1,200,000 Shares
CAVION TECHNOLOGIES, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
NEIDIGER, TUCKER, BRUNER, INC.
000 Xxxxx Xxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(as Representative of the Several
Underwriters named in Schedule I hereto)
------------------, 1999
Gentlemen:
Cavion Technologies, Inc., a Colorado corporation d/b/a xxxxxx.xxx
(the "Company"), proposes, on the terms and subject to the conditions
stated herein, to issue and sell to the several underwriters named in
Schedule I hereto (collectively the "Underwriters"), on whose behalf
Neidiger, Tucker, Bruner, Inc. ("NTB") is acting as representative (the
"Representative"), a total of 1,200,000 shares (the "Firm Shares"), of the
Company's Common Stock, par value $.0001 per share (the "Common Stock").
The Underwriters will have the option to purchase from the Company up to
180,000 additional shares of Common Stock (the "Option Shares") solely to
cover over-allotments in the sale of the Firm Shares. The Firm Shares and
any Option Shares are referred to collectively herein as the "Securities."
The Company also proposes to issue and sell to you individually, and not
in your capacity as Representative, five-year warrants (the
"Representative's Warrants") to purchase, for 125% of the public offering
price of the Firm Shares, an aggregate of 120,000 shares of the Common
Stock as provided in Section 2 hereof. The Representative's Warrants and
the shares of Common Stock issuable upon exercise of the Representative's
Warrants are referred to collectively herein as the "Representative's
Securities."
As the Representative, you have advised the Company that you are
authorized to enter into this Agreement on behalf of the several
Underwriters and that the several Underwriters are willing, severally and
not jointly, to purchase the number of Firm Shares set forth opposite
their respective names on Schedule I. The term "Underwriters" refers to
any individual member of the underwriting syndicate and includes any party
or parties substituted for an Underwriter pursuant to Section 9 hereof.
In consideration of the mutual agreements contained herein, the
parties hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with, the Underwriters that:
1.1 A registration statement, and amendments thereto, on Form SB-2
(Reg. No. 333-80421) with respect to the Securities, the Representative's
Securities and other shares of Common Stock for the benefit of the holders
thereof, including a preliminary form of prospectus, has been carefully
prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act") and has been filed with the
Securities and Exchange Commission (the "Commission"). The conditions for
use of Form SB-2, set forth in the General Instructions thereto, have been
satisfied. Such registration statement, as finally amended and revised at
the time such registration statement was or is declared effective by the
Commission (including the information contained in the form of final
prospectus, if any, filed with the Commission pursuant to Rule 424(b) and
Rule 430A under the Act and deemed to be part of the registration
statement if the registration statement has been declared effective
pursuant to Rule 430A(b)) and as thereafter amended by post-effective
amendment, if any, is herein referred to as the "Registration Statement."
The related final prospectus in the form first filed with the Commission
pursuant to Rule 424(b) or, if no such filing is required, as included in
the Registration Statement, or any supplement thereto, is herein referred
to as the "Prospectus." The prospectus subject to completion in the form
included in the Registration Statement at the time of the initial filing
of the Registration Statement with the Commission, and each such
prospectus as amended from time to time until the date of the Prospectus,
is referred to herein as the "Preliminary Prospectus." Reference made
herein to each Preliminary Prospectus or the Prospectus, as amended or
supplemented, shall include all documents and information incorporated by
reference therein under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Each Preliminary Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the Act. The Company has prepared and
filed such amendments to the Registration Statement since its initial
filing with the Commission, if any, as may have been required to the date
hereof, and will file such additional amendments thereto as may hereafter
be required. There have been delivered to the Representative two signed
copies of the Registration Statement and each amendment thereto, if any,
including one copy of any document filed under the Exchange Act and deemed
to be incorporated by reference into the Registration Statement, together
with one copy of each exhibit filed therewith or incorporated by reference
therein, and such number of conformed copies for each of the Underwriters
of the Registration Statement and each amendment thereto, if any (but
without exhibits), and of each Preliminary Prospectus and of the
Prospectus as the Representatives have requested. For purposes of this
Agreement, "Rules and Regulations" means the rules and regulations adopted
by the Commission under either the Act or the Exchange Act, as the context
requires. For purposes of this Agreement, all references to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to XXXXX.
1.2 No stop order preventing or suspending the use of or
requiring the recirculation of any Preliminary Prospectus has been issued
by the Commission nor have any proceedings been instituted for the
purpose. Each Preliminary Prospectus, at the time of first delivery to
the Underwriters for distribution, conformed in all material respects to
the requirements of the Act and the Rules and Regulations, and did not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation or
warranty as to the information contained in or omitted from any
Preliminary Prospectus in its reliance upon and in conformity with written
information furnished to the Company as stated in Section 7.1 hereof by or
on behalf of any Underwriter through the Representative expressly for use
with reference to the Underwriters in connection with the preparation of
the Registration Statement.
1.3 As of the time the Registration Statement (or any post-
effective amendment thereto) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of the
Prospectus (or any supplement to the Prospectus), and at the Firm Closing
Date and the Option Closing Date (as defined in Section 2), the
Registration Statement and the Prospectus contain and will contain all
statements which are required to be made therein and conform and will
conform in all material respects to the requirements of the Act and the
Rules and Regulations, and neither the Registration Statement nor the
Prospectus contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty as to the
information contained in or omitted from the Registration Statement or the
Prospectus in its reliance upon and in conformity with written information
furnished to the Company as stated in Section 12 hereof by or on behalf of
any Underwriter through the Representative expressly for use with
reference to the Underwriters in connection with the preparation of the
Registration Statement. The Company meets all requirements for the use of
a Form SB-2 registration statement in connection with the offer and sale
of the Securities.
1.4 The Company does not own or control any corporation,
partnership, joint venture, unincorporated association or other entity.
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state or country of its
organization, with full corporate power and authority and all consents,
authorizations, approvals, orders, licenses, certificates and permits of
and from all third parties, including without limitation, federal, state,
local and other governmental authorities and all courts and other
tribunals, as are necessary and material to enable the Company to own,
lease, license and use its properties and assets and conduct its business
as described in the Prospectus. The Company has not received notice of or
have knowledge of any basis for any proceeding or action for the
revocation or suspension of any such consent, authorization, approval,
order, license, certificate or permit or any other action or proposed
action by any regulatory authority having jurisdiction over the Company
that would have a material adverse effect on the Company. The Company is
duly qualified to do business and is in good standing in each jurisdiction
in which the character of the business conducted by it or the location of
the properties owned or leased by it makes such qualification necessary,
except where the failure to do so would not result in a material adverse
effect upon the Company.
1.5 The capitalization of the Company is, and upon consummation
of the transactions contemplated hereby will be, in all material respects
as set forth in the Prospectus. The outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are fully
paid and nonassessable, and the holders thereof are not subject to
personal liability by reason of being such holders and have no rights of
rescission with respect thereto which, if exercised, would have a material
adverse effect on the Company. None of such shares have been issued by
the Company in violation of any preemptive or similar rights or, to the
Company's knowledge, in violation of federal or state securities laws.
Except as described in the Prospectus, there is no commitment, plan or
arrangement to issue, and no outstanding option, warrant, convertible
security or other instrument or right calling for the issuance of, any
shares of capital stock of the Company or any security or other instrument
which is convertible into or exercisable or exchangeable for capital stock
of the Company. The capital stock of the Company, all stock option, stock
bonus and other stock plans or arrangements relating to any capital stock
of the Company, including the Securities and the Representative's
Securities, conform in all respects to the descriptions thereof contained
in the Prospectus.
1.6 The Securities have been duly authorized and, when issued
and paid for as provided herein, will be validly issued, fully paid and
nonassessable. No person has any preemptive or other similar rights with
respect to any of the Securities or the issue and sale thereof.
1.7 Except as described in the Prospectus, no holder of any
securities of the Company or of any options, warrants, or other
convertible or exchangeable securities of the Company (i) has the right to
include any securities of the Company in the Registration Statement or
(ii) has the right to include any securities issued by the Company in any
registration statement to be filed by the Company or to require the
Company to file a registration statement under the Act other than those
which have been waived or satisfied; and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
1.8 Xxxxxx Xxxxxxxx LLP, which has audited the financial
statements and related notes of the Company filed with the Commission as
part of the Registration Statement, are, and during the periods covered by
their reports were, independent certified public accountants with respect
to the Company as required by the Act and the Rules and Regulations.
1.9 The financial statements of the Company, together with
related notes, and schedules, as set forth in the Registration Statement,
comply in all material respects with the requirements of the Act and the
Rules and Regulations and present fairly the financial position and the
results of operations of the Company, at the indicated dates and for the
indicated periods. Such financial statements have been prepared in
accordance with generally accepted accounting principals consistently
applied throughout the periods involved and with the Rules and
Regulations, and all adjustments necessary for a fair presentation of
results for such periods have been made. The Company maintains a system
of internal accounting controls sufficient to provide reasonable assurance
that (a) transactions are executed in accordance with management's general
or specific authorization and (b) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and the rules of regulatory authorities
having jurisdiction over the Company. No other financial statements or
schedules are required to be included or incorporated by reference in the
Registration Statement or the Prospectus. The selected financial data and
summary financial information included in the Prospectus present fairly
the information shown therein and have been compiled on a basis consistent
with the financial statements in the Registration Statement.
1.10 The minute books and stock record books of the Company are
complete and correct and accurately reflect all material actions taken at
meetings of the shareholders and directors of the Company, and all
committees thereof, including, without limitation, the audit committee and
compensation committee, and all issuances and transfers of any shares of
the capital stock of the Company.
1.11 The Company has filed with the appropriate federal, state
and local governmental agencies, and all foreign countries and political
subdivisions thereof, all tax returns, including franchise tax returns,
which are required to be filed (or has duly obtained extensions of time
for the filing thereof) and has paid all taxes shown on such returns and
all assessments received by them to the extent that the same have become
due. The provisions for income taxes payable, if any, shown on the
financial statements filed with or as part of the Registration Statement
are sufficient for all accrued and unpaid foreign and domestic taxes,
whether or not disputed, and for all periods to and including the dates of
such financial statements. The Company has not executed or filed with any
taxing authority, foreign or domestic, any agreement extending the period
for assessment or collection of any income taxes and is not a party to any
pending action or proceeding by any foreign or domestic governmental
agency for assessment or collection of taxes; and no claims for assessment
or collection of taxes have been asserted against the Company.
1.12 Since the respective dates as of which information is given
in the Registration Statement and except as contemplated by the
Prospectus, there has not been (i) any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the business, condition (financial or other), earnings, results
of operations or properties of the Company, whether or not occurring the
ordinary course of business; (ii) any transaction entered into or any
liability or obligation, absolute or contingent, incurred by the Company
which is material to the Company or is otherwise required to be disclosed
in the Registration Statement; (iii) except as disclosed in the
Registration Statement, any change in the capital stock of the Company,
any increase in the short-term or long-term debt (including capitalized
lease obligations) of the Company, or any issuance of options, warrants,
convertible securities or other rights to purchase the capital stock of
the Company; or (iv) any dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock or any
acquisition by the Company of any capital stock of the Company. The
Company has no material contingent obligations or commitments which are
not disclosed in the Registration Statement.
1.13 The Company maintains insurance of the type and in the
amounts as are prudent and generally deemed adequate for their respective
businesses and consistent with insurance maintained by similar companies
in similar businesses, including general liability insurance, performance
guaranty bonds, and insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, including
computer failure, all of which insurance is in full force and effect. The
Company has not been refused any insurance or bonding coverage sought or
applied for; and the Company has no reason to believe that it will not be
able to renew its existing insurance coverage and any performance guaranty
bonds as and when such coverage expires or to obtain similar coverage from
insurers and bonding firms of recognized financial responsibility.
1.14 Except as disclosed in the Prospectus, there is no
litigation or governmental proceeding to which the Company is a party or
to which any property of the Company is subject or which is pending in
which either the Company has been served or, to the best knowledge of the
Company, is otherwise pending or threatened against the Company which, if
adversely determined, will result in any material adverse change in the
financial condition, results of operations, business or prospects of the
Company or which is required to be disclosed in the Prospectus which has
not been so disclosed. To the best knowledge of the Company, no labor
dispute by the employees of the Company exists or is imminent and which,
if it now exists or comes to exist, is expected materially to affect
adversely the financial condition, results of operations, business or
prospects of the Company or which is required to be disclosed in the
Prospectus.
1.15 Each of this Agreement, the Representative's Warrants and
NTB's Financial Consulting Agreement (as provided in Section 4.18 hereof)
constitutes the valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except insofar as rights
to indemnity and/or contribution may be limited by federal or state
securities laws or the public policy underlying such laws and except as
enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally, and be subject
to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The Securities have
been duly and validly authorized by the Company and upon their delivery in
accordance herewith will be duly issued and will be validly issued, fully
paid and nonassessable. The shares of Common Stock issuable upon exercise
of the Representative's Warrants have been duly authorized and reserved
for issuance upon the exercise of such Warrants and when issued upon
payment of the exercise price therefor will be validly issued, fully paid
and nonassessable shares of Common Stock.
1.16 The Company is not in violation of or in default under, and
the consummation of the transactions contemplated herein and the
fulfillment of the terms hereof will not conflict with or result in a
violation of or default under, the Certificate or Articles of
Incorporation, Bylaws of the Company, or under foreign or domestic
judgment, decree, order, statute, rule or regulation applicable to the
Company or any of their respective properties, or under any permit, lease,
license, contract, indenture, mortgage, deed of trust, loan agreement or
other agreement, instrument or obligation to which the Company is a party
or by which any of them or of their respective properties is bound. Each
approval, consent, order, authorization, designation, declaration or
filing by or with any regulatory, administrative or other governmental
body or court necessary in connection with the execution and delivery of
the Company of this Agreement, the Representative's Warrants and the
Financial Consulting Agreement and the consummation of the transactions
contemplated hereby and thereby (except additional steps as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD"), or which may be necessary to qualify the Securities for public
offering by the Underwriters under state securities or "Blue Sky" Laws)
has been obtained or made and is in full force and effect.
1.17 Except as disclosed in the Prospectus, the business and
operations conducted by the Company are being conducted in compliance in
all material respects with all applicable federal, state and local laws.
1.18 The descriptions in the Registration Statement and the
Prospectus of material contracts, including the Company's licenses, leases
and other agreements, are accurate in all material respects and present
fairly the information required to be disclosed, and there are no
contracts or other documents required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement under the Act or the Rules and Regulations which have not been
so described or filed as required.
1.19 Each material contract or other instrument (however
characterized or described) to which the Company is a party or by which
its property or business is or may be bound or affected and to which
reference is made in the Prospectus has been duly and validly executed by
the Company, is in full force and effect in all material respects and is
enforceable against the parties thereto in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the rights
of creditors generally; and none of such contracts or instruments has been
assigned by the Company and neither the Company nor, to the best knowledge
of the Company, any other party is in default thereunder, which default
would have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company, and, to the best
knowledge of the Company, no event has occurred which, with the lapse of
time or the giving of notice, or both, would constitute a default
thereunder and would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company.
1.20 Each employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
("Employee Benefit Plan"), and each bonus, retirement, pension, profit
sharing, stock bonus, thrift, stock option, stock purchase, incentive,
severance, deferred or other compensation or welfare benefit plan,
program, agreement or arrangement of, or applicable to employees of the
Company ("Benefit Plans"), which is presently in existence, or was in
existence at any time during the prior five calendar years, was or has
been established, maintained, and operated in all material respects in
compliance with all applicable federal, state and local statutes, orders,
governmental rules and regulations, including, but not limited to, ERISA
and the Internal Revenue Code of 1986, as amended (the "Code"). The
Company does not, either directly or indirectly as a member of a
controlled group within the meaning of Sections 414(b), (c), (m) and (o)
of the Code ("Controlled Group"), have any material liability that remains
unsatisfied for (A) the termination of any single employer plan under
Section 4062 or 4064 of ERISA, (B) any interest payments under Section
302(e) of ERISA or Section 412(m) of the Code, (C) any excise tax imposed
by Section 4971, Section 4972, Section 4975 or Section 4979 of the Code,
(D) any minimum funding contributions under Section 302(c)(11) of ERISA or
Section 412(c)(11) of the Code, (E) any accumulated funding deficiency
within the meaning of Section 412(a) of the Code, whether or not waived,
or (F) to the Internal Revenue Service, the Department of Labor, the
Pension Benefit Guaranty Corporation, or any Benefit Plan or any
multiemployer plan (as defined in Section 3(37) of ERISA) ("Multiemployer
Plan") under Subtitle D or Subtitle E of Title IV of ERISA, under
Subchapter D of Chapter 1 of Subtitle A of the Code or under Chapter 43 of
Subtitle D of the Code. No action, suit, grievance, arbitration or other
matter of litigation or claim with respect to any Benefit Plan (other than
routine claims for benefits made in the ordinary course of plan
administration for which plan administrative procedures have not been
exhausted) is pending or, to the Company's knowledge, threatened or
imminent against or with respect to any Benefit Plan, any member of a
Controlled Group that includes the Company, or any fiduciary within the
meaning of Section 3(21) of ERISA with respect to a Benefit Plan which, if
determined adversely to the Company, would have a material adverse effect
on the Company. Neither the Company, nor any member of a Controlled Group
that includes the Company has any knowledge of any facts that would give
rise to any action, suit, grievance, arbitration or any other manner of
litigation or claim with respect to any Benefit Plan.
1.21 The Company has not taken and will not take, directly or
indirectly, any action (and does not know of any action by its directors,
officers or stockholders or by others) designed to or which has
constituted or which might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities.
1.22 All transactions during the Company's current or last three
fiscal years between the Company and any person who is or was during such
time period an officer or director or the owner of 5% or more of the
outstanding voting stock of the Company have been disclosed in the
Prospectus to the extent required by the Act and the Rules and
Regulations; and the terms of each such transaction are and were in all
material respects fair to the Company and no less favorable to the Company
than the terms that could have been obtained from unrelated parties.
1.23 To the best knowledge of the Company after due inquiry, the
Company owns or has the irrevocable right to use all patents, trademarks,
service marks, assumed names, trade names, copyrights, and other
intellectual property rights (collectively referred to herein as
"Intellectual Property Rights") necessary to conduct their respective
businesses as now conducted or proposed to be conducted as described in
the Prospectus. The Company has no knowledge of (i) any infringement or
claimed infringement by it or the Subsidiary of any Intellectual Property
Rights of any third party or (ii) any infringement by any third party of
any such intellectual property right of the Company. Except as set forth
in the Prospectus, the Company is not obligated or any liability to make
any payment by way of royalty, fee or otherwise to any owner or licensee
of, or other claimant to, any Intellectual Property Rights with respect to
the Company's use thereof or in connection with the conduct of the
business of the Company.
1.24 The Company has taken reasonable measures to protect the
secrecy, confidentiality and value of all of its Intellectual Property
Rights in all material respects.
1.25 The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property
described or referred to in the Prospectus to be owned or leased by it
free and clear of all liens of any kind whatsoever, other than (i) those
referred to in the Prospectus and (ii) liens for taxes not yet due and
payable.
1.26 Except as disclosed in the Registration Statement and the
Prospectus, the Company has not issued, sold or offered for sale within
the last three years any shares of its Common Stock, any right to acquire
any shares of its Common Stock or any securities or instrument exercisable
for or convertible into any shares of its Common Stock.
1.27 There are no agreements, claims, payments, issuances,
arrangements or understandings, whether oral or written, for services in
the nature of a finder's, consulting or origination fee with respect to
the sale of the Securities payments, issuances, arrangements or
understandings with respect to the Company or any of its officers,
directors, stockholders, partners, employees, or affiliates that may
affect the Underwriters' compensation, as determined by the National
Association of Securities Dealers, Inc. ("NASD") or for which the Company
or any Underwriter may be responsible.
1.28 As of the effective date of the Registration Statement, (i)
the Common Stock has been duly registered under Section 12(g) of the
Exchange Act, and (ii) the Common Stock has been approved for inclusion in
the Automated Quotation System of the National Association of Securities
Dealers, Inc. ("NASDAQ").
1.29 Neither the Company nor to best of the Company's knowledge
any officer, director or employee of or agent acting on behalf of the
Company has at any time (i) made any contributions to any candidate for
political office in violation of law, or failed to disclose fully any
contributions to any candidate for political office in accordance with any
applicable statute, rule, regulation or ordinance requiring such
disclosure, (ii) made any payment to any governmental officer or official,
or other person charged with similar public or quasi-public duties, other
than payments required or allowed by applicable law, (iii) made any
payment outside the ordinary course of business to any purchasing or
selling agent or person charged with similar duties of any entity to which
the Company sells or from which the Company buys products for the purpose
of influencing such agent or person to buy products from or sell products
to the Company, or (iv) engaged in any transaction on behalf of the
Company, maintained any bank account for the Company, or used any
corporate funds of the Company, except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books
and records of the Company.
1.30 Except as set forth in the Prospectus, no officer, director
or principal stockholder of the Company, nor any "affiliate" or
"associate" (as these terms are defined in Rule 405 promulgated under the
Rules and Regulations) of any of the foregoing persons or entities, has or
has had, either directly or indirectly, (i) an interest in any person or
entity that (A) furnishes or sells services or products that are furnished
or sold or are proposed to be furnished or sold by the Company, or (B)
purchases from or sells or furnishes to the Company any goods or services,
or (ii) a beneficial interest in any contract or agreement to which the
Company is a party or by which it may be bound or affected. Except as set
forth in the Prospectus under "Certain Transactions," there are no
existing or proposed agreements, arrangements, understandings, or
transactions between or among the Company and any officer, director, or
principal stockholder of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities.
1.31 Any certificate signed by any officer of the Company on
behalf of the Company and delivered to the Representative or to
Representative's counsel shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
1.32 The Company is not, and upon completion of the transactions
contemplated hereby will not be, required to register as an investment
company under the Investment Company Act of 1940, as amended.
1.33 The Company has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and
sale of the Securities other than such Preliminary Prospectus or the
Prospectus or other materials permitted by the Act to be distributed by
the Company, subject to the Representative's prior written approval
thereof or consent thereto.
1.34 The Company has obtained from each shareholder of the
Company an enforceable written agreement that for the agreed upon terms,
such shareholder will not, without the Representative's prior written
consent, offer, pledge, sell, contract to sell, grant any option for the
sale of, or other dispose of, directly or indirectly, any shares of Common
Stock or any security or other instrument which by its terms is
convertible into, exercisable for or exchangeable for shares of Common
Stock.
1.35 The Company has (i) entered into an employment agreement
with each of Xxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxx, and Xxxxxxx X. Xxxxxxxx
in the forms filed as Exhibits 10.14, 10.15 and 10.16, respectively, to
the Registration Statement, and (ii) purchased term key-person insurance
on the lives of ---------- and ------------- each in the amount of
$1,000,000, which policies name the Company as the beneficiary thereof.
1.36 No action has been taken suspending the registration or
qualification of the Securities in any jurisdiction designated by the
Representative pursuant to Section 4.2 hereof, nor have any proceedings
been initiated or threatened for any such purpose.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. The Company
agrees to sell the Firm Shares to the several Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase, at the price
set forth below, the number of Firm Shares set forth opposite its name on
Schedule I hereto, subject to adjustments in accordance with Section 9
hereof. The purchase price for the Firm Shares shall be $------ per
Share.
2.1 Payment for the Firm Shares shall be made to the Company by
wire transfer or certified or bank cashier's check in same-day funds
against delivery of certificates for the Firm Shares to the Representative
for the several accounts of the Underwriters. Such payment and delivery
shall be conducted at the offices of NTB, 300 Plaza Level, 0000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxx 00000 (or such other place as mutually may be
agreed upon by the Representative and the Company), at -------- a.m.
Denver, time, on the fourth full Business Day after the date of this
Agreement or at such other time and date thereafter as the Representative
and the Company shall agree upon, such time and date being herein referred
to as the "Firm Closing Date."
2.2 In addition, the Company hereby grants to the several
Underwriters an option to purchase, on the terms and subject to the
conditions set forth herein, up to 120,000 Option Shares at the price per
Share set forth above, solely to cover over-allotments in the sale of the
Firm Shares. Nothing contained herein shall obligate the Underwriters to
make any over-allotments in the sale of the Firm Shares. No Option Shares
shall be sold and delivered unless the Firm Shares previously have been,
or simultaneously are, sold and delivered.
2.3 The over-allotment option may be exercised, in whole or in
part, at any time upon written notice given within 45 days after the date
of this Agreement, by NTB, as Representative of the several Underwriters,
to the Company setting forth the number of Option Shares as to which the
several Underwriters are exercising the over-allotment option, the names
and denominations in which the certificates representing the Option Shares
are to be registered and the time and date at which such certificates are
to be delivered (such time and date being referred to herein as the
"Option Closing Date"). The Option Closing Date shall be determined by
the Representative but shall not be earlier than 3 nor later than 10 full
Business Days after the exercise of the over-allotment option, nor in any
event prior to the Firm Closing Date. If the date of exercise of the over-
allotment option is 3 or more days before the Firm Closing Date, the
notice of exercise shall set the Firm Closing Date as the Option Closing
Date. As Representative of the several Underwriters, NTB may cancel the
over-allotment option at any time prior to its expiration by giving
written notice of such cancellation to the Company. If the over-allotment
option is exercised, payment for the Option Shares shall be made to the
Company on the Option Closing Date by wire transfer or certified or bank
cashier's check in same-day funds against delivery of certificates for the
Option Shares at the above stated offices of NTB in Denver, Colorado.
Delivery of certificates for the Firm Shares and any Option Shares shall
be made by or on behalf of the Company through the facilities of the
Depository Trust Company ("DTC") to the Representative for the respective
accounts of the several Underwriters, against payment of the purchase
price therefore by wire transfer or certified or bank cashier's check in
same-day funds to the order of the Company. Certificates for the Firm
Shares and any Option Shares shall be registered in such names and
denominations as the Representative shall have requested at least 2 full
Business Days prior to the applicable Closing Date, and shall be made
available for checking and packaging at a location as may be designated by
the Representative at least 1 full Business Day prior to such Closing
Date. Time shall be of the essence, and delivery at the time and place
specified is a further condition to the obligations of each Underwriter.
2.4 At the closing of the sale of the Firm Shares, the Company
will sell and deliver to the Representative, at an aggregate purchase
price of $100, Representative's Warrants, dated the Firm Closing Date,
substantially in the form filed as an exhibit to the Registration
Statement, evidencing the right of the Representative, and/or
Representative's permitted designees, to purchase up to 120,000 shares
(equal to 10% of the Firm Shares) of Common Stock (subject to adjustment
as provided in the Representative's Warrants) at the price of $----- per
share and on the terms and conditions provided in the Warrants. The
Company shall not be obligated to sell and deliver the Representative's
Warrants, and the Representative shall not be obligated to purchase and
pay for the Warrants, except upon payment for the Firm Shares.
3. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters intend to make a public offering of the Firm Shares as soon
as the Representative deems it advisable to do so. The Firm Shares are to
be initially offered to the public at the initial public offering price
set forth in the Prospectus. The Representative may from time to time
thereafter change the public offering price and other selling terms. To
the extent, if at all, that Option Shares are purchased pursuant to the
over-allotment option, the Underwriters will offer them to the public on
the foregoing terms. It is further understood that the Representative
will act as the representative for the Underwriters in the offering and
sale of the Securities pursuant to an Agreement Among Underwriters entered
into by the Representative and the several other Underwriters.
4. Covenants of the Company. The Company covenants and agrees with
each Underwriter as follows:
4.1 If the Registration Statement has not yet been declared
effective, the Company shall use its best efforts to cause the
Registration Statement and any amendment thereto to become effective under
the Act and, upon notification from the Commission that the Registration
Statement or any amendment thereto has become effective, shall so advise
you immediately, in writing. The Company shall comply with the provisions
of and make all requisite filings with the Commission pursuant to Rule
430A and Rule 424(b) under the Act and notify you in writing of all such
filings. The Company shall notify you promptly of any request by the
Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information; the Company
shall carefully prepare and file with the Commission promptly upon your
request, any amendment of or supplement to the Registration Statement or
Prospectus which, in your reasonable opinion, may be necessary or
advisable in connection with the distribution of the Securities; and the
Company shall not file or make any amendment of or supplement to the
Registration Statement or the Prospectus which is not approved by you
after reasonable notice from the Company to you, which approval shall not
be unreasonably withheld or delayed. The Company shall advise you
immediately of the issuance by the Commission, any state securities
commission or any other regulatory body of any stop order or other order
suspending the effectiveness of the Registration Statement, suspending or
preventing the use of any Preliminary Prospectus or the Prospectus or
suspending the qualification of the Securities for offering or sale in any
jurisdiction, or of the institution of any proceedings for any such
purpose; and the Company shall use its best efforts to prevent the
issuance of any stop order or other such order and, should a stop order or
other such order be issued, to obtain as soon as possible the lifting
thereof.
4.2 The Company shall cooperate with you and your counsel in
connection with the registration or qualification of the Securities for
sale under the securities or "Blue Sky" laws of such jurisdictions as the
Representative shall designate and the continuance of such qualification
in effect for so long a period as the Representative may reasonably
request, except the Company shall not be required to qualify as a foreign
corporation in any jurisdiction where it is not already so qualified or to
execute a general consent to service of process in actions other then
those arising out of the offer and sale of the Securities or take any
action which would subject it to taxation in any jurisdiction where it is
not now so subject.
4.3 Within the time during which a prospectus relating to the
Securities is required to be delivered under the Act, the Company shall
comply with all requirements imposed upon it by the Act and the Exchange
Act, as now and hereafter amended, and by the Rules and Regulations, as
from time to time in force, so far as is necessary to permit the
continuance of sales of or dealings in the Securities as contemplated by
the provisions hereof and the Prospectus. If during such period any event
occurs as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or would omit to
state a material fact necessary to make the statements therein, in light
of the circumstances then existing, not misleading, or if during such
period it is otherwise necessary, in the opinion of the Company or in your
opinion, to amend the Registration Statement or supplement the Prospectus
to comply with the Act, the Company or you, as the case may be, shall
promptly notify the other party and the Company shall amend the
Registration Statement or supplement the Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such
compliance.
4.4 The Company shall make generally available to its security
holders (and shall deliver to you), in the manner contemplated by Rule
158(b) under the Act, as soon as practicable but in any event not later
then 45 days after the end of its fiscal quarter in which the first
anniversary date of the effective date of Registration Statement occurs,
an earnings statement satisfying the requirements of Section 11(a) of the
Act covering a period of at least 12 consecutive months beginning after
the effective date of the Registration Statement; and will advise you in
writing when such statement has been made available.
4.5 For a period of five years from the Firm Closing Date, the
Company will deliver to you on a timely basis (i) a copy of each report,
including, without limitation, reports on Form 8-K, 10-C, 10-K (or 10-KSB)
and 10-Q (or 10-QSB) or any successor form and exhibits thereto filed with
or furnished by the Company to the Commission, any securities exchange or
the National Association of Securities Dealers, Inc. ("NASD") on the date
each such report or document is so filed or furnished; (ii) as soon as
practicable, copies of any reports or communications (financial or other)
of the Company mailed to its security holders; (iii) as soon as
practicable, a copy of any Schedule 13D, 13G, 14D-1, 13E-3 or 13E-4 (or
any successor form) received or prepared by the Company from time to time;
and (iv) such additional information concerning the business and financial
condition of the Company as you may from time to time reasonably request
and which can be prepared or obtained by the Company without unreasonable
effort or expense.
4.6 The Company shall furnish or cause to be furnished to the
Representative or on the Representative's order, without charge, at such
place as the Representative may designate, copies of each Preliminary
Prospectus, the Registration Statement and any pre-effective or post-
effective amendments thereto, the Prospectus, and all amendments and
supplements thereto, including any Prospectus prepared after the effective
date of the Registration Statement, in each case as soon as available and
in such quantities as the Representative may request. The Company will
deliver to the Representative, at or before the Firm Closing Date, two
signed copies of the Registration Statement and all pre-effective or post-
effective amendments thereto including all exhibits filed therewith.
4.7 The Company shall not, during the 180 day period following
the Firm Closing Date, except with the Representative's prior written
consent, offer for sale, contract to sell, issue, distribute, grant any
option, right or warrant to purchase any shares of Common Stock or other
equity securities of the Company or any securities convertible into shares
of Common Stock or such other equity securities, except the Securities,
the Representative's Securities, those options to purchase shares of
Common Stock issued under the Company's Equity Incentive Plan and those
other options to purchase shares of Common Stock (collectively the
"Options") and shares of Common Stock issued upon exercise of the Options,
as those Options are described in the Prospectus.
4.8 The Company shall cause (i) each officer and director of
the Company and each holder of 5% or more of the Company's Common Stock
(or securities convertible into shares Common Stock) to furnish to the
Representative, prior to the date of this Agreement, in form and substance
satisfactory to Representative's counsel, whereby each such person shall
agree not to offer for sale, contract to sell, sell, distribute, grant any
option or other right to purchase or otherwise dispose of or contract to
dispose of any of their shares of the Company's Common Stock (or any
security convertible into shares of the Company's Common Stock) without
the Representative's prior written consent during the 12 month period
following the effective date of the Registration Statement; and (ii) each
other holder of the Company's Common Stock (or other security convertible
into Common Stock) to furnish to the Representative, prior to the date of
this Agreement, a written agreement, in form and substance satisfactory to
Representative's counsel whereby each such person shall agree not to offer
for sale, contract to sell, sell, distribute, grant any option or other
right to purchase or otherwise dispose of or contract to dispose of any of
their shares of the Company's Common Stock (or any security convertible
into shares of the Company's Common Stock) for a period of 9 months from
the effective date of the Registration Statement without the
Representative's prior written consent. Except as the Representative may
consent, in it sole discretion, the foregoing agreements shall also
provide that any sale of shares of the Company's Common Stock by any such
person during the 18 month period from the effective date of the
Registration Statement, and which sale is made pursuant to Rule 144 under
the Act (or comparable provision under the Act) shall be made only in a
transaction or transactions by or directly with the Representative,
providing the compensation charged by the Representative is competitive
with other broker-dealers.
4.9 The Company shall not take, or permit any of its officers
of directors or shareholders or any affiliate (within the meaning of the
term "affiliate" in the Rules and Regulations) to take, directly or
indirectly, any action designed to or which has constituted or might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities; and has not effected any sales of shares of Common Stock or
other securities that are required to be disclosed in response to Item 26
of Part II of the Registration Statement.
4.10 The Company shall apply the net proceeds from the sale of
the Securities in the manner, and subject to the conditions, set forth
under "Use of Proceeds" in the Prospectus. No portion of the net proceeds
will be used, directly or indirectly, to acquire any securities issued by
the Company.
4.11 The Company shall timely file all such reports, forms and
other documents as may be required (including, without limitation, a Form
SR as may be required pursuant to Rule 463 under the Act) from time to
time under the Act, the Exchange Act, and the Rules and Regulations, and
all such reports, forms and documents filed shall comply as to form and
substance with the applicable requirements under the Act, the Exchange
Act, and the Rules and Regulations.
4.12 The Company shall use its best efforts to maintain the
inclusion of the Common Stock for quotation on the SmallCap Market of
NASDAQ.
4.13 For a period of three years from the Firm Closing Date, the
Company shall (i) retain American Securities Transfer & Trust, Inc.,
Denver, Colorado as the transfer agent for the Common Stock and shall
instruct the transfer agent to furnish to the Representative, as and to
the extent reasonably requested by the Representative, at the Company's
sole expense, with copies of the Company's stock transfer sheets relating
to the Company's securities, including a current list of the holders of
all of the Company's securities and a list of the beneficial owners of
securities held by Depository Trust Company; (ii) retain such accounting
firm as the Company's independent public accountants as shall be
reasonably acceptable to the Representative; and (iii) retain such
financial public relations firm as shall be reasonably acceptable to the
Representative for consecutive 6 month terms; provided, however, that any
renewal of such firm's engagement shall be subject to NTB's approval.
4.14 The Company shall take all necessary action, on an
expedited basis, to be included effective with the First Closing Date in
Standard and Poor's Corporate Records, Stock Quotes and Stock Guide
published by Standard and Poor's Corporation and to continue such
inclusion for a period of not less than seven years from the Firm Closing
Date.
4.15 Until that date which is 90 days after the Firm Closing
Date, the Company shall not, without the prior written approval of the
Representative, issue, directly or indirectly, any press release or other
communication or hold any press conference with respect to the Company or
its activities or the offering contemplated hereby, other than trade
releases issued in the ordinary course of the Company's business
consistent with past practices with respect to the Company's operations or
such releases as counsel for the Representative and the Company have
advised are necessary to comply with applicable law.
4.16 For a period of two years from the Firm Closing Date, the
Company agrees that NTB shall have the right to designate one person as an
advisor to the Company's Board of Directors. Such advisor will be
reimbursed for his or her expenses in attending meetings of the Board of
Directors and will receive cash compensation equal to that received by any
other outside director but will have no power to vote as a director. Such
person shall be indemnified by the Company against any claim arising out
of his or her participation in meetings of the Board of Directors to the
same extent as directors. During the stated two year period, NTB's
advisor to the Company's Board of Directors will be (i) invited to attend
all meetings of the Company's Board of Directors; (ii) provided with a
copy of all Actions by Unanimous Written Consent of the Board of Directors
in Lieu of an Actual Meeting; (iii) furnished with a copy of all public
filings by the Company and Company press releases as released; (iv)
updated by the Company's management, on at least a quarterly basis,
regarding the Company's activities, prospects and financial condition; and
(v) advised immediately of material events to the extent consistent with
applicable law. During the subject two year period, the Company shall
hold meetings of its Board of Directors at intervals of not less than once
each calendar quarter. Any advisor to the Company's Board of Directors
designated by NTB shall be acceptable to the Company, which acceptance
shall not be unreasonably withheld.
4.17 For a period of 12 months from the Firm Closing Date, the
Company shall not authorize or otherwise effect any change in the
compensation to any officer and/or director of the Company without 30
days' prior written notice to the Representative.
4.18 On the Firm Closing Date, the Company shall enter into a
consulting agreement, retaining NTB, individually, and not as
Representative of the Underwriters, as financial consultant to the Company
for a period of 24 months at a fee of $48,000 payable in full on the Firm
Closing Date. As financial consultant, the Representative will advise the
Company as to market conditions, financial alternatives, resource
allocation and similar investment banking services. Such consulting
agreement shall also provide for compensation to the Representative as
follows: 5% of the first $3 million, 2.5% of any consideration between $3
million and $5 million; 2% of any consideration between $5 million and $10
million; and 1% of any consideration greater than $10 million paid or
received by the Company (or its shareholders) in any transaction
(including mergers, assets sales and acquisitions) accepted by the Company
(or its shareholders) within 36 months from the Firm Closing Date,
provided the Representative introduced the other party to the Company.
5. COSTS AND EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, the Company will pay all
costs, expenses and fees incident to the performance of the obligations of
the Company under this Agreement, including, without limiting the
generality of the foregoing, the following: (i) all expenses (including
stock transfer taxes, if any) incurred in connection with the delivery of
the Firm Shares and Option Shares to the Underwriters, (ii) all fees and
expenses (including, without limitation, fees and expenses of the
Company's accountants and counsel, but excluding fees and expenses of
counsel for the Underwriters, except as provided in (iii) below) in
connection with the preparation, printing, filing, delivery and shipping
of the Registration Statement (including the financial statements therein
and all amendments and exhibits thereto), each Preliminary Prospectus and
the Prospectus as amended or supplemented, and the printing, delivery and
shipping of this Agreement and other underwriting documents, including
Underwriters' Questionnaires, Underwriters' Powers of Attorney, Blue Sky
Memoranda, Agreements Among Underwriters and Selected Dealer Agreements
and any letters transmitting the offering material to selling group
members (including costs of shipment and delivery), (iii) all filing fees
and fees and disbursements of Representative's counsel incurred in
connection with the qualification of the Securities under state securities
laws as provided in Section 4.2 hereof, (iv) the filing fees of the
Commission and NASD, (v) the fees and expenses of inclusion of the Common
Stock on NASDAQ NMS as well as and any other securities exchange, (vi) the
cost of printing certificates representing the Common Stock, (vii) the
cost and charges of the transfer agent or registrar, (viii) the costs of
"tombstone" advertisements in such publications as you shall reasonably
request, as well as the costs of any other advertising undertaken at the
Company's request, (ix) the costs of preparing, printing and distributing
bound volumes for the Representative and its counsel, (x) all fees and
costs for due diligence information, examinations, (xi) the costs and
expenses associated with the production of materials related to and travel
expenses incurred by the Company's management and you in connection with,
the various meetings to be held between the Company's management and
prospective investors; and (xii) all other costs and expenses incident to
the performance of the obligations of the Company hereunder which are not
otherwise provided for in this section. In addition, the Company shall
also pay you, individually and not in your capacity as Representative, at
the applicable Closing Date, a non-accountable expense allowance equal to
2% of the initial public offering price of the Securities purchased on
such Closing Date (including Option Shares purchased pursuant to the
option granted pursuant to Section 2 hereof). If the sale of the
Securities provided for herein is not consummated by reason of any
termination of this Agreement pursuant to Section 10.2 hereof, or by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or because any
condition of the Underwriters' obligations set forth in Section 6 herein
is not fulfilled, the Company shall reimburse the Representative for all
of Representative's accountable out-of-pocket expenses (including fees and
disbursements of its counsel) actually incurred by the Representative in
connection with the investigation, preparing to market and marketing of
the Securities or in contemplation of performing its obligations
hereunder, such reimbursement not to exceed in the aggregate $65,000. You
acknowledge that $45,000 has been paid to you pursuant to the Company's
prior agreement to be applied against the expense allowance (and which
shall be applied toward such reimbursement of the Representative). You
agree that any portion of such $45,000 that is not necessary to reimburse
you for your out-of-pocket expenses actually incurred if the sale of the
Securities, as contemplated by this Agreement, is not consummated for any
reason shall be repaid to the Company.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase and pay for the Firm Shares on
the Firm Closing Date and the Option Shares, if any, on the Option Closing
Date shall be subject, as of the date hereof, the Firm Closing Date and
the relevant Option Closing Date, if any, respectively, of each of the
representations and warranties on the part of the Company contained
herein, to the performance by the Company of all of its agreements herein
contained, to the fulfillment of or compliance by the Company with all
covenants and conditions hereunder, and to the following additional
conditions:
6.1 The Registration Statement thereto shall have become
effective not later than 5:30 p.m., Washington, D.C. time, on the date of
this Agreement or such later date and time as shall be consented to in
writing by the Representative; all post-effective amendments thereto shall
have become effective and all filings required by Rule 424(b) and Rule
430A under the Act have been completed within the time period required by
the Rules and Regulations prior to the Firm Closing Date; no stop order
suspending the effectiveness of the Registration Statement, or any
amendment or supplement thereto shall have been issued and no proceedings
for the issuance of such an order shall have been indicated or threatened;
and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to Representative's satisfaction.
6.2 The Representative shall not have advised the Company that
(i) the Prospectus, or any supplement thereto, contains an untrue
statement of fact which, in the Representative's reasonable opinion, is
material, or omits to state a fact which, in the Representative's
reasonable opinion, is material and is required to be stated therein or is
necessary to make the statements therein, in light of the circumstances
under which they were made not misleading, or (ii) that the Registration
Statement, or any amendment thereto, contains an untrue statement of fact
which, in the Representative's reasonable opinion, is material, or omits
to state a fact which, in the Representative's reasonable opinion is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
6.3 On or prior to the Firm Closing Date and the Option Closing
Date, if any, the Representative shall have received from Xxxx X. Xxxxxxx,
P.C., counsel for the Representative, such opinion or opinions with
respect to the sufficiency of all corporate proceedings and other legal
matters relating to this Underwriting Agreement and the transactions
contemplated hereby as the Representative reasonably may require, and such
counsel shall have received from the Company or counsel to the Company
such documents and information as they reasonably request to enable them
to pass upon such matters.
6.4 The Representative shall have received at or prior to the
date of this Agreement, the Firm Closing Date from Xxxx X. Xxxxxxx, P.C.,
a memorandum or written summary, in form and substance satisfactory to the
Representative, with respect to the qualification for offering and sale by
the Underwriters of the Securities under the state securities or Blue Sky
laws of such jurisdictions as the Representative may reasonably have
designated to the Company.
6.5 The Representative shall have received on the Firm Closing
Date the opinion of Xxxxxxx Xxxxxx LLP, counsel for the Company, dated
such Closing Date, addressed to the Representative covering the matters
set forth on Annex A attached hereto.
6.6 The Representative shall have received on the Firm Closing
Date the opinion of ---------------------, special counsel to the Company
with respect to intellectual property matters, dated such Closing Date,
addressed to the Representative covering the matters set forth on Annex B
attached hereto.
6.7 The Representative shall have received at the Option
Closing Date, if any, the favorable opinions of the Company's counsel and
special counsel, respectively, addressed to the Representative, confirming
as of such Option Closing Date the statements made by such counsel in its
opinion delivered on the Firm Closing Date.
6.8 As of the Firm Closing Date and Option Closing Date, if
any, (i) there shall have been no transaction, not in the ordinary course
of business, entered into by the Company after the latest date as of which
the financial condition of the Company is set forth in the Registration
Statement and Prospectus that is materially adverse to the Company; (ii)
the Company shall not be in material breach or material default under any
provision of any instrument relating to any outstanding indebtedness;
(iii) the Company shall not have issued any securities (other than as
described in the Registration Statement and other than the Securities and
the Representative's Securities) or declared or paid any dividend or made
any distribution in respect of its capital stock of any class and there
shall not have been any change in the capital stock or any material change
in the debt (long or short term) or liabilities or obligations of the
Company (contingent or otherwise); (iv) no material amount of the assets
of the Company shall have been pledged or mortgaged, except as set forth
in the Registration Statement and Prospectus; (v) no action, suit or
proceeding, at law or in equity, shall have been pending or threatened (or
circumstances giving rise to same) against the Company, or involving or
affecting its business or properties, before or by any court or federal,
state or foreign commission, board or other administrative agency wherein
an unfavorable decision, ruling or finding could have a material adverse
effect on the Company, except as set forth in the Registration Statement
and Prospectus; and (vi) no stop order shall have been issued under the
Act and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission or any state securities regulatory agency.
6.9 The Representative shall have received on the Firm Closing
Date and the Option Closing Date, if any, a certificate or certificates of
the Company, signed by the Chief Executive Officer and by the Chief
Financial Officer to the effect that each of such persons has carefully
reviewed the Registration Statement, the Prospectus and this Agreement,
and that, as of such Closing Date:
6.9.1 The Registration Statement has become
effective under the Act, no stop order suspending the
effectiveness of the Registration Statement has been issued, and
no proceedings for that purpose have been instituted or are
pending or are, to the best of each of such person's knowledge
after due inquiry, contemplated by the Commission; and
6.9.2 The representations and warranties of the
Company in this Agreement are true and correct, as if made on
and as of the Firm Closing Date or the Option Closing Date, as
the case may be, and the Company has complied with all
agreements and satisfied all conditions set forth in this
Agreement on its part to be performed or satisfied at or prior
to the Firm Closing Date or the Option Closing Date, as the case
may be; and
6.9.3 they have carefully examined the
Registration Statement, the Prospectus and any amendments or
supplements thereto, and (a) neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto,
contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (b)
since the effective date of the Registration Statement there has
occurred no event required to be set forth in an amended or
supplemented prospectus which has not been so set forth, (c)
subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the
Company has not incurred any material liability or obligation,
direct or contingent, or entered into any material transaction,
whether or not in the ordinary course of business, or declared
or paid any dividend on any capital stock of the Company, and
there has not been any change in the capital stock, or any
material increase, in the short-term debt or long-term debt
(including any capitalized lease obligation), or any issuance of
options, warrants, convertible securities or other rights to
purchase the capital stock, of the Company, or any material
adverse change, or any development involving a prospective
material change, in the business, key personnel, condition
(financial or other), properties, assets, net worth or results
of operations of the Company, and the Company has not sustained
any material loss or damage to its property or interference with
its business, whether or not any of the foregoing is insured,
which is material to the Company, and (d) except as disclosed in
the Prospectus, there is not pending, threatened or, to their
knowledge, contemplated any action, suit, proceeding or
investigation before or by any court or governmental agency or
body, or any arbitrator which would result in any material
adverse change in the general affairs, business, condition
(financial or other) properties, assets, net worth or results of
operations of the Company.
6.10 The Representative shall have received on or prior to the
date of this Agreement, the approval of the NASD of the terms of the
Underwriters' participation in the distribution of the Securities and the
amount and type of compensation allowable or payable to the Representative
and the Underwriters therefor.
6.11 The Representative shall have received a signed letter from
Xxxxxx Xxxxxxxx LLP, addressed to the Representative, on the date of this
Agreement, the Firm Closing Date and, if applicable, the Option Closing
Date, respectively, and a draft of such letter not less than five days
prior to each said date, from Xxxxxx Xxxxxxxx LLP dated as of the date
hereof, the Firm Closing Date and, if applicable, the Option Closing Date,
as the case may be, which shall confirm, on the basis of a review in
accordance with the procedures set forth in the letter to the
Representative delivered by Xxxxxx Xxxxxxxx LLP on the date hereof, which
letter shall be to the effect set forth in Annex C hereto, that nothing
has come to their attention during the period from the date not more than
5 days prior to date hereof, to a date not more than 5 days prior to the
Firm Closing Date and the Option Closing Date, as the case may be, which
would require any change in their letter dated the date hereof if it were
required to be dated and delivered on the Firm Closing Date or the Option
Closing Date, as the case may be. All such letters shall be in form and
substance satisfactory to the Representative.
6.12 On each of the Firm Closing Date and relevant Option
Closing Date, if any, there shall have been duly tendered to the
Representative for its account and the accounts of the several
Underwriters, certificates representing the Securities in the names and
denominations instructed by the Representative against payment therefor as
provided herein.
6.13 No order suspending the sale of the Securities in any
jurisdiction designated by the Representative pursuant to Section 4.2
hereof shall have been issued and no proceedings for that purpose shall
have been instituted or shall be threatened.
6.14 On or before the Firm Closing Date, the Company shall have
executed and delivered to the Representative the Representative's Warrants
in such denominations and in the names of such designees as shall have
been instructed by the Representative in writing.
6.15 On or before the date of this Agreement, the Common Stock
shall have been duly approved for inclusion on NASDAQ SmallCap Market
subject to official notice of issuance.
6.16 Since the effective date of the Registration Statement, the
Company shall not have sustained any loss by fire, flood, accident or
other calamity, nor shall it have become a party to or the subject of any
litigation, individually or in the aggregate, which is materially adverse
to the Company, nor shall there have been a material adverse change in the
general affairs, business, key personnel, capitalization, financial
position or net worth of the Company, whether or not arising in the
ordinary course of business, which loss, litigation or change, in your
reasonable judgment, shall render it inadvisable to proceed with the
delivery of the Securities.
6.17 Subsequent to the date of this Agreement or, if earlier,
the dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in Section 6.11 or (ii) any
change, or any development involving a prospective change, in or affecting
the business or properties of the Company the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of the
Representative, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Prospectus (exclusive of any supplement thereto).
6.18 At or prior to the Firm Closing Date, the Representative
shall have received the written agreements and performance of the matters
specified in Sections 4.8 and 4.18 hereof.
6.19 Prior to the Firm Closing Date, the Company shall have
furnished to the Representative such further information, certificates and
documents confirming the representations and warranties of the Company and
compliance with the conditions contained herein as the Representative may
reasonably have requested.
The options and certificates mentioned in this Agreement shall
be deemed to be in compliance with the provisions hereof only if they are
in all respects reasonably satisfactory to the Representative and its
counsel.
If any of the conditions established in this Section 6 shall not
have been fulfilled when and as required, the obligations of the
Underwriters hereunder may be terminated at the election of the
Representative upon written notification to the Company on or prior to the
Firm Closing Date or the Option Closing Date, if any, as the case may be
without liability on the part of any Underwriter, including the
Representative, or the Company except to the extent provided in Sections
5, 7 and 10 hereof.
7. INDEMNIFICATION.
7.1 The Company will indemnify and hold harmless each
Underwriter, its officers, directors and counsel and each person, if any,
who controls any Underwriter (including each person who may be substituted
for an Underwriter as provided in Section 9 hereof) within the meaning of
the Act or the Exchange Act, from and against any losses, claims, damages,
expenses, liabilities or actions in respect thereof ("Claims"), joint or
several, to which such Underwriter, its officers, directors or counsel or
each such controlling person may become subject under the Act, the
Exchange Act, Blue Sky Laws or other federal or state statutory laws or
regulations, at common law or otherwise (including payments made in
settlement of any litigation, if such settlement is effected with the
written consent of the Company), insofar as such Claims arise out of or
are based upon any breach of any representation, warranty or covenant made
by the Company in this Agreement, or any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or in any application or other document executed by
the Company or based upon written information furnished by the Company and
filed in any state or other jurisdiction to qualify any of the Shares for
offer/sale under the securities laws thereof or filed with the SEC or any
securities association or exchange (any such document, application or
information being hereinafter called an "Application") or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading (with respect to the Prospectus, in
light of the circumstances under which they were made). The Company
agrees to reimburse each such indemnified party for any legal fees or
other expense as incurred by such indemnified party in connection with
investigating, preparing to defend or defending against or appearing as a
third-party witness in connection with such Claims; provided, however, the
Company will not be liable in any such case to the extent that any such
Claims arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto or in any Application in reliance upon and in
conformity with written information furnished by the Representative to
the Company pursuant to Section 12 of this Agreement. The indemnification
obligations of the Company as provided herein are in addition to and in no
way limit any liability the Company may otherwise have.
7.2 Each Underwriter, severally and not jointly, will indemnify
and hold harmless the Company, each of its directors and officers and each
person, if any, who controls the Company within the meaning of the Act or
the Exchange Act against any Claim to which the Company, or any such
director, officer or controlling person may become subject under the Act,
the Exchange Act, Blue Sky Laws or other federal or state statutory laws
or regulations, at common law or otherwise (including payments made in
settlement of any litigation, if such settlement is effected with the
written consent of such Underwriter and the Representative), insofar as
such Claim arises out of or is based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or any Application, or arises out of or is based upon the omission
or alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein (with respect to the
Prospectus, in light of the circumstances under which they were made), not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or in
any Application in reliance solely upon and in conformity with written
information furnished by the Representative to the Company pursuant to
Section 12 of this Agreement. The indemnification obligations of each
Underwriter as provided above are in addition to any liabilities any such
Underwriter may otherwise have. Notwithstanding the provisions of this
section, no Underwriter shall be required to indemnify or reimburse the
Company, or any officer, director, controlling person in an aggregate
amount in excess of the total price at which the Shares purchased by any
such Underwriter hereunder were offered to the public, less the amount of
any damages such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission.
7.3 Promptly after receipt by an indemnified party under this
section of notice of the commencement of any action in respect of a Claim,
such indemnified party will, if a Claim in respect thereof is to be made
against an indemnifying party under this section, notify the indemnifying
party in writing of the commencement thereof, but the omission so to
notify the indemnifying party will not relieve an indemnifying party from
any liability it may have to any indemnified party under this section or
otherwise, except to the extent that the indemnifying party is prejudiced
in its ability to defend such action. In case any such action is brought
against any indemnified party, and such indemnified party notifies an
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate in and, to the extent that he, she or it
may wish, jointly with all other indemnifying parties, similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such
action include both the indemnified party and any indemnifying party and
the indemnified party shall have reasonably concluded that there may be
legal defenses available to the indemnified party and/or other indemnified
parties which are different from or additional to those available to any
indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties.
7.4 Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the
defense of such action and upon approval by the indemnified party of
counsel selected by the indemnifying party, the indemnifying party will
not be liable to such indemnified party under this section for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (a) the indemnified party shall
have employed separate counsel in connection with the assumption of legal
defenses in accordance with the last sentence of Section 7.3 (it being
understood, however, that the indemnifying party shall not be liable for
the legal fees and expenses of more than one separate counsel approved by
the Representative, if one or more of the Underwriters or their officers,
directors, counsel or controlling persons are the indemnified parties);
(b) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the indemnified party's notice to the
indemnifying party of commencement of the action; or (c) the indemnifying
party has authorized the employment of counsel at the expense of the
indemnifying party.
7.5 If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under subsection 7.1 or 7.2 hereof in
respect of any Claim referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall, subject to the
limitations hereinafter set forth, contribute to the amount paid or
payable by such indemnified party as a result of such Claim (a) in such
proportion as is appropriate to reflect the relative benefits received by
the Company and the Underwriters from the offering of the Shares; or (b)
if the allocation provided by clause (a) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (a), but also the relative fault of the
Company and the Underwriters in connection with the statements or
omissions which resulted in such Claim, as well as any other relevant
equitable considerations. The relative benefits received by each of the
Company and the Underwriters shall be deemed to be in such proportion so
that the Underwriters are responsible for that portion represented by the
percentage that the amount of the underwriting discounts and commissions
per Share appearing on the cover page of the Prospectus bears to the
public offering price per Share appearing thereon, and the Company is
responsible for the remaining portion. The relative fault of the Company
and the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable
by a party as a result of the Claims referred to above shall be deemed to
include, subject to the limitations set forth in subsections 7.3 and 7.4
of this section, any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or
claim.
7.6 The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this section were
determined by pro rata or per capita allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method or
allocation which does not take into account the equitable considerations
referred to in subsection 7.5 of this section. Notwithstanding the other
provisions of this section, no Underwriter shall be required to contribute
any amount that is greater than the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the 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 are several in
proportion to their respective underwriting commitments and not joint.
7.7 If any proceeding is brought in a court of competent
jurisdiction against any person in respect of which indemnification or
contribution may be sought under this Section 7, the other parties hereto
hereby (a) consent to the jurisdiction of the court in which such
proceeding is brought for purposes of enforcing this Section 7, (b) agree
that process issuing from such court may be served upon them by any other
person seeking indemnification or contribution; and (c) agree that they
may be joined as additional defendants in any such proceeding.
8. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND
REPRESENTATIONS. The indemnity and contribution agreements contained in
Section 7 and the representations, warranties and agreements of the
Company in Sections 1 and 4 hereof shall survive the delivery of the
Securities to the Underwriters hereunder and shall remain in full force
and effect, regardless of any termination or cancellation of this
Underwriting Agreement or any investigation made by or on behalf of any
indemnified party.
9. DEFAULT BY UNDERWRITERS; SUBSTITUTION. If on the Firm Closing
Date or the Option Closing Date, as the case may be, any Underwriter shall
fail to purchase and pay for the portion of the securities which such
Underwriter has agreed to purchase and pay for on such data (otherwise
than by reason of the nonfulfillment of any condition to its obligation to
do so hereunder), you, as Representative of the Underwriters, shall use
your best efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase such amounts as may be
agreed upon, and upon the terms set forth herein, of the Firm Securities
or Option Securities, as the case may be, which the defaulting Underwriter
or Underwriters failed to purchase. If during such 36 hours you, as
Representative, shall not have procured such other Underwriters, or any
others, to purchase the Firm Securities or Option Securities, as the case
may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of securities with respect
to which such default shall occur does not exceed 9.09% of the Firm
Securities or Option Securities as the case may be, covered hereby, the
other Underwriters shall be obligated, severally, in proportion to the
respective numbers of Firm Securities or Option Securities, as the case
may be, which they are obligated to purchase hereunder, to purchase the
Firm Securities or Option Securities, as the case may be, which such
defaulting Underwriter or Underwriters failed to purchase (provided that
any non-defaulting Underwriter shall not be obligated to purchase any
Securities which the defaulting Underwriter(s) agreed to purchase if such
additional purchase would cause the non-defaulting Underwriter to be in
violation of the net capital rules of the Commission), or (b) if the
aggregate number of Securities with respect to which such default shall
occur exceeds 9.09% of the Firm Securities or Option Securities, as the
case may be, covered hereby, you as the Representative of the Underwriters
will have the right, by written notice given within the next 36-hour
period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the non-defaulting Underwriters, or of
the Company except for expenses to be borne by the Company as provided in
Section 5 hereof and the indemnity and contribution agreements in Section
7 hereof. In the event of a default by any Underwriter or Underwriters,
as set forth in this Section 9, the Firm Closing Date or Option Closing
Date, as the case may be, may be postponed for such period, not exceeding
seven days, as you, as Representative, may determine in order that the
required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. EFFECTIVE DATE AND TERMINATION.
10.1 Subject to its execution and delivery by the parties this
Agreement shall become effective at 10:00 a.m., Denver time, on the later
of (i) the first full Business Day following the date the Registration
Statement becomes effective or (ii) at such time after the Registration
Statement becomes effective as you, in your discretion, shall release the
Firm Shares for the sale to the public. You shall notify the Company and
its counsel immediately after you have taken any action that causes this
Agreement to become effective. Until this Agreement is effective, it may
be terminated by the Company by giving written notice as hereinafter
provided to you or by you giving notice as hereinafter provided to the
Company, except that the provisions of Sections 5, 7 and 10 hereof shall
at all times be effective. For purposes of this Agreement, the release of
the Firm Shares for sale to the public shall be deemed to have been made
when you release, by telegram or otherwise, firm offers of the Firm Shares
to securities dealers or release for publication a newspaper advertisement
relating to the Securities, whichever occurs first.
10.2 Without limiting the right to terminate this Agreement
pursuant to any other provision hereof, the Representative shall have the
right to terminated this Agreement at any time on or before the Firm
Closing Date or terminate any obligation of the Underwriters to purchase
the Option Shares at any time on or before the Option Closing Date, as the
case may be, if any of the following has occurred since the effective date
hereof: (A) the Company shall have failed, refused or been unable to
perform any agreement or condition on its part to be performed hereunder
unless compliance therewith or performance or satisfaction thereof shall
have been expressly waived in writing by the Representative; (B) any other
condition of the obligations of the Underwriters is not fulfilled; (C) any
event shall have occurred or shall exist which makes untrue or incorrect
in any material respect any statement or information contained in the
Registration Statement which is not reflected in the Registration
Statement but should be reflected therein (exclusive of any amendment or
supplement thereto) to make the statements or information contained
therein not misleading in any material respect; (D) any outbreak or
escalation of major hostilities in which the United States is involved, a
declaration of war by the United States or any other substantial national
calamity or emergency; (E) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ or any suspension of trading in the common stock of
the Company on the NASDAQ; or (F) declaration of a banking moratorium by
either federal or state authorities or a moratorium in foreign exchange
trading by major international banks or persons has been declared.
10.3 In the event the NASD determines that any person has
rendered services of any nature whatsoever to the Company for which such
person has received compensation required to be aggregated with the
compensation to be received by the Representative, the Representative may
terminate this Agreement and its obligations with respect to the public
offering, without liability on its part of any kind to the Company; and in
any such event the Company shall reimburse NTB for all of its accountable
expenses in the maximum amount of $65,000, inclusive of the $45,000
previously paid by the Company.
10.4 Any termination of this Agreement pursuant to this Section
10 shall be without liability on the part of the Company or the
Underwriters, except as otherwise provided in Sections 5 and 7 hereof and
this Section 10.
10.5 Any notice referred to above may be given at the address
specified in Section 10 hereof in writing or by telegraph, facsimile or
telephone, and if by telephone, shall be immediately confirmed in writing.
11. NOTICES. Except as otherwise provided in this Agreement, (a)
whenever notice is required by the provisions hereof to be given to the
Company, such notice shall be in writing and hand delivered or sent by
mail or facsimile transmission to Cavion Technologies, Inc., at 0000 Xxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, facsimile number: (303) 657-
8212, Attn: President, and (b) whenever notice is required by the
provisions hereof to be given to the Representative, such notice shall be
in writing and hand delivered or sent by mail or facsimile transmission to
Neidiger, Tucker, Bruner, Inc., 000 Xxxxx Xxxxx, 0000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxx, 00000, facsimile number: (000) 000-0000, Attn:
Corporate Finance Department.
12. INFORMATION FURNISHED BY UNDERWRITERS. [to be completed]
13. PARTIES. This Agreement shall inure solely to the benefit of
and shall be binding upon, the Underwriters, the Company and the
controlling persons, directors and officers referred to in Section 7
hereof, and their respective successors, legal representatives and
assigns, and no other person shall have or be construed to have any legal
or equitable right, remedy or claim under or in respect of or by virtue of
this Agreement or any provisions herein contained. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
14. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado without
giving any effect to any choice of law or conflict of law provision or
rule whether of the State of Colorado or any other jurisdiction that would
cause the application of the laws of any jurisdiction other than the State
of Colorado. The parties agree to the exclusive jurisdiction of the
courts of the State of Colorado or of the United States of America for the
District of Colorado, and irrevocably submit to such jurisdiction, which
jurisdiction shall be exclusive, in connection with any action brought by
any party hereto relating to this Agreement or the transactions which are
the subject matter hereof.
15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the
Representative's Warrant Agreement and the Financial Consultant Agreement
constitute the entire agreement of the parties hereto and supersede all
prior written or oral agreements, understandings, and negotiations with
respect to the subject matter hereof, including without limitation a
letter of intent dated December 22, 1998 and accepted December 23, 1998
between the Company and NTB. This Agreement may not be amended except in
a writing signed by the Representative and the Company.
16. SEVERABILITY. If any provision of this Agreement shall be held
to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement. The parties agree,
however, that in the event any provision of this Agreement shall be
declared invalid or unenforceable, the parties shall negotiate a new
provision achieving to the extent possible the purpose of the invalid
provision.
17. DEFINITION OF BUSINESS DAY. For purposes of this Agreement,
"Business Day" means any day on which the New York Stock Exchange, Inc. is
open for trading.
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among the Company and each of the several Underwriters.
Very truly yours,
CAVION TECHNOLOGIES, INC.
By -------------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive Officer
Confirmed and accepted
as of the date first above written:
NEIDIGER, TUCKER, BRUNER, INC.
As Representative of the several Underwriters
named in the attached Schedule I hereto
By: NEIDIGER, TUCKER, BRUNER, INC.
By -----------------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be Purchased
------------------
Neidiger, Tucker, Bruner, Inc...............
---------
TOTAL 1,200,000
=========
ANNEX A
Matters to be Covered in the Opinion of
Xxxxxxx Xxxxxx LLP, Counsel for the Company
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of
its organization, with full corporate power and authority necessary to own
or hold its properties and conduct the business in which it is presently
engaged as described in the Prospectus and is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which the character of the business conducted by it or the
properties owned or held by it make such qualification necessary.
(ii) The authorized, issued and outstanding share capital of the
company as of the effective date of the Registration Statement is as set
forth under the caption "Capitalization" in the Prospectus, the Common
Stock and the Representative's Warrants conform to the descriptions
thereof contained under the captions "Description of Securities" and
"Underwriting" in the Prospectus. The outstanding shares of Common Stock
have been, and the Shares upon issuance and delivery and payment therefor
in the manner herein described and in the Representative's Warrants, will
be, duly authorized, validly issued, fully paid and nonassessable. There
are no preemptive or, except as described in the Registration Statement,
other rights to subscribe for or to purchase from the Company, or any
restriction upon the voting or transfer of, any Common Stock pursuant to
the Company's Articles of Incorporation or Bylaws, as amended, or other
governing documents or, to the best knowledge of such counsel, any
agreement or other instrument to which the Company is a party or by which
it is bound, except restrictions under applicable securities laws.
(iii) To the best of such counsel's knowledge, the Company is
not, or with the giving of notice or lapse of time or both would be, in
violation of or in default under, nor will the execution or delivery
hereof or of the Representative's Warrants or consummation of the
transactions contemplated hereby or thereby result in a violation of, or
constitute a default under, the Company's Articles of Incorporation or
Bylaws, as amended, or other governing documents of the Company, or any
agreement, indenture or other instrument to which the Company is a party
or by which it is bound nor will the performance by the Company of its
obligations hereunder or under the Representative's Warrants violate any
law, rule, administrative regulation or decree of any court or any
governmental agency or body having jurisdiction over the Company or any of
its properties which would have a material and adverse effect, or result
in the creation or imposition of any lien, charge, claim or encumbrance,
upon any property or asset of the Company.
(iv) Each of this Underwriting Agreement, the Representative's
Warrants and the Financial Consultant Agreement has been duly authorized,
executed and delivered by the Company, constitutes the valid and binding
agreement of the Company, and is enforceable against the Company in
accordance with its terms except insofar as rights to indemnity and/or
contribution may be limited by applicable securities laws or the public
policy underlying such laws and except as enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally, and be subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(v) The shares of Common Stock issuable upon exercise of the
Representative's Warrants have been duly authorized and reserved for
issuance and, when issued and delivered in accordance with the terms of
the Representative's Warrants, respectively, will be duly and validly
issued, fully paid and nonassessable.
(vi) The certificates representing the Shares and the
Representative's Warrants are in due and proper form.
(vii) The information, if any, required to be set forth in the
Registration Statement in answer to Item ----- of Form SB-2 (insofar as
its relates to such counsel) is to the best of such counsel's knowledge
accurately and adequately set forth therein in all material respects, and
the description of the Company's Equity Incentive Plan and other option
arrangements, and the shares and options which may be issued and granted
thereunder, set forth in the Prospectus is accurate in all material
respects.
(viii) All descriptions in the Prospectus of statutes,
regulations, legal or governmental proceedings, contracts and other
documents and the description of the consequences to the Company of such
laws, proceedings or documents are accurate and fairly present the
information required to be shown; and to the best knowledge of such
counsel, there are no contracts or documents of a character required to be
summarized or described in the Prospectus or to be filed as exhibits to
the Registration Statement which are not so summarized, described or
filed, nor to the best knowledge of such counsel, is there any pending or
threatened litigation or any governmental proceeding, statute or
regulation required to be described in the Prospectus which is not so
described.
(ix) To the best of such counsel's knowledge, no holder of any
securities of the Company has any right to require registration of shares
of Common Stock or other securities of the Company under the Act, except
as any such right may arise under the Representative's Warrant Agreement.
(x) The presently outstanding shares of Common Stock of the Company
were issued in transactions which were not subject to the registration
provisions of the Act and applicable state securities laws. To the best
knowledge of such counsel, there is a reasonable basis to conclude that
neither the offering nor sale of any presently outstanding shares of
Common Stock will be integrated with the offering of the Shares for
purposes of registration under the Act or qualification under any state
securities laws.
(xi) Except for the order of the Commission declaring the
Registration Statement effective under the Act, and except for permits and
similar authorizations required under the securities or "Blue Sky" laws of
certain jurisdictions and for such permits and authorizations which have
been obtained, no consent, approval, authorization or order of any federal
or state court, governmental agency or body is required in connection with
the consummation by the Company of the transactions contemplated by this
Underwriting Agreement, the Representative's Warrants or the Financial
Consulting Agreement.
(xii) The Registration Statement and all post-effective
amendments thereto have become effective under the Act and, to the best of
such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending before or threatened by the
Commission or any state of the United States or other regulatory body and
all filings required by Rule 424 under the Act in connection with the
public offering of the Shares have been made within the time periods
required; and the Registration Statement and the Prospectus and any
amendment or supplement thereto, as of their respective effective dates,
comply as to form in all material respects with the requirements of the
Act (except that counsel need express no opinion with respect to the
financial statements, management's discussion and analysis or other
financial data included therein).
(xiii) The Company meets all the requirements for filing on Form
SB-2.
(xiv) The Company is not, and following completion of the
offering of the Shares and receipt and intended investment of proceeds
therefrom as described in the Final Prospectus, will not be, an
"investment company" as defined in the Investment Company Act of 1940, as
amended.
In rendering the foregoing opinion, counsel may state that such
opinion is limited to federal and applicable state law, and rely, as to
matters of fact, upon certificates of responsible officers of the Company
and on certificates of public officials, and may base its opinion upon
such reasonable investigations and assumptions as shall be set forth in
such opinion. In rendering such opinion such counsel may rely, to the
extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
reasonably satisfactory to counsel to the Underwriters) of other counsel
familiar with the applicable laws and admitted to practice in the
applicable jurisdiction. The opinion of such counsel for the Company
shall state that the opinion of any such other counsel is in form
satisfactory to such counsel and that in their opinion you and they are
justified in relying thereon. In addition, such counsel shall state that
such counsel has participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, representatives of the Underwriters and
counsel for the Underwriters at which the contents of the Registration
Statement and related matters were discussed and; although such counsel
has not independently verified, is not passing upon and does not assume
any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement, no facts have come to
the attention of such counsel that lead them to believe that the
Registration Statement, as of the date it is declared effective by the
Commission, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus as of the
Closing Date includes an untrue statement of a material tact or omits to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need not comment as to
the financial statements, management's discussion and analysis, and other
financial data included in the Registration Statement, the Prospectus or
the exhibits to the Registration Statement).
ANNEX B
Matters to be Covered in the Opinion of Special Counsel
1. such counsel represents the Company in certain matters relating
to intellectual property, including patents and proprietary rights;
2. such counsel is familiar with the technology and processes used
by the Company in its business and the manner of its use and has read the
portions of the Registration Statement and the Prospectus entitled "Risk
Factors-- --------------," and "Business-- -----------------," "Business--
---------------," "Proprietary Rights, Trade Names and Trademarks";
3. to the extent that the Intellectual Property Portion contains
descriptions of the Company's patent applications and patent applications
licensed to the Company (collectively the "Applications") and patents
issued to or otherwise owned or licensed by it (collectively the
"Patents"), such descriptions are accurate and do not omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
4. such counsel has reviewed the Patents and Applications which
Patents and Applications are described in the Intellectual Property
Portion, and based upon such review, a review of the prior art references
made known to counsel and discussions with Company personnel, such counsel
is aware of no valid United States or foreign issued patent that is or
would be infringed by the activities of the Company in the manufacture,
use or sale of any product or proposed product or other material as
described in the Prospectus and made or used according to the Patents or
the Applications;
5. The Applications have been properly prepared and filed on behalf
of the Company or its strategic partners, as the case may be, and are
being diligently pursued by the Company or its strategic partners, as the
case may be; each of the Applications is assigned or licensed to the
Company or its strategic partners, as the case may be; to such counsel's
knowledge, no other entity or individual has any right in or to any of the
inventions claimed in any of the Applications or patents sought to be
issued therefrom; and each of the Applications discloses patentable
subject matter; and
6. such counsel is aware of no pending or threatened judicial,
administrative or other proceedings by governmental authorities or others
relating to the Patents or Applications challenging the validity or scope
of the Patents or Applications (other than customary prosecution
proceedings relating to the Applications).
Such counsel shall also state that it has no reason to believe that
the information contained in the Intellectual Property Portion of the
Registration Statement or the Prospectus, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the information contained in the
Intellectual Property Portion of the Prospectus, as of its date or the
date of such opinion, included or includes any untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering any such opinion, such counsel may rely as to matters of
fact, to the extent they deem proper, on certificates and written
statements of responsible officers of the Company and public officials,
provided that copies of any such statements or certificates shall be
delivered to Underwriters' Counsel.
References to the Registration Statement and the Prospectus in this
Annex shall include any amendment or supplement thereto at the date of
such opinion.
ANNEX C
Matters to be Covered in the Comfort Letter
of Xxxxxx Xxxxxxxx LLP
1. confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act and
the applicable Rules and Regulations;
2. stating their opinion that, (i) the financial statements
examined by them of the Company at all dates and for all periods referred
to in their opinion and included in the Registration Statement and
Prospectus, comply in all material respects with the applicable accounting
requirements of the Act and the published Rules and Regulations thereunder
with respect to registration statements on Form SB-2, (ii) on the basis of
certain indicated procedures (but not an examination in accordance with
generally accepted accounting principles), including examinations of the
instruments of the Company set forth under "Capitalization" in the
Prospectus, a reading of the latest available interim unaudited financial
statements of the Company, whether or not appearing in the Prospectus,
inquiries of the officers of the Company or other persons responsible for
its financial and accounting matters regarding the specific items for
which representations are requested below and a reading of the minute
books of the Company, nothing has come to their attention which would
cause them to believe that during the period from the last audited balance
sheet included in the Registration Statement to a specified date not more
than five days prior to the date of such letter (a) there has been any
change in the capital stock or other securities of the Company or any
payment or declaration of any dividend or other distribution in respect
thereof or exchange therefor from that shown on its audited balance sheets
or in the debt of the Company from that shown or contemplated under
"Capitalization" in the Registration Statement or Prospectus other than as
set forth in or contemplated by the Registration Statement or Prospectus;
(b) there have been any material decreases in net current assets or net
assets as compared with amounts shown in the last audited balance sheet
included in the Prospectus so as to make said financial statements
misleading; and (c) on the basis of the indicated procedures and
discussions referred to in clause (ii) above, nothing has come to their
attention which, in their judgment, would cause them to believe or
indicate that (1) the unaudited financial statements and schedules set
forth in the Registration Statement and Prospectus do not present fairly
the financial position and results of the Company, for the periods
indicated, in conformity with the generally accepted accounting principles
applied on a consistent basis with the audited financial statements, and
(2) the comparison of specific dollar amounts, numbers of shares,
percentages of revenues and earnings, statements and other financial
information pertaining to the Company set forth in the Prospectus in each
case to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including
work sheets, of the Company and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries and other appropriate
procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards), are not in
agreement;
3. stating that they have not during the immediately preceding five
year period (or such shorter period as the Company shall have been in
existence) brought to the attention of any of the Company's management any
"material weakness," as defined in Statement of Auditing Standard No.60
"Communication of Internal Control Structure Related Matters Noted in an
Audit," in any of the Company's internal controls;
4. stating that they have in addition carried out certain specified
procedures, not constituting an audit, with respect to certain pro forma
financial information which is included in the Registration Statement and
the Prospectus and that nothing has come to their attention as a result of
such procedures that caused them to believe such unaudited pro forma
financial information does not comply in form in all respects with the
applicable accounting requirements of Item 301 Regulation S-B or that the
pro forma adjustments have not been properly applied to the historical
amounts in the compilation of that information; and
5. statements as to such other matters incident to the transaction
contemplated hereby as the Representative may request.
