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1,600,000 SHARES
ARTIFICIAL LIFE, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
Fairfax, Virginia
December __, 1998
New York Broker, Inc. New York Broker Deutschland AG
00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000 12 Xxxx Xxxxx Strasse
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Artificial Life, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell an
aggregate of 1,200,000 shares of common stock, $.01 par value per share (the
"Common Stock"), of the Company, to New York Broker, Inc. (the "Representative")
and New York Broker Deutschland AG (together with the Representative, the
"Underwriters"), and Eberhard Schoneburg, Chairman, Chief Executive Officer and
President of the Company (the "Selling Stockholder") proposes, subject to the
terms and conditions stated herein, to sell to the Underwriters an aggregate of
400,000 shares of the Common Stock (such 1,600,000 aggregate shares to be sold
by the Company and the Selling Stockholder are hereinafter referred to as the
"Firm Shares"). In addition, the Company has agreed to sell to the Underwriters,
upon the terms and conditions set forth herein, up to an additional 240,000
shares (the "Additional Shares") of the Common Stock to cover over-allotments by
the Underwriters, if any. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares."
The Company and the Selling Stockholder wish to confirm as follows their
agreement with you and the Underwriters, on whose behalf you are acting, in
connection with the several purchases of the Shares from the Company and the
Selling Stockholder.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1 (File No. 333-64619), including a
prospectus subject to completion, relating to the Shares. Such registration
statement, as amended at the time when it becomes effective and as thereafter
amended by post-effective amendment, is referred to in this Agreement as the
"Registration Statement." The prospectus in the form included in the
Registration Statement, or, if the prospectus included in the Registration
Statement omits information in reliance upon Rule 430A under the Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Act or as part of a post-effective amendment to the
Registration Statement after the Registration Statement becomes effective, the
prospectus as so filed, is referred to in this Agreement as the "Prospectus." If
the Company elects to rely on Rule 434 under the Act, all references to the
Prospectus shall be deemed to include, without limitation, the form of
prospectus and the term sheet contemplated by Rule 434, taken together, provided
to the Underwriters by the Company in reliance on Rule 434 under the Act (the
"Rule 434 Prospectus"). If the Company files another registration statement with
the
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Commission to register a portion of the Shares pursuant to Rule 462(b) under the
Act (the "Rule 462 Registration Statement"), then any reference to "Registration
Statement" herein shall be deemed to include the registration statement on Form
S-1 (File No. 333-64619) and the Rule 462 Registration Statement, as each such
registration statement may be amended pursuant to the Act. The prospectus
subject to completion in the form included in the Registration Statement at the
time of the initial filing of such Registration Statement with the Commission
and as such prospectus is amended from time to time until the date of the
Prospectus are collectively referred to in this Agreement as the "Prepricing
Prospectus."
2. AGREEMENTS TO SELL AND PURCHASE; WARRANT. The Company and the Selling
Stockholder hereby agree, severally and not jointly, to sell the Firm Shares to
the Underwriters and, upon the basis of the representations, warranties and
agreements of the Company and the Selling Stockholder herein contained and
subject to all the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Company and the Selling
Stockholder at a purchase price of $_____ per Share (the "purchase price per
Share"), the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number of Firm Shares as adjusted
pursuant to Section 11 hereof).
The Company hereby also agrees to sell to the Underwriters, and upon the
basis of the representations, warranties and agreements of the Company herein
contained and subject to all the terms and conditions set forth herein, the
Underwriters shall have a one-time right (exercisable for 30 days from the date
of the Prospectus) to purchase from the Company up to 240,000 Additional Shares
at the purchase price per Share. The Additional Shares may be purchased solely
for the purpose of covering over-allotments, if any, made in connection with the
offering of the Firm Shares. If any Additional Shares are to be purchased, each
Underwriter, severally and not jointly, agrees to purchase the number of
Additional Shares (subject to such adjustments as you may determine to avoid
fractional shares) which bears the same proportion to the total number of
Additional Shares to be purchased by the Underwriters as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Firm Shares as adjusted pursuant to Section 11 hereof) bears to
the total number of Firm Shares.
As additional consideration to induce the Representative to enter into
this Agreement, (i) the Company hereby agrees to provide the Representative with
a non-accountable expense account of 3% of the gross proceeds of the offering,
as set forth on cover page of the Prospectus, and (ii) at the Closing, the
Company hereby agrees to sell to the Representative for $100 a warrant to
purchase 160,000 shares of Common Stock (the "Warrant Shares") at a price per
share of $___ in substantially the form as attached hereto as Schedule II. The
Warrant Shares shall be included in the Registration Statement.
3. TERMS OF PUBLIC OFFERING. The Company and the Selling Stockholder have
been advised by you that the Underwriters propose to make a public offering of
their respective portions of the Shares as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable and
initially to offer the Shares upon the terms set forth in the Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of the Firm Shares and payment therefor shall be made at the
offices of New York Broker, Inc., 00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000 at 10:00 a.m., Fairfax, Virginia time, on ___________, 1998 (the
"Closing Date"). The place of closing for the Firm Shares and the Closing Date
may be varied by agreement between the Representative and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to
be purchased by the Underwriters shall be made at the offices of New York
Broker, Inc., 00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 at
10:00 a.m., Fairfax, Virginia time, on such date or dates (the "Additional
Closing Date") (which may be the same as the Closing Date but shall in no event
be earlier than the Closing Date nor earlier than three nor later than ten
business days after the giving of the notice hereinafter referred to) as shall
be specified in a written notice from you on behalf of the Underwriters to the
Company of the Underwriters' determination to purchase a
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number, specified in such notice, of Additional Shares. Such notice may be given
to the Company by you on one occasion at any time within 30 days after the date
of the Prospectus. The place of closing for the Additional Shares and the
Additional Closing Date may be varied by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 1:00 p.m., Fairfax, Virginia time, not later than
one full business day preceding the Closing Date or the Additional Closing Date,
as the case may be. Such certificates shall be made available to you in Fairfax,
Virginia for inspection and packaging not later than 9:30 a.m., Fairfax,
Virginia time, on the business day immediately preceding the Closing Date or the
Additional Closing Date, as the case may be. The certificates evidencing the
Firm Shares and any Additional Shares to be purchased hereunder shall be
delivered to you on the Closing Date or the Additional Closing Date, as the case
may be, against payment of the purchase price therefor by wire transfer of
immediately available funds. Payment for the Firm Shares sold by the Company
hereunder shall be delivered by the Representative to the Company, and payment
for the Shares sold by the Selling Stockholder hereunder shall be delivered by
the Representative to the Selling Shareholder.
5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with the Underwriters as follows:
(a) The Company will use its reasonable best efforts to cause the
Registration Statement and any amendments thereto to become effective, if
it has not already become effective, and will advise you promptly and, if
requested by you, will confirm such advice in writing (i) when the
Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (ii) if Rule 430A under the Act is
employed, when the Prospectus has been timely filed pursuant to Rule
424(b) under the Act, (iii) of any request by the Commission for
amendments or supplements to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction or the initiation of any
proceeding for such purposes and (v) within the period of time referred to
in Section 5(e) below, of any material change in the Company's financial
condition, business or results of operations or of any event that comes to
the attention of the Company that makes any statement made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue in any material respect or that requires the making of any
additions thereto or changes therein in order to make the statements
therein not misleading in any material respect, or of the necessity to
amend or supplement the Prospectus (as then amended or supplemented) to
comply with the Act or any other law. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal or lifting of such order at the earliest possible time. If the
Company elects to rely on Rule 434 under the Act, the Company will provide
the Underwriters with copies of the form of the Rule 434 Prospectus
(including copies of a term sheet that complies with the requirements of
Rule 434 under the Act), in such number as the Underwriters may reasonably
request, and file with the Commission in accordance with Rule 424(b) of
the Act the form of Prospectus complying with Rule 434(b)(2) of the Act
before the close of business on the second business day immediately
following the date hereof. If the Company elects not to rely on Rule 434
under the Act, the Company will provide the Underwriters with copies of
the form of Prospectus, in such number as the Underwriters may reasonably
request, and file with the Commission such Prospectus in accordance with
Rule 424(b) of the Act before the close of business on the second business
day immediately following the date hereof.
(b) The Company will furnish to you, without charge, two signed
duplicate originals of the Registration Statement as originally filed with
the Commission and of each amendment thereto, including financial
statements and all exhibits thereto, and will also furnish to you, without
charge, such number of
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conformed copies of the Registration Statement as originally filed and of
each amendment thereto as you may reasonably request.
(c) The Company will not file any Rule 462 Registration Statement or
any amendment to the Registration Statement or make any amendment or
supplement to the Prospectus unless (i) you shall have previously been
advised thereof and given a reasonable opportunity to review such filing,
amendment or supplement, and (ii) you have not reasonably objected to such
filing, amendment or supplement after being so advised.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to you, without charge, in such
quantities as you have requested or may hereafter reasonably request,
copies of each form of the Prepricing Prospectus. The Company consents to
the use, in compliance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the Underwriters and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus so furnished by the Company.
(e) As soon after the execution and delivery of this Agreement as is
practicable and thereafter from time to time for such period as in the
reasonable opinion of counsel for the Underwriters a prospectus is
required by Section 4(3) of the Act and Rule 174 thereunder to be
delivered in connection with sales by any Underwriter or a dealer, the
Company will deliver to each Underwriter and each dealer, without charge,
as many copies of the Prospectus (and of any amendment or supplement
thereto) as they may reasonably request. The Company consents to the use
of the Prospectus (and of any amendment or supplement thereto) in
compliance with the provisions of the Act and with the securities or Blue
Sky laws of the jurisdictions in which the Shares are offered by the
Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of
time thereafter as the Prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer. If at any time
prior to the later of (i) the completion of the distribution of the Shares
pursuant to the offering contemplated by the Registration Statement or
(ii) the expiration of prospectus delivery requirements with respect to
the Shares under Section 4(3) of the Act and Rule 174 thereunder, any
event shall occur that in the judgment of the Company or in the opinion of
counsel for the Underwriters is required to be set forth in the Prospectus
(as then amended or supplemented) or should be set forth therein in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement
or amend the Prospectus to comply with the Act or any other U.S. federal
or state securities law, the Company will forthwith prepare and, subject
to Sections 5(a) and 5(c) hereof, file with the Commission and use its
reasonable best efforts to cause to become effective as promptly as
possible an appropriate supplement or amendment thereto, and will furnish
to each Underwriter who has previously requested Prospectuses, without
charge, a reasonable number of copies thereof.
(f) The Company will cooperate with you and counsel for the
Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may reasonably
designate and will file such consents to service of process or other
documents as may be reasonably necessary in order to effect and maintain
such registration or qualification for so long as required under the
applicable Blue Sky laws to complete the distribution of the Shares;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action which would subject it to general service of process in suits,
other than those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject. In the event that the
qualification of the Shares in any jurisdiction is suspended, the Company
shall so advise you promptly in writing.
(g) The Company will make generally available to its security
holders a consolidated earnings statement (in form complying with the
provisions of Rule 158), which need not be audited, covering a
twelve-month period commencing after the effective date of the
Registration Statement and the
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Rule 462 Registration Statement, if any, and ending not later than 15
months thereafter, as soon as practicable after the end of such period,
which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act.
(h) During the period ending five years from the date hereof, the
Company will furnish to you (i) as soon as available, a copy of each proxy
statement, quarterly or annual report or other report of the Company
mailed to Stockholders or filed with the Commission, the National
Association of Securities Dealers, Inc. (the "NASD") or The Nasdaq Stock
Market or any securities exchange and (ii) from time to time such other
information concerning the Company as you may reasonably request.
(i) If this Agreement shall be terminated after execution (except
pursuant to a termination under Sections 10(e), 10(g), 10(l), 11 or 12
hereof or by the Company as a result of a material breach of this
Agreement by you or the Underwriters) by the Underwriters because of any
inability, failure or refusal on the part of the Company or the Selling
Stockholder to perform in all material respects any agreement herein or to
comply in all material respects with any of the terms or provisions hereof
or to fulfill in all material respects any of the conditions of this
Agreement, the Company agrees to reimburse you and the other Underwriters
for all out-of-pocket expenses (including reasonable travel expenses and
reasonable fees and expenses of counsel for the Underwriters but excluding
wages and salaries paid by you) reasonably incurred by you in connection
herewith.
(j) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder in accordance in all material respects
with the statements under the caption "Use of Proceeds" in the Prospectus.
(k) If Rule 430A under the Act is employed, the Company will timely
file the Prospectus pursuant to Rule 424(b) under the Act.
(l) For a period of 12 months days after the date of the Prospectus
first filed pursuant to Rule 424(b) under the Act, without your prior
written consent, the Company will not, directly or indirectly, issue,
sell, offer or contract to sell or otherwise dispose of or transfer any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for shares of Common Stock (collectively, "Company
Securities") or any rights to purchase Company Securities, except (i) to
the Underwriters pursuant to this Agreement; (ii) pursuant to the
Representative's Warrant, (iii) for grants of options or other awards
under the Company's stock option or other award plans or agreements and
any issuances of shares of common stock in connection with the exercise of
options or other securities convertible into the common stock of the
Company and (iv) in connection with the issuance of securities pursuant to
mergers, acquisitions and licenses.
(m) Prior to the Closing Date or the Additional Closing Date, as the
case may be, the Company will furnish to you, as promptly as possible,
copies of any unaudited interim financial statements of the Company for
any period subsequent to the periods covered by the financial statements
appearing in the Prospectus.
(n) The Company will comply with all provisions of any undertakings
contained in the Registration Statement.
(o) The Company will not at any time, directly or indirectly take
any action designed, or which might reasonably be expected to cause or
result in, or which will constitute, stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of
any of the Shares.
(p) The Company will use commercially reasonable efforts to qualify
or register its Common Stock for sale in non-issuer transactions under (or
obtain exemptions from the application of) the Blue Sky
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laws of each state where necessary to permit market making transactions
and secondary trading, and will comply with such Blue Sky laws and will
continue such qualifications, registrations and exemptions in effect for a
period of five years after the date hereof.
(q) The Company will timely file with the Nasdaq all documents and
notices and comply with all applicable Qualification Requirements, for
Nasdaq SmallCap securities in connection with the listing of the Shares.
(r) For a period of 12 months after the date of the Prospectus first
filed pursuant to Rule 424(b) under the Act, without your prior written
consent, the Company will not file any registration statement relating to
the offer or sale of any of the Company's securities, other than a
registration statement on Form S-8 relating to the Plans and other than in
connection with any of the shares of Common Stock registered pursuant to
the Registration Statement.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company and the
Selling Stockholder hereby jointly and severally represent and warrant to each
Underwriter on the date hereof, and shall be deemed to represent and warrant to
each Underwriter on the Closing Date and the Additional Closing Date (if any),
that:
(a) Each Prepricing Prospectus included as part of the Registration
Statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424(a) under the Act, complied when so
filed in all material respects with the provisions of the Act, except that
this representation and warranty does not apply to statements in or
omissions from such Prepricing Prospectus (or any amendment or supplement
thereto) made in reliance upon and in conformity with information relating
to any Underwriter furnished to the Company in writing by or on behalf of
any Underwriter through you expressly for use therein. The Commission has
not issued any order preventing or suspending the use of any Prepricing
Prospectus.
(b) The Registration Statement (including any Rule 462 Registration
Statement), in the form in which it becomes effective and also in such
form as it may be when any post-effective amendment thereto shall become
effective, and the Prospectus, and any supplement or amendment thereto
when filed with the Commission under Rule 424(b) under the Act, will
comply in all material respects with the provisions of the Act and will
not at any such times 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 not misleading, except that this
representation and warranty does not apply to statements in or omissions
from the Registration Statement or the Prospectus (or any amendment or
supplement thereto) made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein.
(c) The capitalization of the Company is and will be as set forth in
the Prospectus as of the date set forth therein. All the outstanding
shares of Common Stock of the Company have been, and as of the Closing
Date will be, duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights; except as
set forth in the Prospectus, the Company is not a party to or bound by any
outstanding options, warrants, or similar rights to subscribe for, or
contractual obligations to issue, sell, transfer or acquire, any of its
capital stock or any securities convertible into or exchangeable for any
of such capital stock; the Shares to be issued and sold to the
Underwriters by the Company hereunder have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights; the capital
stock of the Company conforms in all material respects to the description
thereof in the Registration Statement and the Prospectus (or any amendment
or supplement thereto); and the delivery of certificates for the Shares
against payment therefor pursuant to the terms of this Agreement, will
pass valid title to the Shares, free and clear of any claim, encumbrance
or defect in title, to the Underwriters) purchasing such shares in good
faith and without notice of any lien, claim or encumbrance. The
certificates for the Shares are in valid and sufficient form in accordance
with the DGCL.
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(d) The Company is a corporation duly organized and validly existing
as a corporation in good standing under the laws of the State of Delaware
with full power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as described in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), and is duly registered and qualified to conduct its business and
is in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure to so register or qualify would
not be reasonably likely to have a material adverse effect on the
financial condition, business or results of operations of the Company (a
"Material Adverse Effect").
(e) The Company does not have any subsidiaries and does not own a
material interest in or control, directly or indirectly, any other
corporation, partnership, joint venture, association, trust or other
business organization.
(f) There are no legal or governmental proceedings pending or, to
the best knowledge of the Company, threatened, against the Company or to
which the Company or any of its properties is subject, that are required
to be described in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) but are not described as required. Except
as described in the Prospectus, there is no action, suit, inquiry,
proceeding, or investigation by or before any court or governmental or
other regulatory or administrative agency or commission pending or, to the
knowledge of the Company, threatened, against or involving the Company,
which might individually or in the aggregate prevent or adversely affect
the transactions contemplated by this Agreement or result in a Material
Adverse Effect, nor to the Company's knowledge is there any basis for any
such action, suit, inquiry, proceeding, or investigation. There are no
agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement or the Prospectus
(or any amendment or supplement thereto) or to be filed as an exhibit to
the Registration Statement that are not described or filed as required by
the Act.
(g) The Company is not in violation of its Certificate of
Incorporation or Bylaws or any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or of any decree
of any court or governmental agency or body having jurisdiction over the
Company, except for any violation that would not reasonably be expected to
have a Material Adverse Effect, or in default in any material respect in
the performance of any obligation, agreement or condition contained in (i)
any bond, debenture, note or any other evidence of indebtedness, or (ii)
any material agreement, indenture, lease or other material instrument to
which the Company is a party or by which any of its properties may be
bound, except for any default that would not reasonably be expected to
have a Material Adverse Effect; and there does not exist any state of
facts which constitutes an event of default on the part of the Company as
defined in such documents or which, with notice or lapse of time or both,
would constitute such an event of default, except for any default that
would not reasonably be expected to have a Material Adverse Effect.
(h) The Company's execution and delivery of this Agreement and the
performance by the Company of its obligations under this Agreement has
been duly and validly authorized by the Company, and this Agreement has
been duly executed and delivered by the Company, and this Agreement
constitutes a valid and legally binding agreement of the Company.
(i) Neither the issuance and sale of the Shares pursuant hereto, the
execution, delivery or performance of this Agreement by the Company nor
the consummation by the Company of the transactions contemplated hereby or
thereby (i) requires any consent, approval, authorization or other order
of or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official
(except for filings with, and approval of the listing of the shares on,
the Nasdaq Stock Market and except such as may be required for the
registration of the Shares under the Act and under the rules and
regulations of the Bundesaufsichtsamt fur den Wertpapierhandel and
compliance with the
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securities or Blue Sky laws of various jurisdictions, and except for the
NASD's clearance of the underwriting terms of the offering contemplated
hereby as required under the NASD's Rules of Fair Practice), (ii)
conflicts with or will conflict with or constitutes or will constitute a
breach of, or a default or Repayment Event (as defined below) under, the
Certificate of Incorporation or Bylaws of the Company or any agreement,
indenture, lease or other instrument to which the Company is a party or by
which any of its properties may be bound, except for any breach or default
that would not reasonably be expected to have a Material Adverse Effect,
(iii) violates any statute, law, regulation, ruling, filing, judgment,
injunction, order or decree applicable to the Company or any of its
properties, except for any violation that would not reasonably be expected
to have a Material Adverse Effect, or (iv) results in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company, except for any lien, charge or encumbrance that would not
be reasonably be expected to have a Material Adverse Effect. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company.
(j) Except as described in the Prospectus, the Company does not have
outstanding, and at the Closing Date (and the Additional Closing Date, if
applicable) will not have outstanding, any options to purchase, or any
warrants to subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell, any shares of
Common Stock or any such warrants or convertible securities or
obligations. No holder of securities of the Company has rights to the
registration of any securities of the Company as a result of or in
connection with the filing of the Registration Statement or the
consummation of the transactions contemplated hereby that have not been
satisfied or heretofore waived in writing.
(k) Wolf & Company, P.C., the certified public accountants who have
certified the financial statements filed as part of the Registration
Statement and the Prospectus (or any amendment or supplement thereto), are
independent public accountants as required by the Act.
(l) The financial statements, together with related schedules and
notes, included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly in all material respects
the financial position, results of operations and changes in financial
position of the Company on the basis stated in the Registration Statement
and the Prospectus (and any amendment or supplement thereto)at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein; and
the other financial and statistical information and data set forth in the
Registration Statement and Prospectus (and any amendment or supplement
thereto) present fairly in all material respects the information shown
therein and have been prepared on a basis consistent with such financial
statements and the books and records of the Company. No other financial
statements or schedules are required to be included in the Registration
Statement and the Prospectus (and any amendment or supplement thereto).
(m) Except as disclosed in or contemplated by the Registration
Statement and the Prospectus (or any amendment or supplement thereto),
subsequent to the respective dates as of which such information is given
in the Registration Statement and the Prospectus (or any amendment or
supplement thereto), (i) the Company has not incurred any material
liabilities or obligations, indirect, direct or contingent, or entered
into any transaction which is not in the ordinary course of business or
which could result in a material reduction in the future earnings of the
Company; (ii) the Company has not sustained any material loss or
interference with its business or properties from fire, flood, windstorm,
accident or other calamity, whether or not covered by insurance; (iii) the
Company has not paid or declared any dividends or other distributions with
respect to its capital stock and the Company is not in default under the
terms of any class of capital stock of the Company or any outstanding debt
obligations; (iv) there has not been any change in the authorized or
outstanding capital stock of the Company or any material change in the
indebtedness of the
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Company); and (v) there has not been any material adverse change, or any
development involving or which may reasonably be expected to involve a
potential future material adverse change, in the financial condition,
business, or result of operations of the Company.
(n) The Company has good and marketable title to all property (real
and personal) owned by it, free and clear of all mortgages, liens, claims,
security interests or other encumbrances except (i) such as are described
in the financial statements included in the Registration Statement or the
Prospectus (and any amendment or supplement thereto or (ii) such as do not
interfere in any material respect with the use of the property or the
conduct of the business of the Company. All property (real and personal)
held under lease by the Company is held by it under valid, subsisting and
enforceable leases with only such exceptions as in the aggregate do not
interfere in any material respect with the conduct of the business of the
Company. Such leases are in full force and effect, and the Company has no
written notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company under any such leases, or
affecting or questioning the rights of the Company to the continued
possession of the leased premises.
[(o) Except as pursuant to German law, the Company has not
distributed and will not distribute any offering material in connection
with the offering and sale of the Shares other than the Prepricing
Prospectus, the Prospectus, or other offering material, if any, as
permitted by the Act.]
(p) The Company has not taken, directly or indirectly, any action
which constituted, or any action designed, or which might reasonably be
expected to cause or result in or constitute, under the Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares or for any other purpose.
(q) The Company is not, and upon the issuance and sale of the Shares
as herein contemplated and the application of the net proceeds therefrom
as described in the Prospectus will not be, an "investment company," an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company within the meaning of the Investment Company Act of
1940, as amended.
(r) The Company has all permits, licenses, franchises, approvals,
consents and authorizations of governmental or regulatory authorities
(collectively, the "permit" or "permits") as are necessary to own its
properties and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus, except where the failure to have obtained any such permit has
not had and would not reasonably be expected to have a Material Adverse
Effect; the Company has fulfilled and performed all of its obligations
with respect to each such permit, except for any failure to perform that
would not reasonably be expected to have a Material Adverse Effect; and
all of the permits are valid and in full force and effect and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination of any such permit or result in any other
impairment of the rights of the holder of any such permit, subject in each
case to such qualification as may be set forth in the Prospectus; and,
except as described in the Prospectus, except where the failure to be
valid or in full force and effect would not reasonably be expected to
have, and except for any revocation, termination or other impairment that
would not reasonably be expected to have, a Material Adverse Effect.
(s) The Company has complied and will comply with wage and hour
determinations issued by the U.S. Department of Labor under the Service
Contract Act of 1965 and the Fair Labor Standards Act in paying its
employees' salaries, fringe benefits, and other compensation for the
performance of work or other duties in connection with contracts with the
U.S. government, except where the failure to comply has not had and would
not reasonably be expected to have a Material Adverse Effect. The Company
has complied and will comply in all material respects with the terms of
all certifications and representations made to the U.S. government in
connection with the submission of any bid or proposal or any contract,
except where the failure to comply has not had and would not reasonably be
expected to have a Material Adverse Effect. The Company has complied and
will comply with the requirements of the American with
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Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act, the Civil Rights Act of 1964
(Title VII), as amended, the Age Discrimination in Employment Act and
other applicable federal and state employment and labor laws, except where
the failure to comply has not had and would not reasonably be expected to
have a Material Adverse Effect. No labor dispute with the employees of the
Company exists, or to the knowledge of the Company, is imminent.
(t) 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
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with 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, except, in
each case, where the failure to so maintain would not reasonably be
expected to have a Material Adverse Effect.
(u) The Company has not, directly or indirectly, at any time during
the past five years (i) made any unlawful contribution to any candidate
for political office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal, state or
foreign governmental official, or other person charged with similar public
or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof or applicable
foreign jurisdictions.
(v) The Company has obtained all required permits, licenses, and
other authorizations, if any, which are required under federal, state,
local and foreign statutes, ordinances and other laws relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, chemicals, or industrial, hazardous, or toxic materials or
wastes into the environment (including, without limitation, ambient air,
surface water, ground water, land surface, or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, hazardous, or toxic materials or
wastes, or any regulation, rule, code, plan, order, decree, judgment,
injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder ("Environmental Laws"), except where the failure to
obtain any such permit, license or other authorization has not resulted in
and would not reasonably be expected to result in a Material Adverse
Effect. The Company is in compliance with all terms and conditions of all
required permits, licenses, and authorizations, and are also in material
compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables contained in the Environmental Laws, except where the failure
to be in compliance has not had and would not reasonably be expected to
have a Material Adverse Effect. There is no pending or, to the best
knowledge of the Company, threatened civil or criminal litigation, notice
of violation, or administrative proceeding relating in any way to the
Environmental Laws (including but not limited to notices, demand letters,
or claims under the Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), the Emergency Planning
and Community Right to Know Act of 1986, as amended ("EPCRA"), the Clean
Air Act, as amended ("CAA"), or the Clean Water Act, as amended ("CWA")
and similar federal, foreign, state, or local laws) involving the Company.
To the Company's knowledge, there have not been and there are not any
past, present, or reasonably foreseeable future events, conditions,
circumstances, activities, practices, incidents, actions, or plans which
would give rise to any common law or legal liability, or otherwise form
the basis of any claim, action, demand, suit, proceeding, hearing, study,
or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling,
or the emission, discharge, release, or threatened release into the
environment, of any pollutant, contaminant, chemical, or industrial,
hazardous, or toxic material or waste, including, without limitation, any
liability arising, or any claim, action, demand, suit, proceeding,
hearing, study, or investigation which may be brought, under RCRA, CERCLA,
EPCRA, CAA, CWA or similar federal, foreign, state or local laws that
would have a Material Adverse Effect.
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(w) The Company owns and has full right, title and interest in and
to, or has valid licenses or other rights to use, adequate patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trade names, trademarks,
service marks or other intellectual property (collectively, the
"Intellectual Property") necessary for the conduct of its business, free
and clear of all mortgages, claims, liens or other encumbrances (except
for any mortgage, claim, lien or other encumbrance that would not
reasonably be expected to have a Material Adverse Effect); there is no
claim pending against the Company with respect to any Intellectual Property
and the Company has not received notice or otherwise become aware that any
Intellectual Property which it uses or has used in the conduct of its
business infringes upon or conflicts with the rights of any third party or
is invalid or inadequate to protect the interests of the Company, except
for any claim or notice of infringement that would not reasonably be
expected to have a Material Adverse Effect.
(x) All offers, sales, conversions and redemptions of the Company's
capital stock and other securities through the date hereof were made in
compliance with the Act and all other applicable state and federal laws or
regulations.
(y) The Shares have been approved for listing on the Nasdaq SmallCap
Market under the symbol "ALIF," subject to notice of issuance of the
Shares being sold by the Company, and upon consummation of the offering
contemplated hereby the Company will be in compliance with the designation
and maintenance criteria applicable to Nasdaq SmallCap Market securities.
(z) All federal, state, local and foreign tax returns required to be
filed by or on behalf of the Company (and its predecessors) with respect
to all periods ended prior to the date of this Agreement have been filed
(or are the subject of valid extension) with the appropriate federal,
state, local and foreign authorities and all such tax returns, as filed,
are accurate in all material respects. All federal, state, local and
foreign taxes (including estimated tax payments) required to be shown on
all such tax returns or claimed to be due from or with respect to the
business of the Company (and its predecessors) have been paid or reflected
as a liability on the financial statements of the Company for appropriate
periods, except for those taxes or claims therefor which are being
contested by the Company in good faith and for which appropriate reserves
are reflected in the Company's financial statements. All deficiencies
asserted as a result of any federal, state, local or foreign tax audits
have been paid or finally settled and no issue has been raised in any such
audit which, by application of the same or similar principles, reasonably
could be expected to result in a proposed deficiency for any other period
not so audited. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any federal, state, local
or foreign tax return for any period. On the Closing Date, and Additional
Closing Date, if any, all stock transfer and other taxes which are
required to be paid in connection with the sale of the shares to be sold
by the Company to the Underwriters will have been fully paid by the
Company and all laws imposing such taxes will have been complied with.
(aa) Except as set forth in the Prospectus, there are no
transactions with "affiliates" (as defined in Rule 405 promulgated under
the Act) or any officer, director or security holder of the Company
(whether or not an affiliate) which are required by the Act to be
disclosed in the Registration Statement.
(bb) The Company has procured the written agreement of each of the
Company's officers and directors, and each of the persons and entities
listed on Exhibit A hereto (the "Restricted Persons"), that, without the
prior written consent of the Representative, they will not, directly or
indirectly offer, sell, pledge, contract to sell, (including any short
sale), grant any option to purchase or otherwise dispose of any shares of
Common Stock (including, without limitation, shares of Common Stock of the
Company which may be deemed to be beneficially owned by the Restricted
Persons on the date hereof in accordance with the rules and regulations of
the Securities and Exchange Commission and shares of Common Stock which
may be issued upon exercise of a stock option or warrant (collectively,
the "Lock-up Securities") or enter into any Hedging Transaction (as
defined below) relating to the Lock-up Securities (each of the foregoing
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referred to as a "Disposition") for a period of one year after the
effective date of the Registration Statement (the "Lock-Up Period") (the
foregoing restrictions being expressly intended to preclude such persons
from engaging in any Hedging Transaction or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition
during the Lock-Up Period even if the securities would be disposed of by
someone other than the Restricted Person). "Hedging Transaction" means any
short sale (whether or not against the box) or any purchase, sale or grant
of any right (including, without limitation, any put or call option) with
respect. To any security (other than a broad-based market basket or index)
that includes, relates to or derives any significant part of its value
from the Common Stock, but excludes any such transaction which by its
terms cannot result in an offer, sale, pledge, contract to sell, granting
of any option to purchase or otherwise any disposition of the Lock-up
Securities by the Restricted Persons or anyone other than the Restricted
Persons.
(cc) Each of the Registration Statement and any Rule 462(b)
Registration Statement has been declared effective under the Act and no
stop order suspending the effectiveness of the Registration Statement or
any Rule 462(b) Registration Statement has been issued under the Act and
no proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
(dd) The Company's Board of Directors and stockholders have duly
approved (i) the adoption of the Amended and Restated Certificate of
Incorporation of the Company filed as an exhibit to the Registration
Statement, and (ii) the adoption of the Plan filed as an exhibit to the
Registration Statement. The Company has delivered all written notices to
its stockholders required by Delaware law in connection with filing of the
Amended and Restated Certificate of Incorporation, the period for
stockholders of the Company to elect to dissent from the adoption of the
Amended and Restated Certificate of Incorporation has expired and the
Company has received no notice of such election from any of its
stockholders.
(ee) All descriptions in the Registration Statement of contracts and
other documents to which the Company is a party are accurate in all
material respects. There are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments which are required to be
described in the Registration Statement or the Prospectus or to be filed
as exhibits thereto which have not been so described or filed.
(ff) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the Company
any brokerage or finder's fee or any other fee, commission or payment as a
result of the transactions contemplated by this Agreement.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER. The Selling
Stockholder hereby represents and warrants to each Underwriter on the date
hereof (except as otherwise set forth herein), and shall be deemed to represent
and warrant to each Underwriter on the Closing Date and the Additional Closing
Date (if any), that:
(a) The Selling Stockholder has full right, power and authority to
enter into this Agreement and to sell, assign, transfer and deliver the
Shares to be sold by him hereunder.
(b) This Agreement has been duly authorized, executed and delivered
by him, and this Agreement constitutes the valid and binding agreement of
the Selling Stockholder; the performance of this Agreement and the
consummation of the transactions contemplated herein will not result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any statute, indenture,
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mortgage, deed of trust, voting trust agreement, note agreement, lease or
other agreement or instrument to which the Selling Stockholder is a party
or by which the Selling Stockholder or his properties are bound, or under
any order, rule or regulation of any court or governmental agency or body
applicable to the Selling Stockholder or the business or property of the
Selling Stockholder, except for any breach, violation or default that
would not reasonably be expected to have a Material Adverse Effect.
(c) The Selling Stockholder has, and immediately prior to the
Closing Date (and the Additional Closing Date, if any) he will have, good
and valid title to the Shares to be sold by him hereunder, free and clear
of all liens, encumbrances, equities, stockholder agreements, voting
trusts or claims of any nature whatsoever, and, upon delivery of such
Shares and payment therefor pursuant hereto, good and valid title to such
Shares, free and clear of all liens, encumbrances, equities, stockholder
agreements, voting trusts or claims of any nature whatsoever (other than
those arising by or through the Underwriters), will pass to the
Underwriters. The certificates for such Shares are in valid and sufficient
form.
(d) He has not taken, and will not take, directly or indirectly, any
action designed to or which has constituted nor which might reasonably be
expected to cause or result in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Shares.
(e) The information with respect to him contained in the
Registration Statement, the Prepricing Prospectus and the Prospectus (as
amended or supplemented, if the Company shall have filed with the
Commission any amendment or supplement thereto) does not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(f) On the Closing Date, and on the Additional Closing Date, if any,
all stock transfer and other taxes (other than income taxes) which are
required to be paid in connection with the sale and transfer of the Shares
to be sold by him to the Underwriters hereunder will have been fully paid
for by him and all laws imposing such taxes will have been fully complied
with.
(g) The Selling Stockholder has not been prompted to sell the shares
to be sold by him hereunder by any information concerning the Company
which is not set forth in the Prospectus.
(h) Neither he nor any of his affiliates directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, or has any other association with (within the
meaning of Article I, Section 1(m) of the Bylaws of the NASD), any member
firm of the NASD.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982
with respect to the transactions herein contemplated, the Selling Stockholder
agrees to deliver to you at least two days prior to the Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
8. EXPENSES. Whether or not the transactions contemplated hereby are
consummated or this Agreement becomes effective or is terminated, the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the
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Registration Statement and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof and of any Prepricing
Prospectus to the Underwriters and dealers; (ii) the printing and delivery
(including, without limitation, postage, air freight charges and charges for
counting and packaging) of such copies of the Registration Statement, the
Prospectus, each Prepricing Prospectus, the Blue Sky memoranda, the Master
Agreement Among Underwriters, this Agreement, the Selected Dealers Agreement and
all amendments or supplements to any of them as may be reasonably requested for
use in connection with the offering and sale of the Shares; (iii) all expenses
in connection with the qualification of the Shares for offering and sale under
state securities laws or Blue Sky laws, including the reasonable attorneys' fees
and out-of-pocket expenses of the counsel for the Underwriters in connection
therewith; (iv) the filing fees incident to securing any required review by the
NASD of the terms of the sale of the Shares and the reasonable disbursements of
the Underwriters' counsel relating thereto; (v) the cost of preparing stock
certificates; (vi) the costs and charges of any transfer agent or registrar;
(vii) the cost of the tax stamps, if any, in connection with the issuance and
delivery of the Shares to the respective Underwriters (but not the sale of such
shares by the Underwriters); (viii) the transportation, lodging, graphics and
other expenses incidental to the Company's preparation for and participation in
the "roadshow" (both in the United States and Europe) for the offering
contemplated hereby; and (ix) all other costs and expenses incident to the
performance of the obligations of the Company hereunder which are not otherwise
specifically provided for in this Section 8. Notwithstanding the foregoing, in
the event that the proposed offering is terminated for the reasons set forth in
Section 5(i) hereof, the Company agrees to reimburse the Underwriters as
provided in Section 5(i).
9. INDEMNIFICATION AND CONTRIBUTION. Subject to the limitations in this
paragraph below, the Company and the Selling Stockholder jointly and severally
agree to indemnify and hold harmless you and each other Underwriter, the
directors, officers, employees and agents of each Underwriter, and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") from and against any and all losses, claims, damages, liabilities and
expenses, including, without limitation, reasonable costs of investigation and
attorneys' fees and expenses (collectively, "Damages") arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Prepricing Prospectus or in the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading (except to the extent
that any such Damages arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
furnished in writing to the Company by or on behalf of any Underwriter through
you expressly for use in connection therewith); provided, however, that (A) the
indemnity agreement of the Selling Stockholder contained in this paragraph shall
apply only with respect to Damages arising out of or based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information furnished by the Selling
Stockholder to the Company relating to the Selling Stockholder expressly for use
in or in connection with the Registration Statement or the Prospectus (and any
amendment or supplement thereto) and the offering contemplated thereby, and (B)
with respect to any untrue statement or omission made in any Prepricing
Prospectus, the indemnity agreement contained in this paragraph shall not inure
to the benefit of any Underwriter, the directors, officers, employees and agents
of each Underwriter (or to the benefit of any person controlling such
Underwriter) from whom the person asserting any such losses, claims, damages or
liabilities purchased the Shares concerned if both (y) a copy of the Prospectus
(or the Prospectus as amended and supplemented) was not sent or given to such
person at or prior to the written confirmation of the sale of such Shares to
such person as required by the Act, and (z) the untrue statement or omission was
corrected in the Prospectus. In no event, however, shall the liability of the
Selling Stockholder for indemnification under this Section 9 exceed the net
proceeds received by such Selling Stockholder from the sale of his Shares in the
offering.
In addition to the other obligations under this Section 9, the Company and
the Selling Stockholder agree that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding
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arising out of or based upon any statement or omission, or any inaccuracy in the
representations and warranties of the Company or the Selling Stockholder herein
or failure to perform their obligations hereunder, all as set forth in this
Section 9, they will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other reasonable out-of-pocket expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
or the Selling Stockholder's obligation to reimburse each Underwriter for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the person(s) from whom it was received.
If any action or claim shall be brought against any Underwriter or any
person controlling any Underwriter in respect of which indemnity may be sought
against the Company or the Selling Stockholder, such Underwriter or such
controlling person shall promptly notify in writing the party(s) against whom
indemnification is being sought (the "indemnifying party" or "indemnifying
parties"), and such indemnifying party(s) shall assume the defense thereof,
including the employment of counsel reasonably acceptable to such Underwriter or
such controlling person and payment of all fees and expenses. Such Underwriter
or any such controlling person shall have the right to employ separate counsel
(but the Company and the Selling Stockholder shall not be liable for the fees
and expenses of more than one counsel) in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
indemnifying party(s) has (have) agreed in writing to pay such fees and
expenses, (ii) the indemnifying party(s) has (have) failed to assume the defense
and employ counsel reasonably acceptable to the Underwriter or such controlling
person or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
indemnifying party(s), and such Underwriter or such controlling person shall
have been advised by its counsel that one or more legal defenses may be
available to the Underwriter which may not be available to the Company, or that
representation of such indemnified party and any indemnifying party(s) by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party(s) shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person
(notwithstanding its (their) obligation to bear the fees and expenses of such
counsel)). The indemnifying party(s) shall not be liable for any settlement of
any such action effected without its (their) written consent, but if settled
with such written consent, or if there be a final judgment for the plaintiff in
any such action, the indemnifying party(s) agrees to indemnify and hold harmless
any Underwriter and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of such settlement or judgment,
but in the case of a judgment only to the extent stated in the immediately
preceding paragraph.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, and any person who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act and the Selling Stockholder, to
the same extent as the foregoing indemnity from the Company and the Selling
Stockholder to each Underwriter, but only with respect to information furnished
in writing by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action or claim shall be brought or
asserted against the Company, any of its directors, any such officers, or any
such controlling person or the Selling Stockholder based on the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against any
Underwriter pursuant to this paragraph, such Underwriter shall have the rights
and the liabilities and obligations given to the Company and the Selling
Stockholder by the preceding paragraph (except that if the Company shall have
assumed the defense thereof such Underwriter shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Underwriter's expense),
and the Company, its directors, any such officers, and any such controlling
persons and the Selling Stockholder shall have the rights and duties given to
the Underwriters by the immediately preceding paragraph.
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In addition to its other obligations under this Section 9, each
Underwriter severally agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 9 which relates to information furnished to the
Company in writing by or on behalf of the Underwriters through you expressly for
use in the Registration Statement, it will reimburse the Company (and, to the
extent applicable, each officer, director, controlling person or Selling
Stockholder) on a quarterly basis for all reasonable legal or other
out-of-pocket expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company (and, to
the extent applicable, each officer, director, controlling person or Selling
Stockholder) for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Company (and, to the extent applicable, each officer, director,
controlling person or Selling Stockholder) shall promptly return it to the
Underwriters together with interest, compounded daily, determined on the basis
of the Prime Rate. Any such interim reimbursement payments which are not made to
the Company within 30 days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request.
If the indemnification provided for in this Section 9 is unavailable or
insufficient for any reason whatsoever to an indemnified party under the first
or fourth paragraph of this Section 9 in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then an indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder on the one
hand and the Underwriters on the other hand from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Stockholder on the one hand and the Underwriters on
the other hand in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Stockholder on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholder bear to the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus; provided that, in the event that the Underwriters shall have
purchased any Additional Shares hereunder, any determination of the relative
benefits received by the Company and the Selling Stockholder or the Underwriters
from the offering of the Shares shall include the net proceeds (before deducting
expenses) received by the Company and the Selling Stockholder, and the
underwriting discounts and commissions received by the Underwriters, from the
sale of such Additional Shares, in each case computed on the basis of the
respective amounts set forth in the notes to the table on the cover page of the
Prospectus. The relative fault of the Company and the Selling Stockholder on the
one hand and the Underwriters on the other hand 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 and the Selling Stockholder on
the one hand or by the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Selling Stockholder and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 9 was
determined by a pro rata allocation (even if the Underwriters were 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 immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price of the Shares underwritten by it and distributed to the
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public exceeds the amount of any damages which 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 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to the respective numbers of Firm Shares set
forth opposite their names in Schedule I hereto (or such numbers of Firm Shares
increased as set forth in Section 11 hereof) and not joint.
Notwithstanding the second and fifth paragraphs of this Section 9, any
losses, damages, liabilities or expenses for which an indemnified party is
entitled to indemnification or contribution under this Section 9 shall be paid
by the indemnifying party to the indemnified party as such losses, damages,
liabilities or expenses are incurred. The indemnity, contribution and
reimbursement agreements contained in this Section 9 and the representations and
warranties of the Company and the Selling Stockholder, respectively, set forth
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any person controlling the Company or the Selling Stockholder, (ii)
acceptance of any Shares and payment therefor hereunder and (iii) any
termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Company, its directors or officers, or
any person controlling the Company or the Selling Stockholder, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 9.
10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) The Registration Statement shall have become effective not later
than 12:00 noon, New York City time, on the date hereof, or at such later
date and time as shall be consented to in writing by you, and all filings
required by Rules 424(b), 430A and 462 under the Act shall have been
timely made.
(b) You shall be reasonably satisfied that since the respective
dates as of which information is given in the Registration Statement and
Prospectus, (i) there shall not have been any change in the capital stock
of the Company or any material change in the indebtedness of the Company,
(ii) except as set forth or contemplated by the Registration Statement or
the Prospectus (or any amendment or supplement thereto), no oral or
written agreement or other transaction shall have been entered into by the
Company which is not in the ordinary course of business or which would
reasonably be expected to have a Material Adverse Effect, (iii) no loss or
damage (whether or not insured) to the property of the Company shall have
been sustained which had or could reasonably be expected to have a
Material Adverse Effect, (iv) no legal or governmental action, suit or
proceeding affecting the Company or any of its properties which is
material to the Company or which affects or would reasonably be expected
to have a Material Adverse Effect on the transactions contemplated by this
Agreement shall have been instituted or threatened, and (v) there shall
not have been any material change in the financial condition, business,
management, or results of operations of the Company which makes it
impractical or inadvisable in your judgment to proceed with the public
offering or purchase the Shares as contemplated hereby.
(c) You shall have received on the Closing Date (and the Additional
Closing Date, if any) an opinion of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo PC, as counsel for the Company, dated the Closing Date,
satisfactory to you and your counsel, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware,
with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), and is duly registered or otherwise qualified
to conduct its business as a foreign corporation and is in good
standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires
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such registration or qualification, except where the failure to so
register or qualify does not have a Material Adverse Effect.
(ii) The Company does not have any subsidiaries and does not
own a material interest in or control, directly or indirectly, any
other corporation, partnership, joint venture, association, trust or
other business organization.
(iii) The authorized and the outstanding capital stock of the
Company conforms to the description thereof contained in the
Prospectus under the captions "Capitalization" and "Description of
Capital Stock" as of the dates set forth therein. Except as set
forth in the Prospectus, to such counsel's knowledge, the Company is
not a party to or bound by any outstanding options, warrants or
similar rights to subscribe for, or contractual obligations to
issue, sell, transfer or acquire, any of its capital stock or any
securities convertible into or exchangeable for any of such capital
stock.
(iv) All shares of capital stock of the Company outstanding
prior to the issuance of the Shares to be issued and sold by the
Company hereunder, have been duly authorized and validly issued, are
fully paid and nonassessable and are free of any preemptive or, to
the knowledge of such counsel, similar rights that entitle or will
entitle any person to acquire any Shares upon the issuance thereof
by the Company, and no such rights will exist as of the Closing
Date.
(v) The Shares to be issued and sold to the Underwriters by
the Company and sold by the Selling Stockholder hereunder have been
duly authorized and, when issued and delivered to the Underwriters
against payment therefor in accordance with the terms hereof, (A)
such Shares will be validly issued, fully paid and nonassessable and
free of any preemptive rights under Delaware law and, to the
knowledge of such counsel, preemptive or similar rights actually or
purportedly under contract, and (B) good and valid title to such
Shares issued hereunder, to such counsel's knowledge, free and clear
of any claim, encumbrance or defect in title of any nature (other
than any arising by or through the Underwriters), will pass to each
Underwriter that has purchased any portion of such Shares assuming
that the Underwriters are without notice of any "adverse claim"
under Section 8.302 of the UCC, the Underwriters are purchasers for
value in good faith under Section 8.302 and the rights of the
Underwriters are not limited by Section 8.302(4).
(vi) The form of certificates for the Shares conforms in all
material respects to the applicable requirements of the DGCL.
(vii) The Registration Statement has become effective under
the Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose are pending before or
contemplated by the Commission.
(viii) The Company has all requisite corporate power and
authority to enter into this Agreement and to issue, sell and deliver
the Shares to be sold by it to the Underwriters as provided herein, and
this Agreement has been duly authorized, executed and delivered by the
Company and is a valid, legal and binding agreement of the Company.
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(ix) The Company is not in violation of its Certificate of
Incorporation or Bylaws, and, to the knowledge of such counsel, the
Company is not in default in the performance of any obligation,
agreement or condition contained in any bond, indenture, note or
other evidence of indebtedness or any other agreement or obligation
of the Company, where the default would have, individually or in the
aggregate, a Material Adverse Effect.
(x) Neither the offer, sale or delivery of the Shares, the
execution, delivery or performance of this Agreement, compliance by
the Company with all provisions hereof nor consummation by the
Company of the transactions contemplated hereby (A) conflicts or
will conflict with the Certificate of Incorporation or Bylaws of the
Company, or (B) to such counsel's knowledge, constitutes or will
constitute a breach of, or a default under, any material agreement,
indenture, lease or other instrument known to such counsel to which
the Company is a party or by which any of its properties is bound,
except for any breach or default that does not have or would not
reasonably be expected to have a Material Adverse Effect, or to such
counsel's knowledge, creates or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company, except for any lien, charge or encumbrance
that would not reasonably be expected to have a Material Adverse
Effect.
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official
is required on the part of the Company (except such as have been
obtained or made and such as may be required by the NASD or under
state securities or Blue Sky laws governing the purchase and
distribution of the Shares, as to which such counsel need express no
opinion) for the valid issuance and sale of the Shares to the
Underwriters under this Agreement.
(xii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial
statements and the notes thereto and the schedules and other
financial and statistical data included therein, as to which such
counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act.
(xiii) To the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the Company
or to which the Company or any of its properties is subject, that
are required to be described in the Registration Statement or
Prospectus (or any amendment or supplement thereto) that are not
described as required therein.
(xiv) To the knowledge of such counsel, the Company is not in
violation of any law, ordinance, administrative or governmental rule
or regulation applicable to the Company or of any decree of any
court or governmental agency or body having jurisdiction over the
Company except where such violation does not or would not reasonably
be expected to have a Material Adverse Effect.
(xv) To the knowledge of such counsel, the Company has such
permits, licenses, franchises, approvals, consents and
authorizations of governmental or regulatory authorities
("Permits"), as are necessary for the Company to own its properties
and to conduct its business in the manner described in the
Prospectus, except where the failure to have such Permits would not
individually or in the aggregate have a Material Adverse Effect.
(xvi) The real property described in the Prospectus as held
under lease by the Company are held under duly executed leases.
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(xvii) Such counsel has reviewed all agreements, contracts,
indentures, leases or other documents or instruments described or
referred to in the Registration Statement and the Prospectus, and
such agreements, contracts (and forms of contracts), indentures,
leases or other documents or instruments as are summarized in the
Registration Statement and Prospectus are fairly summarized in all
material respects therein, and such counsel does not know of any
agreements, contracts, indentures, leases or other documents or
instruments required by the Act to be filed as Exhibits to the
Registration Statement or to be so summarized which have not been so
summarized or filed.
(xviii) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
In rendering such opinion, in each case where such opinion is qualified by
"the knowledge of such counsel" or "known to such counsel", such counsel may
rely as to matters of fact upon certificates of executive and other officers and
employees of the Company as you and such counsel shall deem are appropriate and
such other procedures as you and such counsel shall mutually agree; provided,
however, in each such case, such counsel shall state that it has no knowledge
contrary to the information contained in such certificates or developed by such
procedures and knows of no reason why you should not reasonably rely upon the
information contained in such certificates or developed by such procedures. Such
counsel may state in such opinion that its knowledge is limited to the knowledge
of its attorneys and other representatives and employees that have given
attention to the Company's matters.
Such counsel shall also include a statement to the effect that, although
such counsel does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
Prospectus, such counsel has no reason to believe that the Registration
Statement, as of the time it became effective under the Act (but after giving
effect to the changes and additions incorporated pursuant to Rule 430A under the
Act), and the Prospectus or any amendment or supplement thereto, on the date it
was filed pursuant to Rule 424(b) under the Act and on the date of such
counsel's opinion contained or contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (except
that such counsel need express no view as to the financial statements and other
financial and statistical information or data included or incorporated by
reference therein). With respect to such statements, Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C. may state that their belief is based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto, certificates of officers of the
Company and of state authorities and discussion of the contents thereof with
officers of the Company, but is without independent check or verification except
as specified.
(d) You shall have received on the Closing Date the opinion of
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC, as counsel for the
Selling Stockholder, dated the Closing Date in form and substance
satisfactory to you, to the effect that:
(i) This Agreement has been duly executed and delivered by the
Selling Stockholder and constitutes the valid and binding agreement
of the Selling Stockholder; and the performance of this Agreement
and, to such counsel's knowledge, the consummation of the
transactions herein and therein contemplated will not result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed
of trust, voting trust agreement, note agreement, lease or other
agreement or instrument of which such counsel is aware and to which
the Selling Stockholder is a party or by which the Selling
Stockholder or his properties are bound, or any order, rule or
regulation, known
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to such counsel of any court or governmental agency or body
applicable to the Selling Stockholder or the business or property of
the Selling Stockholder.
(ii) To such counsel's knowledge, no consent, approval,
authorization or order of, or registration or filing with any court,
regulatory body, administrative agency or other governmental body,
agency or official is required on the part of the Selling
Stockholder (except such as have been obtained or made and such as
may be required by the NASD or under state securities or Blue Sky
laws governing the purchase and distribution of such Shares, as to
which such counsel need express no opinion) for the valid sale of
the shares to the Underwriter under this Agreement.
(iii) Immediately prior to the Closing Date (and immediately
prior to the Additional Closing Date, if applicable), to such
counsel's knowledge, the Selling Stockholder has good and valid
title to the Shares to be sold by the Selling Stockholder under this
Agreement, free and clear of all liens, encumbrances, equities or
claims, and full right, power and authority to sell, assign,
transfer and deliver the Shares to be sold by the Selling
Stockholder hereunder.
(iv) To such counsel's knowledge, good and valid title to such
Shares, free and clear of all liens, encumbrances, equities or
claims (other than those arising by or through the Underwriters) has
been transferred to the Underwriters that has purchased any portion
of such Shares in assuming that the Underwriters are without notice
of any "adverse claim" under Section 8.302 of the UCC, the
Underwriters are purchasers for value in good faith under Section
8.302 and the rights of the Underwriters are not limited by Section
8.302(4).
In rendering such opinion, such counsel may rely upon a certificate of the
Selling Stockholder as to matters of fact (i) with respect to ownership of and
liens, encumbrances, equities or claims on the Shares sold by the Selling
Stockholder, and (ii) with respect to any agreements, mortgages, deeds of trust,
voting trusts, notes, leases or other instruments, provided that such counsel
shall state that they believe that both you and they are justified in relying
upon such certificates.
(e) You shall have received on the Closing Date an opinion of
Xxxxxxxxx Xxxxxxx, P.A., as counsel for the Underwriters, dated the
Closing Date with respect to the issuance and sale of the Firm Shares, the
Registration Statement and other related matters as you may reasonably
request, and the Company and its counsel shall have furnished to your
counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(f) You shall have received letters addressed to you and dated the
date hereof and the Closing Date from the firm of Wolf & Company, P.C.,
independent certified public accountants, substantially in the forms
heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or, to the knowledge of the Company, shall be
threatened or contemplated by the Commission at or prior to the Closing
Date; (ii) no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending or, to the knowledge of the
Company, threatened or contemplated by the Commission or the authorities
of any jurisdiction; (iii) any request for additional information on the
part of the staff of the Commission or any such authorities shall have
been complied with to the satisfaction of the staff of the Commission or
such authorities; (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless
a copy thereof was first submitted to you and you did not object thereto
in good faith; and (v) all of the representations and warranties of the
Company and the Selling Stockholder contained in this Agreement shall be
true and correct in all material respects on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing
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Date, and you shall have received a certificate, dated the Closing Date
and signed by the chief executive officer and the chief financial officer
of the Company (or such other officers as are acceptable to you) to the
effect set forth in this Section 10(g) and in Sections 10(b) and 10(h)
hereof.
(h) The Company shall not have failed at or prior to the Closing
Date to have performed in all material respects or complied in all
material respects with any of its agreements herein contained and required
to be performed or complied with by it hereunder at or prior to the
Closing Date.
(i) You shall have received a certificate, dated on and as of the
Closing Date, by or on behalf of the Selling Stockholder to the effect
that as of such Closing Date the Selling Stockholder representations and
warranties in this Agreement are true and correct in all material respects
as if made on and as of such Closing Date, and that the Selling
Stockholder has performed in all material respects all his obligations and
satisfied in all material respects all the conditions on his part to be
performed or satisfied at or prior to the Closing Date.
(j) The Company and the Selling Stockholder shall have furnished or
caused to have been furnished to you such further certificates and
documents as you shall have reasonably requested.
(k) At or prior to the Closing Date, you shall have received the
written commitment of each of the Restricted Persons, that, without the
prior written consent of the Representative, they will not, directly or
indirectly offer, sell, pledge, contract to sell, (including any short
sale), grant any option to purchase or otherwise dispose of any shares of
Common Stock (including, without limitation, shares of Common Stock of the
Company which may be deemed to be beneficially owned by the Restricted
Persons, on the date hereof in accordance with the rules and regulations
of the Securities and Exchange Commission and shares of Common Stock which
may be issued upon exercise of a stock option or warrant (collectively,
the "Lock-up Securities") or enter into any Hedging Transaction (as
previously defined)) relating to the Lock-up Securities (each of the
foregoing referred to as a "Disposition") for a period of one year after
the effective date of the Registration Statement (the "Lock-Up Period")
(the foregoing restrictions being expressly intended to preclude such
persons from engaging in any Hedging Transaction or other transaction
which is designed to or reasonably expected to lead to or result in a
Disposition during the Lock-Up Period even if the securities would be
disposed of by someone other than the Restricted Person).
(l) At or prior to the effective date of the Registration Statement,
you shall have received a letter from the Corporate Financing Department
of the NASD confirming that such Department has determined to raise no
objections with respect to the fairness or reasonableness of the
underwriting terms and arrangements of the offering contemplated hereby.
(m) At or prior to the Closing Date, the Company shall have
delivered to the Representative the Representative's Warrant substantially
in the form heretofore approved by you and the Warrant Shares shall have
been registered pursuant to the Registration Statement.
(n) The Shares shall have been listed on the Nasdaq SmallCap Market
and the Company shall be in compliance with the designation and
maintenance criteria applicable to Nasdaq SmallCap Market issuers.
(o) At or prior to the Closing Date, the Company shall have
registered with (i) the Corporation Record Service (including Annual
Report information) published by Standard & Poor's Corporation or (ii)
Xxxxx'x Industrial Manual (not Xxxxx'x OTC Industrial Manual).
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and your counsel.
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The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the satisfaction in all material respects on and as of
the Additional Closing Date of the conditions set forth in this Section 10,
except that, if the Additional Closing Date is other than the Closing Date, the
certificates, opinions and letters referred to in paragraphs (c) through (i)
shall be dated as of the Additional Closing Date and the opinions called for by
paragraphs (c) and (d) shall be revised to reflect the sale of Additional
Shares.
If any of the conditions hereinabove provided for in this Section 10 shall
not have been satisfied when and as required by this Agreement, this Agreement
may be terminated by you by notifying the Company of such termination in writing
or by telegram at or prior to such Closing Date, but you shall be entitled to
waive any of such conditions.
11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective
upon the later of (a) the execution and delivery hereof by the parties hereto,
and (b) the effectiveness of the Registration Statement; provided, however, that
the provisions of Sections 8 and 9 shall at all times be effective.
If any one or more of the Underwriters shall fail or refuse to purchase
Firm Shares which it or they have agreed to purchase hereunder, and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Firm Shares, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I hereto bears to the aggregate number
of Firm Shares set forth opposite the names of all non-defaulting Underwriters
or in such other proportion as you may specify in the Agreement Among
Underwriters, to purchase the Firm Shares which such defaulting Underwriter or
Underwriters agreed, but failed or refused to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares and arrangements satisfactory
to you, the Company and the Selling Stockholder for the purchase of such Firm
Shares are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Stockholder. In any such case which does not result in
termination of this Agreement, either you or the Company and the Selling
Stockholder shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement.
12. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company or the Selling Stockholder by notice to the Company
and the Selling Stockholder, if prior to the Closing Date or the Additional
Closing Date (if different from the Closing Date and then only as to the
Additional Shares), as the case may be, in your sole judgment, (i) trading in
the Company's Common Stock shall have been suspended by the Commission or the
Nasdaq SmallCap Market, (ii) trading in securities generally on the New York
Stock Exchange, American Stock Exchange or Nasdaq SmallCap Market shall have
been suspended or materially limited, or minimum or maximum prices shall have
been generally established on such exchange, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by any such exchange or by order of
the Commission or any court or other governmental authority, (iii) a general
moratorium on commercial banking activities shall have been declared by either
federal or Massachusetts Commonwealth authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions or other material event the effect of which on the financial markets
of the United States is such as to make it, in your judgment, impracticable or
inadvisable to market the Shares or to enforce contracts for the sale of the
Shares. Notice of such cancellation shall be promptly given to the Company and
its counsel by telegraph, telecopy or telephone and shall be subsequently
confirmed by letter.
13. INFORMATION FURNISHED BY THE UNDERWRITERS. The Company acknowledges
that the following information in the Prospectus constitutes the only
information furnished by or on behalf of the Underwriters through
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you or on your behalf as such information is referred to in Sections 6(a) and 9
hereof: the last paragraph at the bottom of the cover page concerning the terms
of the offering by the Underwriters, the legend concerning over-allotments,
stabilizing and passive market making on the inside front cover page, and the
information appearing under the caption "Underwriting," except for the ninth
paragraph.
14. MISCELLANEOUS. Except as otherwise provided in Section 12 hereof,
notice given pursuant to any of the provisions of this Agreement shall be in
writing and shall be delivered (i) if to the Company or the Selling Stockholder,
to the office of the Company at Four Xxxxxx Place, Skylobby, Suite 102, Boston
Massachusetts, Attention: Eberhard Schoneburg, Chairman and President (with copy
to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Attention: Xxxxx X.
Xxxxxxxx, Esq.), or (ii) if to you, as Representatives of the Underwriters, to
The New York Broker Group, 00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxxxx Xxxxx-Xxxxxx, President (with copy to Xxxxxxxxx
Xxxxxxx, P.A., 0000 Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, Attention: Xxxx
Xxxxxxxxx, Esq.).
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 9 hereof, the Selling Stockholder and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither of the terms "successor" and "successors and assigns" as used in this
Agreement shall include a purchaser from you of any of the Shares in his status
as such purchaser.
15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia without reference
to choice of law principles thereunder.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
This Agreement shall be effective when, but only when, at least one
counterpart hereof shall have been executed on behalf of each party hereto.
The Company, the Selling Stockholder and the Underwriters each hereby
irrevocably waive any right they may have to a trial by jury in respect to any
claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Stockholder and the Underwriters.
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Very truly yours,
ARTIFICIAL LIFE, INC.
By:
Eberhard Schoneburg
Chairman and President
SELLING STOCKHOLDER
Eberhard Schoneburg
CONFIRMED as of the date first above mentioned, on behalf of itself and the
other Underwriters named in Schedule I hereto.
NEW YORK BROKER, INC.
By:
Xxxxxxxxx Xxxxx-Xxxxxx
President
25
26
EXHIBIT A
27
SCHEDULE I
NUMBER OF
NAME FIRM SHARES
---- -----------
New York Broker, Inc........................................
New York Broker Deutschland AG..............................
TOTAL.......................................................
