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EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT
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UNDERWRITING AGREEMENT
June __, 1997
Nichols, Safina, Xxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
___________________________
___________________________
___________________________
Dear Sirs:
Panorama International Productions, Inc., a Delaware
corporation (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to you, 1,000,000 shares of the common stock,
$.001 par value (the "Common Stock") of the Company, and the stockholders of
the Company named in Schedule I hereto (the "Selling Stockholders") propose,
subject to the terms and conditions stated herein, to issue and sell to you
450,619 shares of the Common Stock of the Company. The aggregate of the
1,450,619 shares to be sold by the Company and Selling Stockholders is herein
called the "Firm Shares". In addition, solely for the purpose of covering
over-allotments, the Company proposes to grant to you the option to purchase up
to 217,593 additional shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "Shares". The Shares are more fully described in the Registration
Statement and Prospectus referred to below.
The Company confirms as follows its agreement with you:
1. REGISTRATION STATEMENT AND PROSPECTUS: The Company
has prepared and filed with the Securities and
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Exchange Commission (the "Commission"), in accordance with the Securities Act
of 1933, as amended, and the rules and regulations of the Commission
promulgated thereunder (the "Rules and Regulations", and together with said
Act, the "Act"), a registration statement on Form SB-2 (File No. ___________)
and may have filed one or more amendments thereto, including in such
registration statement and in certain amendments thereto a related preliminary
prospectus for the registration under the Act of the Shares. In addition,
subject to the provisions of Section 4(e) hereof, the Company has filed or will
promptly file a further amendment to such registration statement prior to the
effectiveness of such registration statement, unless an amendment is not
required pursuant to Rule 430A of the Rules and Regulations. As used in this
Agreement, the term "Registration Statement" means such registration statement,
including the prospectus, financial statements and schedules thereto, exhibits
and other documents filed as part thereof, as amended when, and in the form in
which, it is declared effective by the Commission, and, in the event any
post-effective amendment thereto is filed thereafter and on or before the
Closing Date (as hereinafter defined), shall also mean (from and after the date
such post-effective amendment is effective under the Act) such registration
statement as so amended, provided that such Registration Statement, at the time
it becomes effective, may omit such information as is permitted to be omitted
from the Registration Statement when it becomes effective pursuant to Rule 430A
of the Rules and Regulations, which information ("Rule 430 Information") shall
be deemed to be included in such Registration Statement when a final prospectus
is filed with the Commission in accordance with Rules 430A and 424(b)(1) or (4)
of the Rules and Regulations; the term "Preliminary Prospectus" means each
prospectus included in the Registration Statement, or any amendments thereto,
before it becomes effective under the Act, the form of prospectus omitting Rule
430A Information included in the Registration Statement when it becomes
effective, if applicable (the "Rule 430A Prospectus"), and any prospectus filed
by the Company with your consent pursuant to Rule 424(a) of the Regulations;
the term "Prospectus" means the final prospectus included as part of the
Registration Statement, except that (i) if any
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prospectus (including any preliminary prospectus) which differs from such
prospectus included in the Registration Statement is provided to you for use in
connection with the offering of the Shares (whether or not such differing
prospectus is required to be filed by the Company pursuant to Rule 424(b) under
the Act), the term "Prospectus" as used herein shall mean such differing
prospectus from and after the date on which it shall have been first used, and
(ii) in the event any supplement to or amendment of such prospectus is made
after the date on which the Registration Statement is declared effective and on
or prior to the Closing Date, the term "Prospectus" shall also mean (with
respect to any supplement, from and after the date such supplement is first
used or, with respect to any amendment, the date such amendment is effective
under the Act) such prospectus as so supplemented or amended; and the term
"Effective Date" means (i) if the Company and you have determined not to
proceed pursuant to Rule 430A under the Act, the date on which the Registration
Statement becomes effective, or (ii) if the Company and you have determined to
proceed pursuant to Rule 430A under the Act, the date of this Agreement.
2. AGREEMENTS TO SELL AND PURCHASE: Subject to the
terms and conditions herein set forth, the Company and each of the Selling
Stockholders agree, severally and not jointly, to sell to you and each of you
agree, severally and not jointly, to purchase from the Company, and each of the
Selling Stockholders, at a purchase price of $_______ per Firm Share, the
number of Shares (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying the aggregate number of Firm Shares to be sold by the
Company and each of the Selling Stockholders as set forth opposite their
respective names in
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Schedule I hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by each of you as set forth opposite your
respective names in Schedule I hereto and the denominator of which is the
aggregate number of Firm Shares to be purchased from the Company and the
Selling Stockholders hereunder.
Subject to the terms and conditions herein set forth, the
Company agrees to sell to you, and you shall have the right to purchase from
the Company, up to 217,593 Additional Shares at a purchase price of $_____ per
Additional Share. Additional Shares may be purchased solely for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. If any Additional Shares are to be purchased, each of you, severally,
agrees to purchase from the Company that proportion (subject to such
adjustments as you may both determine to avoid fractional Additional Shares) of
the number of Additional Shares to be purchased which the number of Firm Shares
set forth opposite your name in Schedule II bears to the aggregate number of
Firm Shares to be purchased from the Company and the Selling Stockholders
hereunder. Additional Shares may be purchased at any time and from time to
time on or before the thirtieth business day following the date of this
Agreement upon written notice from you to the Company specifying the number of
Additional Shares to be purchased.
You will offer the Shares for sale at the initial public
offering price set forth on the cover of the Prospectus. After the initial
public offering, you may from time to time increase or decrease the public
offering price, in your sole discretion, by reason of changes in general market
conditions or otherwise.
3. DELIVERY AND PAYMENT: Delivery of and payment for
the Firm Shares shall be made at the offices of Nichols, Safina, Xxxxxx & Co.,
Inc. ("NSL") at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other place
as
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shall be mutually agreed upon) at such time and date, not later than the third
full business day following the Effective Date (unless the time of
effectiveness is after 4:00 P.M. New York time, in which case the date of
closing shall be no later than four business days following the Effective
Date), as you shall designate by at least forty-eight hours prior notice to the
Company and the Selling Stockholders (the "Closing Date"); provided, however,
that payment for the Firm Shares to be sold by the Selling Stockholders will be
made on such later time and date, not later than the tenth full business day
following the Effective Date, as you shall designate by at least forty-eight
hours prior notice to the Selling Stockholders.
Delivery of and payment for Additional Shares shall be made at
said offices of NSL, or at such other place, and at such time(s) and date(s)
(each an "Optional Closing Date") as may be agreed upon in writing by you and
the Company; provided, however, that in no event may an Optional Closing Date
be (i) earlier than the Closing Date or (ii) later than three business days
after the date on which the related notice to purchase Additional Shares is
given.
The Closing Date and the time and place of delivery of and
payment for the Shares may be varied by agreement between you, the Company and
the Selling Stockholders. The Optional Closing Date and the time and place of
delivery of and payment for the Additional Shares may be varied by agreement
between you and the Company. Delivery of certificates for the Shares (in
definitive form, registered in such names and in such denominations as you
shall request at least two business days prior to the Closing Date by written
notice to the Company) shall be made to you against payment of the purchase
price therefor by certified or official bank check or checks payable in New
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York Clearing House funds to the order of the Company and each of the Selling
Stockholders, as their interests may appear. For the purpose of expediting the
checking and packaging of certificates for the Shares, the Company agrees to
make such certificates available for inspection at the offices of NSL at least
twenty-four (24) hours prior to the Closing Date and each Optional Closing
Date, as the case may be.
On the Closing Date, at the time of the delivery and payment
for the Firm Shares, (i) the Company and the Selling Stockholders shall pay to
you as a non-accountable expense allowance a sum equal to $____ per Share for
each Firm Share purchased by you hereunder (or an aggregate of $_________ in
respect of the Firm Shares), less the $25,000 heretofore paid to you in respect
thereof, by certified or official bank check or checks payable in New York
Clearing House funds payable to the order of, and in accordance with
instructions from, you except that if the time and date of the payment for the
Firm Shares to be sold by the Selling Stockholders hereunder is not the Closing
Date, such non-accountable expense allowance shall be paid to you by the
Selling Stockholders on such later date of payment and (ii) the Company shall
issue, sell and deliver to you, for an aggregate purchase price of $10, a
warrant to purchase up to an aggregate of 100,000 Shares (the "Underwriters'
Warrant") in substantially in the form filed as an exhibit to the Registration
Statement. The shares of Common Stock issuable upon exercise of the
Underwriters' Warrant are hereinafter referred to collectively as the
"Underwriters' Warrant Shares". The Underwriters' Warrant will be exercisable
at an initial exercise price of $_____ per Share at any time and from time to
time, in whole or in part, during a four-year period commencing one year
following the Effective Date. The Company has granted you certain registration
rights with respect to the Underwriters' Warrant and the
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securities issuable upon exercise thereof, as set forth in said Underwriters'
Warrant.
On each Additional Closing Date, at the time of the delivery
and payment for the Additional Shares, the Company shall pay to you as a
non-accountable expense allowance, a sum equal to $____ per Additional Share
for each Additional Share purchased by you on such date by certified or
official bank check or checks payable in New York Clearing House funds payable
to the order of, and in accordance with instructions from, you.
4. COVENANTS AND AGREEMENTS OF THE COMPANY AND THE
SELLING STOCKHOLDERS:
(A) The Company covenants and agrees with the
Selling Stockholders and you as follows:
(a) The Company will notify you promptly by
telephone and (if requested by you) will confirm such advice in writing, (1)
when the Registration Statement has become effective and when any
post-effective amendment thereto becomes effective, (2) if Rule 430A under the
Act is used, or the Prospectus is otherwise required to be filed with the
Commission pursuant to Rule 424(b) under the Act, when the Prospectus is filed
with the Commission pursuant to Rule 424(b) under the Act, (3) of any request
by the Commission for amendments or supplements to the Registration Statement
or the Prospectus or for additional information, (4) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, preventing or suspending the use of the Preliminary Prospectus, the
Prospectus, the Registration Statement or any amendment or supplement thereto,
or refusing to permit the effectiveness of the Registration Statement ("Stop
Order"), or the initiation of any proceedings for any of those purposes, (5)
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of the happening of any event during the period mentioned in paragraph (f)
below which in the reasonable judgment of the Company makes any statement made
in the Registration Statement or the Prospectus untrue or which requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements therein not misleading, and (6) of the receipt of any
comments from the Commission or the Blue Sky or securities authorities of any
jurisdiction regarding the Registration Statement, any post-effective amendment
thereto, the Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto. The Company will use its best efforts to prevent the
issuance of any Stop Order by the Commission or any notification from the Blue
Sky or securities authorities of any jurisdiction suspending the qualification
or registration of the Shares for sale in such jurisdictions, and if at any
time the Commission shall issue any Stop Order, or if the Blue Sky or
securities authorities of any jurisdiction shall issue notification suspending
the qualification or registration of the Shares, the Company will make every
reasonable effort to obtain the withdrawal of such Stop Order or notification
at the earliest possible moment. The Company will promptly advise you of its
receipt of any notification with respect to the suspension of the qualification
or registration of the Shares for offer or sale in any jurisdiction or the
initiation or threatening of any action or proceeding for such purpose.
(b) Prior to any public offering of the Shares by
you, the Company will cooperate with you and your counsel in registering or
qualifying the Shares for offer or sale under the Blue Sky or securities laws,
rules or regulations of such jurisdictions as you may reasonably request;
provided that in no event shall the Company be obligated to register or qualify
to do business as a foreign corporation in any jurisdiction where it is not now
so registered or
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qualified or to take any action which would subject it to general service of
process, or to taxation as a foreign corporation doing business, in any
jurisdiction where it is not now so subject. The Company will pay all fees and
expenses relating to the registration or qualification of the Shares under such
Blue Sky or securities laws of such jurisdictions as you may designate
(including the legal fees, expenses and disbursements of counsel to you for the
registration or qualification of the Shares in such jurisdictions as you shall
determine). After registration, qualification or exemption of the Shares for
offer and sale in such jurisdictions, and for as long as any offering pursuant
to this Agreement continues, the Company, at your reasonable request, will file
and make such statements or reports, and pay the fees applicable thereto, at
such times as are or may be required by the laws, rules or regulations of such
jurisdictions in order to maintain and continue in full force and effect the
registration, qualification or exemption for offer or sale of the Shares in
such jurisdictions. After the termination of the offering contemplated hereby,
and as long as any of the Shares are outstanding, the Company will file and
make, and pay all fees applicable thereto, such statements and reports and
renewals of registration as are or may be required by the laws, rules or
regulations of such jurisdictions to maintain and continue in full force and
effect the registration, qualification or exemption for secondary market
transactions in the Shares, in the various jurisdictions in which the Shares
were originally registered, qualified or exempted for offer or sale.
(c) The Company will furnish to you, without
charge, four (4) manually-signed copies and such reasonable number of conformed
copies of the Registration Statement as originally filed on Form SB-2 and of
any amendments (including post-effective amendments thereto), including
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financial statements and schedules, if any, and all consents, certificates and
exhibits (including those incorporated therein by reference to the extent not
previously furnished to you), heretofore or hereafter made, signed by or on
behalf of its officers whose signatures are required thereon and a majority of
its board of directors.
(d) The Company will use its best efforts to
cause the Registration Statement to become effective under the Act. Upon such
effectiveness, if the Company and you have determined not to proceed pursuant
to Rule 430A under the Act, the Company will timely file a Prospectus pursuant
to, and in conformity with, Rule 424(b), if required, and if the Company and
you have determined to proceed pursuant to Rule 430A under the Act, the Company
will timely file a Prospectus pursuant to, and in conformity with, Rules 424(b)
and 430A under the Act.
(e) The Company will give you and your counsel
advance notice of its intention to file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus, whether before or
after the effective date of the Registration Statement, and will not file any
such amendment or supplement unless the Company shall have first delivered
copies of such amendment or supplement to you and your counsel and you and your
counsel shall have given your consent to the filing of such amendment or
supplement. Any such amendment or supplement shall comply with the Act.
(f) From and after the Effective Date, the
Company will deliver to you, without charge, as many copies of the Prospectus
or any amendment or supplement thereto as you may reasonably request. The
Company consents to the use of the Prospectus or any amendment or supplement
thereto by you and by all dealers to whom the Shares may be sold, both
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in connection with the offering or sale of the Shares and for such period of
time thereafter as the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall occur
which in the judgment of you or your counsel should be set forth in the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement
or amendment thereto, and will deliver to each of you, without charge, such
number of copies thereof as you may reasonably request.
(g) The Company will promptly pay all expenses in
connection with (1) the preparation, printing, filing, distribution and
mailing (including, without limitation, express delivery service) of the
Registration Statement, each preliminary prospectus, the Prospectus, and the
preliminary and final forms of Blue Sky memoranda (if any); (2) the issuance
and delivery of the Shares; (3) the fees and expenses of legal counsel and
independent accountants for the Company relating to, among other things,
opinions of counsel, audits, review of unaudited financial statements and cold
comfort review; (4) the fees and expenses of a registrar or transfer agent for
the Common Stock; (5) the printing, filing, distribution and mailing
(including, without limitation, express delivery service) of this Agreement,
the Agreement Among Underwriters, if any, and the Selected Dealers Agreement;
(6) furnishing such copies of the Registration Statement, the Prospectus and
any preliminary prospectus, and all amendments and supplements thereto, as may
be requested for use in connection with the offering and sale of the Shares by
you or by dealers to whom Shares may be sold; (7) any fees and communication
expenses with respect to filings required to be made by you with the
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National Association of Securities Dealers Regulatory, Inc. (the "NASDR"); and
(8) the quotation of the Shares on NASDR's Automated Quotation System
("NASDAQ").
(h) On the Closing Date, the Company shall sell
to you, the Underwriters' Warrant to purchase 100,000 Shares for an aggregate
purchase price of $10.
(i) If this Agreement shall be terminated
pursuant to any of the provisions hereof (otherwise than by notice given by you
pursuant to Section 8 hereof) or if for any reason the Company shall be unable
to perform its obligations hereunder, the Company will reimburse you for all of
your out-of-pocket expenses (including the fees and expenses of your counsel)
reasonably incurred by you in connection herewith; provided, however, the
Company shall not be so obligated to reimburse you if this Agreement is
terminated by reason of a failure to satisfy the condition set forth in Section
7(k) hereinbelow by reason of your unwillingness to modify the underwriting
arrangements pertaining to sale of the Shares and/or the participation by you
in the sale of the Shares, as may be requested by the NASDR.
(j) For a period of ninety (90) days after the
commencement of the public offering of the Shares by you, without your prior
written consent, the Company will not offer, issue, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any securities of the Company, except as provided for and as
contemplated by this Agreement or for stock options granted to employees
pursuant to the option agreements attached as exhibits to the Registration
Statement.
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(k) On or prior to the Closing Date, the Company
shall obtain from each of its officers and directors, his or her enforceable
written agreement, in form and substance satisfactory to your counsel, that for
a period of two (2) years after the Effective Date (or any longer period
required by NASDAQ or any jurisdiction in which the offer and sale of the
Shares is to be registered or qualified), he or she will not offer for sale,
sell, contract to sell, assign, pledge, transfer, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, any securities of the
Company (including without limitation any shares of Common Stock), owned by him
or her as of the Closing Date, whether upon exercise of warrants, stock options
or otherwise, without NSL's prior written consent (the "Lock-up Letter").
(l) The Company has reserved and shall continue
to reserve and keep available the maximum number of shares of its authorized
but unissued Common Stock and other securities for issuance upon exercise of
the Underwriters' Warrant.
(m) For a period of five (5) years after the date
of this Agreement, the Company shall:
(1) retain Ernst & Young LLP or another
nationally recognized firm of independent public accountants, as its auditors,
and at its own expense, shall cause such independent public accountants to
review the Company's financial statements and those of its subsidiaries for
each of the first three fiscal quarters of each fiscal year prior to the
announcement of quarterly financial information, the filing of the Company's
10-Q quarterly reports and the mailing of quarterly financial information to
its stockholders;
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(2) cause the Company's Board of
Directors to meet not less frequently than quarterly, upon proper notice, and
cause an agenda and minutes of the preceding meeting to be distributed to
directors prior to each such meeting;
(3) distribute to its security holders,
within one hundred twenty 120 days after the end of each fiscal year, an annual
report (containing certified financial statements of the Company) prepared in
accordance with those required under Rule 14a-3(b) of Regulation 14A
promulgated by the Commission under the Securities Exchange Act of 1934, as
amended; and
(4) appoint a transfer agent for the
Common Stock, in each case acceptable to you.
(n) For a period of three (3) years after the
date of this Agreement, the Company shall furnish you, free of charge, with the
following:
(1) within ninety (90) days after the
end of each fiscal year, financial statements for the Company and its
subsidiaries and its subsidiaries certified by the independent public
accountants referred to in Section 4(m)(1) above, including a balance sheet,
statement of operations, statement of stockholders' equity and statement of
cash flows, for the Company, with supporting schedules, prepared in accordance
with generally accepted accounting principles, as at the end of such fiscal
year and for the twelve months then ended, accompanied by a copy of the
certificate or report thereon of such independent public accountants;
(2) (x) for so long as the Company is a
reporting company under any of Sections 12(b), 12(g) or
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15(d) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder (collectively, the
"Exchange Act"), promptly after filing with the Commission, copies of all
reports and proxy soliciting material which the Company is required to file
under the Exchange Act, or (y) at such times as the Company is not a reporting
company under the aforesaid provisions of the Exchange Act, as soon as
practicable after the end of each of the first three fiscal quarters of each
fiscal year, financial statements of the Company, including a balance sheet,
statement of operations, statement of shareholders' equity and statement of
cash flows as at the end of, or for each such fiscal quarter and the comparable
period of the preceding year, which statements need not be audited;
(3) as soon as practicable after they
have first been distributed to stockholders of the Company, copies of each
annual and interim financial or other report or communication sent by the
Company to its stockholders (except to the extent duplicative of information
furnished pursuant to any other clause of this Section 4(n));
(4) as soon as practicable following
release or other dissemination, copies of every press release and every
material news item and article in respect of the Company or its affairs
released or otherwise disseminated by the Company;
(5) promptly following receipt thereof,
copies of the Company's daily transfer sheets prepared by the Company's
transfer agent and a list of stockholders; and
(6) such additional documents and
information with respect to the Company and its affairs, if any, as you may
from time to time reasonably request.
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(o) As soon as practicable after the date of this
Agreement, the Company shall apply for listing in Standard and Poor's Corporate
Record Service and Annual Report Service and ensure the Company's continued
listing for a period of not less than five (5) years, provided that the
Company's otherwise complies with prevailing requirements for such listing.
(p) On or prior to the Effective Date, the
Company will have accomplished the quotation of the Shares on the NASDAQ
SmallCap Market, subject only to notice of issuance and the registration of
such securities under the Exchange Act. For a period of five years from the
date of this Agreement, the Company agrees, at its sole cost and expense, to
take all necessary and appropriate action such that its securities continue to
be quoted on NASDAQ, provided that the Company otherwise complies with the
prevailing requirements of NASDAQ.
(q) For a period of one (1) year after the date
of this Agreement, the Company will not seek to amend its certificate of
incorporation or file a certificate of designation to authorize the issuance of
any other class or series of its capital stock, including, without limitation,
any preferred stock, without your prior written consent.
(r) The Company agrees, at its own cost and
expense, to deliver to you and your counsel, within a reasonable period after
the Optional Closing Date, or the expiration of the period in which you may
exercise the over-allotment option, five bound volumes containing copies of all
documents and correspondence filed with, or received from, the Commission,
NASDAQ and the NASDR relating to the offering of the Shares and the closing
thereof, including related matters. In addition, the Company shall bear the
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costs of one (1) "tombstone" advertisement and of twelve (12) "embodiments".
(s) The Company will make generally available to
its security holders and deliver to you as soon as it is practicable to do so
(but in no event later than the 45th day after the end of the twelve-month
period beginning at end of the fiscal quarter of the Company during which the
Registration Statement becomes effective, or, if the Registration Statement
becomes effective during the Company's last fiscal quarter, the 90th day after
the end of such twelve-month period), an earnings statement of the Company and
its subsidiaries (which need not be audited) covering a period of at least
twelve consecutive months commencing after the effective date of the
Registration Statement, which shall satisfy the requirements of Section 11(a)
of the Act.
(t) The Company will, promptly upon your request,
prepare and file with the Commission any amendments or supplements to the
Registration Statement, any Preliminary Prospectus or the Prospectus and take
any other action, which in the reasonable opinion of Xxxxxx & Xxxxx, counsel to
you, may be reasonably necessary or advisable in connection with the
distribution of the Shares, and will cause the same to become effective as
promptly as possible.
(u) The Company will furnish to you as early as
practicable prior to the Closing Date and any Optional Closing Date, as the
case may be, but no less than two full business days prior thereto, a copy of
the latest available unaudited interim financial statements of the Company and
its subsidiaries which have been reviewed by the Company's independent public
accountants, as stated in their letters to be furnished pursuant to Section
7(e) hereof. Such financial statements will be on a consolidated basis to the
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extent the accounts of the Company and its subsidiaries are generally
consolidated in reports furnished to the Company's stockholders.
(v) The Company will apply the net proceeds from
the issuance and sale of the Shares for the purposes and in the manner set
forth under the caption "Use of Proceeds" in the Prospectus, and will file on a
timely basis such reports with the Commission with respect to the sale of the
Shares and the application of the proceeds therefrom as may be required
pursuant to Rule 463 under the Act. The Company will operate its business in
such a manner and, pending application of the net proceeds of the offering for
the purposes and in the manner set forth under the caption "Use of Proceeds" in
the Prospectus, will invest such net proceeds in certain types of securities so
as not to become an "investment company" as such term is defined under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(w) The Company has filed a registration
statement on Form 8-A covering the Shares pursuant to Section 12(b) of the
Exchange Act and will use its best efforts to cause said registration statement
to become effective on the Effective Date. The Company will comply with all
registration, filing and reporting requirements of the Exchange Act, which may
from time to time be applicable to the Company. The Company shall comply with
the provisions of all undertakings contained in the Registration Statement.
(x) Prior to the Closing Date or any Optional
Closing Date, as the case may be, the Company shall neither issue any press
release or other communication, directly or indirectly, nor hold any press
conference with respect to the offering of the Shares, the Company, its
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subsidiaries or its business, results of operations, condition (financial or
otherwise), property, assets, liabilities or prospects of the Company or any of
its subsidiaries, without your prior written consent.
(y) For a period of ninety (90) days after the
date hereof, the Company will not, directly or indirectly, take any action
designed, or which will constitute or which might reasonably be expected to
cause or result in, stabilization or manipulation of the market price of the
Shares, or the facilitation of the sale or resale of the Shares.
(aa) The Company and its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to cash and cash equivalents is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for cash and cash equivalents is compared with the existing cash
and cash equivalents at reasonable intervals and appropriate action is taken
with respect to any differences.
(bb) There are no business relationships or
related party transactions of the nature described in Item 404 of Regulation
S-B of the Rules and Regulations involving the Company, any of its subsidiaries
and any person referred to in Items 401 or 404 of Regulation S-B, except as
required to be described in the Prospectus and as so described.
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(cc) Neither the Company nor any of its
subsidiaries will grant any person or entity registration rights with respect
to any of its securities which are superior to the registration rights
contained in the Underwriters' Warrant and which are exercisable earlier than
six months after the securities to be registered upon exercise of such
registration rights have been offered for sale pursuant to an effective
registration statement under the Act and registered or qualified for sale under
the Blue Sky or state securities law, rules or regulations of the jurisdictions
in which such securities are to be offered for sale.
(dd) The Company agrees, for a period of five (5)
years after the date of this Agreement, to use its best efforts to cause the
Company's Board of Directors to nominate a designee chosen by you for election
to the Company's Board of Directors, and to solicit proxies for the election of
such designee as a director of the Company. At least sixty (60) days prior to
the earlier of any election of the Board of Directors or the commencement of
any solicitation of proxies for such election, the Company shall notify you of
the date of such election or of the commencement of such solicitation. You
shall have the right to furnish written notice to the Company of the name of
the person designated by you to serve as director no more than thirty (30) days
following your receipt of such notice from the Company. In the absence of such
notice from you, the director then serving and previously designated by you
shall be nominated and reelected. In the event you shall choose not to
designate a representative for election to the Company's Board of Directors, a
representative designated by you shall be duly authorized to attend all
meetings of the Company's Board of Directors in a nonvoting observer capacity
and, in such event, the Company shall give such representative copies of all
notices, minutes, consents, and
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other materials that it provides its directors; provided, however, that such
representative shall agree to hold in confidence and trust and to act in a
fiduciary manner with respect to all information so provided, and any rights so
granted to such representative shall be subordinate in all respects to the
fiduciary duties of the Company's Board of Directors to its stockholders. If
the Company maintains a liability insurance policy offering coverage for acts
or omissions of its officers and directors, it agrees to include (to the extent
possible) you and your designee as an insured under such policy.
(ee) The Company hereby agrees to retain a public
relations firm reasonably acceptable to you to provide financial public
relations advice and assistance in a manner reasonable acceptable to you and,
until the second anniversary of the Closing Date (or such earlier date of which
NSL shall cease to own any Underwriter's Warrants or shares of Common Stock
issued in respect thereof), to continue to retain such firm or another firm
reasonably acceptable to you to provide such financial public relations advice
and assistance.
(ff) The Company hereby agrees that, until the
third anniversary of the Closing (or such earlier date on which NSL shall cease
to own any Underwriter's Warrants or shares of Common Stock issued in respect
thereof), the Company will consult with NSL concerning, and furnish to it for
its review, copies of any financial information, news releases and/or other
publicity regarding the Company, its business, or any terms of any proposed
offering of the Company's securities, before disclosing such information,
releases, publicity or terms to any third party.
(B) Each of the Selling Stockholders covenants and agrees
with the Company and you that such Selling
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Stockholder will pay or cause to be paid all costs and expenses incident to the
performance of such Selling Stockholder's obligations hereunder which are not
otherwise specifically provided for in this Agreement, including, without
limitation, any fees and expenses of counsel for such Selling Stockholder and
all expenses and taxes incident to the sale and delivery of the Shares to be
sold by such Selling Stockholder to you hereunder. It is understood, however,
the Company shall bear, and the Selling Stockholders shall not be required to
pay or reimburse the Company for, the cost of any other matters not directly
relating to the sale and purchase of the Firm Shares pursuant to this Agreement
and that except as provided in this Section and Section 6 hereof, the Selling
Stockholders will pay all of their own costs and expenses, including the fees
of their respective counsel and stock transfer taxes on resale of any of the
Shares by you.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SELLING STOCKHOLDERS:
(A) The Company represents and warrants to you and the
Selling Stockholders that:
(a) When the Registration Statement becomes
effective, and at all times subsequent thereto to and including the Closing
Date and each Optional Closing Date, and during such longer period as the
Prospectus may be required to be delivered in connection with sales by you or
any dealer, and during such longer period until any post-effective amendment
thereto shall become effective, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement to the Registration Statement or the Prospectus) will contain all
statements which are required
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to be stated therein in accordance with the Act, will comply with the Act, and
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should have been
set forth in an amendment or supplement to the Registration Statement or the
Prospectus which has not then been set forth in such an amendment or
supplement; if a Rule 430A Prospectus is included in the Registration Statement
at the time it becomes effective, the Prospectus filed pursuant to Rules 430A
and 424(b) (1) or (4) will contain all Rule 430A Information and all statements
which are required to be stated therein in accordance with the Act, will comply
with the Act, and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; and each Preliminary Prospectus, as
of the date filed with the Commission, did not include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; except that no
representation or warranty is made in this Section 5(A)(a) with respect to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 6(c) with respect to
you expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto.
(b) Neither the Commission nor the Blue Sky or
securities authorities of any jurisdiction has issued an order suspending the
effectiveness of the Registration Statement, preventing or suspending the use
of any Preliminary Prospectus, the Prospectus, the Registration
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Statement, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, or suspending the registration or
qualification of the Shares, nor has the Commission or any of such authorities
instituted or threatened to institute any proceedings with respect to such an
order.
(c) The Company is a corporation duly
incorporated and validly existing in good standing under the laws of Delaware,
its jurisdiction of incorporation. The Company and each of its subsidiaries
have full corporate power and authority and have obtained all necessary
consents, authorizations, approvals, orders, licenses, certificates,
declarations and permits of and from, and have made all required filings with,
all federal, state, local and other governmental authorities and all courts and
other tribunals, to own, lease, license and use their properties and assets and
to carry on their respective businesses in the manner described in the
Prospectus. All such consents, authorizations, approvals, orders, licenses,
certificates, declarations, permits and filings are in full force and effect
and the Company and/or its subsidiaries are in all material respects complying
therewith. The Company and its subsidiaries are duly registered or qualified
to do business as a foreign corporation and are in good standing in each other
jurisdiction in which their ownership, leasing, licensing, or use of property
and assets or the conduct of their respective businesses requires such
registration or qualification.
(d) The authorized capital stock of the Company
consists of 10,000,000 shares of Common Stock, of which 2,995,014 shares are
outstanding, and 5,000,000 shares of Preferred Stock, no par value, of which no
shares are outstanding. The Company does not have any subsidiaries or own any
capital stock or equity interest in any other
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corporation, partnership, limited liability company or other entity, except as
disclosed in the Prospectus. Each outstanding share of Common Stock, including
the Firm Shares to be sold by the Selling Stockholders to you hereunder, and
each of the shares of the capital stock of each subsidiary of the Company, is
validly authorized, validly issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, and has not been issued
and is not owned or held in violation of any preemptive rights of stockholders.
There is no commitment, plan or arrangement to issue, and no outstanding
option, warrant or other right calling for the issuance of, any share of
capital stock of the Company, or that of any of its subsidiaries or any
security or other instrument which by its terms is convertible into,
exercisable for, or exchangeable for capital stock of the Company or that of
any of its subsidiaries, except as disclosed in the Prospectus. There is
outstanding no security or other instrument which by its terms is convertible
into or exchangeable for capital stock of the Company, except as disclosed in
the Prospectus.
(e) The financial statements of the Company and
its subsidiaries included in the Registration Statement and the Prospectus
fairly present the financial position, the results of operations and the other
information purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such financial statements have been
prepared in accordance with generally accepted accounting principles and are
prepared in accordance with the books and records of the Company. The
accountants whose reports on the audited financial statements are filed with
the Commission as a part of the Registration Statement are, and during the
periods covered by their report(s) included in the Registration Statement and
the Prospectus were, independent public accountants with respect to the Company
and its subsidiaries within the
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meaning of the Act. No other financial statements are required by Form SB-2 or
otherwise to be included in the Registration Statement or the Prospectus.
Except as disclosed in the Prospectus, there has at no time been a material
adverse change in the condition (financial or otherwise), results of
operations, business, property, assets, liabilities or prospects of the Company
or any of its subsidiaries from the latest information set forth in the
Registration Statement or the Prospectus.
(f) There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation
pending, threatened, or in prospect (or any basis therefor known to the Company
or any of its subsidiaries) with respect to or affecting the Company or any of
its subsidiaries, their operation, business, property or assets, except as
disclosed in the Prospectus or such as individually or in the aggregate do not
now have and are not expected to have a material adverse effect upon the
operations, businesses, property, assets, condition (financial or otherwise) or
prospects of the Company or any of its subsidiaries. Neither the Company nor
any of its subsidiaries is in violation of, or in default with respect to, any
law, rule, regulation, order, judgment, or decree, except as disclosed in the
Prospectus or such as individually or in the aggregate do not now have and are
not expected to have a material adverse effect upon the operations, businesses,
property, assets, condition (financial or otherwise) or prospects of the
Company or any of its subsidiaries; nor is the Company or any of its
subsidiaries required to take any action in order to avoid any such violation
or default.
(g) The Company and its subsidiaries have good
and marketable title in fee simple absolute to all real properties and good
title to all other properties and assets
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which the Prospectus indicates are owned by them, free and clear of all liens,
security interests, pledges, charges, mortgages and other encumbrances (except
as may be required and are to be disclosed in the Prospectus). The properties
held under lease by the Company and its subsidiaries are held by it under valid
and enforceable leases and the interests of the Company and its subsidiaries in
such leases are free and clear of all liens, encumbrances and defects, except
as disclosed in the Prospectus, and the Company and its subsidiaries are in
full compliance with all material terms and conditions thereunder and such
leases are in full force and effect. No real property owned, leased, licensed
or used by the Company or its subsidiaries is situated in an area which is, or
to the knowledge of the Company or its subsidiaries, will be, subject to
zoning, use, or building code restrictions which would prohibit (and no state
of facts relating to the actions or inaction of another person or entity or his
or its ownership, leasing, licensing, or use of any real or personal property
exists or will exist which would prevent) the continued effective ownership,
leasing, licensing, or use of such real property in the business of the Company
or subsidiaries as presently conducted or as the Prospectus indicates any of
them contemplate conducting, except as disclosed in the Prospectus).
(h) Neither the Company, any of its subsidiaries
nor any other party is now or is expected by the Company or any of its
subsidiaries to be in violation or breach of, or in default with respect to
complying with, any material provision of any indenture, mortgage, deed of
trust, debenture, note or other evidence of indebtedness, contract, agreement,
instrument, lease or license, or arrangement or understanding which is material
to the Company or any of its subsidiaries, and each such indenture, mortgage,
deed of trust, debenture, note or other evidence of indebtedness, contract,
agreement, instrument, lease or
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license is in full force and is the legal, valid and binding obligation of the
Company and/or its subsidiaries, and to the knowledge of the Company and its
subsidiaries, of the other contracting party and is enforceable as to them in
accordance with its terms. The Company and its subsidiaries enjoy peaceful and
undisturbed possession under all leases and licenses under which they are
operating. Neither the Company nor any of its subsidiaries is a party to or
bound by any contract, agreement, instrument, lease, license, arrangement or
understanding, or subject to any charter or other restriction, which has had or
is expected in the future to have a material adverse effect on the condition
(financial or otherwise), results of operations, businesses, property, assets
or liabilities of the Company. The Company is not in violation or breach of,
or in default with respect to, any term of its Certificate of Incorporation or
By-laws, in each case as amended to date.
(i) Neither the Company nor any of its
subsidiaries owns or has any licensed rights to, in or under any patents,
patent applications, trademarks, service marks, trademark or service xxxx
applications, trade names, service marks, copyrights, technology, know-how or
other intangible properties or assets (all of the foregoing being herein called
"Intangibles") that are material to the business of the Company and its
subsidiaries, except to the extent disclosed in the Prospectus. There is no
right under any Intangibles of the Company or its subsidiaries necessary to the
business of the Company and its subsidiaries as presently conducted or as
proposed to be conducted as indicated in the Prospectus, except as may be
disclosed in the Prospectus. Neither the Company nor any of its subsidiaries
have received notice of infringement with respect to asserted Intangibles of
others. To the knowledge of the Company and its subsidiaries, there is no
infringement by others of Intangibles of the Company or its
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subsidiaries. To the knowledge of the Company and its subsidiaries, there is
no Intangible of others which has had or may in the future have a materially
adverse effect on the condition (financial or otherwise), results of
operations, businesses, property, assets, liabilities or prospects of the
Company and its subsidiaries.
(j) Neither the Company, its subsidiaries, any
director or officer of the Company or its subsidiaries, or to the best
knowledge of the Company and its subsidiaries, any agent, employee, or other
person authorized to act on behalf of the Company or its subsidiaries have,
directly or indirectly: used any corporate funds of the Company or its
subsidiaries 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 of the Company or its
subsidiaries; violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, as relates to the business of the Company and its
subsidiaries; or made any bribe, rebate, payoff, influence payment, kickback,
or other unlawful payment in connection with the business of the Company or its
subsidiaries.
(k) Any contract, agreement, instrument, lease or
license required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract, agreement,
instrument, lease or license required to be filed as an exhibit to the
Registration Statement has been filed with the Commission as an exhibit to or
has been incorporated as an exhibit by reference into the Registration
Statement.
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(l) The Company has all requisite corporate power
and authority to execute, deliver and perform under the terms and conditions of
this Agreement and the Underwriters' Warrant. All necessary corporate
proceedings of the Company have been duly taken to authorize the execution,
delivery and performance by the Company of this Agreement and the Underwriters'
Warrant. This Agreement has been duly authorized, executed and delivered by
the Company, is a legal, valid, and binding agreement of the Company, and is
enforceable as to the Company in accordance with its terms. The Underwriters'
Warrant has been duly authorized by the Company and, when executed and
delivered by the Company, assuming the due execution and delivery thereof by
the other parties thereto, will be a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms. No
consent, authorization, approval, order, license, certificate, declaration or
permit of or from, or filing with, any governmental or regulatory authority,
agent, board or other body is required for the issue and sale of the Shares by
the Company and the execution, delivery or performance by the Company of this
Agreement or the Underwriters' Warrant (except filings with and orders of the
Commission pursuant to the Act which have been or will be made or obtained
prior to the Closing Date, and such filings, consents or permits as are
required under Blue Sky or securities laws in connection with the transactions
contemplated by this Agreement). No consent of any party to any contract,
agreement, instrument, lease, license, arrangement or understanding to which
the Company or any of its subsidiaries are a party, or to which any of their
properties or assets are subject, is required for the execution, delivery or
performance of this Agreement or the Underwriters' Warrant; and the execution,
delivery and performance of this Agreement and the Underwriters' Warrant will
not violate, result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time
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or both) entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement or understanding,
result in the creation or imposition of, any lien, security interest, pledge,
charge, or other encumbrance upon any of the property or assets of the Company
or its subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, loan or credit agreement, lease or other agreement or instrument to
which the Company or any of its subsidiaries are a party or by which the
Company or any of its subsidiaries are bound or to which any of the property or
assets of the Company or any of its subsidiaries are subject or violate or
result in a breach of any term of the Certificate of Incorporation or By-laws
of the Company or any of its subsidiaries, or violate, result in a breach of,
or conflict with any law, rule, regulation, order, judgment or decree binding
on the Company or any of its subsidiaries or to which any of their operations,
businesses, properties or assets are subject.
(m) The Shares are validly authorized, and when
issued, paid for and delivered in accordance with this Agreement, will be
validly issued, fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and will not be issued in violation of any
preemptive rights of stockholders. You will receive good title to the Shares
and the Underwriters' Warrant purchased by you, upon payment of the purchase
price therefor in accordance with the provisions of this Agreement, free and
clear of all liens, security interests, pledges, charges, claims, equities,
encumbrances, stockholders' agreements and voting trusts (collectively,
"Encumbrances").
(n) The Underwriters' Warrant Shares are validly
authorized and reserved for issuance and, when
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issued, paid for and delivered upon exercise of the Underwriters' Warrant, in
accordance with the provisions of the Underwriters' Warrant will be validly
issued, fully paid and non-assessable and will not be issued in violation of
any preemptive rights of stockholders; and the holders of the Underwriters'
Warrant Shares will receive good title to them, free and clear of all
Encumbrances.
(o) The Shares and the Underwriters' Warrant
conform to all statements relating thereto contained in the Registration
Statement and the Prospectus.
(p) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as otherwise may be stated therein, (i) the Company has not entered into
any transaction or incurred any liability or obligation, contingent or
otherwise, which is material to the Company, except in the ordinary course of
business, (ii) there has not been any change in the outstanding capital stock
of the Company, or any issuance of options, warrants or rights to purchase the
capital stock of the Company, or any material increase in the long-term debt of
the Company, or any material adverse change in the business, condition
(financial or otherwise) or results of operations of the Company, (iii) no loss
or damage (whether or not insured) to the properties of the Company has been
sustained which is material to the Company, (iv) the Company has not paid or
declared any dividend or other distribution with respect to its capital stock,
and (v) there has not been any change, contingent or otherwise, in the direct
or indirect control of the Company nor, to the best knowledge of the Company,
do there exist any circumstances which would likely result in such a change.
(q) Neither the Company nor any officers or
directors of the Company or Affiliates (as defined in Rule
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405 of the Rules and Regulations), have taken or will take, directly or
indirectly, prior to the termination of the offering contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which has caused or resulted in, or which might in
the future 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 any of the Shares.
(r) The Company has not incurred, directly or
indirectly, any liability for a fee, commission or other compensation on
account of the employment of a broker or finder in connection with the offering
of the Shares contemplated by this Agreement, except as contemplated by this
Agreement or as disclosed in the Registration Statement.
(s) The Company is not, and does not intend to
conduct its business in a manner in which it would become, an "investment
company" as defined in Section 3(a) of the Investment Company Act.
(t) The Company has obtained, or prior to the
Closing Date will obtain a Lock-up Letter, from each of its officers and
directors who owns shares of Common Stock.
(u) Other than the Selling Stockholders, no
person or entity has the right to require registration of shares of Common
Stock or other securities of the Company because of the filing or effectiveness
of the Registration Statement.
(v) The Company has and will continue to (i)
adequately insure its properties against loss or damage by fire, (ii) maintain
adequate insurance against liability for negligence and (iii) maintain such
other insurance as is
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usually maintained by companies engaged in the same or similar businesses,
including, without limitation, product liability insurance.
(w) The Company and its subsidiaries have filed
all federal, state and local tax returns required to be filed (or have obtained
extensions therefor) and have paid all taxes shown on such returns and all
assessments received by it to the extent that payment has become due. The
Company and its subsidiaries have made adequate accruals for all taxes which
may be owed by it but has not been paid.
(B) Each of the Selling Stockholders severally represents
and warrants to the Company and you that:
(a) All consents, approvals, authorizations and
orders necessary for the execution and delivery by such Selling Stockholder of
this Agreement and the Power of Attorney (the "Power of Attorney") and the
Custody Agreement (the "Custody Agreement") hereinafter referred to, and for
the sale and delivery of the Shares to be sold by such Selling Stockholder
hereunder, have been obtained; and such Selling Stockholder has full right,
power and authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Stockholder hereunder;
(b) The sale of the Shares to be sold by such
Selling Stockholder hereunder and the performance of this Agreement, the Power
of Attorney and the Custody Agreement and the consummation of the transactions
herein and therein contemplated will not result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any statute, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Selling Stockholder is a party
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or by which such Selling Stockholder is bound, the Trust Agreement of such
Selling Stockholder if such Selling Stockholder is a trust, or any order, rule
or regulation of any court or governmental agency or body having jurisdiction
over such Selling Stockholder or the property of such Selling Stockholder;
(c) Such Selling Stockholder has, and immediately
prior to the Closing Date such Selling Stockholder will have, good and valid
title to the Shares to be sold by such Selling Stockholder hereunder, free and
clear of all Encumbrances; and, upon delivery of such Shares and payment
therefor pursuant hereto, good and valid title to such Shares, free and clear
of all Encumbrances will pass to you;
(d) No offering, sale or other disposition of any
shares of capital stock of the Company will be made within ninety (90) days
after the date of the Prospectus, directly or indirectly, by such Selling
Stockholder, otherwise than hereunder or with your written consent or pursuant
to bona fide gifts to persons who agree in writing with you to be bound by the
provisions of this clause;
(e) Such Selling Stockholder has not taken and
will not take, directly or indirectly, any action which is designed to or which
has constituted 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; and
(f) To the extent that any statements or
omissions made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto are made in reliance upon and
in conformity with written information furnished to the Company
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by such Selling Stockholder expressly for use therein, such Preliminary
Prospectus did, and the Registration Statement and the Prospectus and any
amendments or supplements thereto will, when they become effective or are filed
with the Commission, as the case may be, conform in all material respects to
the requirements of the Act and the rules and regulations of the Commission
thereunder and not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(g) Certificates in negotiable form representing
all of the Shares to be sold by such Selling Stockholder hereunder have been
placed in custody under a Custody Agreement, in the form heretofore furnished
to you, duly executed and delivered by such Selling Stockholder to Xxxxxx
Xxxxxx and Xxxxxx X. Xxxxxx, as custodians (the "Custodians"), and that such
Selling Stockholder has duly executed and delivered a Power of Attorney, in the
form heretofore furnished to you, appointing Messrs. Safina and Mahala, as such
Selling Stockholder's attorney-in-fact (the "Attorney-in-Fact") with authority
to execute and deliver this Agreement on behalf of such Selling Stockholder, to
authorize the delivery of the Shares to be sold by such Selling Stockholder
hereunder and otherwise to act on behalf of such Selling Stockholder in
connection with the transactions contemplated by this Agreement and the Custody
Agreement.
Each of the Selling Stockholders specifically agrees that the
Shares represented by the certificates held in custody for such Selling
Stockholder under the Custody Agreement are subject to the interest of you
hereunder, and that the arrangements made by such Selling Stockholder for such
custody, and the appointment by such Selling Stockholder of the
Attorney-in-Fact by the Power of
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Attorney, are to that extent irrevocable. Each of the Selling Stockholders
specifically agrees that the obligations of the Selling Stockholders hereunder
shall not be terminated by operation of law, whether by the death or incapacity
of any individual Selling Stockholder or, in the case of an estate or trust, by
the death or incapacity of any executor or trustee or the termination of such
estate or trust, or in the case of a partnership or corporation, by the
dissolution of such partnership or corporation, or by the occurrence of any
other event. If any individual Selling Stockholder or any such executor or
trustee should die or become incapacitated, or if any such estate or trust
should be terminated, or if any such partnership or corporation should be
dissolved, or if any other such event should occur, before the delivery of the
Shares hereunder, certificates representing the Shares shall be delivered by or
on behalf of the Selling Stockholders in accordance with the terms and
conditions of this Agreement and of the Custody Agreements, and actions taken
by the Attorney-in-Fact pursuant to the Powers of Attorney shall be as valid as
if such death, incapacity, termination, dissolution or other event had not
occurred, regardless of whether or not the Custodian, the Attorney-in-Fact, or
any of them, shall have received notice of such death, incapacity, termination,
dissolution or other event.
6. INDEMNIFICATION AND CONTRIBUTION:
(a) The Company agrees to indemnify and hold
harmless you, your officers, directors, partners, employees, agents and
counsel, and each person, if any, who controls you within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any and all
loss, liability, claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 6, but not be limited to, attorneys' fees and
any and all expense
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whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (1) in any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration Statement, or the
Prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, or (2) in any application or other document or
communication (in this Section 6 collectively called an "application") executed
by or on behalf of the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to qualify the
Shares under the Blue Sky or securities laws thereof (or the rules and
regulations promulgated thereunder) or filed with the Commission or any
securities exchange or automated quotation system; or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company as stated in Section 6(c) by you for inclusion in any
Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement,
of the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (ii) any breach of any representation,
warranty, covenant or agreement of the Company contained in this Agreement.
The foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Agreement.
If any action is brought against you or any of your officers,
directors, partners, employees, agents or counsel, or any of your controlling
persons (each, an
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"indemnified party") in respect of which indemnity may be sought against the
Company pursuant to the foregoing paragraph, such indemnified party or parties
shall promptly notify the Company in writing of the institution of such action
(but the failure so to notify shall not relieve the Company from any liability
it may have pursuant to this Section 6(a)) and the Company shall promptly
assume the defense of such action, including the employment of counsel
(satisfactory to such indemnified party or parties) and payment of expenses.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of such indemnified party or parties, unless the employment
of such counsel shall have been authorized in writing by the Company in
connection with the defense of such action or the Company shall not have
promptly employed counsel satisfactory to such indemnified party or parties to
have charge of the defense of such action or such indemnified party or parties
shall have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are different
from or additional to those available to the Company, in any of which events
such fees and expenses shall be borne by the Company and the Company shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent. The Company agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of the Shares, any Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or any application.
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(b) Each of the Selling Stockholders severally
agrees to indemnify and hold harmless you, your officers, directors, partners,
employees, agents and counsel, and each person, if any, who controls you within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, the
Company, each director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing indemnity from
the Company to you in Section 6(a), but only with respect to statements or
omissions, if any, made in any Preliminary Prospectus, the 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 such Selling Stockholder expressly for inclusion in
any Preliminary Prospectus, the Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be. If any action shall be brought against you,
the Company or any other person so indemnified based upon any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or any application, and in
respect of which indemnity may be sought against the Selling Stockholders
pursuant to this Section 6(b), the Selling Stockholders shall have the rights
and duties given to the Company, and you, the Company and each other person so
indemnified shall have the rights and duties given to the indemnified parties,
by the provisions of Section 6(a).
(c) You agree to indemnify and hold harmless the
Company, each director of the Company, each officer of
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the Company who shall have signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to you in Section 6(a), but only with
respect to statements or omissions, if any, made in any Preliminary Prospectus,
the 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 you expressly for inclusion in any
Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement,
or the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be. For all purposes of this Agreement, the
public offering price, the amounts of the selling concession and reallowance
set forth in the Prospectus and the information in the third paragraph under
"Underwriting" constitute the only information furnished in writing by or on
your behalf expressly for inclusion in any Preliminary Prospectus, the Rule
430A Prospectus, the Registration Statement or the Prospectus (as from time to
time amended or supplemented), or any amendment or supplement thereto, or in
any application, as the case may be. If any action shall be brought against
the Company or any other person so indemnified based upon any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or any application, and in
respect of which indemnity may be sought against you pursuant to this Section
6(c), you shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 6(a).
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(d) To provide for just and equitable
contribution, if (i) an indemnified party makes a claim for indemnification
pursuant to Section 6(a), 6(b) or 6(c) (subject to the limitations thereof) but
it is found in a final judicial determination, not subject to further appeal,
that such indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the
Exchange Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any director of the Company, any officer
of the Company who signed the Registration Statement, and any controlling
person of the Company), as one entity, and you, as a second entity, shall
contribute to the losses, liabilities, claims, damages and expenses whatsoever
to which any of them may be subject, so that you are responsible for the
proportion thereof equal to the percentage which the aggregate underwriting
discount set forth on the cover page of the Prospectus represents of the
initial public offering price of the Shares set forth on the cover page of the
Prospectus and the Company is responsible for the remaining portion, in
proportion to the net proceeds from the offering received by them; provided,
however, that if applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault of the Company
and you in the aggregate in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses shall also be considered.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement,
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omission, or alleged omission relates to information supplied by the Company or
by you, and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement, omission
or alleged omission. The Company and you agree that it would be unjust and
inequitable if the respective obligations of the Company and you for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages and expenses or by any other
method of allocation that does not reflect the equitable considerations
referred to in this Section 6(d). No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(d), each person, if any, who
controls you within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, each officer of the Company 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 the provisions
of this Section 6(d). Anything in this Section 6(d) to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 6(d) is intended to supersede any right to contribution under the Act,
the Exchange Act, or otherwise.
7. CONDITIONS OF YOUR OBLIGATIONS: Your obligations
hereunder are subject to the continuing accuracy of the representations and
warranties of the Company and the Selling Stockholders contained herein and in
each certificate and document contemplated under this Agreement to be delivered
to you, as of the date hereof, as of the Closing Date, and each Optional
Closing Date, as the case may be, to the performance by the Company and the
Selling Stockholders of their respective obligations hereunder, and to the
following additional conditions:
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(a) Notification that the Registration Statement
has become effective shall be received by you not later than 6:30 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by you. If the Company has elected to rely
upon Rule 430A of the Rules and Regulations, the price of the Shares and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to you of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A
of the Rules and Regulations.
(b) The Commission shall not have issued a Stop
Order and no Blue Sky or securities authority of any jurisdiction shall have
issued an order suspending the registration or qualification of the Shares, and
no proceedings for such purpose shall have been instituted or shall be pending,
or to the knowledge of the Company, be threatened or contemplated by the
Commission or the Blue Sky or securities authorities of any such jurisdiction.
(c) You shall have received an opinion, dated the
Closing Date and satisfactory in form and substance to your counsel from Loeb &
Loeb LLP, with respect to the Company, the Shares, the Underwriters' Warrant
Shares and the Registration Statement. In rendering such opinion, counsel for
the Company may rely (i) as to matters involving the application of laws other
than the laws of the United States and laws of the State of Delaware, to the
extent counsel for the Company deems proper and to the extent specified in such
opinion, upon an opinion or opinions of
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local counsel (in form and substance satisfactory to your counsel) acceptable
to your counsel, familiar with the applicable laws, in which case the opinion
of counsel for the Company shall state that the opinion or opinions of such
other counsel are satisfactory in scope, form and substance to counsel for the
Company and that reliance thereon by counsel for the Company is reasonable;
(ii) as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company; and (iii) to the extent they deem proper,
upon written statements or certificates of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to your counsel.
(d) The respective counsel for each of the
Selling Stockholders, as indicated in Schedule II hereto, each shall have
furnished to you their written opinion with respect to each of the Selling
Stockholders for whom they are acting as counsel, dated the Closing Date, in
form and substance satisfactory to you to the effect that:
(1) A Power of Attorney and a Custody
Agreement have been duly executed and delivered by such Selling Stockholder and
constitute valid and binding agreements of such Selling Stockholder in
accordance with their terms;
(2) This Agreement has been duly executed
and delivered by or on behalf of such Selling Stockholder and constitutes a
valid and binding agreement of such Selling Stockholder in accordance with its
terms; and the sale of the Shares to be sold by such Selling Stockholder
hereunder and the performance of this Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any terms or provisions
of, or constitute a default under, any statute, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such counsel to
which such Selling Stockholder is a party or by which such Selling Stockholder
is bound, the Trust Agreement of such Selling Stockholder if such Selling
Stockholder is a trust, or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction over such
Selling Stockholder or the property of such Selling Stockholder;
(3) No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation of the transactions contemplated by this Agreement in connection
with the Shares to be sold by this Agreement in connection with the Shares to be
sold by such Selling Stockholder hereunder, except such as have been obtained
under the Act and such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of such Shares by you;
(4) Immediately prior to the Closing Date
such Selling Stockholder had good and valid title to the Shares to be sold by
such Selling Stockholder under this Agreement, free and clear of all
Encumbrances, and full right, power and authority to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder hereunder; and
(5) Good and valid title to such Shares,
free and clear of all Encumbrances, has been transferred to you who has
purchased such Shares in good faith and without notice of any Encumbrance or
any other adverse claim within the meaning of the Uniform Commercial Code.
In rendering the opinion in subparagraph (4) such counsel may rely upon
a certificate of such Selling Stockholder in respect of matters of fact as to
ownership of and Encumbrances on the Shares sold by such Selling Stockholder,
provided that such counsel shall state that they believe that both you and they
are justified in relying upon such certificate.
(e) You shall have received letters addressed to
you and dated the date hereof and the Closing Date from Ernst & Young LLP,
independent public accountants
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for the Company, addressed to you, and in form and substance satisfactory to
you, substantially to the effect that:
(1) Such accountants are independent
public accountants as required by the Act and the rules and regulations of the
Commission thereunder and no information need be supplied with respect to them
in answer to Item 13 of Form SB-2.
(2) In their opinion, the financial
statements and related notes and schedules of the Company and its subsidiaries
examined by them, at all dates and for all periods referred to in their report
therein, and included in the Registration Statement and the Prospectus on their
authority as experts comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations of
the Commission promulgated thereunder.
(3) On the basis of limited procedures
not constituting an audit, including a reading of the latest available
unaudited interim financial statements of the Company and its subsidiaries and
the financial data and accounting records of the Company and its subsidiaries,
inquiries of officials of the Company and its subsidiaries and others
responsible for financial and accounting matters, a reading of the minute books
of the Company and its subsidiaries, including, without limitation, the minutes
(if any) of meetings or consents in lieu of meetings of the stockholders and of
the Board of Directors (and any executive committee, audit committee or other
committees thereof) of the Company and its subsidiaries, and other specified
procedures and inquiries requested by you, if any, nothing has come to their
attention which causes them to believe that:
(i) the unaudited financial statements
of the Company and its subsidiaries contained in the Registration Statement and
the Prospectus (if any) do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the Rules and Regulations
of the Commission promulgated thereunder or were not prepared in conformity
with generally accepted accounting principles applied on a basis consistent, in
all material respects, with those followed in the preparation of the audited
financial statements therein;
(ii) except as disclosed in or
contemplated by the Registration Statement and the Prospectus, during the
period from the date of the last audited balance sheet of the Company included
in the Registration Statement and Prospectus to a specified date not more than
five (5) days prior to the date of such letter, there were any decreases, as
compared with the corresponding period of the preceding year, in earnings
from operations, or the total or per share amounts of net earnings;
(iii) except as disclosed in or
contemplated by the Registration Statement and the Prospectus, during the
period from the date of the last audited balance sheet of the Company and its
subsidiaries included in the Registration Statement and Prospectus to a
specified date not more than five (5) days prior to the date of such letter,
there has been any change in the capital stock or other securities of the
Company or any payment or declaration of any dividend or other distribution in
respect thereof or in exchange therefor, or any increase in the long-term debt
of the Company and its subsidiaries or any decrease in the net current assets
or net assets of the Company and its subsidiaries, as compared with the amounts
shown on the last audited balance sheet of the Company, included in the
Registration Statement and the Prospectus (other than in the ordinary course of
business); and
(iv) On the basis of their
examinations referred to in their report and consent included in the
Registration Statement and Prospectus and the indicated procedures and
inquiries referred to above, nothing has come to their attention which, in
their judgment, would cause them to believe or indicate that the financial
statements and related notes and schedules of the Company and its subsidiaries
included in the Registration Statement and Prospectus do not present fairly
the financial position and results of operations of the Company and its
subsidiaries, as at the dates and for the periods indicated, in conformity with
generally accepted accounting principles applied on a consistent basis, and are
not in all material respects a fair presentation of the information purported
to be shown.
(4) In addition to their examination
referred to in their report included in the Registrations Statement and the
Prospectus and the inquiries and limited procedures referred to in clause (iv)
of this Section 7(e), they have performed other procedures, not constituting an
audit, with respect to certain numerical data, percentages, dollar amounts and
other financial information appearing in the Registration Statement and the
Prospectus, which are derived from the general accounting records of the
Company and its subsidiaries, and have compared certain of such data and
information with the accounting records of the Company and its subsidiaries and
found them to be in agreement.
(5) Such other matters as you may have
reasonably requested.
(f) The representations and warranties of the
Company and the Selling Stockholders in this Agreement shall be true and
correct with the same effect as if made on and as of the Closing Date and the
Company and the Selling Stockholders shall have complied with all agreements
and satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Date.
(g) The Registration Statement and the Prospectus
and any amendments or supplements thereto shall contain all statements which
are required to be stated therein in accordance with the Act and the Rules and
Regulations, and shall in all material respects conform to the requirements
thereof, and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(h) There shall have been, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, no material adverse change in the business, property, condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt or general affairs of the Company and its subsidiaries, except
changes which the Registration Statement and the Prospectus indicate might
occur after the effective date of the Registration Statement, and neither the
Company nor its subsidiaries shall have incurred any material liabilities or
entered into any agreements not in the ordinary course of business,
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except as disclosed in the Registration Statement and the Prospectus.
(i) No action, suit or proceeding, at law or in
equity, shall be pending or threatened against the Company or its subsidiaries
which would be required to be set forth in the Registration Statement, and no
proceedings shall be pending or threatened against the Company or its
subsidiaries before or by any commission, board or administrative agency in the
United States or elsewhere, wherein an unfavorable decision, ruling or finding
would have a materially adverse affect on the business, property, condition
(financial or otherwise), results of operations or general affairs of the
Company or its subsidiaries.
(j) The Company and Selling Stockholders shall
have furnished to you or caused to be furnished to you at the Closing Date,
certificates of the President and Chief Financial Officer of the Company and of
the Selling Stockholders (if any), respectively, in form and substance
satisfactory to you, as to the accuracy of the representations and warranties
of the Company and the Selling Stockholders, respectively, herein at and as of
the Closing Date and as to the performance by the Company and the Selling
Stockholders and of all of their respective obligations hereunder to be
performed at or prior to the Closing Date and the Company shall have furnished
to you a certificate of the President and Chief Financial Officer of the
Company satisfactory to you as to the matters set forth in Sections 7(a) and
(b) above.
(k) The NASDR, upon review of the terms of the
public offering of the Shares, shall have indicated that it has no objections
to the underwriting arrangements pertaining to the sale of the Shares and the
participation by you in the sale of the Shares.
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(l) Prior to or on the Closing Date, the Company
shall have executed and delivered the Underwriters' Warrant to you.
(m) Prior to or on the Closing Date, the Company
shall have delivered to you executed copies of the Lock-up Letters.
(n) Subsequent to the date hereof, there shall
not have occurred any change, or any development involving a prospective
change, in or affecting particularly the business or financial affairs of the
Company which would materially and adversely affect the market for the Shares.
(o) Subsequent to the date hereof, no executive
officer of the Company listed as such in the Prospectus shall have died, become
physically or mentally disabled, resigned or have been removed or discharged.
(p) The Company shall furnish you with such
further certificates and documents as you or your counsel shall have reasonably
requested.
All opinions, certificates, letters and other documents
required by this Section 7 to be delivered to you by the Company and the
Selling Stockholders will be in compliance with the provisions hereof only if
they are satisfactory in form and substance to you and your counsel. The
Company will furnish you with such conformed copies of such opinions,
certificates, letters and other documents as you shall reasonably request.
(q) Upon the exercise, in whole or in part, by
you of the option to purchase the Additional Shares, referred to in Section 2
hereof, your obligations to purchase and pay for the Additional Shares will be
subject
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to the continuing accuracy of the representations and warranties of the Company
contained herein and in each certificate and document contemplated under this
Agreement to be delivered to you, as of the date hereof and as of each Optional
Closing Date, to the performance by the Company of its obligations hereunder,
and the following additional conditions:
(1) The Registration Statement shall
remain effective at the Optional Closing Date, and no Stop Order shall have
been issued by the Commission and no proceedings for that purpose shall have
been instituted or shall be pending, or to your knowledge or the knowledge of
the Company, shall be contemplated by the Commission, and any reasonable
request on the part of the Commission for additional information shall have
been complied with to the satisfaction of Xxxxxx & Xxxxx, your counsel.
(2) You shall have received an opinion,
dated the Optional Closing Date and satisfactory in form and substance to
counsel to you, from Loeb & Loeb LLP, counsel to the Company, which opinion
shall be substantially the same in scope and substance as the opinion furnished
to you on the Closing Date pursuant to Section 7(c) hereof, except that such
opinion, where appropriate, shall cover the Additional Shares.
(3) You shall have received a letter in
form and substance satisfactory to you from Ernst & Young LLP, independent
certified public accountants for the Company, dated the Optional Closing Date
and addressed to you confirming the information in their letter referred to in
Section 7(e) hereof and stating that nothing has come to their attention during
the period from the ending date of their review referred to in said letter to a
date not more than five (5) days prior to the Optional Closing Date, which
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would require any change in said letter if it were required to be dated the
Optional Closing Date.
(4) You shall have received a
certificate of the President and Chief Financial Officer of the Company, dated
the Optional Closing Date, in form and substance satisfactory to you,
substantially the same in scope and substance as the certificate furnished to
you on the Closing Date pursuant to Section 7(j) hereof.
8. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective at 9:30
A.M., New York City time, on the first full business day following the day on
which the Registration Statement becomes effective or at the time of the
initial public offering by you of the Shares, whichever is earlier. The time
of the initial public offering shall mean the time, after the Registration
Statement becomes effective, of the release by you for publication of the first
newspaper advertisement which is subsequently published relating to the Shares
or the time, after the Registration Statement becomes effective, when the
Shares are first released by you for offering by you or dealers by letter or
telegram, whichever shall first occur. You, the Company or a
majority-in-interest of the Selling Stockholders may prevent this Agreement
from becoming effective without liability of any party to any other party,
except as noted below in this Section 8, by giving the notice indicated in
Section 8(c) before the time this Agreement becomes effective.
(b) In addition to the right to terminate this
Agreement pursuant to Section 7 hereof by reason of the Company's or Selling
Stockholders' failure, refusal or inability to perform all obligations and
satisfy all
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conditions on their part to be performed or satisfied hereunder prior to the
Closing Date or Optional Closing Date, as the case may be, you shall have the
right to terminate this Agreement at any time prior to the Closing Date or any
Optional Closing Date, as the case may be, by giving notice to the Company and
the Selling Stockholders, if the Company or any of its subsidiaries shall have
sustained a material loss or material adverse interference with its business or
properties from fire, flood, accident, hurricane, earthquake, theft, sabotage,
or other calamity or malicious act, including the death or disability of senior
management, whether or not covered by insurance, or from any labor dispute or
any court or governmental action, order or decree, of such a character as to
have a material adverse effect with the conduct of the business and operations
of the Company and its subsidiaries; or if there shall have been a general
suspension of, or a general limitation on prices for, trading in securities on
the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market; or if a banking moratorium has been declared by a
state or federal authority; or if there shall have been an outbreak of major
hostilities between the United States and any foreign power, or any other
insurrection, armed conflict or national calamity, which in your judgment makes
it impracticable or inadvisable to proceed with the offering, sale or delivery
of the Firm Shares or the Additional Shares, as the case may be.
(c) If you elect to prevent this Agreement from
becoming effective as provided in this Section 8, or to terminate this
Agreement pursuant to Section 7 or this Section 8, you shall notify the Company
and the Selling Stockholders promptly by telephone, telecopier, telex, or
telegram, confirmed by letter. If, as so provided in this Section 8, the
Company elects to prevent this Agreement from becoming effective, the Company
shall notify you promptly by
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telephone, telecopier, telex, or telegram, confirmed by letter. If, as so
provided in this Section 8, a majority-in-interest of the Selling Stockholders
elect to prevent this Agreement from becoming effective, the Selling
Stockholders shall notify you promptly by telephone, telecopier, telex, or
telegram, confirmed by letter.
(d) Anything in this Agreement to the contrary
notwithstanding other than Section 8(e), if this Agreement shall not become
effective by reason of an election by the Company pursuant to this Section 8 or
if this Agreement shall terminate or shall otherwise not be carried out within
the time specified herein by reason of any failure on the part of the Company
to perform any covenant or agreement or satisfy any condition of this Agreement
by it to be performed or satisfied, the sole liability of the Company to you,
in addition to the obligations the Company assumed pursuant to Section 4(g),
will be to reimburse you for such out-of-pocket expenses (including the fees
and disbursements of their counsel) as shall have been incurred by them in
connection with this Agreement or the proposed offer, sale, and delivery of the
Shares, and upon demand the Company agrees to pay promptly the full amount
thereof to you. Anything in this Agreement to the contrary notwithstanding
other than Section 8(e), if this Agreement shall not become effective by reason
of any failure of the part of any of the Selling Stockholders to perform any
covenant or agreement or satisfy any condition of this Agreement by such
Selling Stockholders to be performed or satisfied, the sole liability of such
Selling Stockholders to you will be to reimburse you for such out-of-pocket
expenses (including the fees and disbursements of their counsel) as shall have
been incurred by them in connection with this Agreement or the proposed offer,
sale, and delivery of the Shares, and upon demand such Selling
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Stockholders agrees to pay promptly the full amount thereof to you.
(e) Notwithstanding any election hereunder or any
termination of this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 4(b), 4(g), 6, 10(b) and 10(c) shall
not be in any way affected by such election or termination or failure to carry
out the terms of this Agreement or any part hereof.
9. SUBSTITUTION OF UNDERWRITERS.
If any one or more of the Underwriters shall fail or refuse to
purchase any of Shares which it or they have agreed to purchase hereunder, and
the number of Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
number of Shares, the other Underwriters shall be obligated, severally, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase, in the proportions which the number of
Shares which they have respectively agreed to purchase pursuant to Section 2
hereof bears to the aggregate number of Shares which all such non-defaulting
Underwriters have so agreed to purchase or in such other proportions as you may
specify, provided that in no event shall the maximum number of Shares which any
Underwriter has become obligated to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 9 by more than one-ninth of such number of
Shares, without the written consent of such Underwriter. If any Underwriter or
Underwriters shall fail or refuse to purchase any Shares and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase exceeds one-tenth of the aggregate number of
Shares and arrangements satisfactory to you and the Company for the purchase of
such Shares are not
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made within forty-eight (48) hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company for the purchase or sale of any Shares under this Agreement. In
any such case either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than five business days, in order that
the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. MISCELLANEOUS:
(a) Notices required to be in writing shall be
mailed or delivered (i) to the Company at the Company's office at 0000 Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx, with copies to
Loeb & Loeb LLP, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxx X. Xxxxxxxx, Esq. (ii) to the Selling Stockholders, c/o
Xxxxxx Xxxxxx and Xxxxxx X. Xxxxxx, as Custodians, at Nichols, Safina, Xxxxxx
& Co., Inc.'s office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or (iii) to
you, at the office of Nichols, Safina, Xxxxxx & Co., Inc., 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx, with copies to:
______________ ____________________________________________________________ and
Xxxxxx & Xxxxx, 00 Xxxxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx
00000, Attention: Xxxx Xxxxxx, Esq., and shall be deemed given when received.
Any notice not required to be in writing, including but not limited to notices
under Section 7(a) or 8 hereof, may be made by telex, telecopier or telephone
and shall be deemed given at the time the telex, or telecopied communication is
received
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or the telephone call is made, but if so made shall be subsequently confirmed
in writing.
(b) The representations, warranties, covenants
and agreements of the Company and the Selling Stockholders and the indemnity
and contribution agreements, contained in Sections 4, 5 and 6 of this Agreement
will remain in full force and effect, regardless of any investigation made by
or on behalf of you, the Selling Stockholders, the Company or any of its
officers or directors or any controlling persons of you, the Selling
Stockholders or the Company and will survive acceptance of and payment for any
of the Shares and the termination of this Agreement.
(c) This Agreement has been and is made solely
for the benefit of you, the Selling Stockholders and the Company and the
controlling persons, directors and officers referred to in Section 6 hereof and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" as used in this Agreement shall not include a purchaser, as such
purchaser, of Shares from you.
(d) This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, applicable to
contracts made and to be performed entirely with such State, without regard to
conflict of laws provisions thereof.
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Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Stockholders and you.
Very truly yours,
PANORAMA INTERNATIONAL PRODUCTIONS, INC.
By:________________________________
Xxxxxx X. Xxxxxxx,
Chairman and Chief
Executive Officer
SELLING STOCKHOLDERS:
___________________________________
A. Xxxxxxx Xxxxxx
___________________________________
Xxxxxx X. Xxxxx
___________________________________
Xxxxx Horwytz
___________________________________
Xxxxx Xxxxxxxx
___________________________________
Xxxx Xxxxx
___________________________________
Kepman Capital
___________________________________
Xxxxxxxx Xxxxxx
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___________________________________
M.D. Sabbah
___________________________________
Xxxxxx & Xxxxxxxxx Xxxxxx
___________________________________
Xxxxxx Xxxxxx
___________________________________
Xxxxx Xxxxxxxxx
___________________________________
Xxxxxxx Xxxxxx Rev. Trust
___________________________________
Xxxxxx Xxxxxxxxxx
___________________________________
Xxxxxx Horwytz
___________________________________
Xxxxxx Xxxxxx
___________________________________
Xxxxxx Xxxxxxxx
___________________________________
Xxxxxxx X. Xxxxxx
___________________________________
Xxxx Xxxxxx
___________________________________
Xxxxxx X. Xxxxx
___________________________________
X. Xxxx Xxxxxxx
00
00
___________________________________
Xxxxxx XxXxx
___________________________________
Xxxx Xxxxx
Confirmed, as of the date first above mentioned.
NICHOLS, SAFINA, XXXXXX & CO. INC.
{FIRM NAME},
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
By: NICHOLS, SAFINA, XXXXXX & CO. INC.
By:___________________________
Xxxxxx Xxxxxx
Its:______________________
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SCHEDULE I
Underwriting Agreement, dated ________, 1997
Number
Selling Stockholder of Shares
------------------- ---------
A. Xxxxxxx Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx X. Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxx Horwytz . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxx Xxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxx Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kepman Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxxxx Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . .
M.D. Sabbah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx & Xxxxxxxxx Xxxxxx . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxx Xxxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxxx Xxxxxx Rev. Trust . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx Xxxxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx Horwytz . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx Xxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxxx X. Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxx Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx X. Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . .
X. Xxxx Xxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx XxXxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxx Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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SCHEDULE II
Underwriting Agreement, dated ________, 1997
Underwriter Number of Firm Shares
----------- ---------------------
Nichols, Safina, Xxxxxx & Co., Inc .........................
Total .................. _________________ shares
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