Exhibit 1.1
8 X 8, INC.
3,508,772 Shares
Warrant for 1,403,509 Shares
Common Stock
($0.001 Par Value)
PLACEMENT AGENCY AGREEMENT
September 29, 2004
A.G. Edwards & Sons, Inc.
Griffin Securities, Inc.
as Placement Agents
c/o A.G. Edwards & Sons, Inc.
One North Jefferson Avenue
St. Louis, Missouri 63103
The undersigned,
8
x8,
Inc., a
Delaware corporation (the "Company"), hereby
confirms its agreement with you as follows:
1.
Description of
Securities
. The Company
proposes to issue and sell to
certain investors (collectively, the "Investors")
(i) 3,508,772
shares (the
"Shares") of its Common Stock, par value $0.001 per share (the
"Common Stock"),
and (ii) warrants to purchase
up to 1,403,509 shares of Common Stock (the "Investor Warrants," the
Common Stock underlying the Investor Warrants, the "Investor Warrant
Shares;" the Shares, the Investor Warrants and the Investor Warrant Shares
collectively, the "Securities") as may be adjusted as provided in the
Investor Warrants, in a public offering under its registration statement
(Registration No. 333-114133) on Form S-3. The Company desires to engage
A.G. Edwards & Sons, Inc.
and Griffin Securities, Inc. (together, "
Placement Agents
")
as its placement
agents
in connection with such issuance and sale. The
Securities are more fully described in the Prospectus hereinafter defined.
2.
Agreement to Act as Placement
Agents; Delivery and Payment
. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Placement Agents agree to act as the Company's
exclusive placement agent to assist the Company, on a best efforts basis, in
connection with the proposed issuance and sale by the Company of the Securities
to the Investors. The Company expressly acknowledges and agrees that this
Agreement does not in any way constitute a commitment by the Placement Agents to
purchase any of the Securities and does not ensure successful placement of the
Securities or any portion thereof.
In
accordance with the terms of
that
certain Engagement Letter, dated April 16, 2004, between the Company and
A.G. Edwards & Sons, Inc., and that certain Engagement Letter, dated April
16, 2004, between the Company and Griffin Securities, Inc. (together, the
"Engagement Letters"), concurrently
with the
Closing (as defined below) the Company shall
(i)
pay to the Placement Agents
an amount
equal to
6% of the gross purchase price of the Shares
(the "Placement Fee"),
which payment shall be
effected as set forth in the paragraph immediately following this paragraph, and
(ii)
issue to the Placement Agents warrants in the
form attached as Schedule I to purchase that number of shares of Common
Stock which is equal to 5
%
of the
aggregate number of Shares sold to the Investors plus the Investor Warrant
Shares (the "Warrants")
. Concurrently with the
issuance of the Warrants, the Company shall
execute
and deliver
a
Registration Rights
Agreement
in
substantially
the form attached as Schedule II to the Placement Agents for
their respective signatures
. The allocation of the
Placement Fee and the Warrants among the Placement Agents is contained in the
Agreement Among Placement Agents dated as of September 29, 2004.
Upon satisfaction of the conditions set
forth in
Section 5
hereof, the closing of the sale and issuance of
the Shares and the Investor Warrants (the "
Closing
") shall
occur at the offices of Shulte Roth & Zabel LLP, 919 Third Avenue, New York,
New York 10022, or at such other place as may be agreed upon between you and the
Company (the "
Place of Closing
"), at 10:00 a.m., New York City
Time, on September 30, 2004, or at such other time and date as you and the
Company may agree, such time and date of payment and delivery being herein
called the "
Closing Date
." The delivery of the Shares and the
Investor Warrants shall be made to the respective accounts of the Investors
against payment by the Investors of the purchase price thereof (the
"
Requisite Funds
") to the Placement Agents on behalf of the
Company by Federal Funds wire transfer payable in same day funds. The Placement
Agents shall then immediately transfer the Requisite Funds, less the Placement
Fee and any expenses of the Placement Agents for which the Company is obligated
to reimburse, to the Company by Federal Funds wire transfer payable in same day
funds.
The delivery of the Shares to the
Investors shall be made, at the option of A.G. Edwards & Sons, Inc., either
through the facilities of The Depository Trust Company (the
"
DTC
") or by certificated securities. If A.G. Edwards &
Sons, Inc. elects to deliver the Shares through the facilities of DTC, upon
receipt of notice from A.G. Edwards & Sons, Inc. the Company shall direct
Computershare Trust Company, Inc., as the Company's registrar and transfer
agent
, to register the Shares to the account of A.G.
Edwards & Sons, Inc. at least one full business day prior to the Closing
Date for transfer to the respective accounts of the Investors on the Closing
Date. If
A.G. Edwards & Sons, Inc. elect
s to deliver certificated securities, the Company will
deliver definitive certificates for the Shares at the office of A.G. Edwards
& Sons, Inc., 77 Water Street, New York, New York
("
Edwards' Office
"), or such other place as you and the Company
may mutually agree upon. The certificates for the Shares to be delivered will
be made available to you for inspection at Edwards' Office (or such other place
as you and the Company may mutually agree upon) at least one full business day
prior to the Closing Date and will be registered in such names and denominations
as you may request at least forty-eight hours prior to the Closing Date.
The Company shall deliver the Investor
Warrants as provided in the Securities Purchase Agreement, dated of even date
herewith, by and among the Company, and the investor listed on Schedule I
attached thereto.
At the Closing, the Company shall
issue the
Warrants and
deliver the
same
to A.G. Edwards & Sons, Inc. for
delivery
to the Placement Agents as
allocated between them in accordance with instructions provided to the Company
by A.G. Edwards & Sons, Inc. at least one full business day prior to the
Closing Date.
Within five (5) business days after the receipt by the
Company from an Investor of both a valid notice of exercise of any Investor
Warrants and the payment in cash of the aggregate exercise price for the
Investor Warrants being exercised, the Company shall pay to the Placement Agents
an amount equal to 6% of such aggregate exercise price of the Investor Warrants
that are so exercised by any such Investor (the "Deferred Placement
Fee"), by wire transfer to such account or accounts as the Placement Agents
shall direct the Company in writing.
It is understood that the Company
proposes to offer the Securities to the Investors upon the terms and conditions
set forth in the Prospectus (as defined below).
3.
Representations, Warranties
and Agreements of the Company
.
(a) The Company represents and
warrants to and agrees with the Placement Agents that:
(i) The Company has filed with the
Securities and Exchange Commission (the "
SEC
") a registration
statement (Registration No. 333-114133) on Form S-3 for the registration of
equity securities of the Company, including the Securities, which has been
prepared by the Company pursuant to and in conformity with
the requirements of the Securities Act of 1933, as amended (the "
1933
Act
"), and the rules and regulations thereunder (the "
1933 Act
Rules and Regulations
") of the SEC. Such registration statement has
been declared effective by the SEC. The Company meets the requirements for use
of Form S-3 under the 1933 Act. Copies of such registration statement,
including any amendments thereto, each related preliminary prospectus (meeting
the requirements of Rule 430 or 430A of the 1933 Act Rules and Regulations)
contained therein, and the exhibits, financial statements and schedules thereto
have heretofore been delivered by the Company to you. A final prospectus
containing information permitted to be omitted at the time of effectiveness by
Rule 430A of the 1933 Act Rules and Regulations will be filed promptly by the
Company with the SEC in accordance with Rule 424(b) of the 1933 Act Rules and
Regulations. The term "
Registration Statement
" as used herein
means the registration statement as amended at the time it became effective
under the 1933 Act (the "
Effective Date
"), including financial
statements and all exhibits and all documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act and, if applicable, the
information deemed to be included by Rule 430A of the 1933 Act Rules and
Regulations. If an abbreviated registration statement is prepared and filed
with the SEC in accordance with Rule 462(b) under the 1933 Act (an
"
Abbreviated Registration Statement
"), the term
"
Registration Statement
" as used in this Agreement includes the
Abbreviated Registration Statement. The term "
Prospectus
" as
used herein means the prospectus constituting a part of the Registration
Statement and included in the Registration Statement at the Effective Date, as
supplemented by each prospectus supplement relating to the offering of the
Securities, including any such prospectus supplement filed pursuant to Rule
424(b) of the 1933 Act Rules and Regulations (the "
Prospectus
Supplement
") and including any information and documents included
therein from time to time by reference pursuant to Item 12 of Form S-3 under the
1933 Act. The term "
Preliminary Prospectus
" as used herein
shall mean a preliminary prospectus as contemplated by Rule 430 or 430A of the
1933 Act Rules and Regulations included at any time in the Registration
Statement, including any such preliminary prospectus supplement relating to the
Securities filed by the Company pursuant to the 1933 Act containing a
"subject to completion" legend as described in paragraph 10 of Item
501 of Regulation S-K of the 1933 Act Rules and Regulations. For purposes of
this Agreement, the words "
amend
,"
"
amendment
," "
amended
,"
"
supplement
" or "
supplemented
" with respect to
the Registration Statement or the Prospectus shall mean amendments or
supplements to the Registration Statement or the Prospectus, as the case may be;
as well as documents filed after the date of this Agreement and prior to the
completion of the distribution of the Securities and incorporated by reference
therein as described above.
(ii) Neither the SEC nor any state
or other jurisdiction or other regulatory body has issued, and neither is, to
the knowledge of the Company, threatening to issue, any stop order under the
1933 Act or other order suspending the effectiveness of the Registration
Statement (as amended or supplemented) or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or suspending the qualification or
registration of the Securities for offering or sale in any jurisdiction nor
instituted or, to the knowledge of the Company, threatened to institute
proceedings for any such purpose. Each Preliminary Prospectus at its date of
issue, the Registration Statement and the Prospectus and any amendments or
supplements thereto contain or will contain, as the case may be, all statements
which are required to be stated therein by, and in all material respects conform
or will conform, as the case may be, to the requirements of, the 1933 Act and
the 1933 Act Rules and Regulations. Neither the Registration Statement nor any
amendment thereto, as of the applicable effective date, contains or will
contain, as the case may be, any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or necessary
to make the statements therein, not misleading, and neither any Preliminary
Prospectus, the Prospectus nor any supplement thereto contains or will contain,
as the case may be, any untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representation or warranty as to information contained in or omitted from the
Prospectus in reliance upon, and in conformity with, written information
relating to the Placement Agents furnished to the Company by the Placement
Agents expressly for use in the preparation thereof (as provided in
Section 12
hereof). There is no contract or document required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. The documents incorporated by reference in the Prospectus pursuant to
Item 12 of Form S-3 under the 1933 Act, at the time they were filed with the
SEC, complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "
1934 Act
"), and the
rules and regulations adopted by the SEC thereunder (the "
1934 Act Rules
and Regulations
"). Any future documents incorporated by reference so
filed, when they are filed, will comply in all material respects with the
requirements of the 1934 Act and the 1934 Act Rules and Regulations; no such
incorporated document contained or will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and, when read together
and with the other information in the Prospectus, at the time the Registration
Statement became effective and at the Closing Date, each such incorporated
document did not or will not, as the case may be, 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. The members of the
Company's Audit Committee fulfill the independence requirements under the rules
of Nasdaq.
(iii) This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and by
general principles of equity (the "
Exceptions
").
(iv) The Company and its
subsidiaries have been duly organized and are validly existing as corporations
in good standing under the laws of the states or other jurisdictions in which
they are incorporated, with full power and authority (corporate and other) to
own, lease and operate their properties and conduct their businesses as
described in the Prospectus and, with respect to the Company, to execute and
deliver, and perform the Company's obligations under, this Agreement; the
Company and its subsidiaries are duly qualified to do business as foreign
corporations in good standing in each state or other jurisdiction in which their
ownership or leasing of property or conduct of business legally requires such
qualification, except where the failure to be so qualified, individually or in
the aggregate, would not have a Material Adverse Effect. The term
"
Material Adverse Effect
" as used herein means any
current or prospective
material adverse
effect on the
financial condition
, net worth, business, affairs, management
,
results of operations or cash flow of the Company and its
subsidiaries, taken as a whole.
(v) Neither the Company nor any of
its subsidiaries has sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree. Other than as set forth in the
Prospectus and, since the respective dates as of which information is given in
the Prospectus, there has not been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries
or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the Company
and its subsidiaries taken as a whole, otherwise than as set forth in the
Prospectus.
(vi) The issuance and sale of the
Securities and the execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions herein contemplated, will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any properties or assets of
the Company or any of its subsidiaries under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the properties or assets of the Company
or any of its subsidiaries is subject, except to such extent as, individually or
in the aggregate, does not have
, or would not reasonably be
expected to have,
a Material Adverse Effect, nor will
such action result in any violation of the provisions of the Company's
certificate of incorporation or bylaws or any statute, rule, regulation or other
law, or any order or judgment, of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement, the
issuance and sale of the Securities or the consummation of the transactions
contemplated hereby, except such as have been, or will be prior to the Closing
Date, obtained under the 1933 Act or as may be required by the National
Association of Securities Dealers, Inc. (the "
NASD
") and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or blue sky laws in connection with the purchase
of the Securities by the Investors.
(vii) The Company has duly and
validly authorized capital stock as set forth in the Prospectus; all outstanding
shares of Common Stock of the Company and the Securities conform, or when issued
will conform, to the description thereof in the Prospectus and have been, or,
when issued and paid for in the manner described herein will be, duly
authorized, validly issued, fully paid and non-assessable; and the issuance of
the Securities to be purchased from the Company hereunder is not subject to
preemptive or other similar rights, or any restriction upon the voting or
transfer thereof pursuant to applicable law or the Company's certificate of
incorporation, by-laws or governing documents or any agreement to which the
Company or any of its subsidiaries is a party or by which any of them may be
bound. All corporate action required to be taken by the Company for the
authorization, issuance and sale of the Securities has been duly and validly
taken. Except as disclosed in the Prospectus, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments of sale or rights related to or entitling any person to purchase or
otherwise to acquire any shares of, or any security convertible into or
exchangeable or exercisable for, the capital stock of, or other ownership
interest in, the Company. The outstanding shares of capital stock of the
Company's subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable and are owned by the Company free and clear of any
mortgage, pledge, lien, encumbrance, charge or adverse claim and are not the
subject of any agreement or understanding with any person and were not issued in
violation of any preemptive or similar rights; and there are no outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments of sale or instruments related to or entitling any person to
purchase or otherwise acquire any shares of, or any security convertible into or
exchangeable or exercisable for, the capital stock of, or other ownership
interest in any of the subsidiaries.
(viii) The statements set forth in
the Prospectus describing the Securities and this Agreement, insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair
.
in all material respects.
(ix) Each of the Company and its
subsidiaries is in possession of and is operating in compliance with all
franchises, grants, authorizations, licenses, certificates, permits, easements,
consents, orders and approvals ("
Permits
") from all state,
federal, foreign and other regulatory authorities, and has satisfied the
requirements imposed by regulatory bodies, administrative agencies or other
governmental bodies, agencies or officials, including the Federal Communications
Commission and state public utilities commissions, that are required for the
Company and its subsidiaries lawfully to own, lease and operate their properties
and conduct their businesses as described in the Prospectus, and, each of the
Company and its subsidiaries is conducting its business in compliance with all
of the laws, rules and regulations of each jurisdiction in which it conducts its
business, in each case with such exceptions, individually or in the aggregate,
as would not have a Material Adverse Effect; each of the Company and its
subsidiaries has filed all notices, reports, documents or other information
("
Notices
") required to be filed under applicable laws, rules
and regulations, in each case, with such exceptions, individually or in the
aggregate, as would not have a Material Adverse Effect; and, except as otherwise
specifically described in the Prospectus, neither the Company nor any of its
subsidiaries has received any notification from any court or governmental body,
authority or agency, relating to the revocation or modification of any such
Permit or, to the effect that any additional authorization, approval, order,
consent, license, certificate, permit, registration or qualification
("
Approvals
") from such regulatory authority is needed to be
obtained by any of them, in any case where it could be reasonably expected that
obtaining such Approvals or the failure to obtain such Approvals, individually
or in the aggregate, would have a Material Adverse Effect.
(x) The Company and its subsidiaries
have filed all necessary federal, state and foreign income, franchise, and
excise tax returns and paid all taxes shown as due thereon; all such tax returns
are complete and correct in all material respects; all tax liabilities are
adequately provided for on the books of the Company and its subsidiaries except
to such extent as would not have a Material Adverse Effect; the Company and its
subsidiaries have made all necessary payroll tax payments and are current and
up-to-date; and the Company and its subsidiaries have no knowledge of any tax
proceeding or action pending or threatened against the Company or its
subsidiaries which, individually or in the aggregate,
would
reasonably be expected to
have a Material Adverse
Effect.
(xi) Except as described in the
Prospectus, (A) the Company and its subsidiaries own or possess sufficient
rights and licenses with respect to all patents, copyrights, trademarks, service
marks, trade names and other intellectual property of the Company or any other
person or entity necessary to conduct the business now operated by them, and
(B) neither the Company nor any of its subsidiaries has received any notice
of infringement of or conflict with asserted rights of others with respect to
any patents, patent licenses, copyrights, trademarks, service marks, trade names
or other intellectual property rights which, individually or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(xii) The Company and its
subsidiaries
do not own any
real
property
.
The
Company
and
its subsidiaries
have
good
and marketable title to all personal property owned by them, in each case free
and clear of all liens, encumbrances, restrictions and defects except such as
are described in the Prospectus or do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property; and any property held under lease or sublease by the Company or any of
its subsidiaries is held under valid, subsisting and enforceable leases or
subleases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property by the Company and its
subsidiaries; and neither the Company nor any of its subsidiaries has any notice
or knowledge of any material claim of any sort which has been, or may be,
asserted by anyone adverse to the Company's or any of its subsidiaries rights as
lessee or sublessee under any lease or sublease described above, or affecting or
questioning the Company's or any of its subsidiaries' rights to the continued
possession of the leased or subleased premises under any such lease or sublease
in conflict with the terms thereof.
(xiii) Except as described in the
Prospectus, there is no factual basis for any action, suit or other proceeding
involving the Company or any of its subsidiaries or any of their material assets
for any failure of the Company or any of its subsidiaries, or any predecessor
thereof, to comply with any requirements of federal, state or local regulation
relating to air, water, solid waste management, hazardous or toxic substances,
or the protection of health or the environment. Except as described in the
Prospectus, none of the property owned or leased by the Company or any of its
subsidiaries is, to the best knowledge of the Company, contaminated with any
waste or hazardous substances, and neither the Company nor any of its
subsidiaries may be deemed an "owner or operator" of a
"facility" or "vessel" which owns, possesses, transports,
generates or disposes of a "hazardous substance" as those terms are
defined in 9601 of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. 9601 et seq.
(xiv) No labor disturbance exists with
the employees of the Company or any of its subsidiaries or is imminent which,
individually or in the aggregate, would have a Material Adverse Effect. None of
the employees of the Company or any of its subsidiaries is represented by a
union and, to the best knowledge of the Company and its subsidiaries, no union
organizing activities are taking place. Neither the Company nor any of its
subsidiaries has violated any federal, state or local law or foreign law
relating to discrimination in hiring, promotion or pay of employees, nor any
applicable wage or hour laws, or the rules and regulations thereunder, or
analogous foreign laws and regulations, which might, individually or in the
aggregate, result in a Material Adverse Effect.
(xv)
The Company
and
its subsidiaries
are
in compliance in all material respects
with all
presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) for which the Company and its
subsidiaries would have any liability; the Company and its subsidiaries have not
incurred and do not expect to incur liability under (A) Title IV of ERISA
with respect to termination of, or withdrawal from, any pension plan or
(B) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each pension plan for which the Company or any of its
subsidiaries would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects, and nothing
has occurred, whether by action or by failure to act, which would cause the loss
of such qualification.
(xvi) The Company and its
subsidiaries maintain insurance of the types and in the amounts generally deemed
adequate for its business, including, but not limited to, directors' and
officers' insurance, insurance covering real and personal property owned or
leased by the Company and its subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect. Neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or applied for, and
the Company has no reason to believe that it and its subsidiaries will not be
able to renew their existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.
(xvii) Neither the Company nor any
of its subsidiaries is, or with the giving of notice or lapse of time or both
would be, in default or violation with respect to its certificate of
incorporation or by-laws. Neither the Company nor any of its subsidiaries is,
or with the giving of notice or lapse of time or both would be, in default in
the performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the properties or assets of the Company or any of its
subsidiaries is subject, or in violation of any statutes, laws, ordinances or
governmental rules or regulations or any orders or decrees to which it is
subject, including, without limitation, Section 13 of the 1934 Act, which
default or violation, individually or in the aggregate, would have a Material
Adverse Effect. Neither the Company nor any of its
subsidiaries has, at any time during the past five years, (A) made any
unlawful contributions to any candidate for any political office, or failed
fully to disclose any contribution in violation of law, or (B) made any
payment to any state, federal or foreign government official, or other person
charged with similar public or quasi-public duty (other than payment required or
permitted by applicable law).
(xviii) Other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
or, to
the Company's
knowledge,
threatened,
to
which the Company or any of its subsidiaries is
or would
become
a party or of which any property of the Company
or any of its subsidiaries is
or would be
subject that, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect or which would materially and adversely affect the consummation
of the transactions contemplated hereby or which is required to be disclosed in
the Prospectus.
(xix) The Company is not and, after
giving effect to the offering and sale of the Securities, will not be a
"holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company," as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended (the "
1935
Act
").
(xx) The Company is not and, after
giving effect to the offering and sale of the Securities, will not be an
"investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended (the "
1940 Act
").
(xxi) Pricewaterhouse Coopers LLP,
the accounting firm which has certified the audited financial statements for the
year ended March 31, 2004 filed with or incorporated by reference in and as
a part of the Registration Statement, is an independent public accounting firm
within the meaning of the 1933 Act and the 1933 Act Rules and Regulations.
(xxii) The Company
has established and maintains disclosure controls and procedures
(as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange
Act); such disclosure controls and procedures are designed
to ensure that material information relating to the
Company
,
including its consolidated
Subsidiaries, is made known
to the Company's Chief Executive Officer and its Chief Financial Officer
by others within those entities,
and such disclosure controls and procedures are effective
to perform the functions for which they were established; the Company's auditors
and the Audit Committee of the Board of Directors have been advised of: (i)
any
significant deficiencies
in the design or operation of internal controls
which
could
adversely affect the Company's ability to record, process, summarize
,
and report financial
data
; and
(ii)
any fraud, whether or not material, that involves
management or other employees who have a
role in the
Company's internal
controls; any material weaknesses in
internal controls have been identified for the Company's auditors; since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses; the
principal executive officers (or their equivalents) and principal financial
officers (or their equivalents) of the Company have made all certifications
required by the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act")
and any related rules and regulations promulgated by the Commission, and the
statements contained in any such certification are complete and correct; and the
Company is otherwise
in compliance in
all material respects with all
applicable provisions
of the Sarbanes-Oxley Act that are effective.
The consolidated financial
statements and schedules of the Company, including the notes thereto, filed with
(or incorporated by reference) and as a part of the Registration Statement or
Prospectus, are accurate in all material respects and present fairly the
financial condition of the Company and its subsidiaries as of the respective
dates thereof and the consolidated results of operations and changes in
financial position and consolidated statements of cash flow for the respective
periods covered thereby, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved except
as otherwise disclosed therein. All adjustments necessary for a fair
presentation of results for such periods have been made. The
selected financial data included or incorporated by reference
in the Registration Statement and Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of the
audited financial statements. Any operating or other statistical data included
or incorporated by reference in the Registration Statement and Prospectus comply
in all material respects with the 1933 Act and the 1933 Act Rules and
Regulations and present fairly the information shown therein.
(xxiii) Except as disclosed in the
Prospectus, no holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the Company
because of the filing of the Registration Statement or the consummation of the
transactions contemplated hereby. Except as disclosed in the Prospectus, no
person has the right to require registration under the 1933 Act of any shares of
Common Stock or other securities of the Company, each such holder or other
person has waived his, her or its right to require such registration in
connection with the Registration Statement. No person, other than each of the
Placement Agents, has the right, contractual or otherwise, to cause the Company
to permit such person to underwrite the sale of any of the Securities. Except
for this Agreement, the Engagement Letter, and the letter agreement between the
Company and Griffin Securities, Inc. dated April 16, 2004, there are no
contracts, agreements or understandings between the Company or any of its
subsidiaries and any person that would give rise to a valid claim against the
Company, its subsidiaries or the Placement Agents for a brokerage commission,
finder's fee or like payment in connection with the issuance, purchase and sale
of the Securities.
(xxiv) The Company has not
distributed and, prior to the later to occur of (A) the Closing Date and
(B) completion of the distribution of the Securities, will not distribute
any offering material in connection with the offering and sale of the Securities
other than the Registration Statement, the Preliminary Prospectus, the
Prospectus or documents incorporated therein by reference.
(xxv) The Company has not taken and
will not take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Company's Common Stock, and the Company is not aware of any
such action taken or to be taken by affiliates of the Company.
(b) Any certificate signed by any
officer of the Company and delivered to you or to counsel for the Placement
Agents shall be deemed a representation and warranty by the Company to the
Placement Agents as to the matters covered thereby.
4.
Additional Covenants
.
The Company covenants and agrees with the Placement Agents that:
(a) The Company will timely
transmit copies of the Prospectus, and any amendments or supplements thereto, to
the SEC for filing pursuant to Rule 424(b) of the 1933 Act Rules and
Regulations.
(b) The Company has furnished or
will deliver to the Placement Agents and counsel for the Placement Agents,
without charge, conformed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to be
incorporated by reference therein) and conformed copies of all consents and
certificates of experts. The copies of the Registration Statement and each
amendment thereto furnished to the Placement Agents will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T or by Rule 424(b) of the
1933 Rules and Regulations. The Company will promptly notify the Placement
Agents of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus or preliminary prospectus supplement or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will use its best efforts to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(c) The Company will not file any
amendment or supplement to the Registration Statement, the Prospectus (or any
other prospectus relating to the Securities filed pursuant to Rule 424(b)
of the 1933 Act Rules and Regulations that differs from the Prospectus as filed
pursuant to such Rule 424(b)) and will not file any document under the 1934 Act
before the termination of the offering of the Securities by the Company if the
document would be deemed to be incorporated by reference into the Registration
Statement or the Prospectus, of which the Placement Agents shall not previously
have been advised and furnished with a copy or to which the Placement Agents
shall have reasonably objected or which is not in compliance with the 1933 Act
Rules and Regulations; and the Company will promptly notify you after it shall
have received notice thereof of the time when any amendment to the Registration
Statement becomes effective or when any supplement to the Prospectus has been
filed.
(d) During the period when a
prospectus relating to any of the Securities is required to be delivered under
the 1933 Act by any Placement Agents or dealer, the Company will comply, at its
own expense, with all requirements imposed by the 1933 Act and the 1933 Act
Rules and Regulations, as now and hereafter amended, and by the rules and
regulations of the SEC thereunder, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealing in the Securities
during such period in accordance with the provisions hereof and as contemplated
by the Prospectus.
(e) If, during the period when a
prospectus relating to any of the Securities is required to be delivered under
the 1933 Act by any Placement Agents or dealer, (i) any event relating to
or affecting the Company or of which the Company shall be advised in writing by
the Placement Agents shall occur as a result of which, in the opinion of the
Company or the Placement Agents, the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (ii) it
shall be necessary to amend or supplement the Registration Statement or the
Prospectus to comply with the 1933 Act, the 1933 Act Rules and Regulations, the
1934 Act or the 1934 Act Rules and Regulations, the Company will forthwith at
its expense prepare and file with the SEC, and furnish to the Placement Agents a
reasonable number of copies of, such amendment or supplement or other filing
that will correct such statement or omission or effect such compliance.
(f) During the period when a
prospectus relating to any of the Securities is required to be delivered under
the 1933 Act by any Placement Agents or dealer, the Company will furnish such
proper information as may be lawfully required and otherwise cooperate in
qualifying the Securities for offer and sale under the securities or blue sky
laws of such jurisdictions as the Placement Agents may reasonably designate and
will file and make in each year such statements or reports as are or may be
reasonably required by the laws of such jurisdictions;
provided, however
,
that the Company shall not be required to qualify as a foreign corporation or
shall be required to qualify as a dealer in securities or to file a general
consent to service of process under the laws of any jurisdiction.
(g) In accordance with Section
11(a) of the 1933 Act and Rule 158 of the 1933 Act Rules and Regulations, the
Company will make generally available to its security holders and to holders of
the Securities, as soon as practicable, an earning statement (which need not be
audited) in reasonable detail covering the 12 months beginning not later than
the first day of the month next succeeding the month in which occurred the
effective date (within the meaning of Rule 158) of the Registration
Statement.
(h) During the period when a prospectus relating to any of
the Securities is required to be delivered under the 1933 Act by any Placement
Agents or dealer, the Company will file promptly all documents required to be
filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934
Act. The Company will furnish to its security holders annual reports containing
financial statements audited by independent public accountants and quarterly
reports containing financial statements and financial information which may be
unaudited.
(i)
During
the period beginning from the date of this Agreement and continuing to and
including the date that is 30 days after the Closing Date, the Company will not,
without the prior written consent of the Placement Agents, offer for sale, sell
or enter into any agreement to sell, or otherwise dispose of, any equity
securities of the Company, except for the Securities; provided, however, that
the Company may issue, or grant options to purchase, shares of Common Stock
pursuant to any employee stock incentive plan existing on the date hereof.
(j) The Company will apply the
proceeds from the sale of the Securities as set forth in the description under
"Use of Proceeds" in the Prospectus, which description complies in all
respects with the requirements of Item 504 of Regulation S-K.
(k) The Company will promptly
provide you with copies of all correspondence to and from, and all documents
issued to and by, the SEC in connection with the registration of the Securities
under the 1933 Act
or relating to any documents incorporated
by reference into the Registration Statement or the Prospectus which the Company
files with the SEC at any time until the expiration of one year from the date of
the Prospectus.
(l) Prior to the Closing Date, the
Company will furnish to you, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company and its
subsidiaries for any periods subsequent to the periods covered by the financial
statements appearing in the Registration Statement and the Prospectus or
incorporated therein by reference.
(m) Except as required by law,
prior to the Closing Date, the Company will issue no press release or other
communication, directly or indirectly, and will hold no press conferences with
respect to the Company or any of its subsidiaries, the financial condition,
results of operations, business, properties, assets or liabilities of the
Company or any of its subsidiaries, or the offering of the Securities, without
your prior written consent. In the event that any such disclosure is required
by law, the Company will promptly notify you of such required disclosure prior
to issuing any press release or other communication or holding any press
conference, and, to the extent reasonably practicable, the Company will permit
you to comment on any press release or other communication.
(n) The Company will use its
reasonable
best efforts to obtain
approval for, and maintain the quotation of the Shares and the Investor Warrant
Shares on The Nasdaq SmallCap Market.
(o) The Company and its
subsidiaries will maintain and keep accurate books and records reflecting their
assets and maintain internal accounting controls which provide reasonable
assurance that (i) transactions are executed in accordance with
management's authorization, (ii) transactions are recorded as necessary to
permit the preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company and its subsidiaries,
(iii) access to the assets of the Company and its subsidiaries is permitted
only in accordance with management's authorization, and (iv) the recorded
accounts of the assets of the Company and its subsidiaries are compared with
existing assets at reasonable intervals.
(p) If the Company elects to rely
on Rule 462(b) under the 1933 Act, the Company shall both file an Abbreviated
Registration Statement with the SEC in compliance with Rule 462(b) and pay the
applicable fees in accordance with Rule 111 of the 1933 Act by the earlier of
(i) 9:00 p.m., St. Louis time, on the date of this Agreement, and (ii) the time
that confirmations are given or sent, as specified by Rule 462(b)(2).
(q) The Company will execute and deliver any stock
purchase agreement reasonably requested by any Investor.
5.
Conditions of Closing
.
The Closing shall be subject to the accuracy, as of the date hereof and as of
the Closing Date, of the representations and warranties of the Company contained
herein, to the performance by the Company of its covenants and obligations
hereunder, and to the following additional conditions, and the Company shall not
issue or sell the Shares or the Investor Warrants unless and until all of the
conditions of this
Section 5
shall have been satisfied or waived by
the Placement Agents:
(a) The Registration Statement and
all post-effective amendments thereto shall have become effective not later than
1:00 p.m., New York time, on the date hereof, or, with your consent, at a later
date and time, not later than 1:00 p.m., New York time, on the first business
day following the date hereof, or at such later date and time as may be approved
by the Placement Agents; if the Company has elected to rely on Rule 462(b) under
the 1933 Act, the Abbreviated Registration Statement shall have become effective
not later than the earlier of (x) 10:00 p.m. New York time, on the date
hereof, or (y) at such later date and time as may be approved by the Placement
Agents. All filings required by Rule 424 and Rule 430A of the 1933 Act Rules
and Regulations shall have been made. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceeding for that purpose shall have been initiated
or, to the knowledge of the Company or the Placement Agents, threatened or
contemplated by the SEC, and any request of the SEC for additional information
(to be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the Placement
Agents.
(b) The Placement Agents shall not
have advised the Company on or prior to the Closing Date, that the Registration
Statement or Prospectus or any amendment or supplement thereto contains an
untrue statement of fact which, in the opinion of counsel to the Placement
Agents, is material, or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(c) On the Closing Date, you shall
have received the opinion of Gray Cary Ware & Friedenrich, LLP, counsel for
the Company, addressed to you and dated the Closing Date, to the effect that
, subject to the qualifications and limitations set forth in
such opinion:
(i) The Company is validly existing as
a corporation in good standing under the laws of the State of Delaware and has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into and
perform its obligations under, or as contemplated under, this Agreement.
(ii) The Company has an authorized capitalization as set
forth in the Prospectus under the caption "Description of Capital
Stock."
(iii) Each of the subsidiaries of the Company is a validly
existing as a corporation in good standing under the laws of the jurisdiction of
its formation, and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus. All
of the issued and outstanding capital stock of each such subsidiary has been
duly authorized and is validly issued, fully paid and non-assessable and, to our
knowledge, is
owned by the Company
free and clear of any
adverse claim.
(iv) The Securities have been duly authorized by valid
corporate action and are free from preemptive rights under the Company's charter
or by-laws, the federal laws of
the
United States of America
and the Delaware General
Corporation Law. When so issued and delivered in accordance with the terms of
this Agreement, such shares will be validly issued, fully paid and nonassessable
and conform in all material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock."
(v) To such counsel's knowledge and
other than as set forth in the Prospectus, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which the Company or
any of its subsidiaries is a party or of which any property of the Company or
any of its subsidiaries is the subject, before or brought by
any court or governmental agency or
body
, which such counsel believes would reasonably be
expected to have a Material Adverse Effect or materially and adversely affect
the Company's ability to consummate the transactions contemplated by this
Agreement or to perform its obligations under this Agreement.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company
.
(vii)
To such
counsel's knowledge
and except
as described in the Prospectus
,
the
issuance and sale of the Securities
, the compliance by the Company with all of the provisions of
this Agreement
and the consummation of the
transactions
therein
contemplated,
do
not conflict with
,
or result in the
creation or imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or any of its subsidiaries under,
or constitute a breach of or default under
any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument
filed as an exhibit to the Registration Statement
or to any document incorporated by reference therein
,
except to such extent as, individually or in the aggregate,
would
not have a Material Adverse
Effect, nor will such action result in any violation of the provisions of the
Certificate of Incorporation or Bylaws of the Company, or of any
applicable United States Federal or California law,
statute, rule, regulation
, judgment, order, writ or decree,
known to such counsel to be generally applicable to the Company in such
transactions, of any United States Federal or California government, government
instrumentality or court
having jurisdiction over the
Company or any of its
properties
,
assets or operations.
(viii)
To such counsel's knowledge,
except as described in the Prospectus, there are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments of sale or
rights related to or entitling any person to purchase or otherwise acquire any
shares of, or any security convertible into or exercisable or exchangeable for,
the capital stock of, or other ownership interest in, the Company.
(ix) No filing with, or authentication, approval, consent,
license, order, registration, qualification, or decree of, any United States
Federal, California or, under the General Corporation Law of Delaware, Delaware
Court or governmental authority or agency, is required by the Company for the
performance by the Company of the transactions contemplated by this Agreement,
except such consents, approvals, authorizations, registrations, qualifications,
filings, authentications, licenses, orders or decrees as may be required under
state securities laws in connection with the purchase and distribution of the
Securities by the Placement Agents, as to which we express no opinion.
(x) The statements
set forth
in the Prospectus under the
captions
"Description of Capital Stock" and "Description of Warrant,"
to the extent that they constitute summaries of documents referred to therein or
matters of law or legal conclusions, have been reviewed by such counsel and are,
in all material respects, accurate summaries and fairly present, in all material
respects, the information disclosed therein.
(xi) The Company is not required to
register as an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
(xii) The Registration Statement
has
become effective under the 1933
Act
and, to the best of such counsel's knowledge
, no stop
order proceedings with respect thereto are pending or
threatened under the Act and any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424 under the Act
has been made in the manner and within the time period
required
by such Rule 424;
(xiii) The documents incorporated
by reference in the Prospectus, which documents were filed by the Company with
the Commission prior to the date hereof (other than the financial statements,
related schedules and other financial information derived from accounting
records, either included therein or omitted therefrom, as to which we express no
opinion), complied, when they were filed with the Commission, as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
(xiv) The Registration Statement on the date it became
effective, and the Prospectus on its date and on the date hereof (excluding, in
both the case of the Registration Statement and the Prospectus, the documents
incorporated by reference therein and the financial statements and related
notes, related schedules and other financial information derived from accounting
records, either included therein or omitted therefrom, as to which we express no
opinion), complied as to form in all material respects with the requirements of
the 1933 Act and the rules and regulations thereunder.
Such counsel shall confirm that during
the preparation of the Registration Statement and Prospectus, such counsel
participated in conferences with officers and representatives of the Company and
its independent
accountant
, at
which
the Registration Statement
, the
Prospectus and related matters were discussed and, although such counsel is not
passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the Prospectus or the Registration Statement or the
statements contained therein, and has made no independent check or verification
thereof, on the basis of the foregoing, no facts have come to
such counsel
's
attention that
have caused such
counsel
to believe that
(i)
as of its effective date and
as of the date hereof, the Registration Statement
or any
amendment thereto (other than the financial statements and related schedules and
the financial and statistical data derived from such financial statements or
schedules, as to which we express no belief),
contained any untrue statement of a material fact or
omitted to state any material fact
required to be
stated therein or necessary in order to make the statements therein not
misleading, or (ii) as of its issue date or as of the date hereof, the
Prospectus or any amendment or supplement thereto (other than the financial
statements and related schedules and the financial and statistical data derived
from such financial statements or schedules, as to which we express no belief),
contained
any untrue statement
of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made,
not misleading
.
(d) You shall have received on the
Closing Date, from Bingham McCutchen LLP, counsel to the Placement Agents, such
opinion or opinions, dated the Closing Date, with respect to such matters as you
may reasonably require; and the Company shall have furnished to such counsel
such documents as they reasonably request for the purposes of enabling them to
review or pass on the matters referred to in this
Section 5
and in
order to evidence the accuracy, completeness and satisfaction of the
representations, warranties and conditions herein contained.
(e) You shall have received at or
prior to the Closing Date from Bingham McCutchen LLP a memorandum or memoranda,
in form and substance satisfactory to you, with respect to the qualification for
offering and sale by the Company of the Securities under state securities or
Blue Sky laws of such jurisdictions as the Placement Agents may have designated
to the Company.
(f) PricewaterhouseCoopers LLP shall have furnished to you
a letter, dated the date of delivery thereof, in form and substance
satisfactory to you and PricewaterhouseCoopers LLP, to the effect that:
(i) They are an independent registered public
accounting firm with respect to the Company within the meaning of the 1933 Act
and the applicable rules and regulations thereunder adopted by the SEC;
(ii) In their opinion, the consolidated financial
statements of the Company and its subsidiaries audited by them and included in
the Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the related rules and
regulations adopted by the SEC;
(iii) On the basis of procedures (but not an audit in
accordance with generally accepted auditing standards) consisting of:
a) Reading the minutes of meetings of the stockholders
and the Board of Directors of the Company and its consolidated subsidiaries
since March 31, 2004 as set forth in the minute books through a specified date
not more than five business days prior to the date of delivery of such letter;
b) Making inquiries of certain officials of the
Company who have responsibility for financial and accounting matters regarding
the specific items for which representations are requested below;
nothing has come to their attention as a result of the
foregoing procedures that caused them to believe that:
(1) the unaudited condensed interim financial
statements, included in the Registration Statement, do not comply as to form in
all material respects with the applicable accounting requirements of the 1933
Act and the related rules and regulations adopted by the SEC;
(2) any material modifications should be made to the
unaudited condensed interim financial statements, included in the Registration
Statement, for them to be in conformity with generally accepted accounting
principles.
(g) Except as contemplated in the
Prospectus, (i) neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree; and (ii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, neither
the Company nor any of its subsidiaries shall have incurred any liability or
obligation, direct or contingent, or entered into any transactions, and there
shall not have been any change in the capital stock
(other
than due to employee stock incentive plans)
or short-
term or long-term debt of the Company and its subsidiaries or any change, or any
development involving or which might reasonably be expected to involve a
prospective change in the condition (financial or other), net worth, business,
affairs, management, prospects, results of operations or cash flow of the
Company or its subsidiaries, the effect of which, in any such case described in
clause (i) or (ii), is in your judgment so material or adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares and Investor Warrants being delivered on such Closing Date on the
terms and in the manner contemplated in the Prospectus.
(h) There shall not have occurred
any of the following: (i) a suspension or material limitation in trading
in securities generally on the New York Stock Exchange or The Nasdaq National
Market or the establishing on such exchanges or market by the SEC or by such
exchanges or markets of minimum or maximum prices which are not in force and
effect on the date hereof; (ii) a suspension or material limitation in trading
in the Company's securities on The Nasdaq SmallCap Market or the establishing on
such market by the SEC or by such market of minimum or maximum prices which are
not in force and effect on the date hereof; (iii) a general moratorium on
commercial banking activities declared by either federal or any state
authorities; (iv) the
outbreak or escalation of
hostilities involving the United States or the
declaration by the United States of a national emergency
or war
, which in your judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities in the manner contemplated in the Prospectus
; or (v) any calamity or crisis, change in
national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, which in
your judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities in the manner contemplated in the
Prospectus.
(i) You shall have received
certificates, dated the Closing Date and signed by the President and the Chief
Financial Officer of the Company, in their capacities as such, stating that:
(i) the condition set forth in
Section 5(a)
has been fully satisfied;
(ii) they have carefully examined
the Registration Statement and the Prospectus as amended or supplemented and all
documents incorporated by reference therein and nothing has come to their
attention that would lead them to believe that either the Registration Statement
or the Prospectus, or any amendment or supplement thereto or any documents
incorporated by reference therein as of their respective effective, issue or
filing dates, contained, and the Prospectus as amended or supplemented and all
documents incorporated by reference therein and when read together with the
documents incorporated by reference therein, at such Closing Date, contains any
untrue statement of a material fact, or omits to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(iii) since the Effective Date,
there has occurred no event required to be set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has not been so
set forth and there has been no document required to be filed under the 1934 Act
and the 1934 Act Rules and Regulations that upon such filing would be deemed to
be incorporated by reference into the Prospectus that has not been so filed;
(iv) all representations and
warranties made herein by the Company are true and correct at such Closing Date,
with the same effect as if made on and as of such Closing Date, and all
agreements herein to be performed or complied with by the Company on or prior to
such Closing Date have been duly performed and complied with by the Company;
(v) neither the Company nor any of
its subsidiaries has sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree;
and
(vi) except as disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company nor any of
its subsidiaries has incurred any liabilities or obligations, direct or
contingent, other than in the ordinary course of business, or entered into any
transactions not in the ordinary course of business, which in either case are
material to the Company or such subsidiary; and there has not been any change in
the capital stock
or material increase in the short-term
debt or long-term debt of the Company or any of its subsidiaries or any material
adverse change or any development involving or which may reasonably be expected
to involve a prospective material adverse change, in the condition (financial or
other), net worth, business, affairs, management, prospects, results of
operations or cash flow of the Company and its subsidiaries taken as a whole;
and there has been no dividend or distribution of any kind, paid or made by the
Company on any class of its capital stock; and
(vii) covering such other matters as
you may reasonably request.
(j) The Company shall have
furnished to you at the Closing Date such further information, opinions,
certificates, letters and documents as you may have reasonably requested.
(k) The Shares and the Investor
Warrant Shares shall have been approved for trading upon official notice of
issuance on The Nasdaq SmallCap Market.
All such opinions, certificates,
letters and documents will be in compliance with the provisions hereof only if
they are satisfactory in form and substance to you and to Bingham McCutchen LLP,
counsel for the Placement Agents. The Company will furnish you with such signed
and conformed copies of such opinions, certificates, letters and documents as
you may request.
If any of the conditions specified
above in this
Section 5
shall not have been satisfied at or prior to
the Closing Date or waived by you in writing, this Agreement may be terminated
by you on notice to the Company, whereupon the Company shall not issue or sell
the Shares or Investor Warrants.
6.
Indemnification and
Contribution
.
(a) The Company will indemnify and
hold harmless the Placement Agents from and against any losses, damages or
liabilities, joint or several, to which the Placement Agents may become subject,
under the 1933 Act, the 1934 Act or otherwise, insofar as such losses, damages
or liabilities (or actions or claims in respect thereof) arise out of or are
based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus or any other prospectus relating to the Securities, or
any amendment or supplement thereto, or in any blue sky application or other
document executed by the Company or based on any information furnished in
writing by the Company, filed in any state or other jurisdiction in order to
qualify any or all of the Securities under the securities laws thereof (the
"
Blue Sky Application
"), or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Placement Agents for any legal or other expenses incurred by the Placement
Agents in connection with investigating, preparing, pursuing or defending
against or appearing as a third party witness in connection with any such loss,
damage, liability or action or claim, including, without limitation, any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to the
indemnified party, as such expenses are incurred (including such losses,
damages, liabilities or expenses to the extent of the aggregate amount paid in
settlement of any such action or claim, provided that (subject to
Section 6(c)
hereof) any such settlement is effected with the
written consent of the Company);
provided, however,
that the Company
shall not be liable in any such case to the extent, but only to the extent, that
any such loss, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Prospectus relating to the Securities in reliance upon and in conformity
with written information relating to the Placement Agents furnished to the
Company by the Placement Agents expressly for use in the preparation thereof (as
provided in
Section 12
hereof).
(b) The Placement Agents will
indemnify and hold harmless the Company from and against any losses, damages or
liabilities to which the Company may become subject, under the 1933 Act, the
1934 Act or otherwise, insofar as such losses, damages or liabilities (or
actions or claims in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus relating to the Securities, or arise out of are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Prospectus relating to the Securities in reliance upon and in conformity with
written information relating to the Placement Agents furnished to the Company by
the Placement Agents expressly for use in the preparation thereof (as provided
in
Section 12
hereof), and will reimburse the Company for any legal
or other expenses incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred (including such
losses, damages, liabilities or expenses to the extent of the aggregate amount
paid in settlement of any such action or claim, provided that (subject to
Section 6(c)
hereof) any such settlement is effected with the
written consent of the Placement Agents).
(c) Promptly after receipt by an
indemnified party under
Section 6(a)
or
6(b)
hereof of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party under
Section 6(a)
or
6(b)
hereof, notify each such indemnifying
party in writing of the commencement thereof, but the failure so to notify such
indemnifying party shall not relieve such indemnifying party from any liability
except to the extent that it has been prejudiced in any material respect by such
failure or from any liability that it may have to any such indemnified party
otherwise than under
Section 6(a)
or
6(b)
hereof. In case
any such action shall be brought against any such indemnified party and it shall
notify each indemnifying party of the commencement thereof, each such
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party under
Section 6(a)
or
6(b)
hereof similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of such indemnified party, be counsel to such
indemnifying party), and, after notice from such indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party under
Section 6(a)
or
6(b)
hereof for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ
its own counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment
of counsel by such indemnified party at the expense of the indemnifying party
has been authorized by the indemnifying party, (ii) the indemnified party
shall have been advised by such counsel that there may be a conflict of interest
between the indemnifying party and the indemnified party in the conduct of the
defense, or certain aspects of the defense, of such action (in which case the
indemnifying party shall not have the right to direct the defense of such action
with respect to those matters or aspects of the defense on which a conflict
exists or may exist on behalf of the indemnified party) or (iii) the
indemnifying party shall not in fact have timely employed counsel reasonably
satisfactory to such indemnified party to assume the defense of such action, in
any of which events such fees and expenses to the extent applicable shall be
borne, and shall be paid as incurred, by the indemnifying party. If at any time
such indemnified party shall have requested such indemnifying party under
Section 6(a)
or
6(b)
hereof to reimburse such indemnified
party for fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by
Section 6(a)
or
6(b)
hereof effected without its written
consent if (A) such settlement is entered into more than 45 days after
receipt by such indemnifying party of such request for reimbursement,
(B) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(C) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request for reimbursement prior to the date of
such settlement. No such indemnifying party shall, without the written consent
of such indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not such indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment
(1) includes an unconditional release of such indemnified party from all
liability arising out of such action or claim and (2) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any such indemnified party. In no event shall such indemnifying
parties be liable for the fees and expenses of more than one counsel, including
any local counsel, for all such indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
(d) If the indemnification provided
for in this
Section 6
is by its terms due and owing but is
unavailable or insufficient to indemnify or hold harmless an indemnified party
under
Section 6(a)
or
6(b)
hereof in respect of any losses,
damages or liabilities (or actions or claims in respect thereof) referred to
therein, then each indemnifying party under
Section 6(a)
or
6(b)
hereof shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages or liabilities (or actions
or claims in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company, on the one hand, and the
Placement Agents, on the other hand, from the offering of the Securities. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under
Section 6(c)
hereof and such indemnifying
party was prejudiced in a material respect by such failure, then each such
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault, as applicable, of the Company, on
the one hand, and the Placement Agents, on the other hand, in connection with
the statements or omissions that resulted in such losses, damages or liabilities
(or actions or claims in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by, as applicable, the
Company, on the one hand, and the Placement Agents, on the other hand, shall be
deemed to be in the same proportion as the total net proceeds from such offering
(before deducting expenses) received by the Company bear to the portion of the
total Placement Fee received by each Placement Agents. The relative fault, as
applicable, of the Company, on the one hand, and the Placement Agents, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, on the one hand, or the Placement Agents, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Placement
Agents agree that it would not be just and equitable if contribution pursuant to
this
Section 6(d)
were determined by
pro rata
allocation or
by any other method of allocation that does not take account of the equitable
considerations referred to above in this
Section 6(d)
. The amount
paid or payable by such an indemnified party as a result of the losses, damages
or liabilities (or actions or claims in respect thereof) referred to above in
this
Section 6(d)
shall be deemed to include any legal or other
expenses incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 6(d)
, the Placement Agents shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities were sold to the Investors exceeds the amount of any damages that
the Placement Agents has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) The obligations of the Company
under this
Section 6
shall be in addition to any liability that the
Company may otherwise have and shall extend, upon the same terms and conditions,
to each officer, director, employee, agent or other representative and to each
person, if any, who controls the Placement Agents within the meaning of the 1933
Act; and the obligations of the Placement Agents under this
Section 6
shall be in addition to any liability that the Placement
Agents may otherwise have and shall extend, upon the same terms and conditions,
to each officer and director of the Company who signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the 1933 Act
(f) The parties to this Agreement
hereby acknowledge that they are sophisticated business persons who were
represented by counsel during the negotiations regarding the provisions hereof,
including, without limitation, the provisions of this
Section 6
, and
are fully informed regarding such provisions. They further acknowledge that the
provisions of this
Section 6
fairly allocate the risks in light of
the ability of the parties to investigate the Company and its business in order
to assure that adequate disclosure is made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, and any supplement or amendment thereof,
as required by the 1933 Act.
7.
Representations and
Agreements to Survive Delivery
. The respective representations, warranties,
agreements and statements of the Company and the Placement Agents, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain operative and in full force and effect
regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of the Placement Agents or any controlling
person of the Placement Agents, the Company or any of its officers, directors or
any controlling persons
, and shall survive the Closing
for a period of two years therefrom.
8.
Engagement Terms
.
Additional rights and obligations of the Company and the Representatives are
contained in the Engagement Letter, which remains in full force and effect.
This Agreement and the Engagement Letter shall be construed to be consistent
with one another and effect shall be given to the provisions of each such
contract to the fullest extent possible; provided that the
Indemnification
and Contribution
provisions of
Section 6
shall apply with
respect to claims of the type specified in
Section 6(a)
, instead of
the provisions of the Indemnification Letter Agreement between the Company and
the Representative dated as of April 16, 2004. The Indemnification Letter
Agreement shall apply to all other types of "Losses" defined therein,
however.
9.
Effective Date and
Termination
.
(a) This Agreement may be
terminated (i) by you at any time at or prior to the Closing Date if any
condition specified in
Section 5
hereof shall not have been
satisfied on or prior to the Closing Date or (ii) by either party if the
Closing has not occurred on or before October 30, 2004; provided, however, that
the provisions of this
Section 9
and of
Section 6
,
Section 8
and
Section 10
hereof shall at all times be
effective. Any such termination shall be without liability of any party to any
other party except as provided in
Section 6
,
Section 8
or
Section 10
hereof.
(b) If either party terminates this
Agreement as provided in
Section 9(a)
, such party shall so notify
the other party by telephone, facsimile or telegram, confirmed by letter.
10.
Costs and Expenses
. The
Company, whether or not the transactions contemplated hereby are consummated or
this Agreement is terminated, will bear and pay the costs and expenses incident
to the registration of the Securities and public offering thereof, including,
without limitation, (a) all expenses (including stock transfer taxes)
incurred in connection with the delivery to the several Investors of the
Securities, the filing fees of the SEC, the fees and expenses of the Company's
counsel and accountants and the fees and expenses of counsel for the Placement
Agents, (b) the preparation, printing, filing, delivery and shipping of the
Registration Statement, each Preliminary Prospectus, the Prospectus and any
amendments or supplements thereto and the printing, delivery and shipping of
this Agreement and other offering documents, including the Blue Sky Memoranda,
and any instruments or documents related to any of the foregoing, (c) the
furnishing of copies of such documents to the Placement Agents, (d) the
registration or qualification of the Securities for offering and sale under the
securities laws of the various states and other jurisdictions, (e) the
filing fees of the NASD (if any) and fees and disbursements of counsel to the
Placement Agents relating to any review of the offering by the NASD,
(f) all printing and engraving costs related to preparation of the
certificates for the Securities, including transfer agent and registrar fees,
(g) all fees and expenses relating to the authorization of the Shares and
the Investor Warrant Shares for trading on The Nasdaq SmallCap Market,
(h) all travel expenses, including air fare and accommodation expenses, of
representatives of the Company in connection with the offering of the
Securities, and (i) all of the other costs and expenses incident to the
performance by the Company of the registration and offering of the Securities;
that the Placement Agents will bear and pay any advertising costs and expenses
incurred by the Placement Agents incident to the public offering of the
Securities. The Company agrees to reimburse the Representative, upon request
made from time to time for reasonable out-of-pocket reimbursable fees and
expenses of legal counsel and other advisors which reimbursable fees and
expenses shall not exceed $75,000 in the aggregate without the advance written
approval of the Company. The Company shall reimburse the Placement Agents
within 30 days of receiving an invoice (and such other supporting documentation
as may be reasonably requested by the Company) from the Placement Agents for
such costs and expenses, provided that any such invoice submitted to the Company
at least one business day prior to the Closing Date shall be paid by the Company
at the Closing.
11.
Notices
. All
notices or communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to the Placement Agents, shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed,
to A.G. Edwards & Sons, Inc. at One North Jefferson Avenue, St. Louis,
Missouri 63103, Attention: Director, Corporate Finance, facsimile number (314)
955-6996, with a copy to Albert F. Bender, III; or if sent to the Company shall
be mailed, delivered, sent by facsimile transmission, or telegraphed and
confirmed to the Company at 8x8, Inc., 2445 Mission College Boulevard, Santa
Clara, California 95054, facsimile number (408) 980-0432.
12.
Information Furnished by
Placement Agents.
The Company acknowledges and agrees that the statements
set forth under the caption "Plan of Distribution" in the Prospectus
Supplement constitute the only information furnished by or on behalf of the
Placement Agents for use in the preparation of the Prospectus as referred to in
Section 3(a)(ii)
and
Section 6
hereof.
13.
Parties
. This Agreement
shall inure to the benefit of and be binding upon the Placement Agents, the
Company and, to the extent provided in
Sections 6
and
7
, the
officers and directors of the Company and each person who controls the Company
or the Placement Agents and their respective heirs, executors, administrators,
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, corporation or other entity
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns and
said controlling persons and said officers and directors, and for the benefit of
no other person, corporation or other entity.
14.
Counterparts
. This
Agreement may be executed by any one or more of the parties hereto in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
15.
Pronouns
. Whenever a
pronoun of any gender or number is used herein, it shall, where appropriate, be
deemed to include any other gender and number.
16.
Time of Essence.
Time
shall be of the essence of this Agreement.
17.
Applicable Law
. This
Agreement shall be governed by, and construed in accordance with, the laws of
the state of Delaware, without giving effect to the choice of law or conflict of
laws principles thereof.
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