700,000 Shares of Common Stock
AMBIENT CORPORATION
UNDERWRITING AGREEMENT
New York, New York
___________, 1997
Roan Capital Partners L.P.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Ambient Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to you (the "Underwriter") an aggregate of 700,000 shares of
Common Stock, par value $.001 per share (the "Shares"). In addition, the Company
proposes to grant to the Underwriter the option referred to in Section 2(b) to
purchase all or any part of an aggregate of 105,000 additional Shares.
Unless the context otherwise requires, the aggregate of 600,000 shares
of Common Stock to be sold by the Company, together with all or any part of the
105,000 Shares which the Underwriter has the option to purchase are herein
called the "Shares."
You have advised the Company that you desire to purchase the Shares. The
Company confirms the agreements made by it with respect to the purchase of the
Shares by the Underwriter as follows:
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with you that:
(a) A registration statement (File No. 333-______) on Form SB-2
relating to the public offering of the Shares, including a form of prospectus
subject to completion, copies of which have heretofore been delivered to you,
has been prepared in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with the Commission under 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
(i) 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 you prior to the execution of this Agreement, or (ii) if such registration
statement, as it may have been amended, has not been declared by the Commission
to be effective under the Act, an amendment to such registration statement,
including a form of prospectus, a copy of which amendment has been furnished to
and approved by you prior to the execution of this Agreement. As used in this
Agreement, the term "Registration Statement" means such registration statement,
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); and 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 said Rule 424(b), such term means the
prospectus included in the Registration Statement; except that if such
registration statement or prospectus is amended or such prospectus is
supplemented, after the effective date of such registration statement, the terms
"Registration Statement" and "Prospectus" shall include such registration
statement and prospectus as so amended, and the term
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"Prospectus" shall include the prospectus as so supplemented, or both, as the
case may be.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. At the time the Registration
Statement becomes effective and at all times subsequent thereto up to and on the
First Closing Date (as hereinafter defined) or the Option Closing Date, as the
case may be, (i) the Registration Statement and Prospectus will in all respects
conform to the requirements of the Act and the Rules and Regulations; and (ii)
neither the Registration Statement nor the Prospectus will include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make statements therein not misleading; provided,
however, that the Company makes no representations, warranties or agreements as
to information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriter specifically for use
in the preparation thereof. It is understood that the statements set forth in
the Prospectus on page __ with respect to stabilization, the paragraph under the
heading "Underwriting" relating to concessions to certain dealers, and the
identity of counsel to the Underwriter under the heading "Legal Matters"
constitute for purposes of this Section and Section 6(b) the only information
furnished in writing by or on behalf of the Underwriter for inclusion in the
Registration Statement and Prospectus, as the case may be.
(c) The Company and each of its subsidiaries (the "Subsidiaries")
have been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation with
full corporate power and authority to own their properties and conduct their
business as described in the Prospectus and each other jurisdiction in which the
nature of their business or the character or location of their properties
require such qualification, except where the failure to so qualify will not
materially adversely affect their business, properties or financial condition.
(d) The authorized, issued and outstanding capital stock of the
Company, including the predecessors of the Company, as of the date of the
Prospectus is as set forth in the Prospectus under
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"Capitalization"; the shares of issued and outstanding capital stock of
the Company set forth thereunder have been duly authorized, validly issued and
are fully paid and nonassessable; except as set forth in the Prospectus, no
options, warrants, or other rights to purchase, agreements or other obligations
to issue, or agreements or other rights to convert any obligation into, any
shares of capital stock of the Company have been granted or entered into by the
Company; and the capital stock conforms to all statements relating thereto
contained in the Registration Statement and Prospectus.
(e) The Shares are duly authorized, and when issued and delivered
pursuant to this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights of any security holder of the
Company. Neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated in this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or relating to the
registration of any Shares, except as described in the Registration Statement.
The Shares contained in the Underwriter's Options (as defined in
the Registration Statement) have been duly authorized and, when duly issued and
delivered, the Shares will constitute valid and legally binding obligations of
the Company enforceable in accordance with their terms and entitled to the
benefits provided by the Underwriter's Options, except as enforceability may be
limited by bankruptcy, insolvency or other laws affecting the rights of
creditors generally or by general equitable principles and the indemnification
contained in paragraph 7 of the Underwriter's Options may be unenforceable. The
Shares included in the Underwriter's Options when issued and sold, will be duly
authorized, validly issued, fully paid and non-assessable and free of preemptive
rights and no personal liability will attach to the ownership thereof.
(f) This Agreement and the Underwriter's Options and the
financial consulting agreement referred to in Paragraph 3(u) below, have been
duly and validly authorized, executed, and delivered by the Company and on the
First Closing Date will be duly and validly executed and delivered by the
Company. The Company has full power and authority to authorize, issue, and sell
the Shares to be sold by it hereunder on the terms and conditions set forth
herein, and
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no consent, approval, authorization or other order of any governmental authority
is required in connection with such authorization, execution and delivery or in
connection with the authorization, issuance, and sale of the Shares or the
Underwriter's Options, except such as may be required under the Act, state
securities laws or by the National Association of Securities Dealers, Inc. (The
"NASD").
(g) Except as described in the Prospectus, or except for those
which would not have a material adverse effect on the condition (financial or
otherwise), business prospects, net worth or properties of the Company or the
Subsidiaries taken as a whole (a "Material Adverse Effect"), the Company and the
Subsidiaries are not in violation, breach, or default of or under, and
consummation of the transactions herein contemplated and the fulfillment of the
terms of this Agreement will not conflict with, or result in a breach or
violation of, any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge, or encumbrance upon
any of the property or assets of the Company or the Subsidiaries pursuant to the
terms of, any material indenture, mortgage, deed of trust, loan agreement, or
other agreement or instrument to which the Company or the Subsidiaries is a
party or by which the Company or the Subsidiaries may be bound or to which any
of the property or assets of the Company or the Subsidiaries is subject, nor
will such action result in any violation of the provisions of the articles of
incorporation or the by-laws of the Company or the Subsidiaries, as amended, or
any statute or any order, rule or regulation applicable to the Company or the
Subsidiaries of any court or of any regulatory authority or other governmental
body having jurisdiction over the Company or the Subsidiaries.
(h) Subject to the qualifications stated in the Prospectus, the
Company and the Subsidiaries have good and marketable title to all properties
and assets described in the Prospectus as owned by it, free and clear of all
liens, charges, encumbrances or restrictions, except such as are not materially
significant or important in relation to its business; all of the material leases
and subleases under which the Company or the Subsidiaries is the lessor or
sublessor of properties or assets or under which the Company or the Subsidiaries
holds properties or assets as lessee or sublessee as described in the Prospectus
are in full force and effect, and, except as described in the Prospectus,
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the Company and the Subsidiaries are not in default in any material respect with
respect to any of the terms or provisions of any of such leases or subleases,
and, to the best knowledge of the Company, no claim has been asserted by anyone
adverse to rights of the Company or the Subsidiaries as lessor, sublessor,
lessee, or sublessee under any of the leases or subleases mentioned above, or
affecting or questioning the right of the Company or the Subsidiaries to
continued possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the Prospectus; and
the Company and the Subsidiaries own or lease all such properties described in
the Prospectus as are necessary to its operations as now conducted and, except
as otherwise stated in the Prospectus, as proposed to be conducted as set forth
in the Prospectus.
(i) ___________________________, who have given their report on
certain financial statements filed with the Commission as a part of the
Registration Statement, are with respect to the Company, independent public
accountants within the meaning of the Act and the Rules and Regulations.
(j) The financial statements, and schedules together with related
notes, set forth in the Prospectus or the Registration Statement present fairly
the financial position and results of operations and changes in cash flow
position of the Company and the Subsidiaries on the basis stated in the
Registration Statement, at the respective dates and for the respective periods
to which they apply. Said statements and schedules and related notes have been
prepared in accordance with generally accepted accounting principles applied on
a basis which is consistent during the periods involved except as disclosed in
the Prospectus and Registration Statement. The information set forth under the
caption "Selected Financial Data" in the Prospectus fairly present, on the basis
stated in the Prospectus, the information included therein.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and except as otherwise
disclosed or contemplated therein, the Company and the Subsidiaries have not
incurred any liabilities or obligations, direct or contingent, not in the
ordinary course of business, or entered into any transaction not in the ordinary
course of business, which would have a Material Adverse Effect, and
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except as described in the Prospectus, there has not been any change in the
capital stock of, or any incurrence of long-term debt by, the Company and the
Subsidiaries or any issuance of options, warrants or other rights to purchase
the capital stock of the Company and the Subsidiaries or any material adverse
change or any development involving, so far as the Company and the Subsidiaries
can now reasonably foresee a prospective adverse change in the condition
(financial or other), net worth, results of operations, business, key personnel
or properties of them which would have a Material Adverse Effect.
(l) Except as set forth in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened, any action, suit or
proceeding to which the Company or the Subsidiaries are a party before or by any
court or governmental agency or body, which might result in a Material Adverse
Effect on the Company or the Subsidiaries, nor are there any actions, suits or
proceedings related to environmental matters or related to discrimination on the
basis of age, sex, religion or race; and no labor disputes involving the
employees of the Company or the Subsidiaries exist or to the knowledge of the
Company or the Subsidiaries are threatened which might be expected to have a
Material Adverse Effect.
(m) Except as disclosed in the Prospectus, the Company and the
Subsidiaries have filed all necessary federal, state, and foreign income and
franchise tax returns required to be filed as of the date hereof (taking into
account all extensions of time to file) and have paid all taxes shown as due
thereon; and there is no tax deficiency which has been asserted against the
Company or the Subsidiaries.
(n) Except as disclosed in the Registration Statement, the
Company and the Subsidiaries have sufficient licenses, permits, and other
governmental authorizations currently necessary for the conduct of its business
or the ownership of its properties as described in the Prospectus and is in all
material respects complying therewith and owns or possesses adequate rights to
use all material patents, patent applications, trademarks, service marks,
trade-names, trademark registrations, service xxxx registrations, copyrights,
and licenses necessary for the conduct of such business and had not received any
notice of conflict with the asserted rights of others in respect thereof. To the
best knowledge of the Company, none of the activities or business of the
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Company or its subsidiaries are in violation of, or cause the Company or its
subsidiaries to violate, any law, rule, regulation, or order of the United
States, Israel, any state, county, or locality, or of any agency or body of the
United States, Israel or of any state, county or locality, the violation of
which would have a Material Adverse Effect.
(o) The Company and the Subsidiaries have not, directly or
indirectly, at any time (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contribution in violation
of law or (ii) made any payment to any state, federal or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments or contributions required or allowed by applicable
law. The Company's and the Subsidiaries' internal accounting controls and
procedures are sufficient to cause the Company to comply in all material
respects with the Foreign Corrupt Practices Act of 1977, as amended.
(p) On the Closing Dates (as hereinafter defined) all transfer or
other taxes, (including franchise, capital stock or other tax, other than income
taxes, imposed by any jurisdiction) if any, which are required to be paid in
connection with the sale and transfer of the Shares hereunder will have been
fully paid or provided for by the Company or the Subsidiaries, as the case may
be, and all laws imposing such taxes will have been complied with in all
material respects.
(q) All contracts and other documents of the Company and the
Subsidiaries which are, under the Rules and Regulations, required to be filed as
exhibits to the Registration Statement have been so filed.
(r) The Company has not entered into any agreement pursuant to
which any person is entitled either directly or indirectly to compensation from
the Company for services as a finder in connection with the proposed public
offering.
(s) Except as disclosed in the Prospectus, no officer, director,
or stockholder of the Company or its subsidiaries has any NASD affiliation.
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(t) No other firm, corporation or person has any rights to
underwrite an offering of any of the Company's securities.
(u) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Shares to facilitate the sale or resale of such
Shares hereby.
(v) The Company has no subsidiaries other than
_________________________________________________ ("__________")and
__________________________________________________ ("____") the "Subsidiaries")
and the Company does not own, directly or indirectly, any share capital or other
equity ownership or proprietary interests in any other corporation, association,
trust, partnership, joint venture or other entity. Each Subsidiary is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation. Except as disclosed in the Prospectus, the
Company owns all of the share capital of _____ and _____ free and clear of all
liens, security interests and encumbrances.
(w) The Company is not, and upon receipt of the proceeds from the
sale of the Shares will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
(x) The Company has not distributed and will not distribute prior
to the First Closing Date any offering material in connection with the offering
and sale of the Shares other than the Preliminary Prospectus, Prospectus, the
Registration Statement or the other materials permitted by the Act, if any.
(y) There are no business relationships or related-party
transactions of the nature described in Item 404 of Regulation S-K involving the
Company, the Subsidiaries and any person directed in such Item that are required
to be disclosed in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) and that have not been so disclosed
therein.
2. Purchase, Delivery and Sale of the Shares.
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(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties, and agreements contained
herein, the Company agrees to issue and sell to the Underwriter, and the
Underwriter agrees to buy from the Company at $6.30 per Share, at the place and
time hereinafter specified, 700,000 Shares (the "First Shares").
Delivery of the First Shares against payment therefor shall
take place at the offices of Xxxxxxxxx & Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx (or at such other place as may be designated by agreement between
the Underwriter and the Company) at 10:00 a.m., New York time, ____________,
1997, or at such later time and date as the Underwriter may designate in writing
to the Company at least two business days prior to such purchase, but not later
than _________, 1997, such time and date of payment and delivery for the First
Shares being herein called the "First Closing Date."
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
contained herein, the Company hereby grants an option to the Underwriter to
purchase all or any part of an aggregate of an additional 105,000 Shares (a)at
the same price per Share as the Underwriter shall pay for the First Shares being
sold pursuant to the provisions of subsection (a) of this Section 2 (such
additional Shares being referred to herein as the "Option Shares"). This option
may be exercised within 45 days after the effective date of the Registration
Statement upon written notice by the Underwriter to the Company advising as to
the amount of Option Shares as to which the option is being exercised, the names
and denominations in which the certificates for such Option Shares are to be
registered and the time and date when such certificates are to be delivered.
Such time and date shall be determined by the Underwriter but shall not be
earlier than four nor later than ten full business days after the exercise of
said option (but in no event more than 40 days after the First Closing Date),
nor in any event prior to the First Closing Date, and such time and date is
referred to herein as the "Option Closing Date." Delivery of the Option Shares
against payment therefor shall take place at the offices of Xxxxxxxxx &
Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or at such other place as
may be designated by agreement between the Underwriter and the Company). The
Option granted hereunder may be exercised only to cover over-allotments in the
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sale by the Underwriter of First Shares referred to in subsection (a) above. No
Option Shares shall be delivered unless all First Shares shall have been
delivered to the Underwriter as provided herein.
(c) The Company will make the certificates for the Shares to be
purchased by the Underwriter hereunder available to the Underwriter for checking
at least two full business days prior to the First Closing Date or the Option
Closing Date (which are collectively referred to herein as the "Closing Dates").
The certificates shall be in such names and denominations as the Underwriter may
request, at least three full business days prior to the Closing Dates. Delivery
of the certificates at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriter.
Definitive certificates in negotiable form for the Shares to be
purchased by the Underwriter hereunder will be delivered by the Company to the
Underwriter for the account of the Underwriter against payment of the respective
purchase prices by the Underwriter, by wire transfer in immediately available
funds, payable to the Company.
In addition, in the event the Underwriter exercises the option to
purchase from the Company all or any portion of the Option Shares pursuant to
the provisions of subsection (b) above, payment for such Shares shall be made to
or upon the order of the Company by wire transfer, certified or bank cashier's
checks payable in immediately available funds at the offices of Xxxxxxxxx &
Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or at such other place as
may be designated by agreement between the Underwriter and the Company), at the
time and date of delivery of such Shares as required by the provisions of
subsection (b) above, against receipt of the certificates for such Shares by the
Underwriter for the Underwriter's account registered in such names and in such
denominations as the Underwriter may reasonably request.
It is understood that the Underwriter proposes to offer the
Shares to be purchased hereunder to the public upon the terms and conditions set
forth in the Registration Statement, after the Registration Statement is
declared effective by the Securities and Exchange Commission (the "SEC").
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3. Covenants of the Company. The Company covenants and agrees with the
Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement to be declared effective. 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.
Upon notification from the Commission that the Registration Statement has become
effective, the Company will so advise the Underwriter and will not at any time,
whether before or after the Effective Date, file any amendment to the
Registration Statement or supplement to the Prospectus of which the Underwriter
shall not previously have been advised and furnished with a copy or to which the
Underwriter or its counsel shall have reasonably objected in writing or which is
not in compliance with the Act and the Rules and Regulations. At any time prior
to the later of (A) the completion by the Underwriter of the distribution of the
Shares contemplated hereby (but in no event more than nine months after the date
on which the Registration Statement shall have been declared effective) and (B)
25 days after the date on which the Registration Statement shall have been
declared effective, the Company will prepare and file with the Commission,
promptly upon the Underwriter's request, any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel to the
Company and the Underwriter, may be reasonably necessary or advisable in
connection with the distribution of the Shares.
As soon as the Company is advised thereof, the Company will
advise the Underwriter, and provide the Underwriter with copies of any written
advice, of the receipt of any comments of the Commission, of the effectiveness
of any post-effective amendment to the Registration Statement, of the filing of
any supplement to the Prospectus or any amended Prospectus, of any request made
by the Commission for an amendment of the Registration Statement or for
supplementing of the Prospectus or for additional information with respect
thereto, of the issuance by the Commission or any state or regulatory body of
any stop order or other order or threat thereof suspending the effectiveness of
the Registration Statement or any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Shares
for offering in any jurisdiction, or of the institution of any proceedings for
any of such purposes, and will use its best efforts
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to prevent the issuance of any such order, and, if issued, to obtain as soon as
possible the lifting thereof.
The Company has caused to be delivered to the Underwriter copies
of each Preliminary Prospectus, and the Company has consented and hereby
consents to the use of such copies for the purposes permitted by the Act. The
Company authorizes the Underwriter and dealers to use the Prospectus in
connection with the sale of the Shares for such period as in the opinion of
counsel to the Underwriter and the Company the use thereof is required to comply
with the applicable provisions of the Act and the Rules and Regulations. In case
of the happening, at any time within such period as a Prospectus is required
under the Act to be delivered in connection with sales by the Underwriter or
dealer, of any event of which the Company has knowledge and which materially
affects the Company or the securities of the Company, or which in the opinion of
counsel for the Company and counsel for the Underwriter should be set forth in
an amendment of the Registration Statement or a supplement to the Prospectus in
order to make the statements therein not then misleading, in light of the
circumstances existing at the time the Prospectus is required to be delivered to
a purchaser of the Shares or in case it shall be necessary to amend or
supplement the Prospectus to comply with law or with the Rules and Regulations,
the Company will notify the Underwriter promptly and forthwith prepare and
furnish to the Underwriter copies of such amended Prospectus or of such
supplement to be attached to the Prospectus, in such quantities as the
Underwriter may reasonably request, in order that the Prospectus, as so amended
or supplemented, will not contain any untrue statement of a material fact or
omit to state any material facts necessary in order to make the statements in
the Prospectus, in the light of the circumstances under which they are made, not
misleading. The preparation and furnishing of any such amendment or supplement
to the Registration Statement or amended Prospectus or supplement to be attached
to the Prospectus shall be without expense to the Underwriter, except that in
case the Underwriter is required, in connection with the sale of the Shares to
deliver a Prospectus nine months or more after the effective date of the
Registration Statement, the Company will upon request of and at the expense of
the Underwriter, amend or supplement the Registration Statement and Prospectus
and furnish the Underwriter with reasonable quantities of prospectuses complying
with Section 10(a)(3) of the Act.
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The Company will comply with the Act, the Rules and Regulations
and the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations thereunder in connection with the offering and issuance of the
Shares.
(b) The Company will furnish such information as may be required
and will otherwise cooperate and use its best efforts to qualify to register the
Shares for sale under the securities or "Blue Sky" laws of such jurisdictions as
the Underwriter may reasonably designate and will make such applications and
furnish such information as may be required for that purpose and to comply with
such laws, provided the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general consent of service
of process in any jurisdiction in any action other than one arising out of the
offering or sale of the Shares. The Company will, from time to time, prepare and
file such statements and reports as are or may be required to continue such
qualification in effect for so long a period as the counsel to the Company and
the Underwriter deem reasonably necessary, but not for a period of less than
three (3) years.
(c) If the sale of the Shares provided for herein is not
consummated as a result of the Company's actions or failure to take such actions
as the Underwriter believes are reasonably required to complete the transaction,
the Company shall pay all costs and expenses incurred by it which are incident
to the performance of the Company's obligations hereunder, including but not
limited to, all of the expenses itemized in Section 8, including the actual
accountable out-of-pocket expenses of the Underwriter which shall not exceed
$75,000 (including the reasonable fees and expenses of counsel to the
Underwriter). If the sale of the Shares provided herein is not consummated and
the reasons therefore are reasonably related to a Material Adverse Effect on the
Company, the Company shall pay the Underwriter promptly its actual out-of-pocket
expenses not to exceed $75,000. In the event of the sale or merger of the
Company, any significant subsidiaries or any significant assets thereof prior to
the First Closing Date, as defined herein, and the Closing does not occur, the
Company shall pay the Underwriter $100,000 for services provided, which expenses
shall be limited to actual accountable out-of-pocket expenses.
(d) The Company will use its best efforts (i) to cause a
registration statement under the Exchange Act to be declared
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effective concurrently with the completion of this offering and will notify the
Underwriter in writing immediately upon the effectiveness of such registration
statement, and (ii) to obtain and keep current a listing in the Standard & Poors
or Xxxxx'x OTC Industrial Manual for a period of five (5) years from the
Effective Date.
(e) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the Exchange Act, the Company, at its expense,
will furnish to its stockholders an annual report (including financial
statements audited by independent public accountants), in reasonable detail and
at its expense, will furnish to the Underwriter during the period ending five
(5) years from the date hereof, (i) as soon as practicable after the end of each
fiscal year, but no earlier than the filing of such information with the
Commission, a balance sheet of the Company and any of its subsidiaries as at the
end of such fiscal year, together with statements of income, surplus and cash
flow of the Company and any subsidiaries for such fiscal year, all in reasonable
detail and accompanied by a copy of the certificate or report thereon of
independent accountants; (ii) as soon as practicable after the end of each of
the first three fiscal quarters of each fiscal year, but no earlier than the
filing of such information with the Commission, consolidated summary financial
information of the Company for such quarter in reasonable detail; (iii) as soon
as they are publicly available, a copy of all reports (financial or other)
mailed to security holders; (iv) as soon as they are available, a copy of all
non-confidential reports and financial statements furnished to or filed with the
Commission or any securities exchange or automated quotation system on which any
class of securities of the Company is listed; and (v) such other information as
you may from time to time reasonably request. In addition, the Company shall
deliver to the Underwriter for a three (3) year period following the effective
date, copies of all transfer sheets relating to the Company's securities.
(f) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above will
be on a consolidated basis to the extent the accounts of the Company and its
subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
15
(g) The Company will deliver to the Underwriter at or before the
First Closing Date two signed copies of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to the Underwriter such number of conformed copies of
the Registration Statement, including such financial statements but without
exhibits, and of all amendments thereto, as the Underwriter may reasonably
request. The Company will deliver to or upon the Underwriter's order, from time
to time until the effective date of the Registration Statement, as many copies
of any Preliminary Prospectus filed with the Commission prior to the effective
date of the Registration Statement as the Underwriter may reasonably request.
The Company will deliver to the Underwriter on or promptly after the effective
date of the Registration Statement and thereafter for so long as a Prospectus is
required to be delivered under the Act, from time to time, as many copies of the
Prospectus, in final form, or as thereafter amended or supplemented, as the
Underwriter may from time to time reasonably request.
(h) The Company will deliver to the Underwriter as soon as it is
practicable copies of all reports filed with the Commission under the Exchange
Act.
(i) The Company will apply the net proceeds from the sale of the
Shares substantially for the purposes set forth under "Use of Proceeds" in the
Prospectus, and will file such reports with the Commission with respect to the
sale of the Shares and the application of the proceeds therefrom as may be
required pursuant to Rule 463 under the Act.
(j) The Company will promptly prepare and file with the
Commission any amendments or supplements to the Registration Statement,
Preliminary Prospectus or Prospectus and take any other action, which in the
opinion of counsel to the Underwriter and counsel to the Company, may be
reasonably necessary or advisable in connection with the distribution of the
Shares, and will use its best efforts to cause the same to become effective as
promptly as possible.
(k) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Underwriter's Options.
16
(l) For a period of twenty-four (24) months from the Effective
Date, no officers or directors, nor any shareholder of the Company's securities
prior to the offering, as well as all holders of restricted securities of the
Company, will, directly or indirectly, offer, sell (including any short sale),
grant any option for the sale of, transfer or gift (except for estate planning
or charitable transfers or other privates sales, provided the transferees agree
to be bound by the same restrictions on transfer), acquire any option to dispose
of, or otherwise dispose of any shares of capital stock without the prior
written consent of the Underwriter, other than as set forth in the Registration
Statement. In order to enforce this covenant, the Company shall impose
stop-transfer instructions with respect to the shares owned by such persons
prior to the offering until the end of such period (subject to any exceptions to
such limitation on transferability set forth in the Registration Statement). In
addition, all such persons shall waive any of their registration rights with
respect to all such securities for such twenty-four (24) month period. In
addition, the Company agrees not to file any other registration statement
(excluding a registration statement on Form S-8 or successor form so long as the
shares of Common Stock offered thereby are also subject to this paragraph 3(l))
to register any securities of the Company for such twenty-four (24) month
period, and will not grant any future registration rights without the prior
written consent of the Underwriter for the same twenty-four (24) month periods.
If necessary to comply with any applicable Blue-sky Law, the shares held by such
shareholders will be escrowed, as required by such Blue-Sky Laws. In addition,
the Company shall not issue any shares of its capital stock (or securities
convertible into capital stock) for a twenty four (24) month period following
the Effective Date without the Underwriter's consent, which shall not be
unreasonably withheld. The Company may grant options to purchase up to 250,000
shares of Common Stock under employee stock option plans to the Company's
employees, officers, directors or other consultants or advisors during the
twenty-four (24) month period following the Effective Date without the prior
written consent of the Underwriter. The grant of additional options during such
period will require the Underwriter's prior written consent. With respect to
such 250,000 the options to purchase such 250,000 shares, the Company may not
grant options at exercise prices which are less than the Market Price at the
date of the grant without the prior written consent of the Underwriter.
17
For purposes of this Agreement, Market Price shall mean (i) the average
closing bid price for any ten (10) consecutive trading days within a period of
thirty (30) consecutive trading days ending within five (5) days prior to the
date of issuance of the Common Stock as reported by the National Association of
Securities Dealers, Inc. Automatic Quotation System or the NASD Electronic
Bulletin Board, or (ii) the last reported sale price, for ten (10) consecutive
business days ending within five (5) days of the date of issuance on the primary
exchange on which the Common Stock is traded, if the Common Stock is traded on a
national securities exchange.
(m) Upon completion of this offering, the Company will make all
filings required, including registration under the Exchange Act to obtain the
listing of the Shares on the NASD Electronic Bulletin Board, and will use its
best efforts to effect and maintain such listing for at least five years from
the date of this Agreement to the extent that the Company has at least 300
record holders of Common Stock.
(n) Except for the transactions contemplated by this Agreement,
the Company represents that it has not taken and agrees that it will not take,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Shares or to facilitate the sale or resale of
the Shares.
(o) On the First Closing Date and simultaneously with the
delivery of the Shares, the Company shall execute and deliver to you the
Underwriter's Options. The Underwriter's Options will be substantially in the
form filed as an Exhibit to the Registration Statement.
(p) Intentionally omitted.
(q) Upon the Closing Dates, the Company will have in force key
person life insurance policies on the lives of Xxxxx Xxxxxxxx and such other
members of management as requested by the Underwriter, in the amount of
$1,000,000.00 and will maintain such insurance during the three year period
commencing with the First Closing Date.
18
(r) Intentionally omitted.
(s) For a period of five (5) years from the Effective Date, the
Company, at its expense, shall cause its regularly engaged independent certified
public accountants to review (but not audit) the Company's financial statements
for each of the first three (3) fiscal quarters prior to the announcement of
quarterly financial information and the filing of the Company's 10-Q quarterly
report, provided that the Company shall not be required to file a report of such
accountants relating to such review with the Commission.
(t) The Underwriter shall have the right to request the Company
to use its best efforts to nominate one (1) nominee of the Underwriter for
election to the Board of Directors for three (3) years following the Effective
Date, and in each case the Company will use its best efforts to cause such
nominee to be elected to the Board of Directors. Until such time as the
Underwriter exercises its right to require the Company to use its best efforts
to cause a nominee of the Underwriter to be elected to the Board of Directors
and until such time as such nominee begins to serve on the Board of Directors,
the Company agrees to allow a representative designated by the Underwriter from
time to time to receive timely, written notice of all Board of Directors
meetings and notice of all telephonic Board meetings and the right to attend all
Board meetings and participate in all telephonic Board meetings. The Underwriter
shall also have the right to obtain copies of the minutes from all Board of
Directors meetings for three (3) years following the Effective Date of the
Registration Statement, whether or not a representative of the Underwriter
attends or participates in any such Board meeting. The Company agrees to
reimburse the Underwriter immediately upon the Underwriter's request therefor of
any reasonable travel and lodging expenses directly incurred by the Underwriter
in connection with its representative attending Company Board meetings on the
same basis for other Board members. In addition, the Company shall compensate
such representative as it does all other outside directors of the Company.
(u) The Company agrees to enter into a two year financial
consulting agreement with the Underwriter whereby the Underwriter shall provide
the Company with financial advisory services following the closing in exchange
for which the Company
19
shall pay the Underwriter an aggregate amount of $100,000 on the First Closing
Date.
(v) Intentionally omitted.
(w) Intentionally omitted.
(x) Intentionally omitted.
(y) On or prior to the date hereof, the Company shall have
entered into employment agreements with Xxxxx Xxxxxxxx and such other members of
management as requested by the Underwriter, on terms and conditions satisfactory
to the Underwriter.
4. Conditions of Underwriters' Obligation. The obligations of the
Underwriter to purchase and pay for the Shares which it has agreed to purchase
hereunder are subject to the accuracy (as of the date hereof, and as of the
Closing Dates) of and compliance with the representations and warranties of the
Company herein, to the performance by the Company of its obligations hereunder,
and to the following conditions:
(a) The Registration Statement shall have become effective and
you shall have received notice thereof not later than 10:00 a.m., New York time,
on the day following the date of this Agreement, or at such later time or on
such later date as to which the Underwriter may agree in writing; on or prior to
the Closing Dates no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that or a similar
purpose shall have been instituted or shall be pending or, to the Underwriter's
knowledge or to the knowledge of the Company, shall be contemplated by the
Commission; any request on the part of the Commission for additional information
shall have been complied with to the satisfaction of the Commission; and no stop
order shall be in effect denying or suspending effectiveness of such
qualification nor shall any stop order proceedings with respect thereto be
instituted or pending or threatened. If required, the Prospectus shall have been
filed with the Commission in the manner and within the time period required by
Rules 434 and 424(b) under the Act.
(b) (A) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of Xxxx
20
Marks & Xxxxx, LLP, counsel for the Company, in form and substance satisfactory
to counsel for the Underwriter, to the effect that:
(i) The Company and the Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, with all requisite
corporate power and authority to own their properties and conduct their business
as described in the Registration Statement and Prospectus and, to its knowledge,
are duly qualified or licensed to do business as a foreign corporation and is in
good standing in the State of Israel and each other jurisdiction in which the
ownership or leasing of its properties or conduct of its business requires such
qualification except where the failure to qualify or be licensed will not have a
Material Adverse Effect;
(ii) the authorized capitalization of the Company as of
the date of the prospectus is as set forth under "Capitalization" in the
Prospectus; all shares of the Company's outstanding capital stock have been duly
authorized, validly issued, fully paid and non-assessable and conform in all
material respects to the description thereof contained in the Prospectus; to
such counsel's knowledge the outstanding shares of capital stock of the Company
have not been issued in violation of the preemptive rights of any shareholder
and the shareholders of the Company do not have any preemptive rights or other
rights to subscribe for or to purchase, nor are there any restrictions upon the
voting or transfer of any of the capital stock except as provided in the
Prospectus; the Common Stock and the Underwriter's Options conform in all
material respects to the respective descriptions thereof contained in the
Prospectus; the Shares have been, and the shares of Common Stock to be issued
upon exercise of the Underwriter's Options will have been duly authorized and,
when issued and delivered in accordance with their respective terms and
applicable Delaware law, will be duly and validly issued, fully paid,
non-assessable, free of preemptive rights and no personal liability will attach
to the ownership thereof; all prior sales by the Company of the Company's
securities have been made in compliance with or under an exemption from
registration under the Act and applicable state securities laws; a sufficient
number of shares of Common Stock has been reserved for issuance upon exercise of
the Underwriter's Options and to the best of such counsel's knowledge, neither
the filing of the Registration Statement nor the offering
21
or sale of the Shares as contemplated by this Agreement gives rise to any
registration rights other than (i) those which have been waived or satisfied for
or relating to the registration of any shares of Common Stock or (ii) those
contained in the Underwriter's Options.
(iii) this Agreement and the Underwriter's Options have
been duly and validly authorized, executed, and delivered by the Company;
(iv) the certificates evidencing the Shares comply with
the Delaware General Corporation Law;
(v) except as otherwise disclosed in the Registration
Statement, such counsel knows of no pending or threatened United States or New
York legal or governmental proceedings to which the Company is a party which
would materially adversely affect the business, property, financial condition,
or operations of the Company; or which question the validity of the Securities,
this Agreement, the financial consulting agreement or the Underwriter's Options,
or of any action taken or to be taken by the Company pursuant to this Agreement,
or the Underwriter's Options; to such counsel's knowledge there are no
governmental United States or New York proceedings or regulations required to be
described or referred to in the Registration Statement which are not so
described or referred to;
(vi) the execution and delivery of this Agreement, the
Underwriter's Options, or the financial consulting agreement and the incurrence
of the obligations herein and therein set forth and the consummation of the
transactions herein or therein contemplated, will not result in a breach or
violation of, or constitute a default under the certificate or articles of
incorporation or by-laws of the Company, or to the best knowledge of counsel, in
the performance or observance of any material obligations, agreement, covenant,
or condition contained in any bond, debenture, note, or other evidence of
indebtedness or in any material contract, indenture, mortgage, loan agreement,
lease, joint venture, or other agreement or instrument to which the Company is a
party or by which they or any of their properties is bound or in violation of
any order, rule, regulation, writ, injunction, or decree of any government,
governmental
22
instrumentality, or court, domestic or foreign, the result of which would have a
Material Adverse Effect;
(vii) the Registration Statement has become effective
under the Act, and to the best of such counsel's knowledge, (a) no stop order
suspending the effectiveness of the Registration Statement is in effect, and (b)
no proceedings for that purpose have been instituted or are pending before, or
threatened by, the Commission; the Registration Statement and the Prospectus as
of the Effective Date comply as to form in all material respects with the
applicable requirements of the Act and the Rules and Regulations (except, in the
case of both the Registration Statement and any amendment thereto and the
Prospectus and any supplement thereto, for the financial statements, notes
thereto and other financial information (including without limitation, the pro
forma financial information) and schedules contained therein, as to which such
counsel need express no opinion);
(viii) in the course of preparation of the Registration
Statement and the Prospectus such counsel has participated in conferences with
the President of the Company with respect to the Registration Statement and
Prospectus and such discussions did not disclose to such counsel any information
which gives such counsel reason to believe that the Registration Statement or
any amendment thereto at the time it became effective contained any untrue
statement of a material fact required to be stated therein or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any supplement
thereto contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make statements therein, in light of the
circumstances under which they were made, not misleading (except, in the case of
both the Registration Statement and any amendment thereto and the Prospectus and
any supplement thereto, for the financial statements, notes thereto and other
financial information (including without limitation, the pro forma financial
information) and schedules contained therein, as to which such counsel need
express no opinion);
(ix) all descriptions in the Registration Statement and
the Prospectus, and any amendment or supplement thereto, of contracts and other
agreements to which the Company is a party are
23
accurate and fairly present in all material respects the information required to
be shown, and such counsel is familiar with all contracts and other agreements
referred to in the Registration Statement and the Prospectus and any such
amendment or supplement or filed as exhibits to the Registration Statement, and
such counsel does not know of any contracts or agreements to which the Company
is a party of a character required to be summarized or described therein or to
be filed as exhibits thereto which are not so summarized, described or filed and
such counsel does not know of any defaults under such contracts or agreements
that are not otherwise disclosed therein;
(x) no authorization, approval, consent, or license of any
United States or New York governmental or regulatory authority or agency is
necessary in connection with the authorization, issuance, transfer, sale, or
delivery of the Shares by the Company, in connection with the execution,
delivery, and performance of this Agreement by the Company or in connection with
the taking of any action contemplated herein, or the issuance of the
Underwriter's Options or the Shares underlying the Underwriter's Options, other
than registrations or qualifications of the Shares under applicable state or
foreign securities or Blue Sky laws and registration under the Act and the NASD;
and
(xi) the Shares have been duly authorized for quotation on
the NASD Electronic Bulletin Board.
(xii) except as disclosed in the Registration Statement,
to the best knowledge of such counsel, the Company has sufficient licenses,
permits, and other United States and New York governmental authorizations
currently necessary for the conduct of its business or the ownership of its
properties as described in the Prospectus and is in all material respects
complying therewith. To the best knowledge of such counsel, the business of the
Company is not in violation of, or will not cause the Company to violate any
law, rule, regulation, or order of the United States, any state, county, or
locality, or of any agency or body of the United States, or of any state,
county, or locality, the violation of which would have a Material Adverse Effect
and are in compliance with all rules and regulations pertaining to the business
of the Company.
(xiii) the statements in the Registration Statement under
the caption "Certain U.S. Income Tax Considerations Regarding
24
Shares Acquired by U.S. Taxpayers" have been reviewed by such counsel and
insofar as such statements summarize or describe statements of United States tax
law or legal conclusions thereunder, have been reviewed by such counsel and
constitute an accurate description of the legal matters stated therein in all
material respects;
(xiv) to such counsel's knowledge, there are no business
relationships or related-party transactions of the nature described in Item 404
of Regulation S-K involving the Company, and any person described in such Item
that are required to be disclosed in the Prospectus and which have not been so
disclosed; and
(xv) the Company is not in violation of or default under,
nor will the execution and delivery of this Agreement, the Underwriter's
Purchase Option, or the financial consulting agreement, and the incurrence of
the obligations herein and therein set forth and the consummation of the
transactions herein or therein contemplated, result in a breach or violation of
any material order, rule, regulation, writ, injunction or decree (known to such
counsel with respect to orders, writs, injunctions or decrees) of any United
States or New York government, governmental instrumentality or court except
where such violations or defaults would not have a Material Adverse Effect.
Such opinion shall also cover such matters incident to the
transactions contemplated hereby as the Underwriter or counsel for the
Underwriter shall reasonably request. In rendering such opinion, such counsel
may rely upon certificates of any officer of the Company or public officials as
to matters of fact; and may rely as to all matters of law other than the law of
the United States or of the State of Delaware upon opinions of counsel
satisfactory to the Underwriter, in which case the opinion shall state that they
have no reason to believe that the Underwriter and they are not entitled to so
rely.
(B) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of ___________________________,
Israeli counsel for the Company, in form satisfactory to counsel for the
Underwriter, to the effect that:
25
(i) Ambient Israel, the Company's wholly owned subsidiary
(the "Subsidiary") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Israel, with all
requisite corporate power and authority to own its properties and conduct its
business as described in the Registration Statement and Prospectus;
(ii) all shares of the Subsidiary's outstanding share
capital requiring authorization for issuance by the Subsidiary's Board of
Directors have been duly authorized, validly issued, fully paid and
non-assessable; to such counsel's knowledge the outstanding shares of share
capital of the Subsidiary have not been issued in violation of the preemptive
rights of any shareholder and the shareholders of the Subsidiary do not have any
preemptive rights or other rights to subscribe for or to purchase, nor are there
any restrictions upon the voting or transfer of any of the share capital except
as provided in the Prospectus; the Shares, the Underwriter's Option, and the
financial consulting agreement conform in all material respects to the
respective descriptions thereof contained in the Prospectus; the Shares have
been, and the shares issued upon exercise of the Underwriter's Option, will have
been duly authorized and, when issued and delivered in accordance with their
respective terms will be duly and validly issued, fully paid, non-assessable,
free of preemptive rights; all prior sales by the Subsidiary of the Subsidiary's
securities have been made in compliance with Israeli law; a sufficient number of
Shares has been reserved for issuance upon exercise of the Underwriter's Option
and to the best of such counsel's knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any registration rights other than (i) those which
have been waived or satisfied for or relating to the registration of any Shares
or (ii) those contained in the Underwriter's Option.
(iii) this Agreement, the Underwriter's Option and the
financial consulting agreement have been duly and validly authorized, executed,
and delivered by the Company and, assuming due execution by each other party
hereto or thereto, each constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its respective terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
26
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable,
and except as rights to indemnity or contribution may be limited by applicable
law);
(iv) except as otherwise disclosed in the Registration
Statement, such counsel knows of no pending or threatened Israeli legal or
governmental proceedings to which the Company or Subsidiary is a party which
would materially adversely affect the business, property, financial condition,
or operations of the Company or Subsidiary; or which question the validity of
the Shares, this Agreement, the financial consulting agreement or the
Underwriter's Option, or of any action taken or to be taken by the Company
pursuant to this Agreement, the financial consulting agreement or the
Underwriter's Option; and no such proceedings are known to such counsel to be
contemplated against the Company or Subsidiary; to such counsel's knowledge
there are no such Israeli governmental proceedings or regulations required to be
described or referred to in the Registration Statement which are not so
described or referred to;
(v) to the best knowledge of such counsel, the Company and
Subsidiary are not in violation of or default under nor will the execution and
delivery of this Agreement, the Underwriter's Option, or the financial
consulting agreement and the incurrence of the obligations herein and therein
set forth and the consummation of the transactions herein or therein
contemplated, result in a breach or violation of, or constitute a default under
the Memorandum of Association or Articles of Association of the Subsidiary or to
the best knowledge of counsel, in the performance or observance of any material
obligations, agreement, covenant, or condition contained in any bond, debenture,
note, or other evidence of indebtedness or in any material contract, indenture,
mortgage, loan agreement, lease, joint venture, or other agreement or instrument
to which the Company or Subsidiary is a party or by which they or any of their
properties is bound or in violation of any Israeli order, rule, regulation,
writ, injunction, or decree of any Israeli governmental instrumentality, or
court, the result of which would have a Material Adverse Effect;
(vi) in the course of preparation of the Registration
Statement and the Prospectus such counsel has participated in conferences with
the President of the Company with
27
respect to the contents of the Registration Statement and Prospectus and such
discussions did not disclose to such counsel any information which gives such
counsel reason to believe that the Registration Statement or any amendment
thereto at the time it became effective contained any untrue statement of a
material fact required to be stated therein or omitted to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus or any supplement thereto contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make statements therein, in light of the circumstances under which
they were made, not misleading (except, in the case of both the Registration
Statement and any amendment thereto and the Prospectus and any supplement
thereto, for the financial statements, notes thereto and other financial
information (including without limitation, the pro forma financial information)
and schedules contained therein, as to which such counsel need express no
opinion);
(vii) all descriptions in the Registration Statement and
the Prospectus, and any amendment or supplement thereto, of contracts and other
agreements to which the Company is a party are accurate and fairly present in
all material respects the information required to be shown, and such counsel is
familiar with all contracts and other agreements referred to in the Registration
Statement and the Prospectus and any such amendment or supplement or filed as
exhibits to the Registration Statement, and such counsel does not know of any
contracts or agreements to which the Company is a party of a character required
to be summarized or described therein or to be filed as exhibits thereto which
are not so summarized, described or filed and such counsel does not know of any
defaults under such contracts or agreements that are not otherwise disclosed
therein;
(viii) no authorization, approval, consent, or license of
any Israeli governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale, or delivery of the
Shares by the Company, in connection with the execution, delivery, and
performance of this Agreement by the Company or in connection with the taking of
any action contemplated herein, or the issuance of the Underwriter's Option or
the securities underlying the Underwriter's Option, other than registrations or
qualifications of the Units under applicable state or foreign securities or Blue
Sky laws, registration under
28
the Act and approval by the NASD of the fairness of the underwriting
arrangements (as to which such counsel need express no opinion) and such permits
and approvals required under Israeli law which shall have been obtained on or
before the Closing;
(ix) except as disclosed in the Registration Statement, to
the best knowledge of such counsel, the Company and Subsidiary have sufficient
licenses, permits, and other governmental authorizations currently necessary
under Israeli law for the conduct of its business or the ownership of its
properties as described in the Prospectus, such licenses, permits and other
governmental authorizations obtained are in full force and effect, and the
Company and Subsidiary are in all material respects complying therewith except
where the failure to have any such licenses, permits or governmental
authorization would not have a Material Adverse Effect. To the best knowledge of
such counsel, and except as disclosed in the Registration Statement, the
business of the Company and Subsidiary are not in violation of any Israeli law,
rule or regulation, the violation of which would have a Material Adverse Effect
and are in compliance in all material respects with all material rules and
regulations pertaining to the business of the Company;
(x) to the best of such counsel's knowledge, except as
disclosed in the Prospectus, neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this Agreement gives
rise to any registration rights or other rights, other than those which have
been waived or satisfied for or relating to the registration of any Ordinary
Shares;
(xi) the Company and Subsidiary have obtained all
consents, approvals, authorizations, exemptions or other orders from, and has
made all registrations or filings with, any Israeli court, regulatory body,
administrative agency or other governmental body, official or agency as is
required by Israeli law for the execution, delivery and performance of the
Underwriting Agreement and the consummation of the transactions contemplated
thereby (including, but not limited to, the issuance and sale of Shares as
contemplated by the Underwriting Agreement); to the best of our knowledge, no
proceedings to rescind or modify such consents, approvals, authorizations,
exemptions or orders have been instituted or are pending or contemplated by any
Israeli authority;
29
the Israeli Securities Authority has granted the Company an exemption from the
obligation to publish the Prospectus in the manner required under prevailing
laws of the state of Israel, subject to compliance with the terms of Section
12(d) of this Agreement;
(xii) the statements in the Registration Statement under
the captions "Business - Government Regulation," "Management," and "Description
of Securities," "Israeli Taxation and Foreign Exchange Regulations" and
"Conditions in Israel" have been reviewed by such counsel and insofar as they
refer to descriptions of statements of Israeli law, descriptions of Israeli
statutes, rules or regulations or legal conclusions, are correct in all material
respects.
In rendering such opinion, such counsel may rely upon
certificates of any officer of the Company or public officials as to matters of
fact; and may rely as to all matters of law other than the law of the United
States or of the State of Israel upon opinions of counsel satisfactory to the
Underwriter.
(C) At the First Closing Date, you shall have received the
opinion of ___________, special patent counsel, in form and substance
satisfactory to you, identifying any patent searches conducted with respect to
the Company's and the Subsidiaries' patents and patent applications and
providing that the description in the Registration Statement with respect to the
status of such patents and patent applications is accurate, that the Company and
its Subsidiary own the entire right, title and interest in and to such patents
and patent applications as described in the Prospectus and have not received any
notice of conflict with the asserted rights of others in respect thereof and
that the statements in the Prospectus under the captions _______ and _______ are
true and correct. In addition, the Company and its Subsidiaries own or possess
free and clear of all liens and encumbrances and rights thereto or therein by
third parties, all patents, patent applications, trademarks, service marks,
trade-names, trademark registrations, service xxxx registrations, copyrights,
and licenses ("Intangibles") necessary for the conduct of their business, and
have not received any notice of conflict with the asserted rights of others in
respect thereof. To the best of such counsel's knowledge, the Company's and the
Subsidiaries' Intangibles and the Company's and the Subsidiaries' products,
services or processes do
30
not infringe on any Intangibles held by third parties and no others have
infringed on the Intangibles of the Company. The Company's and the Subsidiaries'
Intangibles which have been registered in the United States Patent and Trademark
Office have been fully maintained and are in full force and effect.
(c) All corporate proceedings and other legal matters relating to
this Agreement, the Registration Statement, the Prospectus and other related
matters shall be satisfactory to or approved by Xxxxxxxxx & Xxxxxxxxx, LLP,
counsel to the Underwriter.
(d) The Underwriter shall have received a letter prior to the
effective date of the Registration Statement and again on and as of the First
Closing Date from ____________________________, independent public accountants
for the Company, substantially in the form reasonably acceptable to the
Underwriter.
(e) At the Closing Dates, (i) the representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects with the same effect as if made on and as of the Closing Dates
taking into account for the Option Closing Date the effect of the transactions
contemplated hereby and the Company shall have performed all of its obligations
hereunder and satisfied all the conditions on its part to be satisfied at or
prior to such Closing Dates; (ii) the Registration Statement and the Prospectus
and any amendments or supplements thereto shall contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, and shall in all material respects conform to the requirements
thereof, and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; (iii) there shall have
been, since the respective dates as of which information is given, no material
adverse change, or to the Company's knowledge, any development involving a
prospective material adverse change, in the business, properties, condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt, or general affairs of the Company or the Subsidiaries from that
set forth in the Registration Statement and the Prospectus, except changes which
the Registration Statement and Prospectus indicate might occur after the
effective date of the Registration Statement,
31
and neither the Company nor the Subsidiaries shall have incurred any material
liabilities or entered into any material agreement not in the ordinary course of
business other than as referred to in the Registration Statement and Prospectus;
(iv) except as set forth in the Prospectus, no action, suit, or proceeding at
law or in equity shall be pending or threatened against the Company or the
Subsidiaries which would be required to be set forth in the Registration
Statement, and no proceedings shall be pending or threatened against the Company
or the Subsidiaries before or by any commission, board, or administrative agency
in the United States or elsewhere, wherein an unfavorable decision, ruling, or
finding would materially and adversely affect the business, property, condition
(financial or otherwise), results of operations, or general affairs of the
Company or the Subsidiaries and (v) the Underwriter shall have received, at the
First Closing Date, a certificate signed by each of the President and the
principal operating officer of the Company, dated as of the First Closing Date,
evidencing compliance with the provisions of this subsection (e).
(f) Intentionally Omitted.
(g) Upon exercise of the option provided for in Section 2(b)
hereof, the obligations of the Underwriter to purchase and pay for the Option
Shares will be subject (as of the date hereof and of the Option Closing Date) to
the following additional conditions:
(i) The Registration Statement shall remain effective at
the Option Closing Date, and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending, or, to your knowledge or the knowledge of the
Company, shall be contemplated by the Commission, and any reasonable request on
the part of the Commission for additional information shall have been complied
with to the satisfaction of the Commission.
(ii) At the Option Closing Date there shall have been
delivered to you the signed opinions of Xxxx Marks & Xxxxx, LLP, U.S. counsel,
__________________, Israeli counsel and _____________, special patent counsel to
the Company, respectively, dated as of the Option Closing Date, in form and
substance reasonably satisfactory to Xxxxxxxxx & Xxxxxxxxx, LLP, counsel to the
Underwriter, which opinions shall be substantially the same in
32
scope and substance as the opinions furnished to you at the initial Closing Date
pursuant to Sections 4(b) hereof, except that such opinions, where appropriate,
shall cover the Option Shares.
(iii) At the Option Closing Date there shall have been
delivered to you a certificate of the President and the principal operating
officer of the Company, dated the Option Closing Date, in form and substance
reasonably satisfactory to Xxxxxxxxx & Xxxxxxxxx, LLP, counsel to the
Underwriter, substantially the same in scope and substance as the certificate
furnished to you at the First Closing Date pursuant to Section 4(e) hereof.
(iv) At the Option Closing Date there shall have been
delivered to you a letter in form and substance satisfactory to you from
____________________________, dated the Option Closing Date and addressed to the
Underwriter confirming the information in their letter referred to in Section
4(d) hereof and stating that nothing has come to their attention during the
period from the ending date of their review referred to in said letter to a date
not more than five business days prior to the Option Closing Date, which would
require any change in said letter if it were required to be dated the Option
Closing Date.
(v) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option Shares shall
be reasonably satisfactory in form and substance to you, and you and Xxxxxxxxx &
Xxxxxxxxx, LLP, counsel to the Underwriter, shall have been furnished with all
such documents, certificates, and opinions as you may reasonably request in
connection with this transaction in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Company or its compliance with any of the covenants or conditions contained
herein.
(h) No action shall have been taken by the Commission or the NASD
the effect of which would make it improper, at any time prior to either of the
Closing Dates, for members of the NASD to execute transactions (as principal or
agent) in the Shares and no proceedings for the taking of such action shall have
been instituted or shall be pending, or, to the knowledge of the Underwriter or
the Company, shall be contemplated by the Commission or the NASD. The Company
represents that at the date hereof it has
33
no knowledge that any such action is in fact contemplated by the Commission or
the NASD.
(i) If any of the conditions herein provided for in this Section
shall not have been fulfilled in all material respects as of the date indicated,
this Agreement and all obligations of the Underwriter under this Agreement may
be canceled at, or at any time prior to, either of the Closing Dates by the
Underwriter notifying the Company of such cancellation in writing or by telegram
at or prior to the applicable Closing Date. Any such cancellation shall be
without liability of the Underwriter to the Company.
5. Conditions of the Obligations of the Company. The obligation of the
Company to sell and deliver the Shares is subject to the following conditions:
(a) The Registration Statement shall have become effective not
later than 10:00 a.m. New York time, on the day following the date of this
Agreement, or on such later date as the Company and the Underwriter may agree in
writing.
(b) At the Closing Dates, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued under the Act
or any proceedings therefor initiated or threatened by the Commission.
If the conditions to the obligations of the Company provided for
in this Section have been fulfilled on the First Closing Date but are not
fulfilled after the First Closing Date and prior to the Option Closing Date,
then only the obligation of the Company to sell and deliver the Shares on
exercise of the option provided for in Section 2(b) hereof shall be affected.
6. Indemnification.
(a) The Company agrees (i) to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act against
any losses, claims, damages, or liabilities, joint or several (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees), to which
such Underwriter or such controlling
34
person may become subject, under the Act or otherwise, and (ii) to reimburse, as
incurred, the Underwriter and such controlling persons for any legal or other
expenses reasonably incurred in connection with investigating, defending against
or appearing as a third party witness in connection with any losses, claims,
damages, or liabilities; insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) relate to and arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
(A) the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment or supplement thereto, (B) any Blue Sky application or other
document executed by the Company specifically for that purpose or containing
written information specifically furnished by the Company and filed in any state
or other jurisdiction in order to qualify any or all of the Units under the
securities laws thereof (any such application, document or information being
hereinafter called a "Blue Sky Application"), or arise out of or are based upon
the omission or alleged omission to state in the Registration Statement, any
Preliminary Prospectus, Prospectus, or any amendment or supplement thereto, or
in any Blue Sky Application, a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be required to indemnify the Underwriter and any
controlling person or be liable in any such case to the extent, but only to the
extent, that any such loss, claim, damage, or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission is made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Underwriter
specifically for use in the preparation of the Registration Statement or any
such amendment or supplement thereof or any such Blue Sky Application or any
such Preliminary Prospectus or the Prospectus or any such amendment or
supplement thereto, provided, further that the indemnity with respect to any
Preliminary Prospectus shall not be applicable on account of any losses, claims,
damages, liabilities, or litigation arising from the sale of Units to any person
if the misstatement or omission was corrected in the Prospectus but a copy of
the Prospectus was not delivered to such person by the Underwriter in accordance
with this Agreement at or prior to the written confirmation of the sale to such
person. This indemnity will be in addition to any liability which the Company
may otherwise have.
35
(b) The Underwriter will indemnify and hold harmless the Company,
each of its directors, each nominee (if any) for director named in the
Prospectus, each of its officers who have 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(a) of the Exchange Act, against any losses, claims,
damages, or liabilities (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and
reasonable attorneys' fees) to which the Company or any such director, nominee,
officer, or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or any Blue
Sky Application in reliance upon and in conformity with written information
furnished to the Company by the Underwriter specifically for use in the
preparation thereof and for any violation by the Underwriter in the sale of such
Shares of any applicable state or federal law or any rule, regulation or
instruction thereunder relating to violations based on unauthorized statements
by Underwriter or its representative, provided that such violation is not based
upon any violation of such law, rule, or regulation or instruction by the party
claiming indemnification or inaccurate or misleading information furnished by
the Company or its representatives, including information furnished to the
Underwriter as contemplated herein. This indemnity agreement will be in addition
to any liability which the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify in writing the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it
36
from any liability which it may have to any indemnified party otherwise than
under this Section unless the omission so to notify prejudices the indemnifying
party. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, subject to the provisions herein stated, with counsel
reasonably satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided that the reasonable fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party or (ii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and in the reasonable judgment of
the counsel to the indemnified party, there is a conflict of interest between
the indemnifying party and the indemnified party in the conduct of the defense
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party, it being understood,
however, that the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for the indemnified party, which firm shall be designated in writing
by the indemnified party). No settlement of any action against an indemnified
party shall be made without the consent of the indemnified party, which shall
not be unreasonably withheld in light of all factors of importance to such
indemnified party. If it is ultimately determined that indemnification is not
permitted,
37
then an indemnified party will return all monies advanced to the indemnifying
party with interest thereon.
7. Contribution. In order to provide for just and equitable contribution
under the Act in any case in which the indemnification provided in Section 6
hereof is requested but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact that
the express provisions of Section 6 provide for indemnification in such case,
then the Company and the Underwriter shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) (after
contribution from others) such proportional amount of such losses, claims,
damages, or liabilities represented by the percentage that the underwriting
discount per Share appearing on the cover page of the Prospectus plus all other
compensation paid to the Underwriter bears to the public offering price
appearing thereon and the Company shall be responsible for the remaining
portion, provided, however, that if such allocation is not permitted by
applicable law, then allocated in such proportion as is appropriate to reflect
relative benefits but also the relative fault of the Company and the Underwriter
and controlling persons, in the aggregate, in connection with the statements or
omissions which resulted in such damages and other relevant equitable
considerations shall also be considered. The relative fault shall be determined
by reference to, among other things, whether in the case of an untrue statement
of a material fact or the omission to state a material fact, such statement or
omission relates to information supplied by the Company or the Underwriter and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such untrue statement or omission. The Company and the
Underwriter agree that it would not be just and equitable if the respective
obligations of the Company and the Underwriter to contribute pursuant to this
Section 7 were to be determined by pro rata or per capita allocation of the
aggregate damages or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 7. No person
guilty of a fraudulent misrepresentation (within the meaning of Section 1(f) of
the Act) shall be entitled to contribution from any
38
person who is not guilty of such fraudulent misrepresentation. As used in this
paragraph, the word "Company" includes any officer, director, or person who
controls the Company within the meaning of Section 15 of the Act. If the full
amount of the contribution specified in this paragraph is not permitted by law,
then the Underwriter and each person who controls the Underwriter shall be
entitled to contribution from the Company, its officers, directors, and
controlling persons, and the Company, its officers, directors, and controlling
persons shall be entitled to contribution from the Underwriter to the full
extent permitted by law. The foregoing contribution agreement shall in no way
affect the contribution liabilities of any persons having liability under
Section 11 of the Act other than the Company and the Underwriter. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent to the settlement; provided, however, that such
consent shall not be unreasonably withheld in light of all factors of importance
to such party.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the sale
of the Shares by the Underwriter is consummated, the Company will pay all costs
and expenses incident to the performance of this Agreement by the Company
including, but not limited to, the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing, and distribution under the Act of the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), Preliminary Prospectus, and the Prospectus, as
amended or supplemented, the fee of the NASD in connection with the filing
required by the NASD relating to the offering of the Shares contemplated hereby;
all expenses, including reasonable fees and disbursements of counsel to the
Underwriter, in connection with the qualification of the Shares under the state
securities or Blue Sky laws which the Underwriter shall designate (which legal
fees (not including filing fees or expenses) shall be $30,000); the cost of
printing and furnishing to the Underwriter copies of the Registration Statement,
each Preliminary Prospectus, if applicable, the Prospectus, this Agreement, and
the Blue Sky Memorandum, any fees relating to the listing of the Units, Common
Stock, and Warrants on NASDAQ or any other securities exchange; the cost of
printing the certificates representing the securities comprising the Shares; the
fees of the transfer agent and warrant
39
agent, reasonable and traditional advertising costs, meetings and presentation
costs; and costs of bound volumes (3 sets for the Underwriter) and prospectus
memorabilia (12 for the Underwriter). The Company shall pay any and all taxes
(including any transfer, franchise, capital stock, or other tax imposed by any
jurisdiction) on sales of the Shares hereunder. The Company will also pay all
costs and expenses incident to the furnishing of any amended Prospectus or of
any supplement to be attached to the Prospectus as called for in Section 3(a) of
this Agreement except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses the Company shall at
the First Closing Date pay to the Underwriter a non-accountable expense
allowance of $126,000. In the event the over-allotment option is exercised, the
Company shall pay to the Underwriter at the Option Closing Date an additional
amount in the aggregate equal to 3.0% of the gross proceeds received upon
exercise of the over-allotment option. In the event the transactions
contemplated hereby are not consummated by reason of any action by the
Underwriter (except if such prevention is based upon a breach by the Company of
any covenant, representation, or warranty contained herein or because any other
condition to the Underwriter's obligations hereunder required to be fulfilled by
the Company is not fulfilled, including the obligation to provide due diligence
materials reasonably required in writing by counsel to the Underwriter, the
Company shall not be liable for any expenses of the Underwriter, including the
Underwriter's legal fees (but shall be required to pay Blue Sky counsel fees and
expenses). In the event the transactions contemplated hereby are not consummated
by reason of the Company's actions or failure to take such actions as the
Underwriter believes are reasonably required to complete the transaction
contemplated herein, the Company shall be liable for the actual accountable
out-of-pocket expenses of the Underwriter, including reasonable legal fees which
shall not exceed $75,000 (less any amount previously paid or payable pursuant to
the next sentence). In the event the transactions contemplated hereby are not
consummated due to a material adverse change in the business or financial
results, prospects or condition of the Company or to adverse market conditions,
the Company shall be liable for the actual out-of-pocket expenses of the
Underwriter, including reasonable legal fees, not to exceed in the aggregate
$75,000.
40
(c) Except as disclosed in the Registration Statement, no person
is entitled either directly or indirectly to compensation from the Company, from
the Underwriter or from any other person for services as a finder in connection
with the proposed offering, and the Company agrees to indemnify and hold
harmless the Underwriter, against any losses, claims, damages, or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all reasonable
attorneys' fees), to which the Underwriter or person may become subject insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon the claim of any person (other than an employee
of the party claiming indemnity) or entity that he or it is entitled to a
finder's fee in connection with the proposed offering by reason of such person's
or entity's influence or prior contact with the indemnifying party.
9. Effective Date. The Agreement shall become effective upon its
execution except that the Underwriter may, at its option, delay its
effectiveness until 11:00 a.m., New York time on the first full business day
following the effective date of the Registration Statement, or at such earlier
time on such business day after the effective date of the Registration Statement
as the Underwriter in its discretion shall first commence the initial public
offering of the Units. This Agreement may be terminated by the Underwriter at
any time before it becomes effective as provided above, except that Sections
3(c), 6, 7, 8, 12, 13, 14, and 15 shall remain in effect notwithstanding such
termination.
10. Termination.
(a) After this Agreement becomes effective, this Agreement,
except for Sections 3(c), 6, 7, 8, 12, 13, 14, and 15 hereof, may be terminated
at any time prior to the Closing Date, by the Underwriter if in the
Underwriter's judgment it is impracticable to offer for sale or to enforce
contracts made by the Underwriter for the resale of the Shares agreed to be
purchased hereunder by reason of (i) the Company having sustained a material
loss, whether or not insured, by reason of fire, earthquake, flood, accident, or
other calamity, or from any labor dispute or court or government action, order,
or decree, (ii) trading in securities on Nasdaq having been suspended or
limited, (iii) material governmental restrictions having been imposed on trading
in
41
securities generally (not in force and effect on the date hereof), (iv) a
banking moratorium having been declared by federal or New York state
authorities, (v) an outbreak of major international hostilities involving the
United States, Israel or other substantial national or international calamity
having occurred, (vi) a pending or threatened legal or governmental proceeding
or action relating generally to the Company's or the Subsidiaries business, or a
notification having been received by the Company or the Subsidiaries of the
threat of any such proceeding or action, which would materially adversely affect
the Company or the Subsidiaries; (vii) except as contemplated by the Prospectus,
the Company or the Subsidiary is merged with or consolidated into or acquired by
another company or group or there exists a binding legal commitment for the
foregoing or any other material change of ownership or control occurs; (viii)
the adoption of a federal law, rule or regulation which, in the reasonable
belief of the Underwriter, would have a material adverse impact on the business
or financial condition of the Company or the Subsidiaries, (ix) any material
adverse change in the financial or securities markets beyond normal market
fluctuations having occurred since the date of this Agreement, or (x) any
material adverse change having occurred, since the respective dates of which
information is given in the Registration Statement and Prospectus, in the
earnings, business prospects, or general condition of the Company or the
Subsidiaries, financial or otherwise, whether or not arising in the ordinary
course of business.
(b) If the Underwriter elects to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this Section
10, the Company shall be promptly notified by the Underwriter, by telephone or
telegram, confirmed by letter.
11. Underwriter's Options. At or before the First Closing Date, the
Company will sell the Underwriter or its designees for a consideration of $.001
per option and upon the terms and conditions set forth in the form of the
Underwriter's Options annexed as an exhibit to the Registration Statement, to
purchase 60,000 Shares. In the event of conflict in the terms of this Agreement
and the Underwriter's Options with respect to language relating to the
Underwriter's Options, the language of the Underwriter's Options shall control.
42
12. Covenants of the Underwriter. You covenant and agree with the
Company as follows:
(a) Compliance with Laws. In connection with the offer and sale
of Shares, you shall comply with any applicable requirements of the Act, the
Exchange Act, the NASD and the applicable state securities or "Blue Sky" laws,
and the rules and regulations thereunder.
(b) Accuracy of Information. No information supplied by you for
use in the Registration Statement, Preliminary Prospectus, Prospectus or Blue
Sky Application will contain any untrue statements of a material fact or omit to
state any material fact necessary to make such information not misleading.
(c) No Additional Information. You will not give any information
or make any representation in connection with the offering of the Shares other
than that contained in the Prospectus.
(d) Sale of Shares. You shall solicit, directly or through
Selected Dealers, purchasers of the Shares only in the jurisdictions in which
you have been advised by the Company that such solicitation can be made, and in
which you or the soliciting Selected Dealer, as the case may be, are qualified
to so act.
13. Representations, Warranties and Agreements to Survive Delivery. The
respective indemnities, agreements, representations, warranties, and other
statements of the Company and the Underwriter and the undertakings set forth in
or made pursuant to this Agreement will remain in full force and effect until
three years from the date of this Agreement, regardless of any investigation
made by or on behalf of the Underwriter, the Company, or any of its officers or
directors or any controlling person and will survive delivery of and payment of
the Shares and the termination of this Agreement.
14. Notice. Any communications specifically required hereunder to be in
writing, if sent to the Underwriter, will be mailed, delivered, or telecopied
and confirmed to them at Roan Capital Partners L.P., 00 Xxxx 00xx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000, with a copy sent to Xxxxxxxxx & Xxxxxxxxx, LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxx Xxxxxxxxx, Esq., or if sent
to the Company, will be mailed, delivered, or telecopied
43
and confirmed to it at __________________________________________, Attention:
_________________ with a copy sent to Xxxx Marks & Xxxxx, LLP, 000 Xxxxx Xxxxxx,
Xxx Xxxx, XX 00000, Attention: Xxxxxx X. Xxxxxxxxxx, Esq. Notice shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication.
15. Parties in Interest. The Agreement herein set forth is made solely
for the benefit of the Underwriter, the Company, any person controlling the
Company or the Underwriter, and directors of the Company, nominees for directors
(if any) named in the Prospectus, its officers who have signed the Registration
Statement, and their respective executors, administrators, successors, assigns
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such purchaser, from the Underwriter of the Shares.
16. Applicable Law. This Agreement will be governed by, and construed in
accordance with, of the laws of the State of New York applicable to agreements
made and to be entirely performed within New York.
17. Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed to constitute an original and shall
become effective when one or more counterparts have been signed by each of the
parties hereto and delivered to the other parties (including by fax, followed by
original copies by overnight mail).
44
18. Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto and supersedes all prior written or oral
agreements, understandings, and negotiations with respect to the subject matter
hereof. This Agreement may not be amended except in writing, signed by the
Underwriter and the Company.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement between the Company and the Underwriter in accordance with its
terms.
Very truly yours,
AMBIENT CORPORATION
By: ____________________________
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
ROAN CAPITAL PARTNERS L.P.
By: __________________________
Name:
Title:
45
