EXHIBIT 1.(a)
[FORM OF UNDERWRITING AGREEMENT --
SUBJECT TO ADDITIONAL REVIEW]
VISUAL DATA CORPORATION
1,000,000 SHARES
OF COMMON STOCK, $.0001 PAR VALUE PER SHARE,
AND
1,000,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
UNDERWRITING AGREEMENT
As of __________________, 1997
Nico X. Xxxxx, President
Noble International Investments, Inc.
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Visual Data Corporation, a Florida corporation (the "Company"),
proposes to sell to Noble International Investments, Inc., a Florida corporation
(the "Representative"), and the several other underwriters named on Schedule 1
attached hereto (collectively, the "Underwriters"), and the Underwriters
severally propose to purchase from the Company, an aggregate of 1,000,000 shares
("Shares") of the Company's common stock, par value $.0001 per share ("Common
Stock"), and 1,000,000 redeemable common stock purchase warrants (the
"Warrants"), as more fully described in Section 1 hereinbelow (the Shares, the
Warrants, and the shares of Common Stock of the Company underlying the Warrants
are hereinafter sometimes collectively referred to as the "Securities").
In addition, either the Company or Xxxxx X. Xxxxxx and Xxxx X.
Xxxxxxxxxx (collectively, and jointly and severally, the "Selling Shareholders")
shall grant to the Underwriters the option to purchase up to an additional
150,000 shares of Common Stock (the "Optional Shares") solely for the purpose of
covering over-allotments (the "Over-Allotment Option"), if any, in connection
with the sale of the Securities. The Company shall grant to the Underwriters the
option to purchase up to an additional 150,000 warrants ("Optional Warrants")
solely for the purpose of covering the Over-Allotment Option. (The Optional
Warrants are referred to collectively as the "Optional Securities" described
above and Optional Securities are referred to collectively as the "Securities,"
unless the context otherwise requires).
1. PURCHASE, SALE, AND DELIVERY OF THE SECURITIES AND UNDERWRITERS'
WARRANTS.
(a) PURCHASE AND SALE OF THE SECURITIES. On the basis of the
representations, warranties, covenants, and agreements of the Company and the
Selling Shareholders herein contained, and subject to the terms and conditions
herein set forth, the Company agrees to sell to the several Underwriters, and
the Underwriters, severally and not jointly, agree to purchase
from the Company, (i) the Shares at a purchase price of $6.00 per share and (ii)
the Warrants at a purchase price of $.10 per Warrant. Each Warrant shall entitle
the holder to purchase one share of Common Stock at a price of $7.20 per share
commencing six months from the Effective Date until five years after the
Effective Date. The Warrants shall be redeemable by the Company for $.05 per
Warrant at any time, commencing six months from the Effective Date and upon the
Company's providing 30 days' prior written notice, if the closing bid price for
Common Stock as reported by the principal exchange on which the Common Stock is
then traded equals or exceeds $9.00 per share for 20 consecutive days. The form
of the Warrant to be used is attached as an exhibit to the Registration
Statement (defined below).
The Underwriters plan to offer the Securities for sale to the
public at the price (the "Public Offering Price") and upon the terms set forth
in the Prospectus (as defined below) (the "Public Offering") as soon as
practicable after the date the Registration Statement (as defined below) is
declared effective (the "Effective Date") by the U.S. Securities and Exchange
Commission (the "Commission"). The Company and the Selling Shareholders
acknowledge that the Representative shall have the right to select and form a
syndicate of selected dealers and other Underwriters, reasonably acceptable to
the Company, to assist the Representative in the Public Offering.
(b) PURCHASE AND SALE OF THE OPTIONAL SECURITIES. The Company
or the Selling Shareholders hereby grant to the Underwriters an option to
purchase from the Company and/or the Selling Shareholders, as the case may be,
solely for the purpose of covering over-allotments in connection with the sale
of the Securities, all or any portion of the Optional Securities for a period of
45 days from the Effective Date at the same purchase price per security payable
by the Underwriters for each security as provided in Subsection 1(a) above.
The option to purchase Optional Securities granted in
Subsection 1(b) hereof may be exercised on such number of occasions as is
determined by the Representative during the term thereof by written notice to
the Company and/or the Selling Shareholders, as the case may be, from the
Representative. Such notice shall set forth the aggregate number of Optional
Securities as to which the option is being exercised and the time and date of
payment and delivery therefor. Such time and date of delivery shall not be later
than either the Closing Date (as defined below) or the second business day after
the day on which the option shall have been exercised (the "Option Closing
Date"). The Option Closing Date shall also refer to any subsequent Option
Closing Date in the event such option is exercised in part on more than one
occasion. Delivery and payment for such Optional Securities shall be at the
offices set forth below for delivery and payment of the Securities.
The obligation of the Underwriters to purchase and pay for any
of the Optional Securities is subject (as of the date hereof and as of the
Closing Date and/or the Option Closing Date) to the accuracy and completeness of
and compliance in all material respects with the representations and warranties
of the Company and the Selling Shareholders herein, to the accuracy and
completeness of the statements of the Company or its officers made in any
certificate or other documents to be delivered by the Company and/or the Selling
Shareholders pursuant to this Agreement, to the performance in all material
respects by the Company and/or the Selling Shareholders of its or their
obligations hereunder, to the satisfaction by the Company and/or the Selling
Shareholders of the conditions as of the date hereof and as of the Closing Date
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and/or Option Closing Date, set forth in Subsection 1(c) hereof, and to the
delivery to the Representative of opinions, certificates and letters dated the
Closing Date and/or Option Closing Date substantially similar in scope to those
specified in Section 7, but with each reference to the "Securities" and the
"Closing Date" being deemed to be the "Optional Securities" and "Option Closing
Date." In the event that the Representative purchases any Optional Shares from
the Selling Shareholders, the Selling Shareholders shall pay to the
Representative the Representative's discount provided in Subsection 5(b) of this
Agreement, the non-accountable expense allowance provided in Subsection 5(c) of
this Agreement, and all other expenses and costs attributable to such purchase
of Optional Shares.
(c) DELIVERY OF AND PAYMENT FOR THE SECURITIES. Delivery of
the certificates representing the Securities shall be made to the Underwriters
at the offices of the Representative, or such other location as the
Representative shall determine and advise the Company upon at least two full
business days' notice in writing, against payment therefor by federal wire
transfer to the Company as appropriate at 11:00 A.M., Eastern Time, on
_____________, 1997, or at such other time and business day (Saturdays, Sundays,
and legal holidays in Boca Raton, Florida, not being considered business days
for the purposes of this Agreement), not later than the third business day
following the date the Underwriters began trading the Securities, as shall be
agreed upon by the Representative and the Company, which time and date are
herein called the "Closing Date." If the Underwriters purchase any Optional
Shares pursuant to the Over-Allotment Option, delivery and payment for the
certificates representing the Optional Shares shall be made in the same manner
described herein on the Option Closing Date.
Delivery of the certificates representing the Securities shall
be made in registered form in such name or names and in such denominations as
the Representative shall specify to the Company upon at least two full business
days' notice in writing prior to the Closing Date or the Option Closing Date, as
the case may be. The Company will make the certificates available to the
Representative for examination at the offices of the Representative or at such
other location as the Representative shall specify to the Company, not later
than 2:00 P.M., Eastern Time, on the business day immediately preceding the
Closing Date or the Option Closing Date, as the case may be.
(d) DELIVERY AND PAYMENT OF THE UNDERWRITERS' WARRANTS. On the
Closing Date, the Company will sell to the Representative or its designee, and
the Representative or its designee shall purchase, the Underwriters' Warrants,
as more fully described in Section 6(a) herein. The Underwriters' Warrants will
be in the form of, and in accordance with, the provisions of the Underwriters'
Warrants attached as an exhibit to the amendment to the Registration Statement
(as defined below). Payment for the Underwriters' Warrants will be made to the
Company by check or checks payable to its order on the Closing Date against
delivery of the certificates representing the Underwriters' Warrants. The
certificates representing the Underwriters' Warrants will be in such
denominations and in such names as the Representative may request at least two
business days prior to the Closing Date.
(e) USE OF PROSPECTUS. The Company and the Selling
Shareholders hereby confirm their authorization to the Underwriters to use, and
to make available for use by dealers, the Preliminary Prospectus and Prospectus
(as defined below), and the Company and the Selling Shareholders hereby
authorize the Underwriters, all selected dealers, and all other dealers to
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whom any of the Securities may be sold by the Underwriters or selected dealers,
to use the Preliminary Prospectus and Prospectus, as from time to time amended
or supplemented, in connection with the sale of the Securities in accordance
with the applicable provisions of the Securities Act of 1933, as amended (the
"Securities Act"), the rules and regulations of the Commission thereunder (the
"Regulations"), and applicable state law until completion of the Public Offering
and for such longer period as the Underwriters may request if the Prospectus is
required to be delivered in connection with sales of the Securities by the
Underwriters or a dealer.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to each, and agrees with the Underwriters, that:
(1) REGISTRATION STATEMENT ON FORM SB-2. The Company
has prepared in conformity with the requirements under the Securities Act and
the Regulations, and has filed with the Commission under the Securities Act, a
registration statement on Form SB-2, File No. 333-18819 (the "Registration
Statement"), including the related Prospectus, for the registration of the sale
of the Securities and the Underwriters' Warrants and the securities underlying
the Underwriters' Warrants (collectively, the "Warrant Securities"). The
conditions for the use of a registration statement on Form SB-2 set forth in the
General Instructions thereto have been satisfied with respect to the Company,
the transactions contemplated herein, and the Registration Statement. As used in
this Agreement, the term "Registration Statement" means such registration
statement of the Company, as amended (pre- or post-effectiveness), on file with
the Commission at the time the registration statement or any post-effective
amendment thereto becomes effective under the Securities Act (including all
financial statements and financial schedules, exhibits, all other documents
filed as a part thereof or incorporated by reference therein, and all the
information contained in any final Prospectus filed with the Commission pursuant
to Rule 424(b) under the Securities Act or deemed by virtue of Rule 430A under
the Securities Act to be part of the Registration Statement). The term
"Prospectus" as used herein means the final Prospectus included as part of the
Registration Statement, including, if applicable, the information contained in
any final Prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act or deemed by virtue of Rule 430A under the Securities Act to be
part of the Registration Statement. The term "Preliminary Prospectus" refers to
and means any prospectus included in the Registration Statement or any amendment
thereto prior to the Registration Statement becoming effective under the
Securities Act.
(2) USE AND ACCURACY OF PROSPECTUS. Neither the
Commission nor any state regulatory authority has issued any order preventing or
suspending the use of any Prospectus or any part thereof, and no proceedings for
that purpose have been instituted or, to the Company's knowledge, are pending,
threatened or contemplated. Each Prospectus delivered to the Underwriters for
dissemination in connection with the Public Offering, at the time of filing
thereof and delivery to the Underwriters for such dissemination, did not contain
any untrue statement of a material fact, or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; the
foregoing shall not apply, however, to statements in, or
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omissions from, any Prospectus that are based upon and conform to written
information furnished to the Company with respect to any Underwriter (or any
affiliate or associate thereof) by or on behalf of the Underwriters or such
Underwriters specifically for use in the preparation thereof.
(3) EFFECTIVENESS AND ACCURACY OF REGISTRATION
STATEMENT. The Registration Statement has or will become effective under the
Securities Act as of the Effective Date. The Registration Statement and the
Prospectus, from the Effective Date through the Closing Date and, if Optional
Securities are purchased, up to and including the Option Closing Date (and if
there are multiple Option Closing Dates, up to and including the last Option
Closing Date), will comply in all respects with the applicable requirements of
the Securities Act and the Regulations, and neither the Registration Statement
nor the Prospectus will, on such dates, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and, on such dates, no event will have
occurred that should have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus that has not then been set forth in
such an amendment or supplement; the foregoing shall not apply, however, to
statements in, or omissions from, the Registration Statement or the Prospectus
that are based upon and conform to written information furnished to the Company
with respect to the Underwriters (or any affiliate or associate thereof) by or
on behalf of the Underwriters specifically for use in the preparation thereof.
The descriptions in the Registration Statement and the Prospectus of contracts
and other documents of the Company are accurate and present fairly the
information required to be disclosed, and there are no contracts or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement under the
Securities Act or the Regulations which have not been so described or filed as
required. The Company has complied with all requests of the Commission and any
state securities commission in a state designated by the Representative pursuant
to Subsection 3(e) hereof for additional information to be included in the
Registration Statement and Prospectus or otherwise.
(4) INDEPENDENT PUBLIC ACCOUNTANTS. Xxxxxxxxx, Xxxxx
& Co., the accountants whose reports on the financial statements of the Company
are filed with the Commission as a part of the Registration Statement are, and
were during the periods covered by their respective reports, independent public
accountants as required by the Securities Act and the Regulations.
(5) ORGANIZATION, QUALIFICATION, ETC. The Company
does not have any subsidiaries and the Company does not own, and at the Closing
Date and any Option Closing Date will not own, directly or indirectly, any stock
or other equity interest in, or control, directly or indirectly, any other
corporation, partnership or other entity, other than HotelView Corporation, a
[Florida] corporation and wholly-owned subsidiary ("HotelView"). Each of the
Company and HotelView is (i) a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, with
full power and authority to own or lease all of the assets owned or leased by it
and to conduct its business as described in the Registration Statement and the
Prospectus and (ii) duly qualified to do business and in good standing as a
foreign corporation in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it makes such
qualification
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necessary, except where the failure to so qualify would not have a material
adverse effect on the condition (financial or otherwise), earnings, business,
assets, properties, results of operations or prospects (financial or otherwise)
of the Company (hereinafter a "Material Adverse Effect"). Complete and correct
copies of the articles of incorporation and the by-laws of each of the Company
and HotelView in effect on the date hereof have been delivered to the
Representative, and no changes therein will be made on or subsequent to the date
hereof and prior to the Closing Date and/or any Option Closing Date.
(6) PERMITS AND LICENSES. Each of the Company and
HotelView has all approvals, licenses, franchises, authorizations and permits
(collectively, "Permits") necessary under all applicable statutes, codes, rules,
regulations, orders and decrees of governments or governmental bodies
(collectively, "Laws") to own, lease or use its assets and to conduct its
business as described in the Prospectus, except where the failure to have any
such Permits, singly or in the aggregate, will not have a Material Adverse
Effect. Neither the Company nor HotelView has received notice of any proceedings
relating to the revocation or modification of any such Permits and the Company
and HotelView are each in all respects in compliance with all of their Permits,
except where the failure to comply, either singly or in the aggregate, will not
have a Material Adverse Effect. The Company is not aware of any breach,
violation or default with respect to such Permits.
(7) CAPITALIZATION AND LEGALITY OF SECURITIES. The
authorized, issued and outstanding capital stock of the Company is as set forth
in the Prospectus under the caption "Capitalization." The Company will have the
adjusted capitalization set forth therein on the Closing Date and each Option
Closing Date, if any, based on the assumptions set forth therein. There are no
preemptive rights with respect to any outstanding securities of the Company. The
capital stock and other securities of the Company conform to the descriptions
thereof contained in the Prospectus under the caption "Description of
Securities," and consists of 20,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, par value $.001 per share ("Preferred Stock"). As of
the date hereof, there are 1,889,849 shares of Common Stock issued and
outstanding. There are no shares of Preferred Stock outstanding. In addition,
the Company has outstanding options to purchase an aggregate of ______ shares of
Common Stock and warrants to purchase an additional ______ shares of Common
Stock, as such options and warrants are more fully described in the Registration
Statement and the Prospectus. The Company has sufficient authorized (and neither
issued nor outstanding) Common Stock to be offered and sold as contemplated
herein, and to be issued upon exercise of the Warrants and the Underwriters'
Warrants. Except as otherwise set forth in the Prospectus, there are no
outstanding options, warrants, or other rights to purchase any shares of Common
Stock or other capital stock of the Company, or to purchase any other securities
convertible into or exchangeable for Common Stock or any other capital stock of
the Company. The outstanding securities of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. All the shares of
Common Stock to be offered by the Prospectus have been duly authorized and, when
issued and delivered against payment therefor as provided in this Agreement, the
Prospectus, and the Representative's Warrant, as applicable, will be validly
issued, fully paid and nonassessable. The Representative's Warrant will
constitute, when sold and delivered as contemplated, a valid and binding
obligation of the Company enforceable in accordance with its terms, except to
the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and similar laws
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and court decisions now or hereafter in effect relating to or affecting
creditors' rights and remedies generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding at law or
in equity). A sufficient number of shares of Common Stock have been reserved for
issuance upon sale and exercise of the Warrants, and the Underwriters' Warrants.
(8) REGISTRATION OF SECURITIES, UNDERWRITERS'
WARRANTS AND WARRANT SECURITIES. Upon the effectiveness of the Registration
Statement, the Securities, Underwriters' Warrants and Warrant Securities shall
have been listed on The Nasdaq SmallCap Market(R). The Company has taken no
action designed, or likely, to have the effect of terminating the registration
of the Securities under Section 12(g) of the Exchange Act, nor has the Company
received any notification that the Commission is contemplating terminating such
registration. The registration of the Securities, Underwriters' Warrants and
Warrant Securities under the Exchange Act was declared effective on the
Effective Date, and the Company has not received any notification that the
Commission is contemplating terminating such registration.
(9) EXCHANGE ACT FILINGS. As of the filing date, each
report or statement filed by the Company with the Commission pursuant to the
Exchange Act complied as to form in all respects with the requirements of the
Exchange Act and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. From the Effective Date thereafter, the Company shall comply with
all periodic reporting and proxy solicitation requirements imposed by the
Commission pursuant to the Exchange Act, and shall promptly furnish the
Representative with copies of all material filed with the Commission pursuant to
the Exchange Act or otherwise furnished to the shareholders of the Company.
(10) TAXES. No transfer tax, stamp duty or other
similar tax is payable by or on behalf of the Underwriters in connection with
(i) the issuance by the Company of the Securities, including the Warrant
Securities, (ii) the purchase by the Underwriters of the Securities from the
Company or the Selling Shareholders and the purchase by the Representative of
the Underwriters' Warrants from the Company, (iii) the consummation by the
Company of any of its obligations under this Agreement, or (iv) resales of the
Securities in connection with the distribution contemplated hereby.
(11) FINANCIAL STATEMENTS. The financial statements
(audited and unaudited), and related financial schedules and notes
(collectively, the "Financial Statements"), filed with and as part of the
Registration Statement, comply in all respects with the applicable accounting
requirements of the Securities Act and the Regulations and present fairly the
financial position of the Company as of the dates thereof and results of
operations and changes in cash flows of the Company for the periods to which
they apply, and such Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. All adjustments that, in the opinion of
management, are necessary for a fair presentation of the results for all such
periods have been made. The Financial Statements included in the Registration
Statement and the Prospectus are the only financial statements required under
the Securities Act or the Regulations to be included in the Registration
Statement and the Prospectus. The other financial and statistical information
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included in the Prospectus, including, without limitation, "Prospectus Summary",
"Summary Consolidated Financial and Operating Data" and "Selected Consolidated
Financial Data" presents fairly the information shown therein, and has been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement and the books and records of the Company.
(12) MATERIAL LOSS. Neither the Company nor HotelView
has, since the date of the latest financial statements included in the
Prospectus or the Registration Statement, sustained any material loss or
interference with its business from fire, explosion, flood, or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order, or decree, other than as set forth in the
Prospectus. Since the respective dates as of which information is set forth in
the Prospectus, and except as otherwise set forth therein: (i) there has not
been any change in the capital stock, or material increase in the short term or
long-term debt, of the Company or HotelView taken as a whole; (ii) there has not
been any material adverse change or any prospective material adverse change in
the condition (financial or otherwise), business, prospects (financial or
otherwise), results of operations, general affairs, or management of the Company
or HotelView, whether or not arising in the ordinary course of business; (iii)
no event has occurred that would result in a material write-down of assets of
the Company or HotelView (iv) neither the Company nor HotelView has incurred any
material liability or obligation, direct or contingent, or entered into any
material transaction, other than those in the ordinary course of business; (v)
neither the Company nor HotelView has purchased any of its outstanding capital
stock; (vi) there has been no dividend or distribution of any kind declared,
paid, or made by the Company in respect of the Common Stock; and (vii) there has
not been any execution or imposition of any material lien, charge, or
encumbrance upon the respective property or assets of the Company or HotelView.
(13) INSURANCE. The Company and HotelView each
maintain such insurance policies, including, but not limited to, general
liability, product and property insurance as are necessary to insure the
Company, HotelView and their respective employees, against such losses and risks
generally insured against by comparable businesses. Neither the Company nor
HotelView has (i) failed to give notice or present any insurance claim with
respect to any matter, including but not limited to such entity's business,
property or employees, under any insurance policy or surety bond in a due and
timely manner, (ii) disputes or claims against any underwriter of such insurance
policies or surety bonds or has not failed to pay any premiums due and payable
thereunder, or (iii) failed to comply with all conditions contained in such
insurance policies and surety bonds. There are no facts or circumstances under
any such insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company or HotelView.
(14) COMPLIANCE WITH DOCUMENTS AND LAWS. Neither the
Company nor HotelView is in violation of its articles of incorporation, by-laws,
or other governing documents. Neither the Company nor HotelView is in default in
the due performance of any lease or other contract, indenture, mortgage, deed of
trust, note, loan, or other agreement or instrument to which the Company or
HotelView is a party or by which either of them is, or any of their respective
properties or businesses are subject, or any applicable license, franchise,
certificate, permit, authorization, statute, rule or regulation of or from any
public, regulatory, or
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governmental agency or authority having jurisdiction over the Company or
HotelView or any of their respective properties or assets, or any approval,
consent, order, judgment or decree. The Company and HotelView are each in
compliance with all laws, rules and regulations applicable to their respective
businesses. The execution and performance of this Agreement by the Company will
not conflict with or result in a breach or violation of, or default under, any
lease or other material contract, indenture, mortgage, deed of trust, note,
loan, or other material agreement or instrument to which the Company or
HotelView is a party or by which either of them, or any of their respective
properties or businesses are, subject and no consent, approval, authorization,
or order of any court or governmental authority or agency having jurisdiction
over the Company or HotelView or any of their respective properties or assets is
required to be obtained by the Company or HotelView for the consummation by the
Company or HotelView of the transactions contemplated herein, except such as
have been obtained or may be required under the Securities Act or the
Regulations or under state securities laws or the applicable rules and
regulations promulgated thereunder.
(15) AUTHORIZATION OF AGREEMENTS. Each of this
Agreement, the Warrants, the Underwriters' Warrants and the Financial Consulting
Agreement (as described herein and in the Prospectus), 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. The
execution, delivery and performance of this Agreement, the Warrants, the
Underwriters' Warrants and the Financial Consulting Agreement by the Company,
the consummation by the Company of the transactions herein and therein
contemplated, and the compliance by the Company with the terms of this
Agreement, the Warrants, the Underwriters' Warrants and the Financial Consulting
Agreement have been duly authorized by all necessary corporate action and do not
and will not, with or without the giving of notice or the lapse of time, or
both, (i) result in any violation of the articles of incorporation or by-laws of
the Company, (ii) result in a breach of or conflict with any of the terms or
provisions of, or constitute default under, or result in the modification or
termination of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to any indenture, mortgage, note, contract, commitment or other
agreement or instrument to which the Company is a party or under which the
Company or any of its properties or assets are or may be bound or affected,
(iii) violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company, or any of its properties or business, or (iv)
violate any Permits of the Company except for any Permits, the violation of
which will not cause a material adverse effect on the business, financial
condition or prospects of the Company. The Agreement, Warrants, the
Underwriters' Warrants and the Financial Consulting Agreement conform to the
descriptions thereof in the Prospectus.
(16) TITLE TO PROPERTY. The Company and HotelView
each have good and marketable title to, and valid and enforceable leasehold
estates in, all items of property described in the Registration Statement or the
Prospectus as owned or leased by each of them, as the case may be, or that are
material to the conduct of their businesses free and clear of all liens,
encumbrances, claims, security interests, and other restrictions, other than
those described in the Registration Statement or Prospectus. The leases,
licenses or other contracts or instruments under which either the Company or
HotelView leases, holds or is entitled to use any property, real or personal,
are valid, subsisting and enforceable, and neither the Company nor
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HotelView is in material default thereunder and, no event has occurred which,
with the passage of time or the giving of notice, or both, would constitute a
default thereunder. Neither the Company nor HotelView has received notice of any
violation of any applicable law, ordinance, regulation, order or requirement
relating to its owned or leased properties. The Company and HotelView have
insured their properties against loss or damage by fire or other casualty and
maintain such other insurance as management of the Company and HotelView
believes is adequate for their respective present business operations.
(17) INTELLECTUAL PROPERTY. Except as set forth in
the Prospectus, the Company and HotelView each own or possess the requisite
licenses, registrations or other evidences of adequate and full rights to use
all copyrights, patents, trademarks, service marks, trade names, trade dress
logos, know-how, trade secrets, licenses, Internet domain names and rights in
any way thereof ("Intellectual Property") presently used in or necessary to
conduct their respective businesses as described in the Prospectus and the
Registration Statement. Neither the Company nor HotelView has knowingly
infringed the rights of another with respect to any item of Intellectual
Property, and there is no outstanding claim of or notice from others alleging
any such infringement. There is no claim, notice or action by any person
pertaining to, or proceeding pending or, to the Company's knowledge, threatened,
which challenges the rights of the Company or HotelView with respect to any
Intellectual Property used in the conduct of their respective businesses.
(18) LITIGATION. There is no litigation or
governmental or other proceeding or investigation before any court or before or
by any public, regulatory, or governmental agency or authority (or any judgment,
decree, or order of such court, agency, or authority) pending or, to the best
knowledge of the Company, threatened to which the Company or HotelView is a
party or of which their respective businesses or properties are subject which is
not disclosed in the Prospectus or Registration Statement as required by the
Securities Act or the Regulations. There are no outstanding orders, judgments or
decrees of any court, governmental agency or other tribunal naming the Company
or HotelView or enjoining the Company or HotelView from taking, or requiring the
Company or HotelView to take, any action, or to which they or their respective
properties or businesses are bound or subject.
(19) RELATED PARTY TRANSACTIONS. Except as set forth
in the Prospectus, no officer, director, shareholder or partner of the Company
or HotelView or any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated under the Regulations) of any of the foregoing persons or
entities has or has had, either directly or indirectly, (i) an interest in any
person or entity which (A) furnishes or sells services or products which are
furnished or sold or are proposed to be furnished or sold by the Company or
HotelView, or (B) purchases from or sells or furnishes to the Company or
HotelView any goods or services, or (ii) a beneficial interest in any contract
or agreement to which the Company or HotelView is a party or by which it may be
bound or affected. Except as set forth in the Prospectus under "Certain
Relationships and Related Transactions," there are no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the Company or
HotelView and any officer, director or 5% or greater securityholder of the
Company or HotelView, or any partner, affiliate or associate of any of the
foregoing persons or entities.
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(20) PROHIBITED PAYMENTS. Neither the Company nor
HotelView, nor any of their respective directors or officers acting in any
capacity on their behalf has used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds; violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment.
(21) INTERNAL ACCOUNTING CONTROLS. The Company and
HotelView each maintain a system of internal accounting controls which, taken as
a whole, is sufficient to cause them to comply with the Foreign Corrupt
Practices Act of 1977, as amended, and to meet the broad objectives of
preventing and detecting errors or irregularities in amounts that would be
material to the Company's or HotelView's financial statements. Except as
specifically disclosed in the Prospectus, neither the Company nor HotelView, nor
any employee or agent of either of them, has made any payment or transfer of any
funds or assets of the Company or HotelView, conferred any personal benefit by
the use of the assets of the Company or HotelView, or received any funds,
assets, or personal benefit in each case in violation of any law, rule, or
regulation, which is required to be disclosed in the Prospectus or necessary to
make the statements therein not misleading.
(22) TAX RETURNS. The Company and HotelView (i) have
paid all federal, state, local and foreign taxes for which they are liable and
have furnished all information returns they are required to furnish pursuant to
the Internal Revenue Code of 1986, as amended, (ii) have established adequate
reserves for such taxes which are not yet due and payable and (iii) do not have
any tax deficiency or claims outstanding, proposed or assessed against them.
Neither the Company nor HotelView has executed or filed with any taxing
authority, foreign or domestic, any agreement extending the period for
assessment or collection of any income taxes, nor are either of them parties to
any pending action or proceeding by any foreign or domestic governmental agency
for assessment or collection of taxes; and no claims for assessment or
collection of taxes have been asserted against either of them. Neither the
Company nor HotelView has been, nor is currently being, audited by any taxing
authority, nor has the Company nor HotelView entered into any agreement to toll
any applicable statute of limitations with respect to the payment of any taxes.
(23) EMPLOYEE PLANS. Except as set forth in the
Registration Statement or the Prospectus, neither the Company nor HotelView has
any employee benefit plans (including, without limitation, pension, profit
sharing, and welfare benefit plans) or deferred compensation arrangements.
(24) LABOR DISPUTES. The Company and HotelView have
each generally enjoyed a satisfactory employer-employee relationship with their
respective employees and are in compliance with all federal, state, local, and
foreign laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours. There are no pending
investigations involving the Company or HotelView by the U.S. Department of
Labor, or any other governmental agency responsible for the enforcement of such
federal, state, local, or foreign laws and regulations. There is no unfair labor
practice charge or complaint against the Company or HotelView pending before the
National Labor Relations
-11-
Board or any lockout, strike, picketing, boycott, dispute, slowdown or stoppage
pending or threatened against or involving the Company or HotelView, or any
predecessor entity, and none has ever occurred. No representation question
exists respecting the employees of the Company or HotelView, no collective
bargaining agreement or modification thereof is currently being negotiated by
the Company or HotelView nor is the Company or HotelView a party to any such
agreement. No grievance or arbitration proceeding is pending under any expired
or existing collective bargaining agreements of the Company or HotelView. No
labor dispute exists or, to the knowledge of the Company, is imminent with the
employees of the Company or HotelView.
(25) REGISTRATION RIGHTS. Except as set forth in the
Registration Statement or the Prospectus, no person, firm, or entity of any
nature whatsoever has any right to require the Company to register or attempt to
register under the Securities Act or any other securities law any shares of
capital stock, including Common Stock or securities convertible into or
exchangeable or exercisable for any shares of capital stock including Common
Stock, by reason of the filing of the Registration Statement with the Commission
or otherwise.
(26) STABILIZATION. Neither the Company, nor
HotelView, nor any person that controls, is controlled by or is under common
control with, the Company has taken or will take, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation under the Exchange Act of the price of any
security in order to facilitate the sale or resale of any of the Securities.
(27) INVESTMENT COMPANY. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus under
the caption "Use of Proceeds" will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(28) FINDER OR BROKER. The Company has not retained
or dealt with any broker or finder with respect to the transactions contemplated
hereby, and the Company knows of no outstanding claims for services in the
nature of a finder's fee or origination fee with respect to the sale of the
Securities hereunder. The Company will indemnify and hold harmless the
Underwriters with respect to any claim for a finder's fee by any party claiming
to be owed such fee based on contacts, conversations, or arrangements with the
Company.
(29) CONTRACTS. Each contract or other instrument to
which either the Company or HotelView is a party or by which their respective
properties or businesses are or may be bound or affected and to which reference
is made in the Registration Statement or Prospectus has been duly and validly
executed by the Company or HotelView, as the case may be, is in full force and
effect in all material respects and, based on the fact that each other party has
full power, corporate or otherwise, to execute, deliver and perform such
contracts, is enforceable against the parties thereto in accordance with its
terms. None of such contracts or instruments has been assigned by the Company or
HotelView, as the case may be, nor are they in default thereunder and, no event
has occurred which, with the lapse of time or the giving of notice, or both,
would constitute a default thereunder which individually or in the aggregate
could reasonably be expected to have a material adverse effect upon the
business, financial condition or prospects of the Company or HotelView.
Additionally, none of the material
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provisions of such contracts or instruments violates any existing applicable
law, rule, regulation, judgment, order or decree of any governmental agency or
court having jurisdiction over the Company or Hotelview or any of their
respective assets or businesses.
(30) NASD INFORMATION. All information provided by
the Company to the Representative or its counsel in connection with any filings
made with the National Association of Securities Dealers, Inc. ("NASD") with
respect to the Public Offering is true and correct.
(31) COMPLIANCE WITH ENVIRONMENTAL LAWS AND
REGULATIONS. The Company and HotelView are each in compliance in all material
respects with all applicable federal, state and local environmental laws and
regulations, including, without limitation, those applicable to emissions to the
environment, waste management and waste disposal (collectively, the
"Environmental Laws"), except for any such noncompliance as may be described in
the Registration Statement or Prospectus and, to the Company's knowledge, there
are no circumstances that would prevent, interfere with, or materially increase
the cost of such compliance in the future. Except as set forth in the
Registration Statement or Prospectus, there is no claim under any Environmental
Laws ("Environmental Claim"), pending or threatened against or affecting the
Company or HotelView and, there are no past or present actions, activities,
circumstances, events or incidents, including, without limitation, releases of
any material into the environment that could form the basis of any Environmental
Claim against or affecting the Company or HotelView.
(32) BUSINESS WITH CUBA. Neither the Company nor
HotelView is doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(33) INDEBTEDNESS. There are no outstanding loans,
advances (except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company or HotelView to or for
the benefit of any of the officers or directors of the Company or HotelView or
any of the members of the families of any of them, except as disclosed in the
Registration Statement and the Prospectus.
(34) ACQUISITIONS OR DISPOSITIONS. Except as set
forth in the Registration Statement and Prospectus, neither the Company nor
HotelView has consummated the acquisition or disposition of any business or
property which is "significant" to them within the meaning of Regulation S-X
under the Securities Act, and no such acquisition or disposition is probable.
(35) CHANGES. At any time, if there is any change in
the information referred to in this Subsection 2(a), the Company will
immediately notify Representative of such change.
(36) REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS. The Company is not aware, and has no reason to believe, that any
representation or warranty of the Selling Shareholders set forth in Subsection
2(b) below is untrue or inaccurate in any material respect.
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(37) ADDITIONAL REPRESENTATIONS. To the Company's
knowledge, no director, officer, or key employee of the Company has been
convicted of any felony, experienced a personal bankruptcy, or been an officer,
director, or key employee of any company that during their tenure with such
company experienced any bankruptcy, or had any trustee, receiver, or conservator
appointed with respect to its business or assets.
(b) REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS. The Selling Shareholders, jointly and severally, represent and
warrant to and agree with each Underwriter that:
(1) AUTHORIZATION OF AGREEMENTS. This Agreement has
been duly authorized, executed, and delivered by the Selling Shareholders and
constitutes valid and binding obligation of each Selling Sharholder, enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement by the Selling Shareholders, the consummation by the Selling
Shareholders of the transactions herein contemplated, and the compliance by the
Selling Shareholders with the terms of this Agreement have been duly authorized
by all necessary action and do not and will not, with or without the giving of
notice or the lapse of time, or both, (i) result in a breach of or conflict with
any of the terms or provisions of, or constitute a default under, or result in
the modification or termination of, indenture, mortgage, note, contract,
commitment or other agreement or instrument to which either of the Selling
Shareholders is a party or under which either of the Selling Shareholders or any
of their respective properties or assets are or may be bound or affected (ii)
violate any existing applicable law, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over either of the Selling Shareholders, or any of their respective properties
or business, or (iii) violate any Permits held by either of the Selling
Shareholders except for any Permits, the violation of which will not cause a
material adverse effect on the business, financial, conditional or prospectus of
the Company.
(2) TRANSACTIONS. No transaction has occurred between
either of the Selling Shareholders and the Company that is required to be
described in and is not described in the Registration Statement and the
Prospectus.
(3) OWNERSHIP. Each of the Selling Shareholders is
the lawful owner of the Securities to be sold by such Selling Sharholder
pursuant to this Agreement and has, and on the Closing Date will have, good and
clear title to such Securities, free of all restrictions on transfer, liens,
encumbrances, security interests and claims whatsoever and has legal right and
full power to sell, transfer and deliver the Securities and will transfer such
title to the Underwriters.
(4) TITLE TO SECURITIES. Upon delivery of and payment
for such Securities pursuant to this Agreement, good and clear title to such
Securities will pass to the Underwriters, free of all restrictions on transfer,
liens, encumbrances, security interests and claims whatsoever.
(5) DELIVERY OF CERTIFICATES. Certificates in
negotiable form for each Selling Shareholders' shares of Common Stock to be
transferred pursuant to Subsection 1(b) of this Agreement have been delivered to
the transfer agent for delivery pursuant to the terms of
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this Agreement; the shares of Common Stock represented by the certificates so
held in custody for such Selling Shareholders are subject to the interests
hereunder of the Underwriters; the arrangements for custody and delivery of such
certificates made by such Selling Shareholders hereunder are not subject to
termination by any acts of such Selling Shareholders, or by operation of law,
and if any such event shall occur before the delivery of such shares of Common
Stock hereunder, certificates for the shares of Common Stock will be delivered
in accordance with the terms and conditions of this Agreement as if such event
had not occurred, regardless of whether or not the custodian shall have received
notice of such event.
(6) STABILIZATION. Neither of the Selling
Shareholders has taken, and neither will take, directly or indirectly, any
action designed to, or which might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the shares of Common Stock pursuant to the
distribution contemplated by this Agreement, and other than as permitted by the
Securities Act, the Selling Shareholders have not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Securities.
(7) ABSENCE OF CONFLICTS WITH AGREEMENTS. The
execution, delivery and performance of this Agreement by the Selling
Shareholders, compliance by the Selling Shareholders with all the provisions
hereof and the consummation of the transactions contemplated hereby will not
require any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body (except as
such may be under the Securities Act or state securities laws) and will not
conflict with or constitute a breach of any of the terms or provisions of any
agreement, indenture or other instrument to which either Selling Sharholder is a
party or by which either Selling Sharholder or property of either Selling
Sharholder is bound, or violate or conflict with any laws, administrative
regulation or ruling or court decree applicable to either Selling Sharholder or
property of either Selling Sharholder.
(8) ACCURACY OF INFORMATION. All information
furnished to the Company by or on behalf of the Selling Shareholders with
respect to the Selling Shareholders for use in connection with the preparation
of the Registration Statement is true, correct and complete in all material
respects as of the stated date of such information and the date hereof; the
Selling Shareholders have each read the information appearing in the Prospectus
and, as it pertains to each Selling Sharholder, such information does not
contain an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of circumstances under
which they were made, not misleading.
(9) FINDER OR BROKER. Neither of the Selling
Shareholders has retained or dealt with any broker or finder with respect to the
transaction contemplated hereby, and neither Selling Sharholder knows of any
outstanding claims for services in the nature of a finder's fee or origination
fee with respect to the sale of Securities by such Selling Sharholder hereunder.
The Selling Shareholders will indemnify and hold harmless the Underwriters with
respect to any claims for a finder's fee by any party claiming to be owed such
fee based on contacts, conversations, or arrangements with the Company or the
Selling Sharholder.
-15-
(10) REASON FOR SALE. The sale of Securities by the
Selling Shareholders pursuant to this Agreement is not prompted by any
information concerning the Company which is not set forth in the Registration
Statement.
3. COVENANTS OF THE COMPANY. The Company covenants to and agrees with
the Underwriters that:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. If the Effective
Date is not prior to the execution and delivery of this Agreement, the Company
will use its best efforts to cause the Registration Statement and any subsequent
amendments thereto to become effective as promptly as possible. The Company will
notify the Underwriters promptly (i) when the Registration Statement or any
subsequent amendment thereto has become effective or any supplement to the
Prospectus has been filed and (ii) of the receipt of any requests, and the
nature and substance thereof, by the Commission for any amendment or supplement
to the Registration Statement or Prospectus or for any other additional
information. The Company will prepare and file with the Commission, promptly
upon the Representative's reasonable request, any amendment or supplement to the
Registration Statement or Prospectus that may be necessary or advisable in
connection with the sale or distribution of the Securities, any of the
Underwriters' Warrants or the Warrant Securities. The Company will file no
amendment or supplement to the Registration Statement or Prospectus (other than
any document required to be filed under the Exchange Act that upon filing is
deemed to be incorporated by reference therein) to which the Representative
shall reasonably object by notice to the Company after having been furnished a
copy within a reasonable time, but no later than five business days, prior to
the proposed filing thereof. The Company will furnish to the Underwriters at or
prior to the filing thereof with the Commission a copy of any document that upon
filing is deemed to be incorporated by reference in whole or in part in the
Registration Statement or the Prospectus.
(b) NOTICE OF STOP ORDER. The Company will advise the
Underwriters promptly, and confirm in writing, when and if it receives notice or
obtains knowledge of (i) the issuance by the Commission or any state securities
commission in a state designated by the Representative pursuant to Subsection
3(e) hereof of any stop order or other order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or the effectiveness of the
Registration Statement or (ii) the suspension of the qualification of any of the
Securities, the Underwriters' Warrants or the Warrant Securities for offering or
sale in any jurisdiction in which they were previously qualified, or (iii) the
initiation or threat of any proceeding for that purpose. The Company will
promptly use its reasonable best efforts to prevent the issuance, and to obtain
the withdrawal if such issuance is not prevented, of any such stop order or
other suspension.
(c) COMPLIANCE WITH THE SECURITIES ACT AND THE EXCHANGE ACT.
Within the time during which a Prospectus relating to the Securities, the
Underwriters' Warrants, or the Warrant Securities is required to be delivered
under the Securities Act, the Company will use its best efforts to comply with
all requirements imposed upon it by the Securities Act and the Exchange Act, as
now in effect and as hereafter amended, and by the Regulations, as from time to
time in force, to permit the continuance of sales of or dealings in the
distribution of the Securities or the Underwriters' Warrants or the Warrant
Securities, as contemplated by the provisions therein, herein, and in the
Registration Statement or Prospectus. If during such
-16-
period any event as to which the Company has knowledge occurs as a result of
which the Registration Statement or the Prospectus as then amended or
supplemented includes an untrue statement of a material fact or omits to state a
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 the Registration Statement or supplement the Prospectus to
comply with the Securities Act, the Company will notify the Representative
promptly, will amend the Registration Statement or supplement the Prospectus so
as to correct such statement or omission or otherwise to effect such compliance,
and will furnish without charge to the Underwriters and to any dealer in
securities as many copies of such amended or supplemented Prospectus as the
Underwriters may from time to time reasonably request. Furthermore, the Company
will prepare and file with the Commission, promptly upon the request of the
Representative, any amendments or supplements to the Registration Statement or
the Prospectus, which in the opinion of the Representative may be necessary to
enable the Underwriters to continue the distribution of the Securities, and will
use its best efforts to cause the same to become effective as promptly as
possible.
(d) COPIES OF SECURITIES ACT DOCUMENTS. The Company will
deliver to the Representative and the Selling Shareholders, from time to time
without charge, such number of copies of the Registration Statement (two of
which delivered to the Representative shall be manually signed and will include
all exhibits), each Preliminary Prospectus, the Prospectus, and all amendments
and supplements thereto, in each case as soon as available and in such
quantities and to such persons as requested by the Underwriters. The Company
consents to the use of any Preliminary Prospectus as originally filed, any
amended Preliminary Prospectus, the Prospectus and any amendments or supplements
thereto by the Underwriters and by any dealer for the purpose contemplated by
the Securities Act and the Regulations.
(e) STATE SECURITIES LAWS QUALIFICATIONS. The Company will use
its best efforts, in cooperation with the Representative and the
Representative's counsel, to register or qualify the Securities, the
Underwriters' Warrants and the Warrant Securities for offer and sale under the
securities laws of such jurisdictions as the Representative may reasonably
designate, and will continue such qualifications in effect for so long as may be
necessary to complete the distribution and sale of such securities.
(f) SECTION 11(A) EARNINGS STATEMENT. The Company will make
generally available to its security holders (within the meaning of Section 11(a)
of the Securities Act) and deliver to the Representative as soon as practicable
an earnings statement that shall satisfy the requirements of Section 11(a) and
Rule 158 under the Securities Act, covering a period of at least 12 consecutive
months after the Effective Date.
(g) REPORT SR TO BE FILED BY COMPANY. Within ten days after
the end of the first three-month period following the Effective Date, the
Company will prepare and file with the Commission a report on Form SR as
prescribed by Rule 463 of Regulation C under the 1933 Act.
(h) INFORMATION PROVIDED TO THE REPRESENTATIVE. Until the
fifth anniversary of the Effective Date, the Company will furnish or cause to be
furnished to the Representative and the Representative's counsel, with
reasonable promptness, copies of (i) quarterly balance
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sheets, statements of income of the Company (which need not be audited) and all
other reports prepared and issued to the public. Additionally, for a period of
three years after the Effective date, the Company shall furnish to the
Representative: (i) all reports, if any, to its shareholders, (ii) all reports
filed by the Company with the Commission, any securities exchange and/or the
NASD; and (iii) such other material documents and information with respect to
the Company and its affairs as the Representative may from time to time
reasonably request and the Company can produce at reasonable cost. The Company
shall cause the Board of Directors to meet, at least quarterly, upon proper
notice, and shall also cause the agenda and minutes of the last meeting to be
mailed to each Director prior to each meeting and a copy of such report to be
sent to the Representative. The Company shall cause its transfer agent to
provide the Representative with copies of the Company's monthly transfer sheets
and Depository Trust Company transfer sheets. Upon request, the Company shall
also provide the Representative with current lists of its shareholders and
warrant holders, if any. The Representative will maintain the confidentiality of
any documents or information provided to it pursuant to this Subsection 3(h) and
will comply fully with federal and state securities laws regarding the use of
such documents or information.
(i) LISTING IN SECURITIES MANUAL; AFTER-MARKET TRADING
MEMORANDUM; NON-ISSUER TRANSACTION. The Company shall have become listed at or
prior to the Effective Date, and shall use its best efforts to maintain such
listing in Standard and Poor's Corporation Records Service and/or Xxxxx'x
Industrial Manual for at least five years after the Effective Date. For a period
of five years from the Effective Date, at the Company's sole expense, the
Company shall cause its counsel to provide to the Representative a list of those
states in which the Company's securities may be traded in non-issuer
transactions under the securities laws of the 50 states.
(j) LISTING ON THE NASDAQ SMALLCAP MARKET(R). Prior to the
Effective Date, the Company, at its cost, shall use its best efforts to have
caused the Securities, Warrants and Common Stock to be listed for trading on The
Nasdaq SmallCap Market(R) system under symbols which are acceptable to the
Representative, and the Company shall use its best efforts to have the
Securities, the Underwriters' Warrants and the Warrant Securities remain listed
for at least five years from the Effective Date, and to ensure that the Company
otherwise complies with the prevailing requirements of The Nasdaq Stock Market,
Inc..
(k) SECTION 12(G) REGISTRATION. Upon the Effective Date, the
Securities, the Underwriters' Warrants and the Warrant Securities will be
registered with the Commission under the provisions of Section 12(g) of the
Exchange Act. The Company will use its best efforts to maintain the registration
of the Securities and the Underwriters' Warrants and the Warrant Securities
under Section 12(g) of the Exchange Act for a minimum of five years after the
Effective Date. The Company shall comply with the Securities Act, the
Regulations, the Exchange Act and the rules and regulations promulgated
thereunder, the applicable rules and regulations of the NASD, and applicable
state securities laws so as to permit the continuance of sales of and dealings
in the Securities and the exercise of the Underwriters' Warrants and the
issuance and sale of the Warrant Securities upon such exercise in compliance
with applicable provisions of such laws, rules, and regulations, including the
filing with the Commission, the NASD and state securities commissions in all
states where the Securities, including the Warrant Securities, have been issued
or sold, all reports required to be so filed, and the Company will deliver to
the holders of the Securities and/or Warrant Securities all reports required to
be
-18-
provided to such holders pursuant to such laws, rules, or regulations. The
Company shall promptly file with the Commission and deliver to the
Representative, from time to time as required to make the same reasonably
current, such statements and reports as are required to be filed by a company
registered under Section 12(g) of the Exchange Act.
(l) USE OF PROCEEDS. The Company shall apply the net proceeds
received from the sale of the Securities and the exercise of the Underwriters'
Warrants in the manner set forth under the caption "Use of Proceeds" in the
Registration Statement and Prospectus, which shall state that the primary
application of the proceeds to be realized by the Company will be for expansion
of existing operations and for working capital.
(m) BOARD MEETINGS AND MEMBERSHIP. For a period of five years
commencing on the Effective Date, the Representative shall have the right to
designate one nominee for election to the Company's Board of Directors, which
member shall be reasonably acceptable to the Company. The Company shall, prior
to the Effective Date, obtain from the officers, directors and holders of 5% or
more of the outstanding Common Stock of the Company, agreements in writing to
vote the shares of Common Stock respectively owned by them, whether directly or
indirectly, during such five-year period in favor of the election of such
nominee. Following the election of such nominee as director, such person shall
receive the same compensation paid to other non-officer directors of the Company
for attendance at meetings of the Board of Directors of the Company and shall be
entitled to receive reimbursement for all reasonable costs incurred in attending
such meetings including, but not limited to, food, lodging and transportation.
The Company agrees to indemnify and hold such director harmless, to the maximum
extent permitted by law, against any and all claims, actions, awards and
judgments arising out of his or her service as director and, in the event the
Company maintains a liability insurance policy affording coverage for the acts
of its officers and directors, to include such director as insured under such
policy. The rights and benefits of such indemnification and the benefits of such
insurance shall, to the extent possible, extend to the Representative insofar as
it may be or may be alleged to be responsible for such director, provided that
the extension of such rights and benefits to the Representative may be done
without additional cost to the Company.
In the event that the Representative does not elect to
designate one member to the Company's Board of Directors, the Representative
shall have the right during such five-year period to have one representative
attend all meetings of the Board of Directors of the Company, which meetings
shall be held at least quarterly, including any meetings of any committees of
the Board of Directors. All information received by such representative at such
meetings shall be kept confidential, shall not be disclosed by the
representative to any third party, and shall be dealt with in full compliance
with federal and state securities laws.
Additionally, the Company shall elect a cause to be elected, a
minimum of two (2) "outside" persons (i.e., excluding affiliates of the Company
and family members of the Company's existing directors, officers and
shareholders) to the Company's Board of Directors within 90 days after the
Effective Date, and shall designate an audit committee consisting of a majority
of such "outside" directors, which will generally supervise the financial
affairs of the Company, including, but not limited to, the application of the
proceeds of the Public Offering.
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(n) FUTURE SALES. The Company will not, during the period of
the Public Offering and for a period of twelve months from the Effective Date,
without the Representative's prior written consent, offer, sell, contract to
sell, grant an option relating to, or otherwise dispose of, any securities of
the Company, except for the issuance of shares of Common Stock to be issued (a)
pursuant to the exercise of options or options currently reserved for future
grant and disclosed in the Registration Statement and Prospectus, (b) pursuant
to and in order to consummate a merger with or acquisition from an unaffiliated
party in a transaction negotiated at arms' length and approved by a majority of
the Company's Board of Directors, (c) in a public offering, at a price not less
than 90% of the average of the closing bid prices of the Common Stock as
reported on The Nasdaq SmallCap Market(R) for the 21 consecutive trading day
period immediately preceding the date of sale (the "Exempt Price"), and (d) in a
private sale at a price not less than 70% of the Exempt Price.
(o) UNDERTAKINGS. The Company will comply with the provisions
of all undertakings contained in the Registration Statement or made in
connection with any application to register or qualify any of the Securities,
including the Warrant Securities, under state securities laws.
(p) CERTAIN DELIVERIES TO THE REPRESENTATIVE. The Company
shall obtain from its officers, counsel, and accountants those certificates,
opinions, and letters referred to in Section 7. The Company shall, upon request
of the Representative, furnish to the Representative as early as practicable
prior to each of the date hereof, the Closing Date and any Option Closing Date,
but not later than two full business days prior thereto, a copy of the latest
available unaudited interim financial statements of the Company (which in no
event shall be as of a date more than 30 days prior to the date of the
Registration Statement) which have been read by the Company's independent public
accountants, as stated in the accountants' letter to be furnished pursuant to
Subsection 7(k) hereof.
(q) REDEMPTION AND DIVIDENDS. For a period of one year from
the Effective Date, the Company shall not redeem any of its securities and shall
not pay any dividends or make any other cash distribution in respect of its
securities in excess of the amount of the Company's current and retained
earnings after the Closing Date, without obtaining the Representative's prior
written consent. The Representative shall either approve or disapprove such
contemplated redemption of securities or dividend payment or distribution within
five business days from the date the Representative receives written notice of
the Company's proposal with respect thereto; a failure of the Representative to
respond within such period of five business days shall be deemed consent to the
transaction.
(r) RESTRICTIONS ON SALES, OPTIONS AND VOTING BY AFFILIATES.
Except upon prior written consent of the Representative, all directors,
officers, and holders of 5% or more of the Company's capital stock issued and
outstanding as of the Effective Date, as well as options, warrants or rights
thereto, shall agree not to sell any shares of any class of capital stock owned
by them, privately or publicly (either pursuant to Rule 144 of the Regulations
or otherwise) for a period of not less than 24 months following the Effective
Date. An appropriate restrictive legend shall be placed on the face of all stock
certificates representing such share of capital stock prior to the Effective
Date. The Company will cause its transfer agent to note such restriction on the
transfer books and records of the Company and will obtain "lock-up
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agreements" from such directors, officers, and shareholders prior to the
Effective Date. Notwithstanding the foregoing, the holders of the Company's
capital stock specified on Schedule 3(r) attached hereto shall not be subject to
the restrictions set forth in this Section 3(r), and the Company's directors,
officers and existing shareholders may make gifts and intrafamily transfers of
Common Stock provided that the transferees agree to be bound by the terms of the
restrictions, on transfer provided in this Section 3(r).
(s) OUTSTANDING WARRANTS, OPTIONS AND OTHER RIGHTS. Unless the
Representative has given its written consent prior to the Effective Date, which
consent shall not be unreasonably withheld, there shall not be outstanding on
the Closing Date any warrants, options, or other rights to purchase any shares
of Common Stock, except as otherwise set forth in the Registration Statement or
Prospectus.
(t) ACCOUNTING FIRM. The Company shall retain a nationally
recognized, reputable independent public accounting firm reasonably acceptable
to the Representative for a period of five years from the Effective Date. The
Representative hereby acknowledges that Xxxxxxxxx, Xxxxx & Co. is such a firm.
(u) BUSINESS WITH CUBA. The Company will inform the Florida
Department of Banking and Finance (the "Department") if at any time it or
HotelView commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the Effective Date. Such information
will be provided to the Department within 90 days after the commencement of
business in Cuba or within 90 days after the change occurs with respect to
previously reported information.
(v) CLOSING BINDERS. The Company shall, at its sole cost and
expense, supply and deliver to the Representative and the Representative's
counsel, within a reasonable period not to exceed 180 days after the Closing
Date, five sets of hard-bound transaction binders, each of which shall include
the Registration Statement, as amended or supplemented, all exhibits to the
Registration Statement, each Preliminary Prospectus, the Prospectus, the
Preliminary Blue Sky Memorandum and any supplement thereto, correspondence filed
with or received from the Commission or the NASD and all underwriting and other
closing documents.
(w) ANNUAL REPORTS. Until the fifth anniversary of the
Effective Date, the Company shall distribute an annual report to all
shareholders setting forth clearly the financial position of the Company.
(x) REPAYMENT OF INDEBTEDNESS. Prior to the Closing Date, the
Company shall not repay (or agree to repay) any indebtedness to any of its
shareholders (or incur any indebtedness to any of its shareholders) unless the
terms thereof are approved in advance by the Representative.
(y) PUBLIC RELATIONS FIRM. Within 30 days of the date hereof,
the Company shall engage a public relations firm acceptable to the Company and
the Representative and shall maintain a relationship with such public relations
firm for a minimum of five years from the date hereof.
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(z) TRANSFER AND WARRANT AGENTS. The Company acknowledges that
it has appointed Interwest Transfer Co. as its transfer agent for the Common
Stock, and the Company shall appoint a warrant agent for the Warrants reasonably
acceptable to the Representative.
(aa) INSURANCE. The Company shall have, prior to the Effective
Date, obtained directors and officers insurance and "key man" life insurance in
the amount of $1,500,000 on the life or lives of its key officers, directors and
employees as deemed necessary by the mutual agreement of the Company and the
Representative and on terms acceptable to both the Company and the
Representative. The Company shall pay the premiums for such insurance and
maintain such insurance in force for a period of not less than five years from
the Effective Date; the Company shall be the named beneficiary on all such
insurance policies.
(ab) EXEMPTIONS FOR NON-ISSUER TRANSACTIONS. The Company shall
cause its counsel to provide to the Representative at the Effective Date a list
to be updated as of the Closing Date and at least annually thereafter for a
minimum of three years, in these states in which the Company's securities may be
traded in non-issuer transactions under the Blue Sky laws of the 50 states. The
Company may, by providing written notice thereof upon execution of this
Agreement, elect to have the Representative's counsel provide the initial
opinion of the opinions required pursuant to this Subsection 3(ab), in exchange
for payment of a fee equal to $2,500.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE REPRESENTATIVE. The
Representative severally represents and warrants to, and agrees with, the
Company and the Selling Shareholders that:
(a) REGISTRATION AS BROKER-DEALER AND MEMBER OF NASD. The
Representative is registered as a broker-dealer with the Commission and in all
states in which it shall offer the Securities, and is a member in good standing
of the NASD. Additionally, any firm with which the Representative associates to
act as an Underwriter shall also be registered as a broker-dealer with the
Commissioner and a member in good standing of the NASD or shall be a foreign
broker-dealer and a member of the national stock exchange of its country of
residency.
(b) NO PENDING PROCEEDINGS. There is not now pending or
threatened against the Representative any action or proceeding of which it has
been advised, either in any court of competent jurisdiction or before the
Commission, or before any state securities commission or the NASD, concerning
its activities as a broker or dealer, that could have a material adverse effect
upon its ability to perform under its obligations this Agreement.
(c) NO UNTRUE STATEMENTS. No information furnished to the
Company in writing by or on behalf of the Representative for the express purpose
of use in or for preparation of the Registration Statement or the Prospectus
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. For
all purposes under this Agreement, the only information which shall be deemed to
have been provided by or on behalf of the Representative for the express purpose
of use in or for preparation of the Registration Statement or the Prospectus
shall be the information contained in the "Underwriting" section of the
Prospectus.
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(d) FINDER OR BROKER. Except as contemplated by this
Agreement, the Representative (i) has not retained or dealt with any broker or
finder or financial consultant with respect to the transactions contemplated
hereby, and (ii) does not know of any outstanding claims for services in the
nature of a finder's fee or origination fee with respect to transactions
contemplated hereby. The Representative will indemnify and hold harmless the
Company with respect to any claims for a finder's fee by any party claiming to
be owed such fee based on contacts, conversations, or arrangements with the
Representative.
5. OFFERING EXPENSES AND RELATED MATTERS.
(a) GENERAL. The Company agrees to pay or reimburse the
Representative, if paid by the Representative, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the issuance, sale and delivery of the Securities, the
Underwriters' Warrants and the Warrant Securities and the performance of the
obligations of the Company hereunder, including without limiting the generality
of the foregoing, (i) the preparation, printing, filing, and copying of the
Registration Statement, Preliminary Prospectus, Prospectus, this Agreement, Blue
Sky memoranda, the Agreement Among Underwriters, if any, the Selected Dealers
Agreement, and other underwriting documents, if any, and any drafts, amendments
or supplements thereto, including the cost of all copies thereof supplied to the
Underwriter in such quantities as reasonably requested by the Representative,
the costs of mailing Preliminary and Final Prospectuses to offerees and
purchasers of the Securities; and the out-of-pocket travel expenses of the
Representative and counsel to the Representative or other professionals
designated by the Representative to visit the Company's facilities for purposes
of discharging due diligence responsibilities; (ii) the printing, engraving,
issuance and delivery of certificates representing the Securities, including any
transfer or other taxes payable thereon; (iii) the registration or qualification
of the Securities, including the Underwriters' Warrants and the Warrant
Securities, under state securities laws, including the reasonable fees and
disbursements of counsel (regardless of whether such counsel is also counsel to
the Representative, subject to the limitation set forth in Subsection 5(c)
below) and filing fees in connection therewith; (iv) all fees and expenses of
the Company's counsel, accountants and all transfer or warrant agent fees; (v)
all costs, expenses and filing fees in connection with review of the terms of
the Public Offering by the NASD; (vi) all costs and expenses and filing fees,
including legal fees, of any listing of the Securities on The Nasdaq SmallCap
Market(R) and/or on a stock exchange and/or in Standard and Poor's Corporate
Reports and/or in any other securities manuals; (vii) all costs and expenses of
five bound volumes provided to the Representative of all closing documents,
paper exhibits, correspondence and records forming the materials included in the
Public Offering; (viii) the reasonable costs and expenses of all pre-closing and
post-closing advertisements relating to the Public Offering (such as tombstone
advertisements); (ix) all costs of holding informational meetings and "road
shows"; and (x) all other costs and expenses incurred or to be incurred by the
Company in connection with the transactions contemplated by this Agreement. The
parties hereto acknowledge that the Registration Statement and the exhibits
thereto have been prepared by counsel for the Company, and that the various
state securities and Blue Sky law applications and the survey distributed by the
Representative in connection therewith have been prepared by the
Representative's counsel, Broad and Xxxxxx, whose costs and expenses shall have
been paid for by the Company at the time such services are rendered. The Company
further acknowledges that the Representative's legal fees incurred in connection
with Blue Sky filings for the Public
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Offering, which filings are being or have been undertaken in _____ states are
currently estimated at $____________ ("Blue Sky Fees"). The Company shall have
paid at least one half of the Blue Sky Fees at the time that it files its
amendment to the Registration Statement with the Commission, and shall pay the
entire outstanding balance of Blue Sky Fees due immediately upon completion of
such Blue Sky filings. The obligations of the Company under this Subsection 5(a)
shall survive any termination or cancellation of this Agreement.
(b) REPRESENTATIVE'S DISCOUNT. The Representative shall be
entitled to, and the Company agrees to pay to Representative, an underwriting
discount equal to 10% of the Public Offering Price paid on each sale of
Securities in the Public Offering, payable at the closing date and any Option
Closing Date.
(c) NON-ACCOUNTABLE EXPENSE ALLOWANCE. In addition to the
Company's payment of the foregoing expenses and Representative's discount, the
Company shall pay to the Representative a non-accountable expense allowance
equal to 3% of the gross proceeds of the Public Offering, including in the
computation of such amount the proceeds from any sale of Optional Securities.
The non-accountable expense allowance due shall be paid at the Closing Date and
on each Option Closing Date, as applicable.
(d) EXPENSES IF THE PUBLIC OFFERING IS NOT COMPLETED. The
Representative hereby acknowledges its prior receipt from the Company of
$35,000, which amount shall be applied to the non-accountable expense allowance.
If the proposed Public Offering is not completed because: (i) of any reason
solely within the control of the Company or its shareholders, (ii) the Company
unilaterally withdraws the proposed Public Offering from the Representative,
(iii) of any material inaccuracy in any representation or warranty made to the
Representative or the failure of the Company to meet any of its obligations
hereunder, or (iv) the Company does not permit the Registration Statement to
become effective for any reason whatsoever, then the $35,000 paid shall be
retained by the Representative as and for its expenses and without any further
liability whatsoever on the part of the Company except in the case of fraud or
willful misconduct on the part of the Company, in which case the Company shall
be responsible for the greater of: (A) such $35,000 or (B) the Representative's
actual costs, expenses, and legal fees incurred without limitation in connection
with the transaction contemplated hereunder. If the Representative unilaterally
withdraws from the Public Offering for any reason other than those reasons set
forth in this Subsection 5(c) above, the Company will be obligated to reimburse
only the actual expenses of the Representative incurred in connection herewith.
It is understood and agreed by the parties hereto that any expenses incurred by
the Representative will be deemed to be reasonable and unobjectionable upon
demonstration by the Representative that such expenses were incurred directly or
indirectly in connection with the proposed transaction and/or relationship of
the parties hereto, as described herein.
(e) ENGAGEMENT OF THE REPRESENTATIVE AS WARRANT SOLICITATION
AGENT. The Company hereby appoints the Representative as warrant solicitation
agent for a period of five years commencing one year from the Effective Date,
and the Representative shall be entitled to receive a 7% warrant conversion fee
upon exercise of the Warrants, pursuant to the NASD Notice to Members 81-38. The
solicitation fee shall relate to the Public Offering and shall be paid for the
period of one to five years from the Effective Date.
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(f) COMPLIANCE WITH STATE SECURITIES LAWS. The Representative
shall determine in which states or jurisdictions the Securities, including the
Underwriters' Warrants and the Warrant Securities (as described below), shall be
registered or qualified for sale. Copies of all applications and related
documents for the registration or qualification of securities (except for the
Registration Statement and Prospectus) filed with the various states shall be
supplied to the Company's counsel as soon as possible following their
transmission to the various states, and copies of all comments and orders
received from the various states shall be made available promptly to the
Company's counsel. Immediately prior to the Effective Date, counsel for the
Representative shall advise counsel for the Company in writing of all states in
which the offering has been registered or qualified for sale or has been
cancelled, withdrawn, or denied, the date of each such event, and the number of
Securities, including the Underwriters' Warrants and the Warrant Securities,
registered or qualified for sale in each such state. The Company shall be
responsible for the cost of state registration or qualification filing fees and
the legal fees of the Representative's counsel in connection with such filings,
which filing fees are payable to the Representative's counsel in advance of such
filings.
6. UNDERWRITERS' WARRANTS; OTHER FINANCIAL ARRANGEMENTS.
(a) UNDERWRITERS' WARRANTS. On the Closing Date, the Company
will sell to the Representative the Underwriters' Warrants, for an aggregate
price of the lesser of $.001 per Representative's Warrant or an aggregate of
$100, evidencing the Representative's right to purchase the equivalent of 10% of
the Securities sold in the Public Offering, at an exercise price of $7.20 per
share of Common Stock and $.12 per Warrant (120% of the Public Offering Price
per share of Common Stock and per Warrant). The Underwriters' Warrants will be
in the form of EXHIBIT A attached hereto. The Underwriters' Warrants shall be
non-exercisable and non-transferable (other than to officers, consultants,
partners or directors of and members of the underwriting or selling group) for a
period of 12 months following the Effective Date. The Underwriters' Warrants
shall be exercisable, in whole or in part, commencing 12 months after the
Effective Date and for a period of four years thereafter (the "Term"). In lieu
of any cash payment required by the Representative in connection with the
exercise of the Underwriters' Warrants, the Underwriters' Warrants shall provide
for the cashless exercise thereof. If the Underwriters' Warrants are not
exercised during the Term, they shall, by their terms, automatically expire. The
Underwriters' Warrants shall contain customary anti-dilutive provisions relating
to any recapitalization, stock split, stock dividend or similar event involving
the Company. The Underwriters' Warrants shall also contain provisions providing
for demand and "piggyback" registration rights with respect to the Underwriters'
Warrants and the Warrant Securities, and shall not be redeemable.
The Underwriters' Warrants shall otherwise be
transferable after one year from the Effective Date pursuant to available
exemptions from registration under the Securities Act.
(b) FINANCIAL CONSULTING AGREEMENT; RIGHT OF FIRST REFUSAL AND
FINDER'S FEE. On the Closing Date, the Company and the Representative shall
enter into a financial consulting agreement in the form of EXHIBIT B attached
hereto, pursuant to which the Representative will offer to provide financial
consulting services to the Company for a 12-month period beginning on the date
hereof (the "Financial Consulting Agreement"). The Company
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shall pay to the Representative a consulting fee equal to 1% of the gross
proceeds generated from the Public Offering, which will be payable in full on
the Closing Date. In addition, the Company agrees to pay to the Representative a
finder's fee based on 5% of the Transaction Value (as defined in the Financial
Consulting Agreement) of any merger, acquisition, joint venture or other similar
transaction to which the Company or a subsidiary of the Company is a party.
(c) REPRESENTATIVE'S RIGHT OF FIRST REFUSAL. The Company and
its affiliates hereby grant to the Representative a right of first refusal, for
a period of three years after the Effective Date, for the underwriting of any
public or private sale of securities by the Company undertaken by or on behalf
of the Company in the future, and for any public or private sale of securities
by the company to be made by its principal shareholders or subsidiaries. The
Company shall, in the event of any such proposed offering or sale, first give
written notice of the proposed offering or sale to the Representative, including
in such notice the terms of such proposed offering or sale ("Proposed Offering")
and an offer by the Company to engage the Representative to underwrite the
Proposed Offering on terms comparable to the current underwriting pursuant to
this Agreement ("Company's Offer"). The Representative shall have ten days from
the date of confirmed receipt of such notice from the Company to either accept
or reject, in writing, the Company's Offer. The Representative's failure to
accept or reject the Company's Offer within such period shall be deemed a
rejection of the Company's Offer, in which case the Company shall be free to
engage other underwriters for such Proposed Offering.
Notwithstanding the foregoing, should an investment banking firm that
is generally recognized to be of a higher tier than the Representative agree to
undertake the underwriting of any public or private sale of securities of the
Company resulting in aggregate gross proceeds of $15,000,000 or more and the
Representative is permitted to participate in such offering to the extent of at
least 10% of the value of such offering, then the right of first refusal
provided herein shall not apply to such offering and any related offering.
Should the Company prefer to work with another investment
banking firm in connection with a future underwriting of any public or private
sale of securities by the Company and the investment banking firm is not
generally recognized to be of a higher tier than the Representative and/or the
underwriting will not result in aggregate gross proceeds of at least
$15,000,000, then upon payment of a fee in the amount of $200,000 to the
Representative, the right of first refusal provided herein shall not apply to
such offering or any related offerings.
(d) FINDER'S FEE. In the event the Company effectuates a
corporate restructuring, merger, joint venture, or acquisition subsequent to the
date hereof and on or prior to two years after the date of termination of this
Agreement, irrespective of any reason for such termination, and such corporate
restructuring, merger, joint venture, or acquisition is effectuated as a result
or consequence of any introduction made directly by the Representative or
indirectly by the Representative through any third party introduced by the
Representative, or by a person whose introduction to the Company can be traced
back to the Representative, to the Company during the term of this Agreement, or
which corporate restructuring, merger, joint venture, or acquisition was
initiated, directly or indirectly through any person introduced by the
Representative to the Company during the term of this Agreement, then the
Company hereby agrees to pay the Representative a finder's fee based on five
percent (5%) of the "Transaction
-26-
Value" (as hereinafter defined) of any such transaction, which payment shall be
due and payable in cash on the date of any such closing with respect thereto.
For purposes of this Agreement, "Transaction Value" shall mean the
aggregate value of all cash, securities, and other property (a) paid to the
Company, its affiliates, or their shareholders in connection with any
transaction referred to hereinabove involving an investment in or acquisition of
the Company or any affiliate (or the assets of either); (b) paid by the Company
or any affiliate in any such transaction involving an investment in or
acquisition of another party or its equity holdings by the Company or any
affiliate; or (c) paid or contributed by the Company or any affiliate and by the
other party or parties in the event of any such transaction involving a joint
venture or similar joint enterprise or undertaking. The value of any such
securities (whether debt or equity) or other property shall be the fair market
value thereof as determined by mutual agreement of the Company and the
Representative or by an independent appraiser jointly selected by the Company
and the Representative.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE UNDERWRITERS.
Notwithstanding the execution and delivery of this Agreement or the performance
of any part hereof, the Underwriters' obligations to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction of each of
the conditions set forth in this Section 7, except to the extent that such
satisfaction is waived in writing by the Representative.
(a) EFFECTIVENESS OF REGISTRATION STATEMENT.
(i) The Registration Statement shall have been
declared effective by the Commission not later than 5:00 P.M.,
Eastern Time, on ______________, 1997, or such later time or
date as shall have been consented to by the Representative in
writing.
(ii) On the Closing Date, no stop order suspending
the effectiveness of the Registration Statement or the
qualification or registration of the Securities, the
Underwriters' Warrants and the Warrant Securities, under the
securities laws of any jurisdiction (whether or not a
jurisdiction specified by the Representative) shall have been
issued, and no proceeding for that purpose shall have been
initiated or shall be threatened or contemplated by the
Commission or the authorities of any such jurisdiction.
(iii) Any request of the Commission or any such
authorities for additional information to be included in the
Registration Statement or Prospectus or otherwise shall have
been complied with to the reasonable satisfaction of counsel
for the Representative.
(b) REPRESENTATIONS; COMPLIANCE WITH AGREEMENT. The
representations and warranties of the Company in this Agreement shall be true
and correct on and as of the Closing Date, with the same effect as if made on
the Closing Date, and the Company shall have complied with all the agreements
and satisfied all the obligations required to be performed or satisfied by it at
or prior to the Closing Date.
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(c) SUFFICIENT AUTHORIZED COMMON STOCK. The Company shall
have, as of the Effective Date, sufficient authorized (and neither issued nor
outstanding) Common Stock to be offered and sold in the Public Offering, and to
be issued and sold upon exercise of the Warrants, Underwriters' Warrants, and
Warrants included in the Warrant Securities.
(d) NO UNTRUE STATEMENTS. The Registration Statement and the
Prospectus shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and, since the Effective Date, there shall not have occurred any
event required to be set forth in an amended or supplemented Prospectus that has
not been so set forth (except any such statement or omission based upon
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Registration Statement).
(e) NO MATERIAL CHANGE. Subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus,
and except as set forth or contemplated in the Prospectus, (i) there shall have
been no Material Adverse Effect, actual or threatened, for whatever reason, with
respect to the properties operations, business, financial condition, results of
operations or prospects of the Company or HotelView, (ii) neither the Company
nor HotelView shall have entered into any material transaction not in the
ordinary course of business, (iii) neither the Company nor HotelView shall have
paid or declared any dividends or other distributions on its capital stock, (iv)
the conduct of the business and operations of the Company and HotelView shall
not have been materially interfered with by strike, fire, flood, hurricane,
accident or other calamity (whether or not insured), or by any court or
governmental action, order or decree, and the respective properties of the
Company and HotelView shall not have sustained any material loss or damage
(whether or not insured) as a result of any such occurrence.
(f) NASD. The NASD shall have indicated that it has no
objection (i) to the underwriting arrangements pertaining to the sale of the
Securities by the Underwriters and (ii) the participation by the Underwriters in
the sale of the Securities. No action shall have been taken by the Commission or
the NASD the effect of which would make it improper, at any time prior to the
Closing Date, for any member firm of the NASD to execute transactions (as
principal or as agent) in the Common Stock and no proceedings for the purpose of
taking such action shall have been instituted or shall be pending, or, to the
best of the Underwriters' or the Company's knowledge, shall be contemplated by
the Commission or the NASD. The Company represents at the date hereof, and shall
represent as of the Closing Date or Option Closing Date, as the case may be,
that it has no knowledge that any such action is in fact contemplated by the
Commission or the NASD.
(g) OFFICERS' CERTIFICATE. The Company shall have furnished to
the Underwriters a certificate of the President and of the Chief Financial
Officer of the Company, dated as of the Closing Date, to the effect that each
signer of such certificate has examined the Registration Statement, the
Prospectus, and this Agreement, and the conditions set forth in Subsections 7(a)
through 7(d) have been satisfied.
(h) OPINION OF COMPANY COUNSEL. At the time this Agreement is
executed and as of the Closing Date and the Option Closing Date, as applicable,
the Company shall have
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furnished to the Underwriters the opinion of counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to counsel for the
Representative and substantially in the form of EXHIBIT C attached hereto.
(i) ADDITIONAL DOCUMENTS. At the Closing Date and any Option
Closing Date, the Underwriters shall have been furnished such additional
documents, opinions and certificates, as they shall reasonably request.
(j) CERTIFICATES, BYLAWS AND PROCEEDINGS. The Company's and
HotelView's Certificate of Incorporation and By-Laws, and all proceedings taken
in connection with the authorization, issuance, or sale of the Securities, the
Underwriters' Warrants and the Warrant Securities, as herein contemplated, shall
be reasonably satisfactory in form and substance to the Underwriters.
(k) ACCOUNTANTS' LETTER. At the time this Agreement is
executed and as of the Closing Date and each Option Closing Date, as applicable,
Xxxxxxxxx, Xxxxx & Co., the current independent public accountants for the
Company shall have furnished to the Underwriters a letter addressed to the
Underwriters and dated the date of this Agreement and/or the Closing Date, and
each Option Closing Date, as applicable, in form and substance satisfactory to
the Representative and counsel to the Representative, confirming that it is the
independent public accountant with respect to the Company within the meaning of
the Securities Act and the Regulations and published instructions, and stating
to the effect that:
(i) In its opinion, the audited financial
statements included in the Registration Statement and
Prospectus covered by its report included therein, comply as
to form in all material respects with the applicable
requirements of the Securities Act and the Regulations and
published instructions.
(ii) On the basis of a reading of the minutes of the
shareholders' and directors' meetings of the Company since
their respective inceptions, inquiries of officials of the
Company responsible for financial and accounting matters, and
other specified procedures and inquiries, nothing came to its
attention causing it to believe that:
(A) the unaudited financial information set
forth in the Prospectus does not comply as to form in
all material respects with the applicable
requirements of the Securities Act and the related
published instructions and Regulations and is not
fairly presented in accordance with generally
accepted accounting principles applied on a basis
consistent basis with the audited financial
statements set forth in the Prospectus, or
(B) with respect to the period subsequent to
_______________, 1997, there were, at a specified
date not more than three business days prior to the
date of such letter, any changes in the capital stock
or long-term debt obligations of the Company, or any
changes or decreases in shareholders' equity, net
assets, or current net assets of the Company, or any
material adverse change in the financial position,
revenues,
-29-
expenses, or results of operations of the Company,
each as compared with the amounts shown in the most
recent balance sheet of the Company included in the
Registration Statement.
(iii) It has compared specific dollar amounts,
numbers of shares of securities, percentages of revenues and
earnings, and statements about other financial or statistical
information pertaining to the Company set forth in the
Prospectus, in each case to the extent that such amounts,
numbers, percentages, statements, and information may be
derived from the general accounting records, which are subject
to the system of internal accounting controls, including
worksheets, of the Company (and excluding any questions
requiring an interpretation by legal counsel), with the
results obtained from the application of specific readings,
inquiries, and other appropriate procedures (which procedures
do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter, and
found them to be in agreement.
(l) CHANGE IN CAPITALIZATION. Subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there shall not have been any Material Adverse Effect on or decrease
in the capitalization of the Company that makes it impractical or inadvisable in
the reasonable judgment of the Representative to proceed with the Public
Offering or the delivery of the Securities, as the case may be, as contemplated
in the Prospectus.
(m) OPINION OF REPRESENTATIVE'S COUNSEL. At the Closing Date
and the Option Closing Date, if any, Broad and Xxxxxx, counsel for the
Representative, shall have furnished to the Company such opinion or opinions,
dated as of the date of its delivery, with respect to such matters as the
Company may reasonably request, and such counsel shall have received such
documents as they may reasonably request to enable them to opine upon such
matters.
(n) THE NASDAQ SMALLCAP MARKET(R). On or before the Closing
Date, the Securities shall have been approved for listing on The Nasdaq SmallCap
Market(R).
(o) "MARKET-OUT" PROVISION. The Representative's obligations
hereunder shall be subject to, among other things, there being, in its opinion:
(i) no material adverse change in the conditions or obligations of the Company,
HotelView or their respective present or proposed businesses and affairs; and
(ii) no market conditions which might render the offer and sale of the shares of
Securities herein contemplated inadvisable.
(p) CERTIFICATE OF SELLING SHAREHOLDERS. The Selling
Shareholders shall have furnished to the Underwriters a certificate, signed by
the Selling Shareholders, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and that the
representations and warranties of each such Selling Sharholder in this Agreement
are true and correct in all material respects on and as of the Closing Date to
the same effect as if made on the Closing Date.
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(q) LETTER AGREEMENTS. The Company will obtain letter
agreements executed by each of its officers, directors and principal
shareholders with respect to those matters referred to in Subsection 3(q).
(r) OTHER INFORMATION. Prior to the Closing Date, the Company
and the Selling Shareholders shall have furnished to the Representative such
further information, certificates, and documents in connection with the
Company's and the Selling Shareholders' obligations set forth herein as the
Representative may reasonably request.
If any of the conditions specified in this Section 7 shall not
have been fulfilled when and as required by this Agreement or expressly waived
in writing by the Representative, this Agreement and all obligations of the
Representative hereunder may be terminated by the Representative at, or at any
time prior to, the Closing Date. Notice of such termination shall be given to
the Company and the Selling Shareholders in writing, or by telegraph, facsimile
transmission or telephone and confirmed in writing. In such event, the Company,
the Selling Shareholders and the Representative shall not be under any
obligation to each other except to the extent provided in Sections 6 and 8
hereof.
8. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company agrees to
indemnify and hold harmless the Representative, each of the other Underwriters
and each person, if any, who controls any of the foregoing within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each of
them, from and against any and all loss, liability, claim, damage, expense or
action, joint or several (including, but not limited to, any and all reasonable
expenses incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever and any amount paid
in settlement of any litigation), commenced or threatened, or of any claim
whatsoever, to which they or any of them may become subject under the Securities
Act, the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, liability, claim, damage, expense
or action arises out of or is based upon (i) any untrue statement or alleged
untrue statement or breach of any representation, warranty or covenant made by
the Company in this Agreement, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in a Preliminary Prospectus or the Prospectus (or
any amendment or supplement thereto), or any omission or alleged omission
therefrom of a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or (iv) any untrue statement or
alleged untrue statement of a material fact contained in any application or
other document executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify all or any of the Securities, the Underwriters' Warrants or the Warrant
Securities under the securities laws thereof or filed with the Commission, the
NASD or any securities exchange, or any omission or alleged omission therefrom
of a material fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however, that the Company shall
not be liable in any such case to the extent that such untrue statement or
omission or such
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alleged untrue statement or omission was made in reliance upon and in conformity
with information furnished in writing by or on behalf of any of the Underwriters
to the Company expressly for use in the Registration Statement (or any amendment
thereto), any such Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto) or any such application or document. The Company
acknowledges that the statements under the caption "Underwriting" contained in
any Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by the Underwriters expressly for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus. The
indemnity agreement contained in this Subsection 8(a) is in addition to any
liability which the Company may otherwise have to the Underwriters or any
controlling person of the Underwriters. The Company agrees to pay any legal and
other expenses for which it is liable under this subsection (a) from time to
time (but not more frequently than monthly) within 30 days after its receipt of
a xxxx therefor.
(b) INDEMNIFICATION BY THE REPRESENTATIVE. The Representative
agrees that it will indemnify and hold harmless the Company, the Selling
Shareholders, each of the Company's officers who signs the Registration
Statement, each of its directors, and each person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage, expense or
action, joint or several, to the same extent as the foregoing indemnity from the
Company and the Selling Shareholders to the Underwriters in Subsection 8(a), but
only with respect to statements or omissions made in the Registration Statement
(or any amendment thereto) or a Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
information furnished in writing by the Representative to the Company expressly
for use in the Registration Statement (or any amendment thereto). The indemnity
agreement contained in this Subsection 8(b) is in addition to any liability
which the Representative may otherwise have to the Company and the Selling
Sharholders or any of the Company's directors, officers, or controlling persons.
The Company and the Selling Shareholders acknowledge that the statements in any
Preliminary Prospectus and in the Prospectus made under the caption
"Underwriting" constitute the only information furnished in writing by the
Representative expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus. The Representative agrees to pay any
legal and other expenses for which it is liable under this Subsection 8(b) from
time to time (but not more frequently than monthly) within 30 days of receipt of
a xxxx therefor.
(c) INDEMNIFICATION BY THE SELLING SHAREHOLDERS. The Selling
Shareholders, jointly or severally, agree to indemnify and hold harmless the
Company, each of the Company's officers who signs the Registration Statement,
the Representative, each of the other Underwriters and each person, if any, who
controls any of the foregoing within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and each of them, to the same extent as
the foregoing indemnity from the Company to the Underwriters in Section 8(a)
above but only with respect to (i) statements or omissions of a material fact,
if any, made in any Preliminary Prospectus, any Rule 430A Prospectus, the
Registration Statement or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Selling Shareholders expressly for use in any
Preliminary Prospectus, any Rule 430A Prospectus, the Registration Statement or
the Prospectus, or any amendment or supplement thereto, or in any application,
as the case may be, or (ii) any breach
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of any representation, warranty, covenant or agreement of the Selling
Shareholders contained in this Agreement. In case any action shall be brought
against the Company, any Underwriter or any other person so indemnified based on
any Preliminary Prospectus, any Rule 430A Prospectus, the Registration Statement
or the Prospectus, or any amendment or supplement thereto, or in any
application, or with respect to any such breach, and in respect of which
indemnity may be sought against any of the Selling Shareholders, the Selling
Shareholders shall have the rights and duties given to the indemnifying parties,
and the Company, the Underwriters and each other person so indemnified shall
have the rights and duties given to the indemnified parties under the provisions
of this Section 8.
(d) CLAIMS. Promptly after receipt by an indemnified party
under this Section 8 of notice of any claim, threatened claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the claim, threatened claim or the
commencement of that action; provided, however, that the failure to notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein, and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with its counsel, who shall be reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim, threatened claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Representative shall have
the right to employ counsel to represent it and its controlling persons who may
be subject to liability arising out of any claim in respect of which indemnity
may be sought by the Representative against the Company and/or the Selling
Shareholders under this Section 8 if, in the Representative's reasonable
judgment, it is necessary for the Representative and its controlling persons to
be represented by separate counsel in order to avoid an actual or potential
conflict of interest or if the Representative shall have reasonably concluded
that there may be defenses available to the Representative and its controlling
persons different from or in addition to those available to the Company or the
Selling Shareholders, and in either such event the reasonable fees and expenses
of such separate counsel shall be paid by the Company and the Selling
Shareholders. An indemnifying party shall not be liable for any settlement of
any action or claims effected without its written consent (which consent shall
not unreasonably be withheld).
[Anything herein to the contrary notwithstanding, the
indemnity agreement of the Company in Subsection 8(a) hereof, the
representations and warranties in this Agreement and any representation or
warranty as to the accuracy of the Registration Statement or the Prospectus
contained in any certificate furnished by the Company pursuant to Section 7
hereof, insofar as they may constitute a basis for indemnification for
liabilities (other than payment by the Company of expenses incurred or paid in
the successful defense of any action, suit or proceeding) arising under the
Securities Act, shall not extend to the extent of any interest therein of a
controlling person or partner of the Representative who is a director, officer
or controlling person of the Company when the Registration Statement has become
effective, except in each
-33-
case to the extent that an interest of such person shall have been determined by
a court of appropriate jurisdiction as not against public policy as expressed in
the Securities Act. Unless in the opinion of counsel for the Company the matter
has been settled by a controlling precedent, the Company will, if a claim for
such indemnification is asserted, submit to a court of appropriate jurisdiction
the question whether such interest is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.]
(e) CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which indemnification provided for in
Subsections 8(a), or 8(b) or 8(c) is unavailable, the Company, the Underwriters
or the Selling Shareholders shall contribute to the aggregate loss, claim,
damage, expense and liability to which the Company, the Underwriters or the
Selling Shareholders may be subject (and, in any case where the Company is
seeking contribution, after seeking contribution from persons who control the
Company within the meaning of the Securities Act, officers of the Company who
signed the Registration Statement and directors of the Company, who may be
liable for contribution and after deducting from such loss, claim, damage,
expense and liability the amount of contribution obtained from such persons or
the Representative) in such proportions as are applicable to reflect the
relative benefits received by the Company, the Underwriters and the Selling
Shareholders from the offering of the Securities; provided, however, that if
such allocation is not permitted by applicable law or if the indemnified party
failed to give the notice required under Subsection 8(d), then the relative
fault of the Company, the Underwriters or the Selling Shareholders, in
connection with the statements or omissions which resulted in such losses,
claims, damages and liabilities and other relevant equitable considerations will
be considered together with such relative benefits. The relative benefits
received by the Company and the Selling Shareholders, on the one hand, and the
Underwriters, on the other hand, shall be deemed to be in the same proportion as
the total net proceeds from the Public Offering (before deducting expenses)
received by the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriters (the
"Underwriters Portion"), in each case appearing on the cover page of the
Prospectus; provided, however, that (i) the provisions of the Agreement Among
Underwriters, if any, shall govern the contribution among Underwriters, (ii) in
no case shall the Underwriters (except as may be provided in the Agreement Among
Underwriters, if any) be responsible for any amount in excess of their
respective pro rata shares, based on the number of Securities purchased by each
of them, of the amount of the Underwriters Portion, and (iii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The relative fault of the Company
and the Selling Shareholders, on the one hand, and of the Underwriters, on the
other hand, shall be determined by reference to, among other things, whether in
the case of an untrue statement or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact, such statement or
omission relates to information supplied by the Company or the Selling
Shareholders, on the one hand, or by the Underwriters, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statements or omission. The Company, the
Selling Shareholders and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Subsection 8(e) were determined by
pro-rata allocation (even if the Underwriters are treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in this Subsection 8(e). The amount paid or
payable by the indemnified party as a result of the losses, claims,
-34-
damages or liabilities referred to above in this Subsection 8(e) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against or appearing as a
third-party witness in any such action or claim. For purposes of this Subsection
8(e), each person, if any, who controls any of the Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Underwriter and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each officer who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clause
(iii) of this Subsection 8(e). Each party entitled to contribution agrees that
upon the service of a summons or other initial legal process upon it in any
action instituted against it in respect of which contribution may be sought, it
will promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought from any obligations it may have hereunder or otherwise (except as
specifically provided in Subsection 8(d)). No party shall be liable for
contribution with respect to any action or claim settled without its consent
(which consent shall not unreasonably be withheld).
(f) SURVIVAL. The respective indemnity and contribution
agreements by the Underwriters, the Selling Shareholders and the Company
contained in this Section 8, and the covenants, representations and warranties
of the Selling Shareholders and the Company set forth herein, shall remain
operative and in full force and effect regardless of (i) any investigation made
by the Underwriters or on their behalf or by or on behalf of any person who
controls the Underwriters, by the Company or any controlling person of the
Company or any director or any officer of the Company, (ii) acceptance and
delivery of the Securities, the Underwriters' Warrants and Warrant Securities
and payment therefor, or (iii) any termination of this Agreement, and any
successor to the Company or to the Underwriters or any person who controls any
of Underwriters or the Company, as the case may be, shall be entitled to the
benefit of such respective indemnity and contribution agreements.
9. EFFECTIVENESS. This Agreement shall become effective
contemporaneously with the effectiveness of the Registration Statement, or at
such date after the Effective Date as the Underwriters, in their discretion,
shall first release the Securities for sale to the public; PROVIDED, HOWEVER,
that the provisions of Sections 5, 8, and 9 hereof shall at all times be in full
force and effect from the date first written above. For the purposes of this
Section 9, the Securities shall be deemed to have been released for sale to the
public upon release by the Underwriters after the Effective Date of a newspaper
advertisement relating to the Securities or upon release by the Underwriters
thereafter of telegrams advising securities dealers of the effectiveness of the
Registration Statement, whichever shall first occur.
10. TERMINATION. This Agreement may be terminated, in the
Representative's sole and absolute discretion, by notice given to the Selling
Shareholders and the Company prior to the Closing Date if the Company or the
Selling Shareholders shall have failed, refused, or been unable, prior to the
Closing Date, to perform any material agreement required to be performed by it
hereunder, or if any other condition precedent to the Underwriters' obligations
hereunder required to be fulfilled by the Company is not fulfilled. In addition,
this Agreement may be
-35-
terminated, as set forth above, if, prior to the Closing Date, any of the
following shall have occurred: (i) material governmental restrictions (not in
force and effect on the date hereof) have been imposed on trading in securities
on The Nasdaq SmallCap Market(R) or in the over-the-counter market; (ii) a
material adverse change, beyond normal fluctuations, in general financial market
or economic conditions from such conditions on the date hereof; (iii) a material
interruption in mail or telecommunications service or other general means of
communications within the United States after the execution and delivery of this
Agreement; (iv) a banking moratorium has been declared by federal or New York or
Florida state authorities; (v) an outbreak of major international hostilities or
other national or international calamity has occurred; (vi) the passage by the
Congress of the United States or by any state legislative body of any act or
measure, or the adoption of any orders, rules, or regulations by any
governmental body or executive or any authoritative accounting institute or
board, that the Underwriters believe will have a Material Adverse Effect on the
business, financial condition, or financial statements of the Company or the
distribution of the Securities or market for the Securities; or (vii) any
Material Adverse Effect has occurred, since the respective dates of which
information is given in the Registration Statement and Prospectus, in the
condition of the Company or HotelView, financial or otherwise, whether or not
arising in the ordinary course of business. Any such termination shall be
without liability of any party to any other party, except as provided in Section
8 herein and except that the Company shall remain obligated to pay costs and
expenses pursuant to Section 5 herein. If the Representative elects to prevent
this Agreement from becoming effective, or to terminate this Agreement, as
provided in this Section 10, the Representative shall promptly notify the
Company and the Selling Shareholders by telegram or telephone, and confirm by
letter, and the Representative shall not be under any liability to the Company
or the Selling Shareholders.
11. DEFAULT BY THE UNDERWRITERS. If the Underwriters shall fail at the
Closing Date to purchase the Securities that they are respectively obligated to
purchase pursuant to this Agreement (the "Defaulted Securities"), the
Underwriters shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriter, to purchase all, but not less than all, of the Defaulted Securities
in such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the Underwriters shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the total number of Securities, the non-defaulting Underwriters
shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations bear to the
underwriting obligations of the non-defaulting Underwriters; and
(b) if the number of Defaulted Securities exceeds 10% of the
total number of Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters.
In the event of any such default that does not result in a termination of this
Agreement, either the Underwriters or the Company shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement
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or Prospectus or in any other documents or arrangements. Nothing contained
herein shall relieve a defaulting Underwriter of any liability it may have for
damages caused by its default.
12. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND INDEMNITIES. The
respective agreements, representations, warranties, and indemnities contained in
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the Company or the Underwriters or their
respective officers or directors or controlling persons, and will survive
delivery of and payment for the Securities and the Underwriters' Warrants and
the Warrant Securities.
13. NOTICES. All notices and other communications hereunder (unless
otherwise expressly provided for herein) shall be in writing and shall be deemed
given when delivered in person, on the business day (before 5:00 P.M.) sent by
facsimile transmission with confirmation of receipt, or on the date indicated on
the return receipt if sent by registered or certified mail (return receipt
requested) to the party to receive the same at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to the Company: Visual Data Corporation
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 0X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx, President
with a copy to: Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
If to the Selling Shareholders: Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxxxxx
[Insert addresses]
If to the Representative: Noble International Investments, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx, President
In each case with a copy to: Broad and Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, P.A.
or Xxxxx X. Xxxxxxx, Esquire
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14. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors. Except as only
to the extent stated in Section 8 herein with respect to the officers, directors
and controlling persons referred to in such Section 8, no person other than the
parties hereto and their respective successors will have any right or obligation
hereunder. The terms "successor" and "successors and assigns" as used in this
Agreement shall not include any buyer, as such, of any of the Securities from
the Underwriters.
15. CONSENTS AND PRIOR APPROVALS. Any consent or approval by the
Underwriters required hereunder to any corporate action of the Company shall not
be unreasonably withheld, and, notwithstanding any other provision hereof, any
such consent or approval to any corporate action of the Company after the
Closing Date, shall not be required if the Company obtains an opinion from an
AV-rated law firm that the requirement of such consent or approval constitutes
an abrogation of the Board of Directors' duties under the corporate law of such
jurisdiction.
16. ENTIRE UNDERSTANDING; INCORPORATION BY REFERENCE. This Agreement,
together with the Financial Consulting Agreement, the Representative's Warrant,
and the other documents, exhibits and schedules referred to herein, contains the
entire understanding between the parties hereto and supersedes any prior
understandings or oral or written agreements between them respecting the subject
matter hereof. The documents, exhibits and schedules referred to in this
Agreement are incorporated herein by reference.
17. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original but all of which taken together
shall constitute one and same agreement.
18. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida, without giving
effect to choice of law or conflict of laws principles thereof, and any
proceeding arising between the parties in any manner pertaining or related to
this Agreement shall, to the extent permitted by law, be held in Palm Beach
County, Florida.
Please confirm, by signing and returning to the Company counterparts of
this Underwriting Agreement, that the foregoing correctly sets forth the
understanding between the Company, the Selling Shareholders and the
Representative, whereupon this Agreement will constitute a binding agreement
among us.
Very truly yours,
VISUAL DATA CORPORATION, a Florida corporation
By:
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
[SIGNATURES CONTINUED]
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SELLING SHAREHOLDERS
-------------------------------
Xxxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxxxxxx
Confirmed and Accepted as of the date first above-written:
NOBLE INTERNATIONAL INVESTMENTS, INC.,
a Florida corporation
By:________________
Name: NICO X. XXXXX
Title: PRESIDENT
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SCHEDULE 1
NUMBER OF
UNDERWRITERS SECURITIES
------------ ----------
Noble International Investments, Inc.
Total
SCHEDULE 3(q)
COMPANY SHAREHOLDERS NOT
SUBJECT TO RESTRICTIONS ON TRANSFERS
EXHIBIT A
REPRESENTATIVE'S WARRANT
EXHIBIT B
FINANCIAL CONSULTING AGREEMENT
EXHIBIT C
OPINION OF COMPANY COUNSEL
1. Each of the Company and HotelView is duly organized and validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, with all requisite corporate power and authority to own or lease
all of the assets owned or leased by it and to conduct its business as described
in the Registration Statement and the Prospectus.
2. Each of the Company and HotelView is qualified to do business and in
good standing as a foreign corporation in all jurisdictions in which the nature
of the activities conducted by it or the character of the assets owned or leased
by it makes such qualification necessary, except for such jurisdictions where
the failure, either singly or in the aggregate, to do so or be in good standing
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business, assets, properties, results of operations or
prospects (financial or otherwise) of the Company (hereinafter a "Material
Adverse Effect"). The Company owns, directly or indirectly, 100% of the
outstanding capital stock of HotelView, and all of such shares have been validly
issued, are fully paid and non-assessable, were not issued in violation of any
preemptive rights, and, except as set forth in the Prospectus, are owned free
and clear of any liens, charges, claims, encumbrances, pledges, security
interests, defects or other restrictions or equities of any kind whatsoever. The
Company does not own, directly or indirectly, any shares of stock or any other
securities of any corporation, or have any equity interest in any firm,
partnership, joint venture, association or other entity, other than HotelView.
3. The Company has full corporate power and authority to execute and
deliver the Underwriting Agreement, the Representative's Warrant, and the
Financial Consulting Agreement (collectively, the "Transaction Documents"), to
perform its obligations thereunder and to consummate the transactions provided
for therein. The execution and delivery of the Transaction Documents by the
Company, the performance of its obligations thereunder, the consummation by the
Company of the transactions contemplated thereby and the Company's compliance
with the terms of the Transaction Documents have been duly authorized by all
necessary corporate action on the part of the Company. The Transaction Documents
have been duly executed and delivered by the Company and constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except to the extent that (i)
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and general equitable principles or a requirement as to commercial
reasonableness, and (ii) enforceability of the indemnification and contribution
provisions set forth in the Underwriting Agreement may be limited by federal or
state securities laws or public policy underlying such laws.
4. The "lock-up" agreements described in Section 3(r) of the
Underwriting Agreement delivered to the Representative have been duly executed
and delivered by the shareholders who are parties thereto, and constitute legal,
valid and binding obligations of such shareholders, enforceable against each of
them in accordance with their respective terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
C-1
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general equitable principles.
5. None of (i) the Company's issue and sale of the Securities, the
Representative's Warrant and Warrant Securities (collectively, the "Registered
Securities"), and (ii) the execution and delivery of the Transaction Documents,
performance of the Company's obligations thereunder, consummation of the
transactions contemplated therein or the conduct by the Company of its business
as described in the Prospectus, conflicts with, or will conflict with, results
in, or will result in, any breach or violation of any of the terms or provisions
of, constitutes, or will constitute, a default under, or results in, or will
result in, the creation of any lien, charge, claim, encumbrance or security
interest of any kind or nature whatsoever upon any property or assets of the
Company pursuant to (A) the articles of incorporation or by-laws of the Company
or HotelView, (B) to such counsel's knowledge after due inquiry, any note,
contract, commitment, indenture, deed of trust, mortgage, voting trust
agreement, shareholders agreement, license or other agreement or instrument to
which the Company or HotelView is a party, by which it is bound or to which any
of its properties may be subject, or (C) any federal, state or local law, rule
or regulation applicable to the Company or, to such counsel's knowledge after
due inquiry, any judgment, order or decree of any federal or [state] court,
arbitrator, regulatory administrative or other governmental agency or body
having jurisdiction over the Company or any of its properties or businesses.
6. No consent, approval, authorization or order of, and no registration
or filing with, any third party or any court, regulatory body, administrative
agency or other governmental agency or official (other than such as may be
required under the Securities Act or the Exchange Act, by the NASD or state
securities laws, as to which such counsel need not express an opinion) is
required for the valid authorization, issuance, sale and delivery of the
Registered Securities pursuant to the Transaction Documents, for the execution
and delivery by the Company of, and the performance by the Company of its
obligations under, the Transaction Documents and for the consummation by the
Company of the transactions contemplated by the Transaction Documents.
7. The Registration Statement has become effective under the Securities
Act. To such counsel's knowledge after due inquiry, no stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus has
been issued, and no proceedings for that purpose have been instituted or are
pending or threatened.
8. Each of the Registration Statement and the Prospectus, and each
amendment or supplement thereto, comply as to form in all material respects with
the requirements of the Securities Act (except for the financial statements,
notes and schedules, and other statistical or other financial data included
therein, as to which such counsel need not express an opinion). The conditions
to use Form SB-2 have been satisfied with respect to the Registration Statement.
9. There are no laws, rules or regulations, judgments, orders or
decrees, required to be described in the Registration Statement and the
Prospectus other than those described in the Registration Statement and
Prospectus. The statements in the Prospectus, insofar as such statements
constitute a summary of laws, rules, regulations or legal conclusions, are
accurate
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summaries and fairly and correctly present in all material respects the
information called for in the Securities Act with respect to such laws, rules,
regulations or conclusions.
10. To such counsel's knowledge after due inquiry, there are no
agreements, contracts or other documents or instruments required to be described
in the Registration Statement and the Prospectus or required to be filed as an
exhibit to the Registration Statement other than those described in the
Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement.
11. The persons listed under the caption "Principal and Selling
Shareholders" in the Prospectus are the respective record and, to such counsel's
knowledge after due inquiry, "beneficial owners" (as such phrase is defined in
Regulation 13d-3 under the Exchange Act) of the Common Stock set forth opposite
their respective names as and to the extent set forth therein.
12. Except as described in the Prospectus, to such counsel's knowledge
after due inquiry, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the Registered Securities.
13. The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
14. No transfer tax, stamp duty or other tax, levy, impost, deduction,
charge or withholding is payable by or on behalf of the Underwriters in
connection with (i) the issuance by the Company of the Registered Securities,
(ii) the purchase by the Underwriters of the Registered Securities, (iii) the
purchase by the Representative of the Underwriters' Warrants or the purchase of
the Warrant Securities by the Representative (or its permitted assignees) upon
the exercise of the Underwriters' Warrants, and (iv) the execution and delivery
by the Company of, or the performance by the Company of its obligations under,
the Transaction Documents or the issuance of the certificates and instruments
representing the Registered Securities.
15. All of the agreements of the Company and HotelView described in,
required to be described in or attached as an exhibit to the Registration
Statement have been validly authorized, executed and delivered by the Company or
HotelView and constitute legal, valid and binding agreements of the Company or
HotelView, enforceable against the Company and HotelView in accordance with
their respective terms, except to the extent that enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
equitable principles. None of the provisions of any such agreements, contracts,
documents or instruments violates any judgment, order, consent or decree or any
federal or state governmental agency or court having jurisdiction over the
Company, Hotelview or their respective properties or businesses, except where
such violation has not and will not have a Material Adverse Effect.
16. Except as described in the Prospectus, the Company and HotelView
are not in violation of, or breach of, or in default under (i) their respective
articles of incorporation or bylaws, or (ii) to such counsel's knowledge after
due inquiry, any material license, contract,
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indenture, mortgage, installment contract, deed of trust, lease, voting trust
agreement, shareholders agreement, note, loan or credit agreement, or other
agreement or instrument to which the Company or HotelView is a party, by which
the Company or HotelView is bound or to which any of its properties are subject.
17. The Company and HotelView hold all licenses, permits,
certifications, registrations, approvals, consents and franchises from all
governmental or regulatory authorities, officials or agencies necessary to own
or lease and operate its properties and to conduct its business as described in
the Prospectus.
18. To such counsel's knowledge after due inquiry, there are no claims,
actions, suits, proceedings, arbitrations, investigations or inquiries pending,
or to such counsel's knowledge after due inquiry, threatened, against or
involving the Company, HotelView or any of its properties (i) that are required
to be disclosed in the Registration Statement in accordance with the Securities
Act and are not so disclosed, (ii) which question the validity of the capital
stock of the Company or HotelView, (iii) which question the validity,
performance or enforceability of the Agreement or any action taken or to be
taken by the Company or HotelView pursuant thereto or in connection therewith,
or (iv) which, in such counsel's opinion, if adversely determined, would have a
Material Adverse Effect.
19. Except as disclosed in the Prospectus, (i) there is no claim or
action by any person pertaining to, or proceeding pending or threatened, that
challenges the ownership or use by the Company or HotelView of any copyright,
trademark, service xxxx, service name, and trade name used by the Company or
HotelView in the conduct of its business; and (ii) each of the Company and
HotelView owns and has full right, title and interest in and to, or has the
valid and exclusive right to, all copyright, trademarks, service marks, service
names and trade names necessary in the conduct of its business as presently
conducted, or as proposed to be conducted as described in the Prospectus, except
where such failure has not and will not have a Material Adverse Effect.
20. The Company has the capitalization set forth in the Prospectus. All
of the issued and outstanding shares of Common Stock of the Company have been
duly authorized, validly issued and are fully paid and nonassessable. The
holders thereof have no rights of rescission with respect thereto and are not
subject to personal liability solely by reason of being such holders. None of
such securities were issued in violation of any preemptive or similar right.
Except as described in the Prospectus, to such counsel's knowledge after due
inquiry, the Company is not a party to or bound by any outstanding options,
warrants or similar rights to subscribe for, or contractual rights or
obligations to issue, sell, transfer or acquire, any of the capital stock of the
Company or any securities convertible into or exchangeable for any of the
capital stock of the Company. All issuances of capital stock by the Company
prior to the date hereof either complied with or were not subject to the
registration requirements of the Securities Act and were made in full compliance
with all applicable federal or state laws, rules and regulations.
21. The certificates representing the Warrants and shares of Common
Stock are in due and proper form. The Securities conform to the descriptions
thereof set forth in the Prospectus.
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22. Except as described in the Prospectus, no person (i) has the right
to include and/or register any securities of the Company in the Registration
Statement or to require the Company to file any registration statement or, if
filed, to include any security in any registration statement filed by the
Company, or (ii) holds any anti-dilution rights with respect to any securities
of the Company.
23. The Securities to be sold by the Company under the Agreement, the
shares of Common Stock to be sold by the Company pursuant to the Warrants, the
Underwriters' Warrants to be sold by the Company under the Agreement, and the
shares of Common Stock and Warrants to be sold by the Company upon the exercise
of the Underwriters' Warrants have been duly authorized, are not and will not be
in violation of any preemptive rights or any similar rights and, when issued,
paid for and delivered in accordance with the terms of the Agreement and will be
validly issued, fully paid and nonassessable. The holders thereof will not be
subject to any restriction on the voting or transfer thereof (other than in
accordance with their terms) or to any personal liability solely by reason of
being such holders, and the issuance thereof is not in violation of any
preemptive or similar right.
24. All corporate action required to be taken for the authorization,
issue and sale of (i) the Securities, (ii) the Underwriters' Warrants, and (iii)
the shares of Common Stock and Warrants underlying the Underwriters' Warrants,
and for the reservation of the shares of Common Stock required to be reserved
for issuance upon the exercise of the Warrants and Underwriters' Warrants, have
been duly and validly taken.
25. The Warrants and Underwriters' Warrants constitute valid and
binding obligations of the Company to issue and sell, upon exercise thereof and
payment therefor, the number and type of securities of the Company called for
thereby. The shares of Common Stock issuable upon exercise of the Warrants and
Underwriters' Warrants have been reserved for issuance at the exercise prices
and under the other terms and conditions provided for in the Warrant Agreement
and Underwriters' Warrants.
26. When the certificates for the Securities being sold under the
Agreement by the Company are duly countersigned by the Company's transfer agent
and delivered to the Underwriters against payment therefor, as provided in the
Agreement, the Underwriters will acquire the Registered Securities free and
clear of any adverse claim that has been identified in a written claim received
by the Company, assuming the Underwriters acquired such shares in good faith and
without notice of any such adverse claim.
27. Counsel has participated in conferences with officers and other
representatives of the Company, representatives of the Company's accountants,
the Representative and counsel to the Representative, at which the contents of
the Registration Statement, the Prospectus and related matters were discussed.
Although counsel is not passing upon and does not assume responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus, on the basis of the foregoing, no
facts or circumstances have come to their attention which lead them to believe
that, on the Effective Date and on the Closing Date, the Registration Statement
and the Prospectus contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
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which they were made, not misleading (other than the financial statements and
other financial and statistical data included therein, as to which such counsel
need not express an opinion).
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