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EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT
3,500,000 Shares of Common Stock
U.S. ONLINE COMMUNICATIONS, INC.
UNDERWRITING AGREEMENT
___________, 1998
Barington Capital Group, L.P. and
Cruttenden Xxxx Incorporated
as Representatives of the several
Underwriters named in Schedule I
attached hereto
c/o Barington Capital Group, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, U.S. OnLine Communications, Inc., a Delaware
corporation (the "Company"), hereby confirms its agreement with Barington
Capital Group, L.P. and Cruttenden Xxxx Incorporated (collectively, the
"Representatives") and the other Underwriters named in Schedule I hereto (you
and the other underwriters being herein collectively called the "Underwriters")
in connection with the proposed offering of certain of its securities to the
public (the "Offering") as follows:
1. Introductory. The Company proposes to issue and sell to the
Underwriters 3,500,000 shares of common stock, par value $.001 per share, of the
Company (the "Common Stock"). In addition, solely for the purpose of covering
over-allotments, the Company proposes to grant the Underwriters the option to
purchase from it up to an additional 525,000 shares of Common Stock (the
"Additional Stock") identical to the Common Stock. The Common Stock is more
fully described in the Prospectus referred to below.
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) The Company has filed with the Securities and
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Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Act"), a registration statement, and may have
filed one or more amendments thereto, on Form SB-2 (Registration No.
333-51781), including in such registration statement and each such
amendment and related preliminary prospectus (a "Preliminary
Prospectus") for the registration of (i) 3,500,000 shares of Common
Stock (the "Firm Stock"), (ii) the Additional Stock, (iii) the common
stock purchase options (the "Representatives' Options") referred to in
Section 5(s), (iv) the shares of Common Stock (the "Representatives'
Stock") issuable upon exercise of the Representatives' Options, (v)
the shares of Common Stock (the "Bridge Stock") issued to investors in
connection with the bridge financing in which Barington Capital Group,
L.P. acted as placement agent, (vi) the shares of Common Stock issued
to U.S. OnLine Communications L.L.C. (the "LLC Stock"), and (vii) the
shares of Common Stock issuable on exercise of the warrants granted to
Silicon Valley Bank and Aspen OnLine Investments, LLC, respectively
(the "Warrants") (the Firm Stock, the Additional Stock, the
Representatives' Options, the Representatives' Stock, the Bridge
Stock, the LLC Stock and the Warrants are collectively referred to as
the "Registered Securities" or the "Securities"). As used in this
Agreement, the term "Registration Statement" means such registration
statement, as amended, on file with the Commission at the time such
registration statement becomes effective (including the prospectus,
financial statements, exhibits, and all other documents filed as a
part thereof), provided that such Registration Statement, at the time
it becomes effective, may omit such information as is permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A of the General Rules and Regulations promulgated
under the Act (the "Regulations"), which information ("Rule 430
Information") shall be deemed to be included in such Registration
Statement when a final prospectus is filed with the Commission in
accordance with Rules 430A and 424(b)(1) or (4) of the Regulations;
the term "Preliminary Prospectus" means each prospectus included in
the Registration Statement, or any amendments thereto, before it
becomes effective under the Act, the form of prospectus omitting Rule
430A Information included in the Registration Statement when it
becomes effective, if applicable (the "Rule 430A Prospectus"), and any
prospectus filed by the Company with your consent pursuant to Rule
424(a) of the Regulations; and the term "Prospectus" means the final
prospectus included as part of the Registration Statement, except that
if the prospectus relating to the securities covered by the
Registration Statement in the form first filed on behalf of the
Company with the Commission pursuant to Rule 424(b) of the Regulations
shall differ from such final prospectus, the term "Prospectus" shall
mean the prospectus as filed pursuant to Rule 424(b) from and after
the date on which it shall have first been used.
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(b) When the Registration Statement becomes effective, and at
all times subsequent thereto and including the Closing Date (as
defined in Section 3) and each Additional Closing Date (as defined in
Section 3), and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Underwriters
or a dealer, and during such longer period until any post-effective
amendment thereto shall become effective, the Registration Statement
(and any post-effective amendment thereto) and the Prospectus (as
amended or as supplemented if the Company shall have filed with the
Commission any amendment or supplement to the Registration Statement
or the Prospectus) will contain all statements which are required to
be stated therein in accordance with the Act and the Regulations, will
comply with the Act and the Regulations, and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should
have been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such
an amendment or supplement; if a Rule 430A Prospectus is included in
the Registration Statement at the time it becomes effective, the
Prospectus filed pursuant to Rules 430A and 424(b)(1) or (4) will
contain all Rule 430A Information and all statements which are
required to be stated therein in accordance with the Act or the
Regulations, will comply with the Act and the Regulations, and will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading; and each Preliminary
Prospectus, as of the date filed with the Commission, did not include
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading; except that no representation or warranty is
made in this Section 2(b) with respect to statements or omissions made
in reliance upon and in conformity with written information furnished
to the Company as stated in Section 8(b) with respect to any
Underwriter by or on behalf of such Underwriter through the
Representatives expressly for inclusion in any Preliminary Prospectus,
the Registration Statement, or the Prospectus, or any amendment or
supplement thereto.
(c) Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement,
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or suspending the registration or qualification of any of the
Registered Securities, nor has any of such authorities instituted or
threatened to institute any proceedings with respect to a Stop Order.
(d) Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease, or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to the Registration Statement.
(e) The Company has no subsidiaries (as defined in the
Regulations) other than as properly described in the Registration
Statement. The Company and each of its subsidiaries is a corporation
or other entity duly organized, validly existing, and in good standing
under the laws of its jurisdiction of organization with full power and
authority, and all necessary and material consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from,
declarations with, and all necessary and material filings with, all
federal, state, local, and other governmental authorities and all
courts and other tribunals, to own, lease, license, and use its
properties and assets and to carry on its business in the manner
described in the Prospectus. The Company and each of its subsidiaries
is duly qualified to do business and is in good standing in every
jurisdiction in which its ownership, leasing, licensing, or use of
property and assets or the conduct of its business makes such
qualification necessary, except where the failure to be so qualified
does not now have and is not, based on the business and prospects of
the Company described in this Prospectus, expected in the future, to
have a material adverse effect on the operations, business,
properties, or assets of the Company.
(f) As of the Closing of the sale of the Firm Stock, the
authorized capital stock of the Company will consist of 20,000,000
shares of Common Stock, of which __________ shares will be issued and
outstanding and 1,000,000 shares of preferred stock, par value $.001
per share, none of which are issued and outstanding. Each outstanding
share of Common Stock is validly authorized, validly issued, fully
paid, and nonassessable, without any personal liability attaching to
the ownership thereof, and has not been issued and is not owned or
held in violation of any preemptive rights of stockholders. There is
no commitment, plan, or arrangement to issue, and no outstanding
option, warrant, or other right calling for the issuance of, any share
of capital stock of the Company or any security or other instrument
which by its terms is convertible into, exercisable for, or
exchangeable for, capital stock of the Company, except as
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described in the Prospectus. There is outstanding no security or other
instrument which by its terms is convertible into or exchangeable for
capital stock of the Company, except as described in the Prospectus.
As of the Closing (as hereinafter defined), there shall be outstanding
no indebtedness of the Company other than (i) trade payables incurred
and unpaid in the ordinary course of business consistent with past
practice, (ii) capital lease obligations properly described in the
Prospectus, (iii) an aggregate principal amount of indebtedness for
borrowed money outstanding to a bank or other financial institution of
not exceeding $7.2 million, (iv) the 10% Subordinated Promissory Note
issued to U.S. OnLine Communications L.L.C., in an aggregate principal
amount of $3 million, and (v) the 14% Subordinated Promissory Note
issued to Aspen OnLine Investments, L.L.C., in an aggregate principal
amount of $1.5 million.
(g) The financial statements of the Company included in the
Registration Statement and the Prospectus fairly present in all
material respects the financial position, the results of operations,
and the other information purported to be shown therein at the
respective dates and for the respective periods to which they apply.
Such financial statements have been prepared in accordance with
generally accepted accounting principles (except to the extent that
certain footnote disclosures regarding any period may have been
omitted in accordance with the applicable rules of the Commission
under the Securities Exchange Act of 1934 (the "Exchange Act"))
consistently applied throughout the periods involved, are correct and
complete, and are in accordance with the books and records of the
Company in all material respects. 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 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 not been a
material adverse change in the financial condition, results of
operations, business, properties, assets, liabilities or prospects of
the Company from the latest information set forth in the Registration
Statement or the Prospectus, except as described in the Prospectus.
(h) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal) or investigation pending or
threatened (or, to the knowledge of the Company, any basis therefor)
with respect to the Company or any of its subsidiaries, or any of its
operations, businesses, properties, assets or liabilities or future
prospects,
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except as described in the Prospectus or except as individually or in
the aggregate do not now have and are not reasonably expected in the
future (assuming the Company or any of its subsidiaries does not
effect a cure thereof) to have a material adverse effect upon the
operations, business, properties, or assets of the Company and its
subsidiaries, taken as a whole. Neither the Company nor any of its
subsidiaries is 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 are not reasonably expected in the future to have a
material adverse effect upon the operations, business, properties,
assets, liabilities or prospects, of the Company or its subsidiaries,
taken as a whole.
(i) Neither the Company nor any of its subsidiaries owns any
real property. The Company and its subsidiaries have 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 as may be properly described in
the Prospectus). No real property owned, leased, licensed, or used by
the Company or any subsidiary 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 known to
the Company relating to the actions or inaction of another person or
entity or his or its ownership, leasing, licensing, or use of any real
or personal property exists or is currently expected to exist which
would prevent, the continued effective ownership, leasing, licensing
or use of such real property in the business of the Company or its
subsidiaries as presently conducted or as the Prospectus indicates it
contemplates conducting (except as may be properly described in the
Prospectus).
(j) The Company and its subsidiaries are not, nor to the
knowledge of the Company is any other party, now or currently expected
by the Company in the future to be in violation or breach of, or in
default with respect to, complying with any material provision of any
contract, agreement, instrument, lease, license, arrangement, or
understanding which is material to the Company or any subsidiary, and
each such contract, agreement, instrument, lease, license,
arrangement, and understanding is in full force and is the legal,
valid, and binding obligation of the Company or any subsidiary, and to
the Company's knowledge, the other parties thereto, and is enforceable
as to the Company or any subsidiary, and to the Company's knowledge,
the other parties thereto, in accordance with its terms. The Company
and its subsidiaries enjoy peaceful and undisturbed possession under
all leases and licenses under which
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they are operating. Neither the Company nor any subsidiary is 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 reasonably be expected in the future
to have a mate- rial adverse effect on the financial condition,
results of operations, business, properties, assets, liabilities, or
prospects of the Company or its subsidiaries, taken as a whole.
Neither the Company nor any subsidiary is in violation or breach of,
or in default with respect to, any term of its articles of
incorporation (or other charter document) or by-laws.
(k) The Company or its subsidiaries own, possess or have the
right to employ all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, software,
systems or procedures), trademarks, service marks and trade names,
inventions, computer programs, technical data and information
(collectively, the "Intangibles") presently employed by them in
connection with the businesses now operated by them or that the
Company or its subsidiaries own or have pending or have licensed, free
and clear of and without violating any right, claimed right, charge,
encumbrance, pledge, security interest, restriction or lien of any
kind of any other person and are in good standing, and, except as
disclosed in the Registration Statement and the Prospectus, neither
the Company nor any subsidiary has received any notice of infringement
of or conflict with asserted rights of others with respect to any of
the foregoing and, to the knowledge of the Company, their rights to
the foregoing are uncontested. The use of the Intangibles in
connection with the business and operations of the Company and its
subsidiaries does not infringe on the rights of any person. There is
no right under any Intangible necessary to the business of the Company
and its subsidiaries as presently conducted or as the Prospectus
indicates it contemplates conducting, except as may be so designated
in the Prospectus. Neither the Company nor any of its subsidiaries has
infringed, is infringing, or has received notice of infringement with
respect to, asserted Intangibles of others. To the knowledge of the
Company, there is no infringement by others of Intangibles of the
Company or any of its subsidiaries. To the knowledge of the Company,
there is no Intangible of others which has had or may reasonably be
expected to have in the future a material adverse effect on the
financial condition, results of operations, business, properties,
assets, liabilities, or prospects of the Company or its subsidiaries,
taken as a whole.
(l) Neither the Company nor any of its subsidiaries or any of
their directors, officers, agents, employees, or any
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other person associated with or acting on behalf of the Company or its
subsidiaries 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.
(m) The Company and each of its subsidiaries has all
requisite corporate power and authority to execute, deliver, and
perform its obligations under each of (i) this Agreement, and (ii) the
certificates evidencing the Representatives' Options (the
"Representatives' Option Agreements" and, collectively with this
Agreement the "Company Documents"). All necessary corporate
proceedings of the Company have been duly taken to authorize the
execution, delivery, and performance of each of the Company Documents
by the Company. This Agreement has been duly authorized, executed, and
delivered by the Company, is the legal, valid, and binding obligation
of the Company, and assuming due authorization, execution and delivery
by the other party hereto, is enforceable as to the Company in
accordance with its terms. Each of the other Company Documents has
been duly authorized by the Company, and is or, when executed and
delivered by the Company and the other parties hereto, will be the
legal, valid, and binding obligation of the Company, enforceable
against the Company in accordance with their respective terms. No
consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any federal, state,
local, or other governmental authority or any court or other tribunal
is required by the Company for the execution, delivery, or performance
by the Company of any of the Company Documents (except filings under
the Act which have been or will be made before the Closing Date and
such consents or approvals consisting only of consents or approvals
under "blue sky" or state securities laws). No consent of any party to
any contract, agreement, instrument, lease, license, arrangement, or
understanding to which the Company or any of its subsidiaries is a
party, or to which any of their properties or assets are subject, is
required for the execution, delivery, or performance of the Company
Documents (except for those consents which have been obtained); and
the execution, delivery, and performance of any of the Company
Documents will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result
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in a breach of any term of the certificate of incorporation (or other
charter document) or by-laws of the Company or violate, result in a
breach of, or conflict with any law, rule, regulation, order,
judgment, or decree binding on the Company or any of its subsidiaries
or to which any of their operations, businesses, properties or assets
are subject.
(n) The Firm Stock and the Additional Stock are validly
authorized and, when issued and delivered in accordance with this
Agreement (and against payment therefor), will be validly issued,
fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders. The Company will
convey to the Underwriters good title to the Firm Stock and Additional
Stock purchased by them, respectively, free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts.
(o) The Representatives' Stock is validly authorized and
reserved for issuance and, when issued and delivered upon exercise of
the Representatives' Options in accordance with the Representatives'
Option Agreements, including payment of the exercise price therefor,
will be validly issued, fully paid and nonassessable, without any
personal liability attaching to ownership thereof, and will not be
issued in violation of any preemptive rights of stockholders. The
Company will convey to the Representatives or their designees good
title to the Representatives' Options and, upon exercise of the
Representatives' Options, the Company will convey to the holders of
the Representatives' Options good title to the Representatives' Stock
purchased by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements,
and voting trusts.
(p) The Securities conform to all statements relating thereto
contained in the Registration Statement or the Prospectus. The
descriptions of any litigation, contract, agreement, instrument, lease
or license required to be described in the Registration Statement or
the Prospectus are correct in all material respects. Any litigation
documents, contract, agreement, instrument, lease, license or other
documents required to be filed as an exhibit to the Registration
Statement has been so filed.
(q) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
and except as may otherwise be properly described in the Prospectus,
the Company has not (i) issued any securities or incurred any
liability or obligation, primary or contingent, for borrowed money,
(ii) entered into any transaction not in the ordinary course of
business, or
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(iii) declared or paid any dividend on its capital stock.
(r) Neither the Company nor any of its subsidiaries or any of
their officers, directors, or affiliates (as defined in the
Regulations), has taken or will take, directly or indirectly, prior to
the termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of
any security of the Company, or which has caused or resulted in, or
which might in the future reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security of the
Company, to facilitate the sale or resale of any of the Firm Stock or
Additional Stock, as the case may be.
(s) The Company has delivered to you the agreement of each of
its directors, officers and affiliates (as defined in the
Regulations), and from each other person or entity who beneficially
owned as of the effective date of the Registration Statement shares of
Common Stock of the Company (each an "Original Stockholder"), an
enforceable written agreement, in form and substance satisfactory to
counsel for the Underwriters, that for a period of 24 months from the
Closing Date such Original Stockholder will not, without your prior
written consent, offer, pledge, issue, sell, contract to sell, grant
any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for shares of Common Stock or other securities of the
Company, including, without limitation, any shares of Common Stock
issuable under any outstanding stock options. Such agreements shall
provide that any such Original Stockholder may sell shares of Common
Stock commencing 12 months after the offering is completed in the
event that the last sales price for the Common Stock on its principal
exchange has been at least 200% of the initial public offering price
per share hereunder for a period of 20 consecutive trading days ending
within 5 days of the date of such sale, and such sale is completed at
a price in excess of 200% of such initial public offering price.
(t) Except as may have been registered in the Registration
Statement, already been exercised or waived or described in the
Registration Statement and the Prospectus, no person or entity has the
right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of
the Registration Statement.
(u) Except as 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
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or finder in connection with the transactions contemplated by this
Agreement.
(v) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with any
person or affiliate located in Cuba within the meaning of Section
517.075 of the Florida Statutes. If, at any time after the date that
the Registration Statement is declared effective with the Commission
or with the Florida Department of Banking and Finance (the "Florida
Department"), whichever date is later, and prior to the end of the
period referred to in the first clause of Section 2(b), the Company
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba, the Company will so inform the
Florida Department within ninety days after such commencement of
business in Cuba, and during the period referred to in Section 2(b)
will inform the Florida Department within ninety days after any change
occurs with respect to previously reported information.
(w) The Registered Securities have been approved for
quotation on the Nasdaq National Market, subject to official notice of
issuance.
(x) Except as contemplated herein or as may have been waived,
no person or entity has any right of first refusal, preemptive right,
right to any compensation, or other similar right or option, in
connection with the Offering, this Agreement, or the Representatives'
Options, or any of the transactions contemplated hereby or thereby.
3. Purchase, Sale, and Delivery of the Firm Stock and the Additional
Stock. On the basis of the representations, warranties, covenants, and
agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to the several
Underwriters, and the Underwriters, severally and not jointly agree to purchase
from the Company, the numbers of shares of Firm Stock set forth opposite the
respective names of the Underwriters on Schedule I hereto.
The purchase price per share of Firm Stock to be paid by the
Underwriters shall be $_____. The initial public offering price per share of
Firm Stock shall be $_____.
Payment for the Firm Stock by the Underwriters shall be made
by wire transfer in immediately available funds to the account or accounts
designated by the Company by written notice to the Representatives at the
offices of Barington Capital Group, L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place in the New York City Metropolitan Area as you
shall determine and advise the Company by at least two full business days'
notice in writing, upon delivery of the Firm Stock to you
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for the respective accounts of the Underwriters. Such delivery and payment shall
be made at 10:00 A.M., New York City Time, on the third business day following
the commencement of the initial public offering, as defined in Section 11(a)
(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 you and the
Company. Such delivery and payment are herein called the "Closing," and the time
and date of such delivery and payment are herein called the "Closing Date."
Certificates for the Firm Stock shall be registered in such
name or names and in such authorized denominations as you may request in writing
at least two full business days prior to the Closing Date. The Company shall
permit you to examine and package such certificates for delivery at least one
full business day prior to the Closing Date.
In addition, the Company hereby grants to the Underwriters
the 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 Firm Stock as provided
for in this Section 3. The Additional Stock shall be purchased by the several
Underwriters from the Company as provided herein, in the same proportion as the
ratio which the number of shares set forth opposite such Underwriter's name on
Schedule I hereto bears to the total number of shares of Firm Stock, subject to
adjustment to avoid fractional shares. This option may be exercised only to
cover over-allotments in the sale of shares of Common Stock by the several
Underwriters. This option may be exercised by you on the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, at any time
and from time to time on or before the forty-fifth day following the effective
date of the Registration Statement, by written notice by you to the Company.
Such notice shall set forth the aggregate number of shares of Additional Stock
as to which the option is being exercised and the time and date, as determined
by you, when such shares of Additional Stock are to be delivered (such delivery
herein being called an "Additional Closing," and such time and date are herein
called an "Additional Closing Date"); provided, however, that no Additional
Closing Date shall be earlier than the Closing Date nor earlier than the third
business day after the date on which the notice of the exercise of the option
shall have been given nor later than the eighth business day after the date on
which such notice shall have been given.
Payment for the Additional Stock by the Underwriters shall be
made by wire transfer in immediately available funds to the account or accounts
designated by the Company by written notice to the Representatives at the
offices of Barington Capital Group, L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place in the New York City Metropolitan Area as you
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shall determine and advise the Company by at least two full days' notice in
writing, upon delivery of the Additional Stock to you for the respective
accounts of the Underwriters.
Certificates for the Additional Stock shall be registered in
such name or names and in such authorized denominations as you may request in
writing at least two full business days prior to the Additional Closing Date
with respect thereto. The Company shall permit you to examine and package such
certificates for delivery at least one full business day prior to the Additional
Closing Date with respect thereto.
4. Offering. The Underwriters are to make a public offering of the
Firm Stock as soon, on or after the effective date of the Registration
Statement, as you deem it advisable so to do. The Firm Stock is to be initially
offered to the public at the initial public offering price as provided for in
Section 3 (such price being herein called the "public offering price"). After
the consummation of the initial public offering, you may from time to time trade
above or below the public offering price, in your sole discretion, by reason of
changes in general market conditions or otherwise.
5. Covenants of the Company. The Company covenants that it will:
(a) Use its best efforts to cause the Registration Statement
to become effective as promptly as possible. If the Registration
Statement has become or becomes effective with a form of prospectus
omitting Rule 430A Information, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will file the
Prospectus, properly completed, pursuant to Rule 424(b) within the
time period prescribed and will provide evidence satisfactory to you
of such timely filing.
(b) Notify you immediately, and confirm such notice in
writing, (i) when the Registration Statement and any post-effective
amendment thereto become effective, (ii) of the receipt of any
comments from the Commission or the "blue sky" or securities authority
of any jurisdiction regarding the Registration Statement, any
post-effective amendment thereto, the Prospectus, or any amendment or
supplement thereto, and (iii) of the receipt of any notification with
respect to a Stop Order or the initiation or threatening of any
proceeding with respect to a Stop Order. The Company will use its best
efforts to prevent the issuance of any Stop Order and, if any Stop
Order is issued, to obtain the lifting thereof as promptly as
possible.
(c) During the time when a prospectus relating to the Firm
Stock and the Additional Stock is required to be delivered hereunder
or under the Act or the Regulations, comply
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so far as it is able with all requirements imposed upon it by the Act,
as now existing and as hereafter amended, and by the Regulations, as
from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Firm Stock or the
Additional Stock, as the case may be, in accordance with the
provisions hereof and the Prospectus. If, at any time when a
prospectus relating to the Firm Stock and the Additional Stock is
required to be delivered hereunder or under the Act or the
Regulations, any event shall have occurred as a result of which, in
the reasonable opinion of counsel for the Company or counsel for the
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 you and promptly prepare and file with the Commission an
appropriate amendment or supplement (in form and substance
satisfactory to you) which will correct such statement or omission or
which will effect such compliance and will use its best efforts to
have any such amendment declared effective as soon as possible.
(d) Deliver without charge to each of the several
Underwriters such number of copies of each Preliminary Prospectus as
may reasonably be requested by the Underwriters and, as soon as the
Registration Statement, or any amendment thereto, becomes effective or
a supplement is filed, deliver without charge to you two signed copies
of the Registration Statement, including exhibits, or such amendment
thereto, as the case may be, and two copies of any supplement thereto,
and deliver without charge to each of the several Underwriters such
number of copies of the Prospectus, the Registration Statement, and
amendments and supplements thereto, if any, without exhibits, as you
may request for the purposes contemplated by the Act.
(e) Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to
qualify the Firm Stock and the Additional Stock for offering and sale
under the "blue sky" or securities laws of such jurisdictions as you
may designate; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a
foreign corporation doing business in such jurisdiction to which it is
not then subject. In each jurisdiction where such qualification shall
be effected, the Company will, unless you agree, in writing, that such
action is not at the time necessary or advisable, file and make such
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statements or reports at such times as are or may be required by the
laws of such jurisdiction.
(f) Use its best efforts to keep the Prospectus and the
Registration Statement current and effective by filing post-effective
amendments, as necessary.
(g) Make generally available (within the meaning of Section
11(a) of the Act and the Regulations) to its security holders as soon
as practicable, but not later than _________, 199_, an earnings
statement (which need not be certified by independent certified public
accountants unless required by the Act, the Regulations, the Exchange
Act or the rules and regulations promulgated under the Exchange Act
but which shall satisfy the provisions of Section 11(a) of the Act and
the Regulations) covering a period of at least twelve months beginning
after the effective date of the Registration Statement.
(h) For the period of twenty four months after the date of
the Prospectus, not, without your prior written consent, offer, issue,
sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or
other securities of the Company (or any security or other instrument
which by its terms is convertible into, exercisable for, or
exchangeable for shares of Common Stock or other securities of the
Company) except as provided in Section 3 and except for (i) the grant
of options to purchase an aggregate of up to 1,000,000 shares of
Common Stock under the Company's 1998 Non-Qualified Stock Option and
Incentive Stock Option Plan (the "1998 Stock Option Plan"), which plan
is properly described in the Prospectus, (ii) the issuance of Common
Stock issuable upon the exercise of stock options and warrants and
conversion of other convertible securities outstanding on the date
hereof (and as described in the Prospectus) or subsequently issued
pursuant to clause (i) hereof, (iii) the issuance of the Securities,
(iv) the issuance of any securities in connection with any merger or
acquisition approved by a majority of the independent directors of the
Company, or (v) the issuance, commencing twelve months after the
closing of the Offering, of shares of Common Stock to unaffiliated
third parties at fair market value pursuant to a private placement
approved by a majority of the independent directors of the Company.
(i) For a period of five years after the effective date of
the Registration Statement, furnish you, without charge, the
following:
(i) within 90 days after the end of each fiscal
year, three copies of financial statements certified by
independent certified public accountants, including a
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balance sheet, statement of income, and statement of cash
flows of the Company and its then existing subsidiaries,
with supporting schedules, prepared in accordance with
generally accepted accounting principles, as at the end of
such fiscal year and for the 12 months then ended, which may
be on a consolidated basis;
(ii) as soon as practicable after they have been
sent to stockholders of the Company or filed with the
Commission, three copies of each annual and interim financial
and other report or communication sent by the Company to its
stockholders or filed with the Commission;
(iii) as soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company; and
(iv) such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its subsidiaries as you may from time to time reasonably
request; provided, however, that the provision of such
documentation does not violate any confidentiality agreement
in effect as of the date hereof.
(j) Apply the net proceeds received by it from the offering
in the manner set forth under "Use of Proceeds" in the Prospectus.
(k) Furnish to you as early as practicable prior to the
Closing Date and any Additional Closing Date, as the case may be, but
no less than two full business days prior thereto, a copy of the
latest available unaudited interim consolidated financial statements
of the Company and its consolidated subsidiaries which have been read
by the Company's independent certified public accountants, as stated
in their letters to be furnished pursuant to Section 7(f).
(l) File no amendment or supplement to the Registration
Statement or Prospectus at any time, after the effective date of the
Registration Statement, unless such filing shall comply with the Act
and the Regulations and unless you shall previously have been advised
of such filing and furnished with a copy thereof, and you and counsel
for the Underwriters shall have a reasonable period of time prior to
such filing to review such filing.
(m) Comply with all registration, filing, and reporting
requirements of the Exchange Act which may from time to time be
applicable to the Company.
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(n) Comply with all provisions of all undertakings contained
in the Registration Statement.
(o) Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication,
directly or indirectly, and hold no press conference with respect to
the Company, the financial conditions, results of operations,
business, properties, assets, liabilities of the Company, or this
Offering, without the Representatives being given a reasonable period
of time to review such press release, communication or topics to be
discussed at any press conference and comment thereon.
(p) File timely with the Commission an appropriate form to
register the Common Stock pursuant to Section 12(b) under the Exchange
Act.
(q) File timely and accurate reports with the Commission in
accordance with Rule 463 of the Regulations or any successor
provision.
(r) Cause the application for quotation of the Registered
Securities on the Nasdaq National Market to be approved prior to the
Closing.
(s) On or prior to the Closing Date, sell to the
Representatives (or their designees), individually and not as
representatives of the Underwriters, the Representatives' Options to
purchase an aggregate of 350,000 shares of Common Stock, which
Representatives' Options shall be evidenced by the Representatives'
Option Agreements, substantially in the form set forth as an exhibit
to the Registration Statement.
(t) Until expiration of the Representatives' Options, keep
reserved sufficient shares of Common Stock, for issuance upon exercise
of the Representatives' Options.
(u) Until the expiration of three years from the Closing
Date, if you, individually and not as representatives of the
Underwriters, shall so request in writing, use its best efforts,
including, without limitation, the solicitation of proxies, to cause
two individuals selected from time to time by Barington Capital Group,
L.P. to be elected as directors of the Company.
(v) Deliver to you, without charge, within a reasonable
period after the last Additional Closing Date or the expiration of the
period in which the Underwriters may exercise the over-allotment
option, three bound volumes of the Registration Statement and all
related materials.
(w) For a period of five years after the Closing Date,
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supply to the appropriate parties such information as may be necessary
or desirable, and otherwise use its best efforts, so that the Company
will be listed and will maintain its listing in the Corporation
Records Service published by Standard & Poor's Corporation and that at
all times during such period such listing will, at a minimum, contain
the names of the Company's officers and directors, a balance sheet as
of a date not more than 18 months prior to such time, and a statement
of operations for either the fiscal year preceding such date or the
most recent fiscal year of operations.
(x) Use its best efforts to maintain the quotation on the
Nasdaq National Market of the Common Stock issued hereunder.
(y) Prior to the date the Registration Statement becomes
effective, procure and maintain Director and Officer Liability
Insurance in the amount no less than $_____ million with a reputable
insurance carrier.
(z) From the Closing Date, retain a transfer agent reasonably
acceptable to the Representatives. Upon the Representatives' request,
the Company shall, for three years from the Closing Date, provide the
Representatives with copies of the Company's daily stock transfer
sheets and lists of the beneficial holders, if available, and record
holders of the Company, from such transfer agent and from the
Depository Trust Company, at the Company's sole cost and expense.
(aa) From the date the Registration Statement becomes
effective and until three years from such date, the Company shall
retain a public relations firm reasonably acceptable to the
Representatives.
6. Payment of Expenses. Except as otherwise provided in Section 11,
the Company hereby agrees to pay all expenses (other than fees of counsel for
the Underwriters, except as provided in Sections 6(c) and 6(e)) in connection
with (a) the preparation, printing, filing, distribution, and mailing of the
Registration Statement, the Prospectus and the certificates and agreements
representing the Securities and the printing, filing, distribution, and mailing
of this Agreement, any Agreement Among Underwriters, any selected dealers
agreement, any Blue Sky Surveys, and if appropriate, any Underwriter's
Questionnaire and Power of Attorney, the certificates representing any of the
Securities, 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 of the Firm Stock and the
Additional Stock, including any transfer or other taxes payable
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thereon, (c) the qualification of the Firm Stock and the Additional Stock under
state or foreign "blue sky" or securities laws, including the costs of printing
and mailing the preliminary and final "Blue Sky Survey" and the reasonable fees
of counsel for the Underwriters and the disbursements in connection therewith,
(d) the filing fees payable to the Commission, the National Association of
Securities Dealers, Inc. (the "NASD"), and the jurisdictions in which such
qualification is sought, (e) the reasonable fees and disbursements of the
Underwriters relating to all filings with the NASD, (f) the application fee and
fees for the quotation of the Common Stock on the Nasdaq National Market, (g)
the fees and expenses of the Company's transfer agent and registrar, (h) the
fees and expenses of the Company's legal counsel and accountants, (i) the fees
of an investigative search firm designated by the Representatives to conduct a
background check of the principals of the Company, (j) the costs (up to a
maximum of $15,000) of placing "tombstone" advertisements in the national
edition of The Wall Street Journal or other publication acceptable to Barington,
and (k) the costs of preparing a reasonable number of transaction "bibles" or
"mementos." In addition, the Company hereby agrees to pay to the Representatives
a non-accountable expense allowance equal to 3% of the aggregate gross proceeds
received by the Company from the sale of the Firm Stock and the Additional Stock
which amounts (less $_____ previously paid to you in respect of such
non-accountable expense allowance) shall be paid to you on the Closing Date
(with respect to Common Stock sold by the Company on the Closing Date) and, if
applicable, on any Additional Closing Date (with respect to Additional Stock
sold by the Company on such Additional Closing Date).
7. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Stock and the Additional Stock, as
provided herein, shall be subject, in their discretion, to the continuing
accuracy of the representations and warranties of the Company contained herein
and in each certificate and document contemplated under this Agreement to be
delivered to you, as of the date hereof and as of the Closing Date (or the
Additional Closing Date, as the case may be), to the performance by the Company
of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective
not later than 6:00 P.M., New York City Time, on the date of this
Agreement or such later date and time as shall be consented to in
writing by you.
(b) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received the favorable opinion of
Xxxxxx & Xxxxx LLP/Xxxxxxx Xxxxxxx P.S., 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 such
number of reproduced copies or signed counterparts thereof for each of
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the Underwriters as shall be satisfactory to the Underwriters, to the
effect that:
(i) the Company and each of its subsidiaries is a
corporation or other entity, duly organized and validly existing, and
in good standing under the laws of its jurisdiction of organization
with full power and authority to own, lease, license, and use its
properties and assets and to conduct its or their business in the
manner described in the Prospectus. The Company and each of its
subsidiaries is duly qualified to do business and is in good standing
in every jurisdiction in which its ownership, leasing, licensing, or
use of property and assets or the conduct of its or their business
makes such qualification necessary except where the failure to be so
qualified does not now have and is not reasonably expected in the
future to have a material adverse effect of the operations, business,
properties or assets of the Company and its subsidiaries, taken as a
whole. The Company and each of its subsidiaries has all necessary and
material consents, authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all federal, state,
local and other governmental authorities and all court and other
tribunals necessary to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the
Prospectus, except where the failure to have any such authorizations,
approvals, orders, licenses, certificates, franchises and permits,
individually or in the aggregate, have not and cannot be reasonably
expected in the future to have a material adverse effect upon the
operations, business, properties, or assets of the Company or its
subsidiaries, taken as a whole.
(ii) the authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, of which, without
taking into account the shares offered pursuant hereto, 2,166,667
shares are outstanding, and 1,000,000 shares of preferred stock, par
value $.001 per share, none of which are outstanding. Each outstanding
share of Common Stock is duly authorized, validly issued, fully paid,
and nonassessable, without any personal liability attaching to the
ownership thereof and to knowledge of such counsel, has not been
issued and is not owned or held in violation of any preemptive right
of stockholders. To the knowledge of such counsel, except for (A) the
1,000,000 shares of Common Stock reserved for issuance upon exercise
of stock options under the Company's 1998 Stock Option Plan, (B) the
shares of Common Stock issuable upon exercise of the Representatives'
Options, (C) the Additional Stock, (D) the 175,000 shares of Common
Stock issuable upon exercise of outstanding options, warrants, rights
or agreements for the purchase or acquisition from the Company of
shares of Common Stock, not otherwise included in items A through C
above; each of which has
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been described in the Prospectus, there is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other
right calling for the issuance of, any share of capital stock of the
Company, or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for, capital stock
of the Company or any outstanding security or other instrument which
by its terms is convertible into or exchangeable for capital stock of
the Company;
(iii) to the knowledge of such counsel, except as
described in the Prospectus, there is no litigation, arbitration,
claim, governmental or other proceeding (formal or informal), or
investigation pending or threatened with respect to the Company or any
subsidiary, or any of their operations, business, properties, or
assets which if determined adversely to the Company would,
individually or in the aggregate, have a material adverse effect upon
the operations, business, properties, or assets of the Company and its
subsidiaries, taken as a whole. To the knowledge of such counsel,
neither the Company nor any subsidiary is in violation of, or in
default with respect to, any law, rule, regulation, or to the
knowledge of such counsel, any order, judgment, or decree, except as
may be described in the Prospectus or such as in the aggregate do not
now have and cannot reasonably be expected in the future to have a
material adverse effect upon the operations, business, properties, or
assets of the Company and its subsidiaries, taken as a whole, nor is
the Company or any of its subsidiaries 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 of its subsidiaries nor any other party is now, nor is
the Company, any of its subsidiaries or any other such party expected
by the Company to be in violation or breach of, or in default with
respect to, complying with any material provision of any contract,
agreement, instrument, lease, license, arrangement, or understanding
known to such counsel which is material to the Company or any of its
subsidiaries, and each such contract, agreement, instrument, lease,
license, arrangement or understanding (in the case of parties other
than the Company or any of its subsidiaries, assuming due
authorization, execution and delivery by such parties) is in full
force and is the legal, valid and binding obligation of the parties
thereto and is enforceable as to them in accordance with its terms;
(v) neither the Company nor any of its subsidiaries
is 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 (or other similar document);
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(vi) the Company has all requisite corporate power and
authority to execute, deliver, and perform each of the Company
Documents. All necessary corporate proceedings of the Company have
been taken to authorize the execution, delivery, and performance by
the Company of the Company Documents. Assuming due authorization,
execution and delivery by each of the other parties thereto, each
Company Document has been duly executed and delivered by the Company.
Each Company Document 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 or will be enforceable as to the Company in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or
other tribunal is required by the Company for the execution, delivery,
or performance by the Company of any of the Company Documents (except
filings under the Act which have been made prior to the Closing Date
and consents consisting only of consents under "blue sky" or state
securities laws, as to which such counsel need not express any
opinion). No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding known to
such counsel and listed as an exhibit to the Registration Statement,
to which the Company or any of its subsidiaries is a party, or to
which any of its or their properties or assets are subject, is
required for the execution, delivery, or performance of any of the
Company Documents; and the execution, delivery, and performance of the
Company Documents will not violate, result in a breach of, conflict
with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under any
such contract, agreement, instrument, lease, license, arrangement, or
understanding known to such counsel upon due inquiry, or violate or
result in a breach of any term of the certificate of incorporation (or
other charter document) or by-laws of the Company or any of its
subsidiaries, or violate, result in a breach of, or conflict with, any
law, rule or regulation, or any order, judgment or decree known to
such counsel upon due inquiry and binding on the Company or any of its
subsidiaries or to which any of its or their operations, business,
properties, or assets are subject (assuming compliance with all
applicable "blue sky" or state securities laws);
(vii) the Firm Stock and the Additional Stock are
validly authorized. Such opinion delivered at the Closing Date or any
Additional Closing Date shall state that, upon payment therefor in
accordance with this Agreement each share of Firm Stock or Additional
Stock, as the case may be, to be delivered on that date is validly
issued, fully paid, and nonassessable, with no personal liability
attaching to
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the ownership thereof, and is not issued in violation of any
preemptive rights of stockholders known to such counsel, and the
Company will convey to the Underwriters good and marketable title to
the Firm Stock and Additional Stock purchased by them, respectively,
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts;
(viii) the Representatives' Stock has been duly and
validly reserved for issuance. Such opinion delivered at the Closing
Date shall state that the Representatives' Options have been duly and
validly issued and delivered. The Representatives' Stock, when issued
and delivered in accordance with the terms of the Representatives'
Option Agreements, including payment of the exercise price therefor,
will be validly authorized, validly issued, fully paid, and
nonassessable, with no personal liability attaching to the ownership
thereof, and will not have been issued in violation of any preemptive
rights of stockholders known to counsel; and the Company will convey
to the Representatives or their designees good title to the
Representatives' Options purchased by them, and, upon exercise of
the Representatives' Options, the Company will convey to the holders
of the Representatives' Options good and marketable title to the
Representatives' Stock, in each case, free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts;
(ix) the Common Stock and the Securities conform to
all statements relating thereto contained in the Registration
Statement or the Prospectus;
(x) to the knowledge of such counsel, the
descriptions of any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus are correct in all material respects. To the knowledge of
such counsel, any contract, agreement, instrument, lease, or license
required to be filed as an exhibit to the Registration Statement has
been filed with the Commission as an exhibit to the Registration
Statement;
(xi) insofar as statements in the Prospectus purport
to summarize the status of litigation or the provisions of laws,
rules, regulations, orders, judgments, decrees, contracts, agreements,
instruments, leases, or licenses, such statements have been prepared
or reviewed by such counsel and accurately reflect the status of such
litigation and provisions purported to be summarized and are correct
in all material respects;
(xii) the conditions for use of Form SB-2 have been
satisfied with respect to the Registration Statement;
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(xiii) the Common Stock has been approved for quotation on
the Nasdaq National Market, subject to official notice of issuance;
(xiv) 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, other than persons or
entities which have waived such rights or whose rights have been
satisfied;
(xv) the Registration Statement has become effective
under the Act. To the knowledge of such counsel, no Stop Order has
been issued and no proceedings for that purpose have been instituted
or threatened;
(xvi) the Registration Statement, any Rule 430A
Prospectus, and the Prospectus, and any amendment or supplement
thereto (other than financial statements, statistical information and
other financial data and schedules contained therein, as to which such
counsel need express no opinion), comply as to form in all material
respects with the require- ments of the Act and the Regulations;
(xvii) to the knowledge of such counsel, since the
effective date of the Registration Statement, no event has occurred
which is required to be described in an amendment or supplement to the
Registration Statement or the Prospectus which has not been set forth
in such an amendment or supplement; and
(xviii) nothing has come to the attention of such counsel
that would lead them to believe that the Registration Statement, any
Rule 430A Prospectus, or the Prospectus, or any amendment or
supplement thereto (other than financial statements, statistical data
and other financial data and schedules which are or should be
contained therein, as to which such counsel need express no opinion),
at the time it or they become effective or at the Closing Date or
Additional Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, at the Closing Date or
Additional Closing Date, as the case may be, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading (in each case other than the financial statements, and
supporting schedules and notes thereto and other financial or
statistical information included therein, as to which no opinion need
be rendered) and such counsel does not know of any amendment to the
Registration Statement required to be
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filed.
In rendering such opinion, counsel for the Company (A) may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company; and (B) may rely to the extent they deem proper, upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such opinions, statements or
certificates shall be delivered to counsel for the Underwriters.
(c) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received the favorable opinion of
Arent, Fox, Kintner, Xxxxxxx & Xxxx, cable regulatory 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 such number of reproduced copies or signed counterparts thereof
for the Underwriters as shall be satisfactory to the Underwriters, to
the effect that:
(i) the statements in the Prospectus and the
Registration Statement under "Prospectus Summary--Operating
Benefits," "Risk Factors--Government Regulation" and
"Business--Government Regulation--CATV Regulatory Issues"
insofar as such statements constitute summaries of matters
relating to cable television regulation which are referred to
therein, fairly and adequately present the information called
for with respect to such legal matters and accurately
summarize the matters referred to therein;
(ii) the discussion of cable regulatory matters set
forth in the Prospectus and the Registration Statement are
complete and accurate in all material respects;
(iii) such counsel has reviewed the Registration
Statement, any Rule 430A Prospectus or the Prospectus or any
amendment or supplement thereto at the time it or they become
effective or at the Closing Date or Additional Closing Date,
as the case may be, relating to the regulation of the Company
in the cable television industry and such statements have
been and are approved by such counsel and are accurate in all
material respects and fairly present the information set
forth therein; and
(iv) nothing has come to the attention of such counsel
that would lead them to believe that the Registration
Statement, any Rule 430A Prospectus, or the Prospectus, or
any amendment or supplement thereto any
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Rule 430 Prospectus, or the Prospectus, or any amendment or
supplement thereto, at the time it or they become effective
or at the Closing Date or Additional Closing Date, as the
case may be, contained an untrue statement of a material
fact with respect to the status of the Company under any
federal or state cable television laws or omitted to state a
material fact relating to the status of the Company under
any federal or state cable television laws required to be
stated therein or necessary to make the statements therein
not misleading or that the Prospectus, at the Closing Date
or Additional Closing Date, as the case may be, included or
includes an untrue statement of a material fact with respect
to the status of the Company under any federal or state
telecommunications laws or omitted or omits to state a
material fact with respect to the status of the Company
under any federal or state cable television laws necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading and
such counsel does not know of any amendment to the
Registration Statement required to be filed.
In rendering such opinion, counsel for the Company (A) may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company; and (B) may rely to the extent they deem proper, upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such opinions, statements or
certificates shall be delivered to counsel for the Underwriters.
(d) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received the favorable opinion of
Hunter Communications Law Group, telecommunications 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 such number of reproduced copies or signed counterparts thereof
for the Underwriters as shall be satisfactory to the Underwriters, to
the effect that:
(i) the statements in the Prospectus and the
Registration Statement under "Prospectus Summary--Operating
Benefits," "Risk Factors--Government Regulation" and
"Business--Government Regulation--Telephony Regulatory
Issues" insofar as such statements constitute summaries of
legal matters referred to therein, fairly and adequately
present the information called for with respect to such legal
matters and accurately summarize the matters referred to
therein;
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(ii) the discussion of regulatory matters set forth
in the Prospectus and the Registration Statement are complete
and accurate in all material respects;
(iii) such counsel has reviewed the Registration
Statement, any Rule 430A Prospectus or the Prospectus or any
amendment or supplement thereto at the time it or they become
effective or at the Closing Date or Additional Closing Date,
as the case may be, relating to the regulation of the Company
in the telecommunications industry and such statements have
been and are approved by such counsel and are accurate in all
material respects and fairly present the information set
forth therein; and
(iv) nothing has come to the attention of such counsel
that would lead them to believe that the Registration
Statement, any Rule 430A Prospectus, or the Prospectus, or
any amendment or supplement thereto any Rule 430 Prospectus,
or the Prospectus, or any amendment or supplement thereto, at
the time it or they become effective or at the Closing Date
or Additional Closing Date, as the case may be, contained an
untrue statement of a material fact with respect to the
status of the Company under any federal or state
telecommunications laws or omitted to state a material fact
relating to the status of the Company under any federal or
state telecommunications laws required to be stated therein
or necessary to make the statements therein not misleading
or that the Prospectus, at the Closing Date or Additional
Closing Date, as the case may be, included or includes an
untrue statement of a material fact with respect to the
status of the Company under any federal or state
telecommunications laws or omitted or omits to state a
material fact with respect to the status of the Company
under any federal or state telecommunications laws necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading and
such counsel does not know of any amendment to the
Registration Statement required to be filed.
In rendering such opinion, counsel for the Company (A) may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company; and (B) may rely to the extent they deem proper, upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such opinions, statements or
certificates shall be delivered to counsel for the Underwriters.
(e) On or prior to the Closing Date and any Additional
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Closing Date, as the case may be, the Representatives shall have been
furnished such information, documents, certificates, and opinions as
they may reasonably require for the purpose of enabling them to review
the matters referred to in Sections 7(b) and 7(c), and in order to
evidence the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions
herein contained, or as you may reasonably request.
(f) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received a certificate of the chief
executive officer and of the chief financial officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case
may be, to the effect that the condition set forth in Section 7(a) has
been satisfied, that as of the date of this Agreement and as of the
Closing Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were
and are accurate, and that as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed.
(g) At the time this Agreement is executed and at the Closing
Date and any Additional Closing Date, as the case may be, you shall
have received a letter from Coopers & Xxxxxxx L.L.P., certified public
accountants, dated the date of delivery, and addressed to the
Underwriters, and in form and substance satisfactory to you, with
reproduced copies or signed counterparts thereof for the Underwriters.
(h) All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Firm Stock and the Additional
Stock shall be satisfactory in form and substance to you and to
counsel for the Underwriters, and the Underwriters 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 you may reasonably
request.
(i) The National Association of Securities Dealers, Inc. upon
review of the terms of the public offering of the Firm Stock and the
Additional Stock, shall not have objected to the Underwriters'
participation in such offering.
(j) Prior to or on the Closing Date, the Company shall have
entered into the Representatives' Option Agreements with the
Representatives.
(k) Prior to or on the Closing Date, the Company shall have
provided to you copies of the agreements referred to in
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Section 2(s).
(l) The Representatives and their counsel shall have received
any additional documents, instruments or certificates which they
reasonably request from the Company.
Any certificate or other document signed by any officer of the Company
and delivered to you 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, you may on behalf of the
several Underwriters terminate this Agreement or, if you so elect, in writing
waive any such conditions which have not been fulfilled or extend the time for
their fulfillment.
8. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless each Underwriter, its respective
officers, directors, partners, employees, agents, and counsel, and
each person, if any, who controls each 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 (which shall
include, for all purposes of this Section 8, but not be limited to,
reasonable attorneys' fees and any and all expense incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any
untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, any Rule 430A Prospectus,
the Registration Statement, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto or
(B) in any application or other document or communication (in this
Section 8 collectively called an "application") executed by or on
behalf of the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to
qualify any of the Registered Securities under the "blue sky" or
securities laws thereof or filed with the Commission or any securities
exchange; or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, unless such statement or omission was made in
reliance upon and in conformity with written information furnished to
the Company as stated in Section 8(b) with respect to any Underwriter
by or on behalf of such Underwriter through the Representatives
expressly for inclusion in any Preliminary Prospectus, any Rule 430A
Prospectus, the
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Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or in any application, as the case may be, or (ii)
any breach of any representation, warranty, covenant, or agreement of
the Company contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Agreement.
If any action is brought against an Underwriter or any of its
respective 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), except to the extent it may have been prejudiced
in any material respect by such failure) and the Company shall
promptly assume the defense of such action, including the employment
of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses in connection with such defense. 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 in a timely manner 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 on advice of counsel that
there may be one or more legal defenses available to it or them or to
other indemnified parties which are different from or additional to
those available to the Company, in any of which events such fees and
expenses shall be borne by the Company and the Company shall not have
the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written
consent, which shall not be unreasonably withheld. The Company shall
not, without the prior written consent of each indemnified party that
is not released as described in this sentence, settle or compromise
any action, or permit a default or consent to the entry of judgment in
or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder, unless such
settlement, compromise, consent, or termination includes an
unconditional release of each indemnified party from all liability in
respect of such action. The Company agrees promptly to notify the
Underwriters of the
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commencement of any litigation or proceedings against the Company or
any of its officers or directors in connection with the sale of the
Firm Stock or the Additional Stock, any Preliminary Prospectus, any
Rule 430A Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto, or any application.
(b) Each Underwriter severally, and not jointly, 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 such Underwriter in Section 8(a), but only with respect to
(i) statements or omissions, if any, made in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement, or
the Prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application in reliance
upon and in conformity with written information furnished to the
Company as stated in this Section 8(b) with respect to any Underwriter
by or on behalf of such Underwriter through the Representatives or
their counsel expressly for inclusion in any Preliminary Prospectus,
any Rule 430A Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be; provided, however, that the
obligation of each Underwriter to provide indemnity under the
provisions of this Section 8(b) shall be limited to the amount which
represents the underwriting discounts received by such Underwriter
hereunder. For all purposes of this Agreement, the information
provided in the first, third and eleventh paragraphs of the
"Underwriting" section and the stabilization language on the inside
front cover set forth in the Prospectus constitute the only
information furnished in writing by or on behalf of any Underwriter
expressly for inclusion in any Preliminary Prospectus, any Rule 430A
Prospectus, the Registration Statement, or the Prospectus (as from
time to time amended or supplemented), or any amendment or supplement
thereto, or in any application (excluding applications to the National
Association of Securities Dealers, Inc. and the Nasdaq Stock Market),
as the case may be. If any action shall be brought against the Company
or any other person so indemnified based on any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or in any
application, and in respect of which indemnity may be sought against
any Underwriter pursuant to this Section 8(b), such Underwriter shall
have the rights and duties given to the Company, and the Company and
each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions
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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 of Firm Stock set forth on the cover
page of the Prospectus represents of the initial public offering price
per share set forth on the cover page of the Prospectus and the
Company is responsible for the remaining portion; provided, however,
that if applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault of the
Company and the Underwriters in the aggregate, in con- nection with
the facts which resulted in such losses, liabilities, claims, damages,
and expenses shall also be considered. The relative fault, in the case
of an untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such
statement, alleged statement, omission, or alleged omission relates to
information supplied by the Company or by the 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
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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 any 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 any Underwriter shall have the same rights to contribution as such
Underwriter and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed the
Registration Statement, and each director of the Company shall have
the same rights to contribution as the Company, subject in each case
to the provisions of this Section 8(c). In no case shall any
Underwriter be liable or responsible for any amount in excess of the
Underwriting discount applicable to the Firm Stock purchased by such
Underwriter hereunder. Anything in this Section 8(c) to the contrary
notwithstanding, no party shall be liable for contribution with
respect to the settlement of any claim or action effected without its
written consent. This Section 8(c) is intended to supersede any right
to contribution under the Act, the Exchange Act, or otherwise.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its
or their obligation to purchase Firm Stock or Additional Shares
hereunder, and if the number of Firm Stock or Additional Shares to
which the defaults of all Underwriters in the aggregate relate does
not exceed 10% of the number of Firm Stock or Additional Shares, as
the case may be, which all Underwriters have agreed to purchase
hereunder, then such Firm Stock or Additional Shares 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 Firm Stock or Additional Shares, as the case may be, which
all Underwriters have agreed to purchase hereunder, you may in your
discretion arrange for yourself or for another party or parties to
purchase such Firm Stock or Additional Shares, as the case may be, to
which such default relates on the terms contained herein. If you do
not arrange for the purchase of such Firm Stock or Additional Shares,
as the case may be, within one business day after the occurrence of
defaults relating to in excess of 10% of the Firm Stock or the
Additional Shares, 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 you to purchase such
Firm Stock or
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Additional Shares, as the case may be, on such terms. If you or the
Company do not arrange for the purchase of the Firm Stock or
Additional Shares, as the case may be, to which such defaults relate
as provided in this Section 9(b), this Agreement may be terminated by
you or by the Company without liability on the part of the Company
(except that the provisions of Sections 6, 8, 9, 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 Firm Stock or Additional Shares to which such
defaults relate are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as
aforesaid, you or the Company 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 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 Firm Stock or the Additional Shares,
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 Firm Stock and Additional Shares actually purchased by
it as a result of its original commitment to purchase Firm Stock and
Additional Shares and its purchase of Firm Stock or Additional Shares
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 Firm Stock and the Additional Stock to the
several Underwriters. In addition, the provisions of Sections 6, 8, 9, 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.
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11. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 9:30 A.M., New
York City Time, on the first full business day following the day on
which the Registration Statement becomes effective or at the time of
the initial public offering by the Underwriters of the Firm Stock,
whichever is earlier. The time of the initial public offering shall
mean the time, after the Registration Statement becomes effective, of
the release by you for publication of the first newspaper
advertisement which is subsequently published relating to the shares
or the time, after the Registration Statement becomes effective, when
the Firm Stock are first released by you for offering by the
Underwriters or dealers by letter or telegram, whichever shall first
occur. You or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except as
noted below in this Section 11, by giving the notice indicated in
Section 11(c) before the time this Agreement becomes effective.
(b) In addition to the right to terminate this Agreement
pursuant to Sections 7 and 9 hereof, you shall have the right to
terminate this Agreement at any time prior to the Closing Date or any
Additional Closing Date, as the case may be, by giving notice to the
Company if any domestic or international event, act, or occurrence has
materially disrupted, or in your opinion will in the immediate future
materially disrupt, the securities markets; or if there shall have
been a general suspension of, or a general limitation on prices for,
trading in securities on the New York Stock Exchange, the Nasdaq
National Market, the American Stock Exchange, or in the
over-the-counter market; or if there shall have been an outbreak of
major hostilities or other national or international calamity; or if a
banking moratorium has been declared by a state or federal authority;
or if a moratorium in foreign exchange trading by major international
banks or persons has been declared; or if there shall have been a
material interruption in the mail service or other means of
communication within the United States; or if the Company shall have
sustained a material or substantial loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage, or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in
your opinion, make it inadvisable to proceed with the offering, sale,
or delivery of the Firm Stock or the Additional Stock, as the case may
be; or if there shall have been such change in the market for
securities in general or in political, financial, or economic
conditions as in your judgment makes it inadvisable to proceed with
the offering, sale, and delivery of the Firm Stock or the Additional
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Stock, as the case may be, on the terms contemplated by the
Prospectus.
(c) If you elect to prevent this Agreement from becoming
effective, as provided in this Section 11, or to terminate this
Agreement pursuant to Section 7, 9, or this Section 11, you shall
notify the Company promptly by telephone, telex, facsimile or
telegram, confirmed by letter. If the Company elects to prevent this
Agreement from becoming effective, as provided in this Section 11, or
to terminate this Agreement pursuant to Section 9 of this Agreement,
the Company shall notify you promptly by telephone, telex, facsimile,
or telegram, confirmed by letter.
(d) Anything in this Agreement to the contrary
notwithstanding other than Section 11(e), if this Agreement shall not
become effective by reason of an election pursuant to this Section 11
or if this Agreement shall terminate or shall otherwise not be carried
out within the time specified herein by reason of any failure on the
part of the Company to perform any covenant or agreement or satisfy
any condition of this Agreement by it to be performed or satisfied,
the sole liability of the Company to the Underwriters, in addition to
the obligations the Company assumed pursuant to Section 6, will be to
reimburse the several Underwriters for such out-of-pocket expenses
(including the reasonable fees and disbursements of their counsel) as
shall have been incurred by them in connection with this Agreement or
the proposed offer, sale, and delivery of the Firm Stock and the
Additional Stock, and the Company agrees to pay promptly upon demand
the full amount thereof, to you for the account of the Underwriters
less amounts previously paid to you on account for or in reimbursement
of such expenses.
(e) Notwithstanding any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 6, 8, 10, and 15 shall not be
in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telecopied and confirmed by letter,
to such Underwriter, to Barington Capital Group, L.P., 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, telecopier number (000) 000-0000, Attention: Xxxx X.
Xxxxxxxx; or if sent to the Company, shall be mailed, delivered, or telecopied
and confirmed by letter, to the Company, 00000 Xxxxxx Xxxx., Xxxxxx, Xxxxx
00000, telecopier number (512) 451- 8732, Attention: Chief Executive Officer.
All notices hereunder shall be effective upon receipt by the party to which it
is addressed.
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13. Parties. You represent that you are 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 you on such behalf. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the several 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
Firm Stock or the Additional Stock), and no other person shall have or be
construed to have any legal or equitable right, remedy, or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
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. Each party hereto 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, each party hereto waives personal service or any summons,
complaint or other process and agrees that service thereof may be made in
accordance with Section 12. Within 30 days after such service, or such other
time as may be mutually agreed upon in writing by the attorneys for the parties
to such action or proceeding, the Company or the Underwriters, as the case may
be, shall appear or answer such summons, complaint or other process.
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If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
U.S. ONLINE COMMUNICATIONS, INC.
By:____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
Accepted as of the date first above written.
New York, New York
BARINGTON CAPITAL GROUP, L.P.
By: LNA CAPITAL CORP.,
General Partner
By:____________________________________
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
Investment Banking
CRUTTENDEN XXXX INCORPORATED
By:____________________________________
Name:
Title:
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SCHEDULE I
Number of
Shares to
be
Name of Underwriter Purchased
------------------- ---------
Barington Capital Group, L.P.............................
Cruttenden Xxxx Incorporated.............................
TOTAL.................................................... 3,500,000
=========
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