EXHIBIT 1.1
XXXXXXXXXX.XXX, INC.
2,500,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
----------------------
_________ , 1999
EBI Securities Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Millennium Financial Group, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
As Representatives of the Several Underwriters
Dear Sirs:
Xxxxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), hereby
confirms its agreement with the several underwriters named in Schedule 1 hereto
(the "Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacity, the "Representatives"), as set forth below.
If you are the only Underwriters, all references herein to the Representatives
shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
----------
Company proposes to sell an aggregate of 2,500,000 shares to the several
Underwriters (the "Firm Securities") of the Company's Common Stock, $.01 par
value per share (the "Common Stock"). The Company also proposes to sell to the
several Underwriters not more than 375,000 additional shares of Common Stock
(15% of the Firm Securities to be sold by the Company) if requested by the
Representatives as provided in Section 3 of this Agreement. Any and all shares
of Common Stock to be purchased by the Underwriters pursuant to such option are
referred to herein as the "Option Securities." The Firm Securities and any
Option Securities are collectively referred to herein as the "Securities."
2. Representations and Warranties of the Company.
---------------------------------------------
(a) The Company represents and warrants to, and agrees with, each of
the several Underwriters that:
----------
/1/ Plus an option to purchase up to 375,000 additional shares to cover
over-allotments, if any.
(i) A registration statement filed on Form SB-2 (File No.
333-74569) with respect to the Securities, including a prospectus
subject to completion, has been filed by the Company with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and one or more
amendments to such registration statement may have been so filed.
After the execution of this Agreement, the Company will file with the
Commission either (A) if such registration statement, as it may have
been amended, has been declared by the Commission to be effective
under the Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment
shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or
permitted by Rule 424(b) under the Act, and as have been provided to
and approved by the Representatives prior to the execution of this
Agreement, or (B) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under
the Act, an amendment to such registration statement, including a form
of prospectus, a copy of which amendment has been furnished to and
approved by the Representatives prior to the execution of this
Agreement. As used in this Agreement, the term "Registration
Statement" means the registration statement initially filed relating
to the Securities, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and
including any information omitted therefrom pursuant to Rule 430A
under the Act and included in the Prospectus (as hereinafter defined);
the term "Preliminary Prospectus" means each prospectus subject to
completion filed with such registration statement or any amendment
thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the
time it was or is declared effective); the term "Prospectus" means:
the prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or if no prospectus is required to be filed pursuant to
Rule 424(b) under the Act, the prospectus included in the Registration
Statement;
(ii) The Commission has not issued or, to the best knowledge
of the Company, threatened or contemplated any order preventing or
suspending the use of any Preliminary Prospectus; no stop order
suspending the sale of the Securities in any jurisdiction has been
issued and no proceedings for that purpose are pending or, to the best
knowledge of the Company, threatened or contemplated, and any request
of the Commission for additional information (to be included in the
Registration Statement, any Preliminary Prospectus or the Prospectus
or otherwise) has been complied with. When the Prospectus or any
amendment or supplement to the Prospectus is filed with the Commission
pursuant to Rule 424(b) (or, if the Prospectus or any part thereof or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was or is declared
effective) and on the Firm Closing Date and any Option Closing Date
(both as hereinafter defined), the Prospectus, as amended or
supplemented at any such time, (A) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder
and (B) did not or will not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements
2
therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph
(ii) do not apply to statements or omissions made in the Registration
Statement or any amendment thereto or the Prospectus or any amendment
or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein;
(iii) The Company and its two subsidiaries at the Closing Date
(hereinafter defined), The Online Medical Bookstore, LLC and InterLink
Services, Inc. (the "Subsidiaries") have been duly organized and are
validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation and are duly qualified
to transact business as foreign corporations and are in good standing
under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their
respective businesses requires such qualification, except where the
failure to be so qualified does not result in a material adverse
change in the condition (financial or otherwise), business, prospects,
net worth or results of operations of the Company and its
Subsidiaries, taken as a whole (a "Material Adverse Effect");
(iv) The Company and its Subsidiaries have full power
(corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus); the Company has
full power (corporate and other) and authority to enter into this
Agreement and to carry out all the terms and provisions hereof to be
carried out by it; and the Company has full power (corporate and
other) and authority to execute and deliver the warrants to purchase
Common Stock to be issued and sold to the Representatives in
accordance with Section 5(n) hereto (the "Representatives' Warrants");
(v) The issued shares of capital stock of the Company's
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned beneficially by the Company free
and clear of any security interests, liens, encumbrances, equities or
claims. The Common Stock issuable pursuant to the Representatives'
Warrants, when issued in accordance with the terms thereof, will be
duly authorized, validly issued, fully paid and nonassessable. The
Representatives' Warrants and the shares of Common Stock issuable
thereunder were not and will not be issued in violation of any
preemptive rights of any security holder of the Company. The Company
has reserved a sufficient number of shares of Common Stock for
issuance pursuant to the Representatives' Warrants. The holders of the
Common Stock issuable pursuant to the Representatives' Warrants will
not be subject to personal liability solely by reason of being such
holders. The issuance and sale of the Common Stock pursuant to the
Representatives' Warrants will be made in conformity with the
applicable registration requirements or exemptions therefrom under
federal and applicable state securities law;
(vi) As of the respective dates set forth in the Prospectus,
the Company had an authorized, issued and outstanding capitalization
as set forth in the Prospectus (or,
3
if the Prospectus is not in existence, the most recent Preliminary
Prospectus). All of the issued shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. The Firm Securities and the Option Securities have been
duly authorized and at the Firm Closing Date or the Option Closing
Date (as the case may be), after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable. Except
as otherwise disclosed in the Prospectus, the Firm Closing Date or the
Option Closing Date, no holders of outstanding shares of capital stock
of the Company will be entitled as such to any preemptive or other
rights to subscribe for any of the Securities, and no holder of
securities of the Company has any right which has not been fully
exercised or waived to require the Company to register the offer or
sale of any securities owned by such holder under the Act in the
public offering contemplated by this Agreement;
(vii) The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and this Agreement and the Representatives'
Warrants conform in all material respects to the descriptions thereof
contained in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus);
(viii) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding (A) securities or obligations of
the Company or its Subsidiaries convertible into or exchangeable for
any capital stock of the Company or its Subsidiaries, (B) warrants,
rights or options to subscribe for or purchase from the Company or its
Subsidiaries any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations of the
Company or its Subsidiaries to issue any shares of capital stock, any
such convertible or exchangeable securities or obligations, or any
such warrants, rights or options;
(ix) The financial statements and schedules of the Company
and its Subsidiaries included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present in all material respects the
financial position of the Company and its Subsidiaries and the results
of operations and cash flows as of the dates and periods therein
specified. Such financial statements and schedules have been prepared
in accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved (except as
otherwise noted therein). The selected financial data set forth under
the captions "Summary Financial Data," "Capitalization" and "Selected
Financial Data" in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) fairly present, in
accordance with GAAP, on the basis stated in the Prospectus (or such
Preliminary Prospectus), the information included therein. No other
financial statements or schedules are required to be included in the
Registration Statement;
(x) Xxxxxx Xxxxxxxx LLP, which has audited the financial
statements of the Company and the predecessors of the two Subsidiaries
and delivered its reports with
4
respect to the audited financial statements included in the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), are
independent public accountants as required by the Act and the
applicable rules and regulations thereunder;
(xi) The execution and delivery of this Agreement and the
Representatives' Warrants have been duly authorized by the Company;
this Agreement has been duly executed and delivered by the Company
and, as of the Closing Date, the Representatives' Warrants will have
been duly executed and delivered by the Company and this Agreement is,
and the Representatives' Warrants when executed and delivered by the
Company on the Closing Date, and in the case of the Representatives'
Warrants, paid for by the Representatives, will be the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability
may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to rights
and remedies of creditors or by general equitable principles. The
information in the Registration Statement and the Prospectus insofar
as it relates to the Representatives' Warrants, in each case as of the
date on which the Registration Statement is declared effective by the
Commission, the Closing Date and any Option Closing Date, is true,
correct and complete in all material respects;
(xii) No legal or governmental proceedings are pending to
which the Company or its Subsidiaries is a party or to which the
property of the Company or its Subsidiaries is subject that are
required to be described in the Registration Statement or the
Prospectus and are not described therein (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), and, to the
Company's knowledge, no such proceedings have been threatened against
the Company or its Subsidiaries or with respect to any of their
respective properties; and no contract or other document is required
to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement that is not
described therein (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) or filed as required;
(xiii) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement and of the
Representatives' Warrants to the Representatives by the Company
pursuant to the terms thereof; the execution and delivery of this
Agreement and the Representatives' Warrants by the Company; the
compliance by the Company with the provisions of this Agreement and
the Representatives' Warrants; and the consummation of all
transactions contemplated therein do not (A) require the consent,
approval, authorization, registration or qualification of or with any
court, government or governmental authority, domestic or foreign,
except such as have been obtained, such as may be required under state
securities or blue sky laws, such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") and, if the
Registration Statement filed with respect to the Securities (as
amended) is not effective under the Act as of the time of execution
hereof, such as may be required (and shall be obtained as provided in
this Agreement) under the Act, or (B) conflict with or result in a
breach or violation of any
5
of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or its Subsidiaries is a party or by
which the Company or its Subsidiaries or any of their respective
properties are bound, or the Certificate of Incorporation or by-laws
of the Company or its Subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or its
Subsidiaries, which would have a Material Adverse Effect;
(xiv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), neither the Company nor its Subsidiaries has
sustained any loss or interference with their respective businesses or
properties having or resulting in a Material Adverse Effect from fire,
flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental
proceeding and there has not been any event, circumstance, or
development that results in, or that the Company believes would result
in, a Material Adverse Effect, except in each case as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus);
(xv) The Company and its Subsidiaries have not, directly or
indirectly (except for the sale of Securities under this Agreement),
(i) taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, or (ii)
since the filing of the Registration Statement, and except for the
transactions contemplated herein, (A) sold, bid for, purchased, or
paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the
Company;
(xvi)(a) The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses except where the failure to possess any
such item would not have a Material Adverse Effect, and (b) none of
the Company or its Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit that, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect, except as described in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus);
(xvii) The Company is not an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and this
transaction will not cause the Company to become an investment company
subject to registration under the 1940 Act;
(xviii) The Company and its Subsidiaries have filed all foreign,
federal, state and local tax returns that are required to be filed or
has requested extensions thereof (except in any case in which the
failure so to file would not have a Material Adverse
6
Effect) and has paid all taxes required to be paid by them and any
other assessment, fine or penalty levied against them, to the extent
that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus);
(xix) Except for the shares of capital stock of the
Subsidiaries owned by the Company, neither the Company nor its
Subsidiaries owns any shares of stock or any other equity securities
of any corporation or has any equity interest in any company,
partnership, association or other entity;
(xx) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in and dispositions of the assets of the Company and its
Subsidiaries, respectively. The Company and its Subsidiaries maintain
a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance
with management's general or specific authorizations; (B) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles
and to maintain asset accountability; (C) access to assets is
permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(xxi) Except as described in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), no default exists and no event has
occurred that, with notice or lapse of time or both, would constitute
a default, in the due performance and observance of any term, covenant
or condition of any contract, indenture, mortgage, deed of trust,
lease or other agreement or instrument to which the Company or its
Subsidiaries are a party or by which the Company or its Subsidiaries
or any of their respective properties are bound or may be affected, in
any respect that would have a Material Adverse Effect. The agreements
to which the Company or its Subsidiaries are a party described in the
Registration Statement are valid agreements, enforceable by the
Company or its Subsidiaries, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally or by general equitable principles and, to the best
of the Company's knowledge, the other contracting party or parties
thereto are not in material breach or material default under any of
such agreements;
(xxii) The Company and the Subsidiaries have not distributed
and, prior to the later of (A) the Firm Closing Date or any Option
Closing Date and (B) the completion of the distribution of the
Securities, will not distribute any written offering material in
connection with the offering and sale of the Securities other than the
Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or
other materials, if any, permitted by the Act;
7
(xxiii) The Company and its Subsidiaries have good and
marketable title to all personal property owned by each of them, in
each case free and clear of any security interests, liens,
encumbrances, equities, claims and other defects, except for those
relating to debts of the Company or its Subsidiaries described in the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and those
that do not interfere with the use made or proposed to be made of such
property by the Company or its Subsidiaries, and any real property and
buildings held under lease by the Company or its Subsidiaries are held
under valid, subsisting and enforceable leases (except as
enforceability may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to rights
and remedies of creditors or by general equitable principles), with
such exceptions as are not material and do not interfere with the use
made or proposed to be made of such property and buildings by the
Company or its Subsidiaries, in each case except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). The Company and
its Subsidiaries own or lease all such properties as are necessary to
their respective operations as now conducted and as described in the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus);
(xxiv) No labor dispute with the employees of the Company or
its Subsidiaries exists or to the Company's knowledge, is threatened
or imminent that could result in a Material Adverse Effect, except as
described in or contemplated by the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), and the
Company is not aware of an existing, imminent or threatened labor
disturbance by the employees of any principal suppliers, contractors
or others that could result in a Material Adverse Effect, except as
described in or contemplated by the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus);
(xxv) The Company and its Subsidiaries own or possess all
material trademarks, service marks, trade names, licenses, copyrights
and proprietary or other confidential information currently employed
by them in connection with their respective businesses, and neither
the Company nor its Subsidiaries has received any notice of
infringement of or conflict with asserted rights of any third party
with respect to any of the foregoing which, singly or in the
aggregate, if the subject of unfavorable decisions, rulings or
findings, would have a Material Adverse Effect, except as described in
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus). The description of the Company's
corporate sponsorships and alliances and customers contained in the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), are true
and complete in all material respects. All such corporate sponsorships
and alliances and customer relationships are in effect and neither the
Company nor its Subsidiaries has received any notice seeking to
terminate or modify such corporate sponsorships and alliances or
customer relationships;
(xxvi) The Company and its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are prudent
8
and customary in the businesses in which they are engaged; and neither
the Company nor its Subsidiaries has any reason to believe that it
will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus);
(xxvii) The Common Stock will be registered in accordance with
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on the date hereof pursuant to the filing of a Form
8-A and, upon notice of issuance, the Securities will be traded on the
Nasdaq National Market in accordance with a confirmation that the
Company has received from The Nasdaq Stock Market, Inc.;
(xxviii) Neither the Company nor the Subsidiaries has at any time
during the last five (5) years (A) made any unlawful contribution to
any candidate for foreign office or failed to disclose fully any
contribution in violation of law, (B) made any payment to any federal
or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any
jurisdiction thereof, (C) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended by the International Anti-
Bribery Act of 1998, or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment, or (D) accepted any
material advertising allowance or marketing allowance from suppliers
or partners and, to the extent any such allowance has been accepted,
the Company and its Subsidiaries have provided proper documentation to
the supplier or partner with respect to advertising as to which the
advertising allowance has been granted;
(xxix) Any pro forma financial or other information and related
notes included in the Registration Statement, each Preliminary
Prospectus and the Prospectus comply (or, if the Prospectus has not
been filed with the Commission, as to the Prospectus, will comply) in
all material respects with the requirements of the Act and the rules
and regulations of the Commission thereunder and present fairly in all
material respects the pro forma information shown, as of the dates and
for the periods covered by such pro forma information. Such pro forma
information, including any related notes and schedules, has been
prepared on a basis consistent with the historical financial
statements and other historical information, as applicable, included
in the Registration Statement, the Preliminary Prospectus and the
Prospectus, except for the pro forma adjustments specified therein,
and give effect to assumptions made on a reasonable basis to give
effect to historical and, if applicable, proposed transactions
described in the Registration Statement, each Preliminary Prospectus
and the Prospectus;
(xxx) Except as set forth in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding loans, advances or guaranties of
indebtedness by the Company or its Subsidiaries to or for the benefit
of any of (i) its "affiliates," as such term is defined in the Act and
the rules and regulations thereof, or (ii) any of the members of the
families of any of them;
9
(xxxi) The Company and its Subsidiaries have no known
liability, absolute or contingent, relating to: (A) public health or
safety; (B) worker health or safety; (C) product defect or warranty
(except, as to product defect or warranty, as is disclosed in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus)); or (D) pollution,
damage to or protection of the environment, including, without
limitation, relating to damage to natural resources, emissions,
discharges, releases or threatened releases of hazardous materials
into the environment (including, further without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, use, treatment,
storage, generation, disposal, transport or handling of any hazardous
materials, except any such liability that would not result in a
material adverse effect. The Company is not aware of the date hereof
of the existence of any such liability, absolute or contingent, of the
type discussed above. As used herein, "hazardous material" includes
chemical substances, wastes, pollutants, contaminants, hazardous or
toxic substances, constituents, materials or wastes, whether solid,
gaseous or liquid in nature; and
(xxxii) Neither the Company nor its Subsidiaries is presently
doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(xxxiii) In the event the Company presents a "road show" over the
Internet, the Company and any contractor engaged by it to prepare and
transmit such"road show" presentation by means of the Internet shall
comply with that certain no-action request from Net Roadshow, Inc. to
the Securities and Exchange Commission on July 23, 1997, as responded
to by the Securities and Exchange Commission on July 30, 1997.
(xxxiv) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), and to the Company's best knowledge after reasonable
investigation, all hardware, firmware, software and computer systems
of the Company and its Subsidiaries and, to the Company's knowledge,
of respective material vendors and suppliers of the Company and its
Subsidiaries are, or will by the Firm Closing Date, year 2000
Compliant (as defined below) and will continue to function in
accordance with their independent purpose without material error or
material interruption as a result of the transition to the year 2000,
to the extent that data submitted or processed is unambiguous and date
specific. The Company will not incur any additional material costs for
the Company or its Subsidiaries to become year 2000 Complaint. For
purposes of this paragraph, "year 2000 Compliant" means, with respect
to the Company, its Subsidiaries, or its respective material vendors
and suppliers, that the hardware, firmware, software and computer
systems of each of the foregoing (i) will completely and accurately
address, produce, store and calculate data involving dates before, on
or after January 1, 2000 and will not produce abnormally ending or
incorrect results involving such dates as used in any forward or
regression dated based functions, and (ii) will provide that date
related functionalities and data fields include the indication of
century and millennium and will perform calculations that involve a
four-digit year.
10
(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Representatives
pursuant to this Agreement shall be deemed a representation and warranty by
the Company to each Underwriter, as to the matters covered thereby.
(c) The Representatives shall receive, on the date hereof, at the
Firm Closing Date and any Option Closing Date (the Firm Closing Date and
the Option Closing Date, hereinafter collectively the "Closing Date"),
representations and warranties of The Online Medical Bookstore, LLC and
InterLink Services, Inc. which shall be identical in form and substance to
the representations and warranties of the Company set forth in Section 2(a)
above. Such representations and warranties shall be set forth in a
certificate effective and relating to the period through and until the
acquisition of the respective subsidiary and shall be signed by the
executive officers of The Online Medical Bookstore, LLC and InterLink
Services, Inc., respectively, and delivered to the Representatives or to
counsel for the Representatives on the date hereof, at the Firm Closing
Date and at any Option Closing Date.
3. Purchase, Sale and Delivery of the Securities.
---------------------------------------------
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, (i) the Company agrees to sell the 2,500,000 shares of common
stock constituting Firm Securities, (ii) each of the Underwriters agrees to
purchase from the Company, at a purchase price of $______ per share, an
aggregate number of Firm Securities set forth opposite the name of such
Underwriter in Schedule 1 hereto. One or more certificates in definitive
form for the Firm Securities that the several Underwriters have agreed to
purchase hereunder from the Company, in such denomination or denominations
and registered in such name or names as the Representatives request upon
written notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company to the
Representatives for the respective accounts of the Underwriters, against
payment by or on behalf of the Underwriters of the aggregate purchase price
therefor by wire transfer in same day funds (the "Wired Funds") to the
account of the Company. Such delivery of and payment for the Firm
Securities shall be made at the offices of EBI Securities Corporation, 0000
Xxxxx Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, at 7:30 a.m.,
Mountain time, on _____________________, 1999, or at such other place, time
or date as the Representatives and the Company may agree upon or as the
Representatives may determine pursuant to Section 9 hereof, such time and
date of delivery against payment being herein referred to as the "Firm
Closing Date." The Company will make such certificate or certificates for
the Firm Securities available for checking and packaging by the
Representatives at the offices of the Company's transfer agent or registrar
at least 24 hours prior to the Firm Closing Date or, if available, will
coordinate the transfer of the Firm Securities to the Underwriters through
the book-entry facilities of the Depository Trust Company.
(b) For the sole purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as
contemplated by the Prospectus, on the basis of the covenants and
agreements of the Underwriters contained in this Agreement and subject to
the terms and conditions set forth in this Agreement, the Company hereby
grants to the several Underwriters an option to purchase the Option
Securities. The purchase price to be paid for any Option Securities shall
be the same price per share as the price per share for the Firm
11
Securities set forth above in paragraph (a) of this Section 3. The option
granted hereby may be exercised as to all or any part of the Option
Securities from time to time within 60 days after the date of the
Prospectus (or, if such 60th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the Nasdaq National
Market or applicable exchange is open). The Underwriters shall not be under
any obligation to purchase any of the Option Securities prior to the
exercise of such option. The Representatives may from time to time exercise
the option granted hereby by giving notice in writing or by telephone
(confirmed within 24 hours in writing) to the Company setting forth the
aggregate number of Option Securities as to which the several Underwriters
are then exercising the option and the date and time for delivery of and
payment for such Option Securities. Any such date of delivery shall be
determined by the Representatives but shall not be earlier than two
business days or later than five business days after such exercise of the
option and, in any event, shall not be earlier than the Firm Closing Date.
The time and date set forth in such notice, or such other time on such
other date as the Representatives and the Company may agree upon or as the
Representatives may determine pursuant to Section 9 hereof, is herein
called the "Option Closing Date" with respect to such Option Securities.
Upon exercise of the option as provided herein, the Company shall become
obligated to sell to each of the several Underwriters, and, subject to the
terms and conditions herein set forth, each of the Underwriters (severally
and not jointly) shall become obligated to purchase from the Company, the
same percentage of the total number of the Option Securities as to which
the several Underwriters are then exercising the option as such Underwriter
is obligated to purchase of the aggregate number of Firm Securities, as
adjusted by the Representatives in such manner as it deems advisable to
avoid fractional shares. If the option is exercised as to all or any
portion of the Option Securities, one or more certificates in definitive
form for such Option Securities, and payment therefor, shall be delivered
on the related Option Closing Date in the manner, and upon the terms and
conditions, set forth in paragraph (a) of this Section 3, except that
reference therein to the Firm Securities and the Firm Closing Date shall be
deemed, for purposes of this paragraph 3(b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) It is understood that you, individually and not as the
Representatives, may (but shall not be obligated to) make payment on behalf
of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall
relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
(d) The Company hereby acknowledges that the wire transfer by or on
behalf of the Underwriters of the purchase price for any Securities does
not constitute closing of a purchase and sale of the Securities. Only
execution and delivery of a receipt (by facsimile or otherwise) for the
Securities by the Underwriters indicates completion of the closing of a
purchase of the Securities from the Company. Furthermore, in the event that
the Underwriters wire funds to the Company prior to the completion of the
closing of a purchase of Securities, the Company hereby acknowledges that
until the Underwriters execute and deliver a receipt for the Securities, by
facsimile or otherwise, the Company will not be entitled to the wired funds
and shall return the wired funds received by it to the Underwriters as soon
as practicable (by wire transfer of same-day funds) upon demand. In the
event that the closing of a purchase of Securities is not completed and the
wired funds are not returned by the Company to the Underwriters on the same
day the wired funds were received by the Company, the Company agrees to pay
to the Underwriters in respect of each day the wired funds are not returned
by
12
it, in same-day funds, interest at the Prime Rate (as defined in Section
8(a)) on the date hereof on the amount of such wired funds received from
the Underwriters.
4. Offering by the Underwriters. Upon your authorization of the release
----------------------------
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees with each
------------------------
of the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, to
become effective as promptly as possible. If required, the Company will
file the Prospectus and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rule 424(b)
under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the rules and
regulations of the Commission thereunder to the extent necessary to permit
the continuance of sales of or dealings in the Securities in accordance
with the provisions hereof and of the Prospectus, as then amended or
supplemented, and (ii) will not file with the Commission the Prospectus or
the amendment referred to in the second sentence of Section 2(a)(i) hereof,
any amendment or supplement to such Prospectus, or any amendment to the
Registration Statement of which the Representatives shall not previously
have been advised and furnished with a copy for a reasonable period of time
prior to the proposed filing and as to which filing the Representatives
shall not have given their consent. The Company will prepare and file with
the Commission, in accordance with the rules and regulations of the
Commission, promptly upon request by the Representatives or counsel for the
Representatives, any amendments to the Registration Statement or amendments
or supplements to the Prospectus that may be deemed necessary or advisable
in connection with the distribution of the Securities by the several
Underwriters, and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective by the Commission as
promptly as possible. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective or
the Prospectus or any amendment or supplement thereto has been filed and
will provide to the Representatives copies of each such filing.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any amendment thereto or any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, (ii) the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, (iii) the
institution, threatening or contemplation of any proceeding for any such
purpose, or (iv) any request made by the Commission for amending the
Registration Statement, for amending or supplementing the Prospectus or for
additional information. The Company will use its best efforts to prevent
the issuance of any such stop order and, if any such stop order is issued,
to obtain the withdrawal thereof as promptly as possible.
13
(c) The Company will endeavor to qualify the Securities for offering
and sale under the securities or blue sky laws of such jurisdictions as the
Representatives may designate and will endeavor to continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction. If, after the public offering of the Securities by the
Underwriters and during such period, the Underwriters propose to vary the
terms of offering thereof by reason of changes in general market conditions
or otherwise, the Representatives will advise the Company in writing of the
proposed variation and if, in the opinion either of counsel for the Company
or counsel for the Representatives, such proposed variation requires that
the Prospectus be supplemented or amended, the Company will forthwith
prepare and file with the Commission a supplement to the Prospectus or an
amended Prospectus setting forth such variation. The Company authorizes
the Underwriters and all dealers to whom any of the Securities may be sold
by the Underwriters to use the Prospectus, as from time to time so amended
or supplemented, in connection with the sale of the Securities in
accordance with the applicable provisions of the Act and the rules and
regulations thereunder for such period.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the
Act, or (ii) the Option Closing Date, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it
is necessary at any time to amend or supplement the Prospectus to comply
with the Act or the rules or regulations of the Commission thereunder, the
Company will promptly notify the Representatives thereof and, subject to
Section 5(a) hereof, will prepare and file with the Commission, at the
Company's expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Representatives a signed copy of the
registration statement originally filed with respect to the Securities and
each amendment thereto (in each case including exhibits thereto), (ii) to
each other Underwriter, a conformed copy of such registration statement and
each amendment thereto (in each case without exhibits thereto), and (iii)
so long as a prospectus relating to the Securities is required to be
delivered under the Act, as many copies of each Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request; without limiting the application of
clause (iii) of this sentence, the Company shall, as soon as practicable
following the determination of the public offering price, deliver to the
Underwriters, without charge, as many copies of the Prospectus and any
amendment or supplement thereto as the Representatives may reasonably
request for purposes of confirming orders that are expected to settle on
the Firm Closing Date.
(f) The Company, as soon as practicable, will make generally
available to its security holders and to the Representatives an earnings
statement of the Company and its Subsidiaries that satisfies the provisions
of Section 11(a) of the Act and Rule 158 thereunder.
14
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the prior
written consent of the Representatives on behalf of the Underwriters,
offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise sell or dispose (or announce any offer, sale, offer
of sale, contract of sale, pledge, grant of any option to purchase or other
sale or disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common
Stock for a period of 12 months after the date hereof, except pursuant to
this Agreement, issuances pursuant to warrants and options outstanding
prior to the date hereof, issuances pursuant to the Representatives'
Warrants, stock options granted under the company's stock option plan or
shares issued pursuant to its stock purchase plan to officers, employees,
directors and consultants and any stock issued on exercise thereof or
issuances in connection with an acquisition or business combination
transaction. If the Company plans to issue any Common Stock or other
securities in connection with an acquisition or a business combination
transaction, the Company shall provide the Representatives with three days'
advance written notice of its intention to so issue such securities
including the terms of any such proposed transaction.
(i) The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities, or (ii) for a period of 12 months after
the date hereof (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to
any person any compensation for soliciting another to purchase any other
securities of the Company. The Company will not, directly or indirectly,
without the prior written consent of the Representatives on behalf of the
Underwriters, offer, purchase, offer to purchase, contract to purchase,
enter into any option to purchase or otherwise purchase or acquire (or
announce any offer, purchase, offer of purchase, contract to purchase,
execution of any option to purchase or other purchase or acquisition of)
any shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of 12
months after the date hereof.
(j) The Company will obtain the lockup agreements described in
Section 7(e) hereof prior to the Firm Closing Date. Any person required to
execute a lock-up agreement shall cause his or her pledgee to also agree in
writing to comply with the pledgor's agreement with the Representatives.
The pledgor shall promptly deliver a copy of any such written agreement
relating to any pledge to the Representatives after execution thereof by
the pledgee.
(k) The Company will use its commercially reasonable efforts to
cause the Securities to be duly traded on the Nasdaq National Market prior
to the Firm Closing Date. The Company will use its best efforts to ensure
that the Securities continue to be traded on the Nasdaq National Market
following the Firm Closing Date.
15
(l) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to the Representatives and to
each Underwriter who may so request in writing copies of (i) all periodic
and special reports furnished by it to stockholders of the Company, (ii)
all information, documents and reports filed by it with the Commission, or
the Nasdaq National Market, (iii) all press releases and material news
items or articles in respect of the Company, its services or affairs
released or prepared by the Company (other than promotional and marketing
materials disseminated solely to customers and potential customers of the
Company in the ordinary course of business) and (iv) any additional
information concerning the Company or its business which the
Representatives may reasonably request.
(m) The Company will use its best efforts to maintain insurance of
the types and in the amounts which it deems adequate for its business
consistent with insurance coverage maintained by companies of similar size
and engaged in similar businesses including, but not limited to, general
liability insurance covering products and services sold or distributed by
the Company, all real and personal property owned or leased by the Company
and its Subsidiaries, and providing coverage for theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against.
(n) On the Closing Date, the Company will sell to the
Representatives, for an aggregate purchase price of $25, warrants to
purchase 250,000 shares of Common Stock (in an amount equal to one warrant
for each ten Firm Shares sold). Such Representatives' Warrants will have an
exercise price equal to $ , subject to adjustment, will be exercisable
during the period beginning on the Effective Date and ending on the fifth
anniversary of the Effective Date and will contain customary anti-dilution
and registration rights provisions.
(o) Comply with all periodic reporting and proxy solicitation
requirements which may from time to time be applicable to the Company as a
result of the Company's registration under Section 12 of the Exchange Act
on a Registration Statement on Form 8-A.
(p) Refrain from filing a Form S-8 Registration Statement (or
successor form of registration statement) in connection with the issuance
of the Company's securities under its stock option plan and stock purchase
plan to employees, consultants or advisors for a period of ninety (90) days
from the Effective Date of the Registration Statement without the
Representatives' prior written consent.
(q) For a period of one year after the Effective Date the Company
will not conduct a sale of any securities of the Company in reliance upon
the exemptions from registration provided by "Regulation S" and "Regulation
D" without the express written consent of the Representatives, which
consent shall not be unreasonably withheld.
(r) Inform the Florida Department of Banking and Finance at any time
prior to the consummation of the distribution of the Firm Securities and
the Additional Securities by the Representatives if it commences engaging
in business with the government of Cuba or with any person or affiliate
located in Cuba. Such information will be provided within 90 days after
the commencement thereof or after a change occurs with respect to
previously reported information.
16
(s) For a period of three years after the Effective Date, the
Representatives shall be designated as Co-Managing Underwriters for any of
the Company's additional private or public securities offerings, or the
mergers or other financial transactions involving the Company, unless the
Representatives decline to accept such appointment or are unable or
unwilling to effect such transaction on terms acceptable to the Company and
offered by another investment bank of recognized national standing. The
Representatives shall respond within 15 business days of notification from
the Company of such a pending transaction.
(t) Promptly after the Effective Date and for a period of three
years thereafter, the Company shall engage at least three investment
banking firms acceptable to the Representatives (one of which shall be one
of the Representatives) to provide industry research and advice to the
Company.
(u) For a period of five years after the Effective Date, the Company
shall maintain an active Board of Directors which shall include at least
two outside and independent members. The Company agrees that its Board of
Directors will have both audit and compensation committees consisting of no
more than three members on each committee and whose respective rosters will
include at least one independent director and, if the Representatives have
designated a nominee to the Board of Directors, will also include such
nominee.
(v) The Company shall invite Company counsel to attend Board
meetings no less than quarterly for requisite approval of all quarterly and
annual reports and at least annually invite the Company's independent
auditors to its Board meetings.
(w) After the Effective Date, the Company will continue to adopt
annual business plans and monthly financial projections (including balance
sheet, profit/loss statement, statement of cash flows, revenue and
earnings) and an annual budget which are agreeable to the Board of
Directors.
(x) After the Effective Date, the Company commits to and shall pay
reasonable expenses for a minimum of one annual U.S. and European road show
with the Representatives for the purpose of providing an annual update to
investors of the Company.
(y) During the five year period commencing on the Effective Date,
the Company shall provide to the Representatives notice of each annual or
special meeting of the Board of Directors of the Company contemporaneously
with such notice being provided to the members of the Board of Directors of
the Company. During such five year period, the Representatives shall have
the right (i) for each of the Representatives to send an observer
designated by the Representatives to each such meeting of the Board of
Directors of the Company, and (ii) at the sole discretion of EBI Securities
Corporation to designate one member to serve on the Board of Directors of
the Company. In the event EBI Securities Corporation notifies the Company
of its desire to place a member on the Board of Directors, the Company's
existing Board of Directors shall take action within 30 days of the date of
such notice to expand the Board of Directors by one additional seat (unless
the Board of Directors shall then have a vacancy) and shall cause that
person identified by EBI Securities Corporation to be nominated to serve in
such vacancy or in such newly created position on the Board of Directors of
the Company for
17
the duration of such five year period. Subject to applicable fiduciary
duties owed by members of the Board of Directors to the Company, the Board
of Directors of the Company agrees that it shall (i) vote in favor or
consent to the nomination of the director nominee designated by EBI
Securities Corporation such that, subject to a favorable vote by the
stockholders of the Company, the nominee designated by EBI Securities
Corporation shall continue to fill such position for the duration of such
five year period, and (ii) recommend a vote by stockholders in favor of the
nominee designated by EBI Securities Corporation to serve on the Board of
Directors at each annual or special meeting of stockholders at which such
director nominee shall stand for election. In addition, the members of the
Board of Directors of the Company agree that, in their capacity as
stockholders of the Company, they shall vote in favor of the election of
the nominee designated by the Representatives at each annual or special
meeting of stockholders of the Company for the duration of such five year
period after the Effective Date .
6. Expenses. The Company will pay all costs and expenses incident to the
--------
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including:
(a) Reasonable fees and disbursements of all counsel and independent
accountants retained by the Company and all other expenses incurred in
connection with the offering of the shares of Common Stock and
Representative's Warrants.
(b) The expenses of preparing, printing and distributing preliminary
and final prospectuses and the expenses associated with the placement of
tombstone advertisements in newspapers to which the Company and
Representatives will mutually agree. The Company and Representatives
specifically agree there shall be a tombstone advertisement in The Wall
Street Journal national edition. The Company will also be responsible for
the costs of DTC tracking and all fees and expenses of the transfer agent
and registrar.
(c) Registration and other fees and expenses related to compliance
with the Act and the Rules, state blue-sky laws and the securities laws of
any foreign jurisdiction in which the Company and Representatives agree the
shares of Common Stock will be offered and the fees and disbursements of
Underwriters' counsel in connection with state blue-sky filings and
preparation of preliminary and final blue-sky surveys.
(d) The filings fees of the SEC, the NASD, state blue-sky
commissions and all regulatory filings.
(e) Expenses relating to the preparation and filing of the
Registration Statement, the final prospectus and all amendments thereto,
including expenses to comply with the SEC's XXXXX filing requirements.
(f) Any costs associated with issuing the shares of Common Stock.
(g) Any expenses for Company personnel and the Company's own out-of-
pocket expenses including, without limitation, the fees and expenses of its
legal counsel, auditors and other outside advisors, the expenses related to
road show meetings and travel and other similar
18
expenses. The Company shall provide arrangements for the payment of these
expenses when incurred.
(h) All expenses for due diligence, including meetings and drafting
meetings associated with this offering. All due diligence expenses and
meetings associated with this offering are reimbursable monthly or as
incurred, as may be requested by the Representatives.
(i) The costs of any luncheons, functions, special expenses and all
road show and travel expenses which shall be paid by the Company when
incurred.
(j) The cost of any videotapes and/or CDs, which are prepared for
the purpose of describing the Company's business, which costs of
preparation will be approved by the Company .
(k) The costs of preparing and broadcasting any Internet-based road
show for viewing by prospective investors selected by the Representatives.
(l) The costs of preparing a total of six bound volumes of the
public offering documents for the Representatives and their counsel.
(m) With respect to expenses, the Company will be required to pay
all direct out-of-pocket expenses incurred in connection with the offering.
7. Conditions of the Underwriters' Obligations. The obligations of the
-------------------------------------------
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the sole discretion of the Representatives, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing
Date, to the accuracy of the statements of the Company's officers made pursuant
to the provisions hereof, to the performance by the Company of its covenants and
agreements hereunder and to the following additional conditions:
(a) If the Registration Statement or any amendment thereto filed
prior to the Firm Closing Date has not been declared effective as of the
time of execution hereof, the Registration Statement or such amendment
shall have been declared effective not later than the earlier of (i) 9:00
A.M., Mountain time, on the date on which the amendment to the Registration
Statement originally filed with respect to the Securities or to the
Registration Statement, as the case may be, containing information
regarding the offering price of the Securities has been filed with the
Commission, and (ii) such later time and date as shall have been consented
to by the Representatives; if required, the Prospectus and any amendment or
supplement thereto shall have been filed with the Commission in the manner
and within the time period required by Rule 424(b) under the Act; no stop
order suspending the effectiveness of the Registration Statement or any
amendment thereto shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of
the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
19
(b) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Xxxxxx Godward LLP, in a form to be agreed upon by
the parties.
(c) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Xxxxxxx, Xxxxxx, Xxxxxxx, Rock & Fields, Chartered,
dated the Closing Date, to the effect that:
(i) The Subsidiaries have been duly incorporated and are
validly existing as corporations in good standing under the laws of
their respective states of incorporation and are duly qualified to
transact business as foreign corporations and are in good standing
under the laws of such jurisdictions and, to such counsel's knowledge,
are not required to be so qualified in any state in the United States
by reason of the ownership or lease of their properties or the conduct
of their business.
(ii) The Subsidiaries have the corporate power to own or
lease their properties and conduct their business as described in the
Registration Statement and the Prospectus, and the Company has no
subsidiaries except as disclosed in the Prospectus.
(iii) The Company had an authorized, issued and outstanding
capitalization as set forth in the Prospectus under the caption
"Capitalization" as of the date set forth therein. All of the issued
and outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable,
and were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities. To
the best of such counsel's knowledge, no holders of securities of the
Company are entitled to have such securities registered under the
Registration Statement or, if so entitled, the Company has obtained
valid and enforceable waivers thereof.
(iv) No legal or governmental proceedings are pending to
which the Company or the Subsidiaries are a party or to which the
property of the Company or the Subsidiaries are subject that are
required to be described in the Registration Statement or the
Prospectus and are not described therein and, to such counsel's
knowledge, no such proceedings have been threatened against the
Company or its Subsidiaries or with respect to any of their respective
properties.
(v) None of the Company and its Subsidiaries has declared,
paid or otherwise made any dividend or distribution of any kind on its
capital stock, except in each case as described in or contemplated by
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) .
(vi) At the Closing Date and upon issuance of the securities
set forth in the Registration Statement, the Company's acquisition of
InterLink Services, Inc. (to be operated as a subsidiary of the
Company by the same name) and The Online Medical Bookstore, LLC (to be
operated as a subsidiary of the Company known as The Online Medical
Bookstore, Inc.) shall have been duly authorized by the parties
thereto, and properly consummated in accordance with: (a) the
description set forth in the
20
Prospectus, (b) the Purchase Agreements between the above-referenced
companies, and (c) the laws of the States of Delaware, Washington and
Idaho, respectively. At the Closing Date and upon payment of the
consideration set forth in the Registration Statement, the Company
shall have purchased all of the outstanding common stock of the
Subsidiaries, and shall have received good title to such shares of
common stock of the Subsidiaries, free and clear of all liens,
security interests, pledges, charges, encumbrances, shareholders'
agreements and voting trusts. Each outstanding share of common stock
of the Subsidiaries is validly authorized, validly issued, fully paid
and nonassessable, with no personal liability attaching to the
ownership thereof, and has not been issued and is not owned or held in
violation of any preemptive right of shareholders. There is no
commitment, plan or arrangement to issue, and no outstanding option,
warrant and or other right for the issuance of any share of capital
stock of the Subsidiaries or any other security or other instrument
which by its terms is convertible into, exercisable for, or
exchangeable for capital stock of the Subsidiaries, except as is
properly described in the Prospectus.
(vii) Neither the Company's offering and sale of 8%
Convertible Preferred Stock commencing in August 1998 nor the
Company's prior offerings and sales of certain shares of Common Stock,
results in an integration with any other offering of securities by the
Company or with this offering.
(viii) Both the Company's offering and sale of 8% Convertible
Preferred Stock commencing in August 1998 and the Company's prior
offerings and sales of shares of Common Stock were exempt from the
registration requirements of Section 5 of the Securities Act of 1933,
as amended, and from the securities registration requirements of any
and all states which have jurisdiction over such transactions.
Such counsel shall also state that, during the course of the
preparation of the Registration Statement, such counsel participated in
conferences with you and with officers and other representatives of the
Company, its independent public accountants and your counsel at which the
contents of the Registration Statement and the Prospectus were discussed.
While such counsel has not independently verified and is not passing upon
the accuracy, completeness or fairness of the statements made in the
Registration Statement and Prospectus, on the basis of the foregoing no
facts have come to such counsel's attention that have caused such counsel
to believe that the Registration Statement, as of the time it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus, as of its
date or the date hereof, contained or contains an untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (except such counsel need express no view as the
financial statements and schedules and related notes and other financial
and statistical data derived therefrom included in the Registration
Statement or Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates or opinions
of responsible officers of the Company
21
and public officials, and may limit its opinions to the laws of the United
States of America and the States of Idaho, Nevada and Washington, as
appropriate.
References to the Registration Statement and the Prospectus in this
paragraph (b), (c) and (d) below shall include any amendment or supplement
thereto at the date of such opinion.
(d) The Representatives shall have received from Xxxxxx Xxxxxxxx LLP
(on behalf Xxxxxxxxxx.xxx, Inc. and the predecessors of the two
Subsidiaries) letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representatives, to
the effect that:
(i) They are independent accountants with respect to the
Company and the predecessors of the two Subsidiaries, respectively,
within the meaning of the Act and the applicable pro forma rules and
regulations thereunder;
(ii) In their opinion, the audited financial statements and
the "pro forma" and "as adjusted" financial data examined by them and
included in the Registration Statement and the Prospectus comply in
form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations;
(iii) On the basis of carrying out certain specified
procedures (which do not constitute an examination made in accordance
with generally accepted auditing standards) that would not necessarily
reveal matters of significance with respect to the comments set forth
in this paragraph (iii), a reading of the minute books of the
shareholders, the board of directors and any committees thereof of the
Company and the predecessors of the two Subsidiaries, respectively,
and inquiries of certain officials of the Company and the predecessors
of the two Subsidiaries, respectively, who have responsibility for
financial and accounting matters, nothing came to their attention that
caused them to believe that at a specific date not more than five
business days prior to the date of such letter, there were any changes
in the capital stock or total debt of the Company and the predecessors
of the two Subsidiaries, respectively, or any decreases in total
assets or shareholders' equity of the Company and the predecessors of
the two Subsidiaries, respectively, in each case compared with amounts
shown on the latest balance sheet included in the Registration
Statement and the Prospectus, or for the period from December 31, 1998
to such specified date there were any decreases, as compared with the
same period in the prior year, in total revenues, net loss or net loss
per share of the Company and the predecessors of the two Subsidiaries,
respectively, except in all instances for changes, decreases or
increases set forth in such letters;
(iv) They have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general accounting
records of the Company and the predecessors of the two Subsidiaries,
respectively, that are included in the Registration Statement and the
Prospectus, and have compared such amounts, percentages and financial
information with such records of the Company and the predecessors of
the two
22
Subsidiaries, respectively, and with information derived from such
records and have found them to be in agreement, excluding any
questions of legal interpretation; and
(v) Their review of the system of internal controls of the
Company and the predecessors of the two Subsidiaries, respectively, to
the extent they deemed necessary in establishing the scope of their
examination of the Company's and the predecessors of the two
Subsidiaries' financial statements as of December 31, 1998 did not
disclose any weaknesses in internal controls that they considered to
be material weaknesses.
In the event that the letters referred to above set forth any
such changes, decreases or increases which, in the reasonable
discretion of the Representatives, are likely to result in a Material
Adverse Effect, it shall be a further condition to the obligations of
the Underwriters that such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary.
References to the Registration Statement and the Prospectus in
this paragraph (c) with respect to either letter referred to above
shall include any amendment or supplement thereto by the date of such
letter.
(e) The Representatives shall have received a certificate, dated the
Firm Closing Date, of Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx and Xxxxxxxx X.
Xxxxx, in their capacities as Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer, respectively, of the Company to the
effect that:
(i) The representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented
as of the Firm Closing Date, does not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company has
performed all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the Firm Closing
Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and
no proceedings for that purpose have been instituted or, to the best
of the Company's knowledge, threatened or are contemplated by the
Commission; and
(iii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor the two Subsidiaries has sustained any loss or
interference with their respective businesses or properties having or
resulting in a Material Adverse Effect from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and
there has not been any event,
23
circumstance, or development that results in, or that the Company
reasonably believes will result in, a Material Adverse Effect, except
in each case as described in or contemplated by the Prospectus
(exclusive of any amendment or supplement thereto).
(f) The Representatives shall have received from each officer and
director of the Company, the persons and entities listed in Schedule 3 and
an agreement to the effect that such person or entity will not, except to
the extent otherwise specifically permitted by the terms of each such
person's or entity's agreement, directly or indirectly, without the prior
written consent of the Representatives, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of an option to purchase or other sale or disposition) of any
shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock for a period of 12 months after
the date of this Agreement or such earlier period as the Representatives
may have agreed in writing, without the Representatives' prior written
consent; provided, however, that intra-family transfers or transfers to a
trust for estate planning purposes shall not be so restricted.
(g) On or before the Firm Closing Date, the Representatives and
their counsel shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company.
(h) Upon consummation of the offering of the Securities, the
Securities shall have approved for trading, on notice of issuance, on the
Nasdaq National Market.
(i) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Berliner Xxxxxx Xxxxxx & Xxxxxxxx, P.C., counsel for
the Representatives, with respect to the issuance and sale of the Firm
Securities, the Registration Statement and Prospectus, and such other
related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such
matters.
(j) The Company shall have executed and delivered, and there shall
have been tendered to the Representatives, all of the Representatives'
Warrants described in Section 5(n) hereof to be purchased by the
Representatives on the Closing Date.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Representatives. The Company shall furnish to the
Representatives such conformed copies of such opinions, certificates, letters
and documents in such quantities as the Representatives and counsel for the
Representatives shall reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
24
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter, its counsel and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities to
which such Underwriter or such controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) Any breach by the Company of its representations or
warranties set forth in Sections 2(a) and (b) of this Agreement;
(ii) Any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, the Prospectus or any amendment or supplement
thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities
or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an
"Application");
(iii) The omission or alleged omission to state in the
Registration Statement or any amendment thereto, or the Prospectus or
any amendment or supplement thereto, or any Application, a material
fact required to be stated therein or necessary to make the statements
therein not misleading; or
(iv) Any untrue statement or alleged untrue statement of any
material fact made by the Company or prepared at its direction and
contained in any audio, visual, electronic or electronically
transmitted materials produced by the Company or at its direction and
used in connection with the marketing of the Securities, including
without limitation, slides, videos, films, Internet presentations,
tape recordings, and, such party or parties, as the case may be, will
reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with
investigating, defending against or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto or any Application
in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Representatives
specifically for use therein; and provided, further, that the Company
will not be liable to any Underwriter or any person controlling such
Underwriter with respect to any such untrue statement or omission made
in any Preliminary Prospectus that is corrected in the Prospectus (or
any amendment or supplement thereto) if the person asserting any such
loss, claim, damage or liability purchased Securities from such
Underwriter but
25
was not sent or given a copy of the Prospectus (as amended or
supplemented) at or prior to the written confirmation of the sale of
such Securities to such person in any case where such delivery of the
Prospectus (as amended or supplemented) is required by the Act, unless
such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Section 5(d) and (e)
of this Agreement. The Company shall not, without the prior written
consent of the Representatives, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit
or proceeding in respect of which indemnification may be sought
hereunder (whether or not any Underwriter or any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling
persons from all liability arising out of such claim, action, suit or
proceeding.
In addition to its other obligations under this Section 8(a), the
Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry, or other proceeding arising out of
or based upon any statement or omission, or any alleged statement or
omission, described in this Section 8(a), it will reimburse the
Representatives and each Underwriter on a monthly basis for all reasonable
legal fees or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry, or other
proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse
the Representatives or Underwriters for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Representatives and the
Underwriters shall promptly return it to the party or parties that made
such payment, together with interest, determined on the basis of the prime
rate (or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Chase Manhattan Bank (the "Prime
Rate"). Any such interim reimbursement payments which are not made to the
Representatives and Underwriters within 45 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request and the Representatives shall be entitled to receive such
reimbursement payments together with interest upon demand therefor. This
indemnity agreement shall be in addition to any liabilities which the
Company may otherwise have.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities to
which the Company or any such director, officer or controlling person of
the Company may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or
any amendment thereto, any
26
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or any Application, (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or any Application or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein, or
(iii) any use of the access code for any Internet-based road show by other
than qualified investors, registered broker-dealers or investment advisors
which results in action taken against the Company by such third party
obtaining access to the Internet-based road show; provided, however, the
Underwriter responsible for distributing such access code to other than a
qualified investor shall be the sole party responsible to the Company in
connection therewith. The Representatives shall not, without the prior
written consent of the Company settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder
(whether or not the Company or any person who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act is a
party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of the Company and
such controlling persons from all liability arising out of such claim,
action, suit or proceeding. This indemnity agreement will be in addition to
any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates it has been
irreparably prejudiced by such failure to receive notice.
(d) In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded or shall have been advised by its counsel that there may be one
or more legal defenses available to it and/or other indemnified parties
that conflict with those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such
action on behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel to defend
such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of
counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying
party shall not be liable for the expenses of
27
more than one separate counsel (in addition to local counsel) in any one
action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this
Section 8, representing the indemnified parties under such paragraph (a)
who are parties to such action or actions), or (ii) the indemnifying party
does not promptly retain counsel satisfactory to the indemnified party, or
(iii) the indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party.
(e) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient,
for any reason, to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities, or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law,
not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by the Underwriters. The relative fault of the
parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Company on one hand or by the Underwriters, on the other
hand, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and
the Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if
the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (f). Notwithstanding
any other provision of this paragraph (f), no Underwriter shall be
obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or
any substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
hereunder are several in proportion to their respective underwriting
obligations and not joint, and as between themselves, contributions among
Underwriters shall be governed by the provisions of the Agreement Among
Underwriters. For the purposes of this paragraph 9(f), each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each
28
director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, shall have the same rights to contribution as the Company.
9. Default of Underwriters. If one or more Underwriters default in their
-----------------------
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, then the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters
as described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 8 hereof, and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 7 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination.
-----------
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing
Date or the related Option Closing Date, respectively, in the event that
the Company shall have failed, refused or been unable to perform all
obligations and
29
satisfy all conditions on its part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Firm Closing Date or, such
Option Closing Date, respectively,
(i) After the respective dates as of which information is given
in the Registration Statement and the Prospectus, any Material Adverse
Effect or development involving a prospective adverse change in or
affecting particularly the business, properties, condition (financial
or otherwise), results of operations or prospects of the Company,
whether or not arising in the ordinary course of business, occurs
which would, in the Representatives' sole judgment, make the offering
or the delivery of the Securities impracticable or inadvisable;
(ii) Trading in the Common Stock shall have been suspended by
the Commission or the Nasdaq National Market or minimum or maximum
prices shall have been established on the Nasdaq National Market;
(iii) A banking moratorium shall have been declared by New York
or United States authorities; or
(iv) There shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended
as of the date hereof.
(b) If the sale of the Securities provided for herein is not
consummated for any reason, the Company will reimburse the Representatives
upon demand in the amount of $10,000 each for investment banking advisory
fees plus all actual accountable expenses (including counsel fees and
disbursements), less any amounts advanced to the Representatives against
expenses incurred prior to the date hereof, that shall have been incurred
by them in connection with the proposed purchase and sale of the
Securities. The Company shall not in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
(c) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 11(b) and Section 10 hereof.
12. Information Supplied by Underwriters. The statements set forth in (a)
------------------------------------
the last paragraph on the front cover page of any Preliminary Prospectus or the
Prospectus,(b) under the heading "Underwriting" in any Preliminary Prospectus or
the Prospectus, and (c) under the heading "Legal Matters" with respect to the
identification of counsel to the Representatives, constitute the only
information furnished by any Underwriter through the Representatives to the
Company for the purposes of Section 8 hereof. The Underwriters confirm that
such statements (to such extent) are correct.
30
13. Notices. All communications hereunder shall be in writing and, if
-------
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to EBI Securities Corporation,
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, with copies
to EBI Securities Corporation at 0000 Xxxxx Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000 and Millennium Financial Group, Inc. , 000 Xxxx 00/xx/ Xxxxxx,
Xxxxx 00X, Xxx Xxxx, Xxx Xxxx, 00000, with copies to Xxxxxx X. Xxxxxx, Esq.,
Berliner Xxxxxx Xxxxxx & Xxxxxxxx, P.C., 0000 Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000, and if sent to the Company, shall be delivered or sent
by mail, telex or facsimile transmission and confirmed in writing to the Company
at 0000 Xxxxxxxxxx Xxx, Xxxxx x'Xxxxx, Xxxxx 00000, Attention: Chief Executive
Officer, with copies to Xxxxxxx X. Xxxxx, Esq., Xxxxxx Godward LLP, 0000 Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000-0000, and Xxxx X. Xxxxxxx, Esq.,
Xxxxxxx Xxxxxx Xxxxxxx Rock & Fields, Chtd., 000 Xxxxx Xxxxxxx Xxxxxxxxx, Xxxxx,
Xxxxx 00000.
14. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (a)
the indemnities of the Company contained in Section 8 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (b) the indemnities of the Underwriters contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company and the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation of this Agreement,
--------------
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of Colorado, without giving
effect to any provisions relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process. All judicial
----------------------------------------------
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of Colorado, and
by execution and delivery of this Agreement, the Company accepts for itself and
in connection with its Subsidiaries and properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and waive
any defense of forum non conveniens and irrevocably agree to be bound by any
judgment rendered thereby in connection with this Agreement. The Company
designates and appoints Xxxxxxx X. Xxxxxx and such other persons as may
hereafter be selected by the Company irrevocably agreeing in writing to so
serve, as its agent to receive on its behalf service of all process in any such
proceedings in any such court, such service being hereby acknowledged by the
Company to be effective and binding service in every respect. A copy of any
such process so served shall be mailed by registered mail to the Company at its
address provided in Section 13 hereof; provided, however, that, unless otherwise
provided by applicable law, any failure to mail such copy shall not affect the
validity of service of such process. If any agent appointed by the Company
refuses to accept service, the Company hereby agrees that service of process
sufficient for personal jurisdiction in any action against the Company in the
State of Colorado may be made by
31
registered or certified mail, return receipt requested, to the Company at its
address provided in Section 13 hereof, and the Company hereby acknowledges that
such service shall be effective and binding in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of any Underwriter to bring proceedings against the
Company in the courts of any other jurisdiction.
17. No Rule of Construction. The parties acknowledge that this Agreement
-----------------------
was initially prepared by the Representatives, and that all parties have read
and negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
18. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and each of the
several Underwriters.
Very truly yours,
Xxxxxxxxxx.xxx, Inc.
By:___________________________________________
Xxxxxxx X. Xxxxxx, Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
EBI SECURITIES CORPORATION
AS REPRESENTATIVE
By: _________________________________
Name: ___________________________
Title: _________________________
MILLENNIUM FINANCIAL GROUP, INC.
AS REPRESENTATIVE
By: _________________________________
Name: ___________________________
Title: _________________________
RWW/NETIVAT/UNDAG#5
32
Schedule 1
UNDERWRITERS
NUMBER OF
FIRM SECURITIES
UNDERWRITERS TO BE PURCHASED
------------ ---------------
EBI Securities Corporation...............................
Millennium Financial Group, Inc..........................
......................................................... ---------
Total.............................................. 2,500,000
=========
33
Schedule 2
Subsidiaries
Name Jurisdiction of Incorporation
---- -----------------------------
The Online Medical Bookstore, LLC Idaho
InterLink Services, Inc. Washington
34
Schedule 3
PERSONS AND ENTITIES SUBJECT TO LOCK-UP AGREEMENTS
Name
----------------------------------------------------------------
Britannia Holdings, Ltd.
Xxxxx X. Xxxxx
Xxxxxx Xxxxx
Xxxxxx Enterprises
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxx Xxxxxxxxx
Xxxxx X. Xxxxxxx
Badlands Marketing
Xxxxxxx X. Xxxxxx
Xxxxx Xxxxxx
Xxxx X. Xxxxxx
Xxxxxx Xxxx
Xxxxxxx Xxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxx
Xxx X. Xxxxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
================
[TO BE UPDATED]
35
Schedule 4
OPINION OF XXXXXX GODWARD LLP
RWW\NETIVAT\UNDAG#5.WPD
36
