Exhibit 1
1,850,000 Shares of Common Stock
and
1,850,000 Common Stock Purchase Warrants
TELLURIAN, INC.
AGREEMENT AMONG UNDERWRITERS
Dated: November , 1996
X.X. Xxxxxxx & Co., Inc.
as Representative of the Several Underwriters
0 Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We confirm our agreement with you as follows for the purchase by you and
the other several Underwriters hereinafter referred to, including ourselves, of
1,850,000 shares of Common Stock and 1,850,000 Common Stock Purchase Warrants
plus the option to purchase up to an aggregate of 210,000 additional shares of
Common Stock and 277,500 additional Common Stock Purchase Warrants (hereinafter
together referred to as the "Securities"), of Tellurian, Inc., a Delaware
corporation, (the "Company"). The Securities are to be purchased from the
Company and Selling Stockholders pursuant to an underwriting agreement, the form
of which is annexed hereto (the "Underwriting Agreement"), the number of
Securities to be purchased by us severally being indicated on Schedule A to the
Underwriting Agreement. The Securities are to be offered to the public, and such
offering will be made under a registration statement and prospectus relating
thereto filed by the Company with the Securities and Exchange Commission, under
the Securities Act of 1933, as amended (the "Act") copies of which, together
with amendments thereto, we have received. The registration statement in the
form in which it becomes effective and the prospectus, as then amended, are
hereinafter respectively referred to as the "Registration Statement" and the
"Prospectus".
1. Authority of Managing Underwriter. We hereby authorize you, on our
behalf, and as our agent and representative (in that capacity sometimes herein
called the "Managing Underwriter" or "Representative"), to execute and deliver
the Underwriting Agreement substantially in the form attached hereto, to act in
our behalf in carrying it out and to take such action and make such
determinations as you may deem advisable under and with respect thereto,
including agreement to any non-material modification thereto (but not
modifications as to price and number of Securities to be purchased by us).
2. Payment and Delivery. The purchase price of the Securities to be
purchased by us shall be $4.50 per share of Common Stock and $0.225 per
Common Stock Purchase Warrant, and on the Closing Date we will pay you the
amount so due plus an additional amount equal to $_____ per share of Common
Stock and $______ per Common Stock Purchase Warrant for Securities purchased by
us, as compensation for your services as Managing Underwriter. You shall give us
at least 24 hours' notice of the Closing Date and the place thereof pursuant to
the Underwriting Agreement. We will deliver, at or before 9:00 A.M., New York
City time, on the day fixed as such Closing Date, to you at the office of the
Representative, or at such other place or time as instructed by you, certified
or bank cashier's checks, payable to the order of the Representative, in New
York Clearing House funds, for the price of the Securities which we have agreed
to purchase and for the aforesaid fee. Upon receipt of such payment, you will
make payment to the order of the Company, for our account, of the purchase price
of such Securities against delivery thereof to you for our account. You shall
thereupon deliver to us the Securities purchased by us, less such amounts
thereof as shall have been reserved for offering to Selected Dealers if a
selling group is formed. In the event we do not pay you the purchase price in
the amount and at the time stated above, you may either treat our failure to do
so as a default on our part or, at your election, pay the purchase price to the
Company on our behalf and charge us with the amount thereof, with interest,
withholding delivery of the Securities for our account until such purchase price
and interest are received by you.
3. Expenses. You shall charge our account with: (i) all transfer taxes, if
any, and other charges on purchases, sales or transfers for our account; and
(ii) our proportionate share (based upon the number of Securities we agree to
purchase) of all other expenses which are not paid by the Company and the
Selling Stockholders, including, but not limited to, advertising costs and legal
fees and disbursements of counsel for the Underwriters, incurred by you under
the terms of this Agreement or in connection with the purchase, carrying and
sale of the Securities, including the expenses chargeable to and caused by any
defaulting Underwriter hereunder. Funds of the Underwriters in your hands, as
Managing Underwriter, may be held in your general funds without accountability
for interest.
4. Public Offering. The initial public offering of the Securities, which
shall be made as set forth in the Prospectus, may be made on the date on which
the Registration Statement becomes effective or as soon thereafter as in your
judgment shall be practicable. The initial public offering prices for the
Securities shall be as shown on the cover page of the Prospectus. We authorize
you to determine the form of any advertisement of the Securities and the form of
agreements, if any, with dealers. We also authorize you to manage any such
public offering and to act as manager under agreements with dealers.
We authorize you to reserve for sale, sell and deliver, on our behalf and
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for our account, to dealers (who may include any Underwriter) selected by you
(herein sometimes referred to as the "Selected Dealers"), who are members of the
National Association of Securities Dealers, Inc. (the "NASD") or to foreign
banks, dealers and institutions not registered under the Securities Exchange Act
of 1934, as amended, (the "Exchange Act") which agree to make no sales within
the United States, its territories or possessions or to persons who are citizens
thereof or residents therein, and in making sales to comply with the NASD's
Interpretation With Respect to Free Riding and Withholding, and to such persons
other than dealers as you shall select, such number of Securities purchased by
us from the Company as you shall determine. Such reservations and sales to
Selected Dealers and other persons for the respective accounts of the several
Underwriters shall be made as you may determine. The concessions to be allowed
to Selected Dealers and by them to be reallowed to others are specified in the
form of Selected Dealer Agreement annexed hereto. If no Selected Dealer
Agreement is entered into, we hereby authorize you to allow concessions not
exceeding $0.125 per share of Common Stock and $0.005 per Common Stock Purchase
Warrant (no part of which may be reallowed) to any other dealer who is a member
of the National Association of Securities Dealers, Inc. or is a foreign dealer.
The concessions and reallowances may be allowed only to dealers who are members
in good standing of said Association, or foreign banks, dealers or institutions
not eligible for membership in said Association who agree to make no sales
within the United States, its territories or possessions or to persons who are
citizens thereof or residents therein, and in making other sales, to comply with
said Associations' Interpretation With Respect to Free-Riding and Withholding.
Sales to others than such members or such foreign banks, dealers or institutions
will be made at the public offering prices.
You shall advise us promptly on the public offering date of the number of
Securities purchased by us which you have not reserved for sale to dealers or
other persons. We will retain for direct sale all of such Securities and, at any
time prior to the termination of this Agreement, you may reserve for sale to
dealers and other persons additional Securities retained by us and remaining
unsold.
We agree that whether or not any Selected Dealer Agreement with Selected
Dealers is entered into we shall be governed by the provisions of the attached
form of Selected Dealer Agreement (except as otherwise expressly provided
herein) during the term hereof, whether or not we are a Selected Dealer.
Upon our request you may from time to time, in your discretion, release to
us for direct sale any Securities reserved by you for sale to Selected Dealers
and other persons on our behalf and not then sold, and any Securities so
released shall not thereafter be deemed reserved.
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If prior to, or within seven days after, the termination of this Agreement
any Securities sold by us (other than Securities sold by you as Managing
Underwriter for the account of an Underwriter pursuant to this Agreement or any
Selected Dealer Agreement) shall be purchased by the Managing Underwriter or by
any Underwriter through the Managing Underwriter in the open market, then any of
such Securities shall be repurchased by us at a price equal to the total cost
thereof including commissions and transfer taxes, if any, on redelivery. The
Securities delivered on such repurchase need not be the identical Securities
originally so purchased. In lieu of the repurchase of such Securities you may,
at your option (a) charge us an amount equal to the difference between the
public offering prices and the cost prices to Selected Dealers of the Securities
so purchased, and any broker's commissions paid in connection with such
purchase, or (b) sell for our account the Securities so purchased, publicly or
privately without notice at such prices and upon such terms and to such
purchasers, including any of the several Underwriters, as you may determine,
charging us the amount of any loss and expense or crediting to us the amount of
any profit, less any expense, resulting from such sale.
5. Sale of Securities by Underwriters to Managing Underwriter. We will
advise you, from time to time upon request, of the number of Securities retained
by or released to us for direct sale which then remain unsold and until the
termination of this Agreement we will, upon your request, sell to you, in order
to enable you to consummate sales or cover over-allotments, such number of such
unsold Securities as you may specify, at such price as you may designate, but
not less than the purchase prices paid to the Company therefor.
6. Transactions in Securities by Underwriters. We agree that until
termination of this Agreement and the Selected Dealer Agreements, we will not
buy or sell for our account any of the Securities or outstanding shares of
Common Stock or warrants of the Company except as permitted in this Agreement
and the Selected Dealer Agreement or as a broker pursuant to unsolicited orders,
provided, however, that, subject to the approval of the Managing Underwriter,
any Underwriter may buy Securities from, or sell Securities to, any other
Underwriter at the public offering prices, less all or any part of a concession
of $0.125 per share of Common Stock and $0.005 per Common Stock Purchase
Warrant, and may buy from, and sell the same to, any Selected Dealer at the
public offering price less all or any part of any concession to Selected Dealers
in the amount specified in the form of Selected Dealer Agreement.
7. Loans and Advances. We authorize you to arrange such loans for our
account, or to make such advances of your funds on our behalf, as you may deem
necessary or advisable in connection with the purchase, delivery or carrying of
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any of the Securities (and as may be permitted by law), and to pledge or hold as
security therefor all or any part of the Securities which we shall have
purchased or agreed to purchase from the Company. We shall be paid or credited
with the proceeds of all loans made for our account.
You may, and at our request will, deliver to us from time to time on or
after the Closing Date and prior to the termination of this Agreement, for
carrying purposes only, any Securities purchased by us which have been reserved
for sale for our account but not sold and paid for. We will redeliver to you any
Securities so delivered to us for carrying purposes at such time or times prior
to such termination as you may demand.
8. Stabilization. We authorize you, in your discretion, during the term of
this Agreement, and for our account (a) to buy and sell Securities in the open
market or otherwise, for long or short account, in such amounts and on such
terms and at such prices as you may determine, provided that, during the term of
this Agreement and the Selected Dealer Agreement, any such sales of Securities
shall be made at the public offering prices or, in the case of sales of
Securities to a Selected Dealer or one of the Underwriters, at the public
offering prices less the concessions applicable thereto under Section 6 above,
or any part of such concessions, and (b) in arranging for sales of Securities to
Selected Dealers, to over-allot and to cover such over-allotments; it being
understood that such purchases and sales and over-allotments shall be as nearly
as practicable in the proportions in which the respective Underwriters have
agreed to purchase the Securities, and that at no time shall our net position,
for either long or short account including such over-allotments, exceed 15% of
the Securities which we have agreed to purchase under the Underwriting
Agreement. Upon your demand, we will pay you the cost of any Securities
purchased for our account and will deliver to you any Securities sold or
over-allotted for our account.
We authorize you to file on our behalf with the Securities and Exchange
Commission any reports required in connection with any transaction pursuant to
this Section 8. You shall notify us promptly if you effect such transactions.
9. Termination and Settlement. Unless earlier terminated by you, this
Agreement shall terminate at the close of business on the 30th day after the
initial public offering unless extended by you for an additional period or
periods not exceeding an aggregate of 30 additional days. You may extend this
Agreement for such period or periods and may terminate this Agreement at any
time without prior notice.
As soon as practicable after any such termination, any Securities held by
you for our account or reserved by you for sale to dealers and other persons
but
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not sold and paid for, shall be delivered to us and our net credit or debit
balance, taking into account our share of known expenses and charges and any
necessary reserve for additional expenses, shall be received from or paid to
you.
Notwithstanding any settlement under this Agreement, we agree to pay our
proportion (based on the number of Securities we agree to purchase from the
Company) of the amount of any claim, demand or liability which may be asserted
against and discharged by the Underwriters, or any of them, based on the claim
that the Underwriters constitute an association, unincorporated business or
other separate entity, and also to pay a like proportion of any transfer taxes
which may be assessed after such settlement and a like proportion of the
expenses incurred by the Underwriters, or any of them, and approved by you in
contesting any such claim, demand, liability or tax.
10. Defaulting Underwriters. In the event of failure of any Underwriter to
perform its obligation to take up and pay for the Securities which it has agreed
to purchase, you shall have the right to arrange for other persons, who may
include yourselves, to take up and pay for such Securities. In the event that
such arrangements are made, the proportions of the Securities then to be
purchased by the other Underwriters and by such other person or persons, if any,
shall be taken as the basis for all rights and obligations hereunder; but this
shall not in any way affect the liability of any defaulting Underwriters to the
other Underwriters for damages resulting from such default, nor shall default in
any way relieve any other Underwriter of any of its obligations hereunder or
under the Underwriting Agreement, except as therein provided.
11. Position of Managing Underwriter. Except as herein otherwise expressly
provided, you shall have full authority to take such action as you may deem
necessary or advisable in respect of all matters pertaining to the Underwriting
Agreement and this Agreement, and the purchase, sale and distribution of the
Securities, but you shall be under no liability to us except for want of good
faith and for obligations assumed by you hereunder and except for any
liabilities under the Act. No obligation not expressly assumed by you in this
Agreement shall be implied herefrom.
12. Indemnity. (a) We agree, and each of the several Underwriters
(including yourselves) shall agree, to indemnify, defend and hold harmless each
other Underwriter and each person who controls any other Underwriter within the
meaning of Section 15 of the Act, to the extent and upon the terms that each
Underwriter agrees to indemnify and hold harmless the Company and the Selling
Stockholders as set forth in Section 6 of the Underwriting Agreement.
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(b) We will pay, upon your request, our proportionate share, based upon our
underwriting obligation, of any losses, damages, liabilities or expenses, joint
or several, paid or incurred by any Underwriter to any person other than an
Underwriter, arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, any amendments or supplements thereto or any preliminary prospectus
or any selling or advertising material approved by you for use by the
Underwriters in connection with the sale of the Securities, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading (other than an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company and the Selling Stockholders by an Underwriter specifically for use
therein) and such proportionate share of any legal or other expenses reasonably
incurred by you or with your consent in connection with investigating or
defending any claim or action in respect of such loss, damage, liability or
expense. In determining the amount of our obligation under this Section 12(b),
appropriate adjustment may be made by you to reflect any amounts received from
the Company and the Selling Stockholders by any one or more Underwriters in
respect of such claim pursuant to Section 6 or Section 7 of the Underwriting
Agreement or otherwise. There shall be credited against any amount paid or
payable by us pursuant to this Section 12(b) any loss, damage, liability or
expense which is incurred by us as a result of any such claim asserted against
us, and if such loss, damage, liability or expense is incurred by us subsequent
to any payment by us pursuant to this Section 12(b), appropriate provision shall
be made to effect such credit, by refund or otherwise. If any such claim is
asserted, you may take such action in connection therewith as you deem necessary
or desirable, including retention of counsel for the Underwriters and in your
discretion separate counsel for any particular Underwriter or groups of
Underwriters. In determining amounts payable pursuant to this Section 12(b) any
loss, damage, liability or expense incurred by any person controlling any
Underwriter within the meaning of Section 15 of the Act which has been incurred
by reason of such control relationship shall be deemed to have been incurred by
such Underwriter. Any Underwriter may elect to retain at its own expense its own
counsel. You may settle or consent to the settlement of any such claim with the
approval of a majority in interest of the Underwriters on advice of counsel
retained by you. Whenever you receive notice of the assertion of any claim to
which the provisions of this Section 12(b) would be applicable, you will give
prompt notice thereof to each Underwriter. You will also furnish each
Underwriter with periodic reports, at such times as you deem appropriate, as to
the status of such claim and the action taken by you in connection therewith. If
any Underwriter or Underwriters default in their obligation to make any payments
under this Section 12(b), each non-defaulting Underwriter shall be obligated to
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pay its proportionate share of all defaulted payments, based upon such
Underwriter's underwriting obligation as related to the underwriting obligations
of all non-defaulting Underwriters. Nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) The indemnity agreement in this Section shall survive the termination
of this Agreement.
13. Confirmation of Underwriters. We confirm that we have examined the
Registration Statement and the amendments thereto referred to in the
Underwriting Agreement, that we are familiar with the proposed final amendment
thereto (including the proposed final form of prospectus), that we are willing
to accept the responsibilities of an underwriter under the Act in respect of the
Registration Statement and are willing to proceed with the public offering of
the Securities in the manner contemplated, and that the form of the Selected
Dealer Agreement employed by you in connection with this offering is
satisfactory to us. We further confirm that the information relating to us in
such proposed final form of prospectus and the statements therein as to the
terms of the offering of the Securities under the heading "Underwriting" of the
Registration Statement insofar as they relate to us are correct, and we
authorize you, as our Managing Underwriter, so to advise the Company. We further
confirm that (a) we are members in good standing of the NASD, or (b) we are a
foreign bank, dealer or institution not registered under the Exchange Act and we
agree (i) that in making sales of the Securities outside the United States we
will comply with the requirements of the NASD's Interpretation With Respect to
Free Riding and Withholding and (ii) that we will not offer or sell any of the
Securities within the United States, its territories or possessions or to
persons who are citizens thereof or residents therein and, (c) we have the ratio
of net capital to aggregate indebtedness, including the indebtedness represented
by our obligation under this Agreement and under the Underwriting Agreement,
required by Rule 15c3-1 promulgated by the Commission pursuant to the provisions
of Section 15(c)(3) of the Exchange Act. We know of no engineering, management
or similar report or memorandum relating to the Company prepared within the last
year in connection with the offering by or for the Company, a controlling person
of the Company or any Underwriter which has not been filed with the Commission.
We also confirm that copies of the latest preliminary prospectus with respect to
the Securities have been mailed, at least two days prior to the date hereof, to
all persons to whom it is presently expected we will sell Securities and that,
if we expect to mail a confirmation of any such sale to any person by air mail,
said preliminary prospectus has been sent to such person by air mail. In
response to Securities Act Release No. 5398, we agree that we will not sell more
than five (5%) percent of the Securities purchased by us hereunder to accounts
over which we exercise discretionary authority. We, and any affiliate of ours
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engaged in the retail distribution of securities which is used by us in
connection with the offering of the Securities, will comply with the applicable
provisions of the Selected Dealer Agreement. We will not sell any Securities at
prices less than the Offering Prices except to persons who have entered into, or
agreed to enter into, the Selected Dealer Agreement. For a period of twenty-five
(25) days after the effectiveness of the Registration Statement, or until
completion of the public offering of the Securities, whichever is later, we will
provide a copy of the Prospectus to any person making a written request
therefor.
14. Miscellaneous. Nothing herein contained shall constitute the several
Underwriters an association, or any Underwriters partners with you or us, or
with each other, or render any Underwriter liable for the obligations of any
other Underwriter; and the rights and liabilities of ourselves and of each of
the Underwriters shall be several and not joint.
The Securities purchased by us pursuant to the Underwriting Agreement shall
remain our property until sold, and no title to any such Securities shall pass
to you by virtue of any of the provisions of this Agreement.
Default by any one or more Underwriters in respect of their several
obligations shall not release us or any other Underwriter from any obligations
hereunder.
You shall not have any responsibility with respect to the right of any
Underwriter or other person to sell the Securities in any jurisdiction,
notwithstanding any information you may furnish in that connection. We authorize
you to file with the New York authorities, as syndicate manager, a Further State
Notice relating to the Securities if required.
The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
This Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of New York, and we hereby
consent and shall submit to the jurisdiction of the courts of the State of New
York and of any federal court sitting in the City of New York with respect to
controversies arising under this Agreement.
15. Notices. Any notice from you to us shall be deemed to have been duly
given if mailed, telephoned, telegraphed or delivered to us at our address set
forth after on Schedule A to the attached Underwriting Agreement.
16. Execution of Agreement. This Agreement has been executed by us and is
delivered to you in duplicate. Your confirmation hereof shall constitute this
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Agreement a valid and binding contract between you and us and each party to a
similarly confirmed agreement substantially identical herewith, and this and
such other agreements shall constitute the Agreement Among Underwriters.
Very truly yours,
By:_________________________________
Confirmed as of the date
first above written:
X.X. XXXXXXX & CO., INC.
By:___________________________
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1,850,000 Shares of Common Stock
and
1,850,000 Common Stock Purchase Warrants
TELLURIAN, INC.
UNDERWRITING AGREEMENT
Dated: November_____ , 1996
X.X. Xxxxxxx & Co., Inc.
as Representative of the Several Underwriters
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Tellurian, Inc., a Delaware corporation (the "Company"),
and the persons listed on Schedule annexed hereto (the "Selling Stockholders")
hereby confirm their agreement with X.X. Xxxxxxx & Co., Inc. (sometimes the
"Representative" or "you") and the several Underwriters named in Schedule A
hereto (the "Underwriters") as follows:
1. Description of Securities. The Company has authorized by appropriate
corporate action, and proposes to issue and sell to the Underwriters, 1,400,000
shares of Common Stock, par value $.01 per share, and 1,850,000 Common Stock
Purchase Warrants and the Selling Stockholders propose to sell to the
Underwriters an aggregate of 450,000 shares of Common Stock, said shares of
Common Stock and Warrants hereinafter referred to as "Shares" and "Warrants".
Each Warrant shall be exercisable for one share of Common Stock. An additional
210,000 Shares of Common Stock, and 277,500 Warrants, have been authorized to
cover over-allotments as provided in Section 3 below. The Shares and Warrants
shall hereinafter sometimes be collectively referred to as the "Securities". The
Shares and Warrants are more fully described in the Registration Statement and
Prospectus referred to hereinafter.
2. Representations and Warranties.
(a) The Company and each Selling Stockholder, jointly and severally,
represents and warrants to, and agrees with, you and the Underwriters that:
(i) A registration statement on Form SB-2 with respect to the
Securities, including a preliminary prospectus, copies of which have heretofore
been delivered by the Company to you, has been carefully prepared by the Company
in conformity with the requirements of the Securities Act of 1933, as amended,
(hereinafter called the "Act") and the Rules and Regulations of the Securities
and Exchange Commission (hereinafter called the "Commission") under such Act,
and has been filed with the Commission (File No. 333-9741). On or prior to the
effective date of such registration statement, one or more amendments to such
registration statement (including a final prospectus), copies of which have
heretofore been or will be delivered to you, will have been so prepared and
filed in the form delivered to you. Such registration statement (including all
exhibits thereto) as amended as of the effective date thereof and each related
preliminary prospectus are herein respectively referred to as the "Registration
Statement", the "Preliminary Prospectus" and the "Prospectus".
(ii) When the Registration Statement becomes effective (the
"Effective Date") and at all times subsequent thereto up to and at the Closing
Date (as defined in Section 3 hereof) and the Additional Closing Date (as
defined in Section 3 hereof), (i) the Registration Statement and the Prospectus
and any amendments or supplements thereto will contain all statements which are
required to be stated therein by the Act and the Rules and Regulations of the
Commission thereunder and will in all respects conform to the requirements of
the Act and such Rules and Regulations, (ii) neither the Registration Statement
nor the Prospectus nor any amendment or supplement thereto will include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and (iii) all documents which are required to be filed as exhibits to the
Registration Statement will have been so filed; provided however, that the
Company and the Selling Stockholders make no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by you or any
Underwriter expressly for use in the preparation thereof.
(iii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with all corporate and other powers and authority necessary to carry on
its businesses, and it is qualified and in such jurisdictions in which the
nature of its business requires such qualification.
(iv) The consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is a party or by which it or any of
its properties is bound, or of its Certificate of Incorporation, or By-laws, or
any order, rule or regulation applicable to the Company or any of its
properties, of any court or other governmental body.
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(v) The Company has full power and lawful authority to authorize
issue and sell the Shares, Warrants, Underwriters' Stock Warrants (as defined
hereinafter) and Underwriters' Warrants (as defined hereinafter) on the terms
and conditions herein set forth, and has taken all corporate action necessary
therefor; no consent, approval, authorization or other order of any regulatory
authority is required for such authorization, issue or sale, except as may be
required under the Act or state securities or blue sky laws. This Agreement has
been duly authorized, executed and delivered by the Company and is a valid and
legally binding agreement of the Company enforceable in accordance with its
terms. The Warrant Agreement between the Company and Continental Stock Transfer
& Trust Company, to be dated the Closing Date, pursuant to which the Warrants
will be issued (the "Warrant Agreement") has been duly authorized by the Company
and, when executed and delivered by the Company and Continental Stock Transfer &
Trust Company, will be a valid and legally binding obligation of the Company,
enforceable in accordance with its terms.
(vi) The Securities and the authorized capitalization of the
Company conform to the descriptions thereof contained in the Registration
Statement and Prospectus. The holders of the Warrants will, upon their exercise,
be entitled to purchase shares in accordance with the terms and conditions set
forth in the Warrant Agreement and the form of Warrant filed as exhibits to the
Registration Statement. The outstanding shares of capital stock are, and the
shares issuable pursuant to the public offering contemplated hereby and upon
exercise of any of the warrants referred to herein will upon such issuance be,
duly authorized, validly issued and fully paid and nonassessable, and the
Company has duly authorized and reserved for issuance upon exercise of warrants
such number of shares as are initially issuable upon such exercise. The
Warrants, the Underwriters' Stock Warrants, the Underwriters' Warrants and the
warrants underlying the Underwriters' Warrants will, when issued and delivered
in accordance with the provisions of the Warrant Agreement, in the case of the
Warrants and the warrants underlying the Underwriters' Warrants, and this
Agreement, in the case of the Underwriters' Stock Warrants, be valid and legally
binding obligations of the Company enforceable in accordance with their
respective terms. There are no options, warrants, rights of conversion,
indebtedness or calls on equity of the Company other than as disclosed in the
Prospectus and Registration Statement.
(vii) Except as set forth or contemplated in the Registration
Statement and Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company has not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, not in the ordinary
course of business, and there has not been any material change in the
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capital stock or funded debt of the Company, or any material adverse change in
the condition (financial or other) or results of operations of the Company.
(viii) The financial statements (audited and unaudited) set
forth in the Registration Statement and Prospectus fairly present the financial
condition of the Company and the results of its operations as of the dates and
for the periods therein specified; and said financial statements (including the
related notes and schedules) have been prepared in accordance with generally
accepted accounting principles which have been consistently applied throughout
the periods covered thereby. Such financial statements and the summaries thereof
included in the Registration Statement and the Prospectus conform in all
material respects to the requirements of the Rules and Regulations of the
Commission.
(ix) The accountants whose opinion or opinions is or are
included in the Registration Statement are independent public accountants within
the meaning of the Act and the Rules and Regulations of the Commission
thereunder.
(x) Except as set forth in the Prospectus, there is not
pending any action, suit or other proceeding to which the Company is a party or
of which any property of the Company is the subject, before or by any court or
other governmental body, which might result in any material adverse change in
the condition, business or prospects of the Company, or might materially
adversely affect the assets of the Company; and except as indicated in the
Prospectus, no such proceeding is known by the Company to be threatened or
contemplated.
(xi) The Company knows of no claim for services, either in the
nature of a finder's fee, brokerage fee or otherwise, with respect to the
financing contemplated hereby, whether or not heretofore satisfied, for which it
or the Underwriters, or any of them, may be responsible, other than as expressly
disclosed in the Prospectus.
(xii) The business and operations of the Company and the
ownership thereof, except as may be disclosed in the Prospectus, comply with all
statutes, ordinances, laws, rules and regulations applicable thereto, the
non-compliance with which could reasonably be expected to have a material,
adverse effect on the Company or its condition (financial or other), business,
prospects, net worth or results of operations; the Company possesses, and is
operating in compliance with the terms, provisions and conditions of, all
certificates, licenses, permits, consents, waivers, approvals, franchises and
concessions required to conduct its business as now conducted, the
non-compliance with which could reasonably be expected to have a material
adverse effect on the Company or its condition (financial or other), business,
4
prospects, net worth or results of operations; each such certificate, license,
permit, consent, waiver, approval, franchise and concession is valid and in full
force and effect and there is no proceeding pending or threatened (or to the
best of the knowledge of the Company and the Selling Stockholders, any basis
therefor) which may lead to the revocation, termination, suspension or
nonrenewal of any such certificate, license, permit,consent, waiver, approval,
franchise or concession.
(xiii) On the Effective Date of the Registration Statement and
immediately prior to the sale of the Securities, the outstanding capital stock
of the Company will consist of no more than 1,600,000 shares of Common Stock,
par value $.01 per share, and there shall be no warrants or options to purchase
shares of Stock of the Company except as set forth in the Prospectus.
(b) Each of the Selling Stockholders, severally and not jointly,
represents and warrants to each Underwriter that:
(i) Such Selling Stockholder (A) has the power and authority
to execute and deliver this Agreement and the Power of Attorney Agreement
(hereinafter defined) on the terms and conditions set forth herein and therein;
(B) is, and when the Registration Statement shall become effective and at the
Closing Time will be, the owner of the Shares to be sold by such Selling
Stockholder to the respective Underwriters pursuant to the terms hereof, in each
case free and clear of all liens, charges, encumbrances and restrictions; (C)
has paid to the Company the full purchase price required to be paid for such
Shares; and (D) has, and when the Registration Statement shall become effective
and at the Closing Time will have, the power and authority to convey good and
valid title to such Shares, in each case free and clear of all liens, charges,
encumbrances and restrictions.
(ii) Such Selling Stockholder has executed an agreement and
power of attorney (the "Power of Attorney Agreement") with ___________________
or _______________________ as attorney-in-fact, and has delivered to such
attorney-in-fact, pursuant to the Power of Attorney Agreement, certificates in
negotiable form for the Shares to be sold by such Selling Stockholder. Copies of
each Power of Attorney Agreement have been delivered to you. Such certificates
and the Shares represented thereby are subject to the rights of the Underwriters
hereunder and, to such extent, the Power of Attorney granted by such Selling
Stockholder to such attorney-in-fact is irrevocable and shall not be terminated
by law or upon the occurrence of any event. If any such event shall occur, with
or without notice to such attorney-in-fact, such attorney-in-fact shall deliver
such certificates in accordance with the terms and provisions of this Agreement
as if such event had not occurred.
(iii) The Power of Attorney Agreement has been duly authorized,
5
executed and delivered by such Selling Stockholder, and this Agreement has been
duly authorized, executed and delivered by such Selling Stockholder or by his or
her attorney-in-fact pursuant to the Power of Attorney Agreement. The Power of
Attorney Agreement and this Agreement each constitute valid and binding
agreements of such Selling Stockholder enforceable in accordance with their
respective terms (except as rights to indemnification may be limited by
applicable law).
(iv) Neither the execution and delivery or performance of this
Agreement or the Power of Attorney Agreement or the consummation of the
transactions herein or therein contemplated nor the compliance with the terms
hereof or thereof by such Selling Stockholder will conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, guaranty, purchase agreement or other
agreement or instrument to which such Selling Stockholder or any of such Selling
Stockholder's property is bound, or under any statute or under any order, rule
or regulation applicable to such Selling Stockholder or any of such Selling
Stockholder's property of any court or other governmental agency; and no
consent, approval, authorization or order of any court or governmental agency or
body is required for the consummation by such Selling Stockholder of the
transactions on such Selling Stockholder's part herein or therein contemplated,
except such as may be required under the Act or under state securities or blue
sky laws.
(v) On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Shares to be sold by the Selling Stockholders to the
several Underwriters hereunder will have been fully paid or provided for by the
Selling Stockholders and all laws imposing such taxes will have been fully
complied with.
(vi) Such Selling Stockholder has not, and at the Closing Time
will not have, taken, directly or indirectly, any action to cause or result in,
or which has constituted, or might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of the Common Stock to
facilitate the sale or the resale of any of the Shares.
3. Purchase, Sale and Delivery of Shares. Subject to the terms and
conditions of this Agreement, and on the basis of the representations,
warranties and agreements herein contained, (A) the Company hereby agrees to
sell to the Underwriters, and the Underwriters agree to purchase from the
Company, at purchase prices of $4.50 per Share and $0.225 per Warrant, and (B)
each of the Selling Stockholders agree, severally and not jointly, to sell to
the Underwriters the number of Shares set forth opposite the name of such
Selling Stockholder on Schedule B hereof, and the Underwriters agree to purchase
from the Selling Stockholders, such Shares at and for a price of $4.50 per
6
Share. The number of Shares to be purchased from the Company and the number of
Shares to be purchased from the Selling Stockholders, respectively (as adjusted
by the Representative to eliminate fractions), by each of the Underwriters shall
be determined by multiplying the aggregate number of such Shares to be sold by
the Company or the Selling Stockholders, as the case may be, as set forth above
and in Schedule B, by a fraction, the numerator of which is the total number of
Shares set forth opposite the name of such Underwriter in Schedule A hereto and
the denominator of which is the aggregate number of Shares set forth in Schedule
A hereto. The obligations of the Underwriters under this Agreement are several
and not joint.
The Company and the Selling Stockholders will deliver the Securities to you
at your office, or such other place as you may designate, against payment to the
Company and the Selling Stockholders for the Securities by wire transfer or by
certified or official bank check or checks payable in New York Clearing House
funds to the order of the Company and the attorney-in-fact of the Selling
Stockholders. The Securities so to be delivered will be in definitive, fully
registered form in such authorized denominations and registered in such names as
you request by notice to the Company and the Selling Stockholders given not
later than 5:00 P.M., New York City time, on the second business day next
preceding the Closing Date. The date and the time of such delivery and payment
shall be 11:00 A.M., New York City time, on _____________, 1996 (or such other
time and date as you and the Company and the Selling Stockholders may agree
upon). The time and date of such payment and delivery is herein sometimes
referred to as the "Closing Date".
The Company and the Selling Stockholders agree to make the Securities
available to you for the purpose of expediting the checking and packaging of the
Securities, at the office at which they are to be delivered, not later than 2:00
P.M., New York City time, on the business day next preceding the Closing Date.
The Company hereby grants to you the right, exercisable within 45 days from
the date hereof, to purchase from the Company up to 210,000 additional Shares of
Common Stock and 277,500 additional Common Stock Purchase Warrants (the
"Additional Securities") at a purchase price of $4.50 per Share and $0.225 per
Warrant, for the purpose of covering over-allotments in the sale by any of the
Underwriters of the Securities. You may exercise your right to purchase
Additional Securities by giving written notice of such exercise to the Company.
Such notice shall set forth the aggregate number of Additional Securities
as to which such right is being exercised, the names in which Additional
Securities are to be registered, the denominations in which Additional
Securities are to be issued and the date and time, as determined by you, when
the Additional Securities are to be delivered (such date and time being herein
7
sometimes referred to as the "Additional Closing Date"); provided, however, that
the Additional Closing Date shall not be earlier than the Closing Date. The
Additional Closing Date may be on the Closing Date; if not, it shall be no
earlier than the third business day after the date on which the right shall have
been exercised nor later than the twelfth business day after the date on which
the right shall have been exercised.
The Company will deliver the Additional Securities to you at your office,
or such other place as you may designate, against payment to the Company for the
Additional Securities by wire transfer or by certified or official bank check or
checks payable in New York Clearing House funds to the order of the Company. The
Additional Securities so to be delivered will be in definitive, fully registered
form in such authorized denominations and registered in such names as you
request by notice to the Company given not later than 5:00 P.M., New York City
time, on the second business day next preceding the Additional Closing Date.
The Company agrees to make the Additional Securities available to you for
the purpose of expediting the checking and packaging of the Securities, at the
office at which they are to be delivered, not later than 2:00 P.M., New York
City time, on the business day next preceding the Additional Closing Date.
It is understood that the Underwriters propose to offer the Securities for
sale to the public upon the terms and conditions set forth in the Registration
Statement, after the Registration Statement becomes effective.
4. Covenants of the Company.
(a) The Company further covenants and agrees with you that:
(i) The Company will use its best efforts to cause the
Registration Statement to become effective and will not at any time, whether
before or after the effective date, file any amendment to the Registration
Statement or supplement to the Prospectus of which you shall not previously have
been advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Act, or the Rules and
Regulations of the Commission thereunder.
(ii) The Company will notify you immediately and confirm in
writing (A) when the Registration Statement and any post-effective amendment
thereto becomes effective, (B) of the issuance of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or of the Prospectus or of the
initiation of any proceedings for such purposes, and (C) of the receipt of any
comments (in writing or orally) from the Commission in respect of the
8
Registration Statement or requesting the amendment, post-effective amendment or
supplementation of the Registration Statement or Prospectus or for additional
information. If the Commission shall enter a stop order or any order preventing
or suspending the use of any Preliminary Prospectus or of the Prospectus at any
time, or shall initiate any proceedings for such purposes, the Company will make
every reasonable effort to prevent the issuance of such order and, if issued, to
obtain the withdrawal thereof. The Company will provide you with copies of all
written communications received by it from the Commission and any other
regulatory agency with respect to the Registration Statement, and every
amendment and post-effective amendment thereto and copies of all replies thereto
by the Company, its counsel and its accountants.
(iii) Within the time during which a prospectus relating to
the Shares and Warrants (or the exercise of any Warrants) is required to be
delivered under the Act, the Company will comply so far as it is able with all
requirements imposed upon it by the Act, as now and hereafter amended, and by
the Rules and Regulations of the Commission thereunder, from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Shares and Warrants (or the shares of stock to be acquired upon the exercise
of the Warrants) as contemplated by the provisions hereof and the Prospectus;
and if during such period any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances then existing, not misleading, or if
during such period it is necessary to amend or supplement the Prospectus to
comply with the Act, the Company will promptly notify you and will amend or
supplement the Prospectus (in form reasonably satisfactory to your counsel and
at the expense of the Company) so as to correct such statement or omission or
effect such compliance.
(iv) The Company will cooperate with you and will take all
necessary action, and furnish to whomever you may direct such proper
information, as may be lawfully required in qualifying the Securities for
offering and sale under the securities or blue sky laws of such states as you
may designate, and in continuing such qualifications in effect so long as
required for the distribution of Securities by you; provided that the Company
shall not be obligated to qualify as a foreign corporation to do business under
the laws of any such state, consent to general service of process in such state
or otherwise to submit to any requirements which it reasonably deems unduly
burdensome.
(v) The Company will pay any and all fees, taxes and expenses
incident to the performance of its obligations under this Underwriting
Agreement, including expenses and taxes incident to the issuance and delivery to
you of the Securities and Additional Securities, if any, to be sold to the
Underwriters pursuant to Section 3 hereof; all fees and disbursements of counsel
9
and accountants for the Company; expenses and filing fees incident to the
preparation, printing, delivery, shipment and filing with the Commission, the
National Association of Securities Dealers, Inc., and state blue sky authorities
of the Registration Statement and all exhibits thereto and the Prospectus, and
any amendments or supplements thereto, including fees of blue sky counsel (to be
designated by the Representative and who may be counsel to the Underwriters)
incident to the qualification for sale of the Securities and Additional
Securities, if any, under blue sky laws. The Company will further pay you as
Representative of the Underwriters for your expenses incurred in connection with
this offering, on a non-accountable basis, an amount equal to 3% of the public
offering price of the Securities sold on behalf of the Company hereunder,
including any Securities sold pursuant to the overallotment option, such
reimbursement and payment to be made to you on closing, and may be deducted by
you from the amount due to the Company for purchase of the Securities pursuant
to Section 3 hereof. In the event that the offering is not consummated, the
Representative will be reimbursed only for its actual, accountable,
out-of-pocket expenses.
(vi) The Company will apply the net proceeds from the sale of
the Securities substantially as set forth under the caption "Use of Proceeds" in
the Prospectus.
(vii) The Company will deliver to you as promptly as practicable
three signed copies of the Registration Statement and all amendments thereto,
including all exhibits therewith or incorporated therein by reference, and
signed consents, certificates and opinions of accountants and of any other
persons named in the Registration Statement as having prepared, certified or
reviewed any part thereof, and will deliver to you such number of unsigned
copies of the Registration Statement and exhibits, and of all amendments
thereto, as you may reasonably request. The Company will deliver to you or upon
your order, from time to time until the effective date of the Registration
Statement, as many copies of the Preliminary Prospectus as you may reasonably
request. The Company will deliver to you or upon your order, on the effective
date of the Registration Statement and thereafter, subject to the provisions of
Section 4(a)(iii) hereof, from time to time, as many copies of the Prospectus in
final form or as thereafter amended or supplemented, as you may reasonably
request. The Company will deliver to you, promptly after closing, three (3)
bound volumes of all of the documents, papers, exhibits, correspondence and
records forming the materials involved in this public offering.
(viii) The Company will make generally available to its security
holders, as soon as it is practicable to do so (but in no event later than
fifteen months after the effective date of the Registration Statement), an
earnings statement of the Company (which need not be audited) covering a
10
period of at least twelve months beginning not later than the first day of the
fiscal quarter next succeeding such effective date which shall satisfy the
provisions of Section 11(a) of the Act.
(ix) For a period of at least five years from the date hereof,
the Company will supply to the Representative, (A) as soon as practicable after
the end of each fiscal year, a balance sheet and statement of operations of the
Company and its consolidated subsidiaries (if any) as at the end of and for each
such year, all in reasonable detail and certified by independent certified
public accountants, (B) as soon as practicable after the end of each of the
first three quarters of each fiscal year, an unaudited statement of operations
of the Company and its consolidated subsidiaries (if any) for such period, (C)
copies of such financial statements and reports as the Company may, from time to
time, furnish generally to holders of any class of its stock, (D) copies of each
report which it shall be required to file with the Commission, any blue sky
authority or any securities exchange at the same time as such reports are filed
and (E) copies of the daily stock transfer sheets of the Company.
(x) Simultaneously with the purchase and payment by the
Underwriters for the Securities on the Closing Date, the Company shall sell, at
a price of $0.001 per warrant, and issue and deliver to the Representative and,
at its request, to any of the several Underwriters or to dealers in the selling
group, or to officers or partners of the Representative, the several
Underwriters or dealers in the selling group, 185,000 warrants, in form and
substance satisfactory to your counsel, to purchase 185,000 shares of Common
Stock of the Company at an exercise price of $8.25 per share ("Underwriters'
Stock Warrants") and 185,000 warrants, in form and substance satisfactory to
your counsel, to purchase 185,000 Common Stock Purchase Warrants (similar to
those being sold to the public except that there shall be exercisable at a price
of $9.90 per share) at a price of $0.4125 per Common Stock Purchase Warrant
("Underwriters' Warrants"). The Underwriters' Stock Warrants and Underwriters'
Warrants will be exercisable for a period of four years commencing one year
after the Effective Date, and will not be transferable for a period of one year
from the Effective Date except to Underwriters and Selected Dealers and officers
and partners thereof. In the event that the Company at any time reduces the
exercise price of the Warrants sold to the public hereunder, the exercise price
of the Underwriters' Stock Warrants, Underwriters' Warrants and Underlying
Common Stock Purchase Warrants shall be proportionately reduced. The
Underwriters' Stock Warrants and Underwriters' Warrants shall have been
registered under the Registration Statement and the holders of a majority of
such Underwriters' Stock Warrants and Underwriters' Warrants or the securities
which may have been issued thereunder shall have the right, at any one time, to
require the Company to prepare and file a post-effective amendment to the
Registration Statement (or a new registration statement, if then required under
the Act) covering all or any portion of the Underwriters' Stock Warrants and
11
Underwriters' Warrants and their underlying securities to permit the public sale
thereof after twelve months from the Effective Date. In connection therewith,
the Company shall be obligated to prepare and file such post-effective amendment
(or such new registration statement) under the Act promptly upon the receipt of
the request of the holders of a majority of the Underwriters' Stock Warrants and
Underwriters' Warrants or securities issued thereunder, and the Company shall be
further obligated to use its best efforts to have such post-effective amendment
(or such new registration statement) rendered effective under the Act, as it may
from time to time be amended hereafter, and Rules and Regulations promulgated
thereunder, as soon as practicable after the filing date of any such
post-effective amendment or such new registration statement, and the Company
shall also be required to take such action as may be necessary to maintain such
post-effective amendment or such new registration statement effective under the
Act for the period, not in excess of nine months, required to sell such
Underwriters' Stock Warrants and Underwriters' Warrants and their underlying
securities in compliance with the Act and Rules and Regulations promulgated
thereunder, and the Company shall be required to provide the accounting
necessary for the filing of any such post-effective amendment or such new
registration statement, plus any amendments or supplements thereto. In addition
to, and not in lieu of, the obligations of the Company hereinabove recited in
this subsection, the Company hereby further covenants and agrees that if, the
Company shall prepare and file a post-effective amendment to the Registration
Statement or a new registration statement under the Act or notification pursuant
to Regulation A under the Act either of which is to become effective at any time
after the expiration of twelve months from the Effective Date with respect to
the public offering of any equity or debt securities of the Company now or
hereafter authorized, the Company will include in such post-effective amendment
or new registration statement or such notification such number of the
Underwriters' Stock Warrants and Underwriters' Warrants and their underlying
securities as requested by the holders of the Underwriters' Stock Warrants and
Underwriters' Warrants or securities issued thereunder, and neither you nor such
holders shall be under no obligation to bear any of the expenses or professional
fees and disbursements to be incurred by the Company in connection with the
preparation and filing of such post-effective amendment, or new registration
statement or such notification. With respect to any post-effective amendment, or
new registration statement, or notification filed by the Company pursuant to
this subsection, the selling securityholders offering any Underwriters' Stock
Warrants, Underwriters' Warrants and their underlying securities thereunder
shall be entitled to the benefits of indemnification by the Company in like
manner and to the same extent as the Company indemnifies the Underwriters
pursuant to Section 6(a) hereof.
(xi) The Company will not, without the prior written consent of
the Representative, for a period of six months after the effective date of the
12
Registration Statement, sell any securities of the Company or sell or grant
options, warrants or rights with respect to any securities of the Company, or
permit or cause a public offering of any securities of the Company except in
accordance with the provisions of the Registration Statement.
(xii) For a period of five years after the effective date of the
Registration Statement, the Representative shall have the right to designate one
person as an advisor to the Company's Board of Directors, who will receive
compensation equal to that received by any other director as well as
reimbursement of expenses for attending meetings, but who will have no power to
vote as a director. Such person shall be indemnified by the Company against any
claim arising out of his participation at meetings of the Board of Directors to
the same extent as any director. During such five year period, the Company will
hold at least four meetings per year of its Board of Directors. In the event the
Company maintains a liability insurance policy with coverage for the acts of its
officers and directors, the Company agrees, if possible, to include the
Representative, First Cambridge Securities Corporation and their designee as
insureds under the policy.
(xiii) At the Closing, the Company shall enter into a consulting
agreement ("Consulting Agreement") retaining the Representative and First
Cambridge Securities Corporation as financial consultants to the Company for a
two-year period commencing as of such closing, at a fee of $74,625 per year, the
total amount of which shall be paid at the Closing. The Company and the
Representative shall also enter into an agreement which will provide for a
finder's fee, ranging from 7% of the first $1,000,000 down to 2-1/2% of the
excess over $9,000,000 of the consideration involved in any transaction
(including mergers and acquisitions) consummated by the Company in which the
Representative introduced the other party to the Company during the five-year
period commencing on the Closing Date.
(xiv) The Company shall cooperate with the Underwriters in
making available to their representatives such information as they may request
in making an investigation of the Company and its affairs.
(xv) Until such time as the securities of the Company are
listed on the New York Stock Exchange or the American Stock Exchange (note
including The Emerging Growth Company List) but in no event more than three
years from the effective date, the Company shall retain Compliance Management
Company or a similar company, to prepare a post registration blue sky market
survey for the Representative for distribution to market makers. Such survey
shall be provided to the Representative annually with the first survey delivered
to it promptly after the completion of the public offering hereunder. The cost
of the first year's survey will not exceed $4,000. In lieu of the foregoing, the
Company may cause its legal counsel to provide the Representative with a survey
to be updated at least annually.
13
(xi) At all times, so long as any of the warrants referred to
herein are outstanding, the Company will have reserved authorized but unissued
shares of stock and underlying warrants, available for immediate issuance in
amounts necessary for the exercise of all warrants then outstanding. The Company
agrees to qualify its Shares for listing on the NASDAQ System Small-Cap Issues
on the Effective Date and will take all necessary and appropriate action so that
the Shares continue to be listed for trading in the NASDAQ System Small-Cap
Issues for at least five years from the Effective Date provided the Company
otherwise complies with the prevailing maintenance requirements of NASDAQ System
Small-Cap. In addition, at such time as the Company qualifies for listing its
securities on the National Market System of NASDAQ, the Company will take all
steps necessary to have the Company's Shares thereof listed on the National
Market System of NASDAQ in lieu of listing as Small-Cap Issues. The Company
shall comply with all periodic reporting and proxy solicitation requirements
imposed by the Commission pursuant to the 1934 Act, and shall promptly furnish
you with copies of all material filed with the Commission pursuant to the 1934
Act or otherwise furnished to shareholders of the Company.
(xii) The Company will register its Common Stock pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended, not later than
the Effective Date.
(xiii) The Company will pay the fees and expenses (but not
transfer taxes, if any) of the Company's stock transfer agents, warrant agents,
and registrars (if any), without charge to stockholders and warrantholders, for
not less than five years after the effective date of the Registration Statement.
(xix) The Representative shall receive a fee of 10% of the
proceeds as and when received by the Company from time to time upon the exercise
of any Warrants after one year from the Effective Date, provided that such fee
shall be paid only in accordance with the rules of the NASD and any applicable
securities laws and rules and regulations. The Representative will not be
eligible to receive the aforementioned warrant exercise fee as a result of
transactions of the following nature: (i) the exercise of Warrants when the
market price of the Company's Common Stock is lower than the exercise price;
(ii) the exercise of Warrants held in any discretionary account; (iii) the
exercise of Warrants where documents disclosing the compensation arrangements
(e.g., the Prospectus) have not been provided to the warrantholder; (iv) the
exercise of Warrants in unsolicited transactions; and (v) the exercise of any
warrants during the one year period commencing on the Effective Date, and
further provided that no broker shall be paid a fee unless such broker is
designated in writing by the customer as the soliciting broker. In addition,
14
it will be a condition to the receipt by the Representative of such fee that it
shall not, in the ten days immediately preceding the solicitation of the
exercise or the date of such exercise, have bid for or purchased the Common
Stock of the Company (or any securities of the Company convertible into or
exchangeable for such Common Stock, including the Warrants) or otherwise have
engaged in any activity that would be prohibited by Rule 10b-6 under the
Securities Exchange Act of 1934, as amended, by one participating in a
distribution of the Company's securities whether as underwriter or otherwise.
The Company will not solicit warrant exercises except through the
Representative.
(xx) Immediately following the closing, the Company shall
exercise its best efforts to be listed in the appropriate Standard & Poor's
manual in order to comply with the requirements of the so-called "standard
manuals exemption" of various blue sky authorities.
(b) Each of Selling Stockholders, severally and not jointly, covenants
and agrees with each Underwriter that:
(i) During the 180 days commencing on the date hereof, such
Selling Stockholder will not, directly or indirectly, take any action designed
to or which will constitute or which might reasonably be expected to cause or
result in the stabilization of the price of the Shares to facilitate the sale or
the resale of any of the Shares.
(ii) If, subsequent to the date hereof, such Selling
Stockholder shall believe or have any reasonable grounds to believe that the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, or that any of the
representations and warranties of the Company or such Selling Stockholder
contained herein or in any certificate or document contemplated under this
Agreement to be delivered to you are false, such Selling Stockholder will
immediately notify you, as the Representative to such effect.
(iii) Such Selling Stockholder will not, without your prior
written consent, sell, contract to sell or otherwise dispose of any shares of
Common Stock owned or held of record in its name, except the sale of Shares to
the Underwriters pursuant to this Agreement, for a period of 180 days after the
Effective Date.
(iv) Such Selling Stockholder will furnish the certificates
referred to in subsections (h) and (i) of Section 9 hereof.
15
(v) Such Selling Stockholder will pay you, as Representative
of the Underwriters, for your expenses incurred in connection with the offering,
on a non-accountable basis, an amount equal to 3% of the public offering price
of the Shares sold on behalf of such Selling Stockholder.
5. Conditions of Underwriters' Obligations. The Underwriters' obligations
to purchase and pay for the Securities, as provided herein, shall be subject to
the accuracy, as of the date hereof and as of the Closing Date (as if made on
the Closing Date), of the representations and warranties of the Company and the
Selling Stockholders herein, to the accuracy of statements made in each
certificate delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Stockholders of their obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., New York City time, on the day following the date of this
Agreement, unless a later time and date be agreed to by you; and no stop order
suspending the effectiveness of the Registration Statement, or order preventing
or suspending the use of any Preliminary Prospectus or of the Prospectus, shall
have been issued and no proceedings for such purpose shall have been instituted
or be pending or, to the knowledge of the Company or you, shall be contemplated
by the Commission; and any request of the Commission for additional information
(to be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the satisfaction of the Underwriters' Counsel.
(b) On the Closing Date the Underwriters shall have received an opinion
of Xxxxxx Xxxxx, P.C., counsel for the Company, dated the Closing Date, to the
effect that:
(i) The Company has full corporate power and authority to enter
into this Agreement and this Agreement has been duly authorized, executed and
delivered by the Company and duly executed and delivered by each Selling
Stockholder or his or her duly authorized attorney-in-fact and constitutes a
valid and binding obligation of the Company and each Selling Stockholder
enforceable in accordance with its terms, subject to bankruptcy, insolvency or
similar laws governing the rights or creditors generally and to the discretion
of courts in granting equitable remedies, except insofar as rights to indemnity
or contribution hereunder may be limited by Federal securities laws. The Power
of Attorney Agreement has been duly authorized, executed and delivered by each
Selling Stockholder and constitutes a valid, binding and legally enforceable
obligation of each Selling Stockholder in accordance with its terms, subject to
bankruptcy, insolvency or similar laws governing the rights of creditors
generally and to the discretion of courts in granting equitable remedies and
validly grants the power of attorney to __________________ and ________________
intended to be granted thereby.
16
(ii) The Warrant Agreement, the Consulting Agreement and the
Mergers and Acquisitions Agreement have been duly authorized, executed and
delivered by the Company and constitute the legal, valid and binding obligations
of the Company enforceable in accordance with their terms (except insofar as
enforcement of the indemnification provisions thereof may be limited by
applicable federal securities laws or principles of public policy and subject to
bankruptcy, insolvency, moratorium, reorganization and similar laws affecting
creditors' rights generally and to general principles of equity). The Company
has full corporate power and authority to enter into the Warrant Agreement and
the Consulting Agreement and to sell, issue and deliver the Shares, Warrants,
Underwriters' Stock Warrants, Underwriters' Warrants and the securities
underlying all warrants;
(iii) The Company has authorized and outstanding capital stock as
set forth under "Capitalization" in the Prospectus; all of the Company's
outstanding shares have been duly authorized and validly issued, and are fully
paid and nonassessable; all of the Shares, Warrants, Underwriters' Stock
Warrants and Underwriters' Warrants sold pursuant to this Agreement have been
duly authorized, validly issued and delivered and are fully paid and
nonassessable, and conform to the descriptions thereof in the Prospectus and
such descriptions conform to the rights duly set forth in the Certificate of
Incorporation of the Company, the Warrant Agreement, the Underwriters' Stock
Warrants, the Underwriters' Warrants and this Agreement; the Warrants, the
Underwriters' Stock Warrants, and the Underwriters' Warrants are, and the
warrants underlying the Underwriters' Warrants will, when issued in accordance
with the provisions of the Warrant Agreement, the Underwriters' Stock Warrants,
the Underwriters' Warrants and this Agreement be, valid and legally binding
obligations of the Company in accordance with their respective terms (subject to
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and
similar laws affecting creditors' rights generally and to general principles of
equity); the securities underlying the Warrants and the Underwriters' Stock
Warrants and the Underwriters' Warrants have been validly authorized and
reserved for issuance, and any shares when issued in accordance with the terms
of the Warrants or Underwriters' Stock Warrants, as the case may be, will be
validly issued and will be fully paid and non-assessable; the holders of the
Shares, Warrants and Underwriters' Stock Warrants, the Underwriters' Warrants,
and the securities underlying the Warrants, the Underwriters' Stock Warrants,
and the Underwriters' Warrants are not, and will not be, subject to any personal
liability for liabilities of the Company by reason of being holders thereof; and
none of such securities which have been issued, have been issued in violation of
the preemptive rights or any other rights of any stockholder of the Company and
17
no stockholder of the Company has any preemptive right to subscribe for or to
purchase any of such Shares, Warrants, Underwriters' Stock Warrants,
Underwriters' Warrants or securities underlying the Warrants, Underwriters'
Stock Warrants and the Underwriters' Warrants;
(iv) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware, has full
corporate power and authority to conduct its business as presently conducted and
as described in the Prospectus and to own its properties and is duly qualified
to do business and is in good standing in each jurisdiction wherein the property
owned or leased, or the conduct of business, by it makes such qualification
necessary (except where failure to so qualify would not have a material adverse
effect on the Company);
(v) The Company is the surviving corporation resulting from the
merger of Tellurian, Inc., a South Carolina corporation (the "Predecessor"),
with and into the Company pursuant to a plan and agreement of merger dated May
16, 1996, which became effective July 2, 1996. Such merger was consummated in
accordance with the provisions of the plan and agreement of merger, which has
been duly authorized by the Company and the Predecessor and their respective
shareholders and complies in all respects with applicable law;
(vi) The Registration Statement has become effective under the
Securities Act and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or is pending or contemplated
by the Commission;
(vii) The Registration Statement and the Prospectus, and any
amendment or supplement thereto, comply as to form in all material respects with
the requirements of the Securities Act and the Rules (except that such counsel
need express no opinion as to the financial statements and schedules and
financial data included therein or omitted therefrom);
(viii) Such counsel has assisted in the preparation of the
Registration Statement and the Prospectus and no fact has come to the attention
of such counsel which leads such counsel to believe that, either as of the
Effective Date or the date of the opinion, (A) either the Registration Statement
or the Prospectus or any amendment or supplement thereto (except for the
financial statements and schedules and financial data included therein or
omitted therefrom, as to which such counsel need express no opinion) contained
any 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, (B) there is any material legal, governmental or administrative
proceeding pending, threatened or contemplated to which the Company is or
18
may become a party or to which any of its property is or may become subject, or
any basis for any legal, governmental or administrative proceeding, required to
be described in the Prospectus under the Act which is not described as required,
or (C) there is any contract or document of a character required to be described
in the Registration Statement or the Prospectus, or to be filed as an exhibit to
the Registration Statement, under the Act which is not described or filed as
required.
(ix) The execution, delivery and performance of this Agreement by
the Company and the Selling Stockholders and the Power of Attorney Agreement by
the Selling Stockholders, and the consummation of the transactions contemplated
therein do not and will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, the Articles
of Incorporation or By-Laws of the Company or any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument known to such counsel to
which the Company or any Selling Stockholder is a party or by which they are
bound or to which any of their property is subject, or any Federal, state or
other statute, law, rule or regulation, or any judgment, order or decree of any
court or governmental agency or body known to such counsel having jurisdiction
over the Company or any Selling Stockholder or any of their property;
(x) No consent, approval, authorization or order of, or
declaration or filing with, any government, governmental instrumentality or
court, is required for the valid consummation by the Company or the Selling
Stockholders of the transactions contemplated by this Agreement, except such as
may be required under the Securities Act or any state securities or "blue sky"
laws in connection with the purchase, sale and distribution of the Shares; and
(xi) To the best of such counsel's knowledge, the Company
possesses all material permits, certificates of compliance, approvals, licenses,
waivers, consents and other rights from governmental authorities which are
requisite for the material conduct of its business as presently conducted and as
described in the Prospectus (except such as in the aggregate would not
materially affect the business or operations of the Company), for the
consummation of the transactions contemplated in this Agreement and for the
offering contemplated by the Prospectus, and each such permit, certificate of
compliance, approval, license, waiver, consent and right is valid and in full
force and effect.
(xii) Such opinion shall be to such further effect with respect to
other legal matters relating to this Agreement and the sale of the Shares
hereunder as counsel for the Underwriters may reasonably request. In rendering
the opinions set forth above, such counsel may rely upon certificates of the
Selling Stockholders, officers of the Company and public officials as to
19
matters of fact, and may rely as to all matters of law other than the laws of
the United States or the corporate laws of the State of Delaware upon opinions
of counsel satisfactory to you, in which case the opinion shall state that they
have no reason to believe that you and they are not entitled to so rely.
Additionally, in rendering such opinion, counsel shall not be required to opine
upon the availability of equitable remedies, including but not limited to, the
remedies of specific performance and injunctive relief.
(c) At the time this Agreement is executed by the parties hereto and
on the Closing Date (and on the Additional Closing Date, if any), the
Underwriters shall have received from Xxxxxx Xxxxx & Co., Inc., a letter dated
as of each such date, to the effect that:
(i) They are independent accountants with respect to the Company
within the meaning of the Act and the applicable published Rules and Regulations
thereunder;
(ii) In their opinion, the financial statements (including the
schedules, if any) in the Registration Statement examined by such firm, comply
as to form in all material respects with the applicable accounting requirements
of the Act and the published Rules and Regulations thereunder with respect to
registration statements on Form SB-2;
(iii) On the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of reading the
minutes of meetings of the stockholders and the Board of Directors of the
Company since the date of the latest audited balance sheet as set forth in the
minute books through a specified date not more than five business days prior to
the date of the letter, reading the unaudited interim financial statements (if
any), including the schedules (if any), of the Company included in the
Registration Statement and making inquiries of certain officials of the Company
who have responsibility for financial and accounting matters regarding the
specific items for which representations are requested below, nothing has come
to their attention as a result of the foregoing procedures that caused them to
believe that (A) the unaudited financial statements (if any), including the
schedules (if any), 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 published Rules and Regulations thereunder; (B)
said financial statements, including the schedules (if any), are not presented
fairly, in conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial statements;
(C) during the period from the date of the latest balance sheet covered by their
report(s) included in the Registration Statement to a specific date not more
than five business days prior to the date of the letter, there has been any
change in the capital stock or long-term debt of the Company as compared with
20
the amounts shown in the balance sheet included in the Registration Statement,
except as set forth in or contemplated by the Registration Statement; or (D) for
the period from the date of the last balance sheet contained in the Prospectus
to a specified date not more than five days prior to the date of such letter,
there has been any decrease, except as described in such letter and previously
discussed with you, in consolidated gross revenues, net income, consolidated
assets or total stockholders' equity as compared with the amounts shown on such
balance sheet, except for such changes or decreases which the Registration
Statement discloses have occurred or may occur; and
(iv) In addition to the examination referred to in their report
included in the Registration Statement and the limited procedures referred to in
clause (iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and Prospectus and
which are specified by you, and have found such amounts, percentages and
financial information to be in agreement with the relevant accounting and
financial records of the Company and its subsidiaries identified in such letter.
(d) The Representative shall have received a certificate or
certificates, dated the Closing Date and the Additional Closing Date, executed
by at least two officers of the Company, including the Chairman of the Board or
the President and the principal financial or accounting officer of the Company,
to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been instituted or are pending or contemplated under the Act;
(ii) Neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto contains 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 since the effective date of
the Registration Statement, there has occurred no event required to be set forth
in an amended or supplemented Prospectus which has not been so set forth;
(iii) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material transaction, not
in the ordinary course of business, and there has not been any material change
in the capital stock or funded debt of the Company, or any material adverse
change in the condition (financial or other) or results of operations of the
Company;
21
(iv) There are no legal proceedings pending or threatened against
the Company of a character affecting the validity of this Agreement or required
to be disclosed in the Prospectus which are not disclosed therein; there are no
transactions or contracts which are required to be summarized therein which are
not so summarized; and there are no material contracts or documents required to
be filed as exhibits to the Registration Statement which are not so filed;
(v) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, the Company has not
sustained any material loss or damage to its properties, whether or not insured;
and
(vi) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the date of the letter;
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the date of
the letter.
(e) The Selling Stockholders shall have performed all of the covenants
contained herein and in any certificate or document contemplated under this
Agreement to be delivered to you and required to be performed by the Selling
Stockholders at or prior to the Closing Date, and you shall have received at the
Closing Date a certificate of the Selling Stockholders, dated as of the Closing
Date, to the effect that the representations and warranties of the Selling
Stockholders contained in this Agreement and in each such certificate and
document are true and correct in all respects on and as of the date of such
certificate as if made on and as of such date, and each of the covenants and
conditions required to be performed or complied with by the Selling Stockholders
on or prior to the date of such certificate has been duly, timely and fully
performed or complied with.
(f) The Company and each of the Selling Stockholders shall have
furnished to you such certificates, in addition to those specifically mentioned
herein, as you may have reasonably required in a timely manner as to the
accuracy and completeness, at the Closing Date, of any statement in the
Registration Statement or the Prospectus; as to the accuracy, at the Closing
Date, of the representations and warranties of the Company and the Selling
Stockholders herein and in each certificate and document contemplated under this
Agreement to be delivered to you; as to the performance by the Company and the
Selling Stockholders of their respective obligations hereunder and under each
such certificate and document; or as to the fulfillment of the conditions
concurrent and precedent to your obligations hereunder.
(g) All corporate proceedings and related matters in connection with
22
the organization of the Company and the qualification, authorization, issuance,
sale and delivery of the Securities shall be satisfactory to Xxxxx X. Xxxxx,
Esq., counsel for the Underwriters, and such counsel shall have been furnished
with such papers and information as he may reasonably have requested in this
connection.
(h) Certain holders of outstanding securities of the Company shall have
agreed not to sell or transfer their securities under Rule 144 under the Act or
otherwise for certain periods of time following the Effective Date of the
offering, as set forth in the Prospectus, without the prior written consent of
the Representative.
(i) All such opinions, letters, certificates and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Underwriters and to their counsel.
(j) If any condition to the Underwriters' obligations hereunder to be
satisfied at or prior to the Closing Date is not so satisfied, the Underwriters
may terminate this Agreement without liability on their part or on the part of
the Company, except for the expenses to be paid or reimbursed by the Company
pursuant to Section 4(a)(v) of this Agreement and except for any liability under
Sections 6 and 7 of this Agreement.
6. Indemnification. (a) The Company and each of the Selling Stockholders,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls each Underwriter within the meaning of the Act
against any losses, claims, damages or liabilities, joint or several, to which
it or such controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or in any blue sky application or other document executed by the Company or a
Selling Stockholder specifically for that purpose or based upon written
information furnished by the Company or a Selling Stockholder filed in any state
or other jurisdiction in order to qualify any or all of the Securities under the
securities laws thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and will reimburse
it and each such controlling person for any legal or other expenses reasonably
incurred by it or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company and the Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue
23
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, such Preliminary Prospectus, the Prospectus or such
amendment or supplement, or in such blue sky application or such other document,
in reliance upon and in conformity with written information furnished to the
Company by an Underwriter specifically for use in the preparation thereof; and
provided, further, that the Company and the Selling Stockholders will not be
liable under this indemnity agreement, insofar as it relates to any Preliminary
Prospectus, to the extent that any such loss, claim, damage, liability or action
results from the fact that an Underwriter sold Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sales, a copy of the Prospectus (or of the Prospectus as then amended or
supplemented if the Company had previously furnished copies thereof to you).
This indemnity agreement will be in addition to any liability which the Company
and the Selling Stockholders may otherwise have. The obligations of each Selling
Stockholder to indemnify the Underwriters and aforesaid controlling persons
hereunder shall be limited to the product of the number of Shares sold by such
Selling Stockholder and the initial public offering price set forth on the cover
page of the Prospectus.
(b) Each Underwriter will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of the Act, and each of the Selling Stockholders to the same extent as the
foregoing indemnity from the Company and the Selling Stockholders to such
Underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director, officer or controlling
person or Selling Stockholder may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or in any
blue sky application or other document executed by the Company specifically for
that purpose filed in any state or other jurisdiction in order to qualify any or
all of the Securities under the securities laws thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, such Preliminary Prospectus, the Prospectus or
such amendment or supplement, or in such blue sky application or such other
document, in reliance upon and in conformity with written information furnished
to the Company by such Underwriter specifically for use in the preparation
thereof; and will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer or controlling person or any such
24
Selling Stockholder in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which an Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 6, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 6. In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party, similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 6 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall be liable for any settlement of any action effected without its
written consent.
7. Contribution. (a) In order to provide for just and equitable
contribution under the Act in any case in which (i) an Underwriter (or any
person who controls the Underwriter within the meaning of the Act) makes claim
for indemnification pursuant to Paragraph 6(a) hereof but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that Paragraph 6(a) provides for indemnification in
such case or (ii) contribution under the Act may be required on the part of an
Underwriter or any such controlling person in circumstances for which
indemnification is provided under Paragraph 6(b), then, and in each case, the
Company, the Selling Stockholders and the Underwriters shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Underwriters are
responsible for an aggregate of 10% (being the amount of the Underwriter's
commission) and the Company and the Selling Stockholders are responsible for the
remaining portion; provided, however, that, in any such case, no person guilty
of a fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
25
(b) Promptly after receipt by any party to this Agreement of notice of
the commencement of any action, suit or proceeding, such party will, if a claim
for contribution in respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the commencement
thereof; but the omission so to notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution under the Act. In case any such action, suit or proceeding is
brought against any party, and such party notifies a contributing party of the
commencement thereof, the contributing party will be entitled to participate
therein with the notifying party and any other contributing party will be
entitled to participate therein with the notifying party and any other
contributing party similarly notified.
8. Substitution of Underwriters. (a) If one or more Underwriters shall
default in its or their obligations to purchase and pay for the Securities
hereunder and if the aggregate number of such Securities which all Underwriters
so defaulting shall have agreed to purchase does not exceed 10% of the aggregate
number of Securities to be purchased by the Underwriters, each non-defaulting
Underwriter shall have the right and is obligated, severally, to purchase and
pay for (in addition to the Securities set forth opposite its name in Schedule
A) that portion of the Securities agreed to be purchased by all such defaulting
Underwriters which the Securities set forth opposite its name in Schedule A
bears to the aggregate Securities so set forth opposite the names of all such
non-defaulting Underwriters. In such event, you as Representative, for the
accounts of the several non-defaulting Underwriters, shall take up and pay for
all or any part of such additional Securities to be purchased by each such
Underwriter under this Section 8(a), and may postpone the Closing Date to a time
not exceeding three full business days after the Closing Date determined as
provided in Section 3 hereof during which time the Company will prepare and file
any amendments to the Registration Statement and take any other action which the
Representative or its counsel shall deem necessary or appropriate to reflect
such event; or
(b) If one or more Underwriters default in its or their obligations to
purchase and pay for Securities hereunder and if the aggregate number of such
Securities which all Underwriters so defaulting shall have agreed to purchase
shall exceed 10% of the aggregate number of Securities to be purchased by the
Underwriters, or if one or more Underwriters for any reason permitted hereunder
cancel its or their obligations to purchase and pay for Securities hereunder,
the non-cancelling and non-defaulting Underwriters (hereinafter called the
"remaining Underwriters") shall have the right to purchase such Securities in
such proportion as may be agreed among them, at the Closing Date determined as
provided in Section 3 hereof. If the remaining Underwriters do not purchase and
pay for such Securities at such Closing Date, the Closing Date shall be
26
postponed for twenty-four hours and the remaining Underwriters shall have the
right to purchase such Securities or to substitute another person or persons, to
purchase the same, or both, at such postponed Closing Date. If by such postponed
Closing Date the remaining Underwriters have not exercised such right to
purchase or obtained a substitute purchaser or purchasers, the Closing Date
shall be postponed for a further twenty-four hours and the Company and the
Selling Stockholders shall have the right to substitute another person or
persons, satisfactory to the Representative, to purchase such Securities at such
second postponed Closing Date. If the Company and the Selling Stockholders shall
not have found such purchasers for such Securities by such second postponed
Closing Date, then this Agreement shall automatically terminate and neither the
Company, the Selling Stockholders nor the remaining Underwriters shall be under
any obligation under this Agreement except that the Company shall remain liable
for the full amount of expenses incurred as provided in Section 4(a)(v) and to
the extent provided in Sections 6(a) and 7 hereof and the Underwriters shall
remain liable to the extent provided in Sections 6(b) and 7 hereof. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default or obligate any Underwriter to
purchase or find purchasers for any Securities in excess of those agreed to be
purchased by such Underwriter under the terms of Sections 3 and 8(a) hereof.
9. Representations and Indemnities to Survive Delivery. All
representations and warranties of the Company contained herein and in the
certificate or certificates delivered pursuant to Section 5(d) hereof, and the
indemnity and contribution agreements contained in Sections 6 and 7 hereof,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person,
or by or on behalf of the Company or any officer, director or controlling
person, or of any termination of this Agreement, and shall survive delivery of
and payment for the Shares.
10. Effective Date of this Agreement and Termination Thereof. (a) This
Agreement shall become effective at 9:00 A.M., New York City time, on the first
full business day after the Registration Statement has become effective, or at
such earlier time after the Registration Statement has become effective as you
in your discretion shall first release the Securities for sale to the public.
For the purposes of this Section 10, the Securities shall be deemed to have been
released for sale to the public upon release by you of the publication of a
newspaper advertisement relating to the Securities or upon release by you of
telegrams or facsimile transmissions offering the Securities for sale, whichever
shall first occur. You or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except as noted
below, by giving the notice hereinafter specified at or before the time this
27
Agreement becomes effective; provided however, that the provisions of this
Section, Section 4(a)(v), Section 6 and Section 7 shall at all times be
effective.
(b) You shall have the right to terminate this Agreement by giving the
notice hereinafter specified at any time at or prior to the Closing Date if (i)
the Company or the Selling Stockholders shall have failed, refused or been
unable, at or prior to the Closing Date, to perform any agreement on their part
to be performed hereunder, or because any other condition precedent to the
Underwriters' obligations hereunder required to be fulfilled by the Company and
the Selling Stockholders have not fulfilled, or if (ii) trading on the New York
Stock Exchange shall have been generally suspended, or minimum or maximum prices
for trading shall have been generally fixed, or maximum ranges for prices for
securities shall have been generally required, on the New York Stock Exchange,
by the New York Stock Exchange or by order of the Commission or any other
governmental authority having jurisdiction, or if there has been a substantial
adverse change in general market or economic conditions, or if a banking
moratorium shall have been declared by Federal or New York authorities, or if an
outbreak of hostilities or other national or international calamity of such
nature as to disorganize the securities markets in the United States shall have
occurred since the execution hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 10, you shall notify the
Company and the Selling Stockholders promptly by telephone or telegram,
confirmed by letter. If the Company elects to prevent this Agreement from
becoming effective, the Company shall notify you promptly by telephone or
telegram, confirmed by letter.
11. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to the Underwriters shall
be mailed, delivered or telegraphed and confirmed to you as Representative at 0
Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or if sent to the Company, shall
be mailed, delivered or telegraphed and confirmed to it at 00 Xxxxxxxxxx Xxxxxx,
Xxxxx Xxxxxx Xxxxx, Xxx Xxxxxx 00000 marked to the attention of the President.
12. Parties. This Agreement shall inure to the benefit of and be binding
upon you and the Company and the several Underwriters and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person or corporation, other than the
parties hereto and their respective successors and assigns, the Selling
Stockholders and the selling securityholders referred to in Section 4(a)(x)
hereof, and the controlling persons and the officers and directors referred to
in Section 6 hereof, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained, this Agreement
28
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of the parties hereto and their respective successors
and assigns, and said selling securityholders and said controlling persons and
said officers and directors, and for the benefit of no other person or
corporation. No purchaser of any of the Securities from any Underwriter shall be
construed a successor or assign by reason merely of such purchase.
13. Information Furnished by Underwriters. The statements set forth in the
last paragraph on the cover page, in the stabilization legend, under the caption
"Underwriting" and the statements regarding counsel for the Underwriters under
the caption "Legal Matters" in any Preliminary Prospectus and in the Prospectus
and in blue sky reports of sales, if any, constitute the written information
furnished by or on behalf of any Underwriter referred to in Sections 2(b), 6(a)
and 6(b) hereof.
14. Miscellaneous. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the Company and the Selling Stockholders shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriters made by you as the Representative. This Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of New York, and the Company hereby consents and will submit
to the jurisdiction of the courts of the State of New York and of any federal
court sitting in the City of New York with respect to controversies arising
under this Agreement.
If the foregoing correctly sets forth the understanding between the Company
and the several Underwriters, please so indicate on behalf of the Underwriters
in the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement between the Company and each of the Underwriters.
Very truly yours,
TELLURIAN, INC.
By: _________________________________
Selling Stockholders
By: _________________________________
, Attorney-in-fact for
the Selling Stockholders
29
Accepted as of the date first above written:
X.X. XXXXXXX & CO., INC.
Acting on behalf of the several
Underwriters named in Schedule A hereto.
By:_________________________________________
30
SCHEDULE A
TELLURIAN, INC.
Underwriting Agreement dated November , 1996
This Schedule sets forth the name and address of each Underwriter and the
number of Shares to be purchased by each Underwriter from the Company and the
Selling Stockholders.
Number of Number of
Name Address Shares Warrants
---- ------- ---------- --------------
X.X. Xxxxxxx 1 Battery Park Plaza
& Co., Inc. Xxx Xxxx, XX 00000
--------- ---------
Total.................................1,850,000 1,850,000
========= =========
31
SCHEDULE B
SELLING STOCKHOLDERS
Number of
Name Shares
---- ---------
Xxxxxx Xxxxxx 200,000
Xxxxxx XxXxxxx 125,000
Xxxxxxx Xxxxxxx 125,000
-------
Total 450,000
=======
32
1,850,000 Shares of Common Stock
and
1,850,000 Common Stock Purchase Warrants
TELLURIAN, INC.
SELECTED DEALER AGREEMENT
Dated: October , 1996
Dear Sirs:
The Underwriters named in the prospectus mentioned below (the
"Underwriters") have severally agreed, subject to the terms and conditions of
the Underwriting Agreement (the "Underwriting Agreement"), to purchase from
Tellurian, Inc. (the "Company") and certain Selling Stockholders, at the prices
set forth on the cover of said prospectus, an aggregate of 1,850,000 shares of
Common Stock (the "Shares") and 1,850,000 Common Stock Purchase Warrants (the
"Warrants"). The Securities are more particularly described in the enclosed
prospectus (the "Prospectus"), additional copies of which will be supplied in
reasonable quantities upon request.
Some or all of the Underwriters are severally offering a part of the
Securities for sale to selected dealers (the "Selected Dealers"), among whom
they are pleased to include you, at the public offering prices, less concessions
in the amounts set forth in the Prospectus under "Underwriting". This offering
is made subject to delivery of the Securities and their acceptance by the
Underwriters, to the approval of all legal matters by counsel, and to the terms
and conditions herein set forth and may be made on the basis of the reservation
of Securities or an allotment against subscription.
We have advised you by telegram of the method and terms of the offering.
Acceptances should be sent to X.X. Xxxxxxx & Co., Inc., 0 Xxxxxxx Xxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000. We reserve the right to reject any acceptances in
whole or in part.
Any of the Securities purchased by you hereunder are to be offered by you
to the public at the public offering prices, except as herein otherwise provided
and except that a reallowance from such public offering prices of not in excess
of the amount set forth in the Prospectus under "Underwriting" may be allowed to
dealers who are members in good standing of the National Association of
Securities Dealers, Inc., or foreign banks, dealers
or institutions not eligible for membership in said Association who represent to
you that they will promptly reoffer such Securities to unrelated persons at the
public offering prices and will abide by the conditions with respect to foreign
banks, dealers and institutions set forth in the confirmation below.
We, acting as Representative, and, with our consent, any Underwriter may
buy Securities from, or sell Securities to, any Selected Dealer or any other
Underwriter, and any Selected Dealer may buy Securities from, or sell Securities
to, any other Selected Dealer or any Underwriter at the public offering prices
less all or any part of the concessions.
You agree to pay us on demand for the accounts of the several Underwriters
an amount equal to the concessions on any Securities purchased by you hereunder
which, prior to the termination of this Agreement, we may purchase or contract
to purchase for the account of any Underwriter or which may be delivered against
purchase contracts made prior to the termination of this Agreement.
Securities purchased by you hereunder shall be paid for on such date as we
shall determine, on one day's notice to you, by certified or official bank check
payable in New York Clearing House funds to the order of X.X. Xxxxxxx & Co.,
Inc., 0 Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as
instructed. Delivery to you of certificates for Securities will be made as soon
as is practicable thereafter. Unless specifically authorized by us, payment by
you may not be deferred until delivery of certificates to you.
The Underwriters have been advised by the Company that a Registration
Statement for the Securities, filed under the Securities Act of 1933, has become
effective. You agree that in selling Securities purchased pursuant hereto (which
agreement shall also be for the benefit of the Company) you will comply with the
applicable requirements of the Securities Act of 1933 and of the Securities
Exchange Act of 1934. No person is authorized by the Company or by the
Underwriters to give any information or make any representations not contained
in the Prospectus in connection with the sale of Securities. You are not
authorized to act as agent for the Company and of the Selling Stockholders or
any of the Underwriters in offering Securities to the public or otherwise.
Nothing contained herein shall constitute the Selected Dealers partners with any
of the Underwriters or with one another.
Upon application to us, we will inform you as to the advice we have
received from counsel concerning the jurisdictions in which Securities have been
qualified for sale or are exempt under the respective securities or blue sky
laws of such jurisdictions, but we have not assumed and will not assume any
obligation or responsibility as to the right of any Selected Dealer to sell
Securities in any such jurisdiction.
2
As Representative, we shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the offering or
arising thereunder. Neither we, acting as Representative, nor any of the
Underwriters shall be under any obligation to you except for obligations
expressly assumed by us in this Agreement.
Each of the Underwriters has authorized us to overallot in arranging for
sales of the Securities to the Selected Dealers and to purchase and sell
Securities for long or short account and has also authorized us to stabilize or
maintain the market prices of the Common Stock and the Warrants of the Company.
You agree, upon our request, at any time or times prior to the termination
of this Agreement, to report to us the number of Securities purchased by you
pursuant to the provisions hereof which then remain unsold.
Selected Dealers will be governed by the conditions herein set forth until
this Agreement is terminated. This Agreement will terminate at the close of
business on the 30th day after the date hereof but, in our discretion, may be
extended by us for a further period not exceeding 30 days and in our discretion,
whether or not extended, may be terminated at any earlier time. Notwithstanding
the termination of this Agreement, you shall remain liable for your
proportionate amount of any claim, demand or liability which may be asserted
against you alone, against you together with other dealers purchasing Securities
upon the terms hereof, or against us, based upon the claim that the Selected
Dealers, or any of them, constitute an association, an unincorporated business
or other entity.
This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, and you consent and
will submit to the jurisdiction of the courts of the State of New York and of
any federal court sitting in the City of New York with respect to controversies
arising under this Agreement.
In the event that you agree to purchase Securities in accordance with the
terms hereof, kindly confirm such agreement by completing and signing the form
provided for that purpose on the enclosed duplicate hereof and returning it to
us promptly, even though you may have previously advised us of your acceptance
by telephone or telegraph.
All communications from you should be addressed to X.X. Xxxxxxx & Co.,
Inc., 0 Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. Any notice from us to you
shall be deemed to have been fully authorized by the Underwriters and to have
been duly given if
3
mailed or telegraphed to you at the address to which this letter is
mailed.
Very truly yours,
X.X. XXXXXXX & CO., INC.
As Representative of the several
Underwriters
By ________________________________
4
X.X. Xxxxxxx & Co., Inc.
As Representative of the several Underwriters
0 Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We hereby confirm our agreement to purchase ___________ Shares and
_____________ Warrants of Tellurian, Inc. allotted to us subject to the terms
and conditions of the foregoing agreement and your telegram to us referred to
therein. We hereby acknowledge receipt of the Prospectus relating to the
Securities, and we confirm that in purchasing Securities we have relied upon no
statements whatsoever, written or oral, other than the statements in such
Prospectus. We have made a record of our distribution of preliminary
prospectuses and, when furnished with copies of any revised preliminary
prospectus, we have promptly forwarded copies thereof to each person to whom we
had theretofore distributed preliminary prospectuses. We hereby represent that
we are a member in good standing of the National Association of Securities
Dealers, Inc. and agree to comply with the Rules of Fair Practice of said
Association, and in particular, Sections 8, 24, 25 and 36 of Article III
thereof, or, if we are not such a member, we are a foreign bank, dealer or
institution not eligible for membership in said Association and agree to make no
sales within the United States, its territories or possessions or to persons who
are citizens thereof or residents therein, and in making any sales to comply
with said Association's Rules and Interpretations to the extent applicable to
us.
.................................
Name of Selected Dealer
By .............................
(Authorized Signature)
.................................
(Print name and title)
Address:
.................................
.................................
Dated as of the date
first above written.
5
