Exhibit 1.1
SHARES
CONNECTSOFT COMMUNICATIONS CORPORATION
UNDERWRITING AGREEMENT
__________ ___, 1997
Hampshire Securities Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
The undersigned, Connectsoft Communications Corporation, a Delaware
corporation (the "Company"), hereby confirms its agreement with Hampshire
Securities Corporation, as representative (the "Representative") of the several
underwriters identified in Schedule I hereto (the "Underwriters") as follows:
1. INTRODUCTION. The Company proposes to issue and sell to the
Underwriters an aggregate of shares of common stock, par value $.001
per share, of the Company (the "Common Stock"). Such shares of Common Stock are
hereinafter referred to as the "Stock". In addition, solely for the purpose of
covering over-allotments, the Company proposes to grant to the Underwriters an
option (the "Over-allotment Option") to purchase from it, in the aggregate, up
to an additional shares (the "Additional Stock") of Common Stock. The
Common Stock is more fully described in the prospectus referred to below.
2. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to, and agrees with, the
Underwriters that:
(1) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have
filed one or more amendments thereto, on Form SB-2 registration No.
333-_______),
including in such registration statement and each such amendment a
related preliminary prospectus, for the registration of the Stock, the
Additional Stock, the common stock purchase warrants referred to in
Section 5(a)(17) (the "Representative's Warrants") and the shares of
Common Stock underlying the Representative's Warrants (the "Warrant
Stock") under the Securities Act of 1933, as amended (the "Act"). As
used in this Agreement, the term "Registration Statement" shall refer
to such registration statement, as amended, on file with the
Commission at the time such registration statement becomes effective
under the Act (including the prospectus, financial statements,
exhibits, and all other documents filed as a part thereof, provided,
however, that such registration statement, at the time it becomes
effective, may omit such information as is permitted to be omitted
from such registration statement when it becomes effective under the
Act pursuant to Rule 430A of the General Rules and Regulations of the
Commission under the Act (the "Regulations"), which information (the
"Rule 430A Information") shall be deemed to be included in such
registration statement when a final prospectus is filed with the
Commission in accordance with Rules 430A and 424(b)(1) or (4) of the
Regulations); the term "Preliminary Prospectus" shall refer to each
prospectus included in the Registration Statement, or any amendments
thereto, before the Registration Statement becomes effective under the
Act, the form of prospectus omitting Rule 430A Information included in
the Registration Statement when the Registration Statement becomes
effective under the Act, if applicable (the "Rule 430A Prospectus"),
and any prospectus filed by the Company with the Representative's
consent pursuant to Rule 424(a) of the Regulations; and the term
"Prospectus" shall refer to the final prospectus in the form first
filed pursuant to Rule 424(b)(1) or (4) of the Regulations or, if no
such filing is required, the form of final prospectus included in the
Registration Statement.
(2) When the Registration Statement becomes effective under
the Act, and at all times subsequent thereto up to and including the
Closing Date (as defined
-2-
in Section 3) and each Additional Closing Date (as defined in Section
3), and during such longer period as the Prospectus may be required to
be delivered in connection with sales by the Underwriters or a dealer,
and during such longer period until any post-effective amendment
thereto shall become effective under the Act, the Registration
Statement (and any post-effective amendment thereto) and the
Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment or supplement to the
Registration Statement or the Prospectus), respectively, will contain
all statements which are required to be stated therein in accordance
with the Act and the Regulations, will comply with the Act and the
Regulations, and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and no
event will have occurred which should have been set forth in an
amendment or supplement to the Registration Statement or the
Prospectus which has not then been set forth in such an amendment or
supplement; if a Rule 430A Prospectus is included in the Registration
Statement at the time it becomes effective under the Act, the
Prospectus filed pursuant to Rules 430A and 424(b)(1) or (4) of the
Regulations will contain all Rule 430A Information and all statements
which are required to be stated therein in accordance with the Act or
the Regulations, will comply with the Act and the Regulations, and
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading; and each Preliminary
Prospectus, as of the date filed with the Commission, contained all
statements required to be stated therein in accordance with the Act
and the Regulations, complied with the Act and the Regulations, and
did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading; except that no
representation or warranty is made in this Section 2(a)(2) with
respect to statements or omissions made in reliance upon, and in
conformity
-3-
with, written information furnished to the Company as stated in
Section 8(b) with respect to any Underwriter by or on behalf of such
Underwriter through the Representative expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, or the
Prospectus, or any amendment or supplement thereto.
(3) Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of, or preventing or suspending the use
of, the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, refusing to permit
the effectiveness of the Registration Statement, or suspending the
registration or qualification of the Stock, the Additional Stock, the
Representative's Warrants or the Warrant Stock, nor has any of such
authorities instituted or threatened to institute any proceedings with
respect to a Stop Order.
(4) Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease, or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to the Registration Statement.
(5) The Company has no subsidiary or subsidiaries (as defined
in the Regulations). The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation, with full power and authority, and
all necessary consents, authorizations, approvals, orders, licenses,
certificates, and permits of and from, and declarations and filings
with, all federal, state, local, and other governmental authorities
and all courts and other tribunals, to own, lease, license, and use
its properties and assets and to conduct its business in the manner
described in the Prospectus. The Company is duly qualified to do
business as a foreign corporation and is in good standing as such in
every jurisdiction in which its ownership, leasing, licensing, or use
of property and assets
-4-
or the conduct of its business makes such qualification necessary,
except where the failure to be so qualified does not amount to a
material liability or disability to the Company.
(6) The Company has authorized capital stock of 5,000,000
shares of Common Stock. Except as disclosed in the Prospectus, each
outstanding share of Common Stock is validly authorized and issued,
fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, has not been issued and is not
owned or held in violation of any preemptive rights of stockholders.
There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance
of, any share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company, except as may be
properly described in the Prospectus. There is outstanding no
security or other instrument which by its terms is convertible into,
or exercisable or exchangeable for, capital stock of the Company,
except as may be properly be described in the Prospectus. The
certificates evidencing the Common Stock are in proper form.
(7) The consolidated financial statements of the Company
included in the Registration Statement and the Prospectus fairly
present, with respect to the Company, the financial position, the
results of operations, the cash flows, and the other information
purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such financial statements
have been prepared in accordance with generally accepted accounting
principles (except to the extent that certain footnote disclosures
regarding any stub period may have been omitted in accordance with the
applicable rules of the Commission under the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) consistently
applied throughout the periods involved, are correct and complete in
all material respects, and are in accordance with the books and
records of the
-5-
Company. Price Waterhouse LLP, the accountants whose report on the
audited financial statements is filed with the Commission as a part of
the Registration Statement, are, and during the periods covered by
their report(s) included in the Registration Statement and the
Prospectus were, independent certified public accountants with respect
to the Company within the meaning of the Act and the Regulations. No
other financial statements are required by Form SB-2 or otherwise to
be included in the Registration Statement or the Prospectus. There
has at no time been a material adverse change in the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company from the latest
information set forth in the Registration Statement or the Prospectus,
except as may be properly described in the Prospectus.
(8) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation pending,
threatened, or, to the best knowledge of the Company, in prospect (or
any basis therefor) with respect to the Company or any of its
operations, businesses, properties, or assets, except as may be
properly described in the Prospectus or such as individually or in the
aggregate do not now have, and will not in the future have, a material
adverse effect upon the operations, business, properties, or assets of
the Company. The Company is not in violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or decree,
except as may be properly described in the Prospectus or such as in
the aggregate do not now have, and will not in the future have, a
material adverse effect upon the operations, business, properties, or
assets of the Company; nor is the Company currently required to take
any action in order to avoid any such violation or default.
(9) The Company has good title to all properties and assets
which the Prospectus indicates are owned by it, free and clear of all
liens, security interests, pledges, charges, encumbrances, and
mortgages, except such as to not materially and adversely affect the
value of such property and do not interfere with the use
-6-
made or proposed to made of such property (or except as may be
properly described in the Prospectus). No real property leased,
licensed, or used by the Company lies in an area which is, or to the
knowledge of the Company will be, subject to zoning, use, or building
code restrictions which would prohibit, and no state of facts relating
to the actions or inactions of another person or entity or his or its
ownership, leasing, licensing, or use of any real or personal property
exists or will exist which would prevent, the continued effective
leasing, licensing, or use of such real property in the business of
the Company as presently conducted or as the Prospectus indicates it
contemplates conducting, with such exceptions as are not material and
do not interfere with the use made or proposed to be made of such
property and buildings by the Company (or except as may be properly
described in the Prospectus).
(10) Neither the Company nor, to the knowledge of the Company,
any other party, is now, or is expected by the Company to be, in
violation or breach of, or in default with respect to, any material
provision of any contract, agreement, instrument, lease, license,
arrangement, or understanding which is material to the Company, and
each such contract, agreement, instrument, lease, license,
arrangement, and understanding is in full force and effect and is the
legal, valid, and binding obligation of the parties thereto and is
enforceable as to them in accordance with its terms. The Company
enjoys peaceful and undisturbed possession under all leases and
licenses under which it is operating. Except as described in the
Prospectus, the Company is not a party to, or bound by, any contract,
agreement, instrument, lease, license, arrangement, or understanding,
or subject to any charter or other restriction, which has had, or may
in the future have, a material adverse effect on the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company. The Company is not
in violation or breach of, or in default with respect to, any term of
its certificate of incorporation (or other charter document) or
by-laws.
-7-
(11) All United States and foreign patents, patent
applications, trademarks, trademark applications, trade names, service
marks, copyrights, franchises, and other intangible properties and
assets (all of the foregoing being herein called "Intangibles") that
the Company owns or has pending, or under which it is licensed, are in
good standing and uncontested, except as may be properly described in
the Prospectus. There is no right under any Intangible necessary to
the business of the Company as presently conducted or as the
Prospectus indicates it contemplates conducting, except as may be so
designated in the Prospectus. The Company has not infringed, is not
infringing, or has not received notice of (or knows of any basis for)
a third party claim of infringement with respect to asserted
Intangibles of others, except as may be properly described in the
Prospectus. To the knowledge of the Company, there is no infringement
by others of Intangibles of the Company. To the knowledge of the
Company, there is no Intangible of others which has had, or may in the
future have a material adverse effect on the financial condition,
results of operations, business, properties, assets, liabilities or
future prospects of the Company, except as may be properly described
in the Prospectus.
(12) Neither the Company nor any director, officer, agent,
employee, or other person associated with, or acting on behalf of, the
Company has, directly or indirectly: used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated
any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment. The Company's internal
accounting controls and procedures are sufficient to cause the Company
to comply in all respects with the Foreign Corrupt Practices Act of
1977, as amended.
-8-
(13) The Company has all requisite power and authority to
execute, deliver, and perform this Agreement and the Representative's
Warrants. All necessary corporate proceedings of the Company have
been duly taken to authorize the execution, delivery, and performance
by the Company of this Agreement and the Representative's Warrants.
This Agreement has been duly authorized, executed, and delivered by
the Company, is the legal, valid, and binding obligation of the
Company, and is enforceable as to the Company in accordance with its
terms. The Representative's Warrants have been duly authorized by the
Company and, when executed and delivered by the Company, will be
legal, valid, and binding obligations of the Company, each enforceable
as to the Company in accordance with its terms. No consent,
authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is
required by the Company for the execution, delivery, or performance by
the Company of this Agreement or the Representative's Warrants (except
filings under the Act which have been or will be made before the
Closing Date and filings and consents consisting only of filings and
consents under "blue sky" or securities laws which have been obtained
at or prior to the date of this Agreement). No consent of any party
to any contract, agreement, instrument, lease, license, arrangement,
or understanding to which the Company is a party, or to which any of
their respective properties or assets are subject, is required for the
execution, delivery, or performance of this Agreement and the
Representative's Warrants; and the execution, delivery, and
performance of this Agreement and the Representative's Warrants will
not violate, result in a breach of, conflict with, result in the
creation or imposition of any lien, charge, or encumbrance upon any
properties or assets of the Company pursuant to the terms of, or (with
or without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under, any such
contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate, result in a
-9-
breach of, or conflict with any term of the certificate of
incorporation (or other charter document) or by-laws of the Company,
or violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or to
which any of its respective operations, businesses, properties, or
assets are subject.
(14) The Stock and the Additional Stock are validly authorized
and, when issued and delivered in accordance with this Agreement, will
be validly issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be issued
in violation of any preemptive or similar rights of stockholders, and
the Underwriters will receive good title to the Stock and the
Additional Stock, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting
trusts. The Common Stock, the Stock, and the Additional Stock conform
to all statements relating thereto contained in the Registration
Statement or the Prospectus.
(15) The Warrant Stock is validly authorized and has been duly
and validly reserved for issuance and, when issued and delivered upon
exercise of the Representative's Warrants in accordance with the terms
thereof, will be validly issued, fully paid, and nonassessable,
without any personal liability attaching to the ownership thereof, and
will not be issued in violation of any preemptive rights of
stockholders; and the holders of the Representative's Warrants will
receive good title to the securities purchased by them upon the
exercise of the Representative's Warrants, free and clear of all
liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts. The Representative's
Warrants and the Warrant Stock conform to all statements relating
thereto contained in the Registration Statement or the Prospectus.
(16) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may otherwise be properly described in the Prospectus, the Company
has not (i) issued any securities
-10-
or incurred any liability or obligation, primary or contingent, for
borrowed money, (ii) entered into any transaction not in the ordinary
course of business, (iii) declared or paid any dividend on its capital
stock, or (iv) experienced any adverse changes or any development
which may materially adversely effect the condition (financial or
otherwise), net assets or stockholders' equity, results of operations,
business, key personnel, assets, or properties of the Company.
(17) Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, prior to the termination of the offering
contemplated by this Agreement, any action designed to stabilize or
manipulate the price of any security of the Company, or which has
caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the
price of any security of the Company, to facilitate the sale or resale
of any of the Stock or the Additional Stock.
(18) The Company has obtained from each of its directors,
officers, and securityholders, a written agreement, in form and
substance satisfactory to counsel for the Underwriters, that, for a
period of 18 months from the date on which the Registration Statement
shall become effective under the Act, he, she, or it will not, without
the Representative's prior written consent, publicly offer, sell,
contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or any
security or other instrument which by its terms is convertible into,
or exercisable or exchangeable for, shares of Common Stock or other
securities of the Company, including, without limitation, any shares
of Common Stock issuable pursuant to the terms of any employee stock
options; provided, however, that such persons may offer, sell,
contract to sell, grant an option for the sale of, or otherwise
dispose of all or any part of his, her, or its shares of Common Stock
or other such security or instrument of the Company during such period
only if such transaction is private in nature and the transferee of
such shares
-11-
of Common Stock or other securities or instruments agrees, prior to
such transaction, to be bound by all of the provisions of such
agreement.
(19) The Company is not, and does not intend to conduct its
business in a manner in which it would become, an "investment company"
as defined in Section 3(a) of the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(20) Except for the securities that are being registered
pursuant to the Registration Statement, no person or entity has the
right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of
the Registration Statement.
(21) Except as may be set forth in the Prospectus, the Company
has not incurred any liability for a fee, commission, or other
compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement.
(22) Neither the Company, nor any of its affiliates, is
presently doing business with the government of Cuba or with any
person or affiliate located in Cuba. If, at any time after the date
on which the Registration Statement is declared effective under the
Act or with the Florida Department of Banking and Finance (the
"Florida Department"), whichever is later, and prior to the end of the
period referred to in the first clause of Section 2(a)(2), the Company
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba, the Company will so inform the
Florida Department within 90 days after such commencement of business
in Cuba, and, during the period referred to in Section 2(a)(2), will
inform the Florida Department within 90 days after any change occurs
with respect to previously reported information.
(23) No officer, director, or stockholder of the Company has
any affiliation or association with the National Association of
Securities Dealers, Inc. (the "NASD") or any member thereof.
-12-
(24) Except as disclosed in the Prospectus, the Company has
filed all necessary federal, state, local, and foreign income and
franchise tax returns and other reports required to be filed and has
paid all taxes shown as due thereon; and there is no tax deficiency
which has been, or, to the knowledge of the Company, might be,
asserted against the Company.
(25) To the best knowledge of the Company, none of the
activities or businesses of the Company is in violation of, or will
cause the Company to violate, any law, rule, regulation, or order of
the United States, any state, county, or locality, or of any agency or
body of the United States or of any state, county, or locality, the
violation of which would have a material adverse effect upon the
condition (financial or otherwise), business, property, prospective
results of operations, or net worth of the Company.
(26) The Common Stock has been designated for quotation on the
NASD National Market (the "NASDAQ/NM").
3. PURCHASE, SALE, AND DELIVERY OF THE STOCK AND THE ADDITIONAL STOCK.
On the basis of the representations, warranties, covenants, and agreements of
the Company herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to the Underwriters, and the
Underwriters, severally and not jointly, agree to purchase from the Company, the
numbers of shares of Stock set forth opposite the respective names of the
Underwriters in Schedule I hereto.
The purchase price per share of the Stock to be paid by the Underwriters
shall be $__________. The initial public offering price per share of the Stock
shall be $10.00.
Payment for the Stock by the Underwriters shall be made by certified or
official bank check in New York Clearing House funds payable to the order of the
Company at the offices of Hampshire Securities Corporation, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the New York City
metropolitan area as the Representative shall determine and advise the Company
by at least two full days' notice in writing, upon delivery of the Stock to the
Representative for the respective accounts of the Underwriters. Such delivery
and payment shall
-13-
be made at 10:00 a.m., New York City local time, on the third business day
following the time of the initial public offering, as defined in Section 11(a)
(unless such time and date is postponed in accordance with the provisions of
Section 9(c)), or at such other time as shall be agreed upon between the
Representative and the Company. The time and date of such delivery and payment
are hereinafter referred to as the "Closing Date."
Certificates for the Stock shall be registered in such name or names and in
such authorized denominations as the Representative may request in writing at
least two full business days prior to the Closing Date. The Company shall
permit the Representative to examine and package such certificates for delivery
at least one full business day prior to the Closing Date.
In addition, the Company hereby grants to the Representative, the
Over-allotment Option to purchase all or a portion of the Additional Stock as
may be necessary to cover over-allotments, at the same purchase price per share
to be paid by the several Underwriters to the Company for the Stock as provided
for in this Section 3. The Over-allotment Option may be exercised only to cover
over-allotments in the sale of shares by the Underwriters. The Over-allotment
Option may be exercised by the Representative on the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, at any time
and from time to time on or before the forty-fifth day following the date on
which the Registration Statement becomes effective under the Act, by written
notice by the Representative to the Company. Such notice shall set forth the
aggregate number of shares of Additional Stock as to which the Over-allotment
Option is being exercised (which shall be allocated as to the Company and the
Representative deem appropriate) and the time and date, as determined by the
Representative, when such shares of Additional Stock are to be delivered (such
time and date are hereinafter referred to as an "Additional Closing Date");
provided, however, that no Additional Closing Date shall be earlier than the
Closing Date nor earlier than the second business day after the date on which
the notice of the exercise of the Over-allotment Option shall have been given
nor later than the eighth business day after the date on which such notice shall
have been given.
-14-
In the event the Company declares or pays a dividend or a distribution on
the Common Stock, whether in the form of cash, shares of Common Stock, or other
consideration, prior to the Additional Closing Date, such dividend or
distribution shall also be paid on the Additional Stock on the later of the
Additional Closing Date and the date on which such dividend or distribution is
payable.
Payment for the shares of Additional Stock by the Representative shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company at the offices of Hampshire Securities
Corporation, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place
in the New York City metropolitan area as the Representative shall determine and
advise the Company by at least two full days' notice in writing, upon delivery
of the shares of Additional Stock to the Representative for the account of the
Representative.
Certificates for the shares of Additional Stock shall be registered in such
name or names and in such authorized denominations as the Representative may
request in writing at least two full business days prior to the Additional
Closing Date with respect thereto. The Company shall permit the Representative
to examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date with respect thereto.
It is understood that the Representative, individually and not as
Representative of the several Underwriters, may (but shall not be obligated to)
make any and all the payments required pursuant to this Section 3 on behalf of
any Underwriters whose check or checks shall not have been received by the
Representative at the time of delivery of the Stock to be purchased by such
Underwriter or Underwriters. Any such payment by the Representative shall not
relieve any such Underwriter or Underwriters of any of its or their obligations
hereunder.
4. OFFERING. The Underwriters are to make a public offering of the Stock
as soon, on or after the date on which the Registration Statement becomes
effective under the Act, as the Representative deem it advisable so to do. The
Stock is to be initially offered to the public at the initial public offering
price as provided for in Section 3 (such price being hereinafter referred to as
the "public offering price"). After the initial public offering, the
Representative may from time
-15-
to time increase or decrease the public offering price, in the Representative's
sole discretion, by reason of changes in general market conditions or otherwise.
5. COVENANTS.
(a) The Company covenants that it will:
(1) Use its best efforts to cause the Registration Statement
to become effective under the Act as promptly as possible and notify
the Representative immediately, and confirm such notice in writing,
(i) when the Registration Statement and any post-effective amendment
thereto become effective under the Act, (ii) of the receipt of any
comments from the Commission or the "blue sky" or securities authority
of any jurisdiction regarding the Registration Statement, any
post-effective amendment thereto, the Prospectus, or any amendment or
supplement thereto, (iii) of the filing with the Commission of any
supplement to the Prospectus, and (iv) of the receipt of any
notification with respect to a Stop Order or the initiation or
threatening of any proceeding with respect to a Stop Order. The
Company will use its best efforts to prevent the issuance of any Stop
Order and, if any Stop Order is issued, to obtain the lifting thereof
as promptly as possible. If the Registration Statement has become or
becomes effective under the Act with a form of prospectus omitting
Rule 430A Information, or filing of the Prospectus with the Commission
is otherwise required under Rule 424(b), the Company will file with
the Commission the Prospectus, properly completed, pursuant to Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Representative of such timely filing.
(2) During the time when a prospectus relating to the Stock or
the Additional Stock is required to be delivered hereunder or under
the Act or the Regulations, comply with all requirements imposed upon
it by the Act, as now existing and as hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of, or dealings in, the Stock and the
Additional Stock in accordance with the provisions hereof and the
-16-
Prospectus. If, at any time when a prospectus relating to the Stock
or the Additional Stock is required to be delivered hereunder or under
the Act or the Regulations, any event shall have occurred as a result
of which, in the reasonable opinion of counsel for the Company or
counsel for the Underwriters, the Registration Statement or the
Prospectus as then amended or supplemented contains any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or if, in the opinion of either of such
counsel, it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the Act or the
Regulations, the Company will immediately notify the Representative
and promptly prepare and file with the Commission an appropriate
amendment or supplement (in form and substance satisfactory to the
Representative) which will correct such statement or omission or which
will effect such compliance and will use its best efforts to have any
such amendment declared effective under the Act as soon as possible.
(3) Deliver without charge to each of the Underwriters such
number of copies of each Preliminary Prospectus as Underwriters may
reasonably request and, as soon as the Registration Statement, or any
amendment thereto, becomes effective under the Act or a supplement is
filed with the Commission, deliver without charge to the
Representative two signed copies of the Registration Statement,
including exhibits, or such amendment thereto, as the case may be, and
two copies of any supplement thereto, and deliver without charge to
each of the Underwriters such number of copies of the Prospectus, the
Registration Statement, and amendments and supplements thereto, if
any, without exhibits, as the Representative may request for the
purposes contemplated by the Act.
(4) Endeavor in good faith, in cooperation with the
Representative, at or prior to the time the Registration Statement
becomes effective under the Act, to qualify the Stock and the
Additional Stock for offering and sale under the "blue
-17-
sky" or securities laws of such jurisdictions as the Representative
may designate; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a
foreign corporation doing business in such jurisdiction to which it is
not then subject. In each jurisdiction where such qualification shall
be effected, the Company will, unless the Representative agree in
writing that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or may
be required by the laws of such jurisdiction.
(5) Make generally available (within the meaning of Section
11(a) of the Act and the Regulations) to its securityholders as soon
as practicable, but not later than 45 days afer the end of the fiscal
quarter in which the first anniversary date of the Reigstration
Statement occurs, an earnings statement (which need not be certified
by independent certified public accountants unless required by the Act
or the Regulations, but which shall satisfy the provisions of Section
11(a) of the Act and the Regulations) covering a period of at least 12
months beginning after the effective date of the Registration
Statement.
(6) For a period of 18 months after the date on which the
Registration Statement shall become effective under the Act, not,
without the Representative's prior written consent, offer, issue,
sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or
other securities of the Company (or any security or other instrument
which by its terms is convertible into, or exercisable or exchangeable
for, shares of Common Stock), except as provided in Section 3 and
except for (i) the issuance of shares of Common Stock issuable upon
the exercise of stock options to purchase up to a aggregate of 900,000
shares of Common Stock which may be granted pursuant to the Company's
1997 Stock Option Plan (the "Plan"), as properly described in the
Prospectus, (ii) the issuance of shares of Warrant Stock issuable upon
exercise of the Representative's Warrants and (iii) the issuance of
Common Stock upon the
-18-
exercise of currently outstanding warrants to purchase [______] shares
of Common Stock.
(7) For a period of five years after the effective date of the
Registration Statement, furnish the Representative without charge the
following:
(i) within 90 days after the end of each fiscal year, three
copies of financial statements certified by independent certified
public accountants, including a balance sheet, statement of
income, and statement of changes in cash flows of the Company,
with supporting schedules, prepared in accordance with generally
accepted accounting principles, as at the end of such fiscal year
and for the 12 months then ended, which may be on a consolidated
basis;
(ii) as soon as practicable after they have been sent to
stockholders of the Company or filed with, or furnished to, the
Commission or the NASD, three copies of each annual and interim
financial, proxy statements and other reports or communications
sent by the Company to its stockholders or filed with, or
furnished to, the Commission or the NASD;
(iii) as soon as practicable, two copies of every press
release and every material news item and article in respect of
the Company or its affairs which was released by the Company; and
(iv) such additional documents and information with respect
to the Company and its affairs as the Representative may from
time to time reasonably request; provided, however, that such
additional documents and information shall be received by the
Representative on a confidential basis, unless otherwise
disclosed to the public, and shall not be used in violation of
the Federal Securities laws and the Regulations.
(8) Apply the net proceeds received by it from the offering
contemplated by this Agreement in the manner set forth under the
heading "Use of Proceeds" in the Prospectus.
-19-
(9) Furnish to the Representative as early as practicable
prior to the Closing Date and any Additional Closing Date, as the case
may be, but no less than two full business days prior thereto, a copy
of the latest available unaudited interim consolidated financial
statements of the Company which have been read by the Company's
independent certified public accountants, as stated in their letters
to be furnished pursuant to Section 7(f).
(10) File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the date
on which the Registration Statement becomes effective under the Act,
unless such filing shall comply with the Act and the Regulations and
unless the Representative shall previously have been advised of such
filing and furnished with a copy thereof, and the Representative and
counsel for the Underwriters shall have approved such filing in
writing. Until the later of (i) the completion by the Underwriters of
the distribution of the Stock (but in no event more than nine months
after the date on which the Registration Statement shall have become
effective under the Act) and (ii) 25 days after the date on which the
Registration Statement becomes effective under the Act, the Company
will prepare and file with the Commission, promptly upon the
Representative's request, any amendments or supplements to the
Registration Statement or the Prospectus which, in the
Representative's sole opinion, may be necessary or advisable in
connection with the distribution of the Stock.
(11) File timely with the Commission an appropriate form to
register the Common Stock pursuant to Section 12(g) of the Exchange
Act and comply with all registration, filing, and reporting
requirements of the Exchange Act, which may from time to time be
applicable to the Company.
(12) Comply with all provisions of all undertakings contained
in the Registration Statement.
(13) Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication,
directly or indirectly, and
-20-
hold no press conference with respect to the Company, the financial
condition, results of operations, business, properties, assets,
liabilities of any of them, or this offering, without the
Representative's prior written consent.
(14) File timely and accurate reports on Form SR with the
Commission in accordance with Rule 463 of the Regulations or any
successor provision.
(15) If the principal stockholders, officers, or directors of
the Company are required by the "blue sky" or securities authority of
any jurisdiction selected by the Representative pursuant to Section
5(a)(4) to escrow or agree to restrict the sale of any security of the
Company owned by them for the Company to qualify or register the Stock
or the Additional Stock for sale under the "blue sky" or securities
laws of any such jurisdiction, cause each such person to escrow or
restrict the sale of such security on the terms and conditions and in
the form specified by the securities administrator of such
jurisdiction.
(16) Make all filings required to maintain the inclusion of
the Common Stock on the NASDAQ/NM for a least five years from the date
of this Agreement.
(17) On the Closing Date, sell to the Representative,
individually and not as Representative of the Underwriters, at the
price of $.001 per Warrant, warrants to purchase the Warrant Stock,
which Representative's Warrants shall be substantially in the form set
forth as an exhibit to the Registration Statement.
(18) Until expiration of the Representative's Warrant, keep
reserved sufficient shares of Common Stock for issuance upon exercise
of the Representative's Warrants.
(19) Deliver to the Representative, without charge, within a
reasonable period after the last Additional Closing Date or the
expiration of the period during which the Representative may exercise
the Over-allotment Option, four sets of bound volumes of the
Registration Statement and all related materials to the individuals
designated by the Representative or counsel to the Underwriters.
-21-
(20) For a period of three years after the effective date of
the Registration Statement, provide, at its sole expense, to the
Representative copies of the Company's daily transfer sheets, if so
requested by the Representative.
(21) Maintain key-person life insurance from such life
insurance Company as reasonably acceptable to the Representative,
payable to the Company on the life of [__________________], in the
amount of at least $1,000,000 for the period of time equal to the
longer of (i) three years from the date on which the Registration
Statement becomes effective under the Act and (ii) the terms of the
employment agreement between the Company and such officer.
(22) Use its best efforts, for a period of five years following
the date on which the Registration Statement becomes effective under
the Act, to cause two persons to be elected to the Company's Board of
Directors who are deemed by the Representative, in the
Representative's reasonable judgment, to be independent of the
Company's management.
(23) Until the expiration of three years from the date on which
the Registration Statement becomes effective under the Act, not effect
a change in the independent certified public accountants for the
Company unless either the Company has received the prior written
consent of the Representative or such substitute independent certified
public accountant is one of Xxxxxx Xxxxxxxx & Co., Ernst & Young,
Price Waterhouse, Deloitte & Touche, Coopers & Xxxxxxx, or KPMG Peat
Marwick.
(24) For a period of three years from the date on which the
Registration Statement becomes effective under the Act, the
Representative shall have the right to appoint a designee as an
observer of the Company's Board of Directors. Such observer will have
the right to attend all meetings of the Board of Directors. Such
observer shall be entitled to receive reimbursement for all
out-of-pocket expenses incurred in attending such meetings, including,
but not limited to, food, lodging, transportation, and any fees paid
to directors for attending meetings. The
-22-
Representative shall be given notice of such meetings at the same time
and in the same manner as directors of the Company are informed. The
Representative and such observer shall be indemnified to the same
extent as the other directors. The Company will use its best efforts
to purchase directors and officers insurance in an amount of not less
than $2,000,000, with a deductible of not more than $50,000, provided,
however, that the Company shall not be required to pay more than
$50,000 per year in order to maintain such insurance, and if insurance
in such amount is not available at such cost, the Company shall
purchase that amount of such insurance which is available at a cost of
$50,000 per year.
(25) For a period of three years from date on which the
Registration Statement becomes effective under the Act, the Company,
at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) the Company's
financial statements for each of the first three fiscal quarters prior
to the announcement of quarterly financial information, the filing of
the Company's Quarterly Report on Form 10-QSB, and the mailing of
quarterly financial information to stockholders.
(26) Have in effect on the Closing Date the Plan, which will
provide for the issuance of options to purchase no more than 1,200,000
shares of Common Stock, of which options to purchase not more than
[_______] shares of Common Stock shall be at less than the fair market
value on the date of grant. The Company will not grant, for a period
of three years following the date on which the Registration Statement
becomes effective under the Act, any non-qualified options unless the
exercise price thereof on the date of grant is at least equal to the
fair market value of the Common Stock on such date. No option granted
under such plan shall be exercisable during the first year following
grant, and each option shall vest thereafter at the rate of 25% per
year.
6. PAYMENT OF EXPENSES. The Company hereby agrees to pay all expenses
(other than fees of counsel for the Underwriters, except as provided in Section
6(c)) in connection with (a) the
-23-
preparation, printing, filing, distribution, and mailing of the Registration
Statement and the Prospectus and the printing, filing, distribution, and mailing
of this Agreement, the Master Agreement Among Underwriters, the Master Selected
Dealer Agreement and related documents, including the cost of all copies thereof
and of the Preliminary Prospectuses and of the Prospectus and any amendments or
supplements thereto supplied to the Underwriters in quantities as hereinabove
stated, (b) the issuance, sale, transfer, and delivery (as applicable) of the
Stock and the Additional Stock, including any transfer or other taxes payable
thereon, (c) the qualification of the Stock and the Additional Stock under state
or foreign "blue sky" or securities laws, including the costs of printing and
mailing the preliminary and final "Blue Sky Survey" and the fees for the
Underwriters' counsel (in the amount of $35,000) and the disbursements in
connection therewith, (d) the filing fees payable to the Commission, the NASD,
and the jurisdictions in which such qualification is sought, (e) any fees
relating to the listing of the Common Stock on the NASDAQ/NM, (f) the cost of
printing certificates representing the shares of Common Stock, (g) the fees of
the transfer agent for the Common Stock, (h) the cost of publication of
"tombstone" advertisements with respect to the offering, which expense shall not
be in excess of $12,000 without the Company's consent, and (i) a non-accountable
expense allowance equal to three percent of the gross proceeds of the sale of
the Stock and, to the extent Additional Stock is sold, on the gross proceeds of
the sale of the Additional Stock (less amounts, if any, previously paid to the
Representative in respect of such non-accountable expense allowance) to the
Representative on the Closing Date.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several
Underwriters to purchase and pay for the Stock and the Additional Stock, as
provided herein, shall be subject, in their discretion, to the continuing
accuracy of the representations and warranties of the Company contained herein
and in each certificate and document contemplated under this Agreement to be
delivered to the Representative, as of the date hereof and as of the Closing
Date (or any Additional Closing Date, as the case may be), to the performance by
the Company of its obligations hereunder, and to the following conditions:
-24-
(a) The Registration Statement shall have become effective under the
Act not later than 6:00 p.m., New York City time, on the date of this Agreement
or such later date and time as shall be consented to in writing by the
Representative; on or prior to the Closing Date, or any Additional Closing Date,
as the case may be, no Stop Order shall have been issued and no proceeding shall
have been initiated or threatened with respect to a Stop Order; and any request
by the Commission for additional information shall have been complied with by
the Company to the reasonable satisfaction of counsel for the Underwriters. If
required, the Prospectus shall have been filed with the Commission in the manner
and within the time period required by Rule 424(b) under the Rgulations.
(b)(1) At the Closing Date and any Additional Closing Date, as the
case may be, the Representative shall have received the favorable opinion of
Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Xxxxxxx, counsel for the Company,
dated the date of delivery, addressed to the Underwriters, and in form and scope
satisfactory to counsel for the Underwriters, with reproduced copies or signed
counterparts thereof for each of the Underwriters, to the effect that:
(i) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of
and from, and declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to conduct its
business in the manner described in the Prospectus. The Company is duly
qualified to do business as a foreign corporation and is in good standing
as such in every jurisdiction in which its ownership, leasing, licensing,
or use of property and assets or the conduct of its business makes such
qualification necessary, except where the failure to be so qualified does
not amount to a material liability or disability to the Company;
(ii) the authorized capital stock of the Company consists of
5,000,000 shares of Common Stock. Except as disclosed in the Prospectus,
each outstanding share of Common Stock is validly authorized and issued,
fully paid, and nonassessable, without any personal
-25-
liability attaching to the ownership thereof, has not been issued and is
not owned or held in violation of any preemptive rights of stockholders.
To the knowledge of such counsel, there is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of the Company or
any security or other instrument which by its terms is convertible into, or
exercisable or exchangeable for, capital stock of the Company, except as
may be properly described in the Prospectus. There is outstanding no
security or other instrument which by its terms is convertible into, or
exercisable or exchangeable for, capital stock of the Company. The
certificates evidencing the Common Stock are in proper form;
(iii) to the knowledge of such counsel, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or informal),
or investigation pending, threatened, or in prospect (or any basis
therefor) with respect to the Company or any of their respective
operations, businesses, properties, or assets, except as may be properly
described in the Prospectus or such as individually or in the aggregate do
not now have, and will not in the future have, a material adverse effect
upon the operations, business, properties, or assets of the Company. To
the knowledge of such counsel, the Company is not in violation of, or in
default with respect to, any law, rule, regulation, order, judgment, or
decree, except as may be properly described in the Prospectus or such as in
the aggregate do not now have and will not in the future have a material
adverse effect upon the operations, business, properties, or assets of the
Company; nor is the Company required to take any action in order to avoid
any such violation or default;
(iv) to the knowledge of such counsel, neither the Company nor any
other party is now, or is expected by the Company to be in violation or
breach of, or in default with respect to, any material provision of any
contract, agreement, instrument, lease, license, arrangement, or
understanding which is material to the Company, and, to the knowledge of
such counsel, each such contract, agreement, instrument, lease, license,
arrangement, or understanding is in full force and effect and is the valid,
legal, and binding obligation of the parties thereto and is enforceable in
accordance with its terms;
-26-
(v) The Company is not in violation or breach of, or in default with
respect to, any term of its certificate of incorporation (or other charter
document) or by-laws;
(vi) the Company has all requisite power and authority to execute,
deliver, and perform this Agreement and the Representative's Warrants. All
necessary corporate proceedings of the Company have been taken to authorize
the execution, delivery, and performance by the Company of this Agreement
and the Representative's Warrant. This Agreement has been duly authorized,
executed, and delivered by the Company, is the legal, valid, and binding
obligation of the Company, and, subject to applicable bankruptcy,
insolvency, and other laws affecting the enforceability of creditors'
rights generally, is enforceable as to the Company in accordance with its
terms. The Representative's Warrants have been duly authorized by the
Company and, when executed and delivered by the Company, will be legal,
valid, and binding obligations of the Company, each enforceable as to the
Company in accordance with its terms. No consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or filing
with, any federal, state, local, or other governmental authority or any
court or other tribunal is required by the Company for the execution,
delivery, or performance by the Company of this Agreement or the
Representative's Warrants (except filings under the Act which have been
made or will be made before the Closing Date or Additional Closing Date, as
the case may be, and filings and consents consisting only of filings and
consents under "blue sky" or securities laws. No consent of any party to
any contract, agreement, instrument, lease, license, arrangement, or
understanding known to such counsel to which the Company is a party, or to
which any of its properties or assets are subject, is required for the
execution, delivery, or performance of this Agreement and the
Representative's Warrants; and the execution, delivery, and performance of
this Agreement and the Representative's Warrants will not violate, result
in a breach of, conflict with, result in the creation or imposition of any
lien, charge, or encumbrance upon any properties or assets of the Company
pursuant to the terms of, or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a default
under, any such contract, agreement, instrument, lease, license,
-27-
arrangement, or understanding known to such counsel, violate or result in a
breach of, or conflict with any term of the certificate of incorporation
(or other charter document) or by-laws of the Company, or violate, result
in a breach of, or conflict with any law, rule, regulation, order,
judgment, or decree binding on the Company or to which any of its
operations, businesses, properties, or assets are subject;
(vii) each share of Stock to be delivered on the Closing Date is
validly authorized and, when issued and delivered in accordance with the
terms hereof, will be validly issued, fully paid, and nonassessable,
without any personal liability attaching to the ownership thereof, and is
not issued in violation of any preemptive rights of stockholders, and the
Underwriters have received good title to the shares of Stock purchased by
them, from the Company, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting
trusts. The Additional Stock is validly authorized and issued, is fully
paid and nonassessable, without any personal liability attaching to the
ownership thereof, and will not be issued in violation of any preemptive
rights of stockholders, and upon delivery of the Additional Stock in
accordance with the terms of the Over-allotment option, the Underwriters
will receive good title to the shares of Additional Stock purchased by
them, from the Company, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholder's agreements and voting trusts.
The Common Stock, the Stock, and the Additional Stock conform to all
statements relating thereto contained in the Registration Statement or the
Prospectus;
(viii) the Warrant Stock is validly authorized and has been duly and
validly reserved for issuance pursuant to the terms of the Representative's
Warrants. The Representative's Warrants have been duly and validly issued
and delivered. The Warrant Stock, when issued and delivered in accordance
with the Representative's Warrants, will be validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and will not have been issued in violation of any preemptive
rights of stockholders. The Representative, and any other holders of the
Representative's Warrants, will receive good title to the securities
purchased by them upon exercise of the
-28-
Representative's Warrants, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting
trusts. The Representative's Warrants and the Warrant Stock conform to all
statements relating thereto contained in the Registration Statement or the
Prospectus;
(ix) to the knowledge of such counsel, each contract, agreement,
instrument, lease, or license required to be described in the Registration
Statement or the Prospectus has been properly described therein, and each
contract, agreement, instrument, lease, or license required to be filed as
an exhibit to the Registration Statement has been filed with the Commission
as an exhibit to the Registration Statement;
(x) insofar as statements in the Prospectus purport to summarize
the status of litigation or the provisions of laws, rules, regulations,
orders, judgments, decrees, contracts, agreements, instruments, leases, or
licenses, such statements have been prepared or reviewed by such counsel
and accurately reflect the status of such litigation and provisions
purported to be summarized and are correct in all respects;
(xi) the Company is not an "investment company" as defined in
Section 3(a) of the Investment Company Act and, if the Company conducts its
business as set forth in the Prospectus, will not become an "investment
company" and will not be required to be registered under the Investment
Company Act;
(xii) to the knowledge of such counsel, no person or entity has the
right to require registration of shares of Common Stock or other securities
of the Company because of the filing or effectiveness of the Registration
Statement; and
(xiii) the Registration Statement has become effective under the Act,
the Prospectus has been filed in accordance with Rule 424(b) of the
Regulations, including the applicable time periods set forth therein, or
such filing is not required. To the knowledge of such counsel, no Stop
Order has been issued and no proceeding for that purpose has been
instituted or threatened. On the basis of the participation of such
counsel in conferences at which the contents of the Registration Statement
and the Prospectus and related matters were discussed, but without
independent verification by such counsel of the accuracy,
-29-
completeness, or fairness of the statements contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, such
counsel have no knowledge that (other than financial statements and other
financial data and schedules which are or should be contained therein, as
to which such counsel need express no opinion): (A) the Registration
Statement, any Rule 430A Prospectus, and the Prospectus, and any amendment
or supplement thereto, does not appear on its face to comply as to form in
all material respects with the requirements of the Act and the Regulations;
(B) any of the Registration Statement, any Rule 430A Prospectus, or the
Prospectus, or any amendment or supplement thereto, contains any untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; or (C) since the effective date of the Registration Statement,
any event has occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has not
been set forth in such an amendment or supplement.
In rendering such opinion, counsel for the Company may rely (A) as to
matters involving the application of laws other than the laws of the United
States and the laws of the State of Delaware, to the extent counsel for the
Company deems proper and to the extent specified in such opinion, upon an
opinion or opinions (in form and substance satisfactory to counsel for the
Underwriters) of other counsel, acceptable to counsel for the Underwriters,
familiar with the applicable laws, in which case the opinion of counsel for the
Company shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company and that
reliance thereon by counsel for the Company and the Underwriters is reasonable;
(B) as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company; and (C) to the extent they deem proper,
upon written statements or certificates of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company; provided that copies of any such opinions,
certificates, or statements shall be annexed as exhibits to the opinion of
counsel for the Company.
-30-
(c) On or prior to the Closing Date and any Additional Closing Date, as
the case may be, the Representative shall have been furnished such information,
documents, certificates, and opinions as it may reasonably require for the
purpose of enabling it to review the matters referred to in Section 7(b), and in
order to evidence the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions herein
contained, or as the Representative may reasonably request.
(d) At the Closing Date or any Additional Closing Date, as the case may
be, (i) the Registration Statement and the Prospectus and any amendments or
supplements thereto shall contain all statements which are required to be stated
therein in accordance with the Act and the Regulations, and in all material
respects conform to the requirements thereof, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) there shall have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus, no
material adverse change, or any development involving a prospective material
adverse change, in the business, properties, or condition (financial or
otherwise), results of operations, capital stock, long-term or short-term debt,
or general affairs of the Company from that set forth in the Registration
Statement and the Prospectus, except changes which the Registration Statement
and Prospectus indicate might occur after the date on which the Registration
Statement becomes effective under the Act, and the Company shall not have
incurred any material liabilities or entered into any agreements not in the
ordinary course of business other than as referred to in the Registration
Statement and Prospectus, (iii) except as set forth in the Prospectus, no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation shall be pending, threatened, or in prospect (or any
basis therefor) with respect to the Company or any of its respective operations,
businesses, properties, or assets which would be required to be set forth in the
Registration Statement, wherein an unfavorable decision, ruling, or finding
would materially adversely affect the business, property, condition (financial
or otherwise), results of operations, or
-31-
general affairs, of the Company, and (iv) the Stock shall have been approved for
listing on the NASDAQ/NM.
(e) At the Closing Date and any Additional Closing Date, as the case may
be, the Representative shall have received a certificate of the chief executive
officer, the chief financial officer, and the chief accounting officer of the
Company, dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect that among other things (i) the conditions set forth in
Sections 7(a) and 7(d) have been satisfied, (ii) as of the date of this
Agreement and as of the Closing Date or such Additional Closing Date, as the
case may be, the representations and warranties of the Company contained herein
were and are accurate and correct in all materials respects, and (iii) as of the
Closing Date or such Additional Closing Date, as the case may be, the
obligations to be performed by the Company hereunder on or prior thereto have
been fully performed.
(f) At the time this Agreement is executed and at the Closing Date and any
Additional Closing Date, as the case may be, the Representative shall have
received a letter, addressed to the Underwriters, and in form and substance
satisfactory to the Representative, with reproduced copies or signed
counterparts thereof for each of the Underwriters, from Price Waterhouse LLP,
independent certified public accountants for the Company, dated the date of
delivery:
(i) confirming that they are, and during the period covered by
their report(s) included in the Registration Statement and the Prospectus
were, independent certified public accountants with respect to the Company
within the meaning of the Act and the published Regulations and stating
that the answer to Item 13 of the Registration Statement is correct insofar
as it relates to them;
(ii) stating that, in their opinion, the consolidated financial
statements and schedules of the Company included in the Registration
Statement examined by them comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations;
(iii) stating that, on the basis of procedures (but not an
examination made in accordance with generally accepted auditing standards)
consisting of a reading of the latest
-32-
available unaudited consolidated interim financial statements of the
Company (with an indication of the date of the latest available unaudited
interim financial statements), a reading of the latest available minutes of
the stockholders and Board of Directors of the Company and committees of
such Board of Directors, inquiries to certain officers and other employees
of the Company responsible for financial and accounting matters, and other
specified procedures and inquiries, nothing has come to their attention
that caused them to believe that: (A) the unaudited consolidated financial
statements and schedules of the Company included in the Registration
Statement and Prospectus do not comply in form in all material respects
with the applicable accounting requirements of the Act and the Exchange Act
and the Regulations or are not fairly presented in conformity with
generally accepted accounting principles (except to the extent that certain
footnote disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Commission under the Exchange
Act) applied on a basis consistent with that of the audited financial
statements appearing therein; (B) there was any change in the capital stock
or long-term debt of the Company or any decrease in the net current assets
or stockholders' equity of the Company as of the date of the latest
available consolidated monthly financial statements of the Company or as of
a specified date not more than five business days prior to the date of such
letter, each as compared with the amounts shown in the most recent balance
sheet included in the Registration Statement and Prospectus, other than as
properly described in the Registration Statement and Prospectus or any
change or decrease (which shall be set forth therein) which the
Representative in its sole discretion shall accept, or (C) there was any
decrease in consolidated net sales, net earnings, or net earnings per share
of Common Stock of the Company, during the period from the date of such
balance sheet to the date of the latest available consolidated monthly
financial statements of the Company or to a specified date not more than
five business days prior to the date of such letter, each as compared with
the corresponding period in the preceding fiscal year, other than as
properly described in the Registration Statement and Prospectus
-33-
or any decrease (which shall be set forth therein) which the Representative
in its sole discretion shall accept; and
(iv) stating that they have compared specific numerical data and
financial information pertaining to the Company set forth in the
Registration Statement, which have been specified by the Representative
prior to the date of this Agreement, to the extent that such data and
information may be derived from the general accounting records of the
Company, and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified
readings, inquiries, and other appropriate procedures (which procedures do
not constitute an examination in accordance with generally accepted
auditing standards) set forth in the letter, and found them to be in
agreement.
(g) All proceedings taken in connection with the issuance, sale, transfer,
and delivery of the Stock and the Additional Stock shall be satisfactory in form
and substance to the Representative and to counsel for the Underwriters, and the
Representative shall have received from such counsel for the Underwriters a
favorable opinion, dated as of the Closing Date and the Additional Closing Date,
as the case may be, with respect to such of the matters set forth under Section
7(b), and with respect to such other related matters, as the Representative may
reasonably request.
(h) The NASD, upon review of the terms of the public offering of the Stock
and the Additional Stock, shall not have objected to the Underwriters'
participation in such offering.
(i) Prior to or on the Closing Date, the Company shall have entered into
the Representative's Warrants with the Representative.
Any certificate or other document signed by any officer of the Company and
delivered to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company hereunder to the
Underwriters as to the statements made therein. If any condition to the
Underwriters' obligations hereunder to be fulfilled prior to or at the Closing
Date or any Additional Closing Date, as the case may be, is not so fulfilled,
the Representative may, on behalf of the Underwriters, may terminate this
Agreement or, if the Representative so elect, in
-34-
writing waive any such conditions which have not been fulfilled or extends the
time for their fulfillment.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any and all loss, liability, claim, damage, and expense
whatsoever (which shall include, for all purposes of this Section 8, but not be
limited to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation) as and when incurred arising out of, based upon, or
in connection with (i) any untrue statement or alleged untrue statement of a
material fact contained in (A) the Registration Statement, any Preliminary
Prospectus, any Rule 430A Prospectus, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto or (B) any
application or other document or communication (for purposes of this Section 8,
collectively referred to as an "application") executed by, or on behalf of, the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Stock or the
Additional Stock under the "blue sky" or securities laws thereof or filed with
the Commission or any securities exchange; or any omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, written information furnished to the
Company as stated in Section 8(b) with respect to any Underwriter by, or on
behalf of, such Underwriter through the Representative expressly for inclusion
in the Registration Statement, any Preliminary Prospectus, any Rule 430A
Prospectus, or the Prospectus, or any amendment or supplement thereto, or in any
application as the case may be, or (ii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this Agreement.
The foregoing agreement to indemnify shall be in addition
-35-
to any liability the Company may otherwise have, including liabilities arising
under this Agreement.
If any action is brought against an Underwriter or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of an Underwriter (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve the Company from
any liability it may have other than pursuant to this Section 8(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (satisfactory to such indemnified party or parties) and
payment of expenses. Such indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties unless
the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action or the Company shall not
have promptly employed counsel reasonably satisfactory to such indemnified party
or parties to have charge of the defense of such action or such indemnified
party or parties shall have reasonably concluded that there may be one or more
legal defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company, and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto), unless such settlement, compromise,
consent, or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees promptly
-36-
to notify the Underwriters of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of the Stock or the Additional Stock, the Registration Statement, any
Preliminary Prospectus, any Rule 430A Prospectus, or the Prospectus, or any
amendment or supplement thereto, or any application.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing indemnity from
the Company to the Underwriters in Section 8(a), but only with respect to
statements or omissions, if any, made in the Registration Statement, any
Preliminary Prospectus, any Rule 430A Prospectus, or the Prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto,
or on any application in reliance upon, and in conformity with, written
information furnished to the Company as stated in this Section 8(b) with respect
to any Underwriter by, or on behalf of, such Underwriter through the
Representative expressly for inclusion in the Registration Statement, any
Preliminary Prospectus, any Rule 430A Prospectus, or the Prospectus, or any
amendment or supplement thereto, or on any application, as the case may be;
provided, however, that the obligation of each Underwriter to provide indemnity
under the provisions of this Section 8(b) shall be limited to the amount which
represents the product of the number of shares of Stock and Additional Stock
underwritten by such Underwriter hereunder and the initial public offering price
per share set forth on the cover page of the Prospectus. For all purposes of
this Agreement, the amounts of the selling concession and reallowance set forth
in the Prospectus constitute the only information furnished in writing by or on
behalf of any Underwriter expressly for inclusion in the Registration Statement,
any Preliminary Prospectus, any Rule 430A Prospectus, or the Prospectus (as from
time to time amended or supplemented), or any amendment or supplement thereto,
or in any application, as the case may be. If any action shall be brought
against the Company, any Selling Stockholder, or any other person so indemnified
based on the Registration Statement, any Preliminary Prospectus, any Rule 430A
Prospectus, or the Prospectus, or any amendment or supplement thereto, or on any
application, and in respect of which indemnity
-37-
may be sought against any Underwriter pursuant to this Section 8(b), such
Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 8(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 8(a) or
8(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case or (ii) any indemnified or indemnifying party seeks
contribution under the Act, the Exchange Act, or otherwise, then the Company
(including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed the Registration
Statement, and any controlling person of the Company) as one entity and the
Underwriters, in the aggregate (including for this purpose any contribution by
or on behalf of an indemnified party) as a second entity shall contribute to the
losses, liabilities, claims, damages, and expenses whatsoever to which any of
them may be subject, so that the Underwriters are responsible for the proportion
thereof equal to the percentage which the underwriting discount per share set
forth on the cover page of the Prospectus represents of the initial public
offering price per share set forth on the cover page of the Prospectus and the
Company is responsible for the remaining portion; in such proportions as are
appropriate to reflect the relative benefits received by the Company and the
Underwriters in the aggregate; provided, however, that if applicable law does
not permit such allocation, then other relevant equitable considerations such as
the relative fault of the Company and the Underwriters in the aggregate in
connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses shall also be considered. The relative benefits received
by the Company and the Underwriters in the aggregate shall be deemed to be in
the same proportion as (x) the total proceeds from the offering of the Stock
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company (y) the total proceeds of the offering of the Additional
Stock (net of underwriting discounts and commissions but before deducting
expenses), and (z) the underwriting discounts and commissions received by the
Underwriters in the aggregate, in each case as set forth in the table on the
cover
-38-
page of the Prospectus and in the footnotes thereto. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by the Underwriters, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement, alleged statement, omission, or alleged omission. The Company and
the Underwriters agree that it would be unjust and inequitable if the respective
obligations of the Company and the Underwriters for contribution were determined
by pro rata or per capita allocation of the aggregate losses, liabilities,
claims, damages, and expenses (even if the Underwriters and the other
indemnified parties were treated as one entity for such purpose) or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 8(c). In no case shall any Underwriter be responsible for a
portion of the contribution obligation imposed on all Underwriters in excess of
its pro rata share based on the number of shares underwritten by it as compared
to the number of shares underwritten by all Underwriters who do not default in
their obligations under this Section 8(c). No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(c), each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and each officer, director, partner, employee, agent,
and counsel of an Underwriter shall have the same rights to contribution as such
Underwriter and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, each officer of
the Company who shall have signed the Registration Statement, and each director
of the Company shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 8(c). Anything in this
Section 8(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 8(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
-39-
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Stock or Additional Stock hereunder, and if the number of
shares of Stock or Additional Stock to which the defaults of all Underwriters in
the aggregate relate does not exceed 10% of the number of shares of Stock or
Additional Stock, as the case may be, which all Underwriters have agreed to
purchase hereunder, then such shares of Stock or Additional Stock to which such
defaults relate shall be purchased by the non-defaulting Underwriters in
proportion to their respective commitments hereunder.
(b) If such defaults exceed in the aggregate 10% of the number of
shares of Stock or Additional Stock, as the case may be, which all Underwriters
have agreed to purchase hereunder, the Representative may, in the
Representative's discretion, arrange for itself or for another party or parties
to purchase such shares of Stock or Additional Stock, as the case may be, to
which such default relates on the terms contained herein. If the Representative
does not arrange for the purchase of such shares of Stock or Additional Stock,
as the case may be, within one business day after the occurrence of defaults
relating to in excess of 10% of the Stock or the Additional Stock, as the case
may be, then the Company shall be entitled to a further period of one business
day within which to procure another party or parties satisfactory to the
Representative to purchase such shares of Stock or Additional Stock, as the case
may be, on such terms. If the Representative or the Company with respect to the
Stock or Additional Stock do not arrange for the purchase of the shares of Stock
or Additional Stock, as the case may be, to which such defaults relate as
provided in this Section 9(b), this Agreement may be terminated by the
Representative or by the Company with respect to the Stock or Additional Stock,
in each case without liability on the part of the Company (except that the
provisions of Sections 5(a)(1), 6, 8, 10, and 13 shall survive such termination)
or the several Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for any damages occasioned by its default
hereunder.
(c) If the shares of Stock or Additional Stock to which such defaults
relate are to be purchased by the non-defaulting Underwriters, or are to be
purchased by another party or
-40-
parties as aforesaid, the Representative or the Company with respect to the
Stock or Additional Stock or the Representative shall have the right to postpone
the Closing Date or the Additional Closing Date, as the case may be, for a
reasonable period but not in any event more than seven business days in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements with
respect to the Stock or the Additional Stock, and the Company agrees to prepare
and file promptly any amendment or supplement to the Registration Statement or
the Prospectus which in the opinion of counsel for the Underwriters may thereby
be made necessary. The term "Underwriter" as used in this Agreement shall
include any party substituted under this Section 9 as if such party had
originally been a party to this Agreement and had been allocated the number of
shares of Stock and Additional Stock actually purchased by it as a result of its
original commitment to purchase Stock and Additional Stock and its purchase of
shares of Stock or Additional Stock pursuant to this Section 9.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by, or on behalf of, any Underwriter or any indemnified
person, or by, or on behalf of, the Company or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Stock and the Additional Stock to the
several Underwriters. In addition, the provisions of Sections 5(a)(1), 6, 8,
10, 11, and 13 shall survive termination of this Agreement, whether such
termination occurs before or after the Closing Date or any Additional Closing
Date.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
(a)This Agreement shall become effective at 9:30 A.M., New York City
local time, on the first full business day following the day on which the
Registration Statement becomes
-41-
effective under the Act or at the time of the initial public offering by the
Underwriters of the Stock, whichever is earlier. The time of the initial public
offering shall mean the time, after the Registration Statement becomes effective
under the Act, of the release by the Representative for publication of the first
newspaper advertisement which is subsequently published relating to the Stock or
the time, after the Registration Statement becomes effective under the Act, when
the Stock is first released by the Representative for offering by the
Underwriters or dealers by letter or telegram, whichever shall first occur. The
Representative or the Company may prevent this Agreement from becoming effective
without liability of any party to any other party, except as noted below in this
Section 11, by giving the notice indicated in Section 11(d) before the time this
Agreement becomes effective under the Act.
(b) If the purchase price of the Stock has not been determined as
provided for in Section 3 prior to 4:30 p.m., New York City local time, on the
third full business day after the date the Registration Statement becomes
effective under the Act, this Agreement may be terminated at any time thereafter
either by the Representative or by the Company by giving notice to the other
unless before such termination the purchase price for the Stock has been so
determined. If the purchase price of the Stock has not been so determined prior
to 4:30 p.m., New York City local time, on the tenth full business day after the
date the Registration Statement becomes effective under the Act, this Agreement
shall automatically terminate forthwith.
(c) In addition to the right to terminate this Agreement pursuant to
Sections 7 and 9 hereof, the Representative shall have the right to terminate
this Agreement at any time prior to the Closing Date by giving notice to the
Company, and, if exercised, the Over-allotment Option, at any time prior to any
Additional Closing Date, by giving notice to the Company, (i) if any domestic or
international event, act, or occurrence has materially disrupted, or, in the
Representative's opinion, will in the immediate future materially disrupt, the
securities markets; or (ii) if there shall have been a general suspension of, or
a general limitation on prices for, trading in securities on the New York Stock
Exchange or the American Stock Exchange or in the over-the-counter market; or
(iii) if there shall have been an outbreak or increase in the level of major
hostilities or other national or international calamity; or (iv) if a banking
moratorium has been
-42-
declared by a state or federal authority; or (v) if a moratorium in foreign
exchange trading by major international banks or persons has been declared; or
(vi) if there shall have been a material interruption in the mail service or
other means of communication within the United States; or (vii) if the Company
shall have sustained a material or substantial loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage, or other calamity or malicious act,
whether or not such loss shall have been insured, or from any labor dispute or
court or government action, order, or decree, which will, in the
Representative's opinion, make it inadvisable to proceed with the offering,
sale, or delivery of the Stock or the Additional Stock, as the case may be; or
(viii) if any material governmental restrictions shall have been imposed on
trading in securities in general, which restrictions are not in effect on the
date hereof; or (ix) if there shall be passed by the Congress of the United
States or by any state legislature any act or measure, or adopted by any
governmental body or authoritative accounting institute or board, or any
governmental executive any orders, rules, or regulations, which the
Representative believes likely to have a material adverse effect on the
business, financial condition, or financial statements of the Company or the
market for the Common Stock; or (x) if there shall have been such change in the
market for the Company's securities or securities in general or in political,
financial, or economic conditions as in the Representative's judgment makes it
inadvisable to proceed with the offering, sale, and delivery of the Stock or the
Additional Stock, as the case may be, on the terms contemplated by the
Prospectus.
(d) If the Representative elects to prevent this Agreement from
becoming effective, as provided in this Section 11, or to terminate this
Agreement, the Representative shall notify the Company promptly by telephone,
telex, or telegram, confirmed by letter. If, as so provided, the Company elects
to prevent this Agreement from becoming effective or to terminate this
Agreement, the Company shall notify the Representative promptly by telephone,
telex, or telegram, confirmed by letter.
(e) Anything in this Agreement to the contrary notwithstanding other
than Section 11(f), if this Agreement shall not become effective by reason of an
election pursuant to this Section 11 or if this Agreement shall terminate or
shall otherwise not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any covenant or
-43-
agreement or satisfy any condition of this Agreement by it to be performed or
satisfied, the sole liability of the Company to the Underwriters, in addition to
the obligations the Company assumed pursuant to Section 6, will be to reimburse
the Underwriters for such out-of-pocket expenses (including the fees and
disbursements of their counsel) as shall have been incurred by them in
connection with this Agreement or the proposed offer, sale, and delivery of the
Stock and the Additional Stock, and, upon demand, the Company agrees to pay
promptly the full amount thereof to the Representative for the respective
accounts of the Underwriters. Anything in this Agreement to the contrary
notwithstanding other than Section 11(f), if this Agreement shall not be carried
out within the time specified herein for any reason other than the failure on
the part of the Company to perform any covenant or agreement or satisfy any
condition of this Agreement by it to be performed or satisfied, the Company
shall have no liability to the Underwriters other than for obligations assumed
by the Company pursuant to Section 6.
(f) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 5(a)(1), 6, 8, 10, and 13 shall not be in any way
affected by such election or termination or failure to carry out the terms of
this Agreement or any part hereof.
12. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
by letter, to such Underwriter, c/o Hampshire Securities Corporation, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxxxx Xxxx, with a copy to
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxxx X. Xxxx, Esq.; or if sent to the Company shall be
mailed, delivered, or telexed or telegraphed and confirmed by letter, to the
Company, Connectsoft Communications Corporation, 00000 XX 00xx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx Xxxxxx, President and Chief
Executive Officer, with a copy to Xxxxxxx X. Xxxxx, Esq., Greenberg, Traurig,
Hoffman, Lipoff, Xxxxx & Xxxxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. All notices hereunder shall be effective upon receipt by the party to
which it is addressed.
-44-
13. PARTIES. The Representative represents that it is authorized to act
on behalf of the several Underwriters named in Schedule I hereto, and the
Company shall be entitled to act and rely on any request, notice, consent,
waiver, or agreement purportedly given on behalf of the Underwriters when the
same shall have been given by the Representative on such behalf. This Agreement
shall inure solely to the benefit of, and shall be binding upon, the
Underwriters and the Company, and the persons and entities referred to in
Section 8 who are entitled to indemnification or contribution, and their
respective successors, legal representatives, and assigns (which shall not
include any buyer, as such, of the Stock or the Additional Stock), and no other
person shall have, or be construed to have, any legal or equitable right,
remedy, or claim under, in respect of, or by virtue of this Agreement or any
provision herein contained. Notwithstanding anything contained in this
Agreement to the contrary, all of the obligations of the Underwriters hereunder
are several and not joint.
14. CONSTRUCTION. This Agreement shall be construed in accordance with
the laws of the State of New York, without giving effect to conflict of laws.
Time is of the essence in this Agreement.
15. CONSENT TO JURISDICTION. The Company irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out
of, or relating to, this Agreement, any document or instrument delivered
pursuant to, in connection with, or simultaneously with this Agreement, or a
breach of this Agreement or any such document or instrument. In any such action
or proceeding, the Company waives personal service of any summons, complaint, or
other process and agrees that service thereof may be made in accordance with
Section 12. Within 30 days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the Company shall appear or answer such summons, complaint, or
other process. Should the Company fail to appear or answer within such 30-day
period or such extended period, as the case may be, the Company shall be deemed
in default and judgment may be entered against the Company for the amount as
demanded in any summons, complaint, or other process so served.
-45-
If the foregoing correctly sets forth the understanding between the
Representative and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
CONNECTSOFT COMMUNICATIONS CORPORATION
BY:
-----------------------------------------
ACCEPTED AS OF THE DATE FIRST ABOVE
WRITTEN IN NEW YORK, NEW YORK
HAMPSHIRE SECURITIES CORPORATION*
BY:
------------------------------------
XXXXXXX XXXX
*ON BEHALF OF ITSELF AND THE OTHER SEVERAL
UNDERWRITERS NAMED IN SCHEDULE I HERETO.
-46-
SCHEDULE I
Total
Number
of Shares
to be
Underwriter Purchased
----------- ---------
Hampshire Securities Corporation. . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . .
=========
-47-
