EXHIBIT 1.1
Global Brands, Inc.
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UNDERWRITING AGREEMENT
Somerset Financial Group, Inc. June __, 2000
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Gentlemen:
Global Brands, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to Somerset Financial Group, Inc. ("Somerset" or the
"Representative") and to each of the other underwriters named in Schedule I
hereto (the "Underwriters"), for each of whom you are acting as Representative
1,300,000 shares of Common Stock (the AShares@) at a public offering price of
$6.25 per share.
The 1,300,000 Shares are hereinafter sometimes referred to as the "Firm
Common Stock." Upon the request of the Representative, and as provided in
Section 3 hereof, the ASelling Security Holders@ named herein in Schedule II
will sell to the Underwriters up to a maximum of 195,000 shares of Common Stock
for the purpose of covering over-allotments. Such additional shares of Common
Stock are hereinafter sometimes referred to as the "Optional Common Stock." Both
the Firm Common Stock and the Optional Common Stock are sometimes collectively
referred to herein as the "Securities." All of the Securities which are the
subject of this Agreement are more fully described in the Prospectus of the
Company described below.
In the event that the Representative does not form an underwriting
group but decides to act as the sole Underwriter, then all references to
Somerset herein as Representative shall be deemed to be to it as such sole
Underwriter and Section 14 hereof shall be deemed deleted in its entirety.
The Company and the Selling Security Holders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representative deems advisable after the Registration Statement hereinafter
referred to becomes effective. The Company and the Selling Security Holders
hereby each confirms its agreement with the Representative and the other
Underwriters as follows:
SECTION 1. Description of Securities. The Company's authorized and
outstanding capitalization when the public offering of the Securities
contemplated hereby is permitted to commence, under the Securities Act of 1933,
as amended (the "Act"), and at the Closing Date (hereinafter defined) will be as
set forth in the Prospectus (hereinafter defined).
SECTION 2. Representations and Warranties of the Company and the
Selling Security Holders. The Company hereby represents and warrants to, and
agrees with, the Underwriters as follows:
(a) A Registration Statement on Form SB-2 and amendments
thereto (No. 333-85683) with respect to the Securities, including a form of
prospectus relating thereto, copies of which have been previously delivered to
you, has been prepared by the Company in conformity with the requirements of the
Act, and the rules and regulations (the "Rules and Regulations") of the
Commission thereunder, and has been filed with the Commission under the Act. The
Company, subject to the provisions of Section 6(a) hereof, may file one or more
amendments to such Registration Statement and Prospectus. The Underwriters will
receive copies of each such amendment.
The Effective Date of the Registration Statement represents the date
that the public offering of the Securities as contemplated by this Agreement is
therefore authorized to commence. The Registration Statement and Prospectus, as
finally amended and revised immediately prior to the Effective Date, are herein
called respectively the "Registration Statement" and the "Prospectus." If,
however, a prospectus is filed by the Company pursuant to Rule 424(b) of the
Rules and Regulations which differs from the Prospectus, the term "Prospectus"
shall also include the prospectus filed pursuant to Rule 424(b).
(b) The Registration Statement (and Prospectus), at the time
it becomes effective under the Act, (as thereafter amended or as supplemented if
the Company shall have filed with the Commission an amendment or supplement),
and, with respect to all such documents, on the Closing Date (hereinafter
defined), will in all material respects comply with the provisions of the Act
and the Rules and Regulations, and will not contain an untrue statement of a
material fact and will not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties contained in this subsection (b)
shall extend to the Underwriters in respect of any statements in or omissions
from the Registration Statement and/or the Prospectus, based upon information
furnished in writing to the Company by the Underwriters specifically for use in
connection with the preparation thereof.
(c) The Company has been duly incorporated and is now, and on
the Closing Date will be, validly existing as a corporation in good standing
under the laws of the State of Delaware, having all required corporate power and
authority to own its properties and conduct its business as described in the
Prospectus. The Company is now, and on the Closing Date will be, duly qualified
to do business as a foreign corporation in good standing in all of the
jurisdictions in which it conducts its business or the character or location of
its properties requires such qualifications except where the failure to so
qualify would not materially adversely affect the Company's business, properties
or financial condition. The Company has no subsidiaries, except as are set forth
in the Prospectus.
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(d) The financial statements of the Company included in the
Registration Statement and Prospectus present fairly the financial position and
results of operations and changes in financial condition of the Company at the
respective dates and for the respective periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved, and
are in accordance with the books and records of the Company.
(e) The Company's auditors, ▇▇▇▇▇▇▇▇▇,▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, who
have given their report on certain financial statements which are included as a
part of the Registration Statement and the Prospectus, are independent public
accountants as required under the Act and the Rules and Regulations.
(f) Subsequent to the respective dates as of which information
is given in the Prospectus and prior to the Closing Date and, except as set
forth in or contemplated in the Prospectus, (i) the Company has not incurred,
nor will it incur, any material liabilities or obligations, direct or
contingent, nor has it, nor will it have entered into any material transactions,
in each case not in the ordinary course of business; (ii) there has not been,
and will not have been, any material change in the Company's certificate of
incorporation or in its capital stock or funded debt; and (iii) there has not
been, and will not have been, any material adverse change in the business, net
worth or properties or condition (financial or otherwise) of the Company whether
or not arising from transactions in the ordinary course of business.
(g) Except as otherwise set forth in the Prospectus, the real
and personal properties of the Company as shown in the Prospectus and
Registration Statement to be owned by the Company are owned by the Company by
good and marketable title free and clear of all liens and encumbrances, except
those (i) specifically referred to in the Prospectus, which do not materially
adversely affect the use or value of such assets, (ii) for current taxes not now
due, or (iii) are held by the Company by valid leases, none of which is in
default. Except as disclosed in the Prospectus and Registration Statement, the
Company in all material respects has full right and licenses, permits and
governmental authorizations required to maintain and operate its business and
properties as the same are now operated and, to its best knowledge, none of the
activities or business of the Company is in material violation of, or causes the
Company to violate any laws, ordinances and regulations applicable thereto, the
violation of which would have a material adverse impact on the condition
(financial or otherwise), business, properties or net worth of the Company.
(h) The Company has no material contingent obligations, nor
are its properties or business subject to any material risks, which may be
reasonably anticipated, which are not disclosed in the Prospectus.
(i) Except as disclosed in the Prospectus and Registration
Statement, there are no material actions, suits or proceedings at law or in
equity of a material nature pending, or to the Company's knowledge, threatened
against the Company which are not adequately covered by insurance, which might
result in a material adverse change in the condition (financial or otherwise),
properties or net worth of the Company, and there are no proceedings pending or,
to the knowledge of the Company, threatened against the Company before or by any
federal or state commission, regulatory body, or administrative agency or other
governmental body, wherein an unfavorable ruling, decision or finding would
materially adversely affect the business, properties or net worth or financial
condition or income of the Company, which are not disclosed in the Prospectus.
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(j) All of the outstanding shares of Common Stock are duly
authorized and validly issued and outstanding, fully paid, non-assessable, and
do not have any and were not issued in violation of any preemptive rights. All
of the Common Stock as described in the Prospectus when paid for shall be duly
authorized and validly issued and outstanding, fully paid, non-assessable, and
will not have any and will not be issued in violation of any preemptive rights.
The Underwriters will receive good and marketable title to the Securities
purchased by them from the Company free and clear of all liens, encumbrances,
claims, security interests, restrictions, stockholders' agreements and voting
trusts whatsoever. Except as set forth in the Prospectus, there are no
outstanding shares of preferred stock and there are no outstanding options,
warrants, or other rights or commitments, providing for the issuance of any
shares of any class of capital stock of the Company, or any security convertible
into, or exchangeable for, any shares of any class of capital stock of the
Company. All of the Securities of the Company to which this Agreement relates
conform to the statements relating to them that are contained in the
Registration Statement and Prospectus.
(k) The certificate or certificates required to be furnished
to the Underwriters pursuant to the provisions of Section 11 hereof will be true
and correct.
(l) The execution and delivery by the Company of this
Agreement has been duly authorized by all necessary corporate action and it is a
valid and binding obligation of the Company, enforceable against it in
accordance with its terms except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws pertaining to
creditors rights generally.
(m) Except as disclosed in the Prospectus, no default exists,
and no event has occurred which, with notice or lapse of time, or both, would
constitute a default in the due performance and observance of any material term,
covenant or condition by the Company or any other party, of any material
indenture, mortgage, deed of trust, note or any other material agreement or
instrument to which the Company is a party or by which it or its business or its
properties may be bound or affected, except as disclosed in the Prospectus. The
Company has full power and lawful authority to authorize, issue and sell the
Firm Common Stock to be sold by it hereunder on the terms and conditions set
forth herein and in the Registration Statement and in the Prospectus. No
consent, approval, authorization or other order of any regulatory authority is
required for such authorization, issue or sale, except as may be required under
the Act or state securities laws. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated, and compliance with
the terms hereof will not conflict with, or constitute a default under any
indenture, mortgage, deed of trust, note or any other agreement or instrument to
which the Company is now a party or by which it or its business or its
properties may be bound or materially affected; the certificate of incorporation
and any amendments thereto; the by-laws of the Company, as amended; or to the
best knowledge of the Company, any law, order, rule or regulation, writ,
injunction or decree of any government, governmental instrumentality, or court,
domestic or foreign, having jurisdiction over the Company or its business or
properties.
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(n) No officer or director of the Company has taken, and each
officer and director has agreed that he will not take, directly or indirectly,
any action designed to stabilize or manipulate the price of the Common Stock in
the open market following the Closing Date or any other type of action designed
to, or that may reasonably be expected to cause or result in such stabilization
or manipulation, or that may reasonably be expected to facilitate the initial
sale, or resale, of any of the Securities which are the subject of this
Agreement.
(o) The Warrants to purchase Common Stock to be issued at
closing to the Representative (the ARepresentative's Warrants@) will be, when
issued and paid for, duly and validly authorized and executed by the Company and
will constitute valid and binding obligations of the Company, legally
enforceable in accordance with their terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws pertaining to creditors rights generally), and the Company will have
duly authorized, reserved and set aside the shares of its Common Stock issuable
upon exercise of the Representative's Warrants and such stock, when issued and
paid for upon exercise of the Representative's Warrants in accordance with the
provisions of the Representative Warrants will be duly authorized and validly
issued, fully-paid and non-assessable.
(p) All of the aforesaid representations, agreements, and
warranties shall survive delivery of, and payment for, the Firm Common Stock.
The Selling Securities Holder represents and warrants to, and
agrees with the several Underwriters, as follows:
(i) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation before any court or
beneficiary, public body or board pending, threatened, or disclosed in the
Prospectus (or any basis therefor known to the Selling Security Holders) with
respect to the Optional Common Stock and the Selling Security Holders. The
Selling Security Holders are not in violation of, or in default with respect to,
any law, rule, regulation, order, judgment, or decree; nor are the Selling
Security Holders required to take any action in order to avoid such violation or
default.
(ii) The Selling Security Holders have all requisite power and
authority to execute, deliver, and perform this Agreement. This Agreement has
been duly executed and delivered by or on behalf of the Selling Security
Holders, is the legal, valid and binding obligation of the Selling Security
Holders, and is enforceable as to the Selling Security Holders in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or other tribunal is
required by the Selling Security Holders for the execution, delivery or
performance of this Agreement (except filings under the Act which have been made
before the applicable Closing Date and such consents consisting only of consents
under "blue sky" or securities laws which have been obtained at or prior to the
date of this Agreement) by the Selling Security Holders. No consent of any party
to any contract, agreement, instrument, lease, license, indenture, mortgage,
deed of trust, note, arrangement or understanding to which the Selling Security
Holders are a party, or to which any of the Selling Security Holders' properties
or assets are subject, is required for the execution, delivery or performance of
this Agreement; and the execution, delivery and performance of this Agreement
will not violate, result in a breach of, conflict with, or (with or without the
giving of notice of the passage of time or both) entitle any party to terminate
or call a default under such contract, agreement, instrument, lease, license,
indenture, mortgage, deed of trust, note, arrangement or understanding, or
violate, result in a breach of, or conflict with, any law, rule, regulation,
order, judgment or decree binding on the Selling Security Holders.
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(iii) The Selling Security Holders have good and marketable
title to their Optional Common Stock to be sold by them pursuant to this
Agreement, free and clear or all liens, security interests, pledges,
restrictions, charges, encumbrances, stockholders' agreements and voting trusts.
(iv) Neither the Selling Security Holders nor any of the
Selling Security Holders' affiliates (as defined in the Regulations) have taken
or will take, directly or indirectly, prior to the termination of the
underwriting syndicate contemplated by this Agreement, any action designed to
stabilize or manipulate the price of the Securities of the Company, or which has
caused or resulted in, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of the securities
or to facilitate the sale or resale of any of the Optional Common Stock.
(v) All information furnished or to be furnished to the
Company by or on behalf of the Selling Security Holders for use in connection
with the preparation of the Registration Statement and the Prospectus is true in
all respects and does not and will not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(vi) Except as may be set forth in the Prospectus, the Selling
Security Holders have not incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement.
(vii) The Selling Security Holders have no knowledge that, and
do not believe that, any representation or warranty of the Company in Section 2
is incorrect.
(viii) The Selling Security Holders have not, directly or
indirectly: used any individual or corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses individual or relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from individual or corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment.
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(ix) Selling Security Holders Optional Common Stock that may
be sold pursuant to this Agreement are duly and validly authorized and issued,
fully paid and non-assessable, and have not been issued and are not owned or
held in violation of any preemptive right of stockholders, optionholders,
warrant holders or other persons.
(x) No transaction has occurred between the Selling Security
Holders and the Company or any third party that is required to be described in
the Registration Statement or the Prospectus.
SECTION 3. Issuance, Sale and Delivery of the Firm Common Stock, the
Optional Common Stock and the Representative's Warrants.
(a) Upon the basis of the representations, warranties,
covenants and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the several
Underwriters, and the Underwriters, severally and not jointly, agree to purchase
from the Company, the number of the Firm Common Stock set forth opposite the
respective names of the Underwriters in Schedule I hereto, plus any additional
Firm Common Stock which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 14 hereof.
The purchase price of the Firm Common Stock to be paid by
the several Underwriters shall be the initial public offering price less a ten
percent discount.
In addition, and upon the same basis, subject to the same
terms and conditions, the Selling Security Holders hereby grants to you as
Representative an option to purchase, but only for the purpose of covering
over-allotments, upon not less than two days' notice from you, the Optional
Common Stock or any portion thereof, at the same price per share of Common Stock
as that set forth in the preceding paragraph. All purchases of the Optional
Common Stock shall be made for the accounts of the several underwriters as
nearly as practicable in proportion to their respective underwriting
obligations. The Optional Common Stock may be exercised by the Representative at
any time, and from time to time, thereafter within a period of 45 calendar days
following the Effective Date. The time(s) and date(s) (if any) so designated for
delivery and payment for the Optional Common Stock shall be set forth in the
notice to the Company. Such dates are herein defined as the Additional Closing
Date(s).
(b) Payment for the Firm Common Stock shall be made by
certified or official bank checks in New York Clearing House funds, payable to
the order of the Company, at the offices of the Representative at ▇▇▇
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such other place as shall be agreed upon by the Representative and the Company,
upon delivery of the Firm Common Stock to the Representative for the respective
accounts of the Underwriters. In making payment to the Company, the
Representative may first deduct all sums due to it for the balance of the
non-accountable expense allowance and under the Financial Consulting Agreement
(as hereinafter defined). Such delivery and payment shall be made at 9:30 A.M.,
New York City Time on a T+ 3 business days basis, which may be delayed by the
Representative at its option to a T+5 business days basis (unless postponed in
accordance with the provisions of Section 14 hereof) or at such other time as
shall be agreed upon by the Representative and the Company. The time and date of
such delivery and payment are hereby defined as the Closing Date. It is
understood that each Underwriter has authorized the Representative, for the
account of such Underwriter, to accept delivery of, receipt for, and make
payment of the purchase price for the Firm Common Stock which it has agreed to
purchase. Subsequently, each Underwriter shall make payment and accept delivery
of the Firm Securities from the Representative through the facilities of
Depository Trust Company (ADTC@); however, the Representative may, at its
option, require payment to be made outside of the facilities of DTC as provided
for in the Agreement Among Underwriters. In the event that the Closing is not
through the facilities of DTC, you individually, and not as Representative may
(but shall not be obligated to) make payment of the purchase price for the Firm
Common Stock to be purchased by any Underwriter whose check shall not have been
received by the Closing Date, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from its obligations hereunder.
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(c) Payment for the Optional Common Stock to the Selling
Security Holders shall be made at the offices of the Representative in Norwalk,
CT or its clearing agent or at such other place as shall be designated by the
Representative, in accordance with the notice delivered to the Selling Security
Holders pursuant to Section 3(a). Such closing date shall be no later than five
business days from the expiration of the forty-five day option period.
(d) Certificates for the Firm Common Stock and for the
Optional Common Stock shall be registered in such name or names and in such
authorized denominations as the Representative may request in writing at least
two business days prior to the Closing Date, and the Additional Closing Date(s)
(if any). The Company and the Selling Security Holders shall permit the
Representative to examine and package said certificates for delivery at least
one full business day prior to the Closing Date and prior to the Additional
Closing Date(s). The Company shall not be obligated to sell or deliver any of
the Firm Common Stock except upon tender of payment by the Underwriters for all
of the Firm Common Stock agreed to be purchased by them hereunder. The
Representative, however, shall have the sole discretion to determine the number
of Optional Common Stock, if any, to be purchased.
(e) At the time of making payment for the Firm Common Stock,
the Company also hereby agrees to sell to the Representative and its permitted
designees, Representative's Warrants to purchase 130,000 shares of Common Stock
at any time during a four year period commencing one year after the Effective
Date at an aggregate purchase price of $100. The Representative's Warrants will
be exercisable at a price of $10.3125 per share. From the Effective Date and
until one (1) year thereafter, such Representative Warrants may not be sold,
transferred, assigned or hypothecated except to the Representative and selling
group members and their officers or partners.
SECTION 4. Public Offering. The several Underwriters agree, subject to
the terms and provisions of this Agreement, to offer the Common Stock to the
public as soon as practicable after the Effective Date, at the initial offering
price of $6.25 and upon the terms described in the Prospectus. The
Representative may, from time to time, decrease the public offering price, after
the initial public offering, to such extent as the Representative may determine,
however, such decreases will not affect the price payable to the Company
hereunder.
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SECTION 5. Registration Statement and Prospectus. The Company will
furnish the Representative, without charge, two signed copies of the
Registration Statement and of each amendment thereto, including all exhibits
thereto and such amount of conformed copies of the Registration Statement and
Amendments as may be reasonably requested by the Representative for distribution
to each of the Underwriters and Selected Dealers.
The Company will furnish, at its expense, as many printed
copies of a Preliminary Prospectus and of the Prospectus as the Representative
may request for the purposes contemplated by this Agreement. If, while the
Prospectus is required to be delivered under the Act or the Rules and
Regulations, any event known to the Company relating to or affecting the Company
shall occur which should be set forth in a supplement to or an amendment of the
Prospectus in order to comply with the Act (or other applicable law) or with the
Rules and Regulations, the Company will forthwith prepare, furnish and deliver
to the Representative and to each of the other Underwriters and to others whose
names and addresses are designated by the Representative, in each case at the
Company's expense, a reasonable number of copies of such supplement or
supplements to or amendment or amendments of, the Prospectus.
The Company authorizes the Underwriters and the selected
dealers, if any, in connection with the distribution of the Securities and all
dealers to whom any of the Securities may be sold by the Underwriters, or by any
Selected Dealer, to use the Prospectus, as from time to time amended or
supplemented, in connection with the offering and sale of the Securities and in
accordance with the applicable provisions of the Act and the applicable Rules
and Regulations and applicable State Securities Laws.
SECTION 6. Covenants of the Company. The Company covenants and agrees
with each Underwriter that:
(a) After the date hereof, the Company will not at any time,
whether before or after the Effective Date, file any amendment to the
Registration Statement or the Prospectus, or any supplement to the Prospectus,
of which the Representative shall not previously have been advised and furnished
with a copy, or to which the Representative or the Underwriters' counsel, shall
have reasonably objected in writing on the ground that it is not in compliance
with the Act or the Rules and Regulations.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as reasonably practicable
and will advise the Representative, (i) when the Registration Statement shall
have become effective and when any amendment thereto shall have become
effective, and when any amendment of or supplement to the Prospectus shall be
filed with the Commission, (ii) when the Commission shall make request or
suggestion for any amendment to the Registration Statement or the Prospectus or
for additional information and the nature and substance thereof, and (iii) of
the issuance by the Commission of an order suspending the effectiveness of the
Registration Statement or of the initiation of any proceedings for that purpose,
and will use every reasonable effort to prevent the issuance of such an order,
or if such an order shall be issued, to obtain the withdrawal thereof at the
earliest possible moment.
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(c) The Company will prepare and file with the Commission,
promptly upon the request of the Representative, such amendments, or supplements
to the Registration Statement or Prospectus, in form and substance satisfactory
to counsel to the Company, as in the reasonable opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ P.C., as
counsel to the Underwriters, may be necessary or advisable in connection with
the offering or distribution of the Securities, and will use its best efforts to
cause the same to become effective as promptly as possible.
(d) The Company will, at its expense, when and as requested by
the Representative, supply all necessary documents, exhibits and information,
and execute all such applications, instruments and papers as may be required or
desirable, in the opinion of the Underwriters' counsel; to qualify the
Securities or such part thereof as the Representative may determine, for sale
under the so-called "Blue Sky" Laws of such states as the Representative shall
designate, and to continue such qualification in effect so long as required for
the purposes of the distribution of the Securities, provided, however, that the
Company shall not be required to qualify as a foreign corporation or to file a
consent to service of process in any state in any action other than one arising
out of the offering or sale of the Securities.
(e) The Company will, at its own expense, file and provide,
and continue to file and provide, such reports, financial statements and other
information as may be required by the Commission, or the proper public bodies of
the states in which the Securities may be qualified for sale, for so long as
required by applicable law, rule or regulation and will provide the
Representative with copies of all such registrations, filings and reports on a
timely basis.
(f) During the period of five years from the Effective Date,
the Company will deliver to the Underwriter a copy of each annual report of the
Company, and will deliver to the Underwriter (i) within 50 days after the end of
each of the Company's first three quarter-yearly fiscal periods, a balance sheet
of the Company as at the end of such quarter-yearly period, together with a
statement of its income and a statement of changes in its cash flow for such
period (Form 10-QSB), all in reasonable detail, signed by its principal
financial or accounting officer, (ii) within 105 days after the end of each
fiscal year, a balance sheet of the Company as at the end of such fiscal year,
together with a statement of its income and statement of changes in cash flow
for such fiscal year (Form 10-KSB), such balance sheet and statement of cash
flow for such fiscal year to be in complete detail and to be accompanied by a
certificate or report of independent public accountants, (who may be the regular
accountants for the Company), (iii) as soon as available a copy of every other
report (financial or other) mailed to the shareholders, and (iv) as soon as
available a copy of every report and financial statement furnished to or filed
with the Commission or with any securities exchange pursuant to requirements by
or agreement with such exchange or the Commission pursuant to the Securities
Exchange Act of 1934, as amended, or any regulations of the Commission
thereunder. If the Company has one or more active subsidiaries, the financial
statements required by (i) and (ii) above shall be furnished on a consolidated
basis in respect of the Company and its subsidiaries if required under generally
accepted accounting principles. The financial statements referred to in (ii)
shall also be furnished to all of the shareholders of the Company as soon as
practicable after the 105 days referred to therein.
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(g) The Company represents that with respect to the
Securities, it will prepare and file a Registration Statement with the
Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended, prior to the Effective Date with a request that such Registration
Statement will become effective on the first day following the Effective Date.
The Company understands that, to register, it must prepare and file with the
Commission a General Form of Registration of Securities (Form 8-A or Form 10).
In addition, the Company agrees to qualify its Common Stock for listing on the
NASDAQ System as a Small-Cap Issue on the Effective Date and will take all
necessary and appropriate action so that its Common Stock continues to be listed
for trading in the NASDAQ System for at least five years from the Effective Date
provided the Company otherwise complies with the prevailing maintenance
requirements of NASDAQ System. In addition, at such time as the Company
qualifies for listing its Common Stock on the National Market System of NASDAQ,
the Company will take all steps necessary to have its Common Stock listed on the
National Market System of NASDAQ in lieu of listing as Small-Cap Issues. The
Company shall comply with all periodic reporting and proxy solicitation
requirements imposed by the Commission pursuant to the 1934 Act, and shall
promptly furnish you with copies of all material filed with the Commission
pursuant to the 1934 Act or otherwise furnished to shareholders of the Company.
(h) The Company will make generally available to its security
holders, as soon as practicable, but in no event later than 15 months after the
Effective Date, an earnings statement of the Company (which need not be audited)
in reasonable detail, covering a period of at least twelve months beginning
after the Effective Date, which earnings statement shall satisfy the provisions
of Section 11(a) of the Act.
(i) The Company shall, on the Effective Date, apply for
listing in Standard and Poor's Corporation Records (requesting coverage in the
Daily News Supplement) and Standard & Poor's Monthly Stock Guide and shall use
its best efforts to have the Company listed in such reports for a period of not
less than five (5) years from the Closing Date.
(j) The Company shall employ the services of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLP or such other auditing firm acceptable to the Representative in
connection with the preparation of the financial statements required to be
included in the Registration Statement and shall continue to appoint such
auditors or such other auditors as are reasonably acceptable to the
Representative for a period of three (3) years following the Effective Date of
the Registration Statement. The Company shall appoint Corporate Stock Transfer,
Inc. as transfer agent for the Securities.
(k) Within ninety (90) days subsequent to the Effective Date,
the Company will furnish "Key Man" Life Insurance in the amount of $1,000,000 on
the life of ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ with the Company as the beneficiary thereof
and the Company shall pay the annual premium therefor for a period of not less
than five years from the Effective Date on the Effective Date. The Company shall
employ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ pursuant to an employment agreement on terms described
in the Prospectus and filed with the Commission as an exhibit to the
Registration Statement.
11
(l) The Company will for a period of five years at its
expense, shall cause its regularly engaged independent certified public
accountants to examine (but not audit) the Company's financial statements for
each of the first three (3) fiscal quarters prior to the announcement of
quarterly financial information, the filing of the Company's Form 10-QSB
quarterly report and the mailing of quarterly financial information to security
holders.
(m) Except for the Stock Option Plan described in the
Prospectus, for a period of two years after the date of this Prospectus, the
Company shall not file a Registration Statement on Form S-8 or any other
appropriate form to register shares underlying a stock option plan without the
prior written consent of the Representative.
(n) The Company, at its expense, shall retain the services of
Blue Sky Data Corp. or another company or legal counsel acceptable to the
Representative to provide the Underwriters with an after market blue sky survey
in those states which the Securities are eligible for sale. The Company shall
also pay the annual cost of providing updates to the Underwriters for a period
of five years or until the Company's Securities are listed on the New York Stock
Exchange, American Stock Exchange or NASDAQ National Market.
(o) As soon as practicable after the Closing Date, the Company
will deliver to the Representative and its counsel a total of three bound
volumes of copies of all documents relating to the public offering which is the
subject of this Agreement.
(p) The Company will at its cost for a period of three years
after the Effective Date, distribute an annual report to all stockholders
setting forth the results of operations and the financial position of the
Company. The Company will, at its cost, for a period of one year after the
Effective Date furnish the Representative at the Company's sole cost with a
duplicate copy of the daily transfer sheets prepared by the Transfer Agent and
copy of the weekly sheets prepared by Depository Trust Company and a duplicate
copy of a list of stockholders.
(q) After the Effective Date, the Company shall retain the
services of a financial public relations firm(s) reasonably satisfactory to the
Representative, and unrelated to or unassociated with the Representative. Such
firm shall be engaged no later than 30 days after the Closing of the public
offering and for a period of three years thereafter.
(r) The Company agrees that no Common or Preferred Stock with
super voting rights will be issued for a period of one year after the Effective
Date without the Representative's prior written consent.
12
SECTION 7. Expenses of the Company.
(a) The Company shall be responsible for and shall bear all of
its expenses directly and necessarily incurred in connection with the proposed
financing, including: (i) the preparation, printing and filing of the
Registration Statement and amendments thereto, including NASD and SEC filing
fees, preliminary and final Prospectus and the printing of the Underwriting
Agreement, the Agreement Among the Underwriters and the Selected Dealers'
Agreement, a Blue Sky Memorandum and material to be circulated to the
Underwriters by us; (ii) the issuance and delivery of certificates representing
the Securities, including original issue and transfer taxes, if any; (iii) the
qualifications of the Company's Securities (covered by the "firm commitment"
offering) under State Securities or Blue Sky Laws, including counsel fees of
▇▇▇▇▇▇ ▇▇▇▇▇ P.C. relating thereto in the sum of Thirty-Five Thousand ($35,000)
Dollars plus disbursements relating to, but not limited to, long-distance
telephone calls, photocopying, messengers, excess postage, overnight mail and
courier services; (iv) the fees and disbursements of counsel for the Company and
the accountants for the Company; (v) costs of qualifying the Securities for
listing on NASDAQ and (vi) post closing tombstone advertisements not to exceed
$12,000. Upon the commencement of the necessary state Blue Sky filings by our
counsel, the Company shall supply him at his request, all necessary state filing
fees. In addition, the Company shall pay ▇▇▇▇▇▇ ▇▇▇▇▇ P.C. $12,500 on or before
the filing of the initial Registration Statement as an advance toward the blue
sky fees, which $12,500 has been paid.
(b) In addition, the Company shall bear each of the following
costs: (i) investigative reports (such as ▇▇▇▇▇▇'▇ Reports) of the Company's
executive officers, directors and principal stockholders, as well as travel and
other reasonable due diligence expenses not to exceed $10,000 in the aggregate,
including without limitation, informational meetings and presentations in
connection with the offering; and (ii) otherwise unreimbursed postage, including
mailing of preliminary and final prospectuses incurred by or on behalf of the
Representative and the Underwriters in preparation for, or in connection with
the offering and sale and distribution of the Securities on an accountable
basis.
SECTION 8. Payment of Underwriters' Expenses.
On the Closing Date, the Company will pay to you an expense
allowance equal to three (3%) percent of the total gross proceeds derived from
the sale of the Firm Common Stock, $15,000 of which has been paid in advance to
the Representative, for the fees and disbursements of counsel to the
Underwriters and for costs of otherwise unreimbursed advertising, traveling,
postage, telephone and telegraph expenses and other miscellaneous expenses
incurred by or on behalf of the Representative and the Underwriters in
preparation for, or in connection with the offering and sale and distribution of
the Securities; and you shall not be obligated to account to the Company for
such disbursements and expenses. Further, in the event that this Agreement is
terminated pursuant to Section 12 hereof, the Company will be obligated to
reimburse the Representative on an accountable basis for its reasonable
out-of-pocket expenses incurred in connection hereunder, less any amounts
previously advanced. On the Closing Date or Additional Closing Date (if any)
that the Representative completes the purchase of all or any portion of the
Optional Common Stock, the Selling Security Holders shall have deducted from the
proceeds payable to them by the Representative, an amount equal to a 10%
discount and a 3% non-accountable expense allowance.
13
SECTION 9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other Federal or state law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Registration
Statement or the statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment
thereof or supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein such fact required to be stated therein or
necessary to make such statements therein not misleading. The Selling Security
Holders agree to indemnify each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they, or any
of them, may become subject under the Act, the Exchange Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the Act, the
Exchange Act or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact with respect to the Selling Security Holders contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment
thereof or supplement thereto (which amendments or supplements are furnished to
the Selling Security Holders), or which arise out of or are based upon any
omission or alleged omission to state therein such fact required to be stated
therein or necessary to make such statements therein not misleading, but only
with reference to information relating to the Selling Security Holders furnished
in writing to the Company by or on behalf of the Selling Security Holders
expressly for use in connection with the preparation of the Registration
Statement and Prospectus or any amendment thereof or supplement thereto (which
amendments or supplements are furnished to the Selling Security Holders), or
which arise out of or are based upon any omission or alleged omission to state
therein such fact required to be stated therein or necessary to make such
statements therein not misleading.
14
(b) Such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of the Securities
to any person by such Underwriter if such untrue statement or alleged untrue
statement or omission was made in such preliminary prospectus, the Registration
Statement or the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein. The
obligations of the Selling Security Holders, pursuant to this Section 9(a) shall
be limited to an amount not exceeding the product of the Per Security Price to
Public of the Securities as set forth on the cover page of the Prospectus and
the number of Securities being sold by each of them. In no event shall the
indemnification agreement contained in this Section 9(a) inure to the benefit of
any Underwriter on account of any losses, claims, damages, liabilities or
actions arising from the sale of the Securities upon the public offering to any
person by such Underwriter if such losses, claims, damages, liabilities or
actions arise out of, or are based upon, a statement or omission or alleged
omission in a preliminary prospectus and if, in respect to such statement,
omission or alleged omission, the Prospectus differs in a material respect from
such preliminary prospectus and a copy of the Prospectus has not been sent or
given to such person at or prior to the confirmation of such sale to such
person. This indemnity agreement will be in addition to any liability which the
Company and the Selling Security Holders may otherwise have.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company who
signs the Registration Statement and the Selling Security Holders, to the same
extent as the foregoing indemnity from the Company and the Selling Security
Holders to each Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto, which were made in
reliance upon and in conformity with information furnished in writing to the
Company by the Representatives on behalf of any Underwriter for specific use
therein; provided, however, that the obligation of each Underwriter to indemnify
the Company (including any controlling person, director or officer thereof) and
the Selling Security Holders shall be limited to the net proceeds received by
the Company and the Selling Security Holders, respectively, from such
Underwriter. For all purposes of this Agreement, the amounts of the selling
concession and reallowance set forth in the Prospectus constitute the only
information furnished in writing by or on behalf of any Underwriter expressly
for inclusion in any Preliminary Prospectus, any Rule 430A Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto.
15
(d) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. No indemnification
provided for in Section 9(a) 9(b), or 9(c) shall be available to any party who
shall fail to give notice as provided in this Section 9(d) if the party to whom
notice was not given was unaware of the proceeding to which such notice would
have related and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to any
indemnified party for contribution or otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party, or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the reasonable
fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.
16
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Sections 9(a) and (b)
is due in accordance with its terms but for any reason is held to be unavailable
from the Company, the Selling Security Holders or the Underwriters, the Company,
the Selling Security Holders and the Underwriters shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by the Company from persons other
than the Underwriters, such as the Selling Security Holders, persons who control
the company within the meaning of the Act, officers of the Company who signed
the Registration Statement and directors of the Company, who may also be liable
for contribution) to which the Company and the Selling Security Holders and one
or more of the Underwriters may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Security Holders on the one hand and the Underwriters on the other from the
offering of the Securities or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided herein in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Selling Security Holders on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Security Holders and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the Offering (net of underwriting discounts but before deducting
expenses) received by the Company or the Selling Security Holders from the sale
of the Securities, as set forth in the table on the cover page of the Prospectus
(but not taking into account the use of the proceeds of such sale of Securities
by the Company), bear to (y) the underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company, the Selling Security Holders and the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact related to information supplied by
the Company, the Selling Security Holders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Security Holders
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
consideration referred to above. Notwithstanding the provisions of this Section
9, (i) in no case shall any Underwriter (except as may be provided in the
Agreement Among Underwriters) be liable or responsible for any amount in excess
of the underwriting discount applicable to the Securities purchased by such
Underwriter hereunder, (ii) in no case shall the Selling Security Holders be
liable or responsible for any amount in excess of the product of the Per
Security Price to Public of the Securities as set forth on the cover page of the
Prospectus and the number of Securities being sold by each of them subject to
the limitation expressed in Section 9(a), and (iii) the Company shall be liable
and responsible for any amount in excess of the underwriting discount and the
amount referred to in clause (ii) provided, however (i) that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i), (ii) and (iii) in the immediately
preceding sentence of this Section 9. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section, notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have hereunder or otherwise than under this Section. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
17
SECTION 10. Effectiveness of Agreement. This Agreement shall become
effective (i) at 9:30 A.M., New York Time, on the first full business day after
the Effective Date, or (ii) at the time of the initial public offering by the
Underwriters of the Securities whichever shall first occur. The time of the
initial public offering by the Underwriters of the Securities for the purposes
of this Section 10, shall mean the time, after the Registration Statement
becomes effective, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating to the
Securities, or the time, after the Registration Statement becomes effective,
when the Securities are first released by the Representative for offering by the
Underwriters or dealers by letter or telegram, whichever shall first occur. The
Representative agrees to notify the Company immediately after it shall have
taken any action, by release or otherwise, whereby this Agreement shall have
become effective. This Agreement shall, nevertheless, become effective at such
time earlier than the time specified above, after the Effective Date, as the
Representative may determine by notice to the Company.
SECTION 11. Conditions of the Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay for the Securities
which the Underwriters have agreed to purchase hereunder are subject to: the
accuracy, as of the date hereof and as of the Closing Dates of all of the
representations and warranties of the Company and the Selling Security Holders
contained in this Agreement; the Company's and the Selling Security Holders'
compliance with, or performance of, all of its covenants, undertakings and
agreements contained in this Agreement that are required to be complied with or
performed on or prior to each of the Closing Dates and to the following
additional conditions:
(a) On or prior to the Closing Date, no order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been instituted or be pending or, to the
knowledge of the Company, shall be threatened by the Commission; any request for
additional information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the satisfaction of the Commission; and neither the Registration
Statement nor any amendment thereto shall have been filed to which counsel to
the Underwriters shall have reasonably objected, in writing.
(b) The Representative shall not have disclosed in writing to
the Company that the Registration Statement or Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel to the Underwriters, is material, or omits to state a fact which, in
the opinion of such counsel, is material and is required to be stated therein,
or is necessary to make the statements therein not misleading.
(c) Between the date hereof and the Closing Date, the Company
shall not have sustained any loss on account of fire, explosion, flood,
accident, calamity or other such cause, of such character as materially
adversely affects its business or property, whether or not such loss is covered
by insurance.
18
(d) Between the date hereof and the Closing Date, there shall
be no litigation instituted or threatened against the Company (or the Selling
Security Holders with respect to the Optional Common Stock), and there shall be
no proceeding instituted or threatened against the Company (or the Selling
Security Holders with respect to the Optional Common Stock) before or by any
federal or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely affect the business, licenses, permits,
operations or financial condition or income of the Company or the right of the
Selling Security Holders to deliver unencumbered title to the Underwriters for
the Optional Common Stock.
(e) Except as contemplated herein or as set forth in the
Registration Statement and Prospectus, during the period subsequent to the
Effective Date and prior to the Closing Date, (A) the Company shall have
conducted its business in the usual and ordinary manner as the same was being
conducted on the date of the filing of the initial Registration Statement and
(B) except in the ordinary course of its business, the Company shall not have
incurred any material liabilities or obligations (direct or contingent), or
disposed of any of its assets, or entered into any material transaction, and (C)
the Company shall not have suffered or experienced any material adverse change
in its business, affairs or in its condition, financial or otherwise. On the
Closing Date, the capital stock and surplus accounts of the Company shall be
substantially as great as at its last financial report without considering the
proceeds from the sale of the Securities except to the extent that any decrease
is disclosed in or contemplated by the Prospectus.
(f) The authorization of the Securities, the Registration
Statement, the Prospectus and all corporate proceedings and other legal matters
incident thereto and to this Agreement, shall be reasonably satisfactory in all
respects to counsel to the Underwriters.
(g) The Company shall have furnished to the Representative the
opinions, dated the Closing Date, and Additional Closing Date(s), addressed to
you, of its counsel that:
(i) The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Delaware
with full corporate power and authority to own and operate its properties and to
carry on its business as set forth in the Registration Statement and Prospectus;
it has authorized and outstanding capital as set forth in the Registration
Statement and Prospectus; and the Company is duly licensed or qualified as a
foreign corporation in all jurisdictions in which by reason of maintaining an
office in such jurisdiction or by owning or leasing real property in such
jurisdiction it is required to be so licensed or qualified except where failure
to be so qualified or licensed would have no material adverse effect.
19
(ii) All of the outstanding Shares of Common Stock are duly
and validly issued and outstanding, fully paid, and non-assessable, and do not
have any, and were not issued in violation of any, preemptive rights. The
Company will have duly authorized, reserved and set aside shares of Common Stock
issuable upon exercise of the outstanding options or warrants and when issued in
accordance with such terms contained in the Prospectus, will be duly and validly
authorized and issued, fully paid and non-assessable.
(iii) All of the Securities of the Company to which this
Agreement relates conform to the statements relating to them that are contained
in the Registration Statement and Prospectus (excluding financial statements).
(iv) The Underwriters against payment therefor, will receive
good and marketable title to the Securities purchased by them from the Company
and the Selling Security Holders in accordance with the terms and provisions of
this Agreement.
(v) To the best of the knowledge of such counsel, except as
set forth in the Prospectus, there are no outstanding options, warrants, or
other rights, providing for the issuance of, and, no commitments, plans or
arrangements to issue, any shares of any class of capital stock of the Company,
or any security convertible into, or exchangeable for, any shares of any class
of capital stock of the Company.
(vi) To the best of such counsel's knowledge, no consents,
approvals, authorizations or orders of agencies, officers or other regulatory
authorities are necessary for the valid authorization, issuance or sale of the
Securities hereunder, except such as may be required under the Act or state
securities or blue sky laws.
(vii) The Registration Statement has become effective under
the Act and, to the best of the knowledge of such counsel, no order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Act, and the Registration Statement and Prospectus, and each amendment
thereof and supplement thereto, comply as to form in all material respects with
the requirements of the Act and the Rules and Regulations (except that no
opinion need be expressed as to financial statements and financial data
contained in the Registration Statement or Prospectus), and in the course of the
preparation of the Registration Statement, nothing has come to the attention of
said counsel to cause them to believe that either the Registration Statement or
the Prospectus or any such amendment or supplement contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and such
counsel is familiar with all contracts referred to in the Registration Statement
or in the Prospectus and such contracts are sufficiently summarized or disclosed
therein, or filed as exhibits thereto, as required, and such counsel does not
know of any other contracts required to be summarized or disclosed or filed; and
such counsel does not know of any legal or governmental proceedings pending or
threatened to which the Company is a party, or in which property of the Company
is the subject, of a character required to be disclosed in the Registration
Statement or the Prospectus which are not disclosed and properly described
therein.
20
(viii) The Representative's Warrants to be issued to the
Representative or its permitted designees hereunder will be, when issued against
payment therefor duly and validly authorized and executed by the Company and
will constitute valid and binding obligations of the Company, legally
enforceable in accordance with their terms (except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally), and
the Company will have duly authorized, reserved and set aside the shares of its
Common Stock issuable upon exercise of the Representative's Warrants and such
stock, when issued and paid for upon exercise of the Representative's Warrants
in accordance with the provisions thereof, will be duly and validly authorized
and issued, fully-paid and non-assessable.
(ix) The Company holds by valid lease, its properties as shown
in the Prospectus, and is in all material respects complying with all laws,
ordinances and regulations applicable thereto.
(x) This Agreement has been duly authorized and executed by
the Company and the Selling Security Holders and is a valid and binding
agreement of the Company and the Selling Security Holders enforceable in
accordance with its terms subject to bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors rights generally and except that
no opinion need be given with regard to the enforceability of Section 9 hereof
or the availability of equitable relief.
(xi) To the best knowledge of such counsel: (a) no default
exists, and no event has occurred which, with notice or lapse of time, or both,
would constitute a default in the due performance and observance of any material
term, covenant or condition by the Company or the Selling Security Holders, of
any indenture, mortgage, deed of trust, note or any other agreement or
instrument to which the Company or the Selling Security Holders are a party or
by which it or its business or its properties may be bound or affected, except
where such default would not have a material adverse effect on the business of
the Company and except as disclosed in the Prospectus; (b) the Selling Security
Holders have full power and legal authority to sell the Optional Common Stock to
the Underwriters free and clear of all liens and encumbrances; (c) the Company
has full power and lawful authority to authorize, issue and sell the Firm Common
Stock on the terms and conditions set forth herein and in the Registration
Statement and in the Prospectus; (d) no consent, approval, authorization or
other order of any regulatory authority is required for such authorization,
issue or sale, except as may be required under the Act or state securities laws,
clearance with the NASD and such other consent, approval, authorization or order
as has been obtained and is in full force and effect; and (e) the execution and
delivery of this Agreement, the consummation of the transactions herein
contemplated, and compliance with the terms hereof will not conflict with, or
constitute a default under, any material indenture, mortgage, deed of trust,
note or any other agreement or instrument to which the Company and the Selling
Security Holders are now a party or by which it or its business or its
properties may be bound or affected, the Certificate of Incorporation and any
amendments thereto, the by-laws of the Company, or any order, rule or
regulation, writ, injunction or decree of any government, governmental
instrumentality, or court, domestic or foreign, having jurisdiction over the
Company or the Selling Security Holders or its business or properties.
21
(xii) Except as disclosed in the Registration Statement and
Prospectus, to the best knowledge of such counsel, there are no material
actions, suits or proceedings at law or in equity of a material nature pending,
or to such counsel's knowledge, threatened against the Company or the Selling
Security Holders which are not adequately covered by insurance and there are no
proceedings pending or, to the knowledge of such counsel, threatened against the
Company or the Selling Security Holder before or by any federal or state
Commission, regulatory body, or administrative agency or other governmental
body, wherein an unfavorable ruling, decision or finding would materially and
adversely affect the business, operation or condition (financial or otherwise)
of the Company or the ability of Selling Security Holders to deliver
unencumbered title of the Optional Common Stock to the Underwriters, which are
not disclosed in the Prospectus.
Such opinion shall also cover such other matters incident to
the transactions contemplated by this Agreement as the Representative shall
reasonably request. In rendering such opinion, such counsel may rely upon
certificates of any officer of the Company or public officials as to matters of
fact.
(h) The Company shall have furnished to the Representative
certificates of the President or Chairman of the Board and the Secretary of the
Company, dated as of the Closing Date, and Additional Closing Date(s), to the
effect that:
(i) Each of the representations and warranties of the Company
contained in Section 2 hereof are true and correct in all material respects at
and as of such Closing Date, and the Company has performed or complied with all
of its agreements, covenants and undertakings contained in this Agreement and
has performed or satisfied all the conditions contained in this Agreement on its
part to be performed or satisfied at the Closing Date;
(ii) The Registration Statement has become effective and no
order suspending the effectiveness of the Registration Statement has been
issued, and, to the best of the knowledge of the respective signers, no
proceeding for that purpose has been initiated or is threatened by the
Commission;
(iii) The respective signers have each carefully examined the
Registration Statement and the Prospectus and any amendments and supplements
thereto, and to the best of their knowledge the Registration Statement and the
Prospectus and any amendments and supplements thereto and all statements
contained therein are true and correct in all material respects, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth except changes which the
Registration Statement and Prospectus indicate might occur.
22
(iv) Except as set forth or contemplated in the Registration
Statement and Prospectus, since the respective dates as of which, or periods for
which, information is given in the Registration Statement and Prospectus and
prior to the date of such certificate (A) there has not been any material
adverse change, financial or otherwise, in the business, business prospects,
earnings, general affairs or condition (financial or otherwise), of the Company
(in each case whether or not arising in the ordinary course of business), and
(B) the Company has not incurred any liabilities, direct or contingent, or
entered into any transactions, otherwise than in the ordinary course of business
other than as referred to in the Registration Statement or Prospectus and except
changes which the Registration Statement and Prospectus indicate might occur.
(i) The Company and the Selling Security Holders shall have
furnished to the Representative on the Closing Date, such other certificates,
additional to those specifically mentioned herein, as the Representative may
have reasonably requested, as to: the accuracy and completeness of any statement
in the Registration Statement or the Prospectus, or in any amendment or
supplement thereto; the representations and warranties of the Company and the
Selling Security Holders herein; the performance by the Company and the Selling
Security Holders of its obligations hereunder; or the fulfillment of the
conditions concurrent and precedent to the obligations of the Underwriters
hereunder, which are required to be performed or fulfilled on or prior to the
Closing Date.
(j) At the time this Agreement is executed, and on the Closing
Date you shall have received a letter from ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, addressed
to the Representative, as Representative of the Underwriters, and dated,
respectively, as of the date of this Agreement and as of the Closing Date and
Additional Closing Date as the case may be (based upon information not more than
five business days prior to such Effective Date, Closing Date and Additional
Closing Date as the case may be), in form and substance reasonably satisfactory
to the Representative, to the effect that:
(i) They are independent public accountants with respect to
the Company within the meaning of the Act and the applicable published Rules and
Regulations of the Commission;
(ii) In their opinion, the financial statements and related
schedules of the Company included in the Registration Statement and Prospectus
and covered by their reports comply as to form in all material respects with the
applicable accounting requirements of the Act and the published Rules and
Regulations of the Commission issued thereunder;
(iii) On the basis of limited procedures, not constituting an
audit, including a review of the latest interim unaudited financial statements
of the Company on the basis specified by the American Institute of Certified
Public Accountants for a review of interim financial information, a reading of
the minutes of meetings of the boards of directors, and stockholders of the
Company, inquiries of officials of the Company responsible for financial and
accounting matters and such other inquiries and procedures as may be specified
in such letter, nothing came to their attention which caused them to believe:
23
(A) that at the date of the latest balance sheet read by them
and at a subsequent specified date not more than five business days prior to the
date of such letter, there was any change in the capital stock or increase in
long-term debt of the Company as compared with amounts shown in the most recent
balance sheet included in the Prospectus, except for changes which the
Prospectus discloses have occurred or may occur or which are described in such
letter;
(B) that at the date of the latest balance sheet read by them
and at a subsequent specified date not more than five business days prior to the
date of such letter, there were any decreases, as compared with amounts shown in
the most recent balance sheet included in the Prospectus, in total assets, net
current assets or stockholder's equity of the Company except for decreases which
the Prospectus discloses have occurred or may occur or which are described in
such letter; or
(C) that for the period from the date of the most recent
financial statements in the Registration Statement to a subsequent specified
date not more than five business days prior to the date of such letter, there
were any decreases, as compared with the corresponding period of the preceding
year, in gross profit or the total or per share amounts of net income of the
Company except for decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter.
(iv) In addition to the audit referred to in their report
included in the Registration Statement and the Prospectus and the limited
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are derived from the
general accounting records of the Company which appear in the Prospectus under
the captions "Summary of Financial Data," "Capitalization", "Management",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Certain Transactions", Summary of Financial Data", "Dilution" and
"Risk Factors," as well as such other financial information as may be specified
by the Representative, and that they have compared such amounts, percentages and
financial information with the accounting records of the Company and have found
them to be in agreement.
(k) Selling Security Holders shall furnish to the
Representative on the Closing Date and the Additional Closing Date(s), if any,
insofar as it applies to the Selling Security Holders, such other certificates,
additional to those specifically mentioned herein, as the Representative may
have reasonably requested, as to: the accuracy and completeness of any statement
in the Registration Statement or the Prospectus, or in any amendment or
supplement thereto; the representations and warranties of the Selling Security
Holders herein; the performance by the Selling Security Holders of its
obligations hereunder; or the fulfillment of the conditions concurrent and
precedent to the obligations of the Underwriters hereunder, which are required
to be performed or fulfilled on or prior to the Closing Date.
24
All the opinions, letters, certificates and evidence mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel to the Representative, whose approval shall not be
unreasonably withheld, conditioned or delayed.
If any of the conditions specified in this section shall not
have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations of the Underwriters hereunder may be terminated
and canceled by the Representative by notifying the Company and the Selling
Security Holders of such termination and cancellation in writing or by telegram
at any time prior to, or on, the Closing Date and any such termination and
cancellation shall be without liability of any party hereto to any other party,
except with respect to the provisions of Sections 7 and 8 hereof. The
Representative may, of course, waive, in writing, any conditions which have not
been fulfilled or extend the time for their fulfillment.
SECTION 12. Termination.
(a) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company and the Selling Security Holders at
any time before it becomes effective pursuant to Section 10.
(b) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company and the Selling Security Holders,
at any time after it becomes effective, in the event that the Company, after
notice from the Representative and an opportunity to cure, shall have failed or
been unable to comply in material respects with any of the material terms,
conditions or provisions of this Agreement on the part of the Company to be
performed, complied with or fulfilled within the respective times herein
provided for, including without limitation Section 6(g) hereof, unless
compliance therewith or performance or satisfaction thereof shall have been
expressly waived by the Representative in writing. This Agreement may also be
terminated if there is any action, suit or proceeding, threatened or pending, at
law or equity against the Company, or by any federal, state or other commission,
board or agency wherein any unfavorable result or decision could materially
adversely affect the business, property, or financial condition of the Company
which was not disclosed in the Prospectus.
25
(c) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company at any time after it becomes
effective, if the offering of, or the sale of, or the payment for, or the
delivery of, the Securities is rendered impracticable because (i) additional
material governmental restriction, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or trading in securities generally on such exchange shall have been
suspended or a general banking moratorium shall have been established by Federal
or New York State authorities or (ii) a war or other national calamity shall
have occurred involving the United States or (iii) the condition of the market
for securities in general shall have materially and adversely changed, or (iv)
the Company or its business or business prospects is materially adversely
affected so that it would be impractical to proceed with, or consummate, this
Agreement or the public offering of the Securities.
(d) Any termination of this Agreement pursuant to this Section
12 shall be without liability of any character (including, but not limited to,
loss of anticipated profits or consequential damages) on the part of any party
hereto, except that the Company shall remain obligated to pay the costs and
expenses provided to be paid by it specified in Sections 6, 7 and 8, to the
extent therein provided. In the event that this offering is terminated by the
Company, the Representative shall be entitled to receive reimbursement of its
out of pocket expenses on an accountable basis after giving credit to the
Company for any advances received toward the Representative's non-accountable
expense allowance. The Representative shall account to the Company for any
advance and shall reimburse the Company for any portion of the advance not
expended for actual out-of-pocket expenses.
SECTION 13. Finder. The Company and the Underwriters mutually represent
that they know of no person who rendered any service in connection with the
introduction of the Company to the Underwriters and that they know of no claim
by anyone for a "finder's fee" or similar type of fee, in connection with the
public offering which is the subject of this Agreement. Each party hereby
indemnifies the other against any such claims by any person known to it, and not
known to the other party hereto, who shall claim to have rendered services in
connection with the introduction of the Company to the Underwriters and/or to
have such a claim.
26
SECTION 14. Substitution of Underwriters.
(a) If one or more Underwriters default in its or their
obligations to purchase and pay for Securities hereunder and if the aggregate
amount of such Securities which all Underwriters so defaulting have agreed to
purchase does not exceed 10% of the aggregate number of Securities constituting
the Securities, the non-defaulting Underwriters shall have the right and shall
be obligated severally to purchase and pay for (in addition to the Securities
set forth opposite their names in Schedule I) the full amount of the Securities
agreed to be purchased by all such defaulting Underwriters and not so purchased,
in proportion to their respective commitments hereunder. In such event the
Representative, for the accounts of the several non-defaulting Underwriters, may
take up and pay for all or any part of such additional Securities to be
purchased by each such Underwriter under this subsection (a), and may postpone
the Closing Date to a time not exceeding seven full business days; or
(b) If one or more Underwriters (other than the
Representative) default in its or their obligations to purchase and pay for the
Securities hereunder and if the aggregate amount of such Securities which all
Underwriters so defaulting shall have agreed to purchase shall exceed 10% of the
aggregate number of Securities or if one or more Underwriters for any reason
permitted hereunder cancel its or their obligations to purchase and pay for
Securities hereunder, the non-canceling and non-defaulting Underwriters
(hereinafter called the "Remaining Underwriters") shall have the right, but
shall not be obligated to purchase such Securities in such proportion as may be
agreed among them, at the Closing Date. If the Remaining Underwriters do not
purchase and pay for such Securities at such Closing Date, the Closing Date
shall be postponed for 24 hours and the remaining Underwriters shall have the
right to purchase such Securities, or to substitute another person or persons to
purchase the same or both, at such postponed Closing Date. If purchasers shall
not have been found for such Securities by such postponed Closing Date, the
Closing Date shall be postponed for a further 24 hours and the Company shall
have the right to substitute another person or persons, satisfactory to you to
purchase such Securities at such second postponed Closing Date. If the Company
shall not have found such purchasers for such Securities by such second
postponed Closing Date, then this Agreement shall automatically terminate and
neither the Company, the Selling Security Holders nor the remaining Underwriters
(including the Representative) shall be under any obligation under this
Agreement (except that the Company shall remain liable to the extent provided in
Paragraph 7 hereof). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section 14. Nothing in this
subparagraph (b) will relieve a defaulting Underwriter from its liability, if
any, to the other Underwriters for damages occasioned by its default hereunder
(and such damages shall be deemed to include, without limitation, all expenses
reasonably incurred by each Underwriter in connection with the proposed purchase
and sale of the Securities) or obligate any Underwriter to purchase or find
purchasers for any Securities in excess of those agreed to be purchased by such
Underwriter under the terms of Sections 3 and 14 hereof.
27
Notwithstanding anything contained herein to the contrary, no
provisions of this Section 14 or any other section of this Underwriting
Agreement are intended to permit an Underwriter to terminate its obligation to
purchase the Firm Securities (as such term is defined in this Underwriting
Agreement) from the Company based upon: (i) the occurrence of non-material
events affecting the Company or the securities market or (ii) the inability to
market the securities.
SECTION 15. Registration of the Representative's Warrants and/or the
Underlying Securities. The Registration Statement filed with the Commission
shall register the Representative's Warrants and underlying securities. The
Company agrees to maintain a current Registration Statement with respect to the
Representative's Warrants and the underlying securities at the sole cost of the
Company until five years after the Effective Date. The Company may satisfy this
requirement by one or more post-effective amendments to the Registration
Statement or through the filing of a new Registration Statement.
SECTION 16. Other Agreements.
(a) Consulting Agreement. On the Effective Date, the Company will enter
into an agreement retaining the Representative as a financial consultant
pursuant to which the Representative shall receive a consulting fee in an amount
equal to two(2%) of the gross proceeds of this offering (including the
Over-Allotment Option) for services for two (2) years from the Effective Date,
payable in full in advance on the Closing Date, which shall include, but not be
limited to, advising the Company in connection with possible acquisition
opportunities, advising the Company regarding shareholder relations including
the preparation of the annual report and other releases, assisting in long-term
financial planning, advice in connection with corporate re-organizations and
expansion and capital structure, and other financial assistance.
(b) Finder's Fee: The Company agrees that if it shall within two (2)
years from the Effective Date, enter into any agreement of understanding with
any person or entity introduced by the Representative involving the following
originated by Representative (i) the sale of all or substantially all of the
assets and properties of the Company, (ii) the merger or consolidation of the
Company (other than a merger or consolidation effected for the purpose of
changing the Company's domicile) or (iii) the acquisition by the Company of the
assets or stock of another business entity, which agreement or understanding
thereafter consummated, whether or not during such two (2) year period, the
Company, upon such consummation, shall pay to the Representative an amount equal
to the following percentages of the consideration paid by the Company in
connection with such transaction:
5% of the first $1,000,000 or portion thereof, of such
consideration; 4% of the second $1,000,000 or portion thereof,
of such consideration; and 3% of such consideration in excess
of the first $2,000,000 of such consideration.
28
The fees payable to the Representative will be in the same
form of consideration as that paid by or to the Company, as the case may be, in
any such transactions.
(c) Designation of Non-voting Advisor to the Board: The Company agrees
that unless waived by us, that the Representative shall have the right to
designate a non-voting advisor to the Board acceptable to the Company who
resides in the New York metropolitan area for a period of two years after the
Effective Date. Said designee shall attend meetings of the Board and shall be
entitled to receive reimbursement for all approved reasonable costs incurred in
attending such meetings, including but not limited to, food, lodging and
transportation. In the event the Company maintains a liability insurance policy
affording coverage for the act of its officers and/or directors, it will agree,
to the extent permitted under such policy, to include each of the Representative
and its designee as an insured under such policy.
SECTION 17. Lock-Up Agreement
Except for the 195,000 shares subject to the Optional Common Stock
which are held by Selling Security Holders or unless waived by the
Representative, the pre-offering holders of the outstanding shares of Common
Stock and Preferred Stock and warrants/options/notes exercisable or convertible
into Capital Stock have agreed not to sell or otherwise transfer their Common
Stock or Preferred Stock for a period of one year from the Effective Date of
this Offering without the prior written consent of the Underwriters. The
aforementioned lock-up agreements executed by the security holders shall also
cover any securities issued by the Company during the first year after the
Effective Date. The Company covenants and represents that after the Effective
Date, it will not grant securities to officers, directors and consultants to the
Company unless they execute a one-year lock-up agreement from the Effective Date
or the lock-up agreement is waived by the Representative.
SECTION 18. Notice. Except as otherwise expressly provided in
this Agreement, (A) whenever notice is required by the provisions hereof to be
given to the Company, such notice shall be given in writing, by certified mail,
return receipt requested, addressed to the Company at the address set forth
herein on the first page, copy to ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, Suite 505, ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; (B) whenever notice is required by the
provisions hereof to be given to the Underwriters, such notice shall be in
writing addressed to the Representative at Somerset Financial Group, Inc.; and
(C) whenever notice is required by the provisions hereof to be given to the
Selling Security Holders, such notice shall be given in writing, by certified
mail, return receipt requested, addressed to the Selling Security Holders at the
addresses set forth in Schedule II. forth herein on the first page copy to
▇▇▇▇▇▇ ▇▇▇▇▇, Esq., ▇▇▇▇▇▇ ▇▇▇▇▇ P.C., Suite 420, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇. Any party may change the address for notices to be sent by
giving written notice to the other persons.
29
SECTION 19. Representations and Agreements to Survive
Delivery. Except as the context otherwise requires, all representations,
warranties, covenants, and agreements contained in this Agreement shall be
deemed to be representations, warranties, covenants, and agreements as at the
date hereof and as at the Closing Date and the Additional Closing Date(s), and
all representations, warranties, covenants, and agreements of the Selling
Security Holders, the several Underwriters and the Company, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any of the Underwriters or any of their controlling persons, and
shall survive any termination of this Agreement (whensoever made) and/or
delivery of the Firm Shares and the Optional Shares to the several Underwriters.
SECTION 20. Miscellaneous. This Agreement is made solely for the
benefit of the Selling Security Holders, the Underwriters and the Company and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successor" or the
term "successors and assigns" as used in this Agreement shall not include any
purchaser, as such, of any of the Shares.
This Agreement shall not be assignable by any party without the other
party's prior written consent. This Agreement shall be binding upon, and shall
inure to the benefit of, our respective successors and permitted assigns. The
foregoing represents the sole and entire agreement between us with respect to
the subject matter hereof and supersedes any prior agreements between us with
respect thereto. This Agreement may not be modified, amended or waived except by
a written instrument signed by the party to be charged. The validity,
interpretation and construction of this Agreement, and of each part hereof,
shall be governed by the internal laws of the State of New York, without giving
effect to the conflict of laws provisions thereof.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall be deemed to
be one and the same instrument.
If a party signs this Agreement and transmits an electronic facsimile
of the signature page to the other party, the party who receives the
transmission may rely upon the electronic facsimile as a signed original of this
Agreement.
30
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Selling Security Holders, the Company and the Underwriters in accordance
with its terms.
Very truly yours,
GLOBAL BRANDS, INC.
By:______________________________
▇▇▇▇▇▇▇ ▇▇▇▇, President
SELLING SECURITY HOLDERS:
_________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_________________________________
▇▇▇▇▇▇▇ ▇▇▇▇
CONFIRMED AND ACCEPTED, as of the date first above written:
SOMERSET FINANCIAL GROUP, INC.
By________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
For itself and as the Representative of
the other Underwriters named in
Schedule I hereto.
31
SCHEDULE I
================================================================================
Underwriter Firm Securities to
be Purchased
--------------------------------------------------------------------------------
Number of Common
Shares
--------------------------------------------------------------------------------
Somerset Financial Group, Inc.
Seaboard Securities, Inc.
---------
Total 1,300,000
32
SCHEDULE II
================================================================================
Name and Address of Amount of Optional
Selling Security Holders Common Stock
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 138,450
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 21,450
▇▇▇▇▇▇▇ ▇▇▇▇ 35,100
-------
Total 195,000
33
EXHIBIT 1.2
GLOBAL BRANDS, INC.
1,300,000 SHARES OF COMMON STOCK
AGREEMENT AMONG UNDERWRITERS
__________, 2000
To each of the Underwriters named in Schedule I
to the attached Underwriting Agreement
Dear Sirs:
1. UNDERWRITING AGREEMENT. Global Brands, Inc. (the "Company"),
proposes to enter into an underwriting agreement in the form of the Underwriting
Agreement attached hereto as Exhibit "A" (the "Underwriting Agreement") with the
underwriters named in Schedule I to the Underwriting Agreement (the
"Underwriters"), acting severally and not jointly, with respect to the purchase
from the Company of 1,300,000 Shares of Common Stock. Such Shares are
hereinafter sometimes referred to as the "Firm Common Stock." Upon our request,
and as provided in Section 3 of the Underwriting Agreement, the Selling Security
Holders named in Schedule II of the Underwriting Agreement will sell to the
Underwriters up to a maximum of 195,000 Shares of Common Stock., Such additional
Securities are hereinafter sometimes referred to as the "Optional Common Stock."
Both the Firm Common Stock and the Optional Common Stock are sometimes
collectively referred to herein as the "Securities." All of the Securities which
are the subject of this Agreement are more fully described in the Prospectus of
the Company described below. Under the terms of the Underwriting Agreement, each
of the Underwriters will agree, in accordance with the terms thereof to purchase
the aggregate number of Common Stock set forth opposite its name in said
Schedule I, subject to adjustment pursuant to Section 12 hereof and Section 14
of the Underwriting Agreement.
2. REGISTRATION STATEMENT AND PROSPECTUS. The Securities are described
in a registration statement and related prospectus which have been filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"). An amendment to such registration statement
has been or will be filed in which you have been or will be named as one of the
Underwriters of the Securities. Copies of the registration statement as filed
and as amended have been delivered to you, and you hereby authorize us to
approve on your behalf any further amendments or supplements which may be
necessary or appropriate. The registration statement, as amended at the time it
becomes effective, is called the "Registration Statement" and the final
prospectus relating to the Securities as filed by the Company with the
Commission pursuant to Rule 424(b) under the Act is referred to as the
"Prospectus."
1
3. AUTHORITY OF REPRESENTATIVE. You authorize us as your Representative
to execute the Underwriting Agreement with the Company in the form attached with
such insertions, deletions or other changes as we may approve (but not as to the
number of, and price of, the Securities to be purchased by you except as
provided herein and therein) and to take such action as in our discretion we may
deem advisable in respect of all matters pertaining to the Underwriting
Agreement, this Agreement, the transactions for the accounts of the several
Underwriters contemplated thereby and hereby, and the purchase, carrying, sale
and distribution of the Securities.
4. PUBLIC OFFERING. In connection with the public offering of the
Securities, you authorize us, in our discretion:
(a) To determine the time and manner of the initial public
offering (after the Registration Statement become effective), the initial public
offering price, and the concessions and reallowances to dealers, to change the
public offering price and such concessions and reallowances after the initial
public offering, to furnish the Company with the information to be included in
the Registration Statement and the Prospectus (and any amendment or supplement
thereto) with respect to the terms of the public offering, and to determine all
matters relating to the public advertisement of the Securities and any
communications with dealers or others;
(b) To reserve all or any part of your Securities for sale to
retail purchasers (including institutions) and to dealers selected by us
("Selected Dealers") among which may be included any Underwriter (including
ourselves) and each of which shall be a member of the National Association of
Securities Dealers, Inc., and each of which shall agree that in making sales to
purchasers in the United States it will conform to the Rules of Fair Practice of
said Association (or, in the case of a foreign dealer not eligible for
membership in such Association, which shall agree not to reoffer, resell or
deliver Securities in the United States, its territories or its possessions, or
to persons whom it has reason to believe are citizens thereof or residents
therein), such reservations for sales to retail purchasers to be as nearly as
practicable in proportion to the respective underwriting obligations of the
Underwriters and such reservations for sales to Selected Dealers to be in such
proportion as we determine, and from time to time to add to the reserved
Securities such Securities retained by you remaining unsold and to release to
you any of your Securities reserved but not sold;
(c) To sell reserved Securities as nearly as practicable in
proportion to the respective reservations to retail purchasers at the public
offering price, and to Selected Dealers at the public offering price less the
Selected Dealer's concession pursuant to the Selected Dealers Agreement in
substantially the form attached; and
(d) To buy Securities for your account from Selected Dealers
at the public offering price less such amount not in excess of the Selected
Dealer's concession as we may determine.
2
After advice from us that the Securities are released for public
offering, you will offer to the public in conformity with the terms of offering
set forth in the Prospectus, or any amendment or supplement, such of your
Securities as we advise you are not reserved.
You recognize the importance of a broad distribution of the Securities
among bona fide investors and you agree to use your best efforts to obtain such
broad distribution and to that end, to the extent you deem practicable, to give
priority to small orders. In offering the Securities to Selected Dealers we will
take such action as we deem appropriate to effect a broad distribution.
5. REPURCHASE OF SECURITIES NOT EFFECTIVELY PLACED FOR INVESTMENT. You
are requested to place for investment those of your Securities which are not
reserved as aforesaid. Any Securities sold by you (otherwise than through us)
which may be delivered to us against a purchase contract made by us for the
account of any Underwriter prior to termination of the provisions referred to in
Section 11 of this Agreement, shall be purchased by you upon demand from us at
the cost of such purchase plus brokerage commissions and transfer taxes on
redelivery. Securities delivered on such repurchase need not be identical to
those purchased by you. In lieu of demand repurchase by you we may in our
discretion (i) sell for your account the Securities so purchased by us, at such
price and upon such terms as we may determine, and debit or credit your account
with the loss and expense or net profit resulting from such sale, or (ii) charge
your account with an amount not in excess of the Selected Dealer's concession
with respect to such Securities plus brokerage commissions and transfer taxes
paid in connection with such purchase.
6. PAYMENT AND DELIVERY. We shall give you at least 24 hours prior
notice of the Closing Date. You agree to deliver payment and receive securities
through the facilities of the Depository Trust Company ("DTC") or, at our
option, to deliver to us at or before 9:00 a.m. New York City Time, on such
Closing Date at the office of Somerset Financial Group, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (or such other office as we may direct), a
certified check or bank cashier's check payable in New York Clearing House funds
to the order of Somerset Financial Group, Inc., as Representative, for the full
purchase price of the Securities which you shall have agreed to purchase from
the Company less the concession to selected dealers. The proceeds to the Company
shall be delivered by us in the amount required in payment of the full purchase
price to the Company against delivery of the Securities to us for your account.
We are authorized to accept that delivery and to give a receipt therefor. You
authorize us, as your custodian, to take delivery of your Securities, registered
as we may direct in order to facilitate deliveries. You also authorize us to
hold for your account such of your Securities as we have reserved for sale to
retail purchasers and to Selected Dealers, and to deliver your reserved
Securities against such sales. We will deliver your unreserved Securities to you
promptly and, after we receive payment for reserved Securities sold by us for
your account, we will remit to you, as promptly as practicable, an amount equal
to the price paid by you for such Securities. As soon as practicable after
termination of Sections 4, 5 and 9 and the first and penultimate sentences of
Section 8 of this Agreement (pursuant to Section 11 hereof) we will deliver to
you any of your Securities reserved but not sold. All Securities delivered to
you pursuant to this Section will be evidenced by certificates in such
denominations as you shall direct by written notice received by us not later
than the second full business day preceding the Closing Date.
3
7. AUTHORITY TO BORROW. In connection with the purchase or carrying of
any Securities purchased hereunder for your account, you authorize us, in our
discretion, to advance funds for your account, charging current interest rates,
or to arrange loans for your account, and in connection therewith to execute and
deliver any notes or other instruments and hold or pledge as security any of
your Securities. Any lender may rely on our instructions in all matters relating
to any such loan. Any of your Securities held by us for your account may be
delivered to you for carrying purposes only, and subject to our further
direction.
8. STABILIZATION AND OVER-ALLOTMENT. To facilitate the distribution of
the Securities, you authorize us during the term of this Agreement, or for such
longer period as may be necessary in our discretion, to make purchases and sales
of the Securities for your account in the open market or otherwise, for long or
short account, on such terms as we deem advisable and, in arranging sales, to
over-allot. You also authorize us to cover any short position incurred pursuant
to this Section on such terms as we deem advisable. Included in the authority
granted to us by you is the authority to exercise the over-allotment option for
you to purchase the Optional Securities granted by Section 3 of the Underwriting
Agreement. All such purchases and sales shall be made for the accounts of the
several Underwriters as nearly as practicable in proportion to their respective
underwriting obligations. Your net commitment under this Section shall not, at
the end of any business day, exceed 15% of your maximum underwriting obligation.
You will on our demand take up at cost or deliver against payment any Securities
purchased or sold for your account and, if any such other Underwriter defaults
in its corresponding obligation, you will assume your proportionate share of
such obligation without relieving the defaulting Underwriter from liability. You
will be obligated in respect to purchases and sales made for your account
hereunder whether or not the proposed purchase of the Securities is consummated.
Upon request you will advise us of Securities retained by you and unsold and
will sell to us for the account of one or more of the Underwriters such of your
unsold Securities as we may designate, at the public offering price thereof less
such amount as we may determine, but not in excess of the Selected Dealer's
concession with respect thereto. Until the termination of this Agreement
pursuant to Section 11 hereof, or prior notification by us, we shall have the
sole right to effect stabilizing transactions in the Securities. You agree that
until such time you will not make any purchases or sales of any of such
securities except as provided in Section 9 hereof. You also agree to timely
provide us with the information required by Rule 17a-2(d) under the Securities
Exchange Act of 1934, as amended (the "1934 Act").
9. OPEN MARKET TRANSACTIONS. You agree not to bid for, purchase,
attempt to induce others to purchase, or sell, directly or indirectly, any
Securities, except as brokers pursuant to unsolicited orders and as otherwise
provided in this Agreement or in the Underwriting Agreement. You further agree
not to offer the Securities for sale until notified by us, as the Representative
of the Underwriters, that they are released for that purpose.
4
10. EXPENSES AND SETTLEMENT. We may charge your account with Selected
Dealer's concessions and all transfer taxes on sales made by us for your account
and with your proportionate share (based upon your underwriting obligation) of
all other expenses incurred by us under the terms of this Agreement or the
Underwriting Agreement, in excess of those reimbursed by the Company pursuant to
Section 8 of the Underwriting Agreement, or in connection with the purchase,
carrying, sale or distribution of the Securities. Our determination of the
amount and allocation of expenses shall be conclusive. As soon as practicable
after termination of the provisions referred to in Section 11, the accounts
hereunder will be settled, but we may reserve from distribution such amount as
we deem advisable to cover possible additional expenses. We may at any time make
partial distribution of credit balances or call for payment of debit balances.
Any of your funds in our hands may be held with our general funds without
accountability for interest. Notwithstanding any settlement, you will pay (i)
your proportionate share (based upon your underwriting obligation) of any
liability which may be incurred by the Underwriters, or any of them, based on
the claim that the Underwriters constitute an association, partnership,
unincorporated business or other separate entity, and of any expenses incurred
by us, or by any other Underwriter with our approval, in contesting any such
liability, and (ii) any transfer taxes which may be assessed and paid after such
settlement on account of any sale or transfer for your account.
11. TERMINATION AND SETTLEMENT. This Agreement will terminate (a) at
the close of business on the 30th day after the date of the Underwriting
Agreement; or (b) on such earlier or later date, not more than 30 days after the
date specified in (a), as we may determine; or (c) on the date of termination of
the Underwriting Agreement, if the same shall be terminated as provided by its
terms.
Upon termination of this Agreement, all authorizations, rights and
obligations hereunder will cease, except (a) the mutual obligation to settle
accounts hereunder, (b) your obligation to pay any claims referred to in the
last paragraph of this Section, (c) the obligations with respect to indemnity
set forth in Section 15 hereof (all obligations of which will continue until
fully discharged), and (d) your obligation with respect to purchases which may
be made by us from time to time thereafter to cover any short position with
respect to the offering, all of which will continue until fully discharged, and
except our authority with respect to matters to be determined by us, or by us
and the Company, pursuant to the terms of the Underwriting Agreement, which will
survive the termination of this Agreement.
The accounts arising pursuant to this Agreement will be settled and
paid as soon as practicable after termination. The determination by us of the
amounts to be paid to or by you will be final and conclusive.
5
Notwithstanding any settlement upon the termination of this Agreement,
you will pay your proportionate share of any amount asserted against and
discharged by the Underwriters, or any of them, based upon the claim that the
Underwriters constitute an association, unincorporated business or other
separate entity, or based upon or arising out of a claim that this Agreement or
the Underwriting Agreement is invalid or illegal for any reason, including any
expense incurred in defending against such claim, and will pay any transfer
taxes which may be assessed thereafter on account of any sale or transfer of
Securities for our account.
12. DEFAULT BY UNDERWRITERS. Default by one or more Underwriters
hereunder or under the Underwriting Agreement shall not release the other
Underwriters from their obligations or affect the liability of any defaulting
Underwriter to the other Underwriters for damages resulting from such default.
In case of default under the Underwriting Agreement by one or more Underwriters,
we may arrange for the purchase by others, including non-defaulting
Underwriters, of Securities not taken up by such defaulting Underwriter and you
will, at our request, increase pro rata with the other non-defaulting
Underwriters the aggregate principal amount of Securities which you are to
purchase, or both, by an amount not exceeding one-ninth of your original
underwriting obligations. In the event any such arrangements are made, the
respective Securities to be purchased by non-defaulting Underwriters and by such
others shall be taken as the basis for the underwriting obligations under this
Agreement.
In the event of default by one or more Underwriters in respect of their
obligations under this Agreement, each non-defaulting Underwriter shall assume
its proportionate share of the obligations under this Agreement of each such
defaulting Underwriter (other than, to the extent stated in the first paragraph
of this Section, the purchase obligation of such defaulting Underwriter).
13. POSITION OF REPRESENTATIVE. We shall be under no liability to you
for any act or omission except for obligations expressly assumed by us in this
Agreement, but no obligation on our part shall be implied or inferred. Nothing
shall constitute the Underwriters, or any of them, an association, partnership,
unincorporated business or other separate entity and the rights and liability of
ourselves and each of the Underwriters are several and not joint.
14. COMPENSATION TO REPRESENTATIVE. As compensation for our services as
Representative, you agree to pay us $___ per share of Common Stock out of the
aggregate underwriting discount attributable to Securities which you agree to
purchase from the Company and/or the Selling Security Holders pursuant to the
Underwriting Agreement. We are authorized to charge your account with such an
amount.
15. INDEMNIFICATION. You will indemnify and hold harmless each other
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act to the extent and upon the terms by which each
Underwriter agrees to indemnify the Company in the Underwriting Agreement. Such
indemnity agreement shall survive the termination of any of the provisions of
this Agreement.
6
In the event that at any time any claim shall be asserted against us as
or as a result of our having acted as Representative, or otherwise involving the
Underwriters generally, relating to the Registration Statement or any
preliminary prospectus or the Prospectus, as from time to time amended or
supplemented, the public offering of the Securities or any of the transactions
contemplated by this Agreement, you authorize us to make such investigation, to
retain such counsel and to take such other action as we shall deem necessary or
desirable under the circumstances, including settlement of any claim or claims
if such course of action shall be recommended by counsel retained by us. You
agree to pay to us, on request, your proportionate share (based upon your
underwriting obligation) of all expenses incurred by us (including, but not
limited to, the disbursements and fees of counsel so retained) in investigating
and defending against such claim or claims, and your proportionate share (based
upon your underwriting obligation) of any liability incurred by us in respect of
such claim or claims, whether such liability shall be the result of a judgment
against us or as a result of any such settlement.
16. BLUE SKY MATTERS. We shall not have any responsibility with respect
to the right of any Underwriter or other person to sell Securities in any
jurisdiction, notwithstanding any information we may furnish in that connection.
You hereby authorize us to take such action as may be necessary or advisable to
qualify the Securities for offering and sale in any jurisdiction. We have caused
to be filed Further State Notices respecting the Securities to be offered to the
public in New York in the form required by, and pursuant to, the provisions of
Article 23A of the General Business Law of the State of New York.
17. TITLE TO SECURITIES. The Securities purchased for the respective
accounts of the several Underwriters shall remain the property of those
Underwriters until sold; and no title to such securities shall in any event pass
to us, as Representative, by virtue of any of the provisions of this Agreement.
18. CAPITAL REQUIREMENTS. Unless the provisions of clause (b) of the
second sentence of the last paragraph of this Agreement are applicable to you,
you confirm that your commitment hereunder will not result in any violation of
Section 8(b) or 15(c) of the 1934 Act or in any violation of any of the rules
and regulations promulgated under the 1934 Act, including, without limitation,
Rule 15c3-1, or any provision of any applicable rules of any securities exchange
to which you are subject or of any restriction imposed upon you by such
exchange.
19. NOTICES AND GOVERNING LAWS. Any notice from you to us shall be
mailed or transmitted by any standard form of written telecommunication to us at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Any notice from us to you
shall be mailed or transmitted by any standard from of written telecommunication
to you at your address as set forth in your Underwriter's Questionnaire. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
7
We represent that we are a member in good standing of the National
Association of Securities Dealers, Inc. You represent that you are (a) a member
in good standing of such Association or (b) a foreign dealer which is not
eligible for membership in such Association, in which event you will make sales
of any Securities only outside the United States and its territories and
possessions to persons who are not citizens or residents of the United States or
its territories or possessions, and that in making any such sales, you will
comply with such Association's Interpretation with respect to Free-Riding and
Withholding. You further represent that: (i) you will notify each of your
customers with respect to whose account you have investment discretion and to
whose account you intend to sell any Securities that you propose to sell
Securities to such account as a principal and you will obtain the customer's
written consent to such sale; and (ii) you will comply with the requirements of
Rule 15c2-8 under the 1934 Act and have distributed or are distributing copies
of a Preliminary Prospectus to all persons to whom you then expected to mail
confirmations of sale, not less than 48 hours prior to the time it is expected
to mail such confirmations.
Very truly yours,
SOMERSET FINANCIAL GROUP, INC.
By:________________________________
As Representative of the several
Underwriters
Confirmed and accepted as of
the date first above written.
-------------------------------
Attorney-in-fact for the several
Underwriters named in Schedule I
to the Underwriting Agreement
8
EXHIBIT 1.3
Somerset Financial Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
GLOBAL BRANDS, INC.
1,300,000 SHARES OF COMMON STOCK
SELECTED DEALER AGREEMENT
Dear Sirs: _________, 2000
We, as the Underwriter named in the Prospectus dated ___________ , 2000
have agreed, subject to the terms and conditions of the Underwriting Agreement
dated this date (the "Underwriting Agreement") to purchase from Global Brands,
Inc. (the "Company"), at the prices set forth on the cover of such Prospectus,
the above referred to 1,300,000 Shares of Common Stock and, at our option, from
the Selling Security Holders named in Schedule II of the Underwriting Agreement,
up to an additional 195,000 shares of Common Stock to cover over-allotments
(collectively being called the "Securities"). The Securities and certain of the
terms on which they are being purchased and offered are more fully described in
the enclosed Prospectus. Additional copies of the Prospectus will be supplied to
you in reasonable quantities upon request.
We, as the Underwriter, are offering to certain dealers ("Selected
Dealers"), among whom we are pleased to include you, part of the Securities, at
the public offering price less a concession of $.___ per Share of Common Stock.
The offering to Selected Dealers is made subject to the issuance and delivery of
the Securities to us and their acceptance by us, to the approval of legal
matters by our counsel, and to the terms and conditions hereof, and may be made
by us on the basis of the reservation of Securities or an allotment against
subscription, or otherwise in our discretion.
The initial public offering prices of the Securities are as set forth
in the Prospectus. With our consent, Selected Dealers may allow a re-allowance
of not in excess of $ -0- per Share of Common Stock in selling the Shares of
Common Stock to other dealers meeting the requirements of the specifications set
forth in the affirmation of dealers contained in the attached Acceptance and
Order. Upon our request, you will notify us of the identity of any dealer to
whom you allow such a reallowance and any Selected Dealer from whom you receive
such a re-allowance.
1
All orders will be strictly subject to confirmation and we reserve the
right in our uncontrolled discretion to reject any order in whole or in part, to
accept or reject orders in the order of their receipt or otherwise, and to
allot. You are not authorized to give any information or make any representation
other than as set forth in the Prospectus in connection with the sale of any of
the Securities. No dealer is authorized to act as agent for the Underwriter, or
for the Company, when offering any of the Securities. Nothing contained herein
shall constitute the Selected Dealers partners with us or with one another.
Upon release by us, you may offer the Securities at the public offering
price, subject to the terms and conditions hereof. We may, and the Selected
Dealers may, with our consent, purchase Securities from and sell Securities to
each other at the public offering price less a concession not in excess of the
concession to Selected Dealers.
Payment for Securities purchased by you is to be made at our office (or
at such other place as instructed) at the public offering price, on such date as
we may advise, on one day's notice to you, by certified or official bank check
in New York Clearing House funds payable to our order. Delivery to you of
certificates for the Securities will be made as soon as is practicable
thereafter. Unless specifically authorized by us, payment by you may not be
deferred until delivery of certificates to you. The concession payable to you
will be paid as soon as practicable after the closing.
This Agreement shall terminate at the close of business on the 30th day
after the effective date of the Registration Statement. We may terminate this
Agreement at any time prior thereto by notice to you. Notwithstanding the
termination of this Agreement, you shall remain liable for your proportionate
share of any transfer tax or any liability which may be asserted or assessed
against us or Selected Dealers based upon the claim that the Underwriter and the
Selected Dealers, or any of them, constitute a partnership, association,
unincorporated business or other entity, including in each case your
proportionate share of expenses incurred in defending against any such claim or
liability.
In the event that, prior to the termination of this Agreement we
purchase in the open market or otherwise any Securities delivered to you, you
agree to repay to us for the account of the Underwriter the amount of the above
concession to Selected Dealers plus brokerage commissions and any transfer taxes
paid in connection with such purchase; which amounts can be withheld from the
concession otherwise payable to you hereunder. Certificates for Securities
delivered on any such purchase need not be the identical certificates originally
issued to you.
At any time prior to the termination of this Agreement, you will, upon
our request, report to us the number of Securities purchased by you under this
Agreement which then remain unsold and will, upon our request, sell to us for
the account of the Underwriter the number of such unsold Securities that we may
designate, at the public offering price less an amount to be determined by us
not in excess of the concession allowed you.
2
We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the offering, including,
without limitation, stabilization and over-allotment. We shall be under no
liability to you except for our lack of good faith and for obligations assumed
by us in this Agreement, except that you do not waive any rights that you may
have under the Securities Act of 1933 (the "1933 Act") or the rules and
regulations thereunder.
Upon application to us, we will inform you of the states and other
jurisdictions of the United States in which it is believed that the Securities
are qualified for sale under, or are exempt from the requirements of, their
respective securities laws, but we assume no responsibility with respect to your
right to sell Securities in any jurisdiction. We have filed a Further State
Notice with respect to the Securities with the Department of State of the State
of New York.
You confirm that you are familiar with Rule 15c2-8 under the Securities
Exchange Act of 1934 (the "1934 Act"), relating to the distribution of
preliminary and final prospectuses, and confirm that you have complied and will
comply therewith (whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the 1934 Act). We will make available to
you, to the extent made available to us by the Company such number of copies of
the Prospectus as you may reasonably request for purposes contemplated by the
1933 Act, the 1934 Act, and the rules and regulations thereunder.
Your attention is directed to Regulation M under the 1934 Act, which
contains certain prohibitions against trading by a person interested in a
distribution until such person has completed its participation in the
distribution. You confirm that you will at all times comply with the provisions
of such Regulation M in connection with this offering.
Any notice from us shall be deemed to have been duly given if
telephoned, and subsequently mailed or transmitted by any standard form of
written tele-communication to you at the address to which this Agreement is
mailed, or if so mailed or transmitted in the first instance.
Please advise us promptly by telephone or any standard form of written
tele-communication of the principal amount of Securities ordered by you and
confirm your agreement hereto by signing the Acceptance and Order on the
enclosed duplicate hereof and returning promptly such signed duplicate copy to
Somerset Financial Group, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
Upon receipt thereof, this instrument and such signed duplicate copy
will evidence the agreement between us.
Very truly yours,
SOMERSET FINANCIAL GROUP, INC.
By:________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
3
ACCEPTANCE AND ORDER
Somerset Financial Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
We hereby enter our order for ______ Shares of Common Stock of Global
Brands, Inc. under the terms and conditions of the foregoing Agreement.
We agree to all the terms and conditions stated in the foregoing
Agreement. We acknowledge receipt of the Prospectus relating to the above
Securities and we further state that in entering this order we have relied upon
said Prospectus and no other statements whatsoever, written or oral. We affirm
that we are either (i) a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") or (ii) a dealer with its principal place
of business located outside the United States, its territories, or possessions
and not registered under the Securities Exchange Act of 1934 and not eligible
for membership in the NASD, who hereby agrees to make no sales within the United
States, its territories or its possessions or to persons who are nationals
thereof or residents therein, and in making any sales, to comply with the NASD's
interpretation with respect to free-riding and withholding, as well as all other
pertinent interpretations of the NASD that may be applicable to us. We also
affirm and agree that we will promptly re-offer any Securities purchased by us
in conformity with the terms of the offering and in conformity with Rules 2730,
2740, 2420 and 2750 of the NASD Conduct Rules and all applicable Rules and
Regulations promulgated under the Securities Exchange Act of 1934.
Date: ___________, 2000
____________________________________
(Name of Selected Dealer)
By:____________________________________
(Authorized Signature)
Address:_______________________________
_______________________________________
4