EXHIBIT 1.1
355,000 SHARES
ACCESS INTEGRATED TECHNOLOGIES, INC.
CLASS A COMMON STOCK
PURCHASE AGREEMENT
January 17, 2006
CRAIG-HALLUM CAPITAL GROUP LLC
222 South Ninth Street, Suite 350
Minneapolis, Minnesota 55402
Ladies and Gentlemen:
Access Integrated Technologies, Inc., a Delaware corporation (the
"COMPANY") proposes, subject to the terms and conditions stated herein, to issue
and sell to Craig-Hallum Capital Group LLC (the "UNDERWRITER") an aggregate of
355,000 authorized but unissued shares (the "SECURITIES") of Class A Common
Stock, $.001 par value per share (the "COMMON STOCK"), of the Company.
The Company and the Underwriter hereby confirm their agreement with respect
to the purchase and sale of the Securities as follows:
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "COMMISSION") a
registration statement on Form S-3 (File No. 333-130553) under the Securities
Act of 1933, as amended (the "SECURITIES ACT") and the rules and regulations
(the "RULES AND REGULATIONS") of the Commission thereunder, and such amendments
to such registration statement as may have been required to the date of this
Agreement. Such registration statement has been declared effective by the
Commission. Such registration statement, at any given time, including amendments
thereto to such time, the exhibits and any schedules thereto at such time, the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act at such time and the documents and information
otherwise deemed to be a part thereof or included therein by Rule 430B under the
Securities Act or otherwise pursuant to the Rules and Regulations at such time,
is herein called the "REGISTRATION STATEMENT." The Registration Statement at the
time it originally became effective is herein called the "ORIGINAL REGISTRATION
STATEMENT."
The Company proposes to file with the Commission pursuant to Rule 424 under
the Securities Act a final prospectus supplement relating to the Securities to a
form of prospectus included in the Registration Statement relating to the
Securities in the form heretofore delivered to the Underwriter. Such prospectus
in the form in which it appears in the Registration Statement is hereinafter
called the "BASE PROSPECTUS." Such supplemental form of prospectus, in the form
in which it shall be filed with the Commission pursuant to Rule 424(b)(including
the Base Prospectus as so supplemented) is hereinafter called the "PROSPECTUS."
Any preliminary form of Prospectus which is filed or used prior to filing of the
Prospectus is hereinafter called a "PRELIMINARY PROSPECTUS." Any reference
herein to the Base Prospectus, any Preliminary Prospectus or the Prospectus
shall be deemed to include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such
prospectus.
For purposes of this Agreement, all references to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus or
any amendment or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("EDGAR"). All references in this Agreement to
amendments or supplements to the Registration Statement, the Base Prospectus,
any Preliminary Prospectus or the Prospectus shall be deemed to mean and include
the subsequent filing of any document under the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT") which is deemed to be incorporated therein by
reference therein or otherwise deemed by the Rules and Regulations to be a part
thereof.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees with, the
Underwriter as follows:
(i) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and each Preliminary
Prospectus, at the time of filing or the time of first use within the
meaning of the Rules and Regulations, complied in all material
respects with the requirements of the Securities Act and the Rules and
Regulations and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that
the foregoing shall not apply to statements in or omissions from any
Preliminary Prospectus in reliance upon, and in conformity with,
written information furnished to the Company by the Underwriter
specifically for use in the preparation thereof.
(ii) The Company has complied to the Commission's satisfaction
with all requests of the Commission for additional or supplemental
information. No stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge
of the Company, are contemplated or threatened by the Commission.
(iii) Each part of the Registration Statement and any
post-effective amendment thereto, at the time such part became
effective (including each deemed effective date with respect to the
Underwriter pursuant to Rule 430B under the Securities Act), at all
2
other subsequent times until the expiration of the Prospectus Delivery
Period (as defined below), and at the Closing Date (as hereinafter
defined), and the Prospectus (or any amendment or supplement to the
Prospectus), at the time of filing or the time of first use within the
meaning of the Rules and Regulations, at all subsequent times until
expiration of the Prospectus Delivery Period, and at the Closing Date
complied and will comply in all material respects with the applicable
requirements and provisions of the Securities Act, the Rules and
Regulations and the Exchange Act and did not and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, as amended or supplemented, as
of its date, or the time of first use within the meaning of the Rules
and Regulations, at all subsequent times until the expiration of the
Prospectus Delivery Period, and at the Closing Date, did not and will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with written
information relating to the Underwriter furnished to the Company by
the Underwriter, specifically for use in the preparation thereof.
(iv) Neither (A) the Issuer General Free Writing Prospectus(es)
issued at or prior to the Time of Sale, the Statutory Prospectus and
the information set forth in Schedule IV to this Agreement, all
considered together (collectively, the "TIME OF SALE DISCLOSURE
PACKAGE"), nor (B) any individual Issuer Limited-Use Free Writing
Prospectus, when considered together with the Time of Sale Disclosure
Package, includes or included as of the Time of Sale any untrue
statement of a material fact or omits or omitted as of the Time of
Sale to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The preceding sentence does not apply to
statements in or omissions from any Statutory Prospectus included in
the Registration Statement or any Issuer Free Writing Prospectus based
upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein. As used in
this paragraph and elsewhere in this Agreement:
(1) "TIME OF SALE" means 7:00 pm (Eastern time) on the date
of this Agreement.
(2) "STATUTORY PROSPECTUS" as of any time means the
Preliminary Prospectus that is included in the Registration
Statement immediately prior to that time. For purposes of this
definition, information contained in a form of prospectus that is
deemed retroactively to be a part of the Registration Statement
pursuant to Rule 430B under the Securities Act shall be
3
considered to be included in the Statutory Prospectus as of the
actual time that form of prospectus is filed with the Commission
pursuant to Rule 424(b) under the Securities Act.
(3) "ISSUER FREE WRITING PROSPECTUS" means any "issuer free
writing prospectus," as defined in Rule 433 under the Securities
Act, relating to the Securities that (A) is required to be filed
with the Commission by the Company, or (B) is exempt from filing
pursuant to Rule 433(d)(5)(i) under the Securities Act because it
contains a description of the Securities or of the offering that
does not reflect the final terms, in each case in the form filed
or required to be filed with the Commission or, if not required
to be filed, in the form retained in the Company's records
pursuant to Rule 433(g) under the Securities Act.
(4) "ISSUER GENERAL FREE WRITING PROSPECTUS" means any
Issuer Free Writing Prospectus that is intended for general
distribution to prospective investors, as evidenced by its being
specified in Schedule I to this Agreement.
(5) "ISSUER LIMITED-USE FREE WRITING PROSPECTUS" means any
Issuer Free Writing Prospectus that is not an Issuer General Free
Writing Prospectus.
(v) (A) Each Issuer Free Writing Prospectus, as of its issue date
and at all subsequent times through the Prospectus Delivery Period or
until any earlier date that the Company notified or notifies the
Underwriter as described in Section 4(a)(iii)(B), did not, does not
and will not include any information that conflicted, conflicts or
will conflict with the information contained in the Registration
Statement, any Statutory Prospectus or the Prospectus. The foregoing
sentence does not apply to statements in or omissions from any Issuer
Free Writing Prospectus based upon and in conformity with written
information furnished to the Company by the Underwriter specifically
for use therein.
(B) (1) At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a BONA
FIDE offer (within the meaning of Rule 164(h)(2) under the Securities
Act) of the Securities and (2) at the date hereof, the Company was not
and is not an "ineligible issuer," as defined in Rule 405 under the
Securities Act, including the Company or any subsidiary in the
preceding three years not having been convicted of a felony or
misdemeanor or having been made the subject of a judicial or
administrative decree or order as described in Rule 405 (without
taking account of any determination by the Commission pursuant to Rule
405 that it is not necessary that the Company be considered an
ineligible issuer), nor an "excluded issuer" as defined in Rule 164
under the Securities Act.
(C) Each Issuer Free Writing Prospectus satisfied, as of its
issue date and at all subsequent times through the Prospectus Delivery
Period, all other conditions to use thereof as set forth in Rules 164
and 433 under the Securities Act.
4
(vi) The financial statements of the Company, together with the
related notes, included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus comply in all material respects with the requirements of
the Securities Act and the Exchange Act and fairly present the
financial condition of the Company as of the dates indicated and the
results of operations and changes in cash flows for the periods
therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved; and
the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein. No other
financial statements or schedules are required to be included in the
Registration Statement, the Time of Sale Disclosure Package or the
Prospectus. To the Company's knowledge, each of PricewaterhouseCoopers
LLP and Eisner LLP, each of which has expressed its opinion with
respect to the financial statements and schedules filed as a part of
the Registration Statement and included in the Registration Statement,
the Time of Sale Disclosure Package and the Prospectus, is an
independent public accounting firm within the meaning of the
Securities Act and the Rules and Regulations and such accountants are
not in violation of the auditor independence requirements of the
Sarbanes-Oxley Act of 2002 (the "SARBANES-OXLEY ACT").
(vii) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. Each of the
Company and its subsidiaries has the corporate power and authority to
own its properties and conduct its business as currently being carried
on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do
business as a foreign corporation in good standing in each
jurisdiction in which it owns or leases real property or in which the
conduct of its business makes such qualification necessary and in
which the failure to so qualify would have a material adverse effect
upon the business, prospects, properties, operations, condition
(financial or otherwise) or results of operations of the Company and
its subsidiaries, taken as a whole, or in its ability to perform its
obligations under this Agreement ("MATERIAL ADVERSE EFFECT").
(viii) Except as contemplated in the Time of Sale Disclosure
Package and in the Prospectus, subsequent to the respective dates as
of which information is given in the Time of Sale Disclosure Package,
neither the Company nor any of its subsidiaries has incurred any
material liabilities or obligations, direct or contingent, or entered
into any material transactions, or declared or paid any dividends or
made any distribution of any kind with respect to its capital stock;
and there has not been any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to the
issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt,
or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock, of the Company or any of its
subsidiaries, or any material adverse change in the financial
condition, business, prospects, property, operations or results of
operations of the Company and its subsidiaries, taken as a whole
("MATERIAL ADVERSE CHANGE").
5
(ix) Except as set forth in the Time of Sale Disclosure Package
and the Prospectus, there is not pending or, to the knowledge of the
Company, threatened or contemplated, any action, suit or proceeding to
which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company is the subject before or by any
court or governmental agency, authority or body, or any arbitrator,
which, individually or in the aggregate, might result in any Material
Adverse Change.
(x) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or
state securities laws and except as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles of
equity. The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any agreement or
instrument to which the Company is a party or by which it is bound or
to which any of its property is subject, or any order, rule,
regulation or decree of any court or governmental agency or body
having jurisdiction over the Company or any of its properties except
for violations and defaults which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, the Company's charter or by-laws. No
consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or for the consummation of
the transactions contemplated hereby, including the issuance or sale
of the Securities by the Company, except such as may be required under
the Securities Act or state securities or blue sky laws; and the
Company has the power and authority to enter into this Agreement and
to authorize, issue and sell the Securities as contemplated by this
Agreement.
(xi) All of the issued and outstanding shares of capital stock of
the Company, including the outstanding shares of Common Stock, are
duly authorized and validly issued, fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws,
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities that have not
been waived in writing (a copy of which has been delivered to counsel
to the Underwriter); the Securities which may be sold hereunder by the
Company have been duly authorized and, when issued, delivered and paid
for in accordance with the terms of this Agreement, will have been
validly issued and will be fully paid and nonassessable; and the
capital stock of the Company, including the Common Stock, conforms to
the description thereof in the Registration Statement, in the Time of
Sale Disclosure Package and in the Prospectus. Except as otherwise
stated in the Registration Statement, in the Time of Sale Disclosure
6
Package and in the Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the
Company's charter, by-laws or any agreement or other instrument to
which the Company is a party or by which the Company is bound. Neither
the filing of the Registration Statement nor the offering or sale of
the Securities as contemplated by this Agreement gives rise to any
rights for or relating to the registration of any shares of Common
Stock or other securities of the Company that have not been waived.
All of the issued and outstanding shares of capital stock of each of
the Company's subsidiaries have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as otherwise
described in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus and except for any directors'
qualifying shares, the Company owns of record and beneficially, free
and clear of any security interests, claims, liens, proxies, equities
or other encumbrances, all of the issued and outstanding shares of
such stock. Except as described in the Registration Statement, in the
Time of Sale Disclosure Package and in the Prospectus, there are no
options, warrants, agreements, contracts or other rights in existence
to purchase or acquire from the Company or any subsidiary of the
Company any shares of the capital stock of the Company or any
subsidiary of the Company. The Company has an authorized and
outstanding capitalization as set forth in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus.
(xii) The Company and each of its subsidiaries holds, and is
operating in compliance in all material respects with, all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any governmental or self-regulatory body
required for the conduct of its business and all such franchises,
grants, authorizations, licenses, permits, easements, consents,
certifications and orders are valid and in full force and effect in
all material respects; and the Company and each of its subsidiaries is
in compliance in all material respects with all applicable federal,
state, local and foreign laws, regulations, orders and decrees.
(xiii) The Company and its subsidiaries have good and marketable
title to all property (whether real or personal) described in the
Registration Statement, in the Time of Sale Disclosure Package and in
the Prospectus as being owned by them which are material to the
business of the Company, in each case free and clear of all liens,
claims, security interests, other encumbrances or defects except such
as are described in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus. The property held under
lease by the Company and its subsidiaries is held by them under valid,
subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material
respect with the conduct of the business of the Company or its
subsidiaries.
(xiv) The Company and each of its subsidiaries owns or possesses
all patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets and rights necessary
for the conduct of the business of the Company and its subsidiaries as
7
currently carried on and as described in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus; except
as stated in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, to the knowledge of the
Company, no name which the Company or any of its subsidiaries uses and
no other aspect of the business of the Company or any of its
subsidiaries will involve or give rise to any infringement of, or
license or similar fees for, any patents, patent applications,
trademarks, service marks, tradenames, trademark registrations,
service mark registrations, copyrights, licenses, inventions, trade
secrets or other similar rights of others material to the business or
prospects of the Company and neither the Company nor any of its
subsidiaries has received any notice alleging any such infringement or
fee.
(xv) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in breach of or
otherwise in default, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the
performance of any material obligation, agreement or condition
contained in any bond, debenture, note, indenture, loan agreement or
any other material contract, lease or other instrument to which it is
subject or by which any of them may be bound, or to which any of the
material property or assets of the Company or any of its subsidiaries
is subject.
(xvi) The Company and its subsidiaries have timely filed all
federal, state and local income tax returns required to be filed and
are not in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto,
other than any which the Company or any of its subsidiaries is
contesting in good faith.
(xvii) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary
Prospectus, the Time of Sale Disclosure Package or the Prospectus or
other materials permitted by the Securities Act to be distributed by
the Company; PROVIDED, HOWEVER, that, except as set forth on Schedule
I, the Company has not made and will not make any offer relating to
the Securities that would constitute a "free writing prospectus" as
defined in Rule 405 under the Securities Act, except in accordance
with the provisions of Section 4(a)(xiv) of this Agreement.
(xviii) The Common Stock is registered pursuant to Section 12(b)
of the Exchange Act and is included or approved for inclusion on the
American Stock Exchange and the Company has taken no action designed
to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or delisting the Common Stock
from the American Stock Exchange (although the Company may choose to
list its securities on the NYSE or Nasdaq National Market) nor has the
Company received any notification that the Commission or the American
8
Stock Exchange is contemplating terminating such registration or
listing. The Company has complied in all material respects with the
applicable requirements of the American Stock Exchange for maintenance
of inclusion of the Common Stock thereon. The Company has filed an
application to include the Securities on the American Stock Exchange.
(xix) Other than the subsidiaries of the Company listed on
SCHEDULE III hereto, the Company, directly or indirectly, owns no
capital stock or other equity or ownership or proprietary interest in
any corporation, partnership, association, trust or other entity.
(xx) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus, since September 30, 2005, there has been no change in the
Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
(xxi) Other than as contemplated by this Agreement, the Company
has not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
(xxii) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties and as is customary for
companies engaged in similar businesses in similar industries.
(xxiii) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company," as such term is defined in the Investment Company Act of
1940, as amended.
(xxiv) The conditions for use of Form S-3, set forth in the
General Instructions thereto, have been satisfied. The Company also
complies with the standards for using Form S-3 as in place prior to
October 21, 1992, namely, as of a date within 30 days prior to the
date of this Agreement, the aggregate market value of the voting and
non-voting common equity of the Company held by non-affiliates of the
Company exceeded $100,000,000 (as calculated by reference to the
closing prior of the Common Stock on the American Stock Exchange) and
non-affiliates of the Company held more than 3,000,000 shares of the
Common Stock on such date.
9
(xxv) The documents incorporated by reference in the Time of Sale
Disclosure Package, the Registration Statement and in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and were filed
on a timely basis with the Commission and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; any
further documents so filed and incorporated by reference in the Time
of Sale Disclosure Package, the Registration Statement or in the
Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange
Act, and will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(xxvi) The Company is in substantial compliance with all
applicable provisions of the Sarbanes-Oxley Act and the rules and
regulations of the Commission thereunder that are effective with
respect to the Company and its subsidiaries on the date of this
Agreement, except where such noncompliance would not have,
individually or in the aggregate, a Material Adverse Effect.
(xxvii) The Company has established and maintains disclosure
controls and procedures (as defined in Rules 13a-14 and 15d-14 under
the Exchange Act) and such controls and procedures are effective in
ensuring that material information relating to the Company, including
its subsidiaries, is made known to the principal executive officer and
the principal financial officer. The Company has utilized such
controls and procedures in preparing and evaluating the disclosures in
the Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus.
(b) Any certificate signed by any officer of the Company and delivered
to the Underwriter or to the Underwriter's Counsel shall be deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell the Securities to the Underwriter, and the
Underwriter agrees to purchase from the Company the Securities. The purchase
price for each share of the Securities shall be $9.951 per share.
(b) The Securities will be delivered by the Company to the Underwriter
for the Underwriter's account against payment of the purchase price therefor by
wire transfer of same day funds payable to the order of the Company, as
appropriate, at the offices of Craig-Hallum Capital Group LLC, 222 South Ninth
Street, Minneapolis, Minnesota, or such other location as may be mutually
acceptable, at 9:00 a.m. Central time on the third (or if the Securities are
10
priced, as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30
p.m. Eastern time, the fourth) full business day following the date hereof, or
at such other time and date as the Underwriter and the Company determine
pursuant to Rule 15c6-1(a) under the Exchange Act, such time and date of
delivery being herein referred to as the "CLOSING DATE." If the Underwriter so
elects, delivery of the Securities may be made by credit through full fast
transfer to the account at The Depository Trust Company designated by the
Underwriter. Certificates representing the Securities, in definitive form and in
such denominations and registered in such names as the Underwriter may request
upon at least two business days' prior notice to the Company, will be made
available for checking and packaging not later than 10:30 a.m., Central time, on
the business day next preceding the Closing Date at the offices of Craig-Hallum
Capital Group LLC, 222 South Ninth Street, Minneapolis, Minnesota, or such other
location as may be mutually acceptable.
4. COVENANTS.
(a) The Company covenants and agrees with the Underwriter as follows:
(i) During the period beginning on the date hereof and ending on
the later of the Closing Date or such date, as in the opinion of counsel for
the Underwriter, the Prospectus is no longer required by law to be delivered
(or in lieu thereof the notice referred to in Rule 173(a) under the
Securities Act is no longer required to be provided), in connection with
sales by an underwriter or dealer (the "PROSPECTUS DELIVERY PERIOD"), prior
to amending or supplementing the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus, the Company shall furnish to the
Underwriter for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Underwriter reasonably objects.
(ii) After the date of this Agreement, the Company shall promptly
advise the Underwriter in writing (i) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission,
(ii) of the time and date of any filing of any post-effective amendment to
the Registration Statement or any amendment or supplement to any Preliminary
Prospectus, the Time of Sale Disclosure Package or the Prospectus, (iii) of
the time and date that any post-effective amendment to the Registration
Statement becomes effective and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto or of any order preventing or
suspending its use or the use of any Preliminary Prospectus, the Time of
Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, or of any proceedings to remove, suspend or terminate from
listing or quotation the Common Stock from any securities exchange upon
which it is listed for trading or included or designated for quotation, or
of the threatening or initiation of any proceedings for any of such
purposes. If the Commission shall enter any such stop order at any time, the
Company will use its reasonable efforts to obtain the lifting of such order
at the earliest possible moment. Additionally, the Company agrees that it
11
shall comply with the provisions of Rules 424(b), 430A and 430B, as
applicable, under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under Rule 424(b) or Rule 433
were received in a timely manner by the Commission (without reliance on Rule
424(b)(8) or Rule 164(b)).
(iii) (A) During the Prospectus Delivery Period, the Company will
comply as far as it is able with all requirements imposed upon it by the
Securities Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, and by the Exchange Act so far
as necessary to permit the continuance of sales of or dealings in the
Securities as contemplated by the provisions hereof, the Time of Sale
Disclosure Package, and the Registration Statement and the Prospectus. If
during such period any event occurs as a result of which the Prospectus (or
if the Prospectus is not yet available to prospective purchasers, the Time
of Sale Disclosure Package ) would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances then existing, not misleading, or
if during such period it is necessary or appropriate in the opinion of the
Company or its counsel or the Underwriter or counsel to the Underwriter to
amend the Registration Statement or supplement the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the Time of Sale
Disclosure Package ) to comply with the Securities Act or to file under the
Exchange Act any document which would be deemed to be incorporated by
reference in the Prospectus in order to comply with the Securities Act or
the Exchange Act, the Company will promptly notify the Underwriter and will
amend the Registration Statement or supplement the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the Time of Sale
Disclosure Package) or file such document (at the expense of the Company) so
as to correct such statement or omission or effect such compliance.
(B) If at any time following issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or would conflict with
the information contained in the Registration Statement, the Statutory
Prospectus or the Prospectus or included or would include an untrue
statement of a material fact or omitted or would omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not misleading, the
Company has promptly notified or promptly will notify the Underwriter and
has promptly amended or will promptly amend or supplement, at its own
expense, such Issuer Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission.
(iv) The Company shall take or cause to be taken all necessary
action to qualify the Securities for sale under the securities laws of such
jurisdictions as the Underwriter reasonably designates and to continue such
qualifications in effect so long as required for the distribution of the
Securities, except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to execute a general
consent to service of process in any state.
12
(v) The Company will furnish to the Underwriter and counsel for the
Underwriter copies of the Registration Statement, each Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus, and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Underwriter may from time to time
reasonably request.
(vi) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than 15 months
after the end of the Company's current fiscal quarter, an earnings statement
(which need not be audited) covering a 12-month period that shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 of the
Rules and Regulations.
(vii) The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay or cause
to be paid (A) all expenses (including transfer taxes allocated to the
respective transferees) incurred in connection with the delivery to the
Underwriter of the Securities, (B) all expenses and fees (including, without
limitation, fees and expenses of the Underwriter's counsel) in connection
with the preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein and all
amendments, schedules, and exhibits thereto), the Securities, each
Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus
and any amendment thereof or supplement thereto, and the printing, delivery,
and shipping of this Agreement and other underwriting documents, including
Blue Sky Memoranda (covering the states and other applicable jurisdictions),
(C) all filing fees and fees and disbursements of the Underwriter's counsel
incurred in connection with the qualification of the Securities for offering
and sale by the Underwriter or by dealers under the securities or blue sky
laws of the states and other jurisdictions which the Underwriter shall
designate, (D) the fees and expenses of any transfer agent or registrar, (E)
the filing fees and fees and disbursements of Underwriter's counsel incident
to any required review and approval by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities, (F)
listing fees, if any, and (G) all other costs and expenses incident to the
performance of its obligations hereunder that are not otherwise specifically
provided for herein. If this Agreement is terminated by the Underwriter
pursuant to Section 8 hereof or if the sale of the Securities provided for
herein is not consummated by reason of any failure, refusal or inability on
the part of the Company to perform any agreement on its part to be
performed, or because any other condition of the Underwriter's obligations
hereunder required to be fulfilled by the Company is not fulfilled, the
Company will reimburse the Underwriter for all out-of-pocket disbursements
(including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges)
incurred by the Underwriter in connection with their investigation,
preparing to market and marketing the Securities or in contemplation of
performing their obligations hereunder. Notwithstanding anything contained
herein, the maximum amount payable by the Company for Underwriter's counsel
fees, disbursements and expenses pursuant to this Section 4(a)(vii) shall be
$15,000.
13
(viii) The Company will apply the net proceeds from the sale of the
Securities to be sold by it hereunder for the purposes set forth in the Time
of Sale Disclosure Package and in the Prospectus.
(ix) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities
(x) The Company will not incur any liability for any finder's or
broker's fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(xi) During the Prospectus Delivery Period, the Company will file
on a timely basis with the Commission such periodic and special reports as
required by the Rules and Regulations.
(xii) The Company and its subsidiaries will maintain such controls
and other procedures, including without limitation those applicable to the
Company and required by Sections 302 and 906 of the Sarbanes-Oxley Act and
the applicable regulations thereunder, that are designed to ensure that
information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Commission's rules and
forms, including without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal executive
officer and its principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure, to ensure that material information relating to Company,
including its subsidiaries, is made known to them by others within those
entities.
(xiii) The Company and its subsidiaries will substantially comply
with all effective applicable provisions of the Sarbanes-Oxley Act.
(xiv) The Company represents and agrees that, unless it obtains the
prior written consent of the Underwriter, and the Underwriter represents and
agrees that, unless it obtains the prior written consent of the Company, it
has not made and will not make any offer relating to the Securities that
would constitute an "issuer free writing prospectus," as defined in Rule 433
under the Securities Act, or that would otherwise constitute a "free writing
prospectus," as defined in Rule 405 under the Securities Act, required to be
filed with the Commission; provided that the prior written consent of the
parties hereto shall be deemed to have been given in respect of the free
writing prospectuses included in Schedule I. Any such free writing
14
prospectus consented to by the Company and the Underwriter is hereinafter
referred to as a "PERMITTED FREE WRITING PROSPECTUS." The Company represents
that it has treated or agrees that it will treat each Permitted Free Writing
Prospectus as an "issuer free writing prospectus," as defined in Rule 433,
and has complied and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including timely
Commission filing where required, legending and record keeping.
5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter hereunder are subject to the accuracy, as of the date hereof and at
the Closing Date (as if made at the Closing Date), of and compliance with all
representations, warranties and agreements of the Company contained herein, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If filing of the Prospectus, or any amendment or supplement thereto,
or any Issuer Free Writing Prospectus, is required under the Securities Act or
the Rules and Regulations, the Company shall have filed the Prospectus (or such
amendment or supplement) or such Issuer Free Writing Prospectus with the
Commission in the manner and within the time period so required (without
reliance on Rule 424(b)(8) or Rule 164(b)); the Registration Statement shall
remain effective; no stop order suspending the effectiveness of the Registration
Statement or any part thereof, or any amendment thereof, nor suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus shall have been issued; no proceedings for the
issuance of such an order shall have been initiated or threatened; any request
of the Commission for additional information (to be included in the Registration
Statement, the Time of Sale Disclosure Package, the Prospectus, any Issuer Free
Writing Prospectus or otherwise) shall have been complied with to the
Underwriter's satisfaction; and the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and arrangements.
(b) The Underwriter shall not have advised the Company that the
Registration Statement, the Time of Sale Disclosure Package or the Prospectus,
or any amendment thereof or supplement thereto, or any Issuer Free Writing
Prospectus, contains an untrue statement of fact which, in the Underwriter's
opinion, is material, or omits to state a fact which, in the Underwriter's
opinion, is material and is required to be stated therein or necessary to make
the statements therein not misleading.
(c) Except as contemplated in the Time of Sale Disclosure Package and in
the Prospectus, subsequent to the respective dates as of which information is
given in the Time of Sale Disclosure Package, neither the Company nor any of its
subsidiaries shall have incurred any material liabilities or obligations, direct
or contingent, or entered into any material transactions, or declared or paid
any dividends or made any distribution of any kind with respect to its capital
stock; and there shall not have been any change in the capital stock (other than
a change in the number of outstanding shares of Common Stock due to the issuance
of shares upon the exercise of outstanding options or warrants), or any material
change in the short-term or long-term debt of the Company, or any issuance of
options, warrants, convertible securities or other rights to purchase the
15
capital stock of the Company or any of its subsidiaries, or any Material Adverse
Change or any development involving a prospective Material Adverse Change
(whether or not arising in the ordinary course of business), or any loss by
strike, fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, incurred by the Company or any subsidiary, the effect of
which, in any such case described above, in the Underwriter's judgment, makes it
impractical or inadvisable to offer or deliver the Securities on the terms and
in the manner contemplated in the Time of Sale Disclosure Package, the
Registration Statement and in the Prospectus.
(d) On or after the Time of Sale (i) no downgrading shall have occurred
in the rating accorded any of the Company's securities by any "nationally
recognized statistical organization," as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
securities.
(e) On the Closing Date, there shall have been furnished to the
Underwriter the opinion of Kelley, Drye & Warren LLP, counsel for the Company,
dated the Closing Date and addressed to the Underwriter, in form and substance
reasonably satisfactory to the Underwriter, to the effect set forth in Schedule
II.
In rendering such opinion such counsel may rely (i) as to matters of law
other than New York, Delaware and federal law, upon the opinion or opinions of
local counsel provided that the extent of such reliance is specified in such
opinion and that such counsel shall state that such opinion or opinions of local
counsel are satisfactory to them and that they believe they and the Underwriter
are justified in relying thereon and (ii) as to matters of fact, to the extent
such counsel deems reasonable upon certificates of officers of the Company and
its subsidiaries provided that the extent of such reliance is specified in such
opinion.
(d) On the Closing Date, the Underwriter shall have received a letter of
Eisner LLP, dated the Closing Date and addressed to the Underwriter, confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements relating
to the qualifications of accountants under Rule 2-01 of Regulation S-X of the
Commission, and stating, as of the date of such letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Time of Sale Disclosure Package,
as of a date not prior to the date hereof or more than five days prior to the
date of such letter), the conclusions and findings of said firm with respect to
the financial information and other matters covered by its letter delivered to
the Underwriter concurrently with the execution of this Agreement, and the
effect of the letter so to be delivered on the Closing Date shall be to confirm
the conclusions and findings set forth in such prior letter.
(e) On the Closing Date, there shall have been furnished to the
Underwriter a certificate, dated the Closing Date and addressed to the
Underwriter, signed by the chief executive officer or the chief financial
officer of the Company, to the effect that:
16
(i) The representations and warranties of the Company in this
Agreement are true and correct, in all material respects, as if made at and
as of the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) No stop order or other order suspending the effectiveness of the
Registration Statement or any part thereof or any amendment thereof or the
qualification of the Securities for offering or sale nor suspending or
preventing the use of the Time of Sale Disclosure Package, the Prospectus
or any Issuer Free Writing Prospectus, has been issued, and no proceeding
for that purpose has been instituted or, to the best of their knowledge, is
contemplated by the Commission or any state or regulatory body; and
(iii) The signers of said certificate have carefully examined the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, and any amendments thereof or supplements thereto (including
any documents filed under the Exchange Act and deemed to be incorporated by
reference into the Time of Sale Disclosure Package, the Registration
Statement or the Prospectus), and
(A) each part of the Registration Statement and the Prospectus,
and any amendments thereof or supplements thereto (including any
documents filed under the Exchange Act and deemed to be incorporated
by reference into the Prospectus) contain, and contained, when such
part of the Registration Statement (or such amendment) became
effective, all statements and information required to be included
therein, each part of the Registration Statement, or any amendment
thereof, does not contain, and did not contain, when such part of the
Registration Statement (or such amendment) became effective, any
untrue statement of a material fact or omit to state, and did not omit
to state when such part of the Registration Statement (or such
amendment) became effective, any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented, does not include and
did not include as of its date, or the time of first use within the
meaning of the Rules and Regulations, any untrue statement of a
material fact or omit to state and did not omit to state as of its
date, or the time of first use within the meaning of the Rules and
Regulations, a material fact necessary to make the statements therein,
in light of the circumstances under which they were made,
(B) neither (1) the Time of Sale Disclosure Package nor (2) any
individual Issuer Limited-Use Free Writing Prospectus, when considered
together with the Time of Sale Disclosure Package, include, nor
included as of the Time of Sale any untrue statement of a material
fact or omits, or omitted as of the Time of Sale, to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
17
(C) since the Time of Sale, there has occurred no event required
to be set forth in an amended or supplemented prospectus which has not
been so set forth, and there has been no document required to be filed
under the Exchange Act that upon such filing would be deemed to be
incorporated by reference into the Time of Sale Disclosure Package,
the Registration Statement or into the Prospectus that has not been so
filed,
(D) subsequent to the respective dates as of which information is
given in the Time of Sale Disclosure Package, neither the Company nor
any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, not in the ordinary course of business, or declared or
paid any dividends or made any distribution of any kind with respect
to its capital stock, and except as disclosed in the Time of Sale
Disclosure Package and in the Prospectus, there has not been any
change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon
the exercise of outstanding options or warrants), or any material
change in the short-term or long-term debt, or any issuance of
options, warrants, convertible securities or other rights to purchase
the capital stock, of the Company, or any of its subsidiaries, or any
Material Adverse Change or any development involving a prospective
Material Adverse Change (whether or not arising in the ordinary course
of business), or any loss by strike, fire, flood, earthquake, accident
or other calamity, whether or not covered by insurance, incurred by
the Company or any subsidiary, and
(E) except as stated in the Time of Sale Disclosure Package and
in the Prospectus, there is not pending, or, to the knowledge of the
Company, threatened or contemplated, any action, suit or proceeding to
which the Company or any of its subsidiaries is a party before or by
any court or governmental agency, authority or body, or any
arbitrator, which might result in any Material Adverse Change.
(f) The Company shall have furnished to the Underwriter and counsel
for the Underwriter such additional documents, certificates and evidence as the
Underwriter or counsel for the Underwriter may have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriter and counsel for the Underwriter. The Company
will furnish the Underwriter with such conformed copies of such opinions,
certificates, letters and other documents as the Underwriter shall reasonably
request.
18
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Underwriter
against any losses, claims, damages or liabilities to which the Underwriter may
become subject, under the Securities Act or otherwise (including in settlement
of any litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, including the information deemed to be a part of the Registration
Statement at the time of effectiveness and at any subsequent time pursuant to
Rules 430A and 430B of the Rules and Regulations, if applicable, any Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any
amendment or supplement thereto (including any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Prospectus),
any Issuer Free Writing Prospectus or in any materials or information provided
to investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Common Stock ("MARKETING MATERIALS"), including
any roadshow or investor presentations made to investors by the Company (whether
in person or electronically) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending against such loss, claim, damage,
liability or action; or (ii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iii) in
whole or in part upon any failure of the Company to perform its obligations
hereunder or under law; PROVIDED, HOWEVER, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus,
or any such amendment or supplement, any Issuer Free Writing Prospectus or in
any Marketing Materials, in reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically for use in
the preparation thereof.
In addition to their other obligations under this Section 6(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 6(a), it will reimburse the Underwriter on a monthly basis for all
reasonable legal fees or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriter for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Underwriter shall promptly return it to the Company, together with
interest, compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Wells Fargo Bank, N.A. (the "PRIME RATE"). Any such interim
reimbursement payments which are not made to the Underwriter within 30 days of a
19
request for reimbursement shall bear interest at the Prime Rate from the date of
such request. This indemnity agreement shall be in addition to any liabilities
which the may otherwise have.
(b) The Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Securities Act or otherwise (including in settlement
of any litigation, if such settlement is effected with the written consent of
such Underwriter), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto or any Issuer Free Writing
Prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, any
Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto, or any Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use in the preparation thereof, and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with investigating or defending against any such
loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party except to the extent such indemnifying
party has been materially prejudiced by such failure. In case any such action
shall be brought against any indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if, in the sole judgment of the Underwriter, it is advisable for the
Underwriter to be represented by separate counsel, the Underwriter shall have
the right to employ a single counsel to represent the Underwriter in any claim
in respect of which indemnity may be sought by the Underwriter under subsection
(a) of this Section 6, in which event the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party or parties and
reimbursed to the Underwriter as incurred (in accordance with the provisions of
the second paragraph in subsection (a) above).
20
The indemnifying party under this Section 6 shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by this Section 6, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement, compromise or consent to the entry
of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is or could have been a party and indemnity was
or could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent (a) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding and (b) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriter on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriter on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriter on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received by
the Underwriter, in each case as set forth in the table on the cover page of the
Prospectus. The 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 the Underwriter and the parties' relevant intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriter agree that it
would not be just and equitable if contributions pursuant to this subsection (d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
21
to in the first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or claim
which is the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), the Underwriter shall not be required to contribute any
amount in excess of the amount by which the total price at which the Securities
were offered to the public exceeds the amount of any damages that the
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and the benefits
of such obligations shall extend, upon the same terms and conditions, to each
person, if any, who controls the Underwriter within the meaning of the
Securities Act; and the obligations of the Underwriter under this Section 6
shall be in addition to any liability that the Underwriter may otherwise have
and the benefits of such obligations shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director of
the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Securities Act.
(f) The Underwriter confirms and the Company acknowledges that there
is no information concerning the Underwriter furnished in writing to the Company
by the Underwriter specifically for inclusion in the Registration Statement, any
Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus or
any Issuer Free Writing Prospectus.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, including but not limited to the
agreements of the Underwriter and the Company contained in Section 6 hereof,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Underwriter or any controlling person
thereof, or the Company or any of its officers, directors, or controlling
persons, and shall survive delivery of, and payment for, the Securities to and
by the Underwriter hereunder.
8. TERMINATION OF THIS AGREEMENT.
(a) The Underwriter shall have the right to terminate this Agreement
by giving notice to the Company as hereinafter specified at any time at or prior
to the Closing Date, if (i) the Company shall have failed, refused or been
unable, at or prior to the Closing Date, to perform any material agreement on
its part to be performed hereunder, (ii) any condition of the Underwriter's
obligations hereunder is not fulfilled, (iii) trading in the Company's Common
Stock shall have been suspended by the Commission or the American Stock Exchange
or trading in securities generally on the Nasdaq National Market, New York Stock
22
Exchange or the American Stock Exchange shall have been suspended, (iv) minimum
or maximum prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required, on the Nasdaq National Market,
New York Stock Exchange or the American Stock Exchange, by such Exchange or by
order of the Commission or any other governmental authority having jurisdiction,
(v) a banking moratorium shall have been declared by federal or state
authorities, or (vi) there shall have occurred any attack on, outbreak or
escalation of hostilities or act of terrorism involving the United States, any
declaration by the United States of a national emergency or war, any change in
financial markets, any substantial change or development involving a prospective
substantial change in United States or international political, financial or
economic conditions, or any other calamity or crisis that, in the Underwriter's
judgment, is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Securities. Any
such termination shall be without liability of any party to any other party
except that the provisions of Section 4(a)(vii) and Section 6 hereof shall at
all times be effective and shall survive such termination.
(b) If the Underwriter elect to terminate this Agreement as provided
in this Section, the Company shall be notified promptly by the Underwriter by
telephone, confirmed by letter.
9. DEFAULT THE COMPANY. If the Company shall fail at the Closing Date to
sell and deliver the Securities which it is obligated to sell hereunder, then
this Agreement shall terminate without any liability on the part of the
Underwriter or, except as provided in Section 4(a)(vii), any non-defaulting
party. No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
10. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing and, if to the Underwriter, shall be mailed,
delivered or telecopied to Craig-Hallum Capital Group LLC, 222 South Ninth
Street, Suite 350, Minneapolis, Minnesota 55402, Attention: Patricia S.
Bartholomew; if to the Company, shall be mailed, delivered or telecopied to it
at 55 Madison Avenue, Suite 300, Morristown, New Jersey 07960, Attention: A.
Dale Mayo; or in each case to such other address as the person to be notified
may have requested in writing. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 6. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from the
Underwriter.
12. ABSENCE OF FIDUCIARY RELATIONSHIP. The Company acknowledges and agrees
that: (a) the Underwriter has been retained solely to act as an underwriter in
23
connection with the sale of the Securities and that no fiduciary, advisory or
agency relationship between the Company and the Underwriter has been created in
respect of any of the transactions contemplated by this Agreement, irrespective
of whether the Underwriter has advised or is advising the Company on other
matters; (b) the price and other terms of the Securities set forth in this
Agreement were established by the Company following discussions and arms-length
negotiations with the Underwriter and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement; (c) it has been advised that the
Underwriter and its affiliates are engaged in a broad range of transactions
which may involve interests that differ from those of the Company and that the
Underwriter has no obligation to disclose such interest and transactions to the
Company by virtue of any fiduciary, advisory or agency relationship; (d) it has
been advised that the Underwriter is acting, in respect of the transactions
contemplated by this Agreement, solely for the benefit of the Underwriter, and
not on behalf of the Company.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.
[Signature Page Follows]
24
Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the Company
and the Underwriter in accordance with its terms.
Very truly yours,
ACCESS INTEGRATED TECHNOLOGIES, INC.
By /s/ A. DALE MAYO
---------------------------------
Title: CHAIRMAN, CHIEF EXECUTIVE
OFFICER AND PRESIDENT
Confirmed as of the date first above
mentioned by the Underwriter.
CRAIG-HALLUM CAPITAL GROUP LLC
By /s/ BARTHOLOMEW
-----------------------------------
Name: P. BARTHOLOMEW
-------------------------------
Managing Director