SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 6, 2000
INTERNET HOLDINGS, INC.
(Exact Name of Company as Specified in its Charter)
UTAH 0-26886 13-3758042
(State or Other (Commission (Employer
Jurisdiction) File Number) Identification
Number)
2 Montpelier Street, Knightsbridge, London SW7 1EZ, United Kingdom
(Address of Principal Executive Offices)
Company's Telephone Number, Including Area Code: 011 44 171 584 1173
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ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On January 6, 2000, Internet Holdings, Inc. (the "Company") entered into an
underwriting agreement (the "Agreement") with Panther Capital Ltd ("Panther") to
sell shares of common stock and warrants of the Company pursuant to an exemption
from registration under Regulation S promulgated under the Securities Act of
1933, as amended (the "Securities Act"). Under the Agreement, the Company will
sell 5,000,000 shares of its common stock, par value $0.001, at a price of $1.00
per share (the "Common Stock") to certain sub-underwriters named in the
Agreement, for whom Panther is acting as lead underwriter. In consideration for
such underwriting, Panther will receive warrants to purchase up to 1,000,000
shares of common stock of the Company (the "Warrants"). The Warrants are
exercisable at $1.00 per share if exercised within one year of the date of the
first closing of the Agreement which shall be no later than January 28, 2000
(the "First Closing") and at a price of $10.00 per share if exercised within two
years of the date of the First Closing. Warrants which have not been exercised
before the second anniversary of the First Closing will expire automatically.
Pursuant to the Agreement, the Company has also made certain
representations and warranties which include, among others, the following:
a. Registration Rights - A registration statement covering 25% of the
Common Stock will be prepared by the Company under the Securities Act
and will be filed with the Commission within 90 days of the completion
of the offering of the Common Stock (the "Registration Statement").
Prior to and during the period of 120 days after the Registration
Statement is declared effective by the Commission, the Company will
not, without prior written consent of Panther, issue, offer, sell, or
grant options to purchase or otherwise dispose any of the Company's
equity securities or any other securities convertible into or
exchangeable for its common stock or other equity security, other than
pursuant to transactions already disclosed to Panther.
b. Lock-Up of Officers and Directors - For a period of 180 days after the
first date that any of the Common Stock is released for sale to the
public, the officers and directors of the Company will not directly or
indirectly sell or offer to sell or otherwise dispose any of their
shares of common stock of the Company or any right to acquire any such
shares without the prior written consent of Panther.
The Common Stock will only be offered outside the U.S. to corporations or
individuals who are "Accredited Investors" and who are not "U.S. Persons" as
such terms are defined under Regulation S.
2
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ITEM 7. FINANCIAL STATEMENTS, PRO-FORMA INFORMATION AND EXHIBITS.
(c) Exhibits
Number Description
------ -----------
10.1 Underwriting Agreement between Panther Capital Ltd and Internet
Holdings, Inc. dated January 6, 2000.
10.2 Form of Subscription Agreement to Purchase Common Stock under
Regulation S.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNET HOLDINGS, INC.
January 31, 2000 By: /s/ Stefan Allesch-Taylor
-------------------------
Stefan Allesch-Taylor,
President
4
PANTHER CAPITAL LTD
[LOGO]
UNDERWRITING AGREEMENT
for
Internet Holdings, Inc.
5,000,000 Shares of Common Stock at $1.00 per share
1,000,000 Warrants exercisable into Common Stock at $1.00 per share during
the first 12 months following the closing and $10.00 per share during the
second 12 months following the closing
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January, 2000
UNDERWRITING AGREEMENT
THIS AGREEMENT is made the 6th day of January 2000 BETWEEN Panther Capital Ltd
of 22 Grosvenor Street, London, United Kingdom (hereinafter called "Panther
Capital") of the first part AND Internet Holdings, Inc. National Association of
Securities Dealers ("NASD") Stock Symbol HTTP of 116 John Street, Suite 1313,
New York, NY 10038 (hereinafter called "the Company") of the second part.
NOW IT IS HEREBY AGREED as follows:
1. INTRODUCTORY
i) Internet Holdings, Inc., a Utah corporation (the "Company"), proposes
to issue and sell 5,000,000 shares of its authorized but unissued
Common Stock, par value $.0001 per share at a price of $1.00 per share
(the "Common Stock"), to the several underwriters named in Schedule A
annexed hereto (the "Sub-Underwriters"), for whom Panther Capital is
acting as Underwriter. Panther Capital and the Sub-Underwriters shall
together be referred to as the "Underwriters". Said aggregate of
5,000,000 shares are herein called the "Firm Common Shares."
ii) As underwriter Panther Capital has underwritten the full amount of the
placement and it is the obligation of Panther Capital to ensure the
full subscription of the placement either by itself or others. In
consideration of such underwriting Panther Capital will be granted
warrants to purchase up to 1,000,000 (one million) shares of Common
Stock, (the "Optional Common Shares"). These warrants are at $1.00 per
share if exercised within one year of the date of the First Closing
(as hereinafter defined) and at a price of $10.00 per share if
exercised within two years of the date of the First Closing but after
one year from the date of the First Closing. If the warrants have not
been exercised they expire automatically at midnight Eastern Standard
Time on the second anniversary of the First Closing.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Underwriters that:
i) A registration statement with respect to twenty five percent (25%) of
the Common Shares will be prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") and will be
filed with the Commission within 90 (ninety) days of the completion of
this offering.
ii) The term "Registration Statement" as used in this Agreement shall mean
such registration statement as is required to enable the Common Shares
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which are the subject of such registration statement to become free
trading and unrestricted within the provisions of the Act.
iii) The Commission has not issued any order preventing or suspending the
use of any Prospectus, and each Prospectus has conformed in all
material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement
of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to
and including each Closing Date hereinafter mentioned, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, will contain all material statements and
information required to be included therein by the Act and the Rules
and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, and neither the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, will include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, no representation or warranty contained in this subsection
shall be applicable to information contained in or omitted from any
Preliminary Prospectus, the Registration Statement, the Prospectus or
any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of
any Underwriter specifically for use in the preparation thereof.
iv) The Company does not own or control, directly or indirectly, any
corporation, association or other entity, other than the Company's
wholly owned subsidiary, Fairfax Equity Limited (the "Subsidiary").
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Utah. The
Subsidiary has been duly formed and is validly existing as a private
limited liability company under the laws of England. The Company and
the Subsidiary have all requisite corporate power and authority to own
and lease their respective properties and conduct their respective
businesses as described in the Prospectus; the Company and the
Subsidiary are in possession of and operating in compliance with all
authorizations, licenses, permits, consents, certificates and orders
which are material to the conduct of its business as currently
conducted, all of which are valid and in full force and effect except
where the failure to hold such authorizations, licenses, permits,
consents, certificates and orders would not have a material and
adverse effect on the Company's business, results and operations and
financial condition; the Company and the Subsidiary are duly qualified
to do business and in good standing in each jurisdiction in which the
ownership or leasing of properties or the conduct of its business
requires such qualification, except for jurisdictions in which the
failure to so qualify would not have a material adverse effect upon
the Company and its Subsidiary taken as a whole; and no proceeding has
been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification. The Company owns all outstanding shares of
capital stock of the Subsidiary, free and clear of any claim, lien or
encumbrance of any kind except for liens described in the Prospectus.
v) The Company has an authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus; the issued
and outstanding shares of Common Stock have been, and the issued and
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outstanding shares of Common Stock immediately prior to Closing will
be duly authorized and validly issued, fully paid and non-assessable,
issued in compliance with all federal and state securities laws, not
issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities, and in conformance
with the description thereof contained in the Prospectus. Except as
disclosed in the Prospectus and the financial statements of the
Company, and the related notes thereto, included in the Prospectus,
the Company has, and immediately prior to the Closing will have, no
outstanding options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the
options or other rights granted thereunder, set forth in the
Prospectus accurately describes such plans or arrangements in all
material respects.
vi) The Common Shares to be sold by the Company have been duly authorized
and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be duly authorized, validly issued, fully paid
and non-assessable, and will conform to the description thereof
contained in or incorporated by reference in the Prospectus. No
preemptive rights or other rights to subscribe for or purchase exist
with respect to the issuance and sale of the Common Shares by the
Company pursuant to this Agreement. No stockholder of the Company has
any right to require the Company to register any shares owned by such
stockholder other than as contemplated by this Agreement. No further
approval or authority of the stockholder or the Board of Directors of
the Company will be required for the issuance and sale of the Common
Shares to be sold by the Company as contemplated herein.
vii) The Company has full legal right, power and authority to enter into
this Agreement and to perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms except as enforceability may
be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally. The execution and delivery of this Agreement by the Company
and the consummation of the transactions herein contemplated will not
violate any provisions of the certificate of incorporation, bylaws or
other organizational documents, of the Company and will not conflict
with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under:
a) Any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which the
Company is a party or by which the Company or any of their
respective properties may be bound or affected, or
b) Any statute or any authorization, judgment, decree, order, rule
or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or
any of its properties. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency
or other governmental body
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is required for the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this
Agreement, except as has been obtained or except for compliance
with the Act.
viii) The financial statements and schedules of the Company, and the
related notes thereto, included in the Prospectus present fairly
the financial position of the Company as of the respective dates
of such financial statements and schedules, and the results of
operations and changes in financial position of the Company for
the respective periods presented, provided, however, that the
unaudited quarterly and unaudited interim financials are
condensed, but include all adjustments (consisting of only normal
recurring adjustments) that the Company considers necessary for a
fair presentation of the Company's financial position, operating
results and cash flows for the interim periods. Such statements,
schedules and related notes have been prepared in accordance with
generally accepted accounting principals applied on a consistent
basis as certified by the auditors in the Company's audited
financial statements provided, however, that the unaudited
quarterly and unaudited interim financials are condensed, but
include all adjustments (consisting of only normal recurring
adjustments) that the Company considers necessary for a fair
presentation of the Company's financial position, operating
results and cash flows for the interim periods.
ix) The Company maintains a system of internal accounting control
sufficient to provide reasonable assurances that:
a) Transactions are executed in accordance with management's
general or specific authorizations,
b) Transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally
accepted accounting principles and to maintain
accountability for assets,
c) Access to assets is permitted only in accordance with
management's general or specific authorization, and
d) The recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
x) Neither the Company nor the Subsidiary is:
a) In violation or default of any provision of its certificate
of incorporation or bylaws, or other organizational
documents, or
b) In breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other
instrument to which it is a party or by which it or any of
its properties are bound, except where a violation, breach
or default would not have a material adverse effect on the
condition (financial or otherwise), business or results of
operations of the Company and the Subsidiary taken as a
whole; and there does not exist any state of facts which
constitutes an event of default on the part of the Company
or the Subsidiary as defined in such documents or which,
with notice or lapse of time or both, would constitute such
an event of default.
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xi) There are no legal or governmental actions, suits or proceedings
(including those related to environmental or discrimination matters)
pending, or to the best knowledge of the Company, threatened, as to
which the Company or the Subsidiary taken as a whole is or may be a
party or of which property owned or leased by the Company or the
Subsidiary is or may be the subject, which actions, suits or
proceedings could reasonably be expected to, individually or in the
aggregate, prevent or adversely affect the transactions contemplated
by this Agreement or result in a material adverse change in the
condition (financial or otherwise), properties, business or results of
operations of the Company and the Subsidiary taken as a whole; and no
labor disturbance by the employees of the Company or the Subsidiary
exists or is imminent which could reasonably be expected to affect
materially and adversely such condition, properties, business or
results of operations. Neither the Company nor the Subsidiary is a
party or subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.
xii) The Company and the Subsidiary have good and marketable title to all
the properties and assets reflected as owned in the financial
statements herein above described (or elsewhere in the Prospectus),
subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those, if any, reflected in such financial statements (or
elsewhere in the Prospectus), or those, which are not material in
amount and do not adversely affect the use made and proposed to be
made of such property by the Company or its Subsidiary, as the case
may be. The Company and the Subsidiary hold their respective leased
properties under valid and binding leases, except where such leases
are not material to the business of the Company and the Subsidiaries,
taken as a whole. Except as disclosed in the Prospectus, the Company
and the Subsidiary own or lease all such properties as are necessary
to their respective operations as now conducted or as proposed to be
conducted.
xiii) The Company and the Subsidiary 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") and
with all requirements prescribed by any and all statutes, orders,
government rules and regulations including the Internal Revenue Code
of 1986, as amended, currently in effect with respect to employee
benefit plans; no "reportable event" (as defined in ERISA) nor any
event described in Sections 4062, 4063 or 4041(c) of ERISA has
occurred for which the Company would have any liability; neither the
Company nor any Subsidiary has incurred and does not expect to incur
material liability under:
a) Title IV of ERISA other than premium payments to the Pension
Benefit Guaranty Corporation arising in the ordinary course of
business or
b) Section 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 Subsidiary would have any material liability that
is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal
Revenue Service and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such determination
letter. Neither the Company nor any Subsidiary has
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incurred any material liability or penalty under Sections 4975
through 4980 of the Code or under Title I of ERISA. All
contributions, premiums or other payments (including all employer
contributions and employee salary reduction contributions) which
are due have been paid to each "pension plan" and all
contributions, premiums or other payments for any period ending
on or before the Closing Date which are not yet due have been
paid to each such "pension plan" or accrued in accordance with
the past custom and practice of the Company. No suit, action or
other litigation (excluding claims for benefits incurred in the
ordinary course of any plan activities) has been brought, or to
the knowledge of the Company is threatened, against or with
respect to any employee benefit plan of the Company or any
Subsidiary. All "pension plans" and other employee-related plans
of the Company and each Subsidiary are fully funded.
xiv) Since the respective dates as of which information is given in the
Prospectus:
a) Neither the Company nor the Subsidiary has incurred any material
liabilities or obligations, indirect, direct or contingent, or
entered into any material verbal or written agreement or other
transaction in any such case which is not in the ordinary course
of business;
b) Neither the Company nor the Subsidiary has sustained any material
loss or interference with its business or properties from fire,
flood, windstorm, accident or other calamity, whether or not
covered by insurance;
c) The Company has not paid or declared any dividends or other
distributions with respect to its capital stock;
d) Neither the Company nor the Subsidiary is in default in the
payment of principal or interest on any outstanding debt
obligations;
e) There has not been any change in the capital stock or
indebtedness material to the Company and the Subsidiary taken as
a whole (other than in the ordinary course of business); and
f) There has not been any material adverse change in the condition
(financial or otherwise), business, properties or results of
operations of the Company or the Subsidiary.
xv) The Company has sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals and governmental authorizations to
conduct its business as now conducted; and the Company has no
knowledge of any material infringement by the Company or the
Subsidiary of any trademark, trade name rights, patent rights,
copyrights, licenses, trade secret or other similar rights of others,
and there is no claim being made against the Company or the Subsidiary
regarding trademark, trade name, patent, copyright, license, trade
secret or other infringement which could have a material adverse
effect on the condition (financial or otherwise), business or results
of operations of the Company and the Subsidiary, taken as a whole.
xvi) The Company and the Subsidiary are each conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which they are conducting business, including,
without limitation, all applicable local, state and federal
environmental laws and regulations; except
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where failure to be so in compliance would not materially adversely
affect the condition (financial or otherwise), business or results of
operations of the Company and the Subsidiary, taken as a whole.
xvii) All necessary federal, state and foreign income and franchise tax
returns have been filed by the Company and the Subsidiary, except
where the failure to file would not have a material adverse effect on
the condition (financial or otherwise), business or results of
operations of the Company and the Subsidiary, taken as a whole, and to
the Company's knowledge, all such tax returns are complete and correct
in all material respects, and all taxes shown as due thereon have been
paid. The Company has no knowledge of any tax deficiency which has
been or might be asserted or threatened against the Company or the
Subsidiary which could reasonably be expected to materially and
adversely affect the business, operations or properties of the Company
and the Subsidiary taken as a whole.
xviii) The Company is not, and upon the closing of the offering
contemplated hereby will not be, an "investment company" or a company
"controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
xix) The Company has not distributed and will not distribute prior to the
First Closing Date any offering material in connection with the
offering and sale of the Common Shares other than the Prospectus or
any other materials permitted by the Act.
xx) The Company and the Subsidiary maintain liability, property and
casualty insurance in an amount and on such terms as are reasonable
and customary for businesses similar to the Company, including against
theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force
and effect.
xxi) Neither the Company nor to the knowledge of the Company any of its
respective employees or agents has at any time during the last five
years
a) Made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation
of law, or
b) Made any payment to any federal or state governmental officer or
official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.
xxii) The Company has not taken, and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause
or result in stabilization or manipulation of the price of the
Company's Common Stock to facilitate the sale or resale of the Common
Shares.
xxiii) The Company has caused each of its executive officers and directors
as set forth in the Prospectus to furnish to Panther Capital an
agreement in a form acceptable to Panther Capital pursuant to which
each such party has agreed that prior to and during the period of 120
days after the first date that registration of the Common Shares is
completed, without the prior written consent of Panther Capital, which
consent may be withheld at the sole discretion of Panther Capital,
such party will not directly or indirectly offer, sell,
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contract to sell or otherwise dispose of any shares of the Company's
Common Stock or securities convertible into or exchangeable for, or
any rights to purchase or acquire, the Company's Common Stock
(including without limitation, Common Stock of the Company which may
be deemed to be beneficially owned in accordance with the rules and
regulations of the Commission); provided, however, that bona fide gift
transactions may be permitted if the donee agrees in writing, prior to
the consummation of the gift, to be bound by the provisions applicable
to the share in the hands of the donor.
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS
The Underwriters, represent and warrant to the Company that the information set
forth on the cover page of the Prospectus with respect to price, underwriting
discounts and commissions and terms of offering and Under "Underwriting" in the
Prospectus was furnished to the Company by and on behalf of the Underwriters for
use in connection with the preparation of the Prospectus and is correct in all
material respects. The Underwriter represents and warrants that, except as
expressly provided herein, it has been authorized by each of the other
Underwriters to enter into this Agreement on its behalf and to act for it in the
manner herein provided.
4. PURCHASE, SALE AND DELIVERY OF COMMON SHARES
i) On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth,
the Company agrees to issue and sell to the Underwriters 5,000,000
Firm Common Shares and the Underwriters agree, severally and not
jointly, to purchase from the Company the number of Firm Common Shares
described below. The purchase price per share to be paid by the
several Underwriters to the Company shall be $1.00 per share.
ii) The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of full shares which (as nearly as
practicable, as determined by Panther Capital) bears to 5,000,000 the
same proportion as the number of shares set forth opposite the name of
such Underwriter in Schedule A hereto bears to the total number of
Firm Common Shares.
iii) Delivery of certificates for the Firm Common Shares to be purchased by
the Underwriters and payment therefore shall be made at the offices of
Panther Capital, 22 Grosvenor Street, London, United Kingdom (or such
other place as may be agreed upon by the Company and the Underwriters)
at such time and date, not later than January 28, 2000 (the "First
Closing Date").
iv) Delivery of certificates for the Firm Common Shares shall be made by
or on behalf of the Company to Panther Capital, for the respective
accounts of the Underwriters with respect to the Firm Common Shares to
be sold by the Company against payment by Panther Capital, for the
accounts of the several Underwriters, of the purchase price therefore
by wire transfer of federal funds to an account designated in writing
by the Company. The certificates for the
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Firm Common Shares shall be registered in such names and denominations
as Panther Capital shall have requested at least two full business
days prior to the First Closing Date, and shall be made available for
checking and packaging on the business day preceding the First Closing
Date at the offices of Panther Capital at 22 Grosvenor Street, London,
United Kingdom.
v) In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company hereby grants an option to Panther
Capital to purchase up to 1,000,000 Optional Common Shares. The
options granted hereunder may be exercised at any time (but in not
more than two tranches) within two years after the First Closing upon
notice by Panther Capital to the Company setting forth the aggregate
number of Optional Common Shares as to which they are exercising the
option, the names and denominations in which the certificates for such
shares are to be registered and the time and place at which such
certificates will be delivered.
vi) For any options exercised prior to midnight Eastern Standard Time on
the first anniversary of the First Closing the exercise price will be
$1.00 per share.
vii) For any options exercised after midnight Eastern Standard Time on the
first anniversary of the First Closing but prior to midnight Eastern
Standard Time on the second anniversary of the First Closing the
exercise price will be $10.00 per share.
viii) All options unexercised at midnight Eastern Standard Time on the
second anniversary of the First Closing shall expire automatically
upon that date at that time.
ix) Panther Capital has advised the Company that each Underwriter has
authorized it to accept delivery of its Common Shares, to make payment
and to give receipt therefore. Panther Capital will make payment for
any Common Shares to be purchased by any Underwriter whose funds shall
not have been received by the First Closing Date or the Second Closing
Date, as the case may be, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
5. COVENANTS OF THE COMPANY
The Company covenants and agrees that:
i) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof to become effective. The Company
will promptly advise Panther Capital in writing:
a) Of the receipt of any comments of the Commission,
b) Of any request of the Commission for amendment of or supplement
to the Registration Statement (either before or after it becomes
effective), or for additional information,
c) When the Registration Statement shall have become effective and
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d) Of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose. If the
Commission shall enter any such stop order at any time, the
Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment. The Company will not file
any amendment or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus
or the Prospectus of which Panther Capital has not been furnished
with a copy a reasonable time prior to such filing or to which
Panther Capital reasonably objects or which is not in compliance
with the Act and the Rules and Regulations.
ii) The Company will immediately notify Panther Capital in writing if, at
any time prior to the Closing Date, any representation or warranty of
the Company set forth herein shall not be true and accurate in all
material respects or, without limiting the foregoing, if there shall
have been any material adverse change, or a development involving a
material adverse change, in the condition (financial or otherwise),
properties, business or results of operations of the Company.
iii) During the period of two years hereafter, the Company will furnish to
Panther Capital and, upon the request of the Underwriters, to each of
the other Underwriters:
a) As soon as practicable after the end of each fiscal year, copies
of the Annual Report of the Company containing the balance sheet
of the Company as of the close of such fiscal year and statements
of income, stockholder's equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public
accountants;
b) As soon as available, copies of any report or communication of
the Company mailed generally to holders of its Common Stock.
iv) Prior to and during the period of 120 days after the first date that
registration of the Common Shares is completed, the Company will not,
without the prior written consent of Panther Capital (which consent
may be withheld at the sole discretion of Panther Capital), issue,
offer, sell, grant options to purchase or otherwise dispose of any of
the Company's equity securities or any other securities convertible
into or exchangeable with its Common Stock or other equity security,
other than pursuant to the Company's stock plans disclosed in the
Prospectus or in connection with the Company's acquisition of
complementary technologies or businesses.
v) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements
under the caption "Use of Proceeds" in the Prospectus.
vi) The Company will maintain a transfer agent and registrar for its
Common Stock.
vii) Panther Capital, on behalf of the Underwriters, may, in its sole
discretion, waive in writing the performance by the Company of any one
or more of the foregoing covenants or extend the time for their
performance.
Page 11 of 24
<PAGE>
6. PAYMENT OF EXPENSES
Whether or not the transactions contemplated hereunder are consummated or
this Agreement becomes effective or is terminated, the Company agrees to
pay all costs, fees and expenses incurred in connection with the
performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality
of the foregoing:
a) All expenses incident to the issuance and delivery of the Common
Shares (including all printing and engraving costs),
b) All fees and expenses of the registrar and transfer agent of the
Common Stock,
c) All necessary issue, transfer and other stamp taxes in connection
with the issuance and sale of the Common Shares to the
Underwriters,
d) All fees and expenses of the Company's counsel and the Company's
independent accountants,
e) All costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the
Registration Statement, the Prospectus (including all exhibits
and financial statements) and all amendments and supplements
provided for herein,
f) All filing fees, attorneys' fees and expenses incurred by the
Company or the Underwriters in connection with qualifying or
registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer
and sale under foreign securities laws,
g) All filing fees of the National Association of Securities
Dealers, Inc. and
h) The Company will pay (directly or by reimbursement) all fees and
expenses incident to the performance of its obligations under
this Agreement, which are not otherwise specifically provided for
herein.
7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS
The obligations of the several Underwriters to purchase and pay for the Firm
Common Shares on the First Closing Date and the Optional Common Shares on the
Second Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company herein set forth as of the date hereof and
as of the First Closing Date or the Second Closing Date, as the case may be, to
the accuracy of the statements of Company's officers made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
Page 12 of 24
<PAGE>
a) Panther Capital shall be satisfied that since the respective
dates as of which information is given in the Prospectus, except
as disclosed in the Prospectus, there shall not have been any
change in the capital stock or any material change in the
indebtedness (other than in the ordinary course of business) of
the Company, except as set forth or contemplated by the
Prospectus, no material verbal or written agreement or other
transaction shall have been entered into by the Company, which is
not in the ordinary course of business,
a) No loss or damage (whether or not insured) to the property of the
Company shall have been sustained which materially and adversely
affects the condition (financial or otherwise), business or
results of operations of the Company,
b) No legal or governmental action, suit or proceeding affecting the
Company which is material to the Company or which affects or
could reasonably be expected to affect the transactions
contemplated by this Agreement shall have been instituted or
threatened and
c) There shall not have been any material change in the condition
(financial or otherwise), business, management or results of
operations of the Company which makes it impractical or
inadvisable in the reasonable judgment of the Underwriters to
proceed with the purchase the Common Shares as contemplated
hereby.
ii) There shall have been furnished to Panther Capital on each Closing
Date, in form and substance satisfactory to Panther Capital, except as
otherwise expressly provided below, an officers certificate signed by
the President of the Company addressed to the Underwriters and dated
the First Closing Date or the Second Closing Date, as the case may be,
to the effect that:
a) The Company has been duly incorporated is validly existing as a
corporation in good standing under the laws of the State of Utah.
The Subsidiary is duly formed and validly existing under the laws
of England. To the Company's knowledge, there are no other
jurisdictions where the ownership or leasing of properties or the
conduct of its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the business, results and operations
or the financial condition of the Company and the Subsidiary,
taken as a whole. The Company has corporate power and authority
to own its properties and conduct its business as described in
the Prospectus;
b) The authorized issued and outstanding capital stock of the
Company conforms in all material respects to the description of
the capital stock set forth under the caption "Capitalization" in
the Prospectus; all necessary and proper corporate proceedings
have been taken in order to validly authorize such Common Stock;
all outstanding shares of Common Stock (including the Firm Common
Shares and any Optional Common Shares) have been duly and validly
issued, are fully paid and non-assessable, have been issued in
compliance with the registration and qualification requirements
of federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights
to subscribe for or purchase any of the Common Shares to be sold
by the Company hereunder;
Page 13 of 24
<PAGE>
c) The certificates evidencing the Common Shares to be delivered
hereunder are in due and proper form under Utah law, and when
duly countersigned by the Company's transfer agent and registrar,
and delivered to Panther Capital or upon its order against
payment of the agreed consideration therefore in accordance with
the provisions of this Agreement, the Common Shares represented
thereby will be duly authorized and validly issued, fully paid
and non-assessable, and will conform in all respects to the
description thereof set forth under the caption "Description of
Securities" in the Prospectus;
d) Except as disclosed in or specifically contemplated by the
Prospectus, there are no outstanding options, warrants or other
rights calling for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock (including,
without limitation, the Common Shares) of the Company or any
security convertible into or exchangeable for capital stock of
the Company;
e) The Prospectus complies as to form in all material respects with
the requirements of the Act and the Rules and Regulations;
f) There are no legal or governmental actions, suits or proceedings
pending or threatened against the Company which are required to
be described in the Prospectus which are not described as
required.
g) The Company has all requisite corporate power and authority to
enter into this Agreement and to sell and deliver the Common
Shares to be sold by it to the several Underwriters; this
Agreement has been duly and validly authorized by all necessary
corporate action by the Company, has been duly and validly
executed and delivered by and on behalf of the Company, and is a
valid and binding agreement of the Company, enforceable in
accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights generally and except as to those provisions relating to
indemnity or contribution for liabilities arising under the Act;
and no approval, authorization, order, consent, filing, license
or permit of or with any court, regulatory, administrative or
other governmental body is required for the execution and
delivery of this Agreement by the Company or the performance by
the Company of its obligations contemplated by this Agreement to
be performed at the time of closing, except such as have been
obtained and are in full force and effect under the Act.
h) The execution and delivery of this Agreement by the Company and
the performance by the Company of its obligations thereunder
contemplated by the Agreement to be performed at the time of the
closing will not conflict with, result in the breach of, or
constitute, either by itself or upon notice or the passage of
time or both, a default under, any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other
instrument or violate any of the provisions of the certificate of
incorporation or bylaws of the Company or, to the Company's
knowledge, violate any judgment, decree or order, which has been
entered against the Company or any statute, rule or regulation of
any court or governmental body having jurisdiction over the
Company or any of its properties;
Page 14 of 24
<PAGE>
i) The Company is not in violation of its certificate of
incorporation or any material provision if its bylaws;
j) No holders of securities of the Company have rights which have
not been waived to the registration of shares of Common Stock or
other securities, because of the filing of the Registration
Statement by the Company or the offering contemplated by this
Agreement;
k) The representations and warranties of the Company set forth in
this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing
Date, as the case may be, and the Company has complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied on or prior to such Closing Date;
l) The board of directors of the Company has carefully examined the
Prospectus; in his or her opinion and to the best of his or her
knowledge, the Prospectus and any amendments or supplements
thereto contain all statements required to be stated therein
regarding the Company; and the Prospectus or any amendment or
supplement thereto does not include any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading;
m) Since the respective dates as of which information is given in
the Prospectus, and except as disclosed in the Prospectus, there
has not been any material adverse change or a development
involving a material adverse change in the condition (financial
or otherwise), business, properties, results of operations or
management of the Company; and there has been no legal or
governmental action, suit or proceeding is pending or, to such
person's knowledge, threatened against the Company which is
material to the Company, whether or not arising from transactions
in the ordinary course of business, or which could reasonably be
expected to adversely affect the transactions contemplated by
this Agreement; since such dates the Company has not entered into
any verbal or written agreement or other transaction which is not
in the ordinary course of business or incurred any material
liability or obligation, direct, contingent or indirect which is
not in the ordinary course of business, made any change in its
capital stock, made any material change in its short-term debt or
funded debt or repurchased or otherwise acquired any of the
Company's capital stock; and the Company has not declared or paid
any dividend, or made any other distribution, upon its
outstanding capital stock payable to stockholders of record on a
date prior to the First Closing Date or Second Closing Date; and
n) Since the respective dates as of which information is given in
the Prospectus, the Company has not sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).
iii) On or before the First Closing Date, letters from each director and
executive officer of the Company, in form and substance satisfactory
to Panther Capital, confirming that for a period of 180 days after the
first date that any of the Common Shares are released for sale to the
public, such
Page 15 of 24
<PAGE>
person or entity will not directly or indirectly sell or offer to sell
or otherwise dispose of any shares of Common Stock or any right to
acquire any such shares without the prior written consent of Panther
Capital, which consent may be withheld at the sole discretion of
Panther Capital.
iv) All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to
Panther Capital. The Company shall furnish Panther Capital with such
manually signed or conformed copies of such opinions, certificates,
letters and documents as it may request. Any certificate signed by any
officer of the Company and delivered to the Underwriters or to counsel
for the Underwriters shall be deemed to be a representation and
warranty by the Company to the Underwriters as to the statements made
therein.
v) If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied,
this Agreement at Panther Capital's election will terminate upon
notification by Panther Capital to the Company without liability on
the part of any Underwriter or the Company except for the expenses to
be paid or reimbursed by the Company pursuant to this Agreement and
except to the extent provided in this Agreement.
8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by Panther Capital pursuant to this Agreement, or if the sale to the
Underwriters of the Common Shares at the First Closing is not consummated
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof, the Company
agrees to reimburse Panther Capital and the other Underwriters upon demand for
all out-of-pocket expenses that shall have been reasonably incurred by Panther
Capital and the other Underwriters in connection with the proposed purchase and
the sale of the Common Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, telegraph
charges and telephone charges relating directly to the offering contemplated by
the Prospectus.
9. EFFECTIVENESS OF REGISTRATION STATEMENT
The Company will use its best efforts to cause the Registration Statement to
become effective, to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
10. INDEMNIFICATION
Page 16 of 24
<PAGE>
i) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning
of the Act against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Underwriter or such
controlling person may become subject, under the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or other
federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company),
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus or his Agreement, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in
any of them not misleading, or arise out of or are based in whole or
in part on any inaccuracy in the representations and warranties of the
Company contained herein or any failure of the Company to perform its
obligations hereunder or under law; and will reimburse each
Underwriter and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by such Underwriter
or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that
a) The Company will not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Prospectus
or any amendment or supplement thereto in reliance upon and in
conformity with the information furnished to the Company by the
Underwriters pursuant to this Agreement.
ii) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers and each person,
if any, who controls the Company within the meaning of the Act
("controlling person"), against any losses, claims, damages,
liabilities or expenses to which the Company, or any such director,
officer or controlling person may become subject, under the Act, the
Exchange Act, or other federal or state statutory law or regulation,
or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of
such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Prospectus or this
Agreement, 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, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Prospectus,
or any amendment or supplement thereto, in reliance upon and in
conformity with the information furnished to the Company by the
Underwriters and will reimburse the Company, or any such director,
officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating, defending,
settling, compromising or paying any such loss,
Page 17 of 24
<PAGE>
claim, damage, liability, expense or action; provided, however, that
no Underwriter shall be required to contribute any amount in excess of
the amount of the total underwriting commissions received by such
Underwriter in connection with the Common Shares underwritten by it.
iii) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying
party under this Section, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section to the extent it is
not prejudiced as a proximate result of such failure.
iv) In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all
other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified
party.
v) If the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such
indemnified party or parties.
vi) Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section for
any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless the indemnified
party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the
next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Underwriters representing the
indemnified parties who are parties to such action) or the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying party.
vii) If the indemnification provided for in this Section is required by its
terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to herein,
then each applicable indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein either:
Page 18 of 24
<PAGE>
a) In such proportion as is appropriate to reflect the relative
benefits received by the Company and the Underwriters from the
offering of the Common Shares or
b) If the allocation provided above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault
of the Company and the Underwriters in connection with the
statements or omissions or inaccuracies in the representations
and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits
received by the Company and the Underwriters shall be deemed to
be in the same proportion, in the case of the Company as the
total price paid to the Company for the Common Shares sold by it
to the Underwriters and in the case of the Underwriters as the
underwriting commissions received by them bears to the total of
such amounts received by the Underwriters as underwriting
commissions.
c) The relative fault of the Company and the Underwriters 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 or the
inaccurate or the alleged inaccurate representation and/or
warranty relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
viii) The provisions set forth in this Section with respect to notice of
commencement of any action shall apply if a claim for contribution is
to be made under this Section provided, however, that no additional
notice shall be required with respect to any action for which notice
has been given under this Section for purposes of indemnification. The
Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section were determined
solely by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section no Underwriter shall be required to
contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection
with the Common Shares underwritten by it. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section are several in
proportion to their respective underwriting commitments and not joint.
ix) It is agreed that any controversy arising out of the operation of this
Section, including the amounts of any requested reimbursement payments
Page 19 of 24
<PAGE>
and the method of determining such amounts, shall be settled by
arbitration conducted under the Code of Arbitration Procedure of the
NASD.
11. DEFAULT OF UNDERWRITERS
i) It shall be a condition to this Agreement and the obligation of the
Company to sell and deliver the Common Shares hereunder, and of each
Underwriter to purchase the Common Shares in the manner as described
herein, that, except as hereinafter in this paragraph provided, each
of the Underwriters shall purchase and pay for all the Common Shares
agreed to be purchased by such Underwriter hereunder upon tender to
the Underwriters of all such shares in accordance with the terms
hereof.
ii) If any Underwriter or Underwriters default in their obligations to
purchase Common Shares hereunder on either the First or Second Closing
Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such
Closing Date does not exceed 10% of the total number of Common Shares
which the Underwriters are obligated to purchase on such Closing Date,
the non-defaulting Underwriters shall have the option, in proportion
to their respective commitments hereunder, to purchase the Common
Shares which such defaulting Underwriters agreed but failed to
purchase on such Closing Date. All such shares not so purchased shall
be purchased by Panther Capital.
iii) If any Underwriter or Underwriters so default and the aggregate number
of Common Shares with respect to which such default occurs is more
than the above percentage then Panther Capital shall purchase all such
shares which are the subject of such default but may offer all or a
portion of such shares to the non-defaulting Underwriters at the sole
discretion of Panther Capital.
iv) Nothing herein will relieve a defaulting Underwriter from liability
for its default.
12. EFFECTIVE DATE
This Agreement shall become effective immediately when upon the signing of the
Agreement by the respective parties to the Agreement.
13. TERMINATION
Without limiting the right to terminate this Agreement pursuant to any other
provision hereof:
i) This Agreement may be terminated by the Company by notice to Panther
Capital or by Panther Capital by notice to the Company at any time
prior
Page 20 of 24
<PAGE>
to the time this Agreement shall become effective as to all its
provisions, and any such termination shall be without liability on the
part of the Company to any Underwriter or of any Underwriter to the
Company.
ii) This Agreement may also be terminated by Panther Capital prior to the
First Closing Date by notice to the Company if:
a) Additional material governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading
in securities generally or minimum or maximum prices shall have
been generally established on the New York Stock Exchange or on
the American Stock Exchange or in the over the counter market by
the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter
market by the NASD, or a general banking moratorium shall have
been established by federal, or New York authorities;
b) An outbreak of major hostilities or other national or
international calamity or any substantial change in political,
financial or economic conditions shall have occurred or shall
have accelerated or escalated to such an extent, as, in the
judgment of the Underwriters, to affect adversely the
marketability of the Common Shares;
c) Any adverse event shall have occurred or shall exist which makes
untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or Prospectus
or which is not reflected in the Registration Statement or
Prospectus but should be reflected therein in order to make the
statements or information contained therein not misleading in any
material respect;
d) There shall be any action, suit or proceeding pending or
threatened, or there shall have been any development or
prospective development involving particularly the business or
properties or securities of the Company or the transactions
contemplated by this Agreement, which, in the reasonable judgment
of the Underwriters, may materially and adversely affect the
Company's business or earnings and makes it impracticable or
inadvisable to offer or sell the Common Shares. Any termination
pursuant to this subsection shall be without liability on the
part of any Underwriter to the Company or on the part of the
Company to any Underwriter.
14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
The respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Common Shares sold hereunder and any termination of this Agreement.
Page 21 of 24
<PAGE>
15. NOTICES
All communications hereunder shall be in writing and shall be mailed, delivered
or couriered and confirmed to the addresses for the parties set out in this
Agreement.
16. SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the parties
hereto and to the benefit of the officers and directors and controlling persons
of the Company, and in each case their respective successors, personal
Underwriters and assigns, and no other person will have any right or obligation
hereunder. No assignment shall relieve any party of its obligations hereunder.
The term "successors" shall not include any purchaser of the Common Shares as
such from any of the Underwriters merely by reason of such purchase.
17. PARTIAL UNENFORCEABILITY
The invalidity or unenforceability of any Section, paragraph or provision of
this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
18. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the
internal laws (and not the laws pertaining to conflicts of laws) of the State of
New York.
19. GENERAL
i) This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed
in several counterparts, each one of which shall be an original, and
all of which shall constitute one and the same document.
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<PAGE>
ii) In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will
not affect the construction or interpretation of this Agreement. This
Agreement may be amended or modified, and only a letter in writing
signed by the Company, and Panther Capital may waive the observance of
any term of this Agreement.
Signed for and on behalf of INTERNET HOLDINGS, INC.
By: /s/ Stefan Allesch-Taylor
-----------------------------
Title: President and Chief Executive Officer
Signed for and on behalf of PANTHER CAPITAL LTD
By: [Authorized Signatory}
Title:
Witnessed
By:
Title:
Page 23 of 24
<PAGE>
SCHEDULE A
----------
Name of Underwriter Number of Firm Common Shares to be Purchased
INTERNET HOLDINGS, INC.
SUBSCRIPTION FOR COMMON STOCK
ISSUED UNDER REGULATION S
Page 1 of 13
<PAGE>
SUBSCRIPTION AGREEMENT
1) Subscription for Shares. The undersigned hereby subscribes for the purchase
of the number of shares ("Offered Shares") of common stock, $0.001 par
value ("Common Stock"), of Internet Holdings, Inc., quoted on the NASD
Bulletin Board with stock symbol HTTP ("Company"), set forth on the
signature page hereof, at a price of U.S. $1.00 per share, in accordance
with and subject to the terms and conditions described herein.
2) Amount and Method of Payment. The Purchase Price is payable by check made
payable to Panther Capital Ltd, Client Account re Internet Holdings, Inc.,
22 Grosvenor Square, London W1X 9LF United Kingdom or via wire transfer by
arrangement.
3) Acceptance of Subscription. The undersigned understands and agrees with the
Company as to each of the following:
a) This subscription may be accepted or rejected by the Company, in whole
or in part, at its sole discretion. In the event that this
subscription is rejected in whole or in part the appropriate funds
shall be returned to subscribers without payment of any interest
b) This subscription shall be deemed accepted only when it is signed by
the Company.
c) The Company has no obligation to accept subscriptions in the order
received.
4) Representations and Warranties. The undersigned hereby acknowledges,
represents and warrants to, and agrees with, the Company as follows:
a) The undersigned did not receive the offer to purchase the Shares in
the United States.
b) The undersigned represents either:
i) At the time the buy order was originated the undersigned was
outside of the United States, or
ii) The transaction underlying the purchase and sale of the Shares
was executed in, on or through a physical trading floor of an
established foreign securities exchange that is located outside
of the United States.
c) The undersigned may not sell the Offered Shares to a U.S. Person, as
defined on Annex A attached hereto, or for the account or benefit of a
U.S. Person prior to the expiration of 12 months from the Closing of
the Offering (the "Restricted Period"); following the expiration of
the Restricted Period, the undersigned may not sell the Shares to a
U.S. Person, or for the benefit of a U.S. Person unless such shares
are registered under the Securities Act of 1933 as amended (the
"Act"), or an exemption from registration is available under the Act
and applicable state securities laws and the undersigned delivers an
opinion of counsel satisfactory to the Company to that effect.
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d) The undersigned or his purchaser representative has had a reasonable
opportunity to ask questions of and receive information and answers from a
person or persons acting on behalf of the Company concerning the Company
and the offering of the Shares, as the undersigned may deem necessary, and
all such questions have been answered and all such information has been
provided to the full satisfaction of the undersigned.
e) The undersigned is a bona fide resident of the country listed on the
signature page to this Subscription Agreement ("Country") in that:
i) If a corporation, partnership, trust or other form of business
organization, it has its principal office within the Country;
ii) If an individual, has his principal residence in the Country; and
iii) If a corporation, partnership, trust or other form of business
organization which was organized, reorganized or recapitalized for the
specific purpose of acquiring Offered Shares, all of its beneficial
owners are resident outside the United States.
f) The undersigned or his purchaser representative has such knowledge and
experience in financial, tax and business matters as to enable him to
utilize the information made available to him in connection with the
Offering of the Offered Shares in order to evaluate the merits and risks of
an investment in the Company and to make an informed investment decision
with respect thereto. In addition, the undersigned or his purchaser
representative has a general knowledge of finance, securities and
investments and has demonstrated skill in making investments based upon his
actual participation. The undersigned is not relying on the Company with
respect to the tax and other economic considerations of the undersigned
relating to his decision to make this investment. In regard to such
considerations of the undersigned relating to his decision to make this
investment. In regard to such considerations, the investor has relied on
the advice of, or has consulted with, only his own advisor. The undersigned
recognizes that investment in the company involves a number of significant
risks and further acknowledges that he or it can bear the economic risk of
the purchase of the Offered Shares, including the total loss of its
investment.
g) The undersigned understands that no State or Federal governmental authority
has made any finding or determination relating to the fairness for
investment in the Offered Shares and that no state or federal governmental
authority has recommended or endorsed, or will recommend or endorse, the
investment in Offered Shares. The undersigned further acknowledges that, in
the event of a breach of any of the representations, warranties, or
covenants contained herein, the Company shall have the right and option to
rescind the sale of the Offered Shares to the undersigned. In such cases,
the amount payable upon rescission will be the Purchase Price, less certain
expenses, costs and damages incurred by the Company.
h) The foregoing representations, warranties and agreements, together with all
other representations and warranties made or given by the undersigned to
the Company in any other written statement or document delivered in
connection with the transactions contemplated hereby, shall be true and
correct in all respects on and as of the date of this Subscription
Agreement as if made on and as of such date and shall survive such date.
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5) Additional Representations by Distributors.
The undersigned, if a distributor, hereby represents as follows:
a) If the undersigned is a "distributor", as defined in Annex A attached
hereto, who sells the Offered Shares to a distributor, dealer or
person receiving a concession, fee or other remuneration in respect of
the securities sold prior to the expiration of the Restricted Period
or who sells securities representing part of its unsold allotment, the
undersigned shall send confirmation or other notice to such purchaser
stating that the purchaser is subject to the same restrictions on
offers and sales that apply to a distributor.
b) If the undersigned is a distributor, the undersigned agrees that all
offers and sales of the securities prior to the expiration of the
Restricted Period shall be made only in accordance with the provisions
of Rule 903 or Rule 904 under Regulation S; pursuant to registration
of the securities under the Act; or pursuant to an available exemption
from the registration requirements of the Act.
6) Limitations on Transfer. The undersigned acknowledges that he is aware that
there are restrictions on the transferability of the Offered Shares of U.S.
persons or for the benefit of U.S. persons. The undersigned also
acknowledges that he will be responsible for compliance with all conditions
on transfer imposed by a federal or state securities statute and securities
law administrator or the Company.
7) Representations of the Company. The Company represents and warrants to, and
agrees with, the undersigned that:
a) The Company has been duly incorporated and validly exists as a
corporation in good standing under the laws of the State of Utah.
b) This Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and
to general principles of equity; and the Issuer has full corporate
power and authority necessary to enter into this Agreement and to
perform its obligations hereunder.
c) No consent, approval, authorization or order of any court, government
agency or body or arbitrator having jurisdiction over the Company or
any of its affiliates is required for execution of this Agreement,
including, without limitation, the issuance and sale of the Offered
Shares, or the performance of its obligations hereunder.
d) Neither the sale of the Offered Shares pursuant to, nor the
performance of its obligations under, this Agreement by the Company
will:
i) Violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse
of time or both would be reasonably likely to constitute a
default) under
(1) The articles of incorporation, charter or by-laws of the
Company or any of its affiliates,
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(2) Any decree, judgment, order, law, treaty, rule, regulation
or determination applicable to the Company or any of its
affiliates of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or any of
its affiliates having jurisdiction or over the properties or
assets of the Company or any of its affiliates,
(3) The terms of any bond, debenture, note or any other evidence
of indebtedness, or any agreement, stock option or other
similar plan, indenture, lease, mortgage, deed of trust or
other instrument to which the Company or any of its
affiliates bound, or to which any of the properties of the
Company or any of its affiliates is subject, or
(4) The terms of any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company or
any of its affiliates is a party; or
ii) Result in the creation or imposition of any lien, charge or
encumbrance upon the Offered Shares or any of the assets of the
Company or any of its affiliates.
e) The Offered Shares:
i) Are free and clear of any security interests, liens, claims or
other encumbrances; ii) Have been duly and validly authorized and
on the Closing Date will be duly and validly issued, fully paid
and non-assessable;
iii) Will not have been, individually and collectively, issued or sold
in violation of any preemptive or other similar rights of the
holders of any securities of the Company;
iv) Will not subject the holders thereof to personal liability by
reason of being such holders; and
v) Are quoted on, and will at the time of sale be eligible for
trading on, the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system either on the NASDAQ Small
Cap market or the NASD Bulletin Board.
8) Additional Information. The undersigned hereby acknowledges and agrees that
the Company may make or cause to be made such further inquiry and obtain
such additional information as it may deem appropriate with regard to the
suitability of the undersigned.
9) Assignability. The undersigned agrees not to transfer or assign this
Subscription Agreement, or any of his interest herein.
10) Entire Agreement. This Subscription Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
hereof, and there are no representations, covenants or other agreements
except as stated herein or referred to herein. Neither this Subscription
Agreement nor any provision hereof shall be waived, modified, discharged,
or terminated except by an instrument in writing signed by the party
against whom any such waiver, modification, discharge or termination is
sought.
11) Applicable Law. This Subscription Agreement shall be construed in
accordance with and governed by the laws of the State of New York.
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12) Severability. Each provision of this Subscription Agreement is intended to
be severable from every other provision, and the invalidity or illegality
of any portion hereof shall not affect the validity or legality of the
remainder hereof.
13) Counterparts. This Subscription Agreement may be executed through the use
of separate signature pages or in any number of counterparts, and each of
such counterparts shall, for all purposes, constitute one agreement binding
on all parties, notwithstanding that all parties are not signatories to the
same counterpart. 14)
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PLEASE PRINT OR TYPE - COMPLETE ALL ITEMS
Number of Shares subscribed ______________
Total purchase price (U.S. $1.00 per Share):________________________
Printed Name(s) of Subscriber*:
__________________________ __________________________
_________________________ __________________________
Name of Business
__________________________ __________________________
Business Address Residence Address
__________________________ __________________________
City, Country and Zip Code City, Country and Zip Code
__________________________ __________________________
Business Telephone Number Residence Telephone Number
__________________________
Facsimile Number
All correspondence and delivery of certificate and confirmations should be
addressed to the above named person and sent by the Company to his ____
business ____ home address (check one).
Capacity of Subscriber (check one):
Individual _______,
Corporation _______,
Company _______,
Other _______ (please specify)
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Ownership of Shares (check one):
Individual _______,
Joint Tenants, with rights of survivorship _______*,
Tenants in Common _______*,
Tenants in Entirety _______*,
Community Property _______*,
* If you are purchasing Shares with only your spouse as co-owner, both you
and your spouse must sign the signature page. If any co-owner is not your
spouse, all co-owners must sign the signature page.
Name of Purchaser Representative, if any ______________________
Address:_____________________
_____________________
Telephone: __________________
Country of citizenship: _____________________________
Country of incorporation or formation: _______________
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SIGNATURES FOR INDIVIDUAL SUBSCRIBERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing statements are
true and correct and that he, she or they have executed this Subscription
Agreement this _____ day of ________________, 20____.
- ----------------------------- --------------------------
Printed Name Signature
- ----------------------------- ---------------------------
Printed Name Signature
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SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the following statements are
true and correct and that it has caused this Subscription Agreement to be duly
executed on its behalf this _____ day of _________________, 20___.
------------------------------
Printed Name of Subscriber
By:---------------------------
Signature of Authorized Person
------------------------------
Printed Name and Title
Page 10 of 13
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THIS PAGE NOT TO BE COMPLETED BY SUBSCRIBER
-------------------------------------------------------
RECEIPT AND ACCEPTANCE
SUBSCRIPTION FOR ________ SHARES ACCEPTED ON
Day: _____Month:__________,Year: _____.
By:____________________________
Name:___________________________
Title:__________________________
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ANNEX A
Reg. S230.902. As used in Regulation S, the following terms shall have the
meanings indicated.
Distributor. "Distributor" means any underwriter, dealer, or other person who
participates, pursuant to a contractual arrangement, in this distribution of the
securities offered or sold in reliance on this Regulation S.
U.S. Person.
"U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under the laws
of the United States;
(iii) Any estate of which any executor or administrator is a U.S. person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the united States:
(vi) Any non-discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of
a U.S. person;
(vii) Any discretionary account or similar account (other than estate or trust)
held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States; and
(viii) Any partnership or corporation if:
a) Organized or incorporated under the laws of any foreign
jurisdiction; and
b) Formed by a U.S. person principally for the purpose of investing
in securities not registered under the Act, unless it is organized
or incorporated, and owned, by accredited investors (as defined in
Rule 501(a) under the Act) who are not natural persons, estates or
trusts.
c) Notwithstanding paragraph (b) of this section, any discretionary
account or similar account (other than an estate or trust) held
for the benefit or account of a non-U.S. person by a dealer or
other professional fiduciary organized, incorporated, or (if an
individual) resident in the United States shall not be deemed a
"U.S. person".
d) Notwithstanding paragraph (b) of this section, any estate of which
any professional fiduciary acting as executor or administrator is
a U.S. person shall not be deemed a U.S. person if:
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i) An executor or administrator of the estate who is not a
U.S. person has sole or shared investment discretion with
respect to the assets of the estate; and
ii) The estate is governed by foreign law.
e) Notwithstanding paragraph (b) of this section, any professional
fiduciary acting as trustee is a U.S. person shall not be deemed a
U.S. person if a trustee who is not a U.S. person has sole or
shared investment discretion with respect to the trust assets, and
no beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person.
f) Notwithstanding paragraph (b) of this section, an employee benefit
plan established and administered in accordance with the law of a
country other than the United States and customary practices and
documentation of such country shall not be deemed a U.S. person.
g) Notwithstanding paragraph (b) of this section, any agency or
branch of a U.S. person located outside the United States shall
not be deemed a "U.S. person" if:
i) The agency or branch operates for valid business reasons;
and
ii) The agency or branch is engaged in the business of
insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the
jurisdiction where located.
iii) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American
Development Bank, the Asian Development Bank, the African
Development Bank, the United Nations, and their agencies,
affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and
pension plans shall not be deemed "U.S. persons".
Page 13 of 13
