EXHIBIT 1.1
UNDERWRITING AGREEMENT
2,500,000 Shares of Common Stock
of
WORLDQUEST NETWORKS, INC.
February __, 2000
Xxxxxxx Bros., L.P.
Xxxx X. Xxxxxxx and Company Incorporated
WestPark Capital, Inc.
As Representatives of the
several Underwriters named
in Schedule I attached hereto
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, WorldQuest Networks, Inc., a Delaware corporation
(the "Company"), hereby confirms its agreement with the several underwriters
named in Schedule I hereto (collectively, the "Underwriters") for whom you have
been authorized to act as Representatives (in such capacity, the
"Representatives"), as set forth below.
1. Introduction. The Company proposes to issue and sell to the
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Underwriters 2,500,000 shares (the "Stock") of the common stock, par value $.01
per share, of the Company (the "Common Stock"). In addition, solely for the
purpose of covering over-allotments, the Company proposes to grant the
Underwriters the option to purchase from it, on a pro rata basis, within 45 days
from the date of the initial public offering of the Common Stock, up to 375,000
shares of Common Stock to be initially purchased from the Company (the
"Additional Stock") at a purchase price equal to the initial public offering
price for the Common Stock. The Common Stock is more fully described in the
Prospectus (as hereinafter defined).
2. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the
"Act"), a registration
statement, and may have filed one or more amendments thereto, on Form SB-2
(File No. 333-93019) (the "Original Registration Statement"), including in
such registration statement and each such amendment a related Preliminary
Prospectus (as hereinafter defined), for the registration of (i) the Stock,
(ii) the Additional Stock, (iii) the common stock purchase warrants
referred to in Section 5(r) hereof (the "Representatives' Warrants"), and
the (iv) the shares of Common Stock underlying the Representatives'
Warrants (the "Warrant Stock") (the Stock, the Additional Stock, the
Representatives' Warrants and the Warrant Stock are collectively referred
to as the "Securities"). After the execution of this Agreement: (i) if the
Original Registration Statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, then the Company
will file with the Commission (A) if the Company relies on Rule 434 of the
Act, a Term Sheet (as hereinafter defined) relating to the Securities, that
shall identify the Preliminary Prospectus that it supplements containing
such information as is required or permitted by Rules 434, 430A and 424(b)
under the Act, or (B) if the Company does not rely on Rule 434 under the
Act, a prospectus in the form most recently included in an amendment to the
Original Registration Statement (or, if no such amendment shall have been
filed, in the Original Registration Statement), with such changes or
insertions as are required by Rule 430A under the Act or permitted by Rule
424(b) under the Act, and, in the case of either clause (i)(A) or (i)(B) of
this sentence, as shall have been provided to and approved by the
Representatives prior to the execution of this Agreement, or (ii) if the
Original Registration Statement, as it may have been amended, has not been
declared by the Commission to be effective under the Act, then the Company
will file with the Commission an amendment to the Original Registration
Statement, including a form of prospectus, a copy of which amendment shall
have been furnished to and approved by the Representatives prior to the
execution of this Agreement, which approval shall not be unreasonably
withheld. The Company, with the prior consent of the Representatives, may
have also filed a related registration statement with the Commission
pursuant to Rule 462(b) under the Act for the purpose of registering a
portion of the Securities (a "Rule 462(b) Registration Statement"), which
shall become effective upon filing. As used in this Agreement, the term
"Registration Statement" means collectively, (i) the Original Registration
Statement, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus, and if any post-effective amendment thereto
becomes effective prior to the Closing Date (as defined in Section 3
hereof), such registration statement as so amended, and (ii) any related
Rule 462(b) Registration Statement which may have been filed with the
Commission pursuant to the Rule 462(b) under the Act (including the
Original Registration Statement and any Preliminary Prospectus or
Prospectus incorporated therein at the time such Rule 462(b) Registration
Statement becomes effective); the term "Preliminary Prospectus" means each
prospectus subject to completion filed with the Commission with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or
any amendment thereto at the time it was or is declared effective); the
term "Prospectus" means:
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(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed with the Commission pursuant
to Rule 424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b) under
the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the Act,
the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 under the Act. Any reference herein to the
"date" of a Prospectus that includes a Term Sheet shall mean the date
of such Term Sheet.
(b) When any Preliminary Prospectus was filed with the Commission it
(i) contained all statements required to be stated therein in accordance
with, and complied in all material respects with the requirements of, the
Act and the rules and regulations of the Commission thereunder, and (ii)
did not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
When the Registration Statement or any amendment thereto was or is declared
effective, as the case may be, it (i) contained or will contain all
statements required to be stated therein in accordance with, and complied
or will comply in all material respects with the requirements of, the Act
and the rules and regulations of the Commission thereunder, and (ii) did
not or will not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. When the Prospectus or any Term Sheet that is a part thereof
or any amendment or supplement to the Prospectus is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or any part
thereof or such amendment or supplement is not required to be so filed,
when the Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was or is declared effective) and
on the Closing Date and any Additional Closing Date (both as hereinafter
defined in Section 3), the Prospectus, as amended or supplemented at any
such time, (i) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder, and (ii) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (b) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement or
any
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amendment thereto or the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with written information furnished to
the Company as stated in Section 8(b) with respect to any Underwriter
through the Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b), then (i) the
Company has filed a Rule 462(b) Registration Statement in compliance with
and that is effective upon filing with the Commission pursuant to Rule
462(b) and has received confirmation of its receipt, and (ii) the Company
has given irrevocable instructions for transmission of the applicable
filing fee in connection with the filing of the Rule 462(b) Registration
Statement in compliance with Rule 111 promulgated under the Act or the
Commission has received payment of such filing fee.
(d) Neither the Commission nor the "blue sky" or securities authority
of any jurisdiction has issued an order (a "Stop Order") suspending the
effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Prospectus, the Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, or suspending the registration
or qualification of any of the Securities, nor has any of such authorities
instituted or threatened to institute any proceedings with respect to a
Stop Order.
(e) Any contract, agreement, instrument, lease, or license required to
be described in the Registration Statement and the Prospectus (or if the
Prospectus is not in existence, the most recent Preliminary Prospectus) has
been properly described therein. Any contract, agreement, instrument,
lease, or license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to or has been
incorporated as an exhibit by reference into the Registration Statement.
(f) The Company has no subsidiaries (as defined in the general rules
and regulations promulgated under the Act (the "Regulations")) other than
Red de Busqueda Mundial, S.A., an inactive Costa Rican corporation and a
joint venture with BDC, LLC, dated April 9, 1999 (together, the
"Subsidiaries"). The Company is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation, with full power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of
and from, and declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to carry on the
business in the manner described in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Each of the Subsidiaries has been duly
incorporated or organized, as applicable, and is validly existing as a
corporation or joint venture, as applicable, in good standing
under the laws of the jurisdiction of its incorporation or organization,
with full corporate or joint venture power and authority to
own, lease and operate its properties and conduct its business as described
in the Prospectus. As of the Effective Date, the outstanding capital
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stock of each of the Subsidiaries, as set forth in the Prospectus, is owned
by the Company, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest; and no preemptive right, co-sale
right, registration right, right of first refusal or other similar right of
stockholders exists with respect to any shares of any of the Subsidiaries.
The Company and each of the Subsidiaries is duly qualified to do business
and is in good standing in every jurisdiction in which its ownership,
leasing, licensing, or use of property and assets or the conduct of its
business makes such qualification necessary. Except as otherwise disclosed
in the Registration Statement, the Company does not own, and at the Closing
Date and any Additional Closing Date will not own, directly or indirectly,
any shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity.
(g) The authorized capital stock of the Company consists of (i)
50,000,000 shares of Common Stock, of which 3,196,699 shares are
outstanding, and (ii) 10,000,000 shares of preferred stock, par value $.01
per share (the "Preferred Stock"), of which no shares are outstanding.
Each outstanding share of the Company's capital stock has been validly
authorized, issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, has not been issued and is
not owned or held in violation of any preemptive rights of stockholders.
There is no commitment, plan, or arrangement to issue, and no outstanding
option, warrant, or other right calling for the issuance of, any share of
capital stock of the Company or any security or other instrument which by
its terms is convertible into, exercisable for, or exchangeable for capital
stock of the Company, except as may be set forth in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus). Except as set forth in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there is
outstanding no security or other instrument which by its terms is
convertible into or exchangeable for capital stock of the Company.
(h) All the issued and outstanding capital stock of each of the
Subsidiaries has been duly authorized and validly issued and is fully paid
and nonassessable, and was not issued in violation of or subject to any
preemptive right, or other rights to subscribe for or purchase any
securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations, and is owned of record and
beneficially, as of the date hereof, and will be owned of record and
beneficially at or prior to the Closing Date, by the Company free and clear
of any pledge, lien, security interest, encumbrance, claim or equitable
interest; and no preemptive right, co-sale right, registration right, right
of first refusal or other similar right of stockholders exists with respect
to any shares of the Subsidiaries. There are no outstanding rights,
warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
any of the Subsidiaries. Except as described in the Registration Statement
and the Prospectus or as may be restricted by the terms and provisions of
any credit or loan facility to which the Company or any of the Subsidiaries
is a party and which is described in the Registration Statement and the
Prospectus, or by relevant state law with respect to the need for
sufficient
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surplus, none of the Subsidiaries is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on its capital stock, or from transferring any of the property
or assets of any such Subsidiary to the Company.
(i) The consolidated financial statements of the Company included in
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) fairly present the
financial position, the results of operations, and the other information
purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such financial statements have
been prepared in accordance with generally accepted accounting principles
(except to the extent that certain footnote disclosures regarding any stub
period may have been omitted in accordance with the applicable rules of the
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) consistently applied throughout the periods involved, are
correct and complete, and are in accordance with the books and records of
the Company and the Subsidiaries. The accountants whose report on the
audited financial statements is filed with the Commission as a part of the
Registration Statement are, and during the periods covered by their
report(s) included in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus)
were, independent certified public accountants within the meaning of the
Act and the Regulations. No other financial statements are required by Form
SB-2 or otherwise to be included in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). There has at no time been a material adverse
change in the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company or the
Subsidiaries from the latest information set forth in the Registration
Statement or the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), except as may be properly described in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). None of the Company or any of the Subsidiaries is
currently planning any probable acquisition for which pro forma financial
information would be required by the Act.
(j) There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, or, to the best
of the Company's knowledge, threatened, or in prospect (or any basis
therefor) with respect to the Company, the Subsidiaries or any of their
respective operations, business, properties, or assets except as may be
properly described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) or such as individually
or in the aggregate do not now have and will not in the future have a
material adverse effect upon the operations, business, properties, or
assets of the Company. Neither the Company nor the Subsidiaries is in
violation of, or in default with respect to, any law, rule, regulation,
order, judgment, or decree except as may be properly described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or such as in the aggregate do not now have and
will not in the future have a material adverse effect upon the operations,
business, properties, or assets of the Company or the Subsidiaries; nor is
either the Company or the Subsidiaries required to take any action in order
to avoid any such violation or default.
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(k) Each of the Company and the Subsidiaries has good and marketable
title in fee simple absolute to all real properties and good title to all
other properties and assets which the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) indicates are
owned by it, free and clear of all liens, security interests, pledges,
charges, encumbrances, and mortgages (except as may be properly described
in the Prospectus, or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) or such as do not materially affect the
value of such property and do not interfere with the use made of such
property by the Company and the Subsidiaries. No real property owned,
leased, licensed, or used by the Company or the Subsidiaries lies in an
area which is, or to the knowledge of the Company or the Subsidiaries will
be, subject to zoning, use, or building code restrictions which would
prohibit, and no state of facts relating to the actions or inaction of
another person or entity or his or its ownership, leasing, licensing, or
use of any real or personal property exists or will exist which would
prevent, the continued effective ownership, leasing, licensing, or use of
such real property in the business of the Company or the Subsidiaries as
presently conducted or as the Prospectus indicates it contemplates
conducting (except as may be properly described in the Prospectus, or if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(l) Neither the Company nor the Subsidiaries, nor to the knowledge of
the Company, any other party, is now or is expected by the Company to be in
violation or breach of, or in default with respect to, complying with any
material provision of any contract, agreement, instrument, lease, license,
arrangement, or understanding which is material to the Company or the
Subsidiaries, and each such contract, agreement, instrument, lease,
license, arrangement, and understanding is in full force and is the legal,
valid, and binding obligation of the parties thereto and is enforceable as
to them in accordance with its terms (subject to applicable bankruptcy,
insolvency and other laws affecting the enforceability of creditors' rights
generally). Each of the Company and the Subsidiaries enjoys peaceful and
undisturbed possession under all leases and licenses under which it
operates. Except as may be properly described in the Prospectus (or if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
neither the Company nor the Subsidiaries is a party to or bound by any
contract, agreement, instrument, lease, license, arrangement, or
understanding, or subject to any charter or other restriction, which has
had or may in the future have a material adverse effect on the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company or the Subsidiaries. The
Company is not in violation or breach of, or in default with respect to,
any term of its certificate of incorporation (or other charter document) or
by-laws. The Subsidiaries are not in violation or breach of, or in default
with respect to, any term of its charter documents, operating agreement or
by-laws, as applicable.
(m) All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises, and other
intangible properties and assets (all of the foregoing being herein called
"Intangibles") that the Company and the Subsidiaries own or have pending,
or under which they are licensed, are in good standing and
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uncontested. There is no right under any Intangible necessary to the
business of the Company or the Subsidiaries as presently conducted or as
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) indicates it contemplates conducting (except as may
be so designated in the Prospectus, or, if the Prospectus if not in
existence, the most recent Preliminary Prospectus). Except as disclosed in
the Prospectus, neither the Company nor the Subsidiaries has infringed, is
infringing, and has received notice of infringement with respect to,
asserted Intangibles of others. To the knowledge of the Company, there is
no infringement by others of Intangibles of the Company or the
Subsidiaries. To the knowledge of the Company, there is no Intangible of
others which has had or may in the future have a materially adverse effect
on the financial condition, results of operations, business, properties,
assets, liabilities, or future prospects of the Company.
(n) None of the Company, the Subsidiaries, nor any director, officer,
agent, employee, or other person associated with or acting on behalf of the
Company or the Subsidiaries has, directly or indirectly (i) used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from Company funds,
(iii) violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or (iv) made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment.
(o) The Company has all requisite power and authority to execute
deliver, and perform both this Agreement and the certificate evidencing the
Representatives' Warrants (the "Representatives' Warrant Agreement" and
together with this Agreement, the "Company Documents"). All necessary
corporate proceedings of the Company have been duly taken to authorize the
execution, delivery, and performance of each of the Company Documents by
the Company. This Agreement has been duly authorized, executed, and
delivered by the Company, is the legal, valid, and binding obligation of
the Company, and is enforceable as to the Company in accordance with its
terms (subject to applicable bankruptcy, insolvency and other laws
affecting the enforceability of creditors' rights generally). The
Representatives' Warrant Agreement has been duly authorized by the Company
and when executed and delivered by the Company, will be the legal, valid,
and binding obligation of the Company, enforceable against the Company in
accordance with its terms (subject to applicable bankruptcy, insolvency and
other laws affecting the enforceability of creditors' rights generally).
No consent, authorization, approval, order, license, certificate, or permit
of or from, or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is required by
the Company for the execution, delivery, or performance by the Company of
any of the Company Documents (except filings under the Act which have been
or will be made before the Closing Date and such consents consisting only
of consents under "blue sky" or securities laws which have been obtained at
or prior to the date of this Agreement). No consent of any party to any
contract, agreement, instrument, lease, license, arrangement, or
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understanding to which either the Company or the Subsidiaries is a party,
or to which any of its respective properties or assets are subject, is
required for the execution, delivery, or performance of the Company
Documents; and the execution, delivery, and performance of any of the
Company Documents will not violate, result in a breach of, conflict with,
or (with or without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or understanding, or
violate or result in a breach of any term of the certificate of
incorporation (or other charter document) or by-laws of the Company or the
Subsidiaries or violate, result in a breach of, or conflict with any law,
rule, regulation, order, judgment, or decree binding on the Company or the
Subsidiaries or to which any of their respective operations, businesses,
properties, or assets are subject.
(p) The Stock and the Additional Stock are validly authorized and,
when issued and delivered in accordance with this Agreement, will be
validly issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders. The Underwriters will
receive good title to the Stock and Additional Stock purchased by them,
respectively, free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, and voting trusts.
(q) The Warrant Stock is validly authorized and reserved for issuance
and, when issued and delivered upon exercise of the Representatives'
Warrants in accordance with the Representatives' Warrant Agreement, will be
validly issued, fully paid and non-assessable, without any personal
liability attaching to the ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders; and the holders of the
Representatives' Warrants will receive good title to the securities
purchased by them, respectively, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements, and
voting trusts.
(r) The Common Stock, the Securities, and the Representatives' Warrant
Agreement conform in all material respects with all statements relating
thereto contained in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(s) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and
except as may otherwise be properly described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
neither the Company nor the Subsidiaries has (i) issued any securities or
incurred any liability or obligation, primary or contingent, for borrowed
money, (ii) entered into any transaction not in the ordinary course of
business, or (iii) declared or paid any dividend on its capital stock.
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(t) None of the Company, the Subsidiaries, nor any of their respective
officers, directors, or affiliates (as defined in the Regulations), has
taken or will take, directly or indirectly, prior to the termination of the
underwriting syndicate contemplated by this Agreement, any action designed
to stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price
of any security of the Company, to facilitate the sale or resale of any of
the Stock or the Additional Stock.
(u) The Company has obtained from each of its directors, officers,
affiliates (as defined in the Regulations) and each other person requested
by the Representatives who beneficially owns any share of Common Stock or
other securities of the Company, such director's, officer's, affiliates's
or other person's enforceable written agreement, in form and substance
satisfactory to counsel for the Underwriters, that for a period of 180 days
from the effective date of the Registration Statement such individual will
not, without the prior written consent of the Representatives, offer,
pledge, sell, contract to sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock or
any security or other instrument which by its terms is convertible into,
exercisable for, or exchangeable for shares of Common Stock or other
securities of the Company, including, without limitation, any shares of
Common Stock issuable under any outstanding stock options or warrants.
(v) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statement.
(w) Except as may be set forth in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
the Company has not incurred any liability for a fee, commission, or other
compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement.
(x) The Company is not, and does not intend to conduct its business in
a manner in which it would become, an "investment company" as defined in
Section 3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
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(y) No officer, director, or, to the knowledge of the Company, any
beneficial owner of the Company's securities has any direct or indirect
affiliation or association with the National Association of Securities
Dealers, Inc. (the "NASD") or any member thereof except as disclosed in
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questionnaires completed, executed and returned to counsel for the
Underwriters.
(z) the Common Stock has been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance;
(aa) The Company has appointed at least two independent directors to
the Company's Board of Directors, as required by the Nasdaq Stock Market
Marketplace Rules,
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which independent directors constitute at least half of the members of the
Company's Compensation Committee and Audit Committee. The Company has
provided to the Representatives the charter of the Audit Committee or
resolutions establishing such committee, which provides, among other
things, for the Audit Committee to approve in advance transactions between
the Company and any of its affiliates.
(bb) To the Company's knowledge, there are no affiliations or
associations between any member of the National Association of Securities
Dealers, Inc. ("NASD") and any of the Company's officers, directors or 5%
or greater securityholders, except as set forth in the Registration
Statement.
(cc) To the extent necessary to comply with the regulation of Internet
telecommunications services providers and telecommunications carriers, the
Company has all necessary material consents, authorizations, approvals,
orders, certificates and permits of and from, and have made all
declarations and filings with, all United States federal and state and
foreign authorities (the "Authorizations") to own, lease, license and use
their properties and assets and to conduct their business in the manner
described in the Prospectus, except as described in the Prospectus, and all
material agreements or arrangements of the Company comply with all
applicable United States federal and state and foreign laws. The Company
is not aware of any breach, violation or default with respect to such
Authorizations.
(dd) Solely with respect to matters specifically relating to the
regulation of Internet telecommunications services providers and
telecommunications carriers administered by United States federal or state
or foreign governmental authorities, including, but not limited to, the
Federal Communications Commission (the "FCC") and state public utility
commissions or similar state authorities (collectively, "PUCs" and,
individually, a "PUC"), the execution and delivery by the Company of, and
the performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or any judgment, order
or decree of any governmental body, agency, or court having jurisdiction
over the Company or any subsidiary, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by the Company of its obligations under this
Agreement.
3. Purchase, Sale, and Delivery of the Stock and the Additional Stock.
-------------------------------------------------------------------
On the basis of the representations, warranties, covenants, and agreements of
the Company, but subject to the terms and conditions herein set forth, the
Company agrees to sell to the several Underwriters, and the Underwriters,
severally and not jointly, agree to purchase from the Company, the numbers of
shares of Stock set opposite the respective names of the Underwriters in
Schedule I attached hereto.
The purchase price of the Stock to be paid by the several Underwriters
shall be $_____________. The public offering price per share of the Stock shall
be $____.
-11-
Payment for the Stock by the Underwriters shall be made by certified or
official bank check or checks drawn upon or by a New York Clearing House bank,
or by wire transfer, and payable in next-day funds to the order of the Company
at the offices of Xxxxxxx Bros., L.P., 000 Xxxxx Xxxxxx - 25th Floor, New York,
New York, or at such other place in the New York City metropolitan area as you
shall determine and advise the Company by at least two full days' notice in
writing, upon delivery of the Stock to you for the respective accounts of the
Underwriters. Such delivery and payment shall be made at 10:00 a.m., New York
City time, on February __, 2000 (unless such time and date is postponed in
accordance with the provisions of Section 9(c) hereof), or at such other time as
shall be agreed upon between you and the Company. The time and date of such
delivery and payment are herein called the "Closing Date."
Certificates for the Stock shall be registered in such name or names and in
such authorized denominations as you may request in writing at least two full
business days' prior to the Closing Date. The Company shall permit you to
examine and package such certificates for delivery at least one full business
day prior to the Closing Date.
In addition, the Company hereby grants to the several Underwriters the
option to purchase all or a portion of the Additional Stock as may be necessary
to cover over-allotments, at the same purchase price per share to be paid by the
several Underwriters to the Company for the Stock as provided for in this
Section 3. The Additional Stock shall be purchased by the several Underwriters
from the Company as provided herein, pro rata in accordance with the ratio which
the number of shares of Stock set forth opposite such Underwriter's name on
Schedule I bears to the total number of shares of Stock, subject to adjustment
to avoid fractional shares. This option may be exercised only to cover over-
allotments in the sale of shares by the several Underwriters. This option may
be exercised by you on the basis of the representations, warranties, covenants,
and agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, at any time and from time to time on or before the
forty-fifth day following the effective date of the Registration Statement, by
written notice by you to the Company. Such notice shall set forth the aggregate
number of shares of Additional Stock as to which the option is being exercised
and the time and date, as determined by you, when such Additional Stock is to be
delivered (such time and date are herein called an "Additional Closing Date");
provided, however, that no Additional Closing Date shall be earlier than the
-------- -------
Closing Date nor earlier than the second business day after the date on which
the notice of the exercise of the option shall have been given nor later than
the third business day after the date on which such notice shall have been
given.
Payment for the shares of Additional Stock by the Underwriters shall be
made by certified or official bank check or checks drawn upon or by a New York
Clearing House bank, or by wire transfer, and payable in next-day funds to the
order of the Company at the offices of Xxxxxxx Bros., L.P., 800 Third Avenue,
New York, New York, or at such other place in the New York City Metropolitan
Area as you shall determine and advise the Company by at least two full days'
notice in writing, upon delivery of the shares of Additional Stock to you for
the respective accounts of the Underwriters.
-12-
Certificates for the Additional Stock shall be registered in such name or
names and in such authorized denominations as you may request in writing at
least two full business days' prior to the Additional Closing Date with respect
thereto. The Company shall permit you to examine and package such certificates
for delivery at least one full business day prior to the Additional Closing Date
with respect thereto.
4. Offering. The Underwriters are to make a public offering of the Stock
---------
as soon, on or after the effective date of the Registration Statement, as you
deem it advisable so to do. The Stock is to be initially offered to the public
at the initial public offering price as provided for in Section 3 hereof (such
price being herein called the "public offering price") and upon the terms and
subject to the conditions set forth in the Prospectus. After the public
offering, you may from time to time increase or decrease the public offering
price, in your sole discretion, by reason of changes in general market
conditions or otherwise.
5. Covenants of the Company. The Company covenants that it will:
-------------------------
(a) Use its best efforts to cause the Registration Statement, if not
effective at the time of execution of this Agreement, and any amendments
thereto, to become effective as promptly as possible. If required, the
Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendments or supplements thereto with the Commission in
the manner and within the time period required by Rules 434 and 424(b)
under the Act. During any time when a prospectus relating to the Stock
and the Additional Stock is required to be delivered under the Act, the
Company (i) will comply with all requirements imposed upon it by the Act
and the Regulations to the extent necessary to permit the continuance of
sales of or dealings in the Stock and the Additional Stock, in accordance
with the provisions hereof and of the Prospectus, as then amended or
supplemented, and (ii) will not file with the Commission the Prospectus,
Term Sheet or the amendment referred to in the second sentence of Section
2(a) hereof, any amendment or supplement to such Prospectus or Term Sheet,
or any amendment to the Registration Statement of which the Representatives
shall not have given its reasonable consent. The Company will prepare and
file with the Commission, in accordance with the Regulations, promptly upon
request by the Representatives or counsel for the Underwriters, any
amendments to the Registration Statement or amendments or supplements to
the Prospectus that may be necessary or advisable in connection with the
distribution of the Stock and Additional Stock by the several Underwriters,
and will use its best efforts to cause any such amendment to the
Registration Statement to be declared effective by the Commission as
promptly as possible.
(b) Notify you immediately, and confirm such notice in writing, (i)
when the Registration Statement and any post-effective amendment thereto
becomes effective, (ii) of the receipt of any comments from the Commission
or the "blue sky" or securities authority of any jurisdiction regarding the
Registration Statement, any post-effective amendment thereto, the
Preliminary Prospectus, the Prospectus, or any amendment or
-13-
supplement thereto, and (iii) of the receipt of any notification with
respect to a Stop Order or the initiation or threatening of any proceeding
with respect to a Stop Order. The Company will use its best efforts to
prevent the issuance of any Stop Order and, if any Stop Order is issued, to
obtain the lifting thereof as promptly as possible.
(c) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Stock or the Additional Stock is required to be
delivered under the Act or the Regulations, or (ii) the Additional Closing
Date, any event occurs as a result of which the Prospectus, as then amended
or supplemented, would include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if for any other reason it is necessary at any time to amend
or supplement the Prospectus to comply with the Act or the Regulations, the
Company will promptly notify the Representatives thereof and, subject to
Section 5(a) hereof, will prepare and file with the Commission, at the
Company's expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance and in case any Underwriter is required
to deliver a prospectus relating to the Stock or the Additional Stock nine
(9) months or more after the effective date of the Registration Statement,
the Company upon the request of the Representatives and at the expense of
such Underwriter will prepare promptly such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section
10(a)(3) of the Securities Act; provided, however, that the expense of the
preparation and delivery of any prospectus required for use nine (9) months
or more after the effective date of the Registration Statement shall be
borne by the Underwriters required to deliver such prospectus.
(d) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a signed copy of the
Original Registration Statement filed with the Commission with respect to
the Securities and each amendment thereto (in each case including exhibits
thereto) or any Rule 462(b) Registration Statement, (ii) to each other
Underwriter, a conformed copy of the Original Registration Statement, any
Rule 462(b) Registration Statement, and each amendment thereto (in each
case without exhibits thereto), and (iii) so long as a prospectus relating
to the Stock and Additional Stock is required to be delivered under the Act
and the Regulations, as many copies of each Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, as the Representatives
may reasonably request; without limiting the application of clause (iii) of
this sentence, the Company, no later than (A) 6:00 p.m., New York City
time, on the date of determination of the public offering price, if such
determination occurred at or prior to 12:00 Noon, New York City time, on
such date, or (B) 6:00 p.m., New York City time, on the business day
following the date of determination of the public offering price, if such
determination occurred after 12:00 Noon, New York City time, on such date,
will deliver to the Representatives, without charge, as many copies of the
Prospectus, and any amendment or supplement thereto, as the Representatives
may reasonably request for purposes of confirming orders that are expected
to settle on the Closing Date.
-14-
(e) Endeavor in good faith, in cooperation with you, at or prior to
the time the Registration Statement becomes effective, to qualify the Stock
and the Additional Stock for offering and sale under the "blue sky" or
securities laws of such jurisdictions as you may designate; provided,
however, that no such qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject to taxation as a
foreign corporation doing business in such jurisdiction to which it is not
then subject. In each jurisdiction where such qualification shall be
effected, the Company will, unless you agree in writing that such action is
not at the time necessary or advisable, file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction. The Company will advise the Representatives promptly after
the Company becomes aware of the suspension of the qualifications or
registration of (or any such exception relating to) the Common Stock of the
Company for offering, sale or trading in any jurisdiction or of any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any orders suspending such qualifications,
registration or exception, the Company will, with the cooperation of the
Representatives use its best efforts to obtain the withdrawal thereof.
(f) Make generally available (within the meaning of Section 11(a) of
the Act and the Regulations) to its security holders as soon as
practicable, but not later than ______________, 2001, an earnings statement
(which need not be certified by independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Section 11(a) of the Act and the Regulations) covering a
period of at least twelve months beginning after the effective date of the
Registration Statement.
(g) For a period of six months from the effective date of the
Registration Statement, not, without the prior written consent of the
Representatives, offer, issue, sell, contract to sell, grant any option for
the sale of, or otherwise dispose of, directly or indirectly, any shares of
Common Stock or other securities of the Company (or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for shares of Common Stock or other securities of the Company)
except for the issuance of (i) the Securities; (ii) stock options which
may be granted pursuant to the Company's 1999 Stock Option Plan (as such
terms are defined in the Prospectus) and the Common Stock issuable upon the
exercise thereof, as set forth in the Prospectus; and (iii) shares of
Common Stock pursuant to the exercise of outstanding warrants and options
or the conversion of convertible notes set forth in the Prospectus.
(h) For a period of five years after the effective date of the
Registration Statement, furnish to the Representatives, without charge, the
following:
(i) within 90 days after the end of each fiscal year, three
copies of financial statements certified by independent certified
public accountants, including a balance sheet, statement of income,
and statement of cash flows of the Company and its then existing
subsidiaries, with supporting schedules, prepared in accordance with
generally accepted accounting principles, as at the end of such fiscal
year and for the 12 months then ended, which may be on a consolidated
basis; separate financial statements shall be furnished for all
subsidiaries whose accounts are not
-15-
consolidated but which at the time are significant subsidiaries as
defined in the rules and regulations under the Act;
(ii) as soon as practicable after they have been sent to
stockholders of the Company or filed with the Commission, three copies
of each annual and interim financial and other report or communication
sent by the Company to its stockholders or filed with the Commission;
(iii) as soon as practicable, two copies of every press release
and every material news item and article in respect of the Company or
its affairs which was released by the Company; and
(iv) such additional documents and information with respect to
the Company and its affairs and the affairs of any of its subsidiaries
as you may from time to time reasonably request.
(i) Apply the net proceeds received by it from the offering in
substantially the manner set forth under "Use of Proceeds" in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(j) Furnish to you as early as practicable prior to the Closing Date
and any Additional Closing Date, as the case may be, but no less than two
full business days prior thereto, a copy of the latest available unaudited
interim consolidated financial statements of the Company and its
consolidated subsidiaries which have been read by the Company's independent
certified public accountants, as stated in their letters to be furnished
pursuant to Section 7(g).
(k) Comply in all material respects with all registration, filing, and
reporting requirements of the Exchange Act which may from time to time be
applicable to the Company.
(l) Comply in all material respects with all provisions of all
undertakings contained in the Registration Statement.
(m) Prior to the Closing Date or any Additional Closing Date, as the
case may be, issue no press release or other communication, directly or
indirectly, and hold no press conference with respect to the Company, the
financial condition, results of operations, business, properties, assets,
liabilities of the Company, or this offering, without your prior written
consent, which consent shall not be unreasonably withheld.
(n) File timely with the Commission an appropriate form to register
the Common Stock pursuant to Section 12(g) under the Exchange Act.
-16-
(o) File no amendment or supplement to the Registration Statement or
Prospectus at any time, whether before or after the effective date of the
Registration Statement, unless such filing shall comply with the Act and
the Regulations and unless the Representatives shall previously have been
advised of such filing and furnished with a copy thereof, and the
Representatives and counsel for the Underwriters shall have approved such
filing in writing.
(p) If the principal stockholders, officers, or directors of the
Company are required by the "blue sky" or securities authority of any
jurisdiction selected by you pursuant to Section 5(e) hereof to escrow or
agree to restrict the sale of any security of the Company owned by them for
the Company to qualify or register the Common Stock for sale under the
"blue sky" or securities laws of such jurisdiction, cause each such person
to escrow or restrict the sale of such security on the terms and conditions
and in the form specified by the securities administrator of such
jurisdiction.
(q) Make all filings required to obtain approval for the inclusion of
the Shares for quotation on the Nasdaq National Market and will use its
best efforts to effect concurrently with the effectiveness of the
Registration Statement and maintain the aforesaid approval for at least
five years from the date of this Agreement. Within ten days after the
Effective Date, the Company shall cause the Company to be listed in the
Xxxxx'x Industrial Manual and cause such listing to be maintained for five
years from the date of this Agreement.
(r) On or prior to the Closing Date, sell to the Representatives (or
its designees), individually and not as Representatives of the
Underwriters, for a consideration of $1.00, the Representatives' Warrants
to purchase 250,000 of the shares of Common Stock (not including the
Additional Stock) offered to the public (the shares of Common Stock
underlying the Representatives' Warrants being herein referred to as the
"Warrant Stock"), which Representatives' Warrants shall be evidenced by the
Representatives' Warrant Agreement in the form set forth as an exhibit to
the Registration Statement.
(s) Until expiration of the Representatives' Warrants, keep reserved
sufficient shares of Common Stock for issuance upon exercise thereof.
(t) The Company will supply you with copies of all correspondence to
and from, and all documents issued to and by the Commission in connection
with the registration of the Stock and Additional Stock under the Act.
(u) Deliver to you, without charge, within a reasonable period after
the last Additional Closing Date or the expiration of the period in which
the Underwriters may exercise the over-allotment option, five bound volumes
of the Registration Statement and all related materials. The Company shall
use its best efforts to deliver such volumes within six months of the
Closing Date.
-17-
(v) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 promulgated under the Act by the earlier of (i) 10:00 p.m. eastern
time on the date of this Agreement, and (ii) the time confirmations are
sent or given, as specified by Rule 462(b)(2).
(w) The Company will not at any time, directly or indirectly, take any
action designed or intended to stabilize or manipulate the price of any
security of the Company, or which caused or resulted in, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
6. Payment of Expenses.
--------------------
(a) The Company hereby agrees to pay all expenses and such additional
fees, as provided in Section 6(a)(iii) below) in connection with (i) the
preparation, printing, filing, distribution, and mailing of the
Registration Statement, any Preliminary Prospectus, the Prospectus and the
printing, filing, distribution, and mailing of this Agreement, any
Agreement Among Underwriters, any selected dealers agreement, and all other
documents related to the offering, purchase, sale and delivery of the
Securities, including the cost of all copies thereof and of the Preliminary
Prospectuses and of the Prospectus and any amendments or supplements
thereto supplied to the Underwriters in quantities as herein above stated,
(ii) the issuance, sale, transfer, and delivery of the Stock and the
Additional Stock, including any transfer or other taxes payable thereon,
(iii) the qualification of the Stock and the Additional Stock under state
or foreign "blue sky" or securities laws, including the costs of printing
and mailing the preliminary and final "Blue Sky Survey" and the fees of
counsel for the Underwriters and their disbursements in connection
therewith, (iv) the filing fees payable to the Commission, the NASD, and
the jurisdictions in which such qualification is sought, (v) the quotation
of the Common Stock on the Nasdaq Stock Market's National Market,
respectively, (vi) the fees and expenses of the Company's transfer agent
and registrar, (vii) the fees and expenses of the Company's legal counsel
and accountants, (viii) all travel and lodging expenses incurred in
connection with the Company's initial public offering, and (ix) the costs
of placing a "tombstone" advertisement in such publications as the
Representatives shall determine. In addition, the Company hereby agrees to
pay to the Representatives a non-accountable expense allowance equal to 2%
of the aggregate gross proceeds received by the Company from the sale of
the Stock and the Additional Stock, which amounts (shall be paid to you on
the Closing Date (with respect to Stock sold by the Company on the Closing
Date) and, if applicable, on the Closing Date and any Additional Closing
Date (with respect to Additional Stock sold by the Company on the Closing
Date or such Additional Closing Date).
(b) In addition to its other obligations under Section 8(a) hereof,
the Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon (i) any statement or omission or
-18-
any alleged statement or omission or (ii) any breach or inaccuracy in its
representations and warranties, it will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
Company's obligation to reimburse each Underwriter for such expenses and
the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Company together with interest,
determined on the basis of the prime rate (or other commercial lending rate
for borrowers of the highest credit standing) announced from time to time
by Citibank, NA, New York, New York (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter in a timely
manner as provided below shall bear interest at the Prime Rate from the due
date for such reimbursement. This expense reimbursement agreement will be
in addition to any other liability which the Company may otherwise have.
The request for reimbursement will be sent to the Company.
(c) In addition to its other obligations under Section 8(b) hereof,
each Underwriter severally agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in Section 8(c) hereof which relates to
written information furnished to the Company by the Representatives on
behalf of the Underwriters specifically for inclusion in the Registration
Statement and the Prospectus, it will reimburse the Company (and, to the
extent applicable, each officer, director or controlling person) on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director or controlling person) for such expenses
and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Company
(and, to the extent applicable, each officer, director or controlling
person) shall promptly return it to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any
such interim reimbursement payments which are not made to the Company
within thirty (30) days of a request for reimbursement shall bear interest
at the Prime Rate from the date of such request. This indemnity agreement
will be in addition to any liability which such Underwriter may otherwise
have.
(d) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in paragraph (b) and/or
(c) of this Section 6, including the amounts of any requested reimbursement
payments and the method of determining amounts, shall be settled by
arbitration conducted under the provisions of the Constitution and Rules of
the Board of Governors of the New York Stock Exchange, Inc.
-19-
or pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for
arbitration or written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does
not make such designation of an arbitration tribunal in such demand or
notice, then the party responding to said demand or notice is authorized to
do so. Such an arbitration would be limited to the operation of the interim
reimbursement provisions contained in paragraph (b) and/or (c) of this
Section 6 and would not resolve the ultimate propriety or enforceability of
the obligation to reimburse expenses which is created by the provisions of
Section 8.
7. Conditions of Underwriters' Obligations. The obligations of the
----------------------------------------
several Underwriters to purchase and pay for the Stock and the Additional Stock,
as provided herein, shall be subject, in their discretion, to the continuing
accuracy of the representations and warranties of the Company contained herein
and in each certificate and document contemplated under this Agreement to be
delivered to you, as of the date hereof and as of the Closing Date (or the
Additional Closing Date, as the case may be), to the performance by the Company
of its obligations hereunder, and to the following conditions:
(a) If the Registration Statement or any amendment thereto filed prior
to the Closing Date has not been declared effective as of the time of
execution hereof, the Registration Statement or such amendment shall have
been declared effective not later than 11:00 a.m., New York City time, on
the date on which the amendment to the registration statement originally
filed with respect to the Securities or the Registration Statement, as the
case may be, containing information regarding the public offering price of
the Stock and the Additional Stock has been filed with the Commission, or
such later time and date as shall have been consented to by the
Representatives; if required, the Prospectus or any Term Sheet that
constitutes part thereof, and any amendment or supplement thereto, shall
have been filed with the Commission in the manner and within the time
period required by Rules 434, 462(b)(2) and 424(b) under the Act; no Stop
Order suspending the effectiveness of the Registration Statement or any
amendment thereto shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of
the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) At the Closing Date and any Additional Closing Date, as the case
may be, the Representatives shall have received the favorable opinion of
Glast, Xxxxxxxx & Xxxxxx, counsel for the Company, dated the date of
delivery, addressed to the Underwriters, and in form and scope reasonably
satisfactory to counsel for the Underwriters, with reproduced copies or
signed counterparts thereof for each of the Underwriters, to the effect set
forth in Exhibit I hereto.
-20-
(c) The Representatives shall have received from Howison & Xxxxxx,
LLP special intellectual property counsel for the Company, an opinion dated
each of the Closing Date and the Additional Closing Date, to the effect set
forth in Exhibit II hereto.
(d) The Representatives shall have received from Xxxxxx, Xxxx &
Xxxxxx, LLP special regulatory property counsel for the Company, an
opinion dated each of the Closing Date and the Additional Closing Date, to
the effect set forth in Exhibit III hereto.
(e) On or prior to the Closing Date and any Additional Closing Date,
as the case may be, the Underwriters shall have been furnished such
information, documents, certificates, and opinions as they may reasonably
require for the purpose of enabling them to review the matters referred to
in Section 7(b), (c) and (d) and in order to evidence the accuracy,
completeness, or satisfaction of any of the representations, warranties,
covenants, agreements, or conditions herein contained, or as you may
reasonably request.
(f) At the Closing Date and any Additional Closing Date, as the case
may be, you shall have received a certificate of the chief executive
officer and of the chief financial officer of the Company, dated the
Closing Date or such Additional Closing Date, as the case may be, to the
effect (i) that the conditions set forth in Section 7(a) have been
satisfied, (ii) that as of the date of this Agreement and as of the Closing
Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were and are
accurate, and (iii) that as of the Closing Date or such Additional Closing
Date, as the case may be, the obligations to be performed by the Company
hereunder on or prior thereto have been fully performed.
(g) At the time this Agreement is executed and at the Closing Date and
any Additional Closing Date, as the case may be, you shall have received a
letter from Ernst & Young LLP, certified public accountants, dated the date
of delivery and addressed to the Underwriters, in form and substance
satisfactory to you, with reproduced copies or signed counterparts thereof
for each of the Underwriters.
(h) All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Stock and the Additional Stock shall be
reasonably satisfactory in form and substance to you and to counsel for the
Underwriters, and the Underwriters shall have received from such counsel
for the Underwriters a favorable opinion, dated as of the Closing Date and
the Additional Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Stock, the Registration
Statement and the Prospectus and with respect to such other related
matters, as you may reasonably request, and the Company shall have
furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters. In rendering such
opinion, such counsel may rely as to all matters governed other than by the
law of California or federal laws on the opinion of counsel referred to in
Section 7(b), (c) and (d).
-21-
(i) The NASD, upon review of the terms of the public offering of the
Stock and the Additional Stock, shall not have objected to the
Underwriters' participation in such offering.
(j) The Nasdaq National Market shall have approved the Common Stock
for quotation, subject to official notice of issuance.
(k) Prior to or on the Closing Date, the Company shall have entered
into the Representatives' Warrant Agreement with the Representatives.
(l) Prior to or on the Closing Date, the Company shall have provided
to you a copy of the agreements referred to in Section 2(t) hereof.
Any certificate or other document signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company hereunder to the Underwriters as to
the statements made therein. If any condition to the Underwriters' obligations
hereunder to be fulfilled prior to or at the Closing Date or any Additional
Closing Date, as the case may be, is not so fulfilled, you may on behalf of the
several Underwriters elect to terminate this Agreement or, if you so elect, in
writing waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
8. Indemnification and Contribution.
---------------------------------
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its officers, directors,
stockholders, members, managers, partners, employees, agents, and counsel, 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, against any and all loss,
liability, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Section 8, but not be limited to, reasonable attorneys' fees
and any and all expense whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, any Term Sheet, the Registration
Statement or the Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto, or (B) in any application or other document
or communication (in this Section 8 collectively called an "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify any of the Securities under the "blue sky" or securities laws thereof or
filed with the Commission or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company as stated in Section 8(b) with respect to any Underwriter by or
on behalf of such Underwriter through the Representatives
-22-
expressly for inclusion in any Preliminary Prospectus, any Term Sheet, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii) any material breach
of any representation, warranty, covenant, or agreement of the Company contained
in this Agreement add provisio that there is no indemnification if statement or
omission cured in final Prospectus and underwriter failed to deliver prior to or
at confirmation of sale. The foregoing agreement to indemnify shall be in
addition to any liability the Company may otherwise have, including liabilities
arising under this Agreement.
If any action is brought against an Underwriter or any of its officers,
directors, stockholders, members, managers, partners, employees, agents, or
counsel, or any controlling persons of an Underwriter (an "indemnified party")
in respect of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly noti fy
the Company in writing of the institution of such action (but the failure so to
notify shall not relieve the Company from any liability it may have pursuant to
this Section 8(a) or otherwise) and the Company shall promptly assume the
defense of such action, including the employment of counsel (satisfactory to
such indemnified party or parties) and payment of expenses. Such indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel satisfactory
to such indemnified party or parties to have charge of the defense of such
action or such indemnified party or parties shall have reasonably concluded that
there may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those available to
the Company, in any of which events such fees and expenses shall be borne by the
Company and the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. Anything in this
paragraph to the contrary notwithstanding, the Company shall not be liable for
any settlement of any such claim or action effected without its written consent,
which shall not be unreasonably withheld. The Company shall not, without the
prior written consent of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment in or otherwise seek to terminate any
pending or threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify the Underwriters of the commencement of
any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of the Stock or the Additional Stock, any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or any application.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing indemnity from
the Company to the several Underwriters, but only with respect to statements or
omissions,
-23-
if any, made in any Preliminary Prospectus, the Registration Statement, or the
Prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, or in any application in reliance upon and in conformity
with written information furnished to the Company as stated in this Section 8(b)
with respect to any Underwriter by or on behalf of such Underwriter through the
Representatives expressly for inclusion in the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or in any application, as
the case may be; provided, however, that the obligation of each Underwriter to
-------- -------
provide indemnity under the provisions of this Section 8(b) shall be limited to
the amount which represents the product of the number of shares of Stock and
Additional Stock underwritten by such Underwriter hereunder and the public
offering price per share set forth on the cover page of the Prospectus. For all
purposes of this Agreement, the amounts of the selling concession and re-
allowance set forth on the cover page of Prospectus, the material set forth
under the caption "Underwriting" and the identity of counsel under the caption
"Legal Matters" constitute the only information furnished in writing by or on
behalf of any Underwriter expressly for inclusion in any Preliminary Prospectus,
the Registration Statement or the Prospectus (as from time to time amended or
supplemented), or any amendment or supplement thereto, or in any application, as
the case may be. If any action shall be brought against the Company or any other
person so indemnified based on any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto, or in any
application, and in respect of which indemnity may be sought against any
Underwriter pursuant to this Section 8(b), such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the indemnified parties,
by the provisions of Section 8(a).
(c) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to Section 8(a) or 8(b)
(subject to the limitations thereof), but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act, or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed the Registration
Statement, and any controlling person of the Company), on the one hand, and the
Underwriters, in the aggregate (including for this purpose any contribution by
or on behalf of an indemnified party), on the other hand, shall contribute to
the losses, liabilities, claims, damages, and expenses whatsoever to which any
of them may be subject, so that the Underwriters are responsible for the
proportion thereof equal to the percentage which the underwriting discount per
share set forth on the cover page of the Prospectus represents of the initial
public offering price per share set forth on the cover page of the Prospectus
and the Company is responsible for the remaining portion; provided, however,
-------- -------
that if applicable law does not permit such allocation, then other relevant
equitable considerations such as the relative fault of the Company and the
Underwriters in the aggregate in connection with the facts which resulted in
such losses, liabilities, claims, damages, and expenses shall also be
considered. The relative fault, in the case of an untrue statement, alleged
untrue statement, omission, or alleged omission, shall be determined by, among
other things, whether such statement, alleged statement, omission, or alleged
omission relates to
-24-
information supplied by the Company or by the Underwriters, and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement, alleged statement, omission, or alleged omission. The
Company and the Underwriters agree that it would be unjust and inequitable if
the respective obligations of the Company and the Underwriters for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Underwriters and the
other indemnified parties were treated as one entity for such purpose) or by any
other method of allocation that does not reflect the equitable considerations
referred to in this Section 8(c). In no case shall any Underwriter be
responsible for a portion of the contribution obligation imposed on all
Underwriters in excess of its pro rata share based on the number of shares of
Stock underwritten by it as compared to the number of shares of Stock
underwritten by all Underwriters who do not default in their obligations under
this Section 8(c). No person guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. For purposes
of this Section 8(c), each person, if any, who controls an Underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and
each officer, director, stockholder, member, manager, partner, employee, agent,
and counsel of an Underwriter shall have the same rights to contribution as such
Underwriter and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, each officer of
the Company who shall have signed the Registration Statement, and each director
of the Company shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 8(c). Anything in this
Section 8(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 8(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
9. Default by an Underwriter.
--------------------------
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Stock or Additional Stock hereunder, and if the number of
shares of Stock or Additional Stock to which the defaults of all Underwriters in
the aggregate relate does not exceed 10% of the number of shares of Stock or
Additional Stock, as the case may be, which all Underwriters have agreed to
purchase hereunder, then such shares of Stock or Additional Stock to which such
defaults relate shall be purchased by the non-defaulting Underwriters in
proportion to their respective commitments hereunder.
(b) If such defaults exceed in the aggregate 10% of the number of shares of
Stock or Additional Stock, as the case may be, which all Underwriters have
agreed to purchase hereunder, you may in your discretion arrange for yourself or
for another party or parties to purchase such shares of Stock or Additional
Stock, as the case may be, to which such default relates on the terms contained
herein. If you do not arrange for the purchase of such shares of Stock or
Additional Stock, as the case may be, within one business day after the
occurrence of defaults relating to in excess of 10% of the Stock or the
Additional Stock, as the case may be, then the Company shall be entitled to a
further period of one business day within which to procure another party or
parties
-25-
satisfactory to you to purchase such shares of Stock or Additional Stock, as the
case may be, on such terms. If you or the Company do not arrange for the
purchase of the Stock or Additional Stock, as the case may be, to which such
defaults relate as provided in this Section 9(b), this Agreement may be
terminated by you or by the Company without liability on the part of the Company
(except that the provisions of Sections 6, 8, 10, and 13 shall survive such
termination) or the several Underwriters, but nothing in this Agreement shall
relieve a defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for any damages occasioned by its default
hereunder.
(c) If the shares of Stock or Additional Stock to which such defaults
relate are to be purchased by the non-defaulting Underwriters, or are to be
purchased by another party or parties as aforesaid, you or the Company shall
have the right to postpone the Closing Date or the Additional Closing Date, as
the case may be, for a reasonable period but not in any event more than seven
days in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents and
arrangements with respect to the Stock or the Additional Stock, and the Company
agrees to prepare and file promptly any amendment or supplement to the
Registration Statement or the Prospectus which in the opinion of counsel for the
Underwriters may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any party substituted under this Section 9 as if
such party had originally been a party to this Agreement and had been allocated
the number of shares of Stock and Additional Stock actually purchased by it as a
result of its original commitment to purchase Stock and Additional Stock and its
purchase of shares of Stock or Additional Stock pursuant to this Section 9.
10. Representations and Agreements to Survive Delivery. All
---------------------------------------------------
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any indemnified person,
or by or on behalf of the Company or any person or entity which is entitled to
be indemnified under Section 8(b), and shall survive termination of this
Agreement or the delivery and the payment of the Stock and the Additional Stock
to the several Underwriters. In addition, the provisions of Sections 6, 8, 10,
11, and 13 shall survive termination of this Agreement, whether such termination
occurs before or after the Closing Date or any Additional Closing Date.
11. Effective Date of This Agreement and Termination Thereof.
---------------------------------------------------------
(a) This Agreement shall become effective at 9:30 a.m., New York City time,
on the first full business day following the day on which the Registration
Statement becomes effective or at the time of the initial public offering by the
Underwriters of the Stock, whichever is earlier. The time of the initial public
offering shall mean the time, after the Registration Statement becomes
effective, of the release by you for publication of the first newspaper
advertisement which is
-26-
subsequently published relating to the Stock or the time, after the Registration
Statement becomes effective, when the Stock is first released by you for
offering by the Underwriters or dealers by letter or telegram, whichever shall
first occur. The Representatives or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party, except as
noted below in this Section 11, by giving the notice indicated in Section 11(c)
before the time this Agreement becomes effective.
(b) In addition to the right to terminate this Agreement pursuant to
Sections 7 and 9 hereof, you shall have the right to terminate this Agreement at
any time prior to the Closing Date or any Additional Closing Date, as the case
may be, by giving notice to the Company if any domestic or international event,
act, or occurrence has materially disrupted, or in your opinion will in the
immediate future materially disrupt, the securities markets; or if there shall
have been a general suspension of, or a general limitation on prices for,
trading in securities on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Stock Market's National Market, the Nasdaq Stock Market's
SmallCap Market, or in the over-the-counter market; or if there shall have been
an outbreak of major hostilities or other national or international calamity; or
if a banking moratorium has been declared by a state or federal authority; or if
a moratorium in foreign exchange trading by major international banks or persons
has been declared; or if there shall have been a material interruption in the
mail service or other means of communication within the United States; or if the
Company shall have sustained a material loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage, labor dispute, legal or governmental
proceeding or other calamity or malicious act which, whether or not such loss
shall have been insured, will, in your opinion, make it inadvisable to proceed
with the offering, sale, or delivery of the Stock or the Additional Stock, as
the case may be; or if there shall have been such material adverse change in the
condition of the Company, or such change in the market for securities in general
or in political, financial, or economic conditions as in your judgment makes it
inadvisable to proceed with the offering, sale, and delivery of the Stock or the
Additional Stock, as the case may be, on the terms contemplated by the
Prospectus.
(c) If you elect to prevent this Agreement from becoming effective, as
provided in this Section 11, or to terminate this Agreement pursuant to Section
7, 9, or this Section 11, you shall notify the Company promptly by telephone,
facsimile transmission, telex, or telegram, confirmed by letter. If the Company
elects to prevent this Agreement from becoming effective, as provided in this
Section 11, or if the Company elects to terminate this Agreement pursuant to
Section 9 of this Agreement, the Company shall notify you promptly by telephone,
facsimile transmission, telex, or telegram, confirmed by letter.
(d) Notwithstanding anything in this Agreement to the contrary other than
Section 11(e) hereof, if this Agreement shall not become effective by reason of
an election pursuant to this Section 11 or if this Agreement shall terminate or
shall otherwise not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any covenant or agreement or
satisfy any condition of the Agreement by it to be performed or satisfied, the
sole liability of the Company to the several Underwriters, in addition to the
obligations the Company
-27-
assumed pursuant to Section 6, will be to reimburse promptly the Representatives
upon presentation to the Company of a statement of account of all other expenses
incurred by the Representatives with regard to preparation for the initial
public offering or incurred by the Underwriters in connection with the initial
public offering, including, but not be limited to, out-of-pocket expenses,
reasonable fees and disbursements of their counsel and travel costs, up to a
maximum of $150,000, less any amounts previously paid by the Company to the
Underwriters or their counsel pursuant to Section 6.
(e) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 6, 8, 10, and 13 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
12. Notices. All communications hereunder, except as may be otherwise
--------
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered or transmitted via facsimile
transmission, telex or telegraph and confirmed by letter, to such Underwriter,
to Xxxxxxx Bros., 000 Xxxxx Xxxxxx - 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax
(000) 000-0000, Attention: Corporate Finance Department; and if sent to the
Company, shall be mailed, delivered or transmitted via facsimile transmission,
telex or telegraph and confirmed by letter, WorldQuest Networks, Inc., 00000
Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, Fax (000) 000-0000, Attention:
Chief Executive Officer. All notices hereunder shall be effective upon receipt
by the party to which it is addressed.
13. Parties. You represent that you are authorized to act on behalf of
--------
the several Underwriters named in Schedule I hereto and the Company shall be
entitled to act and rely on any request, notice, consent, waiver, or agreement
purportedly given on behalf of the Underwriters when the same shall have been
given by you on such behalf. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the several Underwriters and the Company and the
persons and entities referred to in Section 8 who are entitled to
indemnification or contribution, and their respective successors, legal
Representatives, and assigns (which shall not include any buyer, as such, of the
Stock or the Additional Stock), and no other person shall have or be construed
to have any legal or equitable right, remedy, or claim under or in respect of or
by virtue of this Agreement or any provision herein contained. Notwithstanding
anything contained in this Agreement to the contrary, all of the obligations of
the Underwriters hereunder are several and not joint.
14. Construction. This Agreement shall be construed in accordance with
-------------
the laws of the State of New York, without giving effect to conflict of laws.
TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. Consent to Jurisdiction. The Company irrevocably consents to the
------------------------
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out of
or relating to this Agreement, any document or instrument delivered pursuant to,
in connection with or simultaneously with this Agreement, or a
-28-
breach of this Agreement or any such document or instrument. In any such action
or proceeding, the Company waives personal service or any summons, complaint or
other process and agrees that service thereof may be made in accordance with
Section 12. Within 30 days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the Company shall appear or answer such summons, complaint or
other process. Should the Company fail to appear or answer within such 30 day
period or such extended period, as the case may be, the Company shall be deemed
in default and judgement may be entered against the Company for the amount as
demanded in any summons, complaint or other process so served.
-29-
If the foregoing correctly sets forth the understanding between you and the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
WORLDQUEST NETWORKS, INC.
By:___________________________________________
B. Xxxxxxx Xxxxx,
Chairman of the Board and
Chief Executive Officer
Accepted as of the date first above written.
New York, New York
XXXXXXX BROS., LLP
XXXX X. XXXXXXX AND COMPANY INCORPORATED
WESTPARK CAPITAL, INC.
Each acting on its own on behalf and as
Representatives of the other several
Underwriters named in Schedule I hereto.
By: XXXXXXX BROS., L.L.P.
By: _____________________________
Name:
Title:
-30-
SCHEDULE I
Number of Shares of
Stock to be
Purchased
Underwriter from the Company
----------- -------------------
XXXXXXX BROS., L.P.
XXXX X. XXXXXXX AND COMPANY
INCORPORATED
WESTPARK CAPITAL, INC.
TOTAL
-31-
EXHIBIT I
Matters to be Covered in
------------------------
Opinion of Glast Xxxxxxxx Xxxxxx, P.C., Counsel to the Company/1/
--------------------------------------------------------------
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company has all corporate power and authority necessary to own,
lease, operate or hold its properties and to conduct its business (including,
without limitation, as conducted through the Subsidiaries) as described in the
Prospectus and to enter into and perform its obligations under the Company
Documents.
3. The Company is duly qualified or licensed to do business and is in
good standing as a foreign corporation in each jurisdiction in which the
ownership or leasing of its properties or the conduct of its business require
such qualification, except where failure to so qualify will not have a material
adverse change in the properties, business, net worth or results of operations
of the Company, individually or in the aggregate (a "Material Adverse Effect"),
each of such jurisdictions as set forth on a Schedule to the opinion; to such
counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
Subsidiaries and to such counsel's knowledge none of the Subsidiaries owns or
controls, directly or indirectly, any corporation, association or other entity;
4. All of the authorized, issued and outstanding shares of capital stock
of the Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein; all of the shares of the
Company's outstanding stock requiring authorization for issuance by the
Company's Board of Directors have been duly authorized and validly issued, are
fully paid and non-assessable and conform to the description thereof contained
in the Prospectus; have not been issued in violation of or subject to any
statutory pre-emptive right, and, to such counsel's knowledge, have not been
issued in violation of or subject to any contractual preemptive right, co-sale,
right, registration right, right of first refusal or other similar right and,
except as set forth in the Registration Statement, to such counsel's knowledge,
there are no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other
equity interest in the Company.
--------------------------
/1/ Capitalized Terms used herein but not defined shall have the meanings
given such terms in the Underwriting Agreement.
I-1
5. The Common Stock and the Representatives' Warrants conform in all
material respects to the descriptions thereof contained in the Prospectus; the
Stock to be issued as contemplated in the Registration Statement and the
Underwriting Agreement have been duly and validly authorized by the Company for
issuance, and the Company has full corporate power and authority to issue, sell
and deliver the Securities, and, when the Securities are issued and delivered
against payment therefor in accordance with the terms hereof, they will be fully
paid and nonassessable, and will not have been issued in violation of or subject
to any statutory preemptive right, or to such counsel's knowledge, any
contractual preemptive right, co-sale right, registration right, right of first
refusal or other similar right other than those contemplated by the
Representatives' Warrants; and there are no restrictions upon the voting or
transfer of any of the Stock pursuant to the Certificate of Incorporation (as
hereinafter defined) or By-laws, or pursuant to any agreement or other
instrument of the Company known to such counsel.
6. The certificates evidencing the Stock are in valid and proper legal
form; the Representatives' Warrants will be exercisable for shares of Common
Stock of the Company in accordance with the terms of the Representatives'
Warrants and at the price therein provided for; the shares of Common Stock of
the Company issuable upon exercise of the Representatives' Warrants have been
duly authorized and reserved for issuance upon such exercise, and such shares,
when issued upon such exercise in accordance with the terms of the
Representatives' Warrants and when the price is paid shall be fully paid and
non-assessable;
7. To such counsel's knowledge, except as set forth in the Prospectus,
there are no legal or governmental proceedings pending to which the Company is a
party or of which any property or assets of the Company or any is the subject
which, if determined adversely to the Company, could have a Material Adverse
Effect or prevent or adversely affect the transactions contemplated by the
Underwriting Agreement; and, to such counsel's knowledge, no such proceedings
are threatened by governmental authorities or other third parties and there are
no such proceedings which are required to be described or referred to in the
Registration Statement which are not so described or referred to.
8. The Company Documents have been duly and validly authorized by all
necessary corporate action on the part of the Company and have been duly
executed and delivered by the Company and, assuming due authorization, execution
and delivery of the Underwriting Agreement by you, are valid and binding
agreements of the parties; the Company has full corporate power and authority to
enter into the Company Documents.
9. The execution, delivery and performance of the Company Documents, and
the incurrence of the obligations as therein set forth and the consummation of
the transactions therein contemplated will not result, with or without due
notice or lapse of time or both, in a breach or violation of any of the terms or
provisions of or constitute a default under, or give rise to any right of
termination, cancellation or acceleration under, the Company's Certificate of
Incorporation (the "Certificate of Incorporation"), By-laws or other
organizational documents of the Company, or any material indenture, mortgage,
deed of trust, note agreement or other agreement of instrument known to such
counsel to which the Company is a party or by which it or any of its properties
is or may
I-2
be bound and will not result in a breach or violation of any law, statute,
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or result in the creation
of a lien.
10. To such counsel's knowledge, the Company is not presently (a) in
violation of its Certificate of Incorporation or By-laws, or (b), to such
counsel's knowledge, in breach or default under any lease, instrument, license,
permit or any other agreement to which the Company is bound or to which any
property or assets of the Company is the subject, where the consequences of such
violation, breach or default would have a Material Adverse Effect.
11. No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company of
the transactions contemplated by the Company Documents (except such as may be
required by the NASD or as required by the securities or "Blue Sky" laws or any
jurisdiction as to which such counsel need express no opinion) in connection
with the purchase and distribution of the Stock by the Underwriters or the
issuance of the Representatives' Warrants or the shares of Common Stock
underlying the Representatives' Warrants except such as have been obtained or
made, specifying the same.
12. The Registration Statement has become effective under the Securities
Act and, to such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceeding for that purpose
is pending or threatened by the Commission.
13. The Registration Statement and the Prospectus and any amendments or
supplements thereto (except for the financial statements and notes thereto and
related schedules and other financial information as to which such counsel need
express no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations.
14. There are no contracts, agreements or other documents, known to such
counsel, required to be described in the Registration Statement or Prospectus or
to be filed as an exhibit to the Registration Statement which is not described
or filed therein as required. All descriptions of any such contracts,
agreements or documents contained in the Registration Statement are accurate and
complete descriptions of such documents in all material respects.
15. The statements in the Prospectus under the captions "1997 Stock Option
Plan," "Description of Capital Stock" and "Shares Eligible for Future Sale," to
the extent they constitute a summary of documents referred to therein or matters
of law accurately summarize and fairly present in all material respects the
legal and regulatory matters described therein.
16. Neither the Company nor any of the Subsidiaries is nor will they be
after receipt of payment for the Stock, an "investment company," or an entity
"controlled" by an "investment company" required to be registered under the 1940
Act, as such terms are defined in the 1940 Act.
17. To such counsel's knowledge, except as set forth in the Registration
Statement and the Prospectus, no holder of any securities of the Company or any
other person has the right,
I-3
contractual or otherwise, to cause the Company to sell or otherwise issue to
such person, or to permit such person to underwrite the sale of, any of the
Stock or the right to have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Securities Act
of any shares of Common Stock or other securities of the Company that has not
been waived or lapsed.
18. To such counsel's knowledge, the Company possesses all authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from,
and have made all declarations and filings with, all regulatory or governmental
officials, bodies and tribunals ("Permits") to own, lease or operate its
properties and to conduct its business described in the Registration Statement
and the Prospectus, except where the failure to have obtained or made the same
would not have a Material Adverse Effect and to the knowledge of such counsel
neither the Company nor any of the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Permits;
provided, however, such counsel gives no opinion as to any matters hereunder
covered by legal opinions provided to you by Howison & Xxxxxxx, LLP and Xxxxxx,
Xxxx & Xxxxxx LLP.
19. To the knowledge of such counsel the Company is in compliance with,
and conducts its business in conformity with, all applicable federal, state,
local and foreign laws, rules and regulations, of each court or governmental
agency or boding having jurisdiction over the Company, except where the failure
to be in compliance would not have a Material Adverse Effect; to the knowledge
of such counsel, otherwise than as set forth in the Registration Statement and
the Prospectus, no prospective change in any of such federal or state laws,
rules or regulations has been adopted which, when made effective, would have a
Material Adverse Effect; provided, however, such counsel gives no opinion as to
any matters hereunder covered by legal opinions provided to you by Howison &
Xxxxxxx, LLP and Xxxxxx, Xxxx & Xxxxxx LLP.
20. The Stock has been duly approved for quotation on the Nasdaq National
Market, subject to notice of effectiveness.
In addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement or any amendment
thereto, as of the time it became effective under the Securities Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Securities Act), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or (ii) that the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Additional Closing Date,
as the case may be, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (except that such counsel need express no view as to
financial statements and notes thereto and schedules or other financial or
statistical information therein). With respect to such statement, such counsel
may state that their
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belief is based upon the procedures set forth therein, but
is without independent check and verification.
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EXHIBIT II
Matters to be Covered in
------------------------
Opinion of Howison & Xxxxxxx, LLP, Special Intellectual Counsel for the Company
-------------------------------------------------------------------------------
1. The Company is listed in the records of the Patent and Trademark
Office as the holder of record of the patent application and the trademark
registration application to register the trademarks "WorldQuest" and "WorldQuest
Networks" listed on Schedule I to the opinion (the "Applications"). Except as
disclosed in the Prospectus, such counsel knows of no claims of third parties to
any ownership interest or lien with respect to the Applications. To such
counsel's knowledge, none of the Applications has been rejected.
2. The statements under the Prospectus captions "Risk Factors -- Our
business may be adversely affected if we are not able to protect our
intellectual property and other proprietary rights from infringement" and
"Business -- Intellectual Property and Other Proprietary Rights" (collectively,
the "Intellectual Property Portion") in the Prospectus insofar as such
statements constitute summaries of the Company's rights to the Applications are
in all material respects accurate summaries and fairly summarize in all material
respects the legal matters, documents and proceedings relating to the
Applications described therein; to the knowledge of such counsel, the Company
owns the rights to two (2) pending Applications.
3. Such counsel is not aware of any facts that would lead such counsel to
conclude that any patent or trademark issued in respect of an Application would
be invalid.
4. Except as disclosed in the Intellectual Property Portion, such counsel
is not aware that any valid patent is infringed by the activities of the Company
described in the Registration Statement or Prospectus or by the manufacture, use
or sale of any product, device, instrument, drug or other material made and used
according to the Applications.
5. Such counsel is not aware of any material defects of form in the
preparation or filing of the Applications on behalf of the Company. The
Applications are being diligently pursued by the Company.
6. Such counsel knows of no pending or threatened action, suit,
proceeding or claim by others that the Company is infringing or otherwise
violating any patents, copyrights or trade secrets.
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7. Except as disclosed in the Prospectus, such counsel is not aware of
any pending or threatened actions, suits proceedings or claim by others
challenging the validity or scope of the Applications.
8. Such counsel is not aware of any infringement on the part of any third
party of the Applications, trade secrets, know-how or other proprietary rights
of the Company.
9. Nothing has come to the attention of such counsel which causes such
counsel to believe that the information contained in the Intellectual Property
Portion of the Registration Statement, at the time the Registration Statement
became effective, contained an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or that, at the Closing Date, the information contained in
the Intellectual Property Portion of the Effective Prospectus and Final
Prospectus or any amendment or supplement thereto contained any untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
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SCHEDULE I
UNITED STATES PATENTS AND PATENT
AND TRADEMARK APPLICATIONS
United States Patent and Trademark Applications
Docket No. Title Serial No. Filing Date
---------- ----- ---------- -----------
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EXHIBIT III
Matters to be Covered in Opinion
--------------------------------
of Xxxxxx, Xxxx & Xxxxxx LLP, Special Regulatory Counsel for the Company
------------------------------------------------------------------------
1. To the knowledge of such counsel, other than as described in the
Registration Statement, no legal, regulatory or governmental proceedings are
pending to which the Company is a party or to which the assets of the Company
are subject which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), business prospects, net worth or properties of the Company, or
which, individually or in the aggregate, would have a material adverse effect on
the power or ability of the Company to perform its obligations under this
Agreement and the Representatives' Warrants or to consummate the transactions
contemplated thereby or by the Registration Statement and no such material
proceedings have been threatened against the Company or with respect to any of
the Company's assets or properties.
2. To the knowledge of such counsel, the Company is not (A) in default
(or, with notice or lapse of time or both, would be in default) in the
performance or observance of any obligation, agreement, covenant or condition
contained in any governmental license, franchise, authorization, permit or
certificate to which it is a party or by which it may be bound, or to which any
of its respective assets or properties is subject, or (B) in violation of any
law, statute, judgment, decree, order, rule or regulation of any domestic or
foreign court with jurisdiction over the Company or the Company's assets or
properties, or other governmental or regulatory authority, agency or other body
other than such defaults or violations which, individually or in the aggregate,
could not reasonably be expected to have or result in, in the case of clause (A)
or (B), a material adverse effect on the condition (financial or otherwise),
business, net worth or properties of the Company.
3. To the knowledge of such counsel, the Company has obtained all
consents, approvals, orders, certificates, licenses, permits, franchises and
other authorizations of and from, and has made all declarations and filings
with, all governmental and regulatory authorities, all self-regulatory
organizations and all courts and other tribunals necessary to own, lease,
license and use its properties and assets and to conduct its business in the
manner described in the Registration Statement, except to the extent that the
failure to so obtain or file, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), business, net worth or properties of the Company.
4. The statements set forth in the Registration Statement under the
headings "Risk Factors -- The Internet industry may become subject to increased
government regulation which could have a negative effect on our operations" and
"Business -- Government Regulation,"
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(collectively, the "Regulatory Portion") insofar as such statements constitute a
summary of statutes, rules, regulations, legal matters, documents or proceedings
referred to therein, provide a fair summary of such statutes, rules,
regulations, legal matters, documents and proceedings and the information with
respect thereto.
5. Nothing has come to the attention of such counsel which causes such
counsel to believe that the information contained in the Regulatory Portion of
the Registration Statement, at the time the Registration Statement became
effective, contained an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or that, at the Closing Date, the information contained in the
Regulatory Portion of the Prospectus or any amendment or supplement thereto
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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