DRAFT
12/22/98
_______________ Shares
EDUCATIONAL VIDEO CONFERENCING, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
________ __, 1998
Prime Charter Ltd.,
As representative of the
several Underwriters named
in Schedule A hereto
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Educational Video Conferencing, Inc., a Delaware corporation (the
"Company), proposes to issue and sell ____________________ shares (the "Firm
Shares") of its authorized but unissued common stock, par value $.0001 per share
(the "Common Stock"), to Prime Charter Ltd. (the "Representative") and the other
underwriters listed on Schedule A to this Agreement (the Representative and the
other underwriters being herein collectively called the "Underwriters"). The
Company and the persons listed on Schedule B to this Agreement (the "Selling
Stockholders") also propose to grant to the Underwriters an option to purchase
up to an aggregate of _____________________ additional shares (the
"Overallotment Shares") of Common Stock on the terms and conditions set forth in
Section 3(c). The Firm Shares and the Overallotment Shares are hereinafter
collectively referred to as the "Shares."
The Company and the Selling Stockholders wish to confirm as follows
their agreements with the Underwriters in connection with the several purchases
by the Underwriters of the Shares.
1. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form SB-2 (File No. 333-66085), including a prospectus relating to the Shares
and each amendment thereto in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"). There have been delivered to you signed
copies of such registration statement and amendments, together with copies of
each exhibit filed therewith. Copies of such registration statement and
amendments and of the related preliminary prospectus have been delivered to you
in such reasonable quantities as you have requested for each of the
Underwriters. If such registration statement has not become effective, a further
amendment to such registration statement, including a form of final prospectus,
necessary to permit such registration statement to become effective will be
filed promptly by the Company with the Commission. If such registration
statement has become effective, a final prospectus containing all Rule 430A
Information (as hereinafter defined) will be filed by the Company with the
Commission in accordance with, and if required by, Rule 424(b) of the rules and
regulations of the Act (the "Rules and Regulations") on or before the second
business day after the date hereof (or such earlier time as may be required by
the Rules and Regulations).
The term "Registration Statement" as used in this Agreement shall mean
such registration statement (including all exhibits and financial statements) at
the time such registration statement becomes or became effective and, if any
post-effective amendment thereto becomes effective prior to the Closing Date (as
hereinafter defined), shall also mean such registration statement as so amended;
provided, however, that such term shall include all Rule 430A Information deemed
to be included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations and shall also mean any registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations with respect to the Shares. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" as used in this Agreement shall mean the
prospectus relating to the Shares in the form in which it is first filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no
filing pursuant to Rule 424(b) of the Rules and Regulations is required, shall
mean the form of final prospectus included in the Registration Statement at the
time such registration statement becomes
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effective. The term "Rule 430A Information" means information with respect to
the Shares and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A of the
Rules and Regulations.
2. Representations and Warranties. (a) The Company hereby represents
and warrants as follows:
(i) The Company has not received, and has no notice of, any
order of the Commission preventing or suspending the use of any Preliminary
Prospectus, or the institution of proceedings for that purpose, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the Rules and Regulations. When the
Registration Statement became or becomes, as the case may be, effective (the
"Effective Date") and at all times subsequent thereto up to and at the Closing
Date (as hereinafter defined), any later date on which Overallotment Shares are
to be purchased (the "Overallotment Closing Date") and when any post-effective
amendment to the Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the Commission, (A) the Registration
Statement and Prospectus, and any amendments or supplements thereto, will
contain all statements which are required to be stated therein by, and will
comply with the requirements of, the Act and the Rules and Regulations and (B)
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. The foregoing representations and
warranties in this Section 2(a)(i) do not apply to any statements or omissions
made in reliance on and in conformity with the information contained in the
section of the Prospectus entitled "Underwriting." The Company has not
distributed any offering material in connection with the offering or sale of the
Shares other than the Registration Statement, the Preliminary Prospectus, the
Prospectus or any other materials, if any, permitted by the Act.
(ii) 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 full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration Statement.
The Company is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction where the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where the
failure so to qualify would not
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have a material adverse effect on the business, properties, prospects, financial
condition or results of operations of the Company (a "Material Adverse Effect").
The Company has no subsidiaries (as defined in the Rules and Regulations). The
Company does not own, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity.
Complete and correct copies of the certificates of incorporation and of the
bylaws of the Company and all amendments thereto have been delivered to the
Representative and no changes therein will be made subsequent to the date hereof
and prior to the Closing Date or, if later, the Overallotment Closing Date.
(iii) The Company has full power and authority (corporate and
other) to enter into this Agreement and the agreement between the Company and
the Representative relating to issuance of the Representative's Warrants (as
hereinafter defined) (the "Representative's Warrant Agreement"), which is being
executed concurrently herewith, and to perform the transactions contemplated
hereby and thereby to be performed by it. Each of this Agreement and the
Representative's Warrant Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement on the part of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnity and contribution hereunder may be limited by applicable laws
or equitable principles and except as enforcement hereof or thereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles. The performance of this Agreement and the Representative's
Warrant Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
(A) any indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note agreement or other evidence of indebtedness, or any lease, contract or
other agreement or instrument to which the Company is a party or by which its
properties are bound, (B) the certificate of incorporation or bylaws of the
Company or (C) any law, order, rule, regulation, writ, injunction or decree of
any court or governmental agency or body to which the Company is subject. The
Company is not required to obtain or make (as the case may be) any consent,
approval, authorization, order, designation or filing by or with any court or
regulatory, administrative or other governmental agency or body as a requirement
for the consummation by the Company of the transactions contemplated by this
Agreement or the
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Representative's Warrant Agreement, except such as may be required under the
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
under state securities or blue sky ("Blue Sky") laws or under the rules and
regulations of the Pacific Exchange (the "PE"), the Boston Stock Exchange (the
"BSE") and the Nasdaq Small Cap Market ("Nasdaq Small Cap").
(iv) There is not pending or, to the Company's knowledge,
threatened, any action, suit, claim, proceeding or investigation against the
Company or any of its officers or any of its properties, assets or rights before
any court or governmental agency or body or otherwise which might result in a
Material Adverse Effect or prevent consummation of the transactions contemplated
hereby. There are no statutes, rules, regulations, agreements, contracts, leases
or documents that are required to be described in the Prospectus, or to be filed
as exhibits to the Registration Statement by the Act or by the Rules and
Regulations that have not been accurately described in all material respects in
the Prospectus or filed as exhibits to the Registration Statement.
(v) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of any preemptive right, resale
right, right of first refusal or similar right. The authorized and outstanding
capital stock of the Company conforms in all material respects to the
description thereof contained in the Registration Statement and the Prospectus
(and such description correctly states the substance of the provisions of the
instruments defining the capital stock of the Company). The Shares have been
duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company against payment therefor
in accordance with the terms of this Agreement, will be duly and validly issued
and fully paid and nonassessable. No preemptive right, co-sale right, right of
first refusal or other similar rights of security holders exists with respect to
any of the Shares or the issue and sale thereof other than those that have been
expressly waived prior to the date hereof. No holder of securities of the
Company has the right to cause the Company to include such holder's securities
in the Registration Statement. The Representative's Warrant Agreement and the
Representative's Warrants (as hereinafter defined) conform in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus. The shares of Common Stock issuable upon exercise of the
Representative's Warrants (the "Warrant Shares") have been
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duly authorized for issuance and sale to the holders of the Representative's
Warrants pursuant to the Representative's Warrant Agreement and, when issued and
delivered by the Company against payment therefor in accordance with the terms
of the Representative's Warrant Agreement, will be duly and validly issued and
fully paid and nonassessable. No further approval or authorization of any
security holder, the Board of Directors or any duly appointed committee thereof
or others is required for the issuance and sale or transfer of the Shares or the
Warrant Shares, except as may be required under the Act, the Exchange Act or
Blue Sky laws. Except as disclosed in or contemplated by the Prospectus and the
financial statements of the Company and the related notes thereto, included in
the Prospectus, the Company does not have outstanding any options or warrants to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations. The description of the Company's
stock option and other plans or arrangements, and the options or other rights
which may be or have been granted thereunder, set forth in the Prospectus
accurately and fairly presents, in all material respects, the information
required to be shown with respect to such plans, arrangements, options and
rights.
(vi) Xxxxxxxxx Xxxxx Xxxxxxx LLP (the "Accountants") who have
examined the financial statements, together with the related schedules and
notes, of the Company filed with the Commission as a part of the Registration
Statement, which are included in the Prospectus, are independent public
accountants within the meaning of the Act and the Rules and Regulations. The
financial statements of the Company, together with the related schedules and
notes, forming part of the Registration Statement and the Prospectus, fairly
present the financial position and the results of operations of the Company at
the respective dates and for the respective periods to which they apply. All
financial statements, together with the related schedules and notes, filed with
the Commission as part of the Registration Statement have been prepared in
accordance with generally accepted accounting principles as in effect in the
United States consistently applied throughout the periods involved except as may
be otherwise stated in the Registration Statement. The selected and summary
financial and statistical data included in the Registration Statement present
fairly the information shown therein and have been compiled on a basis
consistent with the financial statements presented therein. No other financial
statements or schedules are required by the Act or the Rules and Regulations to
be included in the Registration Statement.
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(vii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been (A) any material adverse change, or any development which, in the
Company's reasonable judgment, is likely to cause a material adverse change, in
the business, prospects, properties or assets described or referred to in the
Registration Statement, or the results of operations, condition (financial or
otherwise), business or operations of the Company, (B) any transaction which is
material to the Company, except transactions in the ordinary course of business,
(C) any obligation, direct or contingent, which is material to the Company,
incurred by the Company, except obligations incurred in the ordinary course of
business, (D) any change in the capital stock or outstanding indebtedness of the
Company or (E) (except as specifically described in the Prospectus) any dividend
or distribution of any kind declared, paid or made on the capital stock of the
Company. The Company has no material contingent obligation which is not
disclosed in the Registration Statement.
(viii) Except as set forth in the Prospectus, (A) the Company
has good and marketable title to all material properties and assets described in
the Prospectus as owned by it, free and clear of any pledge, lien, security
interest, charge, encumbrance, claim, equitable interest or restriction, (B) the
agreements to which the Company is a party described in the Prospectus are valid
agreements, enforceable against the Company in accordance with their respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles and
except as rights to indemnity and contribution thereunder may be limited by
applicable laws or equitable principles, and, to the Company's knowledge, the
other contracting party or parties thereto are not in material breach or default
under any of such agreements and (C) the Company has valid and enforceable
leases for the properties described in the Prospectus as leased by it, and such
leases conform in all material respects to the description thereof, if any, set
forth in the Registration Statement.
(ix) The Company now holds and at the Closing Date and any
later Overallotment Closing Date, as the case may be, will hold, all licenses,
certificates, approvals and permits from all state, United States, foreign and
other regulatory authorities that are material to the conduct of the business of
the Company (as such business is currently conducted), except for such licenses,
certificates, approvals and permits the failure of which to hold would not have
a Material Adverse Effect), all of
7
which are valid and in full force and effect (and there is no proceeding pending
or, to the knowledge of the Company, threatened which may cause any such
license, certificate, approval or permit to be withdrawn, canceled, suspended or
not renewed). The Company is not in violation of its certificate of
incorporation or bylaws, or, except for defaults or violations which would not
have a Material Adverse Effect, in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any contract, indenture,
mortgage, loan agreement, joint venture or other agreement or instrument to
which it is a party or by which it or any of its properties are bound, or in
violation of any law, order, rule, regulation, writ, injunction or decree of any
court or governmental agency or body.
(x) The Company has filed on a timely basis all necessary
federal, state and foreign income, franchise and other tax returns and has paid
all taxes shown thereon as due, and the Company has no knowledge of any tax
deficiency which has been or might be asserted against the Company which might
have a Material Adverse Effect. All material tax liabilities are adequately
provided for within the financial statements of the Company.
(xi) The Company maintains insurance of the types and in the
amounts adequate for its business and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, business interruption insurance and real and personal property owned
or leased against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect.
(xii) The Company is not involved in any labor dispute or
disturbance nor, to the knowledge of the Company, is any such dispute or
disturbance threatened.
(xiii) The Company owns or possesses adequate licenses or
other rights to use all patents, trademarks, service marks, tradenames,
copyrights, trade secrets, know-how, franchises, and other material intangible
property and assets (collectively, "Intellectual Property") necessary to the
conduct of its business as conducted and as proposed to be conducted as
described in the Prospectus. The Company has no knowledge that it lacks or will
be unable to obtain any rights or licenses to use any of the Intellectual
Property necessary to conduct the business now conducted or proposed to be
conducted by it as described in the Prospectus. The Prospectus fairly and
accurately describes the Company's rights with respect to the
8
Intellectual Property. The Company has not received any notice of infringement
or of conflict with rights or claims of others with respect to any Intellectual
Property.
(xiv) The Company is not an "investment company," or a
"promoter" or "principal underwriter" for a registered investment company, as
such terms are defined in the Investment Company Act of 1940, as amended.
(xv) The Company has not incurred any liability for a fee or
commission or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than the underwriting discounts and commissions contemplated hereby.
(xvi) The Company (A) is in compliance with any and all
applicable United States, foreign, state and local environmental laws, rules,
regulations, treaties, statutes and codes promulgated by any and all
governmental authorities relating to the protection of human health and safety,
the environment or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (B) has received all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its
business as currently conducted and (C) is in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permit
licenses or other approvals would not, individually or in the aggregate, have a
Material Adverse Effect. No action, proceeding, revocation proceeding, writ,
injunction or claim is pending or threatened relating to the Environmental Laws
or to the Company's activities involving Hazardous Materials. "Hazardous
Materials" means any material or substance (i) that is prohibited or regulated
by any environmental law, rule, regulation, order, treaty, statute or code
promulgated by any governmental authority, or any amendment or modification
thereto, or (ii) that has been designated or regulated by any governmental
authority as radioactive, toxic, hazardous or otherwise a danger to health,
reproduction or the environment.
(xvii) The Company has not engaged in the generation, use,
manufacture, transportation or storage of any Hazardous Materials on any of the
Company's properties or former properties, except where such use, manufacture,
transportation or storage is in compliance with Environmental Laws. No Hazardous
Materials have been treated or disposed of on any of the Company's properties or
on properties formerly owned or leased by the Company during the time of such
ownership or lease, except in
9
compliance with Environmental Laws. No spills, discharges, releases, deposits,
emplacements, leaks or disposal of any Hazardous Materials have occurred on or
under or have emanated from any of the Company's properties or former
properties.
(xviii) The Company has not at any time during the last five
years (A) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (B) made any
payment to any foreign, United States or state governmental officer or official,
or other person charged with similar public of quasi-public duties, other than
payments required or permitted by the laws of the United States.
(xix) The Shares have been duly authorized for listing on the
PE, BSE and Nasdaq Small Cap upon notice of issuance. The Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the PE, BSE or Nasdaq Small Cap, nor has the Company received any
notification that the Commission, PE, BSE or Nasdaq Small Cap is contemplating
terminating such registration or listing.
(xx) Neither the Company nor, to its knowledge, any of its
officers, directors or affiliates has taken, and at the Closing Date and at any
later Overallotment Closing Date, neither the Company nor, to its knowledge, any
of its officers, directors or affiliates will have taken, directly or
indirectly, any action which has constituted, or might reasonably be expected to
constitute, the stabilization or manipulation of the price of sale or resale of
the Shares.
(xxi) The Company has obtained and delivered to the
Representative agreements (the "Lock-Up Agreements") from each of the persons
and entities listed on Schedule C hereto, representing all of the Company's
executive officers, directors and stockholders (or holders of securities
convertible into or exchangeable or exercisable for equity securities of the
Company), providing that such person or entity will not, commencing on the date
of the Prospectus and continuing for a 12- month period thereafter, without the
Representative's prior written consent, directly or indirectly, offer to sell,
sell, pledge, solicit an offer to buy, contract to sell, grant any option for
the sale thereof, or otherwise encumber, or cause the transfer or disposition
of, any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for, Common Stock, or exercise any registration
rights with respect to
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any shares of common stock or any securities convertible into or exchangeable or
exercisable for any Shares of Common Stock.
(xxii) The Company has not distributed and, prior to the
latest to occur of (A) the Closing Date, (B) the Overallotment Closing Date and
(C) the completion of the distribution of the Shares, will not distribute any
offering material in connection with the offering and sale of the Shares other
than the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or other
materials, if any permitted by the Act.
(b) Each of the Selling Stockholders hereby represents
and warrants as follows:
(i) Such Selling Stockholder has (A) caused a certificate or
certificates for the number of Overallotment Shares which may be sold by such
Selling Stockholder hereunder to be delivered to _________________ (the "Escrow
Agent"), duly endorsed in blank or together with blank stock powers duly
executed, with such Selling Stockholder's signature appropriately guaranteed,
such certificate or certificates to be held in escrow by the Escrow Agent
pursuant to an escrow agreement for delivery, pursuant to the provisions hereof,
on the Closing Date, and (B) granted an irrevocable power of attorney to the
Escrow Agent to purchase all requisite stock transfer tax stamps, to sign this
Agreement (including agreeing on the price at which the Overallotment Shares are
to be sold to the Underwriters) and thereafter to modify and amend this
Agreement, to settle any dispute relating to the terms of this Agreement, to
waive any condition to the obligations of such Selling Stockholder, and to
execute all other instruments and documents and to perform all other acts
necessary to carry out the provisions of this Agreement on behalf of such
Selling Stockholder (such escrow agreement together with such irrevocable powers
of attorney being herein called the "Escrow Agreement").
(ii) Such Selling Stockholder has full power and authority to
enter into this Agreement and the Escrow Agreement and to perform the
transactions contemplated hereby and thereby to be performed by such Selling
Stockholder. This Agreement and the Escrow Agreement have been duly executed and
delivered by such Selling Stockholder. No consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or filing
with, any federal, state, local or other governmental authority or any court or
other tribunal is required by such Selling Stockholder for the execution,
delivery or performance of
11
this Agreement (except filings under the Act which have been or will be made
before the Closing Date and such consents consisting only of consents under Blue
Sky laws which have been obtained at or prior to the date of this Agreement) or
the Escrow Agreement by such Selling Stockholder. No consent of any party to any
contract, agreement, instrument, lease, license, arrangement or understanding to
which such Selling Stockholder is a party, or to which any of such Selling
Stockholder's properties or assets are subject, is required for the execution,
delivery or performance of this Agreement or the Escrow Agreement; and the
execution, delivery and performance of this Agreement and the Escrow Agreement
will not violate, result in a breach of, conflict with or (with or without the
giving of notice or the passage of time or both) entitle any party to terminate
or call a default under any such contract, agreement, instrument, lease,
license, arrangement or understanding, or violate, result in a breach of, or
conflict with, any law, rule, regulation, order, judgment or decree binding on
such Selling Stockholder.
(iii) Such Selling Stockholder is the lawful owner of the
Overallotment Shares to be sold by him and upon sale and delivery of, and
payment for, such Overallotment Shares, as provided herein, such Selling
Stockholder will convey good and marketable title to such Overallotment Shares,
free and clear of any security interests, liens, encumbrances, equities, claims
or other defects.
(iv) Such Selling Stockholder has not, directly or indirectly,
(A) taken any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares or (B) since the filing of the Registration Statement
(i) sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Shares or (ii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company (except for the sale of the Overallotment Shares by such Selling
Stockholder under this Agreement).
(v) To the extent that any statements or omissions are made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder specifically
for use therein, such Preliminary Prospectus did, and the Registration Statement
and the Prospectus and any amendments or supplements thereto, when they become
effective or are filed with
12
the Commission, as the case may be, will conform in all material respects to the
requirements of the Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they are made, not misleading. Such Selling
Stockholder has reviewed the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and the Registration
Statement, and the information regarding such Selling Stockholder set forth
therein is complete and accurate.
(vi) The sale by such Selling Stockholder of the Overallotment
Shares being sold by him pursuant hereto is not prompted by any adverse
information concerning the Company that is not set forth in the Registration
Statement or the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus).
(vii) The sale of the Overallotment Shares being sold to the
Underwriters by such Selling Stockholder pursuant to this Agreement, the
compliance by the Selling Stockholder with the other provisions of this
Agreement and the consummation of the other transactions herein contemplated do
not (A) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained, such as may be required under Blue Sky laws and, if the registration
statement filed with respect to the Shares (as amended) is not effective under
the Act as of the time of execution hereof, such as may be required (and shall
be obtained as provided in this Agreement) under the Act or (B) conflict with or
result in a breach or violation of any of the terms and provisions of, or
constitute a default under any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which such Selling Stockholder is a party or by
which the Selling Stockholder is bound, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or any
arbitrator applicable to the Selling Stockholder.
(viii) The Selling Stockholder has not distributed and, prior
to the latest to occur of (A) the Closing Date, (B) the Overallotment Closing
Date and (C) the completion of the distribution of the Shares, will not
distribute any offering material in connection with the offering and sale of the
Shares other than the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or
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supplement thereto, or other materials, if any permitted by the Act.
3. Purchase of the Shares by the Underwriters.
(a) On the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell the Firm Shares to the several Underwriters, and each of the
Underwriters agrees to purchase from the Company the respective aggregate number
of Firm Shares set forth opposite its name on Schedule A, plus such additional
number of Firm Shares which such Underwriter may become obligated to purchase
pursuant to Section 3(b) hereof. The price at which such Firm Shares shall be
sold by the Company and purchased by the several Underwriters shall be $_____
per share. In making this Agreement, each Underwriter is contracting severally
and not jointly; except as provided in Section 3(b) and Section 3(c), the
agreement of each Underwriter is to purchase only the respective number of Firm
Shares specified on Schedule A.
(b) If for any reason one or more of the Underwriters shall
fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 10 hereof) to
purchase and pay for the number of Shares agreed to be purchased by such
Underwriter or Underwriters, the non-defaulting Underwriters shall have the
right within 24 hours after such default to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the Shares which such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such Shares
and portion, the number of Shares which each non-defaulting Underwriter is
otherwise obligated to purchase under this Agreement shall be automatically
increased on a pro rata basis (as adjusted by you in such manner as you deem
advisable to avoid fractional shares) to absorb the remaining shares and portion
which the defaulting Underwriter or Underwriters agreed to purchase; provided,
however, that the non-defaulting Underwriters shall not be obligated to purchase
the Shares and portion which the defaulting Underwriter or Underwriters agreed
to purchase if the aggregate number of such Shares exceeds 10% of the total
number of Shares which all Underwriters agreed to purchase hereunder. If the
total number of Shares which the defaulting Underwriter or Underwriters agreed
to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company shall have the right, within 24 hours next
succeeding the
14
24-hour period referred to above, to make arrangements with other underwriters
or purchasers reasonably satisfactory to you for purchase of such Shares and
portion on the terms herein set forth. In any such case, either you or the
Company shall have the right to postpone the Closing Date determined as provided
in Section 5 hereof for not more than seven business days after the date
originally fixed as the Closing Date pursuant to said Section 5 in order that
any necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made. If the aggregate number of Shares which
the defaulting Underwriter or Underwriters agreed to purchase exceeds 10% of the
total number of Shares which all Underwriters agreed to purchase hereunder, and
if neither the non-defaulting Underwriters nor the Company shall make
arrangements within the 24-hour periods stated above for the purchase of all the
Shares which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall be terminated without further act or deed and
without any liability on the part of the Company to any non-defaulting
Underwriter and without any liability on the part of any non-defaulting
Underwriter to the Company. Nothing in this Section 3(b), and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and
covenants herein contained, and subject to the terms and conditions herein set
forth, the Company and the Selling Stockholders hereby grant an option to the
several Underwriters to purchase, in the case of the Company, up to ___________
shares of Common Stock, and, in the case of each of the Selling Stockholders, up
to the number of shares of Common Stock set forth opposite such Selling
Stockholder's name on Schedule B at the same price per share as the Underwriters
shall pay for the Firm Shares. Such option may be exercised only to cover
overallotments in the sale of the Firm Shares by the Underwriters and may be
exercised in whole or in part at any time, or from time to time, on or before
the 30th day after the date of the Prospectus upon written or telegraphic notice
by you to the Company and the Selling Stockholders setting forth the aggregate
number of Overallotment Shares as to which the Underwriters are exercising the
option. Delivery of certificates for the Overallotment Shares, and payment
therefor, shall be made as provided in Section 5 hereof. Each Underwriter shall
purchase such percentage of the Overallotment shares as is equal to the
percentage of Firm Shares that such Underwriter is purchasing, the exact number
of shares to be adjusted by the Representative in such manner as you deem
advisable to avoid fractional shares.
15
In the event the options are exercised by you with respect to less than all the
Overallotment Shares, the number of Overallotment Shares covered by the
exercised options shall first be sold by the Company until all of its
Overallotment Shares have been purchased and any excess shall then be sold by
the Selling Stockholders on a pro rata basis until all of their Overallotment
Shares are sold.
(d) On the Closing Date, the Company shall issue and deliver
to the Representative, or at the direction of the Representative, to its
designees as provided in the Representative's Warrant Agreement, for a purchase
price of $.001 per Representative's Warrant (an aggregate of $__________), the
Representative's Warrants entitling the holder thereof to purchase ___________
shares of Common Stock on the terms and conditions set forth in the
Representative's Warrant Agreement.
4. Offering by Underwriters.
The terms of the offering of the Shares by the Underwriters
shall be as set forth in the Prospectus.
5. Delivery of and Payment for the Shares and the
Representative's Warrants.
(a) Delivery of certificates for the Firm Shares, the
Overallotment Shares (if the option granted pursuant to Section 3(c) hereof
shall have been exercised not later than 1:00 p.m., New York time, on the date
at least two business days preceding the Closing Date) and the Representative's
Warrants, and payment therefor, shall be made at the office of Proskauer Rose
LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 at 9:00 a.m., New York City
time, on the fourth business day after the date of this Agreement, or at such
time on such other day, not later than seven full business days after such
fourth business day, as shall be agreed upon in writing by the Company and you
(the "Closing Date").
(b) If the option granted pursuant to Section 3(c) hereof
shall be exercised after 1:00 p.m., New York City time, on the date two business
days preceding the Closing Date, and on or before the 45th day after the date of
this Agreement, delivery of certificates for the Overallotment Shares, and
payment therefor, shall be made at the office of Proskauer Rose LLP, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 at 9:00 a.m., New York City time, on the
third business day after the exercise of such option.
16
(c) Payment for the Shares shall be made to the Company or (in
the case of Overallotment Shares to be purchased from the Selling Stockholders)
to the Escrow Agent, as agent for the Selling Stockholders, by either a same day
funds check or federal funds wire transfer. Such payment shall be made upon
delivery of certificates for the Shares to you for the respective accounts of
the several Underwriters against receipt therefor signed by you. Certificates
for the Shares to be delivered to you shall be registered in such name or names
and shall be in such denominations as you may request at least three business
days before the Closing Date, in the case of Firm Shares, and at least two
business days prior to the Overallotment Closing Date, in the case of the
Overallotment Shares. Such certificates will be made available to the
Underwriters for inspection, checking and packaging at a location in New York,
New York, designated by the Underwriters not less than one full business day
prior to the Closing Date or, in the case of the Overallotment Shares, by 3:00
p.m., New York time, on the business day preceding the Overallotment Closing
Date.
It is understood that you, individually and not on behalf of
the Underwriters, may (but shall not be obligated to) make payment to the
Company or (in the case of Overallotment Shares to be purchased from the Selling
Stockholders) to the Escrow Agent, as agent for the Selling Stockholders, for
shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later Overallotment Closing Date. Any
such payment by you shall not relieve such Underwriter from any of its
obligations hereunder.
(d) Payment for the Representative's Warrants shall be made to
the Company or its order, by either a same day funds check or federal funds wire
transfer. Such payment shall be made upon delivery of certificates for the
Representative's Warrants to you against receipt therefor signed by you.
Certificates for the Representative's Warrants to be delivered to you shall,
subject to the terms and provisions of the Representative's Warrant Agreement,
be registered in such name or names as permitted by the Representative's Warrant
Agreement and shall be in such denominations as you may request at least three
business days before the Closing Date.
6. Further Agreements of the Company. The Company covenants and agrees
as follows:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed
17
and delivered by the parties hereto, to become effective as promptly as
possible; it will notify you, promptly after it shall receive notice thereof, of
the time when the Registration Statement or any subsequent amendment to the
Registration Statement has become effective or any supplement to the Prospectus
has been filed. If the Company omitted information from the Registration
Statement at the time it was originally declared effective in reliance upon Rule
430A(a), the Company will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (1) or (4) of Rule
424(b) of the Rules and Regulations or as part of a post-effective amendment to
such Registration Statement as originally declared effective which is declared
effective by the Commission. If for any reason the filing of the final form of
Prospectus is required under Rule 424(b)(3) of the Rules and Regulations, it
will provide evidence satisfactory to you that the Prospectus contains such
information and has been filed with the Commission within the time period
prescribed. The Company will notify you promptly of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information. Promptly upon your request, it
will prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the reasonable opinion of counsel
to the Representative, may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters. The Company will promptly
prepare and file with the Commission, and promptly notify you of the filing of,
any amendments or supplements to the Registration Statement or Prospectus which
may be necessary to correct any statements or omissions, if, at any time when a
prospectus relating to the Shares is required to be delivered under the Act, any
event shall have occurred as a result of which the Prospectus or any other
prospectus relating to the Shares as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. In case any Underwriter is required to deliver a
prospectus within the nine-month period referred to in Section 10(a)(3) of the
Act in connection with the sale of the Shares, the Company will prepare promptly
upon request, but at the expense of such Underwriter, such amendment or
amendments to the Registration Statement and such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act. The Company will file no amendment or supplement to the Registration
Statement or Prospectus that shall not previously have been submitted to you a
reasonable time prior to the proposed filing thereof or to which
18
you shall reasonably object in writing or which is not in compliance with the
Act and Rules and Regulations or the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of the Registration Statement or the
use of the Prospectus or of the initiation or threat of any proceeding for that
purpose; and it will promptly use its best efforts to prevent the issuance of
any such stop order or to obtain its withdrawal at the earliest possible moment
if such stop order should be issued.
(c) The Company will cooperate with you in endeavoring to
qualify the Shares for offering and sale under the securities laws of such
jurisdictions as you may designate and to continue such qualifications in effect
for so long as may be required for purposes of the distribution of the Shares,
except that the Company shall not be required in connection therewith or as a
condition thereof to qualify as a foreign corporation, or to execute a general
consent to service of process in any jurisdiction, or to make any undertaking
with respect to the conduct of its business. In each jurisdiction in which the
Shares shall have been qualified, the Company will make and file such
statements, reports and other documents in each year as are or may be reasonably
required by the laws of such jurisdictions so as to continue such qualifications
in effect for so long a period as you may reasonably request for distribution of
the Shares, or as otherwise may be required by law.
(d) The Company will furnish to you, as soon as available,
copies of the Registration Statement (three of which will be signed and which
will include all exhibits), each Preliminary Prospectus, the Prospectus, and any
amendments or supplements to such documents, including any prospectus prepared
to permit compliance with Section 10(a)(3) of the Act, all in such quantities as
you may from time to time reasonably request.
(e) The Company will make generally available to its
stockholders as soon as practicable, but in any event not later than the 45th
day following the end of the fiscal quarter first occurring after the first
anniversary of the Effective Date, an earnings statement (which will be in
reasonable detail but need not be audited) complying with the provisions of
Section 11(a) of the Act and Rule 158 of the Rules and Regulations and covering
a 12-month period beginning after the Effective Date, and will advise you in
writing when such statement has been made available.
19
(f) During a period of five years after the date hereof, the
Company, as soon as practicable after the end of each respective period, will
furnish to its stockholders annual reports (including financial statements
audited by independent certified public accountants) and will furnish to its
stockholders unaudited quarterly reports of operations for each of the first
three quarters of the fiscal year, and will, upon request, furnish to you and
the other several Underwriters hereunder (i) concurrently with making such
reports available to its stockholders, statements of operations of the Company
for each of the first three quarters in the form made available to the Company's
stockholders; (ii) concurrently with the furnishing thereof to its stockholders,
a balance sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity and of cash flow of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public accountants; (iii)
concurrently with the furnishing of such reports to its stockholders, copies of
all reports (financial or other) mailed to stockholders; (iv) as soon as they
are available, copies of all reports and financial statements furnished to or
filed with the Commission, any securities exchange or automated quotation system
by the Company (except for documents for which confidential treatment is
requested); and (v) every material press release and every material news item or
article in respect of the Company or its affairs which was generally released to
stockholders or prepared for general release by the Company. During such
five-year period, if the Company shall have any active subsidiaries, the
foregoing financial statements shall be on a consolidated basis to the extent
that the accounts of the Company are consolidated with any subsidiaries, and
shall be accompanied by similar financial statements for any significant
subsidiary that is not so consolidated.
(g) The Company shall not, during the 12 months following the
Effective Date, except with the Representative's your prior written consent,
file, or announce an intent to file, a registration statement covering any of
its shares of capital stock, except that one or more registration statements on
Form S-8 may be filed at any time following the Effective Date covering the
____________ shares of Common Stock reserved for issuance to employees or
directors of the Company pursuant to the 1998 Incentive Plan.
(h) The Company shall not, during the 12 months following the
Effective Date, except with the prior written consent of the Representative, in
its individual capacity and not
20
in its capacity as representative of the Underwriters, issue, sell, offer or
agree to sell, grant, distribute or otherwise dispose of, directly or
indirectly, any shares of Common Stock, or any options, rights or warrants with
respect to shares of Common Stock, or any securities convertible into or
exchangeable for Common Stock, other than the issuance of (i) the Overallotment
Shares, (ii) the Representative's Warrants and (iii) _____________ shares of
Common Stock reserved for issuance to employees or directors of the Company
pursuant to the 1998 Incentive Plan.
(i) The Company will apply the net proceeds from the sale of
the Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(j) The Company will maintain a transfer agent and a registrar
(which may be the same entity as the transfer agent) for the Common Stock.
(k) The Company will use its best efforts to maintain listing
of its shares of Common Stock on the PE, BSE and Nasdaq Small Cap.
(l) The Company is familiar with the Investment Company Act of
1940, as amended, and the rules and regulations thereunder, and has in the past
conducted its affairs, and will in the future conduct its affairs, in such a
manner so as to ensure that the Company was not and will not be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
(m) During a period of five years from the Effective Date, the
Company will, at the option of the Representative, (i) use its best efforts to
nominate and cause to be elected and reelected to the Board of Directors of the
Company a designee of the Representative or (ii) permit an agent of the
Representative to attend all meetings of the Board of Directors of the Company
as a non-voting observer, will give such agent notice of all meetings of the
Board of Directors at the same time and in the same manner that directors are
notified and will reimburse such agent for all expenses incurred in attending
such meetings, including, but not limited to food, transportation and lodging.
7. Expenses.
The Company agrees with each Underwriter that:
21
(a) The Company will pay and bear all costs, fees and expenses
in connection with the preparation, printing and filing of the Registration
Statement (including all amendments, supplements, financial statements,
schedules and exhibits), as many Preliminary Prospectuses and final Prospectuses
and any amendments or supplements thereto that the Representative reasonably
deems necessary; the reproduction of this Agreement; the issuance and delivery
of the Shares and the Representative's Warrants, including stock transfer taxes,
if any; the cost of all stock certificates representing the Shares and transfer
agents' and registrars' fees; the fees and disbursements of counsel for the
Company; all fees and other charges of the Company's independent public
accountants; the cost of furnishing to the several Underwriters copies of the
Registration Statement (including appropriate exhibits), Preliminary
Prospectuses and the Prospectus; NASD filing fees and expenses incident to
securing any required review; all fees and expenses relating to the listing of
the Shares and the Warrant Shares on the PE, BSE and Nasdaq Small Cap; all fees,
expenses and disbursements relating to the registration or qualification of the
Shares under the securities laws of such states and other jurisdictions as the
Representative may reasonably designate (including, without limitation, all
filing and registration fees and fees and disbursements of the Representative's
counsel in connection with Blue Sky matters, such as the Preliminary Blue Sky
Memoranda and any supplemental Blue Sky Memoranda and any instruments relating
to any of the foregoing; the fees and disbursements of counsel to the
Underwriters (not to exceed $200,000) in connection with the offering, this
Agreement and the transactions contemplated hereby; the costs of all mailing and
printing of the underwriting documents (including, but not limited to, the
Underwriting Agreement, any Blue Sky surveys and memoranda and, if appropriate,
any Agreement Among Underwriters, Selected Dealers Agreement, Underwriter's
Questionnaire and Power of Attorney); the costs of preparing, printing and
delivering certificates representing the Shares and the Representative's
Warrants; and all other expenses directly incurred by the Company in connection
with the performance of its obligations hereunder.
(b) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed hereunder or to
fulfill any condition of the Underwriters' obligations hereunder, the Company
will, in addition to paying the expenses described in Section 7(a), reimburse
the several Underwriters for all out-of-pocket expenses (including fees and
disbursements of Underwriters' counsel without the limitations therein set forth
in Section 7(a))
22
incurred by the Underwriters in reviewing the Registration Statement and the
Prospectus and in otherwise investigating, preparing to market or marketing the
Shares.
(c) The Representative, in its individual capacity and not as
representative of the Underwriters, shall also be entitled to a non-accountable
expense allowance equal to 3% of the aggregate offering price of the Shares. The
Company has previously paid the Representative an aggregate of [$100,000] in
partial payment of such non-accountable expense allowance, which amount shall be
non-refundable (notwithstanding the termination of this Agreement for any
reason) and will be applied against the non-accountable expense allowance.
8. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters to purchase and pay for the
Shares, as provided herein, shall be subject: (x) to the accuracy, as of the
date hereof and the Closing Date and any later Overallotment Closing Date, as
the case may be, of the representations and warranties of the Company herein and
to the performance by the Company of its obligations hereunder; (y) in the event
of the purchase of Overallotment Shares from the Selling Stockholders, the
accuracy, as of the Overallotment Closing Date relating to such purchase, of the
representations and warranties of the Selling Stockholders herein and to the
performance of the Selling Stockholders of their obligations hereunder and (z)
to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 9:00 a.m., New York City time, on the day immediately following the
date of this Agreement, or such later time or date as shall be consented to in
writing by you. If the filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b) and Rule 430A of the Rules and Regulations, the
Prospectus shall have been filed in the manner and within the time period
required by Rule 424(b) and Rule 430A of the Rules and Regulations. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened 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 reasonable satisfaction of counsel to the Underwriters.
23
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement, and the
Prospectus, and the registration, authorization, issue, sale and delivery of the
Shares shall have been reasonably satisfactory to counsel to the Underwriters,
and such counsel shall have been furnished with such papers and information as
they may reasonably have requested to enable them to pass upon the matters
referred to herein.
(c) You shall have received, at no cost to you, on the Closing
Date and on any later Overallotment Closing Date, as the case may be, the
opinion of Fishbeino Badilloo Wagnero Xxxxxxx, counsel to the Company, dated the
Closing Date or such later Overallotment Closing Date, in the form attached
hereto as Appendix A, addressed to the Underwriters and with reproduced copies
of signed counterparts thereof for the Representative.
(d) In the event of the purchase of any Overallotment Shares
from the Selling Stockholders, you shall have received, in addition to the
opinion described in section 8(c), the opinion of Fishbeino Badilloo Wagnero
Xxxxxxx, counsel to the Selling Stockholders, dated the Overallotment Closing
Date, in the form
attached hereto as Appendix B.
(e) You shall have received from Proskauer Rose LLP,
Underwriters' Counsel, an opinion or opinions, dated the Closing Date or on any
later Overallotment Closing Date, as the case may be, in form and substance
reasonably satisfactory to you, with respect to certain legal matters as you may
reasonably require, and the Company shall have furnished to such counsel such
documents as it may have reasonably requested for the purpose of enabling it to
pass upon such matters.
(f) You shall have received on the Closing Date and on any
later Overallotment Closing Date, as the case may be, a letter from the
Accountants addressed to the Company and the Underwriters, dated the Closing
Date or such later Overallotment Closing Date, as the case may be, confirming
that it is an independent certified public accountant with respect to the
Company within the meaning of the Act and the Rules and Regulations thereunder
and based upon the procedures described in its letter delivered to you
concurrently with the execution of this Agreement (herein called the "Original
Letter"), but carried out to a date not more than three days prior to the
Closing Date or any such later Overallotment Closing Date, as the case may be,
(i) confirming that the statements and conclusions set forth in the Original
Letter are accurate as of the Closing Date or such later Overallotment Closing
Date, as the case may be; and
24
(ii) setting forth any revisions and additions to the statements and conclusions
set forth in the Original Letter that are necessary to reflect any changes in
the facts described in the Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company which, in your reasonable judgment, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus. In addition, you shall have received from the Accountants a
letter addressed to the Company and made available to you for the use of the
Underwriters stating that its review of the Company's system of internal
accounting controls, to the extent it deemed necessary in establishing the scope
of its latest examination of the Company's financial statements, did not
disclose any weaknesses in internal controls that it considered to be material
weaknesses. All such letters shall be in a form reasonably satisfactory to the
Representative and its counsel.
(g) You shall have received on the Closing Date and on any
later Overallotment Closing Date, as the case may be, a certificate of the
President and the Chief Financial Officer of the Company, dated the Closing Date
or such later date, to the effect that as of such date (and you shall be
satisfied that as of such date):
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if made on and as of the
Closing Date or any later Overallotment Closing Date, as the case may be; and
the Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied at or prior to the Closing
Date or any later Overallotment Closing Date, as the case may be;
(ii) The Registration Statement has become
effective under the Act and no stop order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of the Prospectus has
been issued, and no proceedings for that purpose have been instituted or are
pending or, to the best of their knowledge, threatened under the Act;
(iii) They have carefully reviewed the
Registration Statement, and the Prospectus; and, when the Registration Statement
became effective and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus and any amendments or
supplements thereto contained all statements and information required to be
included
25
therein or necessary to make the statements therein not misleading; and when the
Registration Statement became effective, and at all times subsequent thereto up
to the delivery of such certificate, none of the Registration Statement, the
Prospectus or any amendment or supplement thereto included any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and, since
the Effective Date, there has occurred no event required to be set forth in an
amended or supplemented Prospectus that has not been so set forth; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement, and the Prospectus,
there has not been (A) any material adverse change in the properties or assets
described or referred to in the Registration Statement and the Prospectus or in
the condition (financial or otherwise), operations, business or prospects of the
Company, (B) any transaction which is material to the Company, except
transactions entered into in the ordinary course of business, (C) any
obligation, direct or contingent, incurred by the Company, which is material to
the Company, except obligations incurred in the ordinary course of business in
accordance with past practices,(D) any change in the capital stock or
outstanding indebtedness of the Company which is material to the Company or (E)
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company, except as specifically described in the Prospectus.
(h) In the event of the purchase of Overallotment Shares from
the Selling Stockholders, you shall have received on the Overallotment Closing
Date relating to such purchase a certificate of each of the Selling
Stockholders, dated such Overallotment Closing Date, to the effect that as of
such date (and you shall be satisfied that as of such date):
(i) The representations and warranties of such
Selling Stockholder in this Agreement are true and correct, as if made on and as
of such Overallotment Closing Date; and such Selling Stockholder has complied
with all of the agreements and satisfied all of the conditions on his part to be
performed or satisfied at or prior to such Overallotment Closing Date; and
(ii) Such Selling Stockholder has carefully
reviewed the Registration Statement and the Prospectus; and, when the
Registration Statement became effective and at all times subsequent thereto up
to the delivery of such certificate, the Registration Statement and the
Prospectus and any amendments or
26
supplements thereto, to the extent that any statements or omissions are made in
the Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement in reliance upon and in conformity with information
furnished by such Selling Stockholder to the Company specifically for use
therein, contained all statements and information required to be included
therein or necessary to make the statements therein not misleading; and when the
Registration Statement became effective, and at all times subsequent thereto up
to the time of delivery of such certificate, none of the Registration Statement,
the Prospectus or any amendment or supplement thereto included any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading;
and, since the Effective Date, there has occurred no event required to be set
forth in an amended or supplemented Prospectus that has not been so set forth.
(i) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request as to the accuracy of
the representations and warranties of the Company herein, as to the performance
by the Company of its obligations hereunder and as to the other conditions
precedent to the obligations of the Underwriters hereunder.
(j) The Firm Shares and the Overallotment Shares, if any,
shall have been approved for listing upon notice of issuance on the PE, BSE and
Nasdaq Small Cap.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to counsel to the Underwriters. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
9. Indemnification and Contribution.
(a) Subject to the provisions of Section 9(g), the Company
agrees to indemnify and hold harmless each Underwriter and each person
(including each partner or officer thereof) who controls any Underwriter within
the meaning of Section 15 of the Act from and against any and all losses,
claims, damages or liabilities, joint or several, to which such indemnified
parties or any of them may become subject under the Act, the Exchange Act, the
common law or otherwise, and the Company agrees to reimburse each such
Underwriter and controlling person for any
27
legal or other out-of-pocket expenses (including, except as otherwise
hereinafter provided, reasonable fees and disbursements of counsel) incurred by
the respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any 462(b)
registration statement) or any post-effective amendment thereto (including any
462(b) registration statement), 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, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the omission
or alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that (1) the indemnity agreements of
the Company contained in this Section 9(a) shall not apply to any such losses,
claims, damages, liabilities or expenses if such statement or omission is
contained in the section of the Prospectus entitled "Underwriting," and (2) the
indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Shares which is the subject thereof (or to the benefit of
any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented was not sent or delivered to such person
(excluding any documents incorporated therein by reference) and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented unless the failure is the result of noncompliance by the Company
with Section 6(a) hereof.
(b) Subject to the provisions of Section 9(g), each of the
Selling Stockholders severally agrees to indemnify and hold harmless the
Company, each of its executive officers, each of its directors, each Underwriter
and each person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Act from and against any and
all losses, claims, damages or liabilities, joint or several, to
28
which such indemnified parties or any of them may become subject under the Act,
the Exchange Act, the common law or otherwise, and each of the Selling
Stockholders severally agrees to reimburse the Company, each of its executive
officers, each of its directors, and each such Underwriter and controlling
person for any legal or other out-of-pocket expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any 462(b) registration statement) or any post-effective amendment
thereto (including any 462(b) registration statement), 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, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that (1) the indemnity agreements of each of the Selling Stockholders severally
contained in this Section 9(b) shall apply to any such losses, claims, damages,
liabilities or expenses only if such statement or omission was made in reliance
upon and in conformity with written information furnished by such Selling
Stockholder to the Company for use therein and (2) the indemnity agreement
contained in this Section 9(b) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Shares which
is the subject thereof (or to the benefit of any person controlling such
Underwriter) if at or prior to the written confirmation of the sale of such
Shares a copy of the Prospectus (or the Prospectus as amended or supplemented
was not sent or delivered to such person (excluding any documents incorporated
therein by reference) and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented unless the failure is the result of
noncompliance by the Company with Section 6(a) hereof.
29
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its executive officers, each of its directors,
each other Underwriter and each person (including each partner or officer
thereof) who controls the Company or any such other Underwriter within the
meaning of Section 15 of the Act, from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Act, the Exchange Act, the common law
or otherwise and to reimburse each of them for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post-effective amendment thereto (including any 462(b)
registration statement) 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 or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that in the cases of clauses (i) and (ii) above,
such statement or omission is contained in the Section of the Prospectus
entitled "Underwriting."
(d) Each party indemnified under the provision of Section
9(a),(b)or(c)agrees that, upon the service of a summons or other initial legal
process upon it in any action or suit instituted against it or upon its receipt
of written notification of the commencement of any investigation or inquiry of,
or proceeding against it, in respect of which indemnity may be sought on account
of any indemnity agreement contained in such paragraphs, it will promptly give
written notice (a "Notice") of such service or notification to the party or
parties from whom indemnification may be sought hereunder. No indemnification
provided for in such Section 9(a), (b) or (c) shall be available to any party
who shall fail so to give the Notice if the party to whom such Notice was not
given was unaware of the action, suit,
30
investigation, inquiry or proceeding to which the Notice would have related and
was prejudiced by the failure to give the Notice, but the omission so to notify
such indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the indemnified party for contribution or otherwise than on account
of such indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding against,
or investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (the "Notice of Defense") to the indemnified
party, to assume (alone or in conjunction with any other indemnifying party or
parties) the entire defense of such action, suit, investigation, inquiry or
proceeding, in which event such defense shall be conducted, at the expense of
the indemnifying party or parties, by counsel chosen by such indemnifying party
or parties and reasonably satisfactory to the indemnified party or parties;
provided, however, that (i) if the indemnified party or parties reasonably
determine that there may be a conflict between the positions of the indemnifying
party or parties and of the indemnified party or parties in conducting the
defense of such action, suit, investigation, inquiry or proceeding or that there
may be legal defenses available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or parties,
then counsel for the indemnified party or parties shall be entitled to conduct
the defense to the extent reasonably determined by such counsel to be necessary
to protect the interests of the indemnified party or parties and (ii) in any
event, the indemnified party or parties shall be entitled, at its or their own
expense to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. It is understood that the indemnifying parties
shall not, in respect of the legal defenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all of the Underwriters and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act,
and (b) the fees and expenses of more than one separate firm (in addition to any
local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act. If, within a reasonable time after receipt
of the Notice, an indemnifying party gives a Notice of Defense and the counsel
chosen by the indemnifying party or parties is reasonably satisfactory to the
31
indemnified party or parties, the indemnifying party or parties will not be
liable under Section 9(a), (b) or (c) for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding, except that
(A) the indemnifying party or parties shall bear the legal and other expenses
incurred in connection with the conduct of the defense as referred to in clause
(i) of the proviso to the preceding sentence and (B) the indemnifying party or
parties shall bear such other expenses as it or they have authorized to be
incurred by the indemnified party or parties. If, within a reasonable time after
receipt of the Notice, no Notice of Defense has been given, the indemnifying
party or parties shall be responsible for any legal or other expenses incurred
by the indemnified party or parties in connection with the defense of the
action, suit, investigation, inquiry or proceeding. The indemnifying party or
parties shall not be liable for any settlement of any proceeding effected
without its or their written consent, provided such consent has not been
unreasonably withheld.
(e) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under Section
9(a), (b) or (c), then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in Section 9(a), (b) or (c),(i) in such proportion as is appropriate
to reflect the relative benefits received by each indemnifying party from the
offering of the Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of each indemnifying party in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, or
actions in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares received
by the Company and the total underwriting discount received by the Underwriters,
as set forth in the table on the cover page of the Prospectus, bear to the
aggregate public offering price of the Shares. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by each indemnifying party and
the parties' relative intent, knowledge,
32
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to Section 9(e) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this Section
9(e). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities or actions in respect thereof, referred to in the first
sentence of this Section 9(e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparation to defend or defense against any action or claim
which is the subject of this Section 9(e). Notwithstanding the provisions of
this Section 9(e), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Shares purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 9(e) to contribute are several in
proportion to their respective underwriting obligations and not joint.
Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in Section 9(d)).
(f) The Company will not, without the prior written consent of
each Underwriter, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not such Underwriter
or any person who controls such Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act is a party to such claim, action, suit
or proceeding) unless such settlement, compromise or consent includes an
unconditional release of such Underwriter and each such controlling person from
33
all liability arising out of such claim, action, suit or proceeding.
(g) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof, including without limitation the
provisions of this Section 9 and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 9 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
10. Termination. This Agreement may be terminated by you at any time on
or prior to the Closing Date or on or prior to any later Overallotment Closing
Date, as the case may be, (i) if the Company shall have failed, refused or been
unable, at or prior to the Closing Date, or on or prior to any later
Overallotment Closing Date, as the case may be, to perform any agreement on its
part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not fulfilled,
or (ii) if trading on the New York Stock Exchange, PE, BSE or Nasdaq Small Cap
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been required
on the New York Stock Exchange, PE, BSE or Nasdaq Small Cap, by such trading
exchanges or by order of the Commission or any other governmental authority
having jurisdiction, or if a banking moratorium shall have been declared by
federal or New York authorities, or (iii) if the Company shall have sustained a
loss by strike, fire, flood, accident or other calamity of such character as to
have a Material Adverse Effect regardless of whether or not such loss shall have
been insured, or (iv) if there shall have been a material adverse change in the
general political or economic conditions or financial markets in the United
States as in the judgment of the Representative makes it inadvisable or
impracticable to proceed with the offering, sale and delivery of the Shares, or
(v) if there shall have occurred an outbreak or escalation of hostilities
between the United States and any foreign power or of any other insurrection or
armed conflict involving the United States or other national or international
calamity, hostilities or crisis or the declaration by the United States of a
national emergency which, in the judgment of the Representative, adversely
affects the marketability of the Shares, or (vi) if since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, there shall have occurred any
34
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company or the business, affairs, management, or prospects of the Company,
whether or not arising in the ordinary course of business, or (vii) if any
foreign, federal or state statute, regulation, rule or order of any court or
other governmental authority shall have been enacted, published, decreed or
otherwise promulgated which in the judgment of the Representative materially and
adversely affects or will materially and adversely affect the business or
operations of the Company, or trading in the Common Stock shall have been
suspended, or (viii) there shall have occurred a material adverse decline in the
value of securities generally on the New York Stock Exchange, PE, BSE or Small
Cap which, in the judgment of the Representative, has a material adverse effect
on the marketability of the Shares or (ix) action shall be taken by any foreign,
federal, state or local government or agency in respect of its monetary or
fiscal affairs which, in the judgment of the Representative, has a material
adverse effect on the securities markets in the United States and on the
marketability of the Shares. If this Agreement shall be terminated in accordance
with this Section 10, there shall be no liability of the Company to the
Underwriters and no liability of the Underwriters to the Company; provided,
however, that in the event of any such termination the Company agrees to
indemnify and hold harmless the Underwriters from all costs or expenses incident
to the performance of the obligations of the Company under this Agreement,
including all costs and expenses referred to in Section 7.
If you elect to terminate this Agreement as provided in this Section
10, the Company shall be notified promptly by you by telephone, telecopy or
telegram, confirmed by letter.
11. Reimbursement of Certain Expenses.
(a) Subject to Section 9 of this Agreement, the Company hereby
agrees to reimburse on a monthly basis the Underwriters for all reasonable legal
and other expenses incurred in connection with investigating or defending any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in Section 9(a), notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 11 and the possibility that such payments might later be held to be
improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving
35
such payments shall promptly refund them and (ii) such persons shall provide to
the Company, upon request, reasonable assurances of their ability to effect any
refund, when and if due.
(b) Subject to Section 9 of this Agreement, the Underwriters
hereby agree to reimburse on a monthly basis the Company for all reasonable
legal and other expenses incurred in connection with investigating or defending
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in Section 9(b) of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the Company shall promptly refund it and (ii)
the Company shall provide to the Underwriter, upon request, reasonable
assurances of its ability to effect any refund, when and if due.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 9 hereof, the several parties (in addition
to the Company and the several Underwriters) indemnified under the provisions of
said Section 9, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Shares from any of the several Underwriters.
(a) Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to Prime Charter Ltd., 000 Xxxx Xxx. - 00xx
Xxxxx Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xx. Xxxxxx X. Xxxxxx; and if to the
Company, shall be mailed, telegraphed or delivered to it at its office,
Educational Video Conferencing, Inc., 00 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxx Xxxx, 00000, Attention: Xx. Xxxx X. Xxxxxxxx.
(b) Jurisdiction; Venue; Service of Process. Each of you and the
Company (a) agrees that any legal suit, action or proceeding arising out of or
relating to this letter shall be instituted exclusively in New York State
Supreme Court, County of
36
New York or in the United States District Court for the Southern District of New
York, (b) waives any objection to the venue of any such suit, action or
proceeding, and (c) irrevocably consents to the jurisdiction of the New York
State Supreme Court, County of New York, and the United States District Court
for the Southern District of New York, in any such suit, action or proceeding.
Each of you and the Company further agrees to accept and acknowledge service of
any and all process which may be served in any such suit, action or proceeding
in the New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York. Each of you and the
Company further agrees that service of process upon it mailed by certified mail
to its address shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter or controlling
person thereof, or by or on behalf of the Company or its respective directors of
officers and (ii) delivery of and payment for the Shares under this Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO RULES GOVERNING THE
CONFLICT OF LAWS.
Please sign and return to the Company the enclosed duplicate of this
letter, whereupon this letter will become a binding agreement among the Company
and the several Underwriters in accordance with its terms.
Very truly yours,
EDUCATIONAL VIDEO CONFERENCING, INC.
By
---------------------------------
Xxxx X. Xxxxxxxx
Chairman of the Board
37
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PRIME CHARTER LTD.
By
--------------------------------------
Xxxxxx X. Xxxxxx
Managing Director
Acting on behalf of the several Underwriters, including themselves, named on
Schedule A hereto.
38
SCHEDULE A
UNDERWRITERS
Number of
Shares
to be
Underwriters Purchased
------------ ---------
Prime Charter Ltd.................................
Total [ ]
========
SCHEDULE B
Overallotment
Name of Selling Stockholder Shares
----------------------------- -------------
SCHEDULE C
Lock-up Agreements
------------------
APPENDIX A
----------
(i) The Registration Statement has become effective under the
Act and, to such counsel's knowledge after due inquiry, no stop order suspending
the effectiveness of the Registration Statement or suspending or preventing the
use of the Prospectus has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act; any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) of the
Rules and Regulations has been made in the manner and within the time period
required by such Rule 424(b).
(ii) The Registration Statement, all Preliminary Prospectuses,
the Prospectus, and each amendment or supplement thereto (other than the
financial statements, financial data and supporting schedules included therein,
as to which such counsel need express no opinion), comply as to form in all
material respects with the requirements of the Act and the applicable Rules and
Regulations and to such counsel's knowledge after due inquiry, there are no
agreements, contracts, leases or documents of a character required to be
described in, or filed as an exhibit to, the Registration Statement which are
not described or filed as required by the Act and the applicable Rules and
Regulations.
(iii) The Company is duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware.
(iv) The Company has full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement.
(v) To such counsel's knowledge after due inquiry, the Company
does not own or control, directly or indirectly, any shares of stock or any
other equity interest in any firm, partnership, joint venture, association or
other entity.
(vi) The Company has full corporate power and authority to
enter into the Underwriting Agreement and the Representative's Warrant Agreement
and to issue, sell and deliver the Firm Shares and the Overallotment Shares in
accordance with the terms of the Underwriting Agreement and the Representative's
A-1
Warrants in accordance with the terms of the Representative's Warrant Agreement.
(vii) The Underwriting Agreement and the Representative's
Warrant Agreement have been duly authorized by all necessary corporate action on
the part of the Company, have been duly executed and delivered by the Company
and the Representative's Warrant Agreement is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws of general applicability relating to or affecting
creditors' rights or by general principles of equity, whether considered at law
or in equity, and except as rights to indemnity and contribution thereunder may
be limited by federal or state securities laws or the public policies underlying
such laws.
(viii) The execution, delivery and performance of the
Underwriting Agreement and the Representative's Warrant Agreement by the Company
and the consummation of the transactions therein contemplated do not and will
not (a) conflict with or result in a violation or breach of any of the terms or
provisions of, or constitute a default under (i) any material indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, or any lease, contract or other agreement or
instrument known to such counsel after due inquiry to which the Company is a
party or by which its respective properties are bound, (ii) the Certificate of
Incorporation or Bylaws (or other organizational documents) of the Company,
(iii) any statute, rule or regulation applicable to the Company or (iv) any
applicable license, authorization, approval, permit, judgment, franchise, order,
writ, injunction or decree of any court or governmental agency or body known to
such counsel after due inquiry and to which the Company is subject.
(ix) The Company is not required to obtain or make any
consent, approval, authorization, order, designation or declaration of or filing
by or with any court or regulatory, administrative or other governmental agency
or body in connection with the execution and delivery of the Underwriting
Agreement or the Representative's Warrant Agreement by the Company and the
consummation of the transactions therein contemplated except such as have been
obtained under the Act and the Rules and Regulations or such as may be required
under state securities laws, Blue Sky laws or by the rules and regulations of
the PE, BSE or Nasdaq Small Cap in connection with the purchase and distribution
of the Shares by the Underwriters.
A-2
(x) To such counsel's knowledge after due inquiry, there are
no pending or threatened actions, suits, claims, proceedings or investigations
before any court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign against the Company or any of
their respective officers or any of their respective properties, assets or
rights that, could reasonably be expected to have a Material Adverse Effect or
would limit, revoke, cancel, suspend, or cause not to be renewed any existing
license, certificate, registration, approval or permit that is material to the
conduct of the business of the Company as presently conducted, or that is of a
character otherwise required to be disclosed in the Registration Statement or
the Prospectus under the Act or the applicable Rules and Regulations.
(xi) The authorized capital stock of the Company consists of
__________ shares of Common Stock, of which there are outstanding __________
shares and 1,000,000 shares of Preferred Stock. All the issued and outstanding
shares of Common Stock have been duly authorized and validly issued, are fully
paid and non-assessable, have been issued in compliance with the registration
requirements of applicable federal and state securities laws and were not issued
in violation of any preemptive right, resale right, registration right, right of
first refusal or other similar right known to such counsel.
(xii) The issuance and sale of the Shares and the
Representative's Warrants have been duly authorized by the Company. Upon
issuance and delivery against payment therefor in accordance with the terms of
the Underwriting Agreement, the Shares will be validly issued, fully paid and
non-assessable, and, to such counsel's knowledge after due inquiry, the
stockholders of the Company do not have any preemptive right, resale right,
registration right, right of first refusal or other similar right, in connection
with the purchase or sale of any of the Shares. Shares of Common Stock have been
duly and validly authorized and reserved for issuance upon exercise of the
Representative's Warrants and, when issued and delivered by the Company against
payment therefor in the manner set forth in the Representative's Warrant
Agreement, the Warrant Shares will be duly and validly issued, fully paid,
non-assessable and free of preemptive rights. To such counsel's knowledge after
due inquiry, there are no outstanding warrants, options or other rights granted
by the Company to purchase shares of its Common Stock or other securities, other
than as described in the Prospectus.
A-3
(xiii) The terms and provisions of the Common Stock conform in
all material respects to the description thereof contained in the Registration
Statement and the Prospectus, and the information in the Prospectus under the
caption "Description of Capital Stock," to the extent that it constitutes
matters of law or legal conclusions, has been reviewed by such counsel and is
correct, and the form of certificate evidencing the Common Stock complies with
the applicable provisions of Delaware law.
(xiv) The statements in the Registration Statement and the
Prospectus summarizing statutes, rules and regulations, including the Delaware
General Corporation Law and the description of the Certificate of Incorporation
and Bylaws of the Company are accurate and fairly and correctly present the
information required to be presented by the Act or the Rules and Regulations in
all material respects; and there are no statutes, rules or regulations required
to be described in the Registration Statement or the Prospectus that are not
described or referred to therein as required.
(xv) The statements under the captions "Risk Factors
Outstanding Shares Eligible for Future Sale," "Management Employment and
Agreements," "Management - 1998 Incentive Plan," and "Certain Transactions" in
the Prospectus, insofar as such statements constitute a summary of documents
referred to therein or matters of law, are accurate summaries and fairly and
correctly present, in all material respects, the information called for with
respect to such documents and matters.
(xvi) The information required to be set forth in the
Registration Statement in answer to Item 509 of Regulation S-B insofar as it
relates to such counsel is accurately and adequately set forth therein in all
material respects or no response is required with respect to such Item.
(xvii) The Company is not in violation of its Certificate of
Incorporation or Bylaws, and to such counsel's knowledge after due inquiry, the
Company is not in breach of or default with respect to any provision of any
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument known to such counsel after due inquiry, by which it or any
of its properties may be bound or affected.
(xviii) To such counsel's knowledge after due inquiry, except
as set forth in the Registration Statement and Prospectus, no holders of shares
of Common Stock or other securities of the Company have registration rights with
respect to securities of the Company.
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(xix) No transfer taxes are required to be paid in connection
with the sale or delivery to the Underwriters of the Firm Shares or the
Overallotment Shares.
(xx) The Company is not and will not, upon consummation of the
transactions contemplated by the Underwriting Agreement, be an "investment
company," or a "promoter" or "principal underwriter" for, a "registered
investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
(xxi) The Shares have been approved for listing on the PE, BSE
and Small Cap, subject to official notice of issuance.
(xxii) Counsel for the Company have participated in
conferences with officials and other representatives of the Company, the
Representative, counsel for the Representative and the independent public
accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed,
and although such counsel have not verified the accuracy or completeness of the
statements contained in the Registration Statement or the Prospectus, nothing
has come to the attention of such counsel which caused them to believe that, at
the time the Registration Statement became effective the Registration Statement
(except as to financial statements, financial and statistical data and
supporting schedules contained therein, 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, or at the Closing Date or any later Overallotment
Closing Date, as the case may be, the Registration Statement or the Prospectus
(except as aforesaid) 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, in light of the circumstances under, which they
were made, not misleading.
Counsel rendering the foregoing opinion may rely as to questions of
fact upon representations or certificates of officers of the Company and of
governmental officials, as the case may be, in which case its opinion is to
state that it is so doing and that it has no actual knowledge of any material
misstatement or inaccuracy in such opinions, representations or certificates,
and that such counsel believes that it and the Underwriters are justified in
relying on such opinions, representation or certificates. Copies of any opinion,
A-5
representation or certificate so relied upon shall be delivered to the
Representative, and to the Representative's counsel.
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Appendix B
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(i) The Selling Stockholders have full power and authority to
enter into the Underwriting Agreement and the Escrow Agreement and to sell,
transfer and deliver the Overallotment Shares to be sold by them in the manner
provided in the Underwriting Agreement. The Underwriting Agreement and the
Escrow Agreement have been duly executed and delivered by the Selling
Stockholders.
(ii) Upon delivery of the Overallotment Shares sold by the
Selling Stockholders and the receipt of payment therefor pursuant to the
Underwriting Agreement, good and marketable title to such Overallotment Shares,
free of any adverse claim (as such term is defined in Section 8-102(a)(1) of the
New York Uniform Commercial Code) will pass to the Underwriters, assuming for
this purpose that the Underwriters have purchased such Overallotment Shares
without notice of any such adverse claim.
(iii) The execution, delivery or performance of the
Underwriting Agreement or the Escrow Agreement by any of the Selling
Stockholders, the sale of the Overallotment Shares being sold to the
Underwriters by any of the Selling Stockholders pursuant to the Underwriting
Agreement, the compliance by any of the Selling Stockholders with the other
provisions of the Underwriting Agreement and the Escrow Agreement and the
consummation of the other transactions contemplated in the Underwriting
Agreement and the Escrow Agreement do not (A) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained, such as may be required under Blue
Sky laws or (B) conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under any material indenture,
mortgage, deed of trust, lease or other agreement or instrument, known to such
counsel after due inquiry to which any such Selling Stockholder is a party or by
which any of the Selling Stockholders is bound, or any statute rule or
regulation or any judgment, decree or order, of any court or other governmental
authority or any arbitrator applicable to any of the Selling Stockholders.
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