OBJECTSOFT CORPORATION
1,250,000 Units
Each Unit Consisting of One Share of Common Stock
and One Redeemable Class A Warrant
UNDERWRITING AGREEMENT
New York, New York
____________, 1996
Renaissance Financial Securities Corporation
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
As Representative of the Underwriters
named in Schedule I hereto.
Ladies and Gentlemen:
The undersigned, ObjectSoft Corporation, a Delaware corporation (the
"Company"), hereby confirms its agreement with the underwriters named in
Schedule I hereto (the "Underwriters"), including Renaissance Financial
Securities Corporation (being referred to herein variously as "you" or the
"Representative") and for which you have advised us you have been authorized to
execute this Agreement as Representative, as follows:
1. Purchase and Sale of Securities.
1.1 Firm Securities.
1.1.1 Purchase of Firm Securities. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the several
Underwriters, in the respective amounts set forth opposite their names on
Schedule I hereto, and the Underwriters, severally, and not jointly, an
aggregate of ________
units (the "Units") consisting of ________ shares of the Company's Common Stock,
par value $.0001 per share ("Common Stock"), purchase price of $ per share (or
$__________ per share net of commissions), and Redeemable Class A Warrants
("Warrant(s)") at a purchase price of $_________ per Unit (or $__________ per
Unit net of commissions), each Warrant to purchase one share of Common Stock at
an initial exercise price of $7.80 per share commencing on _______________ (one
year after the Effective Date (as defined hereinafter)) and ending on the
five-year anniversary of the Effective Date (such Units and the shares of Common
Stock and Warrants comprising the Units being referred to herein as the "Firm
Securities"). The Units shall each be comprised of one share of Common Stock and
one Warrant and shall be detachable and separately tradeable immediately upon
issuance.
1.1.2 Payment and Delivery. Delivery and payment for the
Firm Securities shall be made at 10:00 A.M., New York time, on the third
business day following the day that trading commences for the Firm Securities or
at such earlier time as the Underwriters shall determine, or at such other time
as shall be agreed upon by the Representative and the Company, at the offices of
the Representative or at such other place as shall be agreed upon by the
Representative and the Company. The hour and date of delivery and payment for
the Firm Securities are called the "Closing Date." Payment for the Firm
Securities shall be made on the Closing Date at the Representative's election by
certified or bank cashier's check(s) in New York Clearing House funds, payable
to the order of the Company upon delivery to you of certificates (in form and
substance satisfactory to the Representative) representing the Firm Securities
for the accounts of the several Underwriters. The Firm Securities shall be
registered in such name or names and in such authorized denominations as the
Representative may request in writing at least two full business days prior to
the Closing Date. The Company will permit the Representative to examine and
package the Firm Securities for delivery at least one full business day prior to
the Closing Date. The Company shall not be obligated to sell or deliver the Firm
Securities except upon tender of payment by the Underwriters for all the Firm
Securities.
1.2 Over-Allotment Option.
1.2.1 Option Securities. For the purposes only of covering
any over-allotments in connection with the distribution
2
and sale of the Firm Securities, the Representative is hereby granted an option
to purchase up to an additional ___________________ Units from the Company
("Over-allotment Option"). Such additional Units are hereinafter referred to as
the "Option Securities." The Firm Securities and the Option Securities are,
together with the shares of Common Stock issuable upon exercise of the Warrants,
hereinafter referred to collectively as the "Public Securities." The purchase
price to be paid for the Option Securities will be the same price per Option
Security as the price per Firm Security set forth in Section 1.1.1 hereof.
1.2.2 Exercise of Option. The Over-allotment Option
granted pursuant to Section 1.2.1 hereof may be exercised by the Representative
as to all or any part of the Option Securities at any time, from time to time,
within forty-five days after the effective date of the Registration Statement
("Effective Date"). The Representative will not be under any obligation to
purchase any Option Securities prior to the exercise of the Over-allotment
Option. The Over-allotment Option granted hereby may be exercised by the giving
of oral notice to the Company from the Representative, which must be confirmed
by a letter or telecopy setting forth the number and type of Option Securities
to be purchased, the date and time for delivery of and payment for the Option
Securities and stating that the Option Securities referred to therein are to be
used only for the purpose of covering over-allotments in connection with the
distribution and sale of the Firm Securities. If such notice is given at least
two full business days prior to the Closing Date, the date set forth therein for
such delivery and payment will be the Closing Date. If such notice is given
thereafter, the date set forth therein for such delivery and payment will not be
earlier than five full business days after the date of the notice. If such
delivery and payment for the Option Securities does not occur on the Closing
Date, the date and time of the closing for such Option Securities will be as set
forth in the notice (hereinafter the "Option Closing Date"). Upon exercise of
the Over-allotment Option, the Company will become obligated to convey to the
Representative, and, subject to the terms and conditions set forth herein, the
Representative will become obligated to purchase, the number of Option
Securities specified in such notice.
1.2.3 Payment and Delivery. Payment for the Option
Securities will be at the Representative's election by certified or
3
bank cashier's check(s) in New York Clearing House funds, payable to the order
of the Company at the offices of the Representative or at such other place as
shall be agreed upon by the Representative and the Company upon delivery to you
of certificates representing such securities for the account of the
Representative. The certificates representing the Option Securities to be
delivered will be in such denominations and registered in such names as the
Representative requests not less than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be, and will be made
available to the Representative for inspection, checking and packaging at the
aforesaid office of the Company's transfer agent or correspondent not less than
one full business day prior to such Closing Date.
4
1.3 Representative's Purchase Option.
1.3.1 Purchase Option. The Company hereby agrees to issue
and sell to the Representative (and/or its designees) on the Closing Date, in
exchange for a check in the amount of $100, an option ("Representative's
Purchase Option") at an initial exercise price of $_____ per Unit
("Representative's Units") at an initial exercise price of $_____ per
Representative's Unit. The Representative's Purchase Option is exercisable for a
four-year period commencing on the one-year anniversary of the Effective Date.
The Representative's Purchase Option, the Representative's Units, the shares of
Common Stock (the "Representative's Shares") and the Warrants (the
"Representative's Warrants") constituting the Representative's Units, the shares
of Common Stock issuable upon exercise of the Representative's Warrants are
hereinafter referred to collectively as the "Representative's Securities." The
Public Securities and the Representative's Securities are hereinafter referred
to collectively as the "Securities."
1.3.2 Payment and Delivery. Delivery and Payment for the
Representative's Purchase Option in the names and denominations designated by
the Representative shall be made on the Closing Date.
2. Representations and Warranties of the Company. The Company represents
and warrants to the Representative as follows:
2.1 Filing of Registration Statement.
2.1.1 Pursuant to the Act. The Company has filed with the
Securities and Exchange Commission ("Commission") a registration statement and
an amendment or amendments thereto, on Form SB-2 (Reg. No. 333-10519), including
any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Public Securities under the Securities Act of 1933 ("Act"),
which registration statement and amendment or amendments have been prepared by
the Company in conformity with the requirements of the Act, and the rules and
regulations ("Regulations") of the Commission under the Act. 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, schedules, exhibits and all
other documents filed as a part thereof or incorporated therein and all
information deemed to be a part
5
thereof as of such time pursuant to paragraph (b) of Rule 430A of the
Regulations), is hereinafter called the "Registration Statement," and the form
of the final prospectus dated the Effective Date (or, if applicable, the form of
final prospectus filed with the Commission pursuant to Rule 424 of the
Regulations), is hereinafter called the "Prospectus."
2.1.2 Pursuant to the Exchange Act. The Company has filed
with the Commission a registration statement on Form 8-A (File No.__-________)
providing for the registration under the Securities Exchange Act of 1934
("Exchange Act"), of the Public Securities.
2.2 No Stop Orders, Etc. Neither the Commission nor, to the Company's
knowledge, any state regulatory authority has issued any order preventing or
suspending the use of any Preliminary Prospectus or has instituted or, to the
Company's knowledge, threatened to institute any proceedings with respect to
such an order.
2.3 Disclosures in Registration Statement. At the time the
Registration Statement became effective and at all times subsequent thereto up
to the Closing Date:
2.3.1 Securities Act Representation and 10b-5
Representation: The Registration Statement and the Prospectus will contain, with
respect to the Company and the persons listed on Schedule 2.3.1 attached hereto,
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. Neither the Registration
Statement, nor any amendment or supplement thereto, on the Effective Date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and that on the Closing Date, the Prospectus and any
amendment or supplement thereto will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of
6
the Regulations) and when any amendment thereof or supplement thereto was first
filed with the Commission, such Preliminary Prospectus and any amendments
thereof and supplements thereto, at the time such filing was made, complied in
all material respects with the applicable provisions of the Act and the
Regulations. The representation and warranty made in this Section 2.3.1 does not
apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company by the Underwriters
expressly for use in the Registration Statement or Prospectus or any amendment
thereof or supplement thereto ("Underwriters' Information").
2.3.2 Disclosure of Contracts. The description in the
Registration Statement and the Prospectus of contracts and other documents is
accurate and presents fairly the information required to be disclosed and there
are no contracts or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits to
the Registration Statement which have not been so described or filed. Except as
otherwise disclosed in the Prospectus, each contract or other instrument
(however characterized or described) to which the Company is a party or by which
its property or business is or may be bound or affected and (i) which is
referred to in the Prospectus, or (ii) is material to the business of the
Company has been duly and validly executed, is in full force and effect in all
material respects and is enforceable in accordance with its terms, except (i) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification provision may be limited under federal and state laws, and
(iii) that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be sought. None of such
contracts or instruments has been assigned by the Company and the Company, to
the best of its knowledge, is not in default thereunder and, to the Company's
knowledge, no event has occurred which, with the lapse of time or the giving of
notice, or both, would constitute a default thereunder (except as otherwise
disclosed in the Prospectus). None of the material provisions of such contracts
or instruments violates or will result in a violation of any existing applicable
law, rule, regulation, judgment, order or decree of any governmental agency or
court having jurisdiction over the Company,
7
or any of its respective assets, including, without limitation, those relating
to environmental laws and regulations, except where such violation will not have
a material adverse effect on the business, properties or financial condition of
the Company ("Material Adverse Effect").
2.3.3 Prior Securities Transactions. No securities of the
Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by, or under common control
with the Company within the three years prior to the date hereof, except as
disclosed in the Registration Statement and except as to 40,000 shares
transferred by ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇ in private transactions.
2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. At the time the
Registration Statement becomes effective and at all times subsequent thereto, up
to the Closing Date, since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
specifically stated therein, (i) there has been no material adverse change in
the condition, financial or otherwise, or in the results of operation, business
or business prospects of the Company ("Material Adverse Change"), including, but
not limited to, a material loss or interference with its business from fire,
storm, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
whether or not arising in the ordinary course of business, and (ii) there have
been no transactions entered into by the Company, other than those in the
ordinary course of business, which are material with respect to the condition,
financial or otherwise, or the results of its operations, business or business
prospects.
2.4.2 Recent Securities Transactions, Etc. Subsequent to
the respective dates as of which information given in the Registration Statement
and the 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 (iii)
declared or paid any dividend or made any other distribution on or in respect to
its capital stock.
8
2.5 Independent Accountants. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company LLP, whose
reports are filed with the Commission as part of the Registration Statement, are
independent accountants as required by the Act and the Regulations.
2.6 Financial Statements. The financial statements, including the
notes thereto and supporting schedules included in the Registration Statement
and Prospectus, fairly present the
financial position and the results of operations of the Company at the dates and
for the 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 except that unaudited
interim financial statements are subject to year end adjustments and may be
without notes; and the supporting schedules, if any, included in the
Registration Statement present fairly the information required to be stated
therein.
2.7 Authorized Capital; Options; Etc. The Company had at the date or
dates indicated in the Prospectus duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
Based on the assumptions stated in the Registration Statement and the
Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in the Registration
Statement and the Prospectus, on the Effective Date there are, and on the
Closing Date there will be, no options, warrants, or other rights to purchase or
otherwise acquire any authorized but unissued shares of Common Stock of the
Company or any security convertible into shares of Common Stock of the Company,
or any contracts or commitments to issue or sell shares of Common Stock or any
such options, warrants, rights or convertible securities.
2.8 Valid Issuance of Securities; Etc.
2.8.1 Outstanding Securities. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights of rescission
with respect thereto; and none of such securities were issued in violation of
the preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The outstanding options and warrants
to purchase shares of Common Stock constitute the
9
valid and binding obligations of the Company, enforceable in accordance with
their terms, except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (ii) as enforceability of any indemnification provision may be
limited under federal and state laws, and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be sought. The authorized Common Stock and outstanding
options and warrants to purchase shares of Common Stock conform to all
statements relating thereto contained in the Registration Statement and the
Prospectus. The offers and sales of the outstanding Common Stock, options and
warrants to purchase shares of Common Stock were at all relevant times either
registered under the Act and registered or qualified under the applicable state
securities or Blue Sky Laws or exempt from such registration requirements.
2.8.2 Securities Sold Pursuant to this Agreement. The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the Securities are not and will
not be subject to the preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the Company; and all corporate
actions required to be taken for the authorization, issuance and sale of the
Securities have been duly and validly taken. When issued, the Representative's
Purchase Option, the Representative's Warrants and the Warrants will constitute
valid and binding obligations of the Company to issue and sell, upon exercise
thereof and payment therefor, the number and type of securities of the Company
called for thereby and the Representative's Purchase Option, the
Representative's Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification
provision may be limited under federal and state laws, and (iii) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
10
2.8.3 Series A Preferred Stock. All outstanding shares of
the Company's Series A Preferred Stock will be redeemed at $1.00 per share plus
all accumulated dividends accrued but unpaid on the consummation of the sale of
the Firm Securities and, upon such redemption, such holders of the Series A
Preferred Stock shall have no rights with respect to the Company, and the
Company shall have no obligations to such holders.
2.8.4 Series B Preferred Stock. All outstanding shares of
the Company's Series B Preferred Stock were redeemed by the Company in July
1996, and the prior holders of the Series B Preferred Stock have no further
rights with respect to the Company and the Company has no obligations to such
holders.
2.9 Registration Rights of Third Parties. Except as set forth in the
Prospectus, no holders of any securities of the Company or of any options or
warrants of the Company exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to register any
such securities of the Company under the Act or to include any such securities
in a registration statement to be filed by the Company.
2.10 Validity and Binding Effect of Agreements. This Agreement, the
employment agreements with each of ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇") ("Employment Agreements"), the Representative's Purchase Option and
the Warrant Agreement (as hereinafter defined) have been duly and validly
authorized by the Company and constitute, or when executed and delivered will
constitute, the valid and binding agreements of each of the Company, ▇▇▇▇▇ and
Febish, as the case may be, enforceable against each of them in accordance with
their respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) as enforceability of any indemnification provision may be
limited under the federal and state securities laws, (iii) that the provisions
of Confidentiality and Non-Competition agreements may be deemed to violate
public policy or be otherwise not enforceable in whole or in part, and (iv) that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
11
2.11 No Conflicts, Etc. The execution, delivery, and performance by
the Company of this Agreement, the consummation by the Company of the
transactions herein contemplated and the compliance by the Company with the
terms hereof do not and will not, with or without the giving of notice or the
lapse of time or both, (i) result in a breach of, or conflict with any of the
terms and provisions of, or constitute a default under, or result in the
creation, modification, termination or imposition of any lien, charge or
encumbrance upon any of its property or assets pursuant to the terms 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 it is a party or by which it may be bound
or to which any of its property or assets is subject; (ii) result in any
violation of the provisions of its Certificate of Incorporation or By-Laws;
(iii) violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over it or its operations or any of its properties or business; or
(iv) have a material adverse effect on any permit, license, certificate,
registration, approval, consent, license or franchise concerning it or its
operations; except in the case of (i) or (iii), where such default, breach,
violation or effect, either singly or in the aggregate, would not have a
Material Adverse Effect.
2.12 No Defaults; Violations. Except as described in the Prospectus,
no default exists in the due performance and observance of any term, covenant or
condition of any material license, contract, 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 material agreement or instrument
to which the Company, or any of its subsidiaries, if any, is a party or by which
the Company may be bound or to which any of the properties or assets of the
Company is subject, except in each case where such default would not have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries, if
any, is in violation of any term or provision of its Certificate of
Incorporation or By-Laws or in violation of any franchise, license, permit,
applicable law, rule, regulation, judgment or decree of any governmental agency
or court, domestic or foreign, having jurisdiction over it or its operations,
properties or business, except as described in the Prospectus and except where
such violation would not have a Material Adverse Effect.
12
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies to own or lease its properties and conduct its
business as described in the Prospectus, and is and has been doing business in
compliance with all such material authorizations, approvals, orders, licenses,
certificates and permits and all federal, state and local laws, rules and
regulations, except where the failure to have such authorizations, approvals,
orders, licenses, certificates or permits to conduct its business in accordance
therewith would not have a Material Adverse Effect.
2.13.2 Transactions Contemplated Herein. The Company has
all corporate power and authority to enter into this Agreement and to carry out
the provisions and conditions hereof, and all consents, authorizations,
approvals and orders required in connection therewith have been obtained. No
consent, authorization or order of, and no filing with, any court, government
agency or other body is required for the valid issuance, sale and delivery of
the Securities pursuant to this Agreement, the Warrant Agreement and the
Representative's Purchase Option, and as contemplated by the Prospectus, except
with respect to applicable federal and state securities laws.
2.14 Title to Property; Insurance. Subject to the qualification set
forth in the Prospectus, the Company has good and marketable title to, or valid
and enforceable leasehold estates in, all items of real and personal property
(tangible and intangible) owned or lease by it, free and clear of all liens,
encumbrances, claims, security interests, defects and restrictions of any
material nature whatsoever, other than those referred to in the Prospectus,
liens for taxes not yet due and payable and liens of an immaterial nature
arising by operation of law. The Company has insured its properties against loss
or damage by fire, other casualty and other insurance in amounts and on terms as
is usually maintained by similarly situated companies engaged in the same or
similar business.
2.15 Litigation; Governmental Proceedings. Except as set forth in the
Prospectus, there is no action, suit, proceeding,
13
inquiry, arbitration, investigation, litigation or governmental proceeding
pending or, to the Company's knowledge, threatened against, or involving the
properties or business of the Company which if determined adversely to the
Company, might have a Material Adverse Effect or which question the validity of
the capital stock of the Company or this Agreement or of any action taken or to
be taken by the Company pursuant to, or in connection with, this Agreement.
There are no outstanding orders, judgments or decrees of any court, governmental
agency or other tribunal naming the Company and enjoining the Company from
taking, or requiring the Company, to take, any action, or to which the Company,
or its respective properties or business, is bound or subject.
2.16 Good Standing. The Company has been duly organized and is
validly existing as a corporation and is in good standing under the laws of its
state of incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which ownership or
leasing of any properties or the character of its operations requires such
qualification or licensing, except where the failure to qualify would not have a
Material Adverse Effect.
2.17 Taxes. The Company has filed all returns (as hereinafter
defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof. The Company has
paid all taxes (as hereinafter defined) shown as due on such returns that were
filed and has paid all taxes imposed on or assessed against it, except where the
failure to so pay would not have a Material Adverse Effect. The provisions for
taxes payable, if any, shown on the financial statements filed with or as part
of the Registration Statement are sufficient for all accrued and unpaid taxes,
whether or not disputed, and for all periods to and including the dates of such
financial statements. Except as disclosed in writing to the Underwriters, (i) no
issues have been raised (and are currently pending) by any taxing authority in
connection with any of the returns or taxes asserted as due from the Company,
and (ii) no waivers of statutes of limitation with respect to the returns or
collection of taxes have been given by or requested from the Company. The term
"taxes" mean all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise,
severance,
14
stamp, occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments, or charges of any kind whatever, together with any
interest and any penalties, additions to tax, or additional amounts with respect
thereto. The term "returns" means all returns, declarations, reports,
statements, and other documents required to be filed in respect of taxes.
2.18 Employee Options. Except as disclosed in the Prospectus, no
shares of Common Stock are eligible for sale pursuant to Rule 701 promulgated
under the Act in the 12-month period following the Effective Date.
2.19 Transactions Affecting Disclosure to NASD. Except as disclosed
in the letters from Stursberg & ▇▇▇▇▇ to the NASD (as defined below), dated
_____________________ and ______________________ (copies of which have been
provided to and reviewed by the Company):
2.19.1 Finder's Fees. Except as disclosed in the
Prospectus, the Company has not entered into any agreements, nor made any
payments for, nor is aware of any claims for, arrangements or understandings
for, services in the nature of a finder's or origination fee with respect to the
sale of the Securities hereunder.
2.19.2 Payments Within Twelve Months. Except as set forth
in the Registration Statement, the Company has not made any direct or indirect
payments (in cash, securities or otherwise) to (i) any person, as a finder's
fee, investing fee or otherwise, in consideration of such person raising capital
for the Company or introducing to the Company persons who provided capital to
the Company, (ii) to any member of the National Association of Securities
Dealers, Inc. ("NASD"), or (iii) to any person or entity that has any direct or
indirect affiliation or association with any NASD member, within the twelve
month period prior to the date on which the Registration Statement was filed
with the Commission ("Filing Date") or thereafter, other than payments to the
Representative.
2.19.3 Use of Proceeds. None of the net proceeds of the
offering will be paid by the Company to any NASD member or any affiliate or
associate of any NASD member, except as set forth in the Prospectus or as
specifically authorized herein.
15
2.19.4 Insiders' NASD Affiliation. Except as set forth in
the Prospectus, no officer or director of the Company or owner of five (5%)
percent or more of any of the Company's Common Stock has any direct or indirect
affiliation or association with any NASD member. The Company will advise the
Representative and the NASD if the Company becomes aware that any 5% or greater
stockholder of the Company is or becomes an affiliate or associated person of an
NASD member participating in the distribution.
2.20 Foreign Corrupt Practices Act. Neither the Company nor, to the
best of the Company's knowledge, any of its officers, directors, employees,
agents or any other person acting on behalf of the Company has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is, or may be in a position to help or
hinder the business of the Company (or assist it in connection with any actual
or proposed transaction) which (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (ii) if
not given in the past, might have had a Materially Adverse Effect on the assets,
business or operations of the Company as reflected in any of the financial
statements contained in the Prospectus or (iii) if not continued in the future,
might have a Material Adverse Effect on the assets, business, operations or
prospects of the Company. The Company's internal accounting controls and
procedures are sufficient to cause the Company to comply with the Foreign
Corrupt Practices Act of 1977, as amended.
2.21 Nasdaq Eligibility. As of the Effective Date, the Public
Securities have been approved for quotation on the Nasdaq SmallCap Market.
2.22 Intangibles. Subject to the qualifications set forth in the
Prospectus the Company owns or possesses the requisite licenses or rights to use
all trademarks, service marks, service names, trade names, patents and patent
applications, copyrights and other rights (collectively, "Intangibles")
described as being licensed to or owned by it in the Registration Statement. The
Intangibles
16
which have been registered by the Company, if any, in the United States Patent
and Trademark Office have been fully maintained and are in full force and
effect. There is no claim or action by any person pertaining to, or proceeding
pending or to the best knowledge of the Company, threatened and the Company has
not received any notice of conflict with the asserted rights of others which
challenges its exclusive right with respect to any Intangibles used in the
conduct of its business except as described in the Prospectus. The Company has
not received notice of any claim that the Intangibles and the Company's current
products, services and processes do not infringe on any intangibles held by any
third party. To the Company's knowledge, no others have infringed upon the
Intangibles of the Company.
2.23 Relations with Employees.
2.23.1 Employee Matters. The Company is in compliance in
all material respects with all federal, state and local laws and regulations
respecting the employment of its employees and employment practices, terms and
conditions of employment and wages and hours relating thereto, except where the
failure to so comply would not have a Material Adverse Effect. There are no
pending investigations involving the Company by the U.S. Department of Labor or
any other governmental agency responsible for the enforcement of such federal,
state or local laws and regulations. There is no unfair labor practice charge or
complaint against the Company pending before the National Labor Relations Board
or any strike, picketing, boycott, dispute, slowdown or stoppage pending or,
threatened against or involving the Company or any predecessor entity, and none
has ever occurred. No question concerning representation exists respecting the
employees of the Company and no collective bargaining agreement or modification
thereof is currently being negotiated by the Company. No grievance or
arbitration proceeding is pending under any expired or existing collective
bargaining agreements, if any, of the Company.
2.23.2 Employee Benefit Plans. Other than as set forth in
the Registration Statement, the Company does not maintain, sponsor or contribute
to, or is it required to contribute to, any program or arrangement that is an
"employee" pension benefit plan," an "employee welfare benefit plan," or a
"multi-employer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of
17
1974, as amended ("ERISA") ("ERISA Plans"). The Company has not, at any time,
maintained or contributed to a defined benefit plan, as defined in Section 3(35)
of ERISA. If the Company does maintain or contribute to a defined benefit plan,
any termination of the plan on the date hereof would not give rise to liability
under Title IV of ERISA. No ERISA Plan (or any trust created thereunder) has
engaged in a "prohibited transaction" within the meaning of Section 406 of ERISA
or Section 4975 of the Internal Revenue Code of 1986, as amended ("Code"), which
could subject the Company to any tax penalty for prohibited transactions and
which has not adequately been corrected. Any ERISA Plan is in compliance with
all material reporting, disclosure and other requirements of the Code and ERISA
as they relate to any such ERISA Plan. Determination letters have been received
from the Internal Revenue Service with respect to each ERISA Plan which is
intended to comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified thereunder. The Company has never completely
or partially withdrawn from a "multi-employer plan."
2.24 Officers' Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
2.25 Warrant Agreement. At the Closing (as hereinafter defined) the
Company will enter into a warrant agreement with respect to the Warrants and the
Representative's Warrants substantially in the form filed as an exhibit to the
Registration Statement ("Warrant Agreement") with Continental Stock Transfer &
Trust Company, in form and substance satisfactory to the Representative,
providing for, among other things, no redemption of the Warrants without the
giving of prior written notice to the Representative and in accordance with the
Warrant Agreement for the payment of a warrant solicitation fee, if applicable,
as contemplated by Section 3.10 hereof.
2.26 Agreements With Insiders and Others. The Company has caused to
be duly executed lock-up agreements, in substantially the form presented to the
Representative, pursuant to which (i) Messrs. ▇▇▇▇▇ and Febish agree not to sell
any securities of the Company for eighteen (18) months following the Effective
Date without the prior written consent, (ii) certain persons, as described in
the
18
Prospectus, who beneficially own or hold the outstanding Common Stock or
Warrants or options to purchase Common Stock of the Company agree not to sell
any securities of the Company owned by them (either pursuant to Rule 144 of the
Regulations or otherwise) for a period of nine (9) months following the
Effective Date except with the consent of the Representative and (iii) certain
persons who beneficially own or hold warrants to purchase shares of Common Stock
and/or shares of Common Stock purchased from the Company in the Bridge Offering
or the July 1996 Offering, as defined in the Prospectus agree not to sell any
Warrants or shares of Common Stock owned by them (either pursuant to Rule 144 of
the Regulations or otherwise) for a period of twelve (12) months following the
Effective Date except with the consent of the Representative.
2.27 Employment Agreements. The Company has entered into an
Employment Agreement with each of Messrs. ▇▇▇▇▇ and ▇▇▇▇▇▇ in substantially the
same form as set forth as exhibits to the Registration Statement, for a term
commencing on July 1, 1996 and ending on December 31, 2001.
2.28 Representative's Purchase Option. At the Closing, the Company
will execute and deliver the Representative's Purchase Option to the
Representative substantially in the form filed as an exhibit to the Registration
Statement.
3. Covenants of the Company. The Company covenants and agrees as
follows:
3.1 Amendments to Registration Statement. The Company will deliver to
the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the Representative
shall reasonably object.
19
3.2 Federal Securities Laws.
3.2.1 Compliance. During the time when (i) a Prospectus is
required to be delivered under the Act so far as necessary to permit the
continuance of sales or of dealings in the Public Securities; and (ii) a
prospectus (a "Warrant Exercise Prospectus") is required to be delivered under
the Act so far as necessary to permit the exercise of the Warrants,
Representative's Warrants and the Representative's Purchase Option; the Company
will use all reasonable efforts to comply with all requirements imposed upon it
by the Act, the Regulations and the Exchange Act and by the regulations under
the Exchange Act, as from time to time in force, in accordance with the
provisions hereof and the Prospectus which requires the Company to keep the
Registration Statement . If at any time when a Prospectus or a Warrant Exercise
Prospectus relating to the Public Securities or the Representative's Securities
is required to be delivered under the Act and, any event shall have occurred as
a result of which, in the opinion of counsel for the Company or counsel for the
Underwriters, such Prospectus, as then amended or supplemented, includes an
untrue statement of material fact or omits 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, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representative promptly and prepare and file with the
Commission, subject to Section 3.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.
3.2.2 Filing of Final Prospectus. The Company will file
the Prospectus with the Commission pursuant to the requirements of Rule 424 of
the Regulations.
3.2.3 Exchange Act Registration. For a period of five
years from the Effective Date, the Company will use its best efforts to maintain
the registration of the Common Stock and the Warrants under the provisions of
the Exchange Act.
3.3 Blue Sky Filing. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably
20
designate, provided that no such qualification shall be required in any
jurisdiction where, as a result thereof, the Company would be subject to service
of general process or to taxation as a foreign corporation doing business in
such jurisdiction. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representative agrees that such action is
not at the time necessary or advisable, use all reasonable efforts to file and
make such statements or report at such times as are or may be required by the
laws of such jurisdiction.
3.4 Delivery to Underwriters of Prospectuses. The Company will
deliver such number of (i) Prospectuses to the Underwriters and (ii) Warrant
Exercise Prospectuses to the Warrantholders as needed, without charge, from time
to time during the period when such prospectuses are required to be delivered
under the Act . Additionally, the Company will deliver, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
two original executed Registration Statements, including exhibits, and all
post-effective amendments thereto and copies of all exhibits filed therewith or
incorporated therein by reference and all original executed consents of
certified experts.
3.5 Events Requiring Notice to Underwriters. The Company will notify
the Representative immediately and confirm the notice in writing (i) filing of
any post-effective amendment to the Registration Statement, (ii) of the by the
Commission of any stop order or of the initiation, or the threatening, of any
proceeding for that purpose, (iii) of the issuance by any state securities
commission of any proceedings for the suspension of the qualification of the
Public Securities for offering of sale in any jurisdiction or of the initiation,
or the threatening, of any proceeding for that purpose, (iv) of the mailing and
delivery to the Commission for filing of any amendment or supplement to the
Registration Statement or Prospectus, (v) of the receipt of any comments or
request for any additional information from the Commission, and (vi) of the
happening of any event during the period described in Section 3.4 hereof which,
in the judgment of the Company, makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue or which requires the making
of any changes in the Prospectus in order to make the statements therein, in
light of the circumstances under which they were made, not misleading or which
requires the making of any changes in the Registration Statement in order to
make the
21
statements therein not misleading. If the Commission or any state securities
commission shall enter a stop order or suspend such qualification at any time,
the Company will make every reasonable effort to obtain promptly the lifting of
such order.
3.6 Review of Financial Statements. For a period of five years from
the Effective 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 fiscal quarters prior
to the announcement of quarterly financial information, the filing of the
Company's Form 10-Q quarterly report and the mailing of quarterly financial
information to stockholders.
3.7 Unaudited Financials. The Company will furnish to the
Representative as early as practicable subsequent to the date hereof and at
least two full business days prior to the Closing Date, a copy of the latest
available unaudited interim financial information of the Company (which in no
event shall be as of a date more than sixty days prior to the Effective Date)
which have been read by the Company's independent accountants, as stated in
their letter to be furnished pursuant to Section 4.3 hereof.
3.8 Secondary Market Trading and Standard & Poor's. The Company will
take all necessary and appropriate actions to achieve accelerated publication in
Standard and Poor's Corporation Records Corporate Descriptions (as soon as
practicable after the Effective Date) and to maintain such publication with
updated quarterly information for a period of five years from the Effective
Date, including the payment of any necessary fees and expenses. The Company
shall take such action as may be reasonably requested by the Representative to
obtain a secondary market trading exemption in such States as may be requested
by the Representative, including the payment of any necessary fees and expenses.
3.9 Nasdaq Maintenance. For a period of five years from the date
hereof, the Company will use its best efforts to maintain the quotation by the
Nasdaq SmallCap Market of the Common Stock and, if outstanding, the Warrants.
3.10 Warrant Solicitation and Registration of Common Stock Underlying
the Warrants.
22
3.10.1 Warrant Solicitation Fees. The Company hereby
engages the Representative on a non-exclusive basis, as its agent for the
solicitation of the exercise of the Warrants and the additional warrants being
concurrently registered under the Registration Statement. The Company, at its
cost, will (i) assist the Representative with respect to such solicitation, if
requested by the Representative and will (ii) provide the Representative, and
direct the Company's transfer and warrant agent to provide to the
Representative, lists of the record and, to the extent known, beneficial owners
of the Warrants. Commencing one year from the Effective Date, the Company will
pay the Representative a commission of five percent of the Warrant exercise
price for each Warrant exercised, payable on the date of such exercise, on the
terms provided for in the Warrant Agreement, if allowed under the rules and
regulations of the NASD and only if the Representative has provided bona fide
services to the Company in connection with the exercise of such Warrant. In
addition to soliciting, either orally or in writing, the exercise of Warrants,
such services may also include disseminating information, either orally or in
writing, to the Warrantholders about the Company or the market for the Company's
securities, and assisting in the processing of the exercise of Warrants. The
Representative may engage sub-agents in its solicitation efforts. The Company
will disclose the arrangement to pay such solicitation fees to the
Representative in the Warrant Exercise Prospectus.
3.11 [Reserved]
3.12 Reports to the Representative.
3.12.1 Periodic Reports, Etc. For a period of five years
from the Effective Date, the Company will furnish to the Representative copies
of such financial statements and other periodic and special reports as the
Company from time to time furnishes generally to holders of any class of its
securities, and promptly furnish to the Representative (i) a copy of each
periodic report to the Company shall be required to file with the Commission,
(ii) a copy of every press release released by the Company, (iii) copies of each
Form SB, (iv) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4
received or prepared by the Company, and (v) such additional documents and
information with respect to the Company and the affairs of any future
subsidiaries
23
of the Company as the Representative may from time to time reasonably request.
3.12.2 Transfer Sheets and Weekly Position Listings. For a
period of five years from the Closing Date, the Company will furnish to the
Representative at the Company's sole expense such transfer sheets and position
listings of the Company's securities as the Representative may request,
including the daily, weekly and monthly consolidated transfer sheets of the
transfer agent of the Company and the weekly security position listings of the
Depository Trust Co.
3.13 [Reserved]
3.14 Application of Net Proceeds. The Company will apply the net
proceeds from the offering received by it in a manner consistent with the
application described under the caption "USE OF PROCEEDS" in the Prospectus.
3.15 Payment of Expenses.
3.15.1 General Expenses. The Company hereby agrees to pay
on each of the Closing Date and the Option Closing Date, if any, to the extent
not paid at Closing Date, all expenses incident to the performance of the
obligations of the Company under this Agreement, including but not limited to
(i) the preparation, printing, filing, delivery and mailing (including the
payment of postage with respect to such mailing) of the Registration Statement,
the Prospectus and the Preliminary Prospectuses and the printing and mailing of
this Agreement and related documents, including the cost of all copies thereof
and any amendments thereof or supplements thereto supplied to the Representative
in quantities as may be required by the Representative, (ii) the printing,
engraving, issuance and delivery of the shares of Common Stock, the Warrants and
the Representative's Purchase Option, including any transfer or other taxes
payable thereon, (iii) the qualification of the Public Securities and under
state or foreign securities or Blue Sky laws, including the filing fees under
such Blue Sky laws, the costs of printing and mailing the "Preliminary Blue Sky
Memorandum," and all amendments and supplements thereto, fees of
Representative's Blue Sky counsel, which fees shall not exceed an aggregate of
$15,000 for ten states, $1,500 for each additional state and a total of not more
than $40,000, and disbursements of
24
such counsel, and fees and disbursements of local counsel, if any, retained for
such purpose and approved by the Company, and a one-time fee of $2,500 payable
to the e's counsel for the preparation of the Secondary Market Trading Survey,
(iv) costs associated with applications for assignments of a rating of the
Public Securities by qualified rating agencies, (v) filing fees, costs and
expenses (including fees and disbursements for the Representative's counsel)
incurred in registering the offering with the NASD, (vi) costs not to exceed, in
the aggregate, [$35,000] for placing "tombstone" advertisements in The Wall
Street Journal, The New York Times and a third publication which may be selected
by the Representative and transaction lucite cubes or similar commemorative
items in a style and quantity as reasonably requested by the Representative,
(vii) fees and disbursements of the transfer and warrant agent, (viii) the
Company's expenses associated with "due diligence" meetings arranged by the
Representative, (ix) the preparation, binding and delivery of four sets of
transactions "bibles," in form and style satisfactory to the Representative, (x)
any listing of the Public Securities on Nasdaq SmallCap Market, as the case may
be, or any listing in Standard & Poor's, and (xi) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 3.15.1. Since an important part of the
public offering process is for the Company to appropriately and accurately
describe both the background of the principals of the Company and the Company's
competitive position in its industry, the Company will pay for an investigative
search firm of the Representative's choice to conduct an investigation of
principals of the Company mutually selected by the Representative and the
Company (this amount will be credited against the Representative's
non-accountable expense allowance if the offering is consummated as provided
herein). The Representative may deduct from the net proceeds of the offering
payable to the Company on the Closing Date, or the Option Closing Date, if any,
the expenses set forth herein to be paid by the Company to the Representative
and/or to third parties.
3.15.2 Non-Accountable Expenses. The Company further
agrees that, in addition to the expenses payable pursuant to Section 3.15.1, it
will pay to the Representative a non-accountable expense allowance equal to
three (3%) percent of the gross proceeds received by the Company from the sale
of the Public Securities, of which $50,000 has been paid to date, and the
Company will pay the
25
balance on the Closing Date and any additional monies owed attributable to the
Option Securities or otherwise on the Option Closing Date by certified or bank
cashier's check or, at the election of the Representative, by deduction from the
proceeds of the offering contemplated herein. If the offering contemplated by
this Agreement is not consummated for any reason whatsoever then the Company's
liability for payment to the Representative of the non-accountable expense
allowance shall be equal to the sum of the Representative's actual out-of-pocket
expenses (including, but not limited to, counsel fees, "roadshow" and due
diligence expenses). The Representative shall retain such part of the
non-accountable expense allowance previously paid as shall equal its actual
out-of-pocket expenses to exceed $50,000, except in the case of fraud or willful
misconduct on the part of the Company in which event, if the amount previously
paid is insufficient to cover such actual out-of-pocket expenses, the Company
shall remain liable for and promptly pay any other actual out-of-pocket
expenses. If the amount previously paid exceeds the amount of the actual
out-of-pocket expenses, the tive shall promptly remit to the Company any such
excess.
3.16 [Reserved]
3.17 [Reserved]
3.18 Stabilization. Neither the Company, nor, to its knowledge, any
of its employees, directors or stockholders has taken or will take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Public Securities.
3.19 Internal Controls. The Company maintains and will continue to
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are recorded
as necessary in order to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with
26
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.20 [Reserved]
3.21 Transfer Agent. The Company shall retain Continental Stock
Transfer Company as its transfer agent for the Common Stock and the Warrants.
For a period of one year following the Effective Date, the Company will not
switch transfer agents without the Representative's consent, which shall not be
unreasonably withheld.
3.22 Sale of Securities. To the extent that the Company is legally
permitted to do so, it shall not permit or cause a private or public sale or
private or public offering of any of its securities (in any manner, including
pursuant to Rule 144 under the Act) owned nominally or beneficially by the
officers, directors and shareholders owning beneficially more than one (1%)
percent of the outstanding shares of Common Stock of the Company (the
"Insiders") if such offering or sale would be in violation of the Insider's
"lock-up" agreement with the Representative.
4. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Securities, as provided herein, shall
be subject to the continuing accuracy of the representations and warranties of
the Company as of the date hereof and as of each of the Closing Date and the
Option Closing Date, if any, to the accuracy of the statements of officers of
the Company made pursuant to the provisions hereof and to the performance by the
Company of its obligations hereunder and to the following conditions:
4.1 Regulatory Matters.
4.1.1 Effectiveness of Registration Statement. The
Registration Statement shall have become effective not later than 5:00 P.M., New
York time, on the date of this Agreement and, at each of the Closing Date and
the Option Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for the purpose
shall have been instituted or shall be pending or contemplated by the Commission
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of Stursberg & ▇▇▇▇▇,
counsel to the Underwriters.
27
4.1.2 NASD Clearance. By the Closing Date, the
Representative shall have received clearance from the NASD as to the amount of
compensation allowable or payable to the Underwriters as described in the
Registration Statement.
4.1.3 No Blue Sky Stop Orders. No order suspending the
sale of the Securities in any jurisdiction designated by you pursuant to Section
3.3 hereof shall have been issued either on the Closing Date or the Option
Closing Date, and no proceedings for that purpose shall have been instituted or
shall be contemplated.
4.2 Company Counsel Matters.
4.2.1 Opinion of Counsel. On the Closing Date, the
Underwriters shall have received the favorable opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau
& Klimpl, LLP ("PCF&K"), counsel to the Company, dated the Closing Date,
addressed to the Representative, and in form and substance (consistent with the
provisions set forth below) satisfactory to Stursberg & ▇▇▇▇▇, counsel to the
Underwriters, to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation and is duly qualified and licensed and in good standing as a
foreign corporation in each jurisdiction in which it owns or leases any real
property or the character of its operations requires such qualification or
licensing, except where the failure to qualify would not have a Material Adverse
Effect.
(ii) The Company has all requisite corporate power and
authority and to the best of such counsel's knowledge, has all the necessary
authorizations, approvals, orders, licenses, certificates, and permits of and
from all governmental or regulatory officials and bodies to own or lease its
properties and conduct its business as described in the Prospectus and is and
has been doing business in compliance with all such authorizations, approvals,
orders, licenses, certificates and permits and all federal, state and local law,
rules and regulations, except where the failure to obtain authorizations,
approvals, orders, licenses, certificates and permits would not have a material
adverse effect on it or its operations. The Company has all corporate power and
authority to enter into this Agreement and to carry out the
28
provisions and conditions hereof all consents, authorizations, approvals and
orders required in connection herewith have been obtained. To the best of such
counsel's knowledge, no consents, approvals, authorizations or orders of, and no
filing with any court or governmental agency or body (other than such as may be
required under the Act and applicable Blue Sky laws), is required for the valid
authorization, issuance, sale and delivery of the Securities and the
consummation of the transactions and agreements contemplated by this Agreement,
the Warrant Agreement and the Representative's Purchase Option, other than all
such authorizations, approvals, consents, orders, registrations, licenses and
permits which have been duly obtained and are in full force and effect and have
been disclosed to the Underwriters and other than the continuing effectiveness
of the Registration Statement and the delivery of the Prospectus as contemplated
therein.
(iii) All issued and outstanding securities of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; to the best of such counsel's knowledge the holders thereof have
no rights of rescission with respect thereto; and to the best of such counsel's
knowledge none of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company. The outstanding options and warrants to purchase
shares of Common Stock constitute the valid and binding obligations of the
Company, enforceable in accordance with their terms. The offers and sales of the
outstanding Common Stock and options and warrants to purchase shares of Common
Stock were at all relevant times either registered under the Act and all
applicable state securities or Blue Sky laws or exempt from such registration
requirements. The authorized and outstanding capital stock of the Company is as
set forth under the caption "Capitalization" in the Prospectus.
(iv) The Securities have been duly authorized and, when
issued and paid for, will be validly issued, fully paid and non-assessable. The
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or, to such counsel's knowledge, similar
contractual rights granted by the Company. All corporate action required to be
taken for the authorization, issuance and sale of the Securities has been duly
and validly taken. When issued, the Representative's Purchase
29
Option, the Representative's Warrants and the Warrants will constitute valid and
binding obligations of the Company to issue and sell, upon exercise thereof and
payment therefor, the number and type of securities of the Company called for
thereby and such Warrants, the Representative's Purchase Option, and the
Representative's Warrants, when issued, in each case, will be enforceable
against the Company in accordance with their respective terms, except (a) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (b) as enforceability of any
indemnification provision may be limited under federal and state laws, and (c)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefore may be brought. The
certificates representing the Securities are in due and proper form.
(v) To such counsel's knowledge, except as set forth in
the Prospectus, no holders of any securities of the Company or of any options,
warrants or securities of the Company exercisable for or convertible or
exchangeable into securities of the Company have the right to require the
Company to register any such securities of the Company under the Act or to
include any such securities in a registration statement to be filed by the
Company.
(vi) To such counsel's knowledge, there is no claim or
action by any person pertaining to, or proceeding, pending threatened, which
challenges the exclusive rights of the Company with respect to any Intangibles
used in the conduct of its business (including without limitation any such
licenses or rights described in the Prospectus as being owned or possessed by
the Company).
(vii) This Agreement, the Warrant Agreement and the
Representative's Purchase Option have each been duly and validly authorized and,
when executed and delivered by the Company, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except (a) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (b) as enforceability of any indemnification provisions may be
limited under the federal and state securities laws, and (c) that the remedy of
specific performance and injunctive and other forms of equitable relief may
30
be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(viii) The execution, delivery and performance by the
Company of this Agreement, the Representative's Purchase Option and the Warrant
Agreement, the issuance and sale of the Securities, the consummation of the
transactions contemplated hereby and thereby and the compliance by the Company
with the terms and provisions hereof and thereof, do not and will not, with or
without the giving of notice or the lapse of time, or both, (a) to such
counsel's knowledge, conflict with, or result in a breach of, any of the terms
or provisions of, or constitute a default under, or result in the creation or
modification of any lien, security interest, charge or encumbrance upon any of
the properties or assets of any of the Company pursuant to the terms of, any
material mortgage, deed of trust, note, indenture, loan, contract, commitment or
other material agreement or instrument, to which it is a party or by which it or
any of its properties or assets may be bound, (b) result in any violation of the
provisions of the Company's Certificate of Incorporation or By-Laws, (c) to such
counsel's knowledge, violate any statute or any material judgment, order or
decree, rule or regulation applicable to the Company of any court, domestic or
foreign, or of any federal, state or other regulatory authority or other
governmental body having jurisdiction over any of the Company's or its
properties or assets, or (d) to such counsel's knowledge, have a material effect
on any material permit, certification, registration, approval, consent, license
or franchise of the Company.
(ix) The Registration Statement and the Prospectus and any
post-effective amendments or supplements thereto (other than the financial
statements, schedules and data included therein, as to which no opinion need be
rendered) comply as to form in all material respects with the requirements of
the Act and Regulations. The Securities and all other securities issued or
issuable by the Company conform in all respects to the description thereof
contained in the Registration Statement and the Prospectus. The descriptions in
the Registration Statement and the Prospectus of statutes, regulations,
government classifications, 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. To such counsel's
knowledge, no statute or regulation or legal or governmental
31
proceeding required to be described in the Prospectus is not described as
required, nor are any contracts or documents known to counsel, of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement not so described or filed as
required.
(x) Counsel has participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants for the Company and representatives of the Representative at
which the contents of the Registration Statement, the Prospectus and related
matters were discussed and although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus (except as
otherwise set forth in this opinion), no facts have come to the attention of
such counsel which lead them to believe that either the Registration Statement
or any amendment or supplement thereto, as of the date of such opinion,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and schedules and other financial and
statistical data included in the Registration Statement or Prospectus), and that
on the Closing Date, the Prospectus and any amendment or supplement thereto will
contain any untrue statement or a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(xi) The Registration Statement is effective under the
Act, and, to such counsel's 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 or threatened under the Act
or applicable state securities laws.
(xii) The Company has adequately insured its properties
against loss or damage by fire or other casualty and maintains, in adequate
amounts.
(xiii) Except as described in the Prospectus, to such
counsel's knowledge, no default exists in the due performance
32
and observance of any term, covenant or condition of any material license,
contract, indenture, mortgage, deed of trust, note, loan or credit agreement
known to such counsel, or any material agreement or instrument evidencing an
obligation for borrowed money known to such counsel, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or By-Laws or of any material franchise, license,
permit, applicable law, rule, regulation, judgment or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over it or any of its
properties or business, except as described in the Prospectus.
(xiv) To such counsel's knowledge, except as set forth in
the Prospectus, there is no action, suit or proceeding before or by any court of
governmental agency or body, domestic or foreign, now pending, or threatened
against the Company, which might result in any material and adverse change in
the condition (financial or otherwise), business or prospects of the Company, or
might materially and adversely affect the properties or assets thereof.
(xv) To such counsel's knowledge, except as set forth in
the Prospectuses, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the sale of the Securities hereunder or financial consulting
arrangements or any other arrangements, agreements, understandings, payments or
issuances that may affect the Underwriter's compensation, as determined by the
NASD.
Unless the context clearly indicates otherwise, the term "Company" as
used in this Section 4.2.1 shall include each subsidiary, if any, of the
Company. The opinion of counsel for the Company and any opinion relied upon by
such counsel for the Company shall include a statement to the effect that it may
be relied upon by counsel for the Representative.
4.2.2 [Reserved]
4.2.3 Option Closing Date Opinion of Counsel. On any
Option Closing Date, the Underwriters shall have received the
33
favorable opinions of PCF&K, counsel to the Company, dated the Option Closing
Date addressed to the Representative and in the form and substance (consistent
with the provisions set forth herein) satisfactory to Stursberg & ▇▇▇▇▇, counsel
to the Underwriters.
4.2.4 Reliance. In rendering such opinion, such counsel
may rely (i) as to matters involving the application of laws other than the laws
of the United States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and substance reasonably satisfactory
to Underwriters' counsel) of other counsel reasonably acceptable to
Underwriters' counsel, familiar with the applicable laws, and (ii) as to matters
of fact, to the extent they deem proper, on certificates or other written
statements of officers of departments of various jurisdiction having custody of
documents respecting the corporate existence or good standing of the Company,
provided that copies of any such statements or certificates shall be delivered
to Underwriters' counsel if requested. The opinion of counsel for the Company
shall include a statement to the effect that it may be relied upon by counsel
for the Underwriters in its opinion delivered to the Underwriters.
4.2.5 Secondary Market Trading Survey. On the Effective
Date the Underwriters shall have received the Secondary Market Trading Survey.
4.3 Cold Comfort Letter. At the time this Agreement is executed and
at each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representative and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to Stursberg
& ▇▇▇▇▇, counsel for the Underwriters, from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company LLP
dated as of the date of this Agreement and as of the Closing Date and the Option
Closing Date.
4.4 Officers' Certificates.
4.4.1 Officers' Certificate. At each of the Closing Date
and the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Chairman of the Board or the President,
Chief Financial Officer and the
34
Secretary of the Company, dated the Closing Date or the Option Closing Date, as
the case may be, respectively, to the effect that the Company has performed or
complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of closing Date and
the Option Closing Date, as the case may be, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct. In addition,
the Representative will have received a certificate signed by the Chairman of
the Board of the Company in connection with information supplied to state
securities commissions.
4.4.2 Secretary's Certificate. At each of the Closing Date
and the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company, dated the
Closing Date or the Option Closing Date, as the case may be, respectively,
certifying (i) that the By-Laws and Certificate of Incorporation of the Company
are true and complete, have not been modified and are in full force and effect,
(ii) that the resolutions relating to the public offering contemplated by this
Agreement are in full force and effect and have not been modified, (iii) all
correspondence between the Company or its counsel and the Commission, (iv) all
correspondence between the Company or its counsel and the NASD concerning
inclusion on Nasdaq and (v) as to the incumbency of the officers of the Company.
The documents referred to in such certificate shall be attached to such
certificate.
4.5 No Material Changes. Prior to and on each of the Closing Date and
the Option Closing Date, if any, (i) there shall have been no Material Adverse
Change since the Effective Date, (ii) the Company shall not be in default under
any provision of any instrument relating to any outstanding indebtedness which
default would have a Material Adverse Effect, (iii) no material amount of the
assets of the Company shall have been pledged or mortgaged, except as set forth
in or contemplated by the Registration Statement and Prospectus, (iv) no action
suit or proceeding, at law or in equity, shall have been pending or threatened
against the Company, or affecting any of its property or business before or by
any court or federal or state commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may have a Materially
Adversely Effect, except as set forth
35
in the Registration Statement and Prospectus, (v) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated or
threatened by the Commission, and (vi) the Registration Statement and the
Prospectus and any amendments or supplements thereto contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and conform in all material respects to the requirements of
the Act and the Regulations, and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.6 Delivery of Agreements. The Company has delivered to the
Representative executed copies of the Representative's Purchase Option.
4.7 Opinion of Counsel for Underwriters. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Stursberg & ▇▇▇▇▇, counsel to the Underwriters, and you shall have received
from such counsel a favorable opinion, dated the Closing Date and the Option
Closing Date, if any, with respect to such of these proceedings as you may
reasonably require. On or prior to the Effective Date, the Closing Date and the
Option Closing Date, as the case may be, 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 or pass upon the matters
referred to in this Section 4.7, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
5. Indemnification.
5.1 Indemnification of Representative.
5.1.1 General. Subject to the conditions set forth below,
the Company agrees to indemnify and hold harmless the Underwriters, their
directors, officers, agents and employees and each person, if any, who controls
the Underwriters ("controlling person") within the meaning of Section 15 of the
Act or Section
36
20(a) of the Exchange Act, against any and all loss, liability, claim, damage
and expense whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever) to which they
or any of them may become subject under the Act, the Exchange Act or 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 (i) any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time each may be amended and
supplemented); (ii) in any post-effective amendment or amendments or any new
registration statement and prospectus in which is included securities of the
Company issued or issuable upon exercise of the Representative's Purchase
Option; or (iii) any application or other document or written communication (in
this Section 5 collectively called "application") executed by the Company or
based upon written information furnished by the Company in any jurisdiction in
order to qualify the Securities under the securities laws thereof or filed with
the Commission, any state securities commission or agency, Nasdaq 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,
in the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon, and in strict
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 any application, as the case may be;
provided, however, that the foregoing indemnity agreement with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting such losses, claims, damages or liabilities purchased
Public Securities, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Public Securities to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability. The
Company agrees promptly to notify the
37
Representative of the commencement of any litigation or proceedings against the
Company or any of its officers, directors or controlling persons in connection
with the issue and sale of the Securities or in connection with the Registration
Statement or Prospectus.
5.1.2 Procedure. If any action is brought against any
Representative or controlling person in respect of which indemnity may be sought
against the Company pursuant to Section 5.1.1, such Underwriter shall promptly
notify the Company in writing of the institution of such action and the Company
shall assume the defense of such action, including the employment and fees of
counsel (subject to the approval of such Underwriter(s)) and payment of actual
expenses. The Underwriters or controlling person 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 Underwriter or such controlling person
unless (i) the employment of such counsel shall have been authorized in writing
by the Company in connection with the defense of such action, or (ii) the
Company shall not have employed counsel to have charge of the defense of such
action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to the Company (in which case the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events the fees and expenses of
not more than one additional firm of attorneys selected by such Underwriter(s)
and controlling person, as a single group, shall be borne by the Company.
Notwithstanding anything to the contrary contained herein, if such
Underwriter(s) or controlling person shall assume the defense of such action as
provided above, the Company shall have the right to approve the terms of any
settlement of such action which approval shall not be unreasonably withheld.
5.2 Indemnification of the Company. Each Underwriter
severally agrees to indemnify and hold harmless the Company, each of its
directors, each nominee (if any) for director named in the Prospectus, each of
its officers who have signed the Registration Statement and each person, if any,
who controls the Company within the meaning of the Act, from and against any and
all loss, liability, claim, damage and expense as described in the foregoing
indemnity from the Company to the Underwriters, as incurred, but
38
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions directly relating to the transactions effected by such
Underwriter in connection with this offering or made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereto or in any application in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
such Underwriter by or on behalf of such Underwriter expressly for use in such
Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or an application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the Underwriters by the
provisions of Section 5.1.2.
5.3 Contribution.
5.3.1 Contribution Rights. In order to provide for just
and equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Act, the Exchange Act or otherwise may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 5, then, and in each such case, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation
39
(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. Notwithstanding the provisions of this Section 5.3, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Public Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay in respect of
such losses, liabilities, claims, damages and expenses. For purposes of this
Section, each director, officer and employee of the Underwriters and the
Company, and each person, if any, who controls an Underwriter and the Company
within the meaning of Section 15 of the Act shall have the same rights to
contribution as the Underwriter and the Company respectively.
5.3.2 Contribution Procedure. Within fifteen 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 to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which 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 its
representative of the commencement thereof within the aforesaid fifteen 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 which was effected
by such party without the written consent of such contributing party. The
contribution provisions contained in this Section are intended to supersede, to
the extent permitted by law, any right to contribution under the Act, the
Exchange Act or otherwise available.
6. [Reserved]
7. Additional Covenants.
7.1 Board Designee. For a period of five years from the Effective
Date, the Representative shall have the right to send a
40
representative to observe each meeting of the Board of Directors. The Company
agrees to give the Representative written notice of each such meeting and to
provide the Representative with an agenda and minutes of the meeting no later
than it gives such notice and provides such items to the other directors.
7.2 [Reserved]
7.3 [Reserved]
7.4 Press Releases. The Company will not issue a press release or
engage in any other publicity until 25 days after the Effective Date without the
Representative's prior written consent unless counsel for the Company advises
the Company that the issuance of any such press release is required by law or
the rules of the NASD.
7.5 [Reserved]
7.6 Compensation and Other Arrangements. The Company hereby agrees
that for a period of three years from the Effective Date, all the compensation
and other arrangements between the Company and its executive officers, directors
and affiliates shall be approved by a compensation committee of the Company's
Board of Directors, a majority of whom are not employed by the Company.
8. Representations and Agreements to Survive Delivery. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Dates and such representations, warranties and
agreements of the Underwriters and Company, including the indemnity agreements
contained in Section 5 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Underwriters,
the Company or any controlling person, and shall survive termination of this
Agreement or the issuance and delivery of the Securities to the Underwriters
until the earlier of the expiration of any applicable statute of limitations and
the seventh anniversary of the later of the Closing Date or the Option Closing
Date, if any, at which time the representations, warranties and agreements shall
terminate and be of no further force and effect.
9. Effective Date of This Agreement and Termination Thereof.
41
9.1 Effective Date. This Agreement shall become effective on the
Effective Date at the time that the Registration Statement is declared
effective. The time of the initial public offering, for the purpose of this
Section 9 shall mean the time, after the Registration Statement becomes
effective, of the release by you for publication of the first newspaper
advertisement which is subsequently published relating to the Public Securities
or the time, after the Registration Statement becomes effective, when the Public
Securities are first released by you for offering by the Underwriters or dealers
by letter or telegram, whichever shall first occur. You may prevent this
Agreement from becoming effective without liability to any other party, except
as noted below, by giving the notice indicated below in this Section 9 before
the time this Agreement becomes effective. The Representative agrees to give the
Company notice of the commencement of the offering described herein.
9.2 Termination. The Representative shall have the right to terminate
this Agreement at any time prior to any Closing Date, (i) if any domestic or
international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, general securities
markets in the United States; or (ii) 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 have been fixed, or maximum
ranges for prices for securities 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 by order of the Commission or any other government authority having
jurisdiction, or (iii) if the United States shall have become involved in a war
or major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
injured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Securities, or (vii) if either ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall
no longer serve the Company in his present capacity, or (viii) if the Company
has breached in any material respect any of its representations, warranties or
obligations hereunder, or
42
(ix) if the Underwriters shall have become aware after the date hereof of a
Material Adverse Change, or such adverse material change in general market
conditions as in the Representative's judgment would make it impracticable to
proceed with the offering, sale and/or delivery of the Securities or to enforce
contracts made by the Underwriters for the sale of the Securities.
9.3 Notice. If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 9, the
Company shall be notified on the same day as such election is made by you by
telephone or telecopy, confirmed by letter.
9.4 Expenses. In the event that this Agreement shall not be carried
out for any reason, within the time specified herein or any extensions thereof
pursuant to the terms herein, the obligations of the Company to pay the expenses
related to the transactions contemplated herein shall be governed by Section
3.15 hereof.
9.5 Indemnification. 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
Section 5 shall not be in any way effected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
10. Substitution of Representative.
10.1 Substitution. If any Underwriter defaults in its obligation to
purchase the number of Units which it has agreed to purchase under this
Agreement, you shall be obligated to purchase all of the Units not purchased by
the defaulting Underwriter unless such purchase shall cause you to be in
violation of net capital requirements of Rule 15c3-1 of the Exchange Act, in
which case you, and any other Underwriter satisfactory to you who so agree,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) such Units. If, within 48 hours
after such default by any Underwriter, you or the other Underwriters
satisfactory to you do not elect to purchase the Units which the defaulting
Underwriter or Underwriters agree but failed to purchase, then the Company shall
be entitled to a further period of 48 hours within which to procure another
party or parties to purchase the Units which the defaulting Underwriter or
43
Underwriters agreed but failed to purchase. If the Company is unable to arrange
for the purchase of such Shares as provided in this section 10.1, then this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Company except for (i) the payment by the Company of expenses
as provided by Section 3.15.1, (ii) the payment by the Company of accountable
expenses as provided by Section 3.15.2, and (iii) the indemnity and contribution
agreements of the Company and the Underwriter provided by Section 5.
10.2 Further Matters. Nothing contained herein shall relieve a
defaulting Underwriter of any liability it may have for damages caused by its
default. If the other Underwriters satisfactory to you are obligated or agree to
purchase the units of a defaulting Underwriter, either you or the Company may
postpone the Closing Date for up to seven banking days in order to effect any
changes that may be necessary in the Registration Statement, any Preliminary
Prospectus or the Prospectus or in any other document or agreement, and to file
promptly any amendments to the Registration Statement, or any amendments or
supplements to any Preliminary Prospectus or the Prospectus, which in your
opinion may thereby be made necessary.
11. Miscellaneous.
11.1 Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be mailed,
delivered or telecopied and confirmed
If to the Representative:
Renaissance Financial Securities Corporation
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
44
Copy to:
Stursberg & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
ObjectSoft Corporation
Continental Plaza III
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. David ▇. ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau & Klimpl, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
11.2 Headings. The headings contained herein are for the sole purpose
of convenience of reference and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
11.3 Amendment. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.
11.4 Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof, and supersede all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
45
11.5 Binding Effect. 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 Section 5 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have nay legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained.
11.6 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the law of the State of New York,
without giving effect to conflicts of law. The Company hereby agrees that any
action, proceeding or claim against it arising out of, relating in any way to
this Agreement shall be brought and enforced in the courts of the State of New
York, New York County or the Federal District Court of the United States of
America for the Southern District of New York, and irrevocably submits to such
jurisdictions, which jurisdictions shall be exclusive. The Company hereby waives
any objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. To the extent permitted by law, any such process or summons
to be served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 10 hereof. To the extent
permitted by law, such mailing shall be deemed personal service and shall be
legal and binding upon the Company in any action, proceeding or claim. The
Company agrees that the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its reasonable attorneys'
fees and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
11.7 Execution in Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.
11.8 Waiver, Etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall
46
not be deemed or construed to be a waiver of any such provision, nor to in any
way effect the validity of this Agreement or any provision hereof or the right
of any of the parties hereto to thereafter enforce each and every provision of
this Agreement. No wavier of any breach, non-compliance or non-fulfillment of
any of the provisions of this Agreement shall be effective unless set forth in a
written instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such breach,
non-compliance or non-fulfillment shall be construed or deemed to be a waiver of
any other or subsequent breach, non-compliance or non-fulfillment.
If the foregoing correctly sets forth the understanding between the
Underwriters 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,
OBJECTSOFT CORPORATION
By: ______________________________
Name: ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇
Title: Chairman of the Board
Accepted as of the date first above written.
New York, New York
RENAISSANCE FINANCIAL SECURITIES
CORPORATION, Acting on its own
behalf and as Representative
of the general Underwriters
referred to in Schedule I of
the foregoing Underwriting
Agreement.
By:______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President