Exh. 1.1 1,300,000 Shares of Common Stock SCOOP, INC. UNDERWRITING AGREEMENT ---------------------- Los Angeles, California ________________, 1997 SHAMUS GROUP, INC. As Representative of the Several Underwriters Named in Schedule I Hereto 33 Whitehall Street New York, New York 10004 Ladies and Gentlemen: Scoop, Inc., a Delaware corporation (the "Company") and successor to Scoop, Inc., a California corporation ("Scoop California"), confirms its agreement with the several Underwriters named in SCHEDULE I attached hereto and incorporated herein by this reference (the "Underwriters") with respect to the sale by the Company and the purchase by the Underwriters, severally and not jointly, of an aggregate of 1,300,000 shares ("Firm Shares") of the Company's common stock, $.001 par value (the "Common Stock"). The Company shall also sell to the Underwriters, severally and not jointly, an aggregate of up to 195,000 shares of Common Stock for the purpose of covering over-allotments, if any (the "Option Shares"), in accordance with the provisions of Section 3(b) hereof. The Firm Shares and the Option Shares are hereinafter referred to collectively as the "Securities" and are more fully described in the Registration Statement and the Prospectus referred to below. The Company also proposes to issue and sell to the Shamus Group, Inc., a ________________ corporation (the "Representative") or its designees, individually and not in its capacity as Representative, a warrant (the "Representative Warrant") pursuant to the Representative's Warrant Agreement (the "Representative Warrant Agreement"), for the purchase of an additional (130,000) shares of Common Stock (the "Representative's Shares"). Further, the following additional shares of Common Stock (collectively, the "Selling Stockholder Shares") are being registered in connection with this offering, but are not being underwritten by the Underwriters, for the account of certain non-affiliated selling security holders (collectively, the "Selling Stockholders"): (i) up to 200,000 shares of Common Stock that may be issued upon exercise of warrants (the "Consultant Warrants") previously issued to certain consultants of the Company (the "Consultant Warrant Shares"), and (ii) 1,205,152 shares of Common Stock for the account of certain non-affiliated stockholders in accordance with previously granted registration rights. Capitalized terms used herein without definition have the meanings ascribed to them in the Registration Statement (as defined below). 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each of the Underwriters as of the date hereof, and as of the Closing Date and each Option Closing Date (as such terms are defined below), if any, as follows: (a) The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") a registration statement, and amendments thereto, on Form SB-2 (Registration No. 333-15129), including any related preliminary prospectus (the "Preliminary Prospectus"), for the registration of the Shares under the Securities Act of 1933, as amended (the "Act"). As used in this Agreement, the term "Registration Statement" means such registration statement, as amended at the time when it was or is declared effective, including all financial schedules and exhibits thereto and including any information omitted therefrom pursuant to Rule 430A under the Act and included in the Prospectus (as hereinafter defined) and any replacement registration statement on Form S-3 or other appropriate form; the term "Preliminary Prospectus" means each prospectus subject to completion filed with such Registration Statement or any amendments thereto (including the prospectus subject to completion, if any, included in the Registration Statement or any amendment thereto at the time it was or is declared effective); the term "Prospectus" means: (i) if the Company relies on Rule 434 under the Act, the Term Sheet relating to the Securities that is first filed pursuant to Rule 424(b)(7) under the Act, together with the Preliminary Prospectus identified therein that such Term Sheet supplements, (ii) if the Company does not rely on Rule 434 under the Act, the prospectus first filed with the Commission pursuant to Rule 424(b) under the Act, or (iii) if the Company does not rely on Rule 434 under the Act and if no prospectus is required to be filed pursuant to Rule 424(b) under the Act, the prospectus included in the Registration Statement; and the term "Term Sheet" means any term sheet that satisfies the requirements of Rule 434 under the Act. Any reference hereto to the "date" of a Prospectus that includes a Term Sheet shall mean the date of such Term Sheet. For purposes hereof, "Rules and Regulations" means the rules and regulations adopted by the Commission under the Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable. (b) Neither the Commission nor any state regulatory authority has issued any order preventing or suspending the use of any Preliminary Prospectus, the Registration Statement or the Prospectus or any part of any of the foregoing, and no proceedings for a stop order suspending the effectiveness of the Registration Statement or any part thereof have been initiated or are pending, contemplated or threatened. Each Preliminary Prospectus and the Registration Statement (including each amendment thereto), at the time of filing thereof, complied in all material respects with the requirements of the Act and the Rules and Regulations, and neither any Preliminary Prospectus nor the Registration Statement, at the time of filing thereof, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. (c) The Company has filed a Form 8-A with the Commission providing for the registration under the Exchange Act of its Common Stock, which registration shall become effective concurrently with the effectiveness of the Registration Statement. (d) The Company does not own an interest in any corporation, partnership, trust, joint venture or other entity. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation. The Company is duly qualified and licensed and in good standing as a foreign corporation, in each jurisdiction in which it owns or leases property or in which the conduct of its business, as currently being conducted, requires such qualification or licensing, except where the failure to be so qualified, licensed or in good standing, singularly or in the aggregate, would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs, position, stockholders' equity, operations, properties, businesses or results of operations of the Company taken as a whole (a "Material Adverse Effect"). The Company has all requisite corporate power and authority, and has obtained any and all authorizations, approvals, orders, licenses, certificates, franchises and permits of and from all governmental or regulatory officials, agencies, authorities and bodies (including, without limitation, those having jurisdiction over environmental, health or similar matters) necessary to own 2 or lease its properties and conduct its business as described in the Prospectus other than those authorizations, approvals, orders, licenses, certificates, franchises and permits of and from all governmental or regulatory officials, agencies, authorities and bodies (including, without limitation, those having jurisdiction over environmental, health or similar matters) which, singularly or in the aggregate, the failure to obtain would not have a Material Adverse Effect. The Company is and has been doing business in substantial compliance with all such authorizations, approvals, orders, licenses, certificates, franchises and permits and all federal, state and local laws, rules, regulations and orders; and the Company has not received any notice of proceedings relating to the revocation or modification of any such authorizations, approvals, orders, licenses, certificates, franchises or permits which, singularly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect. (e) The Company has a duly authorized, issued and outstanding capitalization as set forth in the Prospectus, and any amendment or supplement thereto, under "Capitalization" and "Description of Capital Stock" and will have the adjusted capitalization set forth therein on the Closing Date (as hereinafter defined) and each Option Closing Date, if any, based upon the assumptions set forth therein. The Company is not a party to or bound by any instrument, agreement or other arrangement or understanding providing for or requiring it to issue any capital stock, rights, warrants, options or other securities, except for this Agreement, the Representative Warrant Agreement, the warrant to Bell & Howell for up to 750,000 shares of Common Stock, the warrant to The Boston Group, L.P. for 92,667 shares of Common Stock, the warrant to Stephen Grayson for 11,250 shares of Common Stock, the Bride Warrant, the LOC Warrant, the Company's 1996 Stock Incentive Plan (the "1996 Plan"), and the Consultant Warrants. The Securities and all other securities issued or issuable by the Company conform or, when issued and paid for, will conform, in all material respects to the description thereof contained in the Registration Statement and the Prospectus. All issued and outstanding securities of the Company have been duly authorized and validly issued and are fully paid and non- assessable; and the holders thereof have no rights of rescission with respect thereto; and none of such securities was issued in violation of the preemptive rights or other similar rights of any holders of any security of the Company. The Securities are not and will not be subject to any preemptive or other similar rights of any stockholder, have been duly authorized and, when issued, paid for and delivered in accordance with the terms hereof, will be validly issued, fully paid and non-assessable; all corporate action required to be taken for the authorization, issue and sale of the Securities has been duly and validly taken; and the certificates representing the Securities, when delivered by the Company, will be in due and proper form. Upon the issuance and delivery of the Securities pursuant to the terms hereof and the Representative Warrant Agreement and Representative Warrant and Representative's Shares to be sold by the Company hereunder and thereunder, respectively, the Underwriters and the Representative, respectively, will own to such Securities and Representative Warrant and Representative's Shares, free and clear of any lien, charge, claim, encumbrance, pledge, security interest, defect or other restriction of any kind whatsoever. (f) The financial statements of the Company and the notes thereto included in the Registration Statement and the Prospectus fairly present the financial position, results of operations and cash flow and changes in financial position and stockholders' equity of the Company at the respective dates and for the respective periods to which they apply, and such financial statements have been prepared in conformity with generally accepted accounting principles and the Rules and Regulations, consistently applied throughout the periods involved. The as adjusted and/or pro forma combined financial information included in the Registration Statement and the Prospectus present fairly the information shown therein, have been prepared in conformity with the Rules and Regulations and have been properly compiled on the basis described therein consistent with the historical financial statements included in the Registration Statement and the Prospectus. The 3 assumptions underlying such as adjusted and/or pro forma financial information are reasonable, and the adjustments made therein are appropriate to give effect to the transactions or circumstances referred to therein. There has been no material adverse change, or development involving a material prospective change, in the condition (financial or otherwise), earnings, business affairs, position, stockholders' equity, operations, obligations, properties, businesses or results of operations of the Company, whether or not arising in the ordinary course of business, since the date of the financial statements included in the Registration Statement and the Prospectus, except as described therein. The financial information set forth in the Prospectus under the headings "Prospectus Summary--Summary Financial Data," "Dilution," "Capitalization," "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" fairly presents the information set forth therein and such financial information has been derived from or compiled on a basis consistent with that of the audited financial statements included in the Registration Statement and the Prospectus as described above. (g) The Company (i) has paid all federal, state and local taxes for which it is liable, including, but not limited to, withholding taxes and amounts payable under Chapters 21 through 24 of the Internal Revenue Code of 1986, as amended (the "Code"), and any other assessments, fines or penalties leveled against it, to the extent any of the foregoing is due and payable or are being contested, except for any of the foregoing which is currently being contested in good faith by appropriate proceedings or as described or contemplated by the Prospectus, and has furnished all information returns it is required to furnish pursuant to the Code or otherwise, (ii) has established adequate reserves for such taxes, assessments, fines or penalties which are not due and payable and (iii) does not have any tax deficiency or claims outstanding, proposed or assessed against it, except where such deficiencies, claims or failure to pay taxes, assessments, fines or penalties, furnish information returns or establish reserves, singularly or in the aggregate, would not have a Material Adverse Effect. (h) [intentionally omitted] (i) The Company maintains insurance policies, including, without limitation, general liability, property and personal liability insurance, which insure the Company, its employees and such other persons to whom such entities may become liable against such losses and risks generally insured against by comparable businesses. (j) To the Company's best knowledge, there is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental or other proceeding (including, without limitation, those pertaining to environmental, health or similar matters) pending, or threatened, to which the Company is subject or to which any property or assets (tangible or intangible) of the Company is subject which (i) questions the validity of the capital stock of the Company, of this Agreement, of the Representative Warrant Agreement or of any action or transaction contemplated by this Agreement, the Representative Warrant Agreement, the Registration Statement or the Prospectus, (ii) is required to be disclosed in the Registration Statement which is not so disclosed (and such proceedings as are summarized in the Registration Statement are accurately summarized in all material respects) or (iii) might, if adversely determined, have a Material Adverse Effect, except as disclosed in the Prospectus. (k) The Company has full legal right, power and authority to authorize, issue, deliver and sell the Securities, to enter into this Agreement and the Representative Warrant Agreement and to consummate the transactions contemplated in such agreements, the Registration Statement and the 4 Prospectus; and this Agreement has been duly and properly authorized, executed and delivered by the Company. (l) None of (i) the issuance, delivery and sale of the Securities, (ii) the execution, delivery or performance of this Agreement or Representative Warrant Agreement, (iii) the consummation of the transactions contemplated herein and in the Representative Warrant Agreement, and Prospectus, (iv) the consummation of the Merger (as hereinafter defined) or (v) the conduct of the Company's business as described in the Registration Statement, the Prospectus and any amendments thereof or supplements thereto, conflicts or will conflict with, or results or will result in any breach or violation of any of the terms, covenants, conditions or provisions of, or constitutes or will constitute (with notice, the lapse of time or both) a default under, or results or will result in the creation or imposition of any lien, charge, claim, encumbrance, pledge, security interest, defect or other restriction or equity of any kind whatsoever upon any property or assets (tangible or intangible) of the Company (except as described in the Prospectus) pursuant to the terms of, (x) the Certificate of Incorporation or bylaws of the Company, (y) any license, contract, indenture, mortgage, installment sale agreement, lease, deed of trust, voting trust agreement, stockholders agreement, purchase order, note, loan or credit agreement or any other material agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by which it is or may be bound or to which any of its properties or assets (tangible or intangible) is or may be subject except where such conflict, breach, violation, lien or other restriction would not have a Material Adverse Effect, or (z) any law, statute, judgment, decree, order, rule or regulation applicable to the Company of any arbitrator, court, administrative agency or other governmental or regulatory official, agency authority or body (including, without limitation, those having jurisdiction over environmental, health or similar matters) having jurisdiction over the Company or any of its activities or properties, except where such conflict or violation would not have a Material Adverse Effect. (m) No consent, approval, authorization, registration, qualification, or order of, and no filing with, any court, administrative agency or other government or regulatory official, agency, authority or body is required for the issuance, delivery and sale of the Securities pursuant to this Agreement, the Prospectus and the Registration Statement, the performance of this Agreement and the Representative Warrant Agreement and the consummation of the transactions contemplated hereby and by the Representative Warrant Agreement, and Prospectus, except such as have been or may be obtained under the Act, state securities or "blue sky" laws and the rules of the National Association of Securities Dealers, Inc. (the "NASD") in connection with the Underwriters' purchase and distribution of the Securities, and except where the Company's failure to obtain any of the foregoing would not have a Material Adverse Effect. (n) All agreements, contracts or other documents or copies of executed agreements, contracts or other documents filed or required to be filed as exhibits to the Registration Statement to which the Company is a party or by which it may be bound are accurately described and fairly present the information required to be shown with respect thereto by Form SB-2 or the Rules and Regulations; there are no agreements, contracts or other documents which are required by the Act to be described in the Registration Statement or filed as exhibits to the Registration Statement which are not described or filed as required; and the exhibits which have been filed are complete and correct copies of the agreements, contracts or other documents of which they purport to be copies. (o) Subsequent to the respective dates as of which information is set forth in the Registration Statement and the Prospectus, and except as may otherwise be indicated or contemplated herein or therein, the Company has not done, or agreed to do, any of the following, (i) issued any 5 securities or incurred any liability or obligation, direct, indirect or contingent, for borrowed money, (ii) entered into any transaction other than in the ordinary course of business or (iii) declared or paid any dividend or made any other distribution on or in respect of any class of its capital stock; and, subsequent to such dates, there has not been any change in the capital stock or any change in the debt (long- or short-term) or liabilities or obligations or any material change in the condition (financial or otherwise), earnings, business affairs, position, prospects, stockholders' equity, operations, properties, businesses or results of operations of the Company except for debt, liabilities and obligations incurred in the normal course of business consistent with past practices. (p) No material default exists, and no event has occurred which, with notice, lapse of time or both, would constitute a material default in the due performance and observance of any term, covenant, condition or provision of any license, contract, indenture, mortgage, installment sale agreement, lease, deed of trust, voting trust agreement, stockholders' agreement, purchase order, note, loan or credit agreement or any other material agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by which it is or may be bound or its properties or assets (tangible or intangible) are or may be subject, except where such default would not have a Material Adverse Effect. (q) The Company has generally enjoyed a satisfactory employer- employee relationship with its employees and it is in substantial compliance with all federal, state and local laws, rules, regulations and orders respecting employment and employment practices, including, without limitation, terms and conditions of employment and wages and hours. There are no pending investigations involving the Company by the U.S. Department of Labor, the Department of Justice - Immigration and Naturalization Service or any other governmental or regulatory official, agency, authority or body responsible for the enforcement of such federal, state or local laws, rules, regulations and orders, except where such investigation would not have a Material Adverse Effect. There is no unfair labor practice charge or complaint pending or, to the best of the Company's knowledge, threatened against the Company before the National Labor Relations Board or any strike, picketing, boycott, dispute, slowdown or stoppage pending, threatened or contemplated against or involving the Company and none has ever occurred. There are no existing collective bargaining agreements with the Company. To the best of the Company's knowledge, no representation question exists respecting the employees of the Company and no collective bargaining agreement or modification thereof is currently being negotiated by or on behalf of the Company. No grievance or arbitration proceeding is pending or threatened under any expired collective bargaining agreements of the Company. No labor dispute with the employees of the Company is pending or threatened. (r) [Intentionally omitted] (s) [Intentionally omitted] (t) The Company owns all trademarks, trade names, service marks, service names, copyrights, patents and patent applications or any licenses or rights to the foregoing, which, individually or in the aggregate, are material to its condition (financial or otherwise), earnings, business affairs, position, stockholders' equity, operations, properties, businesses or results of operations, and, except as specifically disclosed in the Prospectus and, to the best of the Company's knowledge, no such trademarks, trade names, service marks, service names, copyrights or patents are in dispute or are in conflict with any right of any other person or entity. (u) To the best of the Company's knowledge, the Company has the right to use all trade secrets, know-how (including, without limitation, all unpatented and/or unpatentable proprietary or 6 confidential information, systems or procedures), inventions, technology, designs, processes, works of authorship, computer programs and technical data and information that are material to the development, manufacture, operation and sale of all products and services sold or proposed to be sold by the Company, free and clear of and without violating any right, lien or claim of others, including, without limitation, former employers of their employees. (v) The Company has good and marketable title to, or valid and enforceable leasehold estates in, all items of real and personal property owned or leased by it. (w) Deloitte & Touche, L.L.P., whose report is filed with the Commission as a part of the Registration Statement, each Preliminary Prospectus and the Prospectus, is an accounting firm of independent certified public accountants as required by the Act and the Rules and Regulations. (x) [Intentionally omitted] (y) There are no claims, payments, issuances, agreements, arrangements or understandings, whether oral or written, for services in the nature of a finder's fee, brokerage fee, origination fee or otherwise with respect to the offerings contemplated by this Agreement, the Representative Warrant Agreement, the Registration Statement and the Prospectus or any other arrangements, agreements, understandings, payments or issuances that may affect the Underwriters' compensation as determined by the NASD other than as disclosed in the Registration Statement and Prospectus and other than as the Representative may itself have agreed to with third parties. (z) The Securities have been approved for quotation on the Nasdaq SmallCap Market (the "SCM"). (aa) Neither the Company nor any officer, stockholder, employee, agent nor any other person acting on behalf of the Company has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or any official or employee of any governmental agency or instrumentality of any government or any political party or candidate for office or any other person who was, is or may be in a position to help or hinder the business of the Company (or assist them in connection with any actual or proposed transactions) which might subject the Company or any other such person to any damage or penalty in any civil, criminal or governmental action, suit, inquiry, investigation, litigation or proceeding. (ab) Except as set forth in the Prospectus under "Certain Transactions" and except for transaction(s) that would not be required to be disclosed in the Registration Statement pursuant to the Rules and Regulations, to the best of the Company's knowledge, no officer, director or stockholder of the Company, and no affiliate or associate (as those terms are defined in the Rules and Regulations) of any of the foregoing persons or entity, has or has had, either directly or indirectly, (i) an interest in any person or entity which (A) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by the Company or (B) purchases from or sells or furnishes to the Company any products or services or (ii) a beneficial interest in any contract, arrangement, understanding or agreement to which the Company is a party or by which the Company or any of its property or assets (tangible or intangible) may be bound or affected. Except as set forth in the Prospectus under "Certain Transactions" there are no existing agreements, arrangements, understandings or transactions, or proposed agreements, arrangements, understandings or transactions, between or among the Company and any officer or director of the Company or any person listed in 7 the "Principal Stockholders" section of the Prospectus, or, to the best of the Company's knowledge, any affiliate or associate of any of the foregoing persons or entity. (ac) The minute books of the Company have been made available to the Representative and contain a complete summary of all meetings and actions of the directors, including any committee thereof, and stockholders of the Company since the time of its incorporation, and reflect all transactions referred to in such minutes accurately in all material respects. (ad) Except as described in the Registration Statement, no person, corporation, trust, partnership, association or other entity has the right to include or register any securities of the Company in the Registration Statement or to require that any registration statement be filed by the Company or, if filed, to include any security in such registration statement. (ae) Any certificate signed by any officer of the Company designated as an "Officer's Certificate" and delivered to the Representative or to the Underwriters' Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby. (af) [Intentionally omitted] (ag) The Representative Warrant Agreement has been duly and validly authorized by the Company and, assuming due execution by the Representative, constitutes or will constitute a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting enforcement of creditors' rights and the application of equitable principles in any action, legal or equitable, and except as rights to indemnity or contribution may be limited by applicable law). The Company has reserved and available for issuance a sufficient number of shares of Common Stock to be issued upon exercise of the Representative Warrant. (ah) [Intentionally omitted] (ai) The Company is familiar with the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations thereunder, and has in the past conducted, and intends in the future to conduct, its affairs in such a manner as to ensure that it will not become an "investment company" within the meaning of the 1940 Act and such rules and regulations. (aj) The books, records and accounts of the Company accurately and fairly reflect, in reasonable detail, the transactions and dispositions of the assets of the Company. The system of internal accounting controls maintained by the Company is sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary (A) to permit preparation of financial statements in accordance with generally accepted accounting principals and (B) to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any difference. (ak) All transactions necessary to complete the merger (the "Merger") of Scoop California with and into the Company in accordance with the terms of that certain Agreement and Plan of Merger, dated February 25, 1997 (the "Merger Agreement"), between the Company and Scoop California have been consummated and the Merger was effectuated on March ___, 1997 (the "Merger 8 Date"). Each of the Company and Scoop California had all requisite corporate power and authority to execute, deliver and perform the Merger Agreement. All necessary corporate proceedings of the Company and Scoop California had been duly taken to authorize the execution, delivery and performance of the Merger Agreement. The Merger Agreement had been duly authorized, executed and delivered by the Company and/or Scoop California, as the case may be, is the legal, valid and binding obligation of the Company and/or Scoop California, as the case may be, and is enforceable as to the Company and/or Scoop California, as the case may be, in accordance with its terms. The Company has obtained all consents, authorizations, approvals, orders, licenses, certificates or permits of or from, or declaration or filing with, any federal, state, local or other governmental authority or any court of other tribunal which is required by the Company or Scoop California for the execution, delivery, or performance of any Merger Agreement, except where the Company's failure to obtain any of the foregoing would not have a Material Adverse Effect. The Company has obtained all consents, approvals or authorizations of any party to any material license, contract, indenture, mortgage, installment sale agreement, lease, deed of trust, voting trust agreement, stockholders agreement, purchase order, note, loan or credit agreement or any other material agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company or Scoop California is a party or by which either of them is or may be bound or to which either of their properties or assets (tangible or intangible) are or may be subject, necessary for the execution, delivery or performance by the Company or Scoop California of the Merger Agreement, except where the Company's failure to obtain any of the foregoing would not have a Material Adverse Effect. The execution, delivery and performance of the Merger Agreement by the Company and Scoop California did not conflict with and did not result in any breach or violation of any of the terms, covenants, conditions or provisions of, did not constitute (with notice, the lapse of time or both) a default under, result in the creation or imposition of any lien, charge, claim, encumbrance, pledge, security interest, defect or other restriction or equity of any kind whatsoever upon any property or assets (tangible or intangible) of the Company or Scoop California pursuant to the terms of, (i) the Certificate or Articles of Incorporation or bylaws of the Company or Scoop California, (ii) any contract, material license, indenture, mortgage, installment sale agreement, lease, deed of trust, voting trust agreement, stockholders' agreement, purchase order, note, loan or credit agreement or any other material agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company or Scoop California was a party at the Merger Date or by which they were bound at the Merger Date or to which any of their properties or assets (tangible or intangible) were subject at the Merger Date or (iii) any law, statute, judgment, decree, order, rule or regulation applicable to the Company or Scoop California at the Merger Date of any arbitrator, court, administrative agency or other governmental or regulatory official, agency authority or body (including, without limitation, those having jurisdiction over environmental, health or similar matters) having jurisdiction over the Company, Scoop California or either of their activities or properties, except where such conflict, breach, violation, default, lien, charge, claim, encumbrance, pledge, security interest defect or other restriction or equity of any kind would not have a Material Adverse Effect. (al) The Company has all content provider and distributor authorizations, permits, licenses and other approvals necessary for the Company to conduct its business as described in the Prospectus other than those authorizations, approvals, licenses and permits of and from content providers and distributors which, singularly or in the aggregate, the failure to obtain would not have a Material Adverse Effect. The Company is and has been doing business in substantial compliance with all such authorizations, approvals, licenses, and permits; and the Company has not received any notice of violation, revocation or modification of any such authorizations, approvals, licenses or permits which, singularly or in the aggregate, would have a Material Adverse Effect. 9 2. [Intentionally omitted] 3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. (a) On the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriters the Firm Shares, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company that number of the Firm Shares set forth opposite such Underwriter's name, in Schedule I to this Agreement at a price equal to $______ per Share. (b) In addition, on the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters to purchase all or any part of the Option Shares at a price equal to $________ per share. The Option Shares shall be purchased, if the option is exercised as provided herein, from the Company for the accounts of the several Underwriters, severally and not jointly, in proportion to the aggregate number of Firm Shares set forth opposite such Underwriter's name in Schedule I to this Agreement, except that the respective purchase obligations of each Underwriter may be adjusted by the Representative so that no Underwriter shall be obligated to purchase fractional Option Shares. The option granted hereby will expire, to the extent unexercised, forty-five (45) days after the date hereof, and may be exercised, in the Representative's sole discretion, in whole or in part from time to time, only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Firm Shares, upon notice by the Representative to the Company setting forth the number of Option Shares as to which the Underwriters are then exercising the option and the time and date of payment for and delivery of any such Option Shares. Any such time and date of delivery (an "Option Closing Date") shall be determined by the Representative, but shall not be later than four (4) full business days after the exercise of said option, or in any event prior to the Closing Date, unless otherwise agreed upon by the Representative and the Company. Nothing herein contained shall in any way obligate the Underwriters to exercise the option granted hereby. No Option Shares shall be delivered unless the Firm Shares shall be simultaneously delivered or shall theretofore have been delivered as herein provided. (c) Payment of the purchase price for, and delivery of certificates evidencing, the Firm Shares shall be made at the offices of Latham & Watkins, counsel to the Company, at 650 Town Center Drive, 20th Floor, Costa Mesa, California, or at such other place as shall be agreed upon by the Representative and the Company. Such delivery and payment shall be made at 6:30 a.m. (Los Angeles time) on ____________ ___, 1997 or at such other time and date as shall be agreed upon by the Representative and the Company (such time and date of payment and delivery being herein called the "Closing Date"). In addition, in the event that any or all of the Option Shares are purchased by the Underwriters, payment of the purchase price for, and delivery of certificates for, such Option Shares shall be made at the above-mentioned office of the Representative or at such other place as shall be agreed upon by the Representative and the Company with respect to each applicable Option Closing Date as specified in the relevant notice from the Representative to the Company. Delivery of the certificates representing the Firm Shares and the Option Shares, if any, shall be made to the Representative against payment by the Underwriters of the purchase price for the Firm Shares and the Option Shares, if any, to the order of the Company by certified or official bank checks payable in Los Angeles Clearing House funds (next day funds). Certificates representing the Firm Shares and the Option Shares, if any, respectively, shall be in definitive, fully registered form, shall bear no restrictive legends and shall be in such denominations and registered in such names as the Representative may request in writing at least two (2) business days prior to the Closing Date or the relevant Option Closing Date, as the case may be. The certificates representing the Firm Shares and 10 the Option Shares, if any, shall be made available to the Representative at such offices or such other place as the Representative may designate for inspection, checking and packaging no later than 9:30 a.m. Los Angeles time on the last business day prior to the Closing Date or the relevant Option Closing Date, as the case may be. (d) On the Closing Date, the Company shall issue and sell to you, individually and not in your capacity as the Representative, or to your designees, the Representative Warrant for an aggregate purchase price of fifty dollars ($50), which warrant shall entitle the holders thereof to purchase an aggregate of an additional One Hundred Ninety-Five Thousand (195,000) shares of Common Stock. The Representative Warrant shall be issued pursuant to the Representative Warrant Agreement, substantially in the form filed as Exhibit 4.2 to the Registration Statement. Payment for the Representative Warrant shall be made on the Closing Date. The Representative Warrant and the Representative's Shares underlying them shall be registered in the Registration Statement and such Registration Statement shall be kept effective as required by the Representative Warrant Agreement. 4. PUBLIC OFFERING OF THE SECURITIES. As soon after the Registration Statement becomes effective as the Representative deems advisable, the Underwriters shall make a public offering of the Firm Shares and such of the Option Shares as the Representative may determine at the initial price and upon the other terms set forth in the Prospectus. The Underwriters may from time to time increase or decrease the public offering price of the Securities to such extent as the Representative, in its sole discretion, deems advisable. The Underwriters may enter into one or more agreements as they, in their sole discretion, deem advisable with one or more broker-dealers who shall act as dealers in connection with such public offering. 5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and agrees with each of the Underwriters as follows: (a) The Company shall use its best efforts to cause the Registration Statement and any amendments thereto to become effective simultaneously with or as promptly as practicable after the date of this Agreement and will not at any time, whether before or after the effective date of the Registration Statement, file any amendment to the Registration Statement or Term Sheet or supplement to the Prospectus or file any document under the Act or the Exchange Act before termination of the offering of the Securities to the public by the Underwriters of which the Representative shall not previously have been advised and furnished with a copy or to which the Representative shall have reasonably objected (unless the Company's outside counsel reasonably determines in a written opinion that such amendment or supplement is required to be filed pursuant to applicable law) or which is not in compliance with the Act, the Exchange Act or the Rules and Regulations. The Company shall use its best efforts to maintain the effectiveness of the Registration Statement (by filing supplements or post-effective amendments or as otherwise may be required under the Act and the Rules and Regulations) until the earlier of the time that all Representative's Shares have been sold pursuant to such registration statement or the date which is five (5) years from the date the Representative Warrant is initially issued. (b) As soon as the Company is advised or obtains knowledge thereof, the Company will advise the Representative and confirm the same in writing (i) when the Registration Statement, as amended, becomes effective, when any post-effective amendment to the Registration Statement becomes effective and, if the provisions of Rule 430A promulgated under the Act will be relied upon, when the Prospectus has been filed in accordance with said Rule 430A, (ii) of the issuance by the Commission or any State or other regulatory body of any stop order or other order, or of the initiation or the threat or contemplation of any proceeding, the outcome of which may result in the 11 suspension of the effectiveness of the Registration Statement or any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement or Term Sheet thereto, or the institution of any proceedings for that purpose, (iii) of the issuance by the Commission or any State or other regulatory body of any proceedings for the suspension of the qualification of any of the Securities for offering or sale in any jurisdiction or of the initiation or the threat or contemplation of any proceeding for that purpose, (iv) of the receipt of any comments from the Commission and (v) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. If the Commission or any state or other regulatory body shall enter a stop order or other order suspending the effectiveness of the Registration Statement or preventing or suspending the use of the Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto, or suspend such qualification at any time, the Company will make every effort to obtain promptly the lifting of such order or suspension. (c) The Company shall file the Prospectus (in form and substance satisfactory to the Representative) with the Commission, or transmit the Prospectus by a means reasonably calculated to result in filing the same with the Commission, pursuant to Rule 424(b)(1) under the Act (or, if applicable and if reasonably consented to by the Representative, pursuant to Rule 424(b)(4)) within the time period specified in Rule 424(b)(1) (or if applicable, Rule 424(b)(4)) or shall deliver and shall file with the Commission a Term Sheet (in form and substance satisfactory to the Representative) in accordance with Rule 434 under the Act. (d) The Company will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendments) or any amendment or supplement or Term Sheet to the Prospectus (including any revised prospectus which the Company proposes for use in connection with the offering of any of the Securities which differs from the corresponding prospectus on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) under the Act), and will furnish the Representative with copies of any such amendment or supplement or Term Sheet a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement to which the Representative or Jeffer, Mangels, Butler & Marmaro LLP, the Underwriters' counsel (the "Underwriters' Counsel"), shall reasonably object unless the Company's outside counsel reasonably determines in a written opinion that such amendment or supplement or Term Sheet is required to be filed pursuant to applicable law. (e) The Company shall use its best efforts, at or prior to the time the Registration Statement becomes effective, to qualify the Securities for offering and sale under the securities or "blue sky" laws of such jurisdictions as the Underwriters may reasonably designate to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution, and shall make such applications, file such documents and furnish such information as may be required for such purpose; PROVIDED, HOWEVER, the Company shall not be required to qualify as a foreign corporation or to execute a general consent to service of process in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the Company will use its best efforts to file and make such statements or reports at such times as are or may be required by the laws of such jurisdiction to continue such qualification. (f) During the time when a prospectus is required to be delivered under the Act, the Company shall comply in all material respects with all requirements imposed upon it by the Act and the Exchange Act, as now and hereafter amended, and by the Rules and Regulations, as from time to 12 time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities in accordance with the provisions hereof and the Prospectus, or any amendments or supplements thereto. If at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event shall have occurred as a result of which, in the opinion of the Company or counsel for the Company or the Representative or the Underwriters' Counsel, the Prospectus, as then amended or supplemented, would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Company will promptly notify the Representative and prepare and file, at the Company's expense, with the Commission an appropriate amendment or supplement to the Registration Statement or an amendment or supplement to the Prospectus which will correct such statement or omission, or effect such compliance, each such amendment or supplement to be reasonably satisfactory to the Representative and the Underwriters' Counsel, and the Company will furnish to the Underwriters copies of such amendment or supplement as soon as available and in such quantities as the Underwriters may request. (g) As soon as practicable, but in any event not later than forty-five (45) days after the end of the twelve (12) month period beginning after the effective date of the Registration Statement, the Company shall make generally available to its security holders, in the manner specified in Rule 158(b) under the Act, and to the Representative, an earnings statement which will comply with the provisions of Section 11(a) of the Act and Rule 158(a) promulgated under the Act. (h) During the three (3) year period commencing on the date hereof, so long as the Company has securities which are registered under the Act or the Exchange Act or otherwise publicly tradeable and Common Stock continues to be outstanding, the Company, at its expense, will furnish to its stockholders, as soon as practicable, annual reports (including financial statements audited by independent certified public accountants) and will deliver to the Representative: (i) as soon as they are available, copies of all reports (financial or other) mailed to stockholders; (ii) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, the NASD, Nasdaq or any securities exchange; (iii) as soon as they are available, all press releases, material news items or articles of interest to the financial community in respect of the Company or its affairs which are released by or on behalf of the Company; and (iv) any additional information of a public nature concerning the Company or its businesses which the Representative may request. During such three (3) year period, if the Company has active subsidiaries or is a partner or member in any venture or limited liability company, the foregoing financial statements will be on a consolidated basis to the extent that the accounts of the Company and its subsidiaries (including any venture or company of which it is a partner or member) are consolidated, and will be accompanied by similar financial statements for any significant subsidiary (as defined in the Rules and Regulations) which is not so consolidated. 13 (i) The Company will maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar (which may be the same entity as the transfer agent) for the Common Stock. (j) The Company will furnish to the Representative and the Underwriters, without charge and at such place as the Representative may designate, copies of each Preliminary Prospectus, the Registration Statement and any pre-effective or post-effective amendments thereto (two of which will be signed and will include all financial statements and exhibits), the Prospectus, and all amendments and supplements thereto, including any prospectus prepared after the effective date of the Registration Statement and any Term Sheet, in each case as soon as available and in such quantities as the Representative may reasonably request. (k) The Company will assist the Representative's efforts to obtain the agreement of Karl Karlsson (the "Principal Stockholder"), Stanley Berk, Michael Del Rey, each of the holders of the Consultant Warrants, and each executive officer and director of the Company, for a period of twelve (12) months following the effective date of the Registration Statement, not to, directly or indirectly, offer, offer to sell, sell, grant an option for the purchase or sale of, transfer, assign, pledge, hypothecate or otherwise encumber or enter into any agreement to do any of the foregoing with respect to any securities issued or issuable by the Company, whether or not owned by or registered in the name of such person, or dispose of any interest therein (whether pursuant to Rule 144 under the Act or otherwise), without the prior written consent of the Representative (collectively, the "Lock-Up Agreements"). On or before the Closing Date, the Company shall deliver instructions to its transfer agent authorizing such transfer agent to place appropriate legends on the certificates representing the securities subject to the Lock-Up Agreements and to place appropriate stop transfer orders on the Company's ledgers. The Company agrees that, for a period of twelve (12) months commencing with the effective date of the Registration Statement, except as contemplated hereby, it shall not, without the prior written consent of the Representative, issue, sell, grant an option for the sale of, assign, transfer, pledge, distribute or otherwise dispose of, directly or indirectly, or agree or offer to do any of the foregoing, any shares of Common Stock or any option, warrant or other contract right or security convertible, directly or indirectly, into shares of Common Stock, other than grants of options under the 1996 Plan as described (including, without limitation, as to the maximum number of shares of Common Stock issuable thereunder) in the Registration Statement and the issuance of shares of Common Stock upon the exercise of options granted under the 1996 Plan and Warrants outstanding as of the effective date of the Registration Statement. (l) The Company will not take, and will take appropriate measures to prevent any of its officers, directors, stockholders or affiliates (within the meaning of the Rules and Regulations) from taking, directly or indirectly, any action designed to illegally stabilize or manipulate the price of any securities of the Company or which might be expected to cause or result in, under the Exchange Act or otherwise, the illegal stabilization or manipulation of the price of any security of the Company. (m) The Company shall apply the net proceeds from the sale of the Securities offered to the public in the manner set forth under the caption "Use of Proceeds" in the Prospectus and will file any and all required Form SR's in a timely manner. No portion of the net proceeds will be used, directly or indirectly, to acquire any securities issued by the Company. (n) The Company shall timely file all registrations, reports, forms or other documents as may be required (including, without limitation, any Form SR required by Rule 463 under the Act) from time to time under the Act, the Exchange Act and the Rules and Regulations, all such registrations, reports, forms and other documents shall comply in all material respects as to form and 14 substance with the applicable requirements under the Act, the Exchange Act and the Rules and Regulations. The Company shall promptly provide to the Representative and, upon request, the Underwriters copies of such registrations, regulations, reports, forms or other documents. (o) The Company shall furnish to the Representative as early as practicable but in no event later than two (2) full business days prior to the Closing Date and each Option Closing Date, a copy of the latest available preliminary unaudited interim financial statements of the Company (which in no event shall be as of a date more than forty-five (45) days prior to the date hereof, the Closing Date or the relevant Option Closing Date, as the case may be) which have been read by the Company's independent certified public accountants, as stated in their letters to be furnished pursuant to Sections 7(i) and 7(j) hereof. (p) The Company shall cause the Securities to be quoted on the SCM or some other nationally recognized stock exchange and for a period of five (5) years from the date hereof, the Company shall maintain the appropriate SCM or stock exchange listing of the Securities so long as the Company continues to have securities registered under the Act or the Exchange Act or otherwise publicly tradeable and Securities continue to be outstanding and shall comply in all material respects with all registration, filing, reporting and other requirements of the SCM or such stock exchange, which may from time to time be applicable to the Company. (q) [Intentionally omitted] (r) [Intentionally omitted] (s) As soon as practicable, (i) but in no event more than five (5) business days before the effective date of the Registration Statement, the Company shall file a Form 8-A with the Commission providing for the registration under the Exchange Act of the Securities, which registration shall become effective concurrently on such effective date, and (ii) but in no event more than one hundred twenty (120) days after the effective date of the Registration Statement, the Company shall take all necessary and appropriate actions to be included in Standard & Poor's Corporation Manual and Moody's Investors Services, Inc. Manual and to continue such inclusion for a period of not less than five (5) years or so long as the Company has securities which are registered under the Act or the Exchange Act or otherwise publicly tradeable and Common Stock continues to be outstanding. (t) [Intentionally omitted] (u) Until the completion of the distribution (as such term would be applied under Rule 10b-6 promulgated under the Exchange Act) of the Firm Shares and, if applicable, the Option Shares, to the public, the Company shall not, without the prior written consent of the Representative, issue, directly or indirectly, any press release or other communication or hold any press conference with respect to the Company or its activities or the offering contemplated hereby, other than trade releases issued in the ordinary course of the Company's business consistent with past practices with respect to the Company's operations or except as specifically required by law as advised to the Company by its outside counsel. (v) Prior to the earlier of (i) the date which is six (6) years from the effective date of the Registration Statement and (ii) the date of the completion of the sale to the public of all of the Representative's Shares, the Company will not take any action or actions which may prevent or disqualify the Company's use of Form S-1 or SB-2 or, commencing one year from the date hereof, 15 Form S-3 (or other appropriate form), for the registration under the Act of the Representative's Shares. (w) For a period of three (3) years after the effective date of the Registration Statement, the Company shall permit one (1) individual selected in writing from time-to-time by Representative to attend all meetings of the Company's board of directors as a non-voting advisor and to receive all notices and other correspondence and communications sent by the Company to members of its board of directors. Such advisor shall receive no compensation from the Company. Such advisor shall be entitled to receive reimbursement for all reasonable costs incurred in attending such meetings, including, without limitation, food, lodging and transportation in accordance with the policy established by the independent members of the Board of Directors. The Company hereby agrees to indemnify and hold such advisor harmless, to the maximum extent permitted by law, against any and all actions, suits, proceedings, inquiries, arbitrations, investigations, litigation, governmental or other proceedings and awards and judgments arising out of such individual's service as an advisor and, in the event the Company maintains a liability insurance policy affording coverage for the acts of its officers or directors, and/or in the event that the Company has entered into an indemnification agreement with any of its officers or directors, the Company agrees to include such advisor as an insured under such insurance policy and/or to enter into an indemnification agreement with such advisor which is at least as favorable to such individual as any indemnification agreement that the Company has entered into with any of its officers or directors. The rights and benefits of such indemnification and the benefits of such insurance shall, to the maximum extent possible, extend to the Representative insofar as it may be or may be alleged to have any obligation or liability in connection with an action or inaction of such director or advisor. (x) [Intentionally omitted] (y) For a period of seven (7) years from the effective date of the Registration Statement, the Company and all of its subsidiaries shall obtain and maintain insurance policies, including, without limitation, general liability, property, and personal liability insurance, and surety bonds which insure such entities, their employees and such other persons to whom such entities may become liable against such losses and risks generally insured against by comparable businesses. (z) For a period of five (5) years from the date hereof, the Company will retain Deloitte & Touche LLP (or such other nationally-recognized accounting firm qualified to practice in front of the Commission as is reasonably acceptable to the Representative) as its independent certified public accountants and, during such period, the Company will promptly submit to the Representative, upon written request, copies of all accountant's management reports, Company representation letters and similar correspondence between the Company's accountants and the Company. (aa) The Company shall at all times following the Closing Date have reserved and available for issuance a sufficient number of shares of Common Stock to be issued upon exercise of the Representative Warrant. (ab) When the Registration Statement becomes effective and at all times subsequent thereto up to and including the Closing Date and each Option Closing Date, if any, and during such other periods as a prospectus may be required to be delivered in connection with sales by any Underwriter or a dealer, the Registration Statement and the Prospectus will contain all statements which are required to be stated therein in accordance with the Act and the Rules and Regulations, and will comply in all material respects with the requirements of the Act and the Rules and Regulations, and at and through such dates, neither the Registration Statement, the Prospectus nor any amendment 16 thereof or supplement thereto will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. 6. PAYMENT OF EXPENSES. (a) The Company hereby agrees to pay (such payment to be made on the Closing Date as part of the closing on such date and on each Option Closing Date as part of the closing on such date (to the extent not paid on the Closing Date or a previous Option Closing Date)) all expenses and fees (other than fees of the Underwriters' Counsel not specifically provided for in this Section 6) incident to the issuance, offer, sale and delivery of the Securities and the performance of the obligations of the Company under this Agreement and the Representative Warrant Agreement, including, without limitation, (i) the fees and expenses of accountants and counsel for the Company, (ii) all costs and expenses incurred in connection with the preparation, duplication, printing (including mailing and handling charges), filing, delivery and mailing (including the payment of postage with respect thereto) of each Preliminary Prospectus, the Registration Statement and the Prospectus and any amendments and supplements or Term Sheets thereto and the printing, mailing (including the payment of postage with respect thereto) and delivery of this Agreement, all other underwriting documents (including Agreements Among Underwriters, Underwriter's Questionnaires, Underwriter's Powers of Attorneys and Selected Dealer Agreements), the Representative Warrant Agreement and agreements with selected dealers, and related documents, including the cost of all copies thereof and of each Preliminary Prospectus and of the Prospectus and any amendments thereof or supplements thereto supplied to each of the Underwriters and such dealers as the Underwriters may request, in such quantities as the Underwriters may reasonably request, (iii) all costs and expenses (including issue and transfer taxes) incurred in connection with the printing, engraving, issuance, sale and delivery of the Securities, including (x) the purchase by each of the Underwriters, severally and not jointly, of the number of the Securities from the Company set forth opposite its name on Schedule I to this Agreement, (y) the consummation by the Company of any of its obligations under this Agreement and the Representative Warrant Agreement and (z) the resale of the Securities by each of the Underwriters in connection with the distribution contemplated hereby, (iv) all costs and expenses incurred in connection with the qualification of the Securities under state securities or "blue sky" laws and the determination of the status of such securities under legal investment laws, including the costs of printing and mailing the "Preliminary Blue Sky Memorandum," the "Supplemental Blue Sky Memorandum" and the "Legal Investments Survey," if any, (v) the fees, costs and expenses incurred in connection with any required filing with the NASD and obtaining a determination from the NASD with respect to the fairness and reasonableness of the underwriting terms and arrangements and disbursements and fees of Jeffer, Mangels, Butler & Marmaro LLP in connection with such determinations, filings, documents and qualifications of the Securities, (vi) all advertising costs and expenses, including costs and expenses in connection with "road shows," information meetings and presentations, bound volumes and prospectus memorabilia and "tombstone" advertisements, (vii) all costs and expenses incurred in connection with due diligence investigations by an independent third party, subject to the Company's prior approval which shall not be unreasonably withheld, including the fees of any independent counsel (other than Jeffer, Mangels, Butler & Marmaro LLP) or consultants, (viii) the fees and expenses of a transfer agent and registrar for the Securities, (ix) the fees payable to the Commission and (x) the fees and expenses incurred in connection with the listing of the Securities on the SCM and any other exchange. (b) If this Agreement is terminated by the Underwriters in accordance with the provisions of Section 7 or 12 hereof, or if the transactions contemplated hereby are not consummated by the Company for any reason, the Company shall reimburse and indemnify the Underwriters for all 17 of their accountable expenses, including, without limitation, all of the fees and disbursements of Underwriters' Counsel (including, without limitation, the fees of the Underwriters' Counsel specifically provided for herein). (c) The Company further agrees that, in addition to the expenses payable pursuant to Section 7(a) hereof, it will pay to you, individually and not in your capacity as the Representative, on the Closing Date by certified or bank cashier's check, or, at your election, by deduction from the proceeds of the offering of the Firm Shares, a non-accountable expense allowance equal to three percent (3.0%) of the aggregate offering proceeds from the sale of the Firm Shares. In the event the Underwriters elect to exercise all or any part of the over-allotment option described in Section 4(b) hereof, the Company agrees to pay to you, individually and not in your capacity as the Representative, on each Option Closing Date, by certified or bank cashier's check, or, at your election, by deduction from the proceeds of the Option Shares purchased on such Option Closing Date, a non-accountable expense allowance equal to three percent (3.0%) of the aggregate offering proceeds from the sale of such Option Shares. 7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of each of the Underwriters hereunder shall be subject to the continuing accuracy of the representations and warranties of the Company herein as of the date hereof and as of the Closing Date and each Option Closing Date, if any, as if they had been made on and as of the Closing Date or each Option Closing Date, as the case may be; the accuracy on and as of the Closing Date and each Option Closing Date, if any, of the statements of officers of the Company made and certificates of officers of the Company delivered pursuant to the provisions hereof; and the performance by the Company and on and as of the Closing Date and each Option Closing Date, if any, of all of its covenants and obligations hereunder which are possible to perform on and as of such date and to the following further conditions: (a) The Registration Statement shall have become effective not later than 5:00 p.m., New York time, on the date of this Agreement or such later date and time as shall be consented to in writing by the Representative, and, at the Closing Date and each Option Closing Date, if any, no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceedings for that purpose shall have been initiated or shall be pending, threatened or contemplated by the Commission or any State or other regulatory body and any request on the part of the Commission or any State or other regulatory body for additional information shall have been complied with to the reasonable satisfaction of the Representative and the Underwriters' Counsel. If the Company has elected to rely upon Rule 430A under the Act, the price of the Securities and any price-related information previously omitted from the effective Registration Statement pursuant to such Rule 430A shall have been transmitted to the Commission for filing pursuant to Rule 424(b) under the Act within the prescribed time period or shall have been delivered and shall have been filed with the Commission as required by Rule 434 under the Act, as applicable, and, prior to the Closing Date, the Company shall have provided evidence satisfactory to the 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 requirements of Rule 430A under the Act. Neither the Registration Statement nor the Prospectus nor any amendment thereto or supplement thereof (including a Term Sheet) shall have been filed to which the Representative shall have reasonably objected after it shall have had the chance to review such amendment or supplement unless the Company's outside counsel reasonably determines in a written opinion that such amendment or supplement is required to be filed pursuant to applicable law. (b) No Underwriter shall have advised the Company that the Registration Statement, or any amendment thereto, contains an untrue statement of fact which, in the Representative's opinion, is 18 material, or omits to state a fact which, in the Representative's opinion, is material and is required to be stated therein or is necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or that the Prospectus, or any amendment or supplement (including any Term Sheet) thereto, contains an untrue statement of fact which, in the Representative's opinion, is material, or omits to state a fact which, in the Representative's opinion, is material and is required to be stated therein or is necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. (c) On or prior to the Closing Date, the Representative shall have received from the Underwriters' Counsel such opinion or opinions with respect to the organization of the Company, the validity of the Securities, the Registration Statement, the Prospectus and such other related matters as the Representative may request and the Underwriters' Counsel shall have received such papers and information as it may request in order to enable it to pass upon such matters. (d) At the Closing Date, the Representative shall have received the favorable opinion of Latham & Watkins, counsel to the Company, and Daniel Pelekoudas, the Company's General Counsel, each dated as of the Closing Date, addressed to the Representative, in form and substance satisfactory to the Underwriters' Counsel and subject to customary qualifications and conditions, with respect to the matters set forth in Schedules II and III, respectively, attached hereto and incorporated herein by this reference. In rendering its opinion, Latham & Watkins may rely as to matters of fact, to the extent it deems proper, on certificates and written statements of responsible officers of the Company and certificates or other written statement of officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company, provided that copies of any such opinions, statements or certificates shall be delivered to the Representative and the Underwriters' Counsel. At each Option Closing Date, if any, the Representative shall have received the favorable opinion of Latham & Watkins and Daniel Pelekoudas, dated as of such Option Closing Date, addressed to the Representative and in form and substance satisfactory to Underwriters' Counsel confirming as of such Option Closing Date the statements made by Latham & Watkins and Daniel Pelekoudas in their respective opinions delivered on the Closing Date. (e) On or prior to the Closing Date and each Option Closing Date, if any, the Underwriters' Counsel shall have been furnished with such documents, certificates and opinions as it may reasonably require for the purpose of enabling it to review or pass upon the matters referred to in Section 7(c) hereof, or in order to evidence the accuracy, completeness or satisfaction of any of the representations, warranties or conditions of the Company herein contained. (f) Prior to the Closing Date and each Option Closing Date, if any, (i) there shall have been no adverse change or development involving a prospective adverse change in the condition (financial or otherwise), earnings, business affairs, position, stockholders' equity, operations, properties, businesses or results of operations of the Company from the latest dates as of which such matters are set forth in the Registration Statement and the Prospectus; (ii) there shall have been no transaction, not in the ordinary course of business and consistent with past practices, entered into by the Company, from the latest date as of which the financial condition of the Company is set forth in the Registration Statement and the Prospectus, which may in any way be materially adverse to the Company; (iii) the Company shall not be in default, and no event shall have occurred which, with notice, lapse of time or both, would constitute a default, under any provision of any agreement, 19 instrument or other document relating to any outstanding indebtedness, except where such a default or event would not have a Material Adverse Effect; (iv) the Company shall not have issued any securities (other than the Securities) or declared or paid any dividend or made any distribution in respect of its capital stock of any class, and there shall not have been any change in the capital stock, or any change in the debt (long- or short-term) or liabilities or obligations (contingent or otherwise), of the Company except as provided for herein; (v) no material amount of the property or assets (tangible or intangible) of the Company shall have been pledged, mortgaged or otherwise encumbered; and (vi) no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental or other proceeding (including, without limitation, those pertaining to environmental, health or similar matters) shall be pending or threatened to which the Company is subject or to which any property or assets (tangible or intangible) of the Company are subject wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect and except as set forth in the Registration Statement and Prospectus and except for debts, liabilities and obligations incurred in the normal course of business consistent with past practices. (g) At the Closing Date and each Option Closing Date, if any, the Representative shall have received a certificate of the Company, signed by the principal executive officer, the chief financial or chief accounting officer of the Company, each such certificate to be dated the Closing Date or such Option Closing Date, as the case may be, to the effect that the person(s) executing the certificate has carefully examined the Registration Statement, the Prospectus and this Agreement, and that: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects, as if made on and as of the Closing Date or such Option Closing Date, and that the Company has complied in all material respects with all agreements and covenants and satisfied all conditions contained in this Agreement to be performed or satisfied at or prior to the Closing Date or such Option Closing Date, as the case may be; (ii) no stop order suspending the effectiveness of the Registration Statement or any part thereof has been issued, and no proceedings for that purpose have been initiated or are pending, contemplated or threatened; (iii) the Registration Statement, the Prospectus and each amendment and supplement thereto, if any, contain all statements and information required to be included therein, and neither the Registration Statement nor any amendment thereto, at the time such Registration Statement or amendment became effective and as of the date of such certificate included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading and neither any Prospectus nor any supplement thereto, at the date of such Prospectus or supplement thereto and at the date of such certificate, included any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; and (iv) subsequent to the latest respective dates as of which information is given in the Registration Statement and the Prospectus, (A) the Company has not incurred any liabilities or obligations, direct, indirect or contingent, other than in the ordinary course of business; (B) the Company has not paid or declared any dividends or other distributions on its capital stock or other ownership interests; (C) the Company has not entered into any transactions not in the ordinary course of business; (D) there has not been any change in the capital stock, long-term debt or short-term debt (other than any increase in short-term debt in the ordinary course of business) of the Company; (E) other than ordinary wear and tear, the Company has not sustained any material loss or damage to 20 its property or assets (tangible and intangible), whether or not insured; (F) there is no litigation which is pending or threatened against the Company which is required to be set forth in an amended or supplemented Prospectus which has not been so set forth; and (G) there has occurred no event required to be set forth in an amended or supplemented Prospectus which has not been so set forth. References to the Registration Statement and the Prospectus in this Section 8(g) are to such documents as amended and supplemented at the date of such certificate. (h) By the effective date of the Registration Statement, the Representative shall have received clearance from the NASD as to the amount of compensation allowable or payable to the Underwriters, in the amount as described in the Registration Statement. (i) At or prior to the time this Agreement is executed, the Representative shall have received a letter, dated such date, addressed to the Representative and in form and substance satisfactory in all respects to the Representative from Deloitte & Touche, L.L.P.: (i) confirming that it is an accounting firm of independent certified public accountants with respect to the Company within the meaning of the Act and the Rules and Regulations; (ii) stating its opinion that the financial statements and schedules of the Company included in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Act and the Rules and Regulations and that each of the Underwriters may rely upon the opinion of Deloitte & Touche, L.L.P. with respect to such financial statements and schedules included in the Registration Statement; (iii) stating that, on the basis of a limited review which included a reading of the latest available unaudited interim financial statements of the Company (with an indication of the date of the latest available unaudited interim financial statements), a reading of the latest available minutes of the stockholders and the board of directors, including any committees of the board of directors, of the Company, consultations with officers and other employees of the Company responsible for financial and accounting matters and other specified procedures and inquiries, nothing has come to its attention which would lead it to believe that (A) the unaudited financial statements and schedules of the Company included in the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the Act and the Rules and Regulations or are not fairly presented in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements of the Company included in the Registration Statement or (B) at a specified date not more than five (5) days prior to the effective date of the Registration Statement, there has been any change in the capital stock, short- term debt or long-term debt of the Company, or any decrease in the stockholders' equity or net current assets or net assets of the Company as compared with amounts shown in the December 31, 1996 balance sheet included in the Registration Statement or, if there was any change or decrease, setting forth the amount of such change or decrease, or (C) during the period from January 1, 1997 to a specified date not more than five (5) days prior to the effective date of the Registration Statement, there was any decrease in revenues, net income or net earnings per share of Common Stock, in each case as compared with the corresponding period beginning January 1, 1996, or, if there was any such decrease, setting forth the amount of such decrease; (iv) stating that it has compared specific dollar amounts, numbers of shares, percentages, statements and other financial information pertaining to the Company set forth in the 21 Registration Statement, in each case to the extent that such amounts, numbers, percentages, statements and information may be derived from the general accounting records, including work sheets or analysis, of the Company with the results obtained from the application of specific readings, inquiries and other appropriate procedures (which procedures do not constitute an examination in accordance with generally accepted auditing standards) set forth in the letter and found them to be in agreement; (v) stating it has read the unaudited financial statements referred to in Section 5(o) hereof; and (vi) statements as to such other matters as the Representative may reasonably request. (j) At the Closing Date and each Option Closing Date, if any, the Representative shall have received from Deloitte & Touche, L.L.P. a letter, dated as of the Closing Date or such Option Closing Date, as the case may be, to the effect that (i) it reaffirms that statements made in the letter furnished pursuant to Section 6(i) hereof, (ii) if the Company has elected to rely on Rule 430A under the Act or a Term Sheet under Rule 434, to the further effect that it has carried out procedures as specified in clause (iv) of such Section 6(i) with respect to certain amounts, numbers, percentages, statements and other financial information as specified by the Representative and deemed to be a part of the Registration Statement pursuant to Rule 430A(b) or 434 and has found such amounts, numbers, percentages, statements and other financial information to be in agreement with the documents specified in such clause (iv); and (iii) it has read the unaudited financial statements referred to in Section 5(o) hereof. (k) On the Closing Date and each Option Closing Date, if any, there shall have been duly tendered to the Representative the appropriate number of Securities. (l) No order suspending the sale of the shares in any jurisdiction designated by the Representative pursuant to Section 5(e) hereof shall have been issued on either the Closing Date or any Option Closing Date, and no proceedings for that purpose shall have been initiated or shall be pending, contemplated or threatened. (m) On or before the Closing Date, the Company shall have executed and delivered to you, individually and not in your capacity as the Representative, the Representative Warrant Agreement, substantially in the form filed as Exhibit 4.2 to the Registration Statement. The executed version of the Representative Warrant Agreement shall be reasonably satisfactory to you. (n) On or before the effective date of the Registration Statement, the Securities shall have been duly approved for quotation on the SCM. (o) On or before the effective date of the Registration Statement, the Company shall provide the Representative with true copies of executed Lock- Up Agreements. (p) The Company shall provide the Representative with such additional documents and certificates as the Representative may reasonably request. If any condition to the Underwriters' obligations hereunder to be fulfilled prior to or at the Closing Date or at any Option Closing Date, as the case may be, is not so fulfilled, the Underwriters may terminate this Agreement, without liability to any of the Underwriters, or, if the Representative 22 so elects in its sole discretion, it may waive any such conditions which have not been fulfilled or extend the time for their fulfillment. 8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify and hold harmless each Underwriter (for purposes of this Section 8, "Underwriters" shall include the officers, directors, partners, employees, agents and counsel of each Underwriter), and each person, if any, who controls any of the Underwriters, as applicable ("controlling person"), within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and against any and all losses, claims, damages, expenses (including, without limitation, reasonable attorneys, fees and expenses) or liabilities and all actions, suits, proceedings, inquiries, arbitrations, investigations, litigation or governmental or other proceedings (in this Section 8, collectively, "actions") in respect thereof, whatsoever (including, without limitation, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any action, commenced or threatened, or any claim whatsoever), as such are incurred, to which any Underwriter or such controlling person may become subject under the Act, the Exchange Act or any other statute or at common law or otherwise, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained (i) in any Preliminary Prospectus, the Registration Statement or the Prospectus (as from time to time amended and supplemented); (ii) in any post-effective amendment or amendments or any new registration statement and prospectus in which is included securities of the Company issued or issuable upon exercise of the Securities; (iii) in any application or other document or written communication (in this Section 8, collectively, "application") executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Securities under the securities or "blue sky" laws thereof or filed with the Commission, any state securities commission or agency, the NASD or the SCM or any other securities exchange; or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading (in light of the circumstances in which they were made), unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by the Selling Stockholders or the Representative with respect to an Underwriter expressly for use in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment thereof or supplement (including any Term Sheet) thereto, or in any application, as the case may be. In addition to its other obligations under this Section 8(a), the Company agrees that, as an interim measure during the pendency of any action arising out of or based upon any untrue statement or omission, or alleged untrue statement or alleged omission as described in this Section 8(a), it will reimburse each Underwriter (and, to the extent applicable, each controlling person), on a monthly basis for all reasonable legal or other expenses incurred in connection with investigating or defending any such action, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the Company's obligations to reimburse each Underwriter and (and, to the extent applicable, each controlling person), for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction. To the extent that any such interim reimbursement is so held to have been improper as to the Company, each Underwriter (and, to the extent applicable, each controlling person), shall promptly return it to the Company together with interest compounded daily, based on the "reference rate" announced from time to time by Bank of America NTSA (the "Prime Rate"), but in no case more than is allowed by applicable law. Any such interim reimbursement payments which are not made to an Underwriter, or a controlling person, as applicable, within thirty (30) days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request. Notwithstanding the foregoing or anything to the contrary in this Agreement, the Company shall provide no indemnity and shall not hold harmless the Representative or any Underwriter for any claims arising from or relating to a Preliminary Prospectus where the Representative or Underwriter 23 failed to circulate a revised Preliminary Prospectus (if a revised Preliminary Prospectus is prepared by the Company) or deliver the Final Prospectus. The indemnity agreement in this Section 8(a) shall be in addition to any liability which the Company may have at common law or otherwise. (b) Each Underwriter severally, but not jointly, agrees to indemnity and hold harmless the Company (for purposes of this Section 8, "Company" shall include the officers, directors, partners, employees, agents and counsel of the Company) and each other person, if any, who control the Company ("controlling person") within the meaning of the Act, to the same extent as the foregoing indemnity from the Company to each Underwriter, but only with respect to statements or omissions, if any, made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any amendment thereof or supplement (including any Term Sheet) thereto or in any application made in reliance upon, and in strict conformity with, written information furnished to the Company by the Representative with respect to such Underwriter expressly for use in any Preliminary Prospectus, the Registration Statement or the Prospectus or any amendment thereof or supplement (including any Term Sheet) thereto or in any application. The Company acknowledges that the statements set forth under the heading "Underwriting" (other than statements regarding Pete Peterson), the risks factors entitled "Inexperienced Representative" and "Representative's Potential Influence on the Market," statements regarding waiver or release of lock-up restrictions, and the stabilization legend in the Prospectus have been furnished by the Representative with respect to the Underwriters expressly for use therein and constitute the only information furnished in writing by the Representative with respect to the Underwriters for inclusion in any Preliminary Prospectus, the Registration Statement or the Prospectus. In addition to its other obligations under this Section 8(b), each Underwriter severally, but not jointly, agrees that, as an interim measure during the pendency of any action arising out of or based upon any untrue statement or omission, or alleged untrue statement or alleged omission as described in this Section 8(b), it will reimburse Company and (and, to the extent applicable, each controlling person) on a monthly basis for all reasonable legal or other expenses incurred in connection with investigating or defending any such action, notwithstanding the absence of a judicial determination as to the propriety and enforceability of such Underwriter's obligations to reimburse the Company (and, to the extent applicable, each controlling person) for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction. To the extent that any such interim reimbursement is so held to have been improper as to such Underwriter, such Underwriter (and, to the extent applicable, each controlling person) shall promptly return it to the Company, together with interest compounded daily, based on the Prime Rate, but in no case more than is allowed by applicable law. Any such interim reimbursement payments which are not made to the Company within thirty (30) days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request. Notwithstanding the provisions of this Section 8(b), no Underwriter shall be required to indemnify or hold harmless the Company, or any controlling person for, in the aggregate, any amounts in excess of the underwriting discount applicable to the Securities purchased by such Underwriter hereunder. The indemnity agreement in this Section 8(b) shall be in addition to any liability which each Underwriter severally, but not jointly, may have at common law or otherwise. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party shall notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure to so notify an indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent that it has been materially prejudiced by such failure). In case any such action is 24 brought against any indemnified party, and it notifies an indemnifying party or parties of the commencement thereof, the indemnifying party or parties shall be entitled to participate therein, and to the extent it or they may elect by written notice delivered to the indemnified party or parties promptly after receiving the aforesaid notice from such indemnified party or parties, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, an indemnified party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying party or parties in connection with the defense of such action at the expense of the indemnifying party or parties, (ii) the indemnifying party or parties shall not have employed counsel reasonably satisfactory to such indemnified party to have charge of the defense of such action within a reasonable time after notice of commencement of the action or (iii) such indemnified party shall have reasonably concluded that there may be one or more defenses available to it which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of one additional counsel (in addition to appropriate local counsel) shall be borne by the indemnifying parties. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to appropriate local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. Anything in this Section 9 to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent; PROVIDED, HOWEVER, that such consent may not be unreasonably withheld. (d) In order to provide for just and equitable contribution in any case in which (i) an indemnified party makes a claim for indemnification pursuant to this Section 8, but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of this Section 8 provide for indemnification in such case or (ii) contribution under the Act may be required on the part of any indemnified party, then each indemnifying party shall contribute to the amount paid as a result of such losses, claims, damages, expenses or liabilities (or actions in respect thereof) (A) in such proportion as is appropriate to reflect the relative benefits received by each of the contributing parties, on the one hand, and the party to be indemnified, on the other hand, from the offering of the Securities or (B) if the allocation provided by clause (A) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (A) above but also the relative fault of each of the contributing parties, on the one hand, and the party to be indemnified, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages, expenses or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities (before deducting expenses) bear to the total underwriting discounts received by the Underwriters hereunder, in each case as set forth in the table on the cover page of the Prospectus. Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, or by the Representative with respect to an Underwriter, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages, expenses or liabilities (or actions in respect thereof) referred to in the first sentence of this Section 8(d) shall be deemed to include any 25 legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Underwriter shall be required to contribute any amount in excess of the underwriting discount applicable to the Securities purchased by such Underwriter hereunder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act and the cases and promulgations thereunder) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8(d), each person, if any, who controls the Company, or an Underwriter within the meaning of the Act, each officer of the Company who has signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Underwriters, or the Company, as the case may be, subject in each case to the provisions of this Section 9(d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action against such party in respect to which a claim for contribution may be made against another party or parties under this Section 8(d), notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have hereunder or otherwise than under this Section 8(d) except to the extent it has been materially prejudiced by such failure. The contribution agreement set forth above shall be in addition to any liabilities which any indemnifying party may have at common law or otherwise. The Underwriters' obligations in this Section 8(d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The indemnity and contribution agreements contained in this Section 9 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter, the Company, its directors or officers or any person controlling the Company, (ii) acceptance of any Securities and payment therefor hereunder, and (iii) any termination of this Agreement. A successor to any Underwriter or any person controlling any Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 8. (f) In any proceeding relating to the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement (including any Term Sheet) thereto, each party against whom contribution may be sought under this Section 8 hereby consents to the jurisdiction of any court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon him or it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join him or it as an additional defendant in any such proceeding in which such other contributing party is a party. 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties, covenants and agreements contained in this Agreement, or contained in certificates of officers of the Company or delivered pursuant hereto, shall be deemed to be representations, warranties, covenants and agreements at the Closing Date and at each Option Closing Date, as the case may be, and such representations, warranties, covenants and agreements of the Company and the respective indemnity and contribution agreements contained in Section 8. hereof, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Representative, any of the Underwriters or the Company and shall survive the termination of this Agreement and the issuance, sale and delivery of the Securities to the Underwriters. 26 10. EFFECTIVE DATE. This Agreement shall become effective at 10:00 a.m., New York City time, on the date hereof, or at such earlier time after the Registration Statement becomes effective as the Representative, in its sole discretion, shall release the Securities for sale to the public; PROVIDED, HOWEVER, that the provisions of Sections 6, 8 and 11 hereof shall at all times be effective. For purposes of this Section 10, the Securities to be purchased hereunder shall be deemed to have been so released upon the earlier of dispatch by the Representative of telegrams or facsimile transmissions to securities dealers releasing such Securities for offering or the release by the Representative for publication of the first newspaper advertisement which is subsequently published relating to the Securities. 11. TERMINATION. (a) The Representative shall have the right to terminate this Agreement after it becomes effective, the exercise of which shall be determined in the Representative's sole discretion, if: (i) any domestic or international event or act or occurrence has, as determined in the Representative's sole judgment, disrupted, or in the Representative's sole judgment will in the immediate future materially disrupt, the financial markets; or (ii) any material adverse change, as determined in the Representative's sole judgment, in the financial markets shall have occurred; or (iii) trading on the New York Stock Exchange, the American Stock Exchange, the SCM, Nasdaq National Market or the over-the-counter market shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required on the over-the-counter market by the NASD or the Commission or any other governmental authority having jurisdiction; or (iv) the United States shall have become involved in a war or in hostilities, or there shall have been an escalation in an existing war or hostilities or a national emergency shall have been declared in the United States; or (v) a banking moratorium shall have been declared by any Delaware, California or federal authority or body; or (vi) a moratorium in foreign exchange trading shall have been declared; or (vii) the Company shall have sustained a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in the Representative's sole judgment, make it inadvisable to proceed with the offering, sale or delivery of the Securities; or (viii) there shall have been a material adverse change or development involving a material prospective change, in the condition (financial or otherwise), earnings, business affairs, position, prospects, stockholders' equity, operations, obligations, properties, businesses, management or results of operations of the Company taken as a whole, whether or not arising in the ordinary course of business, or (ix) if there shall have been a material adverse change in the general market, political or economic conditions, whether in the United States or elsewhere, as in the Representative's sole judgment would make it inadvisable to proceed with the offering, sale or delivery of the Securities. (b) Notwithstanding any contrary provision contained in this Agreement, in the event of any termination of this Agreement (including, without limitation, pursuant to Sections 7, 11(a) or 12 hereof), and whether or not this Agreement is otherwise carried out, the provisions of Sections 6 and 8 hereof shall remain effective and shall not in any way be affected by such termination or failure to carry out the terms of this Agreement or any part hereof. 12. DEFAULT BY THE COMPANY. If the Company shall fail at the Closing Date or any Option Closing Date, as applicable, to sell and deliver the number of Securities which it is obligated to sell and deliver hereunder on such date, then this Agreement shall terminate (or, if such default shall occur with respect to any Option Shares to be purchased on an Option Closing Date, the Underwriters may, in the Representative's sole discretion, by notice from the Representative to the Company, terminate the Underwriters' obligation to purchase such Option Shares from the Company on such 27 date) with no liability whatsoever on the part of any non-defaulting party other than pursuant to Sections 6, 8 and 11 hereof. No action taken pursuant to this Section 12 shall relieve the Company from liability, if any, in respect of such default. 13. SUBSTITUTION OF UNDERWRITERS. If any Underwriter defaults in its obligation to purchase the number of Securities which it has agreed to purchase under this Agreement, the non-defaulting Underwriters shall be obligated to purchase (in the respective proportions which the number of Securities set forth opposite the name of each non-defaulting Underwriter in Schedule I to this Agreement bears to the total number of Securities set forth opposite the names of all the non-defaulting Underwriters in Schedule I to this Agreement) the Securities which the defaulting Underwriter agreed but failed to purchase; except that the non-defaulting Underwriters shall not be obligated to purchase any of the Securities if the total number of Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase exceeds 10% of the total number of Securities, and any non-defaulting Underwriter shall not be obligated to purchase more than 110% of the number of Securities set forth opposite its name in Schedule I to this Agreement plus the total number of Option Shares purchasable by it pursuant to the terms of Section 3(b) hereof. If the foregoing maximums are exceeded, the non-defaulting Underwriters, and any other underwriters satisfactory to you who so agree, shall have the right, but shall not be obligated, to purchase (in such proportions as may be agreed upon among them) all the Securities. If the non-defaulting Underwriters or the other underwriters satisfactory to you do not elect to purchase the Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter, the Company except for the payment of expenses to be borne by the Company as provided in Section 6(a) hereof and the indemnify and contribution agreements of the Company and the Underwriters contained in Section 8 hereof; PROVIDED, HOWEVER, that this provision shall not affect any Closing which at the time of such termination already shall have taken place. Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have for damages caused by its default. If the other underwriters satisfactory to you are obligated or agreed to purchase the Securities of a defaulting Underwriter, either you or the Company may postpone the Closing Date for up to seven full Business Days in order to effect any changes that may be necessary in the Registration Statement, the Prospectus or in any other document or agreement, and to file promptly any amendments or any supplements to the Registration Statement or the Prospectus which in your opinion may thereby be made necessary. 14. NOTICES. All notices and communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be deemed to have been duly given if mailed, delivered by hand or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Representative at 33 Whitehall Street, New York, New York 10004, Attention: Jim Sheehan, with a copy to Jeffer, Mangels, Butler & Marmaro LLP, 2121 Avenue of the Stars, 10th Floor, Los Angeles, California 90067, Attention: Steven J. Insel, Esq. Notices to the Company shall be directed to the Company at 2540 Red Hill Avenue, Suite 100, Santa Ana, California 92705, Attention: President, with a copy to, Latham & Watkins, 650 Town Center Drive, Twentieth Floor, Costa Mesa, California 92626, Attention: William J. Cernius, Esq. 15. PARTIES. This Agreement shall inure solely to the benefit of and shall be binding upon, the Underwriters and the Company and the controlling persons, officers, directors and others referred to in Section 9 hereof, and their respective successors, legal representatives and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in 28 respect of or by virtue of this Agreement or any provisions herein contained. No purchaser of Securities from an Underwriter shall be deemed to be a successor merely by reason of such purchase. 16. CONSTRUCTION. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to conflict of laws principles thereof. 17. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which taken together shall be deemed to he one and the same instrument. Delivery of executed copies of this Agreement by facsimile transmission shall be deemed to be delivery of an original, executed copy of this Agreement by the transmitting party. 18. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Representative Warrant Agreement constitute the entire agreement of the parties hereto concerning the subject matter hereof and supersede all prior written or oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may not be amended, modified or altered except in a writing signed by the Representative and the Company. 29 If the foregoing correctly sets forth the understanding among the parties hereto, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among us. Very truly yours, SCOOP, INC., A DELAWARE CORPORATION By: ---------------------------------- Name: Mark Davidson Title: President Confirmed and accepted as of the date first above written. SHAMUS GROUP, INC. AS REPRESENTATIVE FOR THE SEVERAL UNDERWRITERS NAMED IN SCHEDULE I ATTACHED HERETO By: -------------------------------- Jim Sheehan Title: 30 SCHEDULE I ---------- UNDERWRITER NUMBER OF SHARES - ----------- ---------------- Shamus Group, Inc. TOTAL 1,300,000