Registration Statement became or becomes, as the case may
be, effective and at all times subsequent thereto up to and on the Closing Date
(hereinafter defined) and on any later date on which Option Shares are to be
purchased, (i) the Registration Statement and the Prospectus, and any
amendments or supplements thereto, contained and will contain all material
information required to be included therein by the Act and the Rules and
Regulations and will in all material respects conform to the requirements of
the Act and the Rules and Regulations, (ii) the Registration Statement, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(iii) the Prospectus, and any amendments or supplements thereto, did not and
will not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties contained in this subparagraph
(b) shall apply to information contained in or omitted from the Registration
Statement or Prospectus, or any amendment or supplement thereto, in reliance
upon, and in conformity with, written information relating to any Underwriter
furnished to the Company by such Underwriter specifically for use in the
preparation thereof.
(c) The Company is duly incorporated and validly existing
as a corporation in good standing under the laws of the State of Delaware. The
Company has full power and authority (corporate and other) to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus; the Company is duly qualified to do
business as foreign corporations and is in good standing in each jurisdiction
in which the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be so
qualified or be in good standing would not have a material adverse effect on
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company; no proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification; the Company is in
possession of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities that are material to the conduct of its business, all of
which are valid and in full force and effect; the Company is not in violation
of or in breach of or in default under (nor has any event occurred that with
notice, lapse of time or both would constitute a breach of or default under)
its charter or bylaws or any material obligation, agreement, covenant or
condition contained in any material bond, debenture, note or other evidence of
indebtedness, or in any
4
material lease, contract, indenture, mortgage, deed of trust, loan agreement,
joint venture or other agreement or instrument to which it is a party or by
which its properties may be bound; and the Company is not in material violation
of any law, order, rule, regulation, writ, injunction, judgment or decree of
any court, government or governmental agency or body, domestic or foreign,
having jurisdiction over it or its properties. The Company does not directly
or indirectly own beneficially or of record any equity interest in or
securities of, or control, any corporation, partnership association or other
entity.
(d) The Company has full legal right, power and authority
to enter into this Agreement and the Representatives' Warrant Agreement and
perform the transactions contemplated hereby and thereby. This Agreement and
the Representatives' Warrant Agreement have been duly authorized, executed and
delivered by the Company and are valid and binding agreements on the part of
the Company, enforceable in accordance with their respective terms, except as
rights to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof or thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles; the
making and performance of this Agreement and the Representatives' Warrant
Agreement by the Company and the consummation of the transactions herein and
therein contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, (i) any bond,
debenture, note or other evidence of indebtedness, or under any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by which its
properties may be bound, (ii) the charter or bylaws of the Company or (iii) any
law, order, rule, regulation, writ, injunction, judgment or decree of any
court, administrative agency, regulatory body, government or governmental
agency or body, domestic or foreign, having jurisdiction over the Company or
its properties. No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or its properties is
required for the execution and delivery of this Agreement and the consummation
by the Company of the transactions herein contemplated, except such as may be
required under the Act, by the NASD Regulation, Inc. (the "NASDR"), the rules
of the American Stock Exchange ("AMEX"), or under state or other securities or
Blue Sky laws, all of which requirements have been satisfied in all material
respects.
(e) There is not pending, threatened, or to the Company's
knowledge, contemplated, any action, suit, claim or proceeding against the
Company, any of its officers, directors, employees, or agents or any of its
properties or assets or rights, at law or in equity, before any court,
administrative agency, regulatory body, government or governmental agency or
body, domestic or foreign, which (i) might, individually or in the aggregate,
result in any material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
or might materially and adversely affect the properties, assets or rights of
the Company, (ii) might prevent consummation of the transactions contemplated
hereby or (iii) is required to be disclosed in the Registration Statement or
Prospectus and is not so disclosed; and there are no agreements, contracts,
leases or documents of the Company of a character required to be described or
referred to in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement by the Act or the Rules and Regulations
which have not been accurately described in all material respects in the
Registration Statement or Prospectus
5
or filed as exhibits to the Registration Statement. The Company is not a party
or subject to the provisions of any injunction, judgment, decree or order of
any court, regulatory body, administrative agency, government or governmental
agency or body domestic or foreign, that could result in a material adverse
change in the condition (financial or other), earnings, operations, business or
business prospects of the Company.
(f) All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "CAPITALIZATION" and conforms in all material
respects to the statements relating thereto contained in the Registration
Statement and the Prospectus (and such statements correctly state the substance
of the instruments defining the capitalization of the Company); the capital
stock of the Company, including the Shares, conforms in all material respects
to the description thereof contained in the Registration Statement and the
Prospectus; the Shares and the Representatives' Warrants and the shares of
Common Stock issuable upon exercise of the Representatives' Warrants have been
duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement, and, when issued and delivered by the Company against payment
therefor in accordance with the terms of this Agreement or the Representatives'
Warrant Agreement, as the case may be, will be duly and validly issued and
fully paid and nonassessable, and will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest; no
preemptive right, co-sale right, registration right, right of first refusal or
other similar right of stockholders exists with respect to any of the Shares or
the issuance and sale thereof or the Representatives' Warrants or the Common
Stock issuable upon exercise thereof; and the certificates for the Shares are
in due and proper form and the holders of the Shares and the Representatives'
Warrants and the Common Stock issuable upon exercise thereof, after making
payment therefor will not be subject to personal liability by reason of being
such holders. No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance and
sale or transfer of the Shares or the Representatives' Warrants or the Common
Stock issuable upon exercise thereof except as may be required under the Act or
under state or other securities or Blue Sky laws. Except as disclosed in the
Registration Statement, Prospectus and the financial statements of the Company,
and the related notes thereto included in the Prospectus, the Company has no
outstanding options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into,
or any contracts or commitments to issue or sell, shares of its capital stock
or any such options, rights, convertible securities or obligations. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth in the Prospectus fairly and accurately presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(g) Grant Thorton LLP and Amper, Politziner & Mattia,
whose reports on the financial statements of the Company are included in the
Registration Statement and the Prospectus, are independent accountants within
the meaning of the Act and the Rules and Regulations; the audited financial
statements of the Company, together with the related schedules and notes, and
the unaudited financial information, forming part of the Registration Statement
and
6
Prospectus, fairly present the financial position and the results of operations
and cash flows of the Company at the respective dates and for the respective
periods to which they apply and have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved. The selected and summary financial and statistical data included in
the Registration Statement present fairly the information shown therein and
have been compiled on a basis consistent with the audited financial statements
presented therein. No other financial statements or schedules are required to
be included in the Registration Statement.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has
not been any (i) material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company, (ii) transaction that is material to the Company, except transactions
entered into in the ordinary course of business consistent with past practices,
(iii) obligation, direct or contingent, that is material to the Company,
incurred by the Company, except obligations incurred in the ordinary course of
business consistent with past practices, (iv) change in the capital stock of
the Company, (v) change in the outstanding indebtedness of the Company that is
either material to the Company or is out of the ordinary course of business of
the Company, (vi) dividend or distribution of any kind declared, paid or made
on the capital stock of the Company, (vii) default in the payment of principal
of or interest on any outstanding debt obligations, or (viii) loss or damage
(whether or not insured) to the property of the Company which has been
sustained or will have been sustained which has a material adverse effect on
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company.
(i) The Company has good and marketable title to all
properties and assets described in the Registration Statement and Prospectus as
owned by it, and valid and subsisting interests in all of the real property
described in the Registration Statement and Prospectus as leased by it, in each
case free and clear of any pledge, lien, security interest, encumbrance, claim
or equitable interest, other than as set forth in the Registration Statement
and Prospectus. The agreements to which the Company is a party described in,
or filed as exhibits to, the Registration Statement and Prospectus are valid
agreements, enforceable by the Company, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or material
default under any of such agreements, and the Company has valid and enforceable
leases for all properties described in the Registration Statement and
Prospectus as leased by it, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles. Except as set forth in the Registration Statement and
Prospectus, the Company owns or leases all such properties as are necessary to
its operations as now conducted or as proposed to be conducted (subject to
additional properties and assets as may be required in connection with
expansion of the Company's operations), and all such properties are free of
contractual or legal restrictions that would impair the use by the Company of
such properties in its business for the purposes described in the Registration
Statement and the Prospectus.
7
(j) The Company has correctly and timely filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes shown thereon as due and all assessments received by it to the
extent that the same have become due. Neither the Company nor any of its
officers has any knowledge of any tax deficiency of the Company or any tax
proceeding or action pending or threatened against the Company. There are no
liens for taxes on the assets of the Company, except for taxes not yet due.
There are no audits pending of the Company's tax returns (federal, state, local
or foreign), and there are no claims which have been or, to the best of the
Company's knowledge, may be asserted relating to any such tax returns which, if
determined adversely, would result in the assertion by any governmental agency
of any deficiency material to the Company. There have been no waivers of any
statute of limitations by the Company relating to tax returns (federal, state,
local and foreign). The Internal Revenue Service has not asserted or
threatened to assert any assessment, claim or liability for taxes due or to
become due in connection with any review or examination of the tax returns of
the Company for any year.
(k) The Company maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts prudent for
its business, including, but not limited to, insurance covering real and
personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism, errors and omissions, and all other risks
customarily insured against, all of which insurance is in full force and
effect; the Company has not been refused any insurance coverage sought or
applied for other than refusal of certain insurance coverages that were
discontinued by the carriers thereof; and the Company does not have any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
materially and adversely affect the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company.
(l) The Company is in compliance in all material respects
with all federal, state and local laws and regulations respecting the
employment of its employees and employment practices, terms and conditions of
employment and wages and hours relating thereto. There are no pending
investigations involving the Company by the United States Department of Labor
or any other governmental agency responsible for the enforcement of such
federal, state or local laws and regulations. There is no labor strike,
dispute or work stoppage or lockout pending, or, to the knowledge of the
Company, threatened, against or affecting the Company, and no such labor
strike, dispute, work stoppage or lockout has occurred with respect to any
employees of the Company, during the two years prior to the date of this
Agreement. No union organization activity is in progress with respect to the
employees of the Company, and no question concerning representation exists with
respect to such employees. No unfair labor practice charge or complaint
against the Company is pending or, to the knowledge of the Company, threatened,
before the National Labor Relations Board or similar foreign authorities, and
no such charge or complaint against the Company has been filed during the past
two years. There is no pending, or, to the knowledge of the Company,
threatened, grievance that, if adversely decided, would have a material adverse
effect on the business, results of operations, prospects or financial condition
of the Company. No charges with respect to or relating to the Company are
pending before the Equal Employment Opportunity Commission or any similar
state, local or foreign agency
8
responsible for the prevention of unlawful employment practices, and no such
charges have been filed with respect to the Company.
(m) The Company owns or possesses rights to use all
know-how necessary to conduct its business as now conducted and as described in
the Registration Statement and Prospectus; no patent rights, or copyrights are
utilized in the business of the Company; the Company has not received any
notice of, and has no knowledge of, any infringement of or conflict with
asserted rights of the Company by others with respect to any patent, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights; and the Company has not received any notice of, and has no
knowledge of, any infringement of or conflict with asserted rights of others by
the Company with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, might have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company.
(n) The Common Stock is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
and is approved for quotation on the AMEX, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or delisting the Common Stock from the
AMEX, nor has the Company received any notification that the Commission or the
NASD is contemplating terminating such registration or listing.
(o) The Company has been advised concerning the
Investment Company Act of 1940, as amended (the "1940 ACT"), and the rules and
regulations thereunder, and the Company has in the past conducted, and the
Company intends in the future to conduct, its affairs in such a manner as to
ensure that it is not and will not become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the 1940 Act and
such rules and regulations.
(p) The Company has not distributed and will not
distribute prior to the later of (i) the Closing Date, or any date on which
Option Shares are to be purchased, as the case may be, and (ii) completion of
the distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectuses, the
Prospectus, the Registration Statement and other materials, if any, permitted
by the Act.
(q) None of the Company, or its officers, directors,
employees or agents has at any time during the last five (5) years made (i) any
unlawful contribution to any candidate for foreign office or failed to disclose
fully any contribution in violation of law, or (ii) any payment to any federal
or state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof, or (iii) any other
payment of funds of the Company prohibited by law, and no funds of the Company
have been set aside for any payment prohibited by law.
(r) Other than the over-allotment option granted to the
Underwriters, the Company has not taken and will not take, directly or
indirectly, any action designed to or that
9
might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares (except for any action taken by the Underwriters).
(s) Except as otherwise set forth in the Registration
Statement and the Prospectus, each of the Company's officer, director and
stockholder's who own 1% or more of the outstanding Common Stock has agreed in
writing that such person will not, except as described below, for a period of
nine months from the date of the final Prospectus (the "LOCK-UP PERIOD"), sell,
offer to sell, solicit an offer to buy, contract to sell, loan, pledge, grant
any option to purchase, or otherwise transfer or dispose of (collectively, a
"DISPOSITION"), any shares of Common Stock, or any securities convertible into
or exercisable or exchangeable for Common Stock (collectively, "SECURITIES"),
now owned or hereafter acquired by such person or with respect to which such
person has or hereafter acquires the power of disposition otherwise than on
exercise (on a cash or cashless basis not resulting in any public sale of
Common Stock) of Common Stock options outstanding, it being understood,
however, that the shares of Common Stock received (net of shares delivered to
the Company in a traditional cashless exercise thereof) by such person shall be
subject to the terms of the Lock-Up Agreement (as defined below). The
foregoing restriction has been expressly agreed to preclude the holder of the
Securities from engaging in any hedging, pledge or other transaction which is
designed to or may reasonably be expected to lead to or result in a Disposition
by any stockholder or any other person of any Securities, whether or not owned
by a stockholder, during the Lock-up Period, even if such Securities would be
disposed of by someone other than such stockholder. Such prohibited hedging,
pledge or other transactions would include, without limitation, any short sale
(whether or not against the box), any pledge of shares covering an obligation
that matures, or could reasonably mature during the Lock-Up Period, or any
purchase, sale or grant of any right (including, without limitation, any put or
call option) with respect to any Securities or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from Securities. Furthermore, each
such person has also agreed and consented to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of the
Securities held by such person except in compliance with this restriction. The
Company has provided to counsel for the Underwriters a complete and accurate
list of all securityholders of the Company as of the Closing Date and the
number and type of securities held by each securityholder. The Company has
provided to counsel for the Underwriters true, accurate and complete copies of
all of the agreements pursuant to which its officers, directors and
stockholders have agreed to such or similar restrictions (the "LOCK-UP
AGREEMENTS") presently in effect. The Company hereby represents and warrants
that it will not purport to release any of its officers, directors or other
stockholders from any Lock-up Agreements currently existing or hereafter
effected without the prior written consent of Cruttenden Roth Incorporated.
(t) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
10
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(u) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers, directors, employees, or consultants of the Company or any of the
members of the families of any of them, except as disclosed in the Registration
Statement and the Prospectus.
(v) Other than Cruttenden Roth Incorporated, on behalf of
the several Underwriters, no person is or will be owed any finders fee or
commission or similar payment in connection with the transactions contemplated
by this Agreement.
(w) There are no persons with registration or other
similar rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the Act, except (i) as
described in the Registration Statement and the Prospectus and (ii) that the
Underwriters have registration rights with respect to the Representatives'
Warrants and the underlying Common Stock as described in the Representatives'
Warrant Agreement.
(x) The Company has conducted and is conducting its
business and operations in compliance with all applicable federal, state, local
and foreign statutes, laws, rules, regulations, ordinances, codes, decisions,
decrees, directives and orders.
(y) The Company has complied with all provisions of
Florida H.B. 1771, codified as Section 517.075 of the Florida statutes, and all
regulations promulgated thereunder relating to issuers doing business with
Cuba.
(z) Except as described in the Prospectus, to the
Company's knowledge, there are no rulemaking or similar proceedings before any
federal, state, local or foreign government or regulatory bodies which involve
or affect the Company which, if the subject of an action unfavorable to the
Company would have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company.
(aa) To the knowledge of the Company, no officer,
director, employee, or consultant of the Company is in violation of any
non-competition, non-disclosure, confidentiality or other similar agreement
with any party other than the Company, and no such person is expected to be in
violation thereof as a result of the business conducted or expected to be
conducted by the Company as described in the Prospectus or such person's
performance of his obligations to the Company.
(bb) The Company has not violated any foreign, federal,
state or local law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("ENVIRONMENTAL LAWS"), and the Company does not anticipate
incurring any material costs or liabilities (including without
11
limitation any capital or operating expenditures) in connection with any
clean-up or remediation of hazardous or toxic substances or wastes, pollutants
or contaminants, related closure of properties or compliance with Environmental
Laws, or any federal or state law relating to discrimination in the hiring,
promotion or pay of employees or any applicable federal or state wages and
hours laws, or any provisions of the Employee Retirement Income Security Act or
the rules and regulations promulgated thereunder, which in each case might
result in any material adverse effect on the properties, assets, operations,
business, business prospects or condition (financial or other) of the Company.
(cc) The Company has such permits, licenses, franchises
and authorizations of governmental or regulatory authorities ("permits"),
including without limitation under any applicable Environmental Laws, as are
necessary to own, lease and operate its properties and to conduct its business;
the Company has fulfilled and performed all of its material obligations with
respect to such permits and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such permit;
and such permits contain no restrictions that are materially burdensome to the
Company.
(dd) All transactions during the Company's current fiscal
year and last three (3) full fiscal years between the Company and any person
who is or was during such period an officer, director or 5% or greater
stockholder of the Company have been (i) on terms which were fair to and in the
best interest of the Company, (ii) approved by a majority of the Company's
directors who did not have an interest in such transactions and (iii) disclosed
in the Prospectus to the extent required under the Act or the Rules and
Regulations.
(ee) The Company is not required to register as a "broker"
or "dealer" in accordance with the provisions of the Exchange Act or the rules
or regulations promulgated thereunder.
(ff) The Company is in compliance with the Foreign Corrupt
Trade Practices Act.
3. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the Company Firm Shares and the Selling Stockholder
agrees to sell to the Underwriters, and each Underwriter agrees, severally and
not jointly, to purchase from the Selling Stockholder the Stockholder Firm
Shares, at a purchase price of $[PRICE LESS DISCOUNT] per share, the respective
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A hereto (subject to adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be
purchased by the several Underwriters pursuant to this Section 3 shall be made
against payment of the purchase price therefor by the several Underwriters by
wire transfer, certified or official bank check or checks drawn in same day
funds, payable to the order of the Company, at the offices of Gibson, Dunn &
12
Crutcher LLP, 1801 California Street, Suite 4100, Denver, Colorado 80202 (or at
such other place as may be agreed upon between the Representatives and the
Company), at 8:00 a.m. Colorado time, (a) on the third (3rd) full business day
following the first day that Shares are traded or (b) if this Agreement is
executed and delivered after 2:30 p.m. Colorado time, the fourth (4th) full
business day following the day that this Agreement is executed and delivered or
(c) at such other time and date not later than seven (7) full business days
following the first day that Shares are traded as the Representatives and the
Company may determine (or at such time and date to which payment and delivery
shall have been postponed pursuant to Section 10), such time and date of
payment and delivery being herein called the "CLOSING DATE"; provided, however,
that if the Company has not made available to the Representatives copies of the
Prospectus within the time provided in Section 4(d), the Representatives may,
in its sole discretion, postpone the Closing Date until no later than two (2)
full business days following delivery of copies of the Prospectus to the
Representatives.
The certificates for the Firm Shares to be so delivered will be made
available to you at such office or such other location including, without
limitation, in New York City, as you may reasonably request for checking at
least one (1) full business day prior to the Closing Date and will be in such
names and denominations as you shall specify at least two (2) full business
days prior to the Closing Date. If the Representatives so elect, delivery of
the Firm Shares may be made by credit through full fast transfer to the
accounts at The Depository Trust Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior to
the Closing Date for the Firm Shares to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder.
The Underwriters intend to make a public offering (as described in
Section 11) of the Firm Shares at the public offering price of $[PRICE TO
PUBLIC] per share. After the public offering the Underwriters may from time to
time, in their discretion, vary the public offering price.
The information set forth on the inside front cover page of the
Prospectus (insofar as such information relates to the Underwriters) concerning
stabilization, syndicate short covering transactions and penalty bids, and
under the first (including the table listing the Underwriters), second, third,
eighth and ninth paragraphs under the caption "Underwriting" in the Prospectus
constitutes the only information furnished by the Underwriters to the Company
for inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement, and you, on behalf of the respective Underwriters, represent and
warrant to the Company that the statements made therein do not include any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
4. Further Agreements of the Company and the Selling Stockholder.
The Company and the Selling Stockholder agree with the several Underwriters
that:
13
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto,
to become effective as promptly as possible; the Company will use its best
efforts to cause any abbreviated registration statement pursuant to Rule 462(b)
of the Rules and Regulations as may be required subsequent to the date the
Registration Statement is declared effective to become effective as promptly as
possible; the Company will notify you, promptly after it shall receive notice
thereof, of the time when the Registration Statement, any subsequent amendment
to the Registration Statement or any abbreviated registration statement has
become effective or any supplement to the Prospectus has been filed; if the
Company omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Rules and
Regulations, the Company will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to such Registration
Statement as originally declared effective which is declared effective by the
Commission; if the Company files a term sheet pursuant to Rule 434 of the Rules
and Regulations, the Company will provide evidence satisfactory to you that the
Prospectus and term sheet meeting the requirements of Rule 434(b) or (c), as
applicable, of the Rules and Regulations have been filed, within the time
period prescribed, with the Commission pursuant to Rule 424(b) of the Rules and
Regulations; if for any reason the filing of the final form of Prospectus is
required under Rule 424(b)(3) of the Rules and Regulations, it will provide
evidence satisfactory to you that the Prospectus contains such information and
has been filed with the Commission within the time period prescribed; it will
notify you promptly of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for additional
information; promptly upon your request, it will prepare and file with the
Commission any amendments or supplements to the Registration Statement or
Prospectus which, in the opinion of counsel for the several Underwriters
("UNDERWRITERS' COUNSEL"), may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters; it will promptly prepare and
file with the Commission, and promptly notify you of the filing of, and provide
you with copies of, any amendments or supplements to the Registration Statement
or Prospectus which may be necessary to correct any statements or omissions,
if, at any time when a prospectus relating to the Shares is required to be
delivered under the Act, any event shall have occurred as a result of which the
Prospectus or any other prospectus relating to the Shares as then in effect
would include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement in connection with the sale of
the Shares, it will prepare promptly upon request, but at the expense of such
Underwriter, such amendment or amendments to the Registration Statement and
such prospectus or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act; and it will file no amendment
or supplement to the Registration Statement or Prospectus which shall not
previously have been submitted to you a reasonable time prior to the proposed
filing thereof or to which you shall reasonably object in writing, subject,
however, to compliance with the Act and the Rules and Regulations and the
provisions of this Agreement.
14
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement, or
suspension of the qualification of the Shares for sale in any jurisdiction, or
of the initiation or threat of any proceeding for any such purpose; and it will
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(c) The Company will use its best efforts (including by
providing full cooperation with your counsel, whose services in this matter are
required and which you and the Company will seek to expedite) to qualify the
Shares for offering and sale under the securities laws of such jurisdictions as
you may designate and to continue such qualifications in effect for so long as
may be required for purposes of the distribution of the Shares, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process. In each
jurisdiction in which the Shares shall have been qualified as above provided,
the Company will make and file such statements and reports in each year as are
or may be required by the laws of such jurisdiction for such purpose.
(d) The Company will furnish to you, as soon as
available, and, in the case of the Prospectus and any term sheet or abbreviated
term sheet under Rule 434, in no event later than the first full business day
following the first day that Shares are traded, copies of the Registration
Statement (two of which will be signed and which will include all exhibits),
each Preliminary Prospectus, the Prospectus and any amendments or supplements
to such documents, including any prospectus prepared to permit compliance with
Section 10(a)(3) of the Act, all in such quantities as you may from time to
time reasonably request. Notwithstanding the foregoing, if Cruttenden Roth
Incorporated, on behalf of the several Underwriters, shall agree to the
utilization of Rule 434 of the Rules and Regulations, the Company shall provide
to you copies of a Preliminary Prospectus updated in all respects through the
date specified by you in such quantities as you may from time to time
reasonably request.
(e) The Company will make generally available to its
securityholders as soon as practicable, but in any event not later than the
forty-fifth (45th) day following the end of the fiscal quarter first occurring
after the first anniversary of the effective date of the Registration
Statement, an earnings statement (which will be in reasonable detail but need
not be audited) complying with the provisions of Section 11(a) of the Act and
covering a twelve (12) month period beginning after the effective date of the
Registration Statement.
(f) During a period of five (5) years after the date
hereof, the Company will furnish to its stockholders as soon as practicable
after the end of each respective period, annual reports (including financial
statements audited by independent certified public accountants) and, upon
request by a stockholder, unaudited quarterly reports of operations for each of
the first three quarters of the fiscal year, and will furnish to you and the
other several Underwriters hereunder, upon request (i) concurrently with
furnishing such reports to its stockholders, statements of operations of the
Company for each of the first three (3) quarters in the form furnished to the
Company's stockholders, (ii) concurrently with furnishing to its stockholders,
a balance sheet of
15
the Company as of the end of such fiscal year, together with statements of
operations, of stockholders' equity, and of cash flows of the Company for such
fiscal year, accompanied by a copy of the certificate or report thereon of
independent certified public accountants, (iii) as soon as they are available,
copies of all reports (financial or other) mailed to stockholders, (iv) as soon
as they are available, copies of all reports and financial statements furnished
to or filed with the Commission, any securities exchange or the NASD, (v) every
material press release and every material news item or article in respect of
the Company or its affairs which was generally released to stockholders or
prepared by the Company, and (vi) any additional information of a public nature
concerning the Company, or its business which you may reasonably request.
During such five (5) year period, if the Company shall have active
subsidiaries, the foregoing financial statements shall be on a consolidated
basis to the extent that the accounts of the Company and such subsidiaries are
consolidated, and shall be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(g) The Company will apply the net proceeds from the sale
of the Shares being sold by it in the manner set forth under the caption "Use
of Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for its Common Stock.
(i) The terms of Section 10 of that certain Letter
Agreement dated August 21, 1997 between you and the Company (the "LETTER
AGREEMENT") are hereby incorporated by reference and made obligations of the
Company and Cruttenden Roth Incorporated as part of this Agreement
notwithstanding that the Letter Agreement shall have ceased to be of full force
or effect for any other purpose. If the transactions contemplated hereby are
not consummated by reason of any failure, refusal or inability on the part of
the Company to perform any agreement on its part to be performed hereunder or
to fulfill any condition of the Underwriters' obligations hereunder, or if the
Company shall terminate this Agreement pursuant to Section 11(a), or if the
Underwriters shall terminate this Agreement pursuant to Section 11(a) or 11(b),
then the provisions of Section 10 of the Letter Agreement shall govern payment
and reimbursement obligations of the parties notwithstanding that the Letter
Agreement shall have ceased to be in full force or effect for any other
purpose.
(j) If at any time during the ninety (90) day period
after the Registration Statement becomes effective, any rumor, publication or
event relating to or affecting the Company shall occur as a result of which in
your opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of and
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
(k) During the Lock-up Period, the Company will not,
without the prior written consent of Cruttenden Roth Incorporated, effect the
Disposition of, directly or indirectly,
16
any Securities other than the sale of the Firm Shares and the Option Shares
hereunder and the Company's issuance of options or Common Stock under the
Company's presently authorized stock option and stock purchase plans described
in the Registration Statement and the Prospectus.
(l) The Company and the Selling Stockholder shall pay to
Cruttenden Roth Incorporated a nonaccountable expense allowance equal to two
and one-half percent (2.5%) of the total Price to Public with respect to Shares
sold by each of them as shown on the front cover of the Prospectus, including,
if exercised, with respect to the over-allotment option. Cruttenden Roth
Incorporated acknowledges that $30,000 of the amount payable by the Company
pursuant to this paragraph has already been paid.
(m) The Company will use its best efforts to cause the
Shares to be listed on the AMEX.
(n) The Company will refrain from investing the proceeds
of the sale of the Shares in such a manner as to cause the Company to become an
"investment company" within the meaning of the 1940 Act.
(o) The Company will furnish to you as early as
practicable before the Closing Date and any later date on which Option Shares
are to be purchased, as the case may be, but not later than two business days
prior thereto, a copy of the latest available unaudited interim consolidated
financial statements, if any, of the Company that have been read by the
Company's independent certified public accountants as stated in their letters
to be furnished pursuant to Section 6(f).
(p) On the Closing Date, the Company will sell the
Representatives' Warrants to the Representatives.
(q) The Company agrees to take, or refrain from taking,
any and all actions necessary so that any shares of Common Stock issuable upon
the exercise of warrants or options to purchase Common Stock shall not become
freely trade during the Lock-Up Period. Without limiting the foregoing, the
Company shall not change the terms of any outstanding warrants to provide for a
cashless exercise, register any such shares under the Act, or set the vesting
schedule of any newly issued options or warrants so that such options or
warrants (or any portion thereof) vest before the expiration of the Lock-Up
Period.
(r) For a period of two years after the Closing Date or
until an offering occurs which Cruttenden Roth Incorporated ("Cruttenden") has
declined to exercise its rights under this Section, the Company shall notify
Cruttenden in writing at least ten (10) days before (i) the proposed private or
public offering of any debt or equity securities (other than bank debt or
similar financing) by the Company or by any of its majority owned or controlled
subsidiaries (collectively referred to herein as the Company) or (ii) the
proposed public offering of any equity securities by any of its stockholders
owning at least five percent of the Company's Common Stock ("PRINCIPAL
SHAREHOLDERS") so that Cruttenden or, at its option, a group of associated
investment bankers shall have the right of first refusal to manage or co-manage
the offering. Cruttenden agrees to notify the Company of Cruttenden's
intention to exercise the right of first refusal within
17
ten (10) days of receipt by Cruttenden of such notice from the Company. If
Cruttenden fails to exercise the right of first refusal within the ten-day
period and the terms of the proposed subsequent financings thereafter are
altered in any material respect, the Company shall again offer to Cruttenden
the right of first refusal to manage or co-manage subsequent financings upon
such altered terms and Cruttenden shall have ten (10) days from the date of
receipt to notify the Company of its acceptance.
5. Expenses.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and
expenses in connection with the preparation, printing and filing of the
Registration Statement (including financial statements, schedules and
exhibits), Preliminary Prospectuses and the Prospectus and any amendments or
supplements thereto; the printing of this Agreement, the Representatives'
Warrant Agreement, the Agreement Among Underwriters, the Selected Dealer
Agreement, the Preliminary Blue Sky Survey and any Supplemental Blue Sky
Survey, the Underwriters' Questionnaire and Power of Attorney, and any
instruments related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the several Underwriters, including transfer taxes, if any;
the cost of all certificates representing the Shares and transfer agents' and
registrars' fees; the fees and disbursements of counsel for the Company; all
fees and other charges of the Company's independent certified public
accountants; the cost of furnishing to the several Underwriters copies of the
Registration Statement (including appropriate exhibits), Preliminary Prospectus
and the Prospectus, and any amendments or supplements to any of the foregoing;
NASDR filing fees and the cost of qualifying the Shares under the laws of such
jurisdictions as you may designate (including fees and disbursements of
Underwriters' Counsel and filing fees in connection with such NASDR filings and
Blue Sky qualifications); the cost of any listing of the Shares on any
securities exchange or qualification of the Shares for inclusion in the AMEX;
registration and other fees payable to the Commission; the cost of preparing
bound volumes of the public offering documents for the Representatives and
Underwriters' Counsel; the Company's road show expenses; and all other expenses
directly incurred by the Company in connection with the performance of its
obligations hereunder. The provisions of this Section 5(a)(i) are intended to
relieve the Underwriters from the payment of the expenses and costs which the
Company hereby agrees to pay.
(ii) In addition to its other obligations under
Section 8(a), the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
described in Section 8(a), it will reimburse the Underwriters on a monthly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriters 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 payment is so held to have been
improper, the Underwriters shall promptly return such payment to the Company
together with interest, compounded daily, determined on the basis of the prime
rate (or other commercial lending rate for borrowers of the
18
highest credit standing) listed from time to time in The Wall Street Journal
which represents the base rate on corporate loans posted by a substantial
majority of the nation's thirty (30) largest banks (the "PRIME RATE"). Any
such interim reimbursement payments which are not made to the Underwriters
within thirty (30) days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request.
(b) In addition to their other obligations under Section
8(b), the Underwriters severally and not jointly agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding described in Section 8(b), they will reimburse the Company on
a monthly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company 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 payment is so held to have been improper, the Company shall
promptly return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of 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.
(c) In addition to its other obligations under Section
8(c), the Selling Stockholder agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
described in Section 8(c), it will reimburse the Underwriters on a monthly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Selling Stockholder's obligation to
reimburse the Underwriters 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 payment is so
held to have been improper, the Underwriters shall promptly return such payment
to the Selling Stockholder together with interest, compounded daily, determined
on the basis of the Prime Rate. Any such interim reimbursement payments which
are not made to the Underwriters within thirty (30) days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request.
(d) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections
5(a)(ii), 5(b) and 5(c), including the amounts of any requested reimbursement
payments, the method of determining such amounts and the basis on which such
amounts shall be apportioned among the reimbursing parties, shall be settled by
arbitration conducted under the provisions of the Constitution and Rules of the
Board of Governors of the New York Stock Exchange, Inc. or pursuant to the Code
of Arbitration Procedure of the NASDR. Any such arbitration must be commenced
by service of a written demand for arbitration or a written notice of intention
to arbitrate, therein electing the arbitration tribunal. In the event the
party demanding arbitration does not make such designation of an arbitration
tribunal in such demand or notice, then the party responding to said demand or
notice is authorized to do so. Any such arbitration will be limited to the
operation of the interim reimbursement provisions contained in Sections
5(a)(ii), 5(b) and 5(c) and will not resolve the
19
ultimate propriety or enforceability of the obligation to indemnify for
expenses that is created by the provisions of Sections 8(a), 8(b) and 8(c) or
the obligation to contribute to expenses that is created by the provisions of
Section 8(e).
6. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Shares as provided herein
shall be subject to the accuracy, as of the date hereof and the Closing Date
and any later date on which Option Shares are to be purchased, as the case may
be, of the representations and warranties of the Company herein, to the
performance by the Company of its obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 p.m., New York time, on the date following the
date of execution and delivery of this Agreement, or such later date and time
as shall be consented to in writing by you; and no stop order suspending the
effectiveness thereof shall have been issued, no suspension of the
qualification of the Shares for sale in any jurisdiction shall have occurred,
and no proceedings for any such purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened by the Commission or
any other regulatory authority of appropriate jurisdiction, and any request of
the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and delivery of
the Shares, shall have been reasonably satisfactory to the Underwriters'
Counsel, and such counsel shall have been furnished with such papers and
information as they may reasonably have requested to enable them to pass upon
the matters referred to in this Section.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, or any later date on which Option
Shares are to be purchased, as the case may be, there shall not have been any
(i) change in the condition (financial or otherwise), earnings, operations,
properties, assets, business or business prospects of the Company from that set
forth in the Registration Statement or Prospectus, which, in your sole
judgment, is material and adverse to the Company and that makes it, in your
sole judgment, impracticable or inadvisable to proceed with the public offering
of the Shares as contemplated by the Prospectus; (ii) any transaction that is
material to the Company entered into or committed to by the Company other than
as described in the Registration Statement and the Prospectus; or (iii) any
material obligation, contingent or otherwise, directly or indirectly, incurred
by the Company other than as described in the Registration Statement and the
Prospectus.
(d) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may be,
the following opinion of Dyer, Ellis & Joseph, P.C., counsel for the Company,
dated the Closing Date or such later date on which Option Shares are to be
purchased addressed to the Underwriters and with reproduced copies or signed
counterparts thereof for each of the Underwriters, to the effect that:
20
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its organization, with full corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement and the Prospectus, and is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the character of the
business conducted by it or the location of the properties owned or
leased by it makes such qualification necessary, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse change in the condition (financial or
otherwise), earnings, operations, properties, assets, business or
business prospects of the Company;
(ii) The Company has all requisite corporate power
and authority and, to such counsel's knowledge, all necessary
authorizations, approvals, consents, orders, licenses, certificates
and permits required to own, lease and license its assets and
properties and to conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus. The
Company has all requisite corporate power and authority and all
necessary authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this
Agreement, and, to issue and sell the Shares and the Representatives'
Warrants, other than those authorizations, approvals, consents, orders
licenses, certificates and permits required under state and foreign
securities laws. To such counsel's knowledge, the Company does not
control, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization.
(iii) The Company had authorized, issued and
outstanding capital stock as of June 30, 1997 as described under the
caption "Capitalization" in the Prospectus and the Common Stock, the
Representatives' Warrants, and the rights issued under the shareholder
rights plan conform to the descriptions thereof contained under the
caption "Description of Capital Stock" in the Prospectus. The
outstanding shares of the Company's capital stock have been, and the
Shares, the Representatives' Warrants, the Common Stock underlying the
Representatives' Warrants (the "Warrant Shares") and the shares of
Common Stock to be issued upon the exercise of the warrants and
options described in the Prospectus, upon issuance, delivery and
payment therefor in the manner herein described, will be, duly
authorized, validly issued, fully paid and non-assessable. The
certificates for the Shares, the Representatives' Warrants and the
Warrant Shares, are in due and proper form under the corporations law
of the State of the Company's organization. There are no preemptive
or other rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any shares of the Company's capital
stock pursuant to the Company's certificate of incorporation, bylaws,
other governing documents or any agreements or other instruments to
which the Company is a party or by which any of them is bound, other
than certain rights pursuant to stock purchase agreements entered into
between the Company and certain of its current stockholders that have
been waived or satisfied in connection with the offering or sale of
the Shares contemplated by this Agreement; and to such counsel's
knowledge, after conducting a reasonable investigation, neither the
filing of the Registration Statement nor the offering or sale of the
Shares as contemplated by this Agreement gives rise to any rights,
which have
21
not been waived or satisfied, for or relating to the registration of
any shares of the Company's capital stock. All corporate action
required to be taken on the part of the Company for the authorization,
issuance and sale of the Shares, the Representatives' Warrants and the
Warrant Shares by the Company has been duly and validly taken;
(iv) The Registration Statement and all
post-effective amendments thereto have become effective under the Act
and, to such counsel's knowledge, after conducting a reasonable
investigation, such counsel has reasonable grounds to believe and does
believe that no stop order proceedings with respect thereto have been
instituted or are pending before or threatened by the Commission and
any and all filings required by Rule 424 and Rule 430A of the Rules
and Regulations have been made;
(v) The Registration Statement and the Prospectus
and any amendment or supplement thereto, as of their respective
effective dates comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations (except that
counsel need express no opinion on the financial statements or other
financial data);
(vi) The Company is not, or with the giving of
notice or lapse of time or both will not be, in violation of or in
default under, nor will the execution or delivery hereof or
consummation of the transactions contemplated hereby result in a
violation of, or constitute a default under, the certificate of
incorporation, bylaws or other governing documents of the Company, or
any agreement, indenture or other instrument to which the Company is a
party or by which it is bound, or to which any of their properties are
subject and of which such counsel is aware or which has been filed as
an Exhibit to the Registration Statement, nor will the performance by
the Company of its obligations hereunder violate any law, rule or
regulation of any governmental agency or body having jurisdiction over
the Company, or its properties, or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property
or assets of the Company. Except for permits and similar
authorizations required under the Act, the NASDR, and the securities
or Blue Sky laws of certain jurisdictions and for such permits and
authorizations which have been obtained, no consent, approval,
authorization or order of any court, governmental agency or body or
financial institution is required in connection with execution and
delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement;
(vii) The descriptions of matters in the
Registration Statement and Prospectus under the headings "Description
of Capital Stock" and "Shares Eligible for Future Sale" are accurate
and fairly present the information required to be shown; and such
counsel, after conducting a reasonable investigation, do not know of
or believe that any contracts or documents of a character required to
be summarized or described therein or to be filed as exhibits thereto
which are not so summarized, described or filed, nor after conducting
a reasonable investigation do such counsel know of or believe that
there is any pending or threatened litigation or any governmental
proceeding, statute or regulation, disclosed by the Act, the Exchange
Act and the respective rules and regulations thereunder. All
descriptions in the Prospectus of statutes, regulations, legal or
governmental proceedings, contracts and other documents, insofar as
such statements
22
constitute a summary of the legal matters, documents or proceeding
referred to therein are accurate and fairly present the information
required to be shown; and such counsel, after conducting a reasonable
investigation, do not know of or believe that any contracts or
documents of a character required to be summarized or described
therein or to be filed as exhibits thereto which are not so
summarized, described or filed, nor after conducting a reasonable
investigation do such counsel know of or believe that there is any
pending or threatened litigation or any governmental proceeding,
statute or regulation required to be described in the Prospectus which
is not so described;
(viii) The Underwriting Agreement and the
Representatives' Warrant Agreement have been duly authorized, executed
and delivered by the Company, and each constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms,
except insofar as indemnification provisions may be limited by Federal
or State securities laws and except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally or by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding at law or in equity) including principles
of commercial reasonableness or conscionability and an implied
covenant of good faith and fair dealing.
(ix) The Company is not an "investment company" or
an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended;
(x) To such counsel's knowledge, the Company is
in compliance with the Foreign Corrupt Trade Practices Act; and
(xi) To such counsel's knowledge after conducting
a reasonable investigation, there are no persons with registration or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under
the Securities Act, except as waived or disclosed in the Registration
Statement and the Prospectus.
In addition, such counsel shall state that such counsel has
acted as outside corporate legal counsel to the Company and participated in
conferences with officials and other representatives of the Company, the
Representatives, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads such counsel to believe that, at the
time the Registration Statement became effective and at all times subsequent
thereto up to and on the Closing Date and on any later date on which Option
Shares are to be purchased, the Registration Statement and any amendment or
supplement thereto (other than the financial statements including supporting
schedules and other financial information derived therefrom, as to which such
counsel need express no opinion) 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 at the Closing Date
or any later date
23
on which the Option Shares are to be purchased, as the case may be, the
Registration Statement, the Prospectus and any amendment or supplement thereto
(except as aforesaid) contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of officers of the Company and public
officials and on the opinions of other counsel satisfactory to the Underwriters
as to matters which are governed by laws other than the Federal laws of the
United States and the Delaware General Corporation Law; provided that such
counsel shall state that they believe that they and the Underwriters are
justified in relying on such certificates and other opinions. Copies of such
certificates and other opinions shall be furnished upon request to the
Underwriters and counsel for the Underwriters.
(e) You shall have received on the Closing Date an
opinion of Dyer, Ellis & Joseph, P.C., counsel for the Selling Stockholder,
dated the Closing Date, to the effect that:
(i) This Agreement has been duly authorized,
executed and delivered by or on behalf of the Selling Stockholder and
constitutes a legal, valid and binding agreement of Selling
Stockholder and is enforceable against the Selling Stockholder in
accordance with its terms, except as the right to indemnity under this
Agreement may be limited by Federal or state securities laws and
except as (i) may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting creditors' rights generally and (ii)
is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(ii) The execution, delivery and performance of
this Agreement by the Selling Stockholder will not contravene, any
provision of applicable law, (ii) the certificates of incorporation,
bylaws or other governing documents of the Selling Stockholder that is
a corporation, or the articles of partnership of the Selling
Stockholder that is a limited partnership, or the trust agreement of
the Selling Stockholder that is a trust or (iii) any agreement or
other instrument known to such counsel to be binding upon the Selling
Stockholder, no consent, approval or authorization of any governmental
body is required for the performance of this Agreement by the Selling
Stockholder, except such as are specified and have been obtained and
except such as may be required by federal securities laws and state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(iii) The Selling Stockholder has valid marketable
title to the Shares to be sold by the Selling Stockholder and has the
legal right and power, and all authorization and approval required by
law, to enter into this Agreement and to sell, transfer and deliver
the Shares to be sold by the Selling Stockholder;
(iv) The Custody Agreement signed by the Selling
Stockholder and the Custodian relating to the deposit of the Shares to
be sold by the Selling Stockholder, and the Power-of-Attorney
appointing certain individuals as the Selling Stockholder's
attorneys-in-fact to the extent set forth therein, relating to the
transactions contemplated
24
hereby and by the Registration Statement, have been duly authorized,
executed and delivered by the Selling Stockholder and are valid and
binding agreements of the Selling Stockholder enforceable against the
Selling Stockholder in accordance with their terms, except as (i) may
be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and (ii) is subject to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(v) Delivery of the certificates for the Shares
to be sold by the Selling Stockholder pursuant to this Agreement to
each of the several Underwriters (who such counsel may assume have
purchased the Shares in good faith and without notice of any adverse
claim) will pass to each such Underwriter marketable title to such
Shares free and clear of any security interests, claims, liens,
equities and other encumbrances.
With respect to all of paragraph (e) above, counsel may rely,
to the extent such counsel deems appropriate, as to matters of fact upon the
representations of the Selling Stockholder contained herein and in the
aforementioned Custody Agreements and Powers of Attorney and in other documents
and instruments and opinions of local counsel; provided however, that copies of
such Custody Agreements and Powers of Attorney and of such other documents and
instruments shall be delivered to the Underwriters and shall be reasonably
satisfactory to your counsel and, in the case of local counsel, such local
counsel shall be reasonably satisfactory to your counsel, (a) a copy of each
opinion from local counsel so relied upon shall be delivered to you and shall
be reasonably satisfactory to your counsel and (b) counsel for each Selling
Stockholder shall state that they have no reason to believe that they are not
justified in relying thereon. With respect to all of paragraph (e) above,
counsel may assume the legal capacity and the absence of any legal disability
to contract as to each Selling Stockholder that is a natural person. The
opinions as to all of paragraph (e) above shall state that such opinions may be
relied upon by the Custodian and the attorneys-in-fact appointed under the
Powers of Attorney executed by the Selling Stockholder.
(f) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may be,
an opinion of Gibson, Dunn & Crutcher LLP, in form and substance reasonably
satisfactory to you, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, and the Company
shall have furnished to such counsel such documents as they may have requested
for the purpose of enabling them to pass upon such matters.
(g) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may be,
letters from Grant Thornton LLP, ("Grant") and Amper Politziner & Mattia
("Amper"), Independent Auditors ("ACCOUNTANTS"), addressed to the Underwriters,
dated the Closing Date or such later date on which Option Shares are to be
purchased, as the case may be (in each case, the "BRING DOWN LETTERS"),
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Act and the applicable published Rules
and Regulations and based upon the procedures described in a letter delivered
to you concurrently with the execution of this
25
Agreement (herein called the "ORIGINAL LETTERS"), but carried out to a date not
more than five (5) business days prior to the Closing Date or such later date
on which Option Shares are to be purchased, as the case may be, (i) confirming,
to the extent true, that the statements and conclusions set forth in the
Original Letters are accurate as of the Closing Date or such later date on
which Option Shares are to be purchased, as the case may be, and (ii) setting
forth any revisions and additions to the statements and conclusions set forth
in the Original Letters that are necessary to reflect any changes in the facts
described in the Original Letters since its date, or to reflect the
availability of more recent financial statements, data or information. The
Bring Down Letters shall not disclose any change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
from that set forth in the Registration Statement or Prospectus, which, in your
sole judgment, is material and adverse and that makes it, in your sole
judgment, impracticable or inadvisable to proceed with the public offering of
the Shares as contemplated by the Prospectus. The Original Letter from Grant
shall be addressed to or for the use of the Underwriters in form and substance
satisfactory to the Underwriters and shall (i) represent, to the extent true,
that they are independent certified public accountants with respect to the
Company within the meaning of the Act and the applicable published Rules and
Regulations, (ii) set forth their opinion with respect to their examination of
the balance sheet of the Company as of December 31, 1996 and related combined
statements of operations, equity and cash flows for the twelve (12) months
ended December 31, 1996, (iii) state that Grant has performed the procedures
set out in Statement of Accounting Standards No. 71 ("SAS 71") for a review of
interim financial information and providing the report of Grant as described in
SAS 71 on the financial statements for the six-month period ended June 30, 1997
(the "QUARTERLY FINANCIAL STATEMENTS"), (iv) state that in the course of such
review, nothing came to their attention that leads them to believe that any
material modifications need to be made to any of the Quarterly Financial
Statements in order for them to be in compliance with generally accepted
accounting principles consistently applied across the periods presented, (v)
state that nothing came to their attention that caused them to believe that the
financial statements included in the Registration Statement and Prospectus do
not comply as to form in all material respects with the applicable accounting
requirements of the Rules and Regulations and that any adjustments thereto have
not been properly applied to the historical amounts in the compilation of such
statements, and (vi) address other matters agreed upon by Grant and you. The
Original Letter from Amper shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(i) represent, to the extent true, that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations, (ii) set forth their opinion with
respect to their examination of the balance sheet of the Company as of December
31, 1995 and related combined statements of operations, equity and cash flows
for each of the two years ended December 31, 1995, (iii) state that nothing
came to their attention that caused them to believe that the financial
statements included in the Registration Statement and Prospectus do not comply
as to form in all material respects with the applicable accounting requirements
of the Rules and Regulations and that any adjustments thereto have not been
properly applied to the historical amounts in the compilation of such
statements, and (iv) address other matters agreed upon by Amper and you.
(h) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case may be,
a certificate of the Company, dated
26
the Closing Date or such later date on which Option Shares are to be purchased,
as the case may be, signed by the Chief Executive Officer and Chief Financial
Officer of the Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the
Company in this Agreement and the Representatives' Warrant Agreement
are true and correct, as if made on and as of the Closing Date or any
later date on which Option Shares are to be purchased, as the case may
be, and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to the Closing Date or any later date on which Option Shares are
to be purchased, as the case may be;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the delivery of
such certificate, the Registration Statement and the Prospectus, and
any amendments or supplements thereto, contained all material
information required to be included therein by the Act and the Rules
and Regulations, and in all material respects conformed to the
requirements of the Act and the Rules and Regulations, the
Registration Statement, and any amendment or supplement thereto, did
not and does not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, the
Prospectus, and any amendment or supplement thereto, did not and does
not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and,
since the effective date of the Registration Statement, there has
occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement and
Prospectus, there has not been any (A) material adverse change in the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company, (B) transaction that is material to
the Company, except transactions entered into in the ordinary course
of business consistent with past practices, (C) obligation, direct or
contingent, that is material to the Company, incurred by the Company,
except obligations incurred in the ordinary course of business
consistent with past practices, (D) change in the capital stock of the
Company, (E) change in the outstanding indebtedness of the Company
that is material to the Company or is out of the ordinary course of
business of the Company, (F) dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, (G)
default in the payment of principal of or interest on any outstanding
debt obligations, or (H) loss or damage (whether or not insured) to
the property of the Company which has been sustained or will have been
sustained which has a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company.
27
(i) The Company shall have obtained and delivered to you
an agreement from each officer, director and 1% stockholder of the Company in
writing prior to the date hereof that such person will not, except as described
below, during the Lock-up Period, effect the Disposition of any Securities now
owned or hereafter acquired by such person or with respect to which such person
has or hereafter acquires the power of disposition, otherwise than on exercise
(on a cash or cashless basis not resulting in any public sale of Common Stock)
of Common Stock Options outstanding, it being understood, however, that the
shares of Common Stock received (net of shares delivered to the Company in a
traditional cashless exercise thereof) by such person upon exercise thereof
shall be subject to the terms of the Lock-Up Agreement. The foregoing
restriction shall have been expressly agreed to preclude the holder of the
Securities from engaging in any hedging, pledge or other transaction which is
designed to or may reasonably be expected to lead to or result in a Disposition
by any stockholder or any other person of any Securities, whether or not owned
by a stockholder, during the Lock-Up Period, even if such Securities would be
disposed of by someone other than such holder. Such prohibited hedging, pledge
or other transactions would include, without limitation, any short sale
(whether or not against the box), any pledge of shares covering an obligation
that matures or could reasonably mature during the Lock-Up Period, or any
purchase, sale or grant of any right (including, without limitation, any put or
call option) with respect to any Securities or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from Securities. Furthermore, such
person will have also agreed and consented to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of the
Securities held by such person except in compliance with this restriction.
(j) The Shares have been approved for listing on the
AMEX.
(k) The Company shall have executed and delivered the
Representatives' Warrant Agreement and shall have tendered to the
Representatives the Representatives' Warrants.
(l) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request (including
certificates of officers of the Company) as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
7. Option Shares.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Selling Stockholder hereby grants to the several Underwriters, for
the purpose of covering over-allotments in connection with the distribution and
sale of the Firm Shares only, a nontransferable option to purchase up to an
aggregate of 240,000 Option Shares at the purchase price per share for the Firm
Shares set forth
28
in Section 3. Such option may be exercised by the Representatives on behalf of
the several Underwriters on one (1) or more occasions in whole or in part
during the period of forty-five (45) days after the date on which the Firm
Shares are initially offered to the public by giving written notice (the
"OPTION NOTICE") to the Company. The number of Option Shares to be purchased
by each Underwriter upon the exercise of such option shall be the same
proportion of the total number of Option Shares to be purchased by the several
Underwriters pursuant to the exercise of such option as the number of Firm
Shares purchased by such Underwriter (set forth in Schedule A hereto) bears to
the total number of Firm Shares purchased by the several Underwriters (set
forth in Schedule A hereto), adjusted by the Representatives in such manner as
to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to
be purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in same-day funds, payable to the order of the Company. In the
event of any breach of such definitive certificate delivery obligations, the
Company shall reimburse the Underwriters for the interest lost and any other
expenses borne by them by reason of such breach. Such delivery and payment
shall take place at the offices of Gibson, Dunn & Crutcher LLP, 1801 California
Street, Suite 4100, Denver, Colorado or at such other place as may be agreed
upon between the Representatives and the Company (i) on the Closing Date, if
written notice of the exercise of such option is received by the Company at
least two (2) full business days prior to the Closing Date, or (ii) on a date
which shall not be later than the third (3rd) full business day following the
date the Company receives written notice of the exercise of such option, if
such notice is received by the Company after the date two (2) full business
days prior to the Closing Date. The certificates for the Option Shares to be
so delivered will be made available to you at such office or such other
location including, without limitation, in New York City, as you may reasonably
request for checking at least one (1) full business day prior to the date of
payment and delivery and will be in such names and denominations as you shall
specify at least two (2) full business days prior to such date of payment and
delivery. If the Representatives so elect, delivery of the Option Shares may
be made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior to
the date of payment and delivery for the Option Shares to be purchased by such
Underwriter or Underwriters. Any such payment by you shall not relieve any
such Underwriter or Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section
7(a), the obligations of the several Underwriters to purchase such Option
Shares will be subject (as of the date hereof and as of the date of payment and
delivery for such Option Shares) to the accuracy of and compliance with the
representations, warranties and agreements of the Company herein, to the
accuracy of the statements of the Company and officers of the Company made
pursuant to the provisions
29
hereof, to the performance by the Company of its obligations hereunder, to the
conditions set forth in Section 6, and to the condition that all proceedings
taken at or prior to the payment date in connection with the sale and transfer
of such Option Shares shall be satisfactory in form and substance to you and to
Underwriters' Counsel, and you shall have been furnished with all such
documents, certificates and opinions as you may request in order to evidence
the accuracy and completeness of any of the representations, warranties or
statements, the performance of any of the covenants or agreements of the
Company or the satisfaction of any of the conditions herein contained.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including, without
limitation, in its capacity as an Underwriter or as a "qualified independent
underwriter" within the meaning of Section 2720 of the Conduct Rules of the
NASDR), under the Act, the Exchange Act or otherwise, specifically including,
but not limited to, losses, claims, damages, judgments, liabilities and
expenses (including the fees and expenses of counsel and other expenses in
connection with investigating, defending or settling any such action or claim)
(or actions in respect thereof), as they are incurred and regardless of whether
the Indemnitee is a party to the litigation, if any, arising out of or based
upon (i) any breach of any representation, warranty, agreement or covenant of
the Company herein contained, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, such Preliminary Prospectus or the Prospectus, or
any such amendment or supplement thereto, in reliance upon, and in conformity
with, written information relating to any Underwriter furnished to the Company
by such Underwriter, directly or through you, specifically for use in the
preparation thereof and, provided further, that the indemnity agreement
provided in this Section 8(a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
losses, claims, damages, liabilities or actions based upon any untrue statement
or alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the
time required by the Act and the Rules and Regulations, unless such failure is
the result of noncompliance by the Company with Section 4(d).
30
The indemnity agreement in this Section 8(a) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act and each of the agents, employees, officers and directors of
each Underwriter and person who so controls any Underwriter. This indemnity
agreement shall be in addition to any liabilities which the Company may
otherwise have.
(b) Each Underwriter, severally and not jointly, agrees
to indemnify and hold harmless the Company against any losses, claims, damages
or liabilities, joint or several, to which the Company may become subject under
the Act or otherwise, specifically including, but not limited to, losses,
claims, damages, judgments liabilities and expenses (including the fees and
expenses of counsel and other expenses in connection with investigating,
defending or settling any such action or claim) (or actions in respect
thereof), as they are incurred and regardless of whether the Indemnitee is a
party to the litigation, if any, arising out of or based upon (i) any breach
of any representation, warranty, agreement or covenant of such Underwriter
herein contained, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in the case of subparagraphs (ii) and (iii) of this Section 8(b) to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter, directly or through you, specifically for use in the preparation
thereof, and agrees to reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred.
The indemnity agreement in this Section 8(b) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
officer of the Company who signed the Registration Statement and each director
of the Company, and each person, if any, who controls the Company within the
meaning of the Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities which each Underwriter may otherwise have.
(c) The Selling Stockholder agrees to indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject (including,
without limitation, in its capacity as an Underwriter or as a "qualified
independent underwriter" within the meaning of Section 2720 of the Conduct
Rules of the NASDR), under the Act, the Exchange Act or otherwise, specifically
including, but not limited to, losses, claims, damages, judgments, liabilities
and expenses (including the fees and expenses of counsel and other expenses in
connection with investigating, defending or settling any such action or claim)
(or actions in respect thereof), as they are incurred and regardless of whether
the Indemnitee is a party to the litigation, if any, arising out of or based
upon (i) any breach of any representation, warranty, agreement or covenant of
the Selling Stockholder herein contained, (ii) any untrue statement or alleged
untrue statement of any material fact contained in
31
the Registration Statement or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each Underwriter for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Selling Stockholder shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus or the Prospectus, or any
such amendment or supplement thereto, in reliance upon, and in conformity with,
written information relating to any Underwriter furnished to the Company by
such Underwriter, directly or through you, specifically for use in the
preparation thereof and, provided further, that the indemnity agreement
provided in this Section 8(c) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
losses, claims, damages, liabilities or actions based upon any untrue statement
or alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the
time required by the Act and the Rules and Regulations, unless such failure is
the result of noncompliance by the Company with Section 4(d).
The indemnity agreement in this Section 8(c) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act and each of the agents, employees, officers and directors of
each Underwriter and person who so controls any Underwriter. This indemnity
agreement shall be in addition to any liabilities which the Selling Stockholder
may otherwise have.
(d) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 8 except to the extent
that it has been prejudiced by such omission. In case any such action is
brought against any indemnified party, and it notified the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided, however, that if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified
32
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election so to assume the defense
of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party hereunder for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not
be liable for the expenses of more than one separate counsel (together with
appropriate local counsel) approved by the indemnifying party representing all
the indemnified parties under Section 8(a), 8(b) or 8(c) hereof who are parties
to such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of
any action unless the indemnifying party shall have approved the terms of such
settlement; provided that such consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and
indemnification could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on all claims that are the subject matter of such
proceeding.
(e) In order to provide for just and equitable
contribution in any action in which a claim for indemnification is made
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 this Section 8 provides for indemnification in such case, all the parties
hereto shall contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such
proportion so that the Underwriters severally and not jointly are responsible
pro rata for the portion represented by the percentage that the underwriting
discount bears to the public offering price, and the Company is responsible for
the remaining portion, provided, however, that (i) no Underwriter shall be
required to contribute any amount in excess of the amount by which the
underwriting discount applicable to the Shares purchased by such Underwriter
exceeds the amount of damages which such Underwriter has otherwise been
required to pay and (ii) no person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this Section 8(e) shall
extend upon the same terms and conditions to, and shall inure to the benefit
of, each person, if any, who controls any Underwriter or the Company within the
meaning of the Act or the Exchange Act and each officer of the Company who
signed the Registration Statement and each director of the Company.
(f) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions hereof including, without limitation,
the provisions of this Section 8, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this
33
Section 8 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Act and the Exchange Act.
9. Representations, Warranties, Covenants and Agreements to
Survive Delivery. All representations, warranties, covenants and agreements of
the Company, the Selling Stockholder and the Underwriters herein or in
certificates delivered pursuant hereto, and the indemnity and contribution
agreements contained in Section 8 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any person controlling any Underwriter within the meaning of the Act or the
Exchange Act, or by or on behalf of the Company, or any of its officers,
directors or controlling persons within the meaning of the Act or the Exchange
Act, and shall survive the delivery of the Shares to the several Underwriters
hereunder or termination of this Agreement.
10. Substitution of Underwriters. If any Underwriter or
Underwriters shall fail to take up and pay for the number of Firm Shares agreed
by such Underwriter or Underwriters to be purchased hereunder upon tender of
such Firm Shares in accordance with the terms hereof, and if the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters so
agreed but failed to purchase does not exceed 10% of the Firm Shares, the
remaining Underwriters shall be obligated, severally in proportion to their
respective commitments hereunder, to take up and pay for the Firm Shares of
such defaulting Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four (24) hours to allow the several Underwriters the privilege of
substituting within twenty-four (24) hours (including non-business hours)
another underwriter or underwriters (which may include any nondefaulting
Underwriter) satisfactory to the Company. If no such underwriter or
underwriters shall have been substituted as aforesaid by such postponed Closing
Date, the Closing Date may, at the option of the Company, be postponed for a
further twenty-four (24) hours, if necessary, to allow the Company the
privilege of finding another underwriter or underwriters, satisfactory to you,
to purchase the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase. If it shall be arranged for the remaining
Underwriters or substituted underwriter or underwriters to take up the Firm
Shares of the defaulting Underwriter or Underwriters as provided in this
Section 10, (i) the Company shall have the right to postpone the time of
delivery for a period of not more than seven (7) full business days, in order
to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees promptly to file any amendments to the Registration Statement,
supplements to the Prospectus or other such documents which may thereby be made
necessary, and (ii) the respective number of Firm Shares to be purchased by the
remaining Underwriters and substituted
34
underwriter or underwriters shall be taken as the basis of their underwriting
obligation. If the remaining Underwriters shall not take up and pay for all
such Firm Shares so agreed to be purchased by the defaulting Underwriter or
Underwriters or substitute another underwriter or underwriters as aforesaid and
the Company shall not find or shall not elect to seek another underwriter or
underwriters for such Firm Shares as aforesaid, then this Agreement shall
terminate.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section 10, then, other than as set forth in the
Letter Agreement, the Company shall not be liable to any Underwriter (except as
provided in Sections 5 and 8 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some reason permitted
under this Agreement, to purchase the number of Firm Shares agreed by such
Underwriter to be purchased hereunder, which Underwriter shall remain liable to
the Company and the other Underwriters for damages, if any, resulting from such
default) be liable to the Company (except to the extent provided in Sections 5
and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 10.
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at the earlier
of (i) 6:30 A.M., California time, on the first full business day following the
effective date of the Registration Statement, or (ii) the time of the public
offering of any of the Shares by the Underwriters after the Registration
Statement becomes effective. The time of the public offering shall mean the
time of the release by you, for publication, of the first newspaper
advertisement relating to the Shares, or the time at which the Shares are first
generally offered by the Underwriters to the public by letter, telephone,
telegram or telecopy, whichever shall first occur. By giving notice as set
forth in Section 12 before the time this Agreement becomes effective, you, as
Representatives of the several Underwriters, or the Company, may prevent this
Agreement from becoming effective without liability of any party to any other
party, except as provided in Sections 4(i) and 8.
(b) You, as Representatives of the several Underwriters,
shall have the right to terminate this Agreement by giving notice as
hereinafter specified at any time on or prior to the Closing Date or on or
prior to any later date on which Option Shares are to be purchased, as the case
may be, (i) if the Company shall have failed, refused or been unable to perform
any agreement on its part to be performed, or because any other condition of
the Underwriters' obligations hereunder required to be fulfilled is not
fulfilled, including, without limitation, any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company from that set forth in the Registration Statement or Prospectus,
which, in your sole judgment, is material and adverse, or (ii) if additional
governmental restrictions, not in force and effect on the date hereof, shall
have been imposed upon trading in securities generally or minimum or maximum
prices shall have been generally established on the New York Stock Exchange or
on the American Stock Exchange or in the over the counter market by The Nasdaq
Stock Market, Inc., or trading in securities generally shall have been
suspended on either such exchange or in the over the counter market by The
Nasdaq Stock Market, Inc., or if a banking
35
moratorium shall have been declared by federal, New York or California
authorities, or (iii) if the Company shall have sustained a loss by strike,
fire, flood, earthquake, accident or other calamity of such character as to
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured, or (iv)
if there shall have been a material adverse change in the general political or
economic conditions or financial markets as in your judgment makes it
inadvisable or impracticable to proceed with the offering, sale and delivery of
the Shares, or (v) if there shall have been an outbreak or escalation of
hostilities or of any other insurrection or armed conflict or the declaration
by the United States of a national emergency which, in the opinion of the
Representatives, makes it impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. In the event
of termination pursuant to subparagraph (i) above, the Company shall remain
obligated to pay costs and expenses pursuant to Sections 4(i), 5 and 8. Any
termination pursuant to any of subparagraphs (ii) through (v) above shall be
without liability of any party to any other party except as provided in
Sections 4(i) and 8.
If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section 11, you shall
promptly notify the Company by telephone, telecopy or telegram, in each case
confirmed by letter. If the Company shall elect to prevent this Agreement from
becoming effective, the Company shall promptly notify you by telephone,
telecopy or telegram, in each case, confirmed by letter.
12. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to you
shall be mailed, delivered, telegraphed (and confirmed by letter) or telecopied
(and confirmed by letter) to you c/o Cruttenden Roth Incorporated, 18301 Von
Karman, Suite 100, Irvine, California 92715, telecopier number (714) 852-9603,
Attention: General Counsel; if sent to the Company, such notice shall be
mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and
confirmed by letter) to 13470 Washington Blvd., Suite 300, Marina del Rey,
California 90292, telecopier number (310) 301-1569, Attention: Chief Executive
Officer.
13. Parties. This Agreement shall inure to the benefit of
and be binding upon the several Underwriters and the Company and their
respective executors, administrators, successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person or entity, other than the parties hereto and their respective
executors, administrators, successors and assigns, and the controlling persons
within the meaning of the Act or the Exchange Act, officers and directors
referred to in Section 8, any legal or equitable right, remedy or claim in
respect of this Agreement or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of the parties hereto and their respective
executors, administrators, successors and assigns and said controlling persons
and said officers and directors, and for the benefit of no other person or
entity. No purchaser of any of the Shares from any Underwriter shall be
construed a successor or assign by reason merely of such purchase.
In all dealings with the Company under this Agreement, you shall act
on behalf of each of the several Underwriters, and the Company shall be
entitled to act and rely upon any statement,
36
request, notice or agreement made or given by you jointly or by Cruttenden Roth
Incorporated on behalf of you.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
15. Counterparts. This Agreement may be signed in several
counterparts, each of which will constitute an original.
If the foregoing correctly sets forth the understanding among the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between the Company and the several Underwriters.
Very truly yours,
SECURACOM, INCORPORATED
By:
------------------------
Name:
-----------------------
Title:
----------------------
Accepted as of the date first above written:
CRUTTENDEN ROTH INCORPORATED
SCOTT & STRINGFELLOW, INC.
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.
By CRUTTENDEN ROTH INCORPORATED
By:
----------------------------------------------
Name:
----------------------------------------------
Title:
----------------------------------------------
37
SCHEDULE A
[Download Table]
Number of Firm Shares
Underwriters to be Purchased
Cruttenden Roth Incorporated
Scott & Stringfellow, Inc. =========================================
Total
EA972380.066/1+
38
Dates Referenced Herein and Documents Incorporated by Reference
↑Top
Filing Submission 0000950133-97-003231 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Wed., Apr. 24, 3:23:29.1pm ET 
