1
Exhibit - 1(A)
2,000,000 Shares
VISUAL DATA CORPORATION
Common Stock
UNDERWRITING AGREEMENT
New York, New York
_____________, 1999
Cruttenden Xxxx Incorporated and
X.X. Xxxxxxxxxx & Co., Inc.
as Representatives of the
several underwriters
c/o Cruttenden Xxxx Incorporated
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Visual Data Corporation, a Florida corporation (the
"COMPANY"), hereby confirms its agreement with you. The Company proposes to
issue and sell to you and X.X. Xxxxxxxxxx & Co., Inc. (referred to together as
the "UNDERWRITER") pursuant to this Underwriting Agreement (the "AGREEMENT") an
aggregate of 1,600,000 shares (the "SECURITIES") of the Company's common stock,
par value $.0001 per share (the "COMMON STOCK"). The Shareholders listed on
SCHEDULE A hereto (the "SELLING SHAREHOLDERS") propose severally to issue and
sell to the Underwriters an aggregate of 400,000 shares of the Company's Common
Stock (the "FIRM SHAREHOLDERS' SHARES," referred to collectively together with
the Securities as the "FIRM SHARES"). The Selling Shareholders have also agreed
to grant you an option to purchase up to an additional 300,000 shares of Common
Stock (the "OPTION SHARES"). The Firm Shares and the Option Shares are referred
to together as the "SHARES." The Firm Shareholders' Shares and the Option
Shares are referred to together as the "SHAREHOLDERS' SHARES."
You have advised the Company and the Selling Shareholders
that you desire to purchase the Shares. The Company and the Selling
Shareholders confirm the agreement made by it with respect to the purchase of
the Shares by the Underwriter, as follows:
1. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, the Underwriter that:
(a) A registration statement on Form S-1 (File
Nos. 333-79887) with respect to the Shares, including a prospectus subject to
completion, has been filed by the Company with the Securities and Exchange
Commission (the "COMMISSION") under the Securities Act of 1933, as amended (the
"ACT"), and in conformity with the requirements of the Act and the rules and
regulations of the Commission thereunder (the "RULES AND REGULATIONS"), and one
or more amendments to such registration statement may have been so filed and
such registration statement has been delivered to you. After the execution of
this Agreement, the Company will file with the Commission either (i) if such
registration statement, as it may have been amended, has been declared by the
Commission to be effective under the Act, either (A) if the Company relies on
Rule 434 under the Act, a Term Sheet (as hereinafter defined) relating to the
Shares, that shall identify the Preliminary Prospectus (as hereinafter defined)
that it
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supplements containing such information as is required or permitted by Rules
434, 430A and 424(b) under the Act or (B) if the Company does not rely on Rule
434 under the Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment shall have
been filed, in such registration statement), with such changes or insertions as
are required by Rule 430A under the Act or permitted by Rule 424(b) under the
Act, and in the case of either clause (i)(A) or (i)(B) of this sentence as have
been provided to and approved by you prior to the execution of this Agreement,
or (ii) if such registration statement, as it may have been amended, has not
been declared by the Commission to be effective under the Act, an amendment to
such registration statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by you prior to the execution of
this Agreement. The Company may also file a related registration statement with
the Commission pursuant to Rule 462(b) under the Act for the purpose of
registering certain additional Shares, which registration shall be effective
upon filing with the Commission. As used in this Agreement, the term
"REGISTRATION STATEMENT" means the registration statement initially filed
relating to the Shares, as amended at the time when it was or is declared
effective under the Act, including all financial schedules and exhibits thereto
and including any information omitted therefrom pursuant to Rule 430A under the
Act and included in the Prospectus (as hereinafter defined), and including any
registration statement filed with the Commission pursuant to Rule 462(b); the
term "PRELIMINARY PROSPECTUS" means each prospectus subject to completion filed
with such registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration
Statement or any amendment thereto at the time it was or is declared effective
under the Act); the term "PROSPECTUS" means:
(i) if the Company relies on Rule 434 under the
Act, the Term Sheet relating to the Shares that is first
filed pursuant to Rule 424(b)(7) under the Act, together with
the Preliminary Prospectus identified therein that such Term
Sheet supplements;
(ii) if the Company does not rely on Rule 434
under the Act, the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Act; or
(iii) if the Company does not rely on Rule 434
under the Act and if no prospectus is required to be filed
pursuant to Rule 424(b) under the Act, the prospectus
included in the Registration Statement;
and the term "TERM SHEET" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "DATE" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order
preventing or suspending use of the Registration Statement or any Preliminary
Prospectus. When any Preliminary Prospectus was filed with the Commission it
(i) contained all statements required to be stated therein in accordance with,
and complied in all material respects with the requirements of, the Act and the
Rules and Regulations and (ii) did not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order
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to make the statements therein, in the light of the circumstances under which
they were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective under the Act, it (i) contained
or will contain all statements required to be stated therein in accordance
with, and complied or will comply in all material respects with the
requirements or, the Act and the Rules and Regulations and (ii) did not or will
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. When the Prospectus or any Term Sheet that is a part
thereof or any amendment or supplement to the Prospectus is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or part thereof or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto Containing such amendment or
supplement to the Prospectus was or is declared effective under the Act) and on
the Closing Date, the Prospectus, as amended or supplemented at any such time,
(i) contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the Rules and Regulations and (ii) did not or will
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by you specifically for use therein. It is
understood that the statements set forth in the Prospectus on the cover page
with respect to fees and discounts, paragraph one (1) and three (3) under the
heading "UNDERWRITING" and the identity of counsel to the Underwriter under the
heading "LEGAL MATTERS" constitute the only information furnished in writing by
or on behalf of the Underwriter for inclusion in the Registration Statement,
the Preliminary Prospectus and Prospectus, as the case may be.
(c) If the Company has elected to rely on Rule
462(b) and the Registration Statement has not been declared effective under the
Act (i) the Company has filed a Registration Statement in compliance with, and
that is effective upon filing pursuant, to Rule 462(b) and has received
confirmation of its receipt and (ii) the Company has given irrevocable
instructions for transmission of the applicable filing fee in connection with
the filing of the Rule 462(b) Registration Statement, in compliance with Rule
111 promulgated under the Act or the Commission has received payment of such
filing fee.
(d) Each of the Company and its subsidiary has
been duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with full power and
authority (corporate and other) to own its properties and conduct its baseness
as described in the Registration Statement and Prospectus and is duly qualified
or licensed to do business as a foreign corporation and is in good standing in
each other jurisdiction in which the nature of its business or the character or
location of its properties requires such qualification, except where the
failure to so qualify will not materially affect the condition (financial or
otherwise), business, properties, prospects, net worth or results of operations
of the Company and its subsidiary, taken as a whole. The Company owns _______
shares (approximately _____% of all of the outstanding shares of capital stock,
of its subsidiary, EDnet, Inc. The Company has no other subsidiaries. Except
for the stock of its subsidiary, the
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Company does not control, directly or indirectly, any corporation, partnership,
joint venture, association or other business organization.
(e) The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus under
"CAPITALIZATION;" the shares of issued and outstanding capital stock of the
Company set forth thereunder have been duly authorized, validly issued, fully
paid and nonassessable; except as set forth in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to issue,
or agreements or other rights to convert any obligation into, any shares of
capital stock of the Company or the subsidiary have been granted or entered
into by the Company; and the Common Stock conforms in all material respects to
all statements relating thereto contained in the Registration Statement and
Prospectus.
(f) The Shares and the shares of Common Stock to
be issued upon exercise of the Underwriter's Warrants (as hereinafter defined)
when issued and delivered pursuant to this Agreement (and the Underwriter's
Warrants with respect to the shares of Common Stock to be issued upon the
exercise thereof), will be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights of any security holder of the
Company. The Underwriter's Warrants when issued, paid for and delivered in
accordance with the terms of the Warrant Agreement (as hereinafter defined),
will be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights of any security holder of the Company. Neither the filing
of the Registration Statement nor the offering or sale of the Shares as
contemplated in this Agreement gives rise to any rights, other than those which
have been waived or satisfied the existence of which have been disclosed to the
Underwriters, for or relating to the registration of any shares of Common
Stock, except as described in the Registration Statement.
(g) Each of this Agreement and the Warrant
Agreement have been duly and validly authorized. This Agreement has been, and
on the Closing Date the Warrant will be, executed and delivered by the Company
and, assuming due execution by the other party hereto and thereto, each
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with their terms, except as enforceability may be
limited by applicable bankruptcy, insolvency or other laws affecting the rights
of creditors generally and the discretion of the courts in granting equitable
remedies. The Company has full power and lawful authority to authorize, issue
and sell the Shares to be sold by it hereunder on the terms and conditions set
forth herein. No consent, approval, authorization or order of, or any filing or
declaration with, any governmental authority is required for the consummation
of the transactions contemplated by this Agreement or in connection with the
issuance and sale of the Shares or the Underwriter's Warrants by the Company,
except such as have been obtained under the Act or the Rules and Regulations
and such as may be required under state securities or Blue Sky laws or the
bylaws and rules of the National Association of Securities Dealers, Inc. (the
"NASD") in connection with the purchase and distribution by the Underwriter of
the Shares and the Underwriter's Warrants to be sold by the Company.
(h) Except as described in the Prospectus,
neither the Company nor its subsidiary is in violation, breach or default
(which includes any event that has occurred which, with notice or lapse of time
or both, would constitute a default) of or under, and consummation of the
transactions herein contemplated and the fulfillment of the terms of this
Agreement or the
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terms of any agreement contemplated hereby will not conflict with, or result in
a breach of, any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of the property or assets of the Company or its subsidiary pursuant to the
terms of any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or the subsidiary is a party or by
which the Company or the subsidiary may be bound or to which any of the
property or assets of the Company or the subsidiary is subject, nor will such
action result in any violation of the provisions of the articles of
incorporation or any order, rule or regulation applicable to the Company or the
subsidiary of any court or any regulatory authority or other governmental body
having jurisdiction over the Company or the subsidiary.
(i) Subject to the qualifications stated in the
Prospectus, each of the Company and the subsidiary has good and marketable
title to all properties and assets described in the Prospectus as owned by
them, free and clear of all liens, charges, encumbrances or restrictions,
except such as are not materially significant or important in relation to its
business; all of the material leases and subleases under which the Company or
the subsidiary is the lessor or sublessor of properties or assets or under
which the Company or the subsidiary holds properties or assets as lessee or
sublessee as described in the Prospectus are in full force and effect, and,
except as described in the Prospectus, neither the Company nor the subsidiary
is in default in any material respect with respect to any of the terms or
provisions of any of such leases or subleases, and no claim has been asserted
by anyone adverse to rights of the Company or the subsidiary as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company or the subsidiary
to continued possession of the leased or subleased premises or assets under any
such lease or sublease, except as described or referred to in the Prospectus;
and each of the Company and the subsidiary owns or leases all such properties
described in the Prospectus as are necessary to its operations as now conducted
and, except as otherwise stated in the Prospectus, as proposed to be conducted
as set forth in the Prospectus.
(j) Xxxxxx Xxxxxxxx LLP who has given its report
on certain financial statements filed and to be filed with the Commission as a
part of the Registration Statement, which are incorporated in the Prospectus,
are, with respect to the Company, independent public accountants as required by
the Act and the Rules and Regulations.
(k) The consolidated financial statements and
the related notes of the Company, any supplementary financial information, any
related schedules and the pro forma financial statements of the Company set
forth in the Registration Statement and the Prospectus present fairly the
consolidated financial position and results of operations and changes in
stockholder's equity and cash flows of the Company on the basis stated in the
Registration Statement, at the respective dates and for the respective periods
to which they apply. The consolidated financial statements and the related
notes of EDnet, Inc., any supplementary financial information and any related
schedules set forth in the Registration Statement and the Prospectus, present
fairly the consolidated financial position and results of operations and
changes in shareholders' equity and cashflows of EDnet, Inc. on the basis
stated in the Registration Statement, at the respective dates and for the
respective periods to which they apply. Said financial statements and notes,
supplementary financial information, related schedules and
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pro forma financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a basis which is consistent
during the periods involved. The financial data with respect to the Company set
forth in the Prospectus under the captions "SUMMARY OF CONSOLIDATED FINANCIAL
INFORMATION," "CAPITALIZATION," "SELECTED FINANCIAL DATA" and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"
fairly present, on the basis stated in the Prospectus, the information set
forth therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Prospectus. No other financial
statements are required by Form S-1 or otherwise to be included in the
Registration Statement or the Prospectus. The pro forma financial information
included in the Registration Statement has been prepared in accordance with the
applicable requirements of Regulation S-X and the assumptions used in the
preparation of such pro forma information are, in the opinion of the Company,
reasonable. There has been no material adverse change in the condition
(financial or otherwise), business, properties, prospects, net worth or results
of operations of the Company and its subsidiary, taken as a whole, from the
latest information set forth in the Registration Statement or the Prospectus,
except as properly described in the Prospectus; and there is no fact known to
the Company or its subsidiary which could reasonably be expected to have a
material and adverse effect on the future prospects of the Company and its
subsidiary (other than political or economic matter of general applicability or
as properly described in the Prospectus).
(l) Subsequent to the respective dates as of
which information is given in the Registration Statement and Prospectus and
except as described in the Registration Statement, the Company has not paid or
declared any dividends or other distributions of any kind on any class of its
capital stock nor has it incurred any liabilities or obligations, direct or
contingent, not in the ordinary course of business, or entered into any
transaction not in the ordinary course of business, which is material to the
business of the Company, and there has not been any change in the capital stock
of, or any material incurrence of long-term debt by the Company or its
subsidiary or any material issuance of options, warrants or other rights to
purchase the capital stock of the Company or its subsidiary or any material
adverse change or any material development involving, so far as the Company or
its subsidiary can now reasonably foresee, a prospective adverse change in the
condition (financial or otherwise), net worth, results of operations, business,
key personnel or properties of the Company or its subsidiary which would be
material to the business or condition (financial or otherwise) of the Company
and its subsidiary, taken as a whole, and neither the Company nor its
subsidiary has become a party to, and neither the business nor the property of
the Company or its subsidiary has become the subject of, any material
litigation whether or not in the ordinary course of business.
(m) Except as set forth in the Prospectus, there
is not now pending or threatened, any action, suit or proceeding to which the
Company or its subsidiary is a party before or by any court or governmental
agency or body, which might result in any material adverse change in the
condition (financial or otherwise), business, properties, prospects, net worth,
or results of operations of the Company and its subsidiary, taken as a whole,
nor are there any actions, suits or proceedings related to environmental
matters or related to discrimination on the basis of age, sex, religion or
race; and no labor disputes involving the employees of the Company or its
subsidiary exist or are threatened which might be expected to materially
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adversely affect the condition (financial or otherwise), business, properties,
prospects, net worth or results of operations of the Company and its
subsidiary, taken as a whole.
(n) Except as disclosed in the Prospectus, each
of the Company and its subsidiary has sufficient licenses, permits,
certificates and other governmental authorizations as are required for the
conduct of its business or the ownership of its property as described in the
Prospectus and are in all material respects complying therewith. Neither the
Company nor its subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit
nor, to the knowledge of the Company or its subsidiary, do any of the
activities or business of the Company or its subsidiary cause the Company or
its subsidiary to be in violation of, or cause the Company or its subsidiary to
violate, any law, rule, regulation or order of the United States, any state,
county or locality, or of any agency or body of the United States or of any
state, county or locality, the violation of which would have a material adverse
impact upon the condition (financial or otherwise), business, properties,
prospects, net worth or results of operations of the Company and its
subsidiary, taken as a whole.
(o) Neither the Company nor its subsidiary has
directly or indirectly, at any time (i) made any contributions to any candidate
for political office, or failed to disclose fully any such contribution in
violation of law or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public
or quasi-public duties, other than payments or contributions required or
allowed by applicable law. The Company's internal accounting controls and
procedures are sufficient to cause the Company to comply in all material
respects with the Foreign Corrupt Practices Act of 1977, as amended.
(p) On the Closing Date (as hereinafter defined)
all transfer or other taxes (including franchise, capital stock or other tax,
other than income taxes, imposed by any jurisdiction), if any, which are
required to be paid in connection with the sale and transfer of the Shares to
the Underwriter hereunder will have been fully paid or provided for by the
Company and all laws imposing such taxes will have been fully complied with in
all material respects.
(q) There is no document or contract of a
character required to be described in the Registration Statement or Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) or to be filed as an exhibit to the Registration Statement which is
not described or filed as required.
(r) The Company has not taken nor will take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute the
stabilization or manipulation of the price of the Shares. The Company has not
distributed and will not distribute any offering material in connection with
the offering and sale of the Shares other than the Preliminary Prospectus and
the Registration Statement, the Prospectus or other materials permitted or
required by the Act.
(s) The Company has not entered into any
agreement pursuant to which any person is entitled, either directly or
indirectly, to compensation from the Company for services as a finder in
connection with the public offering referred to herein.
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(t) There are no holders of shares of Common
Stock or other securities of the Company having rights to register such Common
Stock or other securities by means of the Registration Statement.
(u) The Company has entered into employment
contracts with its principal executive officers, including Xxxxx X. Xxxxxx and
_______________, and the description of such employment agreements in the
Prospectus is true, correct and complete in all material respects.
(v) No labor dispute with the employees of the
Company exists or is threatened or imminent that could result in a material
adverse change in the condition (financial or otherwise), business, properties,
prospects, net worth or results of operations of the Company, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(w) The Company owns or possesses, or can
acquire on reasonable terms, all material patents, patent applications,
trademarks, service marks, trade names, licenses, copyrights and proprietary or
other confidential information currently employed by them in connection with
their respective businesses, and the Company has not received any notice of
infringement of or conflict with asserted rights of any third party with
respect to any of the foregoing, which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or funding, would result in a
material adverse change in the condition (financial or otherwise), business,
properties, prospects, net worth or results of operations of the Company and
its subsidiary, taken as a whole, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(x) The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amount as the Company believes are prudent and customary in the businesses in
which it is engaged; the Company has not been refused any insurance 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 as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not materially and adversely
affect the condition (financial or otherwise), business, properties, prospects,
net worth or results of operations of the Company and its subsidiary, taken as
a whole, except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(y) The Company will conduct its operations in a
manner that will not subject it to registration as an investment company under
the Investment Company Act of 1940, as amended, and this transaction will not
cause the Company to become an investment company subject to registration under
such Act.
(z) The Company has filed all foreign, federal,
state and local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file would
not have a material adverse effect on the Company and its subsidiary, taken as
a whole) and has paid all taxes required to be paid and any other assessment,
fine or penalty levied, to the extent that any of the foregoing is due and
payable, except for any
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such assessment, fine or penalty that is currently being contested in good
faith or as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(aa) Any certificate signed by any officer of the
Company and delivered to the Underwriter or to counsel for the Underwriter
shall be deemed a representation and warranty made by the Company to the
Underwriter as to the matters covered thereby and shall be deemed incorporated
herein in its entirety and shall be effective as if such representation and
warranty were made herein.
(bb) The Company owns no shares of stock or any
other equity securities of any corporation or has any equity interest in any
firm, partnership, association or other entity, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(cc) The books, records and accounts and systems
of internal accounting controls of the Company currently comply in all material
respects with the requirements of Section 13(b)(2) of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"). The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(1) transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (3) access to
assets is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(dd) No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the Underwriter is or
will be, when made, inaccurate, untrue or incorrect in any material respect,
unless such statement, representation, warranty or covenant is qualified as to
materiality, in which case it is not or will not be, when made, inaccurate,
untrue or incorrect.
(ee) The Shares have been approved for listing on
the Nasdaq Stock Market's National Market under the symbol "VDAT," subject only
to notice of issuance.
(ff) The business, operations and facilities of
each of the Company and its subsidiary have been and are being conducted in
compliance in all material respects with all applicable laws, ordinances,
rules, regulations, licenses, permits, approvals, plans, authorizations or
requirements relating to occupational safety and health, or pollution, or
protection of health or the environment (including, without limitation, those
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous or toxic substances, materials or wastes
into ambient air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States or any state or political
subdivision
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thereof, and all applicable judicial or administrative agency or regulatory
decrees, awards, judgments and orders relating thereto; and neither the Company
nor its subsidiary has received any notice from any governmental
instrumentality or any third party alleging any violation thereof or liability
thereunder (including, without limitation, liability for costs of investigating
or remediating sites containing hazardous substances and/or damages to natural
resources), which violation would have, or could reasonably be expected to
have, a material adverse effect on the condition (financial or otherwise),
business, properties, prospects, net worth or results of operations of the
Company and its subsidiary, taken as a whole. The intended use and occupancy of
each of the facilities owned or operated by the Company or its subsidiary
complies in all material respects with all applicable codes and zoning laws and
regulations and there is no pending or, to the knowledge of the Company or its
subsidiary, threatened condemnation, zoning change, environmental or other
proceeding or action that will in any material respect adversely affect the
size of, use of, improvements on, construction on, or access to such
facilities.
(gg) Each executive officer, director and certain
shareholders of the Company, as listed on SCHEDULE B attached hereto, has
delivered to the Underwriter an agreement (the "LOCK-UP AGREEMENT"), in
substantially the form of ANNEX A, to the effect that he, she or it will not,
for a period of two years after the date hereof, without the prior written
consent of the Underwriter, offer to sell, sell, contract to sell, grant any
option to purchase or otherwise dispose (or announce any offer, sale, grant of
any option to purchase or other disposition) of any shares of Common Stock or
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock, except for bona fide private sales or transfers of Common Stock
to purchasers or transferees provided that such person agrees in writing to be
bound by the terms of the Lock-up Agreement.
(hh) No transaction has occurred between or
among the Company or any of its affiliates, officers or directors or any
affiliate or affiliates of any such officer or director that is required to be
described in and is not described in the registration Statement and the
Prospectus.
(ii) Neither the Company nor any of its
affiliates nor any person acting on the Company's behalf has, directly or
indirectly, at any time within the past six (6) months made, nor will any such
party make within six (6) months of the Closing Date, any offer or sale of any
security or solicitation of any offer to buy any security under circumstances
that would eliminate the availability of the exemption from registration under
Regulation D under the Act nor which would violate the Act.
2. Representations and Warranties of the Selling
Shareholders. Each Selling Shareholder represents and warrants to each
Underwriter that:
(a) Such Selling Shareholder on the Closing Date
will have, valid, marketable title to the Shareholder's Shares to be sold by
such Selling Shareholder, free and clear of any lien, claim, security interest
or other encumbrance, including, without limitation, any restriction on
transfer.
(b) Such Selling Shareholder now has, and on the
Closing Date will have, full legal right, power and authorization, and any
approval required by law, to sell, assign
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transfer and deliver such Shareholder's Shares in the manner provided in this
Agreement, and upon delivery of and payment for such Shareholder's Shares
hereunder, the several Underwriters will acquire valid title to such shares of
Common Stock free and clear of any lien, claim, security interest or other
encumbrance.
(c) This Agreement has and the Custody Agreement
on or before Closing will have been duly authorized, executed and delivered by
or on behalf of such Selling Shareholder and are the valid and binding
agreements of such Selling Shareholder enforceable against such Selling
Shareholder in accordance with their terms, except (a) as such enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other laws affecting creditors' rights generally, (b)
that the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought,
and (c) as such enforceability may be subject to limitations on rights to
indemnity or contribution or both by the federal or state securities laws or
the public policies underlying such laws.
(d) Neither the execution and delivery of this
Agreement or the Custody Agreement by or on behalf of such Selling Shareholder
nor the consummation of the transactions herein or therein contemplated by or
on behalf of such Selling Shareholder requires any consent, approval,
authorization or order of, or filing or registration with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required under the Act and the Exchange Act or
such as may be required under state securities or Blue Sky laws governing the
purchase and distribution of the shares of Common Stock or such as has been
obtained) or conflicts or will conflict with or constitutes or will constitute
a breach of, or default under, or violates or will violate, any agreement,
indenture or other instrument to which such Selling Shareholder is a party or
by which such Selling Shareholder is or may be bound or to which any of such
Selling Shareholder's property or assets is subject, or any statute, law, rule,
regulation, ruling, judgment, injunction, order or decree applicable to such
Selling Shareholder or to any property or assets of such Selling Shareholder.
(e) The Registration Statement the Preliminary
Prospectus and the Prospectus, insofar as they relate to such Selling
Shareholder, do not and on the Closing Date will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading (as
to the Prospectus, in light of the circumstances under which they were made).
(f) Such Selling Shareholder does not have any
knowledge or any reason to believe that the Registration Statement, the
Preliminary Prospectus or the Prospectus (or 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 (as to the Prospectus, in light of the circumstances
under which they were made).
(g) The representations and warranties of such
Selling Shareholder in the Custody Agreement are, and on the Closing Date will
be, true and correct.
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(h) Such Selling Shareholder has not taken,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shareholder's Shares,
except for the lock-up arrangements described in the Prospectus.
3. Purchase, Delivery and Sale of the Shares.
(a) Subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company agrees to issue and sell to the Underwriter, and
the Underwriter agrees to buy from the Company and the Selling Shareholders, at
$_______ per share, at the place and time hereinafter specified, 2,000,000
shares of Common Stock (the "FIRM SHARES").
(b) In addition, subject to the terms and
conditions of this Agreement, and upon the basis of the representations,
warranties and agreements herein contained, the Selling Shareholders hereby
grant an option (the "OPTION") to the Underwriter to purchase up to an
additional 300,000 shares of Common Stock (the "OPTION SHARES"), at $______
per share, at the place and time hereinafter specified. The Option hereby
granted will expire 45 days after the date of the Prospectus, and may be
exercised in whole or in part only for the purpose of covering over-allotments
which may be made in connection with the offerings and distribution of the Firm
Shares upon written notice from the Underwriter to the Selling Shareholders
setting forth the amount of Option Shares as to which the Underwriter is
exercising the Option and the time and date of payment for such Option Shares.
Such time and date of delivery for the Option Shares (the "OPTION CLOSING
DATE") shall be determined by the Underwriter, but shall not be, unless
otherwise agreed upon by the Underwriter and the Selling Shareholders, later
than seven full business days after the exercise of the Option, and in no event
prior to the Closing Date (as hereinafter defined). If the Option is exercised
as to all or any portion of the Option Shares, the Selling Shareholders shall
sell all or such portion of the Option Shares to the Underwriter and the
Underwriter shall purchase all or such portion of the Option Shares from the
Selling Shareholders.
(c) Delivery of the Firm Shares against payment
therefor shall take place at the offices of Xxxxxxxxx Xxxxxxx, MetLife
Building, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or at such
other place as may be designated by agreement between you and the Company) at
10:00 a.m., New York time, on _______, 1999, or at such later time and date as
you may designate but not later than ten (10) days from the effective date of
the Registration Statement under the Act (the "EFFECTIVE DATE"), such time and
date of payment and delivery for the Firm Shares being herein called the
"CLOSING DATE." In addition, in the event that any or all of the Option Shares
are purchased by the Underwriter, delivery of the Option Shares against payment
therefor shall take place at the above-mentioned offices of Xxxxxxxxx Traurig
(or at such other place as may be designated by agreement between you and the
Company), at 10:00 a.m., New York time, on the Option Closing Date as specified
in the notice from the Underwriter to the Selling Shareholders.
(d) The Company will make the certificates for
the Firm Shares or the Option Shares, as the case may be, to be purchased by
the Underwriter hereunder available to you
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for inspection at least one (1) full business day prior to the Closing Date or
the Option Closing Date, as the case may be. The certificates shall be in such
names and denominations as you may request at least two (2) full business days
prior to the Closing Date or the Option Closing Date, as the case may be. Time
shall be of the essence, and delivery of the certificates representing the Firm
Shares or the Option Shares, as the case may be, at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriter.
If so requested by you, definitive
certificates in negotiable form for the Firm Shares or the Option Shares, as
the case may be, to be purchased by the Underwriter hereunder will be delivered
by the Company and the Selling Shareholders to you on the Closing Date or the
Option Closing Date, as the case may be, against payment of the purchase price
therefor, by certified or bank cashier's checks in New York Clearing House
funds, payable to the order of the Company or by wire transfer. However, if
eligible, the Shares may be delivered in book entry form using the Full FAST
facilities of The Depository Trust Company.
It is understood that the Underwriter
proposes to offer the Shares to be purchased hereunder to the public, upon the
terms and conditions set forth in the Registration Statement, after the
Registration Statement becomes effective under the Act.
(e) On the Closing Date, the Company will
further issue and sell to you or, at your direction, to your respective bona
fide officers, for a total purchase price of $160.00, warrants entitling the
holders thereof to purchase an aggregate of 160,000 shares of Common Stock, at
an initial exercise price of $_____ per share (the "UNDERWRITER'S WARRANTS")
for a period of four (4) years, such period to commence twelve (12) months
after the Effective Date. Such Underwriter's Warrants shall contain such other
terms and provisions as may be set forth in an agreement with respect thereto
(the "WARRANT AGREEMENT") executed and delivered by the Company and you
simultaneously with the execution and delivery of this Agreement. As provided
in the Warrant Agreement, you may designate that the Underwriter's Warrants be
issued in varying amounts directly to your respective bona fide officers and
not to you. Such designation will be made by you only if you determine that
such issuances would not violate the Rules of Conduct of the National
Association of Securities Dealers, Inc. relating to the review of corporate
financing arrangements. The holders of the Underwriter's Warrants will be
entitled to the registration rights set forth in Section 10 of the Warrant
Agreement.
4. Covenants of the Company. The Company covenants and
agrees with the Underwriter as to the matters set forth in subparagraphs (a)
through (r) below:
(a) The Company will use its best efforts to
cause the Registration Statement, if not effective under the Act at the time of
execution of this Agreement, and any amendments thereto to become effective
under the Act as promptly as possible. If required, the Company will file the
Prospectus or any Term Sheet that constitutes a part thereof and any amendment
or supplement thereto with the Commission in the manner and within the time
period required by Rules 434 and 424(b) under the Act. During any time when a
prospectus relating to the Shares is required to be delivered under the Act,
the Company (i) will comply in all material respects with all requirements
imposed upon it by the Act and the Rules and Regulations to the extent
necessary to permit the continuance of sales of or dealings in the Shares in
accordance with the provisions hereof and of the Prospectus, as then amended or
supplemented, and (ii)
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except as required by law, will not file with the Commission the Prospectus,
Term Sheet or the amendment referred to in the second sentence of Section 1(a)
hereof, any amendment or supplement to such Prospectus, Term Sheet or any
amendment to the Registration Statement of which the Underwriter previously
have been advised and furnished with a copy for a reasonable period of time
prior to the proposed filing and as to which filing the Underwriter shall not
have given their consent. The Company will prepare and file with the
Commission, in accordance with the Rules and Regulations, promptly upon request
by the Underwriter or counsel for the Underwriter, any amendments to the
Registration Statement or amendments or supplements to the Prospectus that may
be necessary or advisable in connection with the distribution of the Shares by
the Underwriter, and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective under the Act by the
Commission as promptly as possible. The Company will advise the Underwriter,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective under
the Act or the Prospectus or any amendment or supplement thereto has been filed
and will furnish the Underwriter with copies of such documents and provide
evidence satisfactory to the Underwriter of each such filing or effectiveness.
The Company will advise the Underwriter, promptly
after receiving notice or obtaining knowledge thereof, of (i) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any amendment thereto or any stop order or any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, (ii) the suspension of the
qualification of any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose or (iv) any request made
by the Commission for amending the Registration Statement, for amending or
supplementing the Prospectus or for additional information. The Company will
use its reasonable best efforts to prevent the issuance of any such stop order
and, if any such order or stop order is issued, to obtain the withdrawal
thereof as promptly as possible.
The Company has caused to be delivered to you copies
of each Preliminary Prospectus, and the Company has consented and hereby
consents to the use of such copies for the purposes permitted by the Act. The
Company authorizes the Underwriter and dealers to use the Prospectus in
connection with the sale of the Shares for such period as, in the opinion of
counsel to the Underwriter, the use thereof is required to comply with the
applicable provisions of the Act and the Rules and Regulations. In case of the
happening, at any time within such period as a Prospectus is required under the
Act to be delivered in connection with sales by an underwriter, of any event of
which the Company has knowledge and which materially affects the Company or the
securities of the Company or which, in the opinion of counsel for the Company
or counsel for the Underwriter, should be set forth in an amendment of the
Registration Statement or a supplement to the Prospectus in order to make the
statements therein not then misleading, in light of the circumstances existing
at the time the Prospectus is required to be delivered to a purchaser of the
Shares, or in case it shall be necessary to amend or supplement the Prospectus
to comply with law or with the Rules and Regulations, the Company will notify
you promptly and forthwith prepare and furnish to you copies of such amended
Prospectus or of such supplement to be attached to the Prospectus, in such
quantities as you may reasonably request, in order that the Prospectus, as so
amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements in
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the Prospectus, in light of the circumstances under which they were made, not
misleading. The preparation and furnishing of any such amendment or supplement
to the Registration Statement or amended Prospectus or supplement to be
attached to the Prospectus shall be without expense to the Underwriter, except
that in case the Underwriter is required, in connection with the sale of the
stock, to deliver a Prospectus ninety (90) days or more after the effective
date of the Registration Statement, the Company will upon request of and at the
expense of the Underwriter, amend or supplement the Registration Statement and
Prospectus and furnish the Underwriter with reasonable quantities of
prospectuses complying with Section 10(a)(3) of the Act.
The Company will comply in all material respects with
the Act, the Rules and Regulations and the Exchange Act and the rules and
regulations thereunder in connection with the offering and issuance of the
Shares.
(b) The Company will use its reasonable best
efforts to qualify to register the Shares for sale under the securities or
"BLUE SKY" laws of such jurisdictions as the Underwriter may reasonably
designate and will make such application and furnish such information as may be
required for that purpose and to comply with such laws, provided the Company
shall not be required to qualify as a foreign corporation or a dealer in
securities or to execute a general consent to service of process in any
jurisdiction in any action other than one arising out of the offering or sale
of the Shares. The Company will, from time to time, prepare and file such
statements and reports as are or may be required to continue such qualification
in effect for so long a period as the Underwriter may reasonably request.
(c) If the sale of the Shares provided for
herein is not consummated for any reason caused by the Company, the Company
shall pay all costs and expenses incident to the performance of the Company's
obligations hereunder including, but not limited to, all of the expenses
itemized in Section 10, including the accountable expenses of the Underwriter,
including legal fees.
(d) For so long as the Company is a reporting
company under either Section 12(b) or (g) or 15(d) of the Exchange Act, the
Company, at its expense, will furnish to its shareholders an annual report
(including financial statements audited by independent public accountants) in
reasonable detail and, at its own expense, will furnish such report to you
during the period ending five (5) years from the date hereof; (i) as soon as
practicable after the end of each fiscal year, a balance sheet of the Company
as at the end of such fiscal year, together with statements of income, changes
in stockholder's equity and cash flows of the Company for such fiscal year, all
in reasonable detail and accompanied by a copy of the certificate or report
thereon of independent accountants; (ii) as soon as they are available, a copy
of all reports (financial or other) mailed to security holders; (iii) as soon
as they are available, a copy of all nonconfidential reports and financial
statements furnished to or filed with the Commission; and (iv) such other
information as you may from time to time reasonably request.
(e) In the event the Company has an active
subsidiary or subsidiaries, such financial statements referred to in subsection
(d) above will be furnished on a consolidated basis to the extent the accounts
of the Company and its subsidiary or subsidiaries are consolidated in reports
finished to its shareholders generally.
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(f) The Company will deliver to you at or before
the Closing Date two (2) signed copies of the Registration Statement, including
all financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to the Underwriter such number of copies of the
Registration Statement, including financial statements but without exhibits, as
the Underwriter may reasonably request. The Company will deliver to or upon the
order of the Underwriter, from time to time until the effective date of the
Registration Statement, as many copies of any Preliminary Prospectus as the
Underwriter may reasonably request. The Company will deliver to the Underwriter
on the effective date of the Registration Statement and thereafter for so long
as a Prospectus is required to be delivered under the Act, from time to time,
as many copies of the Prospectus, in final form, or as thereafter amended or
supplemented, as the Underwriter may from time to time reasonably request.
(g) The Company will make generally available to
its security holders and deliver to you as soon as it is practicable to do so,
but in no event later than ninety (90) days after the and of twelve (12) months
after its current fiscal quarter, an earnings statement (which need not be
audited) covering a period of at least twelve (12) consecutive months beginning
after the effective date of the Registration Statement, which shall satisfy the
requirements of Section 11(a) of the Act.
(h) The Company will apply the net proceeds from
the sale of the Shares for the purposes set forth under "USE OF PROCEEDS" in
the Prospectus, and will file such reports with the Commission with respect to
the sale of the Shares and the application of the proceeds therefrom as may be
required pursuant to Rule 463 under the Act.
(i) The Company will promptly, upon your written
request, prepare and file with the Commission any amendments or supplements to
the Registration Statement, Preliminary Prospectus or Prospectus and take any
other action which, in the reasonable opinion of Xxxxxxxxx Xxxxxxx, counsel to
the Underwriter, may be reasonably necessary or advisable in connection with
the distribution of the Shares, and will use its best efforts to cause the same
to become effective as promptly as possible.
(j) The Company will reserve and keep available
that maximum number of its authorized but unissued shares of Common Stock which
are issuable upon exercise of the Underwriter's Warrants outstanding from time
to time.
(k) Upon completion of this offering, the
Company will make all filings required, including registration under the
Exchange Act, to obtain the listing of its Common Stock on the Nasdaq Stock
Market's National Market, and will effect and will use its best efforts to
maintain such listings for at least five (5) years from the date of this
Agreement.
(l) The Company represents that it has not taken
and agrees that it will not take, directly or indirectly, any action designed
to or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Shares or to facilitate the
sale or resale of the Shares. The Company has not distributed and will not
distribute any offering material in connection with the offering and sale of
the Shares other than the Preliminary Prospectus and the Registration
Statement, the Prospectus or other materially permitted or required by the Act.
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no proceedings for that or any similar purpose shall have been instituted or
shall be pending or,
(m) On the Closing Date and simultaneously with
the delivery of the Firm Shares, the Company shall execute and deliver to
Cruttenden Xxxx Incorporated and its designees the Underwriter's Warrants for
an initial exercise price of $_____ per share. The Underwriter's Warrants will
be substantially in the form as filed as an exhibit to the Registration
Statement.
(n) During the one hundred eighty (180) day
period commencing on the Closing Date, the Company will not, without the prior
written consent of the Underwriter, grant options to purchase shares of Common
Stock at a price less than the initial public offering price except as may be
provided by the Company's currently existing stock option plan as described in
the Prospectus. To the extent that such stock option plan allows, the Company
may issue shares upon exercise of the options.
(o) For a period of two (2) years from the
Effective Date, when deemed necessary by the Chief Financial Officer of the
Company, the Company, at its expense, shall cause its regularly engaged
independent certified public accountants to review (but not audit) the
Company's financial statements for each of the first three (3) fiscal quarters
prior to the announcement of quarterly financial information, the filing of the
Company's quarterly report on Form 10-Q and the mailing of quarterly financial
information to shareholders
(p) Pending completion of the offering and for a
period of ninety (90) days thereafter, the Company will not issue press
releases or engage in other publicity without the Underwriters prior consent.
(q) For a period of two years from the Closing
Date, the Company will not, nor will it allow, without the prior written
consent of the Underwriter, the executive officers, directors or certain
holders of any class of equity securities of the Company to, sell, grant any
option or warrant for the sale, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or other equity securities of the
Company (including any shares obtained through the exercise of options granted
under the Company's Stock Option Plan (as such term is defined in the
Prospectus) or any securities convertible into, exercisable for or exchangeable
for shares of Common Stock or other equity securities of the Company, provided,
however, that with respect to any issuances of securities by the Company such
consent may not be unreasonably withheld.
(r) On the Closing Date, the Company will
furnish you with a Lock-up Agreement, substantially in the form of ANNEX A
hereto, from each of the executive officers, directors and certain holders of
any class of equity securities of the Company, as listed on SCHEDULE B attached
hereto, not to sell any shares of Common Stock or other equity securities of
the Company, held by each prior to the Effective Date or obtained through
exercise of options granted under the Stock Option Plan, for a period of
twenty-four (24) months from the Closing Date, without your prior written
consent, which consent may not be unreasonably withheld; provided, however, the
aforementioned restrictions do not apply to private sales or transfers of
Common Stock to purchasers or transferees who agree in writing to be bound by
the terms of such Lock-up Agreement.
5. Agreements of the Selling Shareholders. Each of the
Selling Shareholders agrees with the Underwriters as follows:
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(a) Such Selling Shareholder will cooperate to
the extent necessary to cause the Registration Statement or any post-effective
amendment thereto to become effective at the earliest possible time.
(b) Such Selling Shareholder will pay all
federal and other taxes, if any, on the transfer or sale of the Shareholders'
Shares being sold by the Selling Shareholder to the Underwriters.
(c) Such Selling Shareholder will do or perform
all things required to be done or performed by the Selling Shareholder prior to
the Closing Date or any Option Closing Date, as the case may be, to satisfy all
conditions precedent to the delivery of the Shareholders' Shares pursuant to
this Agreement.
(d) Such Selling Shareholder has executed or
will execute a "lock-up" letter as provided in Section 4(r) below no later than
the Closing Date.
(e) Except as stated in this Agreement and in
the Preliminary Prospectus and the Prospectus, such Selling Shareholder will
not take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock or to facilitate the sale or resale of the Common
Stock.
(f) Such Selling Shareholder will advise you
promptly and, if requested by you, will confirm such advice in writing, of any
change in the information relating to such Selling Shareholder that suggests
that any statement made in the Registration Statement or the Prospectus (as
then amended or supplemented, if amended or supplemented) is or may be untrue
in any material respect or that the Registration Statement or Prospectus (as
then amended or supplemented, if amended or supplemented) omits or may omit to
state a material fact or a fact necessary to be stated therein in order to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading in any material
respect, or of the necessity to amend or supplement the Prospectus (as then
amended or supplemented, if amended or supplemented) in order to comply with
the Act or any other law.
6. Conditions of Underwriter's Obligations. The
obligations of the Underwriter to purchase and pay for the Firm Shares, and the
Option Shares if the Option is exercised, which it has agreed to purchase
hereunder, are subject to the accuracy (as of the date hereof and as of the
Closing Date, or with respect to the Option Shares, the Option Closing Date) of
and compliance with the representations and warranties of the Company herein,
to the performance by the Company of its obligations hereunder, and to the
following conditions:
(a) The Registration Statement shall have become
effective, and you shall have received notice thereof not later than 10:00
a.m., New York time, on the day following the date of this Agreement, or at
such later time or on such later date as to which you may agree; on or prior to
the Closing Date, and on the Option Closing Date if the Option is exercised, no
stop order suspending the effectiveness of the Registration Statement shall
have been issued, and
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no proceedings for that or any similar purpose shall have been instituted or
shall be pending or, to your knowledge or to the knowledge of the Company,
shall be contemplated by the Commission; any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Xxxxxxxxx Xxxxxxx, counsel to the Underwriter; and
no stop order shall be in effect denying or suspending the effectiveness of
such qualification, nor shall any stop order proceedings with respect thereto
be instituted or pending or threatened under such law.
(b) On the Closing Date, and again on the Option
Closing Date if the Option is exercised, you shall have received the opinion,
dated as of the Closing Date, of Atlas, Xxxxxxxx, Trop & Borkson, P.A., counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriter, to the effect that:
(i) The Company owns _________ (approximately
______% of all of the outstanding capital stock) of EDnet,
Inc. (the "SUBSIDIARY") and has no other subsidiaries. Each
of the Company and the Subsidiary has been duly organized and
is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, with full
power and authority (corporate and other) to own its
properties and conduct its business as described in the
Registration Statement and Prospectus, and is duly qualified
or licensed to do business as a foreign corporation and is in
good standing in each other jurisdiction in which the nature
of its business or the character or location of its
properties requires such qualification, except where the
failure to so qualify would not have a material adverse
effect on the condition (financial or otherwise), business,
properties, prospects, net worth or results of operations of
the Company and its subsidiary, taken as a whole.
(ii) To our knowledge, each of the Company and
the Subsidiary has not been required to obtain any
authorization, approval, order, license or permit of or from
any governmental or regulatory official or body (collectively
"PERMITS") to own or lease its material properties and
conduct the material aspects of its business within the
United States as described in the Prospectus. To our
knowledge, neither the Company nor the Subsidiary has
received any notice of a proceeding relating to the
revocation or modification of any Permit which singly or in
aggregate, if the subject of an unfavorable decision, ruling
or finding would materially and adversely affect the
condition, financial or otherwise, of the Company and the
Subsidiary or their operations taken as a whole.
(iii) The authorized equity capitalization of the
Company is as set forth under "CAPITALIZATION" in the
Prospectus; all shares of the Company's outstanding Common
Stock requiring authorization for issuance by the Company's
Board of Directors have been duly authorized, validly issued,
are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus; to our
knowledge, the outstanding shares of Common Stock of the
Company have not been issued in violation of the preemptive
rights of any stockholder, and the shareholders of the
Company do not have any preemptive rights or other rights to
subscribe for or to purchase, nor are there any restrictions
upon the voting or
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transfer of any of the Shares; the Shares conform to the
description thereof contained in the Prospectus; the Shares
have been duly authorized and, when issued and delivered
pursuant to this Agreement, will be duly and validly issued,
fully paid, nonassessable, free of preemptive rights and no
personal liability will attach to the ownership thereof; and
to our knowledge, neither the filing of the Registration
Statement nor the offering or sale of the Shares as
contemplated by the Agreement gives rise to any registration
rights or other rights, other than those which have been
waived or satisfied, relating to the registration of any
shares of Common Stock.
(iv) The Agreement and the Warrant Agreement have
been duly and validly authorized, executed and delivered by
the Company and the Selling Shareholders and, assuming due
execution and delivery of the Agreement and the Warrant
Agreement by the other parties thereto, payment by the
Underwriter for the Shares offered pursuant to the Agreement
and payment by the Underwriter for the Underwriter's
Warrants, are the valid and legally binding obligations of
the Company and the Selling Shareholders, except as
enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights
in general and subject, as to enforceability to general
principles of equity (regardless of whether enforcement is
sought in a proceeding, in equity or law); and except that no
opinion is expressed as to the enforceability of the
indemnity provisions contained in Section 8 or the
contribution provisions contained in Section 9 of the
Agreement.
(v) The certificates evidencing the Shares are
in due and proper form; the additional shares issuable upon
exercise of the over-allotment option and the shares of
Common Stock of the Company issuable upon exercise of the
Underwriter's Warrants in accordance with the terms of,
respectively, the Agreement and the Warrant Agreement and at
the prices therein provided for, have been duly authorized
and reserved for issuance upon such exercise, and such
shares, when issued upon exercise in accordance with the
terms of the Agreement and such warrants and at the price
provided for, will be duly and validly issued, fully paid and
nonassessable.
(vi) We do not know of any pending or threatened
legal or governmental proceedings to which the Company or a
subsidiary is a party which, if an unfavorable decision were
rendered, could materially adversely affect the condition
(financial or otherwise), business, properties, net worth or
results of operations of the Company and the Subsidiary,
taken as a whole, or which question the validity of the
Common Stock of the Company, the Shares, the Agreement, the
Warrant Agreement, the Underwriter's Warrants or of any
action taken or to be taken by the Company pursuant to the
Agreement, the Warrant Agreement, or the Underwriter's
Warrants; and to our knowledge there are no governmental
proceedings or regulations required to be described or
referred to in the Registration Statement which are not so
described or referred to.
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(vii) Neither the Company nor the Subsidiary is in
violation of or default under, nor will the execution,
delivery or performance by the Company of its obligations
under the Agreement, the Warrant Agreement or the
Underwriter's Warrants, result in a violation of, or
constitute a default under articles or certificate of
incorporation or by-laws of the Company's or of the
Subsidiary.
(viii) The Registration Statement has become
effective under the Act, and no stop order suspending the
effectiveness of the Registration Statement is in effect, and
no proceedings for that purpose have been instituted or are
pending before, or to our knowledge threatened by, the
Commission; the Registration Statement and the Prospectus
(except for the financial statements and other financial data
contained therein, or omitted therefrom, as to which such
counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act
and the Rules and Regulations.
(ix) The descriptions in the Registration
Statement and the Prospectus, and any amendment or supplement
thereto, of contracts and other documents are accurate in all
material respects and fairly present the information required
to be shown; and we do not know of any contract or document
to be summarized or described therein or to be filed as
exhibits thereto which are not so summarized, described or
filed.
(x) No authorization, approval, consent, or
license of any governmental or regulatory authority or agency
is necessary in connection with the authorization, issuance,
transfer, sale or delivery of the Shares by the Company, in
connection with the execution, delivery and performance of
this Agreement or the Warrant Agreement by the Company, or
the issuance of the Underwriter's Warrants or the Common
Stock underlying the Underwriter's Warrants, other than
registrations or qualifications of such stock under
applicable state or foreign securities or "BLUE SKY" laws and
registration under the Act.
(xi) We have reviewed the statements in the
Registration Statement under the captions "BUSINESS,"
"MANAGEMENT," "PRINCIPAL SHAREHOLDERS," "CERTAIN
TRANSACTIONS," "DESCRIPTION OF SECURITIES" and "SHARES
ELIGIBLE FOR FUTURE SALE" and, insofar as they refer to
descriptions of agreements, statements of law, descriptions
of statutes, licenses, rules or regulations or legal
conclusions, such statements are correct in all material
respects.
Such counsel shall also state that such
counsel has participated in the preparation of the Registration Statement and
the Prospectus, and nothing has come to the attention of such counsel to cause
such Counsel to have reason to believe that the Registration Statement or any
amendment thereto at the time it became effective under the Act contained any
untrue statement of a material fact required to be stated therein or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any supplement
thereto contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (except, in the
case of both the
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Registration Statement and any amendment thereto and the Prospectus and any
supplement thereto, for the financial statements, notes thereto and other
financial information and statistical data contained therein, as to which such
counsel need express no opinion).
Such opinion shall also cover such matters
incident to the transactions contemplated hereby as the Underwriter or counsel
for the Underwriter shall reasonably request. In rendering such opinion, such
counsel may rely upon certificates of any officer of the Company or public
officials as to matters of fact; and may rely as to all matters of law other
than the law of the United States or of the State of Florida upon opinions of
counsel satisfactory to you (e.g., local counsel shall provide a satisfactory
opinion for matters of Texas law), in which case the opinion shall state that
they have no reason to believe that you and they are not entitled to so rely.
(c) All corporate proceedings and other legal
matters relating to this Agreement, the Registration Statement, the Prospectus
and other related matters shall be satisfactory to or approved by Xxxxxxxxx
Xxxxxxx, counsel to the Underwriter, and you shall have received from such
counsel a signed opinion, dated as of the Closing Date (or in the event of the
Option Closing, the Option Closing Date), with respect to the validity of the
issuance of the Firm Shares (or in the event of the Option Closing, the Option
Shares), the form of the Registration Statement and Prospectus (other than the
financial statements, notes thereto and other financial data contained
therein), the execution of this Agreement and other related matters as you may
reasonably require. The Company shall have furnished to counsel for the
Underwriter such documents as they may reasonably request for the purpose of
enabling them to render such opinion.
(d) You shall have received a letter on and as
of the Effective Date of the Registration Statement and again on and as of the
Closing Date (and again on and as of the Option Closing Date, if the Option is
exercised) from Xxxxxx Xxxxxxxx LLP, independent public accountants for the
Company, substantially in the form approved by you.
(e) At the Closing Date or, in the event the
Option is exercised, at the Option Closing Date, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of the Closing Date or the Option
Closing Date, as the case may be, and the Company shall have performed all of
its obligations hereunder and satisfied all the conditions on its part to be
satisfied at or prior to such Closing Date or such Option Closing Date, as the
case may be; (ii) the Registration Statement and the Prospectus and any
amendments or supplements thereto shall contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations and in all material respects conform to the requirements thereof,
and neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; (iii) there shall have been, since
the respective dates as of which information is given, no material adverse
change in the condition (financial or otherwise), business, properties,
prospects, net worth, results of operations, capital stock, long-term or
short-term debt or general affairs of the Company and its subsidiary, taken as
a whole, from that set forth in the Registration Statement and the Prospectus,
except changes which the Registration Statement and Prospectus indicate might
occur after the effective date of
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the Registration Statement, and neither the Company nor its subsidiary shall
have incurred any material liabilities or agreement not in the ordinary course
of business other than as referred to in the Registration Statement and
Prospectus; (iv) except as set forth in the Prospectus, no action, suit or
proceeding at law or in equity shall be pending or threatened against the
Company or its subsidiary which would be required to be set forth in the
Registration Statement, and no proceedings shall be pending or threatened
against the Company or its subsidiary before or by any commission, board or
administrative agency in the United States or elsewhere, wherein an unfavorable
decision, ruling or finding would materially adversely affect the condition
(financial or otherwise), business, properties, prospects, net worth or results
of operations of the Company and its subsidiary, taken as a whole; and (v) you
shall receive at the Closing Date or the Option Closing Date, as the case may
be, a certificate signed by each of the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated as of
the Closing Date or the Option Closing Date, as the case may be, evidencing
compliance with the provisions of this subsection (e).
(f) If any of the conditions herein provided for
in this Section shall not have been fulfilled as of the date indicated, this
Agreement and all obligations of the Underwriter under this Agreement may be
canceled at, or at any time prior to, the Closing Date by the Underwriter by
notifying the Company of such cancellation in writing or by telegram at or
prior to the Closing Date. Any such cancellation shall be without liability of
the Underwriter to the Company.
(g) In the event the Option is exercised, if any
of the conditions herein provided for in this Section, with respect to the
Option Closing, shall not have been fulfilled as of the date indicated, all
obligations of the Underwriter under this Agreement with respect to such Option
Closing may be canceled at, or at any time prior to, the Option Closing Date by
the Underwriter by notifying the Company of such cancellation in writing or by
telegram at or prior to the Option Closing Date. Any such cancellation shall be
without liability of the Underwriter to the Company.
7. Conditions of the Company's Obligations. The
obligation of the Company to sell and deliver the Firm Shares, and the Option
Shares if the Option is exercised, is subject to the following conditions:
(a) The Registration Statement shall have become
effective under the Act not later than 10:00 a.m., New York time, on the day
following the date of this Agreement, or on such later date as the Company and
the Underwriter may agree to in writing.
(b) At the Closing Date, and on the Option
Closing Date if the Option is exercised, no stop orders suspending the
effectiveness under the Act of the Registration Statement shall have been
issued under the Act or any proceedings therefor initiated or threatened by the
Commission.
(c) The Company shall have received payment for
the Securities from the Underwriter.
8. Indemnification.
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(a) The Company and each of [SELLING
SHAREHOLDERS], jointly and severally agree to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Act, the Underwriter's counsel and the Company's counsel against
any losses, claims, damages or liabilities, joint or several (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all attorneys' fees), to which the
Underwriter, any controlling person, the Underwriter's counsel or the Company's
counsel may become subject, under the Act or otherwise, insofar, as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in (i) the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto; (ii) any
"Blue Sky" application or other document executed by the Company specifically
for the purpose or based upon written information furnished by the Company
filed in any state or other jurisdiction in order to qualify any or all of the
Shares, under the securities laws thereof (any such application, document or
information being hereinafter called a "BLUE SKY APPLICATION"), or arise out of
or are based upon the omission or alleged omission to state in the Registration
Statement, any Preliminary Prospectus, Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company and each of [SELLING SHAREHOLDERS] will not
be liable in any such case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written or oral information furnished to
the Company by or on behalf of the Underwriter or oral misrepresentations or
omissions in connection therewith specifically for use in the preparation of
the Registration Statement or any such amendment or supplement thereof or any
such Blue Sky Application or any such Preliminary Prospectus or the Prospectus
of any such amendment or supplement thereto. The Company shall not be obligated
to indemnify the Underwriter for a violation of state securities or "Blue Sky"
laws for liability occasioned by reason of such Underwriter's (or its agent's)
failure to have been registered as a broker-dealer (or agent) or the failure of
the securities to have been registered or qualified in a jurisdiction where
such Underwriter (or its agent) is determined to have sold such security. This
indemnity will be in addition to any liability which the Company may otherwise
have.
(b) The Underwriter will indemnify and hold
hardness the Company, each of the Company's directors, each nominee (if any)
for director named in the Prospectus, each of its officers who have signed the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Act, the Underwriter's counsel and the Company's counsel
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys' fees) to which the Company, any
such director, nominee, officer or controlling person, the Underwriter's
counsel or the Company's counsel may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each
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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, in reliance upon and in conformity with
written information furnished to the Company by you specifically for use in the
preparation thereof. The Underwriter shall indemnify the Company for any
violation of state securities or "Blue Sky" laws for liability occasioned by
reason of such Underwriter's (or its agent's) failure to have been registered
as a broker-dealer (or agent) or the failure of the securities to have been
registered or qualified in a jurisdiction which such Underwriter (or agent) is
determined to have sold such security. This indemnity will be in addition to
any liability which the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified
party under this Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section, notify in writing the indemnifying party
of the commencement thereof, but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, subject
to the provisions herein stated, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than the
reasonable costs of investigation. The indemnified party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided that if the indemnified party is the Underwriter or a person who
controls the Underwriter within the meaning of the Act, the fees and expenses
of such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party or (ii) the named parties to any such action (including any
impleaded parties) include both the Underwriter or such controlling person and
the indemnifying party and, the Underwriter reasonably determines that it is
advisable for the Underwriter or controlling persons to be represented by
separate counsel (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of the Underwriter or such
controlling person, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for the Underwriter and
controlling persons, which firm shall be designated in writing by you). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnifying party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnified party.
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(d) If the Closing occurs, the Company will not
have liability to the Underwriter (for indemnification or otherwise) with
respect to any representation or warranty unless on or before the third
anniversary of the date hereof the Underwriter notifies the Company of a claim
of breach of a representation or warranty.
9. Contribution. In order to provide for just and
equitable contribution under the Act in any case in which (i) the Underwriter
makes claim for indemnification pursuant to Section 8 hereof but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case, notwithstanding the fact that the express provisions of Section 8 provide
for indemnification in such case or (ii) contribution under the Act may be
required on the part of the Underwriter or the Company in circumstances for
which indemnification is provided for pursuant to Section 8, then the Company,
in the aggregate, and the Underwriter shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall for
all purposes of this Agreement include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) in
either such case (after contribution from others) in such proportions that the
Underwriter is responsible in the aggregate for that portion of such losses,
claims, damages or liabilities represented by the percentage that the
underwriting discount per share appearing on the cover page of the Prospectus
bears to the public offering price appearing thereon, and the Company shall be
responsible for the remaining portion; provided, however, that, if such
allocation is not permitted by applicable law, then the relative fault of the
Company and the Underwriter, in the aggregate, in connection with the
statements or omissions which resulted in such damages and other relevant
equitable considerations shall also be considered. The relative fault shall be
determined by reference to, among other things, whether in the case of an
untrue statement or a material fact or the omission to state a material fact,
such statement or omission relates to information supplied by the Company or
the Underwriter, and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriter agree that it would not be just and
equitable if the respective obligations of the Company and the Underwriter to
contribute pursuant to this Section 9 were to be determined by pro rata or per
capital allocation of the aggregate damages (even if the Underwriter and its
controlling persons in the aggregate were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the first sentence of this Section 9.
No person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation. For the purposes of this
paragraph, each officer, director, or other person who controls the Underwriter
within the meaning of Section 15 of the Act shall have the same rights to
contribution as such Underwriter, and each officer, director, or other person.
If the full amount of the contribution specified in this paragraph is not
permitted by law, then the Underwriter and each person who controls the
Underwriter shall be entitled to contribution from the Company to the full
extent permitted by law. The foregoing contribution agreement shall in no way
affect the contribution liabilities of any persons having liability under
Section 11 of the Act other than the Company and the Underwriter. No
contribution shall be requested with regard to the settlement of any matter
from any party who did not consent to the settlement; provided, however, that
such consent shall not be unreasonably withheld in light of all factors of
importance to such party.
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10. Costs and Expenses.
(a) Whether or not this Agreement becomes
effective or the sale of the Shares to the Underwriter is consummated, the
Company will pay all costs and expenses incident to the performance of this
Agreement including, but not limited to, the fees and expenses of counsel to
the Company and of the Company's accountants; the costs and expenses incident
to the preparation, printing, filing and distribution under the Act of the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), Preliminary Prospectus and Prospectus, as
amended or supplemented; all expenses, including fees, disbursements and other
charges of counsel to the Underwriter, in connection with any filing required
by the NASD relating to the offering of the Shares contemplated hereby; all
expenses, including fees, disbursements and other charges of counsel to the
Underwriter, in connection with the qualification of the Shares under the state
securities or blue sky laws which the Underwriter shall designate; the cost of
printing and furnishing to the Underwriter copies of the Registration
Statement, each Preliminary Prospectus and the Prospectus; the cost of printing
the certificates representing the Shares; and the costs and expenses incident
to the preparation and printing of bound volumes of the offering documents for
the Underwriters and their Counsel. The Company shall pay any and all taxes
(including any transfer, franchise, capital stock or other tax imposed by any
jurisdiction) on sales by the Company to the Underwriter hereunder. The Company
will also pay all costs and expenses incident to the furnishing of any amended
Prospectus or of any supplement to be attached to the Prospectus as called for
in Section 5(a) of this Agreement except as otherwise set forth in said
Section.
(b) In addition to the foregoing expenses the
Company shall at the Closing Date pay to Cruttenden Xxxx Incorporated a
non-accountable expense allowance equal to 2% of the gross proceeds of the sale
of the Shares. In the event the transactions contemplated hereby are not
consummated by reason of any action by the Underwriter (except if such
prevention is based upon a breach by the Company of any covenant,
representation or warranty contained herein or because any other condition to
the Underwriter's obligations hereunder required to be fulfilled by the Company
is not fulfilled), the Company shall not be liable to the Underwriter for any
out-of-pocket accountable expenses except that the Underwriter may retain all
monies paid to it prior to the termination of the underwriting, but only to the
extent of out-of-pocket accountable expenses incurred by the Underwriter, and
the Underwriter shall return to the Company all monies received in excess of
its out-of-pocket accountable expenses. In the event the transactions
contemplated hereby are not consummated by reason of any action of the Company
or because of a breach by the Company of any covenant, representation or
warranty contained herein, the Company shall be liable for the out-of-pocket
accountable expenses incurred by the Underwriter, including attorneys' fees,
less a credit of any amounts previously paid by the Company to the Underwriter,
and the Underwriter shall return to the Company all monies received in excess
of its out-of-pocket accountable expenses.
(c) No person is entitled either directly or
indirectly to compensation from the Company, from the Underwriter or from any
other person for services as a finder in connection with the proposed offering,
and the Company agrees to indemnify and hold harmless the Underwriter against
any losses, claims, damages or liabilities, joint or several, which shall, for
all purposes of this Agreement, include, but not be limited to, all costs of
defense and
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investigation and all attorneys' fees, to which the Company, the Underwriter or
person may become subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon the
claim of any person (other than an employee of the party claiming indemnity) or
entity that he or it is entitled to a finder's fee in connection with the
proposed offering by reason of such person's or entity's influence or prior
contact with the indemnifying party.
11. Effective Date. This Agreement shall become effective
upon its execution, except that you may, at your option, delay its
effectiveness until 11:00 a.m., New York time, on the first full business day
following the Effective Date of the Registration Statement, or at such earlier
time after the Effective Date of the Registration Statement as you in your
discretion shall first commence the initial public offering by the Underwriter
of any of the Shares. The time of the initial public offering shall mean the
time of release by you of the first newspaper advertisement with respect to the
Shares, or the time when the Shares are first generally offered by you to
dealers by letter or telegram, whichever shall first occur. This Agreement may
be terminated by you at any time before it becomes effective as provided above,
except that Sections 4(c), 8, 9, 10, 14, 15, 16 and 17 hereof shall remain in
effect notwithstanding such termination.
12. Termination.
(a) This Agreement, except for Sections 4(c), 8,
9, 10, 14, 15, 16 and 17 hereof, may be terminated by you at any time prior to
the Closing Date if in your judgment it is impracticable to offer for sale or
to enforce contracts made by the Underwriter for the resale of the Shares
agreed to be purchased hereunder by reason of (i) the Company having sustained
a material loss, whether or not insured, by reason of fire, earthquake, flood,
accident or other calamity, or from any labor dispute or court or government
action, order or decree; (ii) trading in securities on the New York Stock
Exchange, the American Stock Exchange, and/or the Nasdaq Stock Market's
National Market having been generally suspended or limited; (iii) material
governmental restrictions having been imposed on trading in securities
generally (not in force and effect on the date hereof); (iv) a banking
moratorium having been declared by federal or New York State authorities; (v)
an outbreak of major international hostilities or other national or
international calamity having occurred; (vi) the passage by the Congress of the
United States, or by any state legislative body of similar impact, of any act
or measure, or the adoption of any orders, rules or regulations by any
governmental body or any authoritative accounting institute or board, or any
governmental executive, which is reasonably believed likely by the Underwriter
to have a material impact on the condition (financial or otherwise), business,
properties, prospects or financial statements of the Company or on the market
for the securities offered hereby; (vii) any material adverse change in the
financial or securities markets in the United States, particularly in the
over-the-counter market, having occurred since the date of this Agreement, or
(viii) any material adverse change having occurred, since the respective dates
of which information is given in the Registration Statement and Prospectus, in
the condition (financial or otherwise), business, properties, prospects, net
worth or results of operations of the Company, not arising in the ordinary
course of business.
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(b) If you elect to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this Section
12 or in Section 11, the Company shall be promptly notified by you, by
telephone or telegram, confirmed by letter.
13. Warrants. At or before the Closing Date, the Company
will sell to Cruttenden Xxxx Incorporated the Underwriters' Warrants to
purchase an aggregate of 200,000 shares of the Common Stock of the Company for
a consideration of $200.00 upon the terms and conditions set forth in the
Warrant Agreement. In the event of conflict in the terms of this Agreement and
the Underwriter's Warrants, the language of the Underwriter's Warrants shall
control.
14. Representations, Warranties and Agreements to Survive
Delivery. Except as may be limited by Section 8(d), the respective indemnities,
agreements, representations, warranties and other statements of the Company and
the Underwriter set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriter, the Company or any of its officers or directors or any
controlling person and will survive delivery of and payment for the Shares and
the termination of this Agreement.
15. Notices. Any communications specifically required
hereunder to be in writing, if sent to the Underwriter, will be mailed,
delivered or telegraphed and confirmed to them at Cruttenden Xxxx Incorporated,
00 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: Xx. Xxxxxx
Xxxxxxx, with a copy sent to Xxxxxxxxx Xxxxxxx, MetLife Building, 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxx, Esq.,
or if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at Visual Data Corporation, 0000 XX 00xx Xxxxxx, Xxxxxxx Xxxxx,
Xxxxxxx 00000, Attention: Xxxxx X. Xxxxxx, CEO & President, with a copy to
Atlas, Xxxxxxxx, Trop & Borkson, P.A., 000 Xxxx Xxx Xxxx Xxxx., Xxxxx 0000,
Xxxx Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxx X. Xxxxxxxxx, Esq.
16. Parties in Interest. The Agreement herein set forth
is made solely for the benefit of the Underwriter, the Company and any person
controlling the Company or the Underwriter, and the directors of the Company,
nominees for directors (if any) named in the Prospectus, its officers who have
signed the Registration Statement, and their respective executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "SUCCESSORS AND
ASSIGNS" shall not include any purchaser, as such purchaser, from the
Underwriter of the Shares.
17. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO AGREEMENTS MADE AND TO BE ENTIRELY PERFORMED WITHIN CALIFORNIA.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return this agreement, whereupon it will become
a binding agreement among the Company and the Underwriter in accordance with
its terms.
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Very truly yours,
VISUAL DATA CORPORATION
By:
----------------------------
Xxxxx X. Xxxxxx
CEO & President
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
CRUTTENDEN XXXX INCORPORATED
By:
----------------------------
Name:
Title:
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ANNEX A
FORM OF LOCK-UP
Cruttenden Xxxx Incorporated
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated
_______, 1999 (the "UNDERWRITING AGREEMENT"), between Visual Data Corporation,
a Florida corporation (the "COMPANY"), and Cruttenden Xxxx Incorporated (the
"UNDERWRITER"). Capitalized terms used herein and not defined herein shall have
the same meanings ascribed to them in the Underwriting Agreement.
1. In consideration of the Underwriting Agreement, the
undersigned hereby agrees not to, without the prior written consent of the
Underwriter and except as set forth in Section 2, offer, sell or otherwise
dispose of any shares of the Company's common stock, par value $.0001 per share
(the "COMMON STOCK"), or any securities convertible into or exercisable or
exchangeable for, or any rights to purchase or acquires Common Stock owned by
the Undersigned for a period of twenty-four (24) months after the date of the
Underwriting Agreement.
2. The restrictions set forth in Section 1 shall not
apply to private sales or transfers of Common Stock to purchasers or
transferees who agree in writing to be bound by the terms set forth herein.
3. The undersigned hereby waives all registration rights
to which the undersigned may be entitled prior to the expiration of such
twenty-four (24) month period.
Dated: _________, 1999
Very truly yours,
--------------------------------
Name:
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SCHEDULE A
Selling Shareholders
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SCHEDULE B
Lock-Up Parties
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