DRAFT 072196A
________________ Shares
IMAGE GUIDED TECHNOLOGIES, INC.
UNDERWRITING AGREEMENT
_____________, 1996
Hampshire Securities Corporation
As Representative of the several
Underwriters named in Schedule I
attached hereto
640 Fifth Avenue
New York, New York 10019
Gentlemen:
The undersigned, Image Guided Technologies, Inc., a Delaware corporation
(the "Company"), hereby confirms its agreement with Hampshire Securities
Corporation (individually, "Hampshire," and, as representative (the
"Representative") of the several underwriters named in Schedule I hereto (the
"Underwriters")), and the Underwriters as follows:
1. INTRODUCTION.
(a) The Company proposes to issue and sell to the Underwriters an
aggregate of 1,200,000 shares of common stock, no par value, of the Company (the
"Common Stock"). Such shares of Common Stock are hereinafter referred to as the
"Firm Stock".
(b) Solely for the purpose of covering over-allotments, if any, the
Company proposes to grant to Hampshire, individually and not as Representative,
an option (the "Over-
allotment Option") to purchase from it, in the aggregate, up to an additional
180,000 shares of Common Stock. Such shares of Common Stock are hereinafter
referred to as the "Additional Stock." The Firm Stock and the Additional
Stock are hereinafter referred to as the "Stock."
(c) The Company proposes to sell to Hampshire, individually and not
as Representative, 120,000 warrants (the "Representative's Warrants") to
purchase up to an aggregate of 120,000 shares of Common Stock (the "Warrant
Shares") for an aggregate purchase price of $120.00. The Representative's
Warrants shall be substantially in the form filed as an exhibit to the
Registration Statement (as hereinafter defined). The Representative's Warrants
and the Warrant Shares are hereinafter referred to collectively as the
"Representative's Securities." The Stock and the Representative's Securities
are hereinafter referred to collectively as the "Securities."
2. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to, and agrees with, the several
Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and may have filed one or more
amendments thereto, on Form SB-2 (Registration No. 333-_______), including in
such registration statement and each such amendment a related preliminary
prospectus, for the registration of the Securities under the Securities Act of
1933, as amended (the "Securities Act"). As used in this Agreement, the term
"Registration Statement" shall refer to such registration statement referred to
in the first sentence of this Section 2(a), as amended, on file with the
Commission at the time such registration statement is declared by the Commission
to be effective under the Securities Act (including the prospectus, financial
statements, and exhibits filed as a part thereof, provided, however, that such
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registration statement, at the time it is declared by the Commission to be
effective under the Securities Act, may omit such information as is permitted to
be omitted from such registration statement when it becomes effective under the
Securities Act pursuant to Rule 430A of the General Rules and Regulations of the
Commission under the Securities Act (the "Regulations"), which information (the
"Rule 430A Information") shall be deemed to be included in such registration
statement when a final prospectus is filed with the Commission in accordance
with Rules 430A and 424(b)(1) or (4) of the Regulations); the term "Preliminary
Prospectus" shall refer to each prospectus included in the Registration
Statement, or any amendments thereto, before the Registration Statement is
declared by the Commission to be effective under the Securities Act, the form of
prospectus omitting Rule 430A Information included in the Registration Statement
when the Registration Statement becomes effective under the Securities Act, if
applicable (the "Rule 430A Prospectus"), and any prospectus filed by the Company
with the consent of the Representative pursuant to Rule 424(a) of the
Regulations; and the term "Prospectus" shall refer to the final prospectus
forming a part of the Registration Statement in the form first filed with the
Commission pursuant to Rule 424(b)(1) or (4) of the Regulations or, if no such
filing is required, the form of final prospectus forming a part of the
Registration Statement.
(b) When the Registration Statement becomes effective under the
Securities Act, and at all times subsequent thereto up to and including the
Closing Date (as defined in Section 3(a) hereof) and each Additional Closing
Date (as defined in Section 3(b) hereof), and during such longer period as the
Prospectus may be required to be delivered in connection with sales by the
Underwriters or a dealer, and during such longer period until any post-effective
amendment thereto shall become effective under the Securities Act, the
Registration Statement (and any post-effective
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amendment thereto) and the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment or supplement to
the Registration Statement or the Prospectus) will contain all statements
which are required to be stated therein in accordance with the Securities Act
and the Regulations, will comply with the Securities Act and the Regulations,
and will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and no event will have occurred which
should have been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such an
amendment or supplement; if a Rule 430A Prospectus is included in the
Registration Statement at the time it is declared by the Commission to be
effective under the Securities Act, the Prospectus filed pursuant to Rules
430A and 424(b)(1) or (4) of the Regulations will contain all Rule 430A
Information and all statements which are required to be stated therein in
accordance with the Securities Act or the Regulations, will comply with the
Securities Act and the Regulations, and will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and each
Preliminary Prospectus, as of the date filed with the Commission, contained
all statements required to be stated therein in accordance with the
Securities Act and the Regulations, complied with the Securities Act and the
Regulations, and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; except that no representation or
warranty is made in this Section 2(b) with respect to statements or omissions
made in reliance upon, and in conformity with, written information furnished
to the Company as stated in Section 8(b) with respect to any Underwriter by,
or on behalf
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of, such Underwriter through the Representative expressly for inclusion in
the Registration Statement, any Preliminary Prospectus, or the Prospectus, or
any amendment or supplement thereto.
(c) Neither the Commission nor the "blue sky" or securities authority
of any jurisdiction has issued an order (a "Stop Order") suspending the
effectiveness of, or preventing or suspending the use of, the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, refusing to permit the effectiveness of the Registration
Statement, or suspending the registration or qualification of the Securities nor
has any of such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order.
(d) Any contract, agreement, instrument, lease, or license required
to be described in the Registration Statement or the Prospectus has been
properly described therein. Any contract, agreement, instrument, lease, or
license required to be filed as an exhibit to the Registration Statement has
been filed with the Commission as an exhibit to the Registration Statement.
(e) The Company has no subsidiaries (as defined in the Regulations).
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Colorado with full power and authority,
and all necessary consents, authorizations, approvals, orders, licenses,
certificates, and permits of and from, and declarations and filings with, all
federal, state, local, and other governmental authorities and all courts and
other tribunals, to own, lease, license, and use its properties and assets and
to conduct its business in the manner described in the Prospectus. The Company
is duly qualified to do business as a foreign corporation and is in good
standing as such in every jurisdiction in which its ownership, leasing,
licensing, or use of property and assets or the conduct of its business makes
such qualification necessary, except
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where the failure to so qualify will not have a material adverse effect on the
Company's business, properties, or financial condition on a consolidated basis.
(f) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, of which 2,086,689 shares are outstanding,
and 2,500,000 shares of preferred stock, no par value (the "Preferred Stock"),
of which 83,332 are outstanding, which shares of Preferred Stock will be
mandatorily converted immediately prior to the Closing Date into 380,353 shares
of Common Stock. Each outstanding share of Common Stock and Preferred Stock is
validly authorized and issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, has not been issued and
is not owned or held in violation of any preemptive or similar rights of
stockholders. There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance of, any
share of capital stock of the Company or any security or other instrument which
by its terms is convertible into, or exercisable or exchangeable for, capital
stock of the Company, except as may be properly described in the Prospectus.
There is outstanding no security or other instrument which by its terms is
convertible into, or exercisable or exchangeable for, capital stock of the
Company, except as may be properly described in the Prospectus. The
certificates evidencing the Common Stock and the Preferred Stock are in due and
proper form.
(g) The consolidated financial statements of the Company included in
the Registration Statement and the Prospectus fairly present, with respect to
the Company, the financial position, the results of operations, the cash flows,
and the other information purported to be shown therein at the respective dates
and for the respective periods to which they apply. Such consolidated financial
statements have been prepared in accordance with generally accepted accounting
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principles (except to the extent that certain footnote disclosures regarding any
stub period may have been omitted in accordance with the applicable rules of the
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) consistently applied throughout the periods involved, are correct and
complete in all material respects, and are in accordance with the books and
records of the Company. Price Waterhouse LLP, the accountants whose report on
the audited consolidated financial statements is filed with the Commission as a
part of the Registration Statement, are, and during the periods covered by their
reports included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company within the
meaning of the Securities Act and the Regulations. No other financial
statements are required by Form SB-2 or otherwise to be included in the
Registration Statement or the Prospectus. There has at no time been a material
adverse change in the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company on a
consolidated basis from the latest information set forth in the Registration
Statement or the Prospectus, except as may be properly described in the
Prospectus.
(h) There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, threatened, or, to
the best knowledge of the Company, in prospect (or any basis therefor) with
respect to the Company or any of it operations, businesses, properties, or
assets, except as may be properly described in the Prospectus or such as
individually or in the aggregate do not now have, and will not in the future
have, a material adverse effect upon the operations, business, properties, or
assets of the Company. To the best knowledge of the Company, the Company is not
in violation of, or in default with respect to, any law, rule, regulation,
order, judgment, or decree, except as may be properly described in the
Prospectus or
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such as in the aggregate do not now have, and will not in the future have, a
material adverse effect upon the operations, business, properties, or assets
of the Company; nor is the Company currently required to take any action in
order to avoid any such violation or default.
(i) The Company has good and marketable title to all properties and
assets which the Prospectus indicates are owned by it, free and clear of all
liens, security interests, pledges, charges, encumbrances, and mortgages, except
as may be properly described in the Prospectus or as are not material to the
Company. No real property owned, leased, licensed, or used by the Company lies
in an area which is, or to the knowledge of the Company will be, subject to
zoning, use, or building code restrictions which would prohibit, and no state of
facts relating to the actions or inaction of another person or entity or his or
its ownership, leasing, licensing, or use of any real or personal property
exists or will exist which would prevent, the continued effective ownership,
leasing, licensing, or use of such real property in the business of the Company
as presently conducted or as the Prospectus indicates it contemplates
conducting, except as may be properly described in the Prospectus.
(j) The Company nor, to the knowledge of the Company, any other
party, is now, or is expected by the Company to be, in violation or breach of,
or in default with respect to, any provision of any contract, agreement,
instrument, lease, license, arrangement, or understanding which is material to
the Company, and each such contract, agreement, instrument, lease, license,
arrangement, and understanding is in full force and effect and is the legal,
valid, and binding obligation of the parties thereto and is enforceable as to
them in accordance with its respective terms. The Company enjoys peaceful and
undisturbed possession under all leases and licenses under which it is
operating. Except as described in the Prospectus, the Company is not a party
to,
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or bound by, any contract, agreement, instrument, lease, license, arrangement,
or understanding, or subject to any charter or other restriction, which has
had, or may in the future have, a material adverse effect on the financial
condition, results of operations, business, properties, assets, liabilities,
or future prospects of the Company. The Company is not in violation or breach
of, or in default with respect to, any term of its certificate of incorporation
(or other charter document) or by-laws.
(k) The Company owns or possesses adequate rights to use all patents,
patent rights, inventions, trade secrets, licenses, know-how, proprietary
techniques, including processes and substances, trademarks, service marks, trade
names, and copyrights described or referred to in the Prospectus as owned or
used by it or which are necessary for the conduct of its business as currently
conducted as described in the Prospectus and, to the best knowledge of the
Company, its business as contemplated as described in the Prospectus. To the
best knowledge of the Company, all such patents, patent rights, licenses,
trademarks, service marks, and copyrights are (i) valid and enforceable, (ii)
not being infringed by any third parties which infringement could, singly or in
the aggregate, materially and adversely affect the business, properties,
operations, condition (financial or otherwise), results of operations, income,
or business prospects of the Company as presently being conducted or as proposed
to be conducted as described in the Prospectus, and (iii) are uncontested by any
third party. The Company has no knowledge of, nor has it received any notice
of, infringement of, or conflict with, asserted rights of others with respect to
any patents, patent rights, inventions, trade secrets, licenses, know-how,
proprietary techniques, including processes and substances, trademarks, service
marks, trade names, or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling, or finding could materially and
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adversely affect the business, properties, operations, condition (financial or
otherwise), results of operations, income, or business prospects of the Company
as presently being conducted or as proposed to be conducted as described in the
Prospectus.
(l) Neither the Company, nor, to the best knowledge of the Company,
any director, officer, agent, employee, or other person associated with, or
acting on behalf of, the Company, has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment. The
Company's internal accounting controls and procedures are sufficient to cause
the Company and each of the Subsidiaries to comply in all respects with the
Foreign Corrupt Practices Act of 1977, as amended.
(m) The Company has all requisite power and authority to execute,
deliver, and perform each of this Agreement and the Representative's Warrants.
All necessary corporate proceedings of the Company have been duly taken to
authorize the execution, delivery, and performance by the Company of this
Agreement and the Representative's Warrants. This Agreement has been duly
authorized, executed, and delivered by the Company, is the legal, valid, and
binding obligation of the Company, and is enforceable as to the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws affecting the rights of creditors
generally. The Representative's Warrants have been duly authorized by the
Company and, when executed and delivered by the Company, will be legal, valid,
and
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binding obligations of the Company, each enforceable as to the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws affecting the rights of creditors
generally. No consent, authorization, approval, order, license, certificate,
or permit of or from, or declaration or filing with, any federal, state,
local, or other governmental authority or any court or other tribunal is
required by the Company for the execution, delivery, or performance by the
Company of this Agreement or the Representative's Warrants, except filings
under the Securities Act which have been or will be made before the Closing
Date, and consents consisting only of consents under "blue sky" or securities
laws which have been obtained at or prior to the date of this Agreement. No
consent of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party, or to which
any of its properties or assets are subject, is required for the execution,
delivery, or performance of this Agreement and the Representative's Warrants;
and the execution, delivery, and performance of this Agreement and the
Representative's Warrants will not violate, result in a breach of, conflict
with, result in the creation or imposition of any lien, charge, or
encumbrance upon any properties or assets of the Company pursuant to the
terms of, or, with or without the giving of notice or the passage of time or
both, entitle any party to terminate or call a default under, any such
contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate, result in a breach of, or conflict with any term
of the certificate of incorporation (or other charter document) or by-laws of
the Company, or violate, result in a breach of, or conflict with, any law,
rule, regulation, order, judgment, or decree binding on the Company or to
which any of its operations, businesses, properties, or assets are subject.
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(n) The Firm Stock is validly authorized and, when issued and
delivered in accordance with this Agreement, will be validly issued, fully paid,
and nonassessable, without any personal liability attaching to the ownership
thereof, and will not be issued in violation of any preemptive or similar rights
of stockholders, and the Underwriters will receive good title to the shares of
Firm Stock purchased by them, respectively, free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders' agreements,
and voting trusts. The Additional Stock is validly authorized and, when issued
in accordance with the terms hereof, will validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and will not issued in violation of any preemptive or similar rights of
stockholders. The Stock conforms to all statements relating thereto contained
in the Registration Statement and the Prospectus.
(o) The Warrant Stock is validly authorized and has been duly and
validly reserved for issuance and, when issued and delivered upon exercise of
the Representative's Warrants in accordance with the terms thereof, will be
validly issued, fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and will not be issued in violation of any
preemptive or similar rights of stockholders; and the holders of the
Representative's Warrants will receive good title to the securities purchased by
them upon the exercise of the Representative's Warrants, free and clear of all
liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts. The Representative's Securities conform to all
statements relating thereto contained in the Registration Statement and the
Prospectus.
(p) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may
otherwise be properly described in
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the Prospectus, the Company has not (i) issued any securities or incurred any
material liability or material obligation, primary or contingent, for
borrowed money, (ii) entered into any material transaction not in the
ordinary course of business, (iii) declared or paid any dividend on its
capital stock, or (iv) experienced any adverse changes or any development
which may materially adversely effect the condition (financial or otherwise),
net assets or stockholders' equity, results of operations, business, key
personnel, assets, or properties of the Company.
(q) Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take, directly or
indirectly, prior to the termination of the offering contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which has caused or resulted in, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Firm Stock or the Additional Stock.
(r) The Company has obtained from each of its directors and officers
a written agreement, in form and substance satisfactory to counsel for the
Underwriters, that, for a period of 18 months from the date on which the
Registration Statement is declared by the Commission to be effective under the
Securities Act, he, she, or it will not, without the prior written consent of
the Representative, publicly offer, pledge, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, directly or indirectly, any
shares of Common Stock or any security or other instrument which by its terms is
convertible into, or exercisable or exchangeable for, shares of Common Stock or
other securities of the Company, including, without limitation, any shares of
Common Stock issuable pursuant to the terms of any employee stock options;
provided, however,
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that such persons may offer, sell, contract to sell, grant an option for the
sale of, or otherwise dispose of all or any part of his, her, or its shares
of Common Stock or other such security or instrument of the Company during
such period if such transaction is private in nature and the transferee of
such shares of Common Stock or other securities or instruments agrees, prior
to such transaction, to be bound by all of the provisions of such agreement.
(s) The Company is not, and does not intend to conduct its business
in a manner in which it would be required to register as, an "investment
company" as defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations promulgated thereunder.
(t) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement, which right has not been waived.
(u) Except as may be set forth in the Prospectus, the Company has not
incurred any liability for a fee, commission, or other compensation on account
of the employment of a broker or finder in connection with the transactions
contemplated by this Agreement.
(v) Neither the Company, nor any of its affiliates, is presently
doing business with the government of Cuba or with any person or affiliate
located in Cuba. If, at any time after the date on which the Registration
Statement is declared by the Commission to be effective under the Securities Act
or with the Florida Department of Banking and Finance (the "Florida
Department"), whichever is later, and prior to the end of the period referred to
in the first clause of Section 2(b) hereof, the Company commences engaging in
business with the government of Cuba or with any person or affiliate located in
Cuba, the Company will so inform the Florida Department
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within 90 days after such commencement of business in Cuba, and, during the
period referred to in Section 2(b) hereof, will inform the Florida Department
within 90 days after any change occurs with respect to previously reported
information.
(w) No officer, director, or stockholder of the Company has any
affiliation or association with the National Association of Securities Dealers,
Inc. (the "NASD") or any member thereof.
(x) Except as disclosed in the Prospectus, the Company has filed all
necessary federal, state, local, and foreign income and franchise tax returns
and other reports required to be filed and has paid all taxes shown as due
thereon; and there is no tax deficiency which has been, or, to the knowledge of
the Company, might be, asserted against the Company.
(y) To the best knowledge of the Company, none of the activities or
business of the Company is in violation of, or will cause the Company to
violate, any law, rule, regulation, or order of the United States, any state,
county, or locality, or of any agency or body of the United States or of any
state, county, or locality, the violation of which would have a material adverse
effect upon the condition (financial or otherwise), business, property,
prospective results of operations, or net worth of the Company.
(z) The Common Stock has been approved for quotation on the Nasdaq
SmallCap Market and the __________ Stock Market.
3. PURCHASE, SALE, AND DELIVERY OF THE STOCK AND THE REPRESENTATIVE'S
WARRANTS.
(a) On the basis of the representations, warranties, covenants, and
agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the several
Underwriters, and, the Underwriters, severally and
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not jointly, agree to purchase from the Company, the numbers of shares of
Firm Stock set forth opposite the respective names of the Underwriters in
Schedule I hereto.
The purchase price per share of the Firm Stock to be paid by the several
Underwriters shall be $__________. The initial public offering price per share
of the Firm Stock shall be $ _________.
Payment for the Firm Stock by the Underwriters shall be made by certified
or official bank check in New York Clearing House (next day) funds or by
electronic wire transfer of next day funds, payable to the order of the Company,
at the offices of Hampshire Securities Corporation, 640 Fifth Avenue, New York,
New York 10019, or at such other place in the New York City metropolitan area as
the Representative shall determine and advise the Company by at least two full
days' notice, upon delivery of the Firm Stock to the Representative for the
respective accounts of the Underwriters. Such delivery and payment shall be
made at 9:00 a.m., New York City local time, on the third business day following
the time of the initial public offering, as defined in Section 11(a) hereof
(unless such time and date is postponed in accordance with the provisions of
Section 9(c) hereof), or at such other time as shall be agreed upon between the
Representative and the Company. The time and date of such delivery and payment
are hereinafter referred to as the "Closing Date."
Certificates representing the Firm Stock shall be registered in such name
or names and in such authorized denominations as the Representative may request
in writing at least two full business days prior to the Closing Date. The
Company shall permit the Representative to examine and package such certificates
for delivery at least one full business day prior to the Closing Date.
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(b) The Company hereby grants to Hampshire the Over-allotment Option to
purchase up to an additional 180,000 shares of Common Stock, as may be necessary
to cover over-allotments, at the same purchase price per share to be paid by the
several Underwriters to the Company for the Firm Stock as provided for in this
Section 3 hereof. The Over-allotment Option may be exercised only to cover
over-allotments in the sale of shares by Hampshire. The Over-allotment Option
may be exercised by Hampshire on the basis of the representations, warranties,
covenants, and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, at any time and from time to time on or
before the forty-fifth day following the date on which the Registration
Statement becomes effective under the Securities Act, by written notice by
Hampshire to the Company. Such notice shall set forth the aggregate number of
shares of Additional Stock as to which the Over-allotment Option is being
exercised, the name or names in which the certificates representing the
Additional Stock are to be registered, the authorized denominations in which the
Additional Stock is to be registered, and the time and date, as determined by
Hampshire, when such shares of Additional Stock are to be delivered (each such
time and date are hereinafter referred to as an "Additional Closing Date");
provided, however, that no Additional Closing Date shall be earlier than the
Closing Date nor earlier than the second business day after the date on which
the notice of the exercise of the Over-allotment Option shall have been given
nor later than the eighth business day after the date on which such notice shall
have been given.
In the event the Company declares or pays a dividend or a distribution on
the Common Stock, whether in the form of cash, shares of Common Stock, or other
consideration, prior to the Additional Closing Date, such dividend or
distribution shall also be paid on the Additional Stock
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on the later of the Additional Closing Date and the date on which such
dividend or distribution is payable.
Payment for the shares of Additional Stock by Hampshire shall be made by
certified or official bank check in New York Clearing House (next day) funds or
by electronic wire transfer of next day funds payable to the order of the
Company at the offices of Hampshire Securities Corporation, 640 Fifth Avenue,
New York, New York 10019, or at such other place in the New York City
metropolitan area as Hampshire shall determine and advise the Company by at
least two full days' notice, upon delivery of the shares of Additional Stock to
Hampshire for its account.
Certificates for the shares of Additional Stock shall be registered in such
name or names and in such authorized denominations as Hampshire may request in
writing at least two full business days prior to the Additional Closing Date
with respect thereto. The Company shall permit Hampshire to examine and package
such certificates for delivery at least one full business day prior to the
Additional Closing Date with respect thereto.
(c) The Company hereby agrees to issue and sell to Hampshire
and/or its designees on the Closing Date the Representative's Warrants to
purchase the Warrant Shares for an aggregate purchase price of $120.00.
Delivery and payment for the Representative's Warrants shall be made
on the Closing Date. The Company shall deliver to Hampshire, upon payment
therefor, certificates representing the Representative's Warrants in the name or
names and in such authorized denominations as Hampshire may request. The
Representative's Warrants shall be exercisable for a period of four years
commencing one year from the date on which the Registration Statement was
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declared effective under the Securities Act at an initial exercise price per
Warrant Share equal to $_____________.
(d) It is understood that the Hampshire may (but shall not be
obligated to) make any and all the payments required pursuant to this Section 3
on behalf of any Underwriters whose check or checks shall not have been received
by the Representative at the time of delivery of the Stock to be purchased by
such Underwriter or Underwriters. Any such payment by the Representative shall
not relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder.
4. OFFERING. The Underwriters are to make a public offering of the Firm
Stock as soon, on or after the date on which the Registration Statement becomes
effective under the Securities Act, as the Representative deems it advisable so
to do. The Firm Stock is to be initially offered to the public at the initial
public offering price as provided for in Section 3(a) (such price being
hereinafter referred to as the "public offering price"). After the initial
public offering, the Representative may from time to time increase or decrease
the public offering price, in the sole discretion of the Representative, by
reason of changes in general market conditions or otherwise.
5. COVENANTS.
The Company covenants that it will:
(a) Use its best efforts to cause the Registration Statement to
become effective under the Securities Act as promptly as possible and notify the
Representative and counsel to the Underwriters immediately, and confirm such
notice in writing, (i) when the Registration Statement and any post-effective
amendment thereto become effective under the Securities Act, (ii) of the receipt
of any comments from the Commission or the "blue sky" or securities authority of
any
-19-
jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement thereto,
(iii) of the filing with the Commission of any supplement to the Prospectus,
and (iv) of the receipt of any notification with respect to a Stop Order or
the initiation or threatening of any proceeding with respect to a Stop Order.
The Company will use its best efforts to prevent the issuance of any Stop
Order and, if any Stop Order is issued, to obtain the lifting thereof as
promptly as possible. If the Registration Statement has become or becomes
effective under the Securities Act with a form of prospectus omitting Rule
430A Information, or filing of the Prospectus with the Commission is
otherwise required under Rule 424(b) of the Regulations, the Company will
file with the Commission the Prospectus, properly completed, pursuant to Rule
424(b) of the Regulations within the time period prescribed and will provide
evidence satisfactory to the Representative of such timely filing.
(b) During the time when a prospectus relating to the Firm Stock or
the Additional Stock is required to be delivered hereunder or under the
Securities Act or the Regulations, comply with all requirements imposed upon it
by the Securities Act, as now existing and as hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of, or dealings in, the Firm Stock and the Additional Stock
in accordance with the provisions hereof and the Prospectus. If, at any time
when a prospectus relating to the Firm Stock or the Additional Stock is required
to be delivered hereunder or under the Securities Act or the Regulations, any
event shall have occurred as a result of which, in the opinion of counsel for
the Company or counsel for the Underwriters, the Registration Statement or the
Prospectus as then amended or supplemented contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements
-20-
therein not misleading, or if, in the opinion of either of such counsel, it
is necessary at any time to amend or supplement the Registration Statement or
the Prospectus to comply with the Securities Act or the Regulations, the
Company will immediately notify the Representative and promptly prepare and
file with the Commission an appropriate amendment or supplement (in form and
substance satisfactory to the Representative and counsel to the Underwriters)
which will correct such statement or omission or which will effect such
compliance and will use its best efforts to have any such amendment declared
effective under the Securities Act as soon as possible.
(c) Deliver without charge to each of the several Underwriters such
number of copies of each Preliminary Prospectus as may reasonably be requested
by the Underwriters and, as soon as the Registration Statement, or any amendment
thereto, becomes effective under the Securities Act or a supplement is filed
with the Commission, deliver without charge to the Representative two signed
copies of the Registration Statement, including exhibits, or such amendment
thereto, as the case may be, and two copies of any supplement thereto, and
deliver without charge to each of the several Underwriters such number of copies
of the Prospectus, the Registration Statement, and amendments and supplements
thereto, if any, as the Representative may request for the purposes contemplated
by the Securities Act.
(d) Endeavor in good faith, in cooperation with the Representative,
at or prior to the time the Registration Statement becomes effective under the
Securities Act, to qualify the Securities for offering and sale under the "blue
sky" or securities laws of such jurisdictions as may be designated by the
Representative; provided, however, that no such qualification shall be required
in any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction to which it is not
-21-
then subject. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representative agrees in writing that
such action is not at the time necessary or advisable, file and make such
statements or reports at such times as are or may be required by the laws of
such jurisdiction.
(e) Make generally available, within the meaning of Section 11(a) of
the Securities Act and the Regulations, to its security holders as soon as
practicable, but not later than __________, 1996, an earnings statement, which
need not be certified by independent certified public accountants unless
required by the Securities Act or the Regulations, but which shall satisfy the
provisions of Section 11(a) of the Securities Act and the Regulations, covering
a period of at least 12 months beginning after the date on which the
Registration Statement was declared effective under the Securities Act.
(f) For a period of 18 months after the date of the Prospectus, not,
without the prior written consent of the Representative, offer, issue, sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock or other securities of the
Company, or any security or other instrument which by its terms is convertible
into, or exercisable or exchangeable for, shares of Common Stock, except as
contemplated by Section 3 hereof and except for (i) the issuance of stock
options, or shares of Common Stock issuable upon the exercise thereof, which
have been or may be granted pursuant to the Company's 1994 Stock Option Plan, up
to an aggregate of 800,000 shares of Common Stock, all as properly described in
the Prospectus, (ii) upon the exercise of warrants outstanding on the date
hereof, as properly described in the Prospectus, (iii) the issuance of shares of
Warrant Stock issuable upon
-22-
exercise of the Representative's Warrants, and (iv) the issuance of shares of
Common Stock in connection with an acquisition by the Company.
(g) For a period of five years after the date on which the
Registration Statement was declared effective under the Securities Act furnish
the Representative, without charge, the following:
(1) within 90 days after the end of each fiscal year, one copy
of financial statements certified by independent certified public accountants,
including a balance sheet, statement of income, and statement of changes in cash
flows of the Company and its then existing subsidiaries, if any, with supporting
schedules, prepared in accordance with generally accepted accounting principles,
as at the end of such fiscal year and for the 12 months then ended, which may be
on a consolidated basis;
(2) as soon as practicable after they have been sent to
stockholders of the Company or filed with, or furnished to, the Commission or
the NASD, one copy of each annual and interim financial and other report or
communication sent by the Company to its stockholders or filed with, or
furnished to, the Commission or the NASD;
(3) as soon as practicable, one copy of every press release and
every material news item and article in respect of the Company, any subsidiary,
or their respective affairs which was released by the Company or any such
subsidiary; and
(4) such additional documents and information with respect to
the Company, any subsidiary, and their respective affairs, as the Representative
may from time to time reasonably request; provided, however, that such
additional documents and information shall be received by the Representative on
a confidential basis, unless otherwise disclosed to the public, and
-23-
shall not be used in violation of the federal securities laws and the rules
and regulations promulgated thereunder.
(h) Apply the net proceeds received by the Company from the offering
contemplated by this Agreement in the manner set forth under the heading "Use of
Proceeds" in the Prospectus.
(i) Furnish to the Representative as early as practicable prior to
the Closing Date and each Additional Closing Date, if any, as the case may be,
but not less than two full business days prior thereto, a copy of the latest
available unaudited interim financial statements of the Company which have been
read by the Company's independent certified public accountants, as stated in
their letters to be furnished pursuant to Section 7(f) hereof.
(j) File no amendment or supplement to the Registration Statement or
Prospectus at any time, whether before or after the date on which the
Registration Statement was declared effective under the Securities Act, unless
such filing shall comply with the Securities Act and the Regulations and unless
the Representative shall previously have been advised of such filing and
furnished with a copy thereof, and the Representative shall have approved such
filing in writing. Until the later of (i) the completion by the Underwriters of
the distribution of the Stock (but in no event more than nine months after the
date on which the Registration Statement shall have been declared effective
under the Securities Act) and (ii) 25 days after the date on which the
Registration Statement shall have been declared effective under the Securities
Act, the Company will prepare and file with the Commission, promptly upon the
Representative's request, any amendments or supplements to the Registration
Statement or the Prospectus which, in the sole
-24-
opinion of the Representative, may be necessary or advisable in connection
with the distribution of the Stock.
(k) File timely with the Commission an appropriate form to register
the Common Stock pursuant to Section 12(b) and/or 12(g) of the Exchange Act to
include the Stock and comply with all registration, filing, and reporting
requirements of the Exchange Act, which may from time to time be applicable to
the Company.
(l) Comply with all provisions of all undertakings contained in the
Registration Statement.
(m) Prior to the Closing Date or any Additional Closing Date, as the
case may be, issue no press release or other communication, directly or
indirectly, and hold no press conference with respect to the Company, the
financial condition, results of operations, business, properties, assets,
liabilities of any the Company, or this offering, without the prior written
consent of the Representative.
(n) Make all filings required to maintain the inclusion of the
Common Stock on the Nasdaq SmallCap Market and the ________ Stock Exchange for a
least four years from the date of this Agreement.
(o) On the Closing Date, sell to the Hampshire, individually and not
as Representative of the several Underwriters, at the price of $.001 per
warrant, warrants to purchase the Warrant Stock, which Representative's Warrants
shall be substantially in the form set forth as an exhibit to the Registration
Statement.
(p) Until expiration of the Representative's Warrants, keep reserved
a sufficient number of shares of Common Stock for issuance upon exercise of the
Representative's Warrants.
-25-
(q) Deliver to the Representative, without charge, within a
reasonable period after the last Additional Closing Date or the expiration of
the period during which the Representative may exercise the Over-allotment
Options, four sets of bound volumes of the Registration Statement and all
related materials to the individuals designated by the Representative or counsel
to the Underwriters.
(r) For a period of five years after the effective date on which the
Registration Statement is declared effective under the Securities Act, provide,
at its sole expense, to the Representative copies of the Company's daily
transfer sheets, if so requested by the Representative.
(s) Maintain key-person life insurance payable to the Company on the
lives of each of ____________, the ___________of the Company, and __________,
the _________ of the Company, each in the amount of at least $1,000,000, for the
period of time equal to the longer of three years from the date on which the
Registration Statement becomes effective under the Securities Act and the term
of the respective employment agreement between the Company and such officer.
(t) For a period of three years from the date on which the
Registration Statement becomes effective under the Securities Act, the
Representative shall have the right to appoint a designee as an observer of the
Company's Board of Directors. Such observer will have the right to attend all
meetings of the Board of Directors. Such observer shall be entitled to receive
reimbursement for all out-of-pocket expenses incurred in attending such
meetings, including, but not limited to, food, lodging, transportation, and any
fees paid to directors for attending meetings. The Representative shall be
given notice of such meetings at the same time and in the same manner as
directors of the Company are informed. The Representative and such observer
shall be
-26-
indemnified to the same extent as the other directors. The Company will
purchase directors and officers insurance in an amount of not less than
$2,000,000, with a deductible of not more than $_____________, provided,
however, that the Company shall not be required to pay more than $50,000 per
year in order to maintain such insurance, and if insurance in such amount is
not available at such cost, the Company shall purchase that amount of such
insurance which is available at a cost of $50,000 per year.
6. PAYMENT OF EXPENSES.
The Company hereby agrees to pay all expenses (other than fees of counsel
for the Underwriters, except as provided in Section 6(c)) in connection with (a)
the preparation, printing, filing, distribution, and mailing of the Registration
Statement and the Prospectus and the printing, filing, distribution, and mailing
of this Agreement and the Master Agreement Among Underwriters, any Master
Selected Dealer Agreement and related documents, including the cost of all
copies thereof and of the Preliminary Prospectuses and of the Prospectus and any
amendments or supplements thereto supplied to the Underwriters in quantities as
hereinabove stated, and the registration of the Common Stock under the Exchange
Act,(b) the issuance, sale, transfer, and delivery (as applicable) of the
Securities, including any transfer or other taxes payable thereon, (c) the
qualification of the Securities under state or foreign "blue sky" or securities
laws, including the costs of printing and mailing the preliminary and final
"Blue Sky Survey" and the fees of counsel for the Underwriters ($35,000) and the
disbursements in connection therewith, (d) the filing fees payable to the
Commission, the NASD, and the jurisdictions in which such qualification is
sought, (e) any fees relating to the listing of the Common Stock on the Nasdaq
SmallCap Market and the ________ Stock Exchange, (f) the cost of printing
certificates representing the shares of Common
-27-
Stock, (g) the fees of the transfer agent for the Common Stock, (h) the cost
of publication of "tombstone" advertisements with respect to offerings, not
to exceed $20,000, and (i) a non-accountable expense allowance equal to three
percent of the gross proceeds of the sale of the Firm Stock and the
Additional Stock (less amounts, if any, previously paid to the Representative
by the Company in respect of such non-accountable expense allowance) to the
Representative on the Closing Date. Notwithstanding the foregoing, if the
offering contemplated hereby should be terminated, the Company agrees to pay
the Representative only the out-of-pocket expenses incurred by the
Underwriters in connection with this Agreement or the proposed offer, sale,
and delivery of the Securities.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The obligations of the several Underwriters to purchase and pay for the
Firm Stock and the Additional Stock, as provided herein, and the obligation of
Hampshire to purchase and pay for the Representative's Warrants, each as
provided herein, shall be subject, in the discretion of the Representative, to
the continuing accuracy of the representations and warranties of the Company
contained herein and in each certificate and document contemplated under this
Agreement to be delivered to the Underwriters, as of the date hereof and as of
the Closing Date (or any Additional Closing Date, as the case may be), to the
performance by the Company of its obligations hereunder, and to the following
conditions:
(a) The Registration Statement shall have become effective under the
Securities Act not later than 6:00 P.M., New York City local time, on the date
of this Agreement or such later date and time as shall be consented to in
writing by the Representative; on or prior to the Closing Date, or any
Additional Closing Date, as the case may be, no Stop Order shall have been
issued and
-28-
no proceeding shall have been initiated or threatened with respect to a Stop
Order; and any request by the Commission for additional information shall
have been complied with by the Company to the reasonable satisfaction of
counsel for the Underwriters. If required, the Prospectus shall have been
filed with the Commission in the manner and within the time period required
by Rule 424(b) under the Securities Act.
(b) (1) At the Closing Date and any Additional Closing Date, as the
case may be, the Underwriters shall have received the opinion of Messrs.
Ireland, Stapleton, Pryor & Pascoe, P.C. counsel for the Company, dated the date
of delivery, addressed to the Underwriters, and in form and scope satisfactory
to counsel for the Underwriters, with reproduced copies or signed counterparts
thereof for each of the Underwriters, to the effect that:
(i) the Company has no subsidiaries (as defined in the
Regulations). The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Colorado, with full power and
authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and filings
with, all federal, state, local, and other governmental authorities and all
courts and other tribunals, to own, lease, license, and use its properties and
assets and to conduct its business in the manner described in the Prospectus.
The Company is duly qualified to do business as a foreign corporation and is in
good standing as such in every jurisdiction in which its ownership, leasing,
licensing, or use of property and assets or the conduct of its business makes
such qualification necessary;
(ii) the authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, of which [2,086,689] shares are outstanding,
and 2,500,000
-29-
shares of Preferred Stock, of which none are outstanding. Except as
disclosed in the Prospectus, each outstanding share of Common Stock is
validly authorized and issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, has not been issued
and is not owned or held in violation of any preemptive or similar rights of
stockholders. To the knowledge of such counsel, there is no commitment,
plan, or arrangement to issue, and no outstanding option, warrant, or other
right calling for the issuance of, any share of capital stock of the Company
or any security or other instrument which by its terms is convertible into,
or exercisable or exchangeable for, capital stock of the Company, except as
may be properly described in the Prospectus. There is outstanding no
security or other instrument which by its terms is convertible into, or
exercisable or exchangeable for, capital stock of the Company. The
certificates evidencing the Common Stock are in due and proper form;
(iii) to the knowledge of such counsel, there is no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in prospect (or any basis
therefor) with respect to the Company or any of its operations, businesses,
properties, or assets, except as may be properly described in the Prospectus or
such as individually or in the aggregate do not now have, and will not in the
future have, a material adverse effect upon the operations, business,
properties, or assets of the Company. To the knowledge of such counsel, the
Company is not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree, except as may be properly described in
the Prospectus or such as in the aggregate do not now have and will not in the
future have a material adverse effect upon the operations, business, properties,
or assets of the Company; nor is the Company required to take any action in
order to avoid any such violation or default;
-30-
(iv) to the knowledge of such counsel, neither the
Company, nor any other party is now, or is expected by the Company to be, in
violation or breach of, or in default with respect to, any provision of any
contract, agreement, instrument, lease, license, arrangement, or understanding
which is material to the Company, and, to the knowledge of such counsel, each
such contract, agreement, instrument, lease, license, arrangement, or
understanding is in full force and effect and is the valid, legal, and binding
obligation of the parties thereto and is enforceable in accordance with its
terms;
(v) the Company is not in violation or breach of, or
in default with respect to, any term of its respective certificate of
incorporation (or other charter document) or by-laws;
(vi) the Company has all requisite power and authority to
execute, deliver, and perform this Agreement and the Representative's Warrants.
All necessary corporate proceedings of the Company have been taken to authorize
the execution, delivery, and performance by the Company of this Agreement and
the Representative's Warrants. This Agreement has been duly authorized,
executed, and delivered by the Company, is the legal, valid, and binding
obligation of the Company, and, subject to applicable bankruptcy, insolvency,
and other laws affecting the enforceability of creditors' rights generally, is
enforceable as to the Company in accordance with its terms. The
Representative's Warrants have been duly authorized by the Company and, when
executed and delivered by the Company, will be legal, valid, and binding
obligations of the Company, each enforceable as to the Company in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required
-31-
by the Company for the execution, delivery, or performance by the Company of
this Agreement or the Representative's Warrants, except filings under the
Securities Act which have been made prior to the Closing Date or Additional
Closing Date, as the case may be, and consents consisting only of consents
under "blue sky" or securities laws, which have been obtained. No consent of
any party to any contract, agreement, instrument, lease, license, arrangement,
or understanding known to such counsel to which the Company is a party, or to
which any of its properties or assets is subject, is required for the execution,
delivery, or performance of this Agreement and the Representative's Warrants;
and the execution, delivery, and performance of this Agreement and the
Representative's Warrants will not violate, result in a breach of, conflict
with, result in the creation or imposition of any lien, charge, or encumbrance
upon any properties or assets of the Company pursuant to the terms of, or, with
or without the giving of notice or the passage of time or both, entitle any
party to terminate or call a default under, any such contract, agreement,
instrument, lease, license, arrangement, or understanding known to such counsel,
violate or result in a breach of, or conflict with any term of the certificate
of incorporation (or other charter document) or by-laws of the Company, or
violate, result in a breach of, or conflict with any law, rule, regulation,
order, judgment, or decree binding on the Company to which any of its
operations, businesses, properties, or assets are subject;
(vii) each share of Firm Stock to be delivered on the
Closing Date is validly authorized and, when issued and delivered in accordance
with the terms hereof, will be validly issued, fully paid, and nonassessable,
without any personal liability attaching to the ownership thereof, and will not
issued in violation of any preemptive or similar rights of stockholders. Each
share of Additional Stock to be delivered on any Additional Closing Date is
-32-
validly authorized and, when issued and delivered in accordance with the terms
hereof, will be validly issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, and will not issued in
violation of any preemptive or similar rights of stockholders. The Underwriters
will receive good title to the shares of Firm Stock and Additional Stock
purchased by them, respectively, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements, and voting
trusts. The Stock conforms to all statements relating thereto contained in the
Registration Statement or the Prospectus;
(viii) the Warrant Stock is validly authorized and has
been duly and validly reserved for issuance pursuant to the terms of the
Representative's Warrants. The Representative's Warrants have been duly and
validly issued and delivered. The Warrant Stock, when issued and delivered in
accordance with the Representative's Warrants, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and will not have been issued in violation of any preemptive
rights of stockholders. The Representative, and any other holders of the
Representative's Warrants, will receive good title to the securities purchased
by them upon exercise of the Representative's Warrants, free and clear of all
liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts. The Representative's Securities conform to all
statements relating thereto contained in the Registration Statement or the
Prospectus;
(ix) to the knowledge of such counsel, each contract,
agreement, instrument, lease, or license required to be described in the
Registration Statement or the Prospectus has been properly described therein,
and each contract, agreement, instrument, lease, or license
-33-
required to be filed as an exhibit to the Registration Statement has been
filed with the Commission as an exhibit to the Registration Statement;
(x) insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws, rules,
regulations, orders, judgments, decrees, contracts, agreements, instruments,
leases, or licenses, such statements have been prepared or reviewed by such
counsel and accurately reflect the status of such litigation and provisions
purported to be summarized and are correct in all respects;
(xi) the Company is not an "investment company" as
defined in the Investment Company Act and the rules and regulations thereunder
and, if the Company conducts its business as set forth in the Prospectus, will
not become an "investment company", and will not be required to be registered
under the Investment Company Act;
(xii) to the knowledge of such counsel, no person or
entity has the right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of the
Registration Statement, except by entities which have waived such rights as
described in the Registration Statement and the Prospectus; and
(xiii) the Registration Statement has become effective under
the Securities Act, the Prospectus has been filed in accordance with Rule 424(b)
of the Regulations, including the applicable time periods set forth therein, or
such filing is not required. To the knowledge of such counsel, no Stop Order
has been issued and no proceeding for that purpose has been instituted or
threatened. On the basis of the participation of such counsel in conferences at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed, but without independent verification by such counsel of
the accuracy, completeness, or
-34-
fairness of the statements contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, such counsel have no
knowledge that (other than financial statements and other financial data and
schedules which are or should be contained therein, and as to matters set
forth under the headings ____________ and ___________, in each case as to
which such counsel need express no opinion): (A) the Registration Statement,
any Rule 430A Prospectus, and the Prospectus, and any amendment or supplement
thereto, does not appear on its face to comply as to form in all material
respects with the requirements of the Securities Act and the Regulations; (B)
any of the Registration Statement, any Rule 430A Prospectus, or the
Prospectus, or any amendment or supplement thereto, contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(C) since the date of effectiveness under the Securities Act of the
Registration Statement, any event has occurred which should have been set
forth in an amendment or supplement to the Registration Statement or the
Prospectus which has not been set forth in such an amendment or supplement.
In rendering such opinion, counsel for the Company may rely (A) as to
matters involving the application of laws other than the laws of the United
States and the laws of the State of Colorado, to the extent counsel for the
Company deems proper and to the extent specified in such opinion, upon an
opinion or opinions (in form and substance satisfactory to counsel for the
Underwriters) of other counsel, acceptable to counsel for the Underwriters,
familiar with the applicable laws, in which case the opinion of counsel for the
Company shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company and that
reliance thereon by counsel for the Company and the Underwriters is reasonable;
-35-
(B) as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company; and (C) to the extent they deem proper,
upon written statements or certificates of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company; provided that copies of any such opinions,
certificates, or statements shall be annexed as exhibits to the opinion of
counsel for the Company.
(2) At the Closing Date and any Additional Closing Date, as the
case may be, the Underwriters shall have received the favorable opinion of
Messrs. Nikaido, Marmelstein, Murray & Oram, patent counsel for the Company,
dated the date of delivery, addressed to the Underwriters, and in form and scope
satisfactory to counsel for the Underwriters, with reproduced copies or signed
counterparts thereof for each of the Underwriters.
In rendering such opinion, patent counsel for the Company may rely as to
matters of fact, to the extent proper, on certificates of responsible officers
of the Company; provided, that copies of any such opinions, certificates, or
statements shall be annexed as exhibits to the opinion of patent counsel for the
Company.
(c) On or prior to the Closing Date and any Additional Closing Date,
as the case may be, the Underwriters shall have been furnished such information,
documents, certificates, and opinions as they may reasonably require for the
purpose of enabling them to review the matters referred to in Section 7(b), and
in order to evidence the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions herein
contained, or as the Representative may reasonably request.
(d) At the Closing Date or any Additional Closing Date, as the case
may be, (i) the Registration Statement and the Prospectus and any amendments or
supplements thereto shall
-36-
contain all statements which are required to be stated therein in accordance
with the Securities Act and the Regulations, and in all material respects
conform to the requirements thereof, and neither the Registration Statement
nor the Prospectus nor any amendment or supplement thereto shall contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) there shall have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus,
no material adverse change, or any development involving a prospective
material adverse change, in the business, properties, or condition (financial
or otherwise), results of operations, capital stock, long-term or short-term
debt, or general affairs of the Company from that set forth in the
Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the date on
which the Registration Statement becomes effective under the Securities Act,
and the Company shall not have incurred any material liabilities or entered
into any agreements not in the ordinary course of business other than as
referred to in the Registration Statement and Prospectus, (iii) except as set
forth in the Prospectus, no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation shall be pending,
threatened, or in prospect (or any basis therefor) with respect to the
Company or any of its operations, businesses, properties, or assets which
would be required to be set forth in the Registration Statement, wherein an
unfavorable decision, ruling, or finding would materially adversely affect
the business, property, condition (financial or otherwise), results of
operations, or general affairs of the Company, and (iv) the Stock be quoted
upon the Nasdaq SmallCap Market and the _______ Stock Exchange.
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(e) At the Closing Date and any Additional Closing Date, as the case
may be, the Underwriters shall have received a certificate of the chief
executive officer, the chief financial officer, and the chief accounting officer
of the Company, dated the Closing Date or such Additional Closing Date, as the
case may be, to the effect, among other things, that (i) the conditions set
forth in Sections 7(a) and 7(d) have been satisfied, (ii) as of the date of this
Agreement and as of the Closing Date or such Additional Closing Date, as the
case may be, the representations and warranties of the Company contained herein
were and are accurate and correct in all materials respects, and (iii) as of the
Closing Date or such Additional Closing Date, as the case may be, the
obligations to be performed by the Company hereunder on or prior to such time
have been fully performed.
(f) At the time this Agreement is executed and at the Closing Date
and any Additional Closing Date, as the case may be, you shall have received a
letter, addressed to the Underwriters, and in form and substance satisfactory to
the Representative, with reproduced copies or signed counterparts thereof for
each of the Underwriters, from Price Waterhouse LLP, independent certified
public accountants for the Company, dated the date of delivery:
(i) confirming that they are, and during the period covered by
their report(s) included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company within the
meaning of the Securities Act and the published Regulations and stating that the
answer to Item 10 [CHECK] of the Registration Statement is correct insofar as it
relates to them;
(ii) stating that, in their opinion, the financial statements and
schedules of the Company included in the Registration Statement examined by them
comply in form in all
-38-
material respects with the applicable accounting requirements of the Securities
Act and the related published rules and regulations;
(iii) stating that, on the basis of procedures (but not an
examination made in accordance with generally accepted auditing standards)
consisting of a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and Boards of Directors of the Company and
committees of such Board of Directors, inquiries to certain officers and other
employees of the Company responsible for financial and accounting matters, and
other specified procedures and inquiries, nothing has come to their attention
that caused them to believe that: (A) the unaudited financial statements and
schedules of the Company included in the Registration Statement and Prospectus
do not comply in form in all material respects with the applicable accounting
requirements of the Securities Act and the Exchange Act and the related
published rules and regulations under the Securities Act or the Exchange Act or
are not fairly presented in conformity with generally accepted accounting
principles (except to the extent that certain footnote disclosures regarding any
stub period may have been omitted in accordance with the applicable rules of the
Commission under the Exchange Act) applied on a basis consistent with that of
the audited financial statements appearing therein; (B) there was any change in
the capital stock or long-term debt of the Company or any decrease in the net
current assets or stockholders' equity of the Company as of the date of the
latest available monthly financial statements of the Company as of a specified
date not more than five business days prior to the date of such letter, each as
compared with the amounts shown in the ______________ balance sheet included in
the Registration Statement and Prospectus, other than
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as properly described in the Registration Statement and Prospectus or any
change or decrease (which shall be set forth therein) which, in the sole
discretion of the Representative, the Representative shall accept, or (C)
there was any decrease in net sales, net earnings, or net earnings per share
of Common Stock during the period from ___________________ to the date of the
latest available monthly financial statements of the Company or to a
specified date not more than five business days prior to the date of such
letter, each as compared with the corresponding period in 1995, other than as
properly described in the Registration Statement and Prospectus or any
decrease (which shall be set forth therein) which, the sole discretion of the
Representative, the Representative shall accept; and
(iv) stating that they have compared specific numerical data
and financial information pertaining to the Company set forth in the
Registration Statement, which have been specified by the Representative prior to
the date of this Agreement, to the extent that such data and information may be
derived from the general accounting records of the Company, and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries, and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter,
and found them to be in agreement.
(g) All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Securities shall be satisfactory in form and
substance to the Representative and to counsel for the Underwriters, and the
Underwriters shall have received from such counsel for the Underwriters the
opinion, dated as of the Closing Date and the Additional Closing Date, as the
case
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may be, with respect to such of the matters set forth under Section 7(b), and
with respect to such other related matters, as the Representative may
reasonably request.
(h) The NASD, upon review of the terms of the public offering of the
Stock shall not have objected to the Underwriters' participation in such
offering.
(i) Prior to or on the Closing Date, the Company shall have entered
into the Representative's Warrants with the Representative.
(j) Prior to or on the Closing Date, the Company shall have provided
to you copies of the agreements referred to in Section 2(r).
Any certificate or other document signed by any officer of the Company and
delivered to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company hereunder to the
Underwriters as to the statements made therein. If any condition to the
Underwriters' obligations hereunder to be fulfilled prior to or at the Closing
Date or any Additional Closing Date, as the case may be, is not so fulfilled,
the Representative may, on behalf of the several Underwriters, terminate this
Agreement or, if the Representative so elects, in writing waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim, damage,
and expense whatsoever (which shall include, for all purposes of this Section 8,
but not be limited to, attorneys' fees and any and all expense whatsoever
incurred in investigating,
-41-
preparing, or defending against any litigation, commenced or threatened, or
any claim whatsoever and any and all amounts paid in settlement of any claim
or litigation) as and when incurred arising out of, based upon, or in
connection with, (i) any untrue statement or alleged untrue statement of a
material fact contained in (A) the Registration Statement, any Preliminary
Prospectus, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto or (B) any application
or other document or communication (for purposes of this Section 8,
collectively referred to as an "application") executed by, or on behalf of,
the Company or based upon written information furnished by, or on behalf of,
the Company filed in any jurisdiction in order to qualify the Securities
under the "blue sky" or securities laws thereof or filed with the Commission
or any securities exchange; or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made
in reliance upon, and in conformity with, written information furnished to
the Company as stated in Section 8(b) with respect to any Underwriter by, or
on behalf of, such Underwriter through the Representative expressly for
inclusion in the Registration Statement, any Preliminary Prospectus, or the
Prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (ii) any breach of any representation, warranty,
covenant, or agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this
Agreement.
If any action is brought against an Underwriter or any of its respective
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of an Underwriter (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant
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to the foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but the
failure so to notify shall not relieve the Company from any liability it may
have other than pursuant to this Section 8(a)) and the Company shall promptly
assume the defense of such action, including, without limitation, the
employment of counsel satisfactory to such indemnified party or parties and
payment of expenses. Such indemnified party or parties shall have the right
to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such
action or the indemnifying party shall not have promptly employed counsel
satisfactory to such indemnified party or parties to have charge of the
defense of such action or such indemnified party or parties shall have
concluded that there may be one or more legal defenses available to it or
them or to other indemnified parties which are different from, or in addition
to, those available to the indemnifying party, in any of which events such
fees and expenses shall be borne by the indemnifying party, and the
indemnifying party shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. Anything in this
paragraph to the contrary notwithstanding, the indemnifying party shall not
be liable for any settlement of any such claim or action effected without its
written consent, which consent shall not be unreasonably withheld. The
indemnifying party shall not, without the prior written consent of each
indemnified party that is not released as described in this sentence, settle
or compromise any action, or permit a default or consent to the entry of
judgment or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto),
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unless such settlement, compromise, consent, or termination includes an
unconditional release of each indemnified party from all liability in respect
of such action. The Company agrees promptly to notify the Underwriters of the
commencement of any litigation or proceedings against the Company or any of
its officers or directors in connection with the sale of the Securities, the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto, or any application.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to the several Underwriters in Section 8(a), but only with
respect to statements or omissions, if any, made in the Registration Statement,
any Preliminary Prospectus, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application, in
reliance upon, and in conformity with, written information furnished to the
Company as stated in this Section 8(b) with respect to any Underwriter by, or on
behalf of, such Underwriter through the Representative expressly for inclusion
in the Registration Statement, any Preliminary Prospectus, or the Prospectus, or
any amendment or supplement thereto, or on any application, as the case may be;
provided, however, that the obligation of each Underwriter to provide indemnity
under the provisions of this Section 8(b) shall be limited to the amount which
represents the product of (i) the number of shares of Stock underwritten by such
Underwriter hereunder and the (ii) the underwriting discount per share of Common
Stock set forth on the cover page of the Prospectus. For all purposes of this
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Agreement, the amounts of the selling concession and reallowance and the name of
each of the Underwriters, and the number of shares of Firm Stock purchased by
each of the Underwriters set forth in the Prospectus constitute the only
information furnished in writing by, or on behalf of, such Underwriter expressly
for inclusion in the Registration Statement, any Preliminary Prospectus, or the
Prospectus (as from time to time amended or supplemented), or any amendment or
supplement thereto, or in any application, as the case may be. If any action
shall be brought against the Company or any other person so indemnified based on
the Registration Statement, any Preliminary Prospectus, or the Prospectus, or
any amendment or supplement thereto, or in any application, and in respect of
which indemnity may be sought against any Underwriter pursuant to this Section
8(b), such Underwriter shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the rights and
duties given to the indemnified parties, by the provisions of Section 8(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 8(a) or
8(b) (in each case, subject to the limitations thereof), but it is found in a
final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Agreement
expressly provides for indemnification in such case or (ii) any indemnified or
indemnifying party seeks contribution under the Securities Act, the Exchange
Act, or otherwise, then the Company (including for this purpose any contribution
made by, or on behalf of, any director of the Company, any officer of the
Company who signed the Registration Statement, and any controlling person of the
Company), as one entity, and the Underwriters (including for this purpose any
contribution by, or on behalf of, an indemnified party) as a second entity,
shall contribute to the losses, liabilities,
-45-
claims, damages, and expenses whatsoever to which any of them may be subject,
so that the Underwriters, in the aggregate, are responsible for the
proportion thereof equal to the percentage which the underwriting discount
per share of Common Stock set forth on the cover page of the Prospectus
represents of the initial public offering price per share of Common Stock set
forth on the cover page of the Prospectus and the Company is responsible for
the remaining portion; provided, however, that if applicable law does not
permit such allocation, then other relevant equitable considerations such as
the relative fault of the Company and the Underwriters in connection with the
facts which resulted in such losses, liabilities, claims, damages, and
expenses shall also be considered. The relative fault, in the case of an
untrue statement, alleged untrue statement, omission, or alleged omission,
shall be determined by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to information supplied by
the Company or by the Underwriters, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement, alleged statement, omission, or alleged omission. The Company and
the Underwriters agree that it would be unjust and inequitable if the
respective obligations of the Company and the Underwriters for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Underwriters and the
other indemnified parties were treated as one entity for such purpose) or by
any other method of allocation that does not reflect the equitable
considerations referred to in this Section 8(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section
8(c), each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act
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or Section 20(a) of the Exchange Act and each officer, director, partner,
employee, agent, and counsel of any Underwriter shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to the
provisions of this Section 8(c). Anything in this Section 8(c) to the
contrary notwithstanding, no party shall be liable for contribution with
respect to the settlement of any claim or action effected without its written
consent. This Section 8(c) is intended to supersede any right to
contribution under the Securities Act, the Exchange Act, or otherwise.
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Stock or Additional Stock hereunder, and if the
number of shares of Firm Stock or Additional Stock to which the defaults of all
Underwriters in the aggregate relate does not exceed 10% of the number of shares
of Firm Stock or Additional Stock, as the case may be, which all Underwriters
have agreed to purchase hereunder, then such shares of Firm Stock or Additional
Stock to which such defaults relate shall be purchased by the non-defaulting
Underwriters in proportion to their respective commitments hereunder.
(b) If such defaults exceed in the aggregate 10% of the number of
shares of Firm Stock or Additional Stock, as the case may be, which all
Underwriters have agreed to purchase hereunder, the Representative may, in its
discretion, arrange to purchase itself or for another party or parties to
purchase such shares of Firm Stock or Additional Stock, as the case may be, to
which
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such default relates on the terms contained herein. If the Representative
does not arrange for the purchase of such shares of Firm Stock or Additional
Stock, as the case may be, within one business day after the occurrence of
defaults relating to in excess of 10% of the Firm Stock or the Additional
Stock, as the case may be, then the Company shall be entitled to a further
period of one business day within which to procure another party or parties
satisfactory to the Representative to purchase such shares of Firm Stock or
Additional Stock, as the case may be, on such terms. If the Representative
or the Company do not arrange for the purchase of the shares of Firm Stock or
Additional Stock, as the case may be, to which such defaults relate as
provided in this Section 9(b), this Agreement may be terminated by the
Representative or by the Company without liability on the part of the Company
(except that the provisions of Sections 5(a), 6, 8, 10, and 13 shall survive
such termination) or the several Underwriters, but nothing in this Agreement
shall relieve a defaulting Underwriter of its liability, if any, to the other
several Underwriters and to the Company for any damages occasioned by its
default hereunder.
(c) If the shares of Stock or Additional Stock to which such defaults
relate are to be purchased by the non-defaulting Underwriters, or are to be
purchased by another party or parties as aforesaid, the Representative or the
Company shall have the right to postpone the Closing Date or the Additional
Closing Date, as the case may be, for a reasonable period but not in any event
more than seven 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 and arrangements with respect to the Firm Stock or the Additional
Stock, and the Company agrees to prepare and file promptly any amendment or
supplement to the Registration Statement or the Prospectus which in the opinion
of counsel for the Underwriters may thereby be made necessary.
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The term "Underwriter" as used in this Agreement shall include any party
substituted under this Section 9 as if such party had originally been a party
to this Agreement and had been allocated the number of shares of Firm Stock
and Additional Stock actually purchased by it as a result of its original
commitment to purchase Firm Stock and Additional Stock and its purchase of
shares of Firm Stock or Additional Stock pursuant to this Section 9.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including 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 indemnified
person, or by, or on behalf of, the Company, or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Firm Stock and the Additional Stock, if
any, to the several Underwriters. In addition, the provisions of Sections 5(a),
6, 8, 10, 11, and 13 shall survive termination of this Agreement, whether such
termination occurs before or after the Closing Date or any Additional Closing
Date. Notwithstanding anything in the second sentence of Section 6 hereof to
the contrary, and in addition to the obligations assumed by the Company pursuant
to the first sentence of Section 6 hereof, if the offering should be terminated,
the Company shall be liable to the Underwriters only for out-of-pocket expenses
incurred by the Underwriters in connection with this Agreement or the proposed,
offer, sale, and delivery of the Securities.
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11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
(a) This Agreement shall become effective at 9:30 A.M., New York City
local time, on the first full business day following the day on which the
Registration Statement becomes effective under the Securities Act or at the time
of the initial public offering by the Underwriters of the Firm Stock, whichever
is earlier. The time of the initial public offering shall mean the time, after
the Registration Statement becomes effective under the Securities Act, of the
release by the Representative for publication of the first newspaper
advertisement which is subsequently published relating to the Firm Stock or the
time, after the Registration Statement becomes effective under the Securities
Act, when the Firm Stock is first released by the Representative for offering by
the Underwriters or dealers by letter or telegram, whichever shall first occur.
The Representative or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except as noted
below in this Section 11, by giving the notice indicated in Section 11(d) before
the time this Agreement becomes effective under the Securities Act.
(b) If the purchase price of the Firm Stock has not been determined
as provided for in Section 3 prior to 4:30 p.m., New York City local time, on
the fifth full business day after the date on which the Registration Statement
becomes was declared effective under the Securities Act, this Agreement may be
terminated at any time thereafter either by the Representative or by the Company
by giving notice to the other unless before such termination the purchase price
for the Firm Stock has been so determined. If the purchase price of the Firm
Stock has not been so determined prior to 4:30 p.m., New York City local time,
on the tenth full business day after the
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date on which the Registration Statement was declared effective under the
Securities Act, this Agreement shall automatically terminate forthwith.
(c) In addition to the right to terminate this Agreement pursuant to
Sections 7 and 9 hereof, the Representative shall have the right to terminate
this Agreement at any time prior to the Closing Date or any Additional Closing
Date, as the case may be, by giving notice to the Company, and, if exercised,
the Over-allotment Option, at any time prior to any Additional Closing Date, by
giving notice to the Company, (i) if any domestic or international event, act,
or occurrence has materially and adversely disrupted, or, in the opinion of the
Representative, will in the immediate future materially and adversely disrupt,
the securities markets; or (ii) if there shall have been a general suspension
of, or a general limitation on prices for, trading in securities on the New York
Stock Exchange, the American Stock Exchange, the _______ Stock Exchange, or in
the over-the-counter market; or (iii) if there shall have been an outbreak or
increase in the level of major hostilities or other national or international
calamity; or (iv) if a banking moratorium has been declared by a state or
federal authority; or (v) if a moratorium in foreign exchange trading by major
international banks or persons has been declared; or (vi) if there shall have
been a material interruption in the mail service or other means of communication
within the United States; or (vii) if the Company shall have sustained a
material or substantial loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage, or other calamity or malicious act, whether or not such loss
shall have been insured, or from any labor dispute or court or government
action, order, or decree, which will, in the opinion of the Representative, make
it inadvisable to proceed with the offering, sale, or delivery of the Firm Stock
or the Additional Stock, as the case may be; or (viii) if any material
governmental restrictions shall have been imposed on trading in securities in
general, which
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restrictions are not in effect on the date hereof; or (ix) if there shall be
passed by the Congress of the United States or by any state legislature any
act or measure, or adopted by any governmental body or authoritative
accounting institute or board, or any governmental executive, any orders,
rules, or regulations, which the Representative believes likely to have a
material adverse effect on the business, financial condition, or financial
statements of the Company or the market for the Common Stock; or (x) if there
shall have been such material and adverse change in the market for the
Company's securities or securities in general or in political, financial, or
economic conditions as in the judgment of the Representative makes it
inadvisable to proceed with the offering, sale, and delivery of the Firm
Stock or the Additional Stock, as the case may be, on the terms contemplated
by the Prospectus.
(d) If the Representative elects to prevent this Agreement from
becoming effective, as provided in this Section 11, or to terminate this
Agreement pursuant to Section 7 of this Agreement or this Section 11, the
Representative shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects to
prevent this Agreement from becoming effective or to terminate this Agreement,
the Company shall notify the Representative promptly by telephone, telex, or
telegram, confirmed by letter.
(e) Anything in this Agreement to the contrary notwithstanding other
than Section 11(f), if this Agreement shall not become effective by reason of an
election pursuant to this Section 11, or if this Agreement shall terminate or
shall otherwise not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any covenant or agreement or
satisfy any condition of this Agreement by it to be performed or satisfied, the
sole liability of the Company to the several Underwriters, in addition to the
obligations the Company
-52-
assumed pursuant to the first sentence of Section 6, will be to reimburse the
several Underwriters for such out-of-pocket expenses (including the fees and
disbursements of their counsel) as shall have been incurred by them in
connection with this Agreement or the proposed offer, sale, and delivery of
the Securities, and, upon demand, the Company agrees to pay promptly the full
amount thereof to the Representative for the respective accounts of the
Underwriters. Anything in this Agreement to the contrary notwithstanding
other than Section 11(f), if this Agreement shall not be carried out within
the time specified herein for any reason other than the failure on the part
of the Company to perform any covenant or agreement or satisfy any condition
of this Agreement by it to be performed or satisfied, the Company shall have
no liability to the several Underwriters other than for obligations assumed
by the Company pursuant to Section 6.
(f) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 5(a), 6, 8, 10, and 13 shall not be in any way affected
by such election or termination or failure to carry out the terms of this
Agreement or any part hereof. Notwithstanding anything in the second sentence
of Section 6 hereof to the contrary, and in addition to the obligations assumed
by the Company pursuant to the first sentence of Section 6 hereof, if the
offering should be terminated, the Company shall be liable to the several
Underwriters only for out-of-pocket expenses incurred by the several
Underwriters in connection with this Agreement or the proposed, offer, sale, and
delivery of the Securities.
12. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
by letter, to such Underwriter, c/o Hampshire Securities
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Corporation, 640 Fifth Avenue, New York, New York 10019, Attention: Mr. Leo
T. Abbe, Executive Vice President, with a copy to Brock, Fensterstock,
Silverstein, McAuliffe & Wade, LLC, One Citicorp Center, 153 East 53rd
Street, York, New York 10022, Attention: Robert Steven Brown, Esq.; or if
sent to the Company, shall be mailed, delivered, or telexed or telegraphed
and confirmed by letter, to the Company, 5710-B Flatiron Parkway, Boulder,
Colorado 80301, Attention: Mr. Paul L. Ray, President, with a copy to
Ireland, Stapleton, Pryor & Pascoe, P.C. 1675 Broadway, 26th Floor, Denver,
Colorado 80202 Attention: William E. Tanis, Esq. All notices hereunder shall
be effective upon receipt by the party to which it is addressed.
13. PARTIES. Hampshire represents that it is authorized to act as
Representative on behalf of the several Underwriters named in Schedule I
hereto, and the Company shall be entitled to act and rely on any request,
notice, consent, waiver, or agreement purportedly given on behalf of the
Underwriters when the same shall have been given by Hampshire on such behalf.
This Agreement shall inure solely to the benefit of, and shall be binding
upon, the several Underwriters, the Company, and the persons and entities
referred to in Section 8 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which
shall not include any buyer, as such, of the Firm Stock or the Additional
Stock), and no other person shall have, or be construed to have, any legal or
equitable right, remedy, or claim under, in respect of, or by virtue of this
Agreement or any provision herein contained. Notwithstanding anything
contained in this Agreement to the contrary, all of the obligations of the
Underwriters hereunder are several and not joint.
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14. CONSTRUCTION. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
conflict of laws. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. CONSENT TO JURISDICTION. The Company irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out
of, or relating to, this Agreement, any document or instrument delivered
pursuant to, in connection with, or simultaneously with this Agreement, or a
breach of this Agreement or any such document or instrument. In any such action
or proceeding, the Company waives personal service of any summons, complaint, or
other process and agrees that service thereof may be made in accordance with
Section 12. Within 30 days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the Company shall appear or answer such summons, complaint, or
other process. Should the Company fail to appear or answer within such 30-day
period or such extended period, as the case may be, the Company shall be deemed
in default and judgment may be entered against the Company for the amount as
demanded in any summons, complaint, or other process so served.
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If the foregoing correctly sets forth the understandings between the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
IMAGE GUIDED TECHNOLOGIES, INC.
BY:
---------------------------------------
PAUL L. RAY, PRESIDENT
ACCEPTED AS OF THE DATE FIRST ABOVE
WRITTEN IN NEW YORK, NEW YORK
HAMPSHIRE SECURITIES CORPORATION*
BY:
---------------------------------------
LEO T. ABBE, EXECUTIVE VICE PRESIDENT
*ON BEHALF OF ITSELF AND THE OTHER SEVERAL
UNDERWRITERS NAMED IN SCHEDULE I HERETO.
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SCHEDULE I
Total
Number
of Shares
to be
Underwriter Purchased
----------- ---------
Hampshire Securities Corporation...............................
---------
Total..................................................... 1,200,000
---------
---------
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