OBJECTSOFT CORPORATION
1,250,000 Units
Each Unit Consisting of One Share of Common Stock
and One Redeemable Class A Warrant
UNDERWRITING AGREEMENT
New York, New York
_________ __, 1996
Renaissance Financial Securities Corporation
000 Xxx Xxxxxxx Xxxx - Xxxxx 000
Xxxxxxx, XX 00000
As Representative of the Underwriters
named in Schedule I hereto.
Ladies and Gentlemen:
The undersigned, ObjectSoft Corporation, a Delaware corporation (the
"Company"), hereby confirms its agreement with the underwriters named in
Schedule I hereto (the "Underwriters"), including Renaissance Financial
Securities Corporation (being referred to herein variously as "you" or the
"Representative") and for which you have advised us you have been authorized to
execute this Agreement as Representative, as follows:
1. Purchase and Sale of Securities.
1.1 Firm Securities.
1.1.1 Purchase of Firm Securities. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the several
Underwriters, in the respective amounts set forth opposite their names on
Schedule I hereto, and the Underwriters, severally, and not jointly, agree to
purchase, an aggregate of 1,250,000 units (the "Units") consisting of 1,250,000
shares of the Company's Common Stock, par value $.0001 per share ("Common
Stock"), and 1,250,000 Redeemable Class A Warrants ("Warrant(s)") at a purchase
price of $ _____ per Unit (or $ _______ per Unit net of commissions). Each
Warrant shall be exercisable to purchase one share of Common Stock at an initial
exercise price of $7.80 per share commencing on _______________ (one year after
the Effective Date (as defined hereinafter)) and ending on the five-year
anniversary of the Effective Date. The Units shall each be comprised of
one share of Common Stock and one Warrant and shall be detachable and separately
tradeable immediately upon issuance. The (Units and the shares of Common Stock
and Warrants comprising the Units are referred to herein as the "Firm
Securities").
1.1.2 Payment and Delivery. Delivery and payment for the Firm
Securities shall be made at 10:00 A.M., New York time, on _____________________
, 1996, or at such other time, if any, as permitted under applicable federal and
state securities laws, at the offices of the Representative or at such other
place as shall be agreed upon by the Representative and the Company. The hour
and date of delivery and payment for the Firm Securities are called the "Closing
Date." Payment for the Firm Securities shall be made on the Closing Date at the
Representative's election by certified or bank cashier's check(s) in New York
Clearing House funds, payable to the order of the Company upon delivery to you
of certificates (in form and substance satisfactory to the Representative)
representing the Firm Securities for the respective accounts of the several
Underwriters. The Firm Securities shall be registered in such name or names and
in such authorized denominations as the Representative may request in writing at
least two full business days prior to the Closing Date. The Company will permit
the Representative to examine and package the Firm Securities for delivery at
least one full business day prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Firm Securities except upon tender of payment
by the Underwriters for all the Firm Securities.
1.2 Over-Allotment Option.
1.2.1 Option Securities. For the purposes only of covering any
over-allotments in connection with the distribution and sale of the Firm
Securities, the Representative is hereby granted an option to purchase up to an
additional 187,500 Units (and the shares of Common Stock and Warrants comprising
such Units) from the Company ("Over-allotment Option"). Such additional Units
(and the shares of Common Stock and Warrants comprising such Units) are
hereinafter referred to as the "Option Securities." The purchase price to be
paid for the Option Securities will be the same price per Option Security as the
price per Firm Security set forth in Section 1.1.1 hereof. The Firm Securities
and the Option Securities are, together with the shares of Common Stock issuable
upon exercise of the Warrants, hereinafter referred to collectively as the
"Public Securities."
1.2.2 Exercise of Option. The Over-allotment Option granted
pursuant to Section 1.2.1 hereof may be exercised by the Representative as to
all or any part of the Option Securities (but only in the form of Units) at any
time, from time to time, within forty-five days after the effective date of the
Registration Statement ("Effective Date"). The Representative will not be under
any obligation to purchase any Option Securities prior to the exercise of the
Over-allotment Option. The Over-allotment Option granted hereby may be exercised
by the giving of oral notice to the Company from the Representative, which must
be confirmed by a letter or telecopy setting forth the number of Option
Securities to be purchased, the date and time for delivery of and payment for
the Option Securities and stating that the Option Securities referred to therein
are to be used only for the purpose of covering over-allotments in connection
with the distribution and sale of the Firm Securities. If such notice is given
at least two full business days prior to the Closing Date, the date set forth
therein for such delivery and payment will be the Closing Date. If such notice
is given thereafter, the date
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set forth therein for such delivery and payment will not be earlier than five
full business days after the date of the notice. If such delivery and payment
for the Option Securities does not occur on the Closing Date, the date and time
of the closing for such Option Securities will be as set forth in the notice
(hereinafter the "Option Closing Date"). Upon exercise of the Over-allotment
Option, the Company will become obligated to convey to the Representative, and,
subject to the terms and conditions set forth herein, the Representative will
become obligated to purchase, the number of Option Securities specified in such
notice.
1.2.3 Payment and Delivery. Payment for the Option Securities
will be at the Representative's election by certified or bank cashier's check(s)
in New York Clearing House funds, payable to the order of the Company at the
offices of the Representative or at such other place as shall be agreed upon by
the Representative and the Company upon delivery to you of certificates
representing such securities for the account of the Representative. The
certificates representing the Option Securities to be delivered will be in such
denominations and registered in such names as the Representative requests not
less than two full business days prior to the Closing Date or the Option Closing
Date, as the case may be, and will be made available to the Representative for
inspection, checking and packaging at the aforesaid office of the Company's
transfer agent or correspondent not less than one full business day prior to
such Closing Date.
1.3 Representative's Purchase Option.
1.3.1 Purchase Option. The Company hereby agrees to issue and
sell to the Representative (and/or its designees) on the Closing Date, in
exchange for a check in the amount of $100, an option ("Representative's
Purchase Option") at an initial exercise price of $ _______ per Unit
("Representative's Units") at an initial exercise price of $ _____ per
Representative's Unit. The Representative's Purchase Option is exercisable for a
four-year period commencing on the one-year anniversary of the Effective Date.
The Representative's Purchase Option, the Representative's Units, the shares of
Common Stock (the "Representative's Shares") and the Warrants (the
"Representative's Warrants") constituting the Representative's Units and the
shares of Common Stock issuable upon exercise of the Representative's Warrants
are hereinafter referred to collectively as the "Representative's Securities."
The Public Securities and the Representative's Securities are hereinafter
referred to collectively as the "Securities."
1.3.2 Payment and Delivery. Delivery and payment for the
Representative's Purchase Option in the names and denominations designated by
the Representative shall be made on the Closing Date.
2. Representations and Warranties of the Company. The Company represents
and warrants to the Representative as follows:
2.1 Filing of Registration Statement.
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2.1.1 Pursuant to the Act. The Company has filed with the
Securities and Exchange Commission ("Commission") a registration statement and
an amendment or amendments thereto, on Form SB-2 (Reg. No. 333-10519), including
any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Public Securities under the Securities Act of 1933 ("Act"),
which registration statement and amendment or amendments have been prepared by
the Company in conformity with the requirements of the Act, and the rules and
regulations ("Regulations") of the Commission under the Act. Except as the
context may otherwise require, such registration statement, as amended, on file
with the Commission at the time the registration statement becomes effective
(including the prospectus, financial statements, schedules, exhibits and all
other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to paragraph
(b) of Rule 430A of the Regulations), is hereinafter called the "Registration
Statement," and the form of the final prospectus dated the Effective Date (or,
if applicable, the form of final prospectus filed with the Commission pursuant
to Rule 424(b) or Rule 430A of the Regulations), is hereinafter called the
"Prospectus."
2.1.2 Pursuant to the Exchange Act. The Company has filed with
the Commission a registration statement on Form 8-A (File No. 000-21565)
providing for the registration under the Securities Exchange Act of 1934
("Exchange Act"), of the Public Securities.
2.2 No Stop Orders, Etc. Neither the Commission nor, to the
Company's knowledge, any state regulatory authority has issued any order
preventing or suspending the use of any Preliminary Prospectus or has instituted
or, to the Company's knowledge, threatened to institute any proceedings with
respect to such an order.
2.3 Disclosures in Registration Statement. At the time the
Registration Statement became effective and at all times subsequent thereto up
to the Closing Date:
2.3.1 Securities Act Representation and 10b-5 Representation:
The Registration Statement and the Prospectus will contain, with respect to the
Company, all material statements which are required to be stated therein in
accordance with the Act and the Regulations, and will in all material respects
conform to the requirements of the Act and the Regulations. Neither the
Registration Statement, nor any amendment or supplement thereto, on the
Effective Date, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and that on the Closing Date, the Prospectus
and any amendment or supplement thereto will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of the Regulations) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto, at the time such filing was made,
complied in all material respects with the applicable provisions of the Act and
the Regulations. The representation and warranty made in this Section 2.3.1 does
not apply
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to statements made or statements omitted in reliance upon and in conformity with
written information furnished to the Company by the Underwriters expressly for
use in the Registration Statement or Prospectus or any amendment thereof or
supplement thereto ("Underwriters' Information").
2.3.2 Disclosure of Contracts. The description in the
Registration Statement and the Prospectus of contracts and other documents is
accurate and presents fairly the information required to be disclosed and there
are no contracts or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits to
the Registration Statement which have not been so described or filed. Except as
otherwise disclosed in the Prospectus, each contract or other instrument
(however characterized or described) to which the Company is a party or by which
its property or business is or may be bound or affected and (i) which is
referred to in the Prospectus, or (ii) is material to the business of the
Company has been duly and validly executed, is in full force and effect in all
material respects and is enforceable in accordance with its terms, except (i) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification provision may be limited under federal and state laws, and
(iii) that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be sought. None of such
contracts or instruments has been assigned by the Company and the Company, to
the best of its knowledge, is not in default thereunder and, to the Company's
knowledge, no event has occurred which, with the lapse of time or the giving of
notice, or both, would constitute a default thereunder (except as otherwise
disclosed in the Prospectus). None of the material provisions of such contracts
or instruments violates or will result in a violation of any existing applicable
law, rule, regulation, judgment, order or decree of any governmental agency or
court having jurisdiction over the Company, or any of its respective assets,
including, without limitation, those relating to environmental laws and
regulations, except where such violation will not have a Material Adverse
Effect. For purposes of this Agreement "Material Adverse Effect" shall be
defined as a material adverse effect on the business, properties or financial
condition of the Company.
2.3.3 Prior Securities Transactions. No securities of the
Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by, or under common control
with the Company within the three years prior to the date hereof, except as
disclosed in the Registration Statement and except as to 40,000 shares
transferred by Xxxxx X. X. Xxxxx in private transactions.
2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. At the time the Registration
Statement becomes effective and at all times subsequent thereto, up to the
Closing Date, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise specifically
stated therein, (i) there has been no material adverse change in the condition,
financial or otherwise, or in the results of operation, business or business
prospects of the Company ("Material Adverse Change"), including, but not limited
to, a material loss or interference with its business from
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fire, storm, explosion, flood or other casualty, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, whether or not arising in the ordinary course of business, and (ii)
there have been no transactions entered into by the Company, other than those in
the ordinary course of business, which are material with respect to the
condition, financial or otherwise, or the results of its operations, business or
business prospects.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information given in the Registration Statement and
the Prospectus, and except as may otherwise be indicated or contemplated herein
or therein, the Company has not (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money; or (iii)
declared or paid any dividend or made any other distribution on or in respect to
its capital stock.
2.5 Independent Accountants. Xxxxxxx X. Xxxxxx & Company LLP, whose
reports are filed with the Commission as part of the Registration Statement, are
independent accountants as required by the Act and the Regulations.
2.6 Financial Statements. The financial statements, including the
notes thereto and supporting schedules included in the Registration Statement
and Prospectus, fairly present the financial position and the results of
operations of the Company at the dates and for the periods to which they apply;
and such financial statements have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved except that unaudited interim financial statements are subject to year
end adjustments and may be without notes; and the supporting schedules, if any,
included in the Registration Statement present fairly the information required
to be stated therein.
2.7 Authorized Capital; Options; Etc. The Company had at the date or
dates indicated in the Prospectus duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
Based on the assumptions stated in the Registration Statement and the
Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in the Registration
Statement and the Prospectus, on the Effective Date there are, and on the
Closing Date there will be, no options, warrants, or other rights to purchase or
otherwise acquire any authorized but unissued shares of Common Stock of the
Company or any security convertible into shares of Common Stock of the Company,
or any contracts or commitments to issue or sell shares of Common Stock or any
such options, warrants, rights or convertible securities.
2.8 Valid Issuance of Securities; Etc.
2.8.1 Outstanding Securities. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights of rescission
with respect thereto; and none of such securities were issued in violation of
the preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The outstanding options and warrants
to purchase shares of Common
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Stock constitute the valid and binding obligations of the Company, enforceable
in accordance with their terms, except (i) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) as enforceability of any indemnification provision may be
limited under federal and state laws, and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be sought. The authorized Common Stock and outstanding
options and warrants to purchase shares of Common Stock conform in all material
respects to all statements relating thereto contained in the Registration
Statement and the Prospectus. The offers and sales of the outstanding Common
Stock, options and warrants to purchase shares of Common Stock were at all
relevant times either registered under the Act and registered or qualified under
the applicable state securities or Blue Sky Laws or exempt from such
registration requirements.
2.8.2 Securities Sold Pursuant to this Agreement. The Securities
have been duly authorized and, when issued and paid for, will be validly issued,
fully paid and non-assessable; the Securities are not and will not be subject to
the preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate actions required to
be taken for the authorization, issuance and sale of the Securities have been
duly and validly taken. When issued, the Representative's Purchase Option, the
Representative's Warrants and the Warrants will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
therefor, the number and type of securities of the Company called for thereby
and the Representative's Purchase Option, the Representative's Warrants and the
Warrants are enforceable against the Company in accordance with their respective
terms, except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (ii) as enforceability of any indemnification provision may be
limited under federal and state laws, and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
2.8.3 Series A Preferred Stock. All outstanding shares of the
Company's Series A Preferred Stock will be redeemed at $1.00 per share plus all
accumulated dividends accrued but unpaid on the consummation of the sale of the
Firm Securities and, upon such redemption, such holders of the Series A
Preferred Stock shall have no rights with respect to the Company, and the
Company shall have no obligations to such holders.
2.8.4 Series B Preferred Stock. All outstanding shares of the
Company's Series B Preferred Stock were redeemed by the Company in July 1996,
and the prior holders of the Series B Preferred Stock have no further rights
with respect to the Company and the Company has no obligations to such holders.
2.9 Registration Rights of Third Parties. Except as set forth in the
Prospectus, no holders of any securities of the Company or of any options or
warrants of the Company exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company
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to register any such securities of the Company under the Act or to include any
such securities in a registration statement to be filed by the Company.
2.10 Validity and Binding Effect of Agreements. This Agreement, the
employment agreements with each of Xxxxx X. X. Xxxxx ("Xxxxx") and Xxxxxx Xxxxxx
("Xxxxxx") ("Employment Agreements"), the Representative's Purchase Option and
the Warrant Agreement (as hereinafter defined) have been duly and validly
authorized by the Company and constitute, or when executed and delivered will
constitute, the valid and binding agreements of each of the Company, Xxxxx and
Febish, as the case may be, enforceable against each of them in accordance with
their respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) as enforceability of any indemnification provision may be
limited under the federal and state securities laws, (iii) that the provisions
of confidentiality and non-competition provisions of agreements may be deemed to
violate public policy or be otherwise not enforceable in whole or in part, and
(iv) that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
2.11 No Conflicts, Etc. The execution, delivery, and performance by
the Company of this Agreement, the consummation by the Company of the
transactions herein contemplated and the compliance by the Company with the
terms hereof do not and will not, with or without the giving of notice or the
lapse of time or both, (i) result in a breach of, or conflict with any of the
terms and provisions of, or constitute a default under, or result in the
creation, modification, termination or imposition of any lien, charge or
encumbrance upon any of its property or assets pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or credit agreement or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which it is a party or by which it may be bound
or to which any of its property or assets is subject; (ii) result in any
violation of the provisions of its Certificate of Incorporation or By-Laws;
(iii) violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over it or its operations or any of its properties or business; or
(iv) have a Material Adverse Effect on any permit, license, certificate,
registration, approval, consent, license or franchise concerning it or its
operations; except in the case of (i) or (iii), where such default, breach,
violation or effect, either singly or in the aggregate, would not have a
Material Adverse Effect.
2.12 No Defaults; Violations. Except as described in the Prospectus,
no default exists in the due performance and observance of any term, covenant or
condition of any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other agreement or instrument evidencing
an obligation for borrowed money, or any other material agreement or instrument
to which the Company, or any of its subsidiaries, if any, is a party or by which
the Company may be bound or to which any of the properties or assets of the
Company is subject, except in each case where such default would not have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries, if
any, is in violation of any term or provision of its Certificate of
Incorporation or By-Laws or in violation of any franchise, license, permit,
applicable law, rule, regulation, judgment
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or decree of any governmental agency or court, domestic or foreign, having
jurisdiction over it or its operations, properties or business, except as
described in the Prospectus and except where such violation would not have a
Material Adverse Effect.
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies to own or lease its properties and conduct its
business as described in the Prospectus, and is and has been doing business in
compliance with all such material authorizations, approvals, orders, licenses,
certificates and permits and all federal, state and local laws, rules and
regulations, except where the failure to have such authorizations, approvals,
orders, licenses, certificates or permits to conduct its business in accordance
therewith would not have a Material Adverse Effect.
2.13.2 Transactions Contemplated Herein. The Company has all
corporate power and authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents, authorizations, approvals
and orders required in connection therewith have been obtained. No consent,
authorization or order of, and no filing with, any court, government agency or
other body is required for the valid issuance, sale and delivery of the
Securities pursuant to this Agreement, the Warrant Agreement and the
Representative's Purchase Option, and as contemplated by the Prospectus, except
with respect to applicable federal and state securities laws.
2.14 Title to Property; Insurance. Subject to the qualifications set
forth in the Prospectus, the Company has good and marketable title to, or valid
and enforceable leasehold estates in, all items of real and personal property
(tangible and intangible) owned or lease by it, free and clear of all liens,
encumbrances, claims, security interests, defects and restrictions of any
material nature whatsoever, other than those referred to in the Prospectus,
liens for taxes not yet due and payable and liens of an immaterial nature
arising by operation of law. The Company has insured its properties against loss
or damage by fire, other casualty and other insurance in amounts and on terms as
is usually maintained by similarly situated companies engaged in the same or
similar business.
2.15 Litigation; Governmental Proceedings. Except as set forth in the
Prospectus, there is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding pending or, to the
Company's knowledge, threatened against, or involving the properties or business
of the Company which if determined adversely to the Company, might have a
Material Adverse Effect or which question the validity of the capital stock of
the Company or this Agreement or of any action taken or to be taken by the
Company pursuant to, or in connection with, this Agreement. There are no
outstanding orders, judgments or decrees of any court, governmental agency or
other tribunal naming the Company and enjoining the Company from taking, or
requiring the Company, to take, any action, or to which the Company, or its
respective properties or business, is bound or subject.
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2.16 Good Standing. The Company has been duly organized and is
validly existing as a corporation and is in good standing under the laws of its
state of incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which ownership or
leasing of any properties or the character of its operations requires such
qualification or licensing, except where the failure to qualify would not have a
Material Adverse Effect.
2.17 Taxes. The Company has filed all returns (as hereinafter
defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof. The Company has
paid all taxes (as hereinafter defined) shown as due on such returns that were
filed and has paid all taxes imposed on or assessed against it, except where the
failure to so pay would not have a Material Adverse Effect. The provisions for
taxes payable, if any, shown on the financial statements filed with or as part
of the Registration Statement are sufficient for all accrued and unpaid taxes,
whether or not disputed, and for all periods to and including the dates of such
financial statements. Except as disclosed in writing to the Underwriters, (i) no
issues have been raised (and are currently pending) by any taxing authority in
connection with any of the returns or taxes asserted as due from the Company,
and (ii) no waivers of statutes of limitation with respect to the returns or
collection of taxes have been given by or requested from the Company. The term
"taxes" mean all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments, or charges of any kind whatever,
together with any interest and any penalties, additions to tax, or additional
amounts with respect thereto. The term "returns" means all returns,
declarations, reports, statements, and other documents required to be filed in
respect of taxes.
2.18 Employee Options. Except as disclosed in the Prospectus, no
shares of Common Stock are eligible for sale pursuant to Rule 701 promulgated
under the Act in the 12-month period following the Effective Date.
2.19 Transactions Affecting Disclosure to NASD. Except as disclosed
in the letters from Stursberg & Xxxxx to the NASD (as defined below), dated
_____________________ and ______________________ (copies of which have been
provided to and reviewed by the Company):
2.19.1 Finder's Fees. Except as disclosed in the Prospectus, the
Company has not entered into any agreements, nor made any payments for, nor is
aware of any claims for, arrangements or understandings for, services in the
nature of a finder's or origination fee with respect to the sale of the
Securities hereunder.
2.19.2 Payments Within Twelve Months. Except as set forth in the
Registration Statement, the Company has not made any direct or indirect payments
(in cash, securities or otherwise) to (i) any person, as a finder's fee,
investing fee or otherwise, in consideration of such person raising capital for
the Company or introducing to the Company persons who provided capital to the
Company, (ii) to any member of the National Association of Securities Dealers,
Inc. ("NASD"),
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or (iii) to any person or entity that has any direct or indirect affiliation or
association with any NASD member, within the twelve month period prior to the
date on which the Registration Statement was filed with the Commission ("Filing
Date") or thereafter, other than payments to the Representative.
2.19.3 Use of Proceeds. None of the net proceeds of the offering
will be paid by the Company to any NASD member or any affiliate or associate of
any NASD member, except as set forth in the Prospectus or as specifically
authorized herein.
2.19.4 Insiders' NASD Affiliation. Except as set forth in the
Prospectus, no officer or director of the Company or owner of five (5%) percent
or more of any of the Company's Common Stock has any direct or indirect
affiliation or association with any NASD member. The Company will advise the
Representative and the NASD if the Company becomes aware that any 5% or greater
stockholder of the Company is or becomes an affiliate or associated person of an
NASD member participating in the distribution.
2.20 Foreign Corrupt Practices Act. Neither the Company nor, to the
best of the Company's knowledge, any of its officers, directors, employees,
agents or any other person acting on behalf of the Company has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is, or may be in a position to help or
hinder the business of the Company (or assist it in connection with any actual
or proposed transaction) which (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (ii) if
not given in the past, might have had a Materially Adverse Effect on the assets,
business or operations of the Company as reflected in any of the financial
statements contained in the Prospectus or (iii) if not continued in the future,
might have a Material Adverse Effect on the assets, business, operations or
prospects of the Company. The Company's internal accounting controls and
procedures are sufficient to cause the Company to comply with the Foreign
Corrupt Practices Act of 1977, as amended.
2.21 Nasdaq Eligibility. As of the Effective Date, the Public
Securities have been approved for quotation on the Nasdaq SmallCap Market.
2.22 Intangibles. Subject to the qualifications set forth in the
Prospectus, the Company owns or possesses the requisite licenses or rights to
use all trademarks, service marks, service names, trade names, patents and
patent applications, copyrights and other rights (collectively, "Intangibles")
described as being licensed to or owned by it in the Registration Statement. The
Intangibles which have been registered by the Company, if any, in the United
States Patent and Trademark Office have been fully maintained and are in full
force and effect. There is no claim or action by any person pertaining to, or
proceeding pending or to the best knowledge of the Company, threatened and the
Company has not received any notice of conflict with the asserted rights of
others which challenges its rights as described in the Prospectus with respect
to any Intangibles used in the conduct of its
11
business except as described in the Prospectus. The Company has not received
notice of any claim that the Intangibles and the Company's current products,
services and processes infringe on any intangibles held by any third party. To
the Company's knowledge, no others have infringed upon the Intangibles of the
Company.
2.23 Relations with Employees.
2.23.1 Employee Matters. The Company is in compliance in all
material respects with all federal, state and local laws and regulations
respecting the employment of its employees and employment practices, terms and
conditions of employment and wages and hours relating thereto, except where the
failure to so comply would not have a Material Adverse Effect. There are no
pending investigations involving the Company by the U.S. Department of Labor or
any other governmental agency responsible for the enforcement of such federal,
state or local laws and regulations. There is no unfair labor practice charge or
complaint against the Company pending before the National Labor Relations Board
or any strike, picketing, boycott, dispute, slowdown or stoppage pending or,
threatened against or involving the Company or any predecessor entity, and none
has ever occurred. No question concerning representation exists respecting the
employees of the Company and no collective bargaining agreement or modification
thereof is currently being negotiated by the Company. No grievance or
arbitration proceeding is pending under any expired or existing collective
bargaining agreements, if any, of the Company.
2.23.2 Employee Benefit Plans. Other than as set forth in the
Registration Statement, the Company does not maintain, sponsor or contribute to,
or is it required to contribute to, any program or arrangement that is an
"employee" pension benefit plan," an "employee welfare benefit plan," or a
"multi-employer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA Plans"). The Company has not, at any time, maintained
or contributed to a defined benefit plan, as defined in Section 3(35) of ERISA.
If the Company does maintain or contribute to a defined benefit plan, any
termination of the plan on the date hereof would not give rise to liability
under Title IV of ERISA. No ERISA Plan (or any trust created thereunder) has
engaged in a "prohibited transaction" within the meaning of Section 406 of ERISA
or Section 4975 of the Internal Revenue Code of 1986, as amended ("Code"), which
could subject the Company to any tax penalty for prohibited transactions and
which has not adequately been corrected. Any ERISA Plan is in compliance with
all material reporting, disclosure and other requirements of the Code and ERISA
as they relate to any such ERISA Plan. Determination letters have been received
from the Internal Revenue Service with respect to each ERISA Plan which is
intended to comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified thereunder. The Company has never completely
or partially withdrawn from a "multi-employer plan."
2.24 Officers' Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
12
2.25 Warrant Agreement. At the Closing (as hereinafter defined) the
Company will enter into a warrant agreement with respect to the Warrants and the
Representative's Warrants substantially in the form filed as an exhibit to the
Registration Statement ("Warrant Agreement") with Continental Stock Transfer &
Trust Company, in form and substance satisfactory to the Representative,
providing for, among other things, no redemption of the Warrants without the
giving of prior written notice to the Representative and in accordance with the
Warrant Agreement for the payment of a warrant solicitation fee, if applicable,
as contemplated by Section 3.10 hereof.
2.26 Agreements With Insiders and Others. The Company has caused to
be duly executed lock-up agreements, in substantially the form presented to the
Representative, pursuant to which (i) Messrs. Xxxxx and Febish agree not to sell
any securities of the Company for eighteen (18) months following the Effective
Date without the prior written consent, (ii) certain persons, as described in
the Prospectus, who beneficially own or hold the outstanding Common Stock or
Warrants or options to purchase Common Stock of the Company agree not to sell
any securities of the Company owned by them (either pursuant to Rule 144 of the
Regulations or otherwise) for a period of nine (9) months following the
Effective Date except with the consent of the Representative and (iii) certain
persons who beneficially own or hold warrants to purchase shares of Common Stock
and/or shares of Common Stock purchased from the Company in the Bridge Offering
or the July 1996 Offering, as defined in the Prospectus agree not to sell any
Warrants or shares of Common Stock owned by them (either pursuant to Rule 144 of
the Regulations or otherwise) for a period of twelve (12) months following the
Effective Date except with the consent of the Representative.
2.27 Employment Agreements. The Company has entered into an
Employment Agreement with each of Messrs. Xxxxx and Xxxxxx in substantially the
same form as set forth as exhibits to the Registration Statement, for a term
commencing on July 1, 1996 and ending on December 31, 2001.
2.28 Representative's Purchase Option. At the Closing, the Company
will execute and deliver the Representative's Purchase Option to the
Representative substantially in the form filed as an exhibit to the Registration
Statement.
3. Covenants of the Company. The Company covenants and agrees as follows:
3.1 Amendments to Registration Statement. The Company will deliver
to the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the Representative
shall reasonably object.
13
3.2 Federal Securities Laws.
3.2.1 Compliance. During the time when (i) a Prospectus is
required to be delivered under the Act so far as necessary to permit the
continuance of sales or of dealings in the Public Securities; and (ii) a
prospectus (a "Warrant Exercise Prospectus") is required to be delivered under
the Act so far as necessary to permit the exercise of the Warrants,
Representative's Warrants and the Representative's Purchase Option; the Company
will use all reasonable efforts to comply with all requirements imposed upon it
by the Act, the Regulations and the Exchange Act and by the regulations under
the Exchange Act, as from time to time in force, in accordance with the
provisions hereof and as set forth in the Prospectus. If at any time when a
Prospectus or a Warrant Exercise Prospectus relating to the Public Securities or
the Representative's Securities is required to be delivered under the Act and,
any event shall have occurred as a result of which, in the opinion of counsel
for the Company or counsel for the Underwriters, such Prospectus, as then
amended or supplemented, includes an untrue statement of material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representative promptly and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of the Act.
3.2.2 Filing of Final Prospectus. The Company will comply with
the requirements of Rule 424(b) or Rule 430A of the Regulations, as the case may
be, with respect to filing the Prospectus with the Commission.
3.2.3 Exchange Act Registration. For a period of five years from
the Effective Date, the Company will use its best efforts to maintain the
registration of the Common Stock and the Warrants under the provisions of the
Exchange Act.
3.3 Blue Sky Filing. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided 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. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees that such
action is not at the time necessary or advisable, use all reasonable efforts to
file and make such statements or report at such times as are or may be required
by the laws of such jurisdiction.
3.4 Delivery to Underwriters of Prospectuses. The Company will
deliver such number of (i) Prospectuses to the Underwriters and (ii) Warrant
Exercise Prospectuses to the Warrantholders as needed, without charge, from time
to time during the period when such prospectuses are required to be delivered
under the Act. Additionally, the Company will deliver, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
two conformed Registration
14
Statements, including exhibits, and all post-effective amendments thereto and
copies of all exhibits filed therewith or incorporated therein by reference.
3.5 Events Requiring Notice to Underwriters. The Company will notify
the Representative immediately and confirm the notice in writing (i) filing of
any post-effective amendment to the Registration Statement, (ii) of the issuance
by the Commission of any stop order or of the initiation, or the threatening, of
any proceeding for that purpose, (iii) of the issuance by any state securities
commission of any proceedings for the suspension of the qualification of the
Public Securities for offering of sale in any jurisdiction or of the initiation,
or the threatening, of any proceeding for that purpose, (iv) of the mailing and
delivery to the Commission for filing of any amendment or supplement to the
Registration Statement or Prospectus, (v) of the receipt of any comments or
request for any additional information from the Commission, and (vi) of the
happening of any event during the period described in Section 3.4 hereof which,
in the judgment of the Company, makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue or which requires the making
of any changes in the Prospectus in order to make the statements therein, in
light of the circumstances under which they were made, not misleading or which
requires the making of any changes in the Registration Statement in order to
make the statements therein not misleading. If the Commission or any state
securities commission shall enter a stop order or suspend such qualification at
any time, the Company will make every reasonable effort to obtain promptly the
lifting of such order.
3.6 Review of Financial Statements. For a period of five years from
the Effective Date (provided that during such period the Securities of the
Company are registered under Section 12 of the Exchange Act), the Company, at
its expense, shall cause its regularly engaged independent certified public
accountants to review (but not audit) the Company's financial statements for
each of the first three fiscal quarters prior to the announcement of quarterly
financial information, the filing of the Company's Form 10-Q quarterly report
and the mailing of quarterly financial information to stockholders.
3.7 Unaudited Financials. The Company will furnish to the
Representative as early as practicable subsequent to the date hereof and at
least two full business days prior to the Closing Date, a copy of the latest
available unaudited interim financial information of the Company (which in no
event shall be as of a date more than sixty days prior to the Effective Date)
which have been read by the Company's independent accountants, as stated in
their letter to be furnished pursuant to Section 4.3 hereof.
3.8 Secondary Market Trading and Standard & Poor's. The Company will
take all necessary and appropriate actions to achieve accelerated publication in
Standard and Poor's Corporation Records Corporate Descriptions (as soon as
practicable after the Effective Date) and to maintain such publication with
updated quarterly information for a period of five years from the Effective
Date, including the payment of any necessary fees and expenses. The Company
shall take such action as may be reasonably requested by the Representative to
obtain a secondary market
15
trading exemption in such States as may be requested by the Representative,
including the payment of any necessary fees and expenses.
3.9 Nasdaq Maintenance. For a period of five years from the date
hereof, the Company will use its best efforts to maintain the quotation by the
Nasdaq SmallCap Market of the Common Stock and, if outstanding, the Warrants.
3.10 Warrant Solicitation and Registration of Common Stock Underlying
the Warrants.
3.10.1 Warrant Solicitation Fees. The Company hereby engages the
Representative on a non-exclusive basis, as its agent for the solicitation of
the exercise of the Warrants and the additional warrants being concurrently
registered under the Registration Statement. The Company, at its cost, will (i)
assist the Representative with respect to such solicitation, if requested by the
Representative and will (ii) provide the Representative, and direct the
Company's transfer and warrant agent to provide to the Representative, lists of
the record and, to the extent known, beneficial owners of the Warrants.
Commencing one year from the Effective Date, the Company will pay the
Representative a commission of five percent of the Warrant exercise price for
each Warrant exercised, payable on the date of such exercise, on the terms
provided for in the Warrant Agreement, if allowed under the rules and
regulations of the NASD and only if the Representative has provided bona fide
services to the Company in connection with the exercise of such Warrant. In
addition to soliciting, either orally or in writing, the exercise of Warrants,
such services may also include disseminating information, either orally or in
writing, to the Warrantholders about the Company or the market for the Company's
securities, and assisting in the processing of the exercise of Warrants. The
Representative may engage sub-agents in its solicitation efforts. The Company
will disclose the arrangement to pay such solicitation fees to the
Representative in the Warrant Exercise Prospectus.
3.11 [Reserved]
3.12 Reports to the Representative.
3.12.1 Periodic Reports, Etc. For a period of five years from
the Effective Date, the Company will furnish to the Representative copies of
such financial statements and other periodic and special reports as the Company
from time to time furnishes generally to holders of any class of its securities,
and promptly furnish to the Representative (i) a copy of each periodic report
the Company shall be required to file with the Commission, (ii) a copy of every
press release released by the Company, (iii) copies of each Form SR, (iv) a copy
of each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by
the Company, and (v) such additional documents and information with respect to
the Company and the affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request.
3.12.2 Transfer Sheets and Weekly Position Listings. For a
period of five years from the Closing Date, the Company will furnish to the
Representative at the Company's sole expense such transfer sheets and position
listings of the Company's securities as the Representative may request,
16
including the daily, weekly and monthly consolidated transfer sheets of the
transfer agent of the Company and the weekly security position listings of the
Depository Trust Co.
3.13 [Reserved]
3.14 Application of Net Proceeds. The Company will apply the net
proceeds from the offering received by it in a manner consistent with the
application described under the caption "USE OF PROCEEDS" in the Prospectus.
3.15 Payment of Expenses.
3.15.1 General Expenses. The Company hereby agrees to pay all
expenses incident to the performance of the obligations of the Company under
this Agreement, including but not limited to (i) the preparation, printing,
filing, delivery and mailing (including the payment of postage with respect to
such mailing) of the Registration Statement, the Prospectus and the Preliminary
Prospectuses and the printing and mailing of this Agreement and related
documents, including the cost of all copies thereof and any amendments thereof
or supplements thereto supplied to the Representative in quantities as may be
required by the Representative, (ii) the printing, engraving, issuance and
delivery of the shares of Common Stock, the Warrants and the Representative's
Purchase Option, including any transfer or other taxes payable thereon, (iii)
the qualification of the Public Securities and under state or foreign securities
or Blue Sky laws, including the filing fees under such Blue Sky laws, the costs
of printing and mailing the "Preliminary Blue Sky Memorandum," and all
amendments and supplements thereto, fees of Representative's Blue Sky counsel,
which fees shall not exceed an aggregate of $15,000 for ten states, $1,500 for
each additional state and a total of not more than $40,000, and disbursements of
such counsel, and fees and disbursements of local counsel, if any, retained for
such purpose and approved by the Company, and a one-time fee of $2,500 payable
to the Representative's counsel for the preparation of the Secondary Market
Trading Survey, (iv) costs associated with applications for assignments of a
rating of the Public Securities by qualified rating agencies, (v) filing fees,
costs and expenses (including fees and disbursements for the Representative's
counsel) incurred in registering the offering with the NASD, (vi) costs not to
exceed, in the aggregate, $10,000 for placing "tombstone" advertisements in The
Wall Street Journal, The New York Times and a third publication which may be
selected by the Representative and transaction lucite cubes or similar
commemorative items in a style and quantity as reasonably requested by the
Representative, (vii) fees and disbursements of the transfer and warrant agent,
(viii) the Company's expenses associated with "due diligence" meetings arranged
by the Representative, (ix) the preparation, binding and delivery of four sets
of transactions "bibles," in form and style satisfactory to the Representative,
(x) any listing of the Common Stock and the Warrants on Nasdaq SmallCap Market,
as the case may be, or any listing in Standard & Poor's and (xi) all other costs
and expenses incident to the performance of its obligations hereunder. Since an
important part of the public offering process is for the Company to
appropriately and accurately describe both the background of the principals of
the Company and the Company's competitive position in its industry, the Company
will pay for an investigative search firm of the Representative's choice to
conduct an investigation of principals of the Company mutually selected by the
Representative and the Company (this amount
17
will be credited against the Representative's non-accountable expense allowance
if the offering is consummated as provided herein). The Representative may
deduct from the net proceeds of the offering payable to the Company on the
Closing Date, or the Option Closing Date, if any, the expenses set forth herein
to be paid by the Company to the Representative and/or to third parties.
3.15.2 Non-Accountable Expenses. The Company further agrees
that, in addition to the expenses payable pursuant to Section 3.15.1, it will
pay to the Representative a non-accountable expense allowance equal to three
(3%) percent of the gross proceeds received by the Company from the sale of the
Public Securities, of which $50,000 has been paid to date, and the Company will
pay the balance on the Closing Date and any additional monies owed attributable
to the Option Securities or otherwise on the Option Closing Date by certified or
bank cashier's check or, at the election of the Representative, by deduction
from the proceeds of the offering contemplated herein. If the offering
contemplated by this Agreement is not consummated for any reason whatsoever then
the Company's liability for payment to the Representative of the non-accountable
expense allowance shall be equal to the sum of the Representative's actual
out-of-pocket expenses (including, but not limited to, counsel fees, "roadshow"
and due diligence expenses). The Representative shall retain such part of the
non-accountable expense allowance previously paid as shall equal its actual
out-of-pocket expenses, not to exceed $50,000, except in the case of fraud or
willful misconduct on the part of the Company in which event, if the amount
previously paid is insufficient to cover such actual out-of-pocket expenses, the
Company shall remain liable for and promptly pay any other actual out-of-pocket
expenses. If the amount previously paid exceeds the amount of the actual
out-of-pocket expenses, the Representative shall promptly remit to the Company
any such excess.
3.16 [Reserved]
3.17 [Reserved]
3.18 Stabilization. Neither the Company, nor, to its knowledge, any
of its employees, directors or stockholders has taken or will take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Public Securities.
3.19 Internal Controls. The Company maintains and will continue to
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are recorded
as necessary in order to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.20 [Reserved]
18
3.21 Transfer Agent. The Company shall retain Continental Stock
Transfer & Trust Company as its transfer agent for the Common Stock and the
Warrants. For a period of one year following the Effective Date, the Company
will not switch transfer agents without the Representative's consent, which
shall not be unreasonably withheld.
3.22 Sale of Securities. To the extent that the Company is legally
permitted to do so, it shall not permit or cause a private or public sale or
private or public offering of any of its securities (in any manner, including
pursuant to Rule 144 under the Act) owned nominally or beneficially by the
officers, directors and shareholders owning beneficially more than one (1%)
percent of the outstanding shares of Common Stock of the Company (the
"Insiders") if such offering or sale would be in violation of the Insider's
"lock-up" agreement with the Representative.
4. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Securities, as provided herein, shall
be subject to the continuing accuracy of the representations and warranties of
the Company as of the date hereof and as of each of the Closing Date and the
Option Closing Date, if any, to the accuracy of the statements of officers of
the Company made pursuant to the provisions hereof and to the performance by the
Company of its obligations hereunder and to the following conditions:
4.1 Regulatory Matters.
4.1.1 Effectiveness of Registration Statement. The Registration
Statement shall have become effective not later than 5:00 P.M., New York time,
on the date of this Agreement (or at such later date or time as to which you may
agree in writing). At each of the Closing Date and the Option Closing Date, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for the purpose shall have been instituted or
shall be pending or contemplated by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of Stursberg & Xxxxx, counsel to the Underwriters.
4.1.2 NASD Clearance. By the Closing Date, the Representative
shall have received clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriters as described in the Registration
Statement.
4.1.3 No Blue Sky Stop Orders. No order suspending the sale of
the Securities in any jurisdiction designated by you pursuant to Section 3.3
hereof shall have been issued either on the Closing Date or the Option Closing
Date, and no proceedings for that purpose shall have been instituted or shall be
contemplated.
4.2 Company Counsel Matters.
4.2.1 Opinion of Counsel. On the Closing Date, the Underwriters
shall have received the favorable opinion of Xxxxxx Xxxxxx Flattau & Klimpl, LLP
("PCF&K"), counsel to the Company,
19
dated the Closing Date, addressed to the Representative, and in form and
substance (consistent with the provisions set forth below) satisfactory to
Stursberg & Xxxxx, counsel to the Underwriters, to the effect that:
(i) The Company has been duly organized and is validly existing
as a corporation and is in good standing under the laws of its state of
incorporation and is duly qualified and licensed and in good standing as a
foreign corporation in each jurisdiction in which it owns or leases any real
property or the character of its operations requires such qualification or
licensing, except where the failure to qualify would not have a Material Adverse
Effect.
(ii) The Company has all requisite corporate power and authority
to own or lease its properties and conduct its business as described in the
Prospectus. The Company has all corporate power and authority to enter into this
Agreement and to carry out the provisions and conditions hereof. To the best of
such counsel's knowledge, no consents, approvals, authorizations or orders of,
and no filing with any court or governmental agency or body (other than such as
may be required under the Act and applicable Blue Sky laws), is required for the
valid authorization, issuance, sale and delivery of the Securities and the
consummation of the transactions and agreements contemplated by this Agreement,
the Warrant Agreement and the Representative's Purchase Option, other than all
such authorizations, approvals, consents, orders, registrations, licenses and
permits which have been duly obtained and are in full force and effect and have
been disclosed to the Underwriters and other than the continuing effectiveness
of the Registration Statement and the delivery of the Prospectus as contemplated
therein.
(iii) All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
to the best of such counsel's knowledge the holders thereof have no rights of
rescission with respect thereto, except as may have been previously disclosed to
the Representative, and to the best of such counsel's knowledge none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the
Company. The outstanding options and warrants to purchase shares of Common Stock
constitute the valid and binding obligations of the Company, enforceable in
accordance with their terms. The offers and sales of the outstanding Common
Stock and options and warrants to purchase shares of Common Stock were at all
relevant times either registered under the Act or exempt from such registration
requirements. The authorized and outstanding capital stock of the Company is as
set forth under the caption "Capitalization" in the Prospectus.
(iv) The Securities have been duly authorized and, when issued
and paid for, will be validly issued, fully paid and non-assessable. To the best
of such counsel's knowledge, the Securities are not and will not be subject to
the preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. All corporate action required to be
taken for the authorization, issuance and sale of the Securities has been duly
and validly taken. When issued, the Representative's Purchase Option, the
Representative's Warrants and the Warrants will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof
20
and payment therefor, the number and type of securities of the Company called
for thereby and such Warrants, the Representative's Purchase Option, and the
Representative's Warrants, when issued, in each case, will be enforceable
against the Company in accordance with their respective terms, except (a) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (b) as enforceability of any
indemnification provision may be limited under federal and state laws, and (c)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefore may be brought. The
certificates representing the Securities are in due and proper form.
(v) To such counsel's knowledge, except as set forth in the
Prospectus, no holders of any securities of the Company or of any options,
warrants or securities of the Company exercisable for or convertible or
exchangeable into securities of the Company have the right to require the
Company to register any such securities of the Company under the Act or to
include any such securities in a registration statement to be filed by the
Company.
(vi) To such counsel's knowledge, there is no claim or action by
any person pertaining to, or proceeding, pending threatened, which challenges
the rights of the Company, as described in the Prospectus, with respect to any
Intangibles used in the conduct of its business (including without limitation
any such licenses or rights described in the Prospectus as being owned or
possessed by the Company).
(vii) This Agreement, the Warrant Agreement and the
Representative's Purchase Option have each been duly and validly authorized and,
when executed and delivered by the Company, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except (a) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (b) as enforceability of any indemnification provisions may be
limited under the federal and state securities laws, and (c) that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(viii) The execution, delivery and performance by the Company of
this Agreement, the Representative's Purchase Option and the Warrant Agreement,
the issuance and sale of the Securities, the consummation of the transactions
contemplated hereby and thereby and the compliance by the Company with the terms
and provisions hereof and thereof, do not and will not, with or without the
giving of notice or the lapse of time, or both, (a) to such counsel's knowledge,
conflict with, or result in a breach of, any of the terms or provisions of, or
constitute a default under, or result in the creation or modification of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of any of the Company pursuant to the terms of, any material mortgage,
deed of trust, note, indenture, loan, contract, commitment or other material
agreement or instrument, to which it is a party or by which it or any of its
properties or assets may be bound, (b) result in any violation of the provisions
of the Company's Certificate of Incorporation or By-Laws,
21
(c) to such counsel's knowledge, violate any statute or any material judgment,
order or decree, rule or regulation applicable to the Company of any court,
domestic or foreign, or of any federal, state or other regulatory authority or
other governmental body having jurisdiction over any of the Company's or its
properties or assets, or (d) to such counsel's knowledge, have a Material
Adverse Effect on any material permit, certification, registration, approval,
consent, license or franchise of the Company.
(ix) The Registration Statement and the Prospectus and any
post-effective amendments or supplements thereto (other than the financial
statements, schedules and data included therein, as to which no opinion need be
rendered) comply as to form in all material respects with the requirements of
the Act and Regulations. The Securities and all other securities issued or
issuable by the Company conform in all respects to the description thereof
contained in the Registration Statement and the Prospectus. The descriptions in
the Registration Statement and the Prospectus of statutes, regulations,
government classifications, contracts and other documents have been reviewed by
us, and, based upon such review, are accurate in all material respects and
present fairly the information required to be disclosed. To such counsel's
knowledge, no statute or regulation or legal or governmental proceeding required
to be described in the Prospectus is not described as required, nor are any
contracts or documents known to counsel, of a character required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement not so described or filed as required.
(x) Counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants for the Company and representatives of the Representative at which
the contents of the Registration Statement, the Prospectus and related matters
were discussed and although such counsel is not passing upon and does not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as otherwise set
forth in this opinion), no facts have come to the attention of such counsel
which lead them to believe that either the Registration Statement or any
amendment or supplement thereto, as of the date of such opinion, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(it being understood that such counsel need express no opinion with respect to
the financial statements and schedules and other financial and statistical data
or any technical data included in the Registration Statement or Prospectus), and
that on the Closing Date, the Prospectus and any amendment or supplement thereto
will contain any untrue statement or a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(xi) The Registration Statement is effective under the Act, and,
to such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act or applicable state
securities laws.
22
(xii) To such counsel's knowledge, except as set forth in the
Prospectus, there is no action, suit or proceeding before or by any court of
governmental agency or body, domestic or foreign, now pending, or threatened
against the Company, which might result in any material and adverse change in
the condition (financial or otherwise), business or prospects of the Company, or
might materially and adversely affect the properties or assets thereof.
Unless the context clearly indicates otherwise, the term "Company" as
used in this Section 4.2.1 shall include each subsidiary, if any, of the
Company. The opinion of counsel for the Company and any opinion relied upon by
such counsel for the Company shall include a statement to the effect that it may
be relied upon by counsel for the Representative.
4.2.2 [Reserved]
4.2.3 Option Closing Date Opinion of Counsel. On any Option
Closing Date, the Underwriters shall have received the favorable opinions of
PCF&K, counsel to the Company, dated the Option Closing Date addressed to the
Representative and in the form and substance (consistent with the provisions set
forth herein) satisfactory to Stursberg & Xxxxx, counsel to the Underwriters,
which opinion shall be substantially the same in scope and substance as the
opinion you received on the Closing Date, except that such opinion, where
appropriate, shall cover the Option Securities rather than the Firm Securities.
4.2.4 Reliance. In rendering such opinion, such counsel may rely
(i) as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent such
counsel deems proper and to the extent specified in such opinion, if at all,
upon an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' counsel) of other counsel reasonably acceptable to Underwriters'
counsel, familiar with the applicable laws, and (ii) as to matters of fact, to
the extent they deem proper, on certificates or other written statements of
officers of departments of various jurisdiction having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to
Underwriters' counsel if requested. The opinion of counsel for the Company shall
include a statement to the effect that it may be relied upon by counsel for the
Underwriters in its opinion delivered to the Underwriters.
4.2.5 Secondary Market Trading Survey. On the Effective Date the
Underwriters shall have received the Secondary Market Trading Survey.
4.3 Cold Comfort Letter. At the time this Agreement is executed and
at each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representative and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to Stursberg
& Xxxxx, counsel for the Underwriters, from Xxxxxxx X. Xxxxxx & Company LLP
dated as of the date of this Agreement and as of the Closing Date and the Option
Closing Date.
23
4.4 Officers' Certificates.
4.4.1 Officers' Certificate. At each of the Closing Date and the
Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Chairman of the Board or the President,
Chief Financial Officer and the Secretary of the Company, dated the Closing Date
or the Option Closing Date, as the case may be, respectively, to the effect that
the Company has performed or complied with by the Company prior to and as of the
Closing Date, or the Option Closing Date, as the case may be, and that the
conditions set forth in Section 4.5 hereof have been satisfied as of such date
and that, as of closing Date and the Option Closing Date, as the case may be,
the representations and warranties of the Company set forth in Section 2 hereof
are true and correct. In addition, the Representative will have received a
certificate signed by the Chairman of the Board of the Company in connection
with information supplied by the Company to counsel for the Underwriters to be
supplied to state securities commissions.
4.4.2 Secretary's Certificate. At each of the Closing Date and
the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company, dated the
Closing Date or the Option Closing Date, as the case may be, respectively,
certifying (i) that the By-Laws and Certificate of Incorporation of the Company
are true and complete, have not been modified and are in full force and effect,
(ii) that the resolutions relating to the public offering contemplated by this
Agreement are in full force and effect and have not been modified, (iii) all
correspondence between the Company or its counsel and the Commission, (iv) all
correspondence between the Company or its counsel and the NASD concerning
inclusion on Nasdaq and (v) as to the incumbency of the officers of the Company.
The documents referred to in such certificate shall be attached to such
certificate.
4.5 No Material Changes. Prior to and on each of the Closing Date
and the Option Closing Date, if any, (i) there shall have been no Material
Adverse Change since the Effective Date, (ii) the Company shall not be in
default under any provision of any instrument relating to any outstanding
indebtedness which default would have a Material Adverse Effect, (iii) no
material amount of the assets of the Company shall have been pledged or
mortgaged, except as set forth in or contemplated by the Registration Statement
and Prospectus, (iv) no action suit or proceeding, at law or in equity, shall
have been pending or threatened against the Company, or affecting any of its
property or business before or by any court or federal or state commission,
board or other administrative agency wherein an unfavorable decision, ruling or
finding may have a Materially Adversely Effect, except as set forth in the
Registration Statement and Prospectus, (v) no stop order shall have been issued
under the Act and no proceedings therefor shall have been initiated or
threatened by the Commission, and (vi) the Registration Statement and the
Prospectus and any amendments or supplements thereto contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and conform in all material respects to the requirements of
the Act and the Regulations, and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
24
4.6 Delivery of Agreements. The Company has delivered to the
Representative executed copies of the Representative's Purchase Option.
4.7 Opinion of Counsel for Underwriters. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Stursberg & Xxxxx, counsel to the Underwriters, and you shall have received
from such counsel a favorable opinion, dated the Closing Date and the Option
Closing Date, if any, with respect to such of these proceedings as you may
reasonably require. On or prior to the Effective Date, the Closing Date and the
Option Closing Date, as the case may be, counsel for the Underwriters shall have
been furnished such documents, certificates and opinions as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Section 4.7, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
5. Indemnification.
5.1 Indemnification of Representative.
5.1.1 General. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless the Underwriters, their directors,
officers, agents and employees and each person, if any, who controls any
Underwriter ("controlling person") 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 (including but not limited to any and all
legal or other expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever) to which they or any of them may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in (i) any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from time to time
each may be amended and supplemented); (ii) in any post-effective amendment or
amendments or any new registration statement and prospectus in which is included
securities of the Company issued or issuable upon exercise of the
Representative's Purchase Option; or (iii) any application or other document or
written communication (in this Section 5 collectively called "application")
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Securities under the
securities laws thereof or filed with the Commission, any state securities
commission or agency, Nasdaq or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, unless such statement or omission
was made in reliance upon, and in strict conformity with, written information
furnished to the Company with respect to the Underwriters by or on behalf of the
Underwriters expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application, as the case may be; provided, however, that the foregoing indemnity
agreement with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting such
25
losses, claims, damages or liabilities purchased Public Securities, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Public Securities to such person, and if
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability. The Company agrees
promptly to notify the Representative of the commencement of any litigation or
proceedings against the Company or any of its officers, directors or controlling
persons in connection with the issue and sale of the Securities or in connection
with the Registration Statement or Prospectus.
5.1.2 Procedure. If any action is brought against any
Representative or controlling person in respect of which indemnity may be sought
against the Company pursuant to Section 5.1.1, such Underwriter shall promptly
notify the Company in writing of the institution of such action and the Company
shall assume the defense of such action, including the employment and fees of
counsel (subject to the approval of such Underwriter(s)) and payment of actual
expenses. The Underwriters or controlling person 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 Underwriter or such controlling person
unless (i) the employment of such counsel shall have been authorized in writing
by the Company in connection with the defense of such action, or (ii) the
Company shall not have employed counsel to have charge of the defense of such
action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to the Company (in which case the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events the fees and expenses of
not more than one additional firm of attorneys selected by such Underwriter(s)
and controlling person, as a single group, shall be borne by the Company.
Notwithstanding anything to the contrary contained herein, if such
Underwriter(s) or controlling person shall assume the defense of such action as
provided above, the Company shall have the right to approve the terms of any
settlement of such action which approval shall not be unreasonably withheld.
5.2 Indemnification of the Company. Each Underwriter severally
agrees to indemnify and hold harmless the Company, each of its directors, each
nominee (if any) for director named in the Prospectus, each of its officers who
have signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act, from and against any and all loss,
liability, claim, damage and expense as described in the foregoing indemnity
from the Company to the Underwriters, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions
directly relating to the transactions effected by such Underwriter in connection
with this offering or made in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment or supplement thereto or in any
application in reliance upon, and in strict conformity with, written information
furnished to the Company with respect to such Underwriter by or on behalf of
such Underwriter expressly for use in such Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement thereto or
in any such
26
application. In case any action shall be brought against the Company or any
other person so indemnified based on any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement thereto or
an application, and in respect of which indemnity may be sought against any
Underwriter, 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 Underwriters by the provisions of Section 5.1.2.
5.3 Contribution.
5.3.1 Contribution Rights. In order to provide for just and
equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Act, the Exchange Act or otherwise may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 5, then, and in each such case, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Notwithstanding
the provisions of this Section 5.3, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Public Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay in respect of such losses, liabilities,
claims, damages and expenses. For purposes of this Section, each director,
officer and employee of the Underwriters and the Company, and each person, if
any, who controls an Underwriter and the Company within the meaning of Section
15 of the Act shall have the same rights to contribution as the Underwriter and
the Company respectively.
5.3.2 Contribution Procedure. Within fifteen days after receipt
by any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any
27
such contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding which was effected
by such party without the written consent of such contributing party. The
contribution provisions contained in this Section are intended to supersede, to
the extent permitted by law, any right to contribution under the Act, the
Exchange Act or otherwise available.
6. [Reserved]
7. Additional Covenants.
7.1 Board Designee. For a period of five years from the Effective
Date, the Representative shall have the right to designate one nominee for
director of the Company, which nominee must be reasonably acceptable to the
Company, and the Company will use its best efforts to have such nominee elected
a director of the Company. Such nominee need not be the same person for the
entire period; provided, however, that no more than one such nominee of the
Representative shall be a director at any time during the period.
7.2 [Reserved]
7.3 [Reserved]
7.4 Press Releases. The Company will not issue a press release or
engage in any other publicity until 25 days after the Effective Date without the
Representative's prior written consent unless counsel for the Company advises
the Company that the issuance of any such press release is required by law or
the rules of the NASD.
7.5 [Reserved]
7.6 Compensation and Other Arrangements. The Company hereby agrees
that for a period of three years from the Effective Date, all the compensation
and other arrangements between the Company and its executive officers, directors
and affiliates shall be approved by a compensation committee of the Company's
Board of Directors, a majority of whom are not employed by the Company.
8. Representations and Agreements to Survive Delivery. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Dates and such representations, warranties and
agreements of the Underwriters and Company, including the indemnity agreements
contained in Section 5 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Underwriters,
the Company or any controlling person, and shall survive termination of this
Agreement or the issuance and delivery of the Securities to the Underwriters
until the earlier of the expiration of any applicable statute of limitations and
the seventh
28
anniversary of the later of the Closing Date or the Option Closing Date, if any,
at which time the representations, warranties and agreements shall terminate and
be of no further force and effect.
9. Effective Date of This Agreement and Termination Thereof.
9.1 Effective Date. This Agreement shall become effective on the
Effective Date at the time that the Registration Statement is declared
effective. The time of the initial public offering, for the purpose of this
Section 9 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 Public Securities
or the time, after the Registration Statement becomes effective, when the Public
Securities are first released by you for offering by the Underwriters or dealers
by letter or telegram, whichever shall first occur. You may prevent this
Agreement from becoming effective without liability to any other party, except
as noted below, by giving the notice indicated below in this Section 9 before
the time this Agreement becomes effective. The Representative agrees to give the
Company notice of the commencement of the offering described herein.
9.2 Termination. The Representative shall have the right to
terminate this Agreement at any time prior to any Closing Date, (i) if any
domestic or international event or act or occurrence has materially disrupted,
or in your opinion will in the immediate future materially disrupt, general
securities markets in the United States; or (ii) if trading on the New York
Stock Exchange, the American Stock Exchange or in the over-the-counter market
shall have been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities shall have been fixed, or
maximum ranges for prices for securities shall have been required on the
over-the-counter market by the NASD or by order of the Commission or any other
government authority having jurisdiction, or (iii) if the United States shall
have become involved in a war or major hostilities, or (iv) if a banking
moratorium has been declared by a New York State or federal authority, or (v) if
a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities market, or (vi) if the Company
shall have sustained a material 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 delivery of the Securities, or (vii) if either
Xxxxx X. X. Xxxxx or Xxxxxx Xxxxxx shall no longer serve the Company in his
present capacity, or (viii) if the Company has breached in any material respect
any of its representations, warranties or obligations hereunder, or (ix) if any
material adverse change has occurred, since the respective dates of which
information is given in the Registration Statement and the Prospectus, in the
earnings, business, prospects or condition (financial or otherwise) of the
Company, whether or not arising in the ordinary course of business, or (x) if
any adverse material change occurs in the financial or securities markets beyond
the normal fluctuations in the United States since the date of this Agreement.
9.3 Notice. If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 9, the
Company shall be notified on the same day as such election is made by you by
telephone or telecopy, confirmed by letter.
29
9.4 Expenses. In the event that this Agreement shall not be carried
out for any reason, within the time specified herein or any extensions thereof
pursuant to the terms herein, the obligations of the Company to pay the expenses
related to the transactions contemplated herein shall be governed by Section
3.15 hereof.
9.5 Indemnification. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Section 5 shall not be in any way effected by such election or
termination or failure to carry out the terms of this Agreement or any part
hereof.
10. Substitution of Underwriters.
10.1 Substitution. If any Underwriter defaults in its obligation to
purchase the number of Units which it has agreed to purchase under this
Agreement, you shall be obligated to purchase all of the Units not purchased by
the defaulting Underwriter unless such purchase shall cause you to be in
violation of net capital requirements of Rule 15c3-1 of the Exchange Act, in
which case you, and any other Underwriter satisfactory to you who so agree,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) such Units. If, within 48 hours
after such default by any Underwriter, you or the other Underwriters
satisfactory to you do not elect to purchase the Units which the defaulting
Underwriter or Underwriters agree but failed to purchase, then the Company shall
be entitled to a further period of 48 hours within which to procure another
party or parties to purchase the Units which the defaulting Underwriter or
Underwriters agreed but failed to purchase. If the Company is unable to arrange
for the purchase of such Shares as provided in this Section 10.1, then this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Company except for (i) the payment by the Company of expenses
as provided by Section 3.15.1, (ii) the payment by the Company of accountable
expenses as provided by Section 3.15.2, and (iii) the indemnity and contribution
agreements of the Company and the Underwriters provided by Section 5.
10.2 Further Matters. Nothing contained herein shall relieve a
defaulting Underwriter of any liability it may have for damages caused by its
default. If the other Underwriters satisfactory to you are obligated or agree to
purchase the units of a defaulting Underwriter, either you or the Company may
postpone the Closing Date for up to seven banking days in order to effect any
changes that may be necessary in the Registration Statement, any Preliminary
Prospectus or the Prospectus or in any other document or agreement, and to file
promptly any amendments to the Registration Statement, or any amendments or
supplements to any Preliminary Prospectus or the Prospectus, which in your
opinion may thereby be made necessary.
11. Miscellaneous.
11.1 Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be mailed,
delivered or telecopied and confirmed
30
If to the Representative:
Renaissance Financial Securities Corporation
000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
Copy to:
Stursberg & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Attention: C. Xxxxxx Xxxxxxxxx, Xx., Esq.
Fax: (000) 000-0000
If to the Company:
ObjectSoft Corporation
Continental Plaza III
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Mr. David X. X. Xxxxx
Fax: (000) 000-0000
Copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
11.2 Headings. The headings contained herein are for the sole purpose
of convenience of reference and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
11.3 Amendment. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.
11.4 Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitutes the entire agreement
31
of the parties hereto with respect to the subject matter hereof, and supersede
all prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
11.5 Binding Effect. This Agreement shall inure solely to the benefit
of and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 5 hereof, and their
respective successors, legal representatives and assigns, 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 provisions herein
contained.
11.6 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the law of the State of New York,
without giving effect to conflicts of law. The Company hereby agrees that any
action, proceeding or claim against it arising out of, relating in any way to
this Agreement shall be brought and enforced in the courts of the State of New
York, New York County or the Federal District Court of the United States of
America for the Southern District of New York, and irrevocably submits to such
jurisdictions, which jurisdictions shall be exclusive. The Company hereby waives
any objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. To the extent permitted by law, any such process or summons
to be served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 10 hereof. To the extent
permitted by law, such mailing shall be deemed personal service and shall be
legal and binding upon the Company in any action, proceeding or claim. The
Company agrees that the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its reasonable attorneys'
fees and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
11.7 Execution in Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.
11.8 Waiver, Etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way effect the
validity of this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No wavier of any breach, non-compliance or non-fulfillment of any of the
provisions of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which enforcement of
such waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
32
If the foregoing correctly sets forth the understanding between the
Underwriters 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,
OBJECTSOFT CORPORATION
By:
-------------------------
Name: Xxxxx X. X. Xxxxx
Title: Chairman of the Board
Accepted as of the date first above written.
New York, New York
RENAISSANCE FINANCIAL SECURITIES
CORPORATION, Acting on its own behalf
and as Representative of the several
Underwriters referred to in Schedule I
of the foregoing Underwriting Agreement.
By:
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
33
SCHEDULE I
Name Number of Units
---- ---------------
---------
TOTAL 1,250,000
34
