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EXHIBIT 1.1
NTN COMMUNICATIONS, INC.
UNDERWRITING AGREEMENT
2,000,000 Shares of Common Stock
(Par Value $.005 Per Share)
New York, New York
April 14, 2000
Starr Securities, Inc.
60 Broad Street
New York, New York 10004
GunnAllen Financial, Inc.
1715 Westshore Blvd - Suite 775
Tampa, Florida 33607
Dear Sirs:
NTN Communications, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Starr Securities, Inc. ("Starr
Securities") and GunnAllen Financial, Inc. ("GunnAllen" and collectively with
Starr, the "Underwriters", unless the context is otherwise) pursuant to this
Underwriting Agreement (the "Agreement") an aggregate of 2,000,000 shares (the
"Shares") of Common Stock of the Company, par value .005 per share (the "Common
Stock"). It is understood that the Underwriters propose to offer the Shares to
be purchased hereunder to the public upon the terms and conditions set forth
herein and as described in the Registration Statement and the Prospectus (as
such terms are hereinafter defined). The Company will also issue and sell to
GunnAllen, for its own account and the accounts of its designees for an
aggregate price of $48.00, warrants (the "Underwriters' Warrants") to purchase
up to an aggregate of 48,000 shares of Common Stock (the "Warrant Shares") at an
exercise price of $3.75 per share, which sale will be consummated in accordance
with the terms and conditions of the form of Underwriters' Warrant substantially
in the form of Exhibit A to this Agreement.
1. Representations and Warranties. The Company represents and warrants
to, and agrees with, the Underwriters:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission")
in conformity in all material respects with the
provisions of the Securities Act of 1933, as amended,
and the rules and regulations (the "Rules and
Regulations") of the Commission thereunder
(collectively, the "Act"), a registration statement
on Form S-3 (Registration No. 333-33078) under the
Act (the "Registration Statement"), including a
prospectus relating to the Shares; and an amendment
thereto has been filed
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with the Commission, and such amendment has been
similarly prepared. Such registration statement and
such amendment have become effective under the Act.
The Company also has filed, or proposes to file, with
the Commission pursuant to Rule 424(b) under the Act,
a prospectus supplement relating to the offering of
the Shares pursuant to Rule 415 of the Act.
The term "Registration Statement" as used in this Agreement
means the Registration Statement (including all financial schedules and
exhibits), as amended at the time it became effective, as supplemented or
amended prior to the execution of this Agreement. The term "Prospectus" as used
in this Agreement means the prospectus in the form first used to confirm sales
of Shares (the "Base Prospectus") together with the prospectus supplement
relating to the offering of the Shares under Rule 415 of the Act dated the date
hereof in the form first filed with the Commission on or after the date hereof
(the "Prospectus Supplement"). The term "Prepricing Prospectus Supplement" as
used in this Agreement means the Base Prospectus together with any prospectus
supplement subject to completion included in the Registration Statement as filed
with the Commission pursuant to Rule 424(b) under the Act; and as such
prospectus shall have been amended from time to time prior to the date of the
Prospectus. Any reference in this Agreement to the Registration Statement, the
Base Prospectus, any Prepricing Prospectus Supplement or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of the
Registration Statement, such Prepricing Prospectus Supplement or the Prospectus,
as the case may be, and any reference to any amendment or supplement to the
Registration Statement, any Prepricing Prospectus Supplement or the Prospectus
shall be deemed to refer to and include any documents filed after such date
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which, upon filing, are incorporated by reference therein, as required by
paragraph (b) of Item 12 of Form S-3. As used herein, the term "Incorporated
Documents" means the documents which at the time are incorporated by reference
in the Registration Statement, any Prepricing Prospectus Supplement, the
Prospectus, or any amendment or supplement thereto.
(b) Neither the Commission nor, to the best of the
Company's knowledge, any state regulatory authority
has issued an order preventing or suspending the use
of any Prospectus, nor has the Commission or any such
authority instituted or, to the best of the Company's
knowledge, threatened to institute any proceedings
with respect to such an order.
(c) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3
under the Act, and the standards for such form prior
to October 21, 1992. The Registration Statement in
the form in which it became effective and also in
such form as it may be when any post-effective
amendment thereto shall become effective, and the
Prospectus and any supplement or amendment thereto
when filed with the Commission under Rule 424(b)
under the Act, complied or will comply in all
material respects with the provisions of the Act and
will not at any such times 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 not
misleading, except that this representation and
warranty does not apply to statements in or
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omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity
with information relating to the Underwriters
furnished to the Company in writing by or on behalf
of the Underwriters expressly for use therein.
(d) The Incorporated Documents heretofore filed, when
they were filed (or, if any amendment with respect to
any such document was filed, when such amendment was
filed), conformed in all material respects with the
requirements of the Exchange Act and the Rules and
Regulations thereunder, any further Incorporated
Documents so filed will, when they are filed, conform
in all material respects with the requirements of the
Exchange Act and the Rules and Regulations
thereunder; no such document when it was filed (or,
if an amendment with respect to any such document was
filed, when such amendment was filed), contained an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary in order to make the statements therein,
in light of the circumstances under which they were
made, not misleading; and no such further document,
when it is filed, will contain an untrue statement of
a material fact or will omit to state a material fact
required to be stated therein or necessary in order
to make the statements therein, in light of the
circumstances under which they are made, not
misleading.
(e) The Company has been duly incorporated and is now,
and at the Closing Date will be, validly existing and
in good standing as a corporation under the laws of
the State of Delaware, and has (i) an authorized and
outstanding capitalization and indebtedness as set
forth in the Registration Statement and the
Prospectus at the respective dates referred to
therein, and (ii) full corporate power and authority
to own or lease, as the case may be, its properties,
whether tangible or intangible, and conduct its
business as presently conducted and as described in,
or contemplated by, the Registration Statement and
the Prospectus, and to execute, deliver and perform
this Agreement and the Underwriters' Warrant
Agreement and to consummate the transactions
contemplated hereby and thereby. The Company is duly
qualified to do business and is in good standing as a
foreign corporation in all jurisdictions in which the
nature of the business transacted by it or the
character or location of its properties, in each case
taken as a whole, makes such qualification necessary,
except where the failure to so qualify would not have
a material adverse effect upon the financial
condition, results of operations, business or
properties of the Company and its Subsidiaries (as
defined below), taken as a whole.
(f) All of the Company's subsidiaries (collectively, the
"Subsidiaries") are listed on Schedule I attached
hereto. Except for its interests in the Subsidiaries,
the Company does not own, directly or indirectly, any
capital stock of or other equity interest in any
corporation, partnership or other legal entity
whatsoever. Each Subsidiary is a corporation, general
partnership, limited partnership, or limited
liability company, as the case may be, duly
organized, validly existing
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and in good standing in the jurisdiction of its
incorporation or organization, with full corporate,
partnership or limited liability company power and
authority to own or lease, as the case may be, its
properties, whether tangible or intangible, and
conduct its business as presently conducted and as
described in, or contemplated by, the Registration
Statement and the Prospectus. Each of the
Subsidiaries is duly qualified to do business and is
in good standing as a foreign corporation,
partnership or limited liability company, as the case
may be, in all jurisdictions in which the nature of
the business transacted by it or the character or
location of its properties, in each case taken as a
whole, makes such qualification necessary, except
where the failure to so qualify would not have a
material adverse effect upon the financial condition,
results of operations, business or properties of the
Company and the Subsidiaries taken as a whole. All of
the outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable. All
of the interests owned or held by the Company,
directly or indirectly, in each of the Subsidiaries
are free and clear of any lien, adverse claim,
security interest, equity or other encumbrance,
except for such as would not have a material adverse
effect upon the financial condition, results of
operations, business or properties of the Company and
the Subsidiaries taken as a whole.
(g) Each of the Company and the Subsidiaries holds, or
will hold by the Closing Date, all licenses,
certificates and permits from state, federal or other
regulatory authorities which are material for the
conduct of its business as presently conducted and as
described in the Registration Statement and the
Prospectus, and is in material compliance with all
laws and regulations and all orders and decrees
applicable to it or to such business or assets, and
there are no proceedings pending or, to the knowledge
of the Company, threatened, seeking to cancel,
terminate or limit such licenses, approvals or
permits.
(h) The financial statements of the Company, including
the related schedules and notes included or
incorporated by reference into the Registration
Statement and the Prospectus (and any amendment or
supplement thereto), present fairly the consolidated
financial position, results of operations and changes
in financial position of the Company and the
Subsidiaries on the basis stated in the Registration
Statement as of the dates thereof and for the
respective periods indicated therein. Such financial
statements have been prepared in accordance with
generally accepted accounting principles consistently
applied throughout the periods involved, except as
otherwise stated in the Registration Statement and
the Prospectus, and all adjustments necessary for a
fair presentation of results for such periods have
been made. The other financial and statistical
information and data included or incorporated by
reference in the Registration Statement and the
Prospectus (and any amendment or supplement thereto)
are presented fairly and have been compiled on a
basis consistent with that of the financial
statements included or incorporated by reference in
the Registration Statement and the Prospectus and the
books and records of the Company and the
Subsidiaries.
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(i) The accounting firm of KPMG LLP, which has certified
the financial statements included or incorporated by
reference in the Registration Statement and the
Prospectus (or any amendment or supplement thereto),
are independent public accountants within the meaning
of the Act and the Rules and Regulations.
(j) Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement
thereto), subsequent to the respective dates as of
which information is given in the Registration
Statement and the Prospectus (or any amendment or
supplement thereto), neither the Company nor any of
the Subsidiaries has (i) incurred any material
liability or obligation, direct or contingent, or
entered into any material transactions not in the
ordinary course of business; (ii) sustained any
material loss or interference with its business from
fire, storm, explosion, flood or other casualty
(whether or not such loss is insured against), or
from any labor dispute or court or governmental
action, order or decree; or (iii) paid or declared
any dividend or other distribution on its Common
Stock or its other securities or redeemed or
repurchased any of its Common Stock or other
securities. Except as disclosed in the Registration
Statement and the Prospectus (or any amendment or
supplement thereto), and subsequent to the respective
dates as of which information is given in the
Registration Statement and Prospectus, there have not
been any changes in the capital stock or any material
increase in the long-term debt or other securities of
the Company or any of the Subsidiaries or any
material adverse change in the financial condition,
business, operations, income, net worth or properties
of the Company and its Subsidiaries taken as a whole.
(k) This Agreement and compliance by the Company with the
terms hereof have been duly and validly authorized by
all necessary corporate action, and this Agreement
has been duly executed and delivered by the Company
and constitutes the valid and binding obligation of
the Company enforceable in accordance with its terms,
except to the extent that (i) enforceability may be
limited by any bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or
similar laws affecting creditors' rights generally,
(ii) the remedy of specific performance and
injunction or other forms of equitable relief may be
subject to equitable defenses and the discretion of
the court before which any proceeding therefor may be
brought, and (iii) rights to indemnity and
contribution hereunder may be limited by federal or
state securities laws. The Underwriters' Warrant and
compliance by the Company with the terms thereof have
been duly and validly authorized by all necessary
corporate action and, upon execution and delivery
thereof, the Underwriters' Warrant will be duly
executed and delivered by the Company and will
constitute the valid and binding obligation of the
Company enforceable in accordance with its terms,
except to the extent enforceability may be limited by
any bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws
affecting creditors' rights generally and to the
extent that the remedy of specific performance and
injunction or other forms of equitable relief may be
subject to equitable defenses and the discretion of
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the court before which any proceeding therefor may be
brought. The Company is not presently in violation of
or in default under this Agreement or the
Underwriters' Warrant Agreement and the execution,
delivery and performance by the Company of this
Agreement and the Underwriters' Warrant Agreement and
the consummation of the transactions herein and
therein contemplated, will not, with or without the
giving of notice or the lapse of time or both, (i)
result in a breach of or constitute a default under
any of the terms, conditions or provisions of the
Certificate of Incorporation or By-laws, each as
amended, of the Company or any of the Subsidiaries;
(ii) result in a breach of or conflict with any of
the terms or provisions of, or constitute a default
under, or result in the modification or termination
of, or the creation or imposition of any lien,
security interest, charge or encumbrance upon any
property or asset of the Company or any of the
Subsidiaries pursuant to any material note,
indenture, mortgage, deed of trust, contract,
commitment or other material agreement or instrument
to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the
Subsidiaries or any of their respective properties or
assets may be bound or affected; (iii) violate any
existing law, order, rule, regulation, writ,
injunction or decree of any government, governmental
instrumentality, agency, body or court, domestic or
foreign, having jurisdiction over the Company or any
of the Subsidiaries or any of their respective
properties or businesses; or (iv) have any effect on
any permit, certification, registration, approval,
consent, order, license, franchise or other
authorization (collectively, the "Permits") necessary
for the Company or any of the Subsidiaries to own or
lease and operate its properties and to conduct its
business as presently conducted or the ability to
make use thereof.
(l) To the Company's knowledge, no Permits of any
government or governmental instrumentality, agency,
body or court other than under the Act, the blue sky
or securities laws of any state or the rules of the
National Association of Securities Dealers, Inc.
("NASD") (regarding approval of underwriting
compensation) and The American Stock Exchange LLC
("AMEX") (regarding listing of the Common Stock) are
required (i) for the valid authorization, issuance,
sale and delivery of the Shares to the Underwriters,
and (ii) the consummation by the Company of the
transactions contemplated by this Agreement or the
Underwriters' Warrant Agreement.
(m) Except as disclosed in the Registration Statement and
the Prospectus (and any amendment or supplement
thereto), (i) there is neither pending nor, to the
best of knowledge of the Company, threatened, against
the Company or any of the Subsidiaries any claim,
action, suit, or proceeding at law or in equity,
arbitration (or circumstances known to the Company
that may give rise to the same), investigation or
inquiry to which the Company or any of the
Subsidiaries or any of their respective officers,
directors or shareholders is a party or involving the
Company's or any of the Subsidiaries' properties or
businesses before or by any court, arbitration
tribunal or governmental instrumentality, agency, or
body, which, if determined adversely to the
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Company or any of the Subsidiaries, would
individually or in the aggregate result in any
material adverse change in the condition (financial
or other), business, management of affairs, business
prospects, results of operations, income,
shareholders' equity, net worth or properties of the
Company and its Subsidiaries taken as a whole, or
which question the validity of the capital stock of
the Company or any of the Subsidiaries or would
prevent consummation of the transactions contemplated
hereby; nor are there any such actions, suits or
proceedings against the Company or any of the
Subsidiaries related to consumer protection,
distribution, rental and sales, or environmental
matters or matters related to discrimination on the
basis of age, sex, religion or race; and (ii) no
labor dispute or disturbance by the employees of the
Company or any of the Subsidiaries exists or, to the
knowledge of the Company, is threatened which might
be expected to materially adversely affect the
conduct of the business, property, operations,
financial condition or earnings of the Company or any
of the Subsidiaries, taken as a whole.
(n) There is no contract or other document which is
required by the Act or by the Rules and Regulations
to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the
Registration Statement which has not been so
described or filed as required, and each contract or
document which has been described in the Registration
Statement has been described accurately and presents
fairly the information required to be described and
each such contract or document which is filed as an
exhibit to the Registration Statement or is an
Incorporated Document is and shall be in full force
and effect at the Closing Date or shall have been
terminated in accordance with its terms as set forth
in the Registration Statement and Prospectus or any
Incorporated Document, and no party to any such
contract has given notice to the Company of the
cancellation of or, to the knowledge of the Company,
has threatened to cancel any such contract, and
except as described in the Registration Statement and
the Prospectus (and any amendment or supplement
thereto), the Company is not in default thereunder.
(o) Neither the Company nor any of the Subsidiaries owns
any real property. The Company and each of its
Subsidiaries has good title to all of its personal
property (tangible and intangible) and assets,
including any licenses, trademarks and copyrights,
described in the Registration Statement or Prospectus
as owned by it, free and clear of all security
interests, liens, charges, mortgages, encumbrances
and restrictions other than as described in the
Registration Statement and Prospectus or which are
not material in amount. The leases, subleases and
licenses under which the Company and its Subsidiaries
are entitled to lease, hold or use any real or
personal property are valid, subsisting and
enforceable only with such exceptions as are not
material and do not interfere with the use of such
property made or proposed to be made by the Company
or any of its Subsidiaries, and all rentals,
royalties or other payments accruing thereunder which
become due prior to the date of this Agreement have
been duly paid and neither the Company, nor any of
its Subsidiaries, nor, to the Company's best
knowledge, any other party is in
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default in respect of any of the terms or provisions
of any such leases, subleases and licenses, and no
claim of any sort has been asserted by anyone adverse
to the rights of the Company or any of its
Subsidiaries under any such leases, subleases or
licenses affecting or questioning the rights of the
Company or any of its Subsidiaries to the continued
use or enjoyment of the rights and property covered
thereby, in each case, except as disclosed in the
Registration Statement or the Prospectus. Neither the
Company nor any of its Subsidiaries has received
notice of any violation of any applicable law,
ordinance, regulation, order or requirement relating
to its owned or leased properties. The Company and
its Subsidiaries own or lease all such properties as
are necessary to the conduct of their respective
operations as now conducted as set forth in the
Registration Statement and the Prospectus.
(p) The Company and each of its Subsidiaries has filed
with the appropriate federal, state and local
governmental agencies, and all appropriate foreign
countries and political subdivisions thereof, all tax
returns, including franchise tax returns, which are
required to be filed or have duly obtained extensions
of time for the filing thereof and have paid all
taxes shown on such returns and all assessments
received by them to the extent that the same have
become due (except for such as are being contested in
good faith); and the provisions for income taxes
payable, if any, shown on the financial statements
included or incorporated by reference in the
Registration Statement are sufficient for all accrued
and unpaid foreign and domestic taxes, whether or not
disputed, and for all periods to and including the
dates of such consolidated financial statements.
Except as disclosed in writing to the Underwriters,
neither the Company nor any Subsidiary has executed
or filed with any taxing authority, foreign or
domestic, any agreement extending the period for
assessment or collection of any income taxes and is
not a party to any pending action or proceeding by
any foreign or domestic governmental agency for
assessment or collection of taxes; and since January
1, 1997, no claims for assessment or collection of
taxes have been asserted against the Company or any
Subsidiary.
(q) The Company and its Subsidiaries maintain insurance,
which is in full force and effect, including but not
limited to personal injury and product liability
insurance and insurance covering all personal
property owned or leased by the Company and its
Subsidiaries against theft, damage, destruction, acts
of vandalism and all other risks customarily insured
against. The Company and its Subsidiaries maintain
insurance in amounts as are commercially reasonable
and consistent with those maintained by companies
engaged in the same or similar businesses located in
their geographic area. The Company is not aware of
any facts or circumstances which would require it or
any of its Subsidiaries to notify its insurers of any
claim of which notice has not been made or will not
be made in a timely manner. To the best knowledge of
the Company, there are no facts or circumstances
under any existing insurance policy or surety bond
which would relieve any insurer of its obligation to
satisfy in full any existing valid claim of the
Company or any of its Subsidiaries under such policy
or bond.
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(r) Except as described in the Registration Statement and
the Prospectus (including any amendment or supplement
thereto), (i) each of the Company and its
Subsidiaries owns or otherwise possesses adequate,
enforceable rights to use, without material
restriction, all patents, patent rights, inventions,
trademarks, service marks, trade names and
copyrights, trade secrets, confidential information,
processes and formulations (including all other
unpatented and/or unpatentable proprietary or
confidential information, systems or procedures),
inventions, designs, works of authorship, computer
programs and technical data and information which are
used or proposed to be used in the conduct of its
business as described in the Prospectus
(collectively, the "Intangibles"); (ii) neither the
Company nor any of its Subsidiaries has infringed or
is infringing upon the rights of others with respect
to the Intangibles; (iii) the Company has not
received any notice of conflict with the asserted
rights of others with respect to the Intangibles
which could, singly or in the aggregate, materially
adversely affect the business as presently conducted
or the prospects, financial condition or results of
operations of the Company and its Subsidiaries taken
as a whole, and the Company knows of no basis
therefor; (iv) to the best of the Company's
knowledge, no others have infringed upon the
Intangibles of the Company or any of its
Subsidiaries, except for such instances which are not
expected to have a material adverse effect on the
business, financial condition or results of
operations of the Company and the Subsidiaries taken
as a whole; (v) neither the Company nor any of its
Subsidiaries is obligated or under any liability
whatsoever to make any payment by way of royalties,
fees or otherwise to any owner or licensee of, or
other claimant to, the Intangibles with respect to
the use thereof or in connection with the conduct of
its business or otherwise. The Company has taken
reasonable security measures to protect the secrecy,
confidentiality and value of all its Intangibles in
all material aspects.
(s) Neither the Company nor any of its affiliates has
incurred any liability for, nor is there is any
outstanding claim for services in the nature of, a
finder's fee or similar fee in connection with the
transactions herein contemplated.
(t) No officer or director of the Company, or any
affiliate (as such term is defined in Rule 405
promulgated under the Rules and Regulations) of any
such officer or director, has taken, and each officer
or director has agreed that he will not take,
directly or indirectly, any action designed to
constitute or which has constituted or which might
reasonably be expected to cause or result in the
stabilization of the price of the Common Stock or a
violation of Regulation M of the Rules and
Regulations or in a manipulation of the price of any
security issued by the Company.
(u) Except as disclosed in or contemplated by the
Registration Statement or the Prospectus, no officer,
director or stockholder of the Company, or any
"affiliate" or "associate" (as these terms are
defined in Rule 405 promulgated under the Rules and
Regulations) of any of the foregoing persons or
entities has or has had since January 1, 1997, either
directly or indirectly, (i) an
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interest in any person or entity which (A) furnishes
or sells products which are furnished or sold or are
proposed to be furnished or sold by the Company, or
(B) purchases from or sells or furnishes to the
Company any goods or services, or (ii) a beneficial
interest in any contract or agreement to which the
Company is a party or by which it may be bound or
affected. There are no existing agreements,
arrangements, or transactions, between or among the
Company and any officer, director of the Company, or
any partner, affiliate or associate of any of the
foregoing persons or entities which are required to
be described in the Registration Statement and which
are not so described.
(v) The minute books of the Company have been made
available to the Underwriters and contain a fair
summary of all meetings and actions of the directors
and stockholders of the Company since the time of its
incorporation, and reflect all transactions referred
to in such minutes accurately in all respects.
(w) The Company is not aware of any bankruptcy, labor
disturbance or other event affecting any of its
principal suppliers or customers which could
materially adversely affect the condition, financial
or otherwise, prospects, business or results of
operations of the Company and its Subsidiaries taken
as a whole.
(x) The Common Stock and the other securities of the
Company conform to the descriptions thereof included
or incorporated by reference in the Registration
Statement and the Prospectus; the authorized, issued
and outstanding shares of Common Stock will be set
forth in the Prospectus Supplement under the caption
"Description of Capital Stock"; the outstanding
shares of Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable;
the outstanding options and warrants to purchase
Common Stock have been duly authorized and validly
issued and constitute the valid and binding
obligations of the Company, enforceable in accordance
with their terms; the holders of the outstanding
Common Stock are not subject to personal liability
for obligations of the Company solely by reason of
being stockholders; and none of such outstanding
shares of Common Stock or warrants or options to
purchase Common Stock were issued in violation of the
pre-emptive rights of any stockholder of the Company.
The offers and sales of the outstanding Common Stock
and outstanding options and warrants to purchase
Common Stock were at all relevant times either
registered under the Act and the applicable state
securities or Blue Sky laws or exempt from such
registration requirements. Except as disclosed in the
Registration Statement and Prospectus, on the Closing
Date there will be no outstanding options or warrants
for the purchase of, or other outstanding rights to
purchase or acquire, Common Stock or securities
convertible or exchangeable into Common Stock. No
holder of any securities of the Company has any
rights, "demand", "piggyback" or otherwise to have
such securities registered under the Act.
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(y) The issuance and sale of the Shares have been duly
authorized and, upon delivery against payment
therefor as contemplated by this Agreement, the
Shares will be validly issued, fully paid and
non-assessable, and the holders thereof will not be
subject to personal liability solely by reason of
being such holders. The Shares will not be subject to
pre-emptive rights of any stockholder of the Company.
(z) The issuance and sale of the Warrant Shares have been
duly authorized, and, when duly delivered against
payment therefor as contemplated by the Underwriters'
Warrants Agreement, such Warrant Shares will be
validly issued, fully paid and non-assessable, and
will conform to the description thereof contained or
incorporated by reference in the Registration
Statement and the Prospectus. Holders of Warrant
Shares issuable upon the exercise of the
Underwriters' Warrants will not be subject to
personal liability solely by reason of being such
holders. Neither the Underwriters' Warrants nor the
Warrant Shares issuable upon exercise thereof will be
subject to pre-emptive rights of any stockholder of
the Company. The Company has reserved a sufficient
number of shares of Common Stock from its authorized
but unissued Common Stock for issuance upon exercise
of the Underwriters' Warrants in accordance with the
provisions of the Underwriters' Warrant Agreement.
The Underwriters' Warrants conform to the description
thereof contained in the Prospectus.
(aa) Neither the Company or any Subsidiary, nor any
officer, director or other agent of the Company or
any Subsidiary, has, acting on behalf of the Company
or any Subsidiary, at any time (i) made any
contributions to any candidate for political office
in violation of law, or failed to disclose fully any
such contributions in violation of law, (ii) made any
payment to any state, Federal or foreign governmental
officer or official, or any other person charged with
similar public or quasi-public duties, other than
payments required or allowed by applicable law or
(iii) made any payment of funds of the Company or
received or retained any funds in violation of any
law, rule or regulation and under circumstances
requiring the disclosure of such payment, receipt or
retention of funds in the Prospectus. The Company's
internal accounting controls and procedures are
sufficient to cause the Company to comply in all
material respects with the Foreign Corrupt &
Practices Act of 1977, as amended.
(bb) The Company is not an "Investment Company" or a
company "controlled" by an "investment Company,"
within the meaning of the Investment Company Act of
1940, as amended.
(cc) The employment, consulting, confidentiality and
non-competition agreements between the Company and
its officers, employees and consultants which have
been filed as exhibits to the Registration Statement
or to any of the Incorporated Documents are binding
and enforceable obligations upon the respective
parties thereto in accordance with their terms,
except to the extent
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that (i) enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws
affecting creditors' rights generally, (ii) the
remedy of specific performance and injunction or
other forms of equitable relief may be subject to
equitable defenses and the discretion of the court
before which any proceeding therefor may be brought,
and (iii) such obligations are found by a court to
violate public policy or to be unenforceable by
reason of applicable state statutes, or case law.
(dd) Except as disclosed in the Registration Statement and
the Prospectus, the Company has no employee benefit
plans (including, without limitation, profit sharing
and welfare benefit plans) or deferred compensation
arrangements that are subject to the provisions of
the Employee Retirement Income Security Act of 1974.
(ee) Except as disclosed in the Registration Statement and
the Prospectus, there are no voting or other
shareholder agreements between the Company and any
shareholders of the Company or between or by and
among any shareholders of the Company.
(ff) The Company has filed a registration statement on
Form 8-A with respect to its Common Stock under
Section 12(b) of the Exchange Act, and such
registration statement has been declared effective by
the SEC. The Company has filed an additional listing
application with respect to the Shares with the AMEX
and such listing application has been approved by the
AMEX.
(gg) Each of the Company and its Subsidiaries is in
compliance in all material respects with all federal,
state, local, and foreign laws and regulations
respecting employment and employment practices, terms
and conditions of employment and wages and hours. To
the Company's knowledge, there are no pending
investigations involving the Company or any of its
Subsidiaries, by the U.S. Department of Labor or any
other governmental agency responsible for the
enforcement of such federal, state, local, or foreign
laws and regulations. There is no unfair labor
practice charge or complaint against the Company or
any of its Subsidiaries pending before the National
Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or, to
the Company's best knowledge, threatened against or
involving the Company or any of its Subsidiaries or
any predecessor entity, and none has ever occurred.
No representation question exists respecting the
employees of the Company, and no collective
bargaining agreement or modification thereof is
currently being negotiated by the Company or any of
its Subsidiaries. No grievance or arbitration
proceeding is pending under any expired or existing
collective bargaining agreements of the Company or
any of its Subsidiaries.
(hh) The Shares have been approved for listing on the
AMEX.
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(ii) The Company and its Subsidiaries have not since
December 31, 1999 incurred, and will not incur,
additional significant operating expenses or costs to
ensure that its software, hardware and information
systems will continue to be year 2000 compliant.
(jj) The Company has provided to Blank Rome Tenzer
Greenblatt LLP, counsel to the Underwriters
("Underwriters' Counsel"), all agreements,
certificates, correspondence and other items,
documents and information requested by such counsel's
Corporate Review Memorandum dated February 15, 2000.
(kk) Any certificate signed by an officer of the Company
in his capacity as such and delivered to the
Underwriters or the Underwriters' Counsel shall be
deemed a representation and warranty by the Company
to the Underwriters as to the matters covered
thereby.
(ll) Each of the Company and its Subsidiaries is and has
been doing business in material compliance with all
authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal,
state, and local laws, Rules and Regulations; and
each of the Company and its Subsidiaries has not
received any notice of proceedings relating to the
revocation or modification of any such authorization,
approval, order, license, certificate, franchise, or
permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or
finding, would materially adversely affect the
business operations, condition, financial or
otherwise, or the earnings, business affairs,
position, prospects, value, operation, properties,
business or results of operations of the Company and
its Subsidiaries taken as a whole
2. Purchase, Delivery and Sale of the Shares and the Underwriters'
Warrants.
(a) 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 the Shares to the
Underwriters, and the Underwriters agree to purchase
the Shares from the Company, at a net purchase price
of $2.76 per share (net of commissions) as follows:
Starr Securities, Inc. 1,400,000 Shares
GunnAllen Financial, Inc. 600,000 Shares
----------------
Total 2,000,000 Shares
On the Closing Date, as hereinafter defined, the Shares will
be delivered by the Company to the Underwriters against payment of the purchase
price by the Underwriters to the Company by wire transfer of immediately
available funds. Delivery of the Shares against payment therefor shall take
place at the offices of the Underwriters in New York, New York, at 10:00 a.m.,
local New York Time, on April 19, 2000 or at such other location, time and date
as the Underwriters and the Company may agree in writing, such time and date of
payment and delivery for the Shares being herein called the "Closing Date." The
parties acknowledge and
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agree that the Shares shall be maintained in book-entry-only form, and that each
will use its best efforts to comply with the procedures of the DTC. The Shares
to be purchased hereunder shall be registered in such names and in such
denominations as the Underwriters shall request prior to 1:00 P.M., New York
City time, on the second business day preceding the Closing Date.
(b) On the Closing Date, the Company will sell the
Underwriters' Warrants to the Underwriters or to the
Underwriters' designees (which shall be limited to
officers and partners of the Underwriter, members of
the selling group and/or their officers or partners
(collectively, the "Underwriters' Designees")). The
Underwriters' Warrants will be in the form of, and in
accordance with, the provisions of the Underwriters'
Warrant attached as Exhibit A to this Agreement. The
aggregate purchase price for the Underwriters'
Warrants is forty-eight dollars ($48.00). The
Underwriters' Warrants will be restricted from sale,
transfer, assignment or hypothecation for a period of
one (1) year from the Closing Date, except to the
Underwriters' Designees. Payment for the
Underwriters' Warrants will be made to the Company by
check or checks payable to its order on the Closing
Date against delivery of the certificates
representing the Underwriters' Warrants. The
certificates representing the Underwriters' Warrants
will be in such denominations and such names as the
Underwriters may request prior to the Closing Date.
The information set forth on the cover page concerning the
Underwriters and under the caption "Underwriting" or otherwise specifically
relating to the Underwriters in the Prospectus (including any amendment or
supplement thereto) relating to the Shares filed or proposed to be filed by the
Company (insofar as such information relates to the Underwriter) constitutes the
only information furnished by the Underwriters to the Company for inclusion
therein, and the Underwriters represent and warrant to the Company that the
statements made therein are correct and do not include 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 light of the circumstances under
which they were made, not misleading.
3. Public Offering by Underwriter. The Underwriters agree to cause the
Shares to be offered to the public initially at the price and under the terms
set forth in the Prospectus Supplement to be filed by the Company with the
Commission on or after the effective date of this Agreement. The Underwriters
may allow such concessions and discounts upon sales to other dealers as set
forth in the Prospectus Supplement. The Underwriters agree to notify the Company
in writing when the offering is first made and when it is completed. After the
completion of the initial public offering, the public offering price, the
concessions and the reallowance may be changed by the Underwriters.
4. Agreements of the Company. The Company covenants and agrees with the
Underwriters that:
(a) The Company will prepare a Prospectus Supplement
setting forth the number of Shares covered thereby
and their terms not otherwise specified in the
Prospectus pursuant to which the Shares are being
issued, the name of the Underwriters and the number
of Shares which the Underwriters have agreed
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to purchase, the price at which the Shares are to be
purchased by the Underwriters from the Company and
such other information as the Underwriters and the
Company deem appropriate in connection with the
offering of the Shares and file the Prospectus
Supplement in a form approved by the Underwriters
pursuant to Rule 424(b) under the Act no later than
the Commission's close of business on the second
business day following the date of the determination
of the offering price of the Shares. Prior to the
Closing Date, the Company will not file any amendment
or supplement to the Registration Statement or the
Prospectus, (i) which shall not have been previously
submitted to, and approved by, the Underwriters or
counsel for the Underwriters a reasonable time prior
to the filing thereof, such approval not to be
unreasonably withheld or delayed (ii) to which the
Underwriters or counsel for the Underwriters shall
have reasonably objected in writing as not being in
compliance with the Act or the Rules and Regulations,
or (iii) which is not in compliance with the Act or
the Rules and Regulations.
(b) The Company will notify the Underwriters promptly
after it shall have received notice of the time when
any post-effective amendment to the Registration
Statement has become effective or any supplement to
the Prospectus has been filed, and of the receipt of
any comments of the Commission with respect thereto.
(c) The Company will advise the Underwriters promptly of
any request of the Commission for an amendment or
supplement to the Registration Statement or the
Prospectus, or for any additional information, or of
the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement, or of any judgment, order, injunction or
decree preventing or suspending the use of any
Prospectus, or of the institution of any proceedings
for any of such purposes, of which it has knowledge,
and will use its best efforts to prevent the issuance
of any stop order, and, if issued, to obtain as
promptly as possible the lifting thereof.
(d) If at any time when a Prospectus relating to the
Shares is required to be delivered under the Act, any
event shall have occurred as a result of which, in
the opinion of counsel for the Company or counsel for
the Underwriters, the Prospectus, as then amended or
supplemented, includes an untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading, or if it is necessary at any time to
amend or supplement the Registration Statement or the
Prospectus to comply with the Act, the Company will
notify the Underwriters promptly and prepare and file
with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act,
each such amendment or supplement to be satisfactory
to counsel for the Underwriters, and the Company will
furnish to the Underwriters copies of such amendment
or supplement as soon as available and in such
quantities as the Underwriters may reasonably
request.
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(e) Within the time during which the Prospectus is
required to be delivered under the Act, or pursuant
to the undertakings of the Company in the
Registration Statement, the Company will comply, at
its own expense, with all requirements imposed upon
it by the Act, the Rules and Regulations, the
Exchange Act or the Rules and Regulations of the
Commission promulgated under the Exchange Act, each
as now or hereafter amended or supplemented, and by
any order of the Commission so far as necessary to
permit the continuance of sales of, or dealings in,
the Shares.
(f) The Company will furnish to the Underwriters, without
charge, a signed copy of the Registration Statement
and of any amendment or supplement thereto which has
been filed prior to the date of this Agreement,
together with two (2) copies of each exhibit filed
therewith and of each of the Incorporated Documents,
and five (5) conformed copies of such Registration
Statement and as many amendments thereto (unsigned
and exclusive of exhibits) as the Underwriters may
reasonably request. The signed copies of the
Registration Statement so furnished to the
Underwriters will include signed copies of any and
all consents and reports of the independent public
auditors as to the financial statements included in
the Registration Statement and Prospectus, and signed
copies of any and all consents and certificates of
any other person whose profession gives authority to
statements made by them and who are named in the
Registration Statement or Prospectus as having
prepared, certified or reviewed any parts thereof.
(g) The Company will deliver to the Underwriters, without
charge, copies of the Prospectus and, as soon as they
are available, and from time to time thereafter,
copies of each amended or supplemented Prospectus,
and the number of copies to be delivered in each such
case will be such as the Underwriters may reasonably
request. The Company authorizes the Underwriters and
dealers to use the Prospectus in connection with the
sale of the Shares, for such period as, in the
opinion of counsel for the Underwriters, delivery of
the Prospectus is required to comply with the
applicable provisions of the Act and the Rules and
Regulations.
(h) The Company will cooperate with the Underwriters and
Underwriters' Counsel in connection with the
registration or qualification of the Shares for offer
and sale under the blue sky or securities laws of
such states or other jurisdictions as the
Underwriters or counsel for the Underwriters may
designate (provided that such states or jurisdictions
do not require the Company to qualify as a foreign
corporation or to file a general consent to service
of process) and to continue such qualifications in
effect so long as may be required for the purposes of
the distribution of the Shares, all at the Company's
expense. In each state or jurisdiction where the
Company shall qualify the Shares as above provided,
the Company will prepare and file such statements or
reports as may be required by the laws of such state
or jurisdiction, and the Underwriters shall, upon the
written request of the
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Company, supply the Company with all information
known to the Underwriters and required to be included
in such statements or reports.
(i) During the period of two years from the date of this
Agreement, the Company, at its expense, shall furnish
the Underwriters with a copy of each report mailed to
stockholders of the Company, concurrently with such
mailing, and a copy of each report or document,
including, without limitation, reports on Form 8-K,
10-K (or 10-KSB), 10-Q or 10-QSB and exhibits
thereto, filed or furnished by the Company pursuant
to the Exchange Act to the Commission, any securities
exchange or the NASD promptly following the date on
which each such report or document is so filed or
furnished.
(j) For a period of five (5) years from the Closing Date,
the Company shall promptly submit to the Underwriters
copies of all accountants' management reports and
similar correspondence between the Company and its
independent public accountants.
(k) For a period of five (5) years from the Closing Date,
as and to the extent required under the applicable
Rules and Regulations of the Commission under the
Exchange Act, the Company, at its expense, shall
cause its then independent certified public
accountants, to review (but not audit) the Company's
financial statements for each of the first three
fiscal quarters prior to the announcement of
quarterly financial information, the filing of the
Company's 10-Q (or 10-QSB) quarterly report (or other
equivalent report) and the mailing of quarterly
financial information to stockholders.
(l) As soon as practicable, but in any event not later
than 45 days after the end of the 12-month period
beginning on the day after the end of the fiscal
quarter of the Company during which the effective
date of the Registration Statement occurs (90 days in
the event that the end of such fiscal quarter is the
end of the Company's fiscal year), the Company will
make generally available to its security holders in
accordance with Section 11 (a) of the Act an earnings
statement of the Company meeting the requirements of
Rule 158(a) under the Act covering a period of at
least 12 months beginning after the Effective Date,
and advise the Underwriters that such statement has
been so made available.
(m) The Company will apply the net proceeds ("Proceeds")
it realizes from the sale of the Shares in the manner
set forth under the caption "Use of Proceeds" in the
Prospectus Supplement to be filed with the
Commission. Except as set forth in such Prospectus
Supplement, no portion of the net proceeds from the
sale of the Shares will be used to repay any
indebtedness.
(n) The Company, on the Closing Date, will sell to Starr
Securities and GunnAllen the Underwriters' Warrants
(to be divided in such amounts as determined by Starr
Securities) according to the terms specified in
Section 2 (d) hereof. The Company has reserved and
shall continue to reserve a
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sufficient number of shares of Common Stock for
issuance upon exercise of the Underwriters' Warrants.
(o) For a period of two (2) years from the Closing Date,
the Company agrees that it will maintain insurance in
full force and effect of the types and in the amounts
which are customary for similarly situated companies,
including but not limited to, personal injury and
product liability insurance and insurance covering
all personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against.
(p) During the course of the distribution of the Shares,
the Company will not take, directly or indirectly,
any action designed to or which might, in the future,
reasonably be expected to cause or result in
stabilization or manipulation of the price of the
Shares.
(q) The Company will use its best efforts, at its cost
and expense, to take all necessary and appropriate
action to maintain the listing of the Shares on the
AMEX or on the NASDAQ automated quotation system and
maintain such listing for as long as the Shares are
qualified.
(r) On the Closing Date, all transfer or other taxes
(other than income taxes) which are required to be
paid in connection with the sale and transfer of the
Shares will have been fully paid by the Company and
all laws imposing such taxes will have been fully
complied with.
(s) Subsequent to the dates as of which information is
given in the Registration Statement and Prospectus
and prior to the Closing Date, except as disclosed in
or contemplated by the Registration Statement and
Prospectus, (i) the Company will not have incurred
any liabilities or obligations, direct or contingent,
or entered into any material transactions other than
in the ordinary course of business; (ii) there shall
not have been any change in the capital stock, funded
debt (other than regular repayments of principal and
interest on existing indebtedness) or other
securities of the Company, any adverse change in the
condition (financial or other), business, operations,
prospects, income, net worth or properties, including
any loss or damage to the properties of the Company
(whether or not such loss is insured against), which
could adversely affect the condition (financial or
other), business, operations, prospects, income, net
worth or properties of the Company and the
Subsidiaries, taken as a whole; and (iii) the Company
shall not have paid or declared any dividend or other
distribution on its Common Stock or its other
securities or redeemed or repurchased any of its
Common Stock or other securities.
(t) The Company maintains and will continue to maintain a
system of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions
are executed in accordance with management's general
or specific authorization; (ii) transactions are
recorded as necessary in order to
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permit preparation of financial statements in
accordance 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.
(u) For a period of three (3) years from the Closing
Date, management of the Company shall provide the
Board of Directors, on an annual basis, with an
internal budget for the next fiscal year, which
budget must be approved by the Board of Directors.
(v) Except as set forth under the caption "Use of
Proceeds" in the Prospectus (including any supplement
thereto) or otherwise consented to by the
Underwriters, no proceeds from the sale of the Shares
will be used to pay outstanding loans from officers,
directors or shareholders or to pay any accrued
salaries or bonuses to any current or former
employees or consultants or any affiliates thereof or
to pay off any other outstanding debt other than
current trade payables which arose in the ordinary
course of business.
(w) The Company agrees that for so long as the Common
Stock is registered under the Exchange Act, the
Company will hold an annual meeting of stockholders
for the election of directors and will provide the
Company's stockholders with the audited financial
statements of the Company as of the end of the fiscal
year just completed prior thereto. Such financial
statements shall be those required by applicable
rules under the Exchange Act and shall be included in
an annual report pursuant to the requirements
thereof.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each of the Underwriters and each person, if any, who
controls either of the Underwriters within the
meaning of the Act against any losses, claims,
damages, expenses or liabilities, joint or several
(which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense
and investigation and all reasonable attorney's
fees), to which the Underwriters or any such
controlling person may become subject, under the Act
or otherwise, but only as such losses, claims,
damages or liabilities (or action 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 or the
Prospectus, or any amendment or supplement thereto,
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; provided,
however, that the Company will not be liable in any
such case (i) to the extent that any such loss,
claim, damages 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 or the Prospectus or any
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amendment or supplement thereto, in reliance upon,
and in conformity with, written information furnished
to the Company by the Underwriters specifically for
use in the preparation thereof; (ii) if the
Underwriters failed to deliver a Prospectus within
the time required by the Act to the claimant seeking
damages from the Company or (iii) if a material
misstatement or omission was corrected by the Company
in an amended or supplemented Prospectus and the
Underwriters failed to deliver such amended or
supplemented Prospectus to the claimant seeking
damages from the Company. The information set forth
on the cover page concerning the Underwriters and
under the caption "Underwriting" or otherwise
specifically relating to the Underwriters in the
Registration Statement shall be deemed to have been
furnished to the Company by the Underwriters for
purposes hereof. This indemnity will be in addition
to any liability which the Company may otherwise
have.
(b) Each of the Underwriters agrees that it will
indemnify and hold harmless the Company, each of its
directors, each nominee (if any) for director named
in the Prospectus, each of its officers who has
signed the Registration Statement, and each person,
if any, who controls the Company within the meaning
of the Act, against any losses, claims, damages,
expenses or liabilities (which shall, for all
purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation
and all attorney's fees), joint or several, to which
the Company or any such director, nominee, officer or
controlling person may become subject under the Act
or otherwise, but only 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 or the
Prospectus or any amendment or supplement thereto, or
arise out of or are based upon the omission or the
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, but in each
case only to the extent that such untrue statement or
alleged untrue statement or omission or alleged
omission was made in the Registration Statement or
the Prospectus or such amendment or supplement
thereto in reliance upon and in conformity with
written information furnished to the Company by such
Underwriters specifically for use in the preparation
thereof, provided, however, that the obligation of
each Underwriter to indemnify the Company (including
any controlling person, director or officer thereof)
shall (i) only relate to any untrue statement or
alleged untrue statement or any omission or alleged
omission which applies to such Underwriter and (ii)
be limited in amount to the net proceeds received by
the Company from such Underwriter. The information
set forth on the cover page concerning the
Underwriters and under the caption "Underwriting" or
otherwise specifically relating to the Underwriters
in the Registration Statement shall be deemed to have
been furnished to the Company by the Underwriters for
purposes hereof. This indemnity will be in addition
to any liability which the Underwriters may otherwise
have.
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(c) Promptly after receipt by an indemnified party under
this Section 5 of notice of the commencement of any
action, such indemnified party will, if a claim in
respect thereof is to be made against the
indemnifying party under this Section 5, notify the
indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability
which it may have to any indemnified party otherwise
than solely pursuant to this Section 5. In case any
such action is brought against any indemnified party,
which notifies the indemnifying party of the
commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that
it may choose, jointly with any other indemnifying
party similarly notified, reasonably assume the
defense thereof. Subject to the provisions herein
stated 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 5 for any legal or other expenses
subsequently incurred by such indemnified party in
connection with the defense thereof other than
reasonable costs of investigation, unless the
indemnifying party shall have a default judgment
entered against it or shall settle such action
without the consent of the indemnified party. The
indemnified party shall have the right to employ one
separate counsel in any such action and to
participate in the defense thereof, but the fees and
expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel
reasonably satisfactory to the indemnified party;
provided that the fees and expenses of such counsel
shall be at the expense of the indemnifying party if
(i) the employment of such counsel has been
specifically authorized in writing by the
indemnifying party, (ii) the named parties to such
action (including any impleaded parties) include both
the indemnified and the indemnifying party and the
indemnified party shall have been advised by such
counsel that there may be one or more legal defenses
available to the indemnifying party different from or
in conflict with any legal defenses which may be
available to the indemnified party (in which case the
indemnifying party shall not have the right to assume
the defense of such action on behalf of the
indemnified party, it being understood, however, that
the indemnifying party shall, in connection with any
one such action or separate but substantially similar
or related actions in the same jurisdiction arising
out of the same general allegations or circumstances,
be liable only for the reasonable fees and expenses
of one separate firm of attorneys for the indemnified
party, which firm shall be designated in writing by
the indemnified party), or (iii) the professional
competence of the counsel to be employed by the
indemnifying party is not reasonably acceptable to
the indemnified party. No settlement of any action
against an indemnified party shall be made without
the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld. The
indemnifying party shall not be liable to indemnify
the indemnified party for any settlement of any
action effected without the indemnifying party's
prior written consent to any such settlement, which
consent shall not be unreasonably withheld.
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6. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which (i) the Underwriters make a
claim for indemnification pursuant to Section 5 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 denial of the last right of
appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 5 provide for
indemnification in such case, or (ii) contribution under the Act may be required
on the part of the Underwriters, then the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (which shall, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all attorneys'
fees) in either such case (after contribution from others) in such proportions
such that the Underwriters shall be responsible in the aggregate for that
portion of such losses, claims, damages or liabilities determined by multiplying
the total amount of such losses, claims, damages or liabilities by the
difference between the public offering price of the Shares and the purchase
price of the Shares to such Underwriters and dividing the product by the public
offering price of the Shares, and the Company shall be responsible for that
portion of such losses, claims, damages or liabilities determined by multiplying
the total amount of such losses, claims, damages or liabilities by the purchase
price of the Shares to the Underwriters and dividing the product thereof by the
public offering price of the Shares. 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 is not guilty of such fraudulent
misrepresentation. The foregoing contribution agreement shall in no way affect
the contribution liabilities of any persons having liability under Section 11 of
the Act other than the Company and the Underwriters. As used in this Section 6,
the term "Underwriter" includes any person who controls either of the
Underwriters within the meaning of Section 15 of the Act. If the full amount of
the contribution specified in this Section 6 is not permitted by law, then the
Underwriters shall be entitled to contribution from the Company, its officers,
directors and controlling persons to the fullest extent permitted by law. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect to
which a claim for contribution may be made against another party or parties
under this Section 6, notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this Section 6, or to the
extent that such party or parties were not adversely affected by such omission.
The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
7. Survival of Agreements etc. All statements contained in any
schedule, exhibit or other instrument delivered by or on behalf of the parties
hereto, or in connection with the transactions contemplated by this Agreement,
shall be deemed to be representations and warranties hereunder. Notwithstanding
any investigations made by or on behalf of the parties to this Agreement, all
representations, warranties, indemnities and agreements made by the parties to
this Agreement or pursuant hereto shall remain in full force and effect and will
survive delivery of and the payment for the Shares, for a period of three years
from the date hereof, except that, if a party hereto has actual knowledge at the
time of the Closing Date of facts which would constitute a breach of the
representations and warranties contained herein, such breaches shall be waived
by such party if such party consummates the transactions contemplated by this
Agreement.
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8. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase the Shares hereunder are subject to the following
conditions:
(a) All filings required by Rules 424 and 430A under the
Act shall have been timely made, and no stop order
suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding
for that purpose shall have been initiated or be
pending or, to the knowledge of the Company or the
Underwriters, contemplated or threatened by the
Commission; and any request by 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
counsel for the Underwriter; and qualification under
the securities laws of such states as the
Underwriters may designate of the issue and sale of
the Shares upon the terms and conditions herein set
forth or contemplated and containing no provision
unacceptable to the Underwriters shall have been
secured; and no stop order shall be in effect denying
or suspending effectiveness of such qualifications,
nor shall any stop order proceedings with respect
thereto be instituted or pending or threatened under
such laws. If the Company has elected to rely upon
Rule 430A of the Rules and Regulations, the price of
the Shares and any price-related information
previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to
Rule 424(b) of the Rules and Regulations within the
prescribed time period, and prior to the Closing Date
the Company shall have provided evidence satisfactory
to the Underwriters of such timely filing, or a
post-effective amendment providing such information
shall have been promptly filed and declared effective
in accordance with the requirements of Rule 430A of
the Rules and Regulations.
(b) No amendment to the Registration Statement or the
Prospectus to which the Underwriters or counsel for
the Underwriters shall have reasonably objected,
after having received reasonable notice of a proposal
to file the same, shall have been filed.
(c) The Underwriters shall not have discovered and
disclosed to the Company prior to the Closing Date
that the Registration Statement or the Prospectus, or
any amendment or supplement thereto, contains an
untrue statement of fact which, in the reasonable
opinion of counsel for the Underwriters, is material,
or omits to state a fact which, in the reasonable
opinion of such counsel, is material and is required
to be stated therein or is necessary to make the
statements therein not misleading.
(d) Subsequent to the dates as of which information is
given in the Registration Statement and Prospectus
(including any supplement thereto) and on and prior
to the Closing Date, except as disclosed in or
contemplated by the Registration Statement and
Prospectus (including any supplement thereto), (i)
the Company will not have incurred any liabilities or
obligations, direct or contingent, or entered into
any material transactions other than in the ordinary
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course of business; (ii) there shall not have been
any change in the capital stock, funded debt (other
than regular repayments of principal and interest on
existing indebtedness) or other securities of the
Company, any adverse change in the condition
(financial or other), business, management of
affairs, business prospects, results of operations,
income, shareholders' equity, net worth or
properties, including any loss or damage to the
properties of the Company (whether or not such loss
is insured against), which could reasonably be
expected to adversely affect the condition (financial
or other), business, management of affairs, business
prospects, results of operations, income,
shareholders' equity, net worth or properties of the
Company and the Subsidiaries, taken as a whole; and
(iii) the Company shall not have paid or declared any
dividend or other distribution on its Common Stock or
its other securities or redeemed or repurchased any
of its Common Stock or other securities.
(e) The Underwriters shall have received from KPMG LLP,
two signed certificates or letters, one dated and
delivered on the date hereof and one dated and
delivered on the Closing Date, in form and substance
satisfactory to the Underwriters, stating that:
(i) they are independent certified public accountants
with respect to the Company within the meaning of the
Act and the Rules and Regulations, and no disclosure
under Item 13 of the Registration Statement is
required insofar as it relates to them;
(ii) the financial statements included or incorporated
by reference in the Registration Statement and the
Prospectus were examined by them and, in their
opinion, comply as to form in all material respects
with the applicable requirements of the Act, the
Rules and Regulations and instructions of the
Commission with respect to Registration Statements on
Form S-3 and that the Underwriters may rely upon the
opinion of such firm with respect to the financial
statements and supporting schedules included in the
Registration Statement;
(iii) on the basis of inquiries and procedures
conducted by them (not constituting an examination in
accordance with generally accepted auditing
standards), including a reading of the latest
available unaudited interim financial statements or
other financial information of the Company (with an
indication of the date of the latest available
unaudited interim financial statements), inquiries of
officers of the Company who have responsibility for
financial and accounting matters, reviews of minutes
of all meetings of the shareholders, the Board of
Directors and any committees of the Board of
Directors of the Company, as set forth in the minute
books of the Company, and other specified inquiries
and procedures, nothing has come to their attention
as a result of the foregoing inquiries and procedures
that causes them to believe that:
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(A) during the period from the date of the latest
financial statements of the Company appearing in the
Incorporated Documents and incorporated by reference
in the Registration Statement and Prospectus to a
specified date not more than three business days
prior to the date of such letter, there has been any
decreases in net current assets or net assets change
in the Common Stock or other securities of the
Company (except as specifically disclosed in such
certificates or letters), any decreases in
shareholders equity or working capital or any
increases in net current liabilities, net liabilities
or long-term debt in each case as compared with
amounts shown in such financial statements; and any
decrease in revenues or in the total or per share
amounts of income before extraordinary items or net
income or loss, or any other material change in each
case as compared with the corresponding period in the
preceding year or any change in the capitalization or
long term debt of the Company, except in each case
for increases, changes or decreases which the
Prospectus discloses have occurred or will or may
occur.
(B) the unaudited interim financial statements of the
Company, if any, appearing in the Incorporated
Documents and incorporated by reference in the
Registration Statement and the Prospectus, do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
Regulations or are not fairly presented in conformity
with generally accepted accounting principles and
practices on a basis substantially consistent with
the audited financial statements included in the
Registration Statement or the Prospectus;
(iv) On the basis of certain procedures specified by
the Underwriters and described in their letter, they
have compared specific dollar amounts, numbers of
shares, percentages of revenue and earnings and other
information (to the extent they are contained in or
derived from the accounting records of the Company,
and excluding any questions of legal interpretations)
included in the Incorporated Documents and
incorporated by reference in the Registration
Statement and Prospectus with the accounting records
and other appropriate data of the Company and have
found them to be in agreement.
(f) At the Closing Date, the Underwriters shall have
received from O'Melveny & Myers LLP, counsel for the
Company ("Company Counsel"), signed opinions dated as
of the Closing Date, in the forms attached hereto as
Exhibit B.
(g) The Underwriters shall have received a certificate,
dated and delivered as of Closing Date, of the Chief
Executive Officer, the Chief Financial Officer and
Secretary of the Company stating that:
(i) The Company has complied with all the agreements
and satisfied all the conditions on their respective
part to be performed or satisfied hereunder at or
prior to such date, including but not limited to the
agreements and covenants of the Company set forth in
Section 4 hereof.
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(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued nor, to the
Company's knowledge after inquiry of the Commission,
have any proceedings for that purpose have been
instituted or are pending, contemplated or threatened
under the Act.
(iii) Such officers have carefully examined the
Registration Statement and the Prospectus and any
supplement or amendment thereto, each of which
contains all statements required to be stated therein
or necessary to make the statements therein not
misleading and does not contain any untrue statement
of a material fact, and since the Effective Date
there has occurred no event required to be set forth
in the amended or supplemented Prospectus which has
not been set forth.
(iv) As of the date of such certificate, the
representations and warranties contained in Section 1
hereof are true and correct in all material respects
as if such representations and warranties were made
in their entirety on the date of such certificate,
and the Company has complied with all its agreements
herein contained as of the date hereof.
(v) Subsequent to the respective dates as of which
information is given in the Registration Statement
and Prospectus, and except as contemplated in the
Prospectus, the Company has not incurred any material
liabilities or obligations, direct or contingent
(other than in the ordinary course of business), or
entered into any material transactions and there has
not been any change in the Common Stock or funded
debt of the Company or any material adverse change in
the condition (financial or other), business,
operations, income, net worth, properties or
prospects of the Company and its Subsidiaries, taken
as a whole, except for such changes as are
contemplated by, or disclosed in the Prospectus.
(vi) Subsequent to the respective dates as of which
information is given in the Registration Statement
and the Prospectus, the Company shall have not
sustained any material loss of or damage to its
properties, whether or not insured, and since such
respective dates, no dividends or distributions
whatever shall have been declared or paid, or both,
on or with respect to any security (except interest
in respect of loans) of the Company.
(vii) Neither the Company nor any of its officers or
affiliates shall have taken, and the Company, its
officers and affiliates will not take, directly or
indirectly, any action designed to, or which might
reasonably be expected to, cause or result in the
stabilization or manipulation of the price of the
Company's securities to facilitate the sale or resale
of the Shares.
(viii) No action, suit or proceeding, at law or in
equity, which may (A) result in the imposition of
damages or penalties against, or payments by, the
Company in excess of $50,000 or (B) materially
adversely affect the operation of the Company's
business shall be pending or, to the knowledge of
such
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officers, threatened against the Company, or
affecting any of its properties, before or by any
commission, board or other administrative agency,
except as otherwise disclosed in the Registration
Statement or the Prospectus.
(h) Neither the Company nor any of its officers or
affiliates shall have taken, directly or indirectly,
any action designed to, or which might reasonably be
expected to, cause or result in the stabilization or
manipulation of the price of the Company's securities
to facilitate the sale or resale of the Shares.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement
and the Prospectus, the Company shall not have lost
any significant customers or been advised that it may
lose any such significant customers.
(j) On the Closing Date, the Company shall not be a party
to, or be involved in, any arbitration, litigation
(except as set forth in the Registration Statement)
or governmental proceeding, which is then pending,
or, to the knowledge of the Company, threatened, of a
character which is required to be disclosed in the
Registration Statement or which may be reasonably
expected to materially and adversely affect the
condition (financial or other), business, management
of affairs, business prospects, results of
operations, income, shareholders' equity, net worth
or properties of the Company and its Subsidiaries
taken as a whole.
(k) Subsequent to the respective dates as of which
information is given in the Registration Statement
and the Prospectus, the Company shall not have
sustained any loss on account of fire, flood,
accident, or other calamity, whether or not covered
by insurance, which, in the sole judgment of the
Underwriters materially adversely affects the
business of the Company.
(l) At the Closing Date, (i) the representations and
warranties of the Company contained in this Agreement
shall be true and correct in all material respects
with the same effect as if made on and as of the
Closing Dates, and the Company shall have performed,
in all material respects, all its obligations due to
be performed prior thereto; (ii) the Registration
Statement and the Prospectus and any amendment or
supplement thereto shall contain all statements which
are required to be stated therein in accordance with
the Act and the Rules and Regulations and conform in
all material respects to the requirements thereof,
and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto
shall contain any untrue statement of a material fact
or omit to state any material fact required to be
stated therein or necessary to make the statements
therein not misleading; (iii) there shall have been,
since the date as of which information is given in
the Registration Statement and the Prospectus, no
material adverse change in the condition, business,
operations, properties, business prospects,
securities, long-term or short-term debt or general
affairs of the Company and its Subsidiaries taken as
a whole from that set forth in the Registration
Statement or the Prospectus, except changes which the
Registration Statement and the
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Prospectus indicate will occur on or prior to such
Closing Date, and the Company shall not have incurred
any material liabilities or obligations, direct or
contingent, or entered into any material transaction,
contract or agreement not in the ordinary course of
business other than as referred to in the
Registration Statement and the Prospectus; and (iv)
except as set forth in the Prospectus, no action,
suit or proceeding, at law or in equity, shall be
pending or threatened against the Company which might
be required to be set forth in the Registration
Statement, and no proceedings shall be pending or
threatened against the Company before or by any
commission, board or administrative agency in the
United States or elsewhere, wherein an unfavorable
decision, ruling or finding might materially
adversely affect the condition, business, operations,
properties, prospects or general affairs of the
Company.
(m) No action shall have been taken by the Commission or
the NASD the effect of which would make it improper,
at any time prior to the Closing Date, for any member
firm of the NASD to execute transactions (as
principal or as agent) in the Shares, and no
proceedings for the purpose of taking such action
shall have been instituted or shall be pending, or,
to the best of the Underwriters' or the Company's
knowledge, shall be contemplated by the Commission or
the NASD.
(n) The Company meets the current and any existing and
proposed criteria for inclusion of the Shares on
AMEX.
(o) All proceedings taken at or prior to the Closing Date
in connection with the authorization, issuance and
sale of the Shares shall be reasonably satisfactory
in form and substance to the Underwriters and to
Underwriters' Counsel, and such counsel shall have
been furnished with all such documents, certificates
and opinions as they may request for the purpose of
enabling them to pass upon the matters referred to in
this Section 8 hereof and in order to evidence the
accuracy and completeness of any of the
representations, warranties or statements of the
Company, the performance of any covenants of the
Company, or the compliance by the Company with any of
the conditions herein contained.
(p) The Company shall have executed and delivered the
Underwriters' Warrants.
9. Termination. This Agreement may be terminated by the Underwriters,
in their absolute discretion, by notice to the Company (i) if, prior to the
Closing Date, the Company shall have failed or refused to fully comply with any
of the provisions of this Agreement on its part to be performed prior thereto,
or if any of the agreements, conditions, covenants, representations or
warranties of the Company herein contained are not correct or shall not have
been performed or fulfilled within the times specified; (ii) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange will have been suspended; (iii) limited or minimum prices will have
been established on either such Exchange or maximum ranges for prices for
securities shall have been required on the over-the-counter market by the NASD;
(iv) a banking moratorium will have been declared either by federal or New York
State authorities; (v) any
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other restrictions on transactions in securities materially affecting the free
market for securities or the payment for such securities, will be established by
either of such Exchanges, by the Commission by any other federal or state
agency, by action of the Congress or by Executive Order; (vi) the Company will
have sustained a material loss, whether or not insured, by reason of fire,
flood, accident or other calamity; (vii) any action has been taken by the
Government of the United States or any department or agency thereof which, in
the sole judgment of the Underwriters, has had a material adverse effect upon
the general market for securities; (viii) if, prior to the Closing Date there
shall have occurred the outbreak of any war or any other event or calamity
which, in the sole judgment of the Underwriter, materially disrupts the
financial markets of the United States; (ix) if trading of any securities of the
Company shall have been suspended, halted or delisted on any exchange or in any
over-the- counter market or by the Commission; or (x) if, prior to the Closing
Date, any materially adverse change shall have occurred in the sole judgment of
the Underwriter, since the date as of which information is given in the
Registration Statement and the Prospectus, in the financial condition, business,
prospects, operations, properties or obligations of the Company and its
Subsidiaries taken as a whole. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of
Section 6, 7 and 10 shall not be in any way affected by such election or
termination or failure to carry out the terms of this Agreement or any part
hereof.
10. Expenses.
(a) Whether or not the offering is consummated, the
Company will pay all costs and expenses incident to
the performance of the obligations of the Company
hereunder, including without limiting the generality
of the foregoing, (i) the preparation, printing,
filing, and copying of the Registration Statement,
Prospectus, this Agreement, the Selected Dealer
Agreement, and other underwriting documents, if any,
and any drafts, amendments or supplements thereto,
including the cost of all copies thereof supplied to
the Underwriters in such quantities as reasonably
requested by the Underwriters and the costs of
mailing Prospectuses to offerees and purchasers of
the Shares; (ii) the printing, engraving, issuance
and delivery of certificates representing the Shares,
including any transfer or other taxes payable
thereon; (iii) the registration or qualification of
the Shares under state securities or "blue sky" laws,
in accordance with the provisions of Section 10(c)
below and the cost of printing and mailing the "blue
sky Survey"; (iv) all reasonable fees and expenses of
the Company's counsel and accountants; (v) all NASD
filing fees in connection with the offering; (vi) all
costs and expenses of any listing of the Shares on
the AMEX, NASDAQ or any other stock exchange; (vii)
all costs and expenses of preparing four (4) bound
volumes to be provided to the Underwriters of all
documents, paper exhibits, correspondence and records
forming the materials included in the offering;(viii)
the cost of "tombstone" advertisements to be placed
in one or more daily or weekly periodicals as the
Underwriters may request (up to a maximum of
$10,000); (ix) the cost of printing and mailing the
Selected Dealer Agreement and (ix) all other costs
and expenses incurred or to be incurred by the
Company in connection with the transactions
contemplated by this Agreement. The obligations of
the
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Company under this subsection (a) shall survive any
termination or cancellation of this Agreement.
(b) In addition to the Company's responsibility for
payment of the foregoing expenses, the Company shall,
if the offering is closed, pay to the Underwriters a
non-accountable expense allowance equal to 1 7/8% of
the gross proceeds of the offering. The
non-accountable expense allowance due shall be paid
at the Closing Date. The Underwriters hereby
acknowledge prior receipt from the Company of
$10,000, which amount shall be applied to the
non-accountable expense allowance due when and if the
offering is closed. If the offering is not
consummated because the Underwriters elect to
terminate this Agreement in accordance with Section 9
hereof, then the Company shall reimburse the
Underwriters in full for its actual out-of-pocket
expenses (including, without limitation, the fees and
disbursements of its counsel) up to the aggregate sum
of seventy-five thousand dollars ($75,000), against
which sum shall be applied the $10,000 previously
paid on account. If the Company decides not to
proceed with the offering for any reason, and
subsequently engages in any public offering, private
placement, merger, acquisition, joint venture or
similar transaction with any entity within 12 months
after the Company notifies the Underwriters of its
decision not to proceed, the Underwriters shall be
entitled to receive from the Company a cash fee equal
to five percent (5%) of the consideration paid or
received by the Company in connection with such
transaction.
(c) The Underwriters shall determine and notify the
Company prior to the Closing Date in which states or
jurisdictions the Shares shall be registered or
qualified for sale. The Company shall be responsible
for the cost of state registration or qualification,
including the filing fees (which filing fees are
payable to Underwriters' counsel in advance of such
filings) and the legal fees and disbursements of
Underwriters' counsel in connection with obtaining
such registration or qualification.
11. Notices. Any notice hereunder shall be in writing, unless otherwise
expressly provided herein, and if to the respective persons indicated, will be
sufficient if mailed by certified mail, return receipt requested, postage
prepaid, or hand delivered, and confirmed in writing or by telecopier, addressed
as respectively indicated or to such other address as will be indicated by a
written notice similarly given, to the following persons:
(a) If to the Underwriters - addressed to (i) each of:
Starr Securities, Inc., 60 Broad Street, New York,
New York 10004, Attn.: Martin Vegh and GunnAllen
Financial Inc., 1715 Westshore Blvd. Suite 775,
Tampa, Florida 33607, Attn: Howard Davis, with a copy
to Blank Rome Tenzer Greenblatt LLP, 405 Lexington
Avenue, New York, New York 10174, Attention: James
Martin Kaplan, Esq.
(b) If to the Company - addressed to NTN Communications,
Inc., The Campus, 5966 La Place Court, Carlsbad,
California 92008, Attn: Kendra Berger, with a
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copy to O'Melveny & Myers LLP, 610 Newport Center
Drive, Newport Beach, California 92660, Attention:
Thomas L. Leary, Esq.
Notice shall be deemed delivered upon receipt.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the Underwriters and the Company and their respective successors
and assigns. Nothing expressed or mentioned in this Agreement is intended, or
will be construed, to give any person, corporation or other entity other than
the persons, corporations and other entities mentioned in the preceding sentence
any legal or equitable right, remedy, or claim under or in respect to this
Agreement or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other persons; except that the
representations, warranties and indemnities of the Company contained in this
Agreement will also be for the benefit of the directors and officers of the
Underwriters and any person or persons who control any of the Underwriters
within the meaning of Section 15 of the Act, and except that the indemnities of
the Underwriters will also be for the benefit of the directors and officers of
the Company and any person or persons who control the Company within the meaning
of Section 15 of the Act. No purchaser of any of the Shares from the
Underwriters will be deemed a successor or assign solely because of such
purchase.
13. Finders and Holders of First Refusal Rights.
(a) The Company hereby represents and warrants to the
Underwriters that it has not paid any compensation
for services as a finder in connection with any prior
financing of the Company during the twelve-month
period immediately preceding the date hereof and that
no person is entitled, directly or indirectly, to
compensation for services as a finder in connection
with the proposed transactions. The Company further
represents and warrants, no person holds a right of
first refusal or similar right in connection with the
proposed offering, and the Company hereby agrees to
indemnify and hold harmless the Underwriters, its
respective officers, directors, agents and each
person, if any, who controls such Underwriters within
the meaning of Section 15 of the Act, from and
against any loss, liability, claim, damage or expense
whatsoever arising out of a claim by an alleged
finder or alleged holder of a right of first refusal
or similar right in connection with the proposed
offering, insofar as such loss, liability, claim,
damage or expense arises out of any action or alleged
action of the Company.
(b) The Underwriters hereby represent and warrant to the
Company that no person is entitled, directly or
indirectly, to compensation for services as a finder
in connection with the proposed transactions
contemplated by this Agreement; and the Underwriters
hereby agree, severally and not jointly, to indemnify
and hold harmless the Company, its officers,
directors and agents, from and against any loss,
liability, claim, damage or expense whatsoever
arising out of a claim by an alleged finder in
connection with the proposed offering, insofar as
such loss, liability, claim, damage or expense arises
out of any action or alleged action of such
Underwriter.
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14. Applicable Law. This Agreement shall be a deemed to be a contract
made under the laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said state applicable to contracts made
and to be performed entirely within such State. The Company (1) agrees that any
legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted exclusively in New York State Supreme Court, County of New
York, or in the United States District Court for the Southern District of New
York, (2) waives any objection which the Company may have now or hereafter to
the venue of any such suit, action or proceeding, and (3) irrevocably consents
to the jurisdiction of the New York State Supreme Court, County of New York and
the United States District Court for the Southern District of New York in any
such suit, action or proceeding. Each of the Company and the Underwriters
further agrees to accept and acknowledge service of any and all process which
may be served in any suit, action or proceeding in the New York State Supreme
Court, County of New York and the United States District Court for the Southern
District of New York, and agrees that service of process upon the Company mailed
by certified mail to the Company's address shall be deemed in every respect
effective service of process upon the Company in any such suit, action or
proceeding. In the event of litigation between the parties arising hereunder,
the prevailing party shall be entitled to costs and reasonable attorney's fees.
15. Headings. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
16. Counterparts. This Agreement may be executed in any number of
counterparts which, taken together, shall constitute one and the same
instrument.
17. Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the Underwriters and the Company with respect to the
subject matter hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, between them.
18. Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders and the singular shall include the plural, and vice versa.
[Balance of page intentionally left blank]
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If the foregoing correctly sets forth our understanding,
please indicate the Underwriters' acceptance thereof, as of the day and year
first above written, in the spaces provided below for that purpose, whereupon
this letter with the Underwriters' acceptance shall constitute a binding
agreement among us.
[SEAL] Very truly yours,
NTN COMMUNICATIONS, INC.
Attest:
/s/ Kendra Berger By: /s/ Stanley B. Kinsey
- ------------------------------- --------------------------------
Name: Kendra Berger Name: Stanley B. Kinsey
Title: Chief Financial Officer Title: Chief Executive Officer
and Secretary and Chairman of the Board
Confirmed and accepted on the
day and year first above written.
STARR SECURITIES, INC.
By: /s/ Martin Vegh
--------------------------
Name: Martin Vegh
Title: President
GUNNALLEN FINANCIAL INC.
By: /s/ Howard Davis
--------------------------
Name:
Title:
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34
SCHEDULE I
Subsidiaries
1. BUZZTIME.com, Inc., a Delaware corporation, is wholly-owned by NTN.
2. IWN, Inc., a Delaware corporation, is wholly-owned by NTN.
3. IWN, L.P., a Delaware limited partnership, whose general partner is
IWN, Inc.
4. Tapco, Inc., a California corporation, is wholly-owned by NTN.
5. National Telecommunicator Network, Inc., a California corporation, is
wholly-owned by NTN.
The term "Subsidiary" shall be deemed to consist only of the
Subsidiaries of the Company listed above for purposes of this Underwriting
Agreement.
In addition to the Subsidiaries listed above, the Company holds a direct
interest in LearnStar, Inc. and an indirect interest in eBet Limited.
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