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Exhibit 1.1
RUSSIAN WIRELESS TELEPHONE COMPANY, INC.
1,530,000 Shares of Common Stock
and
2,200,000 Redeemable Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
, 1997
X.X. Xxxxxxx & Co., Inc.
As Representative of the several Underwriters
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Russian Wireless Telephone Company, Inc., a Delaware corporation (the
"Company"), and the stockholder listed in Schedule A (the "Selling Stockholder")
of this Underwriting Agreement (the "Agreement") hereby confirm their agreement
with the Underwriters named in Schedule B of the Agreement (the "Underwriters"),
for whom you are acting as representative (the "Representative"), as follows:
1. Description of the Securities.
The Company proposes to issue and sell and the Selling Stockholder
proposes to sell to the Underwriters an aggregate of 1,530,000 shares of common
stock, $.01 par value per share (the "Common Stock") of the Company, of which
1,500,000 shares are being sold by the Company and 30,000 shares by the Selling
Stockholder; and the Company also proposes to sell 2,200,000 redeemable common
stock purchase warrants of the Company (the "Warrants" and collectively with the
Common Stock, the "Securities") in the amounts set forth on Schedule B hereto.
Each Warrant shall entitle the holder to purchase one share of Common Stock for
$7.25, subject to adjustment. The Company proposes to grant to the Underwriters
(or to the Representative, individually) an option to purchase up to 229,500
additional shares of Common Stock and up to an additional 330,000 Warrants (the
"Additional Securities"). The
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offering of Securities and Additional Securities contemplated hereby may
sometimes be referred to as the "Offering."
(a) The Warrants.
The Warrants are exercisable beginning two years from the effective
date of the Registration Statement, as defined in Paragraph 2(a) (the "Effective
Date"), and expire five years after the Effective Date, subject to prior
redemption by the Company. The shares of Common Stock issuable upon the exercise
of the Warrants are hereinafter referred to as the "Warrant Shares."
The Warrants will be redeemable at a price of $.50 per Warrant,
commencing two years after the Effective Date upon at least 30 days prior
written notice provided that the closing bid price of the Common Stock (or
closing sales price if listed on an exchange or on a reporting system that
provides last sales prices) for 20 consecutive trading days ending on the third
day immediately prior to the date on which notice of redemption is given shall
exceed $14.50 per share (subject to adjustment), subject to the right of the
holder to exercise his purchase rights thereunder until redemption.
Notwithstanding the foregoing, the Warrants may be exercised and/or redeemed
commencing one year after the Effective Date with the prior written consent of
the Representative.
(b) Representative's Warrants.
The Company will sell to the Representative, for $10, a warrant to
purchase one share of Common Stock and one Warrant for each ten shares of Common
Stock and ten Warrants sold in this Offering excluding the Additional Securities
(a maximum of 153,000 shares of Common Stock and 220,000 Warrants) at a price
equal to $11.55 per share of Common Stock and $.83 per Warrant (the
"Representative's Warrants" and collectively with the Securities underlying the
Representative's Warrants, the "Representative's Securities"). The Warrants
underlying the Representative's Warrants shall be exercisable at a price of
$7.25 per Warrant. The Representative's Securities shall be non-exercisable and
non-transferable (other than to (i) officers of the Underwriters, and (ii)
members of the selling group and their officers or partners) for a period of 12
months following the Effective Date.
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Thereafter, they are exercisable and transferable for a period of four years. If
the Warrants underlying the Representative's Warrants are not exercised during
their term, they shall, by their terms, automatically expire. The
Representative's Securities shall be registered for sale to the public and shall
be included in the Registration Statement filed in connection with the Offering.
2. Representations and Warranties of the Company.
A. The Company represents and warrants to the Underwriters
that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form SB-2 (File No.
333-24177), including any related preliminary prospectus ("Preliminary
Prospectus"), for the registration of the Securities under the Securities Act of
1933 (the "Act"). The Company will file further amendments to said registration
statement in the form to be delivered to you and will not, before the
registration statement becomes effective, file any other amendment thereto to
which you shall have objected in writing after having been furnished with a copy
thereof. Except as the context may otherwise require, such registration
statement, as amended, on file with the Commission at the time the registration
statement becomes effective (including the prospectus, financial statements,
exhibits and all other documents filed as a part thereof or incorporated
therein), is hereinafter called the "Registration Statement" and the prospectus,
in the form filed with the Commission pursuant to Rule 424(b) of the General
Rules and Regulations of the Commission under the Act (the "Regulations") or, if
no such filing is made, the definitive prospectus used in the Offering, is
hereinafter called the "Prospectus." The Company has delivered to you copies of
each Preliminary Prospectus as filed with the Commission and has consented to
the use of such copies for purposes permitted by the Act.
(b) The Commission has not issued any orders preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects with the requirements of the
Act and has not included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements
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therein, in light of the circumstances under which they were made, not
misleading, subject to the provisions set forth below and except as such untrue
statement or omission has been cured in the a subsequent preliminary prospectus
or in the final prospectus.
(c) When the Registration Statement becomes effective under
the Act and at all times subsequent thereto including the Closing Date
(hereinafter defined) and the Option Closing Date (hereinafter defined) and for
such longer periods as in the opinion of counsel for the Underwriters, a
Prospectus is required to be delivered in connection with the sale of the
Securities by the Underwriters, the Registration Statement and Prospectus, and
any amendment thereof or supplement thereto, will contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations, and will in all material respects conform to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, will
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,
in light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company by you, for use in connection with the
preparation of the Registration Statement or Prospectus, or in any amendment
thereof or supplement thereto. It is understood that the statements set forth
under the heading "Underwriting" in the Prospectus with respect to (i) the
amounts of the selling concession and reallowance; (ii) the identity of counsel
to the Underwriters under the heading "Legal Matters"; and (iii) the information
concerning the NASD affiliation of the Underwriters constitute for purposes of
this Section the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Registration Statement and Prospectus, as the
case may be.
(d) The Company and each of its subsidiaries (each a
"Subsidiary") are, and at the Closing Date and the Option Closing Date will be,
corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation. The Company and each of its
Subsidiaries are duly qualified or licensed and in good standing as foreign
corporations
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in each jurisdiction in which their ownership or leasing of any properties or
the character of their operations requires such qualification or licensing,
except those jurisdictions in which the failure to so qualify would not have a
material adverse effect. The Company and each of its Subsidiaries have all
requisite corporate powers and authority, and, except as set forth in the
Registration Statement, the Company and each of its Subsidiaries and their
employees' have all material and necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies to own or lease their properties and conduct their
businesses as described in the Prospectus, and the Company and each of its
Subsidiaries are doing business and have been doing business during the period
described in the Registration Statement in compliance with all such material
authorizations, approvals, orders, licenses, certificates and permits and all
material federal, state and local laws, rules and regulations concerning the
businesses in which the Company or its Subsidiaries are engaged. The disclosures
in the Registration Statement concerning the effects of federal, state and local
regulation on the Company's or its Subsidiaries' businesses as currently
conducted and as contemplated are correct in all material respects and do not
omit to state a material fact. The Company has all corporate power and authority
to enter into this Agreement and carry out the provisions and conditions hereof,
and all consents, authorizations, approvals and orders required in connection
therewith have been obtained or will have been obtained prior to the Closing
Date.
(e) This Agreement has been duly and validly authorized and
executed by the Company. The Securities (including the Common Stock and the
Warrants), the Warrant Shares, the Representative's Warrants to be issued and
sold by the Company pursuant to this Agreement, the Securities issuable upon
exercise of the Representative's Warrants and payment therefor, and the Common
Stock and Warrant Shares underlying such Representative's Warrants, have been
duly authorized (and, in the case of the Common Stock and the Warrant Shares,
have been duly reserved for issuance) and, when issued and paid for in
accordance with this Agreement (and, in the case of the Warrant Shares, upon
exercise of the Warrants and payment to the Company of the exercise price
therefor), the Common Stock and Warrant Shares will be validly issued, fully
paid and non-assessable; the Common Stock, Warrants, Warrant Shares,
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Representative's Warrants, Additional Securities and Representative's Warrant
Shares are not and will not be subject to the preemptive rights of any
stockholder of the Company and conform and at all times up to and including
their issuance will conform in all material respects to all statements with
regard thereto contained in the Registration Statement and Prospectus; and all
corporate action required to be taken for the authorization, issuance and sale
of the Common Stock, Warrants, Warrant Shares and Representative's Warrants has
been taken, and this Agreement constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms, to issue and sell, upon
exercise in accordance with the terms thereof, the number and kind of securities
called for thereby.
(f) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation, as amended, or Bylaws of the Company or any of
its Subsidiaries or of any evidence of indebtedness, lease, contract or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
properties is bound, or under any applicable law, rule, regulation, judgment,
order or decree of any government, professional advisory body, administrative
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its Subsidiaries or their properties, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries; and no consent, approval,
authorization or order of any court or governmental or other regulatory agency
or body is required for the consummation by the Company or any of its
Subsidiaries of the transactions on their part herein contemplated, except such
as may be required under the Act or under state securities or blue sky laws,
except where a breach, violation or failure to obtain such consent would not
have a material adverse effect upon the business or operation of the Company or
its Subsidiaries.
(g) Subsequent to the date hereof, and prior to the
Closing Date and the Option Closing Date, the Company will not issue or acquire
any equity securities except that the Company may
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make short-term investments as contemplated in the "Use of Proceeds" section of
the Prospectus. Except as described in the Registration Statement, the Company
does not have, and at the Closing Date and at the Option Closing Date will not
have, outstanding any options to purchase or rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell shares of its Preferred Stock, Common Stock or any
such options, warrants, convertible securities or obligations.
(h) The financial statements and notes thereto included in the
Registration Statement and the Prospectus fairly present the financial position
and the results of operations of the Company at the respective dates and for the
respective periods to which they apply; and such financial statements have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved.
(i) Except as set forth in the Registration Statement, the
Company and each Subsidiary are not, and at the Closing Date and at the Option
Closing Date will not be, in violation or breach of, or default in, the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, note, loan or credit agreement, or any other agreement
or instrument evidencing an obligation for borrowed money, or any other
agreement or instrument to which the Company or any of its Subsidiaries are a
party or by which the Company or any of its Subsidiaries may be bound or to
which any of the property or assets of the Company or any of its Subsidiaries
are subject, which violations, breaches, default or defaults, singularly or in
the aggregate, would have a material adverse effect on the Company or any of its
Subsidiaries. The Company and each of its Subsidiaries have not and will not
have taken any action in material violation of the provisions of the Certificate
of Incorporation, as amended, or the Bylaws of the Company or its Subsidiaries
or any statute or any order, rule or regulation of any court or regulatory
authority or governmental body having jurisdiction over or application to the
Company or its Subsidiaries, their businesses or properties.
(j) The Company and each of its Subsidiaries have, and at the
Closing Date and at the Option Closing Date will have, good and marketable title
to all properties and assets described in the
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Prospectus as owned by them, free and clear of all liens, charges, encumbrances,
claims, security interests, restrictions and defects of any material nature
whatsoever, except such as are described or referred to in the Prospectus and
liens for taxes not yet due and payable. All of the material leases and
subleases under which the Company or any of its Subsidiaries are the lessor or
sublessor of properties or assets or under which the Company or any of its
Subsidiaries hold properties or assets as lessee as described in the Prospectus
are, and will on the Closing Date and the Option Closing Date be, in full force
and effect, and except as described in the Prospectus, the Company and its
Subsidiaries are not and will not be in default in respect to any of the terms
or provisions of any of such leases or subleases (which would have a material
adverse effect on the business, business prospects or operations of the Company
or any of its Subsidiaries taken as a whole), and no claim has been asserted by
anyone adverse to rights of the Company or any of its Subsidiaries as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company or any of its
Subsidiaries to continue possession of the leased or subleased premises or
assets under any such lease or sublease except as described or referred to in
the Prospectus, and the Company and each of its Subsidiaries owns or leases all
such properties as are necessary to its operations as now conducted and, except
as otherwise stated in the Prospectus, as proposed to be conducted set forth in
the Prospectus (which would have a material adverse effect on the business,
business prospects or operations of the Company or any of its Subsidiaries taken
as a whole).
(k) The authorized, issued and outstanding capital stock of
the Company as of , 1997 is as set forth in the Prospectus under
"Capitalization"; the shares of issued and outstanding capital stock of the
Company set forth thereunder have been duly authorized, validly issued and are
fully paid and non-assessable; except as set forth in the Prospectus, no
options, warrants or other rights to purchase, agreements or other obligations
to issue, or agreements or other rights to convert any obligation into, any
shares of capital stock of the Company have been granted or entered into by the
Company; and the Common Stock, the Warrants and all such options and warrants
conform in all material respects, to all statements relating thereto contained
in the Registration Statement and Prospectus.
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(l) Except as described in the Prospectus, the Company does
not own or control any capital stock or securities of, or have any proprietary
interest in, or otherwise participate in any other corporation, partnership,
joint venture, firm, association or business organization; provided, however,
that this provision shall not be applicable to the investment, if any, of the
net proceeds from the sale of the Securities sold by the Company in certificates
of deposits, savings deposits, short-term obligations of the United States
Government, money market instruments or other short-term investments.
(m) Ernst & Young LLP, and Ernst & Young (CIS) Limited, who
have given their reports on certain financial statements filed and to be filed
with the Commission as a part of the Registration Statement, which are
incorporated in the Prospectus, are with respect to the Company, independent
public accountants as required by the Act and the Rules and Regulations.
(n) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not
(i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) entered into any transaction other than
in the ordinary course of business; or (iii) declared or paid any dividend or
made any other distribution on or in respect to its capital stock.
(o) There is no litigation or governmental proceeding pending
or to the knowledge of the Company or any Subsidiary threatened against, or
involving the properties or business of the Company or any Subsidiary which
might materially adversely affect the value, assets or the operation of the
properties or the business of the Company or any Subsidiary, except as referred
to in the Prospectus. Further, except as referred to in the Prospectus, there
are no pending actions, suits or proceedings related to environmental matters or
related to discrimination on the basis of age, sex, religion or race, nor is the
Company or any Subsidiary charged with or, to its knowledge, under investigation
with respect to any violation of any statutes or regulations of any regulatory
authority having jurisdiction over its business or operations, and no labor
disturbances by the employees of the Company or any
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Subsidiary exist or, to the knowledge of the Company or any Subsidiary, have
been threatened.
(p) The Company has, and at the Closing Date and at the Option
Closing Date will have, filed all necessary federal, state and foreign income
and franchise tax returns or has requested extensions thereof (except in any
case where the failure to so file would not have a material adverse effect on
the Company), and has paid all taxes which it believes in good faith were
required to be paid by it except for any such tax that currently is being
contested in good faith or as described in the Prospectus.
(q) The Company has not at any time (i) made any contribution
to any candidate for political office, or failed to disclose fully any such
contribution, in violation of law, or (ii) made any payment to any state,
federal, foreign governmental or professional regulatory agency, officer or
official or other person charged with similar public, quasi-public or
professional regulatory duties, other than payments or contributions required or
allowed by applicable law.
(r) Except as set forth in the Registration Statement, to the
knowledge of the Company, neither the Company nor any officer, director,
employee or agent of the Company has made any payment or transfer of any funds
or assets of the Company or conferred any personal benefit by use of the
Company's assets or received any funds, assets or personal benefit in violation
of any law, rule or regulation, which is required to be stated in the
Registration Statement or necessary to make the statements therein not
misleading.
(s) On the Closing Date and on the Option Closing Date, all
transfer or other taxes, if any (other than income tax) which are required to be
paid, and are due and payable, in connection with the sale and transfer of the
Securities by the Company to the Underwriters will have been fully paid or
provided for by the Company as the case may be, and all laws imposing such taxes
will have been fully complied with in all material respects.
(t) There are no contracts or other documents of the Company
which are of a character required to be described in the
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Registration Statement or Prospectus or filed as exhibits to the Registration
Statement which have not been so described or filed.
(u) The Company will apply the net proceeds from the sale of
the Securities sold by it for the purposes and in the manner set forth in the
Registration Statement and Prospectus under the heading "Use of Proceeds."
(v) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (1) transactions are
executed in accordance with management's general or specified authorizations;
(2) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (3) access to assets is permitted only in
accordance with management's general or specific authorizations; and (4) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) Except as set forth in the Prospectus, no holder of any
securities of the Company has the right to require registration of any
securities because of the filing or effectiveness of the Registration Statement.
(x) The Company has not taken and at the Closing Date will not
have taken, directly or indirectly, any action designed to cause or result in,
or which has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock or the
Warrants to facilitate the sale or resale of such securities.
(y) To the Company's knowledge, there are no claims for
services in the nature of a finder's origination fee with respect to the sale of
the Securities hereunder, except as set forth in the Prospectus.
(z) Other than the right of first refusal granted by the
Company to the Representative (as set forth in Section 3(aa) hereof), no right
of first refusal exists with respect to any sale of securities by the Company.
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(aa) No statement, representation, warranty or covenant made
by the Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to Underwriters was, when made, or as of the
Closing Date or as of the Option Closing Date will be materially inaccurate,
untrue or incorrect.
B. The Selling Stockholder represents and warrants to the
Underwriters that:
(a) It (1) has the full right, power and authority to execute
and deliver this Agreement, the Power of Attorney, and the Custody Agreement,
hereinafter referred to, (2) is, and on the Closing Date will be, the owner of
the Selling Stockholder's Common Stock ("Stock") to be sold pursuant to the
terms hereof, free and clear of all liens, charges, encumbrances and
restrictions, (3) has paid the full purchase price required to be paid for such
Stock, (4) on the Closing Date will have paid or provided for all stock transfer
or other taxes (other than income taxes) required to be paid by such Selling
Stockholder in connection with the sale and transfer of such Selling
Stockholder's Stock and all laws imposing such taxes will have been fully
complied with, and (5) has, and on the Closing Date will have, the full legal
right, power and authority to sell, transfer and deliver such Selling
Stockholder's Stock hereunder and xxxxx good and marketable title to such
Selling Stockholder's Stock, free and clear of all liens, charges, encumbrances,
equities, claims and restrictions, whatsoever.
(b) This Agreement, the Power of Attorney and the Custody
Agreement have been duly authorized, executed and delivered by the Selling
Stockholder. This Agreement, the Power of Attorney and the Custody Agreement
constitute the valid and binding agreements of the Selling Stockholder
enforceable in accordance with their terms.
(c) Neither the execution and delivery of this Agreement, the
Power of Attorney, nor the Custody Agreement nor the consummation of the
transactions herein or therein contemplated nor the compliance with the terms
hereof or thereof by the Selling Stockholder will conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, purchase agreement or other agreement or
instrument to which the Selling Stockholder is a party
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or by which the Selling Stockholder is bound and no consent, approval,
authorization or order of any court or governmental agency or body is required
for the consummation by the Selling Stockholder of the transactions on the
Selling Stockholder's part herein contemplated, except such as may be required
under the Act or under state securities or blue sky laws.
(d) The Selling Stockholder has not, and at the Closing Date
will not have, taken, and agrees that it will not take, directly or indirectly,
any action to cause or result in, or which has constituted, or might reasonably
be expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Stock. Other than as
permitted by the Act and the rules and regulations thereunder, the Selling
Stockholder has not distributed and will not distribute any Preliminary
Prospectus, the Prospectus or any other offering material in connection with the
offering and sale of the Stock.
(e) Certificates in negotiable form representing the Selling
Stockholder's Stock to be sold by it have been placed in custody under the
Custody Agreement, in the form heretofore furnished to the Selling Stockholder,
duly executed and delivered by the Selling Stockholder to Hall Xxxxxxx Xxxx
Xxxxxxxx & Xxxx, LLP (the "Custodian"), and the Selling Stockholder has duly
executed and delivered a Power of Attorney, in the form heretofore furnished to
you, appointing Xxxxxx X. Xxxxxx as the Selling Stockholder's attorney-in-fact
(the "Attorney-in-Fact") with authority to execute and deliver this Agreement on
behalf of the Selling Stockholder, to authorize the delivery of the Selling
Stockholder's Stock to be sold by the Selling Stockholder hereunder and
otherwise to act on behalf of the Selling Stockholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
(f) The Selling Stockholder's Stock represented by the
certificates held in custody for the Selling Stockholder under the Custody
Agreement are subject to the interests of the Underwriters hereunder, and the
arrangements made by the Selling Stockholder for such custody, as well as the
appointment by the Selling Stockholder of the Attorney-in-Fact, are, to that
extent, irrevocable. The Selling Stockholder specifically agrees that its
obligations hereunder shall not be terminated by operation of law, whether by
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the death or incapacity of such Selling Stockholder or by the occurrence of any
other event.
3. Covenants of the Company.
The Company covenants and agrees that:
(a) It will deliver to the Representative, without charge, two
conformed copies of each Registration Statement and of each amendment or
supplement thereto, including all financial statements and exhibits.
(b) The Company has delivered to each of the Underwriters, and
each of the Selected Dealers (as hereinafter defined) without charge, as many
copies as have been requested of each Preliminary Prospectus heretofore filed
with the Commission in accordance with and pursuant to the Commission's Rule 430
under the Act and will deliver to the Underwriters and to others whose names and
addresses are furnished by the Underwriters or a Selected Dealer, without
charge, on the Effective Date of the Registration Statement, and thereafter from
time to time during such reasonable period as you may request if, in the opinion
of counsel for the Underwriters, the Prospectus is required by law to be
delivered in connection with sales by the Underwriters or a dealer, as many
copies of the Prospectus (and, in the event of any amendment of or supplement to
the Prospectus, of such amended or supplemented Prospectus) as the Underwriters
may request for the purposes contemplated by the Act. The Company will take all
necessary actions to furnish to whomever directed by the Underwriters, when and
as requested by the Underwriters, all necessary documents, exhibits,
information, applications, instruments and papers as may be reasonably required
or, in the opinion of counsel to the Underwriters desirable, in order to permit
or facilitate the sale of the Securities.
(c) The Company has authorized the Underwriters to use, and
make available for use by prospective dealers, the Preliminary Prospectus, and
authorizes the Underwriters, all dealers selected by you in connection with the
distribution of the Securities (the "Selected Dealers") to be purchased by the
Underwriters and all dealers to whom any of such Securities may be sold by the
Underwriters or by any Selected Dealer, to use the Prospectus, as
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from time to time amended or supplemented, in connection with the sale of the
Securities in accordance with the applicable provisions of the Act, the
applicable Regulations and applicable state law, until completion of the
distribution of the Securities and for such longer period as you may request if
the Prospectus is required under the Act, the applicable Regulations or
applicable state law to be delivered in connection with sales of the Securities
by the Underwriters or the Selected Dealers.
(d) The Company will use its best efforts to cause the
Registration Statement to become effective and will notify the Representative
immediately, and confirm the notice in writing: (i) when the Registration
Statement or any post-effective amendment thereto becomes effective; (ii) of the
issuance by the Commission of any stop order or of the initiation, or to the
best of the Company's knowledge, the threatening, of any proceedings for that
purpose; (iii) the suspension of the qualification of the Securities and the
Representative's Warrants, or underlying securities, for offering or sale in any
jurisdiction or of the initiating, or to the best of the Company's knowledge the
threatening, of any proceeding for that purpose; and (iv) of the receipt of any
comments from the Commission. If the Commission shall enter a stop order at any
time, the Company will make every reasonable effort to obtain the lifting of
such order at the earliest possible moment.
(e) During the time when a prospectus is required to be
delivered under the Act, the Company will comply with all requirements imposed
upon it by the Act and the Securities Exchange Act of 1934 (the "Exchange Act"),
as now and hereafter amended and by the Regulations, as from time to time in
force, as necessary to permit the continuance of sales of or dealings in the
Securities in accordance with the provisions hereof and the Prospectus. If at
any time when a prospectus relating to the Securities is required to be
delivered under the Act, any event shall have occurred as a result of which, in
the opinion of counsel for the Company or counsel for the Underwriters, the
Prospectus as then amended or supplemented includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the
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Company will notify you promptly and prepare and file with the Commission an
appropriate amendment or supplement in accordance with Section 10 of the Act and
will furnish to you copies thereof.
(f) The Company will endeavor in good faith, in cooperation
with you, at or prior to the time the Registration Statement becomes effective,
to qualify the Securities for offering and sale under the securities laws or
blue sky laws of such jurisdictions as you may reasonably designate. In each
jurisdiction where such qualification shall be effected, the Company will,
unless you agree that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or may reasonably
be required by the laws of such jurisdiction.
(g) The Company will make generally available to its security
holders, as soon as practicable, but in no event later than the first day of the
fifteenth full calendar month following the Effective Date of the Registration
Statement, an earnings statement of the Company, which will be in reasonable
detail but which need not be audited, covering a period of at least twelve
months beginning after the Effective Date of the Registration Statement, which
earnings statements shall satisfy the requirements of Section 11(a) of the Act
and the Regulations as then in effect. The Company may discharge this obligation
in accordance with Rule 158 of the Regulations.
(h) During the period of five years commencing on the
Effective Date of the Registration Statement, the Company will furnish to its
stockholders an annual report (including financial statements audited by its
independent public accountants), in reasonable detail, and, at its expense,
furnish each of the Underwriters (i) within 90 days after the end of each fiscal
year of the Company, a consolidated balance sheet of the Company and its
consolidated subsidiaries and a separate balance sheet of each subsidiary of the
Company the accounts of which are not included in such consolidated balance
sheet as of the end of such fiscal year, and consolidated statements of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries and separate statements of operations, stockholders'
equity and cash flows of each of the subsidiaries of the Company the accounts of
which are not included in such consolidated statements, for the
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fiscal year then ended all in reasonable detail and all certified by independent
accountants (within the meaning of the Act and the Regulations), (ii) within 45
days after the end of each of the first three fiscal quarters of each fiscal
year, similar balance sheets as of the end of such fiscal quarter and similar
statements of operations, stockholders' equity and cash flows for the fiscal
quarter then ended, all in reasonable detail, and subject to year end
adjustment, all certified by the Company's principal financial officer or the
Company's principal accounting officer as having been prepared in accordance
with generally accepted accounting principles applied on a consistent basis,
(iii) as soon as available, each report furnished to or filed with the
Commission or any securities exchange and each report and financial statement
furnished to the Company's shareholders generally and (iv) as soon as available,
such other material as the Representative may from time to time reasonably
request regarding the financial condition and operations of the Company.
(i) For a period of eighteen months from the Closing Date, the
Company, at its expense, shall cause its regularly engaged independent certified
public accountants to review (but not audit), the Company's financial statements
for each of the first three quarters prior to the announcement of quarterly
financial information, the filing of the Company's 10-Q quarterly report and the
mailing of quarterly financial information to stockholders.
(j) Prior to the Closing Date or the Option Closing Date, the
Company will not issue, directly or indirectly, without your prior written
consent and that of counsel for the Representative, any press release or other
public announcement or hold any press conference with respect to the Company or
its activities with respect to this Offering.
(k) The Company will deliver to you prior to filing, any
amendment or supplement to the Registration Statement or Prospectus proposed to
be filed after the Effective Date of the Registration Statement and will not
file any such amendment or supplement to which you shall reasonably object after
being furnished such copy.
(l) During the period of 120 days commencing on the date
hereof, the Company will not at any time take, directly or indirectly, any
action designed to, or which will constitute or
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which might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Securities to facilitate the sale or resale of
any of the Securities.
(m) The Company will apply the net proceeds from the Offering
received by it in the manner set forth under "Use of Proceeds" in the
Prospectus.
(n) Counsel for the Company, the Company's accountants, and
the officers and directors of the Company will, respectively, furnish the
opinions, the letters and the certificates referred to in subsections of
Paragraph 9 hereof, and, in the event that the Company shall file any amendment
to the Registration Statement relating to the offering of the Securities or any
amendment or supplement to the Prospectus relating to the offering of the
Securities subsequent to the Effective Date of the Registration Statement, such
counsel, such accountants, such officers and directors, respectively, will, at
the time of such filing or at such subsequent time as you shall specify, so long
as securities being registered by such amendment or supplement are being
underwritten by the Underwriters, furnish to you such opinions, letters and
certificates, each dated the date of its delivery, of the same nature as the
opinions, the letters and the certificates referred to in said Paragraph 9, as
you may reasonably request, or, if any such opinion or letter or certificate
cannot be furnished by reason of the fact that such counsel or such accountants
or any such officer or director believes that the same would be inaccurate, such
counsel or such accountants or such officer or director will furnish an accurate
opinion or letter or certificate with respect to the same subject matter.
(o) The Company will comply with all of the provisions
of any undertakings contained in the Registration Statement in all material
respects.
(p) The Company will reserve and keep available for issuance
that maximum number of its authorized but unissued shares of Common Stock which
are issuable upon exercise of the Warrants and issuable upon exercise of the
Representative's Warrants (including the underlying securities) outstanding from
time to time.
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(q) Following the Effective Date and from time to time
thereafter, so long as the Warrants are outstanding, the Company will timely
prepare and file at its sole cost and expense one or more post-effective
amendments to the Registration Statement or a new registration statement as
required by law as will permit Warrant holders to be furnished with a current
prospectus in the event Warrants are exercised, and to use its best efforts and
due diligence to have same be declared effective. The Company will deliver a
draft of each such post-effective amendment or new registration statement to the
Underwriter at least ten days prior to the filing of such post-effective
amendment or registration statement.
(r) Following the Effective Date and from time to time
thereafter so long as any of the Warrants remain outstanding, the Company will
timely deliver and supply to its warrant agent sufficient copies of the
Company's current Prospectus, as will enable such Warrant Agent to deliver a
copy of such Prospectus to any Warrant or other holder where such Prospectus
delivery is by law required to be made.
(s) So long as any of the Warrants remain outstanding, the
Company shall continue to employ the services of a firm of independent certified
public accountants reasonably acceptable to the Representative in connection
with the preparation of the financial statements to be included in any
registration statement to be filed by the Company hereunder, or any amendment or
supplement thereto (it being understood that Ernst & Young, LLP is acceptable to
the Representative). During the same period, the Company shall employ the
services of a law firm(s) acceptable to the Representative in connection with
all legal work of the Company, including the preparation of a registration
statement to be filed by the Company hereunder, or any amendment or supplement
thereto (it being understood that Hall Xxxxxxx Xxxx Xxxxxxxx & Xxxx, LLP is
acceptable to the Representative).
(t) So long as any of the Warrants remain outstanding, the
Company shall continue to appoint a Warrant Agent for the Warrants, who shall be
reasonably acceptable to the Representative.
(u) The Company agrees that it will, upon the Closing Date,
for a period of no less than five (5) years, engage a designee of the
Representative as an advisor (the "Advisor") to its
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Board of Directors where such Advisor shall attend meetings of the Board,
receive all notices and other correspondence and communications sent by the
Company to members of its Board of Directors and shall be entitled to receive
compensation therefor equal to the entitlement of all non-employee directors.
Such Advisor shall also be entitled to receive reimbursement for all reasonable
costs incurred in attending such meetings including, but not limited to, food,
lodging, and transportation. The Company further agrees that during said five
(5) year period, it shall schedule no less than four (4) formal and "in person"
meetings of its Board of Directors in each such year and fifteen (15) days
advance notice of such meetings shall be given to the Advisor. Further, during
such five (5) year period, the Company shall give notice to the Representative
with respect to any proposed acquisitions, mergers, reorganizations or other
similar transactions. In lieu of the Representative's right to designate an
Advisor, the Representative shall have the right during such five-year period,
in its sole discretion, to designate one person for election as a Director of
the Company and the Company will utilize its best efforts to obtain the election
of such person who shall be entitled to receive the same compensation, expense
reimbursements and other benefits set forth above.
The Company agrees to indemnify and hold the Underwriters and
such Advisor or Director harmless against any and all claims, actions, damages,
costs and expenses, and judgments arising solely out of the attendance and
participation of your designee at any such meeting described herein. In the
event the Company maintains a liability insurance policy affording coverage for
the acts of its of officers and directors, it agrees, if possible, to include
the Representative's designee as an insured under such policy.
(v) Upon the Closing Date, the Company shall have entered into
an agreement with the Representative in form reasonably satisfactory to the
Representative (the "Consulting Agreement"), pursuant to which the
Representative will be retained as a management and financial consultant and
will be paid a fee of $125,000, all of which shall be paid upon the Closing
Date.
(w) The Company's Common Stock and Warrants shall be listed on
the Nasdaq SmallCap Market ("Nasdaq") not later than the Effective Date. Prior
to the Effective Date, the Company will make
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all filings required, including registration under the Exchange Act, to obtain
the listing of the Common Stock and Warrants on Nasdaq, and will effect and use
its best efforts to maintain such listing (unless the Company is acquired) for
at least five years from the date of this Agreement.
(x) The Company will apply for listing in Standard and
Poors Corporation Reports or Moodys OTC Guide and shall use its best efforts to
have the Company included in such publications for at least five years from the
Closing Date.
(y) For a period of twenty-four (24) months from the Closing
Date, no officer, director or holder of any securities of the Company (other
than shares that are currently publicly traded, in the case of stockholders who
are not officers, directors or 5% or greater stockholders) prior to the Offering
will, directly or indirectly, offer, sell (including any short sale), grant any
option for the sale of, acquire any option to dispose of, or otherwise dispose
of any shares of Common Stock, including shares of Common Stock issuable upon
exercise of options, warrants or any convertible securities of the Company,
without the prior written consent of the Representative, other than as set forth
in the Registration Statement. In order to enforce this covenant, the Company
shall impose stop-transfer instructions with respect to the securities owned by
every stockholder prior to the Offering until the end of such period (subject to
any exceptions to such limitation on transferability set forth in the
Registration Statement). If necessary to comply with any applicable Blue-sky
Law, the shares held by such stockholders will be escrowed with counsel for the
Company or otherwise as required.
(z) Except for the issuance of shares of capital stock by the
Company in connection with a dividend, recapitalization, reorganization or
similar transactions or as result of the exercise of warrants or options
disclosed in or issued or granted pursuant to plans disclosed in the
Registration Statement, the Company shall not, for a period of twenty-four (24)
months following the Closing Date, directly or indirectly, offer, sell, issue or
transfer any shares of its capital stock, or any security exchangeable or
exercisable for, or convertible into, shares of the capital stock or register
any of its capital stock (under any form of registration statement, including
Form S-8), without the prior
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written consent of the Representative. Options granted pursuant to plans must be
exercisable at the fair market value on the date of grant.
(aa) For so long as any of the Warrants remain outstanding,
the Company shall maintain key person life insurance payable to the Company on
each of the lives of Xxxxxx X. Xxxxxx, its Chief Executive, and Xxxxxxx Xxxxxx,
the Chief Executive of Corbina Telecommunications and Comptel Ltd., the
Company's subsidiaries, each in the amount of $1,000,000, unless his employment
with the Company is earlier terminated. In such event, the Company will obtain a
comparable policy on the life of his successor for the balance of such period.
(bb) The Company will use its best efforts to obtain, as soon
after the Closing Date as is reasonably possible, liability insurance covering
its officers and directors.
(cc) The Company agrees that any conflict of interest arising
between a member of the Company's Board of Directors and the Company in
connection with such Director's dealing with, or obligations to, the Company,
shall be resolved by a vote of the majority of the independent members of the
Board of Directors.
(dd) The Company agrees that it will employ the services of a
financial public relations firm acceptable to the Representative for a period of
at least twelve months following the Effective Date.
4. Sale, Purchase and Delivery of Securities: Closing Date.
(a) The Company and the Selling Stockholder agree to sell to
the Underwriters, and the Underwriters, on the basis of the warranties,
representations and agreements of the Company and the Selling Stockholder
herein, and subject to the terms and conditions herein, agree to purchase the
Securities from the Company and the Selling Stockholder, as the case may be, at
a price of $7.00 per share of Common Stock and $.50 per Warrant, less an
underwriting discount of nine percent (9%) of the offering price for each
security. The Underwriters may allow a concession not exceeding $ per share
of Common Stock and $ per Warrant to Selected Dealers who are members of the
National Association of Securities
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Dealers, Inc ("NASD"), and to certain foreign dealers, and such dealers may
reallow to NASD members and to certain foreign dealers a concession not
exceeding $ per share of Common Stock and $ per Warrant.
(b) Delivery of the Securities and payment therefor shall be
made at 10:00 A.M., New York time on the Closing Date, as hereinafter defined,
at the offices of the Representative or such other location as may be agreed
upon by you and the Company. Delivery of certificates for the Common Stock and
Warrants (in definitive form and registered in such names and in such
denominations as you shall request by written notice to the Company delivered at
least two business days prior to the Closing Date), shall be made to you for the
account of the Underwriters against payment of the purchase price therefor by
certified or bank check or wire transfer payable in New York Clearing House
funds to the order of the Company. The Company will make such certificates
available for inspection at least two business days prior to the Closing Date at
such place as you shall designate.
(c) The "Closing Date" shall be , 1997, or
such other date not later than the fourth business day following the effective
date of the Registration Statement as you shall determine and advise the Company
by at least three full business days' notice, confirmed in writing.
(d) The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Securities by the Company to
the Underwriters shall be borne by the Company. The Company will pay and hold
the Underwriters, and any subsequent holder of the Securities, harmless from any
and all liabilities with respect to or resulting from any failure or delay in
paying federal and state stamp taxes, if any, which may be payable or determined
to be payable in connection with the original issuance or sale to the
Underwriters of the Securities or any portions thereof.
5. Sale Purchase and Delivery of Additional Securities:
Option Closing Date.
(a) The Company agrees to sell to the Underwriters, and upon
the basis of the representations, warranties and agreements of
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the Company herein contained, subject to the satisfaction of all the terms and
conditions of this Agreement, the Underwriters shall have the option (the
"Option") to purchase the Additional Securities from the Company, at the same
price per Security as set forth in Paragraph 4(a) above. Additional Securities
may be purchased solely for the purpose of covering over-allotments made in
connection with the distribution and sale of the Securities.
(b) The Option to purchase all or part of the Additional
Securities covered thereby is exercisable by you at any time and from time to
time before the expiration of a period of 45 calendar days from the Effective
Date of the Registration Statement (the "Option Period") by written notice to
the Company setting forth the number of Additional Securities for which the
Option is being exercised, the name or names in which the certificates for such
Additional Securities are to be registered and the denominations of such
certificates. Upon each exercise of the Option, the Company shall sell to the
Underwriters the aggregate number of Additional Securities specified in the
notice exercising such Option.
(c) Delivery of the Additional Securities with respect to
which Options shall have been exercised and payment therefor shall be made at
10:00 A.M., New York time on the Option Closing Date, as hereinafter defined, at
the offices of the Representative or at such other locations as may be agreed
upon by you and the Company. Delivery of certificates for Additional Securities
shall be made to you for the account of the Underwriters against payment of the
purchase price therefor by certified or bank check or wire transfer in New York
Clearing House Funds to the order of the Company. The Company will make
certificates for Additional Securities to be purchased at the Option Closing
Date available for inspection at least two business days prior to such Option
Closing Date at such place as you shall designate.
(d) The "Option Closing Date" shall be the date not later than
five business days after the end of the Option Period as you shall determine and
advise the Company by at least three full business days' notice, unless some
other time is agreed upon between you and the Company.
(e) The obligations of the Underwriters to purchase and pay
for Additional Securities at such Option Closing Date shall be
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subject to compliance as of such date with all the conditions specified in
Paragraph 2 herein and the delivery to you of opinions, certificates and
letters, each dated such Option Closing Date, substantially similar in scope to
those specified in Paragraph 9 herein.
(f) The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Additional Securities by the
Company to the Underwriters shall be borne by the Company. The Company will pay
and hold the Underwriters, and any subsequent holder of Additional Securities,
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying federal and state stamp taxes, if any, which may be
payable or determined to be payable in connection with the original issuance or
sale to the Underwriters of the Additional Securities or any portion thereof.
6. Warrant Solicitation Fee.
The Company agrees to pay X.X. Xxxxxxx & Co., Inc. ("Xxxxxxx"), in its
individual capacity and not as representative of the underwriters, a fee of five
percent (5%) of the aggregate exercise price of the Warrants if: (i) the market
price of the Common Stock is greater than the exercise price of the Warrants on
the date of exercise; (ii) the exercise of the Warrants are solicited by a
member of the NASD and the customer states in writing that the transaction was
solicited and designates in writing the broker-dealer to receive compensation
for the exercise; (iii) the Warrants are not held in a discretionary account;
(iv) the disclosure of compensation arrangements was made both at the time of
the Offering and at the time of the exercise of the Warrant; and (v) the
solicitation of the Warrant is not in violation of Regulation M promulgated
under the Exchange Act. The Company agrees not to solicit the exercise of any
Warrants other than through Xxxxxxx and will not authorize any other dealer to
engage in such solicitation without the prior written consent of the
Representative which will not be unreasonably withheld. The Warrant solicitation
fee will not be paid in a non-solicited transaction. No Warrant solicitation by
Xxxxxxx will occur prior to one year from the Effective Date.
7. Representations and Warranties of the Underwriters.
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The Underwriters represent and warrant to the Company that:
(a) The Underwriters are each members in good standing of the
National Association of Securities Dealers, Inc., and have complied with all
NASD requirements concerning net capital and compensation to be received in
connection with the Offering.
(b) To the Underwriters' knowledge, there are no claims for
services in the nature of a finder's origination fee with respect to the sale of
the Securities hereunder to which the Company is, or may become, obligated to
pay.
8. Payment of Expenses.
(a) The Company will pay and bear all costs, fees, taxes and
expenses incident to and in connection with: (i) the issuance, offer, sale and
delivery of the Securities, including all expenses and fees incident to the
preparation, printing, filing and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement (including all exhibits
thereto), each Preliminary Prospectus, the Prospectus, and amendments and
post-effective amendments thereof and supplements thereto, and this Agreement
and related documents, Preliminary and Final Blue Sky Memoranda, including the
cost of preparing and copying all copies thereof in quantities deemed necessary
by the Underwriters; (ii) the costs of preparing and printing all "Tombstone"
and other appropriate advertisements; (iii) the printing, engraving, issuance
and delivery of the Common Stock, Warrants, Warrant Shares, Additional
Securities, Underwriters' Warrants and the securities underlying the
Underwriters' Warrant, including any transfer or other taxes payable thereon in
connection with the original issuance thereof; (iv) the qualification of the
Common Stock and Warrants under the state or foreign securities or "Blue Sky"
laws selected by the Underwriters and the Company, and disbursements and
reasonable fees of counsel for the Underwriters in connection therewith (not to
exceed $50,000) plus the filing fees for such states; (v) a fee of $15,000 to be
paid to counsel for the Underwriters for the preparation of a secondary trading
memorandum; (vi) fees and disbursements of counsel and accountants for the
Company; (vii) other expenses and disbursements incurred on behalf of the
Company (viii) the filing fees payable to the Commission and the National
Association of Securities Dealers, Inc. ("NASD"); and
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(ix) any listing of the Common Stock and Warrants on a securities exchange or on
NASDAQ.
(b) In addition to the expenses to be paid and borne by the
Company referred to in Paragraph 8(a) above, the Company shall reimburse you at
closing for expenses incurred by you in connection with the Offering (for which
you need not make any accounting), in the amount of 3% of the price to the
public of the Securities and Additional Securities sold in the Offering. This 3%
non-accountable expense allowance shall cover the fees of your legal counsel,
but shall not include any expenses for which the Company is responsible under
Paragraph 8(a) above, including the reasonable fees and disbursements of your
legal counsel with respect to Blue Sky matters. As of the date hereof, $25,000
has been advanced by the Company to the Underwriters with respect to such
non-accountable expense allowance. Any unaccounted for portion of the $25,000 so
advanced will be returned to the Company in the event the Offering is not
consummated.
(c) In the event that the Company does not or cannot, for any
reason whatsoever other than a default by the Underwriters, expeditiously
proceed with the Offering, or if any of the Company's representations,
warranties or covenants contained in this Agreement are not materially correct
or cannot be complied with by the Company, or business prospects or obligations
of the Company are adversely affected and the Company does not commence or
continue with the Offering at any time or terminates the proposed transaction
prior to the Closing Date, the Company shall reimburse the Underwriters on an
accountable basis for all out-of-pocket expenses actually incurred in connection
with the Underwriting, this Agreement and all of the transactions hereby
contemplated, including, without limitation, your legal fees and expenses, up to
an aggregate total of $100,000 less such sums which have already been paid.
9. Conditions of Underwriters' Obligations.
The obligations of the Underwriters to consummate the transactions
contemplated by this Agreement shall be subject to the continuing accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of the Closing Date, the accuracy of the statements of the
Company and its
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officers and directors made pursuant to the provisions hereof, and to the
performance by the Company of its covenants and agreements hereunder and under
each certificate, opinion and document contemplated hereunder and to the
following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m., New York time, on the date following the date of this
Agreement, or such later date and time as shall be consented to in writing by
you and, on or prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Securities under the securities laws of any jurisdiction shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending or to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission or any such authorities of any jurisdiction and
any request on the part of the Commission or any such authorities for additional
information shall have been complied with to the reasonable satisfaction of the
Commission or such authorities and counsel to the Underwriters and after the
date hereof no amendment or supplement shall have been filed to the Registration
Statement or Prospectus without your prior consent.
(b) The Registration Statement or the Prospectus or any
amendment thereof or supplement thereto shall not contain an untrue statement of
a fact which is material, or omit to state a fact which is material and is
required to be stated therein or is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) Between the time of the execution and delivery of this
Agreement and the Closing Date, there shall be no litigation instituted against
the Company or any of its officers or directors and between such dates there
shall be no proceeding instituted or, to the Company's knowledge, threatened
against the Company or any of its officers or directors before or by any
federal, state or county commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding would have a material adverse effect
on the Company or its business, business prospects or properties, or have a
material adverse effect on the financial condition or results of operation of
the Company.
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(d) Each of the representations and warranties of the Company
contained herein and each certificate and document contemplated under this
Agreement to be delivered to you shall be true and correct at the Closing Date
as if made at the Closing Date, and all covenants and agreements contained
herein and in each such certificate and document to be performed on the part of
the Company, and all conditions contained herein and in each such certificate
and document to be fulfilled or complied with by the Company at or prior to the
Closing Date shall be fulfilled or complied with.
(e) At the Closing Date, you shall have received the opinion
of Hall Xxxxxxx Xxxx Xxxxxxxx & Xxxx, LLP, counsel to the Company, dated as of
such Closing Date, addressed to the Underwriters and in form and substance
satisfactory to counsel to the Underwriters, to the effect that:
(i) The Company and each of its Subsidiaries are
corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation with full corporate power and
authority, and all licenses, permits, certifications, registrations, approvals,
consents and franchises to own or lease and operate their properties and to
conduct their businesses as described in the Registration Statement. The Company
and each of its Subsidiaries are duly qualified to do business as foreign
corporations and are in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company and each of its Subsidiaries;
(ii) The Company has full corporate power and
authority to execute, deliver and perform the Underwriting Agreement, the
Consulting Agreement, the Warrant Agreement and the Representative's Warrants
and to consummate the transactions contemplated thereby. The execution, delivery
and performance of the Underwriting Agreement, the Consulting Agreement, the
Warrant Agreement and the Representative's Warrants by the Company, the
consummation by the Company of the transactions therein contemplated and the
compliance by the Company with the terms of the Underwriting Agreement, the
Consulting Agreement, the Warrant Agreement and the Representative's Warrants
have been duly
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authorized by all necessary corporate action, and each of the Underwriting
Agreement, the Consulting Agreement, the Warrant Agreement and the
Representative's Warrants have been duly executed and delivered by the Company.
Each of the Underwriting Agreement, the Consulting Agreement, the Warrant
Agreement and the Representative's Warrants is a valid and binding obligation of
the Company, enforceable in accordance with their respective terms, subject, as
to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally and the discretion of courts in granting equitable remedies and except
that enforceability of the indemnification provisions and the contribution
provisions set forth in the Underwriting Agreement may be limited by the federal
securities laws or public policy underlying such laws;
(iii) The execution, delivery and performance of the
Underwriting Agreement, the Consulting Agreement, the Warrant Agreement and the
Representative's Warrants by the Company, the consummation by the Company of the
transactions therein contemplated and the compliance by the Company with the
terms of the Underwriting Agreement, the Consulting Agreement, the Warrant
Agreement and the Representative's Warrants do not, and will not, with or
without the giving of notice or the lapse of time, or both, (A) result in a
violation of the Certificate of Incorporation, as the same may be amended, or
Bylaws of the Company or any of its Subsidiaries, (B) to the best of our
knowledge, result in a breach of, or conflict with, any terms or provisions of
or constitute a default under, or result in the modification or termination of,
or result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage, note, contract, commitment or
other material agreement or instrument to which the Company or any of its
Subsidiaries are a party or by which the Company or any of its Subsidiaries or
any of their properties or assets are or may be bound or affected, except where
any of the foregoing would not result in a material adverse effect upon the
Company's or any Subsidiaries business or operations; (C) to the best of our
knowledge, violate any existing applicable law, rule or regulation or judgment,
order or decree known to us of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its Subsidiaries or any
of their properties or
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businesses; or (D) to the best of our knowledge, have any effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company or any of its Subsidiaries to own or lease and operate their
properties and to conduct their business or the ability of the Company or any of
its Subsidiaries to make use thereof;
(iv) To the best of our knowledge, no authorization,
approval, consent, order, registration, license or permit of any court or
governmental agency or body (other than under the Act, the Regulations and
applicable state securities or Blue Sky laws) is required for the valid
authorization, issuance, sale and delivery of the Securities, the Additional
Securities, the Common Stock, the Warrants, the Warrant Shares, or the
Representative's Warrants, and the consummation by the Company of the
transactions contemplated by the Underwriting Agreement, the Consulting
Agreement, the Warrant Agreement or the Representative's Warrants;
(v) The Registration Statement was declared
effective under the Act on , 1997; to the best of our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued, and
no proceedings for that purpose have been instituted or are pending, threatened
or contemplated under the Act or applicable state securities laws;
(vi) The Registration Statement and the Prospectus,
as of the Effective Date (except for the financial statements and other
financial data included therein or omitted therefrom, as to which we express no
opinion), comply as to form in all material respects with the requirements of
the Act and Regulations and the conditions for use of a registration statement
on Form SB-2 have been satisfied by the Company;
(vii) The description in the Registration Statement
and the Prospectus of statutes, regulations, contracts and other documents have
been reviewed by us, and, based upon such review, are accurate in all material
respects and present fairly the information required to be disclosed, and to the
best of our knowledge, there are no material statutes or regulations, or, to the
best of our knowledge, material contracts or documents, of a character required
to be described in the Registration Statement or
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the Prospectus or to be filed as exhibits to the Registration Statement, which
are not so described or filed as required.
To the best of our knowledge, none of the material
provisions of the contracts or instruments described above violates any existing
applicable law, rule or regulation or judgment, order or decree known to us of
any United States governmental agency or court having jurisdiction over the
Company or any of its assets or businesses;
(viii) The outstanding Common Stock and Warrants
have been duly authorized and validly issued. The outstanding Common stock is
fully paid and nonassessable. To the best of our knowledge, none of the
outstanding Common Stock has been issued in violation of the preemptive rights
of any stockholder of the Company. None of the holders of the outstanding Common
Stock is subject to personal liability solely by reason of being such a holder.
The authorized Common Stock conforms to the description thereof contained in the
Registration Statement and Prospectus. To the best of our knowledge, except as
set forth in the Prospectus, no holders of any of the Company's securities has
any rights, "demand," "piggyback" or otherwise, to have such securities
registered under the Act;
(ix) The issuance and sale of the Securities, the
Additional Securities, the Common Stock, the Warrants, the Warrant Shares and
the Representative's Warrants have been duly authorized and when issued will be
validly issued, fully paid and nonassessable, and the holders thereof will not
be subject to personal liability solely by reason of being such holders. Neither
the Securities, the Additional Securities, nor the Common Stock are subject to
preemptive rights of any stockholder of the Company. The certificates
representing the Securities are in proper legal form;
(x) The issuance and sale of the Warrant Shares and
the Representative's Warrants have been duly authorized and, when paid for,
issued and delivered pursuant to the terms of the Warrant Agreement or the
Representative's Warrants, as the case may be, the Warrants, the Warrant Shares
and the Representative's Warrants will constitute the valid and binding
obligations of the Company, enforceable in accordance with their terms, to issue
and sell the Warrants, the Warrant Shares and/or Representative's
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Warrants. All corporate action required to be taken for the authorization,
issuance and sale of the securities has been duly, validly and sufficiently
taken. The Common Stock and the Warrants have been duly authorized by the
Company to be offered in the form of the Securities. The Warrants, the Warrant
Shares and the Representative's Warrants conform to the descriptions thereof
contained in the Registration Statement and Prospectus;
(xi) The Underwriters have acquired good title to
the Securities, free and clear of all liens, encumbrances, equities, security
interests and claims, provided that the Underwriters are bona fide purchasers as
defined in Section 8-302 of the Uniform Commercial Code;
(xii) Assuming that the Underwriters exercise the
over-allotment option to purchase the Additional Securities and make payments
therefor in accordance with the terms of the Underwriting Agreement, upon
delivery of the Additional Securities to the Underwriters thereunder, the
Underwriters will acquire good title to the Additional Securities, free and
clear of any liens, encumbrances, equities, security interests and claims,
provided that the Underwriters are bona fide purchasers as defined in
Section 8-302 of the Uniform Commercial Code;
(xiii) To the best of our knowledge, there are no
claims, actions, suits, proceedings, arbitrations, investigations or inquiries
before any governmental agency, court or tribunal, foreign or domestic, or
before any private arbitration tribunal, pending or threatened against the
Company or any of its Subsidiaries or involving their properties or businesses,
other than as described in the Prospectus, such description being accurate, and
other than litigation incident to the kind of business conducted by the Company
or any of its Subsidiaries which, individually and in the aggregate, is not
material, and, except as otherwise disclosed in the Prospectus and the
Registration Statement, the Company and its Subsidiaries have complied with all
federal and state laws, statutes and regulations concerning its business;
(xiv) All sales of the Company's securities have
been made in compliance with or under an exemption from the registration
requirements of the Act, and no purchaser of such
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securities in any such sale has a right of action against the Company for
failure to comply with the registration or filing requirements of any state; and
(xv) We have participated in reviews and discussions
in connection with the preparation of the Registration Statement and the
Prospectus. Although we are not passing upon and do not assume responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement, no facts came to our attention which lead us to believe
that (A) the Registration Statement (except as to the financial statements and
other financial data contained therein, as to which we express no opinion), on
the Effective Date, contained any untrue statement of a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or that (B) the
Prospectus (except as to the financial statements and other financial data
contained therein, as to which we express no opinion) contains any untrue
statement or a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(f) At the Closing Date, you shall have received the opinion
of Irina Igitova, Esq., special counsel to the Company with respect to the laws
of the Russian Federation, dated as of such Closing Date, addressed to the
Underwriters and in form and substance satisfactory to counsel to the
Underwriters, to the effect that:
(i) Corbina Telecommunications ("Corbina"),
CompTel Ltd. ("CompTel") and Investelektrosvyaz ("Investelectro") (the "Russian
Subsidiaries") have been duly organized and are validly existing as closed joint
stock companies in good standing under the laws of the Russian Federation, and
have full corporate power and authority to own their properties and conduct
their businesses as described in the Registration Statement and Prospectus;
(ii) The Russian Subsidiaries have obtained, or are
in the process of obtaining, all licenses, permits and other governmental
authorizations necessary to conduct their businesses
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as described in the Prospectus, and such licenses, permits and other
governmental authorizations obtained are in full force and effect, and the
Russian Subsidiaries are in all material respects complying therewith;
(iii) The Company owns 75% of the issued and
outstanding capital stock of each of Corbina and CompTel, and CompTel owns 51%
of Investelectro; all of the Russian Subsidiaries' outstanding securities have
been duly authorized, are validly issued, fully paid and non-assessable and have
not been issued in violation of the preemptive rights of any security holder;
(iv) Such counsel knows of no pending or threatened
legal or governmental proceedings to which either or the Russian
Subsidiaries are a party which could materially adversely affect the business,
property, financial conduct or operations of either of the Russian Subsidiaries;
(v) Such counsel is familiar with all contracts or
other agreements entered into by the Russian Subsidiaries with other Russian
companies, entities, banking institutions or individuals referred to in the
Registration Statement and Prospectus (collectively, the "Russian Agreements"),
and all such Russian Agreements are valid, binding and enforceable under Russian
law, and to the knowledge of such counsel, neither of the Russian Subsidiaries
is in default under any of the Russian Agreements;
(vi) Neither of the Russian Subsidiaries is in
violation of or in default under its Charter Documents or Bylaws, or to the
knowledge of such counsel, in the performance or observance of any material
obligation, agreement, covenant or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any contract, indenture, mortgage,
loan agreement or instrument to which either Russian Subsidiary is are a party
or by which it or any of its properties may be bound, or in violation of any
material order, rule, regulation, writ, injunction or decree of any government
or governmental instrumentality or court; and
(vii) Pursuant to the laws of the Russian
Federation, the minority stockholders of Corbina, CompTel and Investelectro will
not be able to prevent the Company from carrying
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out the businesses of such Russian Subsidiaries or the Company, such as
consummating material transactions or declaring dividends in cash or stock.
(g) On or prior to the Closing Date, counsel for the
Underwriters shall have been furnished such documents, certificates and opinions
as they may reasonably require for the purpose of enabling them to review the
matters referred to in subparagraphs (e) and (f) of this Paragraph 9, or in
order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
(h) Prior to the Closing Date:
(i) There shall have been no material adverse
change in the condition or prospects or the business activities, financial or
otherwise, of the Company from the latest dates as of which such condition is
set forth in the Registration Statement and Prospectus;
(ii) There shall have been no transaction, outside
the ordinary course of business, entered into by the Company from
the latest date as of which the financial condition of the Company is set forth
in the Registration Statement and Prospectus which is material to the Company,
which is either (x) required to be disclosed in the Prospectus or Registration
Statement and is not so disclosed, or (y) likely to have material adverse effect
on the Company's business or financial condition;
(iii) The Company shall not be in default under any
material provision of any instrument relating to any outstanding
indebtedness, except as described in the Prospectus;
(iv) No material amount of the assets of the
Company shall have been pledged, mortgaged or otherwise encumbered, except as
set forth in the Registration Statement and Prospectus;
(v) No action, suit or proceeding, at law or in
equity, shall have been pending or to its knowledge threatened against the
Company or affecting any of its properties or businesses before or by any court
or federal or state commission, board or other administrative agency wherein an
unfavorable
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decision, ruling or finding would materially and adversely affect the business,
operations, prospects or financial condition or income of the Company, taken as
a whole, except as set forth in the Registration Statement and Prospectus; and
(vi) No stop order shall have been issued under the
Act and no proceedings therefor shall have been initiated or, to the Company's
knowledge, threatened by the Commission.
(vii) Each of the representations and warranties of
the Company contained in this Agreement and in each certificate and document
contemplated under this Agreement to be delivered to you was, when originally
made and is at the time such certificate is dated, true and correct.
(i) Concurrently with the execution and delivery of this
Agreement and at the Closing Date, you shall have received a certificate of the
Company signed by the Chief Executive Officer of the Company and the principal
financial officer of the Company, dated as of the Closing Date, to the effect
that the conditions set forth in subparagraph (h) above have been satisfied and
that, as of the Closing Date, the representations and warranties of the Company
set forth in Paragraph 2 herein and the statements in the Registration Statement
and Prospectus were and are true and correct. Any certificate signed by any of
officer of the Company and delivered to you or for counsel for the Underwriters
shall be deemed a representation and warranty by the Company to the Underwriters
as to the statements made therein.
(j) All proceedings taken in connection with the
authorization, issuance or sale of the Common Stock, Warrants, Warrant Shares,
Additional Securities, the Representative's Warrants and the Representative's
Warrant Shares as herein contemplated shall be satisfactory in form and
substance to you and to counsel to the Underwriters, and the Underwriters shall
have received from such counsel an opinion, dated as the Closing Date with
respect to such of these proceedings as you may reasonably require.
(k) The Company shall have furnished to you such certificates,
additional to those specifically mentioned herein, as you may have reasonably
requested in a timely manner as to the
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accuracy and completeness, at the Closing Date, of any statement in the
Registration Statement or the Prospectus, as to the accuracy, at the Closing
Date, of the representations and warranties of the Company herein and in each
certificate and document contemplated under this Agreement to be delivered to
you, as to the performance by the Company of its obligations hereunder and under
each such certificate and document or as to the fulfillment of the conditions
concurrent and precedent to your obligations hereunder.
(l) The obligation of the Underwriters to purchase Additional
Securities hereunder is subject to the accuracy of the representations and
warranties of the Company contained herein on and as of the Option Closing Date
and to the satisfaction on and as of the Option Closing Date of the conditions
set forth herein.
(m) On the Closing Date there shall have been duly tendered to
you for your account the appropriate number of shares of Common Stock and
Warrants constituting the Securities.
10. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Underwriters and each person, if any,
who controls the Underwriters ("controlling person") within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act, against any and
all losses, liabilities, claims, damages, actions and expenses or liability,
joint or several, whatsoever (including but not limited to any and all expense
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), joint or
several, to which it or such controlling persons may become subject under the
Act, the Exchange Act or under any other statute or at common law or otherwise
or under the laws of foreign countries, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any Preliminary Prospectus or the Prospectus (as from
time to time amended and supplemented); in any post-effective amendment or
amendments or any new registration statement and prospectus in which is included
the Warrant Shares of the Company issued or issuable upon exercise of the
Warrants, or Underwriters' Warrant Shares upon exercise of the Underwriters'
Warrants; or in any
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application or other document or written communication (in this Paragraph 10
collectively called "application") executed by the Company or based upon written
information furnished by the Company filed in any jurisdiction in order to
qualify the Common Stock, Warrants, Warrant Shares, Additional Securities,
Underwriters' Warrants and Underwriters' Warrant Shares (including the Shares
issuable upon exercise of the Warrants underlying the Underwriters' Warrants)
under the securities laws thereof or filed with the Commission or any securities
exchange; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading (in the case of the Prospectus, in the light of the circumstances
under which they were made), unless such statement or omission was made in
reliance upon or in conformity with written information furnished to the Company
with respect to the Underwriters by or on behalf of the Underwriters expressly
for use in any Preliminary Prospectus, the Registration Statement or Prospectus,
or any amendment or supplement thereof, or in application, as the case may be.
Notwithstanding the foregoing, the Company shall have no liability under this
Paragraph 10(a) if any such untrue statement or omission made in a Preliminary
Prospectus, is cured in the Prospectus and the Underwriters failed to deliver to
the person or persons alleging the liability upon which indemnification is being
sought, at or prior to the written confirmation of such sale, a copy of the
Prospectus. This indemnity will be in addition to any liability which the
Company may otherwise have.
(b) The Underwriters agree to indemnify and hold harmless the
Company and each of the officers and directors of the Company who have signed
the Registration Statement and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the Underwriters in Paragraph 10(a), but only with respect to any untrue
statement or alleged untrue statement of any material fact contained in or any
omission or alleged omission to state a material fact required to be stated in
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereof or necessary to make the statements therein not
misleading or in any application made solely in reliance upon, and in conformity
with, written information furnished to the Company by you specifically expressly
for use in the preparation of such
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Preliminary Prospectus, the Registration Statement or Prospectus directly
relating to the transactions effected by the Underwriters in connection with
this Offering. This indemnity agreement will be in addition to any liability
which the Underwriters may otherwise have. Notwithstanding the foregoing, the
Underwriters shall have no liability under this Paragraph 10(b) if any such
untrue statement or omission made in a Preliminary Prospectus is cured in the
Prospectus, and the Prospectus is delivered to the person or persons alleging
the liability upon which indemnification is being sought.
(c) If any action is brought against any indemnified party
(the "Indemnitee") in respect of which indemnity may be sought against another
party pursuant to the foregoing (the "Indemnitor"), the Indemnitor shall assume
the defense of the action, including the employment and fees of counsel
(reasonably satisfactory to the Indemnitee) and payment of expenses. Any
Indemnitee 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
Indemnitee unless the employment of such counsel shall have been authorized in
writing by the Indemnitor in connection with the defense of such action. If the
Indemnitor shall have employed counsel to have charge of the defense or shall
previously have assumed the defense of any such action or claim, the Indemnitor
shall not thereafter be liable to any Indemnitee in investigating, preparing or
defending any such action or claim. Each Indemnitee shall promptly notify the
Indemnitor of the commencement of any litigation or proceedings against the
Indemnitee in connection with the issue and sale of the Common Stock, Warrants,
Warrants Shares, Additional Securities, Underwriters' Securities or in
connection with the Registration Statement or Prospectus.
(d) In order to provide for just and equitable contribution
under the Act in any case in which: (i) the Underwriters make a claim for
indemnification pursuant to Paragraph 10 hereof, but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the time to appeal has expired or the last right of appeal has been denied)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Paragraph 10 provides for indemnification of such case; or (ii)
contribution under the Act
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may be required on the part of the Underwriters in circumstances for which
indemnification is provided under this Paragraph 10, then, and in each such
case, the Company and the Underwriters shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after any
contribution from others) in such proportion so that the Underwriters are
responsible for the portion represented by dividing the total compensation
received by the Underwriters herein by the total purchase price of all
Securities sold in the public offering and the Company is responsible for the
remaining portion; provided, that in any such case, no person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The foregoing contribution agreement shall in no way affect
the contribution liabilities of any persons having liability under Section 11 of
the Act other than the Company and the Underwriters. As used in this Paragraph
10, the term "Underwriters" includes any officer, director, or other person who
controls the Underwriters within the meaning of Section 15 of the Act, and the
word "Company" includes any of officer, director or person who controls the
Company within the meaning of Section 15 of the Act. If the full amount of the
contribution specified in this paragraph is not permitted by law, then the
Underwriters and each person who controls the Underwriters shall be entitled to
contribution from the Company to the full extent permitted by law. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent to the settlement.
(e) Within fifteen (15) days after receipt by any party to
this Agreement (or its representative) of notice of the commencement of any
action, suit or proceeding, such party will, if a claim for contribution in
respect thereof is made against another party (the "contributing party"), notify
the contributing party of the commencement thereof, but the omission so to
notify the contributing party will not relieve it from any liability it may have
to any other party other than for contribution hereunder.
In case any such action, suit or proceeding is brought against
any party, and such party notifies a contributing party or his or its
representative of the commencement thereof within the
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aforesaid fifteen (15) days, the contributing party will be entitled to
participate therein with the notifying party and any other contributing party
similarly notified. Any such contributing party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The indemnification provisions contained in
this Paragraph 10 are in addition to any other rights or remedies which either
party hereto may have with respect to the other or hereunder.
11. Representations Warranties Agreements to Survive Delivery.
The respective indemnity and contribution agreements by the
Underwriters and the Company contained in Paragraph 10 hereof, and the
covenants, representations and warranties of the Company and the Underwriters
set forth in this Agreement, shall remain operative and in full force and effect
regardless of (i) any investigation made by the Underwriters or on its behalf or
by or on behalf of any person who controls the Underwriters, or by the Company
or any controlling person of the Company or any director or any of officer of
the Company, (ii) acceptance of any of the Securities and payment therefor, or
(iii) any termination of this Agreement, and shall survive the delivery of the
Securities and any successor of the Underwriters or the Company, or of any
person who controls you or the Company or any other indemnified party, as the
case may be, shall be entitled to the benefit of such respective indemnity and
contribution agreements. The respective indemnity and contribution agreements by
the Underwriters and the Company contained in this Paragraph 11 shall be in
addition to any liability which the Underwriters and the Company may otherwise
have.
12. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 10:00 A.M., New
York time, on the first full business day following the day on which you and the
Company receive notification that the Registration Statement became effective.
(b) This Agreement may be terminated by the Representative by
notifying the Company at any time on or before
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the Closing Date, if any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, securities markets; or if trading on the New York Stock
Exchange, the American Stock Exchange, or in the over-the-counter market shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required on
the over-the-counter market by the NASD or NASDAQ or by order of the Commission
or any other governmental authority having jurisdiction; or if a moratorium in
foreign exchange trading by major international banks or persons has been
declared; or if the Company shall have sustained a loss material or substantial
to the Company taken as a whole by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in your opinion, make it inadvisable to
proceed with the delivery of the Securities; or if there shall have been a
material adverse change in the conditions of the securities market in general,
as in your reasonable judgment would make it inadvisable to proceed with the
offering, sale and delivery of the Securities; or if there shall have been a
material adverse change in the financial or securities markets, particularly in
the over-the-counter market, in the United States having occurred since the date
of this Agreement.
(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Paragraph 12, the
Company shall be notified promptly by you by telephone or facsimile, confirmed
by letter.
(d) If this Agreement shall not become effective by reason of
an election of the Representative pursuant to this Paragraph 12 or if this
Agreement shall not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any undertaking, or to 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
assumed by the Company pursuant to Paragraph 8 herein, will be to reimburse the
Underwriters for the following: (i) Blue Sky counsel fees and expenses to the
extent set forth in Paragraph 8(a)(iv); (ii) Blue Sky filing fees; and (iii)
such reasonable out-of-pocket expenses of the Underwriters (including the fees
and disbursements of their counsel), to the extent set forth in Paragraph 8(c),
in connection with this Agreement and the
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proposed offering of the Securities, but in no event to exceed the sum of
$100,000 less such amounts already paid.
Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Paragraphs 8 and 10 hereof 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.
13. Notices.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to the Underwriters, shall be mailed,
delivered or telegraphed and confirmed to the Representative at X.X. Xxxxxxx &
Co., Inc., Xxx Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxx
Xxxxxxxxxxx, with a copy thereof to Xxxxxxxx X. Xxxxxxx, III, Esq., Gusrae
Xxxxxx & Bruno, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and, if sent to the
Company, shall be mailed, delivered or telegraphed and confirmed to the Company
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxx,
President, with a copy thereof to Hall Xxxxxxx Xxxx Xxxxxxxx & Xxxx, LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxx, Esq.
14. Parties.
This Agreement shall inure solely to the benefit of and shall be
binding upon, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Paragraph 10 hereof, and their respective
successors, legal representatives and assigns,
and no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Agreement or
any provision herein contained.
15. Construction.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York and shall supersede any
agreement or understanding, oral or in writing, express or implied, between the
Company and you relating to the sale of any of the Securities.
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16. Jurisdiction and Venue.
The Company agrees that the courts of the State of New York shall have
jurisdiction over any litigation arising from this Agreement, and venue shall be
proper in the Southern District of New York.
17. Counterparts.
This agreement may be executed in counterparts.
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If the foregoing correctly sets forth the understanding between you,
the Selling Stockholders 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,
RUSSIAN WIRELESS TELEPHONE COMPANY, INC.
By:_____________________________________
Xxxxxx X. Xxxxxx, President
The Selling Stockholder:
THE CAM XXXXXX FOUNDATION
By:_____________________________________
Accepted as of the date first above written:
X.X. XXXXXXX & CO., INC.
By:_____________________________________
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SCHEDULE A
Stock to be Sold By the Selling Stockholder
Name Number of Shares
---- ----------------
The Cam Xxxxxx Foundation 30,000
------
Total: 30,000
======
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SCHEDULE B
Number of Shares Number of
of Common Stock Warrants to
to be Purchased to be Purchased
--------------- ---------------
Underwriter
-----------
X.X. Xxxxxxx & Co., Inc.
Total: 1,530,000 2,200,000
========= =========
