Exhibit 1.1
____________ Shares(1)
INTERCHANGE CORPORATION
Common Stock
UNDERWRITING AGREEMENT
__________________, 2004
Xxxx Capital Partners, LLC
Xxxxxxxx Curhan Ford & Co.
Maxim Group, LLC
As Representative of the Several Underwriters Named in Schedule I hereto
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
Interchange Corporation, a Delaware corporation ("COMPANY"), proposes to
issue and sell to the several Underwriters (as defined below) shares of its
common stock (the "COMMON STOCK"). It is understood that, subject to the
conditions hereinafter stated, ____________ shares of Common Stock (the "FIRM
SECURITIES") will be sold to the several underwriters named in Schedule I hereto
(the "UNDERWRITERS") in connection with a public offering of the Securities (as
defined below). In addition, as set forth below, the Company proposes to issue
and sell to the Underwriters, at the option of the Underwriters, an aggregate of
not more than _____________ additional shares of Common Stock (the "OPTIONAL
SECURITIES"). The Firm Securities and the Optional Securities are hereinafter
called the "SECURITIES". Xxxx Capital Partners, LLC, Xxxxxxxx Curhan Ford & Co.
and Maxim Group, LLC shall act as representatives (the "REPRESENTATIVES") of the
several Underwriters. The Company understands that the Underwriters propose to
make a public offering of the Securities (the "OFFERING") as soon as the
Underwriters deem advisable after this Underwriting Agreement (the "AGREEMENT")
has been executed and delivered. As used in this Agreement, the terms "YOU" or
"YOUR" refer to the Representatives.
In consideration of the foregoing and the promises and covenants contained
herein, the sufficiency of which is hereby acknowledged, the Company and the
Underwriters agree as follows:.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to, and agrees with, each Underwriter that:
(A) A registration statement on Form SB-2 (File No. 333-116965) with
respect to the Securities has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and the rules and regulations of the Securities and Exchange Commission
(the "COMMISSION") thereunder and has been filed with the Commission. Copies of
such registration statement and any amendments, and all forms of the related
prospectuses contained therein, have been delivered to you. Such registration
statement, including the prospectus, Part II, any documents incorporated by
reference therein and all financial schedules and exhibits thereto, as amended
at the time when it shall become effective, is herein referred to as the
"REGISTRATION STATEMENT", and the prospectus included as part of the
Registration Statement on file with the Commission when it shall become
effective
----------
(1) Plus an option to purchase up to ___________ additional shares to cover
over-allotments.
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or, if the procedure in Rule 430A of the Rules and Regulations (as defined
below) is followed, the prospectus that discloses all the information that was
omitted from the prospectus on the effective date pursuant to such Rule 430A,
and in either case, together with any changes contained in any prospectus filed
with the Commission by the Company with your consent after the effective date of
the Registration Statement, is herein referred to as the "FINAL PROSPECTUS". If
the procedure in Rule 430A is followed, the prospectus included as part of the
Registration Statement on the date when the Registration Statement became
effective is referred to herein as the "EFFECTIVE PROSPECTUS". Any prospectus
included in the Registration Statement of the Company and in any amendments
thereto prior to the effective date of the Registration Statement is referred to
herein as a "PRE-EFFECTIVE PROSPECTUS". If the Company has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Act (including the exhibits thereto, the "RULE 462
REGISTRATION STATEMENT"), then any reference herein to the Registration
Statement shall also be deemed to include such Rule 462 Registration Statement.
For purposes of this Agreement, the term "RULES AND REGULATIONS" means the rules
and regulations adopted by the Commission under either the Securities Act or the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as applicable.
(B) No order preventing or suspending the use of any Pre-Effective
Prospectus has been issued by the Commission and each Pre-Effective Prospectus,
at the time of filing thereof, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; except that the foregoing shall not apply to
statements in or omissions from any Pre-Effective Prospectus made in reliance
upon, and in conformity with, written information furnished to the Company by
you, or by any Underwriter through you, specifically for use in the preparation
thereof.
(C) When the Registration Statement becomes effective and as of each
Closing Date (as defined in Section 3), the Registration Statement, any
post-effective amendment thereto, the Effective Prospectus and the Final
Prospectus, as amended or supplemented, shall conform in all material respects
to the requirements of the Securities Act and the Rules and Regulations. At the
time the Registration Statement becomes effective, the Registration Statement
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Effective Prospectus, at the time the Registration
Statement becomes effective, and the Final Prospectus, at the time the
Registration Statement becomes effective and as of each Closing Date (unless the
term "Final Prospectus" refers to a prospectus which has been provided to the
Underwriters for use in connection with the Offering which differs from the
prospectus on file at the Commission at the time the Registration Statement
becomes effective, in which case at the time it is first provided to the
Underwriters for such use), will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The representations, warranties and agreements
in this paragraph shall not apply to statements in, or omissions from, any such
document in reliance upon, and in conformity with, written information furnished
to the Company by you, or by any Underwriter through you, specifically for use
in the preparation thereof. There is no contract or document required to be
described in the Registration Statement or Effective Prospectus or Final
Prospectus or to be filed as an exhibit to the Registration Statement which is
not described or filed as required.
(D) Xxxxxxx & White LLP, whose report appears in the Effective
Prospectus and the Final Prospectus, are independent certified public
accountants as required by the Securities Act and the Rules and Regulations. The
financial statements and schedules (including the related notes) included in any
Pre-Effective Prospectus or the Effective Prospectus or Final Prospectus (each,
a "PROSPECTUS" and collectively, the "PROSPECTUSES") or the Registration
Statement, present fairly the financial condition, the results of the operations
and changes in financial condition of the entities purported to be shown thereby
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at the dates or for the periods indicated and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated. All adjustments necessary for a fair
presentation of results for such periods have been made. The selected financial,
operating and statistical data set forth in the Effective Prospectus and Final
Prospectus under the captions "Prospectus Summary", "Selected Consolidated
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" fairly present, when read in conjunction with the
Company's financial statements and the related notes and schedules and on the
basis stated in the Registration Statement, the information set forth therein.
The assumptions used in preparing the pro forma financial statements included in
each Registration Statement and the Prospectus provide a reasonable basis for
presenting the significant effects directly attributable to the transactions or
events described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(E) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
organization, with full power and authority (corporate and other) to own or
lease its properties and conduct its business as described in the Effective
Prospectus and Final Prospectus, and is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the
character of the business conducted by it or the location of the properties
owned or leased by it makes such qualification necessary; the Company is in
possession of and operating in compliance with all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and orders
required for the conduct of its business, all of which are valid and in full
force and effect (except where any failure to do so would not have a material
adverse effect on the condition (financial or otherwise), business, prospects,
properties or results of operations of the Company ("MATERIAL ADVERSE EFFECT"));
and the Company has not received any notice of proceedings relating to the
revocation or modification of any such franchise, grant, authorization, license,
permit, easement, consent, certificate or order which, individually or in the
aggregate, if the subject of an unfavorable decision, would have, individually
or in the aggregate, a Material Adverse Effect.
(F) The capitalization of the Company (as of the dates set forth
therein) is as set forth under the caption "Capitalization" in the Effective
Prospectus and Final Prospectus, and the Common Stock conforms to the
description thereof contained under the caption "Description of Common Stock" in
the Effective Prospectus and Final Prospectus; the outstanding shares of Common
Stock have been, and the Securities, upon issuance and delivery and payment
therefor in the manner herein described, will be, duly authorized, validly
issued, fully paid and nonassessable. There are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the voting or
transfer of, any shares of Common Stock pursuant to the Company's certificate of
incorporation, by-laws or other governing documents or any agreement or other
instrument to which the Company is a party or by which it may be bound. Neither
the filing of the Registration Statement nor the offering or sale of the
Securities as contemplated by this Agreement and the Registration Statement
gives rise to any rights, other than those which have been waived or satisfied,
for or relating to the registration of any shares of Common Stock. The Company
has no Subsidiaries (as defined in Section 13 hereof) and does not own, directly
or indirectly, any shares of capital stock and does not have any other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust, limited liability company, joint venture or other entity.
(G) Subsequent to the respective dates as of which information is
given in the Effective Prospectus and the Final Prospectus, and except as
described or contemplated in the Effective Prospectus and Final Prospectus: (i)
the Company has not incurred any liabilities or obligations, direct or
contingent, nor entered into any transactions not in the ordinary course of
business, which in either case are material to the Company; (ii) there has not
been any material adverse change in the condition (financial or otherwise), or
any adverse development which materially affects, the business, prospects,
properties, condition
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(financial or otherwise) or results of operations of the Company; and (iii)
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
The Company is not, or with the giving of notice or lapse of time or both
would not be, in violation of or in default under, nor will the execution or
delivery hereof or consummation of the transactions contemplated hereby result
in a violation of, or constitute a default under, the certificate of
incorporation, bylaws or other governing documents of the Company, or any
agreement, contract, mortgage, deed of trust, loan agreement, note, lease,
indenture or other instrument, to which the Company is a party or by which it is
bound, or to which any of its properties are subject, nor will the performance
by the Company of its obligations hereunder violate any law, rule,
administrative regulation or decree of any court, or any governmental agency or
body having jurisdiction over the Company or any of its properties, or result in
the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company. Except for permits and similar authorizations
required under the Securities Act and the securities or "Blue Sky" laws of
certain jurisdictions and for such permits and authorizations which have been
obtained, no consent, approval, authorization or order of any court,
governmental agency or body or financial institution is required in connection
with the consummation of the transactions contemplated by this Agreement.
(H) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general equitable principles, and except to the extent that
the indemnification and contribution provisions of Section 6 hereof may be
limited by federal or state securities laws and public policy considerations in
respect thereof.
(I) The Company has good and marketable title to all real and
personal property owned by it, in each case clear of all liens, encumbrances and
defects except such as are described or referred to in the Effective Prospectus
and Final Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made or proposed to be made of such
property by the Company; and any real property and buildings held under lease by
the Company is held by it under valid, existing and enforceable leases with such
exceptions as are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company.
(J) Except as disclosed in the Effective Prospectus and Final
Prospectus, there is no pending action, suit or proceeding(governmental or
otherwise) against or affecting the Company or any of its properties that, if
determined adversely to the Company would individually or in the aggregate have
a Material Adverse Effect, or would materially and adversely affect the ability
of the Company to perform its obligations under this Agreement, or which are
otherwise material in the context of the sale of the Securities; and no such
actions, suits or proceedings have been or are threatened or, to the Company's
knowledge, contemplated
(K) The Company is not in violation of any law, ordinance,
governmental rule or regulation or court decree to which it may be subject which
violation might have a Material Adverse Effect.
(L) The Company has not taken and may not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to
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constitute, the stabilization or manipulation of the price of the shares of
Common Stock to facilitate the sale or resale of the Securities.
(M) The Company has filed all necessary federal, state and foreign
income and franchise tax returns, and all such tax returns are complete and
correct in all material respects, and, except as described in the Prospectuses,
the Company has not failed to pay any taxes which were payable pursuant to said
returns or any assessments with respect thereto. The Company has no knowledge of
any tax deficiency which has been or is likely to be threatened or asserted
against the Company and which are not described in the Prospectuses.
(N) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(O) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
directors' and officers' insurance, insurance covering real and personal
property owned or leased by the Company against theft, damage, destruction, acts
of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect. The Company has not been refused any
insurance coverage sought or applied for, and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not materially
adversely affect the business, business prospects, properties, condition
(financial or otherwise) or results of operations of the Company.
(P) Neither the Company nor, to the best of the Company's knowledge,
any of its directors, officers, employees or agents has at any time during the
last five years (i) made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any foreign, federal or state governmental officer or
official or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
(Q) The Company is not and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the
Prospectuses, will not be an "investment company" as defined in the Investment
Company Act of 1940, as amended.
(R) The conditions for use of Form SB-2, set forth in the General
Instructions thereto, have been satisfied.
(S) Except as disclosed in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person that would give
rise to a valid claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this offering.
(T) Except as disclosed in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
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securities registered pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement filed by the
Company under the Act.
(U) The Securities have been approved for listing on The Nasdaq
SmallCap Market subject to notice of issuance.
(V) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in connection
with the issuance and sale of the Securities by the Company, except such as have
been obtained and made under the Act and such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or under state securities
laws or the laws of any foreign jurisdiction.
(W) The execution, delivery and performance of this Agreement, and
the issuance and sale of the Securities will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, (i) any
statute, any rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company, except in the
case of this clause (i) for such breaches, violations or defaults which would
not, individually or in the aggregate, have a Material Adverse Effect or (ii)
any agreement or instrument to which the Company is a party or by which the
Company is bound, except in the case of this clause (ii) for such breaches,
violations or defaults which would not, individually or in the aggregate, have a
Material Adverse Effect, or (iii) the charter or by-laws of the Company, and the
Company has full power and authority to authorize, issue and sell the Securities
as contemplated by this Agreement.
(X) The Company possesses adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by them and have not received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company, would
individually or in the aggregate have a Material Adverse Effect.
(Y) The Company is subject to the reporting requirements of either
Section 13 or Section 15(d) of the Exchange Act and files reports with the
Commission on the Electronic Data Gathering, Analysis, and Retrieval (XXXXX)
system.
(Z) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; and (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability.
(AA) Each of the executive officers and directors of the Company and
each stockholder who owns 1% or more of the outstanding Common Stock of the
Company (or securities convertible into or exchangeable or exercisable for 1% or
more of the outstanding Common Stock of the Company) have executed a lockup
letter, in form and substance satisfactory to counsel for the Underwriters
("LOCKUP LETTER").
(BB) No labor dispute with the employees of the Company exists or,
to the knowledge of the Company, is imminent that might have a Material Adverse
Effect.
(CC) The Company owns, possesses, can acquire on reasonable terms,
or otherwise has rights in all Unites States and foreign patents, trademarks,
service marks, tradenames, copyrights,
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trade secrets and other proprietary rights and intellectual property necessary
for the conduct of its respective business as currently carried on and as
proposed to be carried on as described in the Registration Statement and the
Prospectuses (collectively and together with any applications or registrations
for the foregoing, the "INTELLECTUAL Property"). Except as specifically
described in the Registration Statement or the Prospectuses, (i) no third
parties have obtained rights to any such Intellectual Property from the Company,
other than licenses granted in the ordinary course and those that would not have
a Material Adverse Effect; (ii) to the Company's knowledge, there is no
infringement or misappropriation by third parties of any such Intellectual
Property; (iii) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others challenging the Company's rights in
or to any such Intellectual Property, and the Company is unaware of any facts
which would form a basis for any such claim; (iv) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others
challenging the validity, enforceability, or scope of any such Intellectual
Property, and the Company is unaware of any facts which would form a basis for
any such claim; (v) there is no prior, pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company or any
of its products, product candidates, or services infringes, misappropriates, or
otherwise violates, or would infringe upon, misappropriate or otherwise violate
the development or commercialization of its products, product candidates, or
services described in the Prospectus, any patent, trademark, copyright, trade
secret or other proprietary right of others, and the Company is unaware of any
facts which would form a basis for any such claim; (vi) to the Company's
knowledge there is no patent or patent application that contains claims that
cover or may cover any Intellectual Property described in the Prospectus as
being owned by or licensed to the Company or that is necessary for the conduct
of its business as currently or contemplated to be conducted or that interferes
with the issued or pending claims of any such Intellectual Property; (vii) there
is no prior art or public or commercial activity of which the Company is aware
that may render any patent held by the Company invalid or any patent application
held by the Company unpatentable which has not been disclosed to the U.S. Patent
and Trademark Office; and (viii) the Company has not committed any act or
omitted to undertake any act the effect of such commission or omission would
render the Intellectual Property invalid or unenforceable in whole or in part.
None of the technology employed by the Company has been obtained or, to the
Company's knowledge, is being used by the Company in violation of the rights of
any person or third party.
(DD) Except as disclosed in the Prospectuses, the Company is not in
violation of any statute, any rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "ENVIRONMENTAL LAWS"), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any environmental
laws, which violation, contamination, liability or claim would individually or
in the aggregate have a Material Adverse Effect; and the Company is not aware of
any pending investigation which might lead to such a claim.
(EE) Except as described in the Registration Statement or the
Prospectuses, the Company has not sent or received any notice indicating the
termination of or intention to terminate any of the contracts or agreements
referred to or described in the Registration Statement or the Prospectuses, or
filed as an exhibit to the Registration Statement, and no such termination has
been threatened by the Company or any other party to any such contract or
agreement.
(FF) The information contained in the Registration Statement and the
Prospectuses regarding the Company's expectations, plans and intentions, and any
other information that constitutes "forward-looking" information within the
meaning of the Securities Act and the Exchange Act were made
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by the Company on a reasonable basis and reflect the Company's good faith belief
and/or estimate of the matters described therein.
(GG) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater security holders, except as set forth in the
Registration Statement.
(HH) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company agrees
to comply with such Section if prior to the completion of the distribution of
the Securities it commences doing such business.
(II) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities contemplated hereby shall be deemed a
representation and warranty by the Company to each Underwriter and shall be
deemed to be a part of this Section 1 and incorporated herein by this reference.
2. PURCHASE OF THE SECURITIES BY THE UNDERWRITERS.
(A) Subject to the terms and conditions and upon the basis of the
representations, warranties and agreements herein set forth, the Company agrees
to issue and sell to the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase at a price of $________ per share, the
number of Firm Securities set forth opposite such Underwriter's name in Schedule
I hereto, subject to adjustment in accordance with Section 7 hereof. The
Underwriters agree to offer the Firm Securities to the public as set forth in
the Final Prospectus.
(B) The Company hereby grants to the Underwriters an option to
purchase from the Company, solely for the purpose of covering over-allotments in
connection with the distribution and sale of the Firm Securities, all or any
portion of the Optional Securities for a period of thirty (30) days from the
date hereof at the purchase price per Share set forth above. Optional Securities
shall be purchased from the Company, severally and not jointly, for the accounts
of the several Underwriters in proportion to the number of Firm Securities set
forth opposite each such Underwriter's name in Schedule I hereto, except that
the respective purchase obligations of each Underwriter shall be adjusted by you
so that no Underwriter shall be obligated to purchase fractional Optional
Securities. No Optional Securities shall be sold and delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered.
3. DELIVERY OF AND PAYMENT FOR SECURITIES. Delivery of certificates for
the Firm Securities (and certificates for the Optional Securities, if the option
to purchase the same is exercised on or before the third Business Day (as
defined in Section 13 hereof) prior to the First Closing Date (as defined
below)) to be purchased by the Underwriters from the Company and payments
therefor shall be made at the offices of Xxxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx
Xxxxx, 00xx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx (or such other place as mutually may
be agreed upon), on the third full Business Day following the date hereof or, if
the pricing of the Securities occurs after 4:30 p.m., New York City time, on the
fourth full Business Day thereafter, or at such other date as shall be
determined by you and the Company (the "FIRST CLOSING DATE").
The option to purchase Optional Securities granted in Section 2 hereof may
be exercised during the term thereof by written notice to the Company from you.
Such notice shall set forth the aggregate number of Optional Securities as to
which the option is being exercised and the time and date, not earlier than
either the First Closing Date or the second Business Day after the date on which
the option shall
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have been exercised nor later than the fifth Business Day after the date of such
exercise, as determined by you, when the Optional Securities are to be delivered
(the "OPTION CLOSING DATE"). Delivery and payment for such Optional Securities
is to be at the offices set forth above for delivery and payment of the Firm
Securities. (The First Closing Date and the Option Closing Date are herein
individually referred to as the "CLOSING DATE" and collectively referred to as
the "CLOSING DATES".)
Delivery of certificates for the Securities shall be made by or on behalf
of the Company to you, for the respective accounts of the Underwriters, against
payment by you, for the several accounts of the Underwriters, of the purchase
price therefor by (i) Federal funds wire transfer or (ii) certified or official
bank check payable in next day funds to the order of the Company. The
certificates for the Securities shall be registered in such names and
denominations as you shall have requested at least two full Business Days prior
to the applicable Closing Date, and shall be made available for checking and
packaging at a location in New York, New York as may be designated by you at
least one full Business Day prior to such Closing Date. Time shall be of the
essence and delivery at the time and place specified in this Agreement is a
further condition to the obligations of each Underwriter.
4. COVENANTS. The Company covenants and agrees with each Underwriter
that:
(A) The Company shall use its best efforts to cause the Registration
Statement to become effective under the Securities Act and, if the procedure in
Rule 430A of the Rules and Regulations is followed, comply with the provisions
of and make all requisite filings with the Commission pursuant to such Rule and
to notify you promptly (in writing, if requested) of all such filings. The
Company shall notify you promptly of any request by the Commission for any
amendment of or supplement to the Registration Statement or the Effective
Prospectus or the Final Prospectus or for additional information; the Company
shall prepare and file with the Commission, promptly upon your request, any
amendments of or supplements to the Registration Statement or Effective
Prospectus or the Final Prospectus which, in your opinion, may be necessary or
advisable in connection with the distribution of the Securities, provided that
the preparation of such amendments or supplements shall be at your expense if
such a request is given nine months or more after the effective date of the
Registration Statement; and the Company may not file any amendment of or
supplement to the Registration Statement or the Effective Prospectus or the
Final Prospectus, which is not approved by you after reasonable notice thereof,
provided that such approval may not be unreasonably withheld or delayed. The
Company shall advise you promptly of the issuance by the Commission or any state
or other regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, suspending or preventing the use of
any Pre-Effective Prospectus or the Effective Prospectus or Final Prospectus or
suspending the qualification of the Securities for offering or sale in any
jurisdiction, or of the institution of any proceedings for any such purpose; and
the Company shall use its best efforts to prevent the issuance of any stop order
or other such order and, should a stop order or other such order be issued, to
obtain as soon as possible the lifting thereof.
(B) The Company shall furnish to the Underwriters, from time to time
and without charge, copies of the Registration Statement (including exhibits)
and all amendments and supplements to any of such Registration Statement, in
each case as soon as available and in such quantities as you may from time to
time reasonably request.
(C) Within the time during which a Final Prospectus relating to the
Securities is required to be delivered under the Securities Act, the Company
shall comply with all requirements imposed upon it by the Securities Act, as now
and hereafter amended, and by the Rules and Regulations, as from time to time in
force, so far as is necessary to permit the continuance of sales of or dealings
in the Securities as contemplated by the provisions hereof and the Final
Prospectus. If during such period any event occurs as a result of which the
Final Prospectus as then amended or supplemented would include an
9
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances then existing,
not misleading, or if during such period it is necessary to amend the
Registration Statement or supplement the Final Prospectus to comply with the
Securities Act, the Company shall promptly notify you and shall amend the
Registration Statement or supplement the Final Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such compliance.
(D) The Company shall take or cause to be taken all commercially
reasonable action and furnish to whomever you may direct such information as may
be required in qualifying the Securities for sale under the laws of such
jurisdictions which you shall designate and to continue such qualifications in
effect for as long as may be necessary for the distribution of the Securities;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation, or to execute a general consent for service
of process.
(E) The Company shall make generally available to its
securityholders, in the manner contemplated by Rule 158(b) under the Securities
Act, as soon as practicable but in any event not later than 60 days after the
end of its fiscal quarter in which the first anniversary date of the effective
date of the Registration Statement occurs, an earning statement which will
comply with Section 11(a) of the Securities Act covering a period of at least 12
consecutive months beginning after the effective date of the Registration
Statement.
(F) The Company will not, during the 180 days following the
effective date of the Registration Statement, except with your prior written
consent, offer for sale, contract to sell, sell, issue, distribute, grant any
option, right or warrant to purchase or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into, or
exercisable or exchangeable for, shares of Common Stock or register for sale
under the Securities Act any shares of Common Stock otherwise than in accordance
with this Agreement or as contemplated in the Final Prospectus; provided,
however, that the Company may issue, or grant options to purchase, shares of
Common Stock pursuant to any option plan existing on the date hereof.
(G) The Company shall deliver to the Underwriters or their counsel a
Lockup Letter duly executed by each officer and director of the Company and each
holder of 1% of the outstanding Common Stock or any securities convertible into,
or exercisable or exchangeable for, shares of Common Stock.
(H) The Company shall apply the net proceeds of the sale of the
Securities in the manner specified in the Prospectus under the heading "Use of
Proceeds" and shall file such reports with the Commission with respect to the
sale of the Securities and the application of the proceeds therefrom as may be
required in accordance with Rule 463 under the Securities Act.
(I) The Company will furnish to its securityholders annual reports
containing financial statements audited by independent public accountants and
quarterly reports containing financial statements and financial information
which may be unaudited. During the period of five years from the date hereof,
the Company will deliver to you and, upon request, to each of the other
Underwriters, copies of each annual report of the Company and each other report
furnished by the Company to its securityholders and will deliver to you, as soon
as they are available, copies of any other reports (financial or otherwise)
which the Company shall publish or otherwise make available to any of its
securityholders as such, and as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission or
the NASD.
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(J) The Company will use its best efforts to have the Securities
listed on The Nasdaq SmallCap Market.
(K) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111 of the
Act by the earlier of (i) 10:00 p.m., New York City time, on the date of this
Agreement, and (ii) the time that confirmations are given or sent, as specified
by Rule 462(b)(2).
(L) Whether or not this Agreement becomes effective or is terminated
or the sale of the Securities to the Underwriters is consummated, the Company
shall pay or cause to be paid (i) all expenses (including stock transfer taxes)
incurred in connection with the delivery to the several Underwriters of the
Securities, (ii) all fees and expenses (including, without limitation, fees and
expenses of the Company's accountants and counsel, but excluding fees and
expenses of counsel for the Underwriters) in connection with the preparation,
printing, filing, delivery and shipping of the Registration Statement (including
the financial statements therein and all amendments and exhibits thereto), each
Pre-Effective Prospectus, the Effective Prospectus and the Final Prospectus as
amended or supplemented and the printing, delivery and shipping of this
Agreement and other underwriting documents, including Underwriters'
Questionnaires, Underwriters' Powers of Attorney, Blue Sky Memoranda, the
Agreement Among Underwriters and Selected Dealer Agreements, (iii) all filing
fees and fees and disbursements of counsel to the Underwriters incurred in
connection with the qualification of the Securities for sale under state
securities laws as provided in Section 4(d) hereof, (iv) the filing fee of the
NASD and any applicable expenses of counsel for the Underwriters in connection
with a review of the offering by the NASD, (v) any applicable listing fees, (vi)
the cost of printing certificates representing the Securities, (vii) the cost
and charges of any transfer agent or registrar and (viii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise provided for in this Section. It is understood, however, that, except
as provided in this Section, Section 6 and Section 8 hereof, the Underwriters
shall pay all of their own costs and expenses, including the fees of their
counsel, stock transfer taxes on resale of any of the Securities by them and any
advertising expenses connected with any offers they may make. If the sale of the
Securities provided for herein is not consummated by reason of acts of the
Company pursuant to Section 8(a) hereof which prevent this Agreement from
becoming effective, or by reason of any failure, refusal or inability on the
part of the Company to perform any agreement on its part to be performed or
because any other condition of the Underwriters' obligations hereunder is not
fulfilled, unless the failure to perform the agreement or fulfill the condition
is due to the default or omission of any Underwriter, the Company shall
reimburse the several Underwriters for all reasonable out-of-pocket
disbursements (including fees and disbursements of counsel) incurred by the
Underwriters in connection with their investigation, preparing to market and
marketing the Securities or in contemplation of performing their obligations
hereunder, provided, however that such reimbursement shall not exceed $150,000
in the aggregate. The Company shall not in any event be liable to any of the
Underwriters for loss of anticipated profits from the transactions covered by
this Agreement. Notwithstanding any of the foregoing, in the event that the sale
of the Firm Securities to the Underwriters is consummated, the Company shall pay
to the Underwriters at the First Closing Date (and at the Optional Closing Date,
if applicable) a non-accountable expense allowance equal to two percent (2%) of
the gross proceeds of the Offering (which gross proceeds shall equal the public
offering price, as set forth on the cover page of the Final Prospectus (the
"PUBLIC OFFERING PRICE") multiplied by the total number of shares of Common
Stock sold to the Underwriters on such Closing Date). In addition, in the event
that the sale of the Firm Securities to the Underwriters is consummated, the
Company shall issue to the Underwriters (or such other broker-dealers as
directed by Xxxx Capital Partners, LLC) at each Closing Date warrants to
purchase, at an exercise price equal to 125% of the Public Offering Price per
share, the number of shares of the Common Stock equal to the product of ten
percent (10%) multiplied by the total number of shares of Common Stock sold to
the Underwriters on such Closing Date. Each such warrant shall be substantially
in the form attached hereto as Exhibit B.
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(M) If an electronic offering will be made, the Company shall cause
to be prepared and delivered, at its expense, within one business day from the
effective date of this Agreement, to you an "electronic prospectus" to be used
by the Underwriters in connection with the offering and sale of the Securities.
As used herein, the term "electronic prospectus" means a form of prospectus, and
any amendment or supplement thereto, that meets each of the following
conditions: (i) it shall be encoded in an electronic format, satisfactory to
you, that may be transmitted electronically by you and the other Underwriters to
offerees and purchasers of the Securities for at least the period during which a
prospectus relating to the Securities is required to be delivered under the
Securities Act; (ii) it shall disclose the same information as the paper
prospectus and prospectus filed pursuant to XXXXX, except to the extent that
graphic and image material cannot be disseminated electronically, in which case
such graphic and image material shall be replaced in the electronic prospectus
with a fair and accurate narrative description or tabular representation of such
material, as appropriate; and (iii) it shall be in or convertible into a paper
format or an electronic format, satisfactory to you, that will allow investors
to store and have continuously ready access to the prospectus at any future
time, without charge to investors (other than any fee charged for subscription
to the Internet as a whole and for on-line time). The Company hereby confirms
that it has included or will include in the prospectus filed pursuant to XXXXX
or otherwise with the Commission and in the Registration Statement at the time
it was declared effective an undertaking that, upon receipt of a request by an
investor or his or her representative within the period when a prospectus
relating to the Securities is required to be delivered under the Securities Act,
the Company shall transmit or cause to be transmitted promptly, without charge,
a paper copy of the prospectus.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations
of the several Underwriters hereunder are subject to the accuracy, at and as of
the date hereof and each Closing Date (as if made at such Closing Date), of the
representations and warranties of the Company contained herein, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(A) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 5:00 p.m., New York time, on
the date hereof, or, with your consent, at a later time and date, not later,
however, than 5:00 p.m., New York time, on the first Business Day following the
date hereof, or at such later date and time as may be approved by a majority in
interest of the Underwriters; if the Company has elected to rely on Rule 462(b),
the Rule 462(b) Registration Statement shall have become effective not later
than the earlier of (i) 10:00 p.m., New York City time, on the date hereof, or
(ii) at such later date and time as may be approved by a majority in interest of
the Underwriters; all filings required by Rule 424 and Rule 430A of the Rules
and Regulations have been timely made; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceedings for the issuance of such an order
shall have been initiated or, to the knowledge of the Company, threatened; and
any request of the Commission for additional information (to be included in the
Registration Statement or the Final Prospectus or otherwise) shall have been
disclosed to you and complied with to your satisfaction.
(B) No Underwriter shall have advised the Company that (i) the
Effective Prospectus or Final Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in your reasonable opinion, is material, or
omits to state a fact which, in your reasonable opinion, is material and is
required to be stated therein or is necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
(ii) that the Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in your reasonable opinion, is material, or
omits to state a fact which, in your reasonable opinion is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.
(C) On or prior to each Closing Date, you shall have received from
Xxxxxx & Whitney LLP, counsel for the Underwriters, such opinion or opinions
with respect to the validity of the
12
Shares and other related matters and such counsel shall have received such
papers and information from the Company as they request to enable them to pass
upon such matters.
(D) On each Closing Date there shall have been furnished to you the
opinion (addressed to the Underwriters) of Xxxxxx & Xxxxxxx LLP, counsel for the
Company, which includes the opinions set forth on Appendix A, dated such Closing
Date and in form and substance satisfactory to counsel for the Underwriters and
stating that it may be relied upon by counsel for the Underwriters in giving
their opinion.
(E) There shall have been furnished to you a certificate of the
Company, dated such Closing Date and addressed to you, signed by the Chairman of
the Board or the Chief Executive Officer and by the Chief Financial Officer of
the Company to the effect that:
(I) The representations and warranties of the Company in this
Agreement are true and correct, as if made at and as of such Closing Date,
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such
Closing Date;
(II) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been initiated or are pending or, to their knowledge,
contemplated;
(III) Any and all filings required by Rule 424 and Rule 430A
of the Rules and Regulations have been timely made;
(IV) The signers of said certificate have carefully examined
the Registration Statement and the Effective Prospectus and the Final
Prospectus, and any amendments or supplements thereto, and such documents
contain all statements and information required to be included therein;
the Registration Statement or any amendment thereto does not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading; and the Effective Prospectus and the Final Prospectus or
any supplements thereto do not 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, in the light of the
circumstances under which they were made, not misleading;
(V) Since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amendment or
supplement to the Registration Statement or the Effective Prospectus and
the Final Prospectus which has not been so set forth; and
(VI) Since the effective date of the Registration Statement,
the Company shall not have sustained any loss by strike, fire, flood,
accident or other calamity (whether or not insured), or shall have become
a party to or the subject of any litigation, which is material to the
Company, nor shall there have been a material adverse change in the
general affairs, business, key personnel, capitalization, financial
position, earnings or net worth of the Company, whether or not arising in
the ordinary course of business, which loss, litigation or change, in your
judgment, shall render it inadvisable to proceed with the delivery of the
Securities.
(F) On the date of this Agreement and on each Closing Date you shall
have received a letter of Xxxxxxx & White LLP, dated the date hereof or such
Closing Date, as applicable, and addressed to you, in form and substance
previously approved by you, confirming that they are independent certified
public accountants with respect to the Company within the meaning of the
Securities Act and the Rules
13
and Regulations, and stating, as of the date of such letter (or, with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given or incorporated
in the Effective Prospectus and the Final Prospectus, as of a date not
more than five days prior to the date of such letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by its letter delivered to you concurrently with the
execution of this Agreement, and confirming the conclusions and findings
set forth in such prior letter.
(G) You shall have been furnished such additional documents and
certificates as you may reasonably request.
(H) The Securities shall have been duly authorized for listing on
The Nasdaq SmallCap Market.
All such opinions, certificates, letters and documents shall be in compliance
with the provisions hereof only if they are satisfactory in form and substance
to you and to counsel for the Underwriters. The Company shall furnish you with
such conformed copies of such opinions, certificates, letters and other
documents as you shall reasonably request. If any of the conditions specified in
this Section 5 shall not have been fulfilled when and as required by this
Agreement, this Agreement and all obligations of the Underwriters hereunder may
be canceled at, or at any time prior to, each Closing Date, by you. Any such
cancellation shall be without liability of the Underwriters to the Company.
Notice of such cancellation shall be given to the Company in writing, or by
telegraph or telephone and confirmed in writing.
6. INDEMNIFICATION AND CONTRIBUTION.
(A) The Company shall indemnify and hold harmless each Underwriter
against any loss, claim, damage or liability, joint or several, as incurred, to
which such Underwriter may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage or liability (or action in
respect thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement made by the Company in Section 1 hereof, or (ii) any
untrue statement or alleged untrue statement of a material fact contained (A) in
the Registration Statement, any Pre-Effective Prospectus, the Effective
Prospectus or the Final Prospectus or any electronic prospectus or any amendment
or supplement thereto, or (B) in any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Securities under the securities laws thereof
(any such application, documents or information being hereinafter called a "BLUE
SKY APPLICATION"), or (iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
the omission or alleged omission to state in any Pre-Effective Prospectus, the
Effective Prospectus or Final Prospectus or any electronic prospectus or any
supplement thereto or in any Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and, subject to the
terms of Section 6(c) of this agreement, shall reimburse
14
each Underwriter for any legal or other reasonable expenses as incurred by such
Underwriter in connection with investigating or defending against or appearing
as a third-party witness in connection with any such loss, claim, damage,
liability or action, notwithstanding the possibility that payments for such
expenses might later be held to be improper, in which case the person receiving
them shall promptly refund them; except that the Company shall not be liable in
any such case to the extent, but only to the extent, that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company through you
by or on behalf of any Underwriter specifically for use in the preparation of
the Registration Statement, any Pre-Effective Prospectus, the Effective
Prospectus or Final Prospectus or any electronic prospectus or any amendment or
supplement thereto, or any Blue Sky Application.
(B) Each Underwriter severally, but not jointly, shall indemnify and
hold harmless the Company against any loss, claim, damage or liability, joint or
several, as incurred, to which the Company may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage or liability
(or action in respect thereof) arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in the
Registration Statement, Pre-Effective Prospectus, the Effective Prospectus or
Final Prospectus or any electronic prospectus or any amendment or supplement
thereto, or (B) in any Blue Sky Application, or (ii) the omission or alleged
omission to state in the Registration Statement or any amendment thereto a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or the omission or alleged omission to state in any
Pre-Effective Prospectus, the Effective Prospectus or Final Prospectus or any
electronic prospectus or any supplement thereto or in any Blue Sky Application a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; except that such indemnification shall be available in each such
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company through
you by or on behalf of such Underwriter specifically for use in the preparation
thereof; and shall reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigation or defending against any such loss,
claim, damage, liability or action.
(C) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the claim or the commencement of that action; the failure to notify
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under such subsection. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under such subsection for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; except that you shall have
the right to employ counsel to represent you and those other Underwriters who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriters against the Company under such
subsection if, in your reasonable judgment, based upon the advice of counsel, it
is advisable for you and those Underwriters to be represented by separate
counsel, and in that event the fees and expenses of such separate counsel shall
be paid by the Company.
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(D) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the offering
of the Securities 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 the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, 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 proportion
as the total net proceeds from the offering of the Securities (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Final Prospectus. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) 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 subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) 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 shall 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 subsection (c) hereof).
(E) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have, and shall
extend, upon the same terms and conditions, to each officer and director of each
Underwriter and to each person, if any, who controls any Underwriter within the
meaning of the Securities Act; and the obligations of the Underwriters under
this Section 6 shall be in addition to any liability that the respective
Underwriters may otherwise have, and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director of
the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Securities Act, in either case, whether or not such person is a
party to any action or proceeding.
16
7. SUBSTITUTION OF UNDERWRITERS. If any Underwriter defaults in its
obligation to purchase the number of Securities which it has agreed to purchase
under this Agreement, the non-defaulting Underwriters shall be obligated to
purchase (in the respective proportions which the number of Securities set forth
opposite the name of each non-defaulting Underwriter in Schedule I hereto bears
to the total number of Securities set forth opposite the names of all the
non-defaulting Underwriters in Schedule I hereto) the Securities which the
defaulting Underwriter agreed but failed to purchase; except that the
non-defaulting Underwriters shall not be obligated to purchase any of the
Securities if the total number of Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase exceeds 10% of the total number of
Firm Securities, and any non-defaulting Underwriter shall not be obligated to
purchase more than 110% of the number of Securities set forth opposite its name
in Schedule I hereto purchasable by it pursuant to the terms of Section 2. If
the foregoing maximums are exceeded, (a) the non-defaulting Underwriters, and
any other underwriters satisfactory to you who so agree, shall have the right,
but shall not be obligated, to purchase (in such proportions as may be agreed
upon among them) all the Securities. If the non- defaulting Underwriters or the
other underwriters satisfactory to you do not elect to purchase the Securities
which the defaulting Underwriter or Underwriters agreed but failed to purchase,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company except for the payment of expenses to
be borne by the Company and the Underwriters as provided in Section 4(l) and the
indemnity and contribution agreements of the Company and the Underwriters
contained in Section 6 hereof.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have for damages caused by its default. If the other
underwriters satisfactory to you are obligated or agree to purchase the
Securities of a defaulting Underwriter, either you or the Company may postpone
the First Closing Date for up to five full Business Days in order to effect any
changes that may be necessary in the Registration Statement, the Effective
Prospectus or the Final Prospectus or in any other document or agreement, and to
file promptly any amendments or any supplements to the Registration Statement or
the Effective Prospectus or the Final Prospectus which in your opinion may
thereby be made necessary.
8. EFFECTIVE DATE AND TERMINATION.
(A) This Agreement shall become effective at ______ a.m., New York
City time, on the first full Business Day following the earlier of (i) the date
hereof, or (ii) the day on which you release the initial public offering of the
Firm Securities for sale to the public. Until this Agreement is effective, it
may be terminated by the Company or by you by giving notice as hereinafter
provided to you or by you by giving notice as hereinafter provided to the
Company, except that the provisions of Section 4(l) and Section 6 shall at all
times be effective. For purposes of this Agreement, the release of the initial
public offering of the Firm Securities for sale to the public shall be deemed to
have been made when you release, by telegram or otherwise, firm offers of the
Firm Securities to securities dealers or release for publication a newspaper
advertisement relating to the Firm Securities, whichever occurs first.
(B) Until the First Closing Date, this Agreement may be terminated
by you by giving notice as hereinafter provided to the Company, if (i) the
Company shall have failed, refused or been unable, at or prior to the First
Closing Date, to perform any agreement on its part to be performed hereunder
unless the failure to perform any agreement is due to the default or omission by
any Underwriter, (ii) all other conditions of the obligations of the
Underwriters hereunder are not fulfilled when and as required to be fulfilled;
(iii) trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or The Nasdaq Stock Market or the over-the counter
market shall have been suspended or minimum or maximum prices shall have been
established on either of such exchanges or such market by the Commission or by
such exchange or other regulatory body or governmental authority having
jurisdiction, (iv) trading or quotation in any of the Company's securities shall
have been suspended or limited by the Commission or by such exchange or other
regulatory body of governmental
17
authority having jurisdiction, (v) a general banking moratorium shall have been
declared by Federal or state authorities, (vi) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (vii) there shall have been any downgrading or any notice of
intended or potential downgrading in the rating accorded any securities of the
Company by any "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Securities Act, (viii)
there shall have been any material adverse change in general economic, political
or financial conditions or the financial markets or if the effect of
international conditions on the financial markets in the United States shall be
such as, in your judgment, makes it inadvisable to proceed with the delivery of
the Securities, or (ix) any attack on, outbreak or escalation of hostilities,
declaration of war or act of terrorism involving the United States or any other
national or international calamity or emergency if, in your good faith judgment,
the effect of any such attack, outbreak, escalation, declaration, act, calamity
or emergency makes it impractical or inadvisable to proceed with the completion
of the public offering or the delivery of the Securities. Any termination of
this Agreement pursuant to this Section 8 shall be without liability on the part
of the Company or any Underwriter, except as otherwise provided in Section 4(l)
and Section 6 hereof.
Any notice referred to above may be given at the address specified in
Section 10 hereof in writing or by telegraph or telephone, and if by telegraph
or telephone, shall be immediately confirmed in writing.
(C) This Agreement may also be terminated as provided in Section 7
hereof.
9. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND
REPRESENTATIONS. The indemnity and contribution agreements contained in Section
6 and the representations, warranties and agreements of the Company in Sections
1 and 4 shall survive the delivery of the Securities to the Underwriters
hereunder and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any indemnified party.
10. NOTICES. Except as otherwise provided in this Agreement, (a)
whenever notice is required by the provisions of this Agreement to be given to
the Company, such notice shall be in writing addressed and mailed or delivered
to the Company at 00000 Xxxxxxx xx xx Xxxxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX
00000, Facsimile No. (000) 000-0000, Attention: Chief Executive Officer; and (b)
whenever notice is required by the provisions of this Agreement to be given to
the several Underwriters, such notice shall be in writing addressed and mailed
or delivered to you in care of Xxxx Capital Partners, LLC, 00 Xxxxxxxxx Xxxxx,
Xxxxxxx Xxxxx, XX 00000, Facsimile No. (000) 000-0000, Attention: ___________.
11. INFORMATION FURNISHED BY UNDERWRITERS. The following statements set
forth under the caption "Underwriting" in the Effective Prospectus and the Final
Prospectus (except to the extent such statements relate to the Company or sales
or dispositions by the Company) constitute the only written information
furnished by or on behalf of any Underwriter referred to in subsections (b) and
(c) of Section 1 hereof and in subsections (a) and (b) of Section 6 hereof:
information furnished by or on behalf of any Underwriter through the
Representatives to the Company for purposes of Section 3(k) and this Section 11:
(a) statements in the third paragraph which relate to concessions and
reallowances; (b) statements in the fourth paragraph which relate to the
underwriting discounts and commissions; and (c) statements in the eleventh
paragraph regarding stabilization transactions.
12. PARTIES. This Agreement is made solely for the benefit of the
several Underwriters, the Company, any officer, director or controlling person
referred to in Section 6 hereof, and their respective successors and assigns,
and no other person shall acquire or have any right by virtue of this Agreement.
The term "successors and assigns," as used in this Agreement, shall not include
any purchaser of any of the Securities from any of the Underwriters merely by
reason of such purchase.
18
13. DEFINITION OF "BUSINESS DAY" AND "SUBSIDIARY". For purposes of this
Agreement, (a) "BUSINESS DAY" means any day on which the New York Stock
Exchange, Inc. is open for trading, and (b) "SUBSIDIARY" has the meaning set
forth in Rule 405 under the Securities Act.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California , without giving effect to
the choice of law or conflict of laws principles thereof.
15. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
[signature page follows]
19
Please confirm, by signing and returning to us six (two copies for each
Representative) counterparts of this Agreement, that you are acting on behalf of
yourselves and the several Underwriters and that the foregoing correctly sets
forth the agreement among the Company and the several Underwriters.
Very truly yours,
INTERCHANGE CORPORATION
By:
--------------------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED AS OF THE DATE FIRST ABOVE
MENTIONED:
Xxxx Capital Partners, LLC
Xxxxxxxx Curhan Ford & Co.
Maxim Group, LLC
(As Representatives of the Several Underwriters Named
in Schedule I hereto)
By: XXXX CAPITAL PARTNERS, LLC
By:
--------------------------------------------------
Name:
Title:
[Signature Page to Underwriting Agreement]
SCHEDULE I
Underwriting Agreement dated _______________, 2004
NUMBER OF FIRM SECURITIES
UNDERWRITER TO BE PURCHASED
-------------------------------------- -------------------------------------
Xxxx Capital Partners, LLC
Xxxxxxxx Curhan Ford & Co.
Maxim Group, LLC
TOTAL:
APPENDIX A
OPINION OF COMPANY COUNSEL
