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EXHIBIT 1.1
1,200,000 SHARES OF COMMON STOCK
INTERVU INC.
UNDERWRITING AGREEMENT
June __, 1998
JOSEPHTHAL & CO. INC.
CRUTTENDEN XXXX INCORPORATED
As Representatives of the
Several Underwriters listed on Schedule A hereto
c/o Josephthal & Co. Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
InterVU Inc., a Delaware corporation (the "Company"), confirms
its agreement with Josephthal & Co. Inc. ("Josephthal") and each of the
underwriters named in Schedule A hereto (collectively, the "Underwriters," which
term shall also include any underwriter substituted as hereinafter provided in
Section 11), for whom Josephthal and Cruttenden Xxxx Incorporated ("Cruttenden")
are acting as representatives (in such capacity, Josephthal and Cruttenden shall
hereinafter be referred to as "you" or the "Representatives"), with respect to
the sale by the Company and the purchase by the Underwriters, acting severally
and not jointly, of the respective numbers of shares of the Company's common
stock, $.001 par value per share ("Common Stock"), set forth in Schedule A
hereto. Such shares of Common Stock are hereinafter referred to as the "Firm
Shares." If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be to the Underwriters.
Upon your request, as provided in Section 2(b) of this Agreement,
the Company shall also sell to the Underwriters, acting severally and not
jointly, up to an additional 180,000 shares of Common Stock for the purpose of
covering over-allotments, if any (the "Option Shares"). The Firm Shares and the
Option Shares are sometimes hereinafter referred to as the "Shares." The Company
also proposes to issue and sell to you warrants (the "Advisors' Warrants")
pursuant to the Advisors' Warrant Agreement (the "Advisors' Warrant Agreement")
for the purchase of an additional 120,000 shares of Common Stock. The shares of
Common Stock issuable upon exercise of the Advisors' Warrants are hereinafter
referred to as the "Advisors' Shares." The Firm Shares, the Option Shares, the
Advisors' Warrants and the
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Advisors' Shares collectively, are hereinafter referred to as the "Securities"
and are more fully described in the Registration Statement and the Prospectus
referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters as of the
date hereof, and as of the Closing Date (hereinafter defined) and the Option
Closing Date (hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form S-1 (No. 333-51587), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Firm Shares and the Option Shares under the Securities Act of 1933, as
amended (the "Act"), which registration statement and amendment or amendments
have been prepared by the Company in conformity in all material respects with
the requirements of the Act, and the rules and regulations (the "Regulations")
of the Commission under the Act. The Company will not file any amendment thereto
to which the Underwriters shall have objected in writing after having been
furnished with a copy thereof. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus, financial
statements, exhibits and all other documents filed as a part thereof or
incorporated therein (including, but not limited to, those documents or
information incorporated by reference therein) and all information deemed to be
a part thereof as of such time pursuant to paragraph (b) of Rule 430(A) of the
Regulations), is hereinafter called the "Registration Statement," and the form
of prospectus in the form first filed with the Commission pursuant to Rule
424(b) of the Regulations is hereinafter called the "Prospectus." For purposes
hereof, "Rules and Regulations" mean the rules and regulations adopted by the
Commission under either the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor, to the best of the Company's
knowledge, any state regulatory authority has issued any order preventing or
suspending the use of any Preliminary Prospectus, the Registration Statement or
Prospectus or any part of any thereof and no proceedings for a stop order
suspending the effectiveness of the Registration Statement or any of the
Company's securities have been instituted or are pending or, to the Company's
knowledge, threatened. Each of the Preliminary Prospectus, the Registration
Statement and Prospectus at the time of filing thereof conformed in all material
respects with the requirements of the Act and the Rules and Regulations, and
none of the Preliminary Prospectus, the Registration Statement or Prospectus at
the time of filing thereof contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (in the case of the Preliminary
Prospectus and the Prospectus, in light of the circumstances under which they
were made), except that this representation and warranty does not apply to
statements contained in the paragraph relating to stabilization and market
making on the inside front cover page of the Prospectus or under the caption
"Underwriting" in the Prospectus (to the extent such statements relate to the
Underwriters).
(c) When the Registration Statement becomes effective and at
all times subsequent thereto up to the Closing Date and each Option Closing
Date, if any, and during such longer period as the Prospectus may be required to
be delivered in connection with sales by the Underwriters or a dealer, the
Registration Statement and the Prospectus will contain all
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statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations, and will conform to the requirements of the Act
and the Rules and Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus and any amendment or supplement thereto, in light of
the circumstances under which they were made), provided, however, that this
representation and warranty does not apply to statements contained in the
paragraph relating to stabilization and market making on the inside front cover
page of the Prospectus or under the caption "Underwriting" in the Prospectus (to
the extent such statements relate to the Underwriters).
(d) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware. The Company does not own an interest in any corporation, partnership,
trust, joint venture or other business entity. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations requires such qualification or licensing, except for such
jurisdictions where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings, position,
prospects, value, operation, properties, business or results of operations of
the Company. The Company has all requisite corporate power and authority, and
the Company has obtained any and all necessary authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including, without limitation,
those having jurisdiction over environmental or similar matters), to own or
lease its properties and conduct its business as described in the Prospectus,
except for such authorizations, approvals, orders, licenses, certificates,
franchises and permits the failure to so obtain would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
position, prospects, value, operation, properties, business or results of
operations of the Company; the Company is and has been doing business in
compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state and local laws,
rules and regulations, except where the failure to so comply would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, position, prospects, value, operation, properties, business or results
of operations of the Company; and the Company has not received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, position, prospects, value, operation,
properties, business or results of operations of the Company. The disclosures in
the Registration Statement concerning the effects of federal, state and local
laws, rules and regulations on the Company's business as currently conducted and
as contemplated are correct in all material respects and do not omit to state a
material fact necessary to make the statements contained therein not misleading.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization" and
"Description of Capital Stock" and will have the adjusted capitalization set
forth therein on the Closing Date and the Option Closing Date, if any, based
upon the assumptions set forth therein (except for subsequent issuances, if any,
pursuant to the exercise of options referred to in the Prospectus), and the
Company is not a
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party to or bound by any instrument, agreement or other arrangement providing
for it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Advisors' Warrant Agreement and as
described in the Prospectus. The Securities and all other securities issued or
issuable by the Company conform or, when issued and paid for, will conform, in
all respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and non-assessable and the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The Securities are not and will not
be subject to any preemptive or other similar rights of any stockholder, have
been duly authorized and, when issued, paid for and delivered in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable and will
conform to the description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely as such holders; all
corporate action required to be taken for the authorization, issue and sale of
the Securities has been duly and validly taken; and the certificates
representing the Securities will be in due and proper form. Upon the issuance
and delivery pursuant to the terms hereof of the Securities to be sold by the
Company hereunder, the Underwriters or the Representatives, as the case may be,
will acquire good and marketable title to such Securities free and clear of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever, other than such as may be created
by the Underwriters and provided that the Underwriters purchase such shares in
good faith and without notice of any adverse claim.
(f) The financial statements, including the related notes
thereto, included in the Registration Statement, each Preliminary Prospectus and
the Prospectus fairly present the financial position, income, changes in cash
flow, changes in stockholders' equity, and the results of operations of the
Company at the respective dates and for the respective periods to which they
apply and the pro forma financial information included in the Registration
Statement and Prospectus presents fairly on a basis consistent with that of the
audited financial statements included therein, what the Company's pro forma
capitalization would have been for the respective periods and as of the
respective dates to which they apply after giving effect to the adjustments
described therein. Such financial statements have been prepared in conformity
with generally accepted accounting principles and the Rules and Regulations,
consistently applied throughout the periods involved. Except as described in the
Prospectus, there has been no material adverse change or development involving a
material prospective change in the condition, financial or otherwise, or in the
earnings, position, prospects, value, operation, properties, business, or
results of operations of the Company whether or not arising in the ordinary
course of business, since the date of the financial statements included in the
Registration Statement and the Prospectus and the outstanding debt, the
property, both tangible and intangible, and the business of the Company conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. Financial information set forth in
the Prospectus under the headings "Summary Financial Data," "Selected Financial
Data," "Capitalization," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," fairly present, on the basis stated in the
Prospectus, the information set forth therein, and have been derived from or
compiled on a basis consistent with that of the audited financial statements
included in the Prospectus.
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(g) The Company (i) has paid all federal, state, local, and
foreign taxes for which it is liable, including, but not limited to, withholding
taxes and amounts payable under Chapters 21 through 24 of the Internal Revenue
Code of 1986 (the "Code"), and has furnished all information returns it is
required to furnish pursuant to the Code, (ii) has established adequate reserves
for such taxes which are not due and payable, and (iii) does not have any tax
deficiency or claims outstanding, proposed or assessed against it.
(h) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters in connection with (i) the issuance
by the Company of the Securities, (ii) the purchase by the Underwriters of the
Shares from the Company and the purchase by you of the Advisors' Warrants from
the Company, (iii) the consummation by the Company of any of its obligations
under this Agreement or the Advisors' Warrant Agreement, or (iv) resales of the
Shares in connection with the distribution contemplated hereby.
(i) The Company maintains insurance policies, including, but
not limited to, general liability and property insurance, which insure the
Company and its employees, against such losses and risks generally insured
against by comparable businesses. The Company (A) has not failed to give notice
or present any insurance claim with respect to any matter, including but not
limited to the Company's business, property or employees, under the insurance
policy or surety bond in a due and timely manner, (B) does not have any disputes
or claims against any underwriter of such insurance policies or surety bonds or
has not failed to pay any premiums due and payable thereunder, and (C) has not
failed to comply with all conditions contained in such insurance policies and
surety bonds. There are no facts or circumstances under any such insurance
policy or surety bond which would relieve any insurer of its obligation to
satisfy in full any valid claim of the Company.
(j) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or, to the best of the Company's
knowledge, threatened against (and the Company does not know any basis
therefor), or involving the properties or business of, the Company which (i)
questions the validity of the capital stock of the Company, this Agreement or
the Advisors' Warrant Agreement or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement or the Advisors'
Warrant Agreement, (ii) is required to be disclosed in the Registration
Statement which is not so disclosed (and such proceedings as are summarized in
the Registration Statement are accurately summarized in all material respects),
or (iii) would materially and adversely affect the condition, financial or
otherwise, or the earnings, position, prospects, stockholders' equity, value,
operation, properties, business or results of operations of the Company.
(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this Agreement and
the Advisors' Warrant Agreement and to consummate the transactions provided for
in such agreements; and this Agreement and the Advisors' Warrant Agreement have
each been duly and properly authorized, executed and delivered by the Company.
Each of this Agreement and the Advisors' Warrant Agreement constitutes a legal,
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar
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laws affecting creditors' rights generally, (ii) as enforceability of any
indemnification or contribution provisions may be limited under applicable laws
or the public policies underlying such laws and (iii) that the remedies of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceedings may be brought. None of the Company's issuance and sale of the
Securities, execution or delivery of this Agreement or the Advisors' Warrant
Agreement, its performance hereunder and thereunder, its consummation of the
transactions contemplated herein and therein, or the conduct of its business as
described in the Registration Statement, the Prospectus, and any amendments or
supplements thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of the Company pursuant to the terms of, (i)
the certificate of incorporation or by-laws of the Company, (ii) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties, which breach, violation or default would
have a material adverse effect on the condition, financial or otherwise, or the
earnings, position, prospects, value, operation, properties, business or results
of operations of the Company.
(l) Except as described in the Prospectus, no consent,
approval, authorization or order of, and no filing with, any court, regulatory
body, government agency or other body, domestic or foreign, is required for the
issuance of the Shares pursuant to the Prospectus and the Registration
Statement, the issuance of the Advisors' Warrants, the performance of this
Agreement and the Advisors' Warrant Agreement and the transactions contemplated
hereby and thereby, including without limitation, any waiver of any preemptive,
first refusal or other rights that any entity or person may have for the issue
and/or sale of any of the Shares or the Advisors' Warrants, except such as have
been or may be obtained under the Act or may be required under state securities
or Blue Sky laws in connection with the Underwriters' purchase and distribution
of the Shares, and the Advisors' Warrants to be sold by the Company hereunder.
(m) All executed agreements, contracts or other documents or
copies of executed agreements, contracts or other documents filed as exhibits to
the Registration Statement to which the Company is a party or by which it may be
bound or to which any of its assets, properties or business may be subject have
been duly and validly authorized, executed and delivered by the Company, and
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents are
accurate in all material respects and fairly present the information required to
be shown with respect thereto by Form S-1, and there are no contracts or other
documents which are required by the Act to be described in the Registration
Statement or filed as exhibits to the Registration Statement which are not
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described or filed as required, and the exhibits which have been filed are in
all material respects complete and correct copies of the documents of which they
purport to be copies.
(n) Subsequent to the respective dates as of which information
is set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not
(i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (ii) entered into any transaction other than in
the ordinary course of business, or (iii) declared or paid any dividend or made
any other distribution on or in respect of its capital stock of any class, and
there has not been any change in the capital stock, or any material change in
the debt (long or short term) or liabilities or material adverse change in or
affecting the general affairs, management, financial operations, stockholders'
equity or results of operations of the Company.
(o) No default exists in the due performance and observance of
any term, covenant or condition of any license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust agreement,
stockholders agreement, partnership agreement, note, loan or credit agreement,
purchase order, or any other agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which the property
or assets (tangible or intangible) of the Company is subject or affected, which
default would have a material adverse effect on the condition, financial or
otherwise, or the earnings, position, prospects, value, operation, properties,
business or results of operations of the Company.
(p) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance in all
material respects with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours. There are no pending investigations involving
the Company by the U.S. Department of Labor, or any other governmental agency
responsible for the enforcement of such federal, state, local, or foreign laws
and regulations. There is no unfair labor practice charge or complaint against
the Company pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or, to the best of the
Company's knowledge, threatened against or involving the Company or any
predecessor entity, and none has ever occurred. No representation question
exists respecting the employees of the Company, and no collective bargaining
agreement or modification thereof is currently being negotiated by the Company.
No grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company. No labor dispute with the
employees of the Company exists, or, to the best of the Company's knowledge, is
imminent.
(q) Except as described in the Prospectus, the Company does
not maintain, sponsor or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). Except as described in the Prospectus, the Company
does not maintain or contribute, now or at any time previously, to a defined
benefit plan, as defined in Section 3(35) of ERISA. No ERISA Plan (or any trust
created thereunder) has engaged in a "prohibited transaction" within the meaning
of Section 406 of ERISA or
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Section 4975 of the Code, which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue Service with
respect to each ERISA Plan which is intended to comply with Code Section 401(a),
stating that such ERISA Plan and the attendant trust are qualified thereunder.
The Company has never completely or partially withdrawn from a "multiemployer
plan."
(r) Neither the Company nor any of its employees, directors,
stockholders, partners, or affiliates (within the meaning of the Rules and
Regulations) of any of the foregoing has taken or will take, directly or
indirectly, any action designed to or which has constituted or which might be
expected to cause or result in, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or otherwise.
(s) Except as otherwise disclosed in the Prospectus, none of
the patents, patent applications, trademarks, service marks, trade names and
copyrights, and licenses and rights to the foregoing presently owned or held by
the Company are in dispute or, to the best of the Company's knowledge, are in
conflict with the right of any other person or entity. Except as would not
materially adversely affect the business, properties, prospects, condition
(financial or otherwise) or results of operations, the Company (i) owns or has
the right to use, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions or equities of any
kind whatsoever, all patents, trademarks, service marks, trade names and
copyrights, technology and licenses and rights with respect to the foregoing,
used in the conduct of its business as now conducted or proposed to be conducted
without infringing upon or otherwise acting adversely to the right or claimed
right of any person, corporation or other entity under or with respect to any of
the foregoing and (ii) is not obligated or under any liability whatsoever to
make any payment by way of royalties, fees or otherwise to any owner or licensee
of, or other claimant to, any patent, trademark, service xxxx, trade name,
copyright, know-how, technology or other intangible asset, with respect to the
use thereof or in connection with the conduct of its business or otherwise.
(t) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental or other proceeding,
domestic or foreign, pending or, to the Company's knowledge, threatened (or
circumstances that may give rise to the same) against the Company which
challenges the exclusive rights of the Company with respect to any trademarks,
trade names, service marks, service names, copyrights, patents, patent
applications or licenses or rights to the foregoing used in the conduct of its
business, or which challenge the right of the Company to use any technology
presently used or contemplated to be used in the conduct of its business.
(u) The Company owns and has the unrestricted right to use all
trade secrets, know-how (including all other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), inventions,
designs, processes, works of authorship, computer programs and technical data
and information (collectively herein "intellectual property") that are material
to the development, manufacture, operation and sale of all products and services
sold or proposed to be sold by the Company, free and clear of and without
violating
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any right, lien, or claim of others, including without limitation, former
employers of its employees; provided, however, that the possibility exists that
other persons or entities, completely independently of the Company, or its
employees or agents, could have developed trade secrets or items of technical
information similar or identical to those of the Company.
(v) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property stated
in the Prospectus to be owned or leased by it free and clear of all liens,
charges, claims, encumbrances, pledges, security interests, defects, or other
restrictions or equities of any kind whatsoever, other than (i) those referred
to in the Prospectus and (ii) liens for taxes not yet due and payable.
(w) Ernst & Young LLP whose report is filed with the
Commission as a part of the Registration Statement, are independent certified
public accountants as required by the Act and the Rules and Regulations.
(x) The Company has caused to be duly executed legally binding
and enforceable agreements pursuant to which all of the Company's officers,
directors and five percent or greater stockholders have agreed not to, directly
or indirectly, offer to sell, sell, grant any option for the sale of, assign,
transfer, pledge, hypothecate or otherwise encumber or dispose of any securities
issued by the Company, including Common Stock or securities convertible into,
exchangeable or exercisable for or evidencing any right to purchase or subscribe
for any shares of Common Stock (either pursuant to Rule 144 of the Rules and
Regulations or otherwise) whether or not beneficially owned by such persons or
dispose of any beneficial interest therein for a period of not less than 120
days following the effective date of the Registration Statement without the
prior written consent of Josephthal. The Company will cause the Transfer Agent,
as defined below, to xxxx an appropriate legend on the face of stock
certificates representing all of such securities and to place "stop transfer"
orders on the Company's stock ledgers.
(y) Except as described in the Prospectus under
"Underwriting," there are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company or any of its officers, directors, stockholders,
partners, employees or affiliates that may affect the Underwriters'
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(z) The Shares have been approved for trading on the Nasdaq
Stock Market's National Market ("Nasdaq").
(aa) Neither the Company nor any of its officers, employees,
agents, or any other person acting on behalf of the Company, has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency (domestic or foreign) or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is, or may be in a
position to help or hinder the business of the Company (or assist the Company in
connection with any actual or proposed transaction) which
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(a) might subject the Company, or any other such person to any damage or penalty
in any civil, criminal or governmental litigation or proceeding (domestic or
foreign), (b) if not given in the past, might have had a materially adverse
effect on the assets, business or operations of the Company, or (c) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company. The Company's internal accounting controls are
sufficient to cause the Company to comply with the Foreign Corrupt Practices Act
of 1977, as amended.
(ab) Except as set forth in the Prospectus, no officer,
director or stockholder of the Company, or any "affiliate" or "associate" (as
these terms are defined in Rule 405 promulgated under the Rules and Regulations)
of any of the foregoing persons or entities has or has had, either directly or
indirectly, (i) an interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to be furnished
or sold by the Company, or (B) purchases from or sells or furnishes to the
Company any goods or services, or (ii) a beneficial interest in any contract or
agreement to which the Company is a party or by which it may be bound or
affected. Except as set forth in the Prospectus under "Certain Transactions,"
there are no existing agreements, arrangements, understandings or transactions,
or proposed agreements, arrangements, understandings or transactions, between or
among the Company and any officer, director, or five (5) percent stockholder of
the Company or any partner, affiliate or associate of any of the foregoing
persons or entities.
(ac) Any certificate signed by any officer of the Company, and
delivered to the Underwriters or to Underwriters' Counsel (as defined herein)
shall be deemed a representation and warranty by the Company to the Underwriters
as to the matters covered thereby.
(ad) The minute books of the Company have been made available
to the Underwriters and contains a complete summary of all meetings and actions
of the directors, stockholders, audit committee, compensation committee and any
other committee of the Board of Directors of the Company, respectively, since
the time of its incorporation, and reflects all transactions referred to in such
minutes accurately in all material respects.
(ae) Except and to the extent described in the Prospectus, no
holders of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to include
any securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the Company to
file a registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(af) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
2. Purchase, Sale and Delivery of the Shares and Advisors' Warrants.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly, agrees to purchase
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from the Company at a price of $_____ per share of Common Stock, that number of
Firm Shares of set forth in Schedule A opposite the name of such Underwriter,
plus any additional number of Firm Shares which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional 180,000 shares of Common Stock at a price of $__________ per share of
Common Stock. The option granted hereby will expire forty-five (45) days after
(i) the date the Registration Statement becomes effective, if the Company has
elected not to rely on Rule 430A under the Rules and Regulations, or (ii) the
date of this Agreement if the Company has elected to rely upon Rule 430A under
the Rules and Regulations, and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Firm Shares upon notice by
the Representatives to the Company setting forth the number of Option Shares as
to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for any such Option Shares. Any such time and
date of delivery (an "Option Closing Date") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Date, as
hereinafter defined, unless otherwise agreed upon by the Representatives and the
Company. Nothing herein contained shall obligate the Underwriters to make any
over-allotments. No Option Shares shall be delivered unless the Firm Shares
shall be simultaneously delivered or shall theretofore have been delivered as
herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of Josephthal at
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as
shall be agreed upon by the Representatives and the Company. Such delivery and
payment shall be made at 10:00 a.m. (New York City time) on the third business
day following the date of this Agreement, provided, however, that if the Firm
Shares sold hereunder are priced and this Agreement is entered into after 4:30
p.m., (New York City time), on any business day, payment and delivery in respect
of the Firm Shares shall take place on the fourth business day following the
date of this Agreement (such time and date of payment and delivery being herein
called the "Closing Date"). In addition, in the event that any or all of the
Option Shares are purchased by the Underwriters, payment of the purchase price
for, and delivery of certificates for, such Option Shares shall be made at the
above mentioned office of Josephthal or at such other place as shall be agreed
upon by the Representatives and the Company on each Option Closing Date as
specified in the notice from the Representatives to the Company. Delivery of the
certificates for the Firm Shares and the Option Shares, if any, shall be made to
the Underwriters against payment by the Underwriters, severally and not jointly,
of the purchase price for the Firm Shares and the Option Shares, if any, to the
order of the Company for the Firm Shares and the Option Shares, if any, by New
York Clearing House funds. In the event such option is exercised, each of the
Underwriters, acting severally and not jointly, shall purchase that proportion
of the total number of Option Shares then being purchased which the number of
Firm Shares set forth in Schedule A hereto opposite the name of such Underwriter
bears to the total number of Firm Shares, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional
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shares. Certificates for the Firm Shares and the Option Shares, if any, shall be
in definitive, fully registered form, shall bear no restrictive legends and
shall be in such denominations and registered in such names as the Underwriters
may request in writing at least two (2) business days prior to the Closing Date
or the relevant Option Closing Date, as the case may be. The certificates for
the Firm Shares and the Option Shares, if any, shall be made available to the
Representatives at such office or such other place as the Representatives may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to Closing Date or the relevant Option Closing Date, as
the case may be.
(d) On the Closing Date, the Company shall issue and sell to
you Advisors' Warrants at a purchase price of $.0001 per warrant, which warrants
shall entitle the holders thereof to purchase an aggregate of 120,000 shares of
Common Stock. The Advisors' Warrants shall be exercisable for a period of
forty-eight (48) months commencing twelve (12) months from the effective date of
the Registration Statement at a price equaling one hundred twenty percent (120%)
of the initial public offering price of the shares of Common Stock. The
Advisors' Warrant Agreement and form of Warrant Certificate shall be
substantially in the form filed as Exhibit 4.2 to the Registration Statement.
Payment for the Advisors' Warrants shall be made on the Closing Date.
3. Public Offering of the Shares. As soon after the Registration
Statement becomes effective as the Representatives deems advisable, the
Underwriters shall make a public offering of the Shares (other than to residents
of or in any jurisdiction in which qualification of the Shares is required and
has not become effective) at the price and upon the other terms set forth in the
Prospectus. The Representatives may from time to time increase or decrease the
public offering price after distribution of the Shares has been completed to
such extent as the Representatives, in their discretion, deem advisable. The
Underwriters may enter into one of more agreements as the Underwriters, in each
of their sole discretion, deem advisable with one or more broker-dealers who
shall act as dealers in connection with such public offering.
4. Covenants and Agreements of the Company. The Company covenants
and agrees with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before or after the
effective date of the Registration Statement, file any amendment to the
Registration Statement or supplement to the Prospectus or file any document
under the Act or Exchange Act before termination of the offering of the Shares
by the Underwriters of which the Representatives shall not previously have been
advised and furnished with a copy, or to which the Representatives shall have
objected or which is not in compliance with the Act, the Exchange Act or the
Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representatives and confirm the notice in
writing, (i) when the Registration Statement, as amended, becomes effective, if
the provisions of Rule 430A promulgated under the Act will be relied upon, when
the Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective, (ii)
of the issuance by the Commission of any stop order or of the initiation,
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or the threatening, of any proceeding, suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of the
Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or the institution of proceedings for that purpose, (iii) of the
issuance by the Commission or by any state securities commission of any
proceedings for the suspension of the qualification of any of the Securities for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that purpose, (iv) of the receipt of any comments from the
Commission and (v) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information. If the Commission or any state securities commission
authority shall enter a stop order or suspend such qualification at any time,
the Company will use its best efforts to obtain promptly the lifting of such
order.
(c) The Company shall file the Prospectus (in form and
substance satisfactory to the Representatives) or transmit the Prospectus by a
means reasonably calculated to result in filing with the Commission pursuant to
Rule 424(b)(1) (or, if applicable and if consented to by the Representatives,
pursuant to Rule 424(b)(4)) not later than the Commission's close of business on
the earlier of (i) the second business day following the execution and delivery
of this Agreement and (ii) the fifteenth business day after the effective date
of the Registration Statement.
(d) The Company will give the Representatives notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Shares which differs
from the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
and will furnish the Representatives with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such prospectus to which the
Representatives or Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP ("Underwriters' Counsel")
shall object.
(e) The Company shall endeavor in good faith, in cooperation
with the Representatives, at or prior to the time the Registration Statement
becomes effective, to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as the Representatives may designate to
permit the continuance of sales and dealings therein for as long as may be
necessary to complete the distribution, and shall make such applications, file
such documents and furnish such information as may be required for such purpose;
provided, however, the Company shall not be required to qualify as a foreign
corporation or file a general or limited consent to service of process in any
such jurisdiction. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representatives agree that such action is
not at the time necessary or advisable, use all reasonable efforts to file and
make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be
delivered under the Act, the Company shall use all reasonable efforts to comply
with all requirements imposed upon it by
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the Act and the Exchange Act, as now and hereafter amended and by the Rules and
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Shares in accordance with the
provisions hereof and the Prospectus, or any amendments or supplements thereto.
If at any time when a prospectus relating to the Shares is required to be
delivered under the Act, any event shall have occurred as a result of which, in
the opinion of counsel for the Company or Underwriters' Counsel, the Prospectus,
as then amended or supplemented, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will notify the Representatives
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act, each such amendment or
supplement to be satisfactory to Underwriters' Counsel, and the Company will
furnish to the Underwriters copies of such amendment or supplement as soon as
available and in such quantities as the Underwriters may request.
(g) As soon as practicable, but in any event not later than 45
days after the end of the 12-month period beginning on the day after the end of
the fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Representatives, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules
and Regulations, which statement need not be audited unless required by the Act,
covering a period of at least 12 consecutive months after the effective date of
the Registration Statement.
(h) During a period of five (5) years after the date hereof,
the Company will furnish to its stockholders, as soon as practicable, annual
reports (including financial statements audited by independent public
accountants), and will deliver to the Representatives:
(i) concurrently with furnishing quarterly reports, if
any, to its stockholders, statements of income of the Company for each quarter
in the form furnished to the Company's stockholders and certified by the
Company's principal financial or accounting officer;
(ii) concurrently with furnishing such annual reports to
its stockholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with statements of operations, stockholders' equity, and
cash flows of the Company for such fiscal year, accompanied by a copy of the
certificate thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all
reports (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the Commission, the
NASD or any securities exchange;
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(v) every press release and every material news item or
article of interest to the financial community in respect of the Company, or its
affairs which was released or prepared by or on behalf of the Company; and
(vi) any additional information of a public nature
concerning the Company (and any future subsidiary) or its businesses which the
Representatives may request.
Such information shall be deemed to have been delivered to the
Representatives if it is readily available on the Internet with no charge to
access the information. During such five-year period, if the Company has an
active subsidiary, the foregoing financial statements will be on a consolidated
basis to the extent that the accounts of the Company and its subsidiary are
consolidated, and will be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(i) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Common Stock.
(j) During such period as a Prospectus is required by law to
be delivered in connection with sales by an Underwriter or dealer, the Company
will furnish to the Representatives or on the Representatives' order, without
charge, at such place as the Representatives may designate, copies of each
Preliminary Prospectus, the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies will be signed and will
include all financial statements and exhibits), the Prospectus, and all
amendments and supplements thereto, including any prospectus prepared after the
effective date of the Registration Statement, in each case as soon as available
and in such quantities as the Representatives may reasonably request.
(k) On or before the effective date of the Registration
Statement, the Company shall provide the Representatives with duly executed,
legally binding and enforceable agreements pursuant to which for a period of 120
days following the effective date of the Registration Statement, the officers,
directors and five percent or greater stockholders agree that it or he or she
will not, directly or indirectly, offer to sell, sell, grant an option for the
sale of, assign, transfer, pledge, hypothecate or otherwise encumber or dispose
of any securities issued by the Company, including Common Stock or securities
convertible into, exchangeable or exercisable for or evidencing any right to
purchase or subscribe for any shares of Common Stock (either pursuant to Rule
144 of the Rules and Regulations or otherwise) whether or not beneficially owned
by such person or dispose of any beneficial interest therein without the prior
written consent of Josephthal (collectively, the "Lock-up Agreements"). During
the 120-day period commencing with the effective date of the Registration
Statement, the Company shall not, without the prior written consent of
Josephthal, issue, offer to sell, sell, grant any option for the sale of,
transfer, assign, pledge, hypothecate, distribute, or otherwise dispose of,
directly or indirectly, any shares of Common Stock or any options, rights or
warrants with respect to any shares of Common Stock, except (A) for options
issued to employees, consultants or directors of the Company pursuant to an
employee benefit plan described in the Prospectus or shares issued on exercise
thereof and provided that no shares of Common Stock issued upon exercise of such
options may be sold during the 120-day period commencing with the effective date
of the
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Registration Statement and (B) for up to 500,000 shares of Common Stock issued
or contracted to be issued as consideration in respect of acquisitions by the
Company or strategic alliances so long as (i) the recipients of such shares
agree in writing to be bound by a lock-up agreement in the form of the Lock-up
Agreements and (ii) the certificates evidencing such shares bear a legend to
such effect. On or before the Closing Date, the Company shall deliver
instructions to the Transfer Agent authorizing it to place appropriate legends
on the certificates representing the securities subject to the Lock-up
Agreements and to place appropriate stop transfer orders on the Company's
ledgers.
(l) Neither the Company, nor any of its officers, directors,
stockholders, nor any of their respective affiliates (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action designed
to, or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of
the Securities in the manner, and subject to the conditions, set forth under
"Use of Proceeds" in the Prospectus. Except as described in the Prospectus or in
connection with the repurchase of shares under the restricted stock purchase
agreements (a form of which has been incorporated by reference as an exhibit to
the Registration Statement), no portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or
other documents as may be required from time to time, under the Act, the
Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act, and the Rules and Regulations.
(o) The Company shall furnish to the Representatives as early
as practicable prior to each of the date hereof, the Closing Date and each
Option Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in its letter to be
furnished pursuant to Section 6(j) hereof.
(p) The Company shall use its best efforts to maintain the
Nasdaq quotation of the Common Stock to the extent outstanding.
(q) For a period of five (5) years from the Closing Date, the
Company shall furnish to the Representatives at the Representatives' request and
at the Company's sole expense, (i) daily consolidated transfer sheets relating
to the Common Stock and (ii) the list of holders of all of the Company's
securities.
(r) Until the completion of the distribution of the Shares,
the Company shall not, without the prior written consent of the Representatives
and Underwriters' Counsel, issue, directly or indirectly, any press release or
other communication or hold any press conference
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with respect to the Company or its activities or the offering contemplated
hereby, other than trade releases issued in the ordinary course of the Company's
business consistent with past practices with respect to the Company's
operations.
(s) For a period equal to the lesser of (i) five (5) years
from the date hereof, or (ii) the sale to the public of the Advisors' Shares,
the Company will not take any action or actions which may prevent or disqualify
the Company's use of Form S-3 (or other appropriate form) for the registration
under the Act of the Advisors' Shares.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing
Date and the Option Closing Date (to the extent not paid at the Closing Date)
all expenses and fees (other than fees of Underwriters' Counsel, except as
provided in (iv) below) incident to the performance of the obligations of the
Company under this Agreement and the Advisors' Warrant Agreement, including,
without limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing (including mailing and handling charges),
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments and
supplements thereto and the mailing (including the payment of postage with
respect thereto) and delivery of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreements, and related documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriters and such dealers as the Underwriters may reasonably request, in
quantities as hereinabove stated, (iii) the printing, engraving, issuance and
delivery of the Securities, (iv) the qualification of the Securities under state
or foreign securities or "Blue Sky" laws and determination of the status of such
securities under legal investment laws, including the costs of printing and
mailing the "Blue Sky Memorandum," if any, and disbursements and fees of counsel
in connection therewith, (v) fees and expenses of the transfer agent and
registrar, (vi) the fees payable to the Commission and the NASD, and (vii) the
fees and expenses incurred in connection with the trading of the Shares on
Nasdaq and any exchange.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 6 or Section 12, the Company shall
reimburse and indemnify the Representatives for all of their actual
out-of-pocket expenses, including the fees and disbursements of Underwriters'
Counsel.
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6. Conditions of the Underwriters' Obligations. The obligations of
the Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, with respect to the
Company as if it had been made on and as of the Closing Date or each Option
Closing Date, as the case may be; the accuracy on and as of the Closing Date or
Option Closing Date, if any, of the statements of the officers of the Company
made pursuant to the provisions hereof; and the performance by the Company on
and as of the Closing Date and each Option Closing Date, if any, of its
covenants and obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 2:00 P.M., New York time, on the date of this Agreement or such later
date and time as shall be consented to in writing by the Representatives, and,
at Closing Date and each Option Closing Date, if any, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of Underwriters' Counsel. If the Company has elected to rely upon
Rule 430A of the Rules and Regulations, the price of the Shares and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to Closing Date the Company shall
have provided evidence satisfactory to the Representatives of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations.
(b) The Representatives shall not have been advised by the
Company that the Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material, or
omits to state a fact which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material, or
omits to state a fact which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representatives shall
have received from Underwriters' Counsel, such opinion or opinions with respect
to the organization of the Company, the validity of the Securities, the
Advisors' Warrants, the Registration Statement, the Prospectus and other related
matters as the Representatives may request and Underwriters' Counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.
(d) On the Closing Date, the Underwriters shall have received
the favorable opinion of Xxxxxx & Xxxxxxx, counsel to the Company, dated the
Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
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(i) the Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of Delaware,
with corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus. The Company is duly qualified to do business as a foreign
corporation and is in good standing in the states of California, Georgia and New
York.
(ii) the authorized, issued and outstanding capital
stock of the Company is as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization." The issued and outstanding shares
of capital stock of the Company have been duly and validly authorized and
issued, and are fully paid and nonassessable, and to the best of such counsel's
knowledge, free of preemptive rights. Except as described in the Registration
Statement and the Prospectus, to the best of such counsel's knowledge, there is
no commitment or arrangement to issue, and there are no outstanding options,
warrants or other rights calling for the issuance of, any share of capital stock
of the Company or any security or other instrument that by its terms is
convertible into, exercisable for, or exchangeable for capital stock of the
Company.
(iii) the Shares to be issued and sold by the Company
pursuant to the Underwriting Agreement have been duly authorized and, when
issued to and paid for by you and the other Underwriters in accordance with the
terms of the Underwriting Agreement, will be validly issued, fully paid and
nonassessable and, to the best of such counsel's knowledge, free of preemptive
rights. The Advisors' Shares have been duly authorized and reserved for issuance
and upon issuance in accordance with the terms of the Advisors' Warrants will be
validly issued, fully paid and nonassessable, and to the best of such counsel's
knowledge, free of preemptive rights.
(iv) except as described in the Prospectus, to the best
of such counsel's knowledge, no person, corporation, trust, partnership,
association or other entity has the right to include and/or register any
securities of the Company in the Registration Statement, require the Company to
file any registration statement or, if filed, to include any security in such
registration statement.
(v) the Registration Statement has become effective
under the Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued under
the Act and no proceedings therefor have been initiated by the Commission; and
any required filing of the Prospectus pursuant to Rule 424(b) under the Act has
been made in accordance with Rule 424(b) and 430A under the Act.
(vi) the Registration Statement and the Prospectus
comply as to form in all material respects with the requirements for
registration statements on Form S-1 under the Act and the Rules and Regulations;
it being understood, however, that such counsel need not express any opinion
with respect to the financial statements, schedules and other financial and
statistical data included in the Registration Statement or the Prospectus and in
passing upon the compliance as to form of the Registration Statement and the
Prospectus, such counsel may assume that the statements made therein are correct
and complete.
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(vii) to the best of such counsel's knowledge, there are
no statutes or legal or governmental proceedings required to be described in the
Prospectus that are not described as required, or contracts or documents of a
character required to be described in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration Statement that are not described
and filed as required.
(viii) to the best of such counsel's knowledge, there are
no actions, suits, proceedings or investigations pending or threatened against
the Company before or by any court, governmental agency or arbitrator.
(ix) the Company has corporate power and authority to
enter into this Agreement and the Advisors' Warrant Agreement, and this
Agreement and the Advisors' Warrant Agreement have been duly authorized,
executed and delivered by, and the Advisors' Warrant Agreement is a valid and
binding agreement of, the Company, enforceable in accordance with its terms,
except as rights to indemnification thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles.
(x) the execution and delivery by the Company of, and
the issuance and sale of the Securities pursuant to this Agreement and the
Advisors' Warrant Agreement do not (i) violate the Amended and Restated
Certificate of Incorporation or Bylaws of the Company, (ii) to the best of such
counsel's knowledge, breach or result in a default under, cause the time for
performance of any obligation to be accelerated under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the assets of the
Company pursuant to the terms of any document filed as an exhibit to the
Registration Statement, (iii) to the best of such counsel's knowledge, breach or
otherwise violate any existing obligation of the Company under any court or
administrative order, judgment or decree, or (iv) violate applicable provisions
of the General Corporation Law of the State of Delaware or any statute or
regulation of the State of California or of the United States.
(xi) no consent, approval, authorization or order of, or
any filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Securities by the Company, in connection with the execution,
delivery and performance of this Agreement and the Advisors' Warrant Agreement
by the Company, except such as have been obtained under the Act and the Exchange
Act and such as may be required under state securities or Blue Sky laws (as to
which such counsel need not express any opinion) or by the bylaws and rules of
the NASD in connection with the purchase and distribution by the Underwriters of
the Shares to be sold by the Company.
(xii) the Company is not an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(xiii) the form of certificate used to evidence the Shares
is in due and proper form and complies with all statutory requirements under the
laws of the State of Delaware.
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Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and your
representatives, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and has not made any independent check or
verification thereof, during the course of such participation, no facts came to
such counsel's attention that caused such counsel to believe that the
Registration Statement, at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus, as of its date or as of the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that such counsel need
not express any belief with respect to the financial statements, schedules and
other financial and statistical data included in, or omitted from, the
Registration Statement or the Prospectus.
Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written policy
or other document relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991), or any
comparable state bar accord.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance satisfactory to Underwriters'
Counsel) of other counsel acceptable to Underwriters' Counsel, familiar with the
applicable laws; (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company, and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and that the
Representatives and they are justified in relying thereon.
(e) At each Option Closing Date, if any, the Underwriters
shall have received the favorable opinion of Xxxxxx & Xxxxxxx, counsel to the
Company, dated the Option Closing Date, addressed to the Underwriters and in
form and substance satisfactory to Underwriters' Counsel confirming as of Option
Closing Date the statements made by Xxxxxx & Xxxxxxx in its opinion delivered on
the Closing Date.
(f) On or prior to each of the Closing Date and the Option
Closing Date, if any, Underwriters' Counsel shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company, or herein contained.
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(g) Prior to each of the Closing Date and each Option Closing
Date, if any, (i) there shall have been no material adverse change nor
development involving a prospective material adverse change in the condition,
financial or otherwise, prospects, stockholders' equity or the business
activities of the Company, whether or not in the ordinary course of business,
from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, from the latest date as of which the financial condition of the Company
is set forth in the Registration Statement and Prospectus which is materially
adverse to the Company; (iii) the Company shall not be in material default under
any provision of any instrument relating to any outstanding indebtedness; (iv)
the Company shall not have issued any securities (other than the Securities);
the Company shall not have declared or paid any dividend or made any
distribution in respect of its capital stock of any class; and there has not
been any change in the capital stock of the Company, or any material change in
the debt (long or short term) or liabilities or obligations of the Company
(contingent or otherwise); (v) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus; (vi) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened (or circumstances giving rise to
same) against the Company, or affecting any of its properties or business before
or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
adversely affect the business, operations, prospects or financial condition or
income of the Company, except as set forth in the Registration Statement and
Prospectus; and (vii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated, threatened or contemplated by
the Commission.
(h) At each of the Closing Date and each Option Closing Date,
if any, the Underwriters shall have received a certificate of the Company signed
by the principal executive officer and by the chief financial or chief
accounting officer of the Company, dated the Closing Date or Option Closing
Date, as the case may be, to the effect that each of such persons has carefully
examined the Registration Statement, the Prospectus and this Agreement, and
that:
(i) The representations and warranties of the Company
in this Agreement are true and correct, as if made on and as of the Closing Date
or the Option Closing Date, as the case may be, and the Company has complied
with all agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to such Closing
Date or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been instituted or are pending or, to the best of each of
such person's knowledge, after due inquiry are contemplated or threatened under
the Act;
(iii) The Registration Statement and the Prospectus and,
if any, each amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and neither the Preliminary Prospectus or any supplement thereto included any
untrue statement of a
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material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (a) the
Company has not incurred up to and including the Closing Date or the Option
Closing Date, as the case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent; (b) the
Company has not paid or declared any dividends or other distributions on its
capital stock; (c) the Company has not entered into any transactions not in the
ordinary course of business; (d) there has not been any change in the capital
stock of the Company or any material change in the debt (long or short-term) of
the Company; (e) the Company has not sustained any material loss or damage to
its property or assets, whether or not insured; (g) there is no litigation which
is pending or threatened (or circumstances giving rise to same) against the
Company, or any affiliated party of any of the foregoing which is required to be
set forth in an amended or supplemented Prospectus which has not been set forth;
and (h) there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(h) are to such documents as amended and supplemented at the date of such
certificate.
(i) By the Closing Date, the Underwriters will have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriters, as described in the Registration Statement.
(j) At the time this Agreement is executed, the Underwriters
shall have received a letter, dated such date, addressed to the Underwriters in
form and substance satisfactory (including the non-material nature of the
changes or decreases, if any, referred to in clause (iii) below) in all respects
to the Underwriters and Underwriters' Counsel, from Ernst & Young LLP:
(i) confirming that they are independent certified
public accountants with respect to the Company within the meaning of the Act and
the applicable Rules and Regulations;
(ii) stating that it is their opinion that the financial
statements of the Company as of December 31, 1996 and 1997 and for the years
then ended, and for the period from inception (August 2, 1995) through December
31, 1996 included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act and the
Rules and Regulations thereunder and that the Representatives may rely upon the
opinion of Ernst & Young LLP with respect to such financial statements included
in the Registration Statement;
(iii) stating that, on the basis of a limited review
which included a reading of the latest available unaudited interim financial
statements of the Company, a reading of the latest available minutes of the
stockholders and board of directors and the various committees of the boards of
directors of the Company, consultations with officers and other
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employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that (A) the pro forma financial information
contained in the Registration Statement and Prospectus does not comply as to
form in all material respects with the applicable accounting requirements of the
Act and the Rules and Regulations or is not fairly presented in conformity with
generally accepted accounting principles applied on a basis consistent with that
of the audited financial statements of the Company or the unaudited pro forma
financial information included in the Registration Statement, (B) the unaudited
financial statements of the Company included in the Registration Statement do
not comply as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited financial statements
of the Company included in the Registration Statement, or (C) at a specified
date not more than five (5) days prior to the effective date of the Registration
Statement, there has been any change in the capital stock of the Company, any
change in the long-term debt of the Company, or any decrease in the
stockholders' equity of the Company or any decrease in the net current assets or
net assets of the Company as compared with amounts shown in the March 31, 1998
balance sheets included in the Registration Statement, other than as set forth
in or contemplated by the Registration Statement, or, if there was any change or
decrease, setting forth the amount of such change or decrease, and (D) during
the period from March 31, 1998 to a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there was any
decrease in net revenues or net earnings of the Company or increase in net loss
per common share of the Company, in each case as compared with the corresponding
period beginning April 1, 1997 other than as set forth in or contemplated by the
Registration Statement, or, if there was any such decrease, setting forth the
amount of such decrease;
(iv) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found them to be in
agreement; and
(v) statements as to such other matters incident to the
transaction contemplated hereby as the Representatives may request.
(k) At the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received from Ernst & Young LLP a letter, dated as
of the Closing Date or the Option Closing Date, as the case may be, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (j) of this Section hereof except that the specified date referred
to shall be a date not more than five days prior to the Closing Date or the
Option Closing Date, as the case may be, and, if the Company has elected to rely
on Rule 430A of the Rules and Regulations, to the further effect that they have
carried out procedures as specified in clause (v) of subsection (j) of this
Section with respect to certain amounts, percentages and financial
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information as specified by the Representatives and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and have found such amounts,
percentages and financial information to be in agreement with the records
specified in such clause (v).
(l) The Company shall have delivered to the Representatives a
letter from Ernst & Young LLP addressed to the Company stating that they have
not during the immediately preceding two year period brought to the attention of
the Company's management any "weakness" as defined in Statement of Auditing
Standards No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's internal controls.
(m) On the Closing Date and each Option Closing Date, if any,
the Representatives shall have received the favorable opinion of Xxxxx & Xxxxx,
special intellectual property counsel to the Company, dated the Closing Date or
Option Closing Date, addressed to the Underwriters and in substantially the form
of Exhibit A attached hereto.
(n) On each of the Closing Date and Option Closing Date, if
any, there shall have been duly tendered to the Representatives for the several
Underwriters' accounts the appropriate number of Shares.
(o) No order suspending the sale of the Securities in any
jurisdiction designated by the Representatives pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(p) On or before the Closing Date, the Company shall have
executed and delivered to you (i) the Advisors' Warrant Agreement substantially
in the form filed as Exhibit 4.2 to the Registration Statement in final form and
substance satisfactory to the Representatives, and (ii) the Advisors' Warrants
in such denominations and to such designees as shall have been provided to the
Company.
(q) On or before the Closing Date, the Shares shall have been
duly approved for trading on Nasdaq, subject to official notice of issuance.
(r) On or before the Closing Date, there shall have been
delivered to the Representatives the Lock-up Agreements, in form and substance
satisfactory to Underwriters' Counsel.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Option Closing Date,
as the case may be, is not so fulfilled, the Representatives may terminate this
Agreement or, if the Representatives so elect, it may waive any such conditions
which have not been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of
the Underwriters (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
including specifically each person who may be substituted for an Underwriter as
provided in Section 11 hereof), and each person, if
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any, who controls the Underwriter ("controlling person") within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, from and against any
and all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, investigations, inquiries, and suits in respect thereof),
whatsoever (including but not limited to any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) any untrue statement
or alleged untrue statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from time to time
amended and supplemented); (ii) in any post-effective amendment or amendments or
any new registration statement and prospectus in which is included securities of
the Company issued or issuable upon exercise of the Securities; or (iii) in any
application or other document or written communication (in this Section 7
collectively called "application") executed by the Company or based upon written
information furnished by the Company filed, delivered or used in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any state securities commission or agency,
Nasdaq or any other securities exchange, (B) the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), or (C) any breach of any
representation, warranty, covenant or agreement of the Company contained herein
or in any certificate by or on behalf of the Company or any of its officers
delivered pursuant hereto; provided, however, that such indemnity shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) on account of any losses, claims, damages or liabilities arising
from the sale of the Shares to any person by such Underwriter (1) if such untrue
statement or omission or alleged untrue statement or omission was made in such
Preliminary Prospectus, the Registration Statement or the Prospectus or such
amendment or supplement, and was contained in the paragraph relating to
stabilization and market making on the inside front cover page of the Prospectus
or under the caption "Underwriting" in the Prospectus (to the extent such
statements relate to the Underwriters) or (2) if the Company sustains the burden
of proving that such person was not sent or given a copy of the Prospectus (or
the Prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person and the untrue
statement contained in or omission from such Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented).
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of the Act, to the
same extent as the foregoing indemnity from the Company to the Underwriters but
only with respect to statements or omissions, if any, made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any application made in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
any Underwriter by such Underwriter
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expressly for use in such Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any such
application, provided that such written information or omissions only pertain to
disclosures in the Preliminary Prospectus, the Registration Statement or
Prospectus directly relating to the transactions effected by the Underwriters in
connection with this Offering. The Company acknowledges that the statements with
respect to the public offering of the Shares set forth under the heading
"Underwriting" (to the extent such statements relate to the Underwriters) and
the stabilization and market-making legends in the Prospectus have been
furnished by the Underwriters expressly for use therein and constitute the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which the Underwriters may have at common law or
otherwise.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action, investigation,
inquiry, suit or proceeding is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the 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 (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded (based on advice of
counsel) that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct the
defense of such action, investigation, inquiry, suit or proceeding on behalf of
the indemnified party or parties), in any of which events such reasonable and
documented fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action, investigation, inquiry, suit or proceeding or separate but
similar or related actions, investigations, inquiries, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances. Anything in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent; provided, however, that such consent was
not unreasonably withheld. An indemnifying party will not,
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without the prior written consent of the indemnified parties, settle, compromise
or consent to the entry of any judgment with respect to any pending or
threatened claim, action, investigation, inquiry, suit or proceeding in respect
of which indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or
action), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party form all liability arising out
of such claim, action, suit or proceeding and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(d) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes claim for indemnification
pursuant to this Section 7, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions, investigations, inquiries, suits or proceedings in respect thereof) (A)
in such proportion as is appropriate to reflect the relative benefits received
by each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the Shares or (B) if the
allocation provided by clause (A) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is the contributing
party and the Underwriters are the indemnified party, the relative benefits
received by the Company on the one hand, and the Underwriters, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Shares (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table on the cover page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions, investigations, inquiries,
suits or proceedings in respect thereof) referred to above in this subdivision
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action, claim, investigation, inquiry, suit or proceeding. Notwithstanding the
provisions of this subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Shares purchased by the Underwriters hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls the Company within the meaning of the Act, each officer of the Company
who has signed the Registration Statement, and each director of the Company
shall have the same rights to
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contribution as the Company, subject in each case to this subparagraph (d). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit, inquiry, investigation or proceeding against
such party in respect to which a claim for contribution may be made against
another party or parties under this subparagraph (d), notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have hereunder or otherwise
than under this subparagraph (d). The contribution agreement set forth above
shall be in addition to any liabilities which any indemnifying party may have at
common law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements at the Closing
Date and the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the indemnity agreements contained
in Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, any controlling person of any Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and delivery of the
Securities to the Underwriters and the Representatives, as the case may be.
9. Effective Date. This Agreement shall become effective at 10:00
a.m., New York City time, on the next full business day following the date
hereof, or at such earlier time after the Registration Statement becomes
effective as the Representatives, in their discretion, shall release the Shares
for sale to the public; provided, however, that the provisions of Sections 5, 7
and 10 of this Agreement shall at all times be effective. For purposes of this
Section 9, the Shares to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representatives of telegrams to
securities dealers releasing such shares for offering or the release by the
Representatives for publication of the first newspaper advertisement which is
subsequently published relating to the Shares.
10. Termination.
The Representatives shall have the right to terminate this
Agreement, after the date hereof, (i) if any domestic or international event or
act or occurrence has materially disrupted, or in the Representatives' opinion
will in the immediate future materially adversely disrupt the financial markets;
or (ii) any material adverse change in the financial markets shall have
occurred; or (iii) if trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the NASD, the Boston Stock Exchange, the Chicago Board
of Trade, the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Commission or any other government authority having jurisdiction;
or (iv) if trading of any of the securities of the Company shall have been
suspended, or any of the securities of the Company shall have been delisted, on
any exchange or in any over-the-counter market; or (v) if the United States
shall have become involved in a war or major hostilities, or if there shall have
been an escalation in an existing war or major hostilities or a national
emergency shall have been declared in the United States; or (vi) if a banking
moratorium has been declared by a state or federal authority; or (vii) if a
moratorium
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in foreign exchange trading has been declared; or (viii) if the Company shall
have sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
Representatives' opinion, make it inadvisable to proceed with the delivery of
the Shares; or (viii) if there shall have occurred any outbreak or escalation of
hostilities or any calamity or crisis or there shall have been such a material
adverse change in the conditions or prospects of the Company, or such material
adverse change in the general market, political or economic conditions, in the
United States or elsewhere as in the Representatives' judgment would make it
inadvisable to proceed with the offering, sale and/or delivery of the Shares or
(ix) if Xxxxx X. Xxxxxx or Xxxxx Xxxxxx shall no longer serve the Company in his
present capacity.
11. Substitution of the Underwriters. If one or more of the
Underwriters shall fail (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 6, Section 10 or
Section 12 hereof) to purchase the Shares which it or they are obligated to
purchase on such date under this Agreement (the "Defaulted Shares"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangement for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted Shares in
such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the Representatives shall not have completed such arrangements within
such 24-hour period, then:
(a) if the number of Defaulted Shares does not exceed 10% of
the total number of Firm Shares to be purchased on such date, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Shares exceeds 10% of the total
number of Firm Shares, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriters.
No action taken pursuant to this Section 11 shall relieve any
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Representatives shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
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12. Default by the Company. If the Company shall fail at the Closing
Date or at any Option Closing Date, as applicable, to sell and deliver the
number of Shares which it is obligated to sell hereunder on such date, then this
Agreement shall terminate (or, if such default shall occur with respect to any
Option Shares to be purchased on an Option Closing Date, the Underwriters may at
the Representatives' option, by notice from the Representatives to the Company,
terminate the Underwriters' obligation to purchase Option Shares from the
Company on such date) without any liability on the part of any non-defaulting
party other than pursuant to Section 5, Section 7 and Section 10 hereof. No
action taken pursuant to this Section shall relieve the Company from liability,
if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives c/o Josephthal & Co. Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxxx, with a copy to Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxxx X. Xxxxxx, Esq. Notices to the Company shall be directed to
the Company at 0000 Xxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxx X. Xxxxxx, Chairman of the Board and Chief Executive Officer, with a copy
to Xxxxxx & Xxxxxxx, 000 X Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx X. Xxxxx, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, 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 provisions herein
contained. No purchaser of Shares from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement and the Advisors'
Warrant Agreement constitute the entire agreement of the parties hereto and
supersede all prior written or oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may not be amended
except in a writing, signed by the Representatives and the Company.
(Remainder of this page intentionally left blank)
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If the foregoing correctly sets forth the understanding between
the Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
INTERVU INC.
By:
-------------------------------
Xxxxx X. Xxxxxx
Chairman of the Board and
Chief Executive Officer
JOSEPHTHAL & CO. INC.
For itself and as Representatives
of the several Underwriters
named in Schedule A hereto,
By:
--------------------------------
Name:
Title:
CRUTTENDEN XXXX INCORPORATED
For itself and as Representatives
of the several Underwriters
named in Schedule A hereto,
By:
-------------------------------
Name:
Title:
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SCHEDULE A
Number of
Firm Shares
Name of Underwriters to be Purchased
-------------------- ---------------
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Exhibit A
[FORM OF INTELLECTUAL PROPERTY OPINION]
June ___, 1998
JOSEPHTHAL & CO. INC.
CRUTTENDEN XXXX INCORPORATED
As Representatives of the Several Underwriters
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of InterVU Inc.
Gentlemen:
We have acted as special counsel for intellectual property
matters to InterVU, Inc., a Delaware corporation (the "Company"), in connection
with the entering into by the Company of that certain Underwriting Agreement by
and between Josephthal & Co., Inc. ("Josephthal") and Cruttenden Xxxx
Incorporated, as representatives of the several underwriters named in Schedule A
thereto, and the Company, dated June __, 1998 (the "Underwriting Agreement").
This opinion is provided to you pursuant to Section 6(m) of the Underwriting
Agreement.
For the purpose of rendering the opinions set forth below we have
reviewed the following (collectively, the "Documents"):
(i) the Underwriting Agreement;
(ii) that certain Registration Statement filed by the Company on May
1, 1998, together with all amendments thereof and exhibits
thereto (collectively, the "Registration Statement");
(iii) the Company's Prospectus dated June __, 1998, (the "Prospectus");
(iv) a search of the United States Patent and Trademark Office records
relevant to ownership of any and all:
(a) patents and patent applications, including, without
limitation, the patents and patent applications listed on
Schedule A annexed hereto and incorporated by reference
herein (collectively, the "Patents"), and
(b) trademarks, trademark applications, service marks and
service xxxx applications, including, without limitation,
the trademarks listed on Schedule B annexed hereto and
incorporated by reference herein (collectively, the
"Trademarks"),
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owned or purportedly owned by the Company, including those
patents, patent applications and marks licensed to the Company
(collectively, "the Licenses"); conducted by X. X. Xxxxx
Associates, Arlington Virginia and represented to us as true and
correct as of June __, 1998;
(v) a search of the United States Copyright Office records relevant
to ownership of any and all copyrighted material owned,
purportedly owned or licensed by the Company (collectively, "the
Copyrights") conducted by Xxxxxxxx & Xxxxxxxx, Washington, DC and
represented to us as true and correct as of June __, 1998;
(vi) a LitAlert intellectual property litigation search conducted by
us with respect to the Company and all Patents, Trademarks, and
Copyrights identified in paragraphs (iv) and (v) above;
(vii) a search of the Uniform Commercial Code ("UCC") recordation
offices in the jurisdictions of Delaware and California, with
respect to the following two categories of general intangibles:
(a) the intellectual property general intangibles of the
Company, including, without limitation, the Company's patents,
patent applications, inventions, know-how, trademarks, service
marks, copyrights, service and trade names, intellectual
property licenses and other rights, and
(b) the intellectual property general intangibles licensed to
the Company, including, without limitation, the patents, patent
applications, inventions, know-how, trademarks, service marks,
copyrights, service and trade names and other intellectual
property rights licensed to the Company pursuant to the
Licenses,
said search conducted by Corporation Trust UCC Services, New York, New
York and represented to us as accurate and current through June __,
1998; said jurisdictions being the most likely jurisdictions, if any,
apart from the records of the U.S. Patent & Trademark Office and the
U.S. Copyright Office, in which filing of UCC financing statements or
other documents may be filed to evidence a security or other interest in
said general intangibles; and
(viii) any and all records, documents, instruments and agreements in our
possession or under our control relating to the Company.
We have also examined such corporate records, documents,
instruments and agreements, and inquired into such other matters, as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
Whenever our opinion herein is qualified by the phrase "to the
best of our knowledge" or "to the best of our knowledge, after due inquiry,"
such language means than, based upon (i) our inquiries of officers of the
Company, (ii) our review of the Documents, and
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(iii) our review of such other corporate records, documents, instruments and
agreements described in the first sentence of paragraph (h) above, we believe
that such opinions are factually correct.
To our best knowledge, based on this inquiry, we are not aware of
any copyright registrations owned or purported to be owned by the Company.
To our best knowledge, based on this inquiry, we are not aware of
any specific intellectual property rights, including specific patents,
trademarks, or copyrights, which have been licensed to the Company, or which
have been identified with sufficient particularity for a search to be conducted.
We are aware that the Company has non-exclusively purchased, leased or licensed
the use of certain hardware and software products, such as computer equipment
and widely used computer or network operating systems or database management
tools, including products of Microsoft, Inc. and Sybase, Inc. These products may
be subject to intellectual property rights of third parties. Specific patents,
trademarks and copyrights which may be owned by third parties in connection with
these products have not been identified. To our best knowledge, the Company's
intellectual property position is not dependent upon the use of these products,
nor to our best knowledge has the Company taken any exclusive license in any
intellectual property from any third-party. Thus, to our best knowledge there
are no "Licenses" as defined and intended by paragraphs (iv)(b) and (vii)(b)
above, and accordingly, we have not conducted and do not rely on any
intellectual property search as to such "Licenses," companies or products.
To the best of our knowledge, as to all matters of fact
represented to you by the Company in the documents we have reviewed, and
concerning the Company's intellectual property position, we advise you that
nothing has come to our attention that would cause us to believe that such facts
are incorrect, incomplete or misleading or that reliance thereon is not
warranted under the circumstances. We call to your attention that our opinion is
limited to such facts as they exist on the date hereof and do not take into
account any change of circumstances, fact or law subsequent thereto.
Based upon and subject to the foregoing, we are of the opinion that:
1. To the best of our knowledge, after due inquiry, except as
described in the Prospectus or Registration Statement, the Company owns or has
the right to use, free and clear of all liens, encumbrances, pledges, security
interests, defects or other restrictions or equities of any kind whatsoever,
(a) all patents and patent applications owned or purported to
be owned by the Company and used in, or required for, the
conduct of the Company's business (including, without
limitation, the Patents);
(b) all trademarks, tradenames, service marks and service
names owned or purported to be owned by the Company and
used in, or required for, the conduct of the Company's
business (including, without limitation, the Trademarks);
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(c) all copyrights owned or purported to be owned by the
Company and used in, or required for, the conduct of the
Company's business (including, without limitation, the
Copyrights); and
(d) all intellectual property licenses used in, or required
for, the conduct of the Company's business (including
without limitation the Licenses).
2. To the best of our knowledge, after due inquiry, there is no
claim or action, pending, threatened or potential, which affects or could affect
the rights of the Company with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent applications or licenses
owned or purported to be owned by the Company and used in, or required for, the
conduct of the Company's business.
3. To the best of our knowledge, after due inquiry as specified
herein, there is no intellectual property based claim or action, pending,
threatened or potential, which affects or could affect the rights of the Company
with respect to any products, services, processes or licenses used in the
conduct of the Company's business.
4. To the best of our knowledge, after due inquiry, except as
described in the Prospectus or Registration Statement, the Company is not under
any obligation to pay royalties or fees to any third party with respect to any
material, technology or intellectual properties developed, employed, licensed or
used by the Company.
5. To the best of our knowledge, after due inquiry, the statements
in the Prospectus and Registration Statement under the headings, "Risk Factors -
Intellectual Property" and "Business - Intellectual Property" are accurate in
all material respects, fairly represent the information disclosed therein and do
not omit to state any fact necessary to make the statements made therein
complete and accurate.
6. To the best of our knowledge, after due inquiry, the statements
in the Prospectus and Registration Statement do not contain any untrue statement
of a material fact with respect to the intellectual property position of the
Company, or omit to state any material fact relating to the intellectual
property position of the Company which is necessary to make the statements
therein not misleading.
We call your attention to the fact that members of this firm are
licensed to practice law in the States of New York or California and before the
United States Patent and Trademark Office as Registered Patent Attorneys. We
express no opinion with respect to the laws, rules and regulations of any
jurisdictions other than the States of New York or California and the United
States of America.
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The opinions expressed herein are for the sole benefit of, and may be
relied upon only by, the several Underwriters named in Schedule A to the
Underwriting Agreement and Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP.
Very truly yours,
Xxxxx & Xxxxx
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