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EXHIBIT 1.0
TEAM COMMUNICATIONS GROUP, INC.
12300 Wilshire Boulevard, Suite 400
Los Angeles, California 90025
UNDERWRITING AGREEMENT
_________________, 1997
H.J. Meyers & Co., Inc.
1895 Mt. Hope Avenue
Rochester, New York 14620
Ladies and Gentlemen:
TEAM COMMUNICATIONS GROUP, INC., a California corporation (the
"Company"), proposes to issue and sell pursuant to this Underwriting Agreement
(the "Agreement"), an aggregate of 1,300,000 shares of Common Stock, no par
value per share (the "Shares"), commencing on the effective date of the
Registration Statement (the "Effective Date"). In addition, the Company proposes
to grant the option referred to in Section 2(b) to purchase all or any part of
an aggregate of 195,000 additional Shares.
The aggregate of 1,300,000 Shares, together with all or any part of the
195,000 you have the option to purchase, are herein called the "Shares." The
Common Stock of the Company to be outstanding after giving effect to the sale of
the Shares (including the 195,000 Underwriters have the option to purchase) is
herein called the "Common Stock."
You have advised the Company that you desire to purchase the Shares.
The Company confirms the agreements made by it with respect to the purchase of
the Shares by you, as follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with you
that:
(a) A registration statement (File No. 333- ________) on Form
SB-2 relating to the public offering of the Shares, including a preliminary form
of prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with the Commission under the Act. "Preliminary
Prospectus" shall
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mean each prospectus filed pursuant to Rule 430 of the Rules and Regulations.
The registration statement (including all financial schedules and exhibits) as
amended at the time it becomes effective and the final prospectus included
therein are respectively referred to as the "Registration Statement" and the
"Prospectus", except that (i) if the prospectus first filed by the Company
pursuant to Rule 424(b) or Rule 430A of the Rules and Regulations or otherwise
utilized and not required to be so filed shall differ from said prospectus as
then amended, the term "Prospectus" shall mean the prospectus first filed
pursuant to Rule 424(b) or Rule 430A or so utilized from and after the date on
which it shall have been filed or utilized, and (ii) if such registration
statement or prospectus is amended or such prospectus is supplemented, after the
effective date of such registration statement and prior to the Option Closing
Date (as defined in Section 2(b)), the term "Registration Statement" shall
include such registration statement as so amended, and the term "Prospectus"
shall include the prospectus as so amended or supplemented, or both, as the case
may be.
(b) At the time the Registration Statement becomes effective
and at all times subsequent thereto up to the Option Closing Date (hereinafter
defined), (i) the Registration Statement and Prospectus will in all material
respects conform to the requirements of the Act and the Rules and Regulations;
and (ii) neither the Registration Statement nor the Prospectus will 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
in light of the circumstances under which they were made; provided, however,
that the Company makes no representations, warranties or agreements as to
information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of you specifically for use in the
preparation thereof. It is understood that the statements set forth in the
Prospectus with respect to stabilization, the material set forth under the
heading "Under writing" and the identity of counsel to you under the heading
"Legal Matters" constitute the only information furnished in writing by you for
inclusion in the Registration Statement and Prospectus, as the case may be.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, with full power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus and is
duly qualified to do business as a foreign corporation and is in good standing
in all other jurisdictions in which the nature of its business or the character
or location of its properties requires such qualification, except where failure
to so qualify is not reasonably likely to materially adversely affect the
Company's business, properties or financial condition.
(d) The authorized capital stock of the Company as of the
Effective Date was as set forth under "Capitalization" in the Prospectus. The
shares of issued and outstanding capital stock of the Company set forth
thereunder have been duly authorized, validly issued and are fully paid and
non-assessable; except as set forth in the Prospectus, as of the date specified
in the Prospectus no options, warrants or other rights to purchase, agreements
or other obligations to issue, or agreements or other rights to convert any
obligation into, any shares of capital stock of the Company have been granted or
entered into by the Company. The Shares and Underwriter's Warrant conform in all
material respects to all statements relating thereto contained in the
Registration Statement and Prospectus.
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(e) The Shares are duly authorized and, when issued, delivered
and paid for pursuant to this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights of any
security holder of the Company. The certificates evidencing the Shares are and
will be in valid and proper legal form. The Underwriter's Warrant (as defined in
Section 11) will be exercisable for shares of Common Stock of the Company in
accordance with the terms of the Underwriter's Warrant and at the prices therein
provided for. The shares of Common Stock have been duly authorized and reserved
for issuance upon such exercise, and such shares, when issued upon such exercise
in accordance with the terms of the Underwriter's Warrant and when the price is
paid, shall be fully paid and non-assessable. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated in
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any securities of the
Company, except as described in the Registration Statement.
(f) This Agreement and the Underwriter's Warrant have been
duly and validly authorized, executed and delivered by the Company, and assuming
due execution by the other party or parties hereto and thereto, constitute valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as rights to indemnity and
contribution hereunder may be limited by applicable law and except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
the rights of creditors generally or by general equitable principles. The
Company has full power and lawful authority to authorize, issue and sell the
Shares to be sold by it hereunder on the terms and conditions set forth herein,
and no consent, approval, authorization or other order of any governmental
authority is required in connection with such authorization, execution and
delivery or with the authorization, issue and sale of the Shares or the
Underwriter's Warrant, except such as may be required under the Act or state
securities laws.
(g) Except as described in the Prospectus, the Company is not
in material violation, breach or default of or under, and consummation of the
transactions herein contemplated and the fulfillment of the terms of this
Agreement and the Underwriter's Warrant will not conflict with, or result in a
breach of, any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance pursuant
to the terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company are
subject, which would have a material adverse effect on the business, properties
or financial condition of the Company, nor will such action result in any
violation of the provisions of the certificate of incorporation or the by-laws
of the Company, as amended, or any statute or any order, rule or regulation
applicable to the Company of any court or of any regulatory authority or other
governmental body having jurisdiction over the Company, which would have a
material adverse effect on the business, properties or financial condition of
the Company.
(h) The Company owns no real property and, subject to the
qualifications stated in the Prospectus, the Company has good and marketable
title to all properties and assets described in the Prospectus as owned by it,
free and clear of all liens, charges, encumbrances or restrictions, except such
as are not materially significant or important in relation to its business; all
of the leases and subleases under which the Company is the lessor or sublessor
of properties or assets or under which the Company holds properties or assets as
lessee or sublessee as described in the Prospectus
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are in full force and effect, and, except as described in the Prospectus, the
Company is not in default with respect to any of the terms or provisions of any
of such leases or subleases which would have a material adverse effect on the
business, properties or financial condition of the Company, and no claim has
been asserted by anyone adverse to rights of the Company as lessor, sublessor,
lessee or sublessee under any of the leases or subleases mentioned above, or
affecting or questioning the right of the Company to continued possession of the
leased or subleased premises or assets under any such lease or sublease except
as described or referred to in the Prospectus, which would have a material
adverse effect on the business properties or financial condition of the Company;
and the Company owns or leases all such properties described in the Prospectus
as are necessary to its operations as now conducted and, except as otherwise
stated in the Prospectus, as proposed to be conducted as set forth in the
Prospectus.
(i) Price Waterhouse LLP statements filed and to be filed with
the Commission as a part of the Registration Statement, which are included in
the Prospectus, are with respect to the Company independent public accountants
as required by the Act and the Rules and Regulations.
(j) The financial statements and schedules, together with
related notes, set forth in the Prospectus or the Registration Statement present
fairly the financial position and results of operations and changes in financial
position of the Company on the basis stated in the Registration Statement, at
the respective dates and for the respective periods to which they apply. Said
statements and schedules and related notes have been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent
during the periods involved, provided, however, that the quarterly statements do
not contain all notes to such statements as are required under such principles
and such statements do not contain normal year end adjustments.
(k) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, the Company has not
incurred any liabilities or obligations, direct or contingent, not in the
ordinary course of business, or entered into any transaction not in the ordinary
course of business, which is material to the business of the Company, and there
has not been any change in the capital stock of, or any incurrence of long-term
debt by, the Company or any issuance of options, warrants or other rights to
purchase the capital stock of the Company or any adverse change or any
development involving, so far as the Company can now reasonably foresee, a
prospective adverse change in the condition (financial or other), net worth,
results of operations, business, key personnel or properties of it which would
be material to the business or financial condition of the Company, and the
Company has not become party to, and neither the business nor the property of
the Company has become the subject of, any material litigation whether or not in
the ordinary course of business.
(l) Except as set forth in the Prospectus, there is not now
pending nor, to the knowledge of the Company, threatened, any action, suit or
proceeding (including those related to environmental matters or discrimination
on the basis of age, sex, religion or race) to which the Company is a party
before or by any court or governmental agency or body, which, if adversely
determined, would result in any material adverse change in the condition
(financial or other), business prospects, net worth or properties of the
Company; and, except as set forth in the Prospectus, no labor disputes involving
the employees of the Company exist which, if adversely
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determined, would result in any material adverse change in the condition
(financial or otherwise), business prospects, net worth or property of the
Company.
(m) Except as disclosed in the Prospectus, the Company has
filed all necessary federal, state and foreign income and franchise tax returns
and has paid all taxes shown as due thereon; and there is no tax deficiency
which has been or to the knowledge of the Company might be asserted against the
Company which has not been adequately reserved for on the Company's balance
sheet.
(n) The Company has sufficient licenses, permits and other
governmental authorizations currently required for the conduct of its business
or the ownership of its property as described in the Prospectus and is in all
material respects complying therewith and owns or possesses adequate rights to
use all material patents, patent applications, trademarks, mark registrations,
copy rights and licenses necessary for the conduct of such business and has not
received any notice of conflict with the asserted rights of others in respect
thereof. To the best knowledge of the Company, none of the activities or
business of the Company is in violation of, or causes the Company to violate,
any law, rule, regulation or order of the United States, any state, county or
locality, or of any agency or locality, the violation of which would have a
material adverse effect upon the condition (financial or otherwise), business
prospects, net worth or properties of the Company.
(o) The Company has not, directly or indirectly, at any time
(i) made any contributions to any candidate for foreign political office, or if
made, failed to disclose fully any such contribution made in violation of law,
or (ii) made any payment to any state, federal or foreign governmental officer
or official, or other person charged with similar public or quasi-public duties,
other than payments or contributions required or allowed by applicable law. The
Company's internal accounting controls and procedures are sufficient to cause
the Company to comply in all material respects with the Foreign Corrupt
Practices Act of 1977, as amended.
(p) On the Closing Dates (as defined in Section 2(c)), all
transfer or other taxes (including franchise, capital stock or other tax, other
than income taxes imposed by any jurisdiction), if any, which are required to be
paid in connection with the sale and transfer of the Shares to the Underwriter
hereunder will have been fully paid or provided for by the Company and all laws
imposing such taxes will have been fully complied with.
(q) All contracts and other documents of the Company which
are, under the Rules and Regulations, required to be filed as exhibits to the
Registration Statement have been so filed.
(r) The Company has not taken and will not take, directly or
indirectly, any action 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 Shares or to facilitate the sale or resale of
the Shares.
(s) The Company has no subsidiaries.
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(t) Except for this Agreement and other agreements with you,
the Company has not entered into any agreement pursuant to which any person is
entitled either directly or indirectly to compensation from the Company for
services as a finder in connection with the proposed public offering.
2. Purchase, Delivery and Sale of the Shares.
(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties and agreements herein
contained, the Company agrees to issue and sell to you, and you agree to buy
from the Company at $_____ per Share at the place and time hereinafter
specified, the number of Shares set forth opposite your name in Schedule I
hereto (the "Firm Shares").
Delivery of the Firm Shares against payment therefor shall
take place at the offices of H.J. Meyers & Co., Inc., 1895 Mt. Hope Avenue,
Rochester, New York 14620 (or at such other place as may be designated by
agreement between you and the Company) at ________a.m. York time on
_____________, 1997, or at such other time and date, not later than 10 business
days thereafter, as you may designate, such time and date of payment and
delivery for the Firm Shares being herein called the "First Closing Date." Time
shall be of the essence and delivery at the time and place specified in this
subsection (a) is a further condition to your obligations hereunder.
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants you an option to purchase all or any
part of an aggregate of 195,000 same price per Share as you shall pay for the
Shares being sold pursuant to the provisions of subsection (a) of this Section 2
(such additional Shares being referred to herein as the "Option Shares"). This
option may be exercised on one occasion within 30 business days after the
Effective Date upon notice by you to the Company advising it as to the amount of
Option Shares as to which the option is being exercised, the names and
denominations in which the certificates for such Option Shares are to be
registered and the time and date when such certificates are to be delivered.
Such time and date shall be determined by you but shall not be earlier than four
and not later than ten full business days after the exercise of said option, nor
in any event prior to the First Closing Date (although if such option is
exercised within one day after the Effective Date, the closing of the option
shall occur on the First Closing Date), and such time and date is referred to
herein as the "Option Closing Date." Delivery of the Option Shares against
payment therefor shall take place at the offices of H.J. Meyers & Co., Inc.,
1895 Mt. Hope Avenue, Rochester, New York 14620. Time shall be of the essence
and delivery at the time and place specified in this subsection (b) is a further
condition to your obligations hereunder.
The Option granted hereunder may be exercised only to cover
over-allotments in the sale by you of Firm Shares referred to in subsection (a)
above.
(c) The Company will make the certificates for the Shares to
be purchased by you hereunder available to you for checking at least one full
business day prior to the First Closing Date or the Option Closing Date (which
are collectively referred to herein as the "Closing Dates" and
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individually as a "Closing Date"), as the case may be. The certificates shall be
in such names and denominations as you may request, at least two full business
days prior to the relevant Closing Dates. Time shall be of the essence and the
availability of the certificates at the time and place specified in this
Agreement is a further condition to your obligations.
Definitive engraved certificates in negotiable form for the
Shares to be purchased by you hereunder will be delivered by the Company to you
for your account against payment of the purchase price by you, at your option,
by certified or bank cashier's checks in New York Clearing House funds or by
wire transfer, payable to the order of the Company.
In addition, in the event you exercise the option to purchase
from the Company all or any portion of the Option Shares pursuant to the
provisions of subsection (b) above, payment for such Option Shares shall be made
to or upon the order of the Company by you, at your option, by certified or bank
cashier's checks payable in New York Clearing House funds or by wire transfer,
at the offices of H.J. Meyers & Co., Inc. at the time and date of delivery of
such Option Shares as required by the provisions of subsection (b) above,
against receipt of the certificates for such Option Shares by you, registered in
such names and in such denominations as you may request.
It is understood that you propose to offer the Shares to be
purchased hereunder to the public upon the terms and conditions set forth in the
Registration Statement, after the Registration Statement becomes effective.
3. Covenants of the Company.
The Company covenants and agrees with you that:
(a) Company will use its best efforts to cause the
Registration Statement to become effective and, upon notification from the
Commission that the Registration Statement has become effective, will so advise
you and will not at any time, whether before or after the Effective Date, file
any amendment to the Registration Statement or supplement to the Prospectus of
which you shall not previously have been advised and furnished with a copy or to
which you or your counsel shall have reasonably objected in writing or which is
not in compliance with the Act and the Rules and Regulations. At any time prior
to the later of (A) the completion by you of the distribution of the Shares
contemplated hereby (but in no event more than nine months after the Effective
Date) and (B) 25 days after the Effective Date, the Company will prepare and
file with the Commission, promptly upon your request, any amendments or
supplements to the Registration Statement or Prospectus which, in your
reasonable opinion, may be necessary or advisable in connection with the
distribution of the Shares.
Promptly after you or the Company is advised thereof, you will
advise the Company or the Company will advise you, as the case may be, and
confirm the advice in writing, of the receipt of any comments of the Commission,
of the effectiveness of any post-effective amendment to the Registration
Statement, of the filing of any supplement to the Prospectus or any amended
Prospectus, of any request made by the Commission for amendment of the
Registration Statement or for supplementing of the Prospectus or for additional
information with respect thereto,
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of the issuance by the Commission or any state or regulatory body of any stop
orders or other order suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of any preliminary prospectus or
the Prospectus, or of the suspension of the qualification of the Shares for
offering in any jurisdiction, or the institution of any proceedings for any of
such purposes, and will use its best efforts to prevent the issuance of any such
order and, if issued, to obtain as soon as possible the lifting thereof.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company authorizes
you and selected dealers to use the Prospectus in connection with the sale of
the Shares for such period not to exceed nine months from the Effective Date as
in the reasonable opinion of counsel for you the use thereof is required to
comply with the applicable provisions of the Act and the Rules and Regulations.
In case of the happening, at any time within such period as a Prospectus is
required under the Act to be delivered in connection with sales by an
underwriter or dealer, of any event of which the Company has knowledge and which
materially affects the Company or the Shares, or which in the opinion of counsel
for the Company or counsel for you should be set forth in an amendment to the
Registration Statement or a supplement to the Prospectus in order to make the
statements therein not then misleading, in light of the circumstances existing
at the time the Prospectus is required to be delivered to a purchaser of the
Shares, or in case it shall be necessary to amend or supplement the Prospectus
to comply with the Act or with the Rules and Regulations, the Company will
notify you promptly and forthwith prepare and furnish to you copies of such
amended Prospectus or of such supplement to be attached to the Prospectus, in
such quantities as you may reasonably request, in order that the Prospectus, as
so amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Registration Statement or amended Prospectus or supplement
to be attached to the Prospectus shall be without expense to the Underwriters,
except that in case you are required, in connection with the sale of the Shares,
to deliver a Prospectus nine months or more after the Effective Date, the
Company will upon request of and at your expense, amend or supplement the
Registration Statement and Prospectus and furnish you with reasonable quantities
of prospectuses complying with Section 10(a)(3) of the Act.
(b) The Company will comply with the Act, the Rules and
Regulations and the Shares Exchange Act of 1934, as amended (the "Exchange Act")
and the rules and regulations thereunder in connection with the offering and
issuance of the Shares.
The Company will use its best efforts to qualify or register
the Shares for sale under the securities or "blue sky" laws of such
jurisdictions as you may have designated in writing prior to the execution
hereof and will make such applications and furnish such information to counsel
for you as may be required for that purpose and to comply with such laws,
provided that the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general consent to service
process in any jurisdiction. The Company will, from time to time, prepare and
file such statements and reports as are or may be required to continue such
qualification in effect for so long a period as you may reasonably request.
Legal fees for such
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qualifications shall be itemized based on the time expended and costs incurred,
shall be reasonable and shall not in any event exceed $35,000.00, exclusive of
filing fees (unless otherwise agreed). You shall supply copies of all
applications for the registration of Shares and related documents (except for
the Registration Statement and Prospectus) filed with the various states to the
Company's counsel, concurrently with their transmission to the various states,
and copies of all comments and orders received from the various states shall be
supplied to the Company's counsel. You have advised counsel for the Company in
writing of all states wherein the Offering has been registered for sale,
canceled, withdrawn or denied.
(c) The Company will instruct its transfer agent to provide
you with copies of the Depository Trust Company stock transfer sheets on a
weekly basis for a period of six weeks from the First Closing Date and on a
monthly basis thereafter for six additional months.
(d) The Company will use its best efforts to cause a
Registration Statement under the Exchange Act to be declared effective on the
Effective Date.
(e) For so long as the Company is a reporting company under
either Section 12(g), 13 or 15(d) of the Exchange Act, the Company, at its
expense, will furnish to its shareholders an annual report (including financial
statements audited by independent public accountants), in reasonable detail and
at its expense, will furnish to you during the period ending five years from the
date hereof, (i) as soon as practicable after the end of each fiscal year, a
balance sheet of the Company and any subsidiaries as at the end of such fiscal
year, together with statements of income, shareholders equity and cash flows of
the Company and any subsidiaries as at the end of such fiscal year, all in
reasonable detail and accompanied by a copy of the certificate or report thereon
of independent accountants; (ii) as soon as they are available, a copy of all
reports (financial or other) mailed to security holders; (iii) as soon as they
are available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission; and (iv) such other information of a
public nature as you may from time to time reasonably request.
(f) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above 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.
(g) The Company will deliver to you at or before the First
Closing Date one signed copy of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto. The Company will deliver to or upon your order, from time to time until
the Effective Date as many copies of any Preliminary Prospectus filed with the
Commission prior to the Effective Date as the Underwriters may reasonably
request. The Company will deliver to you on the Effective Date and thereafter
for so long as a Prospectus is required to be delivered under the Act, from time
to time, as many copies of the Prospectus, in final form, or as thereafter
amended or supplemented, as you may from time to time reasonably request.
(h) The Company will make generally available to its security
holders and deliver to you as soon as it is practicable to do so, but in no
event later than 90 days after the end of 12
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months after its current fiscal quarter, an earnings statement (which need not
be audited) covering a period of at least 12 consecutive months beginning after
the Effective Date which shall satisfy the requirements of Section 11(a) of the
Act.
(i) The Company will apply the net proceeds from the sale of
the Shares substantially for the purposes set forth under "Use of Proceeds" in
the Prospectus, and will file such reports with the Commission with respect to
the sale of the Shares and the application of the proceeds therefrom as may be
required pursuant to Rule 463 of the Rules and Regulations.
(j) The Company will, promptly upon your request, prepare and
file with the Commission any amendments or supplements to the Registration
Statement, preliminary Prospectus or Prospectus and take any other action, which
in the opinion of Freshman, Marantz, Orlanski, Cooper & Klein, counsel to you,
may be reasonably necessary or advisable in connection with the distribution of
the Shares and will use its best efforts to cause the same to become effective
as promptly as possible.
(k) Prior to the Effective Date, the Company will use its best
efforts to cause the shareholders holding the Warrant Shares (as defeined in the
Prospectus) and the Restricted Shares (as defeined in the Prospectus) to enter
into a written agreement with you, which, among other things, shall provide that
for a period of 12 and 18 months, respectively, following the closing date of
the offering, such shareholders will not sell, assign, hypothecate or pledge any
of the shares of Common Stock of the Company owned by them on the Effective
Date, or subsequently acquired by the exercise of any options or warrants or
conversion of any convertible security of the Company held by them on the
Effective Date directly or indirectly, except with your prior written consent
and such shareholders will permit all certificates evidencing those shares to be
stamped with an appropriate restrictive legend, and the Company will cause the
transfer agent for the Company to note such restrictions on the transfer books
and records of the Company.
(l) The Company shall, upon the initial filing of the
Registration Statement, make all filings required to obtain approval for the
quotation of the Shares on the Nasdaq Smallcap Market ("NASDAQ") and will use
its best efforts to effect and maintain the aforesaid approval for at least five
(5) years from the date of this Agreement. Within ten (10) business days after
the Effective Date, the Company shall cause the Company to be listed in the
Standard & Poor's Corporate Records and cause such listing to be maintained for
five years from the date of this Agreement.
(m) The Company represents that it has not taken, and agrees
that it will not take, directly or indirectly, any action designed to or which
has constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Shares or to facilitate the
sale or resale the Shares.
(n) During the period of the offering, and for a period of
twelve (12) months from the Effective Date, the Company will not sell or
otherwise dispose of any securities of the Company without your prior written
consent, which consent shall not be unreasonably withheld, except for shares of
Common Stock issuable upon exercise of options or warrants or conversion of
convertible securities outstanding on the Effective Date. For a period of
twenty-four (24) months from the
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Effective Date, the Company will not issue, sell or otherwise dispose of any
securities of the Company pursuant to Regulation S under the Act without your
prior written consent.
(o) Prior to the Effective Date, the Company shall retain a
public relations firm acceptable to you, and shall continue to retain such firm,
or any alternate firm acceptable to you, for a minimum period of two (2) years.
(p) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Underwriter's Warrant outstanding from time to time.
(q) The Company shall deliver to you, at the Company's
expense, three (3) bound volumes in form and content reasonably acceptable to
you, containing the Registration Statement and all exhibits filed therewith, and
all amendments thereto, and all other material correspondence, filings,
certificates and other documents filed and/or delivered in connection with this
offering. The Company shall use its best efforts to deliver such volumes with
one hundred eighty (180) days of the First Closing Date.
(r) For a period of twenty-four (24) months from the closing
of the offering, the Underwriter shall have the right to designate an observer
to the Board of Directors provided that the designee is acceptable to the
Company. Such observer shall be entitled to reimbursements for all out-of-pocket
expenses incurred in attending such meetings and indemnified by the Company
against any claims arising out of his participation at Board meetings. The
Company shall hold at least four (4) meetings per year.
4. Conditions of Obligations of H.J. Meyers & Co., Inc.
Your obligations to purchase and pay for the Shares which you
have agreed to purchase hereunder are subject to the accuracy (as of the date
hereof, and as of the Closing Dates) of and compliance with the representations
and warranties of the Company herein, to the performance by the Company of its
obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and
you shall have received notice thereof not later than 10:00 a.m., New York time,
on the date of this Agreement, or at such later time or on such later date as to
which you may agree in writing; on the Closing Dates, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that or any similar purpose shall have been instituted or shall
be pending or, to the knowledge of any Underwriter or to the knowledge of the
Company, shall be contemplated by the Commission; any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Freshman, Marantz, Orlanski, Cooper & Klein, counsel
to you; and no stop order shall be in effect denying or suspending effectiveness
of the Registration Statement nor shall any stop order proceedings with respect
thereto be instituted or pending or threatened under the Act.
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(b) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of Bruce P. Vann, Esq., counsel for
the Company, in form and substance reasonably satisfactory to counsel for you,
to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of California and is duly qualified or licensed to do
business as a foreign corporation in good standing in each other
jurisdiction in which the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where
failure to so qualify will not have a material adverse effect in the
business, properties or financial condition of the Company;
(ii) the authorized capitalization of the Company as
of the date of the Prospectus was as set forth in the Prospectus; all
of the shares of the Company's outstanding stock requiring
authorization for issuance by the Company's Board of Directors have
been duly authorized and validly issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock of the Company, to
such counsel's knowledge, have not been issued in violation of the
preemptive rights of any shareholder and the shareholders of the
Company do not have any preemptive rights or other rights to subscribe
for or to purchase the Shares; except for the transfer restrictions
regarding "affiliates" contained in Rule 144 promulgated under the Act,
there are no restrictions upon the voting or transfer of any of the
Shares; the Common Stock and the Underwriter's Warrant conform in all
material respects to the respective descriptions thereof contained in
the Prospectus; the Shares to be issued as contemplated in the
Registration Statement and this Agreement have been duly authorized
and, when paid for in accordance with the terms of the Agreement, will
be validly issued, fully paid and non-assessable and free of preemptive
rights contained in the Company's certificate or articles of
incorporation or Bylaws, or any other document, instrument or agreement
known to counsel; a sufficient number of shares of Common Stock has
been reserved for issuance upon exercise of the Underwriter's Warrant;
to such counsel's knowledge, neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any registration rights or other rights,
other than those contemplated by the Underwriter's Warrant or described
in the prospectus or which have been waived or satisfied, for or
relating to the registration of the Shares;
(iii) this Agreement and the Underwriter's Warrant
(sometimes hereinafter collectively referred to as the "Underwriter
Agreements") have been duly and validly authorized, executed and
delivered by the Company, and assuming due execution and delivery of
this Agreement by you, such agreements are, or when duly executed will
be, the valid and legally binding obligations of the Company except as
enforceability may be limited by bankruptcy, insolvency, moratorium or
other laws affecting the rights of creditors, or by general equitable
principles; provided that no opinion need be expressed as to the
enforceability of the indemnity provisions contained in Section 6 or
the contribution pro visions contained in Section 7 of this Agreement;
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(iv) the certificates evidencing the Shares are in
valid and proper legal form; the Underwriter's Warrant will be
exercisable for shares of Common Stock of the Company in accordance
with the terms of the Underwriter's Warrant and at the prices therein
provided for; the shares of Common Stock of the Company issuable upon
exercise of the Underwriter's Warrant have been duly authorized and
reserved for issuance upon such exercise, and such shares, when issued
upon such exercise in accordance with the terms of the Underwriter's
Warrant and when the price is paid shall be fully paid and
non-assessable;
(v) Such counsel knows of no pending or threatened
legal or governmental proceedings to which the Company is a party which
are required to be described or referred to in the Registration
Statement which are not so described or referred to;
(vi) The execution and delivery of this Agreement and
the Underwriter's Warrant and the incurrence of the obligations herein
and therein set forth and the consummation of the transactions herein
or therein contemplated will not result in a violation of, or
constitute a default under, the certificate or articles of
incorporation or by-laws of the Company, or in a violation of or
default under any obligation, agreement, covenant or condition
contained in any material bond, debenture, note or other evidence of
indebtedness or in any of the material contracts, indentures,
mortgages, loan agreements, leases, joint ventures or other agreements
or instruments to which the Company is a party that are filed as
Exhibits to the Registration Statement or otherwise known to counsel;
(vii) The Registration Statement has become effective
under the Act, and to such counsels knowledge, no stop order suspending
the effectiveness of the Registration Statement is in effect, no
proceedings for that purpose have been instituted or are pending
before, or threatened by, the Commission and the Registration Statement
and the Prospectus (except, in the case of both the Registration
Statement and any Amendment thereto, and the Prospectus and any
supplement thereto for the financial statements and notes and schedules
thereto, and other financial information or statistical data contained
therein, or omitted therefrom, as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act and the Rules and Regulations;
(viii) All descriptions in the Registration Statement
and the Prospectus, and any amendment or supplement thereto, of
contracts and other documents are accurate and fairly present the
information required to be shown, and such counsel does not know of any
contracts or documents of a character required to be summarized or
described therein or to be filed as exhibits thereto which are not so
summarized, described or filed;
(ix) No authorization, approval, consent or license
of any governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or delivery
of the Shares by the Company, in connection with the execution,
delivery and performance of this Agreement or the Underwriter's Warrant
by the Company or in connection with the taking of any action
contemplated herein or therein, or the issuance of the Underwriter's
Warrant or the Shares underlying the Underwriter's Warrant, other than
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registration or qualification of the Shares under applicable state or
foreign securities or blue sky laws (as to which such counsel need
express no opinion) and registration under the Act; and
(x) The statements in the Registration Statement
under the caption "Description of Capital Stock," to the extent that
such statements constitute a matter of law or legal conclusion have
been reviewed by such counsel and are correct in all material respects;
and
Such counsel has participated in the preparation of
the Registration Statement and the Prospectus and although such counsel has not
reviewed the accuracy or completeness of the statements contained in the
Registration Statement or Prospectus nothing has come to the attention of such
counsel that caused such counsel to have reason to believe that the Registration
Statement or any amendment thereto at the time it became effective contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any supplement thereto contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make statements therein in light of the circumstances under which they
were made not misleading (except, in the case of both the Registration Statement
and any amendment thereto and the Prospectus and any supplement thereto, for the
financial statements, notes and schedules thereto and other financial
information and statistical data contained therein, as to which such counsel
need express no opinion);
In rendering such opinion, such counsel may rely upon
certificates of any officer of the Company or public officials as to matters of
fact; and in rendering such opinion may either (i) rely as to all matters of law
other than the law of the United States or of the State of California upon
opinions of counsel satisfactory to you, in which case the opinion shall state
that they have no reason to believe that you and they are not entitled to so
rely or (ii) assume that the laws of any state other than the State of
California are identical to the laws of the State of California, in rendering
such opinion.
(c) All corporate proceedings and other legal matters relating
to this Agreement, the Registration Statement, the Prospectus, and other related
matters shall be reasonably satisfactory to or approved by Freshman, Marantz,
Orlanski, Cooper Klein, counsel to you, and you shall have received from such
counsel a signed opinion, dated as of the First Closing Date, with respect to
the validity of the issuance of the Shares, the form of the Registration
Statement and Prospectus (other than the financial statements and other
financial data contained therein), the execution of this Agreement and other
related matters as you may reasonably require. The Company shall have furnished
to counsel for you such documents as they may reasonably request for the purpose
of enabling them to render such opinion.
(d) You shall have received a letter on and as of the
Effective Date and again on and as of the First Closing Date, in each instance
describing procedures carried out to a date within five (5) days of the date of
the letter, from Price Waterhouse LLP, independent public accountants for the
Company, substantially in the form approved by you.
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(e) At each of the Closing Dates, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of such Closing Date, and the Company
shall have performed all of its obligations hereunder and satisfied all the
conditions on its part to be satisfied at or prior to such Closing Date; (ii)
the Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statements 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 in light of the circumstances under which they were made; (iii)
there shall have been, since the respective dates as of which information is
given, no material adverse change in the business, properties, condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt or general affairs of the Company from that set forth in the
Registration Statement and the Prospectus, except changes which the Registration
Statement and Prospectus indicate might occur after the Effective Date and the
Company shall not have incurred any material liabilities nor entered into any
agreement not in the ordinary course of business other than as referred to in
the Registration Statement and Prospectus; and (iv) except as set forth in the
Prospectus, no action, suit or proceeding at law shall be pending or threatened
against the Company which would be required to be disclosed in the Registration
Statement, and no proceedings shall be pending or threatened against the Company
before or by any commission, board or administrative agency in the United States
or elsewhere, wherein an unfavorable decision, ruling or finding would
materially and adversely affect the business, property, condition (financial or
otherwise), results of operations or general affairs of the Company. In
addition, you shall have received, at the First Closing Date, a certificate
signed by the President and the principal financial or accounting officer of the
Company, dated as of the First Closing Date, evidencing compliance with the
provisions of this subsection (e).
(f) Upon exercise of the option provided for in Section 2(b)
hereof, your obligations to purchase and pay for the Option Shares referred to
therein will be subject (as of the date hereof and as of the Option Closing
Date) to the following additional conditions:
(i) The Registration Statement shall remain effective
at the Option Closing Date, no stop order suspending the effectiveness
thereof shall have been issued, and no proceedings for that purpose
shall have been instituted or shall be pending, or, to your knowledge
or the knowledge of the Company, shall be contemplated by the
Commission, and any reasonable request on the part of the Commission
for additional information shall have been complied with to the
reasonable satisfaction of Freshman, Marantz, Orlanski, Cooper & Klein,
counsel to you.
(ii) At the Option Closing Date there shall have been
delivered to you the signed opinion of Bruce P. Vann,. Esq., counsel
for the Company, dated as of the Option Closing Date, in form and
substance reasonably satisfactory to Freshman, Marantz, Orlanski,
Cooper & Klein, counsel to you, which opinion shall be substantially
the same in scope and substance as the opinion furnished to you at the
First Closing Date pursuant to Section 4(b) hereof, except that such
opinion, where appropriate, shall cover the Option Shares rather than
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the Firm Shares. If the First Closing Date is the same as the Option
Closing Date, such opinions may be combined.
(iii) At the Option Closing Date, there shall have
been delivered to you a certificate of the President and the Chairman
of the Board of the Company dated the Option Closing Date, in form and
substance reasonably satisfactory to Freshman, Marantz, Orlanski,
Cooper & Klein, counsel to you, substantially the same in scope and
substance as the certificate furnished to you at the First Closing Date
pursuant to Section 4(e) hereof.
(iv) At the Option Closing Date, there shall have
been delivered to you a letter in form and substance satisfactory to
you from Price Waterhouse LLP, dated the Option Closing Date and
addressed to you, confirming the information in their letter referred
to in Section 4(d) hereof as of the date thereof and stating that,
without any additional investigation required, nothing has come to
their attention during the period from the ending date of their review
referred to in said letter to a date not more than five (5) days prior
to the Option Closing Date which would require any change in said
letter if it were required to be dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option
Shares shall be reasonably satisfactory in form and substance to you,
and you and Freshman, Marantz, Orlanski, Cooper & Klein, counsel to
you, shall have been furnished with all such documents and certificates
as you may request in connection with this transaction in order to
evidence the accuracy and completeness of any of the representations,
warranties or statements of the Company or its compliance with any of
the covenants or conditions contained therein.
(g) If any of the conditions herein provided for in this
Section shall not have been completely fulfilled as of the date indicated, this
Agreement and all obligations of the Underwriters under this Agreement may be
cancelled at, or at any time prior to, each Closing Date by your notifying the
Company of such cancellation in writing or by telegram at or prior to the
applicable Closing Date. Any such cancellation shall be without liability of any
Underwriter to the Company, except as otherwise provided herein.
5. Conditions of the Obligations of the Company.
The obligation of the Company to sell and deliver the Shares
is subject to the following conditions:
(a) The Registration Statement shall have become effective not
later than 9:00 a.m. New York time, on the date of this Agreement, or on such
later date or time as you and the Company may agree in writing.
(b) on the Closing Dates, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the Act
or any proceedings therefor initiated or threatened by the Commission.
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If the conditions to the obligations of the Company provided
for in this Section have been fulfilled on the First Closing Date but are not
fulfilled after the First Closing Date and prior to the Option Closing Date,
then only the obligation of the Company to sell and deliver the Option Shares on
exercise of the option provided for in Section 2(b) hereof shall be affected.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless you and
each person, if any, who controls you, within the meaning of the Act, from and
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys, fees), to which you
or such controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in (A) the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment thereof or supplement
thereto, (B) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all
of the Shares under the securities laws thereof (any such application, document
or information being hereinafter called a "Blue Sky Application"), or arise out
of or are based upon the omission or alleged omission to state in the
Registration Statement, or any supplement thereto, or in any Blue Sky
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
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 and in conformity with written information furnished to the
Company through you specifically for use in the preparation of the Registration
Statement or any such amendment or supplement thereof or any such Blue Sky
Application or any such Preliminary Prospectus or the Prospectus or any such
amendment or supplement thereto and provided further, that the indemnity
agreement provided in this Section 6(b) with respect to any preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any losses, claims, charges, liabilities or litigation based
upon any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state therein a material fact purchased Shares,
if a copy of the Prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected has not been sent or
given to such person within the time required by the Act and the Rules and
Regulations thereunder. This indemnity will be in addition to any liability
which the Company may otherwise have.
(b) You agree to 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 have signed the Registration Statement, and each
person, if any, who controls the Company, within the meaning of the Act, from
and against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, shall include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys, fees) to which
the Company or any such director, nominee, officer or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue
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statement or alleged untrue statement of any material fact contained in the
Registration Statement, any preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged untrue statement or omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or omission or alleged untrue statement or omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company through you specifically for use in
preparation thereof. This indemnity agreement will be in addition to any
liability which you may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify in writing the indemnifying party of the commencement
thereof,, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section . In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is any Underwriter
or a person who controls any Underwriter within the meaning of the Act, the fees
and expenses of such counsel shall be at the expense of the indemnifying party
if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or such
controlling person and the indemnifying party, and in your judgment, upon advice
of counsel, it is advisable for such Underwriter or controlling persons to be
represented by separate counsel (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnified party, which shall not be unreasonably withheld.
7. Contribution.
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In order to provide for just and equitable contribution under
the Act in any case in which (i) the indemnified party makes claims for
indemnification pursuant to Section 6 hereof but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case, notwithstanding the fact
that the express provisions of Section 6 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of you,
then the Company and each person who controls the Company, in the aggregate, and
you shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees) in either such case (after
contribution from others) in such proportions that such Underwriter is
responsible in the aggregate for that portion of such losses, claims, damages or
liabilities represented by the percentage that the underwriting discount per
Share appearing on the cover page of the Prospectus bears to the public offering
price per Share appearing thereon, and the Company shall be responsible for the
remaining portion, provided, however, that if such allocation is not permitted
by applicable law, then the relative fault of the Company and you and
controlling persons, in the aggregate, in connection with the statements or
omissions which resulted in such damages and other relevant equitable
considerations shall also be considered. The relative fault shall be determined
by reference to, among other things, whether in the case of an untrue statement
of a material fact or the omission to state a material fact, such statement or
omission relates to information supplied by the Company or you, 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 (a) that it would not be just and equitable if the respective obligations
of the Company and you to contribute pursuant to this Section 7 were to be
determined by pro rata or per capita allocation of the aggregate damages (even
if the Underwriters have to be treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the first sentence of this Section 7 and (b) that
the contribution of any Underwriter shall not be in excess of its proportionate
share of the portion of such losses, claims, damages or liabilities for which
you are responsible. No person guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. As used in
this paragraph, the word "Company" within the meaning of Section 15 of the Act.
Your obligations to contribute pursuant to this Section 7 are several in
proportion to their respective underwriting obligations and not joint. If the
full amount of the contribution specified in this paragraph is not permitted by
law, then you and each person who controls you shall be entitled to contribution
from the Company to the full extent permitted by law. The foregoing contribution
agreement shall in no way affect the contribution liabilities of any persons
having liability under Section 11 of the Act other than the Company and you. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent.to the settlement; provided, however, that such
consent shall not be unreasonably withheld.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the
sale of the Shares to you is consummated, the Company will pay all costs and
expenses incident to the performance of
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this Agreement by the Company, including but not limited to the fees and
expenses of counsel to the Company and of the Company's accountants; the costs
and expenses incident to the preparation, printing, filing and distribution
under the Act 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, the fee of the National
Association of Securities Dealers, Inc. ("NASD") in connection with the filing
required by the NASD relating to the offering of the Shares contemplated hereby;
all expenses, including reasonable fees (but not in excess of the amount set
forth in Section 3(b)) and disbursements of counsel to you, in connection with
the qualification of the Shares under the State Securities or Blue Sky Laws
which you shall designate; the cost of printing and furnishing to you copies of
the Registration Statement, each Preliminary Prospectus, the Prospectus, this
Agreement, the Warrant Agreement and the Blue Sky Memorandum; the cost of
printing the certificates representing the Shares, the expenses of Company due
diligence meetings and presentations, (but not of you or your counsel in
connection therewith) and the expense (which shall not exceed $10,000) of
placing one or more "tombstone" advertisements as directed by you. The Company
shall pay any and all taxes (including any transfer, franchise, capital stock or
other tax imposed by any jurisdiction) on sales to you hereunder. The Company
will also pay all costs and expenses incident to the furnishing of any amended
Prospectus or of any supplement to be attached to the Prospectus as called for
in Section 3(a) of this Agreement except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses, the Company shall
at the First Closing Date pay to you the balance of a non-accountable expense
allowance equal to three percent (3%) of the gross proceeds of the offering. In
the event the over-allotment option is exercised in part or in full, the Company
shall pay to you at the Option Closing Date an additional amount equal to three
percent (3%) of the gross proceeds received upon exercise of the overallotment
option. In the event the transactions contemplated hereby are not consummated
due to the Company's breach of this Agreement or any covenant, condition,
representation or warranty contained herein, the Company shall be liable for
your actual accountable out-of-pocket expenses, including legal fees, provided
however, that any portion previously paid by the Company that has not been
utilized by you in connection with the offering on an accountable basis shall be
refunded by you to the Company.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from any Underwriter or from any other person for
services as a finder in connection with the proposed offering, and the Company
agrees to indemnify and hold harmless you, and you agree to indemnify and hold
harmless, the Company from and against any losses, claims, damages or
liabilities, (which shall, for all purposes of this Agreement, include, but not
be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees), to which the indemnified party may become subject
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon the claim of any person (other than an
employee of the party claiming indemnity) or entity that he or it is entitled to
a finder's fee in connection wit the proposed offering by reason of such
person's or entity's influence or prior contact with the indemnifying party.
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9. Effective Date.
The Agreement shall become effective upon its execution,
except that you may, at your option, delay its effectiveness until the earlier
to occur of 10:00 A.M., New York time on the first full business day following
the Effective Date as you in your discretion shall first commence the initial
public offering by you of any of the Shares. The time of the initial public
offering shall mean the time of release by you of the first newspaper
advertisement with respect to the Shares, or the time when the Shares are first
generally offered by you to dealers by letter or telecopier, whichever shall
first occur. This Agreement may be terminated by you at any time before it
becomes effective as provided above, except that Sections 3(c), 6, 7, 8, 12, 13,
14 and 15 shall remain in effect notwithstanding such termination.
10. Termination.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12, 13,
14 and 15, may be terminated at any time prior to the First Closing Date, and
the option referred to in Section 2(b), if exercised, may be cancelled, at any
time prior to the Option Closing Date, by you if in your judgment it is
impracticable to offer for sale or to enforce contracts made by you for the
resale of the Shares agreed to be purchased hereunder, by reason of (i) the
Company having sustained a material loss, whether or not insured, by reason of
fire, earthquake, flood, accident or other calamity, or from any labor dispute
or court or government action, order or decree, (ii) trading in securities on
the New York Stock Exchange or the American Stock Exchange having been suspended
or limited, (iii) material governmental restrictions having been imposed on
trading in securities generally which are not in force and effect on the date
hereof, (iv) a banking moratorium having been declared by federal of New York
State authorities, (v) an outbreak of major international hostilities or other
national or international calamity having occurred, (vi) the passage by the
Congress of the United States or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which is reasonably believed likely by
you to have a material adverse impact on the business, financial condition or
financial statements of the Company, (vii) any material adverse change in the
financial or securities markets beyond normal fluctuations in the United States
having occurred since the date of this Agreement, or (viii) any material adverse
change having occurred, since the respective dates for which information is
given in the Registration Statement and Prospectus, in the earnings, business,
prospects or general condition of the Company, financial or otherwise, whether
or not arising in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10 or in
Section 9, the Company shall be promptly notified by you, by telephone or
facsimile transmission, confirmed by letter.
11. Underwriter's Warrant.
On the First Closing Date, the Company will issue to you, for
a consideration of $5.00 and upon the terms and conditions set forth in the form
of Underwriter's Warrant annexed as an exhibit to the Registration Statement, an
Underwriter's Warrant to purchase 130,000 Shares. In
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the event of conflict in the terms of this Agreement and the Underwriter's
Warrant, the language of the Underwriter's Warrant shall control.
12. Representations, Warranties and Agreements to Survive Delivery.
The respective indemnities, agreements, representations,
warranties and other statements of the Company and you, set forth in or made
pursuant to this Agreement will remain in full force and effect regardless of
any investigation made by or on behalf of you, the Company or any of its
officers or directors or any controlling persons and will survive delivery of
and payment for the Shares and the termination of this Agreement.
13. Notice.
All communications hereunder will be in writing and, except as
otherwise expressly provided herein, if sent to you, will be mailed, delivered
or telecopied and confirmed to it at H.J. Meyers & Co., Inc., 1895 Mt. Hope
Avenue, Rochester, New York 14620-4596, with a copy sent to Thomas J. Poletti,
Esq. at Freshman, Marantz, Orlanski, Cooper & Klein, 9100 Wilshire Boulevard,
8th Floor East, Beverly Hills, California 90212-3480, or if sent to the Company,
will be mailed, delivered, or facsimiled and confirmed to Drew Levin, 12300
Wilshire Boulevard, Suite 400, Los Angeles, California 90025, with copy sent to
Bruce P. Vann, Esq., Kelley & Lytton, 1900 Avenue of the Stars, Suite 1450, Los
Angeles, California 90067.
14. Parties in Interest.
The Agreement herein set forth is made solely for your
benefit, the Company and, to the extent expressed, the Existing Shareholders,
any person controlling the Company, or you, and directors of the Company,
nominees for directors of the Company (if any) named in the Prospectus, the
officers of the Company who have signed the Registration Statement, and their
respective executors, administrators, successors and assigns, and no other
person shall acquire for have any right under or by virtue of this Agreement.
The term "successors and assigns" shall not include any purchaser, as such
purchaser, from you of the Shares.
15. Applicable Law.
This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be entirely performed within New York.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return this Underwriting Agreement, whereupon it
will become a binding agreement between the Company and you in accordance with
its terms.
Very truly yours,
Team Communications Group, Inc.
Dated: __________, 1997 By:________________________________
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
H.J. Meyers & Co., Inc.
Dated: _______, 1997 By:________________________________
Authorized Officer
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SCHEDULE I
Underwriting Agreement dated ________, 1997
Number of Firm
Shares
Underwriter to be Purchased
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H.J. Meyers & Co., Inc. 1,300,000
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