EXHIBIT 1.0
1,200,000 Shares of Series 1 Convertible Preferred Stock
and
1,200,000 Redeemable Series 1 Preferred Stock Purchase Warrants
TELLURIAN, INC.
UNDERWRITING AGREEMENT
Dated: July , 1998
X.X. Xxxxxxx & Co., Inc.
as Representative of the Several Underwriters
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Tellurian, Inc., a Delaware corporation (the "Company"),
hereby confirms its agreement with X.X. Xxxxxxx & Co., Inc. (sometimes the
"Representative" or "you") and the several Underwriters named in Schedule A
hereto (the "Underwriters") as follows:
1. Description of Securities. The Company has authorized by appropriate
corporate action, and proposes to issue and sell to the Underwriters, 1,200,000
shares of Series 1 Convertible Preferred Stock ("Shares") and 1,200,000 Series 1
Convertible Preferred Stock Purchase Warrants ("Warrants"). Each Warrant shall
be exercisable for one share of Preferred Stock. An additional 180,000 Shares
and 180,000 Warrants, have been authorized to cover over-allotments as provided
in Section 3 below. The Shares and Warrants shall hereinafter sometimes be
collectively referred to as the "Securities". The Shares and Warrants are more
fully described in the Registration Statement and Prospectus referred to
hereinafter.
2. Representations and Warranties.
The Company represents and warrants to, and agrees with, you and the
Underwriters that:
(a) A registration statement on Form SB-2 with respect to the
Securities, including a preliminary prospectus, copies of which have heretofore
been delivered by the Company to you, has been carefully prepared by the Company
in conformity with the requirements of the Securities Act of 1933, as amended,
(hereinafter called the "Act") and the Rules and Regulations of the Securities
and Exchange Commission (hereinafter called the
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"Commission") under such Act, and has been filed with the Commission (File No.
________). On or prior to the effective date of such registration statement, one
or more amendments to such registration statement (including a final
prospectus), copies of which have heretofore been or will be delivered to you,
will have been so prepared and filed in the form delivered to you. Such
registration statement (including all exhibits thereto) as amended as of the
effective date thereof and each related preliminary prospectus are herein
respectively referred to as the "Registration Statement", the "Preliminary
Prospectus" and the "Prospectus".
(b) When the Registration Statement becomes effective (the "Effective
Date") and at all times subsequent thereto up to and at the Closing Date (as
defined in Section 3 hereof) and the Additional Closing Date (as defined in
Section 3 hereof), (i) the Registration Statement and the Prospectus and any
amendments or supplements thereto will contain all statements which are required
to be stated therein by the Act and the Rules and Regulations of the Commission
thereunder and will in all respects conform to the requirements of the Act and
such Rules and Regulations, (ii) neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto will include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(iii) all documents which are required to be filed as exhibits to the
Registration Statement will have been so filed; provided however, that the
Company makes no representations or warranties as to information contained in or
omitted from the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by you or any Underwriter expressly for use in the
preparation thereof.
(c) The Company an its subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of the
jurisdictions of their incorporation with all corporate and other powers and
authority necessary to carry on their businesses, and they are qualified in such
jurisdictions in which the nature of their business requires such qualification.
(d) The consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is a party or by which it or any of
its properties is bound, or of its Certificate of Incorporation, or By-laws, or
any order, rule or regulation applicable to the Company or any of its
properties, of any court or other governmental body.
(e) The Company has full power and lawful authority to authorize, issue
and sell the Shares, Warrants, Underwriters' Stock
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Warrants (as defined hereinafter) and Underwriters' Warrants (as defined
hereinafter) on the terms and conditions herein set forth, and has taken all
corporate action necessary therefor; no consent, approval, authorization or
other order of any regulatory authority is required for such authorization,
issue or sale, except as may be required under the Act or state securities or
blue sky laws. This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and legally binding agreement of the Company
enforceable in accordance with its terms. The Warrant Agreement between the
Company and Continental Stock Transfer & Trust Company, to be dated the Closing
Date, pursuant to which the Warrants will be issued (the "Warrant Agreement")
has been duly authorized by the Company and, when executed and delivered by the
Company and Continental Stock Transfer & Trust Company, will be a valid and
legally binding obligation of the Company, enforceable in accordance with its
terms.
(f) The Securities and the authorized capitalization of the Company
conform to the descriptions thereof contained in the Registration Statement and
Prospectus. The holders of the Warrants will, upon their exercise, be entitled
to purchase shares in accordance with the terms and conditions set forth in the
Warrant Agreement and the form of Warrant filed as exhibits to the Registration
Statement. The outstanding shares of capital stock are, and the shares issuable
pursuant to the public offering contemplated hereby and upon exercise of any of
the warrants referred to herein will upon such issuance be, duly authorized,
validly issued and fully paid and nonassessable, and the Company has duly
authorized and reserved for issuance upon exercise of warrants such number of
shares as are initially issuable upon such exercise. The Warrants, the
Underwriters' Stock Warrants, the Underwriters' Warrants and the warrants
underlying the Underwriters' Warrants will, when issued and delivered in
accordance with the provisions of the Warrant Agreement, in the case of the
Warrants and the warrants underlying the Underwriters' Warrants, and this
Agreement, in the case of the Underwriters' Stock Warrants, be valid and legally
binding obligations of the Company enforceable in accordance with their
respective terms. There are no options, warrants, rights of conversion,
indebtedness or calls on equity of the Company other than as disclosed in the
Prospectus and Registration Statement.
(g) Except as set forth or contemplated in the Registration Statement
and Prospectus, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company has not
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions, not in the ordinary course of business,
and there has not been any material change in the capital stock or funded debt
of the Company, or any material adverse change in the condition (financial or
other) or results of operations of the Company.
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(h) The financial statements (audited and unaudited) set forth in the
Registration Statement and Prospectus fairly present the financial condition of
the Company and the results of its operations as of the dates and for the
periods therein specified; and said financial statements (including the related
notes and schedules) have been prepared in accordance with generally accepted
accounting principles which have been consistently applied throughout the
periods covered thereby. Such financial statements and the summaries thereof
included in the Registration Statement and the Prospectus conform in all
material respects to the requirements of the Rules and Regulations of the
Commission.
(i) The accountants whose opinion or opinions is or are included in the
Registration Statement are independent public accountants within the meaning of
the Act and the Rules and Regulations of the Commission thereunder.
(j) Except as set forth in the Prospectus, there is not pending any
action, suit or other proceeding to which the Company is a party or of which any
property of the Company is the subject, before or by any court or other
governmental body, which might result in any material adverse change in the
condition, business or prospects of the Company, or might materially adversely
affect the assets of the Company; and except as indicated in the Prospectus, no
such proceeding is known by the Company to be threatened or contemplated.
(k) The Company knows of no claim for services, either in the nature of
a finder's fee, brokerage fee or otherwise, with respect to the financing
contemplated hereby, whether or not heretofore satisfied, for which it or the
Underwriters, or any of them, may be responsible, other than as expressly
disclosed in the Prospectus.
(l) The business and operations of the Company and the ownership
thereof, except as may be disclosed in the Prospectus, comply with all statutes,
ordinances, laws, rules and regulations applicable thereto, the non-compliance
with which could reasonably be expected to have a material, adverse effect on
the Company or its condition (financial or other), business, prospects, net
worth or results of operations; the Company possesses, and is operating in
compliance with the terms, provisions and conditions of, all certificates,
licenses, permits, consents, waivers, approvals, franchises and concessions
required to conduct its business as now conducted, the non-compliance with which
could reasonably be expected to have a material adverse effect on the Company or
its condition (financial or other), business, prospects, net worth or results of
operations; each such certificate, license, permit, consent, waiver, approval,
franchise and concession is valid and in full force and effect and there is no
proceeding pending or threatened (or to the best of the knowledge of the
Company, any basis therefor) which may lead to the revocation, termination,
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suspension or nonrenewal of any such certificate, license, permit, consent,
waiver, approval, franchise or concession.
(m) On the Effective Date of the Registration Statement and immediately
prior to the sale of the Securities, the outstanding capital stock of the
Company will be as set forth in the Prospectus, and there shall be no warrants
or options to purchase shares of Stock of the Company except as set forth in the
Prospectus.
3. Purchase, Sale and Delivery of Shares. Subject to the terms and
conditions of this Agreement, and on the basis of the representations,
warranties and agreements herein contained, the Company hereby agrees to sell to
the Underwriters, and the Underwriters agree to purchase from the Company, at
purchase prices of $4.50 per Share and $0.225 per Warrant.
The Company will deliver the Securities to you at your office, or such
other place as you may designate, against payment to the Company for the
Securities by wire transfer or by certified or official bank check or checks
payable in New York Clearing House funds to the order of the Company. The
Securities so to be delivered will be in definitive, fully registered form in
such authorized denominations and registered in such names as you request by
notice to the Company given not later than 5:00 P.M., New York City time, on the
second business day next preceding the Closing Date. The date and the time of
such delivery and payment shall be 11:00 A.M., New York City time, on
________________ (or such other time and date as you and the Company may agree
upon). The time and date of such payment and delivery is herein sometimes
referred to as the "Closing Date".
The Company agrees to make the Securities available to you for the purpose
of expediting the checking and packaging of the Securities, at the office at
which they are to be delivered, not later than 2:00 P.M., New York City time, on
the business day next preceding the Closing Date.
The Company hereby grants to you the right, exercisable within 45 days from
the date hereof, to purchase from the Company up to 180,000 additional Shares of
Preferred Stock and 180,000 additional Warrants (the "Additional Securities") at
a purchase price of $4.50 per Share and $0.225 per Warrant, for the purpose of
covering over-allotments in the sale by any of the Underwriters of the
Securities. You may exercise your right to purchase Additional Securities by
giving written notice of such exercise to the Company.
Such notice shall set forth the aggregate number of Additional Securities
as to which such right is being exercised, the names in which Additional
Securities are to be registered, the denominations in which Additional
Securities are to be issued and the date and
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time, as determined by you, when the Additional Securities are to be delivered
(such date and time being herein sometimes referred to as the "Additional
Closing Date"); provided, however, that the Additional Closing Date shall not be
earlier than the Closing Date. The Additional Closing Date may be on the Closing
Date; if not, it shall be no earlier than the third business day after the date
on which the right shall have been exercised nor later than the twelfth business
day after the date on which the right shall have been exercised.
The Company will deliver the Additional Securities to you at your office,
or such other place as you may designate, against payment to the Company for the
Additional Securities by wire transfer or by certified or official bank check or
checks payable in New York Clearing House funds to the order of the Company. The
Additional Securities so to be delivered will be in definitive, fully registered
form in such authorized denominations and registered in such names as you
request by notice to the Company given not later than 5:00 P.M., New York City
time, on the second business day next preceding the Additional Closing Date.
The Company agrees to make the Additional Securities available to you for
the purpose of expediting the checking and packaging of the Securities, at the
office at which they are to be delivered, not later than 2:00 P.M., New York
City time, on the business day next preceding the Additional Closing Date.
It is understood that the Underwriters propose to offer the Securities for
sale to the public upon the terms and conditions set forth in the Registration
Statement, after the Registration Statement becomes effective.
4. Covenants of the Company.
The Company further covenants and agrees with you that:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective and will not at any time, whether
before or after the effective date, file any amendment to the Registration
Statement or supplement to the Prospectus of which you shall not previously have
been advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Act, or the Rules and
Regulations of the Commission thereunder.
(b) The Company will notify you immediately and confirm in writing (A)
when the Registration Statement and any post-effective amendment thereto becomes
effective, (B) of the issuance of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
any Preliminary Prospectus or of the Prospectus or of the initiation of any
proceedings for such purposes, and (C) of the
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receipt of any comments (in writing or orally) from the Commission in respect of
the Registration Statement or requesting the amendment, post-effective amendment
or supplementation of the Registration Statement or Prospectus or for additional
information. If the Commission shall enter a stop order or any order preventing
or suspending the use of any Preliminary Prospectus or of the Prospectus at any
time, or shall initiate any proceedings for such purposes, the Company will make
every reasonable effort to prevent the issuance of such order and, if issued, to
obtain the withdrawal thereof. The Company will provide you with copies of all
written communications received by it from the Commission and any other
regulatory agency with respect to the Registration Statement, and every
amendment and post-effective amendment thereto and copies of all replies thereto
by the Company, its counsel and its accountants.
(c) Within the time during which a prospectus relating to the Shares
and Warrants (or the exercise of any Warrants) is required to be delivered under
the Act, the Company will comply so far as it is able with all requirements
imposed upon it by the Act, as now and hereafter amended, and by the Rules and
Regulations of the Commission thereunder, from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the Shares and
Warrants (or the shares of stock to be acquired upon the exercise of the
Warrants) as contemplated by the provisions hereof and the Prospectus; and if
during such period any event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances then existing, not misleading, or if during such
period it is necessary to amend or supplement the Prospectus to comply with the
Act, the Company will promptly notify you and will amend or supplement the
Prospectus (in form reasonably satisfactory to your counsel and at the expense
of the Company) so as to correct such statement or omission or effect such
compliance.
(d) The Company will cooperate with you and will take all
necessary action, and furnish to whomever you may direct such proper
information, as may be lawfully required in qualifying the Securities for
offering and sale under the securities or blue sky laws of such states as you
may designate, and in continuing such qualifications in effect so long as
required for the distribution of Securities by you; provided that the Company
shall not be obligated to qualify as a foreign corporation to do business under
the laws of any such state, consent to general service of process in such state
or otherwise to submit to any requirements which it reasonably deems unduly
burdensome.
(e) The Company will pay any and all fees, taxes and expenses incident
to the performance of its obligations under this Underwriting Agreement,
including expenses and taxes incident to the issuance and delivery to you of the
Securities and Additional
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Securities, if any, to be sold to the Underwriters pursuant to Section 3 hereof;
all fees and disbursements of counsel and accountants for the Company; expenses
and filing fees incident to the preparation, printing, delivery, shipment and
filing with the Commission, the National Association of Securities Dealers,
Inc., and state blue sky authorities of the Registration Statement and all
exhibits thereto and the Prospectus, and any amendments or supplements thereto,
including fees of blue sky counsel (to be designated by the Representative and
who may be counsel to the Underwriters) incident to the qualification for sale
of the Securities and Additional Securities, if any, under blue sky laws. The
Company will further pay you as Representative of the Underwriters for your
expenses incurred in connection with this offering, on a non-accountable basis,
an amount equal to 3% of the public offering price of the Securities sold on
behalf of the Company hereunder, including any Securities sold pursuant to the
overallotment option, such reimbursement and payment to be made to you on
closing, and may be deducted by you from the amount due to the Company for
purchase of the Securities pursuant to Section 3 hereof. In the event that the
offering is not consummated, the Representative will be reimbursed only for its
actual, accountable, out-of-pocket expenses.
(f) The Company will apply the net proceeds from the sale of the
Securities substantially as set forth under the caption "Use of Proceeds" in the
Prospectus.
(g) The Company will deliver to you as promptly as practicable three
signed copies of the Registration Statement and all amendments thereto,
including all exhibits therewith or incorporated therein by reference, and
signed consents, certificates and opinions of accountants and of any other
persons named in the Registration Statement as having prepared, certified or
reviewed any part thereof, and will deliver to you such number of unsigned
copies of the Registration Statement and exhibits, and of all amendments
thereto, as you may reasonably request. The Company will deliver to you or upon
your order, from time to time until the effective date of the Registration
Statement, as many copies of the Preliminary Prospectus as you may reasonably
request. The Company will deliver to you or upon your order, on the effective
date of the Registration Statement and thereafter, subject to the provisions of
Section 4(c) hereof, from time to time, as many copies of the Prospectus in
final form or as there after amended or supplemented, as you may reasonably
request. The Company will deliver to you, promptly after closing, three (3)
bound volumes of all of the documents, papers, exhibits, correspondence and
records forming the materials involved in this public offering.
(h) The Company will make generally available to its security holders,
as soon as it is practicable to do so (but in no event later than fifteen months
after the effective date of the
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Registration Statement), an earnings statement of the Company (which need not be
audited) covering a period of at least twelve months beginning not later than
the first day of the fiscal quarter next succeeding such effective date which
shall satisfy the provisions of Section 11(a) of the Act.
(i) For a period of at least five years from the date hereof, the
Company will supply to the Representative, (A) as soon as practicable after the
end of each fiscal year, a balance sheet and statement of operations of the
Company and its consolidated subsidiaries (if any) as at the end of and for each
such year, all in reasonable detail and certified by independent certified
public accountants, (B) as soon as practicable after the end of each of the
first three quarters of each fiscal year, an unaudited statement of operations
of the Company and its consolidated subsidiaries (if any) for such period, (C)
copies of such financial statements and reports as the Company may, from time to
time, furnish generally to holders of any class of its stock, (D) copies of each
form, document and report which it shall be required to file with the
Commission, any blue sky authority or any securities exchange at the same time
as they are filed and (E) copies of the daily stock transfer sheets of the
Company.
(j) Simultaneously with the purchase and payment by the Underwriters
for the Securities on the Closing Date, the Company shall sell, at a price of
$0.001 per warrant, and issue and deliver to the Representative and, at its
request, to any of the several Underwriters or to dealers in the selling group,
or to officers or partners of the Representative, the several Underwriters or
dealers in the selling group, 120,000 warrants, in form and substance
satisfactory to your counsel, to purchase 120,000 shares of Series 1 Convertible
Preferred Stock of the Company at an exercise price of $9.90 per share
("Underwriters' Stock Warrants") and 120,000 warrants, in form and substance
satisfactory to your counsel, to purchase 120,000 Series 1 Preferred Stock
Purchase Warrants (similar to those being sold to the public), at a price of
$0.4125 per 120,000 Series 1 Preferred Stock Purchase Warrant ("Underwriters'
Warrants"). The Underwriters' Stock Warrants and Underwriters' Warrants will be
exercisable for a period of five years commencing on the Effective Date, and
will not be transferable for a period of one year from the Effective Date except
to Underwriters and Selected Dealers and officers and partners thereof. In the
event that the Company at any time reduces the exercise price of the Warrants
sold to the public hereunder, the exercise price of the Underwriters' Stock
Warrants, Underwriters' Warrants and underlying Common Stock Purchase Warrants
shall be proportionately reduced. The Underwriters' Stock Warrants and
Underwriters' Warrants shall have been registered under the Registration
Statement and the holders of a majority of such Underwriters' Stock Warrants and
Underwriters' Warrants or the securities which may have been issued thereunder
shall have the right, at any one time, to require the Company to prepare and
file
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a post-effective amendment to the Registration Statement (or a new registration
statement, if then required under the Act) covering all or any portion of the
Underwriters' Stock Warrants and Underwriters' Warrants and their underlying
securities to permit the public sale thereof after twelve months from the
Effective Date. In connection therewith, the Company shall be obligated to
prepare and file such post-effective amendment (or such new registration
statement) under the Act promptly upon the receipt of the request of the holders
of a majority of the Underwriters' Stock Warrants and Underwriters' Warrants or
securities issued thereunder, and the Company shall be further obligated to use
its best efforts to have such post-effective amendment (or such new registration
statement) rendered effective under the Act, as it may from time to time be
amended hereafter, and Rules and Regulations promulgated thereunder, as soon as
practicable after the filing date of any such post-effective amendment or such
new registration statement, and the Company shall also be required to take such
action as may be necessary to maintain such post-effective amendment or such new
registration statement effective under the Act for the period, not in excess of
nine months, required to sell such Underwriters' Stock Warrants and
Underwriters' Warrants and their underlying securities in compliance with the
Act and Rules and Regulations promulgated thereunder, and the Company shall be
required to provide the accounting necessary for the filing of any such
post-effective amendment or such new registration statement, plus any amendments
or supplements thereto. In addition to, and not in lieu of, the obligations of
the Company hereinabove recited in this subsection, the Company hereby further
covenants and agrees that if, the Company shall prepare and file a
post-effective amendment to the Registration Statement or a new registration
statement under the Act or notification pursuant to Regulation A under the Act
either of which is to become effective at any time after the expiration of
twelve months from the Effective Date with respect to the public offering of any
equity or debt securities of the Company now or hereafter authorized, the
Company will include in such post-effective amendment or new registration
statement or such notification such number of the Underwriters' Stock Warrants
and Underwriters' Warrants and their underlying securities as requested by the
holders of the Underwriters' Stock Warrants and Underwriters' Warrants or
securities issued thereunder, and neither you nor such holders shall be under no
obligation to bear any of the expenses or professional fees and disbursements to
be incurred by the Company in connection with the preparation and filing of such
post-effective amendment, or new registration statement or such notification.
With respect to any post-effective amendment, or new registration statement, or
notification filed by the Company pursuant to this subsection, the selling
securityholders offering any Underwriters' Stock Warrants, Underwriters'
Warrants and their underlying securities thereunder shall be entitled to the
benefits of indemnification by the Company in like manner and to the same extent
as the Company indemnifies the Underwriters pursuant to Section 6(a) hereof.
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(k) The Company will not, without the prior written consent of the
Representative, for a period of six months after the effective date of the
Registration Statement, sell any securities of the Company or sell or grant
options, warrants or rights with respect to any securities of the Company, or
permit or cause a public offering of any securities of the Company except in
accordance with the provisions of the Registration Statement.
(l) At the Closing, the Company shall enter into an agreement extending
its present consulting agreement for a period of one year for a fee of
$________________, the total amount of which shall be paid at the Closing. The
Company and the Representative shall also enter into an agreement which will
provide for a finder's fee, ranging from 7% of the first $1,000,000 down to
2-1/2% of the excess over $9,000,000 of the consideration involved in any
transaction (including mergers and acquisitions) consummated by the Company in
which the Representative introduced the other party to the Company during the
five-year period commencing on the Closing Date, which agreement shall supersede
its current similar agreement between the Company and the Representative.
(m) The Company shall cooperate with the Underwriters in making
available to their representatives such information as they may request in
making an investigation of the Company and its affairs.
(n) Until such time as the securities of the Company are listed on the
New York Stock Exchange, the American Stock Exchange or the National Market
System of NASDAQ, but in no event more than three years from the Effective Date,
the Company shall retain Compliance Management Company or a similar company, to
prepare a post registration blue sky market survey for the Representative for
distribution to market makers. Such survey shall be provided to the
Representative annually with the first survey delivered to it promptly after the
completion of the public
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offering hereunder. The cost of the first year's survey will not exceed $5,000.
In lieu of the foregoing, the Company may cause its legal counsel to provide the
Representative with a survey to be updated at least annually.
(o) At all times, so long as any of the warrants referred to herein are
outstanding, the Company will have reserved authorized but unissued shares of
stock and underlying warrants, available for immediate issuance in amounts
necessary for the exercise of all warrants then outstanding. The Company agrees
to qualify its Shares for listing on the NASDAQ System Small-Cap Issues on the
Effective Date and will take all necessary and appropriate action so that the
Shares continue to be listed for trading in the NASDAQ System Small-Cap Issues
for at least five years from the Effective Date provided the Company otherwise
complies with the prevailing maintenance requirements of NASDAQ System
Small-Cap. In addition, at such time as the Company qualifies for listing its
securities on the National Market System of NASDAQ, the Company will take all
steps necessary to have the Company's Shares thereof listed on the National
Market System of NASDAQ in lieu of listing as Small-Cap Issues. The Company
shall comply with all periodic reporting and proxy solicitation requirements
imposed by the Commission pursuant to the 1934 Act, and shall promptly furnish
you with copies of all material filed with the Commission pursuant to the 1934
Act or otherwise furnished to shareholders of the Company.
(p) The Company will register its Series 1 Preferred Stock pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended, not later than
the Effective Date.
(q) The Company will pay the fees and expenses (but not transfer taxes,
if any) of the Company's stock transfer agents, warrant agents, and registrars
(if any), without charge to stockholders and warrantholders, for not less than
five years after the effective date of the Registration Statement.
(r) The Representative shall receive a fee of 10% of the proceeds as
and when received by the Company from time to time upon the exercise of any
Warrants after one year from the Effective Date, provided that such fee shall be
paid only in accordance with the rules of the NASD and any applicable securities
laws and rules and regulations. The Representative will not be eligible to
receive the aforementioned warrant exercise fee as a result of transactions of
the following nature: (i) the exercise of Warrants when the market price of the
Company's Common Stock is lower than the exercise price; (ii) the exercise of
Warrants held in any discretionary account; (iii) the exercise of Warrants where
documents disclosing the compensation arrangements (e.g., the Prospectus) have
not been provided to the warrantholder; (iv) the exercise of Warrants in
unsolicited transactions; and (v) the exercise of any warrants during the one
year period commencing on
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the Effective Date, and further provided that no broker shall be paid a fee
unless such broker is designated in writing by the customer as the soliciting
broker. In addition, it will be a condition to the receipt by the Representative
of such fee that it shall not, in the ten days immediately preceding the
solicitation of the exercise or the date of such exercise, have bid for or
purchased the Common Stock of the Company (or any securities of the Company
convertible into or exchangeable for such Common Stock, including the Warrants)
or otherwise have engaged in any activity that would be prohibited by Rule 10b-6
under the Securities Exchange Act of 1934, as amended, by one participating in a
distribution of the Company's securities whether as underwriter or otherwise.
The Company will not solicit warrant exercises except through the
Representative.
5. Conditions of Underwriters' Obligations. The Underwriters' obligations
to purchase and pay for the Securities, as provided herein, shall be subject to
the accuracy, as of the date hereof and as of the Closing Date (as if made on
the Closing Date), of the representations and warranties of the Company herein,
to the accuracy of statements made in each certificate delivered pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:00 P.M., New York City time, on the day following the date of this Agreement,
unless a later time and date be agreed to by you; and no stop order suspending
the effectiveness of the Registration Statement, or order preventing or
suspending the use of any Preliminary Prospectus or of the Prospectus, shall
have been issued and no proceedings for such purpose shall have been instituted
or be pending or, to the knowledge of the Company or you, shall be contemplated
by the Commission; and any request of the Commission for additional information
(to be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the satisfaction of the Underwriters' Counsel.
(b) On the Closing Date the Underwriters shall have received an opinion of
Xxxxxx Xxxxx, P.C., counsel for the Company, dated the Closing Date, to the
effect that:
(i) The Company has full corporate power and
authority to enter into this Agreement and this Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency or similar laws governing the rights of
creditors generally and to the discretion of courts in granting equitable
remedies, except insofar as rights to indemnity or contribution hereunder may be
limited by Federal securities laws.
13
(ii) The Warrant Agreement, the Consulting Agreement and the Mergers
and Acquisitions Agreement have been duly authorized, executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms (except insofar as
enforcement of the indemnification provisions thereof may be limited by
applicable federal securities laws or principles of public policy and subject to
bankruptcy, insolvency, moratorium, reorganization and similar laws affecting
creditors' rights generally and to general principles of equity). The Company
has full corporate power and authority to enter into the Warrant Agreement and
the Consulting Agreement and to sell, issue and deliver the Shares, Warrants,
Underwriters' Stock Warrants, Underwriters' Warrants and the securities
underlying all warrants;
(iii) The Company has authorized and outstanding capital stock as set
forth under "Capitalization" in the Prospectus; all of the Company's outstanding
shares have been duly authorized and validly issued, and are fully paid and
nonassessable; all of the Shares, Warrants, Underwriters' Stock Warrants and
Underwriters' Warrants sold pursuant to this Agreement have been duly
authorized, validly issued and delivered and are fully paid and nonassessable,
and conform to the descriptions thereof in the Prospectus and such descriptions
conform to the rights duly set forth in the Certificate of Incorporation of the
Company, the Warrant Agreement, the Underwriters' Stock Warrants, the
Underwriters' Warrants and this Agreement; the Warrants, the Underwriters' Stock
Warrants, and the Underwriters' Warrants are, and the warrants underlying the
Underwriters' Warrants will, when issued in accordance with the provisions of
the Warrant Agreement, the Underwriters' Stock Warrants, the Underwriters'
Warrants and this Agreement be, valid and legally binding obligations of the
Company in accordance with their respective terms (subject to bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
affecting creditors' rights generally and to general principles of equity); the
securities underlying the Warrants and the Underwriters' Stock Warrants and the
Underwriters' Warrants have been validly authorized and reserved for issuance,
and any shares when issued in accordance with the terms of the Warrants or
Underwriters' Stock Warrants, as the case may be, will be validly issued and
will be fully paid and non-assessable; the holders of the Shares, Warrants and
Underwriters' Stock Warrants, the Underwriters' Warrants, and the securities
underlying the Warrants, the Underwriters' Stock Warrants, and the Underwriters'
Warrants are not, and will not be, subject to any personal liability for
liabilities of the Company by reason of being holders thereof; and none of such
securities which have been issued, have been issued in violation of the
preemptive rights or any other rights of any stockholder of the Company and no
stockholder of the Company has any preemptive right to subscribe for or to
purchase any of such Shares, Warrants, Underwriters' Stock Warrants,
Underwriters'
14
Warrants or securities underlying the Warrants, Underwriters' Stock
Warrants and the Underwriters' Warrants;
(iv) The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware, has full corporate
power and authority to conduct its business as presently conducted and as
described in the Prospectus and to own its properties and is duly qualified to
do business and is in good standing in each jurisdiction wherein the property
owned or leased, or the conduct of business, by it makes such qualification
necessary (except where failure to so qualify would not have a material adverse
effect on the Company);
(v) The Registration Statement has become effective under the
Securities Act and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or is pending or contemplated
by the Commission;
(vi) The Registration Statement and the Prospectus, and any amendment or
supplement thereto, comply as to form in all material respects with the
requirements of the Securities Act and the Rules (except that such counsel need
express no opinion as to the financial statements and schedules and financial
data included therein or omitted therefrom);
(vii) Such counsel has assisted in the preparation of the Registration
Statement and the Prospectus and no fact has come to the attention of such
counsel which leads such counsel to believe that, either as of the Effective
Date or the date of the opinion, (A) either the Registration Statement or the
Prospectus or any amendment or supplement thereto (except for the financial
statements and schedules and financial data included therein or omitted
therefrom, as to which such counsel need express no opinion) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(B) there is any material legal, governmental or administrative proceeding
pending, threatened or contemplated to which the Company is or may become a
party or to which any of its property is or may become subject, or any basis for
any legal, governmental or administrative proceeding, required to be described
in the Prospectus under the Act which is not described as required, or (C) there
is any contract or document of a character required to be described in the
Registration Statement or the Prospectus, or to be filed as an exhibit to the
Registration Statement, under the Act which is not described or filed as
required.
(viii) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated therein do not and
will not conflict with or result in
15
a breach or violation of any of the terms or provisions of, or constitute a
default under, the Articles of Incorporation or By-Laws of the Company or any
indenture, mortgage, deed of trust, note agreement or other agreement or
instrument known to such counsel to which the Company is a party or by which it
is bound or to which any of its property is subject, or any Federal, state or
other statute, law, rule or regulation, or any judgment, order or decree of any
court or governmental agency or body known to such counsel having jurisdiction
over the Company or any of its property;
(ix) No consent, approval, authorization or order of, or declaration or
filing with, any government, governmental instrumentality or court, is required
for the valid consummation by the Company the transactions contemplated by this
Agreement, except such as may be required under the Securities Act or any state
securities or "blue sky" laws in connection with the purchase, sale and
distribution of the Shares; and
(x) To the best of such counsel's knowledge, the Company and its
subsidiaries possesses all material permits, certificates of compliance,
approvals, licenses, waivers, consents and other rights from governmental
authorities which are requisite for the material conduct of its business as
presently conducted and as des cribed in the Prospectus (except such as in the
aggregate would not materially affect the business or operations of the
Company), for the consummation of the transactions contemplated in this
Agreement and for the offering contemplated by the Prospectus, and each such
permit, certificate of compliance, approval, license, waiver, consent and right
is valid and in full force and effect.
(xi) Such opinion shall be to such further effect with respect to
other legal matters relating to this Agreement and the sale of the Shares
hereunder as counsel for the Underwriters may reasonably request. In rendering
the opinions set forth above, such counsel may rely upon certificates of
officers of the Company and public officials as to matters of fact, and may rely
as to all matters of law other than the laws of the United States or the
corporate laws of the State of Delaware upon opinions of counsel satisfactory to
you, in which case the opinion shall state that they have no reason to believe
that you and they are not entitled to so rely. Additionally, in rendering such
opinion, counsel shall not be required to opine upon the availability of
equitable remedies, including but not limited to, the remedies of specific
performance and injunctive relief.
(c) At the time this Agreement is executed by the parties hereto and on the
Closing Date (and on the Additional Closing Date, if any), the Underwriters
shall have received from Xxxxxx Xxxxx & Co., Inc., a letter dated as of each
such date, to the effect that:
16
(i) They are independent accountants with respect to the Company within
the meaning of the Act and the applicable published Rules and Regulations
thereunder;
(ii) In their opinion, the financial statements (inclu ding the
schedules, if any) in the Registration Statement examined by such firm, comply
as to form in all material respects with the applicable accounting requirements
of the Act and the published Rules and Regulations thereunder with respect to
registration statements on Form SB-2;
(iii) On the basis of procedures (but not an examination in accordance
with generally accepted auditing standards) consisting of reading the minutes of
meetings of the stockholders and the Board of Directors of the Company since the
date of the latest audited balance sheet as set forth in the minute books
through a specified date not more than five business days prior to the date of
the letter, reading the unaudited interim financial statements (if any),
including the schedules (if any), of the Company included in the Registration
Statement and making inquiries of certain officials of the Company who have
responsibility for financial and accounting matters regarding the specific items
for which representations are requested below, nothing has come to their
attention as a result of the foregoing procedures that caused them to believe
that (A) the unaudited financial statements (if any), including the schedules
(if any), of the Company included in the Registration Statement do not comply as
to form in all material respects with the applicable accounting requirements of
the Act and the published Rules and Regulations thereunder; (B) said financial
statements, including the schedules (if any), are not presented fairly, in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements; (C)
during the period from the date of the latest balance sheet covered by their
report(s) included in the Registration Statement to a specific date not more
than five business days prior to the date of the letter, there has been any
change in the capital stock or long-term debt of the Company as compared with
the amounts shown in the balance sheet included in the Registration Statement,
except as set forth in or contemplated by the Registration Statement; or (D) for
the period from the date of the last balance sheet contained in the Prospectus
to a speci fied date not more than five days prior to the date of such letter,
there has been any decrease, except as described in such letter and previously
discussed with you, in consolidated gross revenues, net income, consolidated
assets or total stockholders' equity as compared with the amounts shown on such
balance sheet, except for such changes or decreases which the Registration
Statement discloses have occurred or may occur; and
(iv) In addition to the examination referred to in their report
included in the Registration Statement and the limited procedures referred to in
clause (iii) above, they have carried out
17
certain specified procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information which are included in the Registration
Statement and Prospectus and which are specified by you, and have found such
amounts, percentages and financial information to be in agreement with the
relevant accounting and financial records of the Company and its subsidiaries
identified in such letter.
(d) The Representative shall have received a certificate or certificates,
dated the Closing Date and the Additional Closing Date, executed by at least two
officers of the Company, including the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, to the effect
that:
(i) No stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act;
(ii) Neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto contains any untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; and since the effective date of
the Registration Statement, there has occurred no event required to be set forth
in an amended or supplemented Prospectus which has not been so set forth;
(iii) Except as contemplated in the Prospectus, subse quent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material transaction, not
in the ordinary course of business, and there has not been any material change
in the capital stock or funded debt of the Company, or any material adverse
change in the condition (financial or other) or results of operations of the
Company;
(iv) There are no legal proceedings pending or threatened against the
Company of a character affecting the validity of this Agreement or required to
be disclosed in the Prospectus which are not disclosed therein; there are no
transactions or contracts which are required to be summarized therein which are
not so summarized; and there are no material contracts or documents required to
be filed as exhibits to the Registration Statement which are not so filed;
(v) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, the Company has not sustained
any material loss or damage to its properties, whether or not insured; and
18
(vi) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the date of the letter;
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the date of
the letter.
(e) The Company shall have furnished to you such certificates, in
addition to those specifically mentioned herein, as you may have reasonably
required in a timely manner as to the accuracy and completeness, at the Closing
Date, of any statement in the Registration Statement or the Prospectus; as to
the accuracy, at the Closing Date, of the representations and warranties of the
Company herein and in each certificate and document contemplated under this
Agreement to be delivered to you; as to the performance by the Company of its
respective obligations hereunder and under each such certificate and document;
or as to the fulfillment of the conditions concurrent and precedent to your
obligations hereunder.
(f) All corporate proceedings and related matters in connection with
the organization of the Company and the qualification, authorization, issuance,
sale and delivery of the Securities shall be satisfactory to Xxxxx X. Xxxxx,
Esq., counsel for the Underwriters, and such counsel shall have been furnished
with such papers and information as he may reasonably have requested in this
connection.
(g) All such opinions, letters, certificates and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Underwriters and to their counsel.
(j) If any condition to the Underwriters' obligations hereunder to be
satisfied at or prior to the Closing Date is not so satisfied, the Underwriters
may terminate this Agreement without liability on their part or on the part of
the Company, except for the expenses to be paid or reimbursed by the Company
pursuant to Section 4(e) of this Agreement and except for any liability under
Sections 6 and 7 of this Agreement.
6. Indemnification. (a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls each Underwriter within
the meaning of the Act against any losses, claims, damages or liabilities, joint
or several, to which it or such controlling person may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or in any blue sky application or other document executed by
the Company 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 Securities
under the securities laws thereof, or arise
19
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse it and each such controlling person
for any legal or other expenses reasonably incurred by it or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case 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 the Registration Statement,
such Preliminary Prospectus, the Prospectus or such amendment or supplement, or
in such blue sky application or such other document, in reliance upon and in
conformity with written information furnished to the Company by an Underwriter
specifically for use in the preparation thereof; and provided, further, that the
Company will not be liable under this indemnity agreement, insofar as it relates
to any Preliminary Prospectus, to the extent that any such loss, claim, damage,
liability or action results from the fact that an Underwriter sold Securities to
a person to whom there was not sent or given, at or prior to the written
confirmation of such sales, a copy of the Prospectus (or of the Prospectus as
then amended or supplemented if the Company had previously furnished copies
thereof to you). This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of the Act,
to the same extent as the foregoing indemnity from the Company to such
Underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director, officer or controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any blue sky
application or other document executed by the Company specifically for that
purpose filed in any state or other jurisdiction in order to qualify any or all
of the Securities under the securities laws thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, such Preliminary Prospectus, the Prospectus or
such amendment or supplement, or in such blue sky application or such other
document, in reliance upon and in conformity with written information furnished
to the Company by such Underwriter
20
specifically for use in the preparation thereof; and will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action. This indemnity agreement will be in
addition to any liability which an 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 shall, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 6, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 6. In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party shall 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, 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 6 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall be liable for any settlement of any action effected without its
written consent.
7. Contribution. (a) In order to provide for just and equitable
contribution under the Act in any case in which (i) an Underwriter (or any
person who controls the Underwriter within the meaning of the Act) makes claim
for indemnification pursuant to Paragraph 6(a) 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 Paragraph 6(a) provides for indemnification in
such case or (ii) contribution under the Act may be required on the part of an
Underwriter or any such controlling person in circumstances for which
indemnification is provided under Paragraph 6(b), then, and in each case, the
Company and the Underwriters shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that the Underwriters are responsible for an
aggregate of 10% (being the amount of the Underwriter's commission) and the
Company are responsible for the remaining portion; provided, however, that, in
any such case, 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 was not guilty of such fraudulent misrepresentation.
21
(b) Promptly after receipt by any party to this Agreement of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the commencement
thereof; but the omission so to notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution under the Act. In case any such action, suit or proceeding is
brought against any party, and such party notifies a contributing party of the
commencement thereof, the contributing party will be entitled to participate
therein with the notifying party and any other contributing party will be
entitled to participate therein with the notifying party and any other
contributing party similarly notified.
8. Substitution of Underwriters. (a) If one or more Underwriters shall
default in its or their obligations to purchase and pay for the Securities
hereunder and if the aggregate number of such Securities which all Underwriters
so defaulting shall have agreed to purchase does not exceed 10% of the aggregate
number of Securities to be purchased by the Underwriters, each non-defaulting
Underwriter shall have the right and is obligated, severally, to purchase and
pay for (in addition to the Securities set forth opposite its name in Schedule
A) that portion of the Securities agreed to be purchased by all such defaulting
Underwriters which the Securities set forth opposite its name in Schedule A
bears to the aggregate Securities so set forth opposite the names of all such
non-defaulting Underwriters. In such event, you as Representative, for the
accounts of the several non-defaulting Underwriters, shall take up and pay for
all or any part of such additional Securities to be purchased by each such
Underwriter under this Section 8(a), and may postpone the Closing Date to a time
not exceeding three full business days after the Closing Date determined as
provided in Section 3 hereof during which time the Company will prepare and file
any amendments to the Registration Statement and take any other action which the
Representative or its counsel shall deem necessary or appropriate to reflect
such event; or
(b) If one or more Underwriters default in its or their obligations to
purchase and pay for Securities hereunder and if the aggregate number of such
Securities which all Underwriters so defaulting shall have agreed to purchase
shall exceed 10% of the aggregate number of Securities to be purchased by the
Underwriters, or if one or more Underwriters for any reason permitted hereunder
cancel its or their obligations to purchase and pay for Securities hereunder,
the non-canceling and non-defaulting Underwriters (hereinafter called the
"remaining Underwriters") shall have the right to purchase such Securities in
such proportion as may be agreed among them, at the Closing Date determined as
provided in Section 3 hereof. If the remaining Underwriters do not purchase and
pay for such Securities at such Closing Date, the Closing Date
22
shall be postponed for twenty-four hours and the remaining Underwriters shall
have the right to purchase such Securities or to substitute another person or
persons, to purchase the same, or both, at such postponed Closing Date. If by
such postponed Closing Date the remaining Underwriters have not exercised such
right to purchase or obtained a substitute purchaser or purchasers, the Closing
Date shall be postponed for a further twenty-four hours and the Company shall
have the right to substitute another person or persons, satisfactory to the
Representative, to purchase such Securities at such second postponed Closing
Date. If the Company shall not have found such purchasers for such Securities by
such second postponed Closing Date, then this Agreement shall automa tically
terminate and neither the Company nor the remaining Underwriters shall be under
any obligation under this Agreement except that the Company shall remain liable
for the full amount of expenses incurred as provided in Section 4(a)(v) and to
the extent provided in Sections 6(a) and 7 hereof and the Underwriters shall
remain liable to the extent provided in Sections 6(b) and 7 hereof. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default or obligate any Underwriter to
purchase or find purchasers for any Securities in excess of those agreed to be
purchased by such Underwriter under the terms of Sections 3 and 8(a) hereof.
9. Representations and Indemnities to Survive Delivery. All representations
and warranties of the Company contained herein and in the certificate or
certificates delivered pursuant to Section 5(d) hereof, and the indemnity and
contribution agreements contained in Sections 6 and 7 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person, or by or on behalf of
the Company or any officer, director or controlling person, or of any
termination of this Agreement, and shall survive delivery of and payment for the
Shares.
10. Effective Date of this Agreement and Termination Thereof. (a) This
Agreement shall become effective at 9:00 A.M., New York City time, on the first
full business day after the Registration Statement has become effective, or at
such earlier time after the Registration Statement has become effective as you
in your discretion shall first release the Securities for sale to the public.
For the purposes of this Section 10, the Securities shall be deemed to have been
released for sale to the public upon release by you of the publication of a
newspaper advertisement relating to the Securities or upon release by you of
telegrams or facsimile transmissions offering the Securities for sale, whichever
shall first occur. You or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except as noted
below, by giving the notice hereinafter specified at or before the time this
Agreement becomes effective;
23
provided however, that the provisions of this Section, Section 4(a)(v), Section
6 and Section 7 shall at all times be effective.
(b) You shall have the right to terminate this Agreement by giving the
notice hereinafter specified at any time at or prior to the Closing Date if (i)
the Company shall have failed, refused or been unable, at or prior to the
Closing Date, to perform any agreement on its part to be performed hereunder, or
because any other condition precedent to the Underwriters' obligations hereunder
required to be fulfilled by the Company has not been fulfilled, or if (ii)
trading on the New York Stock Exchange shall have been generally suspended, or
minimum or maximum prices for trading shall have been generally fixed, or
maximum ranges for prices for securities shall have been generally required, on
the New York Stock Exchange, by the New York Stock Exchange or by order of the
Commission or any other governmental authority having jurisdiction, or if there
has been a substantial adverse change in general market or economic conditions,
or if a banking moratorium shall have been declared by Federal or New York
authorities, or if an outbreak of hostilities or other national or international
calamity of such nature as to disorganize the securities markets in the United
States shall have occurred since the execution hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 10, you shall notify the
Company promptly by telephone or telegram, confirmed by letter. If the Company
elects to prevent this Agreement from becoming effective, the Company shall
notify you promptly by telephone or telegram, confirmed by letter.
11. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to the Underwriters shall
be mailed, delivered or telegraphed and confirmed to you as Representative at 0
Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or if sent to the Company, shall
be mailed, delivered or telegraphed and confirmed to it at 000X Xxxxx 00 Xxxxx,
Xxxxxx, Xxx Xxxxxx 00000 marked to the attention of the President.
12. Parties. This Agreement shall inure to the benefit of and be binding
upon you and the Company and the several Underwriters and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person or corporation, other than the
parties hereto and their respective successors and assigns, the selling
securityholders referred to in Section 4(j) hereof, and the controlling persons
and the officers and directors referred to in Section 6 hereof, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of the
parties hereto and their respective successors and assigns,
24
and said selling securityholders and said controlling persons and said officers
and directors, and for the benefit of no other person or corporation. No
purchaser of any of the Securities from any Underwriter shall be construed a
successor or assign by reason merely of such purchase.
13. Information Furnished by Underwriters. The statements set forth in the
last paragraph on the cover page, in the stabi lization legend, under the
caption "Underwriting" and the state ments regarding counsel for the
Underwriters under the caption "Legal Matters" in any Preliminary Prospectus and
in the Prospectus and in blue sky reports of sales, if any, constitute the
written information furnished by or on behalf of any Underwriter referred to in
Sections 2(b), 6(a) and 6(b) hereof.
14. Miscellaneous. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the Company shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriters made
by you as the Representative. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, and
the Company hereby consents and will submit to the jurisdiction of the courts of
the State of New York and of any federal court sitting in the City of New York
with respect to controversies arising under this Agreement.
If the foregoing correctly sets forth the understanding between the Company
and the several Underwriters, please so indicate on behalf of the Underwriters
in the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement between the Company and each of the Underwriters.
Very truly yours,
TELLURIAN, INC.
By:_________________________________
Accepted as of the date first above written:
X.X. XXXXXXX & CO., INC.
Acting on behalf of the several
Underwriters named in Schedule A hereto.
By:_____________________________
25
1,200,000 Shares of Series 1 Convertible Conferred Stock
and
1,200,000 Redeemable Preferred Stock Purchase Warrants
TELLURIAN, INC.
AGREEMENT AMONG UNDERWRITERS
Dated: July , 1998
X.X. Xxxxxxx & Co., Inc.
as Representative of the Several Underwriters
0 Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We confirm our agreement with you as follows for the purchase by you and
the other several Underwriters hereinafter referred to, including ourselves, of
1,200,000 shares of Series 1 Convertible Preferred Stock and 1,200,000
Redeemable Preferred Stock Purchase Warrants plus the option to purchase up to
an aggregate of 180,000 additional shares of Series 1 Convertible Preferred
Stock and 180,000 additional Redeemable Preferred Stock Purchase Warrants
(hereinafter together referred to as the "Securities"), of Tellurian, Inc., a
Delaware corporation, (the "Company"). The Securities are to be purchased from
the Company pursuant to an underwriting agreement, the form of which is annexed
hereto (the "Underwriting Agreement"), the number of Securities to be purchased
by us severally being indicated on Schedule A to the Underwriting Agreement. The
Securities are to be offered to the public, and such offering will be made under
a registration statement and prospectus relating thereto filed by the Company
with the Securities and Exchange Commission, under the Securities Act of 1933,
as amended (the "Act") copies of which, together with amendments thereto, we
have received. The registration statement in the form in which it becomes
effective and the prospectus, as then amended, are hereinafter respectively
referred to as the "Registration Statement" and the "Prospectus".
1. Authority of Managing Underwriter. We hereby authorize you, on our
behalf, and as our agent and representative (in that capacity sometimes herein
called the "Managing Underwriter" or "Representative"), to execute and deliver
the Underwriting Agreement substantially in the form attached hereto, to act in
our behalf in carrying it out and to take such action and make such
determinations as you may deem advisable under and with respect thereto,
including agreement to any non-material modification thereto (but not
modifications as to price and number of Securities to be purchased by us).
2. Payment and Delivery. The purchase price of the Securities to be
purchased by us shall be $4.50 per share of Preferred Stock and $0.225 per
Redeemable Preferred Stock Purchase Warrant, and on the Closing Date we will pay
you the amount so due plus an additional amount equal to $_____ per share of
Preferred Stock and $____ per Warrant for Securities purchased by us, as
compensation for your services as Managing Underwriter. You shall give us at
least 24 hours' notice of the Closing Date and the place thereof pursuant to the
Underwriting Agreement. We will deliver, at or before 9:00 A.M., New York City
time, on the day fixed as such Closing Date, to you at the office of the
Representative, or at such other place or time as instructed by you, certified
or bank cashier's checks, payable to the order of the Representative, in New
York Clearing House funds, for the price of the Securities which we have agreed
to purchase and for the aforesaid fee. Upon receipt of such payment, you will
make payment to the order of the Company, for our account, of the purchase price
of such Securities against delivery thereof to you for our account. You shall
thereupon deliver to us the Securities purchased by us, less such amounts
thereof as shall have been reserved for offering to Selected Dealers if a
selling group is formed. In the event we do not pay you the purchase price in
the amount and at the time stated above, you may either treat our failure to do
so as a default on our part or, at your election, pay the purchase price to the
Company on our behalf and charge us with the amount thereof, with interest,
withholding delivery of the Securities for our account until such purchase price
and interest are received by you.
3. Expenses. You shall charge our account with: (i) all transfer taxes, if
any, and other charges on purchases, sales or transfers for our account; and
(ii) our proportionate share (based upon the number of Securities we agree to
purchase) of all other expenses which are not paid by the Company, including,
but not limited to, advertising costs and legal fees and disbursements of
counsel for the Underwriters, incurred by you under the terms of this Agreement
or in connection with the purchase, carrying and sale of the Securities,
including the expenses chargeable to and caused by any defaulting Underwriter
hereunder. Funds of the Underwriters in your hands, as Managing Underwriter, may
be held in your general funds without accountability for interest.
4. Public Offering. The initial public offering of the Securities, which
shall be made as set forth in the Prospectus, may be made on the date on which
the Registration Statement becomes effective or as soon thereafter as in your
judgment shall be practicable. The initial public offering prices for the
Securities shall be as shown on the cover page of the Prospectus. We authorize
you to determine the form of any advertisement of the Securities and the form of
agreements, if any, with dealers. We also authorize you to manage any such
public offering and to act as manager under agreements with dealers.
We authorize you to reserve for sale, sell and deliver, on
our behalf and for our account, to dealers (who may include any
Underwriter) selected by you (herein sometimes referred to as the "Selected
Dealers"), who are members of the National Association of Securities Dealers,
Inc. (the "NASD") or to foreign banks, dealers and institutions not registered
under the Securities Exchange Act of 1934, as amended, (the "Exchange Act")
which agree to make no sales within the United States, its territories or
possessions or to persons who are citizens thereof or residents therein, and in
making sales to comply with the NASD's Interpretation With Respect to Free
Riding and Withholding, and to such persons other than dealers as you shall
select, such number of Securities purchased by us from the Company as you shall
determine. Such reservations and sales to Selected Dealers and other persons for
the respective accounts of the several Underwriters shall be made as you may
determine. The concessions to be allowed to Selected Dealers and by them to be
reallowed to others are specified in the form of Selected Dealer Agreement
annexed hereto. If no Selected Dealer Agreement is entered into, we hereby
authorize you to allow concessions not exceeding $_____ per share of Preferred
Stock and $____ per Warrant (no part of which may be reallowed) to any other
dealer who is a member of the National Association of Securities Dealers, Inc.
or is a foreign dealer. The concessions and reallowances may be allowed only to
dealers who are members in good standing of said Association, or foreign banks,
dealers or institutions not eligible for membership in said Association who
agree to make no sales within the United States, its territories or possessions
or to persons who are citizens thereof or residents therein, and in making other
sales, to comply with said Associations' Interpretation With Respect to
Free-Riding and Withholding. Sales to others than such members or such foreign
banks, dealers or institutions will be made at the public offering prices.
You shall advise us promptly on the public offering date of the number of
Securities purchased by us which you have not reserved for sale to dealers or
other persons. We will retain for direct sale all of such Securities and, at any
time prior to the termination of this Agreement, you may reserve for sale to
dealers and other persons additional Securities retained by us and remaining
unsold.
We agree that whether or not any Selected Dealer Agreement with Selected
Dealers is entered into we shall be governed by the provisions of the attached
form of Selected Dealer Agreement (except as otherwise expressly provided
herein) during the term hereof, whether or not we are a Selected Dealer.
Upon our request you may from time to time, in your discretion, release to
us for direct sale any Securities reserved by you for sale to Selected Dealers
and other persons on our behalf and not then sold, and any Securities so
released shall not thereafter be deemed reserved.
3
If prior to, or within seven days after, the termination of this Agreement
any Securities sold by us (other than Securities sold by you as Managing
Underwriter for the account of an Underwriter pursuant to this Agreement or any
Selected Dealer Agreement) shall be purchased by the Managing Underwriter or by
any Underwriter through the Managing Underwriter in the open market, then any of
such Securities shall be repurchased by us at a price equal to the total cost
thereof including commissions and transfer taxes, if any, on redelivery. The
Securities delivered on such repurchase need not be the identical Securities
originally so purchased. In lieu of the repurchase of such Securities you may,
at your option (a) charge us an amount equal to the difference between the
public offering prices and the cost prices to Selected Dealers of the Securities
so purchased, and any broker's commissions paid in connection with such
purchase, or (b) sell for our account the Securities so purchased, publicly or
privately without notice at such prices and upon such terms and to such
purchasers, including any of the several Underwriters, as you may determine,
charging us the amount of any loss and expense or crediting to us the amount of
any profit, less any expense, resulting from such sale.
5. Sale of Securities by Underwriters to Managing Underwriter. We will
advise you, from time to time upon request, of the number of Securities retained
by or released to us for direct sale which then remain unsold and until the
termination of this Agreement we will, upon your request, sell to you, in order
to enable you to consummate sales or cover over-allotments, such number of such
unsold Securities as you may specify, at such price as you may designate, but
not less than the purchase prices paid to the Company therefor.
6. Transactions in Securities by Underwriters. We agree that until
termination of this Agreement and the Selected Dealer Agreements, we will not
buy or sell for our account any of the Securities or outstanding shares of
Common Stock or warrants of the Company except as permitted in this Agreement
and the Selected Dealer Agreement or as a broker pursuant to unsolicited orders,
provided, however, that, subject to the approval of the Managing Underwriter,
any Underwriter may buy Securities from, or sell Securities to, any other
Underwriter at the public offering prices, less all or any part of a concession
of $_____ per share of Preferred Stock and $_____ per Warrant, and may buy from,
and sell the same to, any Selected Dealer at the public offering price less all
or any part of any concession to Selected Dealers in the amount specified in the
form of Selected Dealer Agreement.
7. Loans and Advances. We authorize you to arrange such loans for our
account, or to make such advances of your funds on our behalf, as you may deem
necessary or advisable in connection with the purchase, delivery or carrying of
any of the Securities (and as may be permitted by law), and to pledge or hold as
security
4
therefor all or any part of the Securities which we shall have purchased or
agreed to purchase from the Company. We shall be paid or credited with the
proceeds of all loans made for our account.
You may, and at our request will, deliver to us from time to time on or
after the Closing Date and prior to the termination of this Agreement, for
carrying purposes only, any Securities purchased by us which have been reserved
for sale for our account but not sold and paid for. We will redeliver to you any
Securities so delivered to us for carrying purposes at such time or times prior
to such termination as you may demand.
8. Stabilization. We authorize you, in your discretion, during the term of
this Agreement, and for our account (a) to buy and sell Securities in the open
market or otherwise, for long or short account, in such amounts and on such
terms and at such prices as you may determine, provided that, during the term of
this Agreement and the Selected Dealer Agreement, any such sales of Securities
shall be made at the public offering prices or, in the case of sales of
Securities to a Selected Dealer or one of the Underwriters, at the public
offering prices less the concessions applicable thereto under Section 6 above,
or any part of such concessions, and (b) in arranging for sales of Securities to
Selected Dealers, to over-allot and to cover such over-allotments; it being
understood that such purchases and sales and over-allotments shall be as nearly
as practicable in the proportions in which the respective Underwriters have
agreed to purchase the Securities, and that at no time shall our net position,
for either long or short account including such over-allotments, exceed 15% of
the Securities which we have agreed to purchase under the Underwriting
Agreement. Upon your demand, we will pay you the cost of any Securities
purchased for our account and will deliver to you any Securities sold or
over-allotted for our account.
We authorize you to file on our behalf with the Securities and Exchange
Commission any reports required in connection with any transaction pursuant to
this Section 8. You shall notify us promptly if you effect such transactions.
9. Termination and Settlement. Unless earlier terminated by you, this
Agreement shall terminate at the close of business on the 30th day after the
initial public offering unless extended by you for an additional period or
periods not exceeding an aggregate of 30 additional days. You may extend this
Agreement for such period or periods and may terminate this Agreement at any
time without prior notice.
As soon as practicable after any such termination, any Securities held by
you for our account or reserved by you for sale to dealers and other persons but
not sold and paid for, shall be delivered to us and our net credit or debit
balance, taking into
5
account our share of known expenses and charges and any necessary reserve for
additional expenses, shall be received from or paid to you.
Notwithstanding any settlement under this Agreement, we agree to pay our
proportion (based on the number of Securities we agree to purchase from the
Company) of the amount of any claim, demand or liability which may be asserted
against and discharged by the Underwriters, or any of them, based on the claim
that the Underwriters constitute an association, unincorporated business or
other separate entity, and also to pay a like proportion of any transfer taxes
which may be assessed after such settlement and a like proportion of the
expenses incurred by the Underwriters, or any of them, and approved by you in
contesting any such claim, demand, liability or tax.
10. Defaulting Underwriters. In the event of failure of any Underwriter to
perform its obligation to take up and pay for the Securities which it has agreed
to purchase, you shall have the right to arrange for other persons, who may
include yourselves, to take up and pay for such Securities. In the event that
such arrangements are made, the proportions of the Securities then to be
purchased by the other Underwriters and by such other person or persons, if any,
shall be taken as the basis for all rights and obligations hereunder; but this
shall not in any way affect the liability of any defaulting Underwriters to the
other Underwriters for damages resulting from such default, nor shall default in
any way relieve any other Underwriter of any of its obligations hereunder or
under the Underwriting Agreement, except as therein provided.
11. Position of Managing Underwriter. Except as herein otherwise expressly
provided, you shall have full authority to take such action as you may deem
necessary or advisable in respect of all matters pertaining to the Underwriting
Agreement and this Agreement, and the purchase, sale and distribution of the
Securities, but you shall be under no liability to us except for want of good
faith and for obligations assumed by you hereunder and except for any
liabilities under the Act. No obligation not expressly assumed by you in this
Agreement shall be implied herefrom.
12. Indemnity. (a) We agree, and each of the several Underwriters
(including yourselves) shall agree, to indemnify, defend and hold harmless each
other Underwriter and each person who controls any other Underwriter within the
meaning of Section 15 of the Act, to the extent and upon the terms that each
Underwriter agrees to indemnify and hold harmless the Company as set forth in
Section 6 of the Underwriting Agreement.
6
(b) We will pay, upon your request, our proportionate share, based upon our
underwriting obligation, of any losses, damages, liabilities or expenses, joint
or several, paid or incurred by any Underwriter to any person other than an
Underwriter, arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, any amendments or supplements thereto or any preliminary prospectus
or any selling or advertising material approved by you for use by the
Underwriters in connection with the sale of the Securities, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading (other than an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by an Underwriter specifically for use therein) and such proportionate
share of any legal or other expenses reasonably incurred by you or with your
consent in connection with investigating or defending any claim or action in
respect of such loss, damage, liability or expense. In determining the amount of
our obligation under this Section 12(b), appropriate adjustment may be made by
you to reflect any amounts received from the Company by any one or more
Underwriters in respect of such claim pursuant to Section 6 or Section 7 of the
Underwriting Agreement or otherwise. There shall be credited against any amount
paid or payable by us pursuant to this Section 12(b) any loss, damage, liability
or expense which is incurred by us as a result of any such claim asserted
against us, and if such loss, damage, liability or expense is incurred by us
subsequent to any payment by us pursuant to this Section 12(b), appropriate
provision shall be made to effect such credit, by refund or otherwise. If any
such claim is asserted, you may take such action in connection therewith as you
deem necessary or desirable, including retention of counsel for the Underwriters
and in your discretion separate counsel for any particular Underwriter or groups
of Underwriters. In determining amounts payable pursuant to this Section 12(b)
any loss, damage, liability or expense incurred by any person controlling any
Underwriter within the meaning of Section 15 of the Act which has been incurred
by reason of such control relationship shall be deemed to have been incurred by
such Underwriter. Any Underwriter may elect to retain at its own expense its own
counsel. You may settle or consent to the settlement of any such claim with the
approval of a majority in interest of the Underwriters on advice of counsel
retained by you. Whenever you receive notice of the assertion of any claim to
which the provisions of this Section 12(b) would be applicable, you will give
prompt notice thereof to each Underwriter. You will also furnish each
Underwriter with periodic reports, at such times as you deem appropriate, as to
the status of such claim and the action taken by you in connection therewith. If
any Underwriter or Underwriters default in their obligation to make any payments
under this Section 12(b), each non-defaulting Underwriter shall be obligated to
pay its proportionate share of all defaulted payments,
7
based upon such Underwriter's underwriting obligation as related to the
underwriting obligations of all non-defaulting Underwriters. Nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) The indemnity agreement in this Section shall survive the termination
of this Agreement.
13. Confirmation of Underwriters. We confirm that we have examined the
Registration Statement and the amendments thereto referred to in the
Underwriting Agreement, that we are familiar with the proposed final amendment
thereto (including the proposed final form of prospectus), that we are willing
to accept the responsibilities of an underwriter under the Act in respect of the
Registration Statement and are willing to proceed with the public offering of
the Securities in the manner contemplated, and that the form of the Selected
Dealer Agreement employed by you in connection with this offering is
satisfactory to us. We further confirm that the information relating to us in
such proposed final form of prospectus and the statements therein as to the
terms of the offering of the Securities under the heading "Underwriting" of the
Registration Statement insofar as they relate to us are correct, and we
authorize you, as our Managing Underwriter, so to advise the Company. We further
confirm that (a) we are members in good standing of the NASD, or (b) we are a
foreign bank, dealer or institution not registered under the Exchange Act and we
agree (i) that in making sales of the Securities outside the United States we
will comply with the requirements of the NASD's Interpretation With Respect to
Free Riding and Withholding and (ii) that we will not offer or sell any of the
Securities within the United States, its territories or possessions or to
persons who are citizens thereof or residents therein and, (c) we have the ratio
of net capital to aggregate indebtedness, including the indebtedness represented
by our obligation under this Agreement and under the Underwriting Agreement,
required by Rule 15c3-1 promulgated by the Commission pursuant to the provisions
of Section 15(c)(3) of the Exchange Act. We know of no engineering, management
or similar report or memorandum relating to the Company prepared within the last
year in connection with the offering by or for the Company, a controlling person
of the Company or any Underwriter which has not been filed with the Commission.
We also confirm that copies of the latest preliminary prospectus with respect to
the Securities have been mailed, at least two days prior to the date hereof, to
all persons to whom it is presently expected we will sell Securities and that,
if we expect to mail a confirmation of any such sale to any person by air mail,
said preliminary prospectus has been sent to such person by air mail. In
response to Securities Act Release No. 5398, we agree that we will not sell more
than five (5%) percent of the Securities purchased by us hereunder to accounts
over which we exercise discretionary authority. We, and any affiliate of ours
engaged in the retail distribution of securities which is used by us in
connection with the offering of the Securities, will comply
8
with the applicable provisions of the Selected Dealer Agreement. We will not
sell any Securities at prices less than the Offering Prices except to persons
who have entered into, or agreed to enter into, the Selected Dealer Agreement.
For a period of twenty-five (25) days after the effectiveness of the
Registration Statement, or until completion of the public offering of the
Securities, whichever is later, we will provide a copy of the Prospectus to any
person making a written request therefor.
14. Miscellaneous. Nothing herein contained shall constitute the several
Underwriters an association, or any Underwriters partners with you or us, or
with each other, or render any Underwriter liable for the obligations of any
other Underwriter; and the rights and liabilities of ourselves and of each of
the Underwriters shall be several and not joint.
The Securities purchased by us pursuant to the Underwriting Agreement shall
remain our property until sold, and no title to any such Securities shall pass
to you by virtue of any of the provisions of this Agreement.
Default by any one or more Underwriters in respect of their several
obligations shall not release us or any other Underwriter from any obligations
hereunder.
You shall not have any responsibility with respect to the right of any
Underwriter or other person to sell the Securities in any jurisdiction,
notwithstanding any information you may furnish in that connection. We authorize
you to file with the New York authorities, as syndicate manager, a Further State
Notice relating to the Securities if required.
The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
This Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of New York, and we hereby
consent and shall submit to the jurisdiction of the courts of the State of New
York and of any federal court sitting in the City of New York with respect to
controversies arising under this Agreement.
15. Notices. Any notice from you to us shall be deemed to have been duly
given if mailed, telephoned, telegraphed or deli vered to us at our address set
forth after on Schedule A to the attached Underwriting Agreement.
16. Execution of Agreement. This Agreement has been executed by us and is
delivered to you in duplicate. Your confirmation hereof shall constitute this
Agreement a valid and binding contract between you and us and each party to a
similarly confirmed
9
agreement substantially identical herewith, and this and such other agreements
shall constitute the Agreement Among Underwriters.
Very truly yours,
By:_________________________________
Attorney-in-fact for each of the
Several Underwriters named in
Schedule A of the attached
Underwriting Agreement
Confirmed as of the date first above written:
X.X. XXXXXXX & CO., INC.
By:___________________________
10
SCHEDULE A
TELLURIAN, INC.
Underwriting Agreement dated July , 1998
This Schedule sets forth the name and address of each Underwriter and the
number of Shares to be purchased by each Underwriter from the Company.
Number of Number of
Name Address Shares Warrants
------------ --------------------- --------- ---------
X.X. Xxxxxxx 1 Battery Park Plaza
& Co., Inc. Xxx Xxxx, XX 00000
--------- ---------
Total...................1,200,000 1,200,000
--------- ---------
26
1,200,000 Shares of Series 1 Convertible Preferred Stock
and
1,200,000 Redeemable Preferred Stock Purchase Warrants
TELLURIAN, INC.
SELECTED DEALER AGREEMENT
Dated: July , 1998
Dear Sirs:
The Underwriters named in the prospectus mentioned below (the
"Underwriters") have severally agreed, subject to the terms and conditions of
the Underwriting Agreement (the "Underwriting Agreement"), to purchase from
Tellurian, Inc. (the "Company") at the prices set forth on the cover of said
prospectus, an aggregate of 1,200,000 shares of Series 1 Convertible Preferred
Stock (the "Shares") and 1,200,000 Redeemable Preferred Stock Purchase Warrants
(the "Warrants"). The Securities are more particularly described in the enclosed
prospectus (the "Prospectus"), additional copies of which will be supplied in
reasonable quantities upon request.
Some or all of the Underwriters are severally offering a part of the
Securities for sale to selected dealers (the "Selected Dealers"), among whom
they are pleased to include you, at the public offering prices, less concessions
in the amounts set forth in the Prospectus under "Underwriting". This offering
is made subject to delivery of the Securities and their acceptance by the
Underwriters, to the approval of all legal matters by counsel, and to the terms
and conditions herein set forth and may be made on the basis of the reservation
of Securities or an allotment against subscription.
We have advised you by telegram of the method and terms of the offering.
Acceptances should be sent to X.X. Xxxxxxx & Co., Inc., 0 Xxxxxxx Xxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000. We reserve the right to reject any acceptances in
whole or in part.
Any of the Securities purchased by you hereunder are to be offered by you
to the public at the public offering prices, except as herein otherwise provided
and except that a reallowance from
1
such public offering prices of not in excess of the amount set forth in the
Prospectus under "Underwriting" may be allowed to dealers who are members in
good standing of the National Association of Securities Dealers, Inc., or
foreign banks, dealers or institutions not eligible for membership in said
Association who represent to you that they will promptly reoffer such Securities
to unrelated persons at the public offering prices and will abide by the
conditions with respect to foreign banks, dealers and institutions set forth in
the confirmation below.
We, acting as Representative, and, with our consent, any Underwriter may
buy Securities from, or sell Securities to, any Selected Dealer or any other
Underwriter, and any Selected Dealer may buy Securities from, or sell Securities
to, any other Selected Dealer or any Underwriter at the public offering prices
less all or any part of the concessions.
You agree to pay us on demand for the accounts of the several Underwriters
an amount equal to the concessions on any Securities purchased by you hereunder
which, prior to the termination of this Agreement, we may purchase or contract
to purchase for the account of any Underwriter or which may be delivered against
purchase contracts made prior to the termination of this Agreement.
Securities purchased by you hereunder shall be paid for on such date as we
shall determine, on one day's notice to you, by certified or official bank check
payable in New York Clearing House funds to the order of X.X. Xxxxxxx & Co.,
Inc., 0 Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as
instructed. Delivery to you of certificates for Securities will be made as soon
as is practicable thereafter. Unless specifically authorized by us, payment by
you may not be deferred until delivery of certificates to you.
The Underwriters have been advised by the Company that a Registration
Statement for the Securities, filed under the Securities Act of 1933, has become
effective. You agree that in selling Securities purchased pursuant hereto (which
agreement shall also be for the benefit of the Company) you will comply with the
applicable requirements of the Securities Act of 1933 and of the Securities
Exchange Act of 1934. No person is authorized by the Company or by the
Underwriters to give any information or make any representations not contained
in the Prospectus in connection with the sale of Securities. You are not
authorized to act as agent for the Company or any of the Underwriters in
offering Securities to the public or otherwise. Nothing contained herein shall
constitute the Selected Dealers partners with any of the Underwriters or with
one another.
Upon application to us, we will inform you as to the advice we have
received from counsel concerning the jurisdictions in which Securities have been
qualified for sale or are exempt under the
2
respective securities or blue sky laws of such jurisdictions, but we have not
assumed and will not assume any obligation or responsibility as to the right of
any Selected Dealer to sell Securities in any such jurisdiction.
As Representative, we shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the offering or
arising thereunder. Neither we, acting as Representative, nor any of the
Underwriters shall be under any obligation to you except for obligations
expressly assumed by us in this Agreement.
Each of the Underwriters has authorized us to overallot in arranging for
sales of the Securities to the Selected Dealers and to purchase and sell
Securities for long or short account and has also authorized us to stabilize or
maintain the market prices of the Preferred Stock and the Warrants of the
Company.
You agree, upon our request, at any time or times prior to the termination
of this Agreement, to report to us the number of Securities purchased by you
pursuant to the provisions hereof which then remain unsold.
Selected Dealers will be governed by the conditions herein set forth until
this Agreement is terminated. This Agreement will terminate at the close of
business on the 30th day after the date hereof but, in our discretion, may be
extended by us for a further period not exceeding 30 days and in our discretion,
whether or not extended, may be terminated at any earlier time. Notwithstanding
the termination of this Agreement, you shall remain liable for your
proportionate amount of any claim, demand or liability which may be asserted
against you alone, against you together with other dealers purchasing Securities
upon the terms hereof, or against us, based upon the claim that the Selected
Dealers, or any of them, constitute an association, an unincorporated business
or other entity.
This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, and you consent and
will submit to the jurisdiction of the courts of the State of New York and of
any federal court sitting in the City of New York with respect to controversies
arising under this Agreement.
In the event that you agree to purchase Securities in accordance with the
terms hereof, kindly confirm such agreement by completing and signing the form
provided for that purpose on the enclosed duplicate hereof and returning it to
us promptly, even though you may have previously advised us of your acceptance
by telephone or telegraph.
3
All communications from you should be addressed to X.X. Xxxxxxx & Co.,
Inc., 0 Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. Any notice from us to you
shall be deemed to have been fully authorized by the Underwriters and to have
been duly given if mailed or telegraphed to you at the address to which this
letter is mailed.
Very truly yours,
X.X. XXXXXXX & CO., INC.
As Representative of the several
Underwriters
By ________________________________
4
X.X. Xxxxxxx & Co., Inc.
As Representative of the several Underwriters
0 Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We hereby confirm our agreement to purchase ___________ Shares and
_____________ Warrants of Tellurian, Inc. allotted to us subject to the terms
and conditions of the foregoing agreement and your telegram to us referred to
therein. We hereby acknowledge receipt of the Prospectus relating to the
Securities, and we confirm that in purchasing Securities we have relied upon no
statements whatsoever, written or oral, other than the statements in such
Prospectus. We have made a record of our distribution of preliminary
prospectuses and, when furnished with copies of any revised preliminary
prospectus, we have promptly forwarded copies thereof to each person to whom we
had theretofore distributed preliminary prospectuses. We hereby represent that
we are a member in good standing of the National Association of Securities
Dealers, Inc. and agree to comply with the Rules of Fair Practice of said
Association, and in particular, Sections 8, 24, 25 and 36 of Article III
thereof, or, if we are not such a member, we are a foreign bank, dealer or
institution not eligible for membership in said Association and agree to make no
sales within the United States, its territories or possessions or to persons who
are citizens thereof or residents therein, and in making any sales to comply
with said Association's Rules and Interpretations to the extent applicable to
us.
................................
Name of Selected Dealer
By .............................
(Authorized Signature)
................................
(Print name and title)
Address:
.................................
.................................
Dated as of the date first above written.
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