ACCENT SOFTWARE INTERNATIONAL LTD.
1,500,000 Ordinary Shares
(nominal value NIS .01 per share)
and
Warrants to Purchase 1,500,000 Ordinary Shares
UNDERWRITING AGREEMENT
October , 1996
Sands Brothers & Co., Ltd.
As Representative of the Several Underwriters
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Accent Software International Ltd., a corporation organized under the
laws of the State of Israel (the "Company"), confirms its agreement with Sands
Brothers & Co., Ltd. ("Sands Brothers") and each of the underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as provided in Section 9 hereto), for whom
Sands Brothers is acting as representative (in such capacity, Sands Brothers
shall hereinafter be referred to as "you" or the "Representative"), with respect
to the sale by the Company of an aggregate of one million five hundred thousand
(1,500,000) ordinary shares of the Company, nominal value NIS .01 per share (the
"Offered Shares"), which Offered Shares are presently authorized but unissued
ordinary shares, nominal value NIS .01 per share (individually "Ordinary Share"
and collectively the "Ordinary Shares"), of the Company, at a price of
Dollars and Cents ($ ) per Offered Share, and one million five hundred
thousand (1,500,000) Ordinary Share purchase warrants (the "Offered Warrants"),
at a price of Ten Cents ($.10) per Offered Warrant, each of which Offered
Warrant shall entitle the holder thereof the right to purchase one (1) Ordinary
Share, at an exercise price of Dollars and Cents ($ )
(subject to adjustment in certain circumstances).
Each Offered Warrant is exercisable commencing upon date of issuance and
ending five years from the date of the Prospectus (as hereinafter defined),
unless previously redeemed by the Company. The Company shall have the right,
upon the consent of the Representative, to call each Offered Warrant for
redemption
upon not less than thirty (30) days' written notice at any time commencing upon
the Effective Date (as hereinafter defined) at a redemption price of Ten Cents
($.10) per Offered Warrant provided that the closing bid price of the Ordinary
Shares has been at least 120% of the then effective exercise price of the
Offered Warrants on all 20 of the trading days ending on the third day prior to
the day on which the Company gives notice.
In addition, the Company proposes to grant to the Underwriters, for
the purpose of covering over-allotments in the sale of the Offered Shares and/or
Offered Warrants, the option (which may be exercised by the Representative,
individually) to purchase an aggregate of not more than two hundred twenty five
thousand (225,000) Ordinary Shares (the "Optional Shares") and/or two hundred
twenty five thousand (225,000) Ordinary Share purchase warrants (the "Optional
Warrants") entitling the holder of each Optional Warrant to purchase one (1)
Ordinary Share on the same terms as the Offered Warrants. The Offered Shares
and the Optional Shares are hereinafter collectively referred to as the
"Shares"; and the Offered Warrants and the Optional Warrants are hereinafter
collectively referred to as the "Warrants." The Warrants will be issued
pursuant to a Warrant Agreement (the "Warrant Agreement") to be dated as of the
Closing Date (as hereinafter defined) by and among the Company, the Underwriters
and American Stock Transfer and Trust Company, as warrant agent (the "Warrant
Agent").
The Company also proposes to issue and sell to you (for your own
account and not as Representative of the Several Underwriters) and/or your
designees, warrants (the "Representative's Warrants") to purchase an aggregate
of one hundred fifty thousand (150,000) Ordinary Shares (collectively, the
"Underlying Shares") and one hundred fifty thousand (150,000) warrants similar
but not identical to the Warrants (collectively, the "Underlying Warrants"),
which sale will be consummated in accordance with the terms and conditions of
the form of Representative's Warrant Agreement filed as an exhibit to the
Registration Statement. The Underlying Shares and the Ordinary Shares issuable
upon exercise of the Warrants and the Underlying Warrants are hereinafter
sometimes referred to as the "Warrant Shares". The Shares, the Warrants, the
Representative's Warrants, the Underlying Warrants and the Warrant Shares
(collectively, the "Securities") are more fully described in the Registration
Statement and the Prospectus, as defined below.
You have advised the Company that you and the other Underwriters
desire to purchase, severally, the Offered Shares and Offered Warrants, and that
you have been authorized by the Underwriters to execute this agreement on their
behalf. The Company confirms the agreements made by it with respect to the
purchase of the Offered Shares and Offered Warrants by the
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several Underwriters on whose behalf you are signing this Agreement, as follows:
1. PURCHASE AND SALE OF OFFERED SHARES AND OFFERED WARRANTS. (a)
Subject to the terms and conditions of this Agreement, and upon the basis of the
representations, warranties, and agreements herein contained, the Company agrees
to issue and sell to the Underwriters, and each such Underwriter agrees,
severally and not jointly, to purchase from the Company at $ per Offered
Share and $ per Offered Warrant, at the place and time hereinafter
specified, the number of Offered Shares and Offered Warrants set forth opposite
the names of the Underwriters in Schedule A attached hereto (the "First Offered
Securities") plus any additional Offered Shares and Offered Warrants which such
Underwriters may become obligated to purchase pursuant to the provisions of
Section 9 hereof. The First Offered Securities shall consist of 1,500,000
Offered Shares and 1,500,000 Offered Warrants to be purchased from the Company.
(b) The Underwriters shall not offer the Offered Shares or the
Offered Warrants in Israel to more than 35 offerees in the aggregate and shall
obtain from such offerees in Israel written confirmation that they are acquiring
the Offered Shares and Offered Warrants for investment purposes only and not
with a view toward distribution or resale and shall provide copies of these
written confirmations to the Company at the Closing. At the Closing, the
Underwriters shall furnish the Company with a list of such offerees, the number
of Offered Shares or Offered Warrants acquired by such offerees and the
addresses of such offerees.
(c) Notwithstanding anything contained herein to the contrary, in no
event will the aggregate underwriting discount and non-accountable expense
allowance exceed ten percent (10%) on any sales of Offered Shares and/or Offered
Warrants to IMR Fund, L.P. or its affiliates.
2. PAYMENT AND DELIVERY; REPRESENTATIVE'S WARRANTS.
(a) Delivery of the First Offered Securities against payment therefor
shall take place at the offices of the Representative, 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, (or at such other place as may be designated by agreement
between you and the Company) at 10:00 a.m., New York time, on ,
1996, or at such later time and date as you may designate, such time and date of
payment and delivery for the First Offered Securities being herein called the
"First Closing Date."
(b) The Company will make the certificates for the Offered Shares and
Offered Warrants to be purchased by the Underwriters hereunder available to you
for inspection at least two full business days prior to the First Closing Date
or the
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Option Closing Date (which are collectively referred to herein as the "Closing
Dates"). The certificates shall be in such names and denominations as you may
request, at least two full business days prior to the Closing Dates. Time shall
be of the essence and delivery at the time and place specified in this Agreement
is a further condition to the obligations of each Underwriter.
Definitive certificates in negotiable form for the Offered Shares and
Offered Warrants to be purchased by the Underwriters hereunder will be delivered
by the Company to you for the accounts of the several Underwriters against
payment of the respective purchase prices therefor by the several Underwriters,
by federal wire transfer to the Company. The Representatives' written
confirmation of the effectuation of such federal wire transfer, including the
applicable federal wire number, shall be satisfactory evidence that payment of
the purchase prices for the Offered Shares and Offered Warrants has been made
for purposes of the First Closing Date and, upon presentation of such
confirmation, the Company shall be required to deliver certificates in
negotiable form for the Offered Shares and Offered Warrants at such time.
In addition, in the event the Underwriters (or the Representative,
individually) exercise the option to purchase from the Company all or any
portion of the Optional Shares and Optional Warrants pursuant to the provisions
of Section 3 hereof, payment for such securities shall be made to the Company by
the effectuation of a federal wire transfer at the date of delivery of such
securities as required by the provisions of Section 3 hereof.
It is understood that you, individually and not as Representative of
the several Underwriters, may (but shall not be obligated to) make any and all
payments required pursuant to this Section 2 on behalf of any Underwriters whose
check or checks shall not have been received by the Representative at the time
of delivery of the First Offered Securities to be purchased by such Underwriter
or Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder. It is also
understood that you individually rather than all of the Underwriters may (but
shall not be obligated to) purchase the Optional Shares and/or Optional Warrants
(as hereinafter defined).
It is understood that the several Underwriters propose to offer the
Offered Shares and Offered Warrants to be purchased hereunder to the public upon
the terms and conditions set forth in the Registration Statement, after the
Registration Statement becomes effective.
(c) On the First Closing Date, the Company will sell the
Representative's Warrants to Sands Brothers, for its own
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account and not as Representative of the several Underwriters, or to its
designees. The Representative's Warrants will be in the form of, and in
accordance with, the provisions of the Representative's Ordinary Share Purchase
Warrant attached as an exhibit to the Registration Statement. The aggregate
purchase price for the Representative's Warrants is $100.00. Payment for the
Representative's Warrants will be made to the Company by check or checks payable
to its order on the First Closing Date against delivery of the certificates
representing the Representative's Warrants. The certificates representing the
Representative's Warrants will be in such denominations and such names as Sands
Brothers may request prior to the First Closing Date.
3. OPTION TO PURCHASE OPTIONAL SHARES AND/OR OPTIONAL WARRANTS.
(a) For the purposes of covering any overallotments in
connection with the distribution and sale of the Offered Shares and Offered
Warrants as contemplated by the Prospectus, the Company hereby grants an option
to the several Underwriters (which may be exercised, at its option, by the
Representative, individually) to purchase all or any part of the Optional Shares
and/or Optional Warrants from the Company. This option may be exercised within
45 days after the Effective Date of the Registration Statement upon notice by
the Representative to the Company advising as to the amount of Optional Shares
and/or Optional Warrants as to which the option is being exercised, the names
and denominations in which the certificates for such Optional Shares and/or
Optional Warrants 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
Representative but shall not be earlier than three nor later than ten full
business days after the exercise of said option, 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 Optional Shares and/or Optional Warrants against
payment therefor shall take place at the offices of the Representative, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The number of Optional Shares and Optional
Warrants to be purchased by each Underwriter, if any, shall bear the same
percentage to the total number of Optional Shares and Optional Warrants being
purchased by the several Underwriters pursuant to this subsection (a) as the
number of First Offered Securities such Underwriter is purchasing bears to the
total number of First Offered Securities being purchased pursuant to subsection
(a) of Section 1, as adjusted, in each case by the Representative in such manner
as the Representative may deem appropriate. The option granted hereunder may be
exercised only to cover overallotments in the sale by the Underwriters of First
Offered Securities referred to in Section 1 (a) above. The purchase price to
be paid for the
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Optional Shares and Optional Warrants will be the same price per Optional Share
and Optional Warrant as the price per Offered Share or Offered Warrant, as the
case may be, set forth in Section 1 hereof.
(b) Payment for any Optional Shares and Optional Warrants
purchased will be made to the Company by the effectuation of a federal wire
transfer, against receipt of the certificates for such securities by the
Representative for the respective accounts of the several Underwriters
registered in such names and in such denominations as the Representative may
request. The Representatives' written confirmation of the effectuation of such
federal wire transfer, including the applicable federal wire number, shall be
satisfactory evidence that payment of the purchase prices for the Optional
Shares and Optional Warrants has been made for purposes of the Option Closing
Date and, upon presentation of such confirmation, the Company shall be required
to deliver certificates in negotiable form for the Optional Shares and Optional
Warrants at such time.
(c) The obligation of the Underwriters to purchase and pay for
any of the Optional Shares or Optional Warrants is subject to the accuracy and
completeness (as of the date hereof and as of the Option Closing Date) in all
material respects of the representations and warranties of the Company herein,
to the accuracy and completeness of the statements of the Company or its
officers made in any certificate or other document to be delivered by the
Company pursuant to this Agreement, to the performance in all material respects
by the Company of its obligations hereunder, to the satisfaction by the Company
of the conditions, as of the date hereof and as of the Option Closing Date, and
to the delivery to the Underwriters of opinions, certificates and letters dated
the Option Closing Date substantially similar in scope to those specified in
Section 5, 6(b), (c), (d) and (e) hereof, but with each reference to "Offered
Shares," "Offered Warrants" and "First Closing Date" to be, respectively, to the
Optional Shares, Optional Warrants and the Option Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) The Company is a corporation duly organized and validly
existing under the laws of the State of Israel, with full power and authority,
corporate and other, to own or lease and operate its properties and to conduct
its business as described in the Registration Statement and to execute, deliver
and perform this Agreement, the Warrant Agreement and the Representative's
Warrant Agreement and to consummate the transactions contemplated hereby and
thereby. The Company is duly qualified to do business as a foreign corporation
and is in
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good standing in all jurisdictions wherein such qualification is necessary and
failure so to qualify could have a material adverse effect on the financial
condition, results of operations, business or properties of the Company. Other
than Accent Worldwide, Inc. ("Accent Worldwide"), Accent Software International
(Europe) Ltd. ("Accent Europe") and AgentSoft Ltd. ("AgentSoft"; Accent
Worldwide, Accent Europe and AgentSoft are sometimes hereinafter individually
referred to as a "Subsidiary" and collectively referred to as the
"Subsidiaries"), the Company has no subsidiaries.
(b) Accent Worldwide is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
power and authority, corporate and other, to own or lease and operate its
properties and to conduct its business as described in the Registration
Statement. Accent Worldwide is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company or Accent Worldwide. The Company owns all of the
issued and outstanding shares of capital stock of Accent Worldwide, free and
clear of any security interests, liens, encumbrances, claims and charges, and
all of such shares have been duly authorized and validly issued and are fully
paid and nonassessable. There are no options or warrants for the purchase of,
or other rights to purchase, or outstanding securities convertible into or
exchangeable for, any capital stock or other securities of Accent Worldwide.
(c) Accent Europe is a corporation duly organized, validly
existing and in good standing under the laws of the United Kingdom, with full
power and authority, corporate and other, to own or lease and operate its
properties and to conduct its business as described in the Registration
Statement. Accent Europe is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company or Accent Europe. The Company owns all of the issued
and outstanding shares of capital stock of Accent Europe, free and clear of any
security interests, liens, encumbrances, claims and charges, and all of such
shares have been duly authorized and validly issued and are fully paid and
nonassessable. There are no options or warrants for the purchase of, or other
rights to purchase, or outstanding securities convertible into or exchangeable
for, any capital stock or other securities of Accent Europe.
(d) AgentSoft is a corporation duly organized, validly existing
and in good standing under the laws of the State
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of Israel, with full power and authority, corporate and other, to own or lease
and operate its properties and to conduct its business as described in the
Registration Statement. AgentSoft is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company or AgentSoft. The Company owns % of the issued and
outstanding shares of capital stock of AgentSoft, free and clear of any security
interests, liens, encumbrances, claims and charges, and all of such shares have
been duly authorized and validly issued and are fully paid and nonassessable.
There are no options or warrants for the purchase of, or other rights to
purchase, or outstanding securities convertible into or exchangeable for, any
capital stock or other securities of AgentSoft, except as described in the
Registration Statement.
(e) This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company, and
each of the Warrant Agreement and the Representative's Warrant Agreement, when
executed and delivered by the Company on the First Closing Date, will be valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, in each case subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, except that
rights to indemnification and contribution thereunder and under this Agreement
may be limited by United States or state securities laws or public policy
relating thereto. The execution, delivery and performance of this Agreement,
the Warrant Agreement and the Representative's Warrant Agreement by the Company,
the consummation by the Company of the transactions herein and therein
contemplated and the compliance by the Company with the terms of this Agreement,
the Warrant Agreement and the Representative's Warrant Agreement have been duly
authorized by all necessary corporate action and do not and will not, with or
without the giving of notice or the lapse of time, or both, (i) result in any
violation of the Memorandum of Association or Articles of Association of the
Company; (ii) result in a breach of or conflict with any of the terms or
provisions of, or constitute a default under, or result in the modification or
termination of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company or any of the Subsidiaries pursuant to any indenture, mortgage, note,
contract, commitment or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries or any of their respective properties or assets is or may be bound
or affected; (iii) violate any existing applicable law, rule, regulation,
judgment, order or decree of
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any governmental agency or court, domestic or foreign, having jurisdiction over
the Company or any of the Subsidiaries or any of their respective properties or
business which, in the case of clause (ii) or (iii), would have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company or any of the Subsidiaries or the ability of the
Company or the Subsidiaries to consummate the transactions contemplated hereby.
(f) The Company has received from the Israel Securities
Authority ("ISA") an exemption (the "ISA exemption") from the requirement to
publish a prospectus in Israel (subject to certain conditions) for the offer and
sale of the Offered Shares and Offered Warrants and such exemption was in full
force and effect at the time of the effectiveness of the Registration Statement
and shall be in full force and effect on the date of the Prospectus, on the date
any post-effective amendments to the Registration Statement shall become
effective, and when any supplement or amendment to the Prospectus is filed with
the Commission. Assuming that the several Underwriters complies with the last
two sentences of Section 1 hereof, no authorization, approval, consent, order,
registration, license or permit of any court or governmental agency or body,
other than under the Securities Act of 1933, as amended (the "Act"), the
Regulations (as hereinafter defined) and applicable state securities or Blue Sky
laws, the ISA exemption, the special permit of the Controller of Foreign
Currency of the Bank of Israel and the approval of the Office of the Chief
Scientist of the Ministry of Trade and Industry ("OCS"), each of which has been
received and is in full force and effect, is required for the valid
authorization, issuance, sale and delivery of the Offered Shares and Offered
Warrants, and the consummation by the Company of the transactions contemplated
by this Agreement, the Warrant Agreement or the Representative's Warrant
Agreement or, if so required, all such authorizations, approvals, consents,
orders, registrations, licenses and permits, specifying the same, have been or,
prior to the closing, will be duly obtained and are or will be in full force and
effect.]
(g) The Company has prepared in conformity with the requirements
of the Act and the rules and regulations (the "Regulations") of the Securities
and Exchange Commission (the "Commission") and filed with the Commission a
registration statement (File No. 333-7637) on Form S-1 and has filed one or more
amendments thereto, covering the registration of the Securities under the Act,
including the related preliminary prospectus or preliminary prospectuses (each
thereof being herein called a "Preliminary Prospectus") and a proposed final
prospectus. Each Preliminary Prospectus was endorsed with the legend required
by Item 501(c)(5) of Regulation S-K of the Regulations, including, if
applicable, Rule 430A of the Regulations. Such registration statement including
any documents
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incorporated by reference therein and all financial schedules and exhibits
thereto, as amended at the time it becomes effective, and the final prospectus
included therein are herein, respectively, called the "Registration Statement"
and the "Prospectus," except that, (i) if the prospectus filed by the Company
pursuant to Rule 424(b) of the Regulations differs from the Prospectus, the term
"Prospectus" will also include the prospectus filed pursuant to Rule 424(b), and
(ii) if the Registration Statement is amended or such Prospectus is supplemented
after the effective date of the Registration Statement (the "Effective Date")
and prior to the Option Closing Date (as hereinafter defined), the terms
"Registration Statement" and "Prospectus" shall include the Registration
Statement as amended or supplemented.
(h) Neither the Commission, the ISA, nor to the best of the
Company's knowledge, any state regulatory authority has issued any order
preventing or suspending the use of any Preliminary Prospectus or has instituted
or, to the Company's knowledge, threatened to institute any proceedings with
respect to such an order.
(i) The Registration Statement when it becomes effective, the
Prospectus (and any amendment or supplement thereto) when it is filed with the
Commission pursuant to Rule 424(b), and both documents as of the First Closing
Date, as the case may be, will comply as to form with the Act and the
Regulations and will in all material respects conform to the requirements of the
Act and the Regulations, and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, on such dates, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of the Underwriters in connection with the
Registration Statement or Prospectus or any amendment or supplement thereto by
the Underwriters expressly for use therein.
(j) Luboshitz, Kasierer & Co., Member Firm of Xxxxxxxx
Worldwide, SC, the accountants who have certified certain of the financial
statements filed and to be filed with the Commission as part of the Registration
Statement and the Prospectus, are independent public accountants within the
meaning of the Act and Regulations. The financial statements and schedules and
the notes thereto and the selected financial statements and summary financial
statements filed as part of the Registration Statement and included in the
Prospectus present fairly in all material respects the financial position of the
Company as of the dates thereof, and the results of operations and changes in
financial position of the Company for the periods indicated
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therein, in conformity with generally accepted accounting principles in Israel
and in the United States (which, as applied to the Company for the periods
involved, are substantially identical in all material respects) applied on a
substantially consistent basis throughout the periods involved except as
otherwise stated in the Registration Statement and the Prospectus.
(k) The Company had at the date or dates indicated in the
Prospectus a duly authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus. Based on the assumptions stated in
the Registration Statement and the Prospectus, the Company will have on the
First Closing Date referred to below the adjusted stock capitalization set forth
therein. Except as disclosed in the Registration Statement or the Prospectus,
on the Effective Date and on the First Closing Date referred to below, there
will be no options to purchase, warrants or other rights to subscribe for, or
any securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of the Company's capital stock or any such warrants,
convertible securities or obligations. Except as set forth in the Prospectus,
no holders of any of the Company's securities have any rights, "demand,"
"piggyback" or otherwise, to have such securities registered under the Act.
(l) The descriptions in the Registration Statement and the
Prospectus of contracts and other documents are accurate and present fairly the
information required to be disclosed, and there are no contracts or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement under the
Act or the Regulations which have not been so described or filed as required.
(m) The Company has filed with the appropriate federal, state
and local governmental agencies, and all foreign countries and political
subdivisions thereof, all tax returns, including franchise tax returns, which
are required to be filed or has duly obtained extensions of time for the filing
thereof and has paid all taxes shown on such returns and all assessments
received by it to the extent that the same have become due except where the
failure to file tax returns, obtain extensions of time for filing or pay such
taxes and assessment would not have a material adverse effect on the financial
position, results of operations, properties or business of the Company or any of
the Subsidiaries; and the provisions for income taxes payable, if any, shown on
the financial statements filed with or as part of the Registration Statement are
sufficient for all accrued and unpaid foreign and domestic taxes, whether or not
disputed, and for all periods to and including the dates of such financial
statements. Except as disclosed in writing to the Underwriters,
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the Company has not executed or filed with any taxing authority, foreign or
domestic, any agreement extending the period for assessment or collection of any
income taxes and is not a party to any pending action or proceeding by any
foreign or domestic governmental agency for assessment or collection of taxes;
and no claims for assessment or collection of taxes have been asserted against
the Company.
(n) The outstanding Ordinary Shares and outstanding options and
warrants to purchase Ordinary Shares have been duly authorized and validly
issued. The outstanding Ordinary Shares are fully paid and nonassessable. The
outstanding options and warrants to purchase Ordinary Shares constitute the
valid and binding obligations of the Company, enforceable in accordance with
their terms, in each case subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and except that rights to
indemnification and contribution thereunder and under this Agreement may be
limited by United States or state securities laws or public policy relating
thereto. None of the outstanding Ordinary Shares or options or warrants to
purchase Ordinary Shares has been issued in violation of the preemptive rights
of any shareholder of the Company. None of the holders of the outstanding
Ordinary Shares is subject to personal liability solely by reason of being such
a holder. The offers and sales of the outstanding Ordinary Shares and
outstanding options and warrants to purchase Ordinary Shares were at all
relevant times either registered under the Act, the applicable state securities
or Blue Sky laws and any applicable Israeli securities laws or exempt from such
registration requirements. The authorized Ordinary Shares and outstanding
options and warrants to purchase Ordinary Shares conform in all material
respects to the descriptions thereof contained in the Registration Statement and
Prospectus.
(o) The issuance and sale of the Shares and the Warrant Shares
have been duly authorized and, when the Shares and the Warrant Shares have been
issued and duly delivered against payment therefor as contemplated by this
Agreement or by the Warrant Agreement, as the case may be, the Shares and the
Warrant Shares will be validly issued, fully paid and nonassessable. The
holders of the Securities will not be subject to personal liability solely by
reason of being such holders and none of the Securities will be subject to
preemptive rights of any shareholder of the Company.
(p) The issuance and sale of the Warrants, the Representative's
Warrants and the Underlying Warrants have been duly authorized and, when issued,
paid for and delivered pursuant to the terms of this Agreement or the
Representative's Warrant Agreement, as the case may be, the Warrants, the
Representative's Warrants and the Underlying Warrants will constitute valid and
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binding obligations of the Company, enforceable as to the Company in accordance
with their terms, in each case subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless or whether enforcement is sought in a
proceeding at law or in equity) and except that rights to indemnification and
contribution thereunder and under this Agreement may be limited by United States
or state securities laws or public policy relating thereto. The Warrant Shares
have been duly reserved for issuance upon exercise of the Warrants, the
Representative's Warrants and the Underlying Warrants in accordance with the
provisions of the Warrants, the Representative's Warrants and the Underlying
Warrants. The Warrants, Representative's Warrants and Underlying Warrants will
conform in all material respects to the descriptions thereof contained in the
Registration Statement and Prospectus.
(q) Neither the Company nor the Subsidiary is in violation of,
or in default under, (i) any term or provision of its Memorandum of Association
or Articles of Association, as amended; (ii) any material term or provision or
any financial covenants of any indenture, mortgage, contract, commitment or
other agreement or instrument to which it is a party or by which it or any of
its property or business is or may be bound or affected; or (iii) any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
the Subsidiary or any of their respective properties or business, which, in the
case of clause (ii) and (iii), would have a material adverse effect on the
financial condition, results of operations, business or properties of the
Company or the Subsidiary or the ability of the Company or the Subsidiary to
consummate the transactions contemplated hereby. The Company and the Subsidiary
own, possess or have obtained all governmental and other licenses, permits,
certifications, registrations, approvals or consents and other authorizations
("Permits") necessary to own or lease, as the case may be, and to operate their
properties, and to conduct their respective business or operations as presently
conducted, except where the failure to own, possess or obtain such Permits would
not have a material adverse effect on the financial condition, results of
operations, business or properties of the Company or the Subsidiary. All such
Permits are outstanding and in good standing, and there are no proceedings
pending or, to the best of the Company's knowledge, threatened, or any basis
therefor, seeking to cancel, terminate or limit such Permits.
(r) Except as set forth in the Prospectus, there are no claims,
actions, suits, proceedings, arbitrations,
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investigations or inquiries before any governmental agency, court or tribunal,
domestic or foreign, or before any private arbitration tribunal, pending, or, to
the best of the Company's knowledge, threatened against the Company or any
Subsidiary or involving the Company's or any Subsidiary's properties or business
which, if determined adversely to the Company or any Subsidiary, would,
individually or in the aggregate, have a material adverse effect on the
financial position, results of operations, properties, or business of the
Company or any Subsidiary or which question the validity of the capital stock of
the Company or this Agreement or of any action taken or to be taken by the
Company pursuant to, or in connection with, this Agreement; nor, to the best of
the Company's knowledge, except as disclosed in the Prospectus, is there any
reasonable basis for any such claim, action, suit, proceeding, arbitration,
investigation or inquiry. There are no outstanding orders, judgments or decrees
of any court, governmental agency or other tribunal naming the Company or any
Subsidiary and enjoining the Company or any Subsidiary from taking, or requiring
the Company or any Subsidiary to take, any action, or to which the Company or
any Subsidiary, or the Company's or any Subsidiary's properties or business is
bound or subject which would be material to the Company.
(s) The Company has not incurred any liability for any finder's
fees or similar payments in connection with the transactions herein contemplated
other than payments previously made to the Representative.
(t) (i) The Company and each Subsidiary have sufficient title
and ownership of, or license or other rights to, or have applied for, all
patents, patent applications, trademarks, trademark applications, service marks,
service xxxx applications, trade names, copyrights, trade secrets, information,
proprietary rights, technologies, know-how and processes (collectively,
"Intellectual Property") necessary for its business as now conducted and as
proposed to be conducted, as described in the Prospectus.
(ii) Except as disclosed in the Prospectus, no claims have
been asserted by any person to the ownership or use of any Intellectual Property
or challenging or questioning the validity or effectiveness of any such license
or agreement and the Company and each Subsidiary have no knowledge of any valid
basis for any such claim. The use of the Intellectual Property by the Company
and each Subsidiary does not infringe on the rights of any person and there are
no pending or, to the knowledge of the Company and each Subsidiary, threatened
claims nor has it been alleged that the Intellectual Property is engaged in such
infringements. All of the trademark and trade name registrations, patents and
copyrights are in full force and effect. Other than potential sublicensees of
the Company and
each Subsidiary, no other person has any right to use any Intellectual Property
for similar or related products in competition with the products of the Company
and each Subsidiary and no other person is infringing any of the Intellectual
Property.
(iii) Each of the Company and each Subsidiary has taken
reasonable steps sufficient to safeguard and maintain the secrecy and
confidentiality of, or their respective proprietary rights in, all of the
unpatented know how, technology, proprietary processes, formulae, and other
information owned by it. Without limiting the generality of the foregoing, each
of the Company and each Subsidiary has obtained confidentiality and secrecy
agreements from all past and present employees and independent third parties
involved in the invention or creation of their respective Intellectual
Properties.
(u) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has incurred any material liability or obligation (absolute or
contingent), except liabilities and obligations incurred in the ordinary course
of business, and has not sustained any material loss or interference with its
business from fire, storm, explosion, flood or other casualty, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree; and since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there have not been, and prior
to the First Closing Date referred to below there will not be, any changes in
the capital stock or any material increases in the long-term debt of the Company
or any material adverse change in or affecting the general affairs, management,
financial condition, shareholders' equity, results of operations or prospects of
the Company or any Subsidiary, other than as set forth or contemplated in the
Prospectus.
(v) Neither the Company nor any Subsidiary owns any real
property. Each of the Company and the Subsidiaries have good title to all
material personal property (tangible and intangible) owned by it, free and clear
of all security interests, charges, mortgages, liens, encumbrances and defects,
except such as are described in the Registration Statement and Prospectus or
such as do not materially affect the value or transferability of such property
and do not interfere with the use of such property made, or proposed to be made,
by the Company or any Subsidiary. The leases, licenses or other contracts or
instruments under which the Company and any Subsidiary leases, holds or is
entitled to use any property, real or personal, are valid and subsisting and
neither the Company nor any Subsidiary, nor, to the best of the Company's
knowledge, any other party is in default thereunder and, to the best of the
Company's knowledge, no event has occurred which, with the passage of time or
the
-15-
giving of notice, or both, would constitute a default thereunder. Neither the
Company nor any Subsidiary has received notice of any violation of any
applicable law, ordinance, regulation, order or requirement relating to its
owned or leased properties the violation of which would have a material adverse
effect on the Company or any Subsidiary.
(w) Each material contract or other instrument (however
characterized or described) to which the Company or any Subsidiary is a party or
by which their respective properties or business is or may be bound or affected
and to which reference is made in the Prospectus has been duly and validly
executed by the Company and, assuming that such contracts or other instruments
have been properly executed by parties other than the Company, is in full force
and effect in all material respects and is enforceable against the parties
thereto in accordance with its terms, in each case subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless or whether
enforcement is sought in a proceeding at law or in equity) and except that
rights to indemnification and contribution thereunder and under this Agreement
may be limited by United States or state securities laws or public policy
relating thereto; and none of such contracts or instruments has been assigned by
the Company or any Subsidiary, and neither the Company nor any Subsidiary, nor,
to the best of the Company's knowledge, any other party is in default thereunder
and, to the best of the Company's knowledge, no event has occurred which, with
the lapse of time or the giving of notice, or both, would constitute a default
thereunder.
(x) The employment agreements between the Company, and between
any Subsidiary, and their respective officers and employees, described in the
Registration Statement, are binding and enforceable obligations upon the
respective parties thereto in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws or arrangements affecting creditors' rights
generally and subject to principles of equity and public policy and subject to
the possible finding by an Israeli court of competent jurisdiction that the
scope, time period or geographic range of any post-employment non-competition
restriction exceeds that required to protect the Company's legitimate interests.
(y) Except as set forth in the Prospectus, neither the Company
nor any Subsidiary has any employee benefit plans (including, without
limitation, profit sharing and welfare benefit plans) or deferred compensation
arrangements that are
subject to the provisions of the Employee Retirement Income Security Act of
1974.
(z) To the best of the Company's knowledge, no labor problem
exists with any of the Company's or any of the Subsidiaries' employees or is
imminent which could have a material adverse affect on the Company or any
Subsidiary.
(aa) The Company has adequately insured its properties against
loss or damage by fire or other casualty and maintains, in amounts which it
deems, in good faith, to be adequate, such other insurance, including but not
limited to, liability insurance, as is usually maintained by companies engaged
in the same or similar businesses located in its geographic area.
(ab) Neither the Company nor any Subsidiary nor, to their
knowledge any of their respective officers, employees, agents or any other
person acting on behalf of the Company or any of its Subsidiaries has, directly
or indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency (domestic or foreign) or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is, or may be in a
position to help or hinder the business of the Company or the business of any of
its Subsidiaries (or to assist the Company or any of its Subsidiaries in
connection with any actual or proposed transaction) which (a) might subject the
Company or any of its Subsidiaries, or any other such person, to any damage or
penalty in any civil, criminal or governmental litigation or proceeding
(domestic or foreign); (b) if not given in the past, might have had a material
adverse effect on the assets, business or operations of the Company or of any of
its Subsidiaries; or (c) if not continued in the future, might adversely affect
the assets, business, operations or prospects of the Company and of its
Subsidiaries, taken as a whole. The Company believes that its and its
Subsidiaries' international accounting controls are sufficient to cause the
Company and its Subsidiaries to comply with the Foreign Corrupt Practices Act of
1977, as amended.
(ac) The Company has filed in a timely manner all reports and
other documents required to be filed by it with the Commission under the Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
and, to the Company's knowledge, each such report or other document contained,
at the time it was filed, such information as was required to be included in
such report or other document and all such information was correct and complete
in all material
-17-
respects; the Company has made all reports to shareholders required by law to be
made by the Company and each such report was correct and complete in all
material respects; to the Company's best knowledge, except as disclosed in the
Registration Statement, no event has occurred or is likely to occur that
required would require an amendment to any report or document referred to in
this Section 1(ah) that has not been filed or distributed as required.
(ad) The Company, in all material respects, has provided to
Xxxxxxx Krooks & Xxxx, P.C., counsel to the Representative ("Representative's
Counsel"), all agreements, certificates, correspondence and other items and
documents requested by such counsel's due diligence letter dated October 1,
1996.
(ae) Except as set forth in Prospectus, no officer, director,
principal stockholder or partner of the Company or any of the Subsidiaries, or
any "affiliate" or "associate" (as these terms are defined in Rule 405
promulgated under the Rules and Regulations) of any of the foregoing persons or
entities has or has had, either directly or indirectly, (i) an interest in any
person or entity which (A) furnishes or sells services or products which are
furnished or sold or are proposed to be furnished or sold by the Company or the
Subsidiaries or (B) purchases from or sells or furnishes to the Company or the
Subsidiaries any goods or services, or (ii) a beneficial interest in any
contract or agreement to which the Company or the Subsidiaries is a party or by
which it may be bound or affected. Except as set forth in the prospectus under
"Certain Transactions," there are no existing, agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company or the
Subsidiaries, and any officer, director, Principal Stockholder (as such term is
defined in the Prospectus) of the Company or the Subsidiaries, or any partner,
affiliate or associate of any of the foregoing persons or entities.
(af) Each of the minute books of the Company and the Subsidiaries
have been made available to the Underwriters and contain a complete record in
all material respects of all meetings and actions of the directors and
stockholders of the Company and the Subsidiaries, respectively, since the time
of its respective incorporation, and accurately reflects all transactions
referred to in such minutes in all material respects.
(ag) The Company as of the effective date of the Registration
Statement maintains term key-man insurance on the life of each of Xxxxxx X.
Xxxxxxxxxxx and Xx. Xxxxxxx Xxxxxxxxxxx in the amounts of $3,000,000 and
$2,000,000, respectively, which policies name the Company as the sole
beneficiary thereof.
-18-
Any certificate signed by an officer of the Company and delivered
to the Representative or to counsel for the Representative shall be deemed to be
a representation and warranty by the Company to the Representative as to the
matters covered thereby.
5. CERTAIN COVENANTS OF THE COMPANY. The Company covenants with the
several Underwriters as follows:
(a) The Company will not at any time, whether before the
Effective Date or thereafter during such period as the Prospectus is required by
law to be delivered in connection with the sales of the Offered Shares and
Offered Warrants by the several Underwriters, file or publish any amendment or
supplement to the Registration Statement or Prospectus of which the
Representative has not been previously advised and furnished a copy, or to which
the Representative shall object in writing.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective and will advise the Representative
immediately, and, if requested by the Representative, confirm such advice in
writing, (i) when the Registration Statement, or any post-effective amendment to
the Registration Statement or any supplemented Prospectus is filed with the
Commission; (ii) of the receipt of any comments from the Commission; (iii) of
any request of the Commission for amendment or supplementation of the
Registration Statement or Prospectus or for additional information and (iv) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
any Preliminary Prospectus, or of the suspension of the qualification of the
Offered Shares and/or the Offered Warrants for offering or sale in any
jurisdiction, or of the initiation of any proceedings for any of such purposes.
The Company will make every reasonable effort to prevent the issuance of any
such stop order or of any order preventing or suspending such use and to obtain
as soon as possible the lifting thereof, if any such order is issued.
(c) The Company will deliver to the several Underwriters,
without charge, from time to time until the Effective Date, as many copies of
each Preliminary Prospectus as the Underwriters may reasonably request, and the
Company hereby consents to the use of such copies for purposes permitted by the
Act. The Company will deliver to the several Underwriters, without charge, as
soon as the Registration Statement becomes effective, and thereafter from time
to time as requested, such number of copies of the Prospectus (as supplemented,
if the Company makes any supplements to the Prospectus) as the Underwriters may
reasonably request. The Company has furnished or will furnish to the
Representative two conformed copies of the Registration Statement as originally
filed and of all amendments
-19-
thereto, whether filed before or after the Registration Statement becomes
effective, two copies of all exhibits filed therewith and two conformed copies
of all consents and certificates of experts.
(d) The Company will comply with the Act, the Regulations, the
Exchange Act, and the rules and regulations thereunder so as to permit the
continuance of sales of and dealings in the Offered Shares and Offered Warrants,
in any Optional Shares and Optional Warrants which may be issued and sold, and
in the Warrant Shares underlying such Warrants. If, at any time when a
prospectus relating to such Securities is required to be delivered under the
Act, any event occurs as a result of which the Registration Statement and
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if it shall be necessary to amend or supplement the
Registration Statement and Prospectus to comply with the Act or the regulations
thereunder, the Company will promptly file with the Commission, subject to
Section 5(a) hereof, an amendment or supplement which will correct such
statement or omission or which will effect such compliance.
(e) The Company will furnish such proper information as may be
required and otherwise cooperate in qualifying the Securities for offering and
sale under the securities or Blue Sky laws relating to the offering or for sale
in such jurisdictions as the Representative may reasonably designate, provided
that no such qualification will be required in any jurisdiction where, solely as
a result thereof, the Company would be subject to service of general process or
to taxation or qualification as a foreign corporation doing business in such
jurisdiction.
(f) The Company will make generally available to its security
holders, in the manner specified in Rule 158(b) under the Act, and deliver to
the Representative and its counsel as soon as practicable and in any event not
later than 45 days after the end of its fiscal quarter in which the first
anniversary date of the effective date of the Registration Statement occurs, an
earning statement meeting the requirements of Rule 158(a) under the Act covering
a period of at least 12 consecutive months beginning after the effective date of
the Registration Statement.
(g) For a period of five years from the Effective Date, the
Company will deliver to the Representative and to Representative's Counsel on a
timely basis (i) a copy of each report or document, including, without
limitation, reports on Forms 8-K, 10-C, 10-K and 10-Q and exhibits thereto,
filed or furnished to the Commission, any securities exchange or the National
Association of Securities Dealers, Inc. (the "NASD"); (ii) as soon as
practicable, copies of any reports or
-20-
communications (financial or other) of the Company mailed to its security
holders; (iii) as soon as practicable, a copy of any Schedule 13D, 13G, 14D-1 or
13E-3 and Forms 3, 4 and 5 received or prepared by the Company from time to
time; (iv) monthly statements setting forth such information regarding the
Company's results of operations and financial position (including balance sheet,
profit and loss statements but excluding data regarding outstanding purchase
orders) as is regularly prepared by management of the Company; and (v) such
additional information concerning the business and financial condition of the
Company as the Representative may from time to time reasonably request and which
can be prepared or obtained by the Company without unreasonable effort or
expense. The Company will furnish to its shareholders annual reports containing
audited financial statements and such other periodic reports as it may determine
to be appropriate or as may be required by law.
(h) Neither the Company nor any person that is controlled by the
Company will take any action designed to or which might be reasonably expected
to cause or result in the stabilization or manipulation of the price of the
Offered Shares or the Offered Warrants.
(i) If the transactions contemplated by this Agreement are
consummated, the Representative shall retain the Seventy Thousand Dollars
($70,000) previously paid to it, and the Company will pay or cause to be paid
the following: all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including, but not limited to,
the fees and expenses of accountants and counsel for the Company, the
preparation, printing, mailing and filing of the Registration Statement
(including financial statements and exhibits), Preliminary Prospectuses and the
Prospectus, and any amendments or supplements thereto, the printing and mailing
of the Selected Dealer Agreement, if any, the issuance and delivery of the
Shares and Warrants to the several Underwriters; all taxes, if any, on the
issuance of the Shares and Warrants; the fees, expenses and other costs of
qualifying the Shares and Warrants for sale under the Blue Sky or securities
laws of those states in which the Shares and Warrants are to be offered or sold,
the cost of printing and mailing the "Blue Sky Survey" and fees and
disbursements of counsel in connection therewith, including those of such local
counsel as may have been retained for such purpose; the filing fees incident to
securing any required review by the NASD; the cost of furnishing to the
Underwriters copies of the Registration Statement, Preliminary Prospectuses and
the Prospectus as herein provided; the costs of "bound volumes" for the
Representative and its counsel, the costs of placing "tombstone" advertisements
in the Wall Street Journal and Barrons and all other costs and expenses incident
to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 5(i).
-21-
In addition, at the First Closing Date or the Option Closing
Date, as the case may be, Sands Brothers will, in its individual rather than its
representative capacity, deduct from the payment for the Offered Shares and
Offered Warrants or any Optional Shares and/or Optional Warrants purchased three
percent (3%) of the gross proceeds of the offering (less the sum of Seventy
Thousand Dollars ($70,000) previously paid to the Representative), as payment
for the Representative's nonaccountable expense allowance relating to the
transactions contemplated hereby.
(j) If the transactions contemplated by this Agreement or
related hereto are not consummated because the Company decides not to proceed
with the offering contemplated hereby for any reason or the Representative on
behalf of the several Underwriters decides not to proceed with the offering
contemplated hereby because of a breach by the Company of any representation,
warranty or covenant contained in this Agreement or as a result of adverse
changes in the affairs of the Company, then the Representative may retain an
amount equal to its actual accountable out-of-pocket expenses up to the sum of
$100,000 (inclusive of the $70,000 previously paid to it); provided, however,
that if the Representative shall terminate this Agreement for any other reason,
then the Company need only reimburse the Representative for its actual
accountable out-of-pocket expenses up to a maximum of $70,000, inclusive of the
$70,000 previously paid to it.
(k) The Company will to apply the net proceeds from the sale of
the Shares and Warrants for the purposes set forth in the Prospectus under the
heading "Use of Proceeds."
(l) During the one hundred eighty (180) day period following the
date hereof, none of the Company's officers, directors or holders of five
percent (5%) or more of the Ordinary Shares (the "Principal Shareholders") will
offer for sale or sell or otherwise dispose of any Ordinary Shares owned by
them, directly or indirectly, in any manner whatsoever (including pursuant to
Rule 144 under the Act), and no holder of registration rights relating to the
securities of the Company will exercise any such registration rights, in either
case, without obtaining the prior written approval of the Representative. The
Company will deliver to the Representative the written undertakings as of the
date hereof of its officers, directors and Principal Shareholders to this
effect.
(m) Except for the filing of a Registration Statement on Form
S-3 on or after _______ [180 DAYS FROM DATE HEREOF] to cover the shares
underlying 150,000 warrants issued to IMR Fund, L.P. in connection with the
IMR Notes (as defined in the Prospectus), the Company will not file any
registration statement relating to the offer or sale of any of the Company's
-22-
securities, including any registration statement on Form S-8, during the twelve
(12) months following the date hereof without the Representative's prior written
consent.
(n) The Company maintains and will continue to maintain a system
of internal accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary in order to
permit preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(o) The Company will use its best efforts to maintain the
listing of the Shares on the NASDAQ SmallCap Market for so long as the Shares
remain qualified for such listing.
(p) Subject to the sale of the Offered Shares and Offered
Warrants, the Company shall cause its legal counsel to provide the several
Underwriters with a list, to be updated at least annually, of those states in
which the Ordinary Shares may be traded on non-issuer transactions under the
Blue Sky laws of the several states until such time as the Ordinary Shares are
listed on the New York Stock Exchange or the American Stock Exchange.
(q) Subject to the sale of the Offered Shares and Offered
Warrants, for a period of not less than three (3) years from the date hereof,
the Company will, at Representative's option and if so requested by
Representative, recommend and use its best efforts to elect one designee of
Representative, at the option of Representative, either as a member of or
nonvoting advisor to its Board of Directors; such designee, if elected or
appointed, shall attend meetings of the Board and receive no more or less
compensation than is paid to other non-management directors of the Company and
shall be entitled to receive reimbursement for all reasonable costs incurred in
attending such meetings including, but not limited to, food, lodging and
transportation. Representative shall have the right to elect one designee as an
nonvoting advisor to the Board from the Effective Date to the Approval Date.
The Company agrees to indemnify and hold Representative and its designee
harmless, to the maximum extent permitted by law, against any and all claims,
actions, awards and judgments arising out of such designee's service as a
director or advisor and in the event the Company maintains a liability insurance
policy affording coverage for the acts of its officers and directors, to include
each of Representative and its designee as an insured under such policy.
-23-
If Representative does not exercise its option to designate such
member of or advisor to the Company's Board of Directors, Representative shall
nonetheless have the right to send a representative (who need not be the same
individual from meeting to meeting) to observe each meeting of the Board of
Directors. The Company agrees to give Representative notice of each such
meeting and to provide Representative with an agenda and minutes of the meeting
no later than it gives such notice and provides such items to the directors.
(r) Subject to the sale of the Offered Shares and Offered
Warrants, the Representative shall have the right of first refusal with respect
to future public sales of debt and equity securities of the Company, any
subsidiary or successor to the Company or any Company securities held by any
Principal Shareholders for a three year period following the date hereof. It is
understood that if such a proposed financing is offered to Representative,
Representative shall have thirty (30) days in which to determine whether or not
to accept such offer and, if Representative refuses, and provided that such a
financing is consummated (a) with another underwriter or placement agent upon
the same terms and conditions as those offered to Representative and (b) within
six months after the end of the aforesaid thirty (30) day period, this right of
first refusal shall thereafter be forfeited and terminated; PROVIDED, HOWEVER,
if the financing is not consummated under the conditions of clauses (a) and (b)
above, then the right of first refusal shall once again be reinstated under the
same terms and conditions set forth in this paragraph.
(s) The Company hereby agrees, at its sole cost and expense, to
supply and deliver to the Representative, within a reasonable period from the
date hereof, four (4) bound volumes, including the Registration Statement, as
amended or supplemented, all exhibits to the Registration Statement, the
Prospectus and all other underwriting documents.
(t) Subject to the sale of the Offered Shares and Offered
Warrants, the Company shall pay the Representative a finder's fee equal to five
(5%) percent of the first $ 5 million, four (4%) of the next $1 million, three
(3%) of the next $1 million, two (2%) of the next $1 million and one (1%)
percent thereafter, of consideration in the event the Company, following the
Closing, is a party to any merger, acquisition, joint venture or other similar
transaction introduced directly or indirectly by the Representative and the
Representative actively provides merger and acquisition services in connection
therewith.
(u) During the period commencing one year after the Effective
Date, the Representative shall be entitled to receive a warrant solicitation fee
of 5% of the aggregate exercise price of the Warrants for each Warrant
exercised;
-24-
provided, however, that the Representative will not be entitled to receive such
compensation in Warrant exercise transactions in which (i) the market price of
the Ordinary Shares at the time of exercise is less than the exercise price of
the Warrants; (ii) the Warrants are held in any discretionary account and prior
specific written approval for such exercise has not been received from the
customer; (iii) disclosure of compensation arrangements is not made, in addition
to the disclosure provided in this Prospectus, in documents provided to holders
of the Warrants at the time of exercise; (iv) the exercise of the Warrants is
unsolicited by the Representative; or (v) the solicitation of exercise of the
Warrants was in violation of Rule 10b-6 promulgated under the Exchange Act.
(v) The Company shall continue to retain a transfer agent for
the Ordinary Shares and Warrants, reasonably acceptable to the Representative,
for a period of five (5) years following the Effective Date. In addition, for a
period of three (3) years from the Effective Date, the Company, at its own
expense, shall cause such transfer agent to provide the Representative, if so
requested in writing, with copies of the Company's daily transfer sheets, and,
when so requested by the Representative, a current list of the Company's
security holders, including a list of the beneficial owners of securities held
by a depository trust company and other nominees.
(w) The Company shall, as of the date hereof, have applied for
listing in Standard & Poor's Corporation Records Service (including annual
report information) or Xxxxx'x Industrial Manual (Xxxxx'x OTC Industrial Manual
not being sufficient for these purposes) and shall use its best efforts to have
the Company listed in such manual and shall maintain such listing for a period
of five (5) years from the Effective Date.
(x) For a period of two (2) years following the Effective Date,
the Company shall provide the Representative, on a not less than annual basis,
with internal forecasts setting forth projected results of operations for each
quarterly and annual period in the two (2) fiscal years following the respective
dates of such forecasts. Such forecasts shall be provided to the Representative
more frequently than annually if revised forecasts which reflect more current
information, and significantly revised assumptions or indicate future results
that differ materially from those set forth in the forecasts.
(y) For a period of five (5) years following the Effective Date,
or until such earlier time as the Ordinary Shares and Warrants are listed on the
New York Stock Exchange or the American Stock Exchange, the Company shall cause
its legal counsel to provide the Representative with a list, to be updated at
least annually, of those states in which the Ordinary Shares
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and Warrants may be traded in non-issuer transactions under the Blue Sky laws of
the 50 states.
(z) For a period of five (5) years following the Effective Date,
the Company shall continue to retain Luboshitz, Kasierer & Co. (or a nationally
recognized accounting firm acceptable to the Representative) as the Company's
independent public accountants and shall promptly, upon the Company's receipt
thereof, submit to the Representative copies of such accountants' management
reports and similar correspondence between such accountants and the Company.
(aa) For a period of five (5) years following the Effective Date,
the Company, at its expense, shall cause its then independent certified public
accountants, as described in Section 5(x) above, to review (but not audit) the
Company's financial statements for each of the first three fiscal quarters prior
to the announcement of quarterly financial information, the filing of the
Company's 10-Q quarterly report and the mailing of quarterly financial
information to shareholders.
(ab) So long as any Warrants are outstanding or until the holders
thereof can avail themselves of Rule 144(k) (promulgated pursuant to the Act)
without restriction, the Company shall use its best efforts to cause post-
effective amendments to the Registration Statement to become effective in
compliance with the Act as shall be necessary to enable the sale of the Ordinary
Shares underlying the Warrants and cause a copy of each Prospectus, as then
amended, to be delivered to each holder of record of a Warrant as they request
and as otherwise required by law and, to furnish to the several Underwriters as
many copies of each such Prospectus as they may reasonably request.
(ac) For a period of twenty-five (25) days following the
Effective date, the Company will not issue press releases or engage in any other
publicity without the Representative's prior written consent, other than normal
and customary releases issued in the ordinary course of the Company's business
or those releases required by law.
(ad) The Company shall apply the net proceeds from the sale of
the Shares and the Warrants in the manner, and subject to the conditions, set
forth under "Use of Proceeds" in the Prospectus. No portion of the net proceeds
will be used, directly or indirectly, to acquire any securities issued by the
Company.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATION TO PURCHASE OFFERED
SHARES AND OFFERED WARRANTS FROM THE COMPANY.
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The obligation of the several Underwriters to purchase and pay for the
Offered Shares and Offered Warrants which it has agreed to purchase from the
Company is subject (as of the date hereof and the First Closing Date) to the
accuracy in all material respects of the representations and warranties of the
Company herein, to the accuracy of the statements of the Company or its officers
made pursuant hereto, to the performance in all material respects by the Company
of its obligations hereunder, and to the following additional conditions:
(a) The Registration Statement will have become effective not
later than 10:30 A.M., New York City time, on the day following the date of this
Agreement, or at such later time or on such later date as the Representative may
agree to in writing; prior to the First Closing Date, no stop order suspending
the effectiveness of the Registration Statement will have been issued and no
proceedings for that purpose will have been initiated or will be pending or, to
the best of the Representative's or the Company's knowledge, will be
contemplated by the Commission; and any request on the part of the Commission
for additional information will have been complied with to the satisfaction of
Representative's Counsel.
(b) At the time that this Agreement is executed and at the First
Closing Date, there will have been delivered to the Underwriters signed opinions
of Weil, Gotshal & Xxxxxx, counsel for the Company; Yigal Arnan & Co., Israeli
counsel to the Company; Xxxxxx Xxxxxxxxxxxx, general counsel to the Company; and
Law Offices of ______________, Israeli trademark counsel to the Company, each
dated as of the date hereof or the First Closing Date, as the case may be (and
any other opinions of counsel referred to in such opinion of Company Counsel or
relied upon by Company Counsel in rendering their opinion), substantially as set
forth in Exhibit 6b.
(c) At the First Closing Date (i) the Registration Statement and
the Prospectus and any amendments or supplements thereto will conform in all
material respects to the requirements of the Act and the Regulations, and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto will contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; (ii) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there will not have been
any material adverse change in the financial condition, results of operations or
general affairs of the Company from that set forth or contemplated in the
Registration Statement and the Prospectus, except changes which the Registration
Statement and the Prospectus indicates might occur after the Effective Date;
(iii) since the respective dates as of
-27-
which information is given in the Registration Statement and the Prospectus,
there shall have been no material transaction, contract or agreement entered
into by the Company, other than in the ordinary course of business, which would
be required to be set forth in the Registration Statement and the Prospectus,
other than as set forth therein; and (iv) no action, suit or proceeding at law
or in equity will be pending or, to the best of the Company's knowledge,
threatened against the Company which is required to be set forth in the
Registration Statement and the Prospectus, other than as set forth therein, and
no proceedings will be pending or, to the best of the Company's knowledge,
threatened against the Company before or by any federal, state or other
commission, board or administrative agency wherein an unfavorable decision,
ruling or finding would materially adversely affect the business, property,
financial condition or results of operations of the Company, other than as set
forth in the Registration Statement and the Prospectus. At the First Closing
Date, there will be delivered to the several Underwriters a certificate signed
by the Chairman of the Board or the President or a Vice President of the
Company, dated the First Closing Date, evidencing compliance with the provisions
of this Section 6(d) and stating that the representations and warranties of the
Company set forth in Section 4 hereof were accurate and complete in all material
respects when made on the date hereof and are accurate and complete in all
material respects on the First Closing Date as if then made; that the Company
has performed all covenants and complied with all conditions required by this
Agreement to be performed or complied with by the Company prior to or as of the
First Closing Date; and that, as of the First Closing Date, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or, to his knowledge, are
contemplated or threatened. In addition, the Representative will have received
such other and further certificates of officers of the Company as the
Representative or Representative's Counsel may reasonably request.
(d) At the time that this Agreement is executed and at the First
Closing Date, the several Underwriters will have received a signed letter from
Luboshitz, Kasierer & Co., Member Firm of Xxxxxxxx Worldwide SC, dated the date
such letter is to be received by the Underwriters and addressed to them,
confirming that it is a firm of independent public accountants within the
meaning of the Act and Regulations and stating that: (i) insofar as reported on
by them, in their opinion, the financial statements of the Company included in
the Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable Regulations; (ii) on the
basis of procedures and inquiries (not constituting an examination in accordance
with generally accepted auditing standards) consisting of a reading of the
unaudited interim financial statements of the Company, if any, appearing in the
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Registration Statement and the Prospectus and the latest available unaudited
interim financial statements of the Company, if more recent than that appearing
in the Registration Statement and Prospectus, inquiries of officers of the
Company responsible for financial and accounting matters as to the transactions
and events subsequent to the date of the latest audited financial statements of
the Company, and a reading of the minutes of meetings of the shareholders, the
Board of Directors of the Company and any committees of the Board of Directors,
as set forth in the minute books of the Company, nothing has come to their
attention which, in their judgment, would indicate that (A) during the period
from the date of the latest financial statements of the Company appearing in the
Registration Statement and Prospectus to a specified date not more than three
business days prior to the date of such letter, there have been any decreases in
net current assets or net assets as compared with amounts shown in such
financial statements or decreases in net sales or increases in total or per
share net loss compared with the corresponding period in the preceding year or
any change in the capitalization or long-term debt of the Company, except in all
cases as set forth in or contemplated by the Registration Statement and the
Prospectus, and (B) the unaudited interim financial statements of the Company,
if any, appearing in the Registration Statement and the Prospectus, do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Regulations or are not fairly presented in
conformity with generally accepted accounting principles and practices on a
basis substantially consistent with the audited financial statements included in
the Registration Statement or the Prospectus; and (iii) they have compared
specific dollar amounts, numbers of shares, numerical data, percentages of
revenues and earnings, and other financial information pertaining to the Company
set forth in the Prospectus (with respect to all dollar amounts, numbers of
shares, percentages and other financial information contained in the Prospectus,
to the extent that such amounts, numbers, percentages and information may be
derived from the general accounting records of the Company, and excluding any
questions requiring an interpretation by legal counsel) with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter,
and found them to be in agreement.
(e) There shall have been duly tendered to the Representative
certificates representing the Offered Shares and the Offered Warrants to be sold
on the First Closing Date.
(f) The NASD shall have indicated that it has no objection to
the underwriting arrangements pertaining to the sale of the Shares and Warrants
by the Underwriters.
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(g) No action shall have been taken by the Commission or the
NASD the effect of which would make it improper, at any time prior to the First
Closing Date or the Option Closing Date, as the case may be, for any member firm
of the NASD to execute transactions (as principal or as agent) in the Shares or
Warrants, and no proceedings for the purpose of taking such action shall have
been instituted or shall be pending, or, to the best of the Underwriters' or the
Company's knowledge, shall be contemplated by the Commission or the NASD. The
Company represents at the date hereof, and shall represent as of the First
Closing Date or Option Closing Date, as the case may be, that it has no
knowledge that any such action is in fact contemplated by the Commission or the
NASD.
(h) All proceedings taken at or prior to the First Closing Date
or the Option Closing Date, as the case may be, in connection with the
authorization, issuance and sale of the Shares or Warrants shall be reasonably
satisfactory in form and substance to the Representative and to Representative's
Counsel, and such counsel shall have been furnished with all such documents,
certificates and opinions as they may reasonably request for the purpose of
enabling them to pass upon the matters referred to in Section 6(c) hereof and in
order to evidence the accuracy and completeness of any of the representations,
warranties or statements of the Company, the performance of any covenants of the
Company, or the compliance by the Company with any of the conditions herein
contained.
If any of the conditions specified in this Section 6 have not
been fulfilled, this Agreement may be terminated by the Representative on notice
to the Company.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each officer, director, partner, employee and agent of each
Underwriter, and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and
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 attorneys' fees), to which
they or any of them may become subject, under the Act or otherwise, and will
reimburse, as incurred, the Underwriters and such 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) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in (A) the
Registration Statement,
-30-
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 based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all
of the Securities under the securities laws thereof (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 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 made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Underwriters
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. This indemnity will be in addition to any liability which
the Company may otherwise have.
(b) Each Underwriter severally, but not jointly, 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, from
and 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 all 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, in reliance upon and in conformity with written
-31-
information furnished to the Company by you or by any Underwriter through you
specifically for use in the preparation thereof.
(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 from any liability which it may have to any indemnified party otherwise than
under this Section. 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 if the indemnified party is an Underwriter
or a person who controls such Underwriter within the meaning of the Act, the
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 such Underwriter or such
controlling person and the indemnifying party and in the judgment of the
Representative, it is advisable for the Representative or such Underwriters or
controlling persons to be represented by separate counsel (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such Underwriter or such controlling person, 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 all such Underwriters and controlling persons, which firm shall be
designated in writing by you). No settlement of any action against an
indemnified party shall be made without the consent of the indemnifying party,
-32-
which shall not be unreasonably withheld in light of all factors of importance
to such indemnifying party.
(8) CONTRIBUTION. In order to provide for just and equitable
contribution under the Act in any case in which (i) any Underwriter makes claim
for indemnification pursuant to Section 7 hereof but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case, notwithstanding the
fact that the express provisions of Section 7 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
Underwriter, then the Company and each person who controls the Company, in the
aggregate, and any such 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) in either
such case (after contribution from others) in such proportions that all such
Underwriters are responsible in the aggregate for that portion 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
bears to the public offering price appearing thereon, and the Company shall be
responsible for the remaining portion, provided, however, that (a) if such
allocation is not permitted by applicable law then the relative fault of the
Company and the Underwriters 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 Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if the respective obligations of the Company and the Underwriters to
contribute pursuant to this Section 7 were to be determined by pro rata or per
capita allocation of the aggregate damages (even if the Underwriters and their
respective controlling persons in the aggregate were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the first sentence of this Section 7
and (b) that the contribution of each contributing Underwriter shall not be in
excess of its proportionate share (based on the ratio of the number of Shares
and Warrants purchased by such Underwriter to the number of Shares and Warrants
purchased by all contributing Underwriters) of the
-33-
portion of such losses, claims, damages or liabilities for which the
Underwriters are responsible. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. As used in this paragraph, the term "Underwriter" includes
any officer, director, or other person who controls an Underwriter within the
meaning of Section 15 of the Act, 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 any Underwriter and each person who controls any
Underwriter shall be entitled to contribution from the Company, its officers,
directors and controlling persons 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 Underwriters. 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.
9. SUBSTITUTION OF UNDERWRITERS. If any Underwriters shall for any
reason not permitted hereunder cancel their obligations to purchase the First
Offered Securities hereunder, or shall fail to take up and pay for the number of
First Offered Securities set forth opposite their respective names in Schedule A
hereto upon tender of such First Offered Securities in accordance with the terms
hereof, then:
(a) If the aggregate number of shares of First Offered
Securities which such Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total number of First Offered Securities, the other
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the First Offered Securities which such
defaulting Underwriter or Underwriters agreed but failed to purchase.
(b) If any Underwriter or Underwriters so default and the agreed
number of First Offered Securities with respect to which such default or
defaults occurs is more than 10% of the total number of First Offered
Securities, the remaining Underwriters shall have the right to take up and pay
for (in such proportion as may be agreed upon among them) the First Offered
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase. If such remaining Underwriters do not, at the First Closing Date,
take up and pay for the First Offered Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase, the time for delivery
of the First Offered Securities shall be extended to the next
-34-
business day to allow the several Underwriters the privilege of substituting
within twenty-four hours (including nonbusiness hours) another underwriter or
underwriters satisfactory to the Company. If no such underwriter or
underwriters shall have been substituted as aforesaid, within such twenty-four
hour period, the time of delivery of the First Offered Securities may, at the
option of the Company, be again extended to the next following business day, if
necessary, to allow the Company the privilege of finding within twenty-four
hours (including nonbusiness hours) another underwriter or underwriters to
purchase the First Offered Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase. If it shall be arranged for the
remaining Underwriters or substituted Underwriters to take up the First Offered
Securities of the defaulting Underwriter or Underwriters as provided in this
Section, (i) the Company or the Representative shall have the right to postpone
the time of delivery for a period of not more than seven business days, in order
to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees promptly to file any amendments to the Registration Statement or
supplements to the Prospectus which may thereby be made necessary, and (ii) the
respective numbers of First Offered Securities to be purchased by the remaining
Underwriters or substituted Underwriters shall be taken at the basis of the
underwriting obligation for all purposes of this Agreement.
If in the event of a default by one or more Underwriters and the
remaining Underwriters shall not take up and pay for all the First Offered
Securities agreed to be purchased by the defaulting Underwriters or substitute
another underwriter or underwriters as aforesaid, and the Company shall not find
or shall not elect to seek another underwriter or underwriters for such First
Offered Securities as aforesaid, then this Agreement shall terminate.
If, following exercise of the option provided in Section 3(a)
hereof, any Underwriter or Underwriters shall for any reason not permitted
hereunder cancel their obligations to purchase Optional Shares and/or Optional
Warrants at the Option Closing Date, or shall fail to take up and pay for the
number of Optional Shares and/or Optional Warrants, which they become obligated
to purchase at the Option Closing Date upon tender of such Optional Shares
and/or Optional Warrants in accordance with the terms hereof, then the remaining
Underwriters or substituted Underwriters may take up and pay for the Optional
Shares and Optional Warrants of the defaulting Underwriters in the manner
provided in Section 9(b) hereof. If the remaining Underwriters or substituted
Underwriters shall not take up and pay for all such Optional Shares and/or
Optional Warrants, then the Underwriters shall be entitled to purchase the
number of Optional Shares and/or Optional Warrants for which there is no default
or,
-35-
at their election, the option shall terminate, the exercise thereof shall be of
no effect.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. In the event of termination,
there shall be no liability on the part of any nondefaulting Underwriter to the
Company, provided that the provisions of this Section 9 shall not in any event
affect the liability of any defaulting Underwriter to the Company arising out of
such default.
10. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND
REPRESENTATIONS. The respective indemnity and contribution agreements of the
Company and the Underwriters contained in Sections 7 and 8 hereof, and the
representations and warranties of the Company contained herein shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the Underwriters, the Company or any of its directors and
officers, or any controlling person referred to in said Sections, and shall
survive the delivery of, and payment for, the Shares and the Warrants.
11. TERMINATION OF AGREEMENT.
(a) The Company, by written or telegraphic notice to the
Underwriter, or the Underwriter, by written or telegraphic notice to the
Company, may terminate this Agreement prior to the earlier of (i) 11:00 A.M.,
New York City time, on the first full business day after the Effective Date; or
(ii) the time when the Underwriter, after the Registration Statement becomes
effective, releases the Offered Shares and Offered Warrants for public offering.
The time when the Underwriter "releases the Offered Shares and Offered Warrants
for public offering" for the purposes of this Section 10 means the time when the
Underwriter releases for publication the first newspaper advertisement, which is
subsequently published, relating to the Offered Shares and Offered Warrants, or
the time when the Underwriter releases for delivery to members of a selling
group copies of the Prospectus and an offering letter or an offering telegram
relating to the Offered Shares and Offered Warrants, whichever will first occur.
(b) This Agreement, including without limitation, the obligation
to purchase the Offered Shares and the Offered Warrants and the obligation to
purchase the Optional Shares and/or Optional Warrants after exercise of the
option referred to in Section 3 hereof, are subject to termination in the
absolute discretion of the Underwriter, by notice given to the Company prior to
delivery of and payment for all the Offered Shares and Offered Warrants or the
Optional Shares and Optional Warrants, as the case may be, if, prior to such
time, any of the following shall have occurred: (i) the Company withdraws the
Registration Statement from the Commission or the Company does not or cannot
-36-
expeditiously proceed with the public offering; (ii) the representations and
warranties in Section 4 hereof are not materially correct or covenants in
Section 5 hereof cannot be complied with; (iii) trading in securities generally
on the New York Stock Exchange or the American Stock Exchange will have been
suspended; (iv) limited or minimum prices will have been established on either
such Exchange; (v) a banking moratorium will have been declared either by United
States federal or New York State authorities; (vi) any other restrictions on
transactions in securities materially affecting the free market for securities
or the payment for such securities, including the Offered Shares and Offered
Warrants or the Optional Shares and Optional Warrants, will be established by
NASDAQ, by the Commission, by any other United States federal or state agency,
by action of the Congress or by Executive Order; (vii) trading in any securities
of the Company shall have been suspended or halted by any national securities
exchange, the NASD or the Commission; (viii) there has been a materially
adverse change in the condition (financial or otherwise), prospects or
obligations of the Company; (ix) the Company will have sustained a material
loss, whether or not insured, by reason of fire, flood, accident or other
calamity; (x) any action has been taken by the government of the United States
or the State of Israel or any department or agency thereof which, in the
judgment of the Underwriter, has had a material adverse effect upon the market
or potential market for securities in general; or (xi) the market for securities
in general or political, financial or economic conditions will have so
materially adversely changed that, in the judgment of the Underwriter, it will
be impracticable to offer for sale, or to enforce contracts made by the
Underwriter for the resale of, the Offered Shares and Offered Warrants or the
Optional Shares and Offered Warrants, as the case may be.
(c) If this Agreement is terminated pursuant to Section 6 hereof
or this Section 11 or if the purchases provided for herein are not consummated
because any condition of the Underwriters' obligations hereunder is not
satisfied or because of any refusal, inability or failure on the part of the
Company to comply with any of the terms or to fulfill any of the conditions of
this Agreement, or if for any reason the Company shall be unable to or does not
perform all of its obligations under this Agreement, the Company will not be
liable to the Underwriter for damages on account of loss of anticipated profits
arising out of the transactions covered by this Agreement, but the Company will
remain liable to the extent provided in Sections 5(j), 7, 8 and 10 of this
Agreement.
12. INFORMATION FURNISHED BY THE UNDERWRITERS TO THE COMPANY. It is
hereby acknowledged and agreed by the parties hereto that for the purposes of
this Agreement, including, without limitation, Sections 4(i), 7(a), 7(b) and 8
hereof, the only information given by the Underwriters to the Company for use
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in the Prospectus are the statements set forth [ ON PAGE [2] WITH RESPECT TO
STABILIZATION, UNDER THE HEADING "UNDERWRITING" AND THE IDENTITY OF COUNSEL TO
THE UNDERWRITERS UNDER THE HEADING "LEGAL MATTERS"], as such information appears
in any Preliminary Prospectus and in the Prospectus.
13. NOTICES AND GOVERNING LAW. All communications hereunder will be
in writing and, except as otherwise provided, will be delivered at, or mailed by
certified mail, return receipt requested, or telegraphed to, the following
addresses: if to the Placement Agent, to 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxx Xxxxxxxxx, Executive Vice President, with a copy to
Xxxxxxx Xxxxxx & Xxxx, P.C., Attn: Xxxxxxxx X. Xxxxxxx, Esq., 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; if to the Company, addressed to it at 00
Xxxxxx Xxxxxx Xxxxxx, XXX 00000, Xxxxxxxxx 91530 Israel, Attention: Xxxxxx X.
Xxxxxxxxxxx, President and Chief Executive Officer, with a copy to Weil, Gotshal
& Xxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.
Xxxxx, Esq. and to Xxxxx Xxxxx & Xx., 0 Xxxxxx Xxxxxx Xxxxxx, Xxx Xxxx 00000
Israel, Attention: Xxxxx X. Xxxxxxxxx, Esq.; or, in each case, to such other
address as the parties may hereinafter designate by like notice.
This Agreement shall be deemed to have been made and delivered in
New York City and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York. The Company (1) agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement shall be instituted exclusively in
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (2) waives any objection
which the Company may have now or hereafter to the venue of any such suit,
action or proceeding, and (3) irrevocably consents to the jurisdiction of the
New York State Supreme Court, County of New York, and the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. The Company further agrees to accept and acknowledge service of any
and all process which may be served in any such suit, action or proceeding in
the New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York and agrees that service of
process upon the Company mailed by certified mail to the Company's address shall
be deemed in every respect effective service of process upon the Company, in any
such suit, action or proceeding.
14. PARTIES IN INTEREST. This Agreement is made solely for the
benefit of the several Underwriters, the Company and, to the extent expressed,
any person controlling the Company or any of the Underwriters, each officer,
director, partner, shareholder, employee and agent of the several Underwriters,
the directors of the Company, its officers who have signed the
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Registration Statement, and their respective executors, administrators,
successors and assigns, and, no other person will acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" will
not include any purchaser of the Shares or Warrants from any of the several
Underwriters, as such purchaser.
15. VALIDITY. In case any term of this Agreement will be held
invalid, illegal or unenforceable, in whole or in part, the validity of any
other terms of this Agreement will not in any way be affected thereby.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding of the parties with respect to the subject matter hereof, and
there are no representations, inducements, promises or agreements, oral or
otherwise, not embodied herein.
17. COUNTERPARTS. This Agreement may be executed in counterparts and
each of such counterparts will for all purposes be deemed to be an original, and
such counterparts together will constitute one and the same instrument.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between the Company and the
Underwriter in accordance with its terms.
Very truly yours,
ACCENT SOFTWARE INTERNATIONAL LTD.
By: ______________________________
Name:
Title:
Confirmed and accepted in
New York, N.Y., as of the
date first above written:
SANDS BROTHERS & CO., LTD.
By:_________________________________
For itself and as Representative
of the several Underwriters
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SCHEDULE A
Name of Underwriter Number of Shares/warrants to be Purchased
------------------- -----------------------------------------
Sands Brothers & Co., Ltd.
Total: 1,500,000/ 1,500,000
--------------------
--------------------
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EXHIBIT 6(b)
[TO COME]
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