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ECCS, Inc.
2,500,000 Shares(1)
Common Stock
($.0l par value)
Underwriting Agreement
Tinton Falls, New Jersey
August 19, 1997
Unterberg Harris
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, X.X. 00000
Dear Sirs:
ECCS, Inc., a New Jersey corporation (the "Company"), proposes to
issue and sell to Unterberg Harris (the "Underwriter"), 2,254,018 shares of
Common Stock, $.0l par value ("Common Stock") of the Company, and the persons
named in Schedule I hereto (the "Selling Shareholders") propose to sell to the
Underwriter 245,982 shares of Common Stock (said shares to be issued and sold by
the Company and shares to be sold by the Selling Shareholders collectively being
hereinafter called the "Underwritten Securities"). The Company also proposes to
grant to the Underwriter an option to purchase up to 375,000 additional shares
of Common Stock (the "Option Securities"; the Option Securities, together with
the Underwritten Securities, being hereinafter called the "Securities").
The terms which follow, when used in this Agreement, shall have the
meanings indicated.
"Effective Date" shall mean each date that the Registration
Statement and any post-effective amendment or amendments thereto became or
become effective.
"Execution Time" shall mean the date and time
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(1) Plus an option to purchase from ECCS, Inc. up to 375,000 additional
shares to cover over-allotments.
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that this Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph (i) above and any preliminary prospectus included
in the Registration Statement at the Effective Date that omits Rule 430A
Information.
"Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or,
if no filing pursuant to Rule 424(b) is required, shall mean the form of
final prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph (i) above, exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time,
in the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the Closing
Date (as hereinafter defined including any documents incorporated by
reference), and shall also mean such registration statement as so amended.
Such term shall include Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
"Rule 424" and "Rule 430A" refer to such rules under the Act.
"Rule 430A Information" means information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with,
the Underwriter as set forth below in this Section 1. Certain terms used in
this Section I are defined in subparagraph (iv) of this paragraph (a).
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(i) The Company meets the requirements for the use of Form S-2 under
the Act and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (file number 333-32931) on Form S-2
including a related preliminary prospectus, for the registration under the
Securities Act of 1933 (the "Act") of the offering and sale of the
Securities. The Company may have filed one or more amendments thereto,
including the related preliminary prospectus, each of which has previously
been furnished to you. The Company will next file with the Commission
either (A) prior to effectiveness of such registration statement, a
further amendment to such registration statement (including the form of
final prospectus) or (B) after effectiveness of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b)(1)
or (4). In the case of clause (B), the Company has included in such
registration statement, as amended at the Effective Date, all information
(other than Rule 430A Information) required by the Act and the rules
thereunder to be included in the Prospectus with respect to the Securities
and the offering thereof. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Securities and the offering thereof and, except to the
extent the Underwriter shall agree in writing to a modification, shall be
in all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the
Company has advised you, prior to the Execution Time, will be included or
made therein.
(ii) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the rules thereunder; on the Effective Date,
the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein
not misleading; and, on the Effective Date, the Prospectus,
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if not filed pursuant to Rule 424(b), did not or will not, and on the date
of any filing pursuant to Rule 424(b) and on the Closing Date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company and the Selling Shareholders make no
representations or warranties as to the information contained in or
omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by the Underwriter specifically for
inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
(iii) The Company has not and will not in connection with the filing
of the Registration Statement or any other registration statement being
filed by the Company violate any provision of any contracts, agreements or
understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the
Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
being filed by the Company.
(iv) The Company's authorized equity capitalization is as set forth
in the Prospectus. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full power and authority to own its properties and conduct its
business as described in the Registration Statement and the Prospectus,
and the Company has full power and authority to execute and deliver this
Agreement and to issue and sell the Securities as herein contemplated.
(v) Each of the Company and its subsidiaries is duly qualified or
licensed by and are in good standing in each jurisdiction in which they
conduct their
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respective businesses and in which the failure, individually or in the
aggregate, to be so licensed or qualified and in good standing would have
a material adverse effect on the operations, business, condition or
property of the Company and the subsidiaries, taken as a whole; and the
Company and each of the subsidiaries are in compliance in all material
respects with the laws, orders, rules, regulations and directives issued
or administered by such jurisdictions and where the failure so to comply
would have a material adverse effect on the operations, business,
condition or property of the Company and the subsidiaries, taken as a
whole.
(vi) Neither the Company nor any of the subsidiaries is in breach
of, or in default under (nor has any event occurred which with notice,
lapse of time, or both would constitute a breach of, or default under),
its respective charter or by-laws or in the performance or observance of
any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
agreement or instrument to which the Company or any of the subsidiaries is
a party or by which any of them is bound, the effect of which would have a
material adverse effect on the Company and the subsidiaries, taken as a
whole, and the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not conflict
with, or result in any breach of or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would
constitute a breach of, or default under), any provisions of the charter
or by-laws, of the Company or any of the subsidiaries or under any
provision of any license, indenture, mortgage, deed of trust, bank loan or
credit agreement or other agreement or instrument to which the Company or
any of the subsidiaries is a party or by which any of them or their
respective properties may be bound or affected, or under any Federal,
state, local or foreign law, regulation or rule or any decree, judgment or
order applicable to the Company or any of the subsidiaries.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of
the Company enforceable in accordance with its terms (subject to
applicable
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bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and other similar laws affecting creditors' rights generally from time to
time in effect, and subject, as to enforceability, to general principles
of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(viii) The capital stock of the Company, including the Securities,
conforms in all material respects to the description thereof contained in
the Registration Statement and Prospectus and the certificates for the
Securities are in due and proper form and the holders of the Securities
will not be subject to personal liability solely by reason of being such
holders.
(ix) No approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the issuance and
sale of the Securities as contemplated hereby other than registration of
the Securities under the Act and any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the
Securities are being offered by the Underwriter.
(x) Other than (x) such shares of Common Stock that may be issuable
pursuant to outstanding options and warrants, (y) as set forth under the
captions "Description of Capital Stock--Common Stock" and "--Registration
Rights" in the Registration Statement and Prospectus or (y) to the extent
such rights to include any shares of Common Stock in this Registration
Statement have been satisfied or waived, no person has the right,
contractual or otherwise, to cause the Company to issue to it, or register
pursuant to the Act, any shares of capital stock of the Company upon the
issue and sale of the Securities to the Underwriter hereunder, nor does
any person have preemptive rights, rights of first refusal or other rights
to purchase any of the Securities.
(xi) Ernst & Young LLP, whose reports on the consolidated financial
statements of the Company and the subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus, to the
best of the Company's knowledge, are independent
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accountants within the meaning of the Act and the applicable published
rules and regulations thereunder.
(xii) Each of the Company and the subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under any Federal, state, local or foreign law,
regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, in order to conduct their
respective businesses and where the failure to obtain such licenses,
authorizations, consents and approvals or make such filings would have a
material adverse effect on the Company and the subsidiaries, taken as a
whole. Neither the Company nor any of the subsidiaries is in violation of,
or in default under, any such license, authorization, consent or approval
or any Federal, state, local or foreign law, regulation or rule or any
decree, order or judgment applicable to the Company or any of the
subsidiaries the effect of which would have a material adverse effect on
the Company and the subsidiaries taken as a whole.
(xiii) There are no actions, suits or proceedings pending or
threatened against the Company or any of the subsidiaries or any of their
respective properties, at law or in equity, or before or by any Federal,
state, local or foreign governmental or regulatory commission, board,
body, authority or agency which are reasonably likely to result in a
judgment, decree or order having a material adverse effect on the
operations, business, condition, prospects or property of the Company and
the subsidiaries taken as a whole.
(xiv) The audited financial statements included in the Registration
Statement and the Prospectus present fairly thp consolidated financial
position of the Company and the subsidiaries as of the dates indicated and
the consolidated results of operations and changes in financial position
of the Company and the subsidiaries for the periods specified; such
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis during the
periods involved.
(xv) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may be
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otherwise stated in the Registration Statement or Prospectus, there has
not been (i) any material and unfavorable change, financial or otherwise,
in the business, properties, prospects, regulatory environment, results of
operations or condition (financial or otherwise), present or prospective,
of the Company and the subsidiaries taken as a whole, (ii) any
transaction, which is material to the Company and the subsidiaries taken
as a whole, contemplated or entered into by the Company or any of the
subsidiaries or (iii) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any of the subsidiaries which is
material to the Company and the subsidiaries taken as a whole.
(xvi) The Securities have been approved for inclusion on the Nasdaq
Small Cap Market, subject to official notice of issuance.
(b) Each Selling Shareholder represents and warrants to, and agrees
with, the Underwriter that:
(i) Such Selling Shareholder is the lawful owner of the Securities
to be sold by such Selling Shareholder hereunder and upon sale and
delivery of, and payment for, such Securities, as provided herein, such
Selling Shareholder will convey good and marketable title to such
Securities, free and clear of all liens, encumbrances, equities and claims
whatsoever.
(ii) Certificates in negotiable form for such Selling Shareholder's
Series B Convertible Preferred Stock or Series C Convertible Preferred
Stock, as the case may be (collectively, the "Preferred Stock"), which
Preferred Stock is automatically convertible into Common Stock of the
Company, have been placed in custody for delivery pursuant to the terms of
this Agreement, under a Power of Attorney and Custody Agreement duly
authorized, executed and delivered by such Selling Shareholder, in the
form heretofore furnished to you (the "Power of Attorney and Custody
Agreement") with Xxxxxxxx Xxxxxxxxx, as Custodian (the "Custodian"); the
Securities represented by the certificates so held in custody for each
Selling Shareholder are subject to the interests hereunder of the
Underwriter, the Company and the other Selling Shareholders; the
arrangements for custody and delivery
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of such certificates, made by such Selling Shareholder hereunder and under
the Power of Attorney and Custody Agreement, are not subject to
termination by any acts of such Selling Shareholder, or by operation of
law, whether by the death or incapacity of such Selling Shareholder or the
occurrence of any other event; and if any such death, incapacity or any
other such event shall occur before the delivery of such Securities
hereunder, certificates for the Securities will be delivered by the
Custodian in accordance with the terms and conditions of this Agreement
and the Power of Attorney and Custody Agreement as if such death,
incapacity or other event had not occurred, regardless of whether or not
the Custodian shall have received notice of such death, incapacity or
other event.
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Shareholder of the transactions contemplated herein, except such
as may have been obtained under the Act and such as may be required under
the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriter and such other
approvals as have been obtained.
(iv) Neither the sale of the Securities being sold by such Selling
Shareholder nor the consummation of any other of the transactions herein
contemplated by such Selling Shareholder or the fulfillment of the terms
hereof by such Selling Shareholder will conflict with, result in a breach
or violation of, or constitute a default under any law or certificate of
limited partnership or limited partnership agreement of such Selling
Shareholder or the terms of any indenture or other agreement or instrument
to which such Selling Shareholder is a party or bound, or any judgment,
order or decree applicable to such Selling Shareholder of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over such Selling Shareholder.
(v) This Agreement has been duly executed and delivered by or on
behalf of such Selling Shareholder and is a legal, valid and binding
agreement of such Selling Shareholder enforceable in accordance with its
terms (subject in each case to applicable
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bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and other similar laws affecting creditors' rights generally from time to
time in effect, and subject, as to enforceability, to general principles
of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(vi) When the Registration Statement becomes effective and at all
times subsequent thereto through the latest of the time of purchase,
additional time of purchase or the termination of the offering of the
Securities, the Registration Statement and Prospectus, and any supplements
or amendments thereto as relate to such Selling Shareholder will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
and the Selling Shareholders agree, severally and not jointly, to sell to the
Underwriter, and the Underwriter agrees, to purchase from the Company and the
Selling Shareholders, at a purchase price of [ ] per share, the Underwritten
Securities.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Underwriter to purchase, up
to the total number of Option Securities at the same purchase price per share as
the Underwriter shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriter. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
the Prospectus upon written or telegraphic notice by the Underwriter to the
Company setting forth the number of shares of the Option Securities as to which
the Underwriter is exercising the option and the settlement date. Delivery of
certificates for the shares of option Securities by the Company and payment
therefor to the Company shall be made as provided in Section 3 hereof.
(c) Subject to the terms and conditions and in reliance upon the
representations and warranties set forth herein, on the Closing Date (as
defined herein) the Company agrees to pay the Underwriter a non-accountable
expense allowance in the amount of $50,000.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities
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(if the option provided for in Section 2(b) hereof shall have been exercised on
or before the third business day prior to the Closing Date) shall be made at
10:00 AM, New York City time, on August 25, 1997, or such later date (not later
than September 4, 1997) as the Underwriter shall designate, which date and time
may be postponed by agreement among the Underwriter, the Company and the Selling
Shareholders or as provided in Section 9 hereof (such date and time of delivery
and payment for the Securities being herein called the "Closing Date"). Delivery
of the Securities shall be made to the Underwriter against payment of the
aggregate purchase prices of the Securities being sold by the Company and each
of the Selling Shareholders to the Company and the Selling Shareholders or the
Custodian on behalf of the Selling Shareholders, by wire transfer in immediately
available funds. Delivery of the Underwritten Securities and (if the option
provided for in Section 2(b) hereof shall have been exercised) the Option
Securities shall be made at such location the Underwriter shall reasonably
designate at least one business day in advance of the Closing Date and payment
for such Securities shall be made at such location in the State of New Jersey as
the Company and the Underwriter shall agree. Certificates for the Securities
shall be registered in such names and in such denominations as the Underwriter
may request not less than three full business days in advance of the Closing
Date.
The Company and the Selling Shareholders agree to have the
Underwritten Securities (and, if the option provided for in Section 2(b) hereof
shall have been exercised, the Option Securities) available for inspection,
checking and packaging by the Underwriter in New York, New York, not later than
1:00 PM on the business day prior to the Closing Date.
Each Selling Shareholder will pay all applicable state transfer
taxes, if any, involved in the transfer to the Underwriter of the Securities to
be purchased by them from such Selling Shareholder and the Underwriter will pay
any additional stock transfer taxes involved in further transfers.
If the option provided for in Section 2(b) hereof is exercised after
the third business day prior to the Closing Date, the Company will deliver (at
the expense of the Company) to the Underwriter, on the date specified by the
Underwriter (which shall be within three business days after exercise of said
option), and at such place as may be
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designated by the Underwriter, certificates for the Option Securities in such
names and denominations as the Underwriter shall have requested against payment
of the purchase price thereof to the Company by wire transfer in immediately
available funds. If settlement for the Option Securities occurs after the
Closing Date, the Company will deliver to the Underwriter on the settlement date
for the Option Securities, and the obligation of the Underwriter to purchase the
Option Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by the Underwriter. It is understood that the
Underwriter proposes to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements.
(a) The Company agrees with the Underwriter that:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus without your prior
consent. Subject to the foregoing sentence, if the Registration Statement
has become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will cause
the Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory
to the Underwriter of such timely filing. The Company will promptly advise
the Underwriter (A) when the Registration Statement, if not effective at
the Execution Time, and any amendment thereto, shall have become
effective, (B) when the Prospectus, and any supplement thereto, shall have
been filed (if required) with the Commission pursuant to Rule 424(b), (C)
when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have
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been filed or become effective, (D) of any request by the Commission for
any amendment of the Registration Statement or supplement to the
Prospectus or for any additional information, (E) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose and (F) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the rules thereunder, the Company promptly will prepare and file
with the Commission, subject to the second sentence of paragraph (a) of
this Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Underwriter an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(iv) The Company will furnish to the Underwriter and its counsel,
without charge, signed copies of the Registration Statement (including
exhibits thereto) and, so long as delivery of a prospectus by the
Underwriter or any dealer may be required by the Act, as many copies of
each Preliminary Prospectus and the Prospectus and any supplement thereto
as the Underwriter may reasonably request. The Company will furnish or
cause to be furnished to the Underwriter
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copies of all reports on Form SR required by Rule 463 under the Act. The
Company will pay the expenses of printing or other production of all
documents relating to the offering.
(v) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Underwriter may
designate, and will maintain such qualifications in effect so long as
required for the distribution of the Securities and will pay the fee of
the National Association of Securities Dealers, Inc., in connection with
its review of the offering.
(vi) The Company will apply the net proceeds from the sale of the
Securities in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(vii) The Company will not, for a period of 90 days following the
Execution Time, without the prior written consent of Unterberg Harris,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any other shares of Common Stock
or any securities convertible into, or exchangeable for, shares of Common
Stock; provided, however, that the Company may (a) issue and sell Common
Stock pursuant to any employee stock option plan in effect at the
Execution Time, (b) issue Common Stock issuable upon the conversion of
securities or the exercise of warrants outstanding at the Execution Time,
and (c) if so provided in the Company's Savings and Protection Plan at the
Execution Time, issue Common Stock as all or part of the Company's
"Employer Matching Contributions" thereunder, as that term is defined
therein.
(viii) The Company will pay all expenses, fees and taxes (other than
any transfer taxes and fees and disbursements of counsel for the
Underwriter except as set forth under Section 7 hereof) in connection with
(i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriter and to dealers (including costs of mailing and shipment), (ii)
the issuance, sale and delivery of the Securities by the Company and the
Selling Shareholders, (iii) the word processing or
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printing, and reproduction and distribution, of this Agreement, any
Agreement Among Underwriters, any dealer agreements, any Statements of
Information and the Custody Agreements and the reproduction or printing
and furnishing of copies of each thereof to the Underwriter and to
dealers (including costs of mailing and shipment), (iv) the distribution
of the terms of agreement relating to the organization of the underwriting
syndicate and selling group to the members thereof by mail, telex,
telecopy or other means of communication, (v) the qualification of the
Securities for offering and sale under state laws and the determination of
their eligibility for investment under state law as aforesaid (including
the legal fees and filing fees and other disbursements of counsel for
the Underwriter) and the printing and furnishing of copies of any blue
sky surveys or legal investment surveys to the Underwriter and to
dealers, (vi) any listing of the Securities on any securities exchange or
designation of the Securities for inclusion on the NASDAQ SmallCap Market
and any registration thereof under the Exchange Act, (vii) the filing for
review of the public offering of the Securities by the National
Association of Securities Dealers, Inc. (the "NASD"), and (viii) the
performance of the Company's and the Selling Shareholders' other
obligations hereunder; and
(b) Each Selling Shareholder agrees with the Underwriter that
such Selling Shareholder will not, during the period of 90 days following the
Execution Time, without the prior written consent of Unterberg Harris, offer,
sell or contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any other shares of Common Stock beneficially owned by
such person, or any securities convertible into, or exchangeable for, shares of
Common Stock.
6. Conditions to the obligations of the Underwriter. The
obligations of Unterberg Harris to purchase the Underwritten Securities and the
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Shareholders contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Shareholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Shareholders of
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their respective obligations hereunder and to the following additional
conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Underwriter agrees in writing to a later time,
the Registration Statement will become effective not later than (i) 6:00 PM New
York City time on the date of determination of the public offering price, if
such determination occurred at or prior to 3:00 PM New York City time on such
date or (ii) 10:00 AM on the business day following the day on which the public
offering price was determined, if such determination occurred after 3:00 PM New
York City time on such date; if filing of the Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period required by
Rule 424(b); and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(b) The Company shall have furnished to the Underwriter the opinion
of Xxxxxxxx Xxxxxxxxx, counsel for the Company, dated the Closing Date, to the
effect that:
(i) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate power and
authority to own its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification wherein it owns or leases material
properties or conducts material business; and each subsidiary,
(individually a "Subsidiary" and collectively the "Subsidiaries") is
inactive, and the Subsidiaries do not, either individually or in the
aggregate, own or lease a material portion of the Company's property or
assets or conduct a material portion of the Company's business;
(ii) all the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus
(including the security interests of NationsBanc
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Commercial Corporation and AT&T Commercial Finance Corporation described
therein), all outstanding shares of capital stock of the Subsidiaries are
owned by the Company either directly or through wholly owned subsidiaries
free and clear of any perfected security interest and, to the knowledge of
such counsel, after due inquiry, any other security interests, claims,
liens or encumbrances;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms to the
description thereof contained in the Prospectus; the outstanding shares of
Common Stock (including the Securities being sold hereunder by the Selling
Shareholders) have been duly and validly authorized and issued and are
fully paid and nonassessable; the Securities being sold hereunder by the
Company have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriter pursuant to this Agreement,
will be fully paid and nonassessable; the Securities being sold hereunder
by the Company and by the Selling Shareholders are duly designated for
inclusion, subject to official notice of issuance by the Company, on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
SmallCap Market System; the certificates for the Securities are in valid
and sufficient form; and to the best knowledge of such counsel, the
holders of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the Securities;
(iv) to the best knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or any
of its subsidiaries of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the
Prospectus, and to the best knowledge of such counsel, there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed as
an exhibit, which is not described or filed as required;
(v) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to
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18
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued, no proceedings for that purpose have been instituted or threatened
and the Registration Statement and the Prospectus (other than the
financial statements and other financial and statistical information
contained therein as to which such counsel need express no opinion) comply
as to form in all material respects with the applicable requirements of
the Act and the rules thereunder; and such counsel has no reason to
believe that at the Effective Date the Registration Statement contained
any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus includes any untrue
statement of a material fact or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(vi) this Agreement has been duly authorized, executed and delivered
by the Company;
(vii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriter and such other approvals (specified in such
opinion) as have been obtained;
(viii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation of, or constitute a default under any law or the charter or
by-laws of the Company or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Company or any of its
subsidiaries is a party or bound or any judgment, order or decree known to
such counsel to be applicable to the Company or any of its subsidiaries of
any court,
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19
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Company or any of its subsidiaries; and
(ix) except to the extent set forth in the Prospectus or waived with
respect to registration of any of the Securities to be issued and sold
pursuant to this Agreement, no holders of securities of the Company have
rights to the registration of such securities under the Registration
Statement.
In rendering such opinions, such counsel may rely (A) as to matters involving
the application of laws of any jurisdiction other than the State of New Jersey
or the United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they believe to
be reliable and who are satisfactory to counsel for the Underwriter and (B) as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Reference to the
Prospectus in this paragraph (b) include any supplements thereto at the Closing
Date.
(c) The Selling Shareholders shall have furnished to the Underwriter
the opinion of Xxxxxxxx Xxxxxxxxx, counsel for the Selling Shareholders,
dated the Closing Date, to the effect that:
(i) this Agreement and the Power of Attorney and Custody Agreement
have been duly authorized, executed and delivered by the Selling
Shareholders, the Power of Attorney and Custody Agreement is valid and
binding on the Selling Shareholders and each Selling Shareholder has full
legal right and authority to sell, transfer and deliver in the manner
provided in this Agreement and the Power of Attorney and Custody Agreement
the Securities being sold by such Selling Shareholder hereunder;
(ii) the delivery by each Selling Shareholder to the Underwriter of
certificates for the Securities being sold hereunder by such Selling
Shareholder against payment therefor as provided herein, will pass good
and marketable title to such Securities to the Underwriter, free and
clear of all liens, encumbrances, equities and claims whatsoever;
(iii) no consent, approval, authorization or
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order of any court or governmental agency or body is required for the
consummation by any Selling Shareholder of the transactions contemplated
herein, except such as may have been obtained under the Act and such as
may be required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the Underwriter
and such other approvals (specified in such opinion) as have been
obtained; and
(iv) neither the sale of the Securities being sold by any Selling
Shareholder nor the consummation of any other of the transactions herein
contemplated by any Selling Shareholder or the fulfillment of the terms
hereof by any Selling Shareholder will conflict with, result in a breach
or violation of, or constitute a default under any law or certificate of
limited partnership or limited partnership agreement of any Selling
Shareholder or the terms of any indenture or other agreement or instrument
known to such counsel and to which any Selling Shareholder is a party or
bound, or any judgment, order or decree known to such counsel to be
applicable to any Selling Shareholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over any Selling Shareholder.
(v) to the best of such counsel's knowledge, the statements in the
Prospectus under the caption "Principal and Selling Shareholders" insofar
as such statements constitute a summary of the matters referred to therein
present fairly the information called for with respect to such matters.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New Jersey or
the United States, to the extent they deem proper and specified in such opinion,
upon the opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriter, and (B) as to
matters of fact, to the extent they deem proper, on certificates of the Selling
Shareholders or of responsible officers of the Selling Shareholders and public
officials or on the certificate of limited partnership and partnership agreement
of the Selling Shareholders.
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(d) The Underwriter shall have received from its counsel,
Cravath, Swaine & Xxxxx, such opinions or letters, dated the Closing Date, with
respect to the issuance and sale of the Securities, the Registration Statement,
the Prospectus (together with any supplement thereto) and other related matters
as the Underwriter may reasonably require, and the Company and each Selling
Shareholder shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Underwriter a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto), there
has been no material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its subsidiaries,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(f) At the Execution Time and at the Closing Date, Ernst & Young
shall have furnished to the Underwriter a letter or letters, dated respectively
as of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Underwriter, confirming that they are
22
22
independent accountants within the meaning of the Act and the applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited consolidated financial statements
and financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply in form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited consolidated
financial statements made available by the Company and its subsidiaries;
their limited review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
interim financial information for the six-month period ended June 30,
1997, and as at August [ ], 1997, as indicated in their report dated
August [ ], 1997; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect to
the comments set forth in such letter; a reading of the minutes of the
meetings of the Shareholders, directors and audit and compensation
committees of the Company and the Subsidiaries; and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company and its subsidiaries as to transactions
and events subsequent to June 30, 1997, nothing came to their attention
which caused them to believe that:
(1) any unaudited financial statements included in the
Registration Statement and the Prospectus do not comply in form in
all material respects with applicable accounting requirements of the
Act and with the published rules and regulations of the Commission
with respect to registration statements on Form S-2; and said
unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and the Prospectus;
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(2) with respect to the period subsequent to June 30, 1997,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, in the notes payable
or long-term debt of the Company and the Subsidiaries or capital
stock of the Company or decreases in the Shareholders' equity of the
Company or decreases in working capital of the Company and the
Subsidiaries as compared with the amounts shown on the June 30, 1997
consolidated balance sheet included in the Registration Statement
and the Prospectus, or for the period from July 1, 1997 to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year and the corresponding
period in the preceding quarter in net sales or gross profit or
income before provision for income taxes or income from continuing
operations or net income, of the Company and the Subsidiaries,
except in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Underwriter;
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Registration Statement
and the Prospectus, agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (f) include any supplement
thereto at the date of the letter.
(g) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (g) of this Section 6 or (ii) any change, or
any development
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involving a prospective change, in or affecting the business or properties of
the Company and its subsidiaries the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the judgment of the Underwriter, so material
and adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto).
(h) At the Execution Time, the Company shall have furnished to
the Underwriter a letter substantially in the form of Exhibit A hereto from
each warrantholder, certain holders of the Company's Series B or Series C
Preferred Stock, each officer and director of the Company and each Selling
Shareholder, addressed to Unterberg Harris, in which each such person agrees not
to offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce an offering of, any shares of Common Stock beneficially
owned by such person or any securities convertible into, or exchangeable for,
shares of Common Stock for a period of 90 days following the Execution Time,
without the prior written consent of Unterberg Harris.
(i) Prior to the Closing Date, the Company shall have furnished to
the Underwriter such further information, certificates and documents as
the Underwriter may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriter and its counsel, this Agreement and all
obligations of the Underwriter hereunder may be canceled at, or at any time
prior to, the Closing Date by the Underwriter. Notice of such cancelation shall
be given to the Company and each Selling Shareholder in writing or by telephone
or telegraph confirmed in writing.
7. Reimbursement of the Underwriter's Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriter set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on
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25
the part of the Company or any Selling Shareholder to perform any agreement
herein or comply with any provision hereof other than by reason of a default by
the Underwriter, the Company will reimburse the Underwriter upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel,
but not including, for purposes of this Section 7, any lost profits of the
Underwriter) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities. If the Company is required to make
any payments to the Underwriter under this Section 7 because of any Selling
Shareholder's refusal, inability or failure to satisfy any condition to the
obligations of the Underwriter set forth in Section 6, such Selling Shareholder
shall reimburse the Company on demand for all amounts so paid.
8. Indemnification and Contribution. (a) The Company and the Selling
Shareholders jointly and severally agree to indemnify and hold harmless the
Underwriter, the directors, officers, employees and agents of the Underwriter
and each person who controls the Underwriter within the meaning of either the
Act or the Securities Exchange Act of 1934 (the "Exchange Act") against any and
all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement for the registration
of the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i) the
Company and the Selling Shareholders will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company the Underwriter
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26
specifically for inclusion therein and (ii) such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of the Underwriter (or any
director, officer, employee or agent of the Underwriter or any person
controlling the Underwriter) from whom the person asserting any such loss,
claim, damage or liability purchased the Securities that are the subject thereof
if such person did not receive a copy of the Prospectus (or the Prospectus as
supplemented) excluding documents incorporated therein by reference at or prior
to the confirmation of the sale of such Securities to such person in any case
where such delivery is required under the Act and any untrue statement or
omission of a material fact contained in any Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as supplemented). This indemnity
agreement will be in addition to any liability which the Company or the Selling
Shareholders may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act and each Selling Shareholder, to the same extent as
the foregoing indemnity to the Underwriter, but only with reference to written
information relating to the Underwriter furnished by the Underwriter to the
Company specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
the Underwriter may otherwise have. The Company and each Selling Shareholder
acknowledge that the statements set forth in the last paragraph of the cover
page and under the heading "Underwriting" in any Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by or on behalf
of the Underwriter for inclusion in any Preliminary Prospectus or the
Prospectus, and you confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party
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27
of substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any
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28
reason, the Company and the Selling Shareholders, jointly and severally, and
the Underwriter agree to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Company, one or more of the Selling Shareholders and the Underwriter
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholders on the one hand
and by the Underwriter on the other from the offering of the Securities;
provided, however, that in no case shall the Underwriter be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the Selling
Shareholders, jointly and severally, and the Underwriter shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Selling Shareholders on the one
hand and of the Underwriter on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Selling Shareholders
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses), and benefits received by the Underwriter shall be deemed
to be equal to the total underwriting discounts and commissions, in each case as
set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company, the Selling Shareholders or
the Underwriter, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriter agree that it would
not be just and equitable if contribution were determined by pro rata allocation
or any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), 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. For purposes of
this Section 8, each person who controls the Underwriter within the meaning of
either the Act or the Exchange Act and each
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director, officer, employee and agent of the Underwriter shall have the same
rights to contribution as the Underwriter, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, each officer
of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) Without limitation of and in addition to its obligations under
the other paragraphs of this Section 8, the Company agrees to indemnify and hold
harmless Xxxxxxx Securities Inc. in its role as a "qualified independent
underwriter" (within the meaning of Rule 2720 of the Conduct Rules of the NASD),
its directors, officers, employees and agents and each person who controls
Xxxxxxx Securities Inc. within the meaning of either the Act or the Exchange
Act, provided that they comply with Rule 2720 of the Conduct Rules of the NASD,
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject that are separate or different from
liabilities as an underwriter referred to in Section 8(a), insofar as such
losses, claims, damages or liabilities (or action in respect thereof) arise out
of or are based upon Xxxxxxx Securities Inc.'s acting as a "qualified
independent underwriter" in connection with the offering contemplated by this
Agreement, and agrees to reimburse each such indemnified party, as incurred, for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
(f) The liability of each Selling Shareholder under such Selling
Shareholder's representations and warranties contained in Section I hereof and
under the indemnity and contribution agreements contained in this Section 8
shall be limited to an amount equal to the net proceeds of the Securities sold
by such Selling Shareholder to the Underwriter. The Company and the Selling
Shareholders may agree, as among themselves and without limiting the rights of
the Underwriter under this Agreement, as to the respective amounts of such
liability for which they each shall be responsible.
9. Default by Unterberg Harris. If Unterberg Harris shall fail to
purchase and pay for any of the Securities it has agreed to purchase and such
failure to purchase shall constitute a default in the performance of
30
its obligations under this Agreement, this Agreement will terminate. Nothing
contained in this Agreement shall relieve Unterberg Harris of its liability, if
any, to the Company and the Selling Shareholders for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Underwriter, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in the Company's Common Stock shall have been suspended by the
Commission or the NASDAQ SmallCap Market System or trading in securities
generally on the New York Stock Exchange, the NASDAQ National Market System or
the NASDAQ SmallCap Market System shall have been suspended or limited or
minimum prices shall have been established on either such Exchange or Market
System, (ii) a banking moratorium shall have been declared either by Federal
authorities or by authorities in the States of New York or New Jersey or (iii)
there shall have occurred any outbreak or escalation of hostilities, declaration
by the United States of a national emergency or war or other calamity or crisis
the effect of which on financial markets is such as to make it, in the judgment
of the Underwriter, impracticable or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Prospectus (exclusive of
any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Shareholder and of the Underwriter set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Underwriter,
any Selling Shareholder or the Company or any of the officers, directors
or controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for the Securities. The provisions of Sections 7 and 8
hereof shall survive the termination or cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to Unterberg Xxxxxx, xxxx be mailed,
delivered or telegraphed and confirmed at 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx, 00000; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at Xxx Xxxxxx Xxxxx, Xxxxxx Xxxxx, XX 00000,
attention of the President
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31
and Chief Executive Officer; or if sent to a Selling Shareholder, will be
mailed, delivered or telegraphed and confirmed to such Selling Shareholder at
the address of such Selling Shareholder set forth in Schedule II hereto.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Shareholders and the Underwriter.
Very truly yours,
ECCS, Inc.,
By:
-------------------------------
Name:
Title:
Selling Shareholders
By:
-------------------------------
Attorney-in-Fact
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The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written
Unterberg Harris
By:
-------------------------------
Name:
Title:
34
SCHEDULE I
Number of Shares of
Underwritten
Selling Securities
Shareholders Address To Be Sold
------------ ------- -----------
Monmouth University Xxxxxx X. Xxxxxx 66,668
Monmouth University
Division of Institutional
Advancement
Office of the Vice President
Xxxx Xxxx Xxxxxx, XX 00000-0000
Xxxxxx X. Xxxxx Wang Laboratory, Inc. 50,000
Xxx Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxx Xxxxxxxxx c/o Unterberg Harris 7,500
Swiss Bank Tower
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxxxx c/o American Stock Transfer Co. 121,814
00 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
-------
TOTAL 245,982
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