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EXHIBIT 1.1
1,800,000 Shares of Common Stock
OBJECTIVE COMMUNICATIONS, INC.
UNDERWRITING AGREEMENT
, 1996
-------
Barington Capital Group, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Objective Communications, Inc., a
Delaware corporation (the "Company"), hereby confirms its agreement with you
(the "Underwriter") and any other selling group members named in Schedule I
hereto in connection with the proposed offering of certain of its securities to
the public (the "Offering") as follows:
1. Introductory. The Company proposes to issue and sell to
the Underwriter 1,800,000 shares of Common Stock, par value $.01 per share, of
the Company (the "Common Stock"). In addition, solely for the purpose of
covering over-allotments, the Company proposes to grant the Underwriter the
option to purchase from it up to an additional 270,000 shares of Common Stock
(the "Additional Stock") identical to the Common Stock. The Common Stock is
more fully described in the Prospectus referred to below.
2. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, the Underwriter that:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), a registration statement,
and may have filed one or more amendments thereto, on Form
SB-2 (Registration No. 333-____), including in such
registration statement and each such amendment and related
preliminary prospectus (a "Preliminary Prospectus") for the
registration of (i) the 1,800,000 shares of Common Stock (the
"Firm Stock"), (ii) the Additional Stock, (iii) the Common
Stock purchase options referred to in Section 5(t) (the
"Underwriter's Options"), (iv) the shares of Common Stock (the
"Underwriter's Stock") issuable upon exercise of the
Underwriter's Options and (v) the shares of
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Common Stock (the "Bridge Stock") issuable upon exercise of
the warrants issued to investors in connection with the bridge
financing in which the Underwriter acted as placement agent
(the Firm Stock, the Additional Stock, the Underwriter's
Options and the Underwriter's Stock, and the Bridge Stock are
collectively referred to as the "Securities"). As used in
this Agreement, the term "Registration Statement" means such
registration statement, as amended, on file with the
Commission at the time such registration statement becomes
effective (including the prospectus, financial statements,
exhibits, and all other documents filed as a part thereof),
provided that such Registration Statement, at the time it
becomes effective, may omit such information as is permitted
to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the General Rules and
Regulations promulgated under the Act (the "Regulations"),
which information ("Rule 430 Information") shall be deemed to
be included in such Registration Statement when a final
prospectus is filed with the Commission in accordance with
Rules 430A and 424(b)(1) or (4) of the Regulations; the term
"Preliminary Prospectus" means each prospectus included in the
Registration Statement, or any amendments thereto, before it
becomes effective under the Act, the form of prospectus
omitting Rule 430A Information included in the Registration
Statement when it becomes effective, if applicable (the "Rule
430A Prospectus"), and any prospectus filed by the Company
with your consent pursuant to Rule 424(a) of the Regulations;
and the term "Prospectus" means the final prospectus included
as part of the Registration Statement, except that if the
prospectus relating to the securities covered by the
Registration Statement in the form first filed on behalf of
the Company with the Commission pursuant to Rule 424(b) of the
Regulations shall differ from such final prospectus, the term
"Prospectus" shall mean the prospectus as filed pursuant to
Rule 424(b) from and after the date on which it shall have
first been used.
(b) When the Registration Statement becomes
effective, and at all times subsequent thereto and including
the Closing Date (as defined in Section 3) and each Additional
Closing Date (as defined in Section 3), and during such longer
period as the Prospectus may be required to be delivered in
connection with sales by the Underwriter or a dealer, and
during such longer period until any post-effective amendment
thereto shall become effective, the Registration Statement
(and any post-effective amendment thereto) and the Prospectus
(as amended or as supplemented if the Company shall have filed
with the Commission any amendment or supplement to the
Registration Statement or the Prospectus) will contain all
statements which are required to be stated therein in
accordance with the Act and the Regulations, will comply with
the Act and the Regulations, and will not contain any untrue
statement of a material fact
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or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, and no event will have occurred which should have
been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not then
been set forth in such an amendment or supplement; if a Rule
430A Prospectus is included in the Registration Statement at
the time it becomes effective, the Prospectus filed pursuant
to Rules 430A and 424 (b) (1) or (4) will contain all Rule
430A Information and all statements which are required to be
stated therein in accordance with the Act or the Regulations,
will comply with the Act and the Regulations, and will not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and
each Preliminary Prospectus, as of the date filed with the
Commission, did 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; except that no representation or warranty is made
in this Section 2(b) with respect to statements or omissions
made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 8(b)
with respect to the Underwriter by the Underwriter expressly
for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereto.
(c) Neither the Commission nor the "blue sky" or
securities authority of any jurisdiction has issued an order
(a "Stop Order") suspending the effectiveness of the
Registration Statement, preventing or suspending the use of
any Preliminary Prospectus, the Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to
permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of any of the
Securities, nor has any of such authorities instituted or
threatened to institute any proceedings with respect to a Stop
Order.
(d) Any contract, agreement, instrument, lease,
or license required to be described in the Registration
Statement or the Prospectus has been properly described
therein. Any contract, agreement, instrument, lease, or
license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to
the Registration Statement.
(e) The Company has no subsidiaries (as defined
in the Regulations). The Company is a corporation duly
organized, validly existing, and in good standing under the
laws of Delaware, with full corporate power and authority, and
all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and
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declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other
tribunals, to own, lease, license, and use its properties and
assets and to carry on the business in the manner described in
the Prospectus. The Company is duly qualified to do business
and is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets
or the conduct of its business makes such qualification
necessary except where the failure to be so qualified does not
now have and will not in the future have a material adverse
effect on the operations, business, properties, or assets of
the Company.
(f) As of the Closing of the sale of the Firm
Stock, the authorized capital stock of the Company consists of
____________ shares of Common Stock, of which ___________
shares are outstanding. Each outstanding share of Common
Stock is validly authorized, validly issued, fully paid, and
nonassessable, without any personal liability attaching to the
ownership thereof, and has not been issued and is not owned or
held in violation of any preemptive rights of stockholders.
There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of the Company or any
security or other instrument which by its terms is convertible
into, exercisable for, or exchangeable for, capital stock of
the Company, except as may be properly described in the
Prospectus. There is outstanding no security or other
instrument which by its terms is convertible into or
exchangeable for capital stock of the Company except as may
have been properly described in the Prospectus. There is
outstanding no indebtedness other than (i) trade payables
incurred in the ordinary course of business, (ii) certain
capital lease obligations, (iii) an aggregate principal amount
of $2,000,000 currently outstanding on 10% Senior Secured
Promissory Notes issued pursuant to a bridge financing entered
into as of October __, 1996, October __, 1996 and October __,
1996 and (iv) no more than $_______ outstanding under existing
notes payable.
(g) The financial statements of the Company
included in the Registration Statement and the Prospectus
fairly present the financial position, the results of
operations, and the other information purported to be shown
therein at the respective dates and for the respective periods
to which they apply. Such financial statements have been
prepared in accordance with generally accepted accounting
principles (except to the extent that certain footnote
disclosures regarding any period may have been omitted in
accordance with the applicable rules of the Commission under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) consistently applied throughout the periods involved,
are correct and complete, and are in accordance with the books
and records of the Company. The accountants whose
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report on the audited financial statements is filed with the
Commission as a part of the Registration Statement are, and
during the periods covered by their report(s) included in the
Registration Statement and the Prospectus, were independent
certified public accountants within the meaning of the Act and
the Regulations. No other financial statements are required
by Form SB-2 or otherwise to be included in the Registration
Statement or the Prospectus. There has at no time been a
material adverse change in the financial condition, results of
operations, business, properties, assets, liabilities, or
future prospects of the Company from the latest information
set forth in the Registration Statement or the Prospectus,
except as may be properly described in the Prospectus.
(h) There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or
investigation pending, threatened, or in prospect (or any
basis therefor) with respect to the Company, or any of its
operations, businesses, properties, assets, liabilities or
future prospects, except as may be properly described in the
Prospectus or such as individually or in the aggregate do not
now have and cannot be expected in the future to have a
material adverse effect upon the operations, business,
properties, or assets of the Company. The Company is not in
violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree except as may be
properly described in the Prospectus or such as in the
aggregate do not now have and will not in the future have a
material adverse effect upon the operations, business,
properties, assets, liabilities or future prospects, of the
Company; nor is the Company required to take any action in
order to avoid any such violation or default.
(i) The Company has good and marketable title in
fee simple to all real properties and good title to all other
properties and assets which the Prospectus indicates are owned
by it, free and clear of all liens, security interests,
pledges, charges, encumbrances, and mortgages (except as may
be properly described in the Prospectus). No real property
owned, leased, licensed, or used by the Company lies in an
area which is, or to the knowledge of the Company will be,
subject to zoning, use, or building code restrictions which
would prohibit, and no state of facts relating to the actions
or inaction of another person or entity or his or its
ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent, the
continued effective ownership, leasing, licensing, or use of
such real property in the business of the Company as presently
conducted or as the Prospectus indicates it contemplates
conducting (except as may be properly described in the
Prospectus).
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(j) The Company is not, nor to the knowledge of
the Company is any other party, now or expected by the Company
in the future to be in violation or breach of, or in default
with respect to, complying with any material provision of any
contract, agreement, instrument, lease, license, arrangement,
or understanding which is material to the Company, and each
such contract, agreement, instrument, lease, license,
arrangement, and understanding is in full force and is the
legal, valid, and binding obligation of the parties thereto
and is enforceable as to them in accordance with its terms.
The Company enjoys peaceful and undisturbed possession under
all leases and licenses under which it is operating. The
Company is not a party to or bound by any contract, agreement,
instrument, lease, license, arrangement, or understanding, or
subject to any charter or other restriction, which has had or
may in the future have a material adverse effect on the
financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the
Company. The Company is not in violation or breach of, or in
default with respect to, any term of its articles of
incorporation (or other charter document) or by-laws.
(k) All patents, patent applications, trademarks,
trademark applications, trade names, service marks,
copyrights, franchises, and other intangible properties and
assets (all of the foregoing being herein called
"Intangibles") that the Company owns or has pending, or under
which it is licensed, are in good standing and, to the
Company's knowledge, uncontested. The "Objective
Communication", "________" and "_________" names and their
related logos are trademarks and service marks used by the
Company to identify its products, and such trademarks and
service marks are protected by registration in the name of the
Company on the principal register in the United States Patent
and Trademark Office. There is no right under any Intangible
necessary to the business of the Company as presently
conducted or as the Prospectus indicates it contemplates
conducting except as may be so designated in the Prospectus.
The Company has not infringed, is not infringing, nor has
received notice of infringement with respect to asserted
Intangibles of others. To the knowledge of the Company, there
is no infringement by others of Intangibles of the Company.
To the knowledge of the Company, there is no Intangible of
others which has had or may in the future have a materially
adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or
future prospects of the Company.
(l) Neither the Company, nor any director,
officer, agent, employee, or other person associated with or
acting on behalf of the Company has, directly or indirectly,
used any corporate funds for unlawful contributions, gifts,
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entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment.
(m) The Company has all requisite corporate power
and authority to execute, deliver, and perform its obligations
under each of (i) this Agreement, (ii) the certificate
evidencing the Underwriter's Options (the "Underwriter's
Option Agreement"), and (iii) the proposed financial advisory
and consulting agreement to be entered into between the
Company and the Underwriter in connection with the
consummation of the offering contemplated hereby (the
"Consulting Agreement" and, collectively with this Agreement
and the Underwriter's Option Agreement the "Company
Documents"). All necessary corporate proceedings of the
Company have been duly taken to authorize the execution,
delivery, and performance of each of the Company Documents by
the Company. This Agreement has been duly authorized,
executed, and delivered by the Company, is the legal, valid,
and binding obligation of the Company, and is enforceable as
to the Company in accordance with its terms. Each of the
other Company Documents has been duly authorized by the
Company, and is or, when executed and delivered by the
Company, will be the legal, valid, and binding obligation of
the Company, enforceable against the Company in accordance
with its terms. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by the
Company for the execution, delivery, or performance by the
Company of any of the Company Documents (except filings under
the Act which have been or will be made before the Closing
Date and such consents consisting only of consents under "blue
sky" or state securities laws). No consent of any party to any
contract, agreement, instrument, lease, license, arrangement,
or understanding to which the Company is a party, or to which
any of its properties or assets are subject, is required for
the execution, delivery, or performance of the Company
Documents; and the execution, delivery, and performance of any
of the Company Documents will not violate, result in a breach
of, conflict with, or (with or without the giving of notice or
the passage of time or both) entitle any party to terminate or
call a default under any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate or
result in a breach of any term of the certificate of
incorporation (or other charter document) or by-laws of the
Company or violate, result in a breach of, or conflict with
any law, rule, regulation,
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order, judgment, or decree binding on the Company or to which
any of its operations, businesses, properties, or assets are
subject.
(n) The Firm Stock and the Additional Stock are
validly authorized and, when issued and delivered in
accordance with this Agreement, will be validly issued, fully
paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders. The
Underwriter will receive good title to the Firm Stock and
Additional Stock purchased by them, respectively, free and
clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts.
(o) The Underwriter's Stock is validly authorized
and reserved for issuance and, when issued and delivered upon
exercise of the Underwriter's Options in accordance with the
Underwriter's Option Agreement, will be validly issued, fully
paid and nonassessable, without any personal liability
attaching to ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders; and the
holders of the Underwriter's Options will receive good title
to the securities purchased by them, respectively, free and
clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts.
(p) The Securities conform to all statements
relating thereto contained in the Registration Statement or
the Prospectus.
(q) Subsequent to the respective dates as of
which information is given in the Registration Statement and
the Prospectus, and except as may otherwise be properly
described in the Prospectus, the Company has not (i) issued
any securities or incurred any liability or obligation,
primary or contingent, for borrowed money, (ii) entered into
any transaction not in the ordinary course of business, or
(iii) declared or paid any dividend on its capital stock.
(r) Neither the Company nor any of its officers,
directors, or affiliates (as defined in the Regulations), has
taken or will take, directly or indirectly, prior to the
termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the
price of any security of the Company, or which has caused or
resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation
of the price of any security of the Company, to facilitate the
sale or resale of any of the Firm Stock or Additional Stock,
as the case may be.
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(s) The Company has obtained from each of its
directors, officers and affiliates (as defined in the
Regulations), and from each other person or entity who
beneficially owned as of the effective date of the
Registration Statement shares of Common Stock of the Company
(each an "Original Stockholder"), enforceable written
agreements, in form and substance satisfactory to counsel for
the Underwriter, that for a period of 24 months from the
Closing Date he will not, without your prior written consent,
offer, pledge, issue, sell, contract to sell, grant any option
for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any security or
other instrument which by its terms is convertible into,
exercisable for, or exchangeable for shares of Common Stock or
other securities of the Company, including, without
limitation, any shares of Common Stock issuable under any
outstanding stock options. Such agreements may provide that
any such Original Stockholder may sell up to 30% of his shares
of Common Stock commencing 12 months after the offering is
completed in the event that the last sales price for the
Common Stock on the Nasdaq SmallCap Market has been at least
200% of the initial public offering price per share hereunder
for a period of 20 consecutive trading days ending within 5
days of the date of such sale, and such sale is completed at a
price in excess of 200% of such initial public offering price.
(t) Except as may have been registered in the
Registration Statement or already been exercised or waived, no
person or entity has the right to require registration of
shares of Common Stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement.
(u) Except as may be set forth in the Prospectus,
the Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment
of a broker or finder in connection with the transactions
contemplated by this Agreement.
(v) Neither the Company nor any of its affiliates
is presently doing business with the government of Cuba or
with any person or affiliate located in Cuba. If, at any time
after the date that the Registration Statement is declared
effective with the Commission or with the Florida Department
of Banking and Finance (the "Florida Department"), whichever
date is later, and prior to the end of the period referred to
in the first clause of Section 2(b), the Company commences
engaging in business with the government of Cuba or with any
person or affiliate located in Cuba, the Company will so
inform the Florida Department within ninety days after such
commencement of business in Cuba, and during the period
referred to in Section 2(b) will inform the Florida
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Department within ninety days after any change occurs with
respect to previously reported information.
(w) The Securities have been approved for
quotation on NASDAQ, subject to official notice of issuance.
(x) The Securities have been approved for listing
on the [Boston] Stock Exchange and the [Philadelphia] Stock
Exchange, subject to official notice of issuance.
(y) Except as contemplated herein or therein or
as may have been waived, no person or entity has any right of
first refusal, preemptive right, right to any compensation, or
other similar right or option, in connection with the
Offering, this Agreement, the Underwriter's Options or the
Consulting Agreement, or any of the transactions contemplated
hereby or thereby.
3. Purchase, Sale, and Delivery of the Firm Stock and
the Additional Stock. On the basis of the representations, warranties,
covenants, and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriter, and the Underwriter agrees to purchase from the Company, all of
the shares of Firm Stock.
The purchase price per share of Firm Stock to be paid by the
Underwriter shall be $____. The initial public offering price per share of
Firm Stock shall be $____.
Payment for the Firm Stock by the Underwriter shall be made by
certified or official bank check in New York Clearing House funds payable to
the order of the Company at the offices of Barington Capital Group, L.P., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the New
York City Metropolitan Area as you shall determine and advise the Company by at
least two full days' notice in writing, upon delivery of the Firm Stock to you
for the account of the Underwriter. Such delivery and payment shall be made at
10:00 A.M., New York City Time, on the third business day following the
commencement of the initial public offering, as defined in Section 11(a), or at
such other time as shall be agreed upon between you and the Company. The time
and date of such delivery and payment are herein called the "Closing Date."
Certificates for the Firm Stock shall be registered in such
name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Closing Date. The Company
shall permit you to examine and package such certificates for delivery at least
one full business day prior to the Closing Date.
In addition, the Company hereby grants to the Underwriter the
option to purchase all or a portion of the Additional Stock
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as may be necessary to cover over-allotments, at the same purchase price per
share to be paid by the Underwriter to the Company for the Firm Stock as
provided for in this Section 3. This option may be exercised only to cover
over-allotments in the sale of shares of Common Stock by the Underwriter. This
option may be exercised by you on the basis of the representations, warranties,
covenants, and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, at any time and from time to time on or
before the forty-fifth day following the effective date of the Registration
Statement, by written notice by you to the Company. Such notice shall set
forth the aggregate number of Additional Stock as to which the option is being
exercised and the time and date, as determined by you, when such Additional
Stock are to be delivered (such time and date are herein called an "Additional
Closing Date"); provided, however, that no Additional Closing Date shall be
earlier than the Closing Date nor earlier than the second business day after
the date on which the notice of the exercise of the option shall have been
given nor later than the eighth business day after the date on which such
notice shall have been given.
Payment for the Additional Stock by the Underwriter shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company at the offices of Barington Capital Group,
L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place in
the New York City Metropolitan Area as you shall determine and advise the
Company by at least two full days' notice in writing, upon delivery of the
Additional Stock to you for the account of the Underwriter.
Certificates for the Additional Stock shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Additional Closing Date
with respect thereto. The Company shall permit you to examine and package such
certificates for delivery at least one full business day prior to the
Additional Closing Date with respect thereto.
4. Offering. The Underwriter is to make a public offering of
the Firm Stock as soon, on or after the effective date of the Registration
Statement, as you deem it advisable so to do. The Firm Stock is to be
initially offered to the public at the initial public offering price as
provided for in Section 3 (such price being herein called the "public offering
price"). After the initial public offering, you may from time to time increase
or decrease the public offering price, in your sole discretion, by reason of
changes in general market conditions or otherwise.
5. Covenants of the Company. The Company covenants that it
will:
(a) Use its best efforts to cause the
Registration Statement to become effective as promptly as
possible. If
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the Registration Statement has become or becomes effective
with a form of prospectus omitting Rule 430A Information, or
filing of the Prospectus is otherwise required under Rule
424(b), the Company will file the Prospectus, properly
completed, pursuant to Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to you of
such timely filing.
(b) Notify you immediately, and confirm such
notice in writing, (i) when the Registration Statement and any
post-effective amendment thereto become effective, (ii) of the
receipt of any comments from the Commission or the "blue sky"
or securities authority of any jurisdiction regarding the
Registration Statement, any post-effective amendment thereto,
the Prospectus, or any amendment or supplement thereto, and
(iii) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding
with respect to a Stop Order. 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 as
promptly as possible.
(c) During the time when a prospectus relating to
the Firm Stock and the Additional Stock is required to be
delivered hereunder or under the Act or the Regulations,
comply so far as it is able with all requirements imposed upon
it by the Act, as now existing and as hereafter amended, and
by the Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in
the Firm Stock or the Additional Stock, as the case may be, in
accordance with the provisions hereof and the Prospectus. If,
at any time when a prospectus relating to the Firm Stock and
the Additional Stock is required to be delivered hereunder or
under the Act or the Regulations, any event shall have
occurred as a result of which, in the reasonable opinion of
counsel for the Company or counsel for the Underwriter, the
Registration Statement or the Prospectus as then amended or
supplemented contains any untrue statement of a material fact
or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, or if, in the opinion of either of such counsel,
it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the
Act or the Regulations, the Company will immediately notify
you and promptly prepare and file with the Commission an
appropriate amendment or supplement (in form and substance
satisfactory to you) which will correct such statement or
omission or which will effect such compliance and will use its
best efforts to have any such amendment declared effective as
soon as possible.
(d) Deliver without charge to the Underwriter
such number of copies of each Preliminary Prospectus as may
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reasonably be requested by the Underwriter and, as soon as the
Registration Statement, or any amendment thereto, becomes
effective or a supplement is filed, deliver without charge to
you two signed copies of the Registration Statement, including
exhibits, or such amendment thereto, as the case may be, and
two copies of any supplement thereto, and deliver without
charge to the Underwriter such number of copies of the
Prospectus, the Registration Statement, and amendments and
supplements thereto, if any, without exhibits, as you may
request for the purposes contemplated by the Act.
(e) Endeavor in good faith, in cooperation with
you, at or prior to the time the Registration Statement
becomes effective, to qualify the Firm Stock and the
Additional Stock for offering and sale under the "blue sky" or
securities laws of such jurisdictions as you may designate;
provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the
Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such
jurisdiction to which it is not then subject. In each
jurisdiction where such qualification shall be effected, the
Company will, unless you agree in writing that such action is
not at the time necessary or advisable, file and make such
statements or reports at such times as are or may be required
by the laws of such jurisdiction.
(f) Use its best efforts to keep the Prospectus
and the Registration Statement current and effective by filing
post-effective amendments, as necessary.
(g) Make generally available (within the meaning
of Section 11(a) of the Act and the Regulations) to its
security holders as soon as practicable, but not later than
_______, 1997, an earnings statement (which need not be
certified by independent certified public accountants unless
required by the Act or the Regulations, but which shall
satisfy the provisions of Section 11(a) of the Act and the
Regulations) covering a period of at least twelve months
beginning after the effective date of the Registration
Statement.
(h) For a period of twenty four months after the
date of the Prospectus, not, without your prior written
consent, offer, issue, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or other securities of
the Company (or any security or other instrument which by its
terms is convertible into, exercisable for, or exchangeable
for shares of Common Stock or other securities of the Company)
except as provided in Section 3 and except for (i) the grant
of options under the Company's 1996 Stock Incentive Plan which
is properly described in the
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Prospectus, (ii) the issuance of Common Stock issuable upon
the exercise of stock options and warrants and conversion of
other convertible securities outstanding on the date hereof
and pursuant to the plan[s] described in clause (i) hereof,
(iii) the issuance of the Securities, (iv) the issuance of any
securities in connection with any merger or acquisition, or
(v) the issuance at fair market value of any securities to
unaffiliated third parties approved by the Board of Directors.
(i) For a period of five years after the
effective date of the Registration Statement, furnish you,
without charge, the following:
(i) within 90 days after the end of each
fiscal year, three copies of financial statements
certified by independent certified public
accountants, including a balance sheet, statement of
income, and statement of cash flows of the Company
and its then existing subsidiaries, with supporting
schedules, prepared in accordance with generally
accepted accounting principles, as at the end of such
fiscal year and for the 12 months then ended, which
may be on a consolidated basis;
(ii) as soon as practicable after they have
been sent to stockholders of the Company or filed
with the Commission, three copies of each annual and
interim financial and other report or communication
sent by the Company to its stockholders or filed with
the Commission;
(iii) as soon as practicable, two copies of
every press release and every material news item and
article in respect of the Company or its affairs
which was released by the Company; and
(iv) such additional documents and
information with respect to the Company and its
affairs and the affairs of any of its subsidiaries as
you may from time to time reasonably request.
(j) Apply the net proceeds received by it from
the offering in the manner set forth under "Use of Proceeds"
in the Prospectus.
(k) Furnish to you as early as practicable prior
to the Closing Date and any Additional Closing Date, as the
case may be, but no less than two full business days prior
thereto, a copy of the latest available unaudited interim
consolidated financial statements of the Company and its
consolidated subsidiaries which have been read by the
Company's independent certified public accountants, as
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stated in their letters to be furnished pursuant to Section
7(e).
(l) File no amendment or supplement to the
Registration Statement or Prospectus at any time, whether
before or after the effective date of the Registration
Statement, unless such filing shall comply with the Act and
the Regulations and unless you shall previously have been
advised of such filing and furnished with a copy thereof, and
you and counsel for the Underwriter shall have approved such
filing in writing.
(m) Comply with all registration, filing, and
reporting requirements of the Exchange Act which may from time
to time be applicable to the Company.
(n) Comply with all provisions of all
undertakings contained in the Registration Statement.
(o) Prior to the Closing Date or any Additional
Closing Date, as the case may be, issue no press release or
other communication, directly or indirectly, and hold no press
conference with respect to the Company, the financial
conditions, results of operations, business, properties,
assets, liabilities of the Company, or this offering, without
your prior written consent.
(p) File timely with the Commission an
appropriate form to register the Common Stock pursuant to
Section 12(b) under the Exchange Act.
(q) File timely and accurate reports on Form SR
with the Commission in accordance with Rule 463 of the
Regulations or any successor provision.
(r) Use its best efforts to cause the application
for quotation of the Firm Stock and the Additional Stock and
on The Nasdaq SmallCap Market ("NASDAQ") to be approved as
soon as possible.
(s) Use its best efforts to complete the listing
of the Securities on [The Boston Stock Exchange (the "Boston
Stock Exchange")] and [The Philadelphia Stock Exchange (the
"Philadelphia Stock Exchange")].
(t) On or prior to the Closing Date, enter into
the Consulting Agreement with Barington Capital Group, L.P.,
in the form set forth as an exhibit to the Registration
Statement, which will include, among other things, a provision
granting a right of first refusal to the Underwriter in
connection with certain sales of securities by the Company or
its subsidiaries.
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(u) On or prior to the Closing Date, sell to the
Underwriter (or its designee) the Underwriter's Options to
purchase an aggregate of 140,000 shares of Common Stock, which
Underwriter's Options shall be evidenced by the Underwriter's
Option Agreement in the form set forth as an exhibit to the
Registration Statement.
(v) Until expiration of the Underwriter's
Options, keep reserved sufficient shares of Common Stock for
issuance upon exercise of the Underwriter's Options.
(w) Until the expiration of five years from the
Closing Date, if you shall so indicate in writing to the
Company, use its best efforts, including, without limitation,
the solicitation of proxies, to cause one individual selected
from time to time by Barington Capital Group, L.P. to be
elected director of the Company.
(x) Deliver to you, without charge, within a
reasonable period after the last Additional Closing Date or
the expiration of the period in which the Underwriter may
exercise the over-allotment option, four bound volumes of the
Registration Statement and all related materials.
(y) For a period of five years after the Closing
Date, supply to the appropriate parties such information as
may be necessary or desirable, and otherwise use its best
efforts, so that the Company will be listed and will maintain
its listing in one or more of the securities manuals published
by Standard & Poor's Corporation and Xxxxx'x Investors
Service, Inc. and that at all times during such period such
listing will, at a minimum, contain the names of the Company's
officers and directors, a balance sheet as of a date not more
than 18 months prior to such time, and a statement of
operations for either the fiscal year preceding such date or
the most recent fiscal year of operations.
(z) Use its best efforts to maintain the quotation
on the Nasdaq SmallCap Market, the [Boston] Stock Exchange and
the [Philadelphia] Stock Exchange of price information for the
Common Stock issued hereunder.
(aa) From the date the Registration Statement
becomes effective and until five years from the Closing Date,
procure and maintain Director and Officer Liability Insurance
with a reputable insurance carrier.
(bb) From the Closing Date and until three years
from the date the Registration Statement becomes effective,
retain a transfer agent acceptable to the Underwriter. Upon
the Underwriter's request, the Company shall provide the
Underwriter with copies of the Company's daily stock transfer
sheets and lists of the beneficial and record holders of the
Company, from such transfer agent and from
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the Depository Trust Company, at the Company's sole cost and
expense.
(cc) From the date the Registration Statement
becomes effective and until three years from such date, the
Company shall retain a public relations firm reasonably
acceptable to the Underwriter.
6. Payment of Expenses. The Company hereby agrees to pay all
expenses (other than fees of counsel for the Underwriter, except as provided in
Sections 6(c) and 6(e)) in connection with (a) the preparation, printing,
filing, distribution, and mailing of the Registration Statement and the
Prospectus and the printing, filing, distribution, and mailing of this
Agreement, any Agreement Among Underwriters, any selected dealers agreement,
any Blue Sky Surveys, and if appropriate, any Underwriter's Questionnaire and
Power of Attorney, and related documents, including the cost of all copies
thereof and of the Preliminary Prospectuses and of the Prospectus and any
amendments or supplements thereto supplied to the Underwriter in quantities as
hereinabove stated, (b) the issuance, sale, transfer, and delivery of the Firm
Stock and the Additional Stock, including any transfer or other taxes payable
thereon, (c) the qualification of the Firm Stock and the Additional Stock under
state or foreign "blue sky" or securities laws, including the costs of printing
and mailing the preliminary and final "Blue Sky Survey" and the fees of counsel
for the Underwriter and the disbursements in connection therewith, (d) the
filing fees payable to the Commission, the NASD, and the jurisdictions in which
such qualification is sought, (e) the reasonable fees and disbursements of the
Underwriter relating to all filings with the NASD, (f) the quotation of the
Common Stock on NASDAQ and the listing of the Common Stock on the [Boston]
Stock Exchange and the [Philadelphia] Stock Exchange, (g) the fees and expenses
of the Company's transfer agent and registrar, (h) the fees and expenses of the
Company's legal counsel and accountants, (i) the fees of an investigative
search firm designated by the Underwriter to conduct a background check of the
principals of the Company, (j) the costs (up to a maximum of $10,000) of
placing "tombstone" advertisements in the national edition of The Wall Street
Journal and The New York Times, and (k) the costs of preparing a reasonable
number of transaction "bibles" or "mementos." In addition, the Company hereby
agrees to pay to the Underwriter a non-accountable expense allowance equal to
3% of the aggregate gross proceeds received by the Company from the sale of the
Firm Stock and the Additional Stock which amounts (less $40,000 previously paid
to you in respect of such non-accountable expense allowance) shall be paid to
you on the Closing Date (with respect to Common Stock sold by the Company on
the Closing Date) and, if applicable, on the Closing Date and any Additional
Closing Date (with respect to Additional Stock sold by the Company on the
Closing Date or such Additional Closing Date).
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7. Conditions of Underwriter's Obligations. The obligations
of the Underwriter to purchase and pay for the Firm Stock and the Additional
Stock, as provided herein, shall be subject, in their discretion, to the
continuing accuracy of the representations and warranties of the Company
contained herein and in each certificate and document contemplated under this
Agreement to be delivered to you, as of the date hereof and as of the Closing
Date (or the Additional Closing Date, as the case may be), to the performance
by the Company of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become
effective not later than 6:00 P.M., New York City Time, on the
date of this Agreement or such later date and time as shall be
consented to in writing by you.
(b) At the Closing Date and any Additional
Closing Date, as the case may be, you shall have received the
favorable opinion of Shaw, Pittman, Xxxxx & Towbridge, counsel
for the Company, dated the date of delivery, addressed to the
Underwriter, and in form and scope satisfactory to counsel for
the Underwriter, with such number of reproduced copies or
signed counterparts thereof for the Underwriter as shall be
satisfactory to the Underwriter, to the effect that:
(i) the Company is a corporation, duly
organized and validly existing, and in good standing
under the laws of Delaware with full corporate power
and authority, and all consents, authorizations,
approvals, orders, certificates, and permits of and
from, and declarations and filings with, all federal,
state, local, and other governmental authorities and
all courts and other tribunals necessary to own,
lease, license, and use its properties and assets and
to conduct its business in the manner described in
the Prospectus. The Company is duly qualified to do
business and is in good standing in every
jurisdiction in which its ownership, leasing,
licensing, or use of property and assets or the
conduct of its business makes such qualification
necessary except where the failure to be so qualified
does not now have and will not in the future have a
material adverse effect on the operations, business,
properties, or assets of the Company;
(ii) the authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock
outstanding. Each outstanding share of Common Stock,
is duly authorized, validly issued, fully paid, and
nonassessable, without any personal liability
attaching to the ownership thereof has not been
issued and is not owned or held in violation of any
preemptive right of stockholders. To the knowledge
of such counsel, there
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is no commitment, plan, or arrangement to issue, and
no outstanding option, warrant, or other right
calling for the issuance of, any share of capital
stock of the Company, or any security or other
instrument which by its terms is convertible into,
exercisable for, or exchangeable for, capital stock
of the Company, except as may be properly described
in the Prospectus. There is outstanding no security
or other instrument which by its terms is convertible
into or exchangeable for capital stock of the Company
except as may be properly described in the
Prospectus;
(iii) to the knowledge of such counsel,
there is no litigation, arbitration, claim,
governmental or other proceeding (formal or
informal), or investigation pending or threatened
with respect to the Company, or its operations,
business, properties, or assets except as may be
properly described in the Prospectus or as
individually or in the aggregate do not now have and
cannot be expected in the future to have a material
adverse effect upon the operations, business,
properties, or assets of the Company. To the
knowledge of such counsel, the Company is not in
violation of, or in default with respect to, any law,
rule, regulation, order, judgment, or decree, except
as may be properly described in the Prospectus or
such as in the aggregate do not now have and cannot
be expected in the future to have a material adverse
effect upon the operations, business, properties, or
assets of the Company, nor is the Company required to
take any action in order to avoid any such violation
or default;
(iv) to the knowledge of such counsel,
neither the Company, nor any other party is now or is
expected by the Company to be in violation or breach
of, or in default with respect to, complying with any
material provision of any contract, agreement,
instrument, lease, license, arrangement, or
understanding known to such counsel which is material
to the Company;
(v) the Company is not in violation or
breach of, or in default with respect to, any term of
its articles of incorporation (or other charter
document) or by-laws;
(vi) the Company has all requisite corporate
power and authority to execute, deliver, and perform
each of the Company Documents. All necessary
corporate proceedings of the Company have been taken
to authorize the execution, delivery, and performance
by the Company of the Company Documents. Each
Company Document (excluding any Firm Stock or
Additional Stock not issued on the date of such
opinion) has been duly executed and delivered by the
Company. Each Company
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Document is, or when executed and delivered by the
Company will be, the legal, valid, and binding
obligation of the Company, and (subject to applicable
bankruptcy, insolvency, and other laws affecting the
enforceability of creditors' rights generally) is or
will be enforceable as to the Company in accordance
with its terms. No consent, authorization, approval,
order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state,
local, or other governmental authority or any court
or other tribunal is required by the Company for the
execution, delivery, or performance by the Company of
any of the Company Documents (except filings under
the Act which have been made prior to the Closing
Date and consents consisting only of consents under
"blue sky" or state securities laws). No consent of
any party to any contract, agreement, instrument,
lease, license, arrangement, or understanding known
to such counsel and listed as an Exhibit to the
Registration Statement, to which the Company is a
party, or to which any of its properties or assets
are subject, is required for the execution, delivery,
or performance of any of the Company Documents; and
the execution, delivery, and performance of the
Company Documents will not violate, result in a
breach of, conflict with, or (with or without the
giving of notice or the passage of time or both)
entitle any party to terminate or call a default
under any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or
violate or result in a breach of any term of the
articles of incorporation (or other charter document)
or by-laws of the Company, or violate, result in a
breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the
Company or to which any of its operations, business,
properties, or assets are subject;
(vii) the Firm Stock and the Additional
Stock are validly authorized. Such opinion delivered
at the Closing Date or any Additional Closing Date
shall state that each share of Firm Stock or
Additional Stock, as the case may be, to be delivered
on that date is validly issued, fully paid, and
nonassessable, with no personal liability attaching
to the ownership thereof, and is not issued in
violation of any preemptive rights of stockholders,
and the Underwriter has received good title to the
Firm Stock and Additional Stock purchased by them,
respectively, from the Company, free and clear of all
liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting
trusts;
(viii) the Underwriter's Stock has been duly
and validly reserved for issuance. Such opinion
delivered
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at the Closing Date shall state that the
Underwriter's Options have been duly and validly
issued and delivered. The Underwriter's Stock, when
issued and delivered in accordance with the
Underwriter's Option Agreement, will be validly
authorized, validly issued, fully paid, and
nonassessable, with no personal liability attaching
to the ownership thereof, and will not have been
issued in violation of any preemptive rights of
stockholders; and the holders of the Underwriter's
Options will receive good title to the securities
purchased by them, respectively, free and clear of
all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting
trusts;
(ix) the Common Stock and the Securities
conform to all statements relating thereto contained
in the Registration Statement or the Prospectus;
(x) to the knowledge of such counsel, the
descriptions of any contract, agreement, instrument,
lease, or license required to be described in the
Registration Statement or the Prospectus are correct
in all material respects. To the knowledge of such
counsel, any contract, agreement, instrument, lease,
or license required to be filed as an exhibit to the
Registration Statement has been filed with the
Commission as an exhibit to the Registration
Statement or has been incorporated as an exhibit by
reference into the Registration Statement;
(xi) insofar as statements in the Prospectus
purport to summarize the status of litigation or the
provisions of laws, rules, regulations, orders,
judgments, decrees, contracts, agreements,
instruments, leases, or licenses, such statements
have been prepared or reviewed by such counsel and
accurately reflect the status of such litigation and
provisions purported to be summarized and are correct
in all material respects;
(xii) the conditions for use of Form SB-2
have been satisfied with respect to the Registration
Statement;
(xiii) the Common Stock has been approved
for quotation on NASDAQ, subject to official notice
of issuance;
(xiv) the Common Stock has been approved for
listing on the [Boston] Stock Exchange and the
[Philadelphia] Stock Exchange, subject to official
notice of issuance;
(xv) to the knowledge of such counsel, no
person or entity has the right to require
registration of
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shares of Common Stock or other securities of the
Company because of the filing or effectiveness of the
Registration Statement;
(xvi) the Registration Statement has become
effective under the Act. To the knowledge of such
counsel, no Stop Order has been issued and no
proceedings for that purpose have been instituted or
threatened;
(xvii) the Registration Statement, any Rule
430A Prospectus, and the Prospectus, and any
amendment or supplement thereto (other than financial
statements and other financial data and schedules
contained therein, as to which such counsel need
express no opinion), comply as to form in all
material respects with the requirements of the Act
and the Regulations;
(xviii) such counsel has no reason to
believe that any of the Registration Statement, any
Rule 430A Prospectus, or the Prospectus, or any
amendment or supplement thereto (other than financial
statements and other financial data and schedules
which are or should be contained therein, as to which
such counsel need express no opinion), contains any
untrue statement of a material fact or omits to state
a material fact required to be stated therein or
necessary to make the statements therein not
misleading;
(xix) to the knowledge of such counsel,
since the effective date of the Registration
Statement, no event has occurred which should have
been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has
not been set forth in such an amendment or
supplement; and
(xx) nothing has come to the attention of
such counsel that would lead them to believe that the
Registration Statement, at the time it became
effective or at the Closing Date or Additional
Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading or that the Prospectus, at the Closing
Date or Additional Closing Date, as the case may be
(unless the term "Prospectus" refers to a Prospectus
which has been provided to the Underwriter by the
Company for use in connection with the offering of
the Securities which differs from the Prospectus on
file at the Commission at the Closing Date or
Additional Closing Date, as the case may be, in which
case at the time it is first provided to the
Underwriter for such use), or at the Closing Date or
Additional Closing Date, as the case may be, included
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or includes an untrue statement of a material fact or
omitted or omits 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 (in each case other than the financial
statements and supporting schedules and notes thereto
and other financial or statistical information
included therein, as to which no opinion need be
rendered) and such counsel does not know of any
amendment to the Registration Statement required to
be filed;
(xxi) any right of first refusal,
preemptive right, right to compensation, or other
similar right or option, in connection with the
Offering, this Agreement, the Underwriter's Options
or the Consulting Agreement, or any of the
transactions contemplated hereby or thereby known to
such counsel and not contemplated by the Offering,
this Agreement, the Underwriter's Options or the
Consulting Agreement has been effectively waived.
In rendering such opinion, counsel for the Company may rely (A) as to matters
involving the application of laws other than the laws of the United States, the
laws of the State of Delaware and the laws of the State of Virginia, to the
extent counsel for the Company deems proper and to the extent specified in such
opinion, upon an opinion or opinions (in form and substance satisfactory to
counsel for the Underwriter) of other counsel, acceptable to counsel for the
Underwriter, familiar with the applicable laws, in which case the opinion of
counsel for the Company shall state that the opinion or opinions of such other
counsel are satisfactory in scope, form, and substance to counsel for the
Company and that reliance thereon by counsel for the Company and the
Underwriter is reasonable; (B) may rely as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company; and
(C) may rely to the extent they deem proper, upon written statements or
certificates of officers of departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such opinions, statements or certificates
shall be delivered to counsel for the Underwriter.
(c) On or prior to the Closing Date and any
Additional Closing Date, as the case may be, the Underwriter
shall have been furnished such information, documents,
certificates, and opinions as they may reasonably require for
the purpose of enabling them to review the matters referred to
in Section 7(b), and in order to evidence the accuracy,
completeness, or satisfaction of any of the representations,
warranties, covenants, agreements, or conditions herein
contained, or as you may reasonably request.
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(d) At the Closing Date and any Additional Closing
Date, as the case may be, you shall have received a
certificate of the chief executive officer and of the chief
financial officer of the Company, dated the Closing Date or
such Additional Closing Date, as the case may be, to the
effect that the condition set forth in Section 7(a) has been
satisfied, that as of the date of this Agreement and as of the
Closing Date or such Additional Closing Date, as the case may
be, the representations and warranties of the Company
contained herein were and are accurate, and that as of the
Closing Date or such Additional Closing Date, as the case may
be, the obligations to be performed by the Company hereunder
on or prior thereto have been fully performed.
(e) At the time this Agreement is executed and at
the Closing Date and any Additional Closing Date, as the case
may be, you shall have received a letter from ___________,
certified public accountants, dated the date of delivery, and
addressed to the Underwriter, and in form and substance
satisfactory to you, with reproduced copies or signed
counterparts thereof for the Underwriter.
(f) All proceedings taken in connection with the
issuance, sale, transfer, and delivery of the Firm Stock and
the Additional Stock shall be satisfactory in form and
substance to you and to counsel for the Underwriter, and the
Underwriter shall have received from such counsel for the
Underwriter a favorable opinion, dated as of the Closing Date
and the Additional Closing Date, as the case may be, with
respect to such of the matters set forth under Section 7(b),
and with respect to such other related matters, as you may
reasonably request.
(g) The NASD, upon review of the terms of the public
offering of the Firm Stock and the Additional Stock, shall not
have objected to the Underwriter's participation in such
offering.
(h) Prior to or on the Closing Date, the Company
shall have entered into the Underwriter's Option Agreement
with the Underwriter.
(i) Prior to or on the Closing Date, the Company
shall have entered into the Consulting Agreement with
Barington Capital Group, L.P.
(j) Prior to or on the Closing Date, the Company
shall have provided to you copies of the agreements referred
to in Section 2(s).
Any certificate or other document signed by any officer of the
Company and delivered to you or to counsel for the Underwriter shall be deemed
a representation and warranty by such officer individually and by the Company
hereunder to the
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Underwriter as to the statements made therein. If any condition to the
Underwriter's obligations hereunder to be fulfilled prior to or at the Closing
Date or any Additional Closing Date, as the case may be, is not so fulfilled,
you may terminate this Agreement or, if you so elect, in writing waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
8. Indemnification and Contribution. (a) Subject to the
conditions set forth below, the Company agrees to indemnify
and hold harmless the Underwriter, its respective officers,
directors, partners, employees, agents, and counsel, and each
person, if any, who controls the Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all
purposes of this Section 8, but not be limited to, attorneys'
fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation) as
and when incurred arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, any
Rule 430A Prospectus, the Registration Statement, or the
Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto or (B) in any application
or other document or communication (in this Section 8
collectively called an "application") executed by or on behalf
of the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order
to qualify any of the Securities under the "blue sky" or
securities laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon
and in conformity with written information furnished to the
Company as stated in Section 8(b) with respect to any
Underwriter by or on behalf of such Underwriter through the
Underwriter expressly for inclusion in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii)
any breach of any representation, warranty, covenant, or
agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including
liabilities arising under this Agreement.
If any action is brought against the Underwriter or any of its
respective officers, directors, partners, employees, agents, or counsel, or any
controlling persons of the Underwriter (an
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"indemnified party") in respect of which indemnity may be sought against the
Company pursuant to the foregoing paragraph, such indemnified party or parties
shall promptly notify the Company in writing of the institution of such action
(but the failure so to notify shall not relieve the Company from any liability
it may have other than pursuant to this Section 8(a), except to the extent it
may have been prejudiced in any material respect by such failure) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (satisfactory to such indemnified party or parties) and
payment of expenses. Such indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties
unless the employment of such counsel shall have been authorized in writing by
the Company in connection with the defense of such action or the Company shall
not have promptly employed counsel satisfactory to such indemnified party or
parties to have charge of the defense of such action or such indemnified party
or parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written
consent of each indemnified party that is not released as described in this
sentence, settle or compromise any action, or permit a default or consent to
the entry of judgment in or otherwise seek to terminate any pending or
threatened action, in respect of which indemnity may be sought hereunder
(whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify the Underwriter of the commencement of
any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of the Firm Stock or the Additional
Stock, any Preliminary Prospectus, any Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto, or any
application.
(b) The Underwriter agrees to indemnify and hold
harmless the Company, each director of the Company, each
officer of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Underwriter in Section 8(a),
but only with respect to
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statements or omissions, if any, made in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in
any application in reliance upon and in conformity with
written information furnished to the Company as stated in this
Section 8(b) with respect to any Underwriter by or on behalf
of such Underwriter through the Underwriter expressly for
inclusion in any Preliminary Prospectus, any Rule 430A
Prospectus, the Registration Statement, or the Prospectus, or
any amendment or supplement thereto, or in any application, as
the case may be; provided, however, that the obligation of the
Underwriter to provide indemnity under the provisions of this
Section 8(b) shall be limited to the amount which represents
the underwriting discounts received by the Underwriter
hereunder. For all purposes of this Agreement, the amounts of
the selling concession and reallowance set forth in the
Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for
inclusion in any Preliminary Prospectus, any Rule 430A
Prospectus, the Registration Statement, or the Prospectus (as
from time to time amended or supplemented), or any amendment
or supplement thereto, or in any application, as the case may
be. If any action shall be brought against the Company or any
other person so indemnified based on any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereto, or in any application, and in respect of which
indemnity may be sought against any Underwriter pursuant to
this Section 8(b), such Underwriter shall have the rights and
duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given
to the indemnified parties, by the provisions of Section 8(a).
(c) To provide for just and equitable contribution,
if (i) an indemnified party makes a claim for indemnification
pursuant to Section 8(a) or 8(b) (subject to the limitations
thereof) but it is found in a final judicial determination,
not subject to further appeal, that such indemnification may
not be enforced in such case, even though this Agreement
expressly provides for indemnification in such case or (ii)
any indemnified or indemnifying party seeks contribution under
the Act, the Exchange Act, or otherwise, then the Company
(including for this purpose any contribution made by or on
behalf of any director of the Company, any officer of the
Company who signed the Registration Statement, and any
controlling person of the Company), as one entity, and the
Underwriter (including for this purpose any contribution by or
on behalf of an indemnified party), as a second entity, shall
contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, so
that the Underwriter is responsible for the proportion thereof
equal
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to the percentage which the underwriting discount per share of
Firm Stock set forth on the cover page of the Prospectus
represents of the initial public offering price per share set
forth on the cover page of the Prospectus and the Company is
responsible for the remaining portion; provided, however, that
if applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault
of the Company and the Underwriter, in connection with the
facts which resulted in such losses, liabilities, claims,
damages, and expenses shall also be considered. The relative
fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined
by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to
information supplied by the Company or by the Underwriter, and
the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such
statement, alleged statement, omission, or alleged omission.
The Company and the Underwriter agree that it would be unjust
and inequitable if the respective obligations of the Company
and the Underwriter for contribution were determined by pro
rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the
Underwriter and the other indemnified parties were treated as
one entity for such purpose) or by any other method of
allocation that does not reflect the equitable considerations
referred to in this Section 8(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation.
For purposes of this Section 8(c), each person, if any, who
controls the Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act and each officer,
director, partner, employee, agent, and counsel of the
Underwriter shall have the same rights to contribution as such
Underwriter and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall
have signed the Registration Statement, and each director of
the Company shall have the same rights to contribution as the
Company, subject in each case to the provisions of this
Section 8(c). In no case shall the Underwriter be liable or
responsible for any amount in excess of the Underwriting
discount applicable to the Firm Stock purchased by such
Underwriter hereunder. Anything in this Section 8(c) to the
contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or
action effected without its written consent. This Section
8(c) is intended to supersede any right to contribution under
the Act, the Exchange Act, or otherwise.
9. [Reserved]
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10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriter and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any Underwriter or any indemnified
person, or by or on behalf of the Company or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Firm Stock and the Additional Stock to
the Underwriter. In addition, the provisions of Sections 6, 8, 10, 11, and 13
shall survive termination of this Agreement, whether such termination occurs
before or after the Closing Date or any Additional Closing Date.
11. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 9:30
A.M., New York City Time, on the first full business day
following the day on which the Registration Statement becomes
effective or at the time of the initial public offering by the
Underwriter of the Firm Stock, whichever is earlier. The time
of the initial public offering shall mean the time, after the
Registration Statement becomes effective, of the release by
you for publication of the first newspaper advertisement which
is subsequently published relating to the shares or the time,
after the Registration Statement becomes effective, when the
Firm Stock are first released by you for offering by the
Underwriter or dealers by letter or telegram, whichever shall
first occur. You or the Company may prevent this Agreement
from becoming effective without liability of any party to any
other party, except as noted below in this Section 11, by
giving the notice indicated in Section 11(c) before the time
this Agreement becomes effective.
(b) In addition to the right to terminate this
Agreement pursuant to Section 7 hereof, you shall have the
right to terminate this Agreement at any time prior to the
Closing Date or any Additional Closing Date, as the case may
be, by giving notice to the Company if any domestic or
international event, act, or occurrence has materially
disrupted, or in your opinion will in the immediate future
materially disrupt, the securities markets; or if there shall
have been a general suspension of, or a general limitation on
prices for, trading in securities on the New York Stock
Exchange, the Nasdaq SmallCap Market, the American Stock
Exchange, the [Boston] Stock Exchange, or the [Philadelphia]
Stock Exchange or in the over-the-counter market; or if there
shall have been an outbreak of major
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hostilities or other national or international calamity; or if
a banking moratorium has been declared by a state or federal
authority; or if a moratorium in foreign exchange trading by
major international banks or persons has been declared; or if
there shall have been a material interruption in the mail
service or other means of communication within the United
States; or if the Company shall have sustained a material or
substantial loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage, or other calamity or malicious
act which, whether or not such loss shall have been insured,
will, in your opinion, make it inadvisable to proceed with the
offering, sale, or delivery of the Firm Stock or the
Additional Stock, as the case may be; or if there shall have
been such change in the market for securities in general or in
political, financial, or economic conditions as in your
judgment makes it inadvisable to proceed with the offering,
sale, and delivery of the Firm Stock or the Additional Stock,
as the case may be, on the terms contemplated by the
Prospectus.
(c) If you elect to prevent this Agreement from
becoming effective, as provided in this Section 11, or to
terminate this Agreement pursuant to Section 7, or this
Section 11, you shall notify the Company promptly by
telephone, telex, facsimile or telegram, confirmed by letter.
If the Company elects to prevent this Agreement from becoming
effective, as provided in this Section 11, the Company shall
notify you promptly by telephone, telex, facsimile, or
telegram, confirmed by letter.
(d) Anything in this Agreement to the contrary
notwithstanding other than Section 11(e), if this Agreement
shall not become effective by reason of an election pursuant
to this Section 11 or if this Agreement shall terminate or
shall otherwise not be carried out within the time specified
herein by reason of any failure on the part of the Company to
perform any covenant or agreement or satisfy any condition of
this Agreement by it to be performed or satisfied, the sole
liability of the Company to the Underwriter, in addition to
the obligations the Company assumed pursuant to Section 6,
will be to (i) reimburse the Underwriter for such
out-of-pocket expenses (including the fees and disbursements
of their counsel) as shall have been incurred by them in
connection with this Agreement or the proposed offer, sale,
and delivery of the Firm Stock and the Additional Stock, and
the Company agrees to pay promptly upon demand the full amount
thereof to you for the account of the Underwriter less amounts
previously paid to you in reimbursement of such expenses, and
(ii) if the Company has elected to prevent this Agreement from
becoming effective or if you terminate this Agreement pursuant
to Section 7, the Company and Barington Capital Group, L.P.
shall enter into a consulting agreement, substantially in the
form set forth as an exhibit to the Registration Statement,
providing that for
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a period of one year subsequent to such termination, if the
Company or any subsidiary, affiliate or successor to the
Company is involved in any private placement, merger,
acquisition, disposition or other business combination
transaction, or the acquisition, sale or issuance of any
securities joint venture or other similar transaction (any of
the foregoing, a "Transaction"), or enters into an agreement
with respect thereto, the Company shall pay to Barington
Capital Group, L.P. a fee equal to the sum of (i) 5% of the
first five million dollars of consideration paid in any
Transaction, (ii) 4% of the next two million dollars of
consideration paid in any Transaction, (iii) 3% of the next
two million dollars of consideration paid in any Transaction,
(iv) 2% of the next two million dollars of consideration paid
in any Transaction, and (v) 1% of any consideration paid in
any Transaction in excess of eleven million dollars, such fee
to be paid at the closing of the Transaction to which it
relates. The amount of consideration paid in a Transaction
shall include, for purposes of calculating such fee, all forms
of consideration paid by the Company, or any subsidiary or
affiliate, or received by the Company, its stockholders, or
any subsidiary or affiliate, including, but not limited to,
cash, stock or evidences of indebtedness, or any combination
thereof.
(e) Notwithstanding any election hereunder or any
termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Sections
6, 8, 10, and 15 shall not be in any way affected by such
election or termination or failure to carry out the terms of
this Agreement or any part hereof.
12. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and
confirmed by letter, to such Underwriter, to Barington Capital Group, L.P., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx; or if sent
to the Company, shall be mailed, delivered, or telexed or telegraphed and
confirmed by letter, to the Company, 00000 Xxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX
00000, Attention: ______________. All notices hereunder shall be effective
upon receipt by the party to which it is addressed.
13. Parties. You represent that you are authorized to act on
behalf of the parties named in Schedule I hereto, and the Company shall be
entitled to act and rely on any request, notice, consent, waiver, or agreement
purportedly given on behalf of the Underwriter when the same shall have been
given by you on such behalf. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the Underwriter and the Company and the persons
and entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any
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buyer, as such, of the Firm Stock or the Additional Stock), and no other person
shall have or be construed to have any legal or equitable right, remedy, or
claim under or in respect of or by virtue of this Agreement or any provision
herein contained.
14. Construction. This Agreement shall be construed in
accordance with the laws of the State of New York, without giving effect to
conflict of laws. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. Consent to Jurisdiction. The Company irrevocably
consents to the jurisdiction of the courts of the State of New York and of any
federal court located in such State in connection with any action or proceeding
arising out of or relating to this Agreement, any document or instrument
delivered pursuant to, in connection with or simultaneously with this
Agreement, or a breach of this Agreement or any such document or instrument.
In any such action or proceeding, the Company waives personal service or any
summons, complaint or other process and agrees that service thereof may be made
in accordance with Section 12. Within 30 days after such service, or such other
time as may be mutually agreed upon in writing by the attorneys for the parties
to such action or proceeding, the Company shall appear or answer such summons,
complaint or other process.
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If the foregoing correctly sets forth the understanding
between you and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
OBJECTIVE COMMUNICATIONS, INC.
By:
---------------------------------
Name:
Title:
Accepted as of the date first above written.
New York, New York
BARINGTON CAPITAL GROUP, L.P.
By: LNA CAPITAL CORP.,
General Partner
By:
-----------------------------
Xxxx Xxxxxx, Executive Vice-
President
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