1,750,000 SHARES COMMON STOCK
PREMIS CORPORATION
UNDERWRITING AGREEMENT
__________________, 1996
R. J. Steichen & Company
As Representative of the Several Underwriters
700 Midwest Plaza West
801 Nicollet Avenue
Minneapolis, MN 55402
Dear Ladies and Gentlemen:
Premis Corporation, a Minnesota corporation (the "Company"), hereby
confirms its agreement to issue and sell to the underwriters named in
Schedule I hereto (the "Underwriters"), for which R. J. Steichen & Company is
acting as the representative (in such capacity, the "Representative"), an
aggregate of 1,750,000 shares of authorized but unissued common stock, par
value $.01 per share, of the Company (the "Common Stock"). Such 1,750,000
shares of Common Stock are collectively referred to in this Agreement as the
"Firm Shares." The Company also hereby confirms its agreement to issue and
sell to the Underwriter an aggregate of up to 262,500 additional shares of
Common Stock upon the request of the Representative solely for the purpose of
covering overallotments. Such additional shares are referred to in this
Agreement as the "Option Shares." The Firm Shares and the Option Shares are
collectively referred to herein as the "Shares." Further, the Company hereby
confirms its agreement to issue to the Representative warrants for the
purchase of a total of 175,000 shares as described in Section 5 hereof (the
"Representative's Warrants"), assuming purchase by the Underwriters of the
Firm Shares. The shares issuable upon exercise of the Representative's
Warrants are referred to as the "Warrant Shares."
The Company hereby confirms the arrangements with respect to the
purchase, severally and not jointly, by each of the Underwriters the number
of the Firm Shares set forth opposite their respective names in Schedule I,
plus their pro rata portion of the Option Shares purchased if the
overallotment option is exercised in whole or in part. The Company has been
advised and hereby acknowledges that the Representative has been duly
authorized to act as the representative of the Underwriters. As used in this
Agreement, the term "Underwriter" refers to any individual member of the
underwriting syndicate and includes any party substituted for an Underwriter
under Section 9 hereof.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each of the several Underwriters
as follows:
(a) A registration statement on Form S-2 with respect to the
Shares has been prepared by the Company in conformity with the requirements
of the Securities Act of 1933,
as amended (the "1933 Act") and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "SEC")
thereunder and has been filed with the SEC under the 1933 Act. The
Company has filed such amendments to the registration statement and
such amended preliminary prospectuses as may have been required to be
filed to the date hereof. If the Company has elected not to rely upon
Rule 430A, the Company has prepared and will promptly file an amendment
to the registration statement and an amended prospectus (provided the
Representative has consented to such filing). If the Company has
elected to rely upon Rule 430A, it will prepare and timely file a
prospectus pursuant to Rule 424(b) that discloses the information
previously omitted from the prospectus in reliance upon Rule 430A.
Copies of such registration statement and each pre-effective amendment
thereto, and each related preliminary prospectus have been delivered by
the Company to the Representative. Such registration statement, as
amended or supplemented, including all prospectuses included as a part
thereof, financial schedules, exhibits, the information (if any) deemed
to be part thereof pursuant to Rules 430A and 434 under the 1933 Act
and any registration statement filed pursuant to Rule 462 under the
1933 Act, is herein referred to as the "Registration Statement." The
term "Prospectus" as used herein shall mean the final prospectus, as
amended or supplemented, included as a part of the Registration
Statement on file with the SEC when it becomes effective; provided,
however, that if a prospectus is filed by the Company pursuant to Rules
424(b) and 430A or a term sheet is filed by the Company pursuant to
Rule 434 under the 1933 Act, the term "Prospectus" as used herein shall
mean the prospectus so filed pursuant to Rules 424(b) and 430A) and the
term sheet so filed pursuant to Rule 434. The term "Preliminary
Prospectus" as used herein means any prospectus, as amended or
supplemented, used prior to the Effective Date (as defined in Section
4(a) hereof) and included as a part of the Registration Statement,
including any prospectus filed with the SEC pursuant to Rule 424(a).
(b) Neither the SEC nor any state securities division has issued
any order preventing or suspending the use of any Preliminary
Prospectus, or issued a stop order with respect to the offering of the
Shares or requiring the recirculation of a Preliminary Prospectus and,
to the best knowledge of the Company, no proceeding for any such
purpose has been initiated or threatened. Each part of the
Registration Statement, when such part became or becomes effective,
each Preliminary Prospectus, on the date of filing with the SEC, and
the Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the SEC and on any Closing Date (as defined in
Section 3 hereof), as the case may be, conformed or will conform in all
material respects with the requirements of the 1933 Act and the Rules
and Regulations and the securities laws ("Blue Sky Laws") of the states
where the Shares are to be sold (the "States") and contained or will
contain all statements that are required to be stated therein in
accordance with the 1933 Act, the Rules and Regulations and the Blue
Sky Laws of the States. When the Registration Statement became or
becomes effective and when any post-effective amendments thereto shall
become effective, the Registration Statement did not and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Neither any Preliminary Prospectus, on the date
of filing thereof with the SEC, nor the Prospectus or any amendment or
supplement thereto, on the date of filing thereof with the SEC and on
the First and Second Closing Dates, contained or will contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make
2
the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that none of the
representations and warranties in this Subsection 1(b) shall apply to
statements in, or omissions from, the Registration Statement,
Preliminary Prospectus or the Prospectus, or any amendment thereof or
supplement thereto, which are based upon and conform to written
information furnished to the Company by the Underwriters specifically
for use in the preparation of the Registration Statement, Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto.
There is no contract or other document of the Company of a character
required by the 1933 Act or the Rules and Regulations to be described
in the Registration Statement or Prospectus, or to be filed as an
exhibit to the Registration Statement, that has not been described or
filed as required. The descriptions of all such contracts and
documents or references thereto are correct in all material respects
and include the information required under the 1933 Act and the Rules
and Regulations.
(c) Upon consummation of the acquisition of all of the outstanding
stock of REF Retail Systems Corporation ("REF"), as described in the
Prospectus, concurrent with the First Closing Date, REF will become a
wholly-owned subsidiary of the Company. Other than REF, the Company is
not affiliated with any other company or business entity. The Company
has full requisite power and authority to enter into the Stock Purchase
Agreement with REF dated July 9, 1996 ("REF Agreement"). The REF
Agreement has been duly authorized, executed and delivered by the
Company and REF and is a valid and binding agreement on the part of the
Company and REF, enforceable in accordance with its terms, except as
enforceability may be limited by the application of bankruptcy,
insolvency, moratorium or similar laws affecting the rights of
creditors generally and by judicial limitations on the right of
specific performance and except as the enforceability of the
indemnification or contribution provisions thereof may be affected by
applicable federal or state securities laws. The performance of the
REF Agreement and the consummation of the transactions therein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or REF pursuant to, (i) any
indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note, agreement or other evidence of indebtedness, lease, contract or
other agreement or instrument to which the Company or REF is a party or
by which the property or assets of the Company or REF is bound, (ii)
the Company's or REF's Articles of Incorporation or Bylaws or (iii) any
statute or any order, rule or regulation of any court, governmental
agency or body having jurisdiction over the Company or REF.
(d) Each of the Company and REF has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of their organization, with full corporate power and
authority, to own, lease and operate their properties and conduct their
businesses as described in the Registration Statement and Prospectus.
The Company and REF are duly qualified to do business as foreign
corporations in good standing in each jurisdiction in which the
ownership or lease of their properties, or the conduct of their
business, requires such qualification and in which the failure to be
qualified or in good standing would have a material adverse effect on
the business of the Company or REF. The Company and REF have all
necessary and material authorizations, approvals and orders of and from
all governmental regulatory officials and bodies to own
3
their properties and to conduct their businesses as described in the
Registration Statement and Prospectus, and are conducting their
businesses in substantial compliance with all applicable material laws,
rules and regulations of the jurisdictions in which they conduct
business. The Company and REF hold all material licenses,
certificates, permits, authorizations, approvals and orders of and from
all state, federal and other governmental regulatory officials and
bodies necessary to own their properties and to conduct their
businesses as described in the Registration Statement and Prospectus,
or has obtained waivers from any such applicable requirements from the
appropriate state, federal or other regulatory authorities. All such
licenses, permits, approvals, certificates, consents, orders and other
authorizations are in full force and effect, and the Company or REF
have not received notice of any proceeding or action relating to the
revocation or modification of any such license, permit, approval,
certificate, consent, order or other authorization which, individually
or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, might materially and adversely affect the conduct of the
business or the condition, financial or otherwise, or the earnings,
affairs or business prospects of the Company or REF.
(e) Neither the Company nor REF are in violation of their
respective Articles of Incorporation or Bylaws, nor in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any contract, indenture, mortgage, loan agreement,
joint venture or other agreement or instrument to which the Company or
REF is a party or by which the Company, REF or their properties are
bound, and there does not exist any state of facts which constitutes an
event of default on the part of the Company or REF or which, with
notice or lapse of time or both, would constitute such an event of
default. Neither the Company nor REF are in violation of any law,
order, rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, which
violation is material to the business of the Company or REF.
(f) The Company has full requisite power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and will be a valid and binding agreement
on the part of the Company, enforceable in accordance with its terms,
if and when this Agreement shall have become effective in accordance
with Section 8, except as enforceability may be limited by the
application of bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally and by judicial limitations
on the right of specific performance and except as the enforceability
of the indemnification or contribution provisions hereof may be
affected by applicable federal or state securities laws. The
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or REF pursuant to, (i) any
indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note, agreement or other evidence of indebtedness, lease, contract or
other agreement or instrument to which the Company or REF is a party or
by which the property or assets of the Company or REF is bound, (ii)
the Company's or REF's Articles of Incorporation or Bylaws or (iii) any
statute or any order, rule or regulation of any court, governmental
agency or body having jurisdiction over the Company or REF. No
consent, approval, authorization or order of any court, governmental
agency or body is required for
4
the consummation by the Company of the transactions on its part herein
contemplated, except such as may be required under the 1933 Act, the
Rules and Regulations, the Blue Sky Laws, the rules and regulations of
the National Association of Securities Dealers, Inc. ("NASD") and the
rules and regulations of Nasdaq SmallCap Market-SM- and Nasdaq National
Market.
(g) Except as is otherwise expressly stated in the Registration
Statement or Prospectus, there are no actions, suits or proceedings
pending before any court or governmental agency, authority or body to
which the Company or REF are a party or of which the business or
property of the Company or REF are the subject which might result in
any material adverse change in the condition (financial or otherwise),
business or prospects of the Company or REF, materially and adversely
affect their properties or assets or prevent consummation of the
transactions contemplated by this Agreement. No such actions, suits or
proceedings are threatened except as is otherwise expressly stated in
the Registration Statement or Prospectus. Neither the Company nor REF
are aware of any facts which would form the basis for the assertion of
any material claim or liability which are not disclosed in the
Registration Statement or the Prospectus or adequately reserved for in
the financial statements which are a part thereof, except for such
claims or liabilities which are not currently expected to have a
material adverse effect on the condition (financial or otherwise) or
the earnings, affairs or business prospects of the Company or REF. All
pending legal or governmental proceedings to which the Company or REF
are a party or to which any of their properties are subject which are
not described in the Registration Statement and the Prospectus,
including ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material to the Company or REF.
(h) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus. The outstanding Common
Stock of the Company is duly authorized, validly issued, fully paid and
nonassessable. The Shares conform in substance to all statements relating
thereto contained in the Registration Statement and Prospectus. The
Shares to be sold by the Company hereunder have been duly authorized and,
when issued and delivered pursuant to this Agreement, will be validly
issued, fully paid and nonassessable and will conform to the description
thereof contained in the Prospectus. No preemptive rights or similar
rights of any security holders of the Company exist with respect to the
issuance and sale of the Shares by the Company or exercise of the
Representative's Warrants. The Company has no agreement with any security
holder which gives such security holder the right to require the Company
to register under the 1933 Act any securities of any nature owned or held
by such person either in connection with the transactions contemplated by
this Agreement or after a demand for registration by such holder. Upon
payment for and delivery of the Shares pursuant to this Agreement, the
Underwriters will acquire the Shares, free and clear of all liens,
encumbrances or claims. The certificates evidencing the Shares will
comply as to form with all applicable provisions of the laws of the
State of organization. Except as set forth in any part of the
Registration Statement, the Company does not have outstanding any
options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, any Common Stock or other securities of
the Company, or any such warrants, convertible securities or
obligations.
5
(i) The Representative's Warrants and the Warrant Shares have been
duly authorized. The Representative's Warrants, when issued and
delivered to the Representative, will constitute valid and binding
obligations of the Company in accordance with their terms, except as
enforceability may be limited by the application of bankruptcy,
insolvency, moratorium or similar laws affecting the rights of
creditors generally and by judicial limitations on the right of
specific performance. The Warrant Shares when issued in accordance
with the terms of this Agreement and pursuant to the Representative's
Warrants, will be validly issued, fully paid and nonassessable and
subject to no preemptive rights or similar rights on the part of any
person or entity. A sufficient number of shares of Common Stock of the
Company have been reserved for issuance by the Company upon exercise of
the Representative's Warrants.
(j) Price Waterhouse, LLP, whose reports appear in the
Registration Statement and Prospectus, are independent accountants
within the meaning of the 1933 Act and the Rules and Regulations. The
financial statements of the Company and REF, together with the related
notes, forming part of the Registration Statement and Prospectus (the
"Financial Statements"), fairly present the financial position and the
results of operations of the Company and REF at the respective dates
and for the respective periods to which they apply. The Financial
Statements are accurate, complete and correct and have been prepared in
accordance with the 1933 Act, the Rules and Regulations and generally
accepted accounting principles ("GAAP"), consistently applied
throughout the periods involved, except as may be otherwise stated
therein. The summaries of the Financial Statements and the other
financial, statistical and related notes set forth in the Registration
Statement and the Prospectus are (i) accurate and correct and fairly
present the information purported to be shown thereby as of the dates
and for the periods indicated on a basis consistent with the audited
financial statements of the Company and (ii) in compliance in all
material respects with the requirements of the 1933 Act and the Rules
and Regulations. The Financial Statements are based upon and
consistent with the financial statements and other reports filed by the
Company with the SEC, except for inconsistencies attributable solely to
differences between GAAP and regulatory accounting principles.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and at any Closing
Date, except as is otherwise disclosed in the Registration Statement or
Prospectus, there has not been:
(i) any change in the capital stock or long-term debt (including
any capitalized lease obligation), or increase in the short-term debt
of the Company;
(ii) any issuance of options, warrants, convertible securities
or other rights to purchase the capital stock of the Company (except
as contemplated by the Company's option plan);
(iii) any adverse change, or any development involving a
material adverse change, in or affecting the business, business
prospects, properties, assets, patents or patent applications
(including those of the Company, REF and those relating to devices
or technologies licensed to the Company or REF which are material to
its
6
business), management, financial position, stockholders' equity,
results of operations or general condition of the Company or REF;
(iv) any material transaction entered into by the Company or
REF;
(v) any material obligation, direct or contingent, incurred by
the Company or REF, except obligations incurred in the ordinary course
of business that, in the aggregate, are not material; or
(vi) any dividend or distribution of any kind declared, paid or
made on the Company's capital stock.
(l) Except as is otherwise disclosed in the Registration Statement
or Prospectus, the Company and REF have good and marketable title to
all of the property, real and personal, described in the Registration
Statement or Prospectus as being owned by the Company and REF, free and
clear of all liens, encumbrances, equities, charges or claims, except
as do not materially interfere with the uses made and to be made by the
Company or REF of such property or as disclosed in the Financial
Statements. Except as is otherwise disclosed in the Registration
Statement or Prospectus, the Company and REF have valid and binding
leases to the real and personal property described in the Registration
Statement or Prospectus as being under lease to the Company or REF,
except as to those leases which are not material to the Company or REF
or the lack of enforceability of which would not materially interfere
with the use made and to be made by the Company and REF of such leased
property.
(m) The Company and REF have filed all necessary federal, state
and provincial income and franchise tax returns and paid all taxes
shown as due thereon. The Company and REF are not in default in the
payment of any taxes and have no knowledge of any tax deficiency which
might be asserted against the Company or REF which would materially and
adversely affect the Company's or REF's business or properties.
(n) No labor disturbance by the employees of the Company or REF
exists or is imminent which could reasonably be expected to have a
material adverse effect on the conduct of the business, operations,
financial condition or income of the Company or REF.
(o) Except as disclosed in the Prospectus:
(i) The Company and REF own or possess the unrestricted rights
to use all patents, copyrights, trademarks, trade secrets and
proprietary rights or information necessary for the development,
manufacture, operation and sale of all products and services sold
or proposed to be sold by the Company or REF and for the conduct
of their present or intended business as described in the
Prospectus. There are no pending legal, governmental or
administrative proceedings relating to patents, copyrights,
trademarks or proprietary rights or information to which the
Company or REF are a party or to which any property of the Company
or REF are subject and no such proceedings are, to the best of the
Company's knowledge, threatened or contemplated against the
Company or REF by any governmental agency or authority or others.
The Company or REF have not received any notice of conflict with
7
asserted rights of others. Neither the Company nor REF are using any
confidential information or trade secrets of any third party
without such party's consent.
(ii) Neither the Company nor REF infringe upon the right of
any person under or with respect to any of the intangible rights
listed in the preceding subsection. Neither the Company nor REF
are obligated or under any liability whatsoever to make any
payments by way of royalties, fees or otherwise to any owner of,
licensor of, or other claimant to, any patent, trademark, trade
name, copyright or other intangible asset, with respect to the use
thereof or in connection with the conduct of its business or
otherwise, except as disclosed in the Prospectus.
(p) The Company intends to apply the proceeds from the sale of the
Shares by it to the purposes and substantially in the manner set forth
in the Prospectus.
(q) Neither the Company nor REF have a defined benefit pension
plan or other pension benefit plan which is intended to comply with the
provisions of the Employee Retirement Income Security Act of 1974 as
amended from time to time, except as disclosed in the Registration
Statement.
(r) To the best of the Company's knowledge, no person is entitled,
directly or indirectly, to compensation from the Company, REF or the
Underwriters for services as a finder in connection with the
transactions contemplated by this Agreement.
(s) The conditions for use of a Registration Statement on Form S-2
for the distribution of the Shares have been satisfied with respect to
the Company.
(t) The Company has not taken and will not take, directly or
indirectly, any action (and does not know of any action by its
directors, officers, stockholders, or others) which has constituted or
is designed to, or which might reasonably be expected to, cause or
result in stabilization or manipulation, as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act") or otherwise, of the
price of any security of the Company to facilitate the sale or resale
of the Shares.
(u) The Company has not sold any securities in violation of
Section 5(a) of the 1933 Act.
(v) Each of the Company and REF maintain insurance, which is in
full force and effect, of the types and in the amounts adequate for
their business and in line with the insurance maintained by similar
companies and businesses.
(w) The Company hereby represents that, as of the date hereof, it
has complied with all provisions of Section 517.075, Florida Statutes
and Rule 3E-900-001 of the Rules of the Florida Department of Banking
and Finance, Division of Securities, copies of which are attached
hereto.
(x) Each of the Company and REF maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in
8
accordance with management's general or specific authorizations and (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP.
(y) All material transactions between the Company and its
stockholders who beneficially own more than 5% of any class of the
Company's voting securities have been accurately disclosed in the
Prospectus, and the terms of each such transaction are fair to the
Company and no less favorable to the Company than the terms that could
have been obtained from unrelated parties.
(z) The Company has obtained a written agreement from each of the
officers and directors of the Company, that for 180 days following the
Effective Date, such person will not, without the Representative's
prior written consent, sell, transfer or otherwise dispose of, or agree
to sell, transfer, or otherwise dispose of, any of his or her shares of
Common Stock or any options, warrants or rights to purchase Common
Stock, beneficially held by such persons during such 180 day period
other than by gift to donees who agree to be bound by the same
restriction or by will or the laws of descent. Additionally, the
Company has obtained a written agreement from Sandra J. Biermeier, that
for 90 days following the Effective Date, she will not, without the
Representative's prior written consent, sell, transfer or otherwise
dispose of, or agree to sell, transfer, or otherwise dispose of, any of
her shares of Common Stock or any options, warrants or rights to
purchase Common Stock, beneficially held by her during such 90 day
period other than by gift to donees who agree to be bound by the same
restriction or by will or the laws of descent.
(aa) The Common Stock of the Company has been approved for trading
on the Nasdaq National Market-SM- following effectiveness of the
Registration Statement.
(bb) The Company has timely filed all documents and amendments to
previously filed documents required to be filed by it pursuant to the
1934 Act and the rules and regulations of the SEC thereunder. Each
such document conformed in all material respects with the requirements
of the 1934 Act and contained all information required to be stated
therein in accordance with the 1934 Act. No part of any such document
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. True copies of each of the
documents incorporated by reference, if any, into each Preliminary
Prospectus and the Prospectus have been delivered by the Company to the
Representative. To the best of the Company's knowledge, the executive
officers and directors of the Company and stockholders who hold more
than 5% of the Company's outstanding Common Stock, have made, and are
current with, all filings, if any, that are required under the 1934 Act.
2. PURCHASE, SALE, DELIVERY AND PAYMENT.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to each of the Underwriters,
and the Underwriters agree, severally and not jointly, to purchase from
the Company, at $_____________ per Share (net of underwriting discounts
and commissions of $______ per Share) the respective amount of Firm
Shares set
9
forth opposite such Underwriter's name in Schedule I hereto. The
Underwriters will collectively purchase all of the Firm Shares if any
are purchased.
(b) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth,
the Company hereby grants an option to the Underwriters to purchase an
aggregate of the Option Shares at the same purchase price as the Firm
Shares for use solely in covering any overallotments made by the
Underwriters in the sale and distribution of the Firm Shares. The
option granted hereunder may be exercised at any time (but not more
than once) within 45 days after the Effective Date (as defined in
Section 4(a) hereof) upon notice (confirmed in writing) by the
Representative to the Company setting forth the aggregate number of
Option Shares as to which the Underwriters are exercising the option
and the date on which certificates for such Option Shares are to be
delivered. The option granted hereby may be canceled by the
Representative as to the Option Shares for which the option is
unexercised at any time prior to the expiration of the 45-day period
upon notice to the Company.
(c) The Company will deliver the Firm Shares to the Representative
at the offices of Moss & Barnett, a Professional Association, unless
some other place is agreed upon, at 10:00 A.M., Minneapolis time,
against payment of the purchase price at the same place, on the third
full business day after trading the Shares has commenced (but not more
than ten full business days after the date the Registration Statement
is declared effective), or such earlier time as may be agreed upon
between the Representative and the Company. Such time and place is
herein referred to as the "First Closing Date."
(d) The Company will deliver the Option Shares being purchased by
the Underwriters to the Representative at the offices of Moss &
Barnett, a Professional Association, set forth in Section 2(c) above,
unless some other place is agreed upon, at 10:00 A.M., Minneapolis
time, against payment of the purchase price at the same place, on the
date determined by the Representative and of which the Company has
received notice as provided in Section 2(b), which shall not be earlier
than one nor later than three full business days after the exercise of
the option as set forth in Section 2(b), or at such other time not
later than ten full business days thereafter as may be agreed upon by
the Representative and the Company, such time and date being herein
referred to as the "Second Closing Date." The First and Second Closing
Dates are collectively referred to herein as the "Closing Date."
(e) Certificates for the Shares to be delivered will be registered
in such names and issued in such denominations as the Underwriters
shall request of the Company at least two full business days prior to
the First Closing Date or the Second Closing Date, as the case may be.
The certificates will be made available to the Underwriters in
definitive form for the purpose of inspection and packaging at least 24
hours prior to each respective Closing Date.
(f) Payment for the Shares shall be made, against delivery to the
Representative or its designated agent, of certificates for the Shares
by wire transfer to a designated account of the Company.
(g) The Underwriters will make a public offering of the Shares
directly to the public (which may include selected dealers who are
members in good standing with the
10
NASD or foreign dealers not eligible for membership in the NASD but who
have agreed to abide by the interpretation of the NASD's Board of
Governor's with respect to free-riding and withholding) as soon as the
Underwriter deems practicable after the Registration Statement becomes
effective at the Price to Public set forth in Section 2(a) above,
subject to the terms and conditions of this Agreement and in accordance
with the Prospectus. Such concessions from the public offering price
may be allowed selected dealers of the NASD as the Underwriter
determines, and the Underwriters will furnish the Company with such
information about the distribution arrangements as may be necessary for
inclusion in the Registration Statement. It is understood that the
public offering price and concessions may vary after the initial public
offering. The Underwriters shall offer and sell the Shares only in
jurisdictions in which the offering of Shares has been duly registered
or qualified, or is exempt from registration or qualification, and
shall take reasonable measures to effect compliance with applicable
state and local securities laws.
(h) On the First Closing Date, the Company shall issue and deliver
to the Representative the Representative's Warrants against payment by
the Representative of the purchase price therefor of $50.
(i) It is understood that the Representative, individually and not
as a Representative, may (but shall not be obligated to) make payment
on behalf of any Underwriter or Underwriters for the Shares to be
purchased by such Underwriter or Underwriters. No such payment by the
Representative shall relieve such Underwriter or Underwriters from any
of its or their other obligations hereunder.
3. FURTHER AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees with each of the Underwriters as follows:
(a) If the Registration Statement has not become effective prior
to the date hereof, the Company will use its best efforts to cause the
Registration Statement and any subsequent amendments thereto to become
effective as promptly as possible. The Company will notify the
Representative promptly, after the Company shall receive notice
thereof, of the time when the Registration Statement, or any subsequent
amendment thereto, has become effective or any supplement to the
Prospectus has been filed. Following the execution and delivery of
this Agreement, the Company will prepare, and timely file or transmit
for filing with the SEC in accordance with Rules 430A, 424(b) and 434,
as applicable, copies of the Prospectus, or, if necessary, a
post-effective amendment to the Registration Statement (including the
Prospectus ), in which event, the Company will take all necessary
action to have such post-effective amendment declared effective as soon
as possible. The Company will notify the Representative promptly upon
the Company's obtaining knowledge of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement
or of the initiation or threat of any proceedings for that purpose and
will use its best efforts to prevent the issuance of any stop order
and, if a stop order is issued, to obtain as soon as possible the
withdrawal or lifting thereof. The Company will promptly prepare and
file at its own expense with the SEC any amendments of, or supplements
to, the Registration Statement or the Prospectus which may be necessary
in connection with the distribution of the Shares by the Underwriters.
During the period when a Prospectus relating to the Shares is required
to be delivered under the 1933 Act, the Company will promptly file
11
any amendments of, or supplements to, the Registration Statement or the
Prospectus which may be necessary to correct any untrue statement of a
material fact or any omission to state any material fact necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company will notify the
Representative promptly of the receipt of any comments from the SEC
regarding the Registration Statement or Prospectus or request by the
SEC for any amendment thereof or supplement thereto or for any
additional information. The Company will not file any amendment of, or
supplement to, the Registration Statement or Prospectus, whether prior
to or after the Effective Date, which shall not previously have been
submitted to the Representative and its counsel a reasonable time prior
to the proposed filing or to which the Representative shall have
reasonably objected.
(b) The Company has used and will continue to use its best efforts
to register or qualify the Shares for sale under the securities laws of
such jurisdictions as the Representative may designate and the Company
will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or
qualification. In each jurisdiction in which the Shares shall have
been registered or qualified as above provided, the Company will
continue such registrations or qualifications in effect for so long as
may be required for purposes of the distribution of the Shares;
provided, however, that in no event shall the Company be obligated to
qualify to do business as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action which would
subject it to the service of process in suits, other than those arising
out of the offering or sale of the Shares in any jurisdiction where it
is not now so subject. In each jurisdiction where any of the Shares
shall have been so qualified, the Company will file such statements and
reports as are or may be reasonably required by the laws of such
jurisdiction to continue such qualification in effect. The Company
will notify the Representative immediately of, and confirm in writing,
the suspension of qualification of the Shares or the threat of such
action in any jurisdiction. The Company will use its best efforts to
qualify or register its Common Stock for sale in nonissuer transactions
under (or obtain exemptions from the application of) the securities
laws of such states designated by the Representative (and thereby
permit market-making transactions and secondary trading in its Common
Stock in such states), and will comply with such securities laws and
will continue such qualifications, registrations and exemptions in
effect for a period of five years after the date hereof.
(c) The Company will furnish to the Representative, as soon as
available, copies of the Registration Statement (one of which will be
signed and which shall include all exhibits), each Preliminary
Prospectus, the Prospectus and any amendments or supplements to such
documents, including any prospectus prepared to permit compliance with
Section 10(a)(3) of the 1933 Act, all in such quantities as the
Representative may from time to time reasonably request prior to the
printing of each such document. The Company specifically authorizes
the Underwriters and all dealers to whom any of the Shares may be sold
by the Underwriters to use and distribute copies of such Preliminary
Prospectuses and Prospectuses in connection with the sale of the Shares
as and to the extent permitted by the federal and applicable state and
local securities laws.
12
(d) For as long as the Company has more than 100 beneficial
owners, but in no event more than five years after the Effective Date,
the Company will mail as soon as practicable to the holders of its
Common Stock substantially the following documents, which documents
shall be in compliance with this Section if they are in the form
prescribed by the 1934 Act:
(i) within forty-five days after the end of the first three quarters
of each fiscal year, copies of the quarterly unaudited statement of
profit and loss and quarterly unaudited balance sheets of the Company
and any material subsidiaries; and
(ii) within ninety days after the close of each fiscal year,
appropriate financial statements as of the close of such fiscal year
for the Company and any material Subsidiaries which shall be certified
to by a nationally recognized firm of independent certified public
accountants in such form as to disclose the Company's financial
condition and the results of its operations for such fiscal year.
(e) For as long as the Company has more than 100 beneficial
owners, but in no event more than five years after the Effective Date,
the Company will furnish to the Representative (i) concurrently with
furnishing such reports to its stockholders, the reports described in
Section 3(d) hereof; (ii) as soon as they are available, copies of all
other reports (financial or otherwise) mailed to security holders; and
(iii) as soon as they are available, copies of all reports and
financial statements furnished to, or filed with, the SEC, the NASD,
any securities exchange or any state securities commission by the
Company. During such period, the foregoing financial statements shall be
on a consolidated basis to the extent that the accounts of the Company and
any subsidiary or subsidiaries are consolidated and shall be accompanied
by similar financial statements for any significant Subsidiaries which is
not so consolidated.
(f) The Company will not, without the prior written consent of the
Representative, which consent shall not be unreasonably withheld, sell
or otherwise dispose of any capital stock or securities convertible or
exercisable into capital stock of the Company (other than pursuant to
currently outstanding options and warrants) during the 180-day period
following the Effective Date. Prior to the Closing Date, the Company
will not repurchase or otherwise acquire any of its capital stock or
declare or pay any dividend or make any distribution on any class of
its capital stock.
(g) Subject to the proviso set forth below, the Company shall be
responsible for and pay all costs and expenses incident to the
performance of its obligations under this Agreement including, without
limiting the generality of the foregoing, (i) all costs and expenses in
connection with the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits),
Preliminary Prospectuses and the Prospectus and any amendments thereof
or supplements to any of the foregoing; (ii) the issuance and delivery
of the Shares, including taxes, if any; (iii) the cost of all
certificates representing the Shares; (iv) the fees and expenses of the
transfer agent for the Shares; (v) the fees and disbursements of
counsel for the Company; (vi) all fees and other charges of the
independent public accountants of the Company; (vii) the cost of
furnishing and delivering to the Underwriters and dealers participating
in the offering copies of the Registration Statement
13
(including appropriate exhibits), Preliminary Prospectuses, the Prospectus
and any amendments of, or supplements to, any of the foregoing; (viii)
the NASD filing and quotation fees; (ix) the fees and disbursements,
including filing fees and all accountable fees and expenses of counsel
for the Company incurred in registering or qualifying the Shares for
sale under the laws of such jurisdictions upon which the Representative
and the Company may agree; and (x) a non-accountable expense allowance
to the Representative equal to 2.25% of the gross proceeds of the
Offering. The Representative hereby acknowledge receipt of a $10,000
advance against the Representative's non-accountable expense allowance
referred to in the preceding sentence. In the event this Agreement is
terminated pursuant to Section 8 below, the Company shall remain
obligated to pay the Representative its actual accountable
out-of-pocket expenses, not to exceed $20,000. Further, if upon
termination of this Agreement pursuant to Section 8 below, the
Representative's actual accountable out-of-pocket expenses do not
exceed the $10,000 advance against the Representative's non-accountable
expense allowance, the portion of the advance not used will be
reimbursed to the Company by the Representative.
(h) The Company will not take, and will use its best efforts to
cause each of its officers and directors not to take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Shares.
(i) The Company will use its best efforts to maintain the
quotation of its Common Stock on the Nasdaq SmallCap Market-SM-.
(j) For a period of at least three years after the Effective Date,
the Company will file with the SEC all reports and other documents as
may be required by the 1933 Act, the Rules and Regulations and the 1934
Act.
(k) The Company will apply the proceeds from the sale of the
Shares substantially in the manner set forth in the Prospectus.
(l) Prior to or as of the First Closing Date, the Company shall
have performed each condition to closing required to be performed by it
pursuant to Section 4 hereof.
(m) Other than as permitted by the 1933 Act and the Rules and
Regulations, the Company will not distribute any prospectus or other
offering material in connection with the Offering.
(n) On First Closing Date, the Company shall sell to the
Representative for $50 the Representative's Warrants, in substantially
the form attached as Appendix B hereto.
(o) The Company will use its best efforts to consummate the
acquisition of REF as described in the Prospectus and the REF Agreement.
4. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The respective
obligations of the Underwriters to purchase and pay for the Shares as
provided herein shall be subject to the accuracy of the representations and
warranties of the Company, in the case of the Firm Shares as of the date
14
hereof and the First Closing Date (as if made on and as of the First Closing
Date) and in the case of the Option Shares, as of the date hereof and the
Second Closing Date (as if made on and as of the Second Closing Date), to the
performance by the Company of its obligations hereunder, and to the
satisfaction of the following additional conditions on or before the First
Closing Date in the case of the Firm Shares and on or before the Second
Closing Date in the case of the Option Shares:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M. Minneapolis time, on the first full business day
following the date of this Agreement, or such later date as shall be
consented to in writing by the Representative (the "Effective Date"). If
the Company has elected to rely upon Rule 430A, the information concerning
the price of the Shares and price-related information previously omitted
from the effective Registration Statement pursuant to Rule 430A shall have
been transmitted to the SEC for filing pursuant to Rule 424(b) within the
prescribed time period, and prior to the Closing Date the Company shall
have provided evidence satisfactory to the Representative of such
timely filing (or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance
with the 1933 Act and the Rules and Regulations). No stop order
suspending the effectiveness thereof shall have been issued and no
proceeding for that purpose shall have been initiated or, to the
knowledge of the Company or the Representative, threatened by the SEC
or any state securities commission or similar regulatory body. Any
request of the SEC for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the satisfaction of the Underwriters and their legal
counsel. The NASD, upon review of the terms of the Offering, shall not
have objected to the terms of the Underwriters' participation in the
Offering.
(b) The Representative shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, contains any untrue statement of a fact which is
material or omits to state a fact which is material and is required to
be stated therein or is necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this Section 4(b) shall not apply to
statements in, or omissions from, the Registration Statement or
Prospectus , or any amendment thereof or supplement thereto, which are
based upon and conform to written information furnished to the Company
by the Underwriters specifically for use in the preparation of the
Registration Statement or the Prospectus, or any such amendment or
supplement.
(c) Subsequent to the date as of which information is given the
Registration Statement and Prospectus, there shall not have occurred
any change, or any development involving a prospective change, which
materially and adversely affects the business or properties of the
Company or REF and which, in the reasonable opinion of the
Representative, materially and adversely affects the market for the
Shares.
(d) The Representative shall have received the opinion of Moss &
Barnett, a Professional Association, counsel for the Company, dated as
of such respective Closing Date and satisfactory in form and substance
to the Representative and its counsel, to the effect that:
15
(i) The Company and REF have been duly incorporated and are
validly existing in good standing under the laws of the jurisdiction
of their organization with the requisite corporate power to own, lease
and operate their properties and conduct their businesses as described
in the Prospectus; and are duly qualified to do business as a foreign
corporation in good standing in all jurisdictions where the ownership
or leasing of their properties or the conduct of its business requires
such qualification and in which the failure to be so qualified or in
good standing would have a material adverse effect on their
businesses.
(ii) The number of authorized and, to the best of such counsel's
knowledge, the number of issued and outstanding shares of capital
stock of the Company are as set forth in the Prospectus and all such
capital stock has been duly authorized and is validly issued, fully
paid and nonassessable. Upon delivery of and payment for the Shares
hereunder, the Underwriters will acquire the Shares free and clear of
all liens, encumbrances or claims other than those created by the
Underwriters. To the best of such counsel's knowledge, no preemptive
rights, contractual or otherwise, of securities holders of the Company
exist with respect to the issuance or sale of the Shares by the
Company pursuant to this Agreement or the issuance of the Warrant
Shares upon exercise of the Representative's Warrants. To the best of
such counsel's knowledge, no rights to require registration of shares
of Common Stock or other securities of the Company exist which may be
exercised in connection with the filing of the Registration Statement.
The Shares, Representative's Warrants and Warrant Shares conform as to
matters of law in all material respects to the description of these
securities made in the Prospectus and such description accurately sets
forth the material legal provisions thereof required to be set forth
in the Prospectus.
(iii) The Shares have been duly authorized and, upon delivery
to the Underwriters against payment therefor, will be validly issued,
fully paid and nonassessable.
(iv) The certificates evidencing the Shares comply as to form
with the applicable provisions of the laws of the State of Minnesota.
(v) The Representative's Warrants have been duly authorized,
executed and delivered by the Company and are the valid and binding
obligations of the Company, enforceable in accordance with their
terms, except as enforceability may be limited by the application of
bankruptcy, insolvency, moratorium, or other laws of general
application affecting the rights of creditors generally and by
judicial limitations on the right of specific performance and other
equitable remedies, and except as the enforceability of
indemnification or contribution provisions hereof may be limited by
federal or state securities laws. The Warrant Shares when issued in
accordance with the terms of this Agreement and pursuant to the
Representative's Warrants will be validly issued, fully paid and
nonassessable. A sufficient number of shares of Common Stock has been
reserved for issuance upon exercise of the Representative's Warrants.
16
(vi) The Registration Statement has become and is effective under
the 1933 Act, the Prospectus has been filed as required by Rule
424(b), if necessary and, to the best knowledge of such counsel, no
stop orders suspending the effectiveness of the Registration Statement
have been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.
(vii) To the best of such counsel's knowledge, there are no
material legal or governmental proceedings of a character required by
the 1933 Act and the Rules and Regulations to be described or referred
to in the Registration Statement or Prospectus that are not described
or referred to therein. All pending legal or governmental
proceedings, if any, to which the Company or REF is a party or to
which any of its property is subject which are not described in the
Registration Statement and the Prospectus, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate, not material to the Company or REF.
(viii) No authorization, approval or consent of any governmental
authority or agency is necessary in connection with the issuance and
sale of the Shares as contemplated under this Agreement, except such
as may be required and obtained under the 1933 Act or under state or
other securities laws in connection with the purchase and distribution
of the Shares by the Underwriters.
(ix) The Registration Statement, when it became effective, the
Prospectus and any amendments thereof or supplements thereto, (other
than the financial statements and supporting financial and statistical
data included or incorporated therein, as to which such counsel need
express no opinion) on the date of filing or the date thereof,
complied as to form in all material respects with the requirements of
the 1933 Act and the Rules and Regulations.
(x) This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as enforceability may
be limited by the application of bankruptcy, insolvency, moratorium or
similar laws affecting the rights of creditors generally and judicial
limitations on the right of specific performance and except as the
enforceability of indemnification or contribution provisions hereof
may be limited by federal or state securities laws.
(xi) The REF Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of the Company and
REF, enforceable in accordance with its terms, except as
enforceability may be limited by the application of bankruptcy,
insolvency, moratorium or similar laws affecting the rights of
creditors generally and judicial limitations on the right of specific
performance and except as the enforceability of indemnification or
contribution provisions hereof may be limited by federal or state
securities laws.
(xii) To the best of such counsel's knowledge, the execution,
delivery and performance of this Agreement, the REF Agreement and the
consummation of the transactions described therein will not result in
a violation of, or a default under, the
17
terms or provisions of (A) any material bond, debenture, note,
contract, lease, license, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the
Company or REF is a party or by which the Company, REF or any of its
properties are bound, or (B) any material law, order, rule,
regulation, writ, injunction, or decree known to such counsel of any
government, governmental agency or court having jurisdiction over the
Company or any of its properties.
(xiii) To the best of such counsel's knowledge, except as
described in the Prospectus, there are no United States patents of
third parties which are infringed by the manufacture, use or sale of
the products or processes currently made, used or sold by the Company
or REF.
(xiv) To the best of such counsel's knowledge, and except as
stated below, there are no legal, governmental or administrative
proceedings pending or threatened against the Company or REF that
relate to patents, trademarks or other intellectual property, except
for pending or proposed United States and foreign patent applications.
(xv) To the best of such counsel's knowledge, after due inquiry,
neither the Company nor REF has received any notice of conflict with
the asserted rights of others in respect of any trademarks, service
marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses, inventions, trade secrets,
patents, patent applications, know-how, or similar rights, nor of any
threatened actions with respect thereto, which, if determined
adversely to the Company or REF, would individually or in the
aggregate have a material adverse effect on the general affairs,
financial position, net worth or results of operations of the Company
or REF.
(xvi) To the best of such counsel's knowledge, after due
inquiry, the Company and REF own, possess or are licensed under all
such material trademarks, trademark applications, trademark
registrations, service marks, service mark registrations, copyrights,
patents, patent applications and licenses as are described in the
Prospectus and which are necessary for the Company's and REF's present
or planned future business as described in the Prospectus.
In expressing the foregoing opinion, as to matters of fact relevant to
conclusions of law, counsel may rely, to the extent that they deem proper, upon
certificates of public officials and of the officers of the Company, provided
that copies of such officers' certificates are attached to the opinion.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that, although such counsel cannot
guarantee the accuracy, completeness or fairness of any of the statements
contained in the Registration Statement, Prospectus, or any amendment thereof
or supplement thereto in connection with such counsel's representation,
investigation and due inquiry of the Company in the preparation of the
Registration Statement, Prospectus and any amendment thereof or supplement
thereto, nothing has come to the attention of such counsel which causes them
18
to believe that the Registration Statement, Prospectus, or any amendment
thereof or supplement thereto (other than the financial statements and
supporting financial and statistical data included or incorporated
therein, as to which such counsel need express no opinion) contains an
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, in light of the circumstances in which they were made, not
misleading; provided, however, that such opinion of counsel does not
require any statement concerning statements in, or omissions from, the
Registration Statement, Prospectus, or any amendment thereof or
supplement thereto, which are based upon and conform to written
information furnished to the Company by the Underwriters specifically
for use in the preparation of the Registration Statement, Prospectus,
or any such amendment or supplement.
(e) The Representative shall have received from Fredrikson &
Byron, P.A., its counsel, such opinion or opinions as the
Representative may reasonably require, dated as of each closing date
and satisfactory in form and substance to the Representative, with
respect to the sufficiency of corporate proceedings and other legal
matters relating to this Agreement and the transactions contemplated
hereby, and the Company shall have furnished to said counsel such
documents as they may have requested for the purpose of enabling them
to pass upon such matters. In connection with such opinion, as to
matters of fact relevant to conclusions of law, such counsel may rely,
to the extent that they deem proper, upon representations or
certificates of public officials and of responsible officers of the
Company.
(f) The Representative and the Company shall have received
letters, dated the date hereof and as of each closing date, from Price
Waterhouse, LLP, independent public accountants, substantially similar
to the form set forth in Appendix A hereto.
(g) The Representative shall have received from the Company a
certificate, dated as of each closing date, of the principal executive
officer and the principal financial or accounting officer of the
Company to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct as if made on and as of each closing
date. The Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at, or
prior to, such date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or is pending or to the best knowledge of
such officers contemplated under the 1933 Act.
(iii) Neither the Registration Statement nor the Prospectus nor
any amendment thereof or supplement thereto included any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented prospectus which has not been so set forth;
provided, however, that such certificate does not require any
representation concerning statements in, or omissions from, the
Registration Statement or Prospectus, or any amendment thereof or
supplement
19
thereto, which are based upon and conform to written information
furnished to the Company by any of the Underwriters specifically for
use in the preparation of the Registration Statement or the
Prospectus, or any such amendment or supplement.
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as contemplated or referred to in the Prospectus, no event has
occurred that should have been set forth in an amendment or supplement
to Registration Statement or the Prospectus which has not been so set
forth and the Company has not incurred any direct or contingent
liabilities or obligations material to the Company, or entered into
any material transactions, except liabilities, obligations or
transactions in the ordinary course of business, and there has not
been any change in the capital stock or long-term debt of the Company,
(including any capitalized lease obligations), any material increase
in the short-term debt of the Company, any material adverse change in
the financial position, net worth or results of operations of the
Company or declaration or payment of any dividend.
(v) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, the Company
has not sustained any material loss of, or damage to, its properties,
whether or not insured.
(vi) Except as is otherwise expressly stated in the Registration
Statement and Prospectus, there are no material actions, suits or
proceedings pending before any court or governmental agency, authority
or body, or, to the best of their knowledge, threatened, to which the
Company is a party or of which the business or property of the Company
is the subject.
(vii) The transactions contemplated by the REF Agreement have
been consummated.
(h) The Representative shall have received, dated as of each
closing date, from the Secretary of the Company a certificate of
incumbency certifying the names, titles and signatures of the officers
authorized to execute the resolutions of the Board of Directors of the
Company authorizing and approving the execution, delivery and
performance of this Agreement, a copy of such resolutions to be
attached to such certificate, certifying that such resolutions and the
Articles of Incorporation of the Company and the Bylaws of the Company
have been validly adopted and have not been amended or modified.
(i) The Representative shall have received, dated as of each
closing, from Chappell, Bushell, Stewart, counsel for REF and certain
shareholders of REF, Harris & Harris, counsel for certain shareholders
of REF, and Popham Haik Schnobrich & Kaufman, Ltd., special counsel to
the Company, opinions addressed to the Representative as the
representative of the Underwriters in the form attached as Exhibits
D-1, D-2 and E to the REF Agreement.
(j) The Representative shall have received a written agreement
from each of the officers and directors of the Company, that for 180
days following the Effective Date, such person will not, without the
Representative's prior written consent, sell, transfer or otherwise
20
dispose of, or agree to sell, transfer or otherwise dispose of, other than
by gift to donees who agree to be bound by the same restriction or by will
or the laws of descent, any of his or her Common Stock, or any options,
warrants or rights to purchase Common Stock or any shares of Common Stock
received upon exercise of any options, warrants or rights to purchase
Common Stock, all of which are beneficially held by such persons during
the 180 day period. Additionally, the Representative shall have received a
written agreement from Sandra J. Biermeier, that for 90 days following the
Effective Date, she will not, without the Representative's prior written
consent, sell, transfer or otherwise dispose of, other than by gift to
donees who agree to be bound by the same restriction or by will or the
laws of descent, any shares of Common Stock received upon exercise of any
options, warrants or rights to purchase Common Stock, all of which are
beneficially held by her during the 90 day period.
(k) The Company shall not have failed to have performed any of its
agreements herein contained and required to be performed by it at or
prior to the First Closing Date or the Second Closing Date, as the case
may be. The Representative may waive in writing the performance of any
one or more of the conditions specified in this Section 4 or extend the
time for their performance.
(l) The Shares shall have been registered or qualified for sale or
exempt from such registration or qualification under the securities
laws of such jurisdictions as designated by the Representative such
qualifications or exemptions shall continue in effect to and including
the First Closing Date or the Second Closing Date, as the case may be.
(m) The transactions contemplated by the REF Agreement shall have
occurred simultaneously with the First Closing Date.
(n) The Company shall have furnished to the Representative, dated
as of the date of each Closing Date, such further certificates and
documents as the Representative shall have reasonably required.
(o) All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory to the Representative and its legal counsel. All
statements contained in any certificate, letter, or other document
delivered pursuant hereto by, or on behalf of, the Company shall be
deemed to constitute representations and warranties of the Company.
(p) The Representative may waive in writing the performance of any
one or more of the conditions specified in this Section 4 or extend the
time for their performance.
(q) If any of the conditions specified in this Section 4 shall not
have been fulfilled when and as required by this Agreement to be
fulfilled, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, each Closing
Date by the Representative. Any such cancellation shall be without
liability of the Underwriters to the Company and shall not relieve the
Company of its obligations under Section 3(g)
21
hereof. Notice of such cancellation shall be given to the Company at the
address specified in Section 11 hereof in writing, or by telegraph or
telephone confirmed in writing.
5. REPRESENTATIVE'S WARRANTS. On the First Closing Date, the Company
shall sell to the Representative for $50 the Representative's Warrants, which
shall first become exercisable one year after the Effective Date and shall
remain exercisable for a period of four years thereafter. The Representative's
Warrants shall be subject to certain transfer restrictions and shall be in
substantially the form filed as an exhibit to the Registration Statement and
attached as Appendix B hereto.
6. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act against any losses,
claims, damages or liabilities, joint or several, to which such
Underwriter or each such controlling person may become subject, under
the 1933 Act, the 1934 Act, the common law or otherwise, insofar as
such losses, claims, damages or liabilities (or judicial or
governmental actions or proceedings in respect thereof) arise out of,
or are based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any
amendment thereof, or the omission or alleged omission to state in the
Registration Statement or any amendment thereof a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; (ii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus if used prior to
the Effective Date of the Registration Statement or in the Prospectus
(as amended or as supplemented, if the Company shall have filed with
the SEC any amendment thereof or supplement thereto), or the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
or (iii) any untrue statement or alleged untrue statement of a material
fact contained in any application or other statement executed by the
Company or based upon written information furnished by the Company
filed in any jurisdiction in order to qualify the Shares under, or
exempt the Shares or the sale thereof from qualification under, the
securities laws of such jurisdiction, or the omission or alleged omission
to state in such application or statement a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and the
Company will reimburse each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such
Underwriter or controlling person (subject to the limitation set forth
in Section 6(c) hereof) in connection with investigating or defending
against any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of, or
is based upon, an untrue statement, or alleged untrue statement,
omission or alleged omission, made in reliance upon and in conformity
with written information furnished to the Company by, or on behalf of,
any Underwriter specifically for use in the preparation of the
Registration Statement or any such post effective amendment thereof,
any such Preliminary Prospectus or the Prospectus or any such amendment
thereof or supplement thereto, or in any application or other statement
executed by the Company or any Underwriter filed in any jurisdiction in
order to qualify the Shares under, or exempt the
22
Shares or the sale thereof from qualification under, the securities laws
of such jurisdiction; and provided further that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to
any untrue statement, alleged untrue statement, omission or alleged
omission made in any Preliminary Prospectus but eliminated or remedied
in the Prospectus, such indemnity agreement shall not inure to the
benefit of any Underwriter if the person asserting any loss, claim,
damage or liability purchased the Shares from such Underwriter which
are the subject thereof (or to the benefit of any person who controls
such Underwriter), if a copy of the Prospectus was not sent or
given to such person with, or prior to, the written confirmation of the
sale of such Shares to such person. This indemnity agreement is in
addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally, but not jointly, agrees to
indemnify and hold harmless the Company, each of the Company's
directors, each of the Company's officers who has signed the
Registration Statement and each person who controls the Company within
the meaning of Section 15 of the 1933 Act against any losses, claims,
damages or liabilities to which the Company or any such director,
officer, or controlling person may become subject, under the 1933 Act,
the 1934 Act, the common law, or otherwise, insofar as such losses,
claims, damages, or liabilities (or judicial or governmental actions or
proceedings in respect thereof) arise out of, or are based upon, (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, or
the omission or alleged omission to state in the Registration Statement
or any amendment thereof, a material fact required to be stated therein
or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus if used prior to the Effective
Date of the Registration Statement or in the Prospectus (as amended or
as supplemented, if the Company shall have filed with the SEC any
amendment thereof or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii) any
untrue statement or alleged untrue statement of a material fact
contained in any application or other statement executed by the Company
or by any Underwriter and filed in any jurisdiction in order to qualify
the Shares under, or exempt the Shares or the sale thereof from
qualification under, the securities laws of such jurisdiction, or the
omission or alleged omission to state in such application or statement
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; in each case to the extent, but only the extent,
that such untrue statement, alleged untrue statement, omission or
alleged omission, was made in reliance upon and in conformity with
written information furnished to the Company by, or on behalf of, any
Underwriter specifically for use in the preparation of the Registration
Statement or any such post effective amendment thereof, any such
Preliminary Prospectus or the Prospectus or any such
amendment thereof or supplement thereto, or in any application or other
statement executed by the Company or by any Underwriter and filed in
any jurisdiction, to the extent that it relates to any untrue
statement, alleged untrue statement, omission or alleged omission made
in any Preliminary Prospectus but eliminated or remedied in the
Prospectus, such indemnity agreement shall not inure to the benefit of
any Underwriter if the person asserting any loss, claim, damage or
liability purchased the Shares from such Underwriter which are the
subject thereof (or to the benefit of any person who controls such
Underwriter), if a copy of the Prospectus was not sent or
23
given to such person with, or prior to, the written confirmation of the
sale of such Shares to such person; and each Underwriter will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with investigating
or defending against any such loss, claim, damage, liability or action.
This indemnity agreement is in addition to any liability which the
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 6, notify in writing the
indemnifying party of the commencement thereof. The omission so to
notify the indemnifying party will not relieve it from any liability
under this Section 6 as to the particular item for which
indemnification is then being sought, unless such omission so to notify
prejudices the indemnifying party's ability to defend such action. In
case any such action is brought against any indemnified party and the
indemnified party notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein
and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof,
with counsel who shall be reasonably satisfactory to such indemnified
party; and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under
this Section 6 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that if, in
the reasonable judgment of the indemnified party, it is advisable for
such parties and controlling persons to be represented by separate
counsel, any indemnified party shall have the right to employ separate
counsel to represent it and all other parties and their controlling
persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against
the Company or by the Company against the Underwriters hereunder, in
which event the fees and expenses of such separate counsel shall be
borne by the indemnifying party and paid as incurred. Any such
indemnifying party shall not be liable to any such indemnified party on
account of any settlement of any claim or action effected without the
prior written consent of such indemnifying party.
7. CONTRIBUTION.
(a) If the indemnification provided for in Section 6 is
unavailable under applicable law to any indemnified party in respect of
any losses, claims, damages or liabilities referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Underwriters from the
offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law,in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The Company and the
Underwriters agree that contribution determined by per capita
24
allocation (even if the Underwriters were considered a single person)
would not be equitable. The respective relative benefits received by
the Company on the one hand, and the Underwriters, on the other hand,
shall be deemed to be in the same proportion (A) in the case of the
Company, as the total price paid to the Company for the Shares by the
Underwriters (net of underwriting discount received but before
deducting expenses) bears to the aggregate public offering price of the
Shares and (B) in the case of the Underwriters, as the aggregate
underwriting discount received by them bears to the aggregate public
offering price of the Shares, in each case as reflected in the
Prospectus. The relative fault of the Company and the Underwriters
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. Notwithstanding
the provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price
at which the Shares underwritten by it were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto. The Underwriters' obligation to contribute
pursuant to this section are several and not joint. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls an Underwriter within the meaning
of the 1933 Act or the 1934 Act shall have the same rights to
contribution as such Underwriter, each person who controls the Company
within the meaning of the 1933 Act or the 1934 Act shall have the same
rights to contribution as the Company and 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.
(b) Promptly after receipt by a party to this Agreement of notice
of the commencement of any action, suit or proceeding, such person will,
if a claim for contribution in respect thereof is to be made against
another party (the "Contributing Party"), notify the Contributing Party of
the commencement thereof, but the omission so to notify the Contributing
Party will not relieve the Contributing Party from any liability which
it may have to any party other than under this Section 7, unless such
omission so to notify prejudices the indemnifying party's ability to
defend such action. Any notice given pursuant to Section 6 hereof
shall be deemed to be like notice hereunder. In case any such action,
suit or proceeding is brought against any party, and such person
notifies a Contributing Party of the commencement thereof, the
Contributing Party will be entitled to participate therein with the
notifying party and any other Contributing Party similarly notified.
8. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
25
(a) This Agreement shall become effective at _____ a.m.,
Minneapolis time, on the day on which the Underwriters release the
initial public offering of the Firm Shares for sale to the public. The
Representative shall notify the Company immediately after any action
has been taken which causes this Agreement to become effective. Until
this Agreement is effective, it may be terminated by the Company or the
Representative by giving notice as hereinafter provided, except that
the provisions of Sections 4(g), and 8 shall at all times be effective.
For purposes of this Agreement, the release of the initial public
offering of the Firm Shares for sale to the public shall be deemed to
have been made when the Underwriters release, by telegram or otherwise,
firm offers of the Firm Shares to securities dealers or release for
publication a newspaper advertisement relating to the Firm Shares,
whichever occurs first.
(b) Until the First Closing Date, this Agreement may be terminated
by the Representative, at its option, by giving notice to the Company,
if (i) the Company shall have sustained a loss by fire, flood, accident
or other calamity which is material with respect to the business of the
Company; the Company shall have become a party to material litigation, not
disclosed in the Registration Statement or the Prospectus; or the
business or financial condition of the Company shall have become the
subject of any material litigation, not disclosed in the Registration
Statement or the Prospectus; or there shall have been, since the
respective dates as of which information is given in the Registration
Statement or the Prospectus, any material adverse change in the general
affairs, business, key personnel, capitalization, financial position or
net worth of the Company, whether or not arising in the ordinary course
of business, which loss or change, in the reasonable judgment of the
Representative, shall render it inadvisable to proceed with the delivery
of the Shares, whether or not such loss shall have been insured; (ii)
trading in securities generally on the New York Stock Exchange, American
Stock Exchange, Nasdaq National Market, Nasdaq SmallCap Market-SM- or the
over-the-counter market shall have been suspended or minimum prices shall
have been established on such exchange by the SEC or by such exchanges or
markets; (iii) a general banking moratorium shall have been declared by
federal, New York or Minnesota authorities; (iv) there shall have been
such a material adverse change in general economic, monetary, political
or financial conditions, or the effect of international conditions on the
financial markets in the United States shall be such that, in the
judgment of the Representative, makes it inadvisable to proceed with
the delivery of the Shares; (v) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or
order of either of any court or other governmental authority which, in
the judgment of the Representative, materially and adversely affects or
will materially and adversely affect the business or operations of the
Company; (vi) there shall be a material outbreak of hostilities or
material escalation and deterioration in the political and military
situation between the United States and any foreign power, or a formal
declaration of war by the United States of America shall have occurred;
(vii) the Company shall have failed to comply with any of the
provisions of this Agreement on its part to be performed on or prior to
such date or if any of the conditions, agreements, representations or
warranties of the Company shall not have been fulfilled within the
respective times provided for in this Agreement. Any such termination
shall be without liability of any party to any other party, except as
provided in Sections 6 and 7 hereof; provided, however, that the
Company shall remain obligated to pay costs and expenses to the extent
provided in Section 3(g) hereof.
26
(c) If the Representative elects to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this
Section 8, it shall notify the Company promptly by telegram or
telephone, confirmed by letter sent to the address specified in Section
12 hereof. If the Company shall elect to prevent this Agreement from
becoming effective, it shall notify the Representative promptly by
telegram or telephone, confirmed by letter sent to the address
specified in Section 12 hereof.
9. DEFAULT OF UNDERWRITER. If any Underwriter or Underwriters default in
their obligation to purchase the Firm Shares hereunder and the aggregate amount
of Firm Shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total amount of Firm Shares, the
other Underwriters shall be obligated, severally, in proportion to their
respective commitments hereunder, to purchase the Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so defaults and the aggregate amount of Firm Shares
with respect to which such default or defaults occur is more than 10% of the
total number of Firm Shares and arrangements satisfactory to the Representative
and the Company for purchase of such Firm Shares by other persons (who may
include one or more of the nondefaulting Underwriters, including the
Representative) are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter or
the Company except for the provisions of Sections 6 and 7 hereof. In any such
case, either the Representative or the Company shall have the right to postpone
the Closing Date, but in no event for more than seven days, in order that any
required changes, not including a reduction in the number of Firm Shares, to the
Registration Statement and the Prospectus of any other documents or arrangements
may be effected. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 9. Nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. SURVIVAL OF INDEMNITIES, CONTRIBUTION AGREEMENTS, WARRANTIES AND
REPRESENTATIONS. The respective indemnity and contribution agreements of the
Company and the Underwriters contained in Sections 6 and 7, respectively, the
representations and warranties of the Company set forth in Section 1 hereof and
the covenants of the Company set forth in Section 3 hereof shall remain
operative and in full force and effect, regardless of any investigation made by,
or on behalf of, the s, the Company, any of its officers and directors, or any
controlling person referred to in Sections 6 and 7, and shall survive the
delivery of and payment for the Shares. The aforesaid indemnity and
contribution agreements shall also survive any termination or cancellation of
this Agreement. Any successor of any party or of any such controlling person,
or any legal representative of such controlling person, as the case may be,
shall be entitled to the benefit of the respective indemnity and contribution
agreements.
11. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and, if sent to the
Representative, shall be mailed, delivered or telegraphed and confirmed, to R.
J. Steichen & Company, 700 Midwest Plaza West, 801 Nicollet Avenue, Minneapolis,
Minnesota 55402 Attention: Patrick M. Sidders, Senior Vice President and
Managing Director, with a copy to Melodie R. Rose, Esq., Fredrikson & Byron,
P.A., 1100 International Centre, 900 Second Avenue South, Minneapolis, Minnesota
55402; or, if sent to the Company, shall be mailed, delivered or telegraphed and
confirmed, to Premis Corporation, 15301 Highway 55 West, Plymouth, Minnesota,
Attention: Fritz T. Biermeier, with a copy to Janna R.
27
Severance, Esq., Moss & Barnett, a Professional Association, 4800 Norwest
Center, 90 South Seventh Street, Minneapolis, Minnesota 55402.
12. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements relating to
the stabilization activities of the Underwriters and the statements under the
caption "Underwriting" in any Preliminary Prospectus and in the Prospectus
constitute the written information furnished by, or on behalf of, the
Underwriters specifically for use with reference to the Underwriters referred to
herein.
13. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the Underwriters and the Company, their respective successors and assigns,
and the officers, directors and controlling persons referred to in Sections 6
and 7. Nothing expressed in this Agreement is intended or shall be construed to
give any person or corporation, other than the parties hereto, their respective
successors and assigns, and the controlling persons, officers and directors
referred to in Sections 6 and 7 any legal or equitable right, remedy, or claim
under, or in respect of, this Agreement or any provision herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective executors, administrators, successors, assigns and such controlling
persons, officers and directors, and for the benefit of no other person
or corporation. No purchaser of any Shares from the Underwriters shall be
construed a successor or assign merely by reason of such purchase.
14. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
If the foregoing is in accordance with the Representative's understanding
of this agreement, kindly sign and return to the Company the enclosed
counterpart of this Agreement, whereupon it will become a binding agreement
between the Company and the Underwriters in accordance with its terms.
Very truly yours,
PREMIS CORPORATION
By
-------------------------------------------
Its
------------------------------------------
ACCEPTANCE
The foregoing Underwriting Agreement is hereby confirmed and accepted by the
undersigned for itself and as Representative of the several Underwriters
referred to in the foregoing Agreement as of the date first above written.
R.J. STEICHEN & COMPANY
28
By
----------------------------
Its
----------------------------
568948
29
SCHEDULE I
Name of Underwriter Number of Firm Shares
- ------------------- ---------------------
1. R. J. Steichen & Company. . . . . . . . . . . . .
2. [Name]. . . . . . . . . . . . . . . . . . . . . .
3. [Name]. . . . . . . . . . . . . . . . . . . . . .
4. [Name]. . . . . . . . . . . . . . . . . . . . . .
5. [Name]. . . . . . . . . . . . . . . . . . . . . .
6. [Name]. . . . . . . . . . . . . . . . . . . . . .
7. [Name]. . . . . . . . . . . . . . . . . . . . . .
8. [Name]. . . . . . . . . . . . . . . . . . . . . .
9. [Name]. . . . . . . . . . . . . . . . . . . . . .
10. [Name]. . . . . . . . . . . . . . . . . . . . . .
11. [Name]. . . . . . . . . . . . . . . . . . . . . .
12. [Name]. . . . . . . . . . . . . . . . . . . . . .
13. [Name]. . . . . . . . . . . . . . . . . . . . . .
14. [Name]. . . . . . . . . . . . . . . . . . . . . .
15. [Name]. . . . . . . . . . . . . . . . . . . . . .
----------------
TOTAL. . . . . . . . . . . . . . . . . . . .
1,750,000
----------------
----------------
568948
APPENDIX A
FORM OF COMFORT LETTER OF PRICE WATERHOUSE, LLP
(1) They are independent public accountants with respect to the Company
within the meaning of the Securities Act of 1933, as amended (the "1933 Act").
(2) In their opinion, the financial statements of the Company included in
the Registration Statement which are stated therein to have been examined by
them comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the related published rules and regulations.
(3) On the basis of specified procedures (but not an audit in accordance
with generally accepted auditing standards), including inquiries of certain
officers of the Company responsible for financial and accounting matters as to
transactions and events subsequent to the date of the financial statements
included in the Prospectus, a reading of minutes of meetings of the stockholders
and directors of the Company since the date of the financial statements included
in the Prospectus and other procedures as specified in such letter, nothing came
to their attention which caused them to believe that (a) at a specified date not
more than five days prior to the date thereof in the case of the first letter
and not more than two business days prior to the date thereof in the case of the
second and third letters, there was any change in the capital stock, long-term
debt, or short-term debt (other than normal payments) of the Company, or any
material decrease in net current assets or stockholders' equity, as compared
with amounts shown on the latest balance sheet of the Company included in the
Registration Statement; or (b) for the period from the date of such balance
sheet to a date not more than five days prior to the date thereof in the case of
the first letter and not more than two business days prior to the date thereof
in the case of the second letter, there were any material decreases in working
capital, long-term debt or total stockholders' equity, except for changes or
decreases which the Prospectus discloses, have occurred or may occur, or which
are set forth in such letter.
(4) They have carried out specified procedures, which have been agreed to
by the Representative, with respect to certain information in the Prospectus
specified by the Representative, and on the basis of such procedures, they have
found such information to be in agreement with the accounting records of the
Company or with material derived from such records.
568948
31