1,000,000 Shares
Frontline Communications Corporation
Series B Preferred Stock
UNDERWRITING AGREEMENT
----------------------
December __, 1999
Prime Charter Ltd.,
As representative of the
several Underwriters named
in Schedule A hereto
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Frontline Communications Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell 1,000,000 shares (the "Firm Shares") of
its authorized but unissued Series B Preferred Stock, par value $.01 per share
(the "Series B Preferred Stock"), to Prime Charter Ltd. (the "Representative")
and the other underwriters listed on Schedule A to this Agreement (the
Representative and the other underwriters being herein collectively called the
"Underwriters"). The Company also proposes to grant to the Underwriters an
option to purchase up to an aggregate of 150,000 additional shares (the
"Overallotment Shares") of Series B Preferred Stock on the terms and conditions
set forth in Section 3(c). The Firm Shares and the Overallotment Shares are
hereinafter collectively referred to as the "Shares."
The Company wishes to confirm as follows its agreements with the
Underwriters in connection with the several purchases by the Underwriters of the
Shares.
1. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form SB-2 (File No. __________), including a prospectus relating to the
Shares and each amendment thereto in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"). There have been delivered to
the Representative signed copies of such registration statement and amendments,
together with copies of each exhibit filed therewith. Copies of such
registration statement and amendments and of the related preliminary prospectus
have been delivered to the Representative in such reasonable quantities as the
Representative has requested for each of the Underwriters. If such registration
statement has not become effective, a further amendment to such registration
statement, including a form of final prospectus, necessary to permit such
registration statement to become effective will be filed promptly by the Company
with the Commission. If such registration statement has become effective, a
final prospectus containing all Rule 430A Information (as hereinafter defined)
will be filed by the Company with the Commission in accordance with, and if
required by, Rule 424(b) of the rules and regulations of the Act (the "Rules and
Regulations") on or before the second business day after the date hereof (or
such earlier time as may be required by the Rules and Regulations).
The term "Registration Statement" as used in this Agreement shall mean
such registration statement (including all exhibits and financial statements) at
the time such registration statement becomes or became effective and, if any
post-effective amendment thereto becomes effective prior to the Closing Date (as
hereinafter defined), shall also mean such registration statement as so amended;
provided, however, that such term shall include all Rule 430A Information deemed
to be included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations and shall also mean any registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations with respect to the Shares. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" as used in this Agreement shall mean the
prospectus relating to the Shares in the form in which it is first filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no
filing pursuant to Rule 424(b) of the Rules and Regulations is required, shall
mean the form of final prospectus included in the Registration Statement at the
time such registration statement becomes effective. The term "Rule 430A
Information" means information with respect to the Shares and the offering
thereof permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
(a) Representations and Warranties. The Company hereby represents and warrants
as follows:
(i) The Company has not received, and has no notice of, any order of the
Commission preventing or suspending the use of any Preliminary Prospectus, or
the institution of proceedings for that purpose, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the Rules and Regulations. When the Registration
Statement became or becomes, as the case may be, effective (the "Effective
Date") and at all times subsequent thereto up to and at the Closing Date (as
hereinafter defined), any later date on which Overallotment Shares are to be
purchased (the "Overallotment Closing Date") and when any post-effective
amendment to the Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the Commission, (A) the Registration
Statement and Prospectus, and any amendments or supplements thereto, will
contain all statements which are required to be stated therein by, and will
comply with the requirements of, the Act and the Rules and Regulations and (B)
neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, will include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading. The foregoing representations and
warranties in this Section 2(a)(i) do not apply to any statements or omissions
made in reliance on and in conformity with the information contained in the
section of the Prospectus entitled "Underwriting." The Company has not
distributed any offering material in connection with the offering or sale of the
Shares other than the Registration Statement, the Preliminary Prospectus, the
Prospectus or any other materials, if any, permitted by the Act.
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement. The Company is
duly qualified to do business as a foreign corporation in good standing in each
jurisdiction where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure so to qualify
would not have a material adverse effect on the business, properties, prospects,
financial condition or results of operations of the Company (a "Material Adverse
Effect"). The Company has no subsidiaries (as defined in the Rules and
Regulations) other than its wholly owned subsidiaries, CLEC Communications,
Inc., and WOW Factor, Inc. (the "Subsidiaries"). The Company does not own,
directly or indirectly, any shares of stock or any other equity or long-term
debt securities of any corporation or have any equity interest in any firm,
partnership, joint venture,
association or other entity other than its Subsidiaries. Complete and correct
copies of the certificates of incorporation and of the bylaws of the Company and
all amendments thereto have been delivered to the Representative and no changes
therein will be made subsequent to the date hereof and prior to the Closing Date
or, if later, the Overallotment Closing Date.
(i) The Company has full power and authority (corporate and other) to enter into
this Agreement and the agreement between the Company and the Representative
relating to issuance of the Representative's Warrants (as hereinafter defined)
(the "Representative's Warrant Agreement"), which is being executed concurrently
herewith, and to perform the transactions contemplated hereby and thereby to be
performed by it. Each of this Agreement and the Representative's Warrant
Agreement has been duly authorized, executed and delivered by the Company and is
a valid and binding agreement on the part of the Company, enforceable against
the Company in accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by applicable laws or equitable principles
and except as enforcement hereof or thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles. The
performance of this Agreement and the Representative's Warrant Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (A) any indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note agreement or other evidence
of indebtedness, or any lease, contract or other agreement or instrument to
which the Company is a party or by which its properties are bound, (B) the
certificate of incorporation or bylaws of the Company or (C) any law, order,
rule, regulation, writ, injunction or decree of any court or governmental agency
or body to which the Company is subject. The Company is not required to obtain
or make (as the case may be) any consent, approval, authorization, order,
designation or filing by or with any court or regulatory, administrative or
other governmental agency or body as a requirement for the consummation by the
Company of the transactions contemplated by this Agreement or the
Representative's Warrant Agreement, except such as may be required under the
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
under state securities or blue sky ("Blue Sky") laws or under the rules and
regulations of the Nasdaq SmallCap Market ("Nasdaq SmallCap").
(i) There is not pending or, to the Company's knowledge, threatened, any action,
suit, claim, proceeding or investigation against the Company or any of its
officers or any
of its properties, assets or rights before any court or governmental agency or
body or otherwise which might result in a Material Adverse Effect or prevent
consummation of the transactions contemplated hereby. There are no statutes,
rules, regulations, agreements, contracts, leases or documents that are required
to be described in the Prospectus, or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations that have not
been accurately described in all material respects in the Prospectus or filed as
exhibits to the Registration Statement.
(i) All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws and were not
issued in violation of any preemptive right, resale right, right of first
refusal or similar right. The authorized and outstanding capital stock of the
Company conforms in all material respects to the description thereof contained
in the Registration Statement and the Prospectus (and such description correctly
states the substance of the provisions of the instruments defining the capital
stock of the Company). The Shares have been duly authorized for issuance and
sale to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Company against payment therefor in accordance with the terms
of this Agreement, will be duly and validly issued and fully paid and
nonassessable. The shares of common stock of the company issuable upon
conversion of the Shares (the "Converted Shares") have been duly authorized,
when issued, and be duly and validly issued and fully paid and nonassessable. No
preemptive right, co-sale right, right of first refusal or other similar rights
of security holders exists with respect to any of the Shares or the issue and
sale thereof other than those that have been expressly waived prior to the date
hereof. No holder of securities of the Company has the right to cause the
Company to include such holder's securities in the Registration Statement. The
Representative's Warrant Agreement and the Representative's Warrants (as
hereinafter defined) conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus. The shares
of Series B Preferred Stock issuable upon exercise of the Representative's
Warrants (the "Warrant Shares") have been duly authorized for issuance and sale
to the holders of the Representative's Warrants pursuant to the Representative's
Warrant Agreement and, when issued and delivered by the Company against payment
therefor in accordance with the terms of the Representative's Warrant Agreement,
will be duly and validly issued and fully paid and nonassessable. The shares of
common stock issuable upon conversion of the Warrant Shares (the "Converted
Warrant Shares") have been duly authorized and when issued, will be duly and
validly issued and fully paid and nonassessable. No further approval or
authorization of any security holder, the Board of Directors or any duly
appointed committee thereof or others is required for the issuance and sale or
transfer of the Shares or the Converted Shares or the Warrant Shares or the
Converted Warrant Shares, except as may be required under the Act, the Exchange
Act or Blue Sky laws. Except as disclosed in or contemplated by the Prospectus
and the financial statements of the Company and the related notes thereto,
included in the Prospectus, the Company does not have outstanding any options or
warrants to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. The description of the
Company's stock option and other plans or arrangements, and the options or other
rights which may be or have been granted thereunder, set forth in the Prospectus
accurately and fairly presents, in all material respects, the information
required to be shown with respect to such plans, arrangements, options and
rights.
(i) BDO ▇▇▇▇▇▇▇ LLP (the "Accountants") who have examined the financial
statements, together with the related schedules and notes, of the Company filed
with the Commission as a part of the Registration Statement, which are included
in the Prospectus, are independent public accountants within the meaning of the
Act and the Rules and Regulations. The financial statements of the Company,
together with the related schedules and notes, forming part of the Registration
Statement and the Prospectus, fairly present the financial position and the
results of operations of the Company at the respective dates and for the
respective periods to which they apply. All financial statements, together with
the related schedules and notes, filed with the Commission as part of the
Registration Statement have been prepared in accordance with generally accepted
accounting principles as in effect in the United States consistently applied
throughout the periods involved except as may be otherwise stated in the
Registration Statement. The selected and summary financial and statistical data
included in the Registration Statement present fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein. No other financial statements or schedules are
required by the Act or the Rules and Regulations to be included in the
Registration Statement.
(i) Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been (A) any material
adverse change, or any development which, in the Company's reasonable judgment,
is likely to cause a material adverse change, in the business, prospects,
properties or assets described or referred to in the Registration Statement, or
the results of operations, condition (financial or otherwise), business or
operations of the Company, (B) any transaction which is material to the Company,
except transactions in the ordinary course of business, (C) any obligation,
direct or contingent, which is material to the Company, incurred by the Company,
except obligations incurred in the ordinary course of business, (D) any change
in the capital stock or outstanding indebtedness of the Company or (E) (except
as specifically described in the Prospectus) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company. The Company has
no material contingent obligation which is not disclosed in the Registration
Statement.
(i) Except as set forth in the Prospectus, (A) the Company has good and
marketable title to all material properties and assets described in the
Prospectus as owned by it, free and clear of any pledge, lien, security
interest, charge, encumbrance, claim, equitable interest or restriction, (B) the
agreements to which the Company is a party described in the Prospectus are valid
agreements, enforceable against the Company in accordance with their respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles and
except as rights to indemnity and contribution thereunder may be limited by
applicable laws or equitable principles, and, to the Company's knowledge, the
other contracting party or parties thereto are not in material breach or default
under any of such agreements and (C) the Company has valid and enforceable
leases for the properties described in the Prospectus as leased by it, and such
leases conform in all material respects to the description thereof, if any, set
forth in the Registration Statement.
(ii) The Company now holds and at the Closing Date and any later Overallotment
Closing Date, as the case may be, will hold, all licenses, certificates,
approvals and permits from all state, United States, foreign and other
regulatory authorities that are material to the conduct of the business of the
Company (as such business is currently conducted), except for such licenses,
certificates, approvals and permits the failure of which to hold would not have
a Material Adverse Effect), all of which are valid and in full force and effect
(and there is no proceeding pending or, to the knowledge of the Company,
threatened which may cause any such license, certificate, approval or permit to
be withdrawn, canceled, suspended or not renewed). The Company is not in
violation of its certificate of incorporation or bylaws, or, except for defaults
or violations which would not have a Material Adverse Effect, in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of indebtedness or in
any contract, indenture, mortgage, loan agreement, joint venture or other
agreement or instrument to which it is a party or by which it or any of its
properties are bound, or in violation of any law, order, rule, regulation, writ,
injunction or decree of any court or governmental agency or body.
(i) The Company has filed on a timely basis all necessary federal, state and
foreign income, franchise and other tax returns and has paid all taxes shown
thereon as due, and the Company has no knowledge of any tax deficiency which has
been or might be asserted against the Company which might have a Material
Adverse Effect. All material tax liabilities are adequately provided for within
the financial statements of the Company.
(i) The Company maintains insurance of the types and in the amounts adequate for
its business and consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to, business
interruption insurance and real and personal property owned or leased against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.
(i) The Company is not involved in any labor dispute or disturbance nor, to the
knowledge of the Company, is any such dispute or disturbance threatened.
(i) The Company owns or possesses adequate licenses or other rights to use all
patents, trademarks, service marks, tradenames, copyrights, trade secrets,
know-how, franchises, and other material intangible property and assets
(collectively, "Intellectual Property") necessary to the conduct of its business
as conducted and as proposed to be conducted as described in the Prospectus. The
Company has no knowledge that it lacks or will be unable to obtain any rights or
licenses to use any of the Intellectual Property necessary to conduct the
business now conducted or proposed to be conducted by it as described in the
Prospectus. The Prospectus fairly and accurately describes the Company's rights
with respect to the Intellectual Property. The Company has not received any
notice of infringement or of conflict with rights or claims of others with
respect to any Intellectual Property.
(i) The Company is not an "investment company," or a "promoter" or "principal
underwriter" for a registered investment company, as such terms are defined in
the Investment Company Act of 1940, as amended.
(i) The Company has not incurred any liability for a fee or commission or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement other than the underwriting
discounts and commissions contemplated hereby.
(i) The Company (A) is in compliance with any and all applicable United States,
foreign, state and local environmental laws, rules, regulations, treaties,
statutes and codes promulgated by any and all governmental authorities relating
to the protection of human health and safety, the environment or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (B) has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business as currently conducted and
(C) is in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws, failure to
receive required permit licenses or other approvals would not, individually or
in the aggregate, have a Material Adverse Effect. No action, proceeding,
revocation proceeding, writ, injunction or claim is pending or threatened
relating to the Environmental Laws or to the Company's activities involving
Hazardous Materials. "Hazardous Materials" means any material or substance (i)
that is prohibited or regulated by any environmental law, rule, regulation,
order, treaty, statute or code promulgated by any governmental authority, or any
amendment or modification thereto, or (ii) that has been designated or regulated
by any governmental authority as radioactive, toxic, hazardous or otherwise a
danger to health, reproduction or the environment.
(i) The Company has not engaged in the generation, use, manufacture,
transportation or storage of any Hazardous Materials on any of the Company's
properties or former properties, except where such use, manufacture,
transportation or storage is in compliance with Environmental Laws. No Hazardous
Materials have been treated or disposed of on any of the Company's properties or
on properties formerly owned or leased by the Company during the time of such
ownership or lease, except in compliance with Environmental Laws. No spills,
discharges, releases, deposits, emplacements, leaks or disposal of any Hazardous
Materials have occurred on or under or have emanated from any of the Company's
properties or former properties.
(i) The Company has not at any time during the last five years (A) made any
unlawful contribution to any candidate for foreign office, or failed to disclose
fully any contribution in violation of law, or (B) made any payment to any
foreign, United States or state governmental officer or official, or other
person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States.
(i) The Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock of the Company under the
Exchange Act or delisting the Common Stock from the Nasdaq SmallCap, nor has the
Company received any notification that the Commission, or Nasdaq SmallCap is
contemplating terminating such registration or listing.
(i) Neither the Company nor, to its knowledge, any of its officers, directors or
affiliates has taken, and at the Closing Date and at any later Overallotment
Closing Date, neither the Company nor, to its knowledge, any of its officers,
directors or affiliates will have taken, directly or indirectly, any action
which has constituted, or might reasonably be expected to constitute, the
stabilization or manipulation of the price of sale or resale of the Shares.
(i) The Company has obtained and delivered to the Representative agreements (the
"Lock-Up Agreements") from each of the persons and entities listed on Schedule B
hereto, representing all of the Company's executive officers and directors
providing that such person or entity will not, commencing on the date of the
Prospectus and continuing for a 12-month period thereafter, without the
Representative's prior written consent, directly or indirectly, offer to sell,
sell, pledge, solicit an offer to buy, contract to sell, grant any option for
the sale thereof, or otherwise encumber, or cause the transfer or disposition
of, any shares of Series B Preferred Stock or any securities convertible into or
exchangeable or exercisable for, Series B Preferred Stock, or exercise any
registration rights with respect to any shares of Series B Preferred Stock or
any securities convertible into or exchangeable or exercisable for any Shares of
Series B Preferred Stock.
(i) The Company agrees that it will not, without the Representative's prior
written consent, amend or grant waivers with respect to any existing agreement
between the Company and its executive officers, directors or stockholders (or
holders of securities convertible into or exchangeable or exercisable for equity
securities of the Company) who have not entered into a Lock-Up Agreement with
the Representative and under which such securityholders' ability to transfer
their securities is restricted (the "Existing Lock-Up Agreements"); the Company
further acknowledges and agrees, and will promptly give written notice to the
parties to the Existing Lock-Up Agreements, that the Representative has
specified that the one-year period commencing on the Effective Date shall be the
period during which
such securityholders' ability to transfer their securities shall be restricted
under the Existing Lock-Up Agreements; and the Company agrees that it will, at
its own expense, strictly enforce the Existing Lock-Up Agreements and, if the
Company fails to do so, it will be deemed to have assigned to the Representative
all of the Company's rights under the Existing Lock-Up Agreements and will
indemnify the Representative for all expenses, as and when incurred, arising out
of the Representative's enforcement of the Existing Lock-Up Agreements.
(i) The Company has not distributed and, prior to the latest to occur of (A) the
Closing Date, (B) the Overallotment Closing Date and (C) the completion of the
distribution of the Shares, will not distribute any offering material in
connection with the offering and sale of the Shares other than the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or other materials, if any, as permitted
by the Act.
1. Purchase of the Shares by the Underwriters.
(a) On the basis of the representations and warranties and subject to the terms
and conditions herein set forth, the Company agrees to issue and sell the Firm
Shares to the several Underwriters, and each of the Underwriters agrees to
purchase from the Company the respective aggregate number of Firm Shares set
forth opposite its name on Schedule A, plus such additional number of Firm
Shares which such Underwriter may become obligated to purchase pursuant to
Section 3(b) hereof. The price at which such Firm Shares shall be sold by the
Company and purchased by the several Underwriters shall be $____ per share. In
making this Agreement, each Underwriter is contracting severally and not
jointly; except as provided in Section 3(b) and Section 3(c), the agreement of
each Underwriter is to purchase only the respective number of Firm Shares
specified on Schedule A.
(a) If for any reason one or more of the Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 10 hereof) to purchase and pay for the
number of Shares agreed to be purchased by such Underwriter or Underwriters, the
non-defaulting Underwriters shall have the right within 24 hours after such
default to purchase, or procure one or more other Underwriters to purchase, in
such proportions as may be agreed upon between the Representative and such
purchasing Underwriter or Underwriters and upon the terms herein set forth, all
or any part of the Shares which such defaulting Underwriter or Underwriters
agreed to purchase. If the non-
defaulting Underwriters fail so to make such arrangements with respect to all
such Shares and portion, the number of Shares which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis (as adjusted by the Representative
in such manner as the Representative deems advisable to avoid fractional shares)
to absorb the remaining shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the Shares and portion which the
defaulting Underwriter or Underwriters agreed to purchase if the aggregate
number of such Shares exceeds 10% of the total number of Shares which all
Underwriters agreed to purchase hereunder. If the total number of Shares which
the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
referred to above, to make arrangements with other underwriters or purchasers
reasonably satisfactory to the Representative for purchase of such Shares and
portion on the terms herein set forth. In any such case, either the
Representative or the Company shall have the right to postpone the Closing Date
determined as provided in Section 5 hereof for not more than seven business days
after the date originally fixed as the Closing Date pursuant to said Section 5
in order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made. If the aggregate
number of Shares which the defaulting Underwriter or Underwriters agreed to
purchase exceeds 10% of the total number of Shares which all Underwriters agreed
to purchase hereunder, and if neither the non-defaulting Underwriters nor the
Company shall make arrangements within the 24-hour periods stated above for the
purchase of all the Shares which the defaulting Underwriter or Underwriters
agreed to purchase hereunder, this Agreement shall be terminated without further
act or deed and without any liability on the part of the Company to any
non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company. Nothing in this Section 3(b), and no
action taken hereunder, shall relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase up to 150,000
shares of Series B Preferred Stock at the same price per share as the
Underwriters shall pay for the Firm Shares. Such option may be exercised only to
cover overallotments in the sale of the Firm Shares by the Underwriters and may
be exercised in whole or in
part at any time, or from time to time, on or before the 30th day after the date
of the Prospectus upon written or telegraphic notice by the Representative to
the Company setting forth the aggregate number of Overallotment Shares as to
which the Underwriters are exercising the option. Delivery of certificates for
the Overallotment Shares, and payment therefor, shall be made as provided in
Section 5 hereof. Each Underwriter shall purchase such percentage of the
Overallotment Shares as is equal to the percentage of Firm Shares that such
Underwriter is purchasing, the exact number of shares to be adjusted by the
Representative in such manner as the Representative deems advisable to avoid
fractional shares.
(a) On the Closing Date, the Company shall issue and deliver to the
Representative, or at the direction of the Representative, to its designees as
provided in the Representative's Warrant Agreement, for a purchase price of
$.001 per Representative's Warrant (an aggregate of $100), the Representative's
Warrants entitling the holder thereof to purchase 100,000 shares of Series B
Preferred Stock on the terms and conditions set forth in the Representative's
Warrant Agreement.
1. Offering by Underwriters.
The terms of the offering of the Shares by the Underwriters
shall be as set forth in the Prospectus.
1. Delivery of and Payment for the Shares and the Representative's Warrants.
(a) Delivery of certificates for the Firm Shares, the Overallotment Shares (if
the option granted pursuant to Section 3(c) hereof shall have been exercised not
later than 1:00 p.m., New York time, on the date at least two business days
preceding the Closing Date) and the Representative's Warrants, and payment
therefor, shall be made at the office of Proskauer Rose LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ at 9:00 a.m., New York City time, on the fourth
business day after the date of this Agreement, or at such time on such other
day, not later than seven full business days after such fourth business day, as
shall be agreed upon in writing by the Company and the Representative (the
"Closing Date").
(a) If the option granted pursuant to Section 3(c) hereof shall be exercised
after 1:00 p.m., New York City time, on the date two business days preceding the
Closing Date, and on or before the 45th day after the date of this Agreement,
delivery of certificates for the Overallotment Shares, and payment therefor,
shall be made at the office of Proskauer
Rose LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ at 9:00 a.m., New York
City time, on the third business day after the exercise of such option.
(a) Payment for the Shares shall be made to the Company, by either a same day
funds check or federal funds wire transfer. Such payment shall be made upon
delivery of certificates for the Shares to the Representative for the respective
accounts of the several Underwriters against receipt therefor signed by the
Representative. Certificates for the Shares to be delivered to the
Representative shall be registered in such name or names and shall be in such
denominations as the Representative may request at least three business days
before the Closing Date, in the case of Firm Shares, and at least two business
days prior to the Overallotment Closing Date, in the case of the Overallotment
Shares. Such certificates will be made available to the Underwriters for
inspection, checking and packaging at a location in New York, New York,
designated by the Underwriters not less than one full business day prior to the
Closing Date or, in the case of the Overallotment Shares, by 3:00 p.m., New York
time, on the business day preceding the Overallotment Closing Date.
It is understood that the Representative, individually and not
on behalf of the Underwriters, may (but shall not be obligated to) make payment
to the Company for shares to be purchased by any Underwriter whose check shall
not have been received by the Representative on the Closing Date or any later
Overallotment Closing Date. Any such payment by the Representative shall not
relieve such Underwriter from any of its obligations hereunder.
(a) Payment for the Representative's Warrants shall be made to the Company or
its order, by either a same day funds check or federal funds wire transfer. Such
payment shall be made upon delivery of certificates for the Representative's
Warrants to the Representative against receipt therefor signed by the
Representative. Certificates for the Representative's Warrants to be delivered
to the Representative shall, subject to the terms and provisions of the
Representative's Warrant Agreement, be registered in such name or names as
permitted by the Representative's Warrant Agreement and shall be in such
denominations as the Representative may request at least three business days
before the Closing Date.
1. Further Agreements of the Company. The Company covenants and agrees as
follows:
(a) The Company will use its best efforts to cause the Registration Statement
and any amendment thereof, if not effective at the time and date that this
Agreement is executed and delivered by the parties hereto, to become effective
as promptly as possible; it will notify the Representative, promptly after it
shall receive notice thereof, of the time when the Registration Statement or any
subsequent amendment to the Registration Statement has become effective or any
supplement to the Prospectus has been filed. If the Company omitted information
from the Registration Statement at the time it was originally declared effective
in reliance upon Rule 430A(a), the Company will provide evidence satisfactory to
the Representative that the Prospectus contains such information and has been
filed, within the time period prescribed, with the Commission pursuant to
subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as part
of a post-effective amendment to such Registration Statement as originally
declared effective which is declared effective by the Commission. If for any
reason the filing of the final form of Prospectus is required under Rule
424(b)(3) of the Rules and Regulations, it will provide evidence satisfactory to
the Representative that the Prospectus contains such information and has been
filed with the Commission within the time period prescribed. The Company will
notify the Representative promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or for
additional information. Promptly upon the Representative's request, it will
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the reasonable opinion of counsel
to the Representative, may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters. The Company will promptly
prepare and file with the Commission, and promptly notify the Representative of
the filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if, at
any time when a prospectus relating to the Shares is required to be delivered
under the Act, any event shall have occurred as a result of which the Prospectus
or any other prospectus relating to the Shares as then in effect would include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. In case any Underwriter is required to
deliver a prospectus within the nine-month period referred to in Section
10(a)(3) of the Act in connection with the sale of the Shares, the Company will
prepare promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act. The Company will file no amendment
or supplement to the Registration Statement or Prospectus that shall not
previously have been submitted to the Representative a reasonable time prior to
the proposed filing thereof or to which the Representative shall reasonably
object in writing or which is not in compliance with the Act and Rules and
Regulations or the provisions of this Agreement.
(a) The Company will advise the Representative, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or the use
of the Prospectus or of the initiation or threat of any proceeding for that
purpose; and it will promptly use its best efforts to prevent the issuance of
any such stop order or to obtain its withdrawal at the earliest possible moment
if such stop order should be issued.
(a) The Company will cooperate with the Representative in endeavoring to qualify
the Shares for offering and sale under the securities laws of such jurisdictions
as the Representative may designate and to continue such qualifications in
effect for so long as may be required for purposes of the distribution of the
Shares, except that the Company shall not be required in connection therewith or
as a condition thereof to qualify as a foreign corporation, or to execute a
general consent to service of process in any jurisdiction, or to make any
undertaking with respect to the conduct of its business. In each jurisdiction in
which the Shares shall have been qualified, the Company will make and file such
statements, reports and other documents in each year as are or may be reasonably
required by the laws of such jurisdictions so as to continue such qualifications
in effect for so long a period as the Representative may reasonably request for
distribution of the Shares, or as otherwise may be required by law.
(a) The Company will furnish to the Representative, as soon as available, copies
of the Registration Statement (three of which will be signed and which will
include all exhibits), each Preliminary Prospectus, the Prospectus, and any
amendments or supplements to such documents, including any prospectus prepared
to permit compliance with Section 10(a)(3) of the Act, all in such quantities as
the Representative may from time to time reasonably request.
(a) The Company will make generally available to its stockholders as soon as
practicable, but in any event not later than the 45th day following the end of
the fiscal quarter first occurring after the first anniversary of the Effective
Date, an earnings statement (which will be in reasonable detail but need not be
audited) complying with the provisions of
Section 11(a) of the Act and Rule 158 of the Rules and Regulations and covering
a 12-month period beginning after the Effective Date, and will advise the
Representative in writing when such statement has been made available.
(a) During a period of five years after the date hereof, the Company, as soon as
practicable after the end of each respective period, will furnish to its
stockholders annual reports (including financial statements audited by
independent certified public accountants) and will furnish to its stockholders
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year, and will, upon request, furnish to the Representative and
the other several Underwriters hereunder (i) concurrently with making such
reports available to its stockholders, statements of operations of the Company
for each of the first three quarters in the form made available to the Company's
stockholders; (ii) concurrently with the furnishing thereof to its stockholders,
a balance sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity and of cash flow of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public accountants; (iii)
concurrently with the furnishing of such reports to its stockholders, copies of
all reports (financial or other) mailed to stockholders; (iv) as soon as they
are available, copies of all reports and financial statements furnished to or
filed with the Commission, any securities exchange or automated quotation system
by the Company (except for documents for which confidential treatment is
requested); and (v) every material press release and every material news item or
article in respect of the Company or its affairs which was generally released to
stockholders or prepared for general release by the Company. During such
five-year period, if the Company shall have any active subsidiaries, the
foregoing financial statements shall be on a consolidated basis to the extent
that the accounts of the Company are consolidated with any subsidiaries, and
shall be accompanied by similar financial statements for any significant
subsidiary that is not so consolidated.
(a) The Company shall not, during the 12 months following the Effective Date,
except with the Representative's prior written consent, file, or announce an
intent to file, a registration statement covering to any public offering of its
shares of capital stock.
(a) The Company shall not, during the 12 months following the Effective Date,
except with the prior written consent of the Representative, in its individual
capacity and not in its capacity as representative of the Underwriters, issue,
sell, offer or agree to sell, grant, distribute or otherwise dispose of,
directly or indirectly, any shares of Series B Preferred Stock, or any options,
rights or warrants with respect to shares of Series B Preferred Stock, or any
securities convertible into or exchangeable for Series B Preferred Stock, other
than the issuance of (i) the Overallotment Shares, and (ii) the Representative's
Warrants.
(a) The Company will apply the net proceeds from the sale of the Shares being
sold by it in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(a) The Company will maintain a transfer agent and a registrar (which may be the
same entity as the transfer agent) for the Series B Preferred Stock.
(a) The Company will use its best efforts to maintain listing of its shares of
Common Stock and its Series B Preferred Stock on the American Stock Exchange
("Amex").
(a) The Company is familiar with the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder, and has in the past conducted its
affairs, and will in the future conduct its affairs, in such a manner so as to
ensure that the Company was not and will not be an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
(a) The Company will, at the option of the Representative, (i) during a period
of ____ years from the Effective Date, use its best efforts to nominate and
cause to be elected and reelected to the Board of Directors of the Company a
designee of the Representative or (ii) during a period of _____ years from the
Effective Date, permit an agent of the Representative to attend all meetings of
the Board of Directors of the Company as a non-voting observer, will give such
agent notice of all meetings of the Board of Directors at the same time and in
the same manner that directors are notified and will reimburse such agent for
all expenses incurred in attending such meetings, including, but not limited to
food, transportation and lodging.
1. Expenses.
The Company agrees with each Underwriter that:
(a) The Company will pay and bear all costs, fees and expenses in connection
with the preparation, printing and filing of the Registration Statement
(including all amendments, supplements, financial statements, schedules and
exhibits), as
many Preliminary Prospectuses and final Prospectuses and any amendments or
supplements thereto that the Representative reasonably deems necessary; the
reproduction of this Agreement; the issuance and delivery of the Shares and the
Representative's Warrants, including stock transfer taxes, if any; the cost of
all stock certificates representing the Shares and transfer agents' and
registrars' fees; the fees and disbursements of counsel for the Company; all
fees and other charges of the Company's independent public accountants; the cost
of furnishing to the several Underwriters copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectuses and the Prospectus;
NASD filing fees and expenses incident to securing any required review; all fees
and expenses relating to the listing of the Shares and the Warrant Shares on the
Amex; all fees, expenses and disbursements relating to the registration or
qualification of the Shares under the securities laws of such states and other
jurisdictions as the Representative may reasonably designate (including, without
limitation, all filing and registration fees and fees and disbursements of the
Representative's counsel in connection with Blue Sky matters, such as the
Preliminary Blue Sky Memoranda and any supplemental Blue Sky Memoranda and any
instruments relating to any of the foregoing; the fees and disbursements of
counsel to the Underwriters (not to exceed $_________) in connection with the
offering, this Agreement and the transactions contemplated hereby; the costs of
all mailing and printing of the underwriting documents (including, but not
limited to, the Underwriting Agreement, any Blue Sky surveys and memoranda and,
if appropriate, any Agreement Among Underwriters, Selected Dealers Agreement,
Underwriter's Questionnaire and Power of Attorney); the costs of preparing,
printing and delivering certificates representing the Shares and the
Representative's Warrants; and all other expenses directly incurred by the
Company in connection with the performance of its obligations hereunder.
(a) If the transactions contemplated hereby are not consummated by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed hereunder or to fulfill any condition of
the Underwriters' obligations hereunder, the Company will, in addition to paying
the expenses described in Section 7(a), reimburse the several Underwriters for
all out-of-pocket expenses (including fees and disbursements of Underwriters'
counsel without the limitations therein set forth in Section 7(a)) incurred by
the Underwriters in reviewing the Registration Statement and the Prospectus and
in otherwise investigating, preparing to market or marketing the Shares; such
fees and expenses not to exceed ________.
(a) The Representative, in its individual capacity and not as representative of
the Underwriters, shall also be entitled to a non-accountable expense allowance
equal to 3% of the aggregate offering price of the Shares. The Company has
previously paid the Representative an aggregate of $100,000 in partial payment
of such non-accountable expense allowance, which amount shall be non-refundable
(notwithstanding the termination of this Agreement for any reason) and will be
applied against the non-accountable expense allowance.
1. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters to purchase and pay for the
Shares, as provided herein, shall be subject: (x) to the accuracy, as of the
date hereof and the Closing Date and any later Overallotment Closing Date, as
the case may be, of the representations and warranties of the Company herein and
to the performance by the Company of its obligations hereunder; and (y) to the
following additional conditions:
(a) The Registration Statement shall have become effective not later than 9:00
a.m., New York City time, on the day immediately following the date of this
Agreement, or such later time or date as shall be consented to in writing by the
Representative. If the filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b) and Rule 430A of the Rules and Regulations, the
Prospectus shall have been filed in the manner and within the time period
required by Rule 424(b) and Rule 430A of the Rules and Regulations. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened by the Commission, and
any request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the reasonable satisfaction of counsel to the Underwriters.
(a) All corporate proceedings and other legal matters in connection with this
Agreement, the form of Registration Statement, and the Prospectus, and the
registration, authorization, issue, sale and delivery of the Shares shall have
been reasonably satisfactory to counsel to the Underwriters, and such counsel
shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to
herein.
(a) The Representative shall have received, at no cost to it, on the Closing
Date and on any later Overallotment Closing Date, as the case may be, (the
opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, LLP, counsel to the Company, dated the Closing Date or such later
Overallotment Closing Date, in the form attached hereto as Appendix A. Such
opinion shall be addressed to the Underwriters and with reproduced copies of
signed counterparts thereof for the Representative.
(a) The Representative shall have received from Proskauer Rose LLP,
Underwriters' Counsel, an opinion or opinions, dated the Closing Date or on any
later Overallotment Closing Date, as the case may be, in form and substance
reasonably satisfactory to the Representative, with respect to certain legal
matters as the Representative may reasonably require, and the Company shall have
furnished to such counsel such documents as it may have reasonably requested for
the purpose of enabling it to pass upon such matters.
(a) The Representative shall have received on the Closing Date and on any later
Overallotment Closing Date, as the case may be, a letter from the Accountants
addressed to the Company and the Underwriters, dated the Closing Date or such
later Overallotment Closing Date, as the case may be, confirming that it is an
independent certified public accountant with respect to the Company within the
meaning of the Act and the Rules and Regulations thereunder and based upon the
procedures described in its letter delivered to the Representative concurrently
with the execution of this Agreement (herein called the "Original Letter"), but
carried out to a date not more than three days prior to the Closing Date or any
such later Overallotment Closing Date, as the case may be, (i) confirming that
the statements and conclusions set forth in the Original Letter are accurate as
of the Closing Date or such later Overallotment Closing Date, as the case may
be; and (ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter that are necessary to reflect any
changes in the facts described in the Original Letter since the date of such
letter, or to reflect the availability of more recent financial statements, data
or information. The letter shall not disclose any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company which, in the Representative's reasonable judgment, makes it
impracticable or inadvisable to proceed with the public offering of the Shares
as contemplated by the Prospectus. In addition, the Representative shall have
received from the Accountants a letter addressed to the Company and made
available to the Representative for the use of the Underwriters stating that its
review of the Company's system of internal accounting controls, to the extent it
deemed necessary in establishing the scope of its latest examination of the
Company's financial statements, did not disclose any weaknesses in internal
controls that it considered to be material
weaknesses. All such letters shall be in a form reasonably satisfactory to the
Representative and its counsel.
(a) The Representative shall have received on the Closing Date and on any later
Overallotment Closing Date, as the case may be, a certificate of the President
and the Chief Financial Officer of the Company, dated the Closing Date or such
later date, to the effect that as of such date (and the Representative shall be
satisfied that as of such date):
(i) The representations and warranties of the Company in this Agreement are true
and correct, as if made on and as of the Closing Date or any later Overallotment
Closing Date, as the case may be; and the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied at or prior to the Closing Date or any later Overallotment Closing
Date, as the case may be;
(ii) The Registration Statement has become effective under the Act and no stop
order suspending the effectiveness of the Registration Statement or preventing
or suspending the use of the Prospectus has been issued, and no proceedings for
that purpose have been instituted or are pending or, to the best of their
knowledge, threatened under the Act;
(iii) They have carefully reviewed the Registration Statement, and the
Prospectus; and, when the Registration Statement became effective and at all
times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus and any amendments or supplements
thereto contained all statements and information required to be included therein
or necessary to make the statements therein not misleading; and when the
Registration Statement became effective, and at all times subsequent thereto up
to the delivery of such certificate, none of the Registration Statement, the
Prospectus or any amendment or supplement thereto included 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, since
the Effective Date, there has occurred no event required to be set forth in an
amended or supplemented Prospectus that has not been so set forth; and
(iv) Subsequent to the respective dates as of which information is given in the
Registration Statement, and the Prospectus, there has not been (A) any material
adverse change in the properties or assets described or referred to in the
Registration Statement and the Prospectus or in the condition (financial or
otherwise), operations, business or prospects of the Company, (B) any
transaction which is material to the
Company, except transactions entered into in the ordinary course of business,
(C) any obligation, direct or contingent, incurred by the Company, which is
material to the Company, except obligations incurred in the ordinary course of
business in accordance with past practices,(D) any change in the capital stock
or outstanding indebtedness of the Company which is material to the Company or
(E) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company, except as specifically described in the
Prospectus.
(a) The Company shall have furnished to the Representative such further
certificates and documents as the Representative shall reasonably request as to
the accuracy of the representations and warranties of the Company herein, as to
the performance by the Company of its obligations hereunder and as to the other
conditions precedent to the obligations of the Underwriters hereunder.
(a) The Firm Shares and the Overallotment Shares, if any, shall have been
approved for listing upon notice of issuance on the Amex.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to counsel to the Underwriters. The Company will furnish the Representative with
such number of conformed copies of such opinions, certificates, letters and
documents as the Representative shall reasonably request.
1. Indemnification and Contribution.
(a) Subject to the provisions of Section 9(g), the Company agrees to indemnify
and hold harmless each Underwriter and each person (including each partner or
officer thereof) who controls any Underwriter within the meaning of Section 15
of the Act from and against any and all losses, claims, damages or liabilities,
joint or several, to which such indemnified parties or any of them may become
subject under the Act, the Exchange Act, the common law or otherwise, and the
Company agrees to reimburse each such Underwriter and controlling person for any
legal or other out-of-pocket expenses (including, except as otherwise
hereinafter provided, reasonable fees and disbursements of counsel) incurred by
the respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any 462(b)
registration statement) or any post-effective amendment thereto (including any
462(b) registration statement), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the omission
or alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that (1) the indemnity agreements of
the Company contained in this Section 9(a) shall not apply to any such losses,
claims, damages, liabilities or expenses if such statement or omission is
contained in the section of the Prospectus entitled "Underwriting," and (2) the
indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Shares which is the subject thereof (or to the benefit of
any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) was not sent or delivered to such person
(excluding any documents incorporated therein by reference) and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented) unless the failure is the result of noncompliance by the Company
with Section 6(a) hereof.
(a) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its executive officers, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of Section
15 of the Act, from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Act, the Exchange Act, the common law or otherwise
and to reimburse each of them for any legal or other expenses (including, except
as otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any 462(b) registration statement) or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that in the cases of clauses (i) and (ii) above, such statement or omission is
contained in the Section of the Prospectus entitled "Underwriting."
(a) Each party indemnified under the provision of Section 9(a),(b) or (c) agrees
that, upon the service of a summons or other initial legal process upon it in
any action or suit instituted against it or upon its receipt of written
notification of the commencement of any investigation or inquiry of, or
proceeding against it, in respect of which indemnity may be sought on account of
any indemnity agreement contained in such paragraphs, it will promptly give
written notice (a "Notice") of such service or notification to the party or
parties from whom indemnification may be sought hereunder. No indemnification
provided for in such Section 9(a), (b) or (c) shall be available to any party
who shall fail so to give the Notice if the party to whom such Notice was not
given was unaware of the action, suit, investigation, inquiry or proceeding to
which the Notice would have related and was prejudiced by the failure to give
the
Notice, but the omission so to notify such indemnifying party or parties of any
such service or notification shall not relieve such indemnifying party or
parties from any liability which it or they may have to the indemnified party
for contribution or otherwise than on account of such indemnity agreement. Any
indemnifying party shall be entitled at its own expense to participate in the
defense of any action, suit or proceeding against, or investigation or inquiry
of, an indemnified party. Any indemnifying party shall be entitled, if it so
elects within a reasonable time after receipt of the Notice by giving written
notice (the "Notice of Defense") to the indemnified party, to assume (alone or
in conjunction with any other indemnifying party or parties) the entire defense
of such action, suit, investigation, inquiry or proceeding, in which event such
defense shall be conducted, at the expense of the indemnifying party or parties,
by counsel chosen by such indemnifying party or parties and reasonably
satisfactory to the indemnified party or parties; provided, however, that (i) if
the indemnified party or parties reasonably determine that there may be a
conflict between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses
available to such indemnified party or parties different from or in addition to
those available to the indemnifying party or parties, then counsel for the
indemnified party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties and (ii) in any event, the
indemnified party or parties shall be entitled, at its or their own expense to
have counsel chosen by such indemnified party or parties participate in, but not
conduct, the defense. It is understood that the indemnifying parties shall not,
in respect of the legal defenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for (a)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all of the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act, and (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Act. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
Section 9(a), (b) or (c) for any legal or other expenses subsequently incurred
by the indemnified party or parties in connection with the defense of the
action, suit,
investigation, inquiry or proceeding, except that (A) the indemnifying party or
parties shall bear the legal and other expenses incurred in connection with the
conduct of the defense as referred to in clause (i) of the proviso to the
preceding sentence and (B) the indemnifying party or parties shall bear such
other expenses as it or they have authorized to be incurred by the indemnified
party or parties. If, within a reasonable time after receipt of the Notice, no
Notice of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding. The indemnifying party or parties shall not be liable for
any settlement of any proceeding effected without its or their written consent,
provided such consent has not been unreasonably withheld.
(a) If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless an indemnified party under Section 9(a), (b) or
(c), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities referred to in
Section 9(a), (b) or (c),(i) in such proportion as is appropriate to reflect the
relative benefits received by each indemnifying party from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
each indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Shares received by the Company and the total
underwriting discount received by the Underwriters, as set forth in the table on
the cover page of the Prospectus, bear to the aggregate public offering price of
the Shares. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to Section 9(e) were to be determined by pro rata
allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to in the
first sentence of this Section 9(e). The amount paid by an indemnified party as
a result of the losses, claims, damages or liabilities or actions in respect
thereof, referred to in the first sentence of this Section 9(e) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigation, preparation to defend or defense against
any action or claim which is the subject of this Section 9(e). Notwithstanding
the provisions of this Section 9(e), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Shares purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 9(e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in Section 9(d)).
(a) The Company will not, without the prior written consent of each Underwriter,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not such Underwriter or any person who
controls such Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act is a party to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of such Underwriter and each such controlling person from all liability arising
out of such claim, action, suit or proceeding.
(a) The parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof, including without limitation the provisions of
this Section 9 and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 9 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
1. Termination. This Agreement may be terminated by the Representative at any
time on or prior to the Closing Date or on or prior to any later Overallotment
Closing Date, as the case may be, (i) if the Company shall have failed, refused
or been unable, at or prior to the Closing Date, or on or prior to any later
Overallotment Closing Date, as the case may be, to perform any agreement on its
part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not fulfilled,
or (ii) if trading on the New York Stock Exchange, Nasdaq SmallCap, or Amex
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been required
on the New York Stock Exchange, Nasdaq SmallCap, or Amex by such trading
exchanges or by order of the Commission or any other governmental authority
having jurisdiction, or if a banking moratorium shall have been declared by
federal or New York authorities, or (iii) if the Company shall have sustained a
loss by strike, fire, flood, accident or other calamity of such character as to
have a Material Adverse Effect regardless of whether or not such loss shall have
been insured, or (iv) if there shall have occurred an outbreak or escalation of
hostilities between the United States and any foreign power or of any other
insurrection or armed conflict involving the United States or other national or
international calamity, hostilities or crisis or the declaration by the United
States of a national emergency which, in the judgment of the Representative,
adversely affects the marketability of the Shares, or (v) if since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall have occurred any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company or the business, affairs,
management, or prospects of the Company, whether or not arising in the ordinary
course of business, or (vi) if any foreign, federal or state statute,
regulation, rule or order of any court or other governmental authority shall
have been enacted, published, decreed or otherwise promulgated which in the
judgment of the Representative materially and adversely affects or will
materially and adversely affect the business or operations of the Company, or
trading in the Series B Preferred Stock shall have been suspended, or (vii)
action shall be taken by any foreign, federal, state or local government or
agency in respect of its monetary or fiscal affairs which, in the judgment of
the
Representative, has a material adverse effect on the securities markets in
the United States and on the marketability of the Shares. If this Agreement
shall be terminated in accordance with this Section 10, there shall be no
liability of the Company to the Underwriters and no liability of the
Underwriters to the Company; provided, however, that in the event of any such
termination the Company agrees to indemnify and hold harmless the Underwriters
from all costs or expenses incident to the performance of the obligations of the
Company under this Agreement, including all costs and expenses referred to in
Section 7.
If the Representative elects to terminate this Agreement as provided in
this Section 10, the Company shall be notified promptly by the Representative by
telephone, telecopy or telegram, confirmed by letter.
1. Reimbursement of Certain Expenses.
(a) Subject to Section 9 of this Agreement, the Company hereby agrees to
reimburse on a monthly basis the Underwriters for all reasonable legal and other
expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
Section 9(a), notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligations under this Section 11 and the
possibility that such payments might later be held to be improper; provided,
however, that (i) to the extent any such payment is ultimately held to be
improper, the persons receiving such payments shall promptly refund them and
(ii) such persons shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
(a) Subject to Section 9 of this Agreement, the Underwriters hereby agree to
reimburse on a monthly basis the Company for all reasonable legal and other
expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
Section 9(b) of this Agreement, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 11 and the possibility that such payments might later be held to be
improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the Company shall promptly refund it and (ii)
the Company shall provide to the Underwriter, upon request, reasonable
assurances of its ability to effect any refund, when and if due.
1. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of the Company and the several Underwriters and, with respect to the
provisions of Section 9 hereof, the several parties (in addition to the Company
and the several Underwriters) indemnified under the provisions of said Section
9, and their respective personal representatives, successors and assigns.
Nothing in this Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable remedy or claim under or in
respect of this Agreement or any provision herein contained. The term
"successors and assigns" as herein used shall not include any purchaser, as such
purchaser, of any of the Shares from any of the several Underwriters.
(a) Notices. Except as otherwise provided herein, all communications hereunder
shall be in writing or by telegraph and, if to the Underwriters, shall be
mailed, telegraphed or delivered to Prime Charter Ltd., ▇▇▇ ▇▇▇▇ ▇▇▇. - ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and if to the
Company, shall be mailed, telegraphed or delivered to it at its office,
Frontline Communications Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇-▇▇▇▇▇▇▇▇.
(b) Jurisdiction; Venue; Service of Process. Each of the Representative and the
Company (a) agrees that any legal suit, action or proceeding arising out of or
relating to this letter shall be instituted exclusively in New York State
Supreme Court, County of New York or in the United States District Court for the
Southern District of New York, (b) waives any objection to the venue of any such
suit, action or proceeding, and (c) irrevocably consents to the jurisdiction of
the New York State Supreme Court, County of New York, and the United States
District Court for the Southern District of New York, in any such suit, action
or proceeding. Each of the Representative and the Company further agrees to
accept and acknowledge service of any and all process which may be served in any
such suit, action or proceeding in the New York State Supreme Court, County of
New York, or in the United States District Court for the Southern District of
New York. Each of the Representative and the Company further agrees that service
of process upon it mailed by certified mail to its address shall be deemed in
every respect effective service of process upon it in any such suit, action or
proceeding.
(c) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(d) Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter or controlling
person thereof, or by or on behalf of the Company or its respective directors or
officers and (ii) delivery of and payment for the Shares under this Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO RULES GOVERNING THE
CONFLICT OF LAWS.
Please sign and return to the Company the enclosed duplicate of this
letter, whereupon this letter will become a binding agreement among the Company
and the several Underwriters in accordance with its terms.
Very truly yours,
FRONTLINE COMMUNICATIONS CORPORATION
By ______________________________
Name:____________________________
Title:___________________________
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PRIME CHARTER LTD.
By
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Director
Acting on behalf of the several Underwriters, including themselves, named on
Schedule A hereto.
SCHEDULE A
UNDERWRITERS
Number of
Shares
to be
Underwriters Purchased
------------ ---------
1. Prime Charter
Ltd.
Total 1,000,000
=========
SCHEDULE B
Lock-up Agreements
------------------
Name
----
1.
2.
3.
4.
5.
6.
7.
8.
Existing Lock-up Agreements
Name
----
1.
2.
3.
4.
5.
6.
APPENDIX A
(a) The Registration Statement has become effective under the Act and, to such
counsel's knowledge after due inquiry, no stop order suspending the
effectiveness of the Registration Statement or suspending or preventing the use
of the Prospectus has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act; any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424(b) of the Rules
and Regulations has been made in the manner and within the time period required
by such Rule 424(b).
(i) The Registration Statement, all Preliminary Prospectuses, the Prospectus,
and each amendment or supplement thereto (other than the financial statements,
financial data and supporting schedules included therein, as to which such
counsel need express no opinion), comply as to form in all material respects
with the requirements of the Act and the applicable Rules and Regulations and to
such counsel's knowledge after due inquiry, there are no agreements, contracts,
leases or documents of a character required to be described in, or filed as an
exhibit to, the Registration Statement which are not described or filed as
required by the Act and the applicable Rules and Regulations.
(i) The Company is duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware.
(i) The Company has full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement.
(i) To such counsel's knowledge after due inquiry, the Company does not own or
control, directly or indirectly, any shares of stock or any other equity
interest in any firm, partnership, joint venture, association or other entity.
(i) The Company has full corporate power and authority to enter into the
Underwriting Agreement and the Representative's Warrant Agreement and to issue,
sell and deliver the Firm Shares and the Overallotment Shares in accordance with
the terms of the Underwriting Agreement and the Representative's Warrants in
accordance with the terms of the Representative's Warrant Agreement.
(i) The Underwriting Agreement and the Representative's Warrant Agreement have
been duly authorized by all necessary corporate action on the part of the
Company, have been duly executed and delivered by the Company and the
Representative's Warrant Agreement is a valid and binding agreement of the
Company, enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws of general applicability relating to or affecting
creditors' rights or by general principles of equity, whether considered at law
or in equity, and except as rights to indemnity and contribution thereunder may
be limited by federal or state securities laws or the public policies underlying
such laws.
(i) The execution, delivery and performance of the Underwriting Agreement and
the Representative's Warrant Agreement by the Company and the consummation of
the transactions therein contemplated do not and will not (a) conflict with or
result in a violation or breach of any of the terms or provisions of, or
constitute a default under (i) any material indenture, mortgage, deed of trust,
loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument known to
such counsel after due inquiry to which the Company is a party or by which its
respective properties are bound, (ii) the Certificate of Incorporation or Bylaws
(or other organizational documents) of the Company, (iii) any statute, rule or
regulation applicable to the Company or (iv) any applicable license,
authorization, approval, permit, judgment, franchise, order, writ, injunction or
decree of any court or governmental agency or body known to such counsel after
due inquiry and to which the Company is subject.
(i) The Company is not required to obtain or make any consent, approval,
authorization, order, designation or declaration of or filing by or with any
court or regulatory, administrative or other governmental agency or body in
connection with the execution and delivery of the Underwriting Agreement or the
Representative's Warrant Agreement by the Company and the consummation of the
transactions therein contemplated except such as have been obtained under the
Act and the Rules and Regulations or such as may be required under state
securities laws, Blue Sky laws or by the rules and regulations of the Amex in
connection with the purchase and distribution of the Shares by the Underwriters.
(i) To such counsel's knowledge after due inquiry, there are no pending or
threatened actions, suits, claims, proceedings or investigations before any
court, regulatory body, administrative agency or any other governmental agency
or body, domestic or foreign against the Company or any of their respective
officers or any of their
respective properties, assets or rights that could reasonably be expected to
have a Material Adverse Effect or would limit, revoke, cancel, suspend, or cause
not to be renewed any existing license, certificate, registration, approval or
permit that is material to the conduct of the business of the Company as
presently conducted, or that is of a character otherwise required to be
disclosed in the Registration Statement or the Prospectus under the Act or the
applicable Rules and Regulations.
(i) The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock, of which there are outstanding __________ shares and 2,000,000
shares of Preferred Stock, of which there are outstanding ___ shares. All the
issued and outstanding shares of Common Stock and Preferred Stock have been duly
authorized and validly issued, are fully paid and non-assessable, have been
issued in compliance with the registration requirements of applicable federal
and state securities laws and were not issued in violation of any preemptive
right, resale right, registration right, right of first refusal or other similar
right known to such counsel.
(i) The issuance and sale of the Shares and the Representative's Warrants have
been duly authorized by the Company. Upon issuance and delivery against payment
therefor in accordance with the terms of the Underwriting Agreement, the Shares
will be validly issued, fully paid and non-assessable, and, to such counsel's
knowledge after due inquiry, the stockholders of the Company do not have any
preemptive right, re-sale right, registration right, right of first refusal or
other similar right, in connection with the purchase or sale of any of the
Shares. Shares of Series B Preferred Stock have been duly and validly authorized
and reserved for issuance upon exercise of the Representative's Warrants and
shares of Common Stock (the "Conversion Shares")have been duly and validly
authorized and reserved for issuance upon conversion of the Series B Preferred
Stock, and when issued and delivered by the Company against payment therefor in
the manner set forth in the Representative's Warrant Agreement, the Warrant
Shares and the Conversion Shares will be duly and validly issued, fully paid,
non-assessable and free of preemptive rights. To such counsel's knowledge after
due inquiry, there are no outstanding warrants, options or other rights granted
by the Company to purchase shares of its Series B Preferred Stock or other
securities, other than as described in the Prospectus.
(i) The terms and provisions of the Series B Preferred Stock conform in all
material respects to the description thereof contained in the Registration
Statement and the Prospectus, and the information in the Prospectus under the
caption "Description of Capital Stock," to the extent that it constitutes
matters of law or legal conclusions, has been reviewed by such counsel and is
correct, and the form of certificate evidencing the Series B Preferred Stock
complies with the applicable provisions of Delaware law.
(i) The statements in the Registration Statement and the Prospectus summarizing
statutes, rules and regulations, including the Delaware General Corporation Law
and the description of the Certificate of Incorporation and Bylaws of the
Company are accurate and fairly and correctly present the information required
to be presented by the Act or the Rules and Regulations in all material
respects; and there are no statutes, rules or regulations required to be
described in the Registration Statement or the Prospectus that are not described
or referred to therein as required.
(i) The statements under the captions __________ and ___________ in the
Prospectus, insofar as such statements constitute a summary of documents
referred to therein or matters of law, are accurate summaries and fairly and
correctly present, in all material respects, the information called for with
respect to such documents and matters.
(i) The information required to be set forth in the Registration Statement in
answer to Item 509 of Regulation S-B insofar as it relates to such counsel is
accurately and adequately set forth therein in all material respects or no
response is required with respect to such Item.
(i) The Company is not in violation of its Certificate of Incorporation or
Bylaws, and to such counsel's knowledge after due inquiry, the Company is not in
breach of or default with respect to any provision of any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
known to such counsel after due inquiry, by which it or any of its properties
may be bound or affected.
(i) To such counsel's knowledge after due inquiry, except as set forth in the
Registration Statement and Prospectus, no holders of shares of Common Stock or
other securities of the Company have registration rights with respect to
securities of the Company.
(i) No transfer taxes are required to be paid in connection with the sale or
delivery to the Underwriters of the Firm Shares or the Overallotment Shares.
(i) The Company is not and will not, upon consummation of the transactions
contemplated by the Underwriting
Agreement, be an "investment company," or a "promoter" or "principal
underwriter" for, a "registered investment company," as such terms are defined
in the Investment Company Act of 1940, as amended.
(i) The Shares have been approved for listing on the Amex, subject to official
notice of issuance.
(i) Counsel for the Company have participated in conferences with officials and
other representatives of the Company, the Representative, counsel for the
Representative and the independent public accountants of the Company, at which
conferences the contents of the Registration Statement and the Prospectus and
related matters were discussed, and although such counsel have not verified the
accuracy or completeness of the statements contained in the Registration
Statement or the Prospectus, nothing has come to the attention of such counsel
which caused them to believe that, at the time the Registration Statement became
effective the Registration Statement (except as to financial statements,
financial and statistical data and supporting schedules contained therein, as to
which such counsel need express no 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, or at the Closing
Date or any later Overallotment Closing Date, as the case may be, the
Registration Statement or the Prospectus (except as aforesaid) 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, in light of
the circumstances under which they were made, not misleading.
Counsel rendering the foregoing opinion may rely as to questions of
fact upon representations or certificates of officers of the Company and of
governmental officials, as the case may be, in which case its opinion is to
state that it is so doing and that it has no actual knowledge of any material
misstatement or inaccuracy in such opinions, representations or certificates,
and that such counsel believes that it and the Underwriters are justified in
relying on such opinions, representations or certificates. Copies of any
opinion, representation or certificate so relied upon shall be delivered to the
Representative, and to the Representative's counsel.
