ImageMatrix CORPORATION
1,400,000 Units
UNDERWRITING AGREEMENT
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NEIDIGER, TUCKER, BRUNER, INC. ______________, 1996
300 Plaza Level
1675 Larimer Street
Denver, Colorado 80202
JOSEPH CHARLES & ASSOC., INC.
356 North Camden Drive
Beverly Hills, California 90210
(As Representatives of the Several
Underwriters named in Schedule I hereto)
Gentlemen:
ImageMatrix Corporation, a Colorado corporation (the "Company"),
proposes to sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), on whose behalf Neidiger, Tucker, Bruner, Inc. and Joseph
Charles & Assoc., Inc. are acting as the representatives (the
"Representatives"), 1,400,000 Units (the "Firm Units"), each Unit consisting of
one share of the Common Stock, no par value, of the Company (the "Common Stock")
and one Redeemable Common Stock Purchase Warrant (the "Warrants"). The terms of
the Units and the components of the Units shall be as described in the
Registration Statement which is described below in Section 1(a). In addition,
for the sole purpose of covering over-allotments in connection with the sale of
the Firm Units, the Company proposes to grant to the several Underwriters an
option to purchase up to an additional 210,000 Units (the "Option Units").
The Company further agrees to sell and issue to you individually, and
not in your capacities as Representatives, five-year warrants (the
"Representatives' Warrants") to purchase, for 120% of the public offering price
of the Firm Units, an aggregate of 140,000 Units (the "Representatives' Warrant
Units"). Each Representatives' Warrant Unit consists of one share of Common
Stock ("Warrant Unit Shares") and one Redeemable Common Stock Purchase Warrant
("Underlying Warrant"). The terms and conditions of the Representatives'
Warrants, Representatives' Warrant
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Units, Warrant Unit Shares and Underlying Warrant, including the purchase price
thereof, shall be as set forth in the Representatives' Warrant Agreement filed
as an exhibit to the Registration Statement.
Each of the Representatives has advised the Company that: (a) it is
authorized to enter into this Agreement on behalf of the several Underwriters;
and (b) the several Underwriters are willing, acting severally and not jointly,
to purchase the numbers of Firm Units set forth opposite their respective names
in Schedule I.
The Firm Units, any Option Units purchased pursuant to this Agreement
and the Representatives' Warrant Units are collectively called herein the
"Units" and the Warrants included in the Units and the Representatives' Warrants
are collectively called herein the "Warrants." The shares of Common Stock
issuable upon exercise of the Warrants are collectively called the "Warrant
Shares" and the Warrant Shares, together with the shares of Common Stock
included in the Units, are collectively called the "Shares." The Shares,
Warrants and the Representatives' Warrant Units are sometimes referred to herein
collectively as the "Underlying Securities." The term "Underwriters" refers to
any individual member of the underwriting syndicate and includes any party
substituted for an Underwriter under Section 7 hereof.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter that:
(a) A registration statement on Form SB-2 (File No. 33-31990), and
as a part thereof a preliminary prospectus and related exhibits, for
registration of the Units, Warrants, and Shares has been prepared by
the Company in conformity with the requirements of the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder (the "1933 Act" and the "1933 Act Regulations",
respectively) has been filed with the Securities and Exchange
Commission (the "Commission"). One or more amendments to such
registration statement have been so prepared and filed in the form
delivered to you. No other amendment thereto has been filed and none
will be filed with the Commission prior to the time such registration
statement becomes effective which shall be disapproved by you promptly
after reasonable notice thereof. The registration statement, including
the prospectus, Part II, the documents incorporated by reference
therein and all schedules and exhibits thereto, as amended at the time
when it becomes effective is hereinafter referred to as the
"Registration Statement." Any prospectus included in the Registration
Statement and in any amendments thereto prior to the effective date of
the Registration Statement is referred to herein as the "Preliminary
Prospectus." The prospectus on file with the Commission when the
Registration Statement becomes effective is herein referred to as the
"Prospectus," except that if the prospectus filed by the Company
pursuant to Rules 424(b) and 430A of the 1933 Act Regulations of the
Commission differs from the prospectus on file at the time the
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Registration Statement becomes effective, the term "Prospectus" shall
also include the Rules 424(b) and 430A prospectus from and after the
time it is transmitted to the Commission for filing.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission or any state of the United
States or other regulatory body, and each Preliminary Prospectus, at
the time of filing thereof, 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 light of the
circumstances under which they were made, not misleading; provided,
however, that the foregoing shall not apply to statements or omissions
made in reliance upon and in conformity with written information
furnished to the Company by you or by an Underwriter(s) through you
expressly for use in the Registration Statement or Prospectus.
(c) When the Registration Statement becomes effective, and at all
times subsequent thereto up to and including each Closing Date (as
defined in Section 3), the Registration Statement, any post-effective
amendment thereto and the Prospectus, each as amended or supplemented,
will contain all statements which are required to be stated therein in
accordance with the 1933 Act and 1933 Act Regulations and shall
otherwise comply in all material respects with the requirements of the
1933 Act and 1933 Act Regulations. No such document shall contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing shall not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company by an Underwriter(s)
through you expressly for use in the Registration Statement or
Prospectus.
(d) To the best of the Company's knowledge and information, each
firm of accountants which certified any of the financial statements
included in the Registration Statement is an independent certified
public accountant as required by the 1933 Act and the 1933 Act
Regulations. The financial statements (including the related notes)
included in the Registration Statement, any Preliminary Prospectus and
the Prospectus present fairly the financial condition, the results of
operations, changes in financial condition and cash flows of the
Company at the dates and for the periods indicated and have been
prepared in accordance with generally accepted accounting principles
and accounting requirements of the 1933 Act and the 1933 Act
Regulations applied on a consistent basis throughout the periods
indicated. All adjustments necessary for a fair presentation of results
for such periods have been made. The selected financial data included
in the Registration Statement, any Preliminary Prospectus and the
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with the audited financial statements
included in the Registration Statement, any Preliminary Prospectus and
the Prospectus.
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(e) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado, with full
power and authority (corporate and other) to own or lease its
properties and conduct its business as described in the Prospectus, and
is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the business conducted by it or
the location of the properties owned or leased by it makes such
qualification necessary, except where the failure to do so would not
have a material adverse effect. The Company holds all material
licenses, certificates, permits, consents, orders and approvals or
other authorizations necessary to lease or own, as the case may be, and
to operate its property and conduct its business as described in the
Prospectus. None of the activities or businesses of the Company is in
violation of any law, rule, regulation or order of the United States,
any state, county or locality, or of any agency or body of the United
States or of any state, county or locality, other than violations which
would not have a material adverse effect upon the Company. The Company
has no "subsidiaries" (as that term is defined in the 1933 Act
Regulations) and has not had any subsidiaries since its formation,
other than the subsidiary or subsidiaries ("Subsidiary" or
"Subsidiaries") identified in the Registration Statement. (As used
herein, the term "Company," when used with respect to any period during
which any Subsidiary was a subsidiary of the Company, shall be deemed
to include such Subsidiary or Subsidiaries.) The Company does not own
or hold any interest in any corporation, partnership, joint venture or
other entity except as described in the Registration Statement and
Preliminary Prospectus and the Prospectus.
(f) The capitalization of the Company is or will be as set forth
under the caption "Capitalization" in the Prospectus, and the Units and
the Underlying Securities conform or will conform to the description
thereof contained under the caption "Description of Securities" in the
Prospectus. The outstanding shares of Common Stock have been, and the
Units and their components upon issuance and delivery and payment
therefor in the manner contemplated by this Agreement, will be, duly
authorized, validly issued, fully paid and nonassessable. The shares of
Common Stock are not subject to preemptive rights or other rights to
subscribe for or to purchase additional securities from the Company, or
subject to any restriction upon voting or transfer, pursuant to the
Company's Articles of Incorporation or Bylaws, as amended, or any
agreement (except as provided in Section 4(u) hereof) or other
instrument to which the Company is a party or by which it is bound.
Neither the filing of the Registration Statement nor the offering or
sale of the Units, Warrants or Shares, as contemplated by this
Agreement and the Representatives' Warrant Agreement, gives rise to any
rights other than those which have been waived or satisfied.
(g) Except as may be described in or contemplated by the
Prospectus, there has not been any material adverse change in, or any
adverse development that materially affects, the business, properties,
financial condition, results of operations or prospects of the Company
from the date as of which information is given in the Prospectus; and
except as described in the Prospectus, the Company has not, directly or
indirectly, incurred any
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material liabilities or obligations, direct or contingent, not in the
ordinary course of business, other than obligations related to the
offering of the Units and as otherwise provided herein, or entered into
any transaction not in the ordinary course of business which is
material to the business of the Company and required to be disclosed in
the Prospectus. Except as described in or contemplated by the
Prospectus, there has not been any material change in the capital stock
of, or any incurrence of long-term debt by, the Company, or any
issuance or grant of options, warrants or rights to purchase the
capital stock of the Company, or any declaration or payment of any
dividend on the capital stock of the Company from the date as of which
information will be given in the Prospectus.
(h) The Company is not, nor with the giving of notice or lapse of
time or both will it be, in violation of or in default under, nor will
the execution or delivery hereof or of the Representatives' Warrant
Agreement or consummation of the transactions contemplated hereby or
thereby result in a violation of, or constitute a default that would be
material to the business of the Company under the Company's Articles of
Incorporation or Bylaws, as amended, or other governing documents of
the Company, or any material agreement, deed of trust, indenture or
other instrument, to which the Company is a party or by which it is
bound, or to which any of its properties is subject, nor will the
Company's performance of its obligations hereunder or under the
Representatives' Warrant Agreement violate any law, rule,
administrative regulation or decree of any court or any governmental
agency or body having jurisdiction over the Company or any of its
properties, or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or asset of the Company.
Except for an order of the Commission declaring the Registration
Statement effective, and except for permits and similar authorizations
required under the securities or "blue sky" laws of certain states of
the United States and for such permits and authorizations which have
been obtained, no consent, approval, authorization or order of any
court, governmental agency or body or financial institution is required
in connection with the consummation of the transactions contemplated by
this Agreement or the Representatives' Warrant Agreement.
(i) This Agreement, including the Representatives' Warrant
Agreement and the other agreements of the Company provided for herein,
has been duly authorized, executed and delivered by the Company and
constitute the valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except insofar as
rights to indemnity and/or contribution may be limited by federal or
state securities laws or the public policy underlying such laws and
except as enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights
generally, and be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law). The Units, Warrants and Shares have been duly authorized
for issuance and sale, and, when issued pursuant to this Agreement and
the Representatives' Warrant Agreement against payment of the
consideration therefor, will be validly issued, fully paid and
nonassessable and not subject to preemptive rights. The Shares issuable
upon exercise of the Warrants have been duly
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authorized and reserved for issuance upon exercise of the Warrants and
when issued upon payment of the consideration therefor will be validly
issued, fully paid and nonassessable shares of Common Stock and not
subject to preemptive rights.
(j) The Company has good and marketable title to each of the items
of real property and good title to each of the items of personal
property which are described or referred to in the Prospectus as being
owned by it and valid and enforceable leasehold interests in each of
the items of real and personal property which are referred to in the
Prospectus as being leased by it, in each case free and clear of all
liens, encumbrances, claims, security interests and defects, other than
those described in the Prospectus and those which do not and will not
have a material adverse effect upon the value and the Company's use of
such properties or the Company's business, financial condition or
results of operations.
(k) There is no litigation or governmental proceeding to which the
Company is a party or to which any property of the Company is subject
or which is pending in which the Company has been served or, to the
best knowledge of the Company, is otherwise pending or threatened
against the Company, nor is there any basis therefor, which will result
in any material adverse change in the financial condition, results of
operations, business or prospects of the Company or which is required
to be disclosed in the Prospectus which has not been disclosed in the
Prospectus. To the Company's knowledge, no labor disturbance by the
employees of the Company exists or is imminent which, if it now exists
or comes to exist, is expected materially to affect adversely the
financial condition, results of operations, business or prospects of
the Company or which is required to be disclosed in the Prospectus.
(l) The descriptions in the Registration Statement and the
Prospectus of material contracts and other documents are accurate in
all material respects and present fairly the information required to be
disclosed, and there are no contracts or other documents required to be
described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement under the 1933 Act or the 1933
Act Regulations which have not been so described or filed as required.
Each material contract or other instrument (however characterized or
described) to which the Company is a party or by which its property or
business is or may be bound or affected and to which reference is made
in the Prospectus has been duly and validly executed by the Company, is
in full force and effect in all material respects and is enforceable
against the parties thereto in accordance with its terms, subject, as
to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of
creditors generally and the discretion of courts in granting equitable
remedies; and none of such contracts or instruments has been assigned
by the Company and neither the Company nor, to the best knowledge of
the Company, any other party is in material default thereunder, which
default would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company;
and, to the best knowledge of the Company, no event has occurred which,
with the lapse of time or the giving of notice, or both, would
constitute a default thereunder,
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which would have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company. None of
the material provisions of such contracts or instruments violates any
existing applicable law, rule, regulation, judgment, order or decree of
any governmental agency or court having jurisdiction over the Company
or any of its assets or business including, without limitation, those
relating to health care or employee benefits, which violation would
have a material adverse effect on the business, prospects, financial
condition or results of the operations of the Company.
(m) The Company has filed with the appropriate federal, state and
local governmental agencies, and all foreign countries and political
subdivisions thereof, all tax returns, including franchise tax returns,
which are required to be filed or has duly obtained extensions of time
for the filing thereof and has paid all taxes shown on such returns and
all assessments received by it to the extent that the same have become
due. The provisions for income taxes payable, if any, shown on the
financial statements filed with or as part of the Registration
Statement are sufficient for all accrued and unpaid foreign and
domestic taxes, whether or not disputed, and for all periods to and
including the dates of such financial statements. The Company has not
executed or filed with any taxing authority, foreign or domestic, any
agreement extending the period for assessment or collection of any
income taxes and is not a party to any pending action or proceeding by
any foreign or domestic governmental agency for assessment or
collection or taxes; and no claims for assessment or collection of
taxes have been asserted against the Company.
(n) The Company is not in violation of or in default under (i) any
term or provision of its Articles of Incorporation or Bylaws, as
amended; (ii) any material term or provision or any material financial
covenant of any indenture, mortgage, contract, commitment or other
agreement or instrument to which it is a party or by which it or any of
its property or business is or may be bound or affected; or (iii) any
existing applicable law, rule, regulation, judgment, order or decree of
any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its properties or business the
violation of which would have a material adverse effect on the Company.
The Company owns, possesses or has obtained all governmental and other
(including those obtainable from third parties) licenses, permits,
certifications, registrations, approvals or consents and other
authorizations necessary to own or lease, as the case may be, and to
operate its properties, whether tangible or intangible, and to conduct
any of the business operations of the Company as presently conducted
(except where the Company's failure to obtain such license, permit,
certification, registration, approval, consent or other authorization
would not materially adversely affect the Company) and all such
licenses, permits, certifications, registrations, approvals, consents
and other authorizations are outstanding and in good standing, and
there are not any proceedings pending or, to the best of the knowledge
of the Company, threatened, seeking to cancel, terminate or limit such
licenses, permits, certifications, registrations, approvals or consents
or other authorizations.
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(o) The books, records and accounts of the Company accurately and
fairly reflect, in reasonable detail, the transactions in and
dispositions of assets of, and results of operations of, the Company.
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded in a manner sufficient to
permit preparation of financial statements in conformity with
applicable generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorizations; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company's internal accounting controls
and procedures are sufficient to cause the Company to comply in all
material respects with applicable law.
(p) Neither the Company nor to the Company's knowledge any officer,
director or employee of or agent acting on behalf of the Company has at
any time (i) made any contributions to any candidate for political
office in violation of law, or failed to disclose fully any
contributions to any candidate for political office in accordance with
any applicable statute, rule, regulation or ordinance requiring such
disclosure, (ii) made any payment to any governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or allowed by applicable law,
(iii) made any payment outside the ordinary course of business to any
purchasing, selling, licensing or reselling agent or person charged
with similar duties of any entity to which the Company sells or from
which the Company buys products, services or rights for the purpose of
influencing such agent or person to buy products, services or rights
from or sell products, services or rights to the Company, or (iv)
engaged in any transaction on behalf of the Company, maintained any
bank account for the Company, or used any corporate funds of the
Company, except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records of
the Company.
(q) The Company's properties are adequately insured by insurors of
recognized financial responsibility against loss or damage by fire and
other appropriate risks (including computer failure), the Company's
performance is adequately guaranteed by bonding firms of recognized
financial responsibility in accordance with all requirements under its
agreements and all applicable regulations and rules applicable to its
agreements; and the Company maintains such other insurance and
performance guaranty bonds as are prudent or customarily maintained by
companies of comparable size and in the same or similar business and in
the same or similar localities; the Company has not been refused any
insurance or bonding coverage sought or applied for; and the Company
has no reason to believe that it will not be able to renew its existing
insurance coverage and performance guaranty bonds as and when such
coverage expires or to obtain similar coverage from similar insurors
and bonding firms as may be necessary to continue its business at a
cost that would not
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materially and adversely affect the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company,
except as described in or contemplated by the Prospectus.
(r) The Company owns or possesses adequate and enforceable rights
to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") employed by it in connection
with the operation of its business, including, without limitation, the
Intangibles described or referred to in the Prospectus and any
Intangibles incorporated into any product of the Company described in
the Prospectus. The Company is not in material breach of, or in
material default under, any license, reseller, integrator or other
agreement or instrument to which any Intangibles are subject. All third
parties whose consent to assignment of any agreement with respect to
the Intangibles or any product of the Company or any third party which
incorporates any Intangibles have consented to such assignment to the
Company. Except as may be set forth in the Prospectus, the Company has
not received any notice of infringement of or conflict with, and to
best of the Company's knowledge, the Company is not infringing or in
conflict with, asserted rights of others with respect to any Intangible
which, singly or in the aggregate, if the subject of a decision, ruling
or finding unfavorable to the Company, would materially and adversely
affect the financial condition, results of operations, business or
prospects of the Company.
(s) There are no outstanding loans or advances or guarantees of
indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or owners of record of more than
five percent of the outstanding shares of Common Stock, or any of the
members of the families of any of them, which are required by the 1933
Act Regulations to be described in the Registration Statement, which
are not fully and adequately described therein.
(t) The Company is not, and, upon completion of the offering of the
Units and application of the net proceeds therefrom in the manner
contemplated under the caption "Use of Proceeds" in the Prospectus,
will not be, an "investment company" as defined in the Investment
Company Act of 1940, as amended.
(u) The Company has not taken and shall not take, directly or
indirectly, any action resulting in a violation of Rule 10b-6 or Rule
10b-7 under the Securities Exchange Act of 1934, as amended (the "1934
Act"), or designed to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Units or the Underlying Securities to
facilitate the sale or resale of any of such securities.
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(v) As of the effective date of the Registration Statement, the
Common Stock has been duly registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder (the "1934 Act" and the "1934 Act
Regulations", respectively) and the Units, the Common Stock and the
Warrants have been approved for quotation on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") upon
official notice of issuance.
(w) No person (other than a person affiliated with either of you)
has rendered services of any nature whatsoever to the Company for which
such person has received compensation required to be aggregated with
the compensation to be received by the Underwriters in connection with
this offering and no person has any claim for services in the nature of
a finder's fee or brokerage fee with respect to this offering for which
the Company or any Underwriter may be responsible.
(x) The Company has retained a public relations firm acceptable to
the Company and you for a period of six months commencing with the Firm
Closing Date (as defined in Section 3 below).
(y) Within the three years prior to the filing of the Registration
Statement, neither the Company nor any predecessor or affiliate thereof
has sold any securities in violation of Section 5(a) of the 1933 Act.
No unregistered securities of the Company or any affiliate or a
predecessor of the Company have been sold within three years of the
date hereof except as stated in Part II of the Registration Statement.
(z) Any certificate signed by any officer of the Company and
delivered to you or to your counsel shall be deemed a representation
and warranty by the Company to you as to the matters covered thereby.
2. Purchase, Sale and Delivery of the Units and Representatives'
Warrant Units.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, and subject to the terms and conditions
herein set forth, the Company shall sell to the Underwriters the Firm
Units, and subject to the terms and conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the
Company, at a price per Unit of $_____, at the place and time
hereinafter specified, the number of Firm Units set forth opposite
their respective names in Schedule I hereto, subject to adjustment in
accordance with Section 7 hereof. The Underwriters agree to release the
Firm Units for resale to the public at the price of $____ per Firm Unit
promptly, in the judgment of the Representatives, after the effective
date of the Registration Statement on the terms set forth in the
Prospectus.
(b) On the basis of the representations, warranties, covenants and
agreements herein contained, and subject to the terms and conditions
herein set forth, for the sole
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purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Units as contemplated by the
Prospectus, the Company hereby grants the Underwriters an option to
purchase, severally and not jointly, up to an aggregate of 210,000
Option Units in the aggregate. The purchase price per Unit to be paid
for the Option Units shall be the same price per Unit as for the Firm
Units. The option granted hereby may be exercised as to all or any part
of the Option Units at any time or times not more than 60 days
subsequent to the effective date of this Agreement. No Option Units
shall be sold and delivered unless the Firm Units previously have been,
or simultaneously are, sold and delivered. The right to purchase the
Option Units or any portion thereof may be surrendered and terminated
at any time upon notice to the Company by you.
(c) On the basis of the representations, warranties, covenants and
agreements herein contained, and subject to the terms and conditions
herein set forth, the Company shall sell to you individually, and/or
your designated officers, and not as the Representatives of the
Underwriters, at the Firm Closing Date, for $100, Representatives'
Warrants to purchase an aggregate of up to 140,000 Representatives'
Warrant Units. The price, terms and provisions of the Representatives'
Warrant Units and the respective rights and obligations of the Company
and the holders of the Representatives' Warrants and/or
Representatives' Warrant Units and the components thereof are set forth
in the Representatives' Warrant Agreement between the Company and the
Representatives and executed simultaneously herewith.
3. Time of Delivery and Payment. Delivery of certificates for the
Firm Units and certificates for the Option Units, to the extent that the option
to purchase the Option Units is exercised, as well as the Representatives'
Warrant Agreement and Representatives' Warrants, and the respective payments
therefor shall be made at the offices of Neidiger, Tucker, Bruner, Inc. at 300
Plaza Level, 1675 Larimer, Denver, Colorado 80202 (or such other place as
mutually may be agreed upon by you and the Company), at 10:00 A.M., Denver,
Colorado time, on the fourth full Business Day following the date the
Registration Statement becomes effective (the "Firm Closing Date") (it being
contemplated that the determination of the public offering price of the Units
shall occur after the 4:30 p.m EST close of trading on the New York Stock
Exchange on the effective date and most secondary trading will not occur until
after the opening of the market on the next business day); provided that such
date may be accelerated or extended by agreement of the Company and you or
postponed pursuant to the provisions of Section 7 hereof.
The option to purchase Option Units granted in Section 2 hereof may be
exercised during the term thereof by written notice to the Company from you.
Such notice shall set forth the aggregate number of Option Units as to which the
option is being exercised and the time and date during the term thereof, as
determined by you, when the Option Units are to be delivered (the "Option
Closing Date"). Delivery and payment for such Option Units are to be at the
offices set forth above for delivery and payment of the Firm Units. (The Firm
Closing Date and the Option Closing Date are herein individually referred to as
the "Closing Date" and collectively referred to herein as the "Closing Dates.")
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Delivery of certificates for the Firm Units and the Option Units shall
be made by or on behalf of the Company to you, for the respective accounts of
the Underwriters, against payment by you of the purchase price therefor by
either wire transfer of immediately available funds or certified or official
bank check or checks payable in Denver Clearing House funds to the order of the
Company. The certificates for the components of the Units shall be registered in
such names and denominations as you shall have requested at least two full
Business Days prior to the applicable Closing Date, and shall be made available
for checking and packaging at a location as may be designated by you at least
one full Business Day prior to such Closing Date. Time shall be of the essence,
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of each Underwriter.
4. Covenants. The Company covenants and agrees with each
Underwriter as follows:
(a) The Company shall comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and Rule
424(b) under the 1933 Act and 1933 Act Regulations and notify you
promptly, and confirm in writing, of all such filings. The Company
shall use its best efforts to cause the Registration Statement and any
amendment thereto to become effective and, upon notification from the
Commission that the Registration Statement or any amendment thereto has
become effective, shall so advise you promptly, in writing. The Company
shall notify you promptly of any request by the Commission for any
amendment of or supplement to the Registration Statement or the
Prospectus or for additional information; the Company shall carefully
prepare and file with the Commission promptly upon your request, any
amendment of or supplement to the Registration Statement or Prospectus
which, in your reasonable opinion, may be necessary or advisable in
connection with the distribution of the Units; and the Company shall
not file any amendment of or supplement to the Registration Statement
or the Prospectus which is not approved by you after reasonable notice
from the Company to you, which approval shall not be unreasonably
withheld or delayed. The Company shall advise you promptly of the
issuance by the Commission, any state securities commission or any
other regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, suspending or preventing
the use of the Prospectus or suspending the qualification of the Units
and the securities comprising the Units for offering or sale in any
jurisdiction, or of the institution of any proceedings for any such
purpose; and the Company shall use its best efforts to prevent the
issuance of any stop order or other such order and, should a stop order
or other such order be issued, to obtain as soon as possible the
lifting thereof.
(b) The Company shall furnish to the Representatives and their
counsel, from time to time and without charge, a reasonable number of
copies of the Registration Statement as originally filed and as
subsequently amended, of which at least four copies of each such filing
shall be manually signed and shall include all exhibits.
(c) Within the time during which a Prospectus relating to the Units
is required to be delivered under the 1933 Act and 1933 Act
Regulations, the Company shall comply
-12-
with all requirements imposed upon it by the 1933 Act or the 1934 Act,
as now or hereafter amended, and by the 1933 Act Regulations, as from
time to time in force, so far as is necessary to permit the continuance
of sales of or dealings in the Units as contemplated by the provisions
hereof and the Prospectus. If during such period any event occurs as a
result of which the Prospectus as then amended or supplemented 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 otherwise necessary, in the opinion of the Company or in
your opinion, to amend the Registration Statement or supplement the
Prospectus to comply with the 1933 Act, the Company or you, as the case
may be, shall promptly notify the other party and the Company shall
amend the Registration Statement or supplement the Prospectus (at the
expense of the Company) so as to correct such statement or omission or
effect such compliance.
(d) The Company shall cooperate with you and your counsel in
connection with the registration or qualification of the Units for sale
under the "blue sky" laws of such jurisdictions which you shall
designate and to continue such qualifications in effect for as long a
period as you may reasonably request, except that in no event shall the
Company be obligated in connection therewith to qualify as a foreign
corporation or as a dealer in any jurisdiction where it is not already
so qualified, or to execute a general consent for service of process in
suits other than those arising out of the offer and sale of the Units,
or to take any action which would subject it to taxation in any
jurisdiction where it is not now so subject.
(e) The Company shall make generally available to its security
holders (and shall deliver to you), in the manner contemplated by Rule
158(b) under the 1933 Act, as soon as practicable but in any event not
later than 45 days after the end of its fiscal quarter in which the
first anniversary date of the effective date of the Registration
Statement occurs, an earnings statement satisfying the requirements of
Section 11(a) of the 1933 Act covering a period of at least twelve
consecutive months beginning after the effective date of the
Registration Statement.
(f) For a period of five (5) years from the effective date of the
Registration Statement, the Company will deliver to you on a timely
basis (i) a copy of each report, including, without limitation, reports
on Form 8-K, 10-C, 10-K (or 10-KSB) and 10-Q (or 10-QSB) or any
successor form and exhibits thereto filed with or furnished by the
Company to the Commission, any securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD") on the date each
such report or document is so filed or furnished; (ii) as soon as
practicable, copies of any reports or communications (financial or
other) of the Company mailed to its security holders; (iii) as soon as
practicable, a copy of any Schedule 13D, 13G, 14D-1, 13E-3 or 13E-4 (or
any successor form) received or prepared by the Company from time to
time; and (iv) such additional information concerning the business and
financial condition of the Company as you may from time to time
reasonably request and which can be prepared or obtained by the Company
without unreasonable effort or expense.
-13-
(g) The Company shall apply the net proceeds of the sale of the
Firm Units and any Option Units as set forth in the Prospectus under
the caption "Use of Proceeds." In particular, the Company shall prior
to May 30, 1996 pay in full the Company's obligations to ENTEX and the
Company shall prior to May 30, 1996 pay in full the outstanding
principal amount and all interest and principal payable in respect of
the Company's obligations to BankOne, regardless of the extension of
due date on the BankOne obligation executed between the Company and
BankOne in February 1996 on any forbearance of any default in respect
of the death of any Co-Borrower. Prior to the full application of such
net proceeds in the manner therein contemplated, the Company shall
invest or reinvest such proceeds only in high quality, short-term
investments or cash equivalents as described in the Prospectus.
(h) The Company shall file such reports with the Commission with
respect to the sale of the Units and the application of the proceeds
therefrom as may be required in accordance with Rule 463 under the 1933
Act.
(i) The Company shall pay or cause to be paid (i) all expenses
(including stock transfer taxes, if any) incurred in connection with
the delivery of the Firm Units and Option Units to the Underwriters,
(ii) all fees and expenses (including, without limitation, fees and
expenses of the Company's accountants and counsel) in connection with
the preparation, printing, filing, delivery and shipping of the
Registration Statement (including the financial statements therein and
all amendments and exhibits thereto), each Preliminary Prospectus and
the Prospectus as amended or supplemented, and the copying, delivery
and shipping (but not preparation) of the Underwriting Agreement and
other underwriting documents, including Underwriters' Questionnaires,
Underwriters' Powers of Attorney, Blue Sky Memoranda, Agreements Among
Underwriters and Selected Dealer Agreements and any letters
transmitting the offering materials to selling group members (including
costs of mailing and shipment); (iii) all filing fees and fees for
legal services and disbursements of Representatives' counsel incurred
in connection with the registration/qualification of the Units under
state securities laws; (iv) the filing fees, listing fees and costs of
the NASD and NASDAQ; (v) applicable listing or similar fees; (vi) the
cost of printing certificates representing the components comprising
the Units; (vii) the cost and charges of the transfer agent or
registrar for the Units and Underlying Securities; (viii) the costs of
"tombstone" advertisements in such publications as you shall reasonably
request, as well as the costs of any other advertising undertaking at
the Company's request, including all graphic slide costs (not to exceed
$3,000 in the aggregate); (ix) the costs of preparing, printing and
distributing bound volumes for you and your counsel; (x) the costs of
all due diligence meetings to be held in cities selected by mutual
agreement of the Company and you; provided, however, each of the
Company and you shall be solely responsible for the travel expenses of
their respective employees or representatives to attend such meetings;
and (xi) all other costs and expenses incident to the performance of
the obligations of the Company under this Agreement which are not
otherwise provided for in this section. In addition, the Company shall
also pay to you, individually and not in your capacity as
Representatives, at the
-14-
applicable Closing Date, a nonaccountable expense allowance equal to 3%
of the initial public offering price of the Units purchased on such
Closing Date (including Option Units purchased pursuant to the option
granted pursuant to Section 2 hereof). If the sale of the Units
provided for herein is not consummated by reason of any termination of
this Agreement pursuant to Section 8(b) hereof, or 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 condition of the
Underwriter's obligations set forth in Section 5 herein is not
fulfilled, the Company shall reimburse the Representatives for all of
the Representatives' accountable out-of-pocket expenses (including
reasonable fees and disbursements of Representatives' counsel) actually
incurred in connection with the investigation, preparing to market and
marketing of the Units or in contemplation of performing
Representatives' obligations hereunder, such reimbursement not to
exceed in the aggregate $_________. The Representatives acknowledge
that $25,000 has been paid by the Company to be applied against the
stated expense allowance.
(j) The Company, at its expense, shall furnish the holders of its
Common Stock, Units and Underlying Securities with annual reports
containing audited financial statements prepared in accordance with the
applicable accounting requirements of the 1933 and 1934 Acts and the
1933 and 1934 Act Regulations and reported on by its independent
certified accountants. For five (5) years after the First Closing Date,
at its expense, the Company shall furnish to you (i) as soon as
practicable after the end of each fiscal year, a balance sheet of the
Company and any Subsidiary as at the end of such fiscal year together
with statements of income or operations, shareholders' equity and cash
flows of the Company for such fiscal year, all in reasonable detail and
accompanied by a copy of the certificate or report thereon of the
Company's independent certified public accountants; (ii) as soon as
they are available, a copy of all reports (financial or other) mailed
to the Company's shareholders; (iii) as soon as they are available, a
copy of all reports and financial statements furnished to or filed with
the Commission; and (iv) such other information as you may from time to
time reasonably request and which can be prepared or provided without
unreasonable effort or expense.
(k) If and so long as the Company has an active subsidiary or
subsidiaries, the financial statements provided for in Section 4(j)
will be on a consolidated basis to the extent the accounts of the
Company and its subsidiary or subsidiaries are consolidated in reports
furnished to its shareholders generally. Separate financial statements
shall be furnished for all subsidiaries whose accounts are not
consolidated but which at the time are significant subsidiaries as
defined in the 1933 and 1934 Act Regulations.
(l) The Company shall continue to maintain the system of internal
accounting controls described in Section 1(o).
(m) For a period of five (5) years from the effective date of the
Registration Statement, the Company shall comply with all filing and
reporting requirements of the 1934
-15-
Act which may from time to time be applicable to the Company, including
those necessary to maintain the registration of the Common Stock under
Section 12(g) of the 1934 Act.
(n) The Company shall use its best efforts to maintain the
inclusion of the Units, the Common Stock and the Warrants for quotation
on NASDAQ. If the Common Stock qualifies at a future time for quotation
on the National Market System of NASDAQ ("NASDAQ NMS"), the Company
will use its best efforts to obtain inclusion of the Common Stock and
Warrants for quotation of NASDAQ NMS.
(o) For a period of five (5) years from the effective date of the
Registration Statement, the Company shall (i) use its best efforts to
register and remain covered by the Corporation Records Service
(including annual report information) published by Standard & Poor's
Corporation; (ii) retain a transfer agent for the Common Stock
reasonably acceptable to you and, at your request, shall cause such
transfer agent to provide you on a monthly basis with copies of the
Company's stock transfer sheets and, as and when requested by you, a
current list of the Company's security holders, including a list of the
beneficial owners of securities held by Depository Trust Company and
any other nominees; and (iii) retain such accounting firm as its
independent public accountants as shall be reasonably acceptable to
you.
(p) The Company shall take such steps as shall be necessary to
ensure that neither the Company nor any subsidiary thereof shall become
an "investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
(q) Prior to the filing and closing of the public offering
contemplated by this Agreement, no discussions will be held by any
representative of the Company with any member of the news media or
release any information or other publicity about the Company, its
business or its management without the approval of counsel to the
Company and Representatives.
(r) For as long as the Company's Common Stock, or other securities
are registered under the 1934 Act, to comply in all material respects
with the 1934 Act and 1934 Act Regulations thereunder and to hold
annual meetings of shareholders for the election of directors within
180 days following the end of the Company's fiscal year.
(s) The Company shall use its best efforts to obtain and to cause
to be in force within 60 days of the effective date of the Registration
Statement policies of life insurance in the face amounts and on the
lives of such key employees of the Company as designated by the
Representatives; and each policy shall identify the Company as the
beneficiary thereof.
-16-
(t) For a period of 12 months from the effective date of the
Registration Statement, the Company shall not authorize or otherwise
effect any change in the compensation to any officer and/or director of
the Company without 30 days' prior written notice to you.
(u) Prior to the effective date of the Registration Statement, the
Company shall cause (i) each officer, director of the Company and each
holder of 5% or more of the Company's Common Stock (or securities
convertible into Common Stock) to furnish to you their written
agreement, in form and content satisfactory to your counsel, whereby
each such person shall not sell, pledge, assign or otherwise dispose or
contract to dispose of any of their shares of Common Stock (or
securities convertible into Common Stock) for a period of 12 months
following the effective date of the Registration Statement without the
prior written consent of Neidiger, Tucker, Bruner, Inc., and (ii) each
other holder of the Company's Common Stock (or securities convertible
into Common Stock) to furnish to you their written agreement, in form
and content satisfactory to your counsel, whereby each such person
shall not sell, pledge, assign or otherwise dispose or contract to
dispose of any of their shares of Common Stock (or securities
convertible into Common Stock) for a period of 6 months from the
effective date of the Registration Statement without the prior written
consent of Neidiger, Tucker, Bruner, Inc. The foregoing agreements
shall also provide that any sale of shares of Common Stock by such
persons during the applicable restrictive period, and which sale is
subject to Rule 144 under the 1933 Act (or comparable provision under
the 1933 Act) shall be made in transactions by or directly with
Neidiger, Tucker, Bruner, Inc.
(v) So long as any Warrants are outstanding, the Company shall use
its best efforts to cause post-effective amendments to the Registration
Statement to become effective in compliance with the 1933 Act and
without any lapse of time between the effectiveness of any such post-
effective amendments and cause a copy of each Prospectus, as then
amended, to be delivered to each holder of record of a Warrant and to
furnish to the Underwriters and each dealer as many copies of each such
Prospectus as the Underwriters or dealer may reasonably request.
-17-
(w) On the Firm Closing Date, the Company and NTB shall enter into
an agreement which shall provide that NTB shall have the right to
designate one person as an advisor to the Company's Board of Directors.
Such advisor will be reimbursed for his or her expenses in attending
meetings of the Board of Directors and will receive cash compensation
equal to that received by any other outside director but will have no
power to vote as a director. Such person shall be indemnified by the
Company against any claim arising out of his or her participation in
meetings of the Board of Directors to the same extent as directors.
During the stated 3 year period, NTB's advisor to the Company's Board
of Directors will be (i) invited to attend all meetings of the
Company's Board of Directors; (ii) provided with a copy of all Actions
by Unanimous Written Consent of the Board of Directors in Lieu of an
Actual Meeting; (iii) furnished with a copy of all public filings by
the Company and Company press releases as released; (iv) updated by the
Company's management, on at least a quarterly basis, regarding the
Company's activities, prospects and financial condition; and (v)
advised immediately of material events to the extent consistent with
applicable law. During the subject 3 year period, the Company will hold
meetings of its Board of Directors at intervals of not less than 90
days each year. Any advisor to the Company's Board of Directors
designated by NTB also shall be acceptable to the Company, which
acceptance shall not be unreasonably withheld and such advisor(s) shall
each be required to execute an appointment letter representing that
such advisor will comply with certain responsibilities under the
federal securities laws with respect to Company information obtained by
such advisor in the attendance at meetings of the Board of Directors,
in a form to be agreed between the Company and NTB on the Firm Closing
Date.
(x) Upon the exercise of any Warrants after ______________________,
1997 (13 months after the effective date of the Registration
Statement), and assuming that the Company desires assistance to solicit
Warrant exercises, the Company will pay NTB a solicitation fee of 5% of
the aggregate exercise price of such Warrants which are exercised
through the efforts and with the assistance of NTB, if (i) the market
price of the Common
-18-
Stock is greater than the exercise price of such Warrants on the date
of exercise, (ii) written confirmation by the warrantholder that the
exercise of the Warrant was solicited by NTB and that NTB is designated
to receive the solicitation fee, (iii) the Warrant is not held in a
discretionary account, (iv) disclosure of compensation arrangements has
been made in documents provided to the warrant holder (such as the
Prospectus) both as part of the original offering and at the time of
exercise and (v) the solicitation of the Warrant was not in violation
of Rule 10b-6 promulgated under the 1934 Act.
(y) On the Firm Closing Date, the Company shall enter into a
consulting agreement ("Consulting Agreement"), retaining NTB,
individually, and not as a Representative of the Underwriters, as
financial consultant to the Company for a period of 12 months for a fee
of $30,000 ($2,500 monthly for 12 months) all payable in full on the
Firm Closing Date. As financial consultant, NTB will advise the Company
as to market conditions, financial alternatives, resource allocation,
mergers, acquisition and other business combinations and other
investment banking services. Such consulting Agreement will also
provide for such compensation to NTB as shall be agreed between the NTB
and the Company for varying percentages not to exceed five percent (5%)
of any consideration paid or received by the Company or the Company's
shareholders in any transaction (including mergers and acquisitions)
consummated by the Company in which NTB introduced the other party to
the Company within 36 months from the Firm Closing Date if such
transaction is consummated within 36 months from the Firm Closing Date.
5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder to purchase and pay for the Units are subject to
the accuracy, as of the date hereof and each Closing Date (as if made at such
Closing Date), of the representations and warranties of the Company contained
herein and any certificate of the Company pursuant to the terms hereof to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and all filings required by Rule
424 and Rule 430A under the 1933 Act shall have been made within the
time period required by the 1933 Act Regulations prior to the Firm
Closing Date; no stop order suspending the effectiveness of the
Registration Statement or any amendment or supplement thereto shall
have been issued; no proceedings for the issuance of such an order
shall have been initiated or threatened; and any request of the
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to your satisfaction.
(b) You shall not have advised the Company that the Registration
Statement or Prospectus, or any amendment or supplement thereto,
contains an untrue statement of fact which, in your reasonable opinion,
is material, or omits to state a fact which, in your reasonable
opinion, is material and is required to be stated therein or is
necessary to make
-19-
the statements therein, in light of the circumstances under which they
were made, not misleading.
(c) On each Closing Date, there shall have been furnished to you
the opinion (addressed to you as Representatives) of Chrisman, Bynum &
Johnson, P.C., Boulder, Colorado, special securities counsel for the
Company, dated such Closing Date and in form and substance reasonably
satisfactory to counsel for you and stating that it may be relied upon
by counsel for the Representatives in giving their opinion, if required
by you, to the effect that:
(i) 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 Colorado, with full corporate power
and authority to own or lease its properties and conduct its
business as described in the Prospectus. The Company is duly
qualified to do business and is in good standing in each
jurisdiction, to the extent the character of the business
conducted by it or the location of the properties owned or
leased by it makes such qualification necessary, except to the
extent that the failure to so qualify does not have a material
adverse effect upon the Company.
(ii) The authorized, issued and outstanding share capital of
the Company is as set forth under the caption "Capitalization"
in the Prospectus and the Units, Common Stock, Representatives'
Warrants and Underlying Securities conform to the descriptions
thereof contained under the captions "Description of
Securities" and "Underwriting" in the Prospectus. The offering
and sale of securities pursuant to the Prospectus will not
violate the rights of any holder of the Company's outstanding
securities including its common stock, warrants or options, and
all required notices, consents or waivers required with respect
to any security holder pursuant to any Registration Right
Agreement(s) as referred to in the Prospectus have been given
by the parties thereto. The outstanding shares of Common Stock
have been, and the Units and each Unit component, upon issuance
and delivery and payment therefor in the manner herein
described will be duly authorized, validly issued, fully paid
and nonassessable. There are no preemptive or, except as
described in the Registration Statement, other rights to
subscribe for or to purchase from the Company, or any
restriction upon the voting or transfer of, any Common Stock
pursuant to the Company's Articles of Incorporation or Bylaws,
as amended, or, to the best knowledge of such counsel, any
agreement or other instrument to which the Company is a party
or by which it is bound, except restrictions under applicable
securities laws and as provided in Section 4(u) hereof.
-20-
(iii) To the best of such counsel's knowledge, the Company
is not, nor with the giving of notice or lapse of time or both
would be, in violation of or in default under, nor will the
execution or delivery hereof or of the Representatives' Warrant
Agreement or Unit Warrant Agreement or consummation of the
transactions contemplated hereby or thereby result in a
violation of, or constitute a default under, the Company's
Articles of Incorporation or Bylaws, as amended, of the
Company, or any material agreement, indenture or other
instrument to which the Company is a party or by which it is
bound nor will the performance by the Company of its
obligations hereunder or under the Representatives' Warrant
Agreement or Unit Warrant Agreement violate any law, rule,
administrative regulation or decree of any court or any
governmental agency or body having jurisdiction over the
Company or any of its properties which would have a material
and adverse effect, or result in the creation or imposition of
any lien, charge, claim or encumbrance, upon any property or
asset of the Company.
(iv) Each of this Underwriting Agreement, the
Representatives' Warrant Agreement, the Unit Warrant Agreement
and the Warrants has been duly authorized, executed and
delivered by the Company, constitutes the valid and binding
agreement of the Company, and is enforceable against the
Company in accordance with its terms except insofar as rights
to indemnity and/or contribution may be limited by applicable
securities laws or the public policy underlying such laws and
except as enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors'
rights generally, and be subject to general principles of
equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(v) The Warrant Shares (including those issuable upon
exercise of the Representatives' Warrants) and Representatives'
Warrant Units have been duly authorized and reserved for
issuance and, when issued and delivered in accordance with the
terms of this Agreement and the Representatives' Warrant
Agreement, respectively, will be duly and validly issued, fully
paid and nonassessable.
(vi) The certificates representing the Underlying Securities
and the Representatives' Warrants are in due and proper form.
(vii) The information, if any, required to be set forth in
the Registration Statement in answer to Item 9 of Form SB-2
(insofar as it relates to such counsel) is to the best of such
counsel's knowledge accurately and adequately set forth therein
in all material respects.
-21-
(viii) To the best of such counsel's knowledge, all
descriptions in the Prospectus of statutes, regulations, legal
or governmental proceedings, contracts and other documents and
the description of the consequences to the Company of such
laws, proceedings or documents are accurate and fairly present
the information required to be shown in all material respects;
and such counsel does not know of any statutes, regulations,
proceedings, contracts or documents of a character required to
be summarized or described in the Prospectus or to be filed as
exhibits to the Registration Statement which are not so
summarized, described or filed, nor does such counsel know of
any pending or threatened litigation or any governmental
proceeding, statute or regulation required to be described in
the Prospectus which is not so described.
(ix) To the best of such counsel's knowledge, the Company
owns or has adequate and enforceable rights to use each of the
Intangibles (as defined in Section 1(r)) used in connection
with the operation of the Company's business, including,
without limitation, the Intangibles described or referred to in
the Prospectus and any Intangibles incorporated into any
product of the Company described in the Prospectus, and all
statements with respect to the Intangibles, including
statements with respect to products of the Company which
incorporate any Intangibles, are accurate and fairly present
the information required to be presented in all material
respects.
(x) To the best of such counsel's knowledge, no holder of
any securities of the Company has any right to require
registration of shares of Common Stock or other securities of
the Company under the 1933 Act, except as any such right may
arise under the Representatives' Warrant Agreement and certain
Registration Rights Agreements among the Company and the
holders of all its outstanding Common Stock as set forth in
Part II of the Registration Statement, including any
registration rights applicable to any options or warrants
heretofore granted by the Company and all rights to require
registration in connection with the offering and sale of
securities described in the Prospectus, pursuant to the
Registration Rights Agreement(s) or any similar agreement to
which the Company is a party have been effectively waived by
all parties for the applicable periods stated in Section 4(u).
The description of the Registration Rights Agreement set forth
in the Prospectus is accurate and fairly presents the
information required to be shown in all material respects.
(xi) The presently outstanding shares of Common Stock of the
Company were issued in transactions which were not subject to
the registration provisions of the 1933 Act and applicable
state securities laws, except that such opinion shall not
include an opinion regarding subjective
-22-
investment intent of purchasers in any private placement. To
the best knowledge of such counsel, there is a reasonable basis
to conclude that neither the offering nor sale of any presently
outstanding shares of Common Stock will be integrated with the
offering of the Units for purposes of registration under the
Securities Act, or qualification under any state securities
laws.
(xii) Except for the order of the Commission declaring the
Registration Statement effective under the 1933 Act, and except
for permits and similar authorizations required under the
securities or "blue sky" laws of certain jurisdictions and for
such permits and authorizations which have been obtained, no
consent, approval, authorization or order of any federal or
state court, governmental agency or body is required in
connection with the consummation by the Company of the
transactions contemplated by this Agreement, the Warrants or
the Representatives' Warrant Agreement.
(xiii) The Registration Statement and any post-effective
amendments thereto have become effective under the 1933 Act
and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued and, to the best of such counsel's knowledge, no
proceedings for that purpose have been instituted or are
pending before or threatened by the Commission or any state of
the United States or other regulatory body and all filings
required by Rule 424 under the 1933 Act in connection with the
public offering of the Units have been made within the time
periods required; and the Registration Statement and the
Prospectus and any amendment or supplement thereto, as of their
respective effective dates, comply as to form in all material
respects with the requirements of the 1933 Act (except that
counsel need express no opinion with respect to the financial
statements, management's discussion and analysis or other
financial data included therein).
(xiv) To the best of such counsel's knowledge, the Company
has reasonable grounds to believe that it meets all the
requirements for filing on Form SB-2.
(xv) The Company is not, and following completion of the
offering of the Units and receipt and intended investment of
proceeds therefrom as described in the Prospectus, will not be,
an "investment company" as defined in the Investment Company
Act of 1940, as amended.
In rendering the foregoing opinion, counsel may state that such
opinion is limited to federal and applicable state law, and rely, as to
matters of fact, upon certificates of responsible officers of the
Company and on certificates of public
-23-
officials, and may base its opinion upon such reasonable investigations
and assumptions as shall be set forth in such opinion. In rendering
such opinion such counsel may rely, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
counsel to you) of other counsel familiar with the applicable laws and
admitted to practice in the applicable jurisdiction. The opinion of
such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and that in their
opinion the Representatives and they are justified in relying thereon.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the independent public accountants for
the Company, representatives of the Representative and counsel for the
Representative at which the contents of the Registration Statement and
related matters were discussed and, although such counsel has not
independently verified, is not passing upon and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement, no facts have come
to the attention of such counsel that lead it to believe that the
Registration Statement, as of the date it is declared effective by the
Commission, 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 not misleading, or that the Prospectus as
of the Closing Date includes an untrue statement of a material fact or
omits 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 (it being understood that such counsel need
not comment as to the financial statements, management's discussion and
analysis, and other financial data included in the Registration
Statement, and the Prospectus or the exhibits to the Registration
Statement).
(d) There shall have been furnished to you the certificate, dated
the Closing Date and addressed to you as Representatives, signed by the
President and Chief Executive Officer and by the Treasurer and Chief
Financial Officer of the Company, to the effect that (i) the
representations and warranties of the Company contained in Section 1 of
this Agreement are true and correct as if made at and as of such
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 such Closing Date; (ii) no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for that purpose to their knowledge have been initiated or
threatened; (iii) the signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any
amendments or supplements thereto, and such documents contain all
statements and information required to be included therein, and do not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and (iv) since the effective date of
the Registration Statement, there
-24-
has occurred no event required to be set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has
not been so set forth.
(e) Since the effective date of the Registration Statement under
the 1933 Act, the Company shall not have sustained any loss by fire,
flood, accident or other calamity, nor shall it have become a party to
or the subject of any litigation, individually or in the aggregate,
which is materially adverse to the Company, nor shall there have been a
material adverse change in the general affairs, business, key
personnel, capitalization, financial position or net worth of the
Company, whether or not arising in the ordinary course of business,
which loss, litigation or change, in your reasonable judgment, shall
render it inadvisable to proceed with the delivery of the Units.
(f) On the date of this Agreement and on each Closing Date, Ernst &
Young shall have furnished to the Representatives a letter or letters
dated respectively as of the date of this Agreement and as of each
Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the 1933 Act and the applicable 1933 Act
Regulations and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration
Statement and Prospectus and reported on by them comply in form
in all material respects with applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company; their
limited review in accordance with standards established by the
American Institute of Certified Public Accountants of the
unaudited interim financial information for the 3 month period
ended March 31, 1996, and as at March 31, 1996, carrying out
certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of
the minutes of the meetings of the stockholders, directors and
audit and compensation committees of the Company; and inquiries
of certain officials of the Company who have responsibility for
financial and accounting matters of the Company as to
transactions and events subsequent to December 31, 1995,
nothing came to their attention which caused them to believe
that:
A. any unaudited financial statements included in the
Registration Statement and the Prospectus do not comply
in form in all material respects with applicable
accounting requirements of the 1933 Act and with the
1933 Act
-25-
Regulations with respect to registration statements on
Form SB-2; and said unaudited financial statements are
not in conformity with generally accepted accounting
principles applied on a basis substantially consistent
with that of the audited financial statements included
in the Registration Statement and the Prospectus; and
B. with respect to the period subsequent to March 31,
1996, there were any changes, at a specified date not
more than five business days prior to the date of the
letter, in the long-term debt of the Company or capital
stock of the Company or decreases in the stockholders'
equity of the Company or decreases in working capital,
total assets, income from operations or gross profit of
the Company as compared with the amounts shown on the
March 31, 1996 balance sheet included in the
Registration Statement and the Prospectus or for the
period from March 31, 1996 to such specified date there
were any decreases, as compared with the amounts shown
in the balance sheet at December 31, 1995 included in
the Prospectus, in net revenues or income before income
taxes or in total or per share amounts of net income of
the Company except in all instances for changes or
decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by the
Company as to the significance thereof unless said
explanation is not deemed necessary by the
Representatives; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information
of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information
derived from the general accounting records of the Company) set
forth in the Registration Statement and the Prospectus,
including the information set forth under the captions "Summary
Financial Information", "Risk Factors", "Dilution",
"Capitalization", "Selected Financial Data", "Management
Discussion and Analysis of Financial Condition and Results of
Operations", "Business" and "Management" in the Prospectus,
agrees with the accounting records of the Company excluding any
questions of legal interpretation.
References to the Prospectus in this paragraph (f) include
any supplement thereto at the date of the letter.
-26-
The Representatives shall have also received from Ernst &
Young a letter stating that the Company's system of internal
accounting controls, taken as a whole, is sufficient to meet
the broad objectives of internal accounting control insofar as
those objectives pertain to the prevention or detection of
errors or irregularities in the amounts that would be material
in relation to the financial statements of the Company.
(g) Subsequent to the date of this Agreement or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(f) of this Section 5 or (ii) any change, or any development involving
a prospective change, in or affecting the business or properties of the
Company the effect of which, in any case referred to in clause (i) or
(ii) above, is, in the judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Units as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto).
(h) On or prior to the date of this Agreement, the NASD shall have
approved the Underwriters' participation and the distribution of the
Units to be sold pursuant to the Registration Statement and the
Prospectus.
(i) The Units, the Common Stock and the Warrants shall have been
designated for quotation on NASDAQ Small Cap, and, in each case,
subject only to notice of issuance.
(j) At or prior to the Firm Closing Date, the Representatives'
Warrant Agreement shall have been entered into by the Company and you,
and the Representatives' Warrants shall have been issued and sold to
you pursuant to the Representatives' Warrant Agreement.
(k) At or prior to the Firm Closing Date, you shall have received
the written agreements and representations described in Section 4(u),
(w), and (y) hereof.
(l) Prior to the Firm Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above
or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives
and counsel for the Representatives, this Agreement and all obligations
of the Underwriters hereunder may be canceled at, or at any time prior
to, the Firm Closing Date by the Representatives. Notice
-27-
of such cancellation shall be given to the Company in writing, or by
telephone or facsimile and confirmed in writing.
6. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter,
each of their respective officers, directors, partners, employees,
agents and counsel, and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section
20(a) of the 1934 Act, against any loss, claim, damage or liability (or
any action in respect thereof), joint or several, to which such
Underwriter may become subject, under the 1933 Act or otherwise,
insofar as such loss, claim, damage or liability (or action with
respect thereto) arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact made by the
Company in Section 1 hereof, or (ii) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Prospectus or
any amendment or supplement thereto, or (B) in any application or other
document executed by the Company specifically for that purpose or based
upon written information furnished by the Company filed with any state
or other jurisdiction in order to qualify any or all of the Units or
other securities under the securities laws thereof or with the
Commission or securities regulatory authority or securities exchange
(any such application, document or information being hereinafter called
a "Application"), or (iii) the omission or alleged omission to state in
the Registration Statement, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto or in any Application
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and shall, promptly upon request,
reimburse each Underwriter for any reasonable legal or reasonable other
expenses as incurred by such Underwriter in connection with
investigating, preparing to defend, or defending against or appearing
as a third-party witness in connection with any such loss, claim,
damage, liability or action, notwithstanding the possibility that
payments for such expenses might later be held to be improper, in which
case the person receiving them shall promptly refund them; provided,
however, that the Company shall not be liable in any such case to the
extent, but only to the extent, that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon
or in conformity with written information furnished to the Company
through you by or on behalf of any Underwriter specifically for use in
the preparation of the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or
any Blue Sky Application; and provided further, that with respect to
any untrue statement or omission or alleged untrue statement or
omission made in any Preliminary Prospectus, the indemnity agreement
contained in this paragraph shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims,
damages, liabilities or expenses purchased the Units concerned (or to
the benefit of any person controlling such Underwriter) to the extent
that any such loss, claim, damage, liability or expense of such
Underwriter or controlling person results from the fact that a copy of
the Prospectus was not sent or given to such person at or prior to the
written confirmation of sale of such Units as required by the 1933 Act,
and if the untrue statement
-28-
or omission has been corrected in the Prospectus, unless such failure
to deliver the Prospectus was a result of noncompliance by the Company
with its obligations under Section 4(c) hereof.
(b) Each Underwriter severally, but not jointly, shall indemnify
and hold harmless the Company, each of its directors, each nominee (if
any) for director named in the Prospectus, each of its officers who has
signed the Registration Statement and each person who controls the
Company within the meaning of Section 15 of the 1933 Act or Section
20(a) of the 1934 Act, against any loss, claim, damage or liability (or
any action in respect thereof) to which the Company or any such
director, nominee, officer or controlling person may become subject,
under the 1933 Act or otherwise, insofar as such loss, claim, damage or
liability (or action with respect thereof) arises out of or is based
upon (i) any claim which results from failure to send or give a copy of
the Prospectus to an investor at or prior to the written confirmation
of sale of Units at any time when the Company shall have delivered
sufficient Prospectuses to the Underwriters to effect distribution of
such Prospectus (ii) any untrue statement or alleged untrue statement
of a material fact contained (A) in the Registration Statement, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or (B) in any Application, or (iii) the omission or alleged
omission to state in the Registration Statement, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto or
in any Application a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that such
indemnification shall be available in each such 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 reliance upon or
in conformity with written information furnished to the Company by such
Underwriter specifically for use in the preparation thereof; and shall
reimburse any legal or other expenses as and when reasonably incurred
by the Company or any such other indemnified person in connection with
investigating, defending against, settling, compromising or paying 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 any claim or the commencement of any
action, the indemnified party shall, if a claim with respect thereto is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the claim or the commencement of
that action; and the failure to notify the indemnifying party shall not
relieve it from any liability that it may have to an indemnified party
otherwise than under such subsection. If any such claim or action is
brought against an indemnified party, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim
or action, the indemnifying party shall not be liable to the
indemnified party under such subsection for any legal or other expenses
subsequently incurred by the indemnified party in connection with
-29-
the defense thereof other than reasonable costs of investigation,
except that you shall have the right to employ counsel to represent you
and those other Underwriters who may be subject to liability arising
out of any claim with respect to which indemnity may be sought by the
Underwriters against the Company under such subsection if, in your
reasonable judgment, it is advisable for you and those Underwriters to
be represented by separate counsel, and in that event the reasonable
legal fees and expenses of one such separate counsel shall be paid by
the Company.
(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 and the
Underwriters from the offering of the Units, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company and the Underwriters in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities,
as well as any other relevant equitable considerations. The relative
respective benefits received by the Company and the Underwriters shall
be deemed to be in the same proportion that the total net proceeds from
the offering of the Units (before deducting expenses other than the
non-accountable expense allowance) received by the Company and the
total underwriting discounts and commissions received by the
Underwriters bear to one another. 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 Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Underwriters
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 into account the
equitable considerations referred 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 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), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Units underwritten by it and distributed to the public exceeds the
amount of any damages that such 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 1933 Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d)
to contribute are several in proportion to their respective
underwriting obligations and are
-30-
not joint. Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any
action instituted against it with respect to which contribution may be
sought, it shall promptly give written notice of such service to the
party or parties from whom contribution may be sought, but the omission
so to notify such party or parties of any such service shall not
relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically
provided in Section 6(c) above).
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability that the Company may otherwise have, and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20(a) of the 1934 Act, and the
obligations of each Underwriter under this Section 6 shall be in
addition to any liability that such Underwriter may otherwise have, and
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 Section 15 of the 1933 Act or Section
20(a) of the 1934 Act.
7. Substitution of Underwriters. If on any Closing Date any Underwriter
defaults in its obligation to purchase the number of Units which it has agreed
to purchase hereunder, the non-defaulting Underwriters shall be obligated to
purchase (in the respective proportions which the number of Firm Units set forth
opposite the name of each non-defaulting Underwriter in Schedule I hereto bears
to the total number of Firm Units set forth opposite the names of all of the
non-defaulting Underwriters in Schedule I hereto) the Units which the defaulting
Underwriter agreed but failed to purchase on such Closing Date, except that the
non-defaulting Underwriters shall not be obligated to purchase any of the Units
if the total number of Units on such Closing Date which the defaulting
Underwriter or Underwriters agreed but failed to purchase exceeds 10% of the
total number of Units to be purchased on such Closing Date, and any non-
defaulting Underwriter shall not be obligated to purchase more than 110% of the
number of Units which it agreed to purchase on such Closing Date pursuant to the
terms of Section 2 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 Units to be purchased on
such Closing Date; and if the non-defaulting Underwriters and any other
underwriters satisfactory to you do not elect to purchase the Units that the
defaulting Underwriter or Underwriters agreed but failed to purchase, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Company except for the payment of expenses to be borne by the
Company and the Underwriters as provided in Section 4(i) hereof and the
indemnity and contribution agreements of the Company and the Underwriters
contained in Section 6 hereof.
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 agree
-31-
to purchase the Units of a defaulting Underwriter, either you or the Company may
postpone the Firm 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 reasonable opinion may thereby be made necessary.
8. Effective Date and Termination.
(a) This Agreement shall become effective at 11:00 A.M., Denver,
Colorado time, on the earlier of (i) the first full Business Day
following the date the Registration Statement becomes effective, or
(ii) at such time after the Registration Statement becomes effective as
you shall release the Firm Units for sale to the public. You shall
notify the Company and its counsel immediately after you have taken any
action that causes this Underwriting Agreement to become effective.
Until this Agreement is effective, it may be terminated by the Company
by giving notice as hereinafter provided to you or by you by giving
notice as hereinafter provided to the Company, except that the
provisions of Sections 4(i) and 6 hereof shall at all times be
effective. For purposes of this Agreement, the release of the Firm
Units for sale to the public shall be deemed to have been made when you
release, by telegram or otherwise, firm offers of the Firm Units to
securities dealers or release for publication a newspaper advertisement
relating to the Firm Units, whichever occurs first.
(b) This Agreement shall be subject to termination by you (subject,
however, to your undertakings with the NASD) by giving notice to the
Company prior to the delivery of and payment for the Units, if prior to
such time (i) the Company shall have failed, refused or been unable to
perform any agreement on its part to be performed hereunder unless
compliance therewith or performance or satisfaction thereof shall have
been expressly waived in writing by the Representatives; (ii) any other
condition of the obligations of the Underwriters hereunder is not
fulfilled; (iii) there shall have occurred any material adverse change,
since the respective dates as of which information is given in the
Prospectus, in or affecting the business or financial condition of the
Company or the Company's earnings, business affairs, management or
prospects of the Company, whether or not arising in the ordinary course
of its business; (iv) there shall have occurred an outbreak of major
hostilities (or an escalation thereof) in which the United States is
involved, a declaration by the United States of a national emergency or
war or other calamity or crisis the effect of which on financial
markets is such as to result, in your judgment, in a material
impairment of this Agreement by making it impracticable or inadvisable
to proceed with the offering or delivery of the Units as contemplated
by the Prospectus (exclusive of any supplement thereto); (v) there
shall have occurred suspension of trading in securities on the New York
Stock Exchange, the American Stock Exchange or the NASDAQ market system
or minimum or maximum prices shall have been established on either of
said Exchange or market system; (vi) a banking moratorium shall have
been declared by federal or state authorities; (vii) there shall have
occurred any action by any federal, state or local government or agency
in respect to monetary or fiscal affairs or regulations affecting
health care delivery or the health care
-32-
claims process which in the reasonable opinion of the Representatives
have a material adverse effect on the securities markets in the United
States or the business prospects of the Company or business generally;
or
(c) This Agreement also may be terminated as provided in Section 5.
(d) Any termination of this Agreement pursuant to this Section 8
shall be without liability on the part of the Company or the
Underwriters, except as otherwise provided in Sections 4(i) and 6
hereof.
Any notice referred to in Section 8 above may be given at the
address specified in Section 10 hereof in writing or by facsimile or
telephone; and if by facsimile or telephone, shall be immediately
confirmed in writing.
9. Survival of Indemnities, Contribution, Warranties and Representations.
The indemnity and contribution agreements contained in Section 6 and the
representations, warranties and covenants of the Company in Sections 1 and 4
shall survive the delivery of the Units to the Underwriters hereunder and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any indemnified
party or any party to the contribution provisions of Section 6(d).
10. Notices. Except as otherwise provided in this Agreement, (a)
whenever notice is required by the provisions hereof to be given to the Company,
such notice shall be in writing and personally delivered or sent by mail or
facsimile transmission to the Company at 1400 South Colorado Boulevard, Suite
500, Denver, Colorado 80222, Attention: Gerald E. Henderson, President,
(facsimile: (303) 399-1554) with a copy to Chrisman, Bynum & Johnson, P.C.,
1900 Fifteenth Street, Boulder, Colorado 80302, Attention: Christopher M.
Hazlitt, Esq. (facsimile: (303) 449-5426); and (b) whatever notice is required
by the provisions hereof to be given to the Representatives such notice shall be
in writing and personally delivered or sent by mail or facsimile transmission to
Neidiger, Tucker, Bruner, Inc. at 300 Plaza Level, 1675 Larimer Street, Denver,
Colorado 80202, Attention: Mr. Anthony B. Petrelli, Senior Vice President
(facsimile: (303) 623-9310), with a copy to John G. Herbert, P.C., 1675 Larimer
Street, Suite 310, Denver, Colorado 80202, Attention: John G. Herbert, Esq.
(facsimile: (303) 534-3638); and to Joseph Charles & Assoc., Inc., 356 North
Camden Drive, Beverly Hills, California 90210, Attention: Richard A. Rappaport,
Managing Director.
11. Representations and Warranties and Information Furnished by
Underwriters. Each Representative, for itself and on behalf of the several
Underwriters, represents and warrants (and the Company acknowledges) that the
statements set forth in the table on the front cover page with respect to
underwriting discounts, the paragraph on or about the inside front cover page
with respect to stabilization, and under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus (except for statements made under
the caption "Underwriting" in any such Prospectus relating to sales or
dispositions by the Company and the Company's undertakings), constitute the
-33-
only written information furnished by or on behalf of the Underwriters referred
to in paragraphs (b) and (c) of Section 1 hereof and in paragraphs (a) and (b)
of Section 6 hereof, and are true and correct in all material respects. The
Representatives further represent and warrant that they have been authorized by
each of the several Underwriters as Representatives to enter into this
Underwriting Agreement on its behalf and to act in the matter herein provided.
12. Parties. This Agreement is made solely for the benefit of the
several Underwriters, the Company, and any officer, director or controlling
person referred to in Section 6 hereof, and their respective successors and
assigns, and, except as provided in Section 15 of this Agreement, no other
person shall acquire or have any right by virtue of this Agreement. The term
"successors and assigns," as used in this Agreement, shall not include any
purchaser of any of the Units from the Underwriters. You shall act on behalf of
each of the several Underwriters and the Company shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of each of the
several Underwriters if the same shall have been made or given in writing by
you.
13. Definition of "Business Day". For purposes of this Agreement,
"Business Day" means any day on which the New York Stock Exchange, Inc. is open
for trading.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado without giving effect to the
choice of law or conflict of laws, principles or rules thereof.
15. Submission to Jurisdiction and Waiver of Inconvenient Forum. The
Company, by the execution and delivery of this Underwriting Agreement,
designates and appoints CT Corporation System as the authorized agent of the
Company upon whom process may be served in any suit, proceeding or other action
which is brought against the Company in any United States federal or state court
sitting in the City and County of Denver, State of Colorado, and which relates
to or arises out of this Underwriting Agreement or the offering of the Units
hereunder and the Company expressly accepts jurisdiction of any such court in
respect of any such suit, proceeding or other action and, without limiting other
methods of obtaining jurisdiction, expressly submits to exclusive personal
jurisdiction of any such court in respect of any such suit, proceeding or other
action. Such designation and appointment shall be irrevocable, unless and until
a successor authorized agent in the City and County of Denver, State of Colorado
reasonably acceptable to you shall have been appointed by the Company, such
successor shall have accepted such appointment and written notice thereof shall
have been given to you. The Company further agrees that service of process upon
its authorized agent or successor (and written notice of said service to the
Company, given as provided in Section 10 above) shall be deemed in every respect
personal service of process upon the Company in any such suit, proceeding or
other actions. (For the Company's convenience only and not for the purposes of
service of process or effecting personal jurisdiction in any such suit,
proceeding or other action, copies of such process shall also, if practicable,
be mailed to the notice parties set forth in Section 10 of this agreement if
Neidiger, Tucker, Bruner, Inc. shall be the party serving such process on giving
such notice.) The Company hereby irrevocably waives any objection that it may
have or hereafter have to the laying of venue of any such action or proceeding
arising out
-34-
of or based on the Units, or this Agreement or otherwise relating to
the offering, issuance and sale of the Units in any federal or state court
sitting in City and County of Denver and State of Colorado and hereby further
irrevocably waives any claim that any such action or proceeding in any such
court has been brought in an inconvenient forum. The Company agrees that any
final judgment after exhaustion of all appeals or the expiration of time to
appeal in any such action or proceeding arising out of the sale of the Units or
this Agreement rendered by any such federal court or state court shall be
conclusive, and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law. Nothing contained in this
Agreement shall affect or limit the right of any Underwriter to serve any
process or notice of motion or other application in any other manner permitted
by law or limit or affect the right of any Underwriter to bring any action or
proceeding against the Company or any of its property in the courts of any other
jurisdiction. The Company further agrees to take any and all action, including
the execution and filing of all such instruments and documents, as may be
necessary to continue such designation and appointment or such substitute
designation and appointment in full force and effect. The Company hereby agrees
to the exclusive jurisdiction of the courts of the State of Colorado, or the
federal courts sitting in the City and County of Denver, State of Colorado in
connection with any action brought by it relating to this Agreement or the
offering of the Units hereunder.
The provisions of this Section 15 are also intended to benefit those
persons who acquire the Firm Units and the Option Units from the Underwriters.
16. Counterparts. This Underwriting Agreement may be signed in two or
more counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
-35-
Please confirm, by signing and returning to us counterparts of this
Agreement, that you are acting on behalf of yourself and the several
Underwriters and that the foregoing correctly sets forth the agreement among the
Company and the several Underwriters.
Very truly yours,
IMAGEMATRIX CORPORATION
By:
-------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above mentioned:
NEIDIGER, TUCKER, BRUNER, INC. and
JOSEPH CHARLES & ASSOC., INC.
As Representatives of the Several
Underwriters Named in Schedule I
hereto
By: NEIDIGER, TUCKER, BRUNER, INC.
By:
----------------------------------
Name:
Title:
By: JOSEPH CHARLES & ASSOC., INC.
By:
----------------------------------
Name:
Title:
-36-
SCHEDULE I
----------
Name Number of Units
- ---- ---------------
Neidiger, Tucker, Bruner, Inc.
Joseph Charles & Assoc., Inc.
---------------
Total 1,400,000
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