Exhibit 1(a)
800,000 UNITS
EUROWEB INTERNATIONAL CORP.
(EACH UNIT CONSISTING OF
ONE SHARE OF SERIES A CONVERTIBLE CUMULATIVE REDEEMABLE PREFERRED STOCK
AND ONE COMMON STOCK PURCHASE WARRANT)
UNDERWRITING AGREEMENT
Dated: , 1998
▇.▇. ▇▇▇▇▇▇▇ & Co., Inc.
as Representative of the Several Underwriters
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, EuroWeb International Corp., a Delaware corporation (the
"Company"), hereby confirms its agreement with ▇.▇. ▇▇▇▇▇▇▇ & Co., Inc.
(sometimes the "Representative" or "you") and the several Underwriters named in
Schedule A hereto (the "Underwriters") as follows:
1. DESCRIPTION OF UNITS. The Company has authorized by appropriate
corporate action, and proposes to issue and sell to the Underwriters, 800,000
Units, each consisting of one Share of Series A Convertible Cumulative
Redeemable Preferred Stock and one Common Stock Purchase Warrants, (the
"Units"). An additional 120,000 Units have been authorized to cover
over-allotments as provided in Section 3 below. The Units, Series A Convertible
Cumulative Redeemable Preferred Stock and Common Stock Purchase Warrants are
more fully described in the Registration Statement and Prospectus referred to
hereinafter.
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to,
and agrees with, you and the Underwriters that:
(a) A registration statement on Form SB-2 with respect to the Units,
including a preliminary prospectus, copies of which have heretofore been
delivered by the Company to you, has been carefully prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended,
(hereinafter called the "Act") and the Rules and Regulations of the Securities
and Exchange Commission (hereinafter called the "Commission") under such Act,
and has been filed with the Commission (File No. __________). On or prior to
the effective date of such registration statement, one or more amendments to
such registration statement (including a final prospectus), copies of which
have heretofore been or will be delivered to you, will have been so prepared
and filed in the form delivered to you. Such registration statement (including
all exhibits thereto) as amended
1
as of the effective date thereof and each related preliminary prospectus are
herein respectively referred to as the "Registration Statement", the
"Preliminary Prospectus" and the "Prospectus".
(b) When the Registration Statement becomes effective (the "Effective
Date") and at all times subsequent thereto up to and at the Closing Date (as
defined in Section 3 hereof) and the Additional Closing Date (as defined in
Section 3 hereof), (i) the Registration Statement and the Prospectus and any
amendments or supplements thereto will contain all statements which are
required to be stated therein by the Act and the Rules and Regulations of the
Commission thereunder and will in all respects conform to the requirements of
the Act and such Rules and Regulations, (ii) neither the Registration Statement
nor the Prospectus nor any amendment or supplement thereto will include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and (iii) all documents which are required to be filed as exhibits
to the Registration Statement will have been so filed; provided however, that
the Company makes no representations or warranties as to information contained
in or omitted from the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by you or any Underwriter expressly for
use in the preparation thereof.
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with all
corporate and other powers and authority necessary to carry on its businesses,
and it is qualified and in such jurisdictions in which the nature of its
business requires such qualification.
(d) The consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is a party or by which it or any
of its properties is bound, or of its Certificate of Incorporation, or By-laws,
or any order, rule or regulation applicable to the Company or any of its
properties, of any court or other governmental body.
(e) The Company has full power and lawful authority to authorize,
issue and sell the Units and the Underwriters' Unit Warrants (as defined
hereinafter) on the terms and conditions herein set forth, and has taken all
corporate action necessary therefor; no consent, approval, authorization or
other order of any regulatory authority is required for such authorization,
issue or sale, except as may be required under the Act or state Units or blue
sky laws. This Agreement has been duly authorized, executed and delivered by
the Company and is a valid and legally binding agreement of the Company
enforceable in accordance with its terms. The Warrant Agreement between the
Company and American Continental Stock Transfer & Trust Company, to be dated
the Closing Date, pursuant to which the Warrants will be issued (the "Warrant
Agreement") has been duly authorized by the Company and, when executed and
delivered by the Company and American Stock Transfer & Trust Company, will be a
valid and legally binding obligation of the Company, enforceable in accordance
with its terms.
2
(f) The Units and the authorized capitalization of the Company conform
to the descriptions thereof contained in the Registration Statement and
Prospectus. The holders of the Warrants will, upon their exercise, be entitled
to purchase shares in accordance with the terms and conditions set forth in the
Warrant Agreement and the form of Warrant filed as exhibits to the Registration
Statement. The outstanding shares of capital stock are, and the shares issuable
pursuant to the public offering contemplated hereby and upon exercise of any of
the warrants referred to herein will upon such issuance be, duly authorized,
validly issued and fully paid and nonassessable, and the Company has duly
authorized and reserved for issuance upon exercise of warrants such number of
shares as are initially issuable upon such exercise. The Warrants, the
Underwriters' Unit Warrants and the warrants underlying the Underwriters' Unit
Warrants will, when issued and delivered in accordance with the provisions of
the Warrant Agreement, in the case of the Warrants and the warrants underlying
the Underwriters' Unit Warrants, and this Agreement, in the case of the
Underwriters' Unit Warrants, be valid and legally binding obligations of the
Company enforceable in accordance with their respective terms. There are no
options, warrants, rights of conversion, indebtedness or calls on equity of the
Company other than as disclosed in the Prospectus and Registration Statement.
(g) Except as set forth or contemplated in the Registration Statement
and Prospectus, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company has not
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions, not in the ordinary course of business,
and there has not been any material change in the capital stock or funded debt
of the Company, or any material adverse change in the condition (financial or
other) or results of operations of the Company.
(h) The financial statements (audited and unaudited) set forth in the
Registration Statement and Prospectus fairly present the financial condition of
the Company and the results of its operations as of the dates and for the
periods therein specified; and said financial statements (including the related
notes and schedules) have been prepared in accordance with generally accepted
accounting principles which have been consistently applied throughout the
periods covered thereby. Such financial statements and the summaries thereof
included in the Registration Statement and the Prospectus conform in all
material respects to the requirements of the Rules and Regulations of the
Commission.
(i) The accountants whose opinion or opinions is or are included in
the Registration Statement are independent public accountants within the
meaning of the Act and the Rules and Regulations of the Commission thereunder.
(j) Except as set forth in the Prospectus, there is not pending any
action, suit or other proceeding to which the Company is a party or of which
any property of the Company is the subject, before or by any court or other
governmental body, which might result in any material adverse change in the
condition, business or prospects of the Company, or might materially adversely
affect the assets of the Company; and except as indicated in the Prospectus, no
such proceeding is known by the Company to be threatened or contemplated.
3
(k) The Company knows of no claim for services, either in the nature
of a finder's fee, brokerage fee or otherwise, with respect to the financing
contemplated hereby, whether or not heretofore satisfied, for which it or the
Underwriters, or any of them, may be responsible, other than as expressly
disclosed in the Prospectus.
(l) The business and operations of the Company and the ownership
thereof, except as may be disclosed in the Prospectus, comply with all
statutes, ordinances, laws, rules and regulations applicable thereto, the
non-compliance with which could reasonably be expected to have a material,
adverse effect on the Company or its condition (financial or other), business,
prospects, net worth or results of operations; the Company possesses, and is
operating in compliance with the terms, provisions and conditions of, all
certificates, licenses, permits, consents, waivers, approvals, franchises and
concessions required to conduct its business as now conducted, the
non-compliance with which could reasonably be expected to have a material
adverse effect on the Company or its condition (financial or other), business,
prospects, net worth or results of operations; each such certificate, license,
permit, consent, waiver, approval, franchise and concession is valid and in
full force and effect and there is no proceeding pending or threatened (or to
the best of the knowledge of the Company and the Selling Stockholders, any
basis therefor) which may lead to the revocation, termination, suspension or
nonrenewal of any such certificate, license, permit, consent, waiver, approval,
franchise or concession.
(m) On the Effective Date of the Registration Statement and
immediately prior to the sale of the Units, the outstanding capital stock of
the Company will consist of no more than 5,178,246 shares of Common Stock, par
value $.001 per share, and no shares of Preferred Stock, and there shall be no
warrants or options to purchase shares of Stock of the Company except as set
forth in the Prospectus.
3. PURCHASE, SALE AND DELIVERY OF SHARES. Subject to the terms and
conditions of this Agreement, and on the basis of the representations,
warranties and agreements herein contained, the Company hereby agrees to sell
to the several Underwriters, the number of Units set forth opposite their
respective names on Schedule A hereto, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company such number of Units at
a purchase price of $5.40 per Unit.
The Company will deliver the Units to you at your office, or such other
place as you may designate, against payment to the Company for the Units by
wire transfer or by certified or official bank check or checks payable in New
York Clearing House funds to the order of the Company. The Units so to be
delivered will be in definitive, fully registered form in such authorized
denominations and registered in such names as you request by notice to the
Company given not later than 5:00 P.M., New York City time, on the second
business day next preceding the Closing Date. The date and the time of such
delivery and payment shall be 11:00 A.M., New York City time, on
________________, 1998 (or such other time and date as you and the Company may
agree upon). The time and date of such payment and delivery is herein sometimes
referred to as the "Closing Date".
4
The Company agrees to make the Units available to you for the purpose of
expediting the checking and packaging of the Units, at the office at which they
are to be delivered, not later than 2:00 P.M., New York City time, on the
business day next preceding the Closing Date.
The Company hereby grants to you the right, exercisable within 45 days
from the date hereof, to purchase from the Company up to 210,000 additional
Units (the "Additional Units") at a purchase price of $5.22 per Unit, for the
purpose of covering over-allotments in the sale by any of the Underwriters of
the Units. You may exercise your right to purchase Additional Units by giving
written notice of such exercise to the Company.
Such notice shall set forth the aggregate number of Additional Units as to
which such right is being exercised, the names in which Additional Units are to
be registered, the denominations in which Additional Units are to be issued and
the date and time, as determined by you, when the Additional Units are to be
delivered (such date and time being herein sometimes referred to as the
"Additional Closing Date"); PROVIDED, HOWEVER, that the Additional Closing Date
shall not be earlier than the Closing Date. The Additional Closing Date may be
on the Closing Date; if not, it shall be no earlier than the third business day
after the date on which the right shall have been exercised nor later than the
twelfth business day after the date on which the right shall have been
exercised.
The Company will deliver the Additional Units to you at your office, or
such other place as you may designate, against payment to the Company for the
Additional Units by wire transfer or by certified or official bank check or
checks payable in New York Clearing House funds to the order of the Company.
The Additional Units so to be delivered will be in definitive, fully registered
form in such authorized denominations and registered in such names as you
request by notice to the Company given not later than 5:00 P.M., New York City
time, on the second business day next preceding the Additional Closing Date.
The Company agrees to make the Additional Units available to you for the
purpose of expediting the checking and packaging of the Units, at the office at
which they are to be delivered, not later than 2:00 P.M., New York City time,
on the business day next preceding the Additional Closing Date.
It is understood that the Underwriters propose to offer the Units for sale
to the public upon the terms and conditions set forth in the Registration
Statement, after the Registration Statement becomes effective.
4. COVENANTS OF THE COMPANY. The Company further covenants and agrees with
you that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and will not at any time, whether before or after
the effective date, file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have been
advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Act, or the Rules
and Regulations of the Commission thereunder.
5
(b) The Company will notify you immediately and confirm in writing (A)
when the Registration Statement and any post-effective amendment thereto
becomes effective, (B) of the issuance of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or of the Prospectus or of the
initiation of any proceedings for such purposes, and (C) of the receipt of any
comments (in writing or orally) from the Commission in respect of the
Registration Statement or requesting the amendment, post-effective amendment or
supplementation of the Registration Statement or Prospectus or for additional
information. If the Commission shall enter a stop order or any order preventing
or suspending the use of any Preliminary Prospectus or of the Prospectus at any
time, or shall initiate any proceedings for such purposes, the Company will
make every reasonable effort to prevent the issuance of such order and, if
issued, to obtain the withdrawal thereof. The Company will provide you with
copies of all written communications received by it from the Commission and any
other regulatory agency with respect to the Registration Statement, and every
amendment and post-effective amendment thereto and copies of all replies
thereto by the Company, its counsel and its accountants.
(c) Within the time during which a prospectus relating to the Units
(or the exercise of any Warrants) is required to be delivered under the Act,
the Company will comply so far as it is able with all requirements imposed upon
it by the Act, as now and hereafter amended, and by the Rules and Regulations
of the Commission thereunder, from time to time in force, so far as necessary
to permit the continuance of sales of or dealings in the Units (or the shares
of stock to be acquired upon the exercise of the Warrants) as contemplated by
the provisions hereof and the Prospectus; and if during such period any event
occurs as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Prospectus to comply with the Act, the
Company will promptly notify you and will amend or supplement the Prospectus
(in form reasonably satisfactory to your counsel and at the expense of the
Company) so as to correct such statement or omission or effect such compliance.
(d) The Company will cooperate with you and will take all necessary
action, and furnish to whomever you may direct such proper information, as may
be lawfully required in qualifying the Units for offering and sale under the
Units or blue sky laws of such states as you may designate, and in continuing
such qualifications in effect so long as required for the distribution of Units
by you; provided that the Company shall not be obligated to qualify as a
foreign corporation to do business under the laws of any such state, consent to
general service of process in such state or otherwise to submit to any
requirements which it reasonably deems unduly burdensome.
(e) The Company will pay any and all fees, taxes and expenses incident
to the performance of its obligations under this Underwriting Agreement,
including expenses and taxes incident to the issuance and delivery to you of
the Units and Additional Units, if any, to be sold to the Underwriters pursuant
to Section 3 hereof; all fees and disbursements of counsel and accountants for
the Company; expenses and filing fees incident to the preparation, printing,
delivery, shipment and filing with the Commission, the National Association of
Securities Dealers, Inc., and state blue sky authorities of
6
the Registration Statement and all exhibits thereto and the Prospectus, and any
amendments or supplements thereto, including fees of blue sky counsel (to be
designated by the Representative and who may be counsel to the Underwriters)
incident to the qualification for sale of the Units and Additional Units, if
any, under blue sky laws. The Company will further pay you as Representative of
the Underwriters for your expenses incurred in connection with this offering,
on a non-accountable basis, an amount equal to 3% of the public offering price
of the Units sold on behalf of the Company hereunder, including any Units sold
pursuant to the overallotment option, such reimbursement and payment to be made
to you on closing, and may be deducted by you from the amount due to the
Company for purchase of the Units pursuant to Section 3 hereof. In the event
that the offering is not consummated, the Representative will be reimbursed
only for its actual, accountable, out-of-pocket expenses.
(f) The Company will apply the net proceeds from the sale of the Units
substantially as set forth under the caption "Use of Proceeds" in the
Prospectus.
(g) The Company will deliver to you as promptly as practicable three
signed copies of the Registration Statement and all amendments thereto,
including all exhibits therewith or incorporated therein by reference, and
signed consents, certificates and opinions of accountants and of any other
persons named in the Registration Statement as having prepared, certified or
reviewed any part thereof, and will deliver to you such number of unsigned
copies of the Registration Statement and exhibits, and of all amendments
thereto, as you may reasonably request. The Company will deliver to you or upon
your order, from time to time until the effective date of the Registration
Statement, as many copies of the Preliminary Prospectus as you may reasonably
request. The Company will deliver to you or upon your order, on the effective
date of the Registration Statement and thereafter, subject to the provisions of
Section 4(a)(iii) hereof, from time to time, as many copies of the Prospectus
in final form or as thereafter amended or supplemented, as you may reasonably
request. The Company will deliver to you, promptly after closing, three (3)
bound volumes of all of the documents, papers, exhibits, correspondence and
records forming the materials involved in this public offering.
(h) The Company will make generally available to its security holders,
as soon as it is practicable to do so (but in no event later than fifteen
months after the effective date of the Registration Statement), an earnings
statement of the Company (which need not be audited) covering a period of at
least twelve months beginning not later than the first day of the fiscal
quarter next succeeding such effective date which shall satisfy the provisions
of Section 11(a) of the Act.
(i) For a period of at least five years from the date hereof, the
Company will supply to the Representative, (A) as soon as practicable after the
end of each fiscal year, a balance sheet and statement of operations of the
Company and its consolidated subsidiaries (if any) as at the end of and for
each such year, all in reasonable detail and certified by independent certified
public accountants, (B) as soon as practicable after the end of each of the
first three quarters of each fiscal year, an unaudited statement of operations
of the Company and its consolidated subsidiaries (if any) for such period, (C)
copies of such financial statements and reports as the Company may, from time
to time, furnish generally to holders of any class of its stock, (D) copies of
each report which it shall be
7
required to file with the Commission, any blue sky authority or any Units
exchange at the same time as such reports are filed and (E) copies of the daily
stock transfer sheets and weekly DTC reports for Units of the Company.
(j) Simultaneously with the purchase and payment by the Underwriters
for the Units on the Closing Date, the Company shall sell, at a price of $0.001
per warrant, and issue and deliver to the Representative and, at its request,
to any of the several Underwriters or to dealers in the selling group, or to
officers or partners of the Representative, the several Underwriters or dealers
in the selling group, 80,000 warrants, in form and substance satisfactory to
your counsel, to purchase 80,000 Units of the Company (similar to those being
sold to the public) at a price of $_____ per Unit ("Underwriters' Unit
Warrants"). The Underwriters' Unit Warrants will be exercisable for a period of
five years commencing on the Effective Date, and will not be transferable for a
period of one year from the Effective Date except to Underwriters and Selected
Dealers and officers and partners thereof. The Underwriters' Unit Warrants
shall have been registered under the Registration Statement and the holders of
a majority of such Underwriters' Unit Warrants or the Units which may have been
issued thereunder shall have the right, at any one time, to require the Company
to prepare and file a post-effective amendment to the Registration Statement
(or a new registration statement, if then required under the Act) covering all
or any portion of the Underwriters' Unit Warrants and their underlying Units to
permit the public sale thereof after twelve months from the Effective Date. In
connection therewith, the Company shall be obligated to prepare and file such
post-effective amendment (or such new registration statement) under the Act
promptly upon the receipt of the request of the holders of a majority of the
Underwriters' Unit Warrants or Units issued thereunder, and the Company shall
be further obligated to use its best efforts to have such post-effective
amendment (or such new registration statement) rendered effective under the
Act, as it may from time to time be amended hereafter, and Rules and
Regulations promulgated thereunder, as soon as practicable after the filing
date of any such post-effective amendment or such new registration statement,
and the Company shall also be required to take such action as may be necessary
to maintain such post-effective amendment or such new registration statement
effective under the Act for the period, not in excess of nine months, required
to sell such Underwriters' Unit Warrants and their underlying Units in
compliance with the Act and Rules and Regulations promulgated thereunder, and
the Company shall be required to provide the accounting necessary for the
filing of any such post-effective amendment or such new registration statement,
plus any amendments or supplements thereto. In addition to, and not in lieu of,
the obligations of the Company hereinabove recited in this subsection, the
Company hereby further covenants and agrees that if, the Company shall prepare
and file a post-effective amendment to the Registration Statement or a new
registration statement under the Act or notification pursuant to Regulation A
under the Act either of which is to become effective at any time after the
expiration of twelve months from the Effective Date with respect to the public
offering of any equity or debt Units of the Company now or hereafter
authorized, the Company will include in such post-effective amendment or new
registration statement or such notification such number of the Underwriters'
Unit Warrants and their underlying Units as requested by the holders of the
Underwriters' Units Warrants or Units issued thereunder, and neither you nor
such holders shall be under any obligation to bear any of the expenses or
professional fees and disbursements to be incurred by the Company in connection
with the preparation and filing of such post-effective amendment, or new
registration statement or such notification. With respect to any post-effective
8
amendment, or new registration statement, or notification filed by the Company
pursuant to this subsection, the selling securityholders offering any
Underwriters' Unit Warrants and their underlying Units thereunder shall be
entitled to the benefits of indemnification by the Company in like manner and
to the same extent as the Company indemnifies the Underwriters pursuant to
Section 6(a) hereof.
(k The Company will not, without the prior written consent of the
Representative, for a period of six months after the effective date of the
Registration Statement, sell any Units of the Company or sell or grant options,
warrants or rights with respect to any Units of the Company, or permit or cause
a public offering of any Units of the Company except in accordance with the
provisions of the Registration Statement.
(l) For a period of five years after the effective date of the
Registration Statement, the Representative shall have the right to designate
one person as an advisor to the Company's Board of Directors, who will receive
compensation equal to that received by any other director as well as
reimbursement of expenses for attending meetings, but who will have no power to
vote as a director. Such person shall be indemnified by the Company against any
claim arising out of his participation at meetings of the Board of Directors to
the same extent as any director. During such five year period, the Company will
hold at least four meetings per year of its Board of Directors. In the event
the Company maintains a liability insurance policy with coverage for the acts
of its officers and directors, the Company agrees, if possible, to include the
Representative and its designee as an insured under the policy.
(m) At the Closing, the Company shall enter into a consulting
agreement ("Consulting Agreement") retaining the Representative as financial
consultant to the Company for a two-year period commencing as of such closing,
at a fee of $48,000 per year, the total amount of which shall be paid at the
Closing. The Company and the Representative shall also enter into an agreement
which will provide for a finder's fee, ranging from 7% of the first $1,000,000
down to 2-1/2% of the excess over $9,000,000 of the consideration involved in
any transaction (including mergers and acquisitions) consummated by the Company
in which the Representative introduced the other party to the Company during
the five-year period commencing on the Effective Date.
(n) The Company shall cooperate with the Underwriters in making
available to their representatives such information as they may request in
making an investigation of the Company and its affairs.
(o) Until such time as the Units of the Company are listed on the New
York Stock Exchange or the American Stock Exchange but in no event more than
three years from the effective date, the Company shall retain Compliance
Management Company or a similar company, to prepare a post registration blue
sky market survey for the Representative for distribution to market makers.
Such survey shall be provided to the Representative annually with the first
survey delivered to it promptly after the completion of the public offering
hereunder. The cost of the first year's survey will not exceed $4,000. In lieu
of the foregoing, the Company may cause its legal counsel to provide the
Representative with a survey to be updated at least annually.
9
(p) At all times, so long as any of the warrants referred to herein
are outstanding, the Company will have reserved authorized but unissued shares
of stock and underlying warrants, available for immediate issuance in amounts
necessary for the exercise of all warrants then outstanding. The Company agrees
to qualify the Units for listing on the NASDAQ System Small-Cap Issues on the
Effective Date and will take all necessary and appropriate action so that the
Units and after separate of the Units, their underlying Units will be listed
for trading in the NASDAQ System Small-Cap Issues for at least five years from
the Effective Date provided the Company otherwise complies with the prevailing
maintenance requirements of NASDAQ System Small-Cap. In addition, at such time
as the Company qualifies for listing its Units on the National Market System of
NASDAQ, the Company will take all steps necessary to have the Units and after
separation of the Units, their underlying Units will thereof listed on the
National Market System of NASDAQ in lieu of listing as Small-Cap Issues. The
Company shall comply with all periodic reporting and proxy solicitation
requirements imposed by the Commission pursuant to the 1934 Act, and shall
promptly furnish you with copies of all material filed with the Commission
pursuant to the 1934 Act or otherwise furnished to shareholders of the Company.
(q) The Company will register the Units and components thereof
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended,
not later than the Effective Date.
(r) The Company will pay the fees and expenses (but not transfer
taxes, if any) of the Company's transfer agents, warrant agents, and registrars
(if any), without charge to stockholders and warrantholders, for not less than
five years after the effective date of the Registration Statement.
(s) The Representative shall receive a fee of 10% of the proceeds as
and when received by the Company from time to time upon the exercise of any
Warrants after one year from the Effective Date, provided that such fee shall
be paid only in accordance with the rules of the NASD and any applicable Units
laws and rules and regulations. The Representative will not be eligible to
receive the aforementioned warrant exercise fee as a result of transactions of
the following nature: (i) the exercise of Warrants when the market price of the
Company's Common Stock is lower than the exercise price; (ii) the exercise of
Warrants held in any discretionary account; (iii) the exercise of Warrants
where documents disclosing the compensation arrangements (e.g., the Prospectus)
have not been provided to the warrantholder; (iv) the exercise of Warrants in
unsolicited transactions; and (v) the exercise of any warrants during the one
year period commencing on the Effective Date, and further provided that no
broker shall be paid a fee unless such broker is designated in writing by the
customer as the soliciting broker. In addition, it will be a condition to the
receipt by the Representative of such fee that it shall not, in the ten days
immediately preceding the solicitation of the exercise or the date of such
exercise, have bid for or purchased the Common Stock of the Company (or any
Units of the Company convertible into or exchangeable for such Common Stock,
including the Warrants) or otherwise have engaged in any activity that would be
prohibited by Rule 10b-6 under the Securities Exchange Act of 1934, as amended,
by one participating in a distribution of the Company's Units whether as
underwriter or otherwise. The Company will not solicit warrant exercises except
through the Representative.
10
(t) Immediately following the closing, the Company shall exercise its
best efforts to have the Units listed in the appropriate Standard & Poor's
manual in order to comply with the requirements of the so-called "standard
manuals exemption" of various blue sky authorities.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The Underwriters' obligations
to purchase and pay for the Units, as provided herein, shall be subject to the
accuracy, as of the date hereof and as of the Closing Date (as if made on the
Closing Date), of the representations and warranties of the Company herein, to
the accuracy of statements made in each certificate delivered pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later than
5:00 P.M., New York City time, on the day following the date of this Agreement,
unless a later time and date be agreed to by you; and no stop order suspending
the effectiveness of the Registration Statement, or order preventing or
suspending the use of any Preliminary Prospectus or of the Prospectus, shall
have been issued and no proceedings for such purpose shall have been instituted
or be pending or, to the knowledge of the Company or you, shall be contemplated
by the Commission; and any request of the Commission for additional information
(to be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the satisfaction of the Underwriters' Counsel.
(b) On the Closing Date the Underwriters shall have received an opinion of
▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Company, dated the Closing Date, to the effect
that:
(i) The Company has full corporate power and authority to enter into
this Agreement and this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency or similar laws governing the rights of creditors generally and to
the discretion of courts in granting equitable remedies, except insofar as
rights to indemnity or contribution hereunder may be limited by Federal
Securities laws.
(ii) The Warrant Agreement, the Consulting Agreement and the Mergers
and Acquisitions Agreement have been duly authorized, executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms (except insofar as
enforcement of the indemnification provisions thereof may be limited by
applicable federal Securities laws or principles of public policy and subject
to bankruptcy, insolvency, moratorium, reorganization and similar laws
affecting creditors' rights generally and to general principles of equity). The
Company has full corporate power and authority to enter into the Warrant
Agreement and the Consulting Agreement and to sell, issue and deliver the
Shares, Warrants, Underwriters' Stock Warrants, Underwriters' Warrants and the
Units underlying all warrants;
(iii) The Company has authorized and outstanding capital stock as set
forth under "Capitalization" in the Prospectus; all of the Company's
outstanding shares have been duly authorized and validly issued, and are fully
paid and nonassessable; all of the Units, Series A Preferred Stock,
11
Warrants, Underwriters' Unit Warrants sold pursuant to this Agreement have been
duly authorized, validly issued and delivered and are fully paid and
nonassessable, and conform to the descriptions thereof in the Prospectus and
such descriptions conform to the rights duly set forth in the Certificate of
Incorporation of the Company, the Warrant Agreement, the Underwriters' Unit
Warrants and this Agreement; the Warrants, the Underwriters' Unit Warrants are,
and the warrants underlying the Underwriters' Warrants will, when issued in
accordance with the provisions of the Warrant Agreement, the Underwriters' Unit
Warrants and this Agreement be, valid and legally binding obligations of the
Company in accordance with their respective terms (subject to bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
affecting creditors' rights generally and to general principles of equity); the
Units underlying the Warrants and the Underwriters' Unit Warrants have been
validly authorized and reserved for issuance, and any shares when issued in
accordance with the terms of the Warrants or Underwriters' Unit, will be
validly issued and will be fully paid and non-assessable; the holders of the
Units, Series A Preferred Stock, Warrants and Underwriters' Unit Warrants, and
the Units underlying the Warrants are not, and will not be, subject to any
personal liability for liabilities of the Company by reason of being holders
thereof; and none of such Units which have been issued, have been issued in
violation of the preemptive rights or any other rights of any stockholder of
the Company and no stockholder of the Company has any preemptive right to
subscribe for or to purchase any of the Units, Series A Preferred Stock,
Warrants, Underwriters' Unit Warrants or Units underlying the Warrants;
(iv) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware, has full
corporate power and authority to conduct its business as presently conducted
and as described in the Prospectus and to own its properties and is duly
qualified to do business and is in good standing in each jurisdiction wherein
the property owned or leased, or the conduct of business, by it makes such
qualification necessary (except where failure to so qualify would not have a
material adverse effect on the Company);
(v) The Registration Statement has become effective under the
Securities Act and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or is pending or
contemplated by the Commission;
(vi) The Registration Statement and the Prospectus, and any amendment
or supplement thereto, comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations thereunder
(except that such counsel need express no opinion as to the financial
statements and schedules and financial data included therein or omitted
therefrom);
(vii) Such counsel has assisted in the preparation of the Registration
Statement and the Prospectus and no fact has come to the attention of such
counsel which leads such counsel to believe that, either as of the Effective
Date or the date of the opinion, (A) either the Registration Statement or the
Prospectus or any amendment or supplement thereto (except for the financial
statements and schedules and financial data included therein or omitted
therefrom, as to which such counsel need express no opinion) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (B)
12
there is any material legal, governmental or administrative proceeding pending,
threatened or contemplated to which the Company is or may become a party or to
which any of its property is or may become subject, or any basis for any legal,
governmental or administrative proceeding, required to be described in the
Prospectus under the Act which is not described as required, or (C) there is
any contract or document of a character required to be described in the
Registration Statement or the Prospectus, or to be filed as an exhibit to the
Registration Statement, under the Act which is not described or filed as
required.
(viii) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated therein do
not and will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, the Articles of
Incorporation or By-Laws of the Company or any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument known to such counsel to
which the Company is a party or by which it is bound or to which any of its
property is subject, or any Federal, state or other statute, law, rule or
regulation, or any judgment, order or decree of any court or governmental
agency or body known to such counsel having jurisdiction over the Company or
any of its property;
(ix) No consent, approval, authorization or order of, or declaration
or filing with, any government, governmental instrumentality or court, is
required for the valid consummation by the Company of the transactions
contemplated by this Agreement, except such as may be required under the
Securities Act or any state Units or "blue sky" laws in connection with the
purchase, sale and distribution of the Units; and
(x) To the best of such counsel's knowledge, the Company possesses all
material permits, certificates of compliance, approvals, licenses, waivers,
consents and other rights from governmental authorities which are requisite for
the material conduct of its business as presently conducted and as described in
the Prospectus (except such as in the aggregate would not materially affect the
business or operations of the Company), for the consummation of the
transactions contemplated in this Agreement and for the offering contemplated
by the Prospectus, and each such permit, certificate of compliance, approval,
license, waiver, consent and right is valid and in full force and effect.
(xi) Such opinion shall be to such further effect with respect to
other legal matters relating to this Agreement and the sale of the Units
hereunder as counsel for the Underwriters may reasonably request. In rendering
the opinions set forth above, such counsel may rely upon certificates of
officers of the Company and public officials as to matters of fact, and may
rely as to all matters of law other than the laws of the United States or the
corporate laws of the State of Delaware upon opinions of counsel satisfactory
to you, in which case the opinion shall state that they have no reason to
believe that you and they are not entitled to so rely. Additionally, in
rendering such opinion, counsel shall not be required to opine upon the
availability of equitable remedies, including but not limited to, the remedies
of specific performance and injunctive relief.
13
(c) At the time this Agreement is executed by the parties hereto and on
the Closing Date (and on the Additional Closing Date, if any), the Underwriters
shall have received from BDO ▇▇▇▇▇▇▇, LLP, a letter dated as of each such date,
to the effect that:
(i) They are independent accountants with respect to the Company
within the meaning of the Act and the applicable published Rules and
Regulations thereunder;
(ii) In their opinion, the financial statements (including the
schedules, if any) in the Registration Statement examined by such firm, comply
as to form in all material respects with the applicable accounting requirements
of the Act and the published Rules and Regulations thereunder with respect to
registration statements on Form SB-2;
(iii) On the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of reading
the minutes of meetings of the stockholders and the Board of Directors of the
Company since the date of the latest audited balance sheet as set forth in the
minute books through a specified date not more than five business days prior to
the date of the letter, reading the unaudited interim financial statements (if
any), including the schedules (if any), of the Company included in the
Registration Statement and making inquiries of certain officials of the Company
who have responsibility for financial and accounting matters regarding the
specific items for which representations are requested below, nothing has come
to their attention as a result of the foregoing procedures that caused them to
believe that (A) the unaudited financial statements (if any), including the
schedules (if any), of the Company included in the Registration Statement do
not comply as to form in all material respects with the applicable accounting
requirements of the Act and the published Rules and Regulations thereunder; (B)
said financial statements, including the schedules (if any), are not presented
fairly, in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited financial statements;
(C) during the period from the date of the latest balance sheet covered by
their report(s) included in the Registration Statement to a specific date not
more than five business days prior to the date of the letter, there has been
any change in the capital stock or long-term debt of the Company as compared
with the amounts shown in the balance sheet included in the Registration
Statement, except as set forth in or contemplated by the Registration
Statement; or (D) for the period from the date of the last balance sheet
contained in the Prospectus to a specified date not more than five days prior
to the date of such letter, there has been any decrease, except as described in
such letter and previously discussed with you, in consolidated gross revenues,
net income, consolidated assets or total stockholders' equity as compared with
the amounts shown on such balance sheet, except for such changes or decreases
which the Registration Statement discloses have occurred or may occur; and
(iv) In addition to the examination referred to in their report
included in the Registration Statement and the limited procedures referred to
in clause (iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and Prospectus and
which are specified by you, and have found such amounts, percentages and
financial information to be in agreement with the relevant accounting and
financial records of the Company and its subsidiaries identified in such
letter.
14
(d) The Representative shall have received a certificate or
certificates, dated the Closing Date and the Additional Closing Date, executed
by at least two officers of the Company, including the Chairman of the Board or
the President and the principal financial or accounting officer of the Company,
to the effect that:
(i) No stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act;
(ii) Neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has not
been so set forth;
(iii) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material transaction,
not in the ordinary course of business, and there has not been any material
change in the capital stock or funded debt of the Company, or any material
adverse change in the condition (financial or other) or results of operations
of the Company;
(iv) There are no legal proceedings pending or threatened against the
Company of a character affecting the validity of this Agreement or required to
be disclosed in the Prospectus which are not disclosed therein; there are no
transactions or contracts which are required to be summarized therein which are
not so summarized; and there are no material contracts or documents required to
be filed as exhibits to the Registration Statement which are not so filed;
(v) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company has not
sustained any material loss or damage to its properties, whether or not
insured; and
(vi) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the date of the letter;
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the date of
the letter.
(e) The Company shall have furnished to you such certificates, in
addition to those specifically mentioned herein, as you may have reasonably
required in a timely manner as to the accuracy and completeness, at the Closing
Date, of any statement in the Registration Statement or the Prospectus; as to
the accuracy, at the Closing Date, of the representations and warranties of the
Company herein and in each certificate and document contemplated under this
Agreement to be delivered to you; as to the performance by the Company of its
respective obligations hereunder and
15
under each such certificate and document; or as to the fulfillment of the
conditions concurrent and precedent to your obligations hereunder.
(f) All corporate proceedings and related matters in connection with
the organization of the Company and the qualification, authorization, issuance,
sale and delivery of the Units shall be satisfactory to ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.,
counsel for the Underwriters, and such counsel shall have been furnished with
such papers and information as he may reasonably have requested in this
connection.
(g) Certain holders of outstanding Units of the Company shall have
agreed not to sell or transfer their Units under Rule 144 under the Act or
otherwise for certain periods of time following the Effective Date of the
offering, as set forth in the Prospectus, without the prior written consent of
the Representative.
(h) All such opinions, letters, certificates and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Underwriters and to their counsel.
(i) If any condition to the Underwriters' obligations hereunder to be
satisfied at or prior to the Closing Date is not so satisfied, the Underwriters
may terminate this Agreement without liability on their part or on the part of
the Company, except for the expenses to be paid or reimbursed by the Company
pursuant to Section 4(a)(v) of this Agreement and except for any liability
under Sections 6 and 7 of this Agreement.
6. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls each Underwriter within
the meaning of the Act against any losses, claims, damages or liabilities,
joint or several, to which it or such controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any blue sky application or other
document executed by the Company 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 Units under the Units laws
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse it and each such
controlling person for any legal or other expenses reasonably incurred by it or
such controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus, the Prospectus or such
amendment or supplement, or in such blue sky application or such other
document, in reliance upon and in conformity with written information furnished
to the Company by an Underwriter specifically for use in the preparation
thereof; and provided, further, that the Company will not be liable under this
indemnity agreement, insofar as it relates to any Preliminary Prospectus, to
the extent that any such loss, claim, damage, liability or action results from
the fact that an Underwriter sold Units to a person
16
to whom there was not sent or given, at or prior to the written confirmation of
such sales, a copy of the Prospectus (or of the Prospectus as then amended or
supplemented if the Company had previously furnished copies thereof to you).
This indemnity agreement will be in addition to any liability which the Company
and the Selling Stockholders may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of the Act, to the same extent as the foregoing indemnity from the Company to
such Underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director, officer or controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any blue sky
application or other document executed by the Company specifically for that
purpose filed in any state or other jurisdiction in order to qualify any or all
of the Units under the Units laws thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, such Preliminary Prospectus, the Prospectus or such
amendment or supplement, or in such blue sky application or such other
document, in reliance upon and in conformity with written information furnished
to the Company by such Underwriter specifically for use in the preparation
thereof; and will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability which an
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 6, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 6. In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party, similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall be liable for any
settlement of any action effected without its written consent.
7. CONTRIBUTION. (a) In order to provide for just and equitable
contribution under the Act in any case in which (i) an Underwriter (or any
person who controls the Underwriter within the meaning of
17
the Act) makes claim for indemnification pursuant to Paragraph 6(a) hereof but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that Paragraph 6(a) provides for
indemnification in such case or (ii) contribution under the Act may be required
on the part of an Underwriter or any such controlling person in circumstances
for which indemnification is provided under Paragraph 6(b), then, and in each
case, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that the Underwriters are
responsible for an aggregate of 10% (being the amount of the Underwriter's
commission) and the Company are responsible for the remaining portion;
provided, however, that, in any such case, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(b) Promptly after receipt by any party to this Agreement of notice of
the commencement of any action, suit or proceeding, such party will, if a claim
for contribution in respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the commencement
thereof; but the omission so to notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution under the Act. In case any such action, suit or proceeding is
brought against any party, and such party notifies a contributing party of the
commencement thereof, the contributing party will be entitled to participate
therein with the notifying party and any other contributing party will be
entitled to participate therein with the notifying party and any other
contributing party similarly notified.
8. SUBSTITUTION OF UNDERWRITERS. (a) If one or more Underwriters shall
default in its or their obligations to purchase and pay for the Units hereunder
and if the aggregate number of such Units which all Underwriters so defaulting
shall have agreed to purchase does not exceed 10% of the aggregate number of
Units to be purchased by the Underwriters, each non-defaulting Underwriter
shall have the right and is obligated, severally, to purchase and pay for (in
addition to the Units set forth opposite its name in Schedule A) that portion
of the Units agreed to be purchased by all such defaulting Underwriters which
the Units set forth opposite its name in Schedule A bears to the aggregate
Units so set forth opposite the names of all such non-defaulting Underwriters.
In such event, you as Representative, for the accounts of the several
non-defaulting Underwriters, shall take up and pay for all or any part of such
additional Units to be purchased by each such Underwriter under this Section
8(a), and may postpone the Closing Date to a time not exceeding three full
business days after the Closing Date determined as provided in Section 3 hereof
during which time the Company will prepare and file any amendments to the
Registration Statement and take any other action which the Representative or
its counsel shall deem necessary or appropriate to reflect such event; or
(b) If one or more Underwriters default in its or their obligations to
purchase and pay for Units hereunder and if the aggregate number of such Units
which all Underwriters so defaulting shall have agreed to purchase shall exceed
10% of the aggregate number of Units to be purchased by the Underwriters, or if
one or more Underwriters for any reason permitted hereunder cancel its or their
18
obligations to purchase and pay for Units hereunder, the non-canceling and
non-defaulting Underwriters (hereinafter called the "remaining Underwriters")
shall have the right to purchase such Units in such proportion as may be agreed
among them, at the Closing Date determined as provided in Section 3 hereof. If
the remaining Underwriters do not purchase and pay for such Units at such
Closing Date, the Closing Date shall be postponed for twenty-four hours and the
remaining Underwriters shall have the right to purchase such Units or to
substitute another person or persons, to purchase the same, or both, at such
postponed Closing Date. If by such postponed Closing Date the remaining
Underwriters have not exercised such right to purchase or obtained a substitute
purchaser or purchasers, the Closing Date shall be postponed for a further
twenty-four hours and the Company shall have the right to substitute another
person or persons, satisfactory to the Representative, to purchase such Units
at such second postponed Closing Date. If the Company shall not have found such
purchasers for such Units by such second postponed Closing Date, then this
Agreement shall automatically terminate and neither the Company nor the
remaining Underwriters shall be under any obligation under this Agreement
except that the Company shall remain liable for the full amount of expenses
incurred as provided in Section 4(a)(v) and to the extent provided in Sections
6(a) and 7 hereof and the Underwriters shall remain liable to the extent
provided in Sections 6(b) and 7 hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default or obligate any Underwriter to purchase or find purchasers for
any Units in excess of those agreed to be purchased by such Underwriter under
the terms of Sections 3 and 8(a) hereof.
9. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. All
representations and warranties of the Company contained herein and in the
certificate or certificates delivered pursuant to Section 5(d) hereof, and the
indemnity and contribution agreements contained in Sections 6 and 7 hereof,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling
person, or by or on behalf of the Company or any officer, director or
controlling person, or of any termination of this Agreement, and shall survive
delivery of and payment for the Units.
10. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF. (a) This
Agreement shall become effective at 9:00 A.M., New York City time, on the first
full business day after the Registration Statement has become effective, or at
such earlier time after the Registration Statement has become effective as you
in your discretion shall first release the Units for sale to the public. For
the purposes of this Section 10, the Units shall be deemed to have been
released for sale to the public upon release by you of the publication of a
newspaper advertisement relating to the Units or upon release by you of
telegrams or facsimile transmissions offering the Units for sale, whichever
shall first occur. You or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except as noted
below, by giving the notice hereinafter specified at or before the time this
Agreement becomes effective; provided however, that the provisions of this
Section, Section 4(a)(v), Section 6 and Section 7 shall at all times be
effective.
(b) You shall have the right to terminate this Agreement by giving the
notice hereinafter specified at any time at or prior to the Closing Date if (i)
the Company shall have failed, refused or been unable,
19
at or prior to the Closing Date, to perform any agreement on its part to be
performed hereunder, or because any other condition precedent to the
Underwriters' obligations hereunder required to be fulfilled by the Company
have not fulfilled, or if (ii) trading on the New York Stock Exchange shall
have been generally suspended, or minimum or maximum prices for trading shall
have been generally fixed, or maximum ranges for prices for Units shall have
been generally required, on the New York Stock Exchange, by the New York Stock
Exchange or by order of the Commission or any other governmental authority
having jurisdiction, or if there has been a substantial adverse change in
general market or economic conditions, or if a banking moratorium shall have
been declared by Federal or New York authorities, or if an outbreak of
hostilities or other national or international calamity of such nature as to
disorganize the Units markets in the United States shall have occurred since
the execution hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 10, you shall notify the
Company promptly by telephone or telegram, confirmed by letter. If the Company
elects to prevent this Agreement from becoming effective, the Company shall
notify you promptly by telephone or telegram, confirmed by letter.
11. NOTICES. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to the Underwriters
shall be mailed, delivered or telegraphed and confirmed to you as
Representative at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or if sent to
the Company, shall be mailed, delivered or telegraphed and confirmed to it at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇ marked to the attention of
the President.
12. PARTIES. This Agreement shall inure to the benefit of and be binding
upon you and the Company and the several Underwriters and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person or corporation, other than
the parties hereto and their respective successors and assigns and the
controlling persons and the officers and directors referred to in Section 6
hereof, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of the parties hereto and their respective successors and
assigns and said controlling persons and said officers and directors, and for
the benefit of no other person or corporation. No purchaser of any of the Units
from any Underwriter shall be construed a successor or assign by reason merely
of such purchase.
13. INFORMATION FURNISHED BY UNDERWRITERS. The statements set forth in the
last paragraph on the cover page, in the stabilization legend, under the
caption "Underwriting" and the statements regarding counsel for the
Underwriters under the caption "Legal Matters" in any Preliminary Prospectus
and in the Prospectus and in blue sky reports of sales, if any, constitute the
written information furnished by or on behalf of any Underwriter referred to in
Sections 2(b), 6(a) and 6(b) hereof.
14. MISCELLANEOUS. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the Company shall be entitled to act and rely
upon any statement, request, notice or agreement
20
on behalf of any Underwriters made by you as the Representative. This Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of New York, and the Company hereby consents and will submit
to the jurisdiction of the courts of the State of New York and of any federal
court sitting in the City of New York with respect to controversies arising
under this Agreement.
If the foregoing correctly sets forth the understanding between the
Company and the several Underwriters, please so indicate on behalf of the
Underwriters in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between the Company and each of the
Underwriters.
Very truly yours,
EUROWEB INTERNATIONAL CORP.
By:_________________________________
Accepted as of the date first above written:
▇.▇. ▇▇▇▇▇▇▇ & CO., INC.
Acting on behalf of the several
Underwriters named in Schedule A hereto.
By:_____________________________
21
SCHEDULE A
EUROWEB INTERNATIONAL CORP.
UNDERWRITING AGREEMENT DATED ______________________, 1998
This Schedule sets forth the name and address of each Underwriter and the
number of Shares to be purchased by each Underwriter from the Company and the
Selling Stockholders.
NAME ADDRESS NUMBER OF UNITS
---- ------- ---------------
▇.▇. ▇▇▇▇▇▇▇ 1 Battery Park Plaza
& Co., Inc. ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
---------
Total.................................. 800,000
---------
22