<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 1997
REGISTRATION NO. 333-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ALL COMMUNICATIONS CORPORATION
(NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEW JERSEY 22-3124655
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) INDUSTRIAL CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
1450 ROUTE 22 WEST
MOUNTAINSIDE, NEW JERSEY 07092
(908) 789-8800
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
RICHARD REISS, PRESIDENT
1450 ROUTE 22 WEST
MOUNTAINSIDE, NEW JERSEY 07092
(908) 789-8800
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
ALEXANDER BIENENSTOCK, ESQ. STUART NEUHAUSER, ESQ.
JOSHUA M. JAFFE, ESQ. BERNSTEIN & WASSERMAN, LLP
SINGER ZAMANSKY LLP 950 THIRD AVENUE
40 EXCHANGE PLACE NEW YORK, NEW YORK 10022
NEW YORK, NEW YORK 10005 TELEPHONE NO.: (212) 826-0730
TELEPHONE NO.: (212) 809-8550 FACSIMILE NO.: (212) 371-4730
FACSIMILE NO.: (212) 344-0394
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
(cover continued on next page)
------------------------
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE AND
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
(cover continued from previous page)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Units, each consisting of two shares of Common Stock, no
par value per share, and two Class A Warrants(2)........ 632,500Uts. $ 7.00 $ 4,427,500.00 $ 1,341.67
Common Stock, no par value per share, underlying
Units(2)................................................ 1,265,000Shs.
Class A Warrants underlying Units(2)...................... 1,265,000Wts.
Common Stock, no par value per share, issuable upon
exercise of Class A Warrants(3)......................... 1,265,000Shs. 4.25 5,376,250.00 1,629.17
Underwriter's Unit Purchase Options(4).................... 55,000Opts. .001 55.00 .02
Units, each consisting of two shares of Common Stock, no
par value per share, and two Class A Warrants, issuable
upon exercise of Underwriter's Options(3)............... 55,000Uts. 8.40 462,000.00 140.00
Common Stock, no par value per share, underlying
Underwriter's Options................................... 110,000Shs.
Class A Warrants underlying Underwriter's Options(3)...... 110,000Wts.
Common Stock, no par value per share, issuable upon
exercise of Class A Warrants underlying the
Underwriter's Options................................... 110,000Shs. 4.25 467,500.00 141.67
Bridge Units, each consisting of one share of Common
Stock, no par value per share, and one Class A Warrant,
issuable upon conversion of Bridge Notes................ 375,000Uts. 3.50 1,312,500.00 397.73
Common Stock, no par value per share...................... 375,000Shs.
Class A Warrants.......................................... 375,000Wts.
Common Stock, no par value per share, issuable upon
exercise of Class A Warrants(3)......................... 375,000Shs. 4.25 159,375.00 48.30
Common Stock, no par value per share, to be sold by the
Selling Stockholder..................................... 750,000Shs. 3.50 2,625,000.00 795.45
Total........................................... $14,830,180.00 $ 4,494.01
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes 82,500 Units which may be issued upon exercise of an option granted
to the Underwriter to cover over-allotments, if any. See 'Underwriting.'
(3) Pursuant to Rule 416, there are also being registered such additional
securities as may become issuable pursuant to the anti-dilution provisions
of the Class A Warrants and the Underwriter's Options.
(4) Represents options (the 'Underwriter's Options') to purchase 55,000 Units.
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND CAPTION CAPTIONS IN PROSPECTUS
----------------------------------------------------------------------- ------------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front Cover of
Prospectus........................................................... Cover Page
2. Inside Front and Outside Back Cover Pages of Prospectus................ Cover Page, Inside Cover Page,
Outside Back Page
3. Summary Information and Risk Factors................................... Prospectus Summary, Risk Factors
4. Use of Proceeds........................................................ Use of Proceeds
5. Determination of Offering Price........................................ Cover Page, Underwriting
6. Dilution............................................................... Dilution
7. Selling Securityholders................................................ Concurrent Offering
8. Plan of Distribution................................................... Prospectus Summary, Underwriting
9. Legal Proceedings...................................................... Business
10. Directors, Executive Officers, Promoters and Control Persons........... Management, Principal Stockholders
11. Security Ownership of Certain Beneficial Owners and Management......... Principal Stockholders
12. Description of Securities.............................................. Description of Securities
13. Interest of Named Experts and Counsel.................................. *
14. Disclosure of Commission Position on Indemnification for Securities Act Management
Liabilities..........................................................
15. Organization Within Last Five Years.................................... *
16. Description of Business................................................ Prospectus Summary, Business
17. Management's Discussion and Analysis or Plan of Operation.............. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
18. Description of Property................................................ Business
19. Certain Relationships and Related Transactions......................... Certain Transactions
20. Market for Common Equity and Related Shareholder Matters............... Front Cover Page, Description of
Securities
21. Executive Compensation................................................. Management
22. Financial Statements................................................... Financial Statements
23. Changes in and Disagreements with Accounts on Accounting and Financial Change in Accountants
Disclosure...........................................................
</TABLE>
- ------------
* Not Applicable
<PAGE>
<PAGE>
EXPLANATION NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering of 550,000 Units (the 'Offering
Prospectus'), and one to be used in connection with the sale of (i) 375,000
Bridge Units by certain note holders and (ii) 750,000 shares of Common Stock by
the President of the Company (the 'Selling Securityholders' Prospectus'). The
offering Prospectus and the Selling Securityholders' Prospectus will be
identical in all respects except for the alternate pages for the Selling
Securityholders' Prospectus included herein which are labeled 'Alternate Page
for Selling Securityholders' Prospectus.'
<PAGE>
<PAGE>
PRELIMINARY PROSPECTUS, DATED: FEBRUARY 4, 1997
SUBJECT TO COMPLETION
ALL COMMUNICATIONS CORPORATION
550,000 UNITS, CONSISTING OF 1,100,000 SHARES OF COMMON STOCK
AND 1,100,000 REDEEMABLE CLASS A WARRANTS
All Communications Corporation (the 'Company') hereby offers 550,000 units
('Units'), each Unit consisting of two shares of Common Stock, no par value per
share ('Common Stock'), and two redeemable Class A Common Stock Purchase
Warrants ('Warrants'). Each Warrant entitles the registered holder thereof to
purchase one share of Common Stock at a price of $4.25 per share, subject to
adjustment, for four years commencing one year from the date of this Prospectus.
The Common Stock and Warrants comprising the Units will be separately
transferable immediately upon issuance. The Company may redeem the Warrants
commencing , 1998 (18 months from the date of the Prospectus), or earlier
with the consent of Monroe Parker Securities, Inc. (the 'Underwriter'), at a
price of $.10 per Warrant, on not less than 30 days' prior written notice, if
the last sale price of the Common Stock has been at least 250% ($10.63 per
share) of the current Warrant exercise price, subject to adjustment, for at
least 20 consecutive trading days ending within three days prior to the date on
which notice of redemption is given. See 'Description of Securities.'
(Cover continued on following page)
------------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE AND SUBSTANTIAL DILUTION AND SHOULD BE CONSIDERED ONLY BY
INVESTORS WHO CAN AFFORD TO SUSTAIN A LOSS OF THEIR ENTIRE INVESTMENT. SEE 'RISK
FACTORS' ON PAGE 7 AND 'DILUTION' ON PAGE 14.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THEY
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) THE COMPANY(2)
<S> <C> <C> <C>
Per Unit..................................................... $7.00 $.70 $6.30
Total(3)................................................ $3,850,000 $385,000 $3,465,000
</TABLE>
(1) Excludes additional compensation to be received by the Underwriter in the
form of (i) options (the 'Underwriter's Options') to purchase 55,000 Units,
exercisable over a period of four years commencing one year from the date of
this Prospectus, at an exercise price equal to 120% of the public offering
price of the Units being offered hereby; (ii) a 3% non-accountable expense
allowance of $115,500 (or $132,825 if the over-allotment option is exercised
in full); and (iii) a two-year consulting agreement pursuant to which the
Underwriter will receive a fee equal to 2% of the gross proceeds of the
offering, payable upon the completion of this offering. The Company has
agreed under certain circumstances to pay the Underwriter a warrant
solicitation fee of 5% of the exercise price received for each warrant
exercised. In addition, the Company and the Underwriter have agreed to
indemnify each other against certain liabilities under the Securities Act of
1933 (the 'Securities Act'). See 'Underwriting.'
(2) Before deducting expenses, including the Underwriter's non-accountable
expense allowance and the consulting fee payable by the Company, estimated
at $450,000 (or $478,875 if the over-allotment option is exercised in full).
(3) The Company has granted to the Underwriter an option, exercisable within 45
days from the date of this Prospectus, to purchase up to an additional
82,500 Units on the same terms solely to cover over-allotments, if any. If
the over-allotment option is exercised in full, the Price to Public,
Underwriting Discounts and Commissions and Proceeds to the Company would be
$4,427,500, $442,750 and $3,984,750 respectively.
------------------------
MONROE PARKER SECURITIES, INC.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
<PAGE>
(cover continued)
Prior to this offering, there has been no public market for the Units,
Common Stock or Warrants. The offering price of the Units and the exercise price
and the terms of the Warrants have been determined by negotiations between the
Company and the Underwriter, and are not necessarily related to net asset value,
projected earnings or other established criteria of value. The Company has
applied for quotation of the Units, Common Stock and Warrants on the Nasdaq
SmallCap Market ('Nasdaq') under the symbols 'ACMNU,' 'ACMN' and 'ACMNW,'
respectively. Application has also been made to list the Units, Common Stock and
Warrants on the Pacific Stock Exchange under the symbols 'CMNU,' 'CMN' and
'CMNW,' respectively. There can be no assurance that an active trading market in
the Company's securities will develop after the completion of this offering, or
be sustained. See 'Underwriting.'
The Registration Statement of which this Prospectus forms a part also
registers up to 375,000 bridge units ('Bridge Units'), each consisting of one
share of Common Stock and one Warrant, on behalf of certain note holders of the
Company (the 'Selling Bridge Unitholders'), and up to 750,000 shares of Common
Stock on behalf of the President of the Company (the 'Selling Stockholder')
which may be sold by them for their accounts from time to time in open market
transactions. The Bridge Units and the Common Stock and Warrants comprising the
Bridge Units are collectively referred to herein as the 'Registered Bridge
Securities.' The Common Stock to be sold by the Selling Stockholder is referred
to herein as the 'Registered Common Stock.' The Registered Bridge Securities
offered by the Selling Bridge Unitholders and the Registered Common Stock
offered by the Selling Stockholder are not part of the underwritten public
offering. The Selling Bridge Unitholders may not sell the Registered Bridge
Securities prior to two years from the date of this Prospectus without the prior
consent of the Underwriter. The Selling Stockholder may not sell the Registered
Common Stock prior to three years from the date of this Prospectus without the
prior consent of the Underwriter.
The Units are being offered on a 'firm commitment' basis by the
Underwriter, subject to prior sale, when, as and if delivered to and accepted by
the Underwriter, and subject to the Underwriter's right to reject orders in
whole or in part, and to the approval of certain legal matters by counsel and
certain other conditions. It is expected that delivery of certificates
representing the Units will be made against payment therefor on or about
, 1997.
The Company intends to furnish its stockholders with annual reports
containing financial statements audited and reported upon by its independent
public accountants after the end of each fiscal year, commencing with its fiscal
year ending December 31, 1997, and will make available such other periodic
reports as the Company may deem to be appropriate or as may be required by law.
The Company has registered the Units, the Common Stock and the Warrants under
the Securities Exchange Act of 1934 (the 'Exchange Act') and, commencing on the
date of this Prospectus, will be subject to the reporting requirements of the
Exchange Act and will file all required information with the Securities and
Exchange Commission (the 'Commission').
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following discussion summarizes certain information contained in this
Prospectus. It does not purport to be complete and is qualified in its entirety
by reference to more detailed information and financial statements, including
the notes thereto, appearing elsewhere in this Prospectus. Unless otherwise
indicated, all share and per share information in this Prospectus (i) gives
effect to the conversion of $750,000 principal amount of 12% Convertible
Subordinated Notes (the 'Bridge Notes') by certain note holders of the Company
(the 'Selling Bridge Unitholders') into 375,000 Bridge Units (the 'Bridge
Units'), each consisting of one share of Common Stock and one Warrant, prior to
the completion of this offering; and (ii) assumes no exercise of (a) the
Underwriter's over-allotment option; (b) the Warrants; (c) the Selling Bridge
Unitholders' Warrants; and (d) the Underwriter's Options. See 'Interim
Financing,' ' Description of Securities' and 'Underwriting.'
THE COMPANY
All Communications Corporation (the 'Company' or 'ACC') is engaged in the
business of selling, installing and servicing voice and videoconferencing
communications systems, concentrating on the commercial and industrial
marketplace. The Company's voice communications products are intended
principally for small to medium-sized business use; its videoconferencing
communications products are intended for use by all business, governmental,
educational and medical entities. In connection with the sale and service of its
products, the Company also markets peripheral data and telecommunications
products obtained from others. Through its headquarters office in Mountainside,
New Jersey and nationwide subcontractors, the Company sells, installs and
upgrades its communication and information distribution products and services.
VOICE COMMUNICATIONS. ACC is a major reseller of Panasonic Communications
and Systems Company's ('Panasonic') digital telephone systems, voice processing
systems and computer telephone integration solutions in the United States. The
Company's principal voice communications products are multi-featured, fully
electronic, digitally controlled key systems and hybrid telephone systems, voice
processing products with computer telephone integration hardware and software
and related business products and services for commercial distribution. A key
telephone system provides each telephone with direct access to multiple outside
trunk lines and internal communications through intercom lines. A PABX (private
automatic branch exchange) system, through a central switching system, permits
the connection of internal and external lines. A hybrid switching system
provides, in a single system, both key telephone and PABX features. Key
telephone equipment may be used with PABX equipment. Voice processing products
include voice-mail and interactive voice response systems, which allow via a
single line instrument, access to computerized information. All of the Company's
systems are software-based and fully digital. This enables the Company to
readily incorporate a variety of additional features as well as the ability to
expand a system's capability through software enhancements.
The Company sells, installs and services Panasonic telecommunications
products throughout the United States both through employees of the Company and
subcontractors. During the fiscal years ended December 31, 1996 and 1995, one
customer, Coldwell Banker'r', a brand of HFS Incorporated, accounted for
approximately 26% and approximately 28%, respectively, of the Company's total
sales. The Company's current business strategy is to focus on sales,
installation and service operations. In connection with implementing its
business strategy, the Company is seeking to expand its business by offering
customers and potential customers a broader range of products.
VIDEOCONFERENCING. The Company began selling Sony Electronics Inc.'s (a
division of Sony Corporation) ('Sony') videoconferencing products in the third
quarter of 1994, and is currently one of Sony's largest United States Sony
Authorized Videoconferencing Resellers (SAVR). Videoconferencing communications
systems, utilizing advanced technology, enable users at separate locations to
engage in face-to-face discussions. In addition to the use of video conferences
as a corporate communications tool, use of videoconferencing communications
systems is expanding into numerous additional applications, including (i)
teachers providing lectures to students at multiple locations, (ii) physicians
engaging in consultations utilizing x-rays and other photographic material,
(iii) conducting multi-location staff
3
<PAGE>
<PAGE>
training programs and (iv) engineers in separate design facilities coordinating
the joint development of products. Sony's videoconferencing systems incorporate
superior audio and data sharing capabilities. The systems expand the user's
ability to conduct business in person while substantially reducing or
eliminating travel costs and non-productive travel time. ACC offers what it
believes to be the only system with the built in ability to connect with four
locations without the use of an external bridge. Videoconferencing communication
is generally considered to be more effective than audio communication, as
information retention is improved when presented visually.
Through a non-exclusive agreement with Sony, ACC provides videoconferencing
systems for United States customers on a global basis, with a concentration in
the Northeastern United States. The Company (i) provides its customers with
components produced by Sony, a leading worldwide manufacturer of room based
videoconferencing equipment, and several other manufacturers of ancillary
equipment, (ii) selects and integrates those components into complete systems
designed to suit each customer's particular communications requirements and
(iii) provides training and other continuing services designed to insure that
its customers fully and efficiently utilize their systems. Sony does not sell
its videoconferencing products on a direct basis.
To accommodate ACC's growth in the videoconferencing market sector, the
Company recently opened offices and demonstration facilities in New York City
and Washington, D.C. The Company has assembled a team of industry experts with
substantial videoconferencing communications expertise and, over the past 18
months, has provided over 35 videoconferencing systems on a national and
international basis. Customers of the Company in this area include Fedders,
Waterford Crystal, Deutche Bank, Shearman & Sterling, The British Ministry of
Defense, St. Johns University, Banco de Columbia and Tetra Pak.
During the fiscal years ended December 31, 1996 and 1995, approximately 72%
and 70%, respectively, of the Company's total sales were attributable to the
sale of voice communications equipment manufactured by Panasonic, and
approximately 27% and 27%, respectively, of the Company's total sales were
attributable to the sale of videoconferencing communications equipment
manufactured by Sony. See 'Business -- Sales and Marketing.'
ACC was organized as a New Jersey corporation on August 16, 1991. Its
executive offices are located at 1450 Route 22 West, Mountainside, New Jersey
07092.
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........................... 550,000 Units, each Unit consisting of two shares of Common Stock
and two redeemable Class A Common Stock Purchase Warrants (the
'Warrants'). The Common Stock and Warrants comprising the Units
will be separately transferable immediately upon issuance. See
'Description of Securities.'
Description of Warrants:
Exercise of Warrants....................... Subject to redemption by the Company, the Warrants may be
exercised at any time during the four-year period commencing one
year from the date of this Prospectus at an exercise price of
$4.25 per share, subject to adjustment.
Redemption of Warrants..................... The Warrants are redeemable by the Company commencing 18 months
from the date of the Prospectus, or earlier with the consent of
the Underwriter, at $.10 per Warrant, on not less than 30 days'
prior written notice, provided that the last sale price of the
Common Stock is at least 250% ($10.63 per share) of the current
Warrant exercise price, subject to adjustment, for at least 20
consecutive trading days ending within three days prior to the
date on which notice of redemption is given. See 'Description of
Securities.'
</TABLE>
4
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Common Stock Outstanding Prior to 3,375,000 shares(1)
Offering(1)................................
Common Stock Outstanding After Offering(1)... 4,475,000 shares(1)
Use of Proceeds.............................. The Company intends to utilize the net proceeds from this
offering, estimated at approximately $3,015,000, for telephone
systems inventory, videoconferencing equipment inventory,
leasing new corporate headquarters and leasehold improvements,
hiring additional employees, the purchase of computer equipment
and associated software, marketing and working capital. See 'Use
of Proceeds.'
Proposed Nasdaq Symbols (2):
Units...................................... ACMNU
Common Stock............................... ACMN
Warrants................................... ACMNW
Proposed Pacific Stock Exchange Symbols (2):
Units...................................... CMNU
Common Stock............................... CMN
Warrants................................... CMNW
Risk Factors................................. The securities offered hereby are speculative, involve a high
degree of risk and immediate substantial dilution, and should be
considered only by investors who can afford to sustain a loss of
their entire investment. See 'Risk Factors' and 'Dilution.'
</TABLE>
- ------------
(1) Includes 375,000 shares of Common Stock included in the Bridge Units,
assuming the conversion of $750,000 principal amount of Bridge Notes into
375,000 Bridge Units. Does not include an aggregate of 2,025,000 shares
which may be issued upon exercise of (i) the Warrants included in the Units
offered hereby; (ii) the Underwriter's Options and underlying Warrants;
(iii) the Underwriter's over-allotment option and underlying Warrants; and
(iv) the shares underlying the Warrants included in the Bridge Units. See
'Interim Financing,' ' Description of Securities' and 'Underwriting.'
(2) Notwithstanding quotation on Nasdaq and listing on the Pacific Stock
Exchange, there can be no assurance that an active trading market for the
Company's securities will develop or, if developed, will be sustained.
5
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<PAGE>
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Statement of Income Data:
Net revenues........................................................... $3,884,700 $2,641,331
Gross margin........................................................... 1,383,627 859,612
Income from operations................................................. 119,235 48,936
Income before income taxes............................................. 90,209 17,249
Income taxes........................................................... 38,606 8,029
Net income.................................................................. 51,603 9,220
Net income per share...................................................... $.03 $.01
Weighted average number of common shares outstanding........................ 1,977,518 1,884,002
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
---------------------------- -----------------
PRO FORMA
ACTUAL AS ADJUSTED(1)
---------- --------------
<S> <C> <C> <C>
Balance Sheet Data:
Working capital................................. $ 748,250 $3,763,250 $ 52,286
Total assets.................................... 2,083,392 5,098,392 754,640
Total liabilities............................... 1,912,994 1,162,994 673,345
Retained earnings............................... 80,398 80,398 28,795
Stockholders' equity............................ 170,398 3,935,398 81,295
</TABLE>
- ------------
(1) Gives effect to the subsequent conversion of $750,000 principal amount of
Bridge Notes by the Selling Bridge Unitholders into 375,000 Bridge Units and
the sale of the 550,000 Units offered hereby. See 'Use of Proceeds,'
'Interim Financing' and 'Description of Securities.'
6
<PAGE>
<PAGE>
RISK FACTORS
The securities offered hereby are speculative in nature and involve a high
degree of risk. Accordingly, in analyzing an investment in these securities,
prospective investors should carefully consider, along with other matters
referred to herein, the following risk factors.
LIMITED HISTORY OF PROFITABLE OPERATIONS. The Company has operated only
since August 1991, and generated net income of $51,603 and $9,220 for the fiscal
years ended December 31, 1996 and 1995, respectively. Although the Company has
achieved revenue growth and profitability during the past two fiscal years,
there can be no assurance that such growth can be sustained or that the Company
will remain profitable. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations.' The Company may experience significant
fluctuations in future operating results as a result of a number of factors,
including delays in product enhancements and new product introductions by its
suppliers, market acceptance of new products, and reduction in demand for
existing products as a result of new product introductions by competitors of the
Company's suppliers. Any of these factors could cause quarterly operating
results to vary significantly from prior periods. In addition, the Company's
gross profit percentage may vary significantly depending on the mix of products
and services contributing to revenues in any period.
DEPENDENCE UPON MAJOR CUSTOMER. During the fiscal years ended December 31,
1996 and 1995, one customer, Coldwell Banker'r', a real estate brokerage
franchisor with approximately 2,800 franchise offices and a brand of HFS
Incorporated ('HFS'), accounted for approximately 26% and approximately 28%,
respectively, of the Company's total sales. In December 1996, the Company signed
a non-exclusive Preferred Vendor Agreement ('Agreement') with HFS for a term of
four years expiring December 8, 2000, for the Company to provide telephone and
voice processing systems to the real estate brokerage franchise systems of
Century 21'r', ERA'r' and Coldwell Banker'r', with an aggregate of approximately
9,000 United States franchise offices. The Company expects to continue to sell
its telephone and voice processing systems to Coldwell Banker franchisees as
well as to franchisees of Century 21 and ERA pursuant to the Agreement. It is
expected that sales to Coldwell Banker will continue to be substantial; however,
in view of the Agreement and the anticipated expansion of the Company's
business, it is expected that sales to Coldwell Banker as a percentage of total
sales will decrease. It is, however, anticipated that sales to HFS franchisees,
including Century 21, ERA and Coldwell Banker, will, in the foreseeable future,
account for a substantial portion of the Company's total sales. Any significant
reductions in sales to Coldwell Banker franchisees, or the failure to generate
significant sales to Century 21 and/or ERA franchisees would have an adverse
impact on the Company's total revenues and profitability in the future. See
'Business -- Customers.'
DEPENDENCE ON SUPPLIERS. During the fiscal years ended December 31, 1996
and 1995, approximately 72% and 70%, respectively, of the Company's total sales
were attributable to the sale of voice communications equipment manufactured by
Panasonic Communications & System Company ('Panasonic'), and approximately 27%
and 27%, respectively, of the Company's total sales were attributable to the
sale of videoconferencing communications equipment manufactured by Sony
Electronics Inc. ('Sony'). Termination or change of the Company's business
relationship with Panasonic and/or Sony, disruption of supply, their failure to
remain competitive in quality, function or price, or the determination of either
Panasonic or Sony to reduce reliance on independent distributors such as the
Company could have a material adverse effect on the Company. See
'Business -- Sales and Marketing.'
The Company has agreements with both Panasonic and Sony authorizing the
Company to serve as their non-exclusive reseller in the United States. The
agreement with Panasonic expires on December 31, 1997 and is automatically
renewable for successive one-year terms unless terminated by either party upon
at least 30 days' prior written notice. The agreement with Sony, which expires
on March 31, 1997, may be terminated by either party upon 60 days' prior written
notice. The Company expects to sign a new one year agreement with Sony upon the
expiration of the present term. There can be no assurance that either agreement
will not be terminated, or that the Company will enter into a new agreement with
Sony at the expiration of the term of the existing agreement. While there are
other suppliers of voice and videoconferencing communications equipment who
provide products similar to those which the Company purchases from Panasonic and
Sony, respectively, termination of the
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Company's relationship with either or both of these suppliers could have a
material adverse effect on the Company. See 'Business -- Reseller Agreements.'
DEPENDENCE ON PROCEEDS OF THIS OFFERING; POSSIBLE NEED FOR ADDITIONAL
FINANCING. The Company is dependent on the proceeds of this offering to generate
cash for the expansion of its product lines and marketing efforts. The Company
anticipates, based on its proposed plans, that the proceeds of this offering,
together with funds generated from operations, will be sufficient to satisfy its
anticipated cash requirements for approximately two years following the
completion of this offering. In the event that the costs involved in the
development of its expanded operations prove to be greater than anticipated,
additional financing may be required. The Company expects to satisfy any
additional capital requirements with proceeds, if any, from the exercise of
Warrants, or through debt and/or equity financing. The Company has no current
arrangement with respect to such additional financing and there can be no
assurance that such financing, if available, will be on terms acceptable to the
Company. See 'Use of Proceeds' and 'Business.'
DILUTION. A purchaser of Common Stock in this offering will experience an
immediate and substantial dilution of $2.64 (75%) per share between the pro
forma net tangible book value per share after the offering and the public
offering price of $3.50 per share (assuming no value is attributed to the
Warrants). See 'Dilution.'
CONTINUED CONTROL BY MANAGEMENT. Upon completion of this offering (assuming
the conversion of $750,000 principal amount of Bridge Notes into 375,000 Bridge
Units), the officers and directors of the Company will beneficially own
approximately 62.5% of the Company's outstanding Common Stock. The Company's
stockholders do not have the right to cumulative voting in the election of
directors. Accordingly, such individuals will be in a position to effectively
control the Company, including the election of all of the directors of the
Company. See 'Management' and 'Principal Stockholders.'
STAGGERED BOARD OF DIRECTORS. In December 1996, the stockholders of the
Company approved an amendment to the Company's By-Laws dividing the Board of
Directors into three classes, each of which shall serve for a staggered term of
three years. Such division of the Company's Board of Directors could have the
effect of impeding an attempt to take over the Company or change or remove
management, since only one class will be elected annually. Thus, only
approximately one-third of the existing Board of Directors could be replaced at
any election of directors. See 'Management.'
COMPETITION. The audio and videoconferencing communications industries have
been characterized by pricing pressures and business consolidations. The Company
competes with other manufacturers and distributors of voice communications and
videoconferencing systems, many of which are larger, have greater recognition in
the industry, a longer operating history and greater financial resources than
the Company. The Company's competitors in the voice communications sector
include Lucent Technologies, Inc., Northern Telecom and Toshiba. ACC's
competitors in the video communications sector include Picturetel Corporation,
Compression Labs, Incorporated and VTEL Corporation. Existing competitors may
continue to broaden their product lines and expand their retail operations, and
potential competitors may enter into or increase their focus on the audio and/or
videoconferencing communications market, resulting in greater competition for
the Company. In particular, management believes that as the demand for
videoconferencing communications systems continues to increase, additional
competitors, many of which also will have greater resources than the Company,
will enter the videoconferencing market. Consequently, there can be no assurance
that the Company can successfully compete with established and better
capitalized companies. See 'Business -- Competition.'
DEPENDENCE ON KEY PERSONNEL. The Company is highly dependent on the
experience of its management in the continuing development of its retail
operations. The loss of the services of certain of these individuals,
particularly Richard Reiss, Chairman of the Board, Chief Executive Officer and
President of the Company, would have a material adverse effect on the Company's
business. The Company has entered into employment agreements with Mr. Reiss,
Joseph Scotti, Vice President - Sales and Marketing of Voice Products and Leo
Flotron, Vice President - Sales and Marketing of Videoconferencing Products of
the Company. Mr. Reiss' agreement expires on December 31, 2001, and Messrs.
Scotti and Flotron's agreements expire on December 31, 1999. Each of such
agreements may be terminated by the employee upon 90 days' prior written notice
without penalty, subject to a one year non-compete clause. The Company is in the
process of obtaining key-man life insurance in the amount
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of $1,000,000 on the life of Mr. Reiss, with the Company as the named
beneficiary. The future success of the Company will also depend upon its ability
to attract and retain additional marketing and sales personnel for its
expansion. The Company has set aside approximately $350,000 from the net
proceeds of the offering for such purpose. The Company faces intense competition
for such highly qualified personnel from other manufacturers and distributors of
voice communications and videoconferencing systems. There can be no assurance
that such individuals can be hired or retained. The failure to recruit
additional key personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. See 'Use of Proceeds'
and 'Management.'
BROAD DISCRETION IN APPLICATION OF PROCEEDS BY MANAGEMENT; CHANGE IN USE OF
PROCEEDS. Approximately $1,415,000 (46.9%) of the estimated net proceeds of this
offering (including up to $750,000 to be utilized to repay Bridge Notes to the
extent that they are not converted into Bridge Units) has been allocated to
working capital. Additionally, in the event that the Underwriter's over-
allotment option is exercised or to the extent that the Warrants are exercised,
the Company will realize additional net proceeds, which will be added to working
capital. Accordingly, the Company's management will have broad discretion as to
the application of such proceeds. Notwithstanding its plan to develop its
business as described in this Prospectus, future events, including the problems,
expenses, difficulties, complications and delays frequently encountered by
businesses, as well as changes in the economic climate or changes in government
regulations, may make the reallocation of funds necessary or desirable. Any such
reallocation will be at the discretion of the Board of Directors. See 'Use of
Proceeds.'
NO PUBLIC MARKET. Prior to this offering, there has been no public market
for the Units, Common Stock or Warrants. Accordingly, there can be no assurance
that an active trading market in any of such securities will develop and be
sustained upon the completion of this offering or that the market price of such
securities will not decline below the initial public offering price.
ARBITRARY OFFERING PRICE. The initial public offering price of the Units
and the exercise price and terms of the Warrants have been determined by
negotiations between the Company and the Underwriter. See 'Underwriting' for a
discussion of the factors considered in determining the initial public offering
price. Regulatory developments and economic and other external factors, as well
as period-to-period fluctuations in financial results, may also have a
significant impact on the market price of such securities.
POSSIBLE RESTRICTIONS ON MARKET-MAKING ACTIVITIES IN COMPANY'S SECURITIES.
The Underwriter has advised the Company that it intends to make a market in the
Company's securities. Regulation M, which was recently adopted to replace Rule
10b-6 and certain other rules promulgated under the Securities Exchange Act of
1934, as amended (the 'Exchange Act'), may prohibit the Underwriter from
engaging in any market-making activities with regard to the Company's securities
for the period from five business days (or such other applicable period as
Regulation M may provide) prior to any solicitation by the Underwriter of the
exercise of Warrants until the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right that the
Underwriter may have to receive a fee for the exercise of Warrants following
such solicitation. As a result, the Underwriter may be unable to provide a
market for the Company's securities during certain periods while the Warrants
are exercisable. In addition, under applicable rules and regulations under the
Exchange Act, any person engaged in the distribution of the Selling
Securityholders' securities may not simultaneously engage in market-making
activities with respect to any securities of the Company for the applicable
'cooling off' period (currently at least two and possibly nine business days)
prior to the commencement of such distribution. Accordingly, in the event the
Underwriter is engaged in a distribution of the Selling Securityholders'
securities, it will not be able to make a market in the Company's securities
during the applicable restrictive period. Any temporary cessation of such
market-making activities could have an adverse effect on the market price of the
Company's securities. See 'Underwriting.'
UNDERWRITER'S OPTIONS. The Company has agreed to sell to the Underwriter,
at an aggregate price of $55, the right to purchase up to an aggregate of 55,000
Units (the 'Underwriter's Options'). Such Options will be exercisable for a
four-year period commencing one year after the date of the Prospectus, at a per
Unit exercise price equal to 120% of the initial per Unit public offering price
of the
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<PAGE>
Units being offered hereby. For the life of such Options, the holders thereof
are given the opportunity to profit from a rise in the market price of the
Common Stock or Warrants, which may result in a dilution of the interests of
other stockholders. As a result, the Company may find it more difficult to raise
additional equity capital if it should be needed for its business while such
Options are outstanding. See 'Underwriting.'
EFFECT OF ISSUANCE OF COMMON STOCK UPON EXERCISE OF WARRANTS; POSSIBLE
ISSUANCE OF OPTIONS. Immediately after the completion of this offering, assuming
full exercise of the Underwriter's over-allotment option and the conversion of
$750,000 principal amount of Bridge Notes into 375,000 Bridge Units, the Company
will have outstanding warrants to purchase an aggregate of up to 1,640,000
shares of Common Stock, including the shares issuable upon exercise of the
Warrants offered hereby, the Warrants underlying the Bridge Units and the
Warrants underlying the Underwriter's Options. In addition, up to 500,000 shares
of Common Stock have been reserved for issuance pursuant to the Company's Stock
Option Plan, none of which have been granted to date. Unless registered for
sale, any shares of Common Stock acquired upon the exercise of such warrants or
options would be 'restricted securities' for purposes of Rule 144, subject to
the two-year holding period (which commences when shares are issued upon
exercise of a warrant or option), volume and other resale restrictions of Rule
144. The Company has agreed to use its best efforts to file and maintain, so
long as the Warrants are exercisable, a current registration statement with the
Commission relating to the Warrants and the shares of Common Stock underlying
the Warrants. In addition, the Underwriter has certain demand and 'piggyback'
registration rights with respect to the securities underlying the Underwriter's
Options.
The exercise of such warrants or options and the sale of the underlying
shares of Common Stock (or even the potential exercise or sale) may have a
depressive effect on the market price of the Company's securities. The exercise
of the warrants and options also may dilute the interest of investors in this
offering. Moreover, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected because the holders of the
outstanding warrants and options can be expected to exercise them, to the extent
they are able to, at a time when the Company would, in all likelihood, be able
to obtain any needed capital on terms more favorable to the Company than those
provided in the warrants and options. See 'Management -- Stock Option Plan,'
'Description of Securities -- Class A Warrants' and 'Underwriting.'
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF THE WARRANTS. The Warrants may be
redeemed by the Company commencing 18 months from the date of this Prospectus,
or earlier with the consent of the Underwriter, at a redemption price of $.10
per Warrant upon not less than 30 days' prior written notice provided the last
sale price of the Common Stock on Nasdaq (or another national securities
exchange), for 20 consecutive trading days ending within three days of the
notice of redemption, equals or exceeds 250% ($10.63 per share) of the current
Warrant exercise price, subject to adjustment. Redemption of the Warrants could
force the holders to exercise the Warrants and pay the exercise price at a time
when it may be disadvantageous for the holders to do so, sell the Warrants at
the then current market price when they might otherwise wish to hold the
Warrants, or to accept the redemption price, which is likely to be substantially
less than the market value of the Warrants at the time of redemption. See
'Description of Securities -- Class A Warrants.'
UNDERWRITER'S LIMITED UNDERWRITING EXPERIENCE. The Underwriter has been
actively engaged in the securities brokerage and investment banking business
since 1994. However, the Underwriter has engaged in only limited underwriting
activities, and this offering is only the fifth public offering in which the
Underwriter has acted as the sole or managing Underwriter. There can be no
assurance that the Underwriter's limited experience as an underwriter of public
offerings will not adversely affect the proposed public offering of the Units,
Common Stock and Warrants, the subsequent development of a trading market, if
any, or the market for and liquidity of the Company's securities. Therefore,
purchasers of the securities offered hereby may suffer a lack of liquidity in
their investment or a material diminution of the value of their investment.
UNDERWRITER'S INFLUENCE ON THE MARKET. A significant amount of the Units
offered may be sold to customers of the Underwriter. Such customers subsequently
may engage in transactions for the sale or purchase of such Units and may
otherwise effect transactions in such securities. If they participate in the
market, the Underwriter may exert substantial influence on the market, if one
develops, for the Units,
10
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<PAGE>
Common Stock and Warrants. Such market-making activity may be discontinued at
any time. The price and liquidity of the Units, Common Stock and Warrants may be
significantly affected by the degree, if any, of the Underwriter's participation
in such market. See 'Underwriting.'
QUALIFICATION AND MAINTENANCE REQUIREMENTS FOR LISTING ON THE NASDAQ
SMALLCAP MARKET. In order for the Company's securities to be included in the
Nasdaq SmallCap Market ('Nasdaq'), the Company must, after giving effect to the
completion of this offering, have a net worth of at least $2,000,000 and total
assets of at least $4,000,000. While the Company's Units, Common Stock and
Warrants are expected to meet the current Nasdaq listing requirements upon
completion of this offering and be initially included on Nasdaq, there can be no
assurance that the Company will meet the criteria for continued listing.
Continued inclusion on Nasdaq generally requires that (i) the Company maintain
at least $2,000,000 in total assets and $1,000,000 in capital and surplus, (ii)
the minimum bid price of the Common Stock be $1.00 per share, (iii) there be at
least 100,000 shares in the public float valued at $200,000 or more, (iv) the
Common Stock have at least two active market makers, and (v) the Common Stock be
held by at least 300 holders.
Nasdaq has recently proposed more stringent financial requirements for
listing on Nasdaq. With respect to continued listing, such new requirements are
(i) either at least $2,000,000 in tangible assets, a $35,000,000 market
capitalization or net income of at least $500,000 in two of the three prior
years, (ii) at least 500,000 shares in the public float valued at $1,000,000 or
more, (iii) a minimum Common Stock bid price of $1.00, (iv) at least two active
market makers, and (v) at least 300 holders of Common Stock. If adopted, the
Company will have to meet and maintain such new requirements. If the Company is
unable to satisfy Nasdaq's maintenance requirements, its securities may be
delisted from Nasdaq. In such event, trading, if any, in the Units, Common Stock
and Warrants would thereafter be conducted in the over-the-counter market in the
so-called 'pink sheets' or the NASD's 'Electronic Bulletin Board.' Consequently,
the liquidity of the Company's securities could be impaired, not only in the
number of securities which could be bought and sold, but also through delays in
the timing of transactions, reduction in security analysts' and the news media's
coverage of the Company and lower prices for the Company's securities than might
otherwise be attained.
RISKS OF LOW-PRICED STOCK. If the Company's securities were delisted from
Nasdaq (see 'Qualification and Maintenance Requirements for Listing on the
Nasdaq SmallCap Market'), they could become subject to Rule 15g-9 under the
Exchange Act, which imposes additional sales practice requirements on
broker-dealers which sell such securities to persons other than established
customers and 'accredited investors' (generally, individuals with net worths in
excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together
with their spouses). For transactions covered by this rule, a broker-dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, such
rule may adversely affect the ability of broker-dealers to sell the Company's
securities and may adversely affect the ability of purchasers in this offering
to sell in the secondary market any of the securities acquired hereby.
Commission regulations define a 'penny stock' to be any non-Nasdaq equity
security that has a market price (as therein defined) of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the Commission relating to the penny stock
market. Disclosure is also required to be made about commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks.
The foregoing required penny stock restrictions will not apply to the
Company's securities if such securities are listed on Nasdaq and have certain
price and volume information provided on a current and continuing basis or meet
certain minimum net tangible assets or average revenue criteria. There can be no
assurance that the Company's securities will qualify for exemption from these
restrictions. In any event, even if the Company's securities were exempt from
such restrictions, it would remain subject to Section 15(b)(6) of the Exchange
Act, which gives the Commission the authority to prohibit any person that is
engaged in unlawful conduct while participating in a distribution of a penny
stock from associating with a broker-dealer or participating in a distribution
of a penny stock, if the Commission
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finds that such a restriction would be in the public interest. If the Company's
securities were subject to the rules on penny stock, the market liquidity for
the Company's securities could be severely adversely affected. In such event,
the regulations on penny stocks could limit the ability of broker-dealers to
sell the Company's securities and thus the ability of purchasers of the
Company's securities to sell their securities in the secondary market.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS.
The Warrants are being registered pursuant to a Registration Statement filed
with the Securities and Exchange Commission ('Commission') under the Securities
Act of 1933 (the 'Securities Act'), of which this Prospectus is a part, and
after its effectiveness the Warrants may be traded, and upon exercise, their
underlying shares of Common Stock may be sold, in the public market that may
develop for the securities for approximately one year thereafter. However,
unless such Registration Statement is kept current by the Company and measures
to qualify or keep qualified such securities in certain states are taken,
investors purchasing the Warrants in this offering, although exercisable, will
not be able to exercise the Warrants or sell its underlying shares of Common
Stock issuable upon exercise of the Warrants in the public market. The Company
has agreed to use its best efforts to qualify and maintain a current
registration statement covering such shares of Common Stock. There can be no
assurance, however, that the Company will be able to maintain a current
registration statement or to effect appropriate qualifications under applicable
state securities laws, the failure of which may result in the exercise of the
Warrants and the resale or other disposition of Common Stock issued, upon such
exercise, being unlawful. See 'Description of Securities -- Class A Warrants.'
POTENTIAL ADVERSE IMPACT OF PREFERRED STOCK ON RIGHTS OF HOLDERS OF COMMON
STOCK. The Company's Certificate of Incorporation authorizes the issuance of up
to 1,000,000 shares of preferred stock with the Board of Directors having the
right to determine the designations, rights, preferences and privileges of the
holders of one or more series of preferred stock. Accordingly, the Board of
Directors is empowered, without shareholder approval, to issue preferred stock
with voting, dividend, conversion, liquidation or other rights which could
adversely affect the voting power and equity interest of the holders of Common
Stock. The preferred stock, which could be issued with the right to more than
one vote per share, could be utilized as a method of discouraging, delaying or
preventing a change of control of the Company. The possible impact on takeover
attempts could adversely affect the price of the Company's Common Stock. The
Company has no current plans to issue any shares of preferred stock. In
addition, for a period of three years from the date of this Prospectus, the
issuance of any shares of preferred stock is subject to the Underwriter's prior
consent. See 'Description of Securities -- Preferred Stock.'
LACK OF DIVIDENDS. To date, the Company has not paid any dividends on its
Common Stock, and intends to retain earnings, if any, for use in its business
and does not anticipate paying any cash dividends in the foreseeable future. See
'Dividend Policy.'
SHARES ELIGIBLE FOR FUTURE SALE. Upon the completion of this offering, the
Company will have 4,475,000 shares of Common Stock outstanding (assuming an
aggregate of $750,000 principal amount of Bridge Notes are converted into
375,000 Bridge Units), including 1,100,000 shares included in the 550,000 Units
offered hereby by the Company, and 375,000 shares comprising a portion of the
Bridge Units and 750,000 shares of Registered Common Stock which are included in
the Registration Statement of which this Prospectus forms a part. The remaining
2,250,000 shares of Common Stock currently outstanding are 'restricted
securities' as that term is defined in Rule 144 under the Securities Act, and
may not be sold unless such sale is registered under the Securities Act or is
made pursuant to an exemption from registration under the Securities Act,
including the exemption provided by Rule 144. Such shares will be eligible for
sale in the public market pursuant to Rule 144 at various times beginning 90
days after the date of this Prospectus, subject to the three-year lock-up
described below. The 375,000 shares of Common Stock and the 375,000 shares
underlying the 375,000 Warrants comprising the Bridge Units may not be sold
until two years following the date of this Prospectus without the prior consent
of the Underwriter. The holders of all of the 3,000,000 shares of the Company's
Common Stock currently outstanding (including the 750,000 shares of Registered
Common Stock held by the President) have agreed that for a period of three years
from the date of this Prospectus they will not sell any of their shares, or any
shares issuable upon exercise of warrants or options exercisable into shares of
Common
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Stock, without the prior consent of the Underwriter. The Company is unable to
predict the effect that sales made under Rule 144 or otherwise may have on the
market price of the Common Stock. However, the possibility that substantial
amounts of Common Stock may be sold in the public market may have an adverse
effect on the market price for the Company's Common Stock. See 'Description of
Securities,' 'Shares Eligible for Future Sale' and 'Underwriting.'
INDEMNIFICATION OF DIRECTORS UNDER NEW JERSEY LAW. Pursuant to both the
Company's Certificate of Incorporation and New Jersey law the Company's officers
and directors are indemnified by the Company for monetary damages for breach of
fiduciary duty, except for liability which arises in connection with (i) a
breach of duty or loyalty, (ii) acts or omissions not made in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
dividend payments or stock repurchases illegal under New Jersey law, or (iv) any
transaction in which the officer or director derived an improper personal
benefit. The Company's Certificate of Incorporation does not have any effect on
the availability of equitable remedies (such as an injunction or rescissions)
for breach of fiduciary duty. However, as a practical matter, equitable remedies
may not be available in particular circumstances. See 'Management -- Director
and Officer Liability.'
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DILUTION
For purposes of the following discussion of dilution and tables, no value
is attributed to the Warrants included in the Units. After giving effect to the
subsequent conversion of $750,000 principal amount of Bridge Notes by the
Selling Bridge Unitholders into 375,000 Bridge Units, the pro forma net tangible
book value of the Company as of December 31, 1996 was $822,492 or $.24 per
share. Pro forma net tangible book value per share is determined by dividing the
tangible net worth of the Company, consisting of tangible assets (exclusive of
capitalized public offering expenses) less total liabilities, by the number of
shares of Common Stock outstanding. After giving effect to the sale by the
Company of the 1,100,000 shares of Common Stock included in the 550,000 Units
offered pursuant to this Prospectus at the initial public offering price of
$3.50, and the receipt of the net proceeds therefrom the pro forma net tangible
book value of the Company at December 31, 1996 would be $3,837,492 or $.86 per
share, representing an immediate increase in net tangible book value of $.62 per
share to present stockholders and an immediate dilution of $2.64 per share or
approximately 75%, to public investors. 'Dilution' means the difference between
the public offering price per share and the pro forma net tangible book value
per share after giving effect to the offering. The following table illustrates
the dilution of a new investor's equity as of December 31, 1996.
<TABLE>
<S> <C> <C>
Public offering price per share......................................................... $3.50
Pro forma net tangible book value per share before offering........................ $.24
Increase per share attributable to public investors................................ .62
----
Pro Forma net tangible book value per share after offering.............................. .86
-----
Dilution to public investors............................................................ $2.64
-----
-----
</TABLE>
The following table summarizes, (i) as of the date of this Prospectus, the
number of shares of Common Stock purchased by investors in the Company; (ii) the
375,000 shares of Common Stock included in the 375,000 Bridge Units to be issued
to the Selling Bridge Unitholders upon the conversion of $750,000 principal
amount of Bridge Notes prior to the completion of this offering; (iii) the total
cash consideration and the average price per share paid to the Company for the
Common Stock outstanding prior to the completion of this offering; and (iv) the
number of shares and consideration to be paid by the public investors for the
1,100,000 shares of Common Stock included in the 55,000 Units to be sold in this
offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- --------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Stockholders................... 3,000,000(1) 67.0% $ 90,000 1.9% $ .03
---------
---------
Selling Bridge Unitholders.............. 375,000(2) 8.4 750,000 16.0 $2.00
---------
---------
Public Investors........................ 1,100,000 24.6 3,850,000 82.1 $3.50
--------- ------- ---------- ------- ---------
---------
Total(1)...................... 4,475,000 100.0% $4,690,000 100.0%
--------- ------- ---------- -------
--------- ------- ---------- -------
</TABLE>
- ------------
(1) Excludes (i) up to 1,100,000 shares of Common Stock issuable upon exercise
of Warrants to be issued to public investors; (ii) up to 220,000 shares of
Common Stock issuable upon exercise of the Underwriter's Options and
underlying Warrants; (iii) up to 330,000 shares of Common Stock issuable
upon exercise of the Underwriter's over-allotment option and underlying
Warrants; and (iv) up to 500,000 shares of Common Stock reserved for
issuance upon exercise of options granted pursuant to the Company's stock
option plan, of which options to purchase 167,500 shares of Common Stock
have been granted to date. Includes 750,000 shares of Common Stock which are
being registered for sale by this Prospectus on behalf of the President of
the Company. See 'Management-Stock Option Plan,' 'Interim Financing,'
'Description of Securities,' 'Concurrent Offering' and 'Underwriting.'
(2) Excludes up to 375,000 shares of Common Stock issuable upon exercise of the
Selling Bridge Unitholders' Warrants. See 'Interim Financing' and
'Concurrent Offering.'
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USE OF PROCEEDS
The net proceeds to the Company from the sale of the 550,000 Units offered
hereby, after deducting underwriting discounts and commissions and other
expenses of this offering, are estimated to be $3,015,000 ($3,563,625 if the
Underwriter's over-allotment option is exercised in full). The Company intends
to utilize the net proceeds of this offering over the next 24 months
substantially as follows:
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
APPLICATION AMOUNT PERCENTAGE
- --------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Telephone Systems Inventory(1)............................................. $ 400,000 13.3%
Videoconferencing Equipment Inventory(2)................................... 235,000 7.8
Leasing New Corporate Headquarters and Leasehold Improvements(3)........... 240,000 8.0
Hiring Additional Employees(4)............................................. 350,000 11.6
Purchase of Computer Systems and Associated Software(5).................... 175,000 5.8
Marketing(6)............................................................... 200,000 6.6
Working Capital(7)......................................................... 1,415,000 46.9
----------- -----------
$3,015,000 100.0%
----------- -----------
----------- -----------
</TABLE>
- ------------
(1) Includes telephone common equipment ($125,000); telephone sets ($225,000);
and voice mail ($50,000).
(2) Includes video codecs ($110,000); monitors ($50,000); and peripheral
equipment, including cameras and audio systems ($50,000).
(3) Includes costs in connection with moving the Company's headquarters office
to larger facilities in the first half of 1997. It is estimated that such
facilities will contain approximately 10,000 square feet of space to be
utilized for executive, administrative and sales functions and for
demonstration of the Company's voice and video communications systems. An
additional approximately 5,000 square feet of space will be utilized for
warehousing of the Company's inventory. See 'Business -- Facilities.'
(4) Includes costs associated with the planned hiring and retention over the
next two years of two branch sales managers for the Company's voice
products, who will report directly to the Company's Vice President -- Sales
and Marketing of Voice Products; nine voice sales representatives, who will
report directly to the voice branch sales managers; and three
videoconferencing sales representatives, who will report directly to the
Company's Vice President -- Sales and Marketing of Videoconferencing
Products. See 'Business -- Sales and Marketing.'
(5) Includes costs in connection with upgrading both the hardware and software
of the Company's computer systems, software and local area network (LAN).
The new system will encompass service order entry, inventory management,
billing, accounting, word processing and administrative software. Also
includes consulting fees for project design and implementation.
(6) Includes costs in connection with exhibiting the Company's products at trade
shows ($100,000) and costs associated with a direct mail campaign directed
to the approximately 9,000 franchisees of CENTURY 21'r', ERA'r' and Coldwell
Banker'r' ($100,000), as required under the Company's Preferred Vendor
Agreement with HFS Incorporated. See 'Business -- Sales and Marketing.'
(7) Working capital will be used to pay general and administrative expenses and
for general working capital purposes. Also, working capital will be used to
repay the principal amount of the Bridge Notes, to the extent that they are
not converted into Bridge Units. While the aggregate principal amount of the
Bridge Notes totals $750,000, management believes that the portion of the
Bridge Notes that will not be converted into Bridge Units will be minimal.
Accordingly, all remaining funds will be used for general working capital
purposes, including the possible acquisition of other voice and video
communications systems resellers. See 'Interim Financing.'
------------------------
The foregoing allocations are estimates only and are subject to revision
from time to time to meet the Company's requirements; any excess will be added
to working capital and any shortage will be
15
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<PAGE>
deducted from working capital. Furthermore, allocations may be changed in
response to unanticipated developments in the Company's business. The Company
may re-allocate such amounts from time to time among the categories shown above
or to new categories if it believes such to be in its best interest. In the
event that the Underwriter's over-allotment option is exercised or to the extent
that the Warrants are exercised, including the Warrants underlying the Bridge
Units, the Company will realize additional net proceeds, which will be added to
working capital. Pending full utilization of the net proceeds of this offering,
the Company intends to make temporary investments in United States government or
federally insured securities. The Company believes that the net proceeds from
this offering, plus working capital from operations and other sources of funds
will be adequate to sustain operations for the foreseeable future.
16
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at
December 31, 1996; (i) on an historical basis; (ii) on a pro forma basis, giving
effect to the conversion of $750,000 principal amount of Bridge Notes by the
Selling Bridge Unitholders into 375,000 Bridge Units; and (iii) on such pro
forma basis, after giving effect to the issuance and sale of 550,000 offered
hereby. This table should be read in conjunction with the financial statements,
including the notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- --------- -----------
<S> <C> <C> <C>
Long term debt............................................................. $ 816,152(1) $ 66,152 $ 66,152
---------- --------- -----------
Stockholders' equity(2)
Common Stock, no par value, 100,000,000 shares authorized; 3,000,000
shares issued and outstanding, actual; 3,375,000 shares issued and
outstanding, pro forma; 4,475,000 shares issued and outstanding, pro
forma as adjusted................................................... 90,000 840,000 3,855,000
Retained earnings..................................................... 80,398 80,398 80,398
---------- --------- -----------
Total stockholders' equity.................................. 170,398 920,398 3,935,398
---------- --------- -----------
Total capitalization........................................ $ 986,550 $986,550 $4,001,550
---------- --------- -----------
---------- --------- -----------
</TABLE>
- ------------
(1) Includes an aggregate of $750,000 principal amount of 12% Convertible
Subordinated Notes ('Bridge Notes') which were issued by the Company
in the Bridge Financing which was completed in December 1996. See 'Interim
Financing.'
(2) Does not include (i) up to 1,100,000 shares of Common Stock issuable upon
exercise of Warrants to be issued to public investors; (ii) up to 375,000
shares of Common Stock issuable upon exercise of the Selling Bridge
Unitholders' Warrants; (iii) up to 220,000 shares of Common Stock issuable
upon exercise of the Underwriter's Options and underlying Warrants; (iv) up
to 330,000 shares of Common Stock issuable upon exercise of the
Underwriter's over-allotment option and underlying Warrants; and (v) up to
500,000 shares of Common Stock reserved for issuance upon exercise of
options granted pursuant to the Company's stock option plan, of which
options to purchase 167,500 shares of Common Stock have been granted to
date. See 'Management -- Stock Option Plan,' 'Interim Financing,'
'Description of Securities,' and 'Underwriting.'
DIVIDEND POLICY
The Company has never paid any cash dividends on its Common Stock and it is
currently the intention of the Company not to pay cash dividends on its Common
Stock in the foreseeable future. Management intends to reinvest earnings, if
any, in the expansion of the Company's business. Any future declaration of cash
dividends will be at the discretion of the Board of Directors and will depend
upon the earnings, capital requirements and financial position of the Company,
general economic conditions and other pertinent factors.
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<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected historical financial data and other
operation information of the Company. The selected historical financial data in
the table for the years ended December 31, 1996 and 1995 is derived from the
audited financial statements of the Company. The selected financial data set
forth below should be read in conjunction with the Company's financial
statements and notes thereto and with the section entitled 'Management's
Discussion and Analysis of Financial Condition and Results of Operations.'
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Statement of Income Data:
Net revenues..................................................................... $3,884,700 $2,641,331
Gross margin..................................................................... 1,383,627 859,612
Income from operations........................................................... 119,235 48,936
Income before income taxes....................................................... 90,209 17,249
Income taxes..................................................................... 38,606 8,029
Net income....................................................................... 51,603 9,220
Net income per share............................................................. $.03 $.01
Weighted average number of common shares outstanding............................. 1,977,518 1,884,002
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------- DECEMBER 31,
ACTUAL PRO FORMA(1) 1995
---------- ------------ ------------
<S> <C> <C> <C>
Balance Sheet Data:
Working capital................................................. $ 748,250 $3,763,250 $ 52,286
Total assets.................................................... 2,083,392 5,098,392 754,640
Total liabilities............................................... 1,912,994 1,162,994 673,345
Retained earnings............................................... 80,398 80,398 28,795
Stockholders' equity............................................ 170,398 3,935,398 81,295
</TABLE>
- ------------
(1) Gives effect to the subsequent conversion of $750,000 principal amount of
Bridge Notes by the Selling Bridge Unitholders into 375,000 Bridge Units.
See 'Use of Proceeds,' 'Interim Financing' and 'Description of Securities.'
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's financial statements and the notes thereto. The discussion of
results, causes and trends should not be construed to imply any conclusion that
such results or trends will necessarily continue in the future.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 ('FISCAL 1996') COMPARED TO YEAR ENDED DECEMBER 31,
1995 ('FISCAL 1995')
NET REVENUES. Since 1995, the Company's revenues have consisted primarily
of sales of Panasonic digital telephone and voice processing systems, and Sony
videoconferencing products. The Panasonic systems are most suited for small to
medium-sized businesses, particularly professional offices. The Company's
videoconferencing revenues to date have been derived principally from the sale
of the Sony Trinicom 5000 model, which is targeted to the large commercial and
institutional user.
Operating revenue for fiscal 1996 was $3,884,700, an increase of
$1,243,369, or 47% over fiscal 1995 revenue of $2,641,331. Sales of telephone
and voice processing equipment increased in 1996 by 53% to $2,807,170 over
fiscal 1995 revenue of $1,837,930. The increase was due in part to the hiring of
additional sales personnel in 1995 and into 1996, including a Vice President in
charge of sales and marketing of voice products in the third quarter of 1995. In
1995, the Company also began marketing Panasonic products to the Coldwell Banker
real estate brokerage network. In January 1996, the Company and Coldwell Banker
Corporation ('CBC'), owner of the Coldwell Banker brand at the time, entered
into a formal agreement in which the Company provided trade discounts and
favorable terms for an exclusive dealership to sell Panasonic telecommunications
systems to CBC's corporate-owned offices. In December 1996, this agreement was
superseded by the signing of a non-exclusive four-year Preferred Vendor
Agreement with the new owner of the Coldwell Banker brand, HFS Incorporated
('HFS'), to provide Panasonic products to the HFS-owned brands, Century 21, ERA,
and Coldwell Banker real estate brokerage franchise systems. The Company has
paid HFS a $50,000 access fee for marketing rights and will pay HFS commissions
ranging from 2% to 13% of gross sales, depending on the products and services
sold. The agreement obligates the Company to provide various sales and marketing
services, and to commit to a fixed price schedule over the four-year term.
Significant increases in Panasonic equipment prices during the HFS contract
period could have a material adverse impact on the Company's results of
operations in the event the Company is not able to pass along the increases to
HFS franchisees. Sales to Coldwell Banker offices accounted for 26% and 28% of
net revenues in fiscal 1996 and 1995, respectively. The Company expects revenues
generated under the HFS agreement to represent a significant portion of total
operating revenues during fiscal 1997.
Sales of videoconferencing systems increased in 1996 by 48% to $1,039,026
over fiscal 1995 revenue of $704,343. The Company's videoconferencing sales
program began in earnest in the fourth quarter of 1995 with the hiring of a
former Sony executive to serve as Vice President in charge of sales and
marketing for videoconferencing and network products. The Company currently has
videoconferencing demonstration facilities in New York City and Washington, D.C.
in addition to its corporate headquarters in New Jersey, and anticipates hiring
additional sales personnel for both videoconferencing and voice communications
products during the first quarter of fiscal 1997.
COST OF REVENUES. Cost of revenues in fiscal 1996 was $2,501,073, or 64% of
net revenues, as compared to $1,781,719, or 67% of net revenues in fiscal 1995.
Cost of revenues consists primarily of net product, installation and customer
training costs. Higher margin sales in fiscal 1996 offset increases in warranty,
depreciation, and compensation costs, to account for the 3% improvement in cost
of revenues as a percentage of net revenues.
Most of the products sold by the Company are purchased under non-exclusive
dealer agreements with Panasonic and Sony. Both agreements specify, among other
things, sales territories, payment terms, purchase quotas and reseller prices.
The Panasonic agreement renews automatically for one-year
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periods, but may be terminated with or without cause by either party upon 30
days' written notice. The Company is presently negotiating a new agreement with
Sony to succeed the current agreement scheduled to expire on March 31, 1997. The
termination of either agreement, or their renewal on less favorable terms than
currently in effect, could have a material adverse impact on the Company's
business.
GROSS MARGIN. Gross margins increased to $1,383,627, or 36% of net revenues
in fiscal 1996, as compared to $859,612, or 33% of net revenues in fiscal 1995.
The improvement was due primarily to a decrease in lower margin Coldwell Banker
sales as a percentage of total net revenues, from 28% in fiscal 1995 to 26% in
fiscal 1996, although the dollar volume of Coldwell Banker sales actually
increased in 1996.
SELLING. Selling expenses, which include sales salaries, commissions, sales
overhead, and marketing costs, increased to $664,786, or 17% of net revenues in
fiscal 1996, as compared to $482,470, or 18% of net revenues in fiscal 1995. The
increase in dollar terms was due primarily to higher compensation costs, which
related to the hiring of new sales executives in the latter part of 1995, and to
the increase in 1996 sales volume. Due to the anticipated increase in sales
executive and staff salaries, as well as higher marketing costs associated with
the HFS contract, the Company expects selling expenses as a percentage of net
revenues to increase at least through the first half of fiscal 1997.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
to $599,606, or 15% of net revenues in fiscal 1996, as compared to $328,206, or
12% of net revenues in fiscal 1995. The increase was due primarily to higher
administrative salaries and fringe benefits, depreciation, and telephone
expenses related to the growth in the Company's operations. The Company is
planning a relocation of its headquarters in 1997 to accommodate its growing
sales staffing, overhead, and inventory storage requirements. Accordingly,
general and administrative expenses, to the extent associated with the
relocation, are expected to increase in fiscal 1997. A new employment agreement
with the Company's president, effective January 1, 1997, will also result in
higher compensation costs (see Notes to Financial Statements).
INCOME TAXES. The Company's provision for income taxes was $38,606, or 43%
of fiscal 1996 income before taxes, as compared to $8,029, or 47% of fiscal 1995
income before income taxes. The exceptionally high income tax rates are due
primarily to the partial nondeductibility of certain marketing costs, which have
caused the Company's income to be taxed at higher than expected marginal rates,
as well as high flat tax rates at the state level.
NET INCOME. The Company generated net income of $51,603, or $.03 per share
and $9,220, or $.01 per share for the fiscal years ended December 31, 1996 and
1995, respectively. The increase in fiscal 1996 was primarily the result of
revenue growth and a slight shift in the Company's revenue mix, which produced
higher gross margins.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Company had working capital of $748,250,
including $645,614 in cash and cash equivalents. Net cash used by operating
activities for the year ended December 31, 1996 was $461,287. Increases in
accounts receivable due to revenue growth in 1996, as well as increases in
inventories to fill the increasing volume of orders on a timely basis, more than
offset cash flows provided by net income, depreciation, and higher accounts
payable and accrued expense levels.
Net cash used by investing activities for fiscal 1996 was $119,846,
consisting of purchases of furniture and equipment totaling $67,346, and the
$50,000 access fee required under the HFS contract.
Net cash provided by financing activities for fiscal 1996 was $1,072,841,
consisting of $750,000 gross proceeds from a private placement of 12%
Convertible Subordinated Notes ('Bridge Notes') in December 1996, borrowings of
$562,071 under a new bank line of credit and term loan, and proceeds of $37,500
from the exercise of Common Stock options, offset by repayments of outstanding
borrowings under a refinanced credit facility, and principal amortization of
long-term debt, totaling $228,824. The Company also paid deferred financing
costs of $15,406 in connection with its private placement, and $32,500 in costs
associated with its proposed public offering.
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In May 1996, the Company replaced its $150,000 bank line of credit and
equipment term loans totaling $92,700 with a new credit facility from another
bank for a $600,000 working capital line of credit and an $85,000 term loan.
Advances under the line of credit bear interest at the rate 1% above the bank's
Alternate Base Rate (ABR), and are due on demand. The term loan provides for
monthly principal payments of $1,770.83 plus interest at the bank's ABR plus
1.25%. Outstanding borrowings are secured by a first lien on the Company's
assets, a $100,000 United States Treasury Bill hypothecated by the Company's
President, and his unconditional personal guarantee. Panasonic has also
subordinated to the bank its security interest in the Company's inventory
purchases.
As of December 1996, borrowings under the line of credit totaled $447,071,
and the balance of the term loan was $72,604. The bank line of credit is
renewable annually. The Company currently expects that it will be able to renew
the line of credit under similar terms upon its maturity.
The Bridge Notes become due and payable together with accrued interest to
the extent not converted, at the earlier of December 31, 1999 or the date the
Company completes an initial public offering of its securities. The Bridge Notes
are convertible into an aggregate of 375,000 Bridge Units at the rate of one
Bridge Unit per $2.00 of principal amount of Bridge Notes. Each Bridge Unit will
consist of one share of the Company's Common Stock and one Warrant. The terms of
the Warrants will be identical to any Warrants sold in this offering. It is
anticipated, but cannot be assured, that the Bridge Unitholders will convert
their Bridge Notes to Bridge Units prior to the completion of this offering.
The Company entered into a letter of intent for a $3.85 million firm
commitment public offering of 550,000 Units, each unit to consist of two shares
of Common Stock and two Class A Redeemable Common Stock Purchase Warrants. The
primary purpose of the offering is to provide funds for the relocation and
expansion of the Company's facilities, the hiring of new employees, the purchase
of additional inventory, and other working capital needs.
Management believes the Company's operations and existing financing sources
will generate sufficient cash flow to satisfy the needs of its current
operations for the next twelve months. However, alternative sources of capital
will be necessary in order for the Company to finance its proposed expansion
plans.
IMPACT OF INFLATION
Inflation has had no material effect on the Company's operations or
financial condition.
SEASONALITY
The Company's results of operations are not significantly affected by
seasonal factors.
BUSINESS
GENERAL
All Communications Corporation (the 'Company' or 'ACC') is engaged in the
business of selling, installing and servicing voice and videoconferencing
communications systems, concentrating on the commercial and industrial
marketplace. The Company's voice communications products are intended
principally for small to medium-sized business use; its videoconferencing
communications products are intended for use by all business, governmental,
educational and medical entities. In connection with the sale and service of its
products, the Company also markets peripheral data and telecommunications
products obtained from others. Through its headquarters office in Mountainside,
New Jersey and nationwide subcontractors, the Company sells, installs and
upgrades its communication and information distribution products and services.
VOICE COMMUNICATIONS. ACC is a major reseller of Panasonic Communications
and Systems Company's ('Panasonic') digital telephone systems, voice processing
systems and computer telephone integration solutions in the United States. The
Company's principal voice communications products are multi-featured, fully
electronic, digitally controlled key systems and hybrid telephone systems, voice
processing products with computer telephone integration hardware and software
and related business products and services for commercial distribution. A key
telephone system provides each telephone
21
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with direct access to multiple outside trunk lines and internal communications
through intercom lines. A PABX (private automatic branch exchange) system,
through a central switching system, permits the connection of internal and
external lines. A hybrid switching system provides, in a single system, both key
telephone and PABX features. Key telephone equipment may be used with PABX
equipment. Voice processing products include voice-mail and interactive voice
response systems, which allow via a single line instrument, access to
computerized information. All of the Company's systems are software-based and
fully digital. This enables the Company to readily incorporate a variety of
additional features as well as the ability to expand a system's capability
through software enhancements.
The Company sells, installs and services Panasonic telecommunications
products throughout the United States both through employees of the Company and
subcontractors. During the fiscal years ended December 31, 1996 and 1995, one
customer, Coldwell Banker'r', a brand of HFS Incorporated, accounted for
approximately 26% and approximately 28%, respectively, of the Company's total
sales. The Company's current business strategy is to focus on sales,
installation and service operations. In connection with implementing its
business strategy, the Company is seeking to expand its business by offering
customers and potential customers a broader range of products.
VIDEOCONFERENCING. The Company began selling Sony Electronics Inc.'s (a
division of Sony Corporation) ('Sony') videoconferencing products in the third
quarter of 1994, and is currently one of Sony's largest United States Sony
Authorized Videoconferencing Resellers (SAVR). Videoconferencing communications
systems, utilizing advanced technology, enable users at separate locations to
engage in face-to-face discussions. In addition to the use of video conferences
as a corporate communications tool, use of videoconferencing communications
systems is expanding into numerous additional applications, including (i)
teachers providing lectures to students at multiple locations, (ii) physicians
engaging in consultations utilizing x-rays and other photographic material,
(iii) conducting multi-location staff training programs and (iv) engineers in
separate design facilities coordinating the joint development of products.
Sony's videoconferencing systems incorporate superior audio and data sharing
capabilities. The systems expand the user's ability to conduct business in
person while substantially reducing or eliminating travel costs and
non-productive travel time. ACC offers what it believes to be the only system
with the built in ability to connect with four locations without the use of an
external bridge. Video communication is generally considered to be more
effective than audio communication, as information retention is improved when
presented visually.
Through a non-exclusive agreement with Sony, ACC provides videoconferencing
systems for United States customers on a global basis, with a concentration in
the Northeastern United States. The Company (i) provides its customers with
components produced by Sony, a leading worldwide manufacturer of room based
videoconferencing equipment, and several other manufacturers of ancillary
equipment, (ii) selects and integrates those components into complete systems
designed to suit each customer's particular communications requirements and
(iii) provides training and other continuing services designed to insure that
its customers fully and efficiently utilize their systems. Sony does not sell
its videoconferencing products on a direct basis.
To accommodate ACC's growth in the videoconferencing market sector, the
Company recently opened offices and demonstration facilities in New York City
and Washington, D.C. The Company has assembled a team of industry experts with
substantial videoconferencing communications expertise and, over the past 18
months, has provided over 35 videoconferencing systems on a national and
international basis. Customers of the Company in this area include Fedders,
Waterford Crystal, Deutche Bank, Shearman & Sterling, The British Ministry of
Defense, St. Johns University, Banco de Columbia and Tetra Pak.
INDUSTRY OVERVIEW
VOICE COMMUNICATIONS. Advances in telecommunications technologies have
facilitated the development of increasingly sophisticated telephone systems and
applications. Telecommunications systems have evolved from simple analog
telephones to sophisticated digital systems and applications. Users increasingly
rely upon a variety of applications, including conference calling,
speakerphones, voice processing and automated attendant, to improve
communications within their organizations and with customers and vendors.
Digital technology has facilitated the integration of computing and
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telecommunications technologies, which has made possible a number of new
applications that further enhance productivity. Examples of these applications
include caller I.D., where a caller's telephone number is displayed on the
telephone, call accounting, which permits accounting for telephone usage and
toll calls, electronic data interchange between customers and vendors and the
use of automatic number identification coupled with 'database look-up,' where
customer information is retrieved automatically from a computerized database
when the customer calls.
Historically, advanced technologies and applications have been initially
introduced in large telecommunications systems. However, small to medium size
businesses and other organizations, as well as small to medium size facilities
of larger organizations, are increasingly requiring and seeking out
telecommunication systems with advanced features and applications at a more
effective price-performance point, in order to improve efficiency and enhance
competitiveness.
As businesses' telecommunications requirements have become more advanced,
the integration of the different parts of a system has become increasingly
difficult. The system integration, service and support capabilities of
telecommunications suppliers have become significant competitive factors. In
order to meet the needs of end users, suppliers have been increasingly required
to develop close relationships with end users.
VIDEOCONFERENCING. Videoconferencing communications entails the
transmission of video and audio signals and computerized data between two or
more locations through a digital telecommunication network. Videoconferencing
communications systems were first introduced in the late 1970s in the form of
specialized dedicated conference rooms outfitted with expensive electronic
equipment and requiring trained operators. Signals were transmitted over
dedicated transmission lines established between fixed locations. Market
acceptance of early systems was limited because of the low quality of the video
output, as well as the high hardware and transmission costs and limited
availability of transmission facilities.
Technological developments in the 1980's resulted in a dramatic increase in
the quality of video communications, as well as a substantial reduction in its
cost. The proliferation of switched digital networks, which transmit digital, as
opposed to analog, signals, eliminated the requirement of dedicated transmission
lines. Advances in data compression and decompression technology, and the
introduction of devices for separating and distributing digital signals over
several channels simultaneously and recombining them after transmission,
resulted in products with substantially improved video and audio quality and
further reduced hardware costs. Competition among telecommunications carriers
during the past decade, together with the expanded use of fiber optic technology
and the development of integrated switched digital networks ('ISDN') have
further contributed to reduced transmission costs.
STRATEGY
The Company resells to end user customers a number of the telecommunication
industry's leading voice-communication and videoconferencing systems and
products through non-exclusive reseller agreements with Panasonic and Sony,
respectively, and is positioned to provide its customers with the installation
and/or integration of the systems and products as well as continued maintenance
and service. The Company believes that continued technological advances in both
the voice communication and videoconferencing industry will result in systems
and products that are readily useful as well as cost effective to a larger
segment of end users. Neither Sony nor Panasonic have developed internal
departments for the direct sale of telecommunication systems, and instead have
chosen to engage resellers such as the Company for the purpose of sales,
marketing, installation and maintenance of their systems and products. The
Company intends to broaden its marketing focus to industries that it believes
will achieve significant benefits through utilization of both voice
communication and videoconferencing systems, and the Company will hold monthly
seminars to introduce the voice communication and videoconferencing systems to
prospective customers. The Company intends to expand its sales activities into
additional geographic markets through the acquisition and establishment of
regional reseller offices and the hiring of additional sales personnel. The
Company also seeks to enhance the sales and services provided to end user
customers in a more efficient and cost effective manner by maintaining an
inventory of readily available voice communication and videoconferencing
systems, and upgrading the Company's internal computerized management system.
See 'Use of Proceeds.'
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PRODUCTS
The Company is a reseller of voice communications products manufactured by
Panasonic Communications and Systems Company's ('Panasonic') Business Telephone
System Division and videoconferencing products manufactured by Sony Electronics
Inc. ('Sony'). The Company has agreements with both Panasonic and Sony
authorizing the Company to serve as their non-exclusive reseller in the United
States and the Company sells, installs and maintains the full line of voice and
videoconferencing products manufactured by these companies.
VOICE COMMUNICATIONS. Panasonic currently manufactures digital key and
hybrid telephone systems under its Digital Business System (DBS) product line
with a maximum capacity of 192 ports. The systems can be configured to have a
maximum of either 64 central office (C.O.) telephone lines and 128 telephone
sets, 56 C.O. telephone lines and 136 telephone sets, or 48 C.O. telephone lines
and 144 telephone sets. The telephone sets can have up to 24 C.O. telephone line
appearances. The telephone sets contain a speaker and microphone in each set for
handsfree intercom conversation and for an optional price of approximately $50
contain a full speakerphone for handsfree conversation on outside lines as well
as intercom. The telephone sets can also have a built-in interactive display for
internal messaging, to measure the length of time of a telephone conversation,
to display the number dialed, or to display the telephone number of the
individual calling into the system where caller identification is part of the
telephone service provided on the lines by the local line service provider.
Panasonic has announced that it intends to release a new system with a
maximum capacity of 576 ports in the fourth quarter of 1997. This new system
will not replace the current DBS product line; it will be positioned as an
enhanced version of the current product line with additional features and
greater capacity.
Panasonic also has manufactured for it, on an original equipment
manufacturer basis, a fully integrated voice processing system. The system
ranges from two to eight voice ports and 30 hours of message storage. The system
has automated attendant features which allow for incoming calls to be answered
electronically and distributed to specific extensions without the use of a
switchboard operator. The system can be interactive with display telephone sets,
which display the number of new messages along with the number of old messages
and allow for one touch commands rather than multiple digit codes to perform
functions of the voice processing system.
The DBS supports several open architecture interfaces that allow external
computers to interact and control the DBS through industry standard interfaces.
The DBS supports an RS-232 system level interface, an RS-232 Hayes based desktop
interface and a Windows Dynamic Data Exchanges (DDE) interface. The Company has
Developer Toolkits available that include the detailed interface specifications,
application notes and development tools to assist third party software
developers to develop vertical market applications for the DBS products. DBS
applications include database look-up (which utilizes caller-ID information to
retrieve customer information automatically from a computerized database),
automated attendant, interactive voice response and call accounting (which
permits the monitoring of telephone usage and toll cost). The Company recently
announced support of the Microsoft Telephone Application Programming Interface
(TAPI) in DBS version 8.0 and support of the Novell Telephony Services
Applications Programming Interface (TSAPI). The DBS is managed through a
Windows-based interface on a PC to facilitate installation, system configuration
and programming.
The Company also sells, installs, and maintains peripheral equipment not
manufactured by Panasonic. The peripheral equipment installed by the Company is
readily available through multiple manufacturers and suppliers.
VIDEOCONFERENCING. Sony manufactures both the Trinicom 5000
videoconferencing system, and the Trinicom 4000 videoconferencing system. Both
systems offer a rollabout design which can be placed into operation quickly and
allows for convenient movement from one conference room to another.
Alternatively, the systems can be installed as permanent fixtures in
custom-built conference rooms designed for specific applications, or distance
learning classrooms which are designed for teachers to provide lectures to
students at multiple locations outfitted with similar videoconferencing
equipment. Both systems generally contain the following components:
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Monitor
The monitor is a television set that is used at each participating
location for viewing persons and objects involved in the communication. The
screen of the monitor generally includes a window or inset, that may be
used to duplicate the image shown by a monitor located at another site, or
to view documents or other graphic images related to the discussion. Some
systems include dual or multiple monitors, providing full-sized
simultaneous views of both graphic images and meeting participants.
Video Camera
The video camera is similar to a camcorder and is generally located on
top of the monitor. The video cameras included in the Company's systems
record full-color images and have pan, tilt, and zoom capabilities. Some
systems include auxiliary video cameras to provide additional camera angles
or to view various locations within a room.
Codec
The coding-decoding device, known as the 'codec,' is the heart of a
video communications system. Because video images have high information
content, their transmission requires significantly greater bandwidth
(capacity) than is required to transmit audio signals or computer data. One
codec converts analog signals into digital signals and compresses the
digital signals, enabling them to be transmitted over conventional and
ubiquitous data networks, while a second codec decompresses and
reconstitutes the signals into their analog form at the receiving location.
The signals transmitted by codecs are bi-directional, enabling each codec
simultaneously to send and receive signals. The compression-decompression
process is accomplished using algorithms, or mathematical formulae, that
are embedded in the codec.
Inverse Multiplexer
Because video signals (even after digital compression) require greater
bandwidth than is available in most telephone lines, an inverse multiplexer
is used to distribute the signals to several lines prior to transmission.
The distributed signals are then simultaneously transmitted over the
different lines, and a receiving inverse multiplexer recombines them to
their original format.
Multi-point Control Unit
A multi-point control unit, known as an 'MCU' or 'bridge,' is a device
that enables more than two videoconferencing locations to participate
simultaneously in a meeting. The Sony Trinicom 5000 has a built-in MCU for
more than two locations and up to four locations. This built-in MCU feature
is exclusive to the Sony Trinicom 5000.
Document Camera
The document camera may be used to display documents, photographs and
small three-dimensional objects in color. Because the document camera
produces 'freeze-frame' images, enhanced resolution of the recorded item is
possible.
Videoscan Converter
The videoscan converter facilitates the transmission of computerized
data.
Keypad
The keypad, one of which is required at each participating location,
is the device used to control the video cameras, monitors and other aspects
of the system.
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Audio Unit
Each participating site has an audio unit which provides
near-high-fidelity audio communications. Up to three audio units can be
installed per site.
The components listed above included in the Company's systems are
purchased from Sony. The Company also purchases ancillary equipment from
other manufacturers and suppliers for specific custom-built conference
rooms and distance learning classrooms.
RESELLER AGREEMENTS
The Company has agreements with Panasonic and Sony authorizing the Company
to serve as their non-exclusive reseller in the United States. The agreement
with Panasonic expires on December 31, 1997 and is automatically renewable for
successive one-year terms unless terminated by either party upon at least 30
days' prior notice, or immediately by Panasonic upon written notice to the
Company if ACC is in default in the performance of its obligations under the
agreement, or upon the bankruptcy or insolvency of ACC. The agreement with Sony,
which expires on March 31, 1997, may be terminated by either party upon 60 days'
prior written notice. Sony may immediately terminate the agreement by giving the
Company notice if the Company defaults in the performance of its obligations
under the agreement which default is not remedied by ACC within 10 days after
notice, or upon the bankruptcy or insolvency of the Company. The Company expects
to sign a new one-year agreement with Sony upon the expiration of the present
term.
CUSTOMERS
During the fiscal years ended December 31, 1996 and 1995, one customer,
Coldwell Banker'r', a real estate brokerage franchisor with approximately 2,800
franchise offices and a brand of HFS Incorporated ('HFS'), accounted for
approximately 26% and approximately 28%, respectively, of the Company's total
sales. In December 1996, the Company signed a non-exclusive Preferred Vendor
Agreement ('Agreement') with HFS for a term of four years expiring December 8,
2000, for the Company to provide telephone and voice processing systems to the
real estate brokerage franchise systems of Century 21'r', ERA'r' and Coldwell
Banker'r' (the 'Franchisees'), with an aggregate of approximately 9,000 United
States franchise offices. Pursuant to the Agreement, HFS has agreed to promote
the Company and its telephone and voice processing products to the Franchisees
and make available to ACC a list containing the names, business addresses and
contact telephone numbers of the Franchisees. The Company will offer its
products, including installation and maintenance service contracts, to the
Franchisees. The sum of $50,000 was paid to HFS in return for HFS providing
access to the Franchisees. HFS is to receive commissions ranging from 2% to 13%
of gross sales, depending on the products and services sold. The Agreement may
not be terminated by either party except for a material breach in the terms of
the Agreement by either party. The breaching party shall be given notice of the
breach and the opportunity to cure such breach within 30 days of the date of
notice (10 days in the case of a default in payment). HFS can also terminate the
Agreement in the event it receives a bona fide written offer from a supplier for
the services provided by ACC under the Agreement at pricing that is at least 5%
less than the pricing provided in the Agreement. Within 15 days of notice of
such offer, ACC may offer HFS the same prices and services offered by such
suppliers. If ACC does not make such offer within 15 days, HFS may terminate the
Agreement upon 30 days notice to the Company.
The Company expects to continue to sell its telephone and voice processing
systems to Coldwell Banker franchisees as well as to franchisees of Century 21
and ERA pursuant to the Agreement. It is expected that sales to Coldwell Banker
will continue to be substantial; however, in view of the Agreement and the
anticipated expansion of the Company's business, it is expected that sales to
Coldwell Banker as a percentage of total sales will decrease. It is, however,
anticipated that sales to the Franchisees will, in the foreseeable future,
account for a substantial portion of the Company's total sales.
To accommodate ACC's growth in the videoconferencing market sector, the
Company recently opened offices and demonstration facilities in New York City
and Washington, D.C. The Company has assembled a team of industry experts with
substantial videoconferencing communications expertise and,
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over the past 18 months, has provided over 35 videoconferencing systems on a
national and international basis. Customers of the Company in this area include
Fedders, Waterford Crystal, Deutche Bank, Shearman & Sterling, The British
Ministry of Defense, St. Johns University, Banco de Columbia and Tetra Pak.
SALES AND MARKETING
The Company maintains a sales and marketing organization supported by
sales, technical and training personnel versed in the specifications and
features of the voice communications and videoconferencing systems sold to
end-user customers. The Company markets both voice communications and
videoconferencing systems through its direct sales force. The Company also
provides training to its sales force to maintain the expertise necessary to
effectively market and promote the systems.
At its own cost and expense, Panasonic furnishes the Company with sales,
advertising and promotional materials for the voice communication and voice
processing systems, which the Company in turn furnishes to its existing
customers and prospective customers in conjunction with sales promotion programs
of Panasonic. The Company maintains up to date systems for demonstration and
promotion to end-user customers and potential end-user customers. The technical
and training personnel attend sales and service training sessions offered by
Panasonic from time to time to enhance their knowledge and expertise in the
sale, installation and maintenance of the systems.
The Company also has a number of programs in place for promoting the
videoconferencing systems manufactured by Sony. Company personnel including
members of the sales and technical departments attend video communications trade
shows. The Company hosts seminars for the purposes of demonstrating
videoconferencing systems to its customers and prospective customers, and to
provide customers the opportunity to learn more about the Company's products and
services. In order to facilitate enhanced marketing and promotion of the
videoconferencing systems the Company has recently opened offices in Washington,
D.C. and New York City. These locations provide the Company with additional
direct sales forces as well as fully functional demonstration facilities to
customers and potential customers.
During the fiscal years ended December 31, 1996 and 1995, approximately 72%
and 70%, respectively, of the Company's total sales were attributable to the
sale of voice communications equipment manufactured by Panasonic, and
approximately 27% and 27%, respectively, of the Company's total sales were
attributable to the sale of videoconferencing communications equipment
manufactured by Sony.
CUSTOMER SERVICE AND SUPPORT
The Company believes that the service and support it provides to customers
is an important factor in the success of its business. The technical expertise
and experience of the Company's management and employees enables it to provide
its customers with a single source for a variety of systems consulting and
maintenance services.
The Company provides customers of both voice communication and video
conferencing systems with a full compliment of services to ensure customer
satisfaction and optimal utilization of the systems. As a preliminary component
of a sale to a customer or prospective customer, the Company provides consulting
services in order to assess the customer's needs and specifications and to
determine the most effective method to achieve those needs. Upon delivery of the
system, Company employees install and test the equipment to make sure the
systems are fully functional. In situations where a customer is located at a
great distance from the Company's offices, the Company, on an as-needed basis,
will engage the services of an installation subcontractor located in close
geographic proximity to the customer, for the installation and testing of
equipment sold by the Company to the customer. The retention of an installation
subcontractor located in close proximity to a customer benefits the customer
through quick and cost-effective installation of the system. After the equipment
is functional, the Company provides training to all levels of the customer's
organization. Training includes instruction in systems operation and, with
respect to videoconferencing systems, planning and administration of meetings.
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Panasonic provides a one year warranty on defects in materials, design and
workmanship. Sony provides a limited warranty card with its systems and
equipment for a one year warranty on parts-replacement. The Company maintains a
24 hour toll-free technical support hotline that customers may call. The Company
also provides onsite support and maintenance which includes the repair and/or
replacement of equipment.
BACKLOG
At December 31, 1996, order backlog amounted to approximately $693,000,
compared with approximately $140,500 at December 31, 1995. The Company's backlog
consists of firm purchase orders by customers for delivery within the next 90
days.
EMPLOYEES, CONSULTANTS AND SUBCONTRACTORS
As of January 15, 1997, the Company employed 17 full-time employees, as
well as a network of consultants and installation subcontractors who are
available on an as-needed basis for marketing support and to provide contract
installation. Seven of the Company's employees are engaged in marketing and
sales, seven in installation service and customer support and three in
administration. None of the Company's employees are represented by a labor
union. The Company believes that its employee relations are good.
COMPETITION
The audio and videoconferencing communications industries have been
characterized by pricing pressures and business consolidations. The Company
competes with other manufacturers and distributors of voice communications and
videoconferencing systems, many of which are larger, have greater recognition in
the industry, a longer operating history and greater financial resources than
the Company. The Company's competitors in the voice communications sector
include Lucent Technologies, Inc., Northern Telecom and Toshiba. ACC's
competitors in the video communications sector include Picturetel Corporation,
Compression Labs, Incorporated and VTEL Corporation. Existing competitors may
continue to broaden their product lines and expand their retail operations, and
potential competitors may enter into or increase their focus on the audio and/or
videoconferencing communications market, resulting in greater competition for
the Company. In particular, management believes that as the demand for
videoconferencing communications systems continues to increase, additional
competitors, many of which also will have greater resources than the Company,
will enter the videoconferencing market. Consequently, there can be no assurance
that the Company can successfully compete with established and better
capitalized companies.
FACILITIES
The Company's headquarter office is located at 1450 Route 22 West,
Mountainside, New Jersey 07092. The approximately 4,200 square feet of office
and warehouse space is leased for a term of five years expiring March 31, 2000.
The total base rental for the premises is $54,360 per annum through May 31, 1997
and, thereafter, $62,280 per annum through May 31, 2000. The Company has the
option to renew the lease for an additional term of three years, at a base
rental of $75,774 per annum, provided the Company is not in default thereof. The
Company is obligated thereunder to pay its proportionate share of escalations in
real estate taxes and cost escalations of operational services as well as its
proportionate share of the cost of electrical consumption.
The Company leases demonstration facilities located at 1130 Connecticut
Avenue, N.W., Washington, D.C. 20036, on a month-to-month basis at a monthly
rental of $2,500. The lease expires on June 30, 1997. The Company also occupies
demonstration facilities at 521 Fifth Avenue, New York, New York 10175 on a
month-to-month basis, at the rate of $1,000 per month.
The Company anticipates moving its headquarters office to larger facilities
in the first half of 1997. It is estimated that such facilities will contain
approximately 10,000 square feet of space to be utilized for executive,
administrative and sales functions and for the demonstration of the Company's
voice and
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video communications systems. An additional approximately 5,000 square feet of
space will be utilized for warehousing of the Company's inventory.
INSURANCE
The Company believes that it maintains adequate liability and property
insurance coverage. There can be no assurance that the coverage will be
sufficient for all future claims or that insurance will continue to be available
in adequate amounts at reasonable rates.
LITIGATION
Other than as described below, there are no pending material legal
proceedings to which the Company or any of its properties is subject.
The Company is the subject of a civil action filed by Samantha M. Figeuroa
on July 23, 1996 in the Superior Court of New Jersey, Middlesex County, arising
from an automobile accident involving a vehicle driven by Ms. Figeuroa and one
of the Company's vans. The Company van was driven by an employee of the Company
who has since left ACC. The ex-employee is also named as a party to the action.
Ms. Figeuroa alleges personal injuries due to the negligence of the named
parties and seeks damages of $5,000,000. The liability insurance carrier is
defending the action on behalf of ACC. The Company believes that its liability
insurance is sufficient to cover any potential loss resulting from an adverse
decision.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the executive
officers and directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Richard Reiss................................ 39 Chairman of the Board, Chief Executive Officer and President
Peter Barrett................................ 38 Vice President -- Operations
Joseph Scotti................................ 35 Vice President -- Sales and Marketing of Voice Products
Leo Flotron.................................. 36 Vice President -- Sales and Marketing of Videoconferencing
Products
Scott Tansey................................. 33 Vice President -- Finance
Robert B. Kroner............................. 67 Director
Eric Friedman................................ 48 Director
Peter N. Maluso.............................. 42 Director
Andrea Grasso................................ 36 Secretary and Director
</TABLE>
In December 1996, the stockholders of the Company approved an amendment to
the Company's By-Laws dividing the Board of Directors into three classes as
nearly equal as possible, with the members of each class being elected to serve
for a staggered term of three years, and one class being elected annually. The
Class I director, Richard Reiss, serves for a term expiring at the 1997 Annual
Meeting of Stockholders. The Class II directors, Robert B. Kroner and Andrea
Grasso, serve for terms expiring at the 1998 Annual Meeting of Stockholders. The
Class III directors, Eric Friedman and Peter N. Maluso, serve for three year
terms expiring at the 1999 Annual Meeting of Stockholders.
Directors are elected at the Company's annual meeting of shareholders and
serve until the conclusion of the terms, at which time their successors are duly
elected by the shareholders. Vacancies and newly created directorships resulting
from any increase in the number of directors or by a resignation of a director
may be filled by a majority vote of directors then remaining in office. Officers
are elected by and serve at the pleasure of the Board of Directors. The Board of
Directors has established an audit committee.
Richard Reiss has been Chairman of the Board, Chief Executive Officer and
President of the Company since its formation in August 1991. Prior thereto, from
1987 to 1990, Mr. Reiss was Vice President -- Sales and Marketing of NyCom
Information Services, Inc., an operator's services company. From 1984 through
1987, Mr. Reiss served as the Chairman and Chief Executive Officer of
TeleDigital Corporation, a New Jersey based interconnect company which, in 1986,
was acquired by Standard Telecommunications Corporation which, in turn, was
acquired by JWP Information Services. Prior thereto, from 1982 to 1984, he was a
founder and employed as Executive Vice President of TeleSolutions, a New Jersey
based interconnect company.
Peter Barrett has been Vice President -- Operations of the Company since
its formation in August 1991, responsible for ACC's operations, installations
and technical aspects. From 1988 to 1991, Mr. Barrett served as a supervisor for
GTE/Fujitsu, responsible for the installation and maintenance of 2800 lines and
related telecommunications equipment at IBM in Franklin Lakes, New Jersey. Prior
thereto, from 1984 through 1987, Mr. Barrett was employed by TeleDigital
Corporation as Vice President -- Operations.
Joseph Scotti joined the Company in August 1995 as Vice President -- Sales
and Marketing, dealing in all aspects of voice communications. From 1990 to
1995, Mr. Scotti held numerous sales and sales management positions with
Northern Telecom. Prior thereto, from 1987 to 1990, he served as a sales manager
at Cortel Business Systems in New York City. From 1985 to 1987, Mr. Scotti was
employed as an account executive for TeleDigital Corporation. Mr. Scotti
received a B.S. degree in Marketing from St. Peters College.
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Leo Flotron joined the Company in October 1995 as Vice President -- Sales
and Marketing, in charge of sales and marketing for videoconferencing and
network products. From 1988 to 1995, Mr. Flotron held numerous positions with
Sony Electronics, Inc., and serves as the Company's liaison with Sony as a
turnkey provider of videoconferencing equipment throughout the United States.
Prior thereto, from 1985 to 1988, Mr. Flotron was Director of Business
Development for Gaynor and Company, a biotechnology company located in New York
City. Mr. Flotron holds a B.S. degree in Business from The University of
Massachusetts in Amherst, and an M.S. degree in Finance from Louisiana State
University.
Scott Tansey joined the Company as Vice President -- Finance in December
1996. From 1992 until he joined the Company, Mr. Tansey served as Director,
Finance and Administration, of Data Transmission Services, Inc., a closely held
long distance wire data communications provider, where he was a member of a
senior management team involved in strategic planning and general business
operating decisions. Prior thereto, from 1989 to 1992, he was employed as
Accounting Manager for Industrial Innovation Management, Inc., a closely held
division of a venture capital firm, where he was responsible for all areas of
finance, accounting and administration. From 1985 to 1989, he was a Senior
Accountant for J.H. Cohn & Company, Accountants, a public accounting firm. Mr.
Tansey received a B.S. degree in Accounting from Fairleigh Dickinson University,
Madison, New Jersey, and an M.B.A. degree in Finance from Rider College,
Lawrenceville, New Jersey. He is a certified public accountant.
Robert B. Kroner has been a director of the Company since its formation in
August 1991. Mr. Kroner is a practicing attorney licensed in the State of New
Jersey, having been engaged in the general practice of law for over the past 40
years. Mr. Kroner received his LLB. degree from Harvard Law School and holds an
LLM. degree from New York University's Graduate School of Law.
Eric Friedman has been a director of the Company since December 1996. He
has served as Vice President and Treasurer of Chem International, Inc., a
publicly held company, since June 1996. From June 1978 through May 1996, he was
a partner in Shachat and Simson, a certified public accounting firm. Mr.
Friedman received a B.S. degree from the University of Bridgeport and is a
certified public accountant.
Peter N. Maluso has been a director of the Company since December 1996.
Since 1995, Mr. Maluso has been employed as a Principal at International
Business Machines, Inc. ('IBM'), responsible for IBM's Global Services Legacy
Transformation Consulting practice in the Northeastern United States. The
practice area concentrates on strategic systems planning, systems assessments,
business process redesign and year 2000 transformations. Prior thereto, from
1988 to 1995, he was a Senior Manager for KPMG Peat Marwick's strategic services
practice in New Jersey. From 1986 to 1988, Mr. Maluso served as a
Principal -- Financial Services Group, at American Management Systems. Prior
thereto, from 1982 to 1986, he was employed by Chase Manhattan Bank as Second
Vice President -- Data Systems Development. Mr. Maluso received his B.A. degree
in Economics from Muhlenberg College and holds an M.B.A. degree in Finance from
Lehigh University. He is a certified public accountant.
Andrea Grasso has been the Secretary of the Company since August 1995, and
a director since December 1996. Ms. Grasso serves as the Company's Office
Administrator, responsible for accounts receivable, accounts payable, payroll,
sales reports and bank reports. Prior to joining the Company, Ms. Grasso
operated her own telecommunications business.
DIRECTORS' COMPENSATION
Members of the Board of Directors who are not employees of the Company have
not, to date, received any compensation. However, beginning with the next Board
of Directors meeting, the Company expects to pay outside directors $250 for each
meeting of the Board of Directors and any of its committee meetings attended by
such director, and also are entitled to reimbursement of reasonable expenses
incurred in attending such meetings. Additionally, non-employee directors may
receive options under the stock option plan.
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EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's chief executive officer and
its two other executive officers (the 'Named Executive Officers') whose total
annual salary and bonus exceeded $100,000 in any of the last three fiscal years
ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------- COMPENSATION
SALARY BONUS ------------
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#)
- ------------------------------------------------------------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
Richard Reiss, President and Chief Executive Officer............... 1996 $ 108,000 $ 50,000 --
1995 100,000 31,500 --
1994 272,800 -- 560,000
Joseph Scotti, Vice President...................................... 1996 68,640 31,760 --
Leo Flotron, Vice President........................................ 1996 68,640 32,360 --
</TABLE>
The following table sets forth certain information with respect to the
exercise of options to purchase Common Stock during the fiscal year ended
December 31, 1996, and the unexercised options, if any, and the value thereof at
that date, for each of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
SHARES NUMBER OF UNEXERCISED IN-
ACQUIRED ON VALUE UNEXERCISED THE-MONEY
EXERCISE REALIZED OPTIONS AT OPTIONS AT FY-
NAME (#) (#) FY-END (#) END ($)
- ----------------------------------------------------- ----------- ----------- -------------- ---------------
<S> <C> <C> <C> <C>
Richard Reiss........................................ 560,000 0 0 0
Joseph Scotti........................................ 200,000 0 0 0
Leo Flotron.......................................... 200,000 0 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
Effective January 1, 1997, the Company entered into employment agreements
with Richard Reiss, President, Joseph Scotti, Vice President-Sales and Marketing
of Voice Products and Leo Flotron, Vice President-Sales and Marketing of
Videoconferencing Products of the Company. The employment agreement with Mr.
Reiss expires December 31, 2001 and provides for Mr. Reiss to receive an annual
base salary as follows: $138,000 for the fiscal year ending December 31, 1997;
$175,000 for the fiscal year ending December 31, 1998; and $210,000 for the
fiscal year ending December 31, 1999. The annual base salary for Mr. Reiss for
the fourth and fifth years of the employment agreement shall be for amounts
recommended by the Compensation Committee of the Board of Directors, but in no
event less than $210,000 per annum. The employment agreements with Messrs.
Scotti and Flotron expire on December 31, 1999 and each provide for the
following annual base salary: $104,000 for the fiscal year ending December 31,
1997; $114,000 for the fiscal year ending December 31, 1998; and $124,000 for
the fiscal year ending December 31, 1999. Additionally, Messrs. Scotti and
Flotron are each to receive one-half of 1% of net sales of the Company, paid
bi-annually, during the term of their employment agreements.
Messrs. Reiss, Scotti and Flotron have agreed to devote their full business
time to the affairs of the Company. The Company has agreed to secure, and pay
the premiums on, a life insurance policy on the life of Mr. Reiss, in the amount
of $1,000,000, with the benefits payable to his estate or designated
beneficiary. The Company has also agreed to provide Mr. Reiss with the use of an
automobile. Mr. Reiss' employment agreement entitles him to participate in all
Company pension and profit-sharing plans and to receive an option to purchase an
aggregate of up to 100,000 shares of Common Stock under the Company's stock
option plan. The Company has agreed to provide each of Messrs. Scotti and
Flotron with an automobile allowance of $400 per month.
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The Company has the right to terminate the aforementioned employment
agreements for 'cause' as defined in the employment agreements. The Company has
the right to terminate Mr. Reiss without cause, upon not less than ninety days'
prior written notice in the event that Mr. Reiss is unable to perform his
required duties for a period of 120 consecutive days due to 'total and permanent
disability,' as defined in the employment agreement. In such event, Mr. Reiss
shall be entitled to receive compensation for the remainder of the term of the
employment agreement. The Company may terminate the employment agreements of
Messrs. Scotti and Flotron without cause, upon not less than ten days' prior
written notice in the event that either Mr. Scotti or Mr. Flotron are unable to
perform their required duties for a period of 90 consecutive days due to 'total
and permanent disability.' In such event the employee shall be entitled to
compensation for the 90-day disability period. Each of the aforementioned
employees may terminate his employment with the Company at any time upon 90
days' prior written notice. In such event, the employee shall only be entitled
to the compensation due through the date of termination. Such employees have
also agreed not to disclose any confidential information of the Company during
the term of employment or thereafter. In addition, these employees have agreed
not to compete with the Company during the term of their employment and for a
period of one year after the date of the termination of their employment with
the Company.
STOCK OPTION PLAN
The Company's Board of Directors and shareholders have adopted a stock
option plan (the 'Stock Option Plan') that provides for the grant to employees,
officers, directors, and consultants of the Company of options to purchase up to
500,000 shares of Common Stock.
Options under the Stock Option Plan may be either 'incentive stock options'
within the meaning of Section 422 of the United States Internal Revenue Code of
1986, as amended (the 'Code'), or non-qualified options. Incentive stock options
may be granted only to employees and consultants of the Company.
The per share exercise price of the Common Stock subject to incentive stock
options granted pursuant to the Stock Option Plan may not be less than the fair
market value of the Common Stock on the date the option is granted. Under the
Stock Option Plan, the aggregate fair market value (determined as of the date
the option is granted) of the Common Stock that first became exercisable by any
employee in any one calendar year pursuant to the exercise of incentive stock
options may not exceed $100,000. No person who owns, directly or indirectly, at
the time of the granting of an incentive stock option to him, 10% or more of the
total combined voting power of all classes of stock of the Company (a '10%
Stockholder'), shall be eligible to receive any incentive stock options under
the Stock Option Plan unless the option price is at least 110% of the fair
market value of the Common Stock subject to the option, determined on the date
of grant. Non-qualified options are not subject to this limitation. The Company,
however, has agreed with the Underwriter that it will not grant options to
purchase Common Stock under the plan for thirty-six (36) months after the date
of this Prospectus at an exercise price which is less than the fair market value
on the date of grant.
No incentive stock option may be transferred by an optionee other than by
will or the laws of descent and distribution, and during the lifetime of an
optionee, the option will be exercisable only by the optionee. Pursuant to the
terms of the Stock Option Plan, unless otherwise provided in any option grant,
in the event of termination of employment, other than by death or permanent
total disability, the optionee will have three months after such termination to
exercise the option. The Stock Option Plan provides that upon termination of
employment of an optionee by reason of death or permanent total disability, an
option remains exercisable for one year thereafter to the extent it was
exercisable on the date of such termination.
Options under the Stock Option Plan must be granted within 10 years from
the effective date thereof. Incentive stock options granted under the Stock
Option Plan cannot be exercised more than 10 years from the date of grant,
except that incentive stock options issued to a 10% Stockholder are limited to
five year terms. Any unexercised options under the Stock Option Plan that expire
or that terminate upon an employee's ceasing to be employed with the Company
become available once again for issuance.
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As of January 15, 1997, incentive stock options to purchase a total of
85,974 shares of Common Stock have been granted under the Stock Option Plan,
including an aggregate of 60,974 to executive officers of the Company (Mr.
Reiss, 25,974; and Mr. Tansey, 35,000), and non-qualified stock options to
purchase a total of 81,526 shares of Common Stock have been granted under the
Stock Option Plan, including 74,026 to an executive officer (Mr. Reiss, 74,026).
All of the options are exercisable at a price of $3.50 per share, except Mr.
Reiss' incentive stock options which are exercisable at $3.85 per share. The
options are fully exercisable beginning January 15, 1998, except for Mr.
Tansey's option, which vests in 20% increments over a period of five years on
each annual anniversary date of his employment. The options expire on January
15, 2007, except for Mr. Reiss' incentive stock option, which expires on January
15, 2002.
Future grants of stock options are in the discretion of the Board of
Directors and, thus, the amount and terms of such grants, if any, are not
presently determinable.
DIRECTOR AND OFFICER LIABILITY
New Jersey's Business Corporation Act permits New Jersey corporations to
include in their certificates of incorporation a provision eliminating or
limiting the personal liability of directors and officers of the corporation for
damages arising from certain breaches of fiduciary duty. The Company's
Certificate of Incorporation includes a provision eliminating the personal
liability of directors and officers to the Company and its stockholders for
damages to the maximum extent permitted by New Jersey law, including exculpation
for acts of omissions in violation of directors' and officers' fiduciary duties
of care. Under current New Jersey law, liability is not eliminated in the case
of a breach of a director's or officer's duty of loyalty (i.e., the duty to
refrain from transactions involving improper conflicts of interest) to the
Company or its stockholders, the failure to act in good faith, the knowing
violation of law or the obtainment of an improper personal benefit. The
Company's Certificate of Incorporation does not have any effect on the
availability of equitable remedies (such as an injunction or rescissions) for
breach of fiduciary duty. However, as a practical matter, equitable remedies may
not be available in particular circumstances.
CERTAIN TRANSACTIONS
On March 26, 1994, the Company granted an option to Richard Reiss, Chairman
of the Board and President of the Company, to purchase 560,000 shares of Common
Stock at an exercise price of $.03 per share, expiring on March 26, 1997. On
December 18, 1996, Mr. Reiss exercised his option, acquiring 560,000 shares of
Common Stock for an aggregate price of $16,800. On October 1, 1995, the Company
granted to Leo Flotron, a Vice President of the Company, an option to purchase
200,000 shares of Common Stock at an exercise price of $.03 per share, expiring
on the date of the termination of his employment with the Company. On December
13, 1996, Mr. Flotron exercised his options, acquiring 200,000 shares of Common
Stock for an aggregate price of $6,000. On August 1, 1995, the Company granted
to Joseph Scotti, a Vice President of the Company, an option to purchase 200,000
shares of Common Stock at an exercise price of $.03 per share, expiring on the
date of the termination of his employment with the Company. On December 13,
1996, Mr. Scotti exercised his options, acquiring 200,000 shares of Common Stock
for an aggregate price of $6,000. On September 25, 1995, the Company granted to
Robert Kroner, a director of and general counsel to the Company, an option to
purchase 50,000 shares of Common Stock at an exercise price of $.03 per share,
expiring on September 25, 2000. On December 13, 1996, Mr. Kroner exercised his
option, acquiring 50,000 shares of Common Stock for an aggregate price of
$1,500.
On May 22, 1996, the Company obtained a balance term loan in the amount of
$85,000 ('Loan') from the Bank of New York (NJ) (the 'Bank'). The per annum
interest rate on the Loan is 1.25% above the Bank's Alternate Base Rate. The
Loan is set to mature on May 22, 2000. Additionally, on May 22, 1996, the
Company obtained from the Bank an annually renewable working capital line of
credit ('Credit Line') in the amount of $600,000. The per annum interest rate on
the Credit Line is 1% above the Bank's Alternate Base Rate. The Loan and Credit
Line have been personally guaranteed by Richard Reiss, and are secured by the
accounts receivable, inventory, equipment and vehicles, and general intangibles
of the Company pursuant to a security agreement between the Company and the
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Bank, dated May 22, 1996. As additional security for the Loan and Credit Line,
the Company has pledged to the Bank a $100,000 United States Treasury Bill,
which Treasury Bill is owned by Richard Reiss and for which Richard Reiss has
given consent to hypothecate and has authorized the Company to pledge as secured
collateral.
Additionally, on May 22, 1996, the Bank entered into a Subordination
Agreement with Panasonic whereby Panasonic agreed to subordinate its security
interest in the inventory of goods and merchandise supplied by Panasonic to the
Company, to the security interest of the Bank in such inventory. Such inventory
is part of the security underlying the Loan and Credit Line from the Bank.
On January 4, 1995, Richard Reiss, the President of the Company, loaned the
Company $25,000, at an interest rate of 9% per annum, which loan was repaid on
August 8, 1995. On October 30, 1995, Mr. Reiss borrowed $25,000 from the
Company, without interest, which loan was repaid on November 10, 1995. On April
12, 1996, Mr. Reiss loaned the Company $55,000, without interest, which loan was
repaid on May 13, 1996.
INTERIM FINANCING
In December 1996, the Company completed a bridge financing (the 'Bridge
Financing'), pursuant to which it issued to seven accredited investors (the
'Selling Bridge Unitholders') an aggregate of $750,000 principal amount of 12%
Convertible Subordinated Notes ('Bridge Notes'). The Bridge Notes bear interest
at the rate of 12% per annum, payable annually on December 31. To the extent not
converted, the principal amount of the Bridge Notes is due and payable on the
earlier of (i) December 31, 1999 or (ii) the date of the completion of an
initial public offering ('IPO') of the Company's securities (the 'Maturity
Date'). Principal and interest on the Bridge Notes are subordinate to all
existing indebtedness of the Company and any future institutional indebtedness.
Commencing on the effective date of an IPO prior to the Maturity Date, the
Bridge Notes are convertible, at the option of the holders, into an aggregate of
up to 375,000 Bridge Units (as hereinafter defined) and the Company will issue
to each note holder one Bridge Unit for each $2.00 principal amount of Bridge
Notes presented for conversion. Each Bridge Unit shall consist of one share of
Common Stock and one Warrant, such Warrant being identical in all respects to
the Warrant comprising a portion of the Units offered by the Company in the IPO.
Upon conversion, all interest accrued on the Bridge Notes shall be waived. The
Company is registering for sale in the Registration Statement of which this
Prospectus forms a part, the aggregate of 375,000 Bridge Units issuable upon
conversion of the Bridge Notes, and the Common Stock and Warrants comprising the
Bridge Units. The Bridge Units and/or the Common Stock and Warrants comprising
the Bridge Units may be sold commencing two years from the date of this
Prospectus, or earlier with the consent of the Underwriter. See 'Use of
Proceeds,' 'Description of Securities-Bridge Units' and 'Concurrent Offering.'
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock by (i) each person who is known by the
Company to be the beneficial owner of 5% or more of the Company's outstanding
Common Stock; (ii) each director of the Company; (iii) each executive officer of
the Company named in the Summary Compensation Table; and (iv) all executive
officers and directors as a group, as of the date of this Prospectus and after
the sale of 550,000 Units by the Company in this offering. Except as otherwise
indicated in the footnotes below, the Company believes that each of the
beneficial owners of the Common Stock listed in the table, based on information
furnished by such owner, has sole investment and voting power with respect to
such shares.
<TABLE>
<CAPTION>
PERCENTAGE
--------------------------
NUMBER OF SHARES BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED OFFERING(2) OFFERING(2)
- -------------------------------------------------------------------- ------------------ ----------- -----------
<S> <C> <C> <C>
Richard Reiss....................................................... 2,060,000 68.7% 50.2%
Peter Barrett....................................................... 150,000 5.0% 3.7%
Joseph Scotti....................................................... 200,000 6.7% 4.9%
Leo Flotron......................................................... 200,000 6.7% 4.9%
Andrea Grasso....................................................... 25,000 0.8% 0.6%
Robert B. Kroner ................................................... 150,000 5.0% 3.7%
111 Northfield Avenue
West Orange, NJ 07052
Eric Friedman ...................................................... -- -- --
9 Settlers Lane
Westfield, NJ 07090
Peter N. Maluso .................................................... -- -- --
193 Westgate Drive
Edison, NJ 08820
All executive officers and directors as a group (nine persons)...... 2,785,000 92.9% 67.9%
</TABLE>
- ------------
(1) Unless otherwise indicated, the address of such individual is c/o All
Communications Corporation, 1450 Route 22 West, Mountainside, NJ 07092.
(2) Excludes 375,000 shares of Common Stock issuable in the event of the
conversion of $750,000 principal amount of Bridge Notes into 375,000 Bridge
Units prior to the completion of this offering. See 'Interim Financing.'
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DESCRIPTION OF SECURITIES
The following description of the Company's securities does not purport to
be complete and is subject in all respects to applicable New Jersey law and to
the provisions of the Company's Certificate of Incorporation and By-Laws, the
Warrant Agreement among the Company and American Stock Transfer & Trust Company,
as warrant agent, pursuant to which the Warrants will be issued and the
Underwriting Agreement between the Company and the Underwriter, copies of all
which have been filed with the Commission as Exhibits to the Registration
Statement of which this Prospectus is a part.
UNITS
Each Unit consists of two shares of Common Stock, no par value per share
('Common Stock'), and two redeemable Class A Common Stock Purchase Warrants
('Warrants'), each Warrant entitling the holder thereof to purchase one share of
Common Stock. The Common Stock and Warrants comprising the Units are separately
transferable immediately upon issuance.
GENERAL
The Company's authorized capital stock, as set forth in its Certificate of
Incorporation, consists of 100,000,000 shares of Common Stock, no par value per
share, and 1,000,000 shares of preferred stock, no par value per share.
COMMON STOCK
There are currently 3,375,000 shares of Common Stock outstanding (including
375,000 shares of Common Stock comprising a part of the 375,000 Bridge Units
issuable upon conversion of $750,000 principal amount of Bridge Notes prior to
the completion of this offering). Holders of Common Stock have the right to cast
one vote for each share held of record on all matters submitted to a vote of
holders of Common Stock, including the election of directors. There is no right
to cumulate votes for the election of directors. Stockholders holding a majority
of the voting power of the capital stock issued and outstanding and entitled to
vote, represented in person or by proxy, are necessary to constitute a quorum at
any meeting of the Company's stockholders, and the vote by the holders of a
majority of such outstanding shares is required to effect certain fundamental
corporate changes such as liquidation, merger or amendment of the Company's
Certificate of Incorporation.
Holders of Common Stock are entitled to receive dividends pro rata based on
the number of shares held, when as and if declared by the Board of Directors,
from funds legally available therefor, subject to the rights of holders of any
outstanding preferred stock. In the event of the liquidation, dissolution or
winding up of the affairs of the Company, all assets and funds of the Company
remaining after the payment of all debts and other liabilities, subject to the
rights of the holders of any outstanding preferred stock, shall be distributed,
pro rata, among the holders of the Common Stock. Holders of Common Stock are not
entitled to preemptive or subscription or conversion rights, and there are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and the shares of Common Stock offered
hereby will be when issued, fully paid and non-assessable.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of up to
1,000,000 shares of preferred stock, none of which are currently outstanding,
with the Board of Directors having the right to determine the designations,
rights, preferences and privileges of the holders of one or more series of
preferred stock. Accordingly, the Board of Directors is empowered, without
shareholder approval, to issue preferred stock with voting, dividend,
conversion, liquidation or other rights which could adversely affect the voting
power and equity interest of the holders of Common Stock. The preferred stock,
which could be issued with the right to more than one vote per share, could be
utilized as a method of discouraging, delaying or preventing a change of control
of the Company. The possible impact on takeover attempts could adversely affect
the price of the Company's Common Stock. The Company has
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no current plans to issue any shares of preferred stock. In addition, for a
period of three years from the date of this Prospectus, the issuance of any
shares of preferred stock is subject to the Underwriter's prior consent.
CLASS A WARRANTS
The Company has authorized the issuance of five year redeemable Class A
Common Stock Purchase Warrants ('Warrants') to purchase an aggregate of
1,100,000 shares of Common Stock (exclusive of 375,000 Warrants included in the
Bridge Units, 165,000 Warrants issuable upon exercise of the Underwriter's
over-allotment option and 110,000 Warrants underlying the Underwriter's
Options), and has reserved an equivalent number of shares for issuance upon
exercise of such Warrants. Each Warrant entitles the registered holder thereof
to purchase one share of Common Stock at a price of $4.25, subject to
adjustment, for four years commencing one year from the date of this Prospectus.
After expiration, the Warrants will be void and of no value. The Warrants
underlying the Underwriter's Options have the same terms and conditions as the
Warrants to be sold to the public, except that they are subject to redemption by
the Company at any time after the Underwriter's Options have been exercised and
the underlying Warrants are outstanding.
The Company may redeem the Warrants commencing , 1998 (18 months from
the date of the Prospectus), or earlier with the consent of the Underwriter, at
a price of $.10 per Warrant, on not less than 30 days' prior written notice, if
the closing bid price of the Common Stock (if the Common Stock is then traded in
the over-the-counter market) or the last sale price of the Common Stock (if the
Common Stock is then traded on a national securities exchange or the Nasdaq
National Market or SmallCap System) has been at least 250% ($10.63 per share) of
the current Warrant exercise price, subject to adjustment, for at least 20
consecutive trading days ending within three days prior to the date on which
notice of redemption is given.
The Warrants contain provisions that protect the holders thereof against
dilution by adjustment of the exercise price and number of shares issuable upon
exercise, on the occurrence of certain events, such as stock dividends or
certain other changes in the number of outstanding shares except for shares
issued pursuant to any Company stock option plans for the benefit of its
employees, directors and agents, the Warrants offered hereby, the Underwriter's
Options, the Underwriter's over-allotment option, and any equity securities for
which adequate consideration is received. The Company is not required to issue
fractional shares. In lieu of the issuance of such fractional shares, the
Company will pay cash to such holders of the Warrants. In computing the cash
payable to such holders, a share of Common Stock will be valued at its price
immediately prior to the close of business on the expiration date. The holder of
a Warrant will not possess any rights as a shareholder of the Company unless he
exercises his Warrant.
BRIDGE UNITS
In December 1996, the Company completed a bridge financing (the 'Bridge
Financing'), pursuant to which it issued to the Selling Bridge Unitholders an
aggregate of 750,000 principal amount of 12% Convertible Subordinated Notes (the
'Bridge Notes'), which bear interest at the rate of 12% per annum and are due
and payable, to the extent not converted, on the earlier of the completion of
this offering or December 31, 1999. Commencing on the date of this Prospectus,
the Bridge Notes are convertible, at the option of the holders, into an
aggregate of up to 375,000 Bridge Units, each consisting of one share of Common
Stock and one Warrant, and the Company will issue to each note holder one Bridge
Unit for each $2.00 principal amount of Bridge Notes presented for conversion.
The Company is registering for sale in the Registration Statement of which this
Prospectus forms a part, the Bridge Units and the Common Stock and Warrants
comprising the Bridge Units. The Bridge Units and/or the Common Stock and
Warrants comprising the Bridge Units may be sold commencing two years from the
date of this Prospectus, or earlier with the consent of the Underwriter. See
'Use of Proceeds,' 'Interim Financing' and 'Concurrent Offering.'
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SHARES ELIGIBLE FOR FUTURE SALE
Upon the completion of this offering, the Company will have 4,475,000
shares of Common Stock outstanding (assuming an aggregate of $750,000 principal
amount of Bridge Notes are converted into 375,000 Bridge Units), including
1,100,000 shares included in the 550,000 Units offered hereby by the Company,
and 375,000 shares comprising a portion of the Bridge Units and 750,000 shares
of Registered Common Stock which are included in the Registration Statement of
which this Prospectus forms a part. The remaining 2,250,000 shares of Common
Stock currently outstanding are 'restricted securities' as that term is defined
in Rule 144 under the Securities Act, and may not be sold unless such sale is
registered under the Securities Act or is made pursuant to an exemption from
registration under the Securities Act, including the exemption provided by Rule
144. Such shares will be eligible for sale in the public market pursuant to Rule
144 at various times beginning 90 days after the date of this Prospectus,
subject to the three-year lock-up described below. The 375,000 shares of Common
Stock and the 375,000 shares underlying the 375,000 Warrants comprising the
Bridge Units may not be sold until two years following the date of this
Prospectus without the prior consent of the Underwriter. The holders of all of
the 3,000,000 shares of the Company's Common Stock currently outstanding
(including the 750,000 shares of Registered Common Stock held by the President)
have agreed that for a period of three years from the date of this Prospectus
they will not sell any of their shares, or any shares issuable upon exercise of
warrants or options exercisable into shares of Common Stock, without the prior
consent of the Underwriter. The Company is unable to predict the effect that
sales made under Rule 144 or otherwise may have on the market price of the
Common Stock. However, the possibility that substantial amounts of Common Stock
may be sold in the public market may have an adverse effect on the market price
for the Company's Common Stock.
In general, under Rule 144 as currently in effect, a shareholder (or
shareholders whose shares are aggregated) who has beneficially owned any
restricted securities for at least two years (including a shareholder who may be
deemed to be an affiliate of the Company), will be entitled to sell, within any
three-month period, that number of shares that does not exceed the greater of
(i) 1% of the then outstanding shares of Common Stock (44,750 shares based on
4,475,000 shares of Common Stock outstanding upon completion of this offering,
assuming the Underwriter's over-allotment option is not exercised) or (ii) the
average weekly trading volume of the Common Stock during the four calendar weeks
preceding the date on which notice of such sale is given to the Commission,
provided certain public information, manner of sale and notice requirements are
satisfied. A shareholder who is deemed to be an affiliate of the Company,
including members of the Board of Directors and senior management of the
Company, will still need to comply with the restrictions and requirements of
Rule 144, other than the two-year holding period requirement, in order to sell
shares of Common Stock that are not restricted securities, unless such sale is
registered under the Securities Act. A shareholder (or shareholders whose shares
are aggregated) who is deemed not to have been an affiliate of the Company at
any time during the 90 days preceding a sale by such shareholder, and who has
beneficially owned restricted shares for at least three years, will be entitled
to sell such shares under Rule 144 without regard to the volume limitations
described above.
LISTING ON NASDAQ SMALLCAP MARKET SYSTEM
Immediately following the offering, it is anticipated that the Units,
Common Stock and Warrants will be listed on the Nasdaq SmallCap Market System
under the symbols 'ACMNU,' 'ACMN' and 'ACMNW,' respectively. An application to
list such securities on Nasdaq has been filed. Management believes that the
Company will meet Nasdaq listing requirements upon the completion of this
offering. Application has also been made to list the Units, Common Stock and
Warrants on the Pacific Stock Exchange under the symbols 'CMNU,' 'CMN' and
'CMNW,' respectively.
No assurance can be given that the prices of such securities will be so
quoted or that a trading market for the Company's securities will develop or be
sustained, or at what price the securities will trade. In addition, even if such
securities are listed and traded initially on Nasdaq, the Company may
subsequently fail to meet certain minimum standards for continued listing. In
that event, such securities will consequently be delisted, and their price will
no longer be quoted in such system. Such result may
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make it extremely difficult to sell or trade the Company's securities. See 'Risk
Factors -- Qualification and Maintenance Requirements for Listing on the Nasdaq
SmallCap Market.'
TRANSFER/WARRANT AGENT AND REGISTRAR
American Stock Transfer & Trust Company, New York, New York, is the
transfer and warrant agent and registrar for the securities of the Company.
NEW JERSEY SHAREHOLDER PROTECTION ACT
The Company is subject to the New Jersey Shareholder Protection Act (the
'Protection Act') which restricts certain business combinations by the Company
with any of its 10% stockholders. Generally, the Protection Act prohibits a
publicly held New Jersey corporation with its principal executive offices and
significant business operations in New Jersey from engaging in any business
combination (defined generally as any merger, consolidation, sale, lease,
exchange, mortgage, or pledge, or any stock transfer, securities
reclassification, liquidation or dissolution, excluding certain transactions
involving assets or securities which have a market value below that specified in
the Protection Act) with an 'Interested Shareholder' (defined generally as any
person who is the beneficial owner of 10% or more of the voting power of the
outstanding shares or any affiliate of the Corporation who at any time within
the five-year period immediately prior to the date of the business combination
has been the beneficial owner of 10% or more of the voting power of the
outstanding shares) for a period of five years from the date the Interested
Shareholder became an Interested Shareholder, unless such transaction is
approved by the board of directors prior to the date the shareholder became an
interested Shareholder. In addition, the Protection Act prohibits any business
combination at any time with an Interested Shareholder other than a transaction
that (i) is approved by the board of directors of the applicable company prior
to the date the Interested Shareholder became the Interested Shareholder; or
(ii) is approved by the affirmative vote of the holders of two-thirds of the
voting shares not beneficially owned by the Interested Shareholder at a meeting
called for that purpose; or (iii) satisfies certain stringent price and terms
criteria.
Certain stockholders may consider the Protection Act to have
disadvantageous effects. Tender offers or other non-open market acquisitions of
shares by persons attempting to acquire control through market purchases may
cause the market price of the shares to reach levels that are higher than would
be otherwise the case. The Protection Act may discourage any or all of such
acquisitions, particularly those of less than all of the Company's shares, and
may thereby deprive certain holders of the Company's shares of an opportunity to
sell their shares at a temporarily higher market price.
These provisions could have the effect of delaying, deferring or preventing
a change of control of the Company. The Commission has indicated that the use of
authorized unissued shares of voting stock could have an anti-takeover effect.
In such cases, various specific disclosures to the stockholders are required.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
by and between the Company and the Underwriter (the 'Underwriting Agreement'),
the Underwriter has agreed to purchase from the Company, and the Company has
agreed to sell to the Underwriter, an aggregate of 550,000 Units, at the initial
public offering price less the underwriting discounts and commissions set forth
on the cover page of this Prospectus.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of certificates representing the Units is subject
to certain conditions precedent, and that the Underwriter will purchase all of
the Units offered hereby on a 'firm commitment' basis if any are purchased.
The Underwriter has advised the Company that it proposes initially to offer
the Units directly to the public at the initial public offering price set forth
on the cover page of this Prospectus and to certain
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dealers at such price less a concession not in excess of $. per Unit. After
the initial public offering, the public offering price and concession may be
changed.
The Company has granted to the Underwriter an option, exercisable during
the 45-day period after the date of this Prospectus, to purchase up to an
aggregate of 82,500 additional Units at the initial per Unit public offering
price less the underwriting discounts and commissions set forth on the cover
page of this Prospectus. The Underwriter may exercise this option only to cover
over-allotments, if any, made in connection with the sale of the Units offered
hereby.
The Company has agreed to pay to the Underwriter a non-accountable expense
allowance equal to 3% of the gross proceeds of this offering, including any
Units purchased pursuant to the Underwriter's over-allotment option, no portion
of which has been paid to date.
The Company and the Underwriter have agreed to indemnify each other
against, or to contribute to losses arising out of, certain civil liabilities in
connection with this offering, including liabilities under the Securities Act.
The Company and all of its current stockholders have agreed not to offer,
sell, contract to sell or otherwise dispose of any shares of Common Stock or
rights to acquire shares of Common Stock without the prior written consent of
the Underwriter for a period of three years after the date of this Prospectus.
The Company has agreed to sell to the Underwriter, for an aggregate price
of $55, the right to purchase up to an aggregate of 55,000 Units (the
'Underwriter's Options'). The Underwriter's Options will be exercisable for a
four-year period commencing one year after the date of the Prospectus, at a per
Unit exercise price equal to 120% of the initial per Unit public offering price
of the Units being offered hereby. The Warrants underlying the Underwriter's
Options have the same terms and conditions as the Warrants to be sold to the
public in this offering, except that they are subject to redemption by the
Company at any time after the Underwriter's Options have been exercised and the
underlying Warrants are outstanding. The Underwriter's Options may not be sold,
assigned, transferred, pledged or hypothecated for a period of one year from the
date of the Prospectus except to the Underwriter or its officers.
The Company has agreed to file, during the four-year period beginning one
year from the date of the Prospectus, on two separate occasions (on only one
occasion at the cost of the Underwriter), at the request of the holders of a
majority of the Underwriter's Options and the underlying shares of Common Stock
and Warrants, and to use its best efforts to cause to become effective, a
post-effective amendment to the Registration Statement or a new registration
statement under the Securities Act, as required to permit the public sale of the
shares of Common Stock and Warrants issued or issuable upon exercise of the
Underwriter's Options. In addition, the Company has agreed to give advance
notice to holders of the Underwriter's Options of its intention to file certain
registration statements commencing one year and ending six years after the date
of the Prospectus, and in such case, holders of such Underwriter's Options or
underlying shares of Common Stock and Warrants shall have the right to require
the Company to include all or part of such shares of Common Stock and Warrants
underlying such Underwriter's Options in such registration statement at the
Company's expense.
For the life of the Underwriter's Options, the holders thereof are given
the opportunity to profit from a rise in the market price of the shares of
Common Stock and Warrants, which may result in a dilution of the interests of
other stockholders. As a result, the Company may find it more difficult to raise
additional equity capital if it should be needed for the business of the Company
while the Underwriter's Options are outstanding. The holders of the
Underwriter's Options might be expected to exercise them at a time when the
Company would, in all likelihood, be able to obtain additional equity capital on
terms more favorable to the Company than those provided by the Underwriter's
Options. Any profit realized on the sale of the shares of Common Stock issuable
upon the exercise of the Underwriter's Options may be deemed additional
underwriting compensation.
As part of the Underwriting arrangements, the Company has agreed to enter
into an agreement retaining the Underwriter as a financial consultant to the
Company for a two-year period commencing on the date of the completion of this
offering at a fee of 2% of the gross proceeds of this offering, to be paid in
full on the completion of this offering. The underwriting agreement will also
provide for a finder's fee, ranging from 5% of the first $3,000,000 down to 1%
of the excess over $10,000,000 of the
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consideration involved in any capital business transaction (including mergers
and acquisitions) consummated by the Company in which the Underwriter introduced
the other party to the Company during the five-year period following the
completion of the offering.
Upon the exercise of the Warrants, the Company will pay the Underwriter a
fee of 5% of the aggregate exercise price if (i) the market price of its Common
Stock on the date the Warrant is exercised is greater than the then exercise
price of the Warrants; (ii) the exercise of the Warrant was solicited by a
member of NASD and the customer states in writing that the transaction was
solicited and designates in writing the broker-dealer to receive compensation
for the exercise; (iii) the Warrant is not held in a discretionary account; (iv)
disclosure of compensation arrangements was made both at the time of the
Offering and at the time of exercise of the Warrants; (v) the solicitation of
exercise of the Warrant was not in violation of Rule 10b-6 promulgated under the
Securities Exchange Act of 1934 or any replacement rule; and (vi) no fee will be
paid on non-solicited exercises. The Underwriter as well as any other
broker-dealer must cease bidding for or purchasing the issuer's securities for
up to nine business days prior to such solicitation efforts until the later of
the termination of such efforts or the waiver of such fee. There will not be a
Warrant solicitation for 12 months from the date of this Prospectus.
Prior to this offering there has been no public trading market for the
Company's securities. The initial public offering price of the Units and the
exercise price and the terms of the Warrants have been determined by negotiation
between the Company and the Underwriter. Factors considered in determining the
initial public offering price, in addition to prevailing market conditions,
included the history of and prospects for the industry in which the Company
competes, and assessment of the Company's management, the prospects of the
Company, its capital structure and such other factors as were deemed relevant.
The foregoing includes a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
the Underwriting Agreement that is on file as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Underwriter has informed the Company that no sales will be made to any
account over which the Underwriter exercises discretionary authority.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Singer Zamansky LLP, New York, New York. Certain legal matters will
be passed upon for the Underwriter by Bernstein & Wasserman, LLP, New York, New
York. Singer Zamansky LLP represents the Underwriter in other matters.
EXPERTS
The financial statements of the Company included in this Prospectus have
been audited by Schneider Ehrlich & Wengrover LLP, independent auditors, as set
forth in their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
CONCURRENT OFFERING
The Registration Statement of which this Prospectus forms a part also
covers 375,000 Bridge Units, each consisting of one share of Common Stock and
one Warrant being offered by the Selling Bridge Unitholders and 750,000 shares
of Common Stock being offered by the Selling Stockholder made pursuant to the
Selling Securityholders' Prospectus.
42
<PAGE>
<PAGE>
ADDITIONAL INFORMATION
The Company is not a reporting company under the Exchange Act. The Company
has filed a Registration Statement on Form SB-2 under the Securities Act with
the Commission in Washington, D.C. with respect to the Units offered hereby.
This Prospectus, which is part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement and the exhibits
thereto. For further information with respect to the Company and the Units
offered hereby, reference is hereby made to the Registration Statement and such
exhibits, which may be inspected without charge at the office of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and at 500 West Madison (Suite 1400), Chicago, Illinois 60661. Copies
of such material may also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. The address of such site is
http://www.sec.gov. Statements contained in this Prospectus as to the contents
of any contract or other document referred to are not necessarily complete and
in each instance reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
Following the offering, the Company will be subject to the reporting and
other requirements of the Exchange Act and intends to furnish to its
stockholders annual reports containing audited financial statements and may
furnish interim reports as it deems appropriate.
43
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
INDEX TO FINANCIAL STATEMENTS
CONTENTS
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
Independent Auditors' Report........................................................................ F-2
Balance Sheets...................................................................................... F-3
Statements of Income................................................................................ F-4
Statements of Stockholders' Equity.................................................................. F-5
Statements of Cash Flows............................................................................ F-6
Notes to Financial Statements....................................................................... F-7 - F-15
</TABLE>
F-1
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of ALL COMMUNICATIONS CORPORATION
We have audited the accompanying balance sheets of All Communications
Corporation as of December 31, 1996 and 1995, and the related statements of
income, cash flows, and stockholders' equity for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, the financial statements referred to
above present fairly, in all material respects, the financial position of All
Communications Corporation as of December 31, 1996 and 1995 and the results of
its operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.
SCHNEIDER EHRLICH & WENGROVER LLP
Woodbury, New York
January 21, 1997
F-2
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.......................................................... $ 645,614 $153,906
Accounts receivable (net of allowance for doubtful accounts of $25,000 and $10,000,
respectively)..................................................................... 681,411 346,502
Inventory.......................................................................... 497,353 145,047
Deferred income taxes.............................................................. 9,119 --
Other current assets............................................................... 11,595 8,517
---------- --------
Total current assets.......................................................... 1,845,092 653,972
Furniture, equipment and leasehold improvements -- net.................................. 128,984 91,758
Deferred financing costs................................................................ 15,406 --
Deferred stock offering costs........................................................... 32,500 --
Other assets............................................................................ 61,410 8,910
---------- --------
Total assets.................................................................. $2,083,392 $754,640
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank loan payable.................................................................. $ 447,071 $100,000
Current portion of long-term debt.................................................. 21,250 21,210
Accounts payable................................................................... 505,319 364,420
Accrued expenses................................................................... 108,259 81,437
Income taxes payable............................................................... -- 4,421
Deferred income taxes.............................................................. -- 13,871
Customer deposits.................................................................. 14,943 16,027
---------- --------
Total current liabilities..................................................... 1,096,842 601,386
---------- --------
Noncurrent liabilities
12% Convertible Subordinated Notes payable......................................... 750,000 --
Long-term debt, less current portion............................................... 51,354 65,218
Deferred income taxes.............................................................. 14,798 6,741
---------- --------
Total noncurrent liabilities....................................................... 816,152 71,959
---------- --------
Total liabilities............................................................. 1,912,994 673,345
---------- --------
COMMITMENTS AND CONTINGENCIES -- SEE NOTES
Stockholders' equity
Preferred stock, $.01 par value; 1,000,000 shares authorized, none issued or
outstanding....................................................................... -- --
Common Stock, no par value; 100,000,000 authorized; 3,000,000 and 1,750,000 issued
and outstanding, respectively..................................................... 90,000 52,500
Retained earnings.................................................................. 80,398 28,795
---------- --------
Total stockholders' equity.................................................... 170,398 81,295
---------- --------
Total liabilities and stockholders' equity.................................... $2,083,392 $754,640
---------- --------
---------- --------
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net revenues.......................................................................... $3,884,700 $2,641,331
Cost of revenues...................................................................... 2,501,073 1,781,719
---------- ----------
Gross margin.......................................................................... 1,383,627 859,612
---------- ----------
Operating expenses:
Selling.......................................................................... 664,786 482,470
General and administrative....................................................... 599,606 328,206
---------- ----------
Total operating expenses.................................................... 1,264,392 810,676
---------- ----------
Income from operations................................................................ 119,235 48,936
---------- ----------
Other (income) expenses
Loan writeoff.................................................................... -- 25,000
Interest income.................................................................. -- (634)
Interest expense................................................................. 29,026 7,321
---------- ----------
Total other (income) expenses............................................... 29,026 31,687
---------- ----------
Income before income taxes............................................................ 90,209 17,249
Provision for income taxes............................................................ 38,606 8,029
---------- ----------
Net income............................................................................ $ 51,603 $ 9,220
---------- ----------
---------- ----------
Net income per common and common equivalent share..................................... $.03 $.01
---------- ----------
---------- ----------
Weighted average common and common equivalent shares outstanding...................... 1,977,518 1,884,002
---------- ----------
---------- ----------
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
-------------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
--------- ------- -------- --------
<S> <C> <C> <C> <C>
Balances at January 1, 1995........................................ 1,666,666 $50,000 $ 19,575 $ 69,575
Issuance of common stock for services rendered
at $.03 per share................................................ 83,334 2,500 -- 2,500
Net income for the year............................................ -- -- 9,220 9,220
--------- ------- -------- --------
Balances at December 31, 1995...................................... 1,750,000 52,500 28,795 81,295
Exercise of common stock options................................... 1,250,000 37,500 -- 37,500
Net income for the year............................................ -- -- 51,603 51,603
--------- ------- -------- --------
Balances at December 31, 1996...................................... 3,000,000 $90,000 $ 80,398 $170,398
--------- ------- -------- --------
--------- ------- -------- --------
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------
1996 1995
---------- ---------
<S> <C> <C>
Cash Flows From Operating Activities
Net income........................................................................ $ 51,603 $ 9,220
Adjustments to reconcile net income to net cash provided (used) by operating
activities:
Depreciation and amortization................................................ 30,120 6,835
Loan writeoff................................................................ -- 25,000
Common stock issued for services............................................. -- 2,500
Increase (decrease) in cash attributable to changes in assets and liabilities
Accounts receivable..................................................... (334,909) (241,941)
Inventory............................................................... (352,306) (131,976)
Other current assets.................................................... (3,078) (8,517)
Accounts payable........................................................ 140,899 326,505
Accrued expenses........................................................ 26,822 69,359
Income taxes payable.................................................... (4,421) 4,421
Deferred income taxes................................................... (14,933) (3,734)
Customer deposits....................................................... (1,084) 13,077
---------- ---------
Net cash provided (used) by operating activities................... (461,287) 70,749
---------- ---------
Cash Flows From Investing Activities
Purchases of furniture, equipment and leasehold improvements...................... (67,346) (98,593)
Increase in other assets.......................................................... (52,500) (6,710)
---------- ---------
Net cash used by investing activities.............................. (119,846) (105,303)
---------- ---------
Cash Flows From Financing Activities
Proceeds from issuance of common stock............................................ 37,500 --
Deferred financing costs.......................................................... (15,406) --
Deferred stock offering costs..................................................... (32,500) --
Proceeds from long-term debt...................................................... 85,000 92,700
Payments on long-term debt........................................................ (98,824) (6,272)
Proceeds from bank loans.......................................................... 477,071 100,000
Payments on bank loans............................................................ (130,000) --
Proceeds from stockholder loan receivable......................................... -- 25,000
Repayment of stockholder loan receivable.......................................... -- (25,000)
Proceeds from stockholder loan payable............................................ 55,000 25,000
Repayment of stockholder loan payable............................................. (55,000) (25,000)
Proceeds from issuance of convertible subordinated notes.......................... 750,000 --
---------- ---------
Net cash provided by financing activities.......................... 1,072,841 186,428
---------- ---------
Increase in Cash and Cash Equivalents.................................................. 491,708 151,874
Cash at Beginning of Period............................................................ 153,906 2,032
---------- ---------
Cash and Cash Equivalents at End of Period............................................. $ 645,614 $ 153,906
---------- ---------
---------- ---------
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest..................................................................... $ 29,026 $ 7,321
---------- ---------
---------- ---------
Income taxes................................................................. $ 60,807 $ 7,422
---------- ---------
---------- ---------
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- DESCRIPTION OF BUSINESS
All Communications Corporation (the 'Company') was incorporated on August
16, 1991 under the laws of the State of New Jersey. The Company is engaged in
the business of selling, installing and servicing voice and videoconferencing
communications systems to commercial and institutional customers located
principally within the United States. The Company is headquartered in
Mountainside, New Jersey.
Most of the products sold by the Company are purchased under non-exclusive
dealer agreements with Panasonic Communications & Systems Company ('Panasonic')
for digital business telephone systems and related products, and with Sony
Electronics, Inc. ('Sony') for videoconferencing equipment. Both agreements
specify, among other things, sales territories, payment terms, purchase quotas
and reseller prices. The Panasonic agreement renews automatically for one-year
periods, but may be terminated with or without cause by either party upon thirty
days written notice. Panasonic holds a security interest in Panasonic inventory
maintained by the Company, which has been subordinated to the security interest
of the Company's lender. The Company is currently negotiating a new agreement
with Sony to succeed the current contract scheduled to expire on March 31, 1997.
The termination of either agreement, or their renewal on less favorable terms
than currently in effect, could have a material adverse impact on the Company's
business.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORY
Inventory is valued at the lower of cost (determined on a first-in,
first-out basis), or market.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities and the reported revenues
and expenses. Actual results could vary from the estimates that were used.
REVENUE RECOGNITION
Revenue from the sale and installation of voice and videoconferencing
systems is recognized at the time the systems are installed, with reserves
established for the estimated future costs of service warranties. Customer
prepayments are deferred until product systems have been installed. Service
revenues are recognized at the time the services are rendered and the Company
has no significant further obligations to the customer.
INCOME PER SHARE
Income per share is computed using the weighted average number of common
and common equivalent shares outstanding during the period. In accordance with
the rules of the Securities and Exchange Commission, shares issuable upon the
conversion of the 12% Subordinated Convertible Notes Payable have been included
in the calculation of common and common equivalent shares outstanding for all
periods presented using the treasury stock method.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with a maturity of
three months or less when purchased to be cash equivalents.
F-7
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash, cash equivalents, and
trade accounts receivable. The Company places its cash and cash equivalents
primarily in commercial checking accounts and interest-bearing time deposits.
Balances may from time to time exceed federally insured limits.
The Company performs ongoing credit evaluations of its customers and to
date has not experienced any material losses. Revenues to one significant
customer accounted for 26% and 28% of net revenues for the years ended
December 31, 1996 and 1995, respectively. At December 31, 1996, receivables
from this customer represented approximately 25% of net accounts receivable.
DEPRECIATION AND AMORTIZATION
Furniture, equipment and leasehold improvements are stated at cost.
Furniture and equipment are depreciated over the estimated useful lives of the
related assets, which range from three to five years. Leasehold improvements are
amortized over the shorter of either the asset's useful life or the related
lease term. Depreciation is computed on the straight-line method for financial
reporting purposes and on the modified accelerated cost recovery system (MACRS)
for income tax purposes.
INCOME TAXES
The Company uses the liability method to determine its income tax expense
as required under Statement of Financial Accounting Standards No. 109 (SFAS
109). Under SFAS 109, deferred tax assets and liabilities are computed based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance if, based on the
weight of available evidence, it is more likely than not that all or some
portion of the deferred tax assets will not be realized. The ultimate
realization of the deferred tax asset depends on the Company's ability to
generate sufficient taxable income in the future.
DEFERRED STOCK OFFERING COSTS
Costs incurred in connection with the Company's proposed public offering of
common stock and warrants will be charged to capital in the event the offering
is successful, or charged to operations if the offering is abandoned.
LONG-LIVED ASSETS
In accordance with SFAS No. 121, 'Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of', the Company
records impairment losses on long-lived assets used in operations, including
goodwill and intangible assets, when events and circumstances indicate that the
assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
RECENT ACCOUNTING PRONOUNCEMENT
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, 'Accounting for Stock-based Compensation'. SFAS No. 123 is effective for
fiscal years beginning after December 15, 1995, and requires that the Company
either recognize in its financial statements costs related to its employee
stock-based compensation plans, such as stock option and stock purchase plans,
or make pro forma disclosures of such costs in a footnote to the financial
statements. The Company has elected to continue to use the intrinsic value-based
method of APB Opinion no. 25, as allowed under SFAS No.
F-8
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
123, to account for all of its employee stock-based compensation plans. The
adoption of SFAS No. 123 did not have a material effect on the Company's
financial position or results of operations.
NOTE 3 -- FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Furniture, equipment and leasehold improvements consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- -------
<S> <C> <C>
Leasehold improvements..................................................................... $ 9,768 $ 9,768
Office furniture........................................................................... 13,187 11,872
Computer equipment......................................................................... 25,024 20,253
Demonstration equipment.................................................................... 41,136 --
Vehicles................................................................................... 76,824 56,700
-------- -------
165,939 98,593
Less: Accumulated depreciation............................................................. 36,955 6,835
-------- -------
$128,984 $91,758
-------- -------
-------- -------
</TABLE>
Depreciation expense was $30,120 and $6,835 for the years ended December
31, 1996 and 1995, respectively.
NOTE 4 -- SALES AGREEMENTS
In December 1996, the Company signed a non-exclusive four-year Preferred
Vendor Agreement with HFS Incorporated ('HFS') to provide Panasonic telephone
and voice processing systems to its Century 21, ERA, and Coldwell Banker brand
real estate brokerage franchise systems. The Company has paid a $50,000 access
fee for marketing rights and will pay HFS commissions ranging from 2% to 13% of
gross sales, depending on the products and services sold. The agreement requires
the Company to establish toll-free telephone service for HFS franchisees, to
commit personnel to the handling of franchisee accounts and to defray the cost
of certain marketing activities. The Company has also agreed to a fixed price
schedule over the term of the agreement.
The access fee is included in Other Assets in the accompanying Balance
Sheet, and will be amortized on a straight-line basis over the term of the
contract.
The HFS contract supersedes a four-year agreement signed in January 1996
with Coldwell Banker Corporation ('CBC'), the previous owner of the Coldwell
Banker brand, in which the Company provided trade discounts and favorable terms
for an exclusive dealership to sell Panasonic telecommunications systems to
CBC's corporate-owned brokerage offices.
NOTE 5 -- ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- -------
<S> <C> <C>
Sales taxes payable.......................................... $ 35,909 $18,413
Other........................................................ 72,350 63,024
-------- -------
$108,259 $81,437
-------- -------
-------- -------
</TABLE>
F-9
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6 -- TRANSACTIONS WITH RELATED PARTIES
In January 1995, the president of the Company loaned the Company $25,000 at
an interest rate of 9% per annum, which loan was repaid in August 1995. In
October 1995, the president borrowed $25,000 from the Company, without interest,
which loan was repaid in November 1995. In April 1996, the president loaned the
Company $55,000, without interest, which loan was repaid in May 1996.
In October 1994, the Company provided a $25,000 loan to a privately-held
entity. The Company's president was a stockholder in the entity and became a
member of its board. The loan was written off in 1995 when the entity filed for
bankruptcy.
NOTE 7 -- NOTES PAYABLE AND LONG-TERM DEBT
TERM LOANS AND LINES OF CREDIT
In 1995, the Company entered into a Loan and Security Agreement with a bank
that provided a $150,000 line of credit, bearing interest at the prime rate plus
1% per annum. The lender also provided term financing to the Company at various
dates in 1995 for the purchase of equipment in the aggregate amount of $92,700.
The loans were evidenced by four promissory notes bearing fixed rates of
interest ranging from 8.75% to 9% per annum.
In May 1996, the Company entered into a new credit facility with a bank for
a $600,000 working capital line of credit and an $85,000 term loan, and repaid
outstanding borrowings with its previous lender. Advances under the line of
credit bear interest at the rate 1% above the bank's 'Alternate Base Rate'
('ABR') (9.25% at December 31, 1996), and are due on demand. The line of credit
is renewable annually. The term loan provides for monthly principal payments of
$1,770.83 plus interest at the bank's ABR plus 1.25% (9.5% at December 31,
1996).
Substantially all of the assets of the Company are pledged as security for
the loans. The Company's principal stockholder has pledged a United States
Treasury Bill in the amount of $100,000 as additional collateral and has
provided a personal guarantee on the loans. Panasonic has also subordinated to
the bank its security interest in Panasonic inventory owned by the Company.
12% CONVERTIBLE SUBORDINATED NOTES PAYABLE
In December 1996, the Company realized net proceeds of $734,594 from a
private placement of $750,000 principal amount of 12% Convertible Subordinated
Notes (the 'Bridge Notes'). The notes bear interest at the rate of 12% per annum
and become due and payable together with accrued interest, to the extent not
converted, at the earlier of December 31, 1999 or the date the Company completes
an initial public offering (IPO) of its securities. Principal and interest are
subordinated to all existing indebtedness of the Company and to any future
institutional indebtedness.
Commencing on the effective date of an IPO prior to the maturity date, the
notes are convertible, at the option of the holder, into an aggregate of 375,000
Bridge Units at the rate of one Unit per $2.00 of principal amount of notes.
Each Bridge Unit will consist of one share of the Company's Common Stock and one
warrant. The term of the warrants will be identical to any warrants sold in the
IPO. Upon conversion, all accrued interest will be waived. The Company expects
to register for sale as part of its IPO registration, the Bridge Units issuable
upon conversion of the Bridge Notes, and the Common Stock and Warrants
comprising the Bridge Units.
Costs incurred in connection with the private placement totaling $15,406
have been capitalized as deferred financing costs, and are being amortized on a
straight-line basis over the term of the loan.
The aggregate maturities of long-term debt for the next four years ending
December 31, are as follows: 1997 -- $21,250; 1998 -- $21,250; 1999 -- $771,250
and 2000 -- $8,854.
F-10
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8 -- STOCKHOLDERS' EQUITY
ISSUANCE OF COMMON STOCK
In April 1995, the Company issued 33,334 and 50,000 shares of its Common
Stock, respectively, to an officer and the Company's attorney in consideration
of services rendered. The Company's board of directors valued these shares at
$2,500, or $.03 per share.
STOCK OPTIONS
In 1994, the Company issued 560,000 nonqualified options to its president
and principal stockholder exercisable at $.03 per share. In 1995, the Company
issued additional nonqualified options to certain of its employees and advisors
to purchase up to 725,000 shares of the Company's Common Stock for $.03 per
share, including a five-year option to purchase 50,000 shares issued to the
Company's general counsel who is also a board member. A total of 35,000 options
were canceled in 1996 when the option holders left the Company.
The Company has elected to use the intrinsic value-based method of APB
Opinion No. 25 to account for all of its employee stock-based compensation
plans. Accordingly, no compensation cost has been recognized in the accompanying
financial statements for stock options because the exercise price of each option
equals or exceeds the fair value of the underlying common stock as of the grant
date for each stock option, except for stock granted in April 1995 in which the
Company has recorded stock compensation of $2,500, as determined by the
Company's Board of Directors.
The Company has adopted the pro forma disclosure provisions of SFAS No.
123. Had compensation cost for the Company's stock-based compensation grants
been determined in a manner consistent with the fair value approach described in
SFAS No. 123, the Company's net income and net income per share as reported
would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1996 1995
------- ------
<S> <C> <C>
Net income
As reported......................................................... $51,603 $9,220
Adjusted pro forma.................................................. 51,507 7,630
Net income per share
As reported......................................................... .03 .01
Adjusted pro forma.................................................. .03 .01
</TABLE>
The fair value of each option is estimated on the date of grant using the
minimum value method with the following weighted average assumptions: No
dividends, an expected life of one to two years, and a risk-free interest rate
of 6.00% for the year ended December 31, 1995.
A summary of the status of the Company's options for the years ended
December 31, 1996 and 1995, is as follows:
F-11
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1996
---------------------- -----------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
FIXED EXERCISE FIXED EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Outstanding at beginning of year..................... 560,000 $ .03 1,285,000 $ .03
Granted.............................................. 725,000 .03 -- --
Forfeited............................................ -- -- (35,000) .03
Exercised............................................ -- -- (1,250,000) .03
--------- ----------
Outstanding at end of year/period.................... 1,285,000 --
--------- ----------
--------- ----------
Options exercisable at period-end.................... 1,210,000 --
--------- ----------
--------- ----------
Weighted average fair value of options granted during
the year........................................... $ .0025 $ --
--------- ----------
--------- ----------
</TABLE>
In December 1996, the Board of Directors adopted the Company's Stock Option
Plan (the 'Plan') and has reserved up to 500,000 shares of Common Stock for
issuance thereunder. The Plan provides for the granting of options to officers,
directors, employees and advisors of the Company. The exercise of incentive
stock options ('ISOs') issued to employees who are less than 10% stockholders
shall not be less than the fair market value of the underlying shares on the
date of grant or not less than 110% of the fair market value of the shares in
the case of an employee who is a 10% stockholder. The exercise price of
restricted stock options shall not be less than the par value of the shares to
which the option relates. Options are not exercisable for a period of one year
from the date of grant. Thereafter, options may be exercised as determined by
the Board of Directors, with maximum terms of ten and five years, respectively,
for ISOs issued to employees who are less than 10% stockholders and employees
who are 10% stockholders. In addition, under the plan, no individual will be
given the opportunity to exercise ISO's valued in excess of $100,000, in any
calendar year, unless and to the extent the options have first become
exercisable in the preceding year. The maximum number of shares with respect to
which options may be granted to an individual during any twelve month period is
100,000. The Plan will terminate in 2006.
Subsequent to December 31, 1996, the Company granted 85,974 incentive stock
options exercisable at prices ranging from $3.50 to $3.85 per share and 81,526
non-qualified options exercisable at $3.50 per share under the Plan.
PREFERRED STOCK
On December 6, 1996, the Company's stockholders approved an amendment to
the Company's Certificate of Incorporation to authorize the issuance of up to
1,000,000 shares of Preferred Stock. The rights and privileges of the Preferred
Stock have not yet been determined.
F-12
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9 -- INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1996 1995
-------- -------
<S> <C> <C>
Current:
Federal........................................................... $ 39,320 $ 7,089
State............................................................. 14,219 4,674
-------- -------
Total current................................................ 53,539 11,763
-------- -------
Deferred:
Federal........................................................... (13,589) (3,398)
State............................................................. (1,344) (336)
-------- -------
Total deferred............................................... (14,933) (3,734)
-------- -------
$ 38,606 $ 8,029
-------- -------
-------- -------
</TABLE>
The Company's effective tax rate differs from the statutory federal tax
rate as shown in the following table:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------
1996 1995
------- ------
<S> <C> <C>
Computed 'expected' tax expense.......................................... $18,944 $2,587
State tax expenses, net of federal benefit............................... 7,495 1,320
Non-deductible items..................................................... 8,032 3,128
Other.................................................................... 4,135 994
------- ------
$38,606 $8,029
------- ------
------- ------
</TABLE>
The tax effects of the temporary differences that give rise to significant
portions of the deferred tax assets and liabilities as of 1996 and 1995 are
presented below:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax liabilities:
Depreciation....................................................... $14,799 $ 6,741
Tax basis change in accounting method.............................. 6,780 19,271
------- -------
Total deferred tax liabilities..................................... 21,579 26,012
------- -------
Deferred tax assets:
Allowance for doubtful accounts.................................... 7,950 2,700
Accrued reserves................................................... 7,950 2,700
------- -------
Total deferred tax assets.......................................... 15,900 5,400
------- -------
Net deferred tax liabilities............................................ $ 5,679 $20,612
------- -------
------- -------
</TABLE>
NOTE 10 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
Effective December 31, 1995, the Company adopted SFAS 107, which requires
disclosing fair value to the extent practicable for financial instruments which
are recognized or unrecognized in the balance sheet. The fair value of the
financial instruments disclosed therein are not necessarily representative of
the amount that could be realized or settled, nor does the fair value amount
consider the tax
F-13
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
consequences of realization or settlement. The following table summarizes
financial instruments by individual balance sheet accounts as of December 31,
1996.
<TABLE>
<CAPTION>
CARRYING
AMOUNT FAIR VALUE
---------- ----------
<S> <C> <C>
Debt maturing within one year..................................... $ 468,321 $ 468,321
Long-term debt.................................................... 801,354 801,354
---------- ----------
Totals....................................................... $1,269,675 $1,269,675
---------- ----------
---------- ----------
</TABLE>
For debt classified as current, it was assumed that the carrying amount
approximated fair value for these instruments because of their short maturities.
The fair value of long-term debt is based on current rates at which the Company
could borrow funds with similar remaining maturities. The carrying amount of
long-term debt approximates fair value.
NOTE 11 -- COMMITMENTS AND CONTINGENCIES
EMPLOYMENT AGREEMENTS
The Company's board of directors has approved new employment agreements for
three of its officers, effective January 1, 1997. The agreement with the
Company's president has a five-year term and provides for an annual salary of
$138,000 in the first year, increasing to $175,000 and $210,000 in the second
and third years, respectively. In years four and five, the president's base
salary will be $210,000, but can be increased at the discretion of the board of
director's compensation committee. Under the agreement, the Company will secure
and pay the premiums on a $1,000,000 life insurance policy payable to the
president's designated beneficiary or his estate. The agreement further provides
for medical benefits, the use of an automobile, and grants of 25,974 incentive
stock options and 74,026 non-qualified stock options under the Company's Stock
Option Plan.
The other agreements have a three-year term and replace three-year
contracts currently in effect. Those contracts, which were initiated in 1995,
each provided for salaries of $62,400 per year with 10% annual increases, plus
the grant of 200,000 immediately vested options to purchase shares of the
Company's common stock at $.03 per share. The new agreements each provide for
annual salaries of $104,000 in the first year, increasing by $10,000 each year
thereafter. The agreements further provide for an incentive bonus equal to 1/2
of 1% of net sales payable twice yearly to both officers. Each employee will
also be entitled to a monthly automobile allowance.
Each of the three agreements may be terminated without cause by the
respective employee upon ninety days written notice to the Company.
CONSULTING AGREEMENT
The Company has an agreement for an indefinite term with its general
counsel to provide corporate legal services for a fee of $18,000 per year.
F-14
<PAGE>
<PAGE>
ALL COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
OPERATING LEASES
The Company leases its facilities pursuant to a non-cancelable operating
lease agreement.
Future minimum annual rentals on this lease are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1997 ..................................................... $ 58,980
1998 ..................................................... 62,280
1999 ..................................................... 62,280
2000 ..................................................... 25,950
--------
$209,490
--------
--------
</TABLE>
Rent expense has been recognized on a straight-line basis to account for
fixed rental escalations during the lease term, resulting in deferred rent of
$4,572 at December 31, 1996. The Company also leases demonstration facilities at
two other locations on a month-to-month basis. Total rent expense for the years
ended December 31, 1996 and 1995 was $73,957 and $44,300, respectively.
LAWSUIT
The Company is the subject of a civil action filed by an individual on July
23, 1996 in the Superior Court of New Jersey, Middlesex County, arising from an
automobile accident involving a vehicle driven by the plaintiff and a
Company-owned van driven by an individual employed by the Company at the time.
The plaintiff alleges personal injuries due to the negligence of the Company,
the employee, and the driver of a third vehicle involved in the accident, and
seeks damages of $5,000,000. The Company's liability insurance carrier is
defending the action. Although an evaluation of the outcome cannot be made at
the present time, the Company believes that its liability insurance is
sufficient to cover any potential loss resulting from an adverse decision, and
accordingly, has not recorded any provisions for loss in the accompanying
financial statements.
NOTE 12 -- PROPOSED PUBLIC OFFERING
In December 1996, the Company entered into a letter of intent for a $3.85
million firm commitment public offering of 550,000 Units, each unit to consist
of two shares of Common Stock and two Class A Redeemable Common Stock Purchase
Warrants.
F-15
<PAGE>
<PAGE>
__________________________________ __________________________________
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OR PROJECTIONS OF FUTURE PERFORMANCE
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, ANY SUCH OTHER INFORMATION,
PROJECTIONS OR REPRESENTATIONS, IF GIVEN OR MADE, MUST NOT BE RELIED UPON AS
HAVING BEEN SO AUTHORIZED. THE DELIVERY OF THIS PROSPECTUS OR ANY SALE HEREUNDER
AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF ANY OFFER TO BUY ANY OF THE COMMON STOCK OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................ 3
Risk Factors...................................... 7
Dilution.......................................... 14
Use of Proceeds................................... 15
Capitalization.................................... 17
Dividend Policy................................... 17
Selected Financial Data........................... 18
Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 19
Business.......................................... 21
Management........................................ 30
Certain Transactions.............................. 34
Interim Financings................................ 35
Principal Stockholders............................ 36
Description of Securities......................... 37
Underwriting...................................... 40
Legal Matters..................................... 42
Experts........................................... 42
Concurrent Offering............................... 42
Additional Information............................ 43
Index to Financial Statements..................... F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN ITS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
550,000 UNITS
ALL COMMUNICATIONS
CORPORATION
CONSISTING OF
1,100,000 SHARES OF COMMON STOCK
AND
1,100,000 REDEEMABLE
CLASS A WARRANTS
---------------------
PROSPECTUS
---------------------
MONROE PARKER
SECURITIES, INC.
, 1997
__________________________________ __________________________________
<PAGE>
<PAGE>
[ALTERNATIVE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]
PRELIMINARY PROSPECTUS, DATED FEBRUARY , 1997
SUBJECT TO COMPLETION
ALL COMMUNICATIONS CORPORATION
375,000 BRIDGE UNITS
EACH BRIDGE UNIT CONSISTING OF ONE SHARE OF
COMMON STOCK AND ONE REDEEMABLE CLASS A WARRANT
AND
750,000 SHARES OF COMMON STOCK
This Prospectus relates to the sale of up to 375,000 Bridge Units of All
Communications Corporation (the 'Company') by certain note holders of the
Company (the 'Selling Bridge Unitholders') upon the exercise of 12% Convertible
Subordinated Notes ('Bridge Notes') in the aggregate principal amount of
$750,000 sold by the Company in December 1996 (the 'Bridge Financing'). Each
Bridge Unit consists of one share of Common Stock, no par value per share
('Common Stock'), and one redeemable Class A Common Stock Purchase Warrant
('Warrant'). The Bridge Units and the Common Stock and Warrants comprising the
Bridge Units are collectively referred to herein as the 'Registered Bridge
Securities.' Each Warrant entitles the registered holder thereof to purchase one
share of Common Stock at a price of $4.25 per share, subject to adjustment, for
four years commencing one year from the date of this Prospectus. The Company may
redeem the Warrants commencing , 1998 (18 months from the date of
the Prospectus), or earlier with the consent of Monroe Parker Securities, Inc.
(the 'Underwriter'), at a price of $.10 per Warrant, on not less than 30 days'
prior written notice, if the last sale price of the Common Stock has been at
least 250% ($10.63 per share) of the current Warrant exercise price, subject to
adjustment, for at least 20 consecutive trading days ending within three days
prior to the date on which notice of redemption is given. This Prospectus also
relates to the sale of up to 750,000 shares of Common Stock by the President of
the Company (the 'Selling Stockholder'). The Common Stock to be sold by the
Selling Stockholder is referred to herein as the 'Registered Common Stock.' The
Selling Bridge Unitholders and the Selling Stockholder are collectively referred
to herein as the 'Selling Securityholders.' See 'Selling Securityholders and
Plan of Distribution.'
The Company has applied for quotation of its Common Stock and Warrants on
the Nasdaq SmallCap Market ('Nasdaq') under the symbols 'ACMN' and 'ACMNW,'
respectively. Application has also been made to list the Common Stock and
Warrants on the Pacific Stock Exchange under the symbols 'CMN' and 'CMNW,'
respectively.
The Company will not receive any proceeds from the sale by the Selling
Bridge Unitholders of the Registered Bridge Securities except to the extent the
Warrants are exercised, or from the sale by the Selling Stockholder of the
Registered Common Stock.
------------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD BE CONSIDERED ONLY BY
INVESTORS WHO CAN AFFORD TO SUSTAIN A LOSS OF THEIR ENTIRE INVESTMENT. SEE 'RISK
FACTORS' ON PAGE AND 'DILUTION' ON PAGE .
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THEY
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
<PAGE>
The Selling Securityholders may be deemed 'Underwriters' as defined in the
Securities Act of 1933 (the 'Securities Act'). If any broker-dealers are used by
the Selling Securityholders, any commissions paid to broker-dealers and, if
broker-dealers purchase any Registered Bridge Securities or Registered Common
Stock as principals, any profits received by such broker-dealers on the resales
of the Registered Bridge Securities or Registered Common Stock may be deemed
underwriting discounts or commissions under the Securities Act. In addition, any
profit realized by the Selling Securityholders may be deemed to be underwriting
commissions. All costs, expenses and fees in connection with the registration of
the Registered Bridge Securities offered by the Selling Bridge Unitholders,
estimated at approximately $19,645, will be borne by the Selling Bridge
Unitholders. The cost of registering the Registered Common Stock offered by the
Selling Stockholder will be borne by the Company. Brokerage commissions, if any,
attributable to the sale of the Registered Bridge Securities and Registered
Common Stock will be borne by the Selling Securityholders. The Company has
agreed to indemnify the Selling Securityholders against certain liabilities,
including liabilities under the Securities Act.
The 375,000 Bridge Units and the shares of Common Stock and Warrants
comprising the Bridge Units offered hereby may be sold from time to time by the
Selling Bridge Unitholders, or by transferees, commencing two years from the
date of this Prospectus, or earlier with the consent of the Underwriter. The
750,000 shares of Common Stock offered hereby may be sold from time to time by
the Selling Stockholder, or by transferees, commencing three years from the date
of this Prospectus, or earlier with the consent of the Underwriter. No
underwriting arrangements have been entered into by the Selling Securityholders.
The distribution of the Selling Securityholders' securities by the Selling
Securityholders may be effected by one or more transactions that may take place
on the over-the-counter market, including ordinary broker's transactions,
privately negotiated transactions or through the sale to one or more dealers for
resale of such securities as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Securityholders in connection with the
sales of the Selling Securityholders' securities. See 'Selling Securityholders
and Plan of Distribution.'
On the date of this Prospectus, a registration statement under the
Securities Act with respect to an underwritten public offering (the 'Offering')
by the Company of 550,000 Units, each Unit consisting of two shares of Common
Stock and two Warrants, was declared effective by the Securities and Exchange
Commission (the 'Commission').
A-2
<PAGE>
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........................... Up to 375,000 Bridge Units, each Unit consisting of one share of
Common Stock and one redeemable Class A Common Stock Purchase
Warrant ('Warrant'), are being offered by the certain note
holders of the Company (the 'Selling Bridge Unitholders') upon
the exercise of 12% Convertible Subordinated Notes ('Bridge
Notes') in the aggregate principal amount of $750,000 sold by
the Company in December 1996 (the 'Bridge Financing'). In
addition, 750,000 shares of Common Stock (the 'Registered Common
Stock') are being offered by the President of the Company (the
'Selling Stockholder'). The Selling Bridge Unitholders and the
Selling Stockholder are collectively referred to herein as the
'Selling Securityholders.' The securities comprising the Bridge
Units are identical to the shares of Common Stock and Warrants
concurrently being offered and sold by the Company to the public
in an underwritten public offering (the 'Offering'). The sales
by the Selling Bridge Unitholders and the Selling Stockholder
are not part of the Offering. The Selling Bridge Unitholders may
not sell the Bridge Units or the Common Stock and Warrants
comprising the Bridge Units (collectively, the 'Registered
Bridge Securities') prior to two years from the date of this
Prospectus without the consent of the Underwriter. The Selling
Stockholder may not sell the Registered Common Stock prior to
three years from the date of this Prospectus without the consent
of the Underwriter.
The Selling Securityholders have advised the Company that any
sales of the Registered Bridge Securities and Registered Common
Stock will be made on the Nasdaq SmallCap Market at prevailing
prices or in private transactions at negotiated prices. See
'Selling Securityholders and Plan of Distribution.'
Description of Warrants:
Exercise of Warrants.................... Subject to redemption by the Company, the Warrants may be
exercised at any time during the four-year period commencing one
year from the date of this Prospectus at an exercise price of
$4.25 per share, subject to adjustment.
Redemption of Warrants.................. The Warrants are redeemable by the Company commencing 18 months
from the date of the Prospectus, or earlier with the consent of
the Underwriter, at $.10 per Warrant, on not less than 30 days'
prior written notice, provided that the last sale price of the
Common Stock is at least 250% ($10.63 per share) of the current
Warrant exercise price, subject to adjustment, for at least 20
consecutive trading days ending within three days prior to the
date on which notice of redemption is given. See 'Description of
Securities.'
Common Stock Outstanding(1).................. 4,475,000 shares(1)
Use of Proceeds.............................. The Company will not receive any proceeds from the sale by the
Selling Bridge Unitholders of the Registered Bridge Securities
except to the extent the Warrants are exercised, or from the
sale by the Selling Stockholder of the Registered Common Stock.
Proposed Nasdaq Symbols(2):
Common Stock............................ ACMN
Warrants................................ ACMNW
</TABLE>
A-3
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Proposed Pacific Stock Exchange Symbols(2):
Common Stock............................ CMN
Warrants................................ CMNW
Risk Factors................................. The securities offered hereby are speculative, involve a high
degree of risk and immediate substantial dilution, and should be
considered only by investors who can afford to sustain a loss of
their entire investment. See 'Risk Factors' and 'Dilution.'
</TABLE>
- ------------
(1) Includes 1,100,000 shares of Common Stock included in the Offering and
375,000 shares of Common Stock included in the Bridge Units, assuming the
conversion of $750,000 principal amount of Bridge Notes into 375,000 Bridge
Units. Does not include an aggregate of 2,025,000 shares which may be issued
upon exercise of (i) the Warrants underlying the Units included in the
Offering; (ii) the Underwriter's Options and underlying Warrants ; (iii) the
Underwriter's over-allotment option and underlying Warrants; and (iv) the
shares underlying the Warrants included in the Bridge Units. See 'Interim
Financing,' ' Description of Securities' and 'Underwriting.'
(2) Notwithstanding quotation on Nasdaq and listing on the Pacific Stock
Exchange, there can be no assurance that an active trading market for the
Company's securities will develop or, if developed, will be sustained.
A-4
<PAGE>
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale by the Selling
Bridge Unitholders of the Registered Bridge Securities except to the extent the
underlying Warrants are exercised, or from the sale by the Selling Stockholder
of the Registered Common Stock. The net proceeds to the Company from the sale of
the 550,000 Units in the Offering, after deducting underwriting discounts and
commissions and other expenses of the Offering, are estimated to be $3,015,000
($3,563,625 if the Underwriter's over-allotment option is exercised in full).
The Company intends to utilize the net proceeds of this offering over the next
24 months substantially as follows:
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
APPLICATION AMOUNT PERCENTAGE
- --------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Telephone Systems Inventory(1)............................................. $ 400,000 13.3%
Videoconferencing Equipment Inventory(2)................................... 235,000 7.8
Leasing New Corporate Headquarters and Leasehold Improvements(3)........... 240,000 8.0
Hiring Additional Employees(4)............................................. 350,000 11.6
Purchase of Computer Systems and Associated Software(5).................... 175,000 5.8
Marketing(6)............................................................... 200,000 6.6
Working Capital(7)......................................................... 1,415,000 46.9
----------- -----------
$3,015,000 100.0%
----------- -----------
----------- -----------
</TABLE>
The foregoing allocations are estimates only and are subject to revision
from time to time to meet the Company's requirements; any excess will be added
to working capital and any shortage will be deducted from working capital.
Furthermore, allocations may be changed in response to unanticipated
developments in the Company's business. The Company may re-allocate such amounts
from time to time among the categories shown above or to new categories if it
believes such to be in its best interest. In the event that the Underwriter's
over-allotment option is exercised or to the extent that the Warrants are
exercised, the Company will realize additional net proceeds, which will be added
to working capital. Pending full utilization of the net proceeds of the
Offering, the Company intends to make temporary investments in United States
government or federally insured securities. The Company believes that the net
proceeds from the Offering, plus working capital from operations and other
sources of funds will be adequate to sustain operations for the foreseeable
future.
- ------------
(1) Includes telephone common equipment ($125,000); telephone sets ($225,000);
and voice mail ($50,000).
(2) Includes video codecs ($110,000); monitors ($50,000); and peripheral
equipment, including cameras and audio systems ($50,000).
(3) Includes costs in connection with moving the Company's headquarters office
to larger facilities in the first half of 1997. It is estimated that such
facilities will contain approximately 10,000 square feet of space to be
utilized for executive, administrative and sales functions and for
demonstration of the Company's voice and video communications systems. An
additional approximately 5,000 square feet of space will be utilized for
warehousing of the Company's inventory. See 'Business -- Facilities.'
(4) Includes costs associated with the planned hiring and retention over the
next two years of two branch sales managers for the Company's voice
products, who will report directly to the Company's Vice President -- Sales
and Marketing of Voice Products; nine voice sales representatives, who will
report directly to the voice branch sales managers; and three
videoconferencing sales representatives, who will report directly to the
Company's Vice President -- Sales and Marketing of Videoconferencing
Products. See 'Business -- Sales and Marketing.'
(5) Includes costs in connection with upgrading both the hardware and software
of the Company's computer systems, software and local area network (LAN).
The new system will encompass service order entry, inventory management,
billing, accounting, word processing and administrative software. Also
includes consulting fees for project design and implementation.
(footnotes continued on next page)
A-5
<PAGE>
<PAGE>
(footnotes continued from previous page)
(6) Includes costs in connection with exhibiting the Company's products at trade
shows ($100,000) and costs associated with a direct mail campaign directed
to the approximately 9,000 franchisees of CENTURY 21'r', ERA'r' and Coldwell
Banker'r' ($100,000), as required under the Company's Preferred Vendor
Agreement with HFS Incorporated. See 'Business -- Sales and Marketing.'
(7) Working capital will be used to pay general and administrative expenses and
for general working capital purposes. Also, working capital will be used to
repay the principal amount of the Bridge Notes, to the extent that they are
not converted into Bridge Units. While the aggregate principal amount of the
Bridge Notes totals $750,000, management believes that the portion of the
Bridge Notes that will not be converted into Bridge Units will be minimal.
Accordingly, all remaining funds will be used for general working capital
purposes, including the possible acquisition of other voice and video
communications systems resellers. See 'Interim Financing.'
A-6
<PAGE>
<PAGE>
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
In connection with the Bridge Financing which was completed in December
1996, the Company has registered for sale pursuant to the Registration Statement
of which this Prospectus is a part, an aggregate of 375,000 Bridge Units,
consisting of 375,000 shares of Common Stock and 375,000 Warrants, on behalf of
the persons named below (the 'Selling Bridge Unitholders'). Except for Eric
Friedman, who was recently elected to the Board of Directors of the Company,
none of the Selling Bridge Unitholders has had a material relationship with or
has held any position or office with the Company or the Underwriter within the
past three years. The Bridge Units and/or the shares of Common Stock and
Warrants comprising the Bridge Units may be sold commencing two years from the
date of this Prospectus, or earlier with the consent of the Underwriter. See
'Interim Financing' and 'Description of Securities.'
Set forth below is information as to the Selling Bridge Unitholders.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED PRIOR NUMBER OF
TO OFFERING(1) NUMBER OF WARRANTS NUMBER OF
NAME AND ADDRESS ------------------ SHARES BENEFICIALLY WARRANTS
OF BENEFICIAL OWNER NUMBER PERCENT OFFERED(2) OWNED(1) OFFERED(2)
- ------------------------------------------------------------ ------- ------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Charles S. Junger .......................................... 75,000 2.2% 75,000 75,000 75,000
42 West 39th Street
New York, NY 10018
E. Gerald Kay .............................................. 162,500 4.8% 62,500 62,500 62,500
3 Isabella Place
Glen Rock, NJ 07452
Knoll-Smith Partnership .................................... 62,500 1.9% 62,500 62,500 62,500
10414 N.W. 24th Place
Sunrise, FL 33322
Stephen Capizzi ............................................ 50,000 1.5% 50,000 50,000 50,000
20 English Woods
Rochester, NY 14610
R.F. Properties Corp. ...................................... 37,500 1.1% 37,500 37,500 37,500
66 Powerhouse Road
Roslyn Heights, NY 11577
Kenneth Lipson ............................................. 25,000 0.7% 25,000 25,000 25,000
251 28th Avenue
San Francisco, CA 94121
Peter and Tamara Balner .................................... 25,000 0.7% 25,000 25,000 25,000
40 Winter Lane
Watchung, NJ 07080
Harold Orlow ............................................... 25,000 0.7% 25,000 25,000 25,000
236 Brookdale Road
Stamford, CT 06903
Eric Friedman .............................................. 12,500 0.4% 12,500 12,500 12,500
9 Settlers Lane
Westfield, NJ 07090
</TABLE>
- ------------
(1) Assumes the conversion of an aggregate of $750,000 principal amount of
Bridge Notes into 375,000 Bridge Units, and does not include up to 375,000
shares of Common Stock issuable upon exercise of the 375,000 Warrants
included in the Bridge Units.
(2) Beneficial ownership of the Bridge Units and underlying securities by the
Selling Bridge Unitholders after the Offering will depend on the number of
Bridge Units and/or the shares of Common Stock and Warrants comprising the
Units sold by each selling Bridge Unitholder.
A-7
<PAGE>
<PAGE>
The Company will not receive any proceeds from the sale by the Selling
Bridge Unitholders of the Bridge Units or underlying securities other than upon
exercise of their Warrants.
The Selling Bridge Unitholders have agreed to reimburse the Company for
certain expenses in connection with the registration of the Registered Bridge
Securities. These expenses consist of $445 (SEC filing fee attributable to the
Selling Bridge Unitholders' securities); $6,500 (based upon a pro rata share of
Blue Sky legal expenses and filing fees); $10,200 (based upon a pro rata share
of legal fees and expenses); and $2,500 (based upon a pro rata share of
accounting fees and expenses), for a total of $19,645. Such amounts will be paid
to the Company on the date of the completion of the Offering.
In addition to the Units registered hereunder to be sold by the Company and
the 375,000 Bridge Units registered hereunder to be sold by the Selling Bridge
Unitholders, 750,000 shares of Common Stock are being registered by this
Prospectus on behalf of Richard Reiss, the President of the Company (the
'Selling Stockholder'). Such shares of Common Stock may be sold commencing three
years from the date of this Prospectus, or earlier with the consent of the
Underwriter.
The following table sets forth certain information with respect to the
Selling Stockholder for whom the Company is registering 750,000 shares of Common
Stock ('Registered Common Stock') for sale to the public, as of the date of this
Prospectus and after the sale of 550,000 Units by the Company and 750,000 shares
of Common Stock by the Selling Stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERING NUMBER OF THE OFFERING
--------------------- SHARES TO ---------------------
NAME NUMBER PERCENT BE OFFERED NUMBER PERCENT
- ------------------------------------------- --------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
Richard Reiss.............................. 2,060,000 68.7% 750,000 1,310,000 32.0%
</TABLE>
The Company will not receive any proceeds from the sale by the Selling
Stockholder of the Registered Common Stock.
The Selling Bridge Unitholders have advised the Company with respect to the
Bridge Units and the shares of Common Stock and Warrants comprising the Bridge
Units, and the Selling Stockholder has advised the Company with respect to the
Registered Common Stock, that sales may be effected from time to time in
transactions (which may include block transactions) by or for the account of the
Selling Bridge Unitholders or Selling Stockholder (collectively, the 'Selling
Securityholders') in the over-the-counter market or in negotiated transactions,
a combination of such methods of sale or otherwise, and securities may be
transferred by gift. The Selling Securityholders may effect such transactions by
selling their securities directly to purchasers, through broker-dealers acting
as agents for the Selling Securityholders or to broker-dealers who may purchase
shares as principals and thereafter sell the securities from time to time in the
over-the-counter market, in negotiated transactions or otherwise. Such
broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders and/or the
purchasers from whom such broker-dealers may act as agents or to whom they may
sell as principals or otherwise (which compensation as to a particular
broker-dealer may exceed customary commissions).
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Selling Securityholders' securities may not
simultaneously engage in market-making activities with respect to any securities
of the Company during the applicable 'cooling-off' period (currently at least
two and possibly nine business days) prior to the commencement of such
distribution. Accordingly, in the event the Underwriter is engaged in a
distribution of a Selling Securityholder's securities, it will not be able to
make a market in the Company's securities during the applicable restrictive
period. However, the Underwriter has not agreed to and is not obligated to act
as broker-dealer in the sale of any Selling Securityholder's securities and the
Selling Securityholders may be required, and in the event the Underwriter is a
market-maker, will likely be required, to sell such securities through another
broker-dealer. In addition, each Selling Securityholder desiring to sell
securities will be subject to the applicable provisions of the Exchange Act and
the rules and regulation thereunder, including without limitation Rules 10b-6
and 10b-7, which provisions may limit the timing of the purchases and sales of
shares of the Company's securities by such Selling Securityholders.
A-8
<PAGE>
<PAGE>
The Selling Securityholders and broker-dealers, if any, acting in
connection with such sales might be deemed to be 'underwriters' within the
meaning of Section 2(11) of the Securities Act and any commission received by
them and any profit on the resale of the securities might be deemed to be
underwriting discount and commissions under the Securities Act. The Selling
Securityholders may agree to indemnify any agent, dealer, or broker-dealer that
participates in transactions involving sales of the Company's securities against
certain liabilities, including liabilities arising under the Securities Act.
Sales of the Company's securities by the Selling Securityholders, or even the
potential of such sales, would likely have an adverse effect on the market price
of the Common Stock.
At the time a particular offer of the Company's securities is made by or on
behalf of the Selling Securityholders, to the extent required, a Prospectus will
be distributed which will set forth the number of Bridge Units, shares of Common
Stock and Warrants being offered and the terms of the offering, including the
name or names of any underwriters, dealers or agents, if any, the purchase price
paid by any underwriter for the Company's securities purchased from the Selling
Securityholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, and the proposed selling price to the public.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Singer Zamansky LLP, New York, New York.
EXPERTS
The financial statements of the Company included in this Prospectus have
been audited by Schneider Ehrlich & Wengrover LLP, independent auditors, as set
forth in their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
CONCURRENT OFFERING
The Registration Statement of which this Prospectus forms a part also
covers 550,000 Units, each consisting of two shares of Common Stock and two
Warrants being offered by the Company in the Offering made pursuant to the
Offering Prospectus.
ADDITIONAL INFORMATION
The Company is not a reporting company under the Exchange Act. The Company
has filed a Registration Statement on Form SB-2 under the Securities Act with
the Commission in Washington, D.C. with respect to the Units offered hereby.
This Prospectus, which is part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement and the exhibits
thereto. For further information with respect to the Company and the Units
offered hereby, reference is hereby made to the Registration Statement and such
exhibits, which may be inspected without charge at the office of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and at 500 West Madison (Suite 1400), Chicago, Illinois 60661. Copies
of such material may also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. The address of such site is
http://www.sec.gov. Statements contained in this Prospectus as to the contents
of any contract or other document referred to are not necessarily complete and
in each instance reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
Following the offering, the Company will be subject to the reporting and
other requirements of the Exchange Act and intends to furnish to its
stockholders annual reports containing audited financial statements and may
furnish interim reports as it deems appropriate.
A-9
<PAGE>
<PAGE>
[ALTERNATE BACK COVER]
_____________________________ _____________________________
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OR PROJECTIONS OF FUTURE PERFORMANCE
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, ANY SUCH OTHER INFORMATION,
PROJECTIONS OR REPRESENTATIONS, IF GIVEN OR MADE, MUST NOT BE RELIED UPON AS
HAVING BEEN SO AUTHORIZED. THE DELIVERY OF THIS PROSPECTUS OR ANY SALE HEREUNDER
AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF ANY OFFER TO BUY ANY OF THE COMMON STOCK OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................................................... 3
Risk Factors............................................................................................................... 7
Dilution................................................................................................................... 14
Use of Proceeds............................................................................................................ 15
Capitalization............................................................................................................. 17
Dividend Policy............................................................................................................ 17
Selected Financial Data.................................................................................................... 18
Management's Discussion and Analysis of Financial Condition and Results of Operations...................................... 19
Business................................................................................................................... 21
Management................................................................................................................. 30
Certain Transactions....................................................................................................... 34
Interim Financings......................................................................................................... 35
Principal Stockholders..................................................................................................... 36
Selling Securityholders and Plan of Distribution...........................................................................
Description of Securities.................................................................................................. 37
Legal Matters.............................................................................................................. 42
Experts.................................................................................................................... 42
Concurrent Offering........................................................................................................ 42
Additional Information..................................................................................................... 43
Index to Financial Statements.............................................................................................. F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN ITS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
ALL COMMUNICATIONS
CORPORATION
375,000 BRIDGE UNITS
EACH BRIDGE UNIT CONSISTING OF ONE
SHARE OF COMMON STOCK AND ONE
REDEEMABLE CLASS A WARRANT
AND
750,000 SHARES OF COMMON STOCK
------------------------
PROSPECTUS
------------------------
, 1997
_____________________________ _____________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 14A:3-5 of the New Jersey Business Corporation Act and paragraph 6
of the Company's Certificate of Incorporation (Exhibit 3.3) provide for
indemnification of directors and officers of the Company under certain
circumstances.
Reference is made to Paragraphs 6 and 7 of the Underwriting Agreement
(Exhibit 1.1) with respect to indemnification of the Company and the
Underwriter.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons of the
registrant, pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such a director, officer or controlling person in
connection with the securities being registered hereunder, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the securities offered hereby.
<TABLE>
<S> <C>
SEC registration fee........................................................... $ 4,494.01
NASD registration fee.......................................................... 1,983.02
Nasdaq listing fee............................................................. 10,000.00
Pacific Stock Exchange listing fee............................................. 22,500.00
Printing and engraving......................................................... 40,000.00
Accountants' fees and expenses................................................. 25,000.00
Legal fees..................................................................... 100,000.00
Transfer agent's and warrant agent's fees and expenses......................... 5,000.00
Blue Sky fees and expenses..................................................... 40,000.00
Underwriter's non-accountable expense allowance................................ 115,500.00
Underwriter's consulting agreement............................................. 77,000.00
Miscellaneous.................................................................. 8,522.97
-----------
Total................................................................ $450,000.00
-----------
-----------
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information concerning the issuance by the Registrant of
its securities within the past three years without registering the securities
under the Securities Act of 1933. All such securities are restricted securities
and the certificates bear a restrictive legend.
II-1
<PAGE>
<PAGE>
(a) The following table sets forth the Registrant's sales of unregistered
securities during the period from April 28, 1995 through December 13, 1996.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
NAME DATE OF PURCHASE COMMON STOCK CONSIDERATION
- ---------------------------------------------------------- ------------------ ------------ -------------
<S> <C> <C> <C>
Peter Barrett............................................. April 28, 1995 50,000 $ 1,500
Robert B. Kroner.......................................... April 28, 1995 33,334 1,000
Robert B. Kroner.......................................... December 13, 1996 50,000 1,500
E. Gerald Kay............................................. December 13, 1996 100,000 3,000
Maureen Rini.............................................. December 13, 1996 25,000 750
Robin Kubu................................................ December 13, 1996 25,000 750
Leo Flotron............................................... December 13, 1996 200,000 6,000
Joseph Scotti............................................. December 13, 1996 200,000 6,000
Keith Blackmore........................................... December 13, 1996 25,000 750
Douglas Roser............................................. December 13, 1996 25,000 750
Andrea Grasso............................................. December 13, 1996 25,000 750
Maria Aversa.............................................. December 13, 1996 2,500 75
Eric Gerkens.............................................. December 13, 1996 2,500 75
Richard Reiss............................................. December 18, 1996 560,000 16,800
Anthony Zarro............................................. December 18, 1996 10,000 300
------------ -------------
1,333,334 $40,000
------------ -------------
------------ -------------
</TABLE>
(b) In December 1996, the Company completed a bridge financing ('Bridge
Financing'), pursuant to which it issued to seven accredited investors an
aggregate of $750,000 principal amount of 12% Convertible Subordinated Notes
('Bridge Notes'). To the extent not converted, the principal amount of the
Bridge Notes is due and payable on the earlier of the completion of this
offering or December 31, 1999. Commencing on the effective date of this
offering, the Bridge Notes are convertible, at the option of the holders, into
an aggregate of up to 375,000 Bridge Units, each consisting of one share of
Common Stock and one Warrant, and the Company will issue to each note holder one
Bridge Unit for each $2.00 principal amount of Bridge Notes presented for
conversion. The following table sets forth the names of the investors in the
Bridge Financing, together with the principal amount of Bridge Notes acquired by
each investor.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
NAME BRIDGE NOTES
- ---------------------------------------------------------------------- ------------
<S> <C>
Charles S. Junger..................................................... $150,000
E. Gerald Kay......................................................... 125,000
Knoll-Smith Partnership............................................... 125,000
Stephen Capizzi....................................................... 100,000
R.F. Properties Corp. ................................................ 75,000
Kenneth Lipson........................................................ 150,000
Eric Friedman......................................................... 25,000
------------
$750,000
------------
------------
</TABLE>
The issuances described in paragraphs (a) and (b) are exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) thereof
as transactions not involving a public offering.
II-2
<PAGE>
<PAGE>
ITEM 27. EXHIBITS
<TABLE>
<C> <S>
1.1 -- Form of Underwriting Agreement.
1.2 -- Form of Underwriter's Options.
1.3 -- Form of Consulting Agreement between the Registrant and the Underwriter.
1.4 -- Form of Selected Dealers Agreement.
3.1 -- Certificate of Incorporation, as amended.
3.2 -- By-Laws, as amended.
4.1 -- Form of Warrant Agreement among the Registrant and American Stock Transfer & Trust Company, as
Warrant Agent.
4.2 -- Specimen Common Stock Certificate of Registrant.
4.3 -- Specimen Class A Warrant Certificate of Registrant.
5.1 -- Opinion of Singer Zamansky LLP.(1)
10.1 -- Agreement, Dated December 9, 1996, between the Registrant and HFS Incorporated.
10.2 -- Dealer Agreement, Dated May 20, 1992, between the Registrant and Panasonic Communications & System
Company.
10.3 -- 1996 Reseller Agreement, Dated April 1, 1996, between the Registrant and Sony Electronics Inc.
10.4 -- Employment Agreement, Effective January 1, 1997, between the Registrant and Richard Reiss.
10.5 -- Employment Agreement, Effective January 1, 1997, between the Registrant and Joseph Scotti.
10.6 -- Employment Agreement, Effective January 1, 1997, between the Registrant and Leo Flotron.
10.7 -- Lease Agreement for Premises Located at 1450 Route 22, Mountainside, New Jersey, Dated April 13,
1995, between the Registrant and Mountain Plaza Associates.
10.8 -- First Amendment to Lease Agreement for Premises Located at 1450 Route 22, Mountainside, New Jersey,
Dated June 27, 1996, between the Registrant and Mountain Plaza Associates.
10.9 -- Sublease Agreement for Premises Located at 1130 Connecticut Avenue, N.W., Washington D.C., Dated July
1, 1996, between the Registrant and Charles L. Fishman, P.C.
10.10 -- Stock Option Plan.
11.1 -- Computation of Income Per Share.
24.1 -- Consent of Schneider Ehrlich & Wengrover LLP, the Company's Independent Auditors (see Page II-6).
24.2 -- Consent of Singer Zamansky LLP (Included in Exhibit 5.1).
25.1 -- Powers of Attorney (see Page II-5).
27.1 -- Financial Data Schedule, Article 5.
</TABLE>
- ------------
(1) To be filed by amendment.
ITEM 28. UNDERTAKINGS
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) To provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the underwriters to permit prompt delivery to each
purchaser.
II-3
<PAGE>
<PAGE>
(3) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(4) To remove from the registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of the
registrant, pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act, and is therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(6) For determining any liability under the Securities Act, to treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the issuer under Rule 424(b)(1), or (4) or 497(h) under the
Securities Act as part of this registration statement as of the time the
Commission declared it effective.
(7) For determining any liability under the Securities Act, to treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-4
<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe it meets all the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
Mountainside, New Jersey on February 4, 1997.
ALL COMMUNICATIONS CORPORATION
By: /S/ RICHARD REISS
.................................
RICHARD REISS,
CHAIRMAN
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard Reiss his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits and schedules thereto, and
all other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully ratifying and confirming all that said attorney-in-fact and
agent or their substitutes or substitute may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 4, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ RICHARD REISS Chairman of the Board of Directors, Chief February 4, 1997
......................................... Executive Officer and President (Principal
RICHARD REISS Executive Officer)
/s/ SCOTT TANSEY Vice President -- Finance (Principal February 4, 1997
......................................... Financial and Accounting Officer)
SCOTT TANSEY
/s/ ROBERT B. KRONER Director February 4, 1997
.........................................
ROBERT B. KRONER
/s/ ERIC FRIEDMAN Director February 4, 1997
.........................................
ERIC FRIEDMAN
/s/ PETER MALUSO Director February 4, 1997
.........................................
PETER MALUSO
/s/ ANDREA GRASSO Director February 4, 1997
.........................................
ANDREA GRASSO
</TABLE>
II-5
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated January 21, 1997
relating to the financial statements of All Communications Corporation, which
appears in such Prospectus. We also consent to the reference to us under the
heading 'Experts' is such Prospectus.
SCHNEIDER EHRLICH & WENGROVER LLP
Woodbury, New York
February 3, 1997
II-6
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------ ---------------------------------------------------------------------------------------------------- ----
<C> <S> <C>
1.1 -- Form of Underwriting Agreement...................................................................
1.2 -- Form of Underwriter's Options....................................................................
1.3 -- Form of Consulting Agreement between the Registrant and the Underwriter..........................
1.4 -- Form of Selected Dealers Agreement...............................................................
3.1 -- Certificate of Incorporation, as amended.........................................................
3.2 -- By-Laws, as amended..............................................................................
4.1 -- Form of Warrant Agreement among the Registrant and American Stock Transfer & Trust Company, as
Warrant Agent.....................................................................................
4.2 -- Specimen Common Stock Certificate of Registrant..................................................
4.3 -- Specimen Class A Warrant Certificate of Registrant...............................................
5.1 -- Opinion of Singer Zamansky LLP.(1)
10.1 -- Agreement, Dated December 9, 1996, between the Registrant and HFS Incorporated...................
10.2 -- Dealer Agreement, Dated May 20, 1992, between the Registrant and Panasonic Communications &
System Company....................................................................................
10.3 -- 1996 Reseller Agreement, Dated April 1, 1996, between the Registrant and Sony Electronics Inc....
10.4 -- Employment Agreement, Effective January 1, 1997, between the Registrant and Richard Reiss........
10.5 -- Employment Agreement, Effective January 1, 1997, between the Registrant and Joseph Scotti........
10.6 -- Employment Agreement, Effective January 1, 1997, between the Registrant and Leo Flotron..........
10.7 -- Lease Agreement for Premises Located at 1450 Route 22, Mountainside, New Jersey, Dated April 13,
1995, between the Registrant and Mountain Plaza Associates........................................
10.8 -- First Amendment to Lease Agreement for Premises Located at 1450 Route 22, Mountainside, New
Jersey, Dated June 27, 1996, between the Registrant and Mountain Plaza Associates.................
10.9 -- Sublease Agreement for Premises Located at 1130 Connecticut Avenue, N.W., Washington D.C., Dated
July 1, 1996, between the Registrant and Charles L. Fishman, P.C..................................
10.10 -- Stock Option Plan................................................................................
11.1 -- Computation of Income Per Share..................................................................
24.1 -- Consent of Schneider Ehrlich & Wengrover LLP, the Company's Independent Auditors (see Page
II-6).............................................................................................
24.2 -- Consent of Singer Zamansky LLP (Included in Exhibit 5.1).........................................
25.1 -- Powers of Attorney (see Page II-5)...............................................................
27.1 -- Financial Data Schedule, Article 5...............................................................
</TABLE>
- ------------
(1) To be filed by amendment.
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as ... 'r'
<PAGE>
<PAGE>
550,000 Units (each Unit consisting of two (2) shares of Common
Stock, no par value per share and two (2) Warrants for Common Stock)
ALL COMMUNICATIONS CORPORATION
UNDERWRITING AGREEMENT
New York, New York
, 1997
------------
Monroe Parker Securities, Inc.
2500 Westchester Avenue
Purchase, New York 10577
All Communications Corporation, a New Jersey corporation (the
'Company'), proposes to issue and sell to you (the 'Underwriter'), an aggregate
of 550,000 Units ('Units'), each Unit consisting of two (2) shares of Common
Stock, no par value per share ('Common Stock'), and two (2) Class A Redeemable
Purchase Warrants for Common Stock ('Warrants'). The Units, Common Stock and
Warrants may be collectively referred to hereinafter as the 'Securities'. Each
Warrant entitles the registered holder thereof to purchase one (1) share of
Common Stock at an exercise price of $4.25 per share for a period of three (3)
years, commencing , 1997 (one (1) year from the Effective Date)
through , 2001. The Warrants are subject to redemption by the Company
upon not less than thirty (30) days' notice at any time after , 1998
(eighteen (18) months from the Effective Date) or earlier with the consent of
the Underwriter, at $.10 per warrant, if the closing sale price per share of
Common Stock has equaled or exceeded 250% of the then exercise price of the
Warrants on all 20 business days ending on the third day prior to the written
notice of redemption. In addition, the Company proposes to grant to the
Underwriter the option referred to in Section 2(b) to purchase all or any part
of an aggregate of 82,500 additional Units.
Unless the context otherwise requires, the aggregate of 550,000 Units
to be sold by the Company and the shares of Common Stock and the Warrants
comprising the Units, are herein called the 'Units.' The Common Stock to be
outstanding after giving effect to the sale of the Units are also called the
'Shares.'
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You have advised the Company that you desire to purchase the Units.
The Company confirms the agreements made by it with respect to the purchase of
the Units by the Underwriter as follows:
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with you that:
(a) A registration statement (File No. 333- ) on Form SB-2
relating to the public offering of the Units, including a form of prospectus
subject to completion, copies of which have heretofore been delivered to you,
has been prepared in conformity with the requirements of the Securities Act of
1933, as amended (the 'Act'), and the rules and regulations (the 'Rules and
Regulations') of the Securities and Exchange Commission (the 'Commission')
thereunder, and has been filed with the Commission under the Act and one or more
amendments to such registration statement may have been so filed. After the
execution of this Agreement, the Company will file with the Commission either
(i) if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, a prospectus in the
form most recently included in an amendment to such registration statement (or,
if no such amendment shall have been filed in such registration statement), with
such changes or insertions as are required by Rule 430A under the Act or
permitted by Rule 424(b) under the Act and as have been provided to and approved
by you prior to the execution of this Agreement, or (ii) if such registration
statement, as it may have been amended, has not been declared by the Commission
to be effective under the Act, an amendment to such registration statement,
including a form of prospectus, a copy of which amendment has been furnished to
and approved by you prior to the execution of this Agreement. As used in this
Agreement, the term 'Company' means All Communications Corporation and/or each
of its subsidiaries ('Subsidiaries'); the term 'Registration Statement' means
such registration statement, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term 'Preliminary
Prospectus' means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); and the term
'Prospectus' means the prospectus first filed with the Commission pursuant to
Rule 424(b) under the Act, or, if no prospectus is required to be filed pursuant
to said Rule 424(b), such term means the prospectus included in the Registration
Statement; except that if such registration statement or prospectus is amended
or such prospectus is supplemented, after the effective date of such
registration statement and prior to the Option Closing Date (as hereinafter
defined), the terms 'Registration Statement' and 'Prospectus' shall include such
registration statement and prospectus as so amended, and the term 'Prospectus'
shall include the prospectus as so supplemented, or both, as the case may be.
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(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. At the time the Registration
Statement becomes effective and at all times subsequent thereto up to and on the
First Closing Date (as hereinafter defined) or the Option Closing Date, as the
case may be, (i) the Registration Statement and Prospectus will in all respects
conform to the requirements of the Act and the Rules and Regulations; and (ii)
neither the Registration Statement nor the Prospectus will include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make statements therein not misleading; provided,
however, that the Company makes no representations, warranties or agreements as
to information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriter specifically for use
in the preparation thereof. It is understood that the statements set forth in
the Prospectus with respect to stabilization, under the heading 'Underwriting',
the Risk Factor entitled 'Underwriter's Limited Underwriting Experience' and the
identity of counsel to the Underwriter under the heading 'Legal Matters'
constitute for purposes of this Section and Section 6(b) the only information
furnished in writing by or on behalf of the Underwriter for inclusion in the
Registration Statement and Prospectus, as the case may be.
(c) The Company and its Subsidiaries have been duly incorporated
and are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation with full corporate power and
authority to own their properties and conduct their business as described in the
Prospectus and are duly qualified or licensed to do business as foreign
corporations and are in good standing in each other jurisdiction in which the
nature of their business or the character or location of their properties
require such qualification, except where the failure to so qualify will not
materially adversely affect the Company's or Subsidiaries' business, properties
or financial condition.
(d) The authorized, issued and outstanding capital stock of the
Company and its Subsidiaries, including the predecessors of the Company, is as
set forth the Company's financial statements contained in the Registration
Statement; the shares of issued and outstanding capital stock of the Company and
its Subsidiaries set forth therein have been duly authorized, validly issued and
are fully paid and nonassessable; except as set forth in the Prospectus, no
options, warrants, or other rights to purchase, agreements or other obligations
to issue, or agreements or other rights to convert any obligation into, any
shares of capital stock of the Company or its Subsidiaries have been granted or
entered into by the Company or its Subsidiaries; and the capital stock conforms
to all statements relating thereto contained in the Registration Statement and
Prospectus.
(e) The Units and the shares of Common Stock, when paid for,
issued and delivered pursuant to this Agreement, will have been duly authorized,
issued and delivered and will constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
the right of creditors generally or by general equitable principles, and
entitled to
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the rights and preferences provided by the Certificate of Incorporation, which
will be in the form filed as an exhibit to the Registration Statement. The terms
of the Common Stock conform to the description thereof in the Registration
Statement and Prospectus.
The Warrants, when paid for, issued and delivered pursuant to
this Agreement, will have been duly authorized, issued and delivered and will
constitute valid and legally binding obligations of the Company enforceable in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting the right of creditors generally
or by general equitable principles, and entitled to the benefits provided by the
warrant agreement pursuant to which such Warrants are to be issued (the 'Warrant
Agreement'), which will be substantially in the form filed as an exhibit to the
Registration Statement. The shares of Common Stock issuable upon exercise of the
Warrants have been reserved for issuance upon the exercise of the Warrants and
when issued in accordance with the terms of the Warrants and Warrant Agreement,
will be duly and validly authorized validly issued, fully paid and
non-assessable and free of preemptive rights. The Warrant Agreement has been
duly authorized and, when executed and delivered pursuant to this Agreement,
assuming due authorization, execution and delivery by the transfer agent, will
have been duly executed and delivered and will constitute the valid and legally
binding obligation of the Company enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other laws
affecting the rights of creditors generally or by general equitable principles.
The Warrants and Warrant Agreement conform to the respective descriptions
thereof in the Registration Statement and Prospectus.
The Purchase Option (as defined in the Registration Statement),
when paid for, issued and delivered pursuant to this Agreement will constitute
valid and legally binding obligations of the Company enforceable in accordance
with their terms and entitled to the benefits provided by the Purchase Option,
except as enforceability may be limited by bankruptcy, insolvency or other laws
affecting the rights of creditors generally or by general equitable principles.
The Securities issuable upon exercise of the Purchase Option (and the shares of
Common Stock issuable upon exercise of the Warrants) when issued and paid for in
accordance with this Agreement, the Purchase Option and the Warrant Agreement,
will be duly authorized, validly issued, fully paid and non-assessable and free
of preemptive rights.
(f) This Agreement has been duly and validly authorized, executed
and delivered by the Company. The Company has full power and authority to
authorize, issue and sell the Units to be sold by it hereunder on the terms and
conditions set forth herein, and no consent, approval, authorization or other
order of any governmental authority is required in connection with such
authorization, execution and delivery or in connection with the authorization,
issuance and sale of the Units or the Purchase Option, except such as may be
required under the Act or state securities laws.
(g) Except as described in the Prospectus, or which would not
have a material adverse effect on the condition (financial or otherwise),
business prospects, net worth
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or properties of the Company and the Subsidiaries taken as a whole (a 'Material
Adverse Effect'), the Company and its Subsidiaries are not in violation, breach
or default of or under, and consummation of the transactions herein contemplated
and the fulfillment of the terms of this Agreement will not conflict with, or
result in a breach or violation of, any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of the Company or its
Subsidiaries pursuant to the terms of any material indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
its Subsidiaries is a party or by which the Company or its Subsidiaries may be
bound or to which any of the property or assets of the Company or its
Subsidiaries is subject, nor will such action result in any violation of the
provisions of the certificate of incorporation or the by-laws of the Company or
its Subsidiaries, as amended, or any statute or any order, rule or regulation
applicable to the Company or its Subsidiaries of any court or of any regulatory
authority or other governmental body having jurisdiction over the Company or its
Subsidiaries.
(h) Subject to the qualifications stated in the Prospectus, the
Company and its Subsidiaries have good and marketable title to all properties
and assets described in the Prospectus as owned by them, free and clear of all
liens, charges, encumbrances or restrictions, except such as are not materially
significant or important in relation to their business; all of the material
leases and subleases under which the Company or its Subsidiaries is the lessor
or sublessor of properties or assets or under which the Company and its
Subsidiaries holds properties or assets as lessee or sublessee as described in
the Prospectus are in full force and effect, and, except as described in the
Prospectus, the Company and its Subsidiaries are not in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and, to the best knowledge of the Company, no claim has been asserted
by anyone adverse to rights of the Company or its Subsidiaries as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company or its Subsidiaries
to continued possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the Prospectus; and
the Company and its Subsidiaries own or lease all such properties described in
the Prospectus as are necessary to their operations as now conducted and, except
as otherwise stated in the Prospectus, as proposed to be conducted as set forth
in the Prospectus.
(i) , which has given its report on certain
financial statements filed with the Commission as a part of the Registration
Statement, is with respect to the Company, independent public accountants as
required by the Act and the Rules and Regulations.
(j) The financial statements, and schedules together with related
notes, set forth in the Prospectus or the Registration Statement present fairly
the financial position and results of operations and changes in cash flow
position of the Company and its Subsidiaries on the basis stated in the
Registration Statement, at the respective dates and for the respective
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periods to which they apply. Said statements and schedules and related notes
have been prepared in accordance with generally accepted accounting principles
applied on a basis which is consistent during the periods involved except as
disclosed in the Prospectus and Registration Statement.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and except as otherwise
disclosed or contemplated therein, the Company and its Subsidiaries have not
incurred any liabilities or obligations, direct or contingent, not in the
ordinary course of business, or entered into any transaction not in the ordinary
course of business, which would have a Material Adverse Effect, and there has
not been any change in the capital stock of, or any incurrence of short-term or
long-term debt by, the Company or its Subsidiaries or any issuance of options,
warrants or other rights to purchase the capital stock of the Company or its
Subsidiaries or any material adverse change or any development involving, so far
as the Company or its Subsidiaries can now reasonably foresee a prospective
adverse change in the condition (financial or otherwise), net worth, results of
operations, business, key personnel or properties of it which would have a
Material Adverse Effect.
(l) Except as set forth in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened, any action, suit or
proceeding to which the Company or its Subsidiaries is a party before or by any
court or governmental agency or body, which might result in any material adverse
change in the financial condition, business prospects, net worth, or properties
of the Company or its Subsidiaries, nor are there any actions, suits or
proceedings related to environmental matters or related to discrimination on the
basis of age, sex, religion or race; and no labor disputes involving the
employees of the Company or its Subsidiaries exist or to the knowledge of the
Company, are threatened which might be expected to have a Material Adverse
Effect.
(m) Except as disclosed in the Prospectus, the Company and its
Subsidiaries have filed all necessary federal, state and foreign income and
franchise tax returns required to be filed as of the date hereof and have paid
all taxes shown as due thereon; and there is no tax deficiency which has been,
or to the knowledge of the party, may be asserted against the Company or its
Subsidiaries.
(n) Except as disclosed in the Registration Statement or
Prospectus, the Company and its Subsidiaries have sufficient licenses, permits
and other governmental authorizations currently necessary for the conduct of
their business or the ownership of their properties as described in the
Prospectus and is in all material respects complying therewith and owns or
possesses adequate rights to use all material patents, patent applications,
trademarks, service marks, trade-names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of such
businesses and have not received any notice of conflict with the asserted rights
of others in respect thereof. To the best knowledge of the Company, none of the
activities or business of the Company and its Subsidiaries are in
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violation of, or cause the Company or its Subsidiaries to violate, any law,
rule, regulation or order of the United States, any state, county or locality,
or of any agency or body of the United States or of any state, county or
locality, the violation of which would have a Material Adverse Effect.
(o) The Company and its Subsidiaries have not, directly or
indirectly, at any time (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contribution in violation
of law or (ii) made any payment to any state, federal or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments or contributions required or allowed by applicable
law. The Company's and Subsidiaries' internal accounting controls and procedures
are sufficient to cause the Company and its Subsidiaries to comply in all
material respects with the Foreign Corrupt Practices Act of 1977, as amended.
(p) On the Closing Dates (hereinafter defined) all transfer or
other taxes, (including franchise, capital stock or other tax, other than income
taxes, imposed by any jurisdiction) if any, which are required to be paid in
connection with the sale and transfer of the Securities to the Underwriter
hereunder will have been fully paid or provided for by the Company and all laws
imposing such taxes will have been complied with in all material respects.
(q) All contracts and other documents of the Company which are,
under the Rules and Regulations, required to be filed as exhibits to the
Registration Statement have been so filed.
(r) Except as disclosed in the Registration Statement, the
Company has no Subsidiaries.
(s) Except as disclosed in the Registration Statement, the
Company has not entered into any agreement pursuant to which any person is
entitled either directly or indirectly to compensation from the Company for
services as a finder in connection with the proposed public offering.
(t) Except as previously disclosed in writing by the Company to
the Underwriter or as disclosed in the Registration Statement, no officer,
director or stockholder of the Company has any National Association of
Securities Dealers, Inc. (the 'NASD') affiliation.
(u) No other firm, corporation or person has any rights to
underwrite an offering of any of the Company's securities.
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2. Purchase, Delivery and Sale of the Units.
(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties, and agreements herein
contained, the Company agrees to issue and sell to the Underwriter and the
Underwriter agrees to buy from the Company at $6.30 per Unit, at the place and
time hereinafter specified, 550,000 Units (the 'First Units').
Delivery of the First Units against payment therefor shall take
place at the offices of Bernstein & Wasserman, LLP, 950 Third Avenue, New York,
New York (or at such other place as may be designated by agreement between the
Underwriter and the Company) at 10:00 a.m., New York time, on , 1997,
or at such later time and date as the Underwriter may designate in writing to
the Company at least two business days prior to such purchase, but not later
than , 1997 such time and date of payment and delivery for the First
Units being herein called the 'First Closing Date.'
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants an option to the Underwriter (the
'Over-Allotment Option') to purchase all or any part of an aggregate of an
additional 82,500 Units to cover over allotments at the same price per Unit as
the Underwriter shall pay for the First Units being sold pursuant to the
provisions of subsection (a) of this Section 2 (such additional Units being
referred to herein as the 'Option Units'). This option may be exercised within
45 days after the effective date of the Registration Statement upon written
notice by the Underwriter to the Company advising as to the amount of Option
Units as to which the option is being exercised, the names and denominations in
which the certificates for such Option Units are to be registered and the time
and date when such certificates are to be delivered. Such time and date shall be
determined by the Underwriter but shall not be earlier than four nor later than
ten full business days after the exercise of said option (but in no event more
than 55 days after the Effective Date), nor in any event prior to the First
Closing Date, and such time and date is referred to herein as the 'Option
Closing Date.' Delivery of the Option Units against payment therefor shall take
place at the offices of Bernstein & Wasserman, LLP, 950 Third Avenue, New York,
NY 10022 (or at such other place as may be designated by agreement between the
Underwriter and the Company). The option granted hereunder may be exercised only
to cover over-allotments in the sale by the Underwriter of First Units referred
to in subsection (a) above. No Option Units shall be delivered unless all First
Units shall have been delivered to the Underwriter as provided herein.
(c) The Company will make the certificates for the Units to be
purchased by the Underwriter hereunder available to you for checking at least
two full business days prior to the First Closing Date or the Option Closing
Date (which are collectively referred to herein as the 'Closing Dates'). The
certificates shall be in such names and denominations as you may request, at
least three full business days prior to the Closing Dates. Delivery of the
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certificates at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriter.
Definitive certificates in negotiable form for the Units to be
purchased by the Underwriter hereunder will be delivered by the Company to you
for the account of the Underwriter against payment of the respective purchase
prices by the Underwriter, by wire transfer or certified or bank cashier's
checks in New York Clearing House funds, payable to the order of the Company.
In addition, in the event the Underwriter exercises the option to
purchase from the Company all or any portion of the Option Units pursuant to the
provisions of subsection (b) above, payment for such Units shall be made to or
upon the order of the Company by wire transfer or certified or bank cashier's
checks payable in New York Clearing House funds at the offices of Bernstein &
Wasserman, LLP, 950 Third Avenue, New York, N.Y., at the time and date of
delivery of such Units as required by the provisions of subsection (b) above,
against receipt of the certificates for such Units by you for your account
registered in such names and in such denominations as you may reasonably
request.
It is understood that the Underwriter proposes to offer the Units
to be purchased hereunder to the public upon the terms and conditions set forth
in the Registration Statement, after the Registration Statement becomes
effective.
3. Covenants of the Company. The Company covenants and agrees with the
Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective. If required, the Company will file
the Prospectus and any amendment or supplement thereto with the Commission in
the manner and within the time period required by Rule 424(b) under the Act.
Upon notification from the Commission that the Registration Statement has become
effective, the Company will so advise you and will not at any time, whether
before or after the effective date, file any amendment to the Registration
Statement or supplement to the Prospectus of which you shall not previously have
been advised and furnished with a copy or to which you or your counsel shall
have reasonably objected in writing or which is not in compliance with the Act
and the Rules and Regulations. At any time prior to the later of (A) the
completion by the Underwriter of the distribution of the Units contemplated
hereby (but in no event more than nine months after the date on which the
Registration Statement shall have become or been declared effective) and (B) 25
days after the date on which the Registration Statement shall have become or
been declared effective, the Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the Registration
Statement or Prospectus which, in the opinion of counsel to the Company and the
Underwriter, may be reasonably necessary or advisable in connection with the
distribution of the Units.
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As soon as the Company is advised thereof, the Company will
advise you, and provide you copies of any written advice, of the receipt of any
comments of the Commission, of the effectiveness of any post-effective amendment
to the Registration Statement, of the filing of any supplement to the Prospectus
or any amended Prospectus, of any request made by the Commission for an
amendment of the Registration Statement or for supplementing of the Prospectus
or for additional information with respect thereto, of the issuance by the
Commission or any state or regulatory body of any stop order or other order or
threat thereof suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Units for offering in any jurisdiction,
or of the institution of any proceedings for any of such purposes, and will use
its best efforts to prevent the issuance of any such order, and, if issued, to
obtain as soon as possible the lifting thereof.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company authorizes
the Underwriter and dealers to use the Prospectus in connection with the sale of
the Units for such period as in the opinion of counsel to the Underwriter and
the Company the use thereof is required to comply with the applicable provisions
of the Act and the Rules and Regulations. In case of the happening, at any time
within such period as a Prospectus is required under the Act to be delivered in
connection with sales by the Underwriter or dealer of any event of which the
Company has knowledge and which materially affects the Company or the securities
of the Company, or which in the opinion of counsel for the Company and counsel
for the Underwriter should be set forth in an amendment of the Registration
Statement or a supplement to the Prospectus in order to make the statements
therein not then misleading, in light of the circumstances existing at the time
the Prospectus is required to be delivered to a purchaser of the Units or in
case it shall be necessary to amend or supplement the Prospectus to comply with
law or with the Rules and Regulations, the Company will notify you promptly and
forthwith prepare and furnish to you copies of such amended Prospectus or of
such supplement to be attached to the Prospectus, in such quantities as you may
reasonably request, in order that the Prospectus, as so amended or supplemented,
will not contain any untrue statement of a material fact or omit to state any
material facts necessary in order to make the statements in the Prospectus, in
the light of the circumstances under which they are made, not misleading. The
preparation and furnishing of any such amendment or supplement to the
Registration Statement or amended Prospectus or supplement to be attached to the
Prospectus shall be without expense to the Underwriter, except that in case the
Underwriter is required, in connection with the sale of the Units to deliver a
Prospectus nine months or more after the effective date of the Registration
Statement, the Company will upon request of and at the expense of the
Underwriter, amend or supplement the Registration Statement and Prospectus and
furnish the Underwriter with reasonable quantities of prospectuses complying
with Section 10(a)(3) of the Act.
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The Company will comply with the Act, the Rules and Regulations
and the Securities Exchange Act of 1934 (the 'Exchange Act') and the rules and
regulations thereunder in connection with the offering and issuance of the
Securities.
(b) The Company will furnish such information as may be required
and to otherwise cooperate and use its best efforts to qualify or register the
Units for sale under the securities or 'blue sky' laws of such jurisdictions as
you may designate and will make such applications and furnish such information
as may be required for that purpose and to comply with such laws, provided the
Company shall not be required to qualify as a foreign corporation or a dealer in
securities or to execute a general consent of service of process in any
jurisdiction in any action other than one arising out of the offering or sale of
the Units. The Company will, from time to time, prepare and file such statements
and reports as are or may be required to continue such qualification in effect
for so long a period as the counsel to the Company and the Underwriter deem
reasonably necessary.
(c) If the sale of the Units provided for herein is not
consummated as a result of the Company not performing its obligations hereunder
in all material respects, the Company shall pay all costs and expenses incurred
by it which are incident to the performance of the Company's obligations
hereunder, including but not limited to, all of the expenses itemized in Section
8, including the accountable expenses of the Underwriter, (including the
reasonable fees and expenses of counsel to the Underwriter).
(d) The Company will use its best efforts to (i) cause a
registration statement under the Exchange Act to be declared effective
concurrently with the completion of this offering and will notify you in writing
immediately upon the effectiveness of such registration statement, and (ii) to
obtain and keep current a listing in the Standard & Poors or Moody's OTC
Industrial Manual.
(e) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the Exchange Act, the Company, at its expense,
will furnish to its stockholders an annual report (including financial
statements audited by independent public accountants), in reasonable detail and
at its expense, will furnish to you during the period ending five (5) years from
the date hereof, (i) as soon as practicable after the end of each fiscal year,
but no earlier than the filing of such information with the Commission a balance
sheet of the Company and any of its Subsidiaries as at the end of such fiscal
year, together with statements of income, surplus and cash flow of the Company
and any Subsidiaries for such fiscal year, all in reasonable detail and
accompanied by a copy of the certificate or report thereon of independent
accountants; (ii) as soon as practicable after the end of each of the first
three fiscal quarters of each fiscal year, but no earlier than the filing of
such information with the Commission, consolidated summary financial information
of the Company for such quarter in reasonable detail; (iii) as soon as they are
publicly available, a copy of all reports (financial or other) mailed to
security holders; (iv) as soon as they are available, a copy of all
non-confidential reports and financial statements furnished to or filed with the
Commission or any
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securities exchange or automated quotation system on which any class of
securities of the Company is listed; and (v) such other information as you may
from time to time reasonably request.
(f) In the event the Company has an active subsidiary or
Subsidiaries, such financial statements referred to in subsection (e) above will
be on a consolidated basis to the extent the accounts of the Company and its
subsidiary or Subsidiaries are consolidated in reports furnished to its
stockholders generally.
(g) The Company will deliver to you at or before the First
Closing Date two signed copies of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to the Underwriter such number of conformed copies of
the Registration Statement, including such financial statements but without
exhibits, and of all amendments thereto, as the Underwriter may reasonably
request. The Company will deliver to or upon your order, from time to time until
the effective date of the Registration Statement, as many copies of any
Preliminary Prospectus filed with the Commission prior to the effective date of
the Registration Statement as you may reasonably request. The Company will
deliver to the Underwriter on the effective date of the Registration Statement
and thereafter for so long as a Prospectus is required to be delivered under the
Act, from time to time, as many copies of the Prospectus, in final form, or as
thereafter amended or supplemented, as the Underwriter may from time to time
reasonably request.
(h) The Company will make generally available to its security
holders and to the registered holders of its Warrants and deliver to you as soon
as it is practicable to do so but in no event later than 90 days after the end
of twelve months after its current fiscal quarter, an earnings statement (which
need not be audited) covering a period of at least twelve consecutive months
beginning after the effective date of the Registration Statement, which shall
satisfy the requirements of Section 11(a) of the Act.
(i) The Company will apply the net proceeds from the sale of the
Securities substantially for the purposes set forth under 'Use of Proceeds' in
the Prospectus and, except as set forth therein, shall not use any proceeds to
pay any (i) debt for borrowed funds, or (ii) debt or obligation owed to any
insider outside of salary in the ordinary course of business.
(j) The Company will promptly prepare and file with the
Commission any amendments or supplements to the Registration Statement,
Preliminary Prospectus or Prospectus and take any other action, which in the
opinion of counsel to the Underwriter and counsel to the Company, may be
reasonably necessary or advisable in connection with the distribution of the
Securities, and will use its best efforts to cause the same to become effective
as promptly as possible.
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(k) The Company will reserve and keep available the maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Purchase Option outstanding from time to time.
(l) (1) For a period of thirty six (36) months from the First
Closing Date or twenty four (24) months with respect to the Bridge Lenders to
the Company or Richard Reiss, no officer, director or shareholder of any
securities prior to the offering will, directly or indirectly, offer, sell
(including any short sale), grant any option for the sale of, acquire any option
to dispose of, or otherwise dispose of any shares of Common Stock without the
prior written consent of the Underwriter, other than as set forth in the
Registration Statement. In order to enforce this covenant, the Company shall
impose stop-transfer instructions with respect to the securities owned by every
shareholder prior to the offering until the end of such period (subject to any
exceptions to such limitation on transferability set forth in the Registration
Statement). If necessary to comply with any applicable Blue-sky Law, the shares
held by such shareholders will be escrowed with counsel for the Company or
otherwise as required.
(2) Except for the issuance of shares of capital stock by the
Company in connection with a dividend, recapitalization, reorganization or
similar transactions or as result of the exercise of warrants or options to
purchase up to 500,000 shares of Common Stock pursuant to an incentive and
non-qualified stock option plan disclosed in or issued or granted pursuant to
plans disclosed in the Registration Statement, the Company shall not, for a
period of thirty six (36) months following the First Closing Date, directly or
indirectly, offer, sell, issue or transfer any shares of its capital stock, or
any security exchangeable or exercisable for, or convertible into, shares of the
capital stock or (including stock options) register any of its capital stock
(under any form of registration statement including Form S-8), without the prior
written consent of the Underwriter upon at least 30 days' notice. Options
granted pursuant to plans must be exercisable at the fair market value on the
date of grant. Notwithstanding the foregoing provisions, the Company may issue
securities during said thirty six (36) month period in connection with
acquisitions by the Company which would have a positive effect on the Company's
income statement based upon generally accepted accounting principles.
(m) Upon completion of this offering, the Company will make all
filings required, including registration under the Exchange Act, to obtain the
listing of the Units, Common Stock and the Warrants in the Nasdaq SmallCap
system, and will use its best efforts to effect and maintain such listing for at
least five years from the date of this Agreement.
(n) Except for the transactions contemplated by this Agreement
and as disclosed in the Prospectus, the Company represents that it has not taken
and agrees that it will not take, directly or indirectly, any action designed to
or which has constituted or which might reasonably be expected to cause or
result in the stabilization or manipulation of the price of any of the
Securities.
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(o) On the First Closing Date and simultaneously with the
delivery of the Units, the Company shall execute and deliver to you the Purchase
Option. The Purchase Option will be substantially in the form filed as an
Exhibit to the Registration Statement.
(p) On the First Closing Date, the Company will have in force key
person life insurance on the life of Mr. Reiss in an amount of not less than
$1,000,000, payable to the Company, and will use its best efforts to maintain
such insurance during the three year period commencing with the First Closing
Date.
(q) So long as any Warrants are outstanding and the exercise
price of the Warrants is less than the market price of the Common Stock, the
Company shall use its best efforts to cause post-effective amendments to the
Registration Statement to become effective in compliance with the Act and
without any lapse of time between the effectiveness of any such post-effective
amendments and cause a copy of each Prospectus, as then amended, to be delivered
to each holder of record of a Warrant and to furnish to the Underwriter as many
copies of each such Prospectus as such Underwriter or dealer may reasonably
request. The Company shall not call for redemption of any of the Warrants unless
a registration statement covering the securities underlying the Warrants has
been declared effective by the Commission and remains current at least until the
date fixed for redemption.
(r) For a period of five (5) years following the Effective Date,
the Company will maintain registration with the Commission pursuant to Section
12(g) of the Exchange Act and will provide to the Underwriter copies of all
filings made with the Commission pursuant to the Exchange Act. In the event that
the Company fails to maintain registration with the Commission pursuant to
Section 12(g) during such five year period, the Company will provide reasonable
access to an independent accountant designated by the Underwriter, to all books,
records and other documents or statements that reflect the Company's financial
status at least once each quarter, at the Company's expense.
(s) The Company agrees to pay the Underwriter a warrant
solicitation fee of 5.0% of the exercise price of any of the Warrants exercised
beginning one (1) year after the Effective Date (not including warrants
exercised by the Underwriter) if (a) the market price of the Company's Common
Stock on the date the Warrant is exercised is greater than the exercise price of
the Warrant, (b) the exercise of the Warrant was solicited by the Underwriter
and the holder of the warrant designates the Underwriter in writing as having
solicited such Warrant, (c) the Warrant is not held in a discretionary account,
(d) disclosure of the compensation arrangement is made upon the sale and
exercise of the Warrants, (e) soliciting the exercise is not in violation of
Rule 10b-6 under the Securities Exchange Act of 1934, and (f) solicitation of
the exercise is in compliance with the NASD Notice to Members 81-38 (September
22, 1981).
(t) For a period of two years from the Effective Date, at the
request of the Underwriter, the Company shall provide promptly, at the expense
of the Company, copies of
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the Company's monthly transfer sheets furnished to it by its transfer agent and
copies of the securities position listings provided to it by the Depository
Trust Company.
(u) The Company hereby agrees that:
(i) The Company will pay a finder's fee to the Underwriter,
equal tofive percent (5%) of the first $3,000,000 of the consideration involved
in any transaction, 4% of the next $3,000,000 of consideration involved in the
transaction, 3% of the next $2,000,000, 2% of the next $2,000,000 and 1% of the
excess, if any, for future consummated transactions, if any, introduced by the
Underwriter (including mergers, acquisitions, joint ventures, and any other
business for the Company introduced by the Underwriter) consummated by the
Company (an 'Introduced Consummated Transaction'), in which the Underwriter
introduced the other party to the Company during a period ending five years
following the First Closing Date; and
(ii) Any finder's fee due hereunder will be paid in cash or
other consideration that is acceptable to the Underwriter, at the closing of the
particular Introduced Consummated Transaction for which the finder's fee is due.
(v) Upon the first Closing Date and simultaneously with the
delivery of the Securities, the Company shall execute and deliver to the
Underwriter, a two year financial consulting agreement in the form attached as
an Exhibit to the Registration Statement which shall require the Company to pay
the Underwriter 2% of the gross proceeds of the Offering. (the 'Financial
Consulting Agreement').
(w) For a period of two (2) years following the Effective Date
the Company, at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) the Company's financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
10-Q quarterly report and the mailing of quarterly financial information to
stockholders, provided that the Company shall not be required to file a report
of such accountants relating to such review with the Commission. The Company
will retain its present legal counsel and independent certified public
accountants for at least one year from the Closing Date.
(x) For the two (2) year period commencing on the First Closing
Date, the Company shall recommend and use its best efforts to elect a designee
of the Underwriter as a member of the Company's Board of Directors. Such
designee shall serve on the Compensation Committee of the Board of Directors so
long as such designee would qualify as disinterested for the purpose of Section
162(m) of the Internal Revenue Code of 1986, as amended. Alternatively, the
Underwriter may appoint an advisor who will be able to attend all meetings of
the Board of Directors. However, the Board of Directors shall have the right to
require such advisor to execute a confidentiality agreement satisfactory to the
Company. The
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Underwriter shall also have the right to written notice no later than notice to
other directors of each meeting and to obtain copies of the minutes, if
requested, from all Board of Directors meetings for two (2) years following the
Effective Date of the Registration Statement, whether or not a nominee of the
Underwriter attends or participates in any such Board meeting. To the extent
permitted by law, the Company will indemnify the Underwriter and its designee
for the actions of such designee as a director of the Company. The Company will
use its best efforts to obtain liability insurance not to exceed $50,000 per
year in premiums to cover acts of officers and directors, including said
designee. The Company agrees to reimburse the Underwriter immediately upon the
Underwriter's request therefor of any reasonable travel and lodging expenses
directly incurred by the Underwriter in connection with its designee or
representative attending Company Board meetings on the same basis for other
Board members.
(y) For a period of thirty (30) days from and after the Effective
Date, the Company will not issue a press release or engage in any publicity
other than promotion by the Company of its products and services and other press
releases in the ordinary course of its business, without the Underwriter's prior
written consent, unless required by law.
4. Conditions of Underwriter's Obligation. The obligations of the
Underwriter to purchase and pay for the Units which it has agreed to purchase
hereunder, are subject to the accuracy (as of the date hereof, and as of the
Closing Dates) of and compliance with the representations and warranties of the
Company herein, to the performance by the Company of its obligations hereunder,
and to the following conditions:
(a) The Registration Statement shall have become effective and
you shall have received notice thereof not later than 10:00 A.M., New York time,
on the day following the date of this Agreement, or at such later time or on
such later date as to which you may agree in writing; on or prior to the Closing
Dates no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that or a similar purpose shall
have been instituted or shall be pending or, to your knowledge or to the
knowledge of the Company, shall be contemplated by the Commission; any request
on the part of the Commission for additional information shall have been
complied with to the satisfaction of the Commission; and no stop order shall be
in effect denying or suspending effectiveness of such qualification nor shall
any stop order proceedings with respect thereto be instituted or pending or
threatened. If required, the Prospectus shall have been filed with the
Commission in the manner and within the time period required by Rule 424(b)
under the Act.
(b) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of Singer Zamansky LLP, counsel for
the Company, in form and substance satisfactory to counsel for the Underwriter,
to the effect that:
(i) the Company and its Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective
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jurisdictions of organization, with all requisite corporate power and authority
to own their properties and conduct their business as described in the
Registration Statement and Prospectus and are duly qualified or licensed to do
business as foreign corporations and are in good standing in each other
jurisdiction in which the ownership or leasing of their properties or conduct of
their business requires such qualification except where the failure to qualify
or be licensed will not have a Material Adverse Effect;
(ii) the authorized capitalization of the Company as of
, 1997 is as set forth in the Registration Statement; the Securities as
set forth in the Registration Statement have been duly authorized and upon
payment of consideration therefor, will be validly issued, fully paid and
non-assessable and conform in all material respects to the description thereof
contained in the Prospectus; to such counsel's knowledge the outstanding shares
of capital stock of the Company and its Subsidiaries have not been issued in
violation of the preemptive rights of any shareholder and to such counsel's
knowledge the shareholders of the Company do not have any preemptive rights or
other rights to subscribe for or to purchase, nor are there any restrictions
upon the voting or transfer of any of the capital stock except as provided in
the Prospectus or as required by law. The Securities, the Purchase Option and
the Warrant Agreement conform in all material respects to the respective
descriptions thereof contained in the Prospectus; the shares of Common Stock,
and the shares of Common Stock issuable upon exercise of Warrants, the Purchase
Option, and the Warrant Agreement will have been duly authorized and, when
issued and delivered in accordance with their respective terms, will be duly and
validly issued, fully paid, non-assessable, free of preemptive rights to the
best of their knowledge; to the best of their knowledge, all prior sales by the
Company of the Company's securities, have been made in compliance with or under
an exemption from registration under the Act and applicable state securities
laws; a sufficient number of shares of Common Stock has been reserved for
issuance upon exercise of the Warrants and Common Stock has been reserved for
issuance upon exercise of the Warrants contained in the Purchase Option and to
the best of such counsel's knowledge, neither the filing of the Registration
Statement nor the offering or sale of the Securities as contemplated by this
Agreement gives rise to any registration rights other than those which have been
waived or satisfied for or relating to the registration of any shares of Common
Stock;
(iii) this Agreement, the Purchase Option, and the Warrant
Agreement have been duly and validly authorized, executed and delivered by the
Company;
(iv) the certificates evidencing the Securities as described
in the Registration Statement comply in all material respects with the
descriptions set forth therein, and comply with the Delaware General Corporation
Law, as in effect on the date hereof; each Warrant will be exercisable for one
share of the Common Stock of the Company, respectively, and at the prices
provided for in the Warrant Agreement;
(v) except as otherwise disclosed in the Registration
Statement, such counsel knows of no pending or threatened legal or governmental
proceedings to which the
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Company or its Subsidiaries are a party which would materially adversely affect
the business, property, financial condition or operations of the Company or its
Subsidiaries; or which question the validity of the Securities, this Agreement,
the Warrant Agreement or the Purchase Option, or of any action taken or to be
taken by the Company pursuant to this Agreement, the Warrant Agreement or the
Purchase Option; to such counsel's knowledge there are no governmental
proceedings or regulations required to be described or referred to in the
Registration Statement which are not so described or referred to;
(vi) the execution and delivery of this Agreement, the
Purchase Option or the Warrant Agreement and the incurrence of the obligations
herein and therein set forth and the consummation of the transactions herein or
therein contemplated, will not result in a breach or violation of, or constitute
a default under the certificate of incorporation or by-laws of the Company or
its Subsidiaries, or to the best knowledge of counsel after due inquiry, in the
performance or observance of any material obligations, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material contract, indenture, mortgage, loan agreement,
lease, joint venture or other agreement or instrument to which the Company or
its Subsidiaries is a party or by which they or any of their properties is bound
or in violation of any order, rule, regulation, writ, injunction, or decree of
any government, governmental instrumentality or court, domestic or foreign the
result of which would have a Material Adverse Effect;
(vii) the Registration Statement has become effective under
the Act, and to the best of such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings
for that purpose have been instituted or are pending before, or threatened by,
the Commission; the Registration Statement and the Prospectus (except for the
financial statements and other financial data contained therein, or omitted
therefrom, as to which such counsel need express no opinion) as of the Effective
Date comply as to form in all material respects with the applicable requirements
of the Act and the Rules and Regulations;
(viii) in the course of preparation of the Registration
Statement and the Prospectus such counsel has participated in conferences with
the President of the Company with respect to the Registration Statement and
Prospectus and such discussions did not disclose to such counsel any information
which gives such counsel reason to believe that the Registration Statement or
any amendment thereto at the time it became effective contained any untrue
statement of a material fact required to be stated therein or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any supplement
thereto contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make statements therein, in light of the
circumstances under which they were made, not misleading (except, in the case of
both the Registration Statement and any amendment thereto and the Prospectus and
any supplement thereto, for the financial statements, notes thereto and other
financial information (including
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without limitation, the pro forma financial information) and schedules contained
therein, as to which such counsel need express no opinion);
(ix) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and other
agreements to which the Company or its Subsidiaries is a party are accurate and
fairly present in all material respects the information required to be shown,
and such counsel is familiar with all contracts and other agreements referred to
in the Registration Statement and the Prospectus and any such amendment or
supplement or filed as exhibits to the Registration Statement, and such counsel
does not know of any contracts or agreements to which the Company or its
Subsidiaries is a party of a character required to be summarized or described
therein or to be filed as exhibits thereto which are not so summarized,
described or filed;
(x) no authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in connection with
the authorization, issuance, transfer, sale or delivery of the Securities by the
Company, in connection with the execution, delivery and performance of this
Agreement by the Company or in connection with the taking of any action
contemplated herein, or the issuance of the Purchase Option or the Securities
underlying the Purchase Option, other than registrations or qualifications of
the Securities under applicable state or foreign securities or Blue Sky laws and
registration under the Act; and
(xi) the Units, shares of Common Stock and the Warrants have
been duly authorized for quotation on the Nasdaq SmallCap System ('Nasdaq').
Such opinion shall also cover such matters incident to the
transactions contemplated hereby as the Underwriter or counsel for the
Underwriter 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; and may rely as to all matters of law other than the law of
the United States or of the State of New York or Delaware upon opinions of
counsel satisfactory to you, in which case the opinion shall state that they
have no reason to believe that you and they are not entitled to so rely.
(c) Intentionally Omitted.
(d) All corporate proceedings and other legal matters relating to
this Agreement, the Registration Statement, the Prospectus and other related
matters shall be satisfactory to or approved by Bernstein & Wasserman, LLP,
counsel to the Underwriter.
(e) You shall have received a letter prior to the Effective Date
and again on and as of the First Closing Date from , independent
public accountants for the Company, substantially in the form reasonably
acceptable to you, providing you with such 'cold comfort' as you may reasonably
require.
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(f) At the Closing Dates, (i) the representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects with the same effect as if made on and as of the Closing Dates
taking into account for the Option Closing Dates the effect of the transactions
contemplated hereby and the Company or its Subsidiaries shall have performed all
of its obligations hereunder and satisfied all the conditions on its part to be
satisfied at or prior to such Closing Date; (ii) the Registration Statement and
the Prospectus and any amendments or supplements thereto shall contain all
statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations, and shall in all material respects conform to the
requirements thereof, and neither the Registration Statement nor the Prospectus
nor any amendment or supplement thereto shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; (iii) there shall
have been, since the respective dates as of which information is given, no
material adverse change, or to the Company or its Subsidiaries's knowledge, any
development involving a prospective material adverse change, in the business,
properties, condition (financial or otherwise), results of operations, capital
stock, long-term or short-term debt or general affairs of the Company or its
Subsidiaries from that set forth in the Registration Statement and the
Prospectus, except changes which the Registration Statement and Prospectus
indicate might occur after the effective date of the Registration Statement, and
the Company or its Subsidiaries shall not have incurred any material liabilities
or entered into any material agreement not in the ordinary course of business
other than as referred to in the Registration Statement and Prospectus; (iv)
except as set forth in the Prospectus, no action, suit or proceeding at law or
in equity shall be pending or threatened against the Company or its Subsidiaries
which would be required to be set forth in the Registration Statement, and no
proceedings shall be pending or threatened against the Company or its
Subsidiaries before or by any commission, board or administrative agency in the
United States or elsewhere, wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, property, condition
(financial or otherwise), results of operations or general affairs of the
Company or its Subsidiaries, and (v) you shall have received, at the First
Closing Date, a certificate signed by each of the President and the principal
operating officer of the Company or its Subsidiaries, dated as of the First
Closing Date, evidencing compliance with the provisions of this subsection (f).
(g) Upon exercise of the Over-Allotment Option provided for in
Section 2(b) hereof, the obligations of the Underwriter to purchase and pay for
the Option Units referred to therein will be subject (as of the date hereof and
as of the Option Closing Date) to the following additional conditions:
(i) The Registration Statement shall remain effective at the
Option Closing Date, and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending, or, to your knowledge or the knowledge of the
Company, shall be contemplated by the Commission, and
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any reasonable request on the part of the Commission for additional information
shall have been complied with to the satisfaction of the Commission.
(ii) At the Option Closing Date there shall have been
delivered to you the signed opinion of Singer Zamansky LLP, counsel to the
Company, dated as of the Option Closing Date, in form and substance reasonably
satisfactory to Bernstein & Wasserman, LLP, counsel to the Underwriter, which
opinion shall be substantially the same in scope and substance as the opinion
furnished to you at the First Closing Date pursuant to Sections 4(b) hereof,
except that such opinion, where appropriate, shall cover the Option Securities.
(iii) At the Option Closing Date there shall have be
delivered to you a certificate of the President and the principal operating
officer of the Company, dated the Option Closing Date, in form and substance
reasonably satisfactory to Bernstein & Wasserman, LLP, counsel to the
Underwriter, substantially the same in scope and substance as the certificate
furnished to you at the First Closing Date pursuant to Section 4(f) hereof.
(iv) At the Option Closing Date there shall have been
delivered to you a letter in form and substance satisfactory to you from
, dated the Option Closing Date and addressed to the Underwriter
confirming the information in their letter referred to in Section 4(e) hereof
and stating that nothing has come to their attention during the period from the
ending date of their review referred to in said letter to a date not more than
five business days prior to the Option Closing Date, which would require any
change in said letter if it were required to be dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option Closing
Date in connection with the sale and issuance of the Option Units shall be
reasonably satisfactory in form and substance to you, and you and Bernstein &
Wasserman, LLP, counsel to the Underwriter, shall have been furnished with all
such documents, certificates, and opinions as you may reasonably request in
connection with this transaction in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Company or its compliance with any of the covenants or conditions contained
herein.
(h) No action shall have been taken by the Commission or the NASD
the effect of which would make it improper, at any time prior to the Closing
Date, for members of the NASD to execute transactions (as principal or agent) in
the Securities and no proceedings for the taking of such action shall have been
instituted or shall be pending, or, to the knowledge of the Underwriter or the
Company, shall be contemplated by the Commission or the NASD. The Company and
the Underwriter represent that at the date hereof each has no knowledge that any
such action is in fact contemplated against it by the Commission or the NASD.
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(i) If any of the conditions herein provided for in this Section
shall not have been fulfilled in all material respects as of the date indicated,
this Agreement and all obligations of the Underwriter under this Agreement may
be canceled at, or at any time prior to, each Closing Date by the Underwriter
notifying the Company of such cancellation in writing or by telegram at or prior
to the applicable Closing Date. Any such cancellation shall be without liability
of the Underwriter to the Company.
5. Conditions of the Obligations of the Company, The obligation of the
Company to sell and deliver the Units is subject to the following conditions:
(a) The Registration Statement shall have become effective not
later than 10:00 A.M. New York time, on the day following the date of this
Agreement, or on such later date as the Company and the Underwriter may agree in
writing.
(b) At the Closing Dates, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued under the Act
or any proceedings therefor initiated or threatened by the Commission.
If the conditions to the obligations of the Company provided for
in this Section have been fulfilled on the First Closing Date but are not
fulfilled after the First Closing Date and prior to the Option Closing Date,
then only the obligation of the Company to sell and deliver the Units on
exercise of the Over-Allotment Option provided for in Section 2(b) hereof shall
be affected.
6. Indemnification.
(a) The Company agrees (i) to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act against
any losses, claims, damages or liabilities, joint or several (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees), to which
such Underwriter or such controlling person may become subject, under the Act or
otherwise, and (ii) to reimburse, as incurred, the Underwriter and such
controlling persons for any legal or other expenses reasonably incurred in
connection with investigating, defending against or appearing as a third party
witness in connection with any losses, claims, damages or liabilities; insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
relating to (i) and (ii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in (A) the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, (B) any blue sky application or other document executed by
the Company specifically for that purpose containing written information
specifically furnished by the Company and filed in any state or other
jurisdiction in order to qualify any or all of the Securities under the
securities laws thereof (any such application, document or information being
hereinafter called a 'Blue Sky Application'), or
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arise out of or are based upon the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, Prospectus, or any amendment
or supplement thereto, or in any Blue Sky Application, a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be required to indemnify the
Underwriter and any controlling person or be liable in any such case to the
extent, but only to the extent, that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Underwriter
specifically for use in the preparation of the Registration Statement or any
such amendment or supplement thereof or any such Blue Sky Application or any
such preliminary Prospectus or the Prospectus or any such amendment or
supplement thereto, provided, further that the indemnity with respect to any
Preliminary Prospectus shall not be applicable on account of any losses, claims,
damages, liabilities or litigation arising from the sale of Securities to any
person if a copy of the Prospectus was not delivered to such person at or prior
to the written confirmation of the sale to such person. This indemnity will be
in addition to any liability which the Company may otherwise have.
(b) The Underwriter will indemnify and hold harmless the Company,
each of its directors, each nominee (if any) for director named in the
Prospectus, each of its officers who have signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and reasonable attorneys' fees) to which the Company or any
such director, nominee, officer or controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by the Underwriter
specifically for use in the preparation thereof and for any violation by the
Underwriter in the sale of such Securities of any applicable state or federal
law or any rule, regulation or instruction thereunder relating to violations
based on unauthorized statements by Underwriter or its representative; provided
that such violation is not based upon any violation of such law, rule or
regulation or instruction by the party claiming indemnification or inaccurate or
misleading information furnished by the Company or its representatives,
including information furnished to the Underwriter as contemplated herein. This
indemnity agreement will be in addition to any liability which the Underwriter
may otherwise have.
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(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify in writing the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, 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, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that the reasonable fees and expenses of such
counsel shall be at the expense of the indemnifying party if (i) the employment
of such counsel has been specifically authorized in writing by the indemnifying
party or (ii) the named parties to any such action (including any impleaded
parties) include both the indemnified party and the indemnifying party and in
the reasonable judgment of the counsel to the indemnified party, it is advisable
for the indemnified party to be represented by separate counsel (in which case
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, that
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for the
indemnified party, which firm shall be designated in writing by the indemnified
party). No settlement of any action against an indemnified party shall be made
without the consent of the indemnified party, which shall not be unreasonably
withheld in light of all factors of importance to such indemnified party. If it
is ultimately determined that indemnification is not permitted, then an
indemnified party will return all monies advanced to the indemnifying party.
7. Contribution.
In order to provide for just and equitable contribution under the
Act in any case in which the indemnification provided in Section 6 hereof is
requested but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that the express provisions of
Section 6 provide for indemnification in such case, then the Company and each
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person who controls the Company, in the aggregate, and the Underwriter shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (which shall, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees) (after contribution from others) in such proportions
that the Underwriter is responsible in the aggregate for that portion of such
losses, claims, damages or liabilities represented by the percentage that the
underwriting discount for each of the Units appearing on the cover page of the
Prospectus bears to the public offering price appearing thereon and the Company
shall be responsible for the remaining portion; provided, however, that if such
allocation is not permitted by applicable law then allocated in such proportion
as is appropriate to reflect relative benefits but also the relative fault of
the Company and the Underwriter and controlling persons, in the aggregate, in
connection with the statements or omissions which resulted in such damages and
other relevant equitable considerations shall also be considered. The relative
fault shall be determined by reference to, among other things, whether in the
case of an untrue statement of a material fact or the omission to state a
material fact, such statement or omission relates to information supplied by the
Company or the Underwriter and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriter agree that it would not be just and
equitable if the respective obligations of the Company and the Underwriter to
contribute pursuant to this Section 7 were to be determined by pro rata or per
capita allocation of the aggregate damages or by any other method of allocation
that does not take account of the equitable considerations referred to in this
Section 7. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. As used in this
paragraph, the word 'Company' includes any officer, director, or person who
controls the Company within the meaning of Section 15 of the Act. If the full
amount of the contribution specified in this paragraph is not permitted by law,
then the Underwriter and each person who controls the Underwriter shall be
entitled to contribution from the Company, its officers, directors and
controlling persons, and the Company, its officers, directors and controlling
persons shall be entitled to contribution from the Underwriter to the full
extent permitted by law. The foregoing contribution agreement shall in no way
affect the contribution liabilities of any persons having liability under
Section 11 of the Act other than the Company and the Underwriter. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent to the settlement; provided, however, that such
consent shall not be unreasonably withheld in light of all factors of importance
to such party.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the sale
of the Securities to the Underwriter is consummated, the Company will pay all
costs and expenses incident to the performance of this Agreement by the Company
including, but not limited to, the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the
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Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), Preliminary Prospectus and the Prospectus, as
amended or supplemented, the fee of the NASD in connection with the filing
required by the NASD relating to the offering of the Units contemplated hereby;
all expenses, including reasonable fees not to exceed $40,000 and disbursements
of counsel to the Underwriter, in connection with the qualification of the
Securities under the state securities or blue sky laws which the Underwriter
shall designate; the cost of printing and furnishing to the Underwriter copies
of the Registration Statement, each Preliminary Prospectus, the Prospectus, this
Agreement, and the Blue Sky Memorandum, any fees relating to the listing of the
Units, Common Stock and Warrants on Nasdaq or any other securities exchange, the
cost of printing the certificates representing the Securities; fees for bound
volumes and prospectus memorabilia and the fees of the transfer agent and
warrant agent. The Company shall pay any and all taxes (including any transfer,
franchise, capital stock or other tax imposed by any jurisdiction) on sales to
the Underwriter hereunder. The Company will also pay all costs and expenses
incident to the furnishing of any amended Prospectus or of any supplement to be
attached to the Prospectus as called for in Section 3(a) of this Agreement
except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses, the Company shall at
the First Closing Date pay to the Underwriter a non-accountable expense
allowance of $115,500. In the event the overallotment option is exercised, the
Company shall pay to the Underwriter at the Option Closing Date an additional
amount in the aggregate equal to 3% of the gross proceeds received upon exercise
of the overallotment option. In the event the transactions contemplated hereby
are not consummated by reason of any action by the Underwriter (except if such
prevention is based upon a breach by the Company of any covenant, representation
or warranty contained herein or because any other condition to the Underwriter's
obligations hereunder required to be fulfilled by the Company is not fulfilled)
the Company shall not be liable for any expenses of the Underwriter, including
the Underwriter's legal fees. In the event the transactions contemplated hereby
are not consummated by reason of the Company being unable to perform its
obligations hereunder in all material respects, the Company shall be liable for
the actual accountable out-of-pocket expenses of the Underwriter, including
reasonable legal fees.
(c) Except as disclosed in the Registration Statement, no person
is entitled either directly or indirectly to compensation from the Company, from
the Underwriter or from any other person for services as a finder in connection
with the proposed offering, and the Company agrees to indemnify and hold
harmless the Underwriter, against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all reasonable
attorneys' fees), to which the Underwriter or person may become subject insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the claim of any person (other than an employee
of the party claiming indemnity) or entity that he or it is entitled to a
finder's fee in connection with the proposed offering by reason of such person's
or entity's influence or prior contact with the indemnifying party.
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9. Effective Date.
The Agreement shall become effective upon its execution except
that you may, at your option, delay its effectiveness until 11:00 A.M., New York
time on the first full business day following the effective date of the
Registration Statement, or at such earlier time on such business day after the
effective date of the Registration Statement as you in your discretion shall
first commence the public offering of the Units. The time of the initial public
offering shall mean the time of release by you of the first newspaper
advertisement with respect to the Securities, or the time when the Securities
are first generally offered by you to dealers by letter or telegram, whichever
shall first occur. This Agreement may be terminated by you at any time before it
becomes effective as provided above, except that Sections 3(c), 6, 7, 8, 12, 13,
14 and 15 shall remain in effect notwithstanding such termination.
10. Termination.
(a) After this Agreement becomes effective, this Agreement,
except for Sections 3(c), 6, 7, 8, 12, 13, 14 and 15 hereof, may be terminated
at any time prior to the First Closing Date, by you if in your judgment (i)
trading in securities on the New York Stock Exchange or the American Stock
Exchange having been suspended or limited, (ii) material governmental
restrictions have been imposed on trading in securities generally (not in force
and effect on the date hereof), (iii) a banking moratorium has been declared by
federal or New York state authorities, (iv) an outbreak of major international
hostilities involving the United States or other substantial national or
international calamity has occurred, (v) a pending or threatened legal or
governmental proceeding or action relating generally to the Company's business,
or a notification has been received by the Company of the threat of any such
proceeding or action, which would materially adversely affect the Company; (vi)
the passage by the Congress of the United States or by any state legislative
body of similar impact, of any act or measure, or the adoption of any orders,
rules or regulations by any governmental body or any authoritative accounting
institute or board, or any governmental executive, which is reasonably believed
likely by the Underwriter to have a material adverse impact on the business,
financial condition or financial statements of the Company; or (vii) any
material adverse change having occurred, since the respective dates of which
information is given in the Registration Statement and Prospectus, in the
earnings, business prospects or general condition of the Company, financial or
otherwise, whether or not arising in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10, the
Company shall be promptly notified by you, by telephone or telegram, confirmed
by letter.
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11. Purchase Option.
At or before the First Closing Date, the Company will sell the
Underwriter or its designees for a consideration of $10, and upon the terms and
conditions set forth in the form of Purchase Option annexed as an exhibit to the
Registration Statement, a Purchase Option to purchase an aggregate of 55,000
Units. In the event of conflict in the terms of this Agreement and the Purchase
Option with respect to language relating to the Purchase Option, the language of
the Purchase Option shall control.
12. Representations and Warranties of the Underwriter.
The Underwriter represents and warrants to the Company that it is
registered as a broker-dealer in all jurisdictions in which it is offering the
Units and that it will comply with all applicable state or federal laws relating
to the sale of the Units, including but not limited to, violations based on
unauthorized statements by the Underwriter or its representatives.
13. Representations, Warranties and Agreements to Survive Delivery.
The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Underwriter and the
undertakings set forth in or made pursuant to this Agreement will remain in full
force and effect until three years from the date of this Agreement, regardless
of any investigation made by or on behalf of the Underwriter, the Company or any
of its officers or directors or any controlling person and will survive delivery
of and payment of the Securities and the termination of this Agreement.
14. Notice.
Any communications specifically required hereunder to be in
writing, if sent to the Representative, will be mailed, delivered or telecopied
and confirmed to them at Monroe Parker Securities, Inc., 2500 Westchester
Avenue, Purchase, New York 10577, with a copy sent to Bernstein & Wasserman,
LLP, 950 Third Avenue, New York, New York 10022, Attention: Steven F. Wasserman,
or if sent to the Company, will be mailed, delivered or telecopied and confirmed
to it at 1450 Route 22 West, Suite 103, Mountainside, NJ 07092, with a copy sent
to Singer Zamansky LLP, 48 Exchange Place, 20th Floor, New York, NY 10005.
Notice shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication.
15. Parties in Interest.
The Agreement herein set forth is made solely for the benefit of
the Underwriter, the Company, any person controlling the Company or the
Underwriter, and directors of the Company, nominees for directors (if any) named
in the Prospectus, its officers
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who have signed the Registration Statement, and their respective executors,
administrators, successors, assigns and no other person shall acquire or have
any right under or by virtue of this Agreement. The term 'successors and
assigns' shall not include any purchaser, as such purchaser, from the
Underwriter of the Units.
16. Applicable Law.
This Agreement will be governed by, and construed in accordance
with, of the laws of the State of New York applicable to agreements made and to
be entirely performed within New York.
17. Counterparts.
This agreement may be executed in one or more counterparts each
of which shall be deemed to constitute an original and shall become effective
when one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties (including by fax, followed by original copies by
overnight mail).
18. Entire Agreement; Amendments.
This Agreement constitutes the entire agreement of the parties
hereto and supersedes all prior written or oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may not
be amended except in writing, signed by the Underwriter and the Company.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement between the Company and the Underwriter in accordance with its
terms.
Very truly yours,
ALL COMMUNICATIONS CORPORATION
By:
----------------------------
Name: Richard Reiss
Title: President
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
MONROE PARKER SECURITIES, INC.
By:
----------------------------
Name: Stephen J. Drescher
Title: Director Corporate Finance
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Option to Purchase
55,000 Units
ALL COMMUNICATIONS CORPORATION
PURCHASE OPTION
Dated: __________, 1997
THIS CERTIFIES that Monroe Parker Securities, Inc., 2500 Westchester
Avenue, Purchase, NY 10577 (hereinafter sometimes referred to as the 'Holder'),
is entitled to purchase from ALL COMMUNICATIONS CORPORATION (hereinafter
referred to as the 'Company'), at the prices and during the periods as
hereinafter specified, up to 55,000 Units ('Units'), each Unit consisting of two
(2) shares of Common Stock, no par value per share ('Common Stock'), and (2)
Class A Redeemable Common Stock Purchase Warrants ('Warrants'). Each Warrant
entitles the registered holder thereof to purchase one (1) share of Common Stock
at an exercise price of $4.25 per share. The Warrants (hereinafter, the
'Warrants') are exercisable for a three year period, commencing __________,
1998(one (1) year from the Effective Date). Hereinafter, the Units, shares of
Common Stock and Warrants shall be referred to as an 'Option Securities' or
'Securities.'
The Securities have been registered under a Registration Statement on
Form SB-2 (File No. 333-________) declared effective by the Securities and
Exchange Commission on __________, 1997 (the 'Registration Statement'). This
Option (the 'Option') to purchase 55,000 Units was originally issued pursuant to
an underwriting agreement between the Company and Monroe Parker Securities, Inc.
as underwriter (the 'Underwriter'), in connection with a public offering of
550,000 Units (collectively, the 'Public Securities') through the Underwriter,
in consideration of $55.00 received for the Option.
Except as specifically otherwise provided herein, the Common Stock and
the Warrants issued pursuant to this Option shall bear the same terms and
conditions as described under the caption
<PAGE>
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'Description of Securities' in the Registration Statement, and the Warrants
shall be governed by the terms of the Warrant Agreement dated as of __________,
1997, executed in connection with such public offering (the 'Warrant
Agreement'), except that the holder shall have registration rights under the
Securities Act of 1933, as amended (the 'Act'), for the Option, the Units, the
Common Stock and the Warrants included in the Option, and the shares of Common
Stock underlying the Warrants, as more fully described in paragraph 6 of this
Option. In the event of any reduction of the exercise price of the Warrants
included in the Public Securities, the same changes to the Warrants included in
the Option and the components thereof shall be simultaneously effected.
1. The rights represented by this Option shall be exercised at the
prices, subject to adjustment in accordance with paragraph 8 of this Option, and
during the periods as follows:
(a) Between __________, 1998 (one (1) year from the Effective
Date) and __________, 2002, inclusive, the Holder shall have the option to
purchase Units hereunder at a price of $8.40 per Unit (subject to adjustment
pursuant to paragraph 8 hereof) (the 'Exercise Price').
(b) After __________, 2002, the Holder shall have no
right to purchase any Units hereunder.
2. The rights represented by this Option may be exercised at any time
within the period above specified, in whole or in part, by (i) the surrender of
this Option (with the purchase form at the end hereof properly executed) at the
principal executive office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company); (ii) payment to the Company
of the Exercise Price then in effect for the number of Option Securities
specified in the above-mentioned purchase form together with applicable stock
transfer taxes, if any; and (iii) delivery to the Company of a duly executed
agreement signed by the person(s) designated in the purchase form to the effect
that such person(s) agree(s) to be bound by the provisions of paragraph 6 and
subparagraphs (b), (c) and (d) of paragraph 7 hereof. This Option shall be
deemed to have been exercised, in whole or in part to the extent specified,
immediately prior to the close of business on the date this Option is
surrendered and payment is made in accordance
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with the foregoing provisions of this paragraph 2, and the person or persons in
whose name or names the certificates for shares of Common Stock and Warrants
shall be issuable upon such exercise shall become the holder or holders of
record of such Common Stock and Warrants at that time and date. The Common Stock
and Warrants and the certificates for the Common Stock and Warrants so purchased
shall be delivered to the Holder within a reasonable time, not exceeding ten
(10) days, after the rights represented by this Option shall have been so
exercised.
3. This Option shall not be transferred, sold, assigned, or
hypothecated for a period of one (1) year from the Effective Date, except that
it may be transferred to successors of the Holder, and may be assigned in whole
or in part to any person who is an officer of the Holder or selling group member
of the offering during such period. Any transfer after one (1) year must be
accompanied with an immediate exercise of the Option. Any such assignment shall
be effected by the Holder (i) executing the form of assignment at the end hereof
and (ii) surrendering this Option for cancellation at the office or agency of
the Company referred to in paragraph 2 hereof, accompanied by a certificate
(signed by an officer of the Holder if the Holder is a corporation), stating
that each transferee is a permitted transferee under this paragraph 3 hereof;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Option or Options of like tenor and representing in
the aggregate rights to purchase the same number of Option Securities as are
purchasable hereunder.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued as part of the Option Securities purchased hereunder and the
Common Stock which may be issued upon exercise of the Warrants will, upon
issuance, be duly and validly issued, fully paid and nonassessable. The Company
further covenants and agrees that during the periods within which this Option
may be exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to provide for the exercise of
this Option and that it will have authorized and reserved a sufficient number of
shares of Common Stock for issuance upon exercise of the Warrants included in
the Option Securities.
5. This Option shall not entitle the Holder to any voting,
dividend, or other rights as a stockholder of the Company.
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6. (a) During the period set forth in paragraph l(a) hereof, the
Company shall advise the Holder or its transferee, whether the Holder holds the
Option or has exercised the Option and holds Option Securities or any of the
securities underlying the Option Securities, by written notice at least 20 days
prior to the filing of any post-effective amendment to the Registration
Statement or of any new registration statement or post-effective amendment
thereto under the Act covering any securities of the Company, for its own
account or for the account of others (other than a registration statement on
Form S-4 or S-8 or any successor forms thereto), and will for a period of five
years from the effective date of the Registration Statement, upon the request of
the Holder within 10 days of the receipt of the Company's notice, include in any
such post-effective amendment or registration statement, such information as may
be required to permit a public offering of the Option, all or any of the Units,
Common Stock, or Warrants included in the Units or the Common Stock issuable
upon the exercise of the Warrants (the 'Registrable Securities'). The Company
shall supply prospectuses and such other documents as the Holder may request in
order to facilitate the public sale or other disposition of the Registrable
Securities, use its best efforts to register and qualify any of the Registrable
Securities for sale in such states as such Holder designates provided that the
Company shall not be required to qualify as a foreign corporation or a dealer in
securities or execute a general consent to service of process in any
jurisdiction in any action and do any and all other acts and things which may be
reasonably necessary or desirable to enable such Holders to consummate the
public sale or other disposition of the Registrable Securities, and furnish
indemnification in the manner provided in paragraph 7 hereof. The Holder shall
furnish information and indemnification as set forth in paragraph 7 except that
the maximum amount which may be recovered from the Holder shall be limited to
the amount of proceeds received by the Holder from the sale of the Registrable
Securities. The Company shall use its best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
holders of Registrable Securities requested to be included in the registration
to include such securities in such underwritten offering on the same terms and
conditions as any similar securities of the Company included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such offering advises the holders of Registrable Securities that the total
amount of securities which they intend to
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include in such offering is such as to materially and adversely affect the
success of such offering, then the amount of securities to be offered for the
accounts of holders of Registrable Securities shall be eliminated, reduced, or
limited to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount, if any, recommended by such managing
underwriter or underwriters (any such reduction or limitation in the total
amount of Registrable Securities to be included in such offering to be borne by
the holders of Registrable Securities proposed to be included therein pro rata).
The Holder will pay its own legal fees and expenses and any underwriting
discounts and commissions on the securities sold by such Holder and shall not be
responsible for any other expenses of such registration.
(b) If any 50% holder (as defined below) shall give notice to
the Company at any time during the period set forth in paragraph l(a) hereof to
the effect that such holder desires to register under the Act this Option or any
of the underlying securities contained in the Option Securities underlying the
Option under such circumstances that a public distribution (within the meaning
of the Act) of any such securities will be involved then the Company will
promptly, but no later than 60 days after receipt of such notice, file a
post-effective amendment to the current Registration Statement or a new
registration statement pursuant to the Act, to the end that the Option and/or
any of the Securities underlying the Option Securities may be publicly sold
under the Act as promptly as practicable thereafter and the Company will use its
best efforts to cause such registration to become and remain effective for a
period of 120 days (including the taking of such steps as are reasonably
necessary to obtain the removal of any stop order); provided that such holder
shall furnish the Company with appropriate information in connection therewith
as the Company may reasonably request in writing. The 50% holder (which for
purposes hereof shall mean any direct or indirect transferee of such holder)
may, at its option, request the filing of a post-effective amendment to the
current Registration Statement or a new registration statement under the Act
with respect to the Registrable Securities on only one occasion during the term
of this Option. The Holder may at its option request the registration of the
Option and/or any of the securities underlying the Option in a registration
statement made by the Company as contemplated by Section 6(a) or in connection
with a request made pursuant to this Section 6(b) prior to acquisition of the
Securities issuable upon
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exercise of the Option and even though the Holder has not given notice of
exercise of the Option. The 50% holder may, at its option, request such
post-effective amendment or new registration statement during the described
period with respect to the Option or separately as to the Common Stock and/or
Warrants included in the Option and/or the Common Stock issuable upon the
exercise of the Warrants, and such registration rights may be exercised by the
50% holder prior to or subsequent to the exercise of the Option. Within ten
business days after receiving any such notice pursuant to this subsection (b) of
paragraph 6, the Company shall give notice to the other holders of the Options,
advising that the Company is proceeding with such post-effective amendment or
registration statement and offering to include therein the securities underlying
the Options of the other holders. Each holder electing to include its
Registrable Securities in any such offering shall provide written notice to the
Company within twenty (20) days after receipt of notice from the Company. The
failure to provide such notice to the Company shall be deemed conclusive
evidence of such holder's election not to include its Registrable Securities in
such offering. Each holder electing to include its Registrable Securities shall
furnish the Company with such appropriate information (relating to the
intentions of such holders) in connection therewith as the Company shall
reasonably request in writing. All costs and expenses of only one such
post-effective amendment or new registration statement shall be borne by the
Company, except that the holders shall bear the fees of their own counsel and
any underwriting discounts or commissions applicable to any of the securities
sold by them.
The Company shall be entitled to postpone the filing
of any registration statement pursuant to this Section 6(b) otherwise required
to be prepared and filed by it if (i) the Company is engaged in a material
acquisition, reorganization, or divestiture, (ii) the Company is currently
engaged in a self-tender or exchange offer and the filing of a registration
statement would cause a violation of Rule 10b-6 under the Securities Exchange
Act of 1934, (iii) the Company is engaged in an underwritten offering and the
managing underwriter has advised the Company in writing that such a registration
statement would have a material adverse effect on the consummation of such
offering or (iv) the Company is subject to an underwriter's lock-up as a result
of an underwritten public offering and such underwriter has refused in writing,
the Company's request to waive such lock-up. In the event of such
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postponement, the Company shall be required to file the registration statement
pursuant to this Section 6(b), within 60 days of the consummation of the event
requiring such postponement.
The Company will use its best efforts to maintain such
registration statement or post-effective amendment current under the Act for a
period of at least six months (and for up to an additional three months if
requested by the Holder) from the effective date thereof. The Company shall
supply prospectuses, and such other documents as the Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities, use its best efforts to register and qualify any of the
Registrable Securities for sale in such states as such holder designates,
provided that the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or execute a general consent to service of
process in any jurisdiction in any action and furnish indemnification in the
manner provided in paragraph 7 hereof.
(c) The term '50% holder' as used in this paragraph 6 shall
mean the holder of at least 50% of the Common Stock and the Warrants underlying
the Option (considered in the aggregate) and shall include any owner or
combination of owners of such securities, which ownership shall be calculated by
determining the number of shares of Common Stock held by such owner or owners as
well as the number of shares then issuable upon exercise of the Warrants.
7. (a) Whenever pursuant to paragraph 6 a registration statement
relating to the Option or any shares or warrants issued or issuable upon the
exercise of any Options, is filed under the Act, amended or supplemented, the
Company will indemnify and hold harmless each holder of the securities covered
by such registration statement, amendment, or supplement (such holder being
hereinafter called the 'Distributing Holder'), and each person, if any, who
controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such securities and each person,
if any, who controls (within the meaning of the Act) any such underwriter,
against any losses, claims, damages, or liabilities, joint or several, to which
the Distributing Holder, any such controlling person or any such underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in
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respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any such registration
statement or any preliminary prospectus or final prospectus constituting a part
thereof or any amendment or supplement thereto, or arise out of or are based
upon the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and will reimburse
the Distributing Holder and each such controlling person and underwriter for any
legal or other expenses reasonably incurred by the Distributing Holder or such
controlling person or underwriter in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage, or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus, or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder, for use in the preparation thereof.
(b) The Distributing Holder will indemnify and hold harmless
the Company, each of its directors, each of its officers who have signed said
registration statement and such amendments and supplements thereto, each person,
if any, who controls the Company (within the meaning of the Act) against any
losses, claims, damages, or liabilities, joint and several, to which the Company
or any such director, officer, or controlling person may become subject, under
the Act or otherwise, insofar as such losses, claims, damages, or liabilities
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in said registration statement, said preliminary
prospectus, said final prospectus, or said amendment or supplement, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in said registration statement, said preliminary prospectus,
said final prospectus, or said amendment or supplement in reliance upon and in
conformity with written information furnished by such Distributing Holder for
use in the preparation thereof; and will reimburse the Company or any such
director, officer, or controlling
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person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action.
(c) Promptly after receipt by an indemnified party under this
paragraph 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Paragraph 7.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may 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, the
indemnifying party will not be liable to such indemnified party under this
paragraph 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof.
8. The Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Option shall be subject to
adjustment from time to time upon the happening of certain events as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the record date for such dividend or distribution or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that it shall equal the price determined by multiplying the Exercise
Price by a fraction, the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such action, and the numerator
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of which shall be the number of shares of Common Stock outstanding immediately
prior to such action. Notwithstanding anything to the contrary contained in the
Warrant Agreement, in the event an adjustment to the Exercise Price is effected
pursuant to this Subsection (a) (and a corresponding adjustment to the number of
Option Securities is made pursuant to Subsection (d) below), the exercise price
of the Warrants shall be adjusted so that it shall equal the price determined by
multiplying the exercise price of the Warrants by a fraction, the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after giving effect to such action and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
In such event, there shall be no adjustment to the number of shares of Common
Stock or other securities issuable upon exercise of the Warrants. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) In case the Company shall fix a record date for the
issuance of rights or warrants to all holders of its Common Stock entitling them
to subscribe for or purchase shares of Common Stock (or securities convertible
into Common Stock) at a price (the 'Subscription Price') (or having a conversion
price per share) less than the current market price of the Common Stock (as
defined in Subsection (e) below) on the record date mentioned below, the
Exercise Price shall be adjusted so that the same shall equal the price
determined by multiplying the number of shares then comprising an Option
Securities by the product of the Exercise Price in effect immediately prior to
the date of such issuance multiplied by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock outstanding on the record
date mentioned below and the number of additional shares of Common Stock which
the aggregate offering price of the total number of shares of Common Stock so
offered (or the aggregate conversion price of the convertible securities so
offered) would purchase at such current market price per share of the Common
Stock, and the denominator of which shall be the sum of the number of shares of
Common Stock outstanding on such record date and the number of additional shares
of Common Stock offered for subscription or purchase (or into which the
convertible securities so offered are convertible). Such adjustment shall be
made successively whenever such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
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shareholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or warrants the
Exercise Price shall be readjusted to the Exercise Price which would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock (or securities convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute to the
holders of its Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions and-dividends or distributions referred to in
Subsection (a) above) or subscription rights or warrants (excluding those
referred to in Subsection (b) above), then in each such case the Exercise Price
in effect thereafter shall be determined by multiplying the number of shares
then comprising an Option Securities by the product of the Exercise Price in
effect immediately prior thereto multiplied by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding multiplied
by the current market price per share of Common Stock (as defined in Subsection
(e) below), less the fair market value (as determined by the Company's Board of
Directors) of said assets or evidences of indebtedness so distributed or of such
rights or warrants, and the denominator of which shall be the total number of
shares of Common Stock outstanding multiplied by such current market price per
share of Common Stock. Such adjustment shall be made successively whenever such
a record date is fixed. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive such
distribution.
(d) Whenever the Exercise Price payable upon exercise of this
Option is adjusted pursuant to Subsections (a), (b) or (c) above, the number of
Option Securities purchasable upon exercise of this Option shall simultaneously
be adjusted by multiplying the number of Option Securities initially issuable
upon exercise of this Option by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
(e) For the purpose of any computation under Subsections
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(b) or (c) above, the current market price per share of Common Stock at any date
shall be deemed to be the average of the daily closing prices for 20 consecutive
business days before such date. The closing price for each day shall be the last
sale price regular way or, in case no such reported sale takes place on such
day, the average of the last reported bid and asked prices regular way, in
either case on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or admitted to trading
on such exchange, the average of the highest reported bid and lowest reported
asked prices as reported by NASDAQ, or other similar organization if NASDAQ is
no longer reporting such information, or if not so available, the fair market
price as determined by the Board of Directors.
(f) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least fifteen
cents ($0.15) in such price; provided, however, that any adjustments which by
reason of this Subsection (i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment required to be made
hereunder. All calculations under this Section 8 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be. Anything in
this Section 8 to the contrary notwithstanding, the Company shall be entitled,
but shall not be required, to make such changes in the Exercise Price, in
addition to those required by this Section 8, as it shall determine, in its sole
discretion, to be advisable in order that any dividend or distribution in shares
of Common Stock, or any subdivision, reclassification or combination of Common
Stock, hereafter made by the Company shall not result in any Federal Income tax
liability to the holders of Common Stock or securities convertible into Common
Stock (including Warrants issuable upon exercise of this Option).
(g) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly, but no later than 10 days after any
request for such an adjustment by the Holder, cause a notice setting forth the
adjusted Exercise Price and adjusted number of Option Securities issuable upon
exercise of this Option and, if requested, information describing the
transactions giving rise to such adjustments, to be mailed to the Holder, at the
address set forth herein, and shall cause a certified copy thereof to be mailed
to its transfer agent, if any. The Company may retain a firm of independent
certified public accountants selected by the
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Board of Directors (who may be the regular accountants employed by the Company)
to make any computation required by this Section 8, and a certificate signed by
such firm shall be conclusive evidence of the correctness of such adjustment.
(h) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (a) above, the Holder thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Option shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the Common
Stock contained in Subsections (a) to (g), inclusive above.
(i) No adjustments shall be made in connection with
future public offerings.
9. This Agreement shall be governed by and in accordance
with the laws of the State of New York.
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IN WITNESS WHEREOF, All Communications Corporation has caused this
Option to be signed by its duly authorized officers under its corporate seal,
and this Option to be dated as of the date first above written.
ALL COMMUNICATIONS CORPORATION
By: ______________________________
Richard Reiss
President
(Corporate Seal)
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PURCHASE FORM
(To be signed only upon exercise of option)
THE UNDERSIGNED, the holder of the foregoing Option, hereby irrevocably
elects to exercise the purchase rights represented by such Option for, and to
purchase thereunder,
_____Units, each consisting of two Shares of Common Stock, no par value per
share, of All Communications Corporation and two (2) Warrants and herewith makes
payment of $______________ therefor, and requests that the Warrants and
certificates for shares of Common Stock be issued in the name(s) of, and
delivered to _________________________ whose address(es) is (are)
_____________________________________________.
Dated:
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TRANSFER FORM
(To be signed only upon transfer of the Option)
For value received, the undersigned hereby sells, assigns, and
transfers unto _________________________________ the right to purchase Units,
each consisting of two (2) shares of Common Stock and two (2) Warrants of All
Communications Corporation, in the numbers set forth below represented by the
foregoing Option to the extent of _____ shares of Common Stock and ____
Warrants, and appoints _________________________________ attorney to transfer
such rights on the books of All Communications Corporation, with full power of
substitution in the premises.
Dated:
By: ______________________________
Address:
______________________________
______________________________
______________________________
In the presence of:
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FINANCIAL CONSULTING AGREEMENT
Agreement made this ____ day of _______, 1997 by and between
Monroe Parker Securities, Inc.('Consultant') and All Communications Corporation
(the 'Company').
WHEREAS, the Company desires to obtain Consultant's consulting
services in connection with the Company's business and financial affairs, and
Consultant is willing to render such services as hereinafter more fully set
forth.
NOW, THEREFORE, the parties hereby agree as follows:
1. The Company hereby engages and retains Consultant and
Consultant hereby agrees to use its best efforts, to render to the Company the
consulting services hereinafter described for a period of two years commencing
as of, and conditioned upon, the closing of the underwriting contemplated in the
Registration Statement on Form SB-2, No. 333-_______, declared effective by the
Securities and Exchange Commission on __________, 1997.
2. Consultant's services hereunder shall consist of
consultations with the Company concerning investment banking and other financial
matters to be determined by the Company.
3. The Company agrees that Consultant shall not be precluded
during the term of this Agreement from providing other consulting services or
engaging in any other business activities whether or not such consulting
services or business activities are pursued for gain, profit or other pecuniary
advantage and whether or not such consulting activities are in direct or
indirect competition with the business activities of the Company.
4. The Company agrees to pay to Consultant for its services
hereunder the sum of Two Percent (2%) of the gross proceeds of the Company's
initial public offering. The Company agrees that the entire sum due to
Consultant hereunder shall be paid in full on the date hereof.
5. Consultant shall be entitled to reimbursement by the
Company of such reasonable out-of-pocket expenses as Consultant may incur in
performing services under this Agreement.
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6. All final decisions with respect to consultations or
services rendered by Consultant pursuant to this Agreement shall be those of the
Company, and there shall be no liability on the part of the Consultant in
respect thereof. This Agreement and the Underwriting Agreement dated __________,
1997 contain the entire agreement of the parties hereto with respect to the
subject matter hereof, and there are no representations or warranties other than
as shall be herein or therein set forth. No waiver or modification hereof shall
be valid unless in writing. No waiver of any term, provision or condition of
this Agreement, in any one or more instance, shall constitute a waiver of any
other provision thereof, whether or not similar, nor shall such waiver
constitute a continuing waiver.
7. This Agreement shall be governed, construed and enforced in
accordance with the laws of the State of New York, without regard to the
principals of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused the
agreement to be signed as of the day and year first above written.
ALL COMMUNICATIONS CORPORATION
By:___________________________
Name:
Title:
MONROE PARKER SECURITIES, INC.
By:___________________________
Name: Stephen J. Drescher
Title: Director
Corporate Finance
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A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. NO
OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE
CAN BE RECEIVED UNTIL THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE, AND ANY
SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY
KIND, AT ANY TIME PRIOR TO NOTICE OF ITS ACCEPTANCE GIVEN AFTER THE EFFECTIVE
DATE.
ALL COMMUNICATIONS CORPORATION
550,000 UNITS CONSISTING OF
1,100,000 SHARES OF COMMON STOCK, NO PAR VALUE
AND
1,100,000 CLASS A REDEEMABLE COMMON STOCK
PURCHASE WARRANTS
SELECTED DEALERS AGREEMENT
_______ __, 1997
Dear Sirs:
1. Monroe Parker Securities, Inc. (the "Underwriter"), has agreed to
offer on a firm commitment basis, subject to the terms and conditions and
execution of the Underwriting Agreement, 550,000 Units each consisting of two
(2) shares of Common Stock, no par value per share ("Common Stock") of All
Communications Corporation (the "Company") and two (2) Class A Redeemable Common
Stock Purchase Warrants ("Warrants") (hereinafter, collectively referred to as
the "Units"; including any shares of Common Stock and Warrants offered pursuant
to an over-allotment option, the "Firm Units"). Each Warrant is exercisable to
purchase one (1) share of Common Stock. The Firm Units are more particularly
described in the enclosed Preliminary Prospectus, additional copies of which, as
well as the Prospectus (after effective date), will be supplied in reasonable
quantities upon request.
2. The Underwriter is soliciting offers to buy Units, upon the terms and
conditions hereof, from Selected Dealers, who are to act as principals,
including you, who are (i) registered with the Securities and Exchange
Commission ("the Commission") as broker-dealers under the Securities Exchange
Act of 1934, as amended ("the 1934 Act"), and members in good standing with the
National Association of Securities Dealers, Inc. ("the NASD"), or (ii) dealers
of
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institutions with their principal place of business located outside the United
States, its territories and possessions and not registered under the 1934 Act
who agree to make no sales within the United States, its territories and
possessions or to persons who are nationals thereof or residents therein and, in
making sales, to comply with the NASD's interpretation with respect to
free-riding and withholding. The Units are to be offered to the public at a
price of $7.00 per Unit. Selected Dealers will be allowed a concession of not
less than __% of the aggregate offering price. You will be notified of the
precise amount of such concession prior to the effective date of the
Registration Statement. The offer is solicited subject to the issuance and
delivery of the Units and their acceptance by the Underwriter, to the approval
of legal matters by counsel and to the terms and conditions as herein set forth.
3. Your offer to purchase may be revoked in whole or in part without
obligation or commitment of any kind by you any time prior to acceptance and no
offer may be accepted by us and no sale can be made until after the registration
statement covering the Units has become effective with the Commission. Subject
to the foregoing, upon execution by you of the Offer to Purchase below and the
return of same to us, you shall be deemed to have offered to purchase the number
of Units set forth in your offer on the basis set forth in paragraph 2 above.
Any oral notice by us of acceptance of your offer shall be immediately followed
by written or telegraphic confirmation preceded or accompanied by a copy of the
Prospectus. If a contractual commitment arises hereunder, all the terms of this
Selected Dealers Agreement shall be applicable. We may also make available to
you an allotment to purchase Units, but such allotment shall be subject to
modification or termination upon notice from us any time prior to an exchange of
confirmations reflecting completed transactions. All references hereafter in
this Agreement to the purchase and sale of the Units assume and are applicable
only if contractual commitments to purchase are completed in accordance with the
foregoing.
4. You agree that in re-offering the Units, if your offer is accepted
after the Effective Date, you will make a bona fide public distribution of same.
You will advise us upon request of the Units purchased by you remaining unsold,
and we shall have the right to repurchase such Units upon demand at the public
offering price less the concession as set forth in paragraph 2 above. Any of the
Units purchased by you pursuant to this Agreement are to be re-offered by you to
the public at the public offering price, subject to the terms hereof and shall
not be offered or sold by you below the public offering price before the
termination of this Agreement.
5. Payment for Units which you purchase hereunder shall be made by you
on such date as we may determine by certified or bank cashier's check payable in
New York Clearinghouse funds to Monroe Parker Securities, Inc. Certificates for
the Securities shall be delivered as soon as practicable at the offices of
Monroe Parker Securities, Inc., 2500 Westchester Avenue, Purchase, New York
10577. Unless specifically authorized by us, payment by you may not be deferred
until delivery of certificates to you.
6. A registration statement covering the offering has been filed with
the Commission in respect to the Units. You will be promptly advised when the
registration statement becomes
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effective. Each Selected Dealer in selling the Units pursuant hereto agrees
(which agreement shall also be for the benefit of the Company) that it will
comply with the applicable requirements of the Securities Act of 1933 and of the
1934 Act and any applicable rules and regulations issued under said Acts. No
person is authorized by the Company or by the Underwriter to give any
information or to make any representations other than those contained in the
Prospectus in connection with the sale of the Units. Nothing contained herein
shall render the Selected Dealers a member of the underwriting group or partners
with the Underwriter or with one another.
7. You will be informed by us as to the states in which we have been
advised by counsel the Units have been qualified for sale or are exempt under
the respective securities or blue sky laws of such states, but we have not
assumed and will not assume any obligation or responsibility as to the right of
any Selected Dealer to sell Units in any state.
8. The Underwriter shall have full authority to take such action as we
may deem advisable in respect of all matters pertaining to the offering or
arising thereunder. The Underwriter shall not be under any liability to you,
except such as may be incurred under the Securities Act of 1933 and the rules
and regulations thereunder, except for lack of good faith and except for
obligations assumed by us in this Agreement, and no obligation on our part shall
be implied or inferred herefrom.
9. Selected Dealers will be governed by the conditions herein set forth
until this Agreement is terminated. This Agreement will terminate when the
offering is completed. Nothing herein contained shall be deemed a commitment on
our part to sell you any Units; such contractual commitment can only be made in
accordance with the provisions of paragraph 3 hereof.
10. You represent that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("Association") and registered as a
broker-dealer or are not eligible for membership under Section I of the By-Laws
of the Association who agree to make no sales within the United States, its
territories or possessions or to persons who are nationals thereof or residents
therein and, in making sales, to comply with the NASD's interpretation with
respect to free-riding and withholding. Your attention is called to the
following: (a) Rules 2730, 2740, 2420 and 2750 of the NASD Conduct Rules of the
Association and the interpretations of said Section promulgated by the Board of
Governors of such Association including the interpretation with respect to
"FreeRiding and Withholding"; (b) Section 10(b) of the 1934 Act and Rules
10b-6 and 10b-10 of the general rules and regulations promulgated under said
Act; (c) Securities Act Release #3907; (d) Securities Act Release #4150; and (e)
Securities Act Release #4968 requiring the distribution of a Preliminary
Prospectus to all persons reasonably expected to be purchasers of Units from you
at least 48 hours prior to the time you expect to mail confirmations. You, if a
member of the Association, by signing this Agreement, acknowledge that you are
familiar with the cited law, rules and releases, and agree that you will not
directly and/or indirectly violate any provisions of applicable law in
connection with your participation in the distribution of the Units.
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11. In addition to compliance with the provisions of paragraph 10
hereof, you will not, until advised by us in writing or by wire that the entire
offering has been distributed and closed, bid for or purchase Units or its
component securities in the open market or otherwise make a market in such
securities or otherwise attempt to induce others to purchase such securities in
the open market. Nothing contained in this paragraph 11 shall, however, preclude
you from acting as agent in the execution of unsolicited orders of customers in
transactions effectuated for them through a market maker.
12. You understand that the Underwriter may in connection with the
offering engage in stabilizing transactions. If the Underwriter contracts for or
purchases in the open market in connection with such stabilization any Units
sold to you hereunder and not effectively placed by you, the Underwriter may
charge you the Selected Dealer's concession originally allowed you on the Units
so purchased, and you agree to pay such amount to us on demand.
13. By submitting an Offer to Purchase you confirm that your net capital
is such that you may, in accordance with Rule 15c3-1 adopted under the 1934 Act,
agree to purchase the number of Units you may become obligated to purchase under
the provisions of this Agreement.
14. You agree that (i) you shall not recommend to a customer the
purchase of Firm Units unless you shall have reasonable grounds to believe that
the recommendation is suitable for such customer on the basis of information
furnished by such customer concerning the customer's investment objectives,
financial situation and needs, and any other information known to you, (ii) in
connection with all such determinations, you shall maintain in your files the
basis for such determination, and (iii) you shall not execute any transaction in
Firm Units in a discretionary account without the prior specific written
approval of the customer.
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15. You represent that neither you nor any of your affiliates or
associates owns any Common Stock of the Company.
16. All communications from you should be directed to us at the office
of Monroe Parker Securities, Inc., 2500 Westchester Avenue, Purchase, New York
10577. All communications from us to you shall be directed to the address to
which this letter is mailed.
Very truly yours,
MONROE PARKER SECURITIES, INC.
By:
_______________________________
Name:
Title:
ACCEPTED AND AGREED TO AS OF THE ______
DAY OF ____________, 1997
[Name of Dealer]
By: ____________________________
Its
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TO: Monroe Parker Securities, Inc.
2500 Westchester Avenue
Purchase, New York 10577
We hereby subscribe for _____ Units of All Communications Corporation in
accordance with the terms and conditions stated in the foregoing letter. We
hereby acknowledge receipt of the Prospectus referred to in the first paragraph
thereof relating to said Units. We further state that in purchasing said Units
we have relied upon said Prospectus and upon no other statement whatsoever,
whether written or oral. We confirm that we are a dealer actually engaged in the
investment banking or securities business and 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 and its possessions and not registered as a
broker or dealer under the Securities Exchange Act of 1934, as amended, who
hereby agrees not to make any sales within the United States, its territories or
its possessions or to persons who are nationals thereof or residents therein. We
hereby agree to comply with the provisions of Rule 2740 of the NASD Conduct
Rules, and if we are a foreign dealer and not a member of the NASD, we also
agree to comply with the NASD's interpretation with respect to free-riding and
withholding, to comply, as though we were a member of the NASD, with the
provisions of Rules 2730 and 2750 of the NASD Conduct Rules.
Name of
Dealer:
___________________________
By:
______________
Address:
______________
______________
Dated: _____________, 1997
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CERTIFICATE OF INCORPORATION
OF
ALL COMMUNICATIONS CORPORATION
THIS IS TO CERTIFY THAT, THERE is hereby organized a corporation under and
by virtue of N.J.S. 14A:1-1 et seq., the 'New Jersey Business Corporation Act.'
1. The name of the Corporation is:
ALL COMMUNICATIONS CORPORATION
2. The purposes for which this corporation is organized is: To engage in
any activities within the purposes for which a corporation may be organized
under the New Jersey Business Corporation Act, N.J.S. 14A-1 et seq.
3. The aggregate number of shares the corporation shall have authority to
issue is 100,000,000.
4. The address of the corporation's initial registered office is: 111
Northfield Avenue, West Orange, New Jersey 07052, Suite 201. The initial
registered agent at such address is:
ROBERT B. KRONER
5. The first Board of Directors of this corporation shall consist of one
Director and the name and address of such director is:
RICHARD A. REISS
324 Weed Avenue
Stamford, Conn. 06902
6. The name of the incorporator is ROBERT B. KRONER, 111 Northfield Avenue,
West Orange, New Jersey 07052.
7. All officers and directors shall be indemnified by the corporation to
the fullest extent permitted by N.J.S. 14a:3-5.
8. A director of the corporation shall not be personally liable to the
corporation or its shareholders for damages for breach of any duty owed to the
corporation or its shareholders,
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except for liability for any breach of duty based upon an act or omission (a) in
breach of such persons duty of loyalty to the corporation or its shareholders,
(b) not in good faith or involving a knowing violation of law or (c) resulting
in receipt by such person of an improper personal benefit.
IN WITNESS WHEREOF, the individual incorporator being over the age of 18
years has signed this Certificate on this 15th day of August, 1991.
/s/ ROBERT B. KRONER
...............................
ROBERT B. KRONER
111 Northfield Avenue, Suite 201
West Orange, New Jersey 07052
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CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF
ALL COMMUNICATIONS CORPORATION
The following Amendment to the Certificate of Incorporation of All
Communications Corporation was approved by the shareholders of the corporation
pursuant to the provisions of N.J.S. 14A:9-2(4) as follows:
(A). The name of the corporation is All Communications Corporation.
(B). Paragraph 3 of the Certificate of Incorporation is amended to
add Article Seventh as follows:
'The aggregate number of shares the corporation shall have
authority to issue is 101,000,000, 100,000,000 of which are common
and 1,000,000 of which are preferred'.
(C). The Amendment was adopted by the shareholders of All
Communications Corporation on December 6, 1996.
(D). The number of shares entitled to vote on the Amendment is
1,500,000.
(E). The number of shares voting for the Amendment is 1,500,000 and
no shares voting against.
(F). This Amendment is to become effective immediately at the time
filing.
IN WITNESS WHEREOF the undersigned has executed this Certificate of
Amendment on the 9th day of December, 1996 intending that the same be thereafter
filed in the office of the New Jersey Secretary of State pursuant to N.J.S.
14A:9-4(5).
All Communications Corporation
/s/ RICHARD A. REISS
...............................
By: RICHARD A. REISS, PRESIDENT
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STATE OF NEW JERSEY :
SS:
COUNTY OF UNION :
I CERTIFY that on December 9, 1996, Richard A. Reiss personally came before
me and acknowledged under oath, to my satisfaction, that this person (or if more
than one, each person):
(a) is named in and personally signed this document; and
(b) signed, sealed and delivered this document as his act and deed.
/s/ ROBERT B. KRONER
...............................
ROBERT B. KRONER
An Attorney at Law of New Jersey
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AMENDED
BY-LAWS
OF
ALL COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
Adopted August 16, 1991
ARTICLE I
OFFICES
1. Registered Office and Agent.--The registered office of the Corporation
in the State of New Jersey is at 111 Northfield Avenue, Suite 201, West Orange,
New Jersey
The registered agent of the Corporation at such office is ROBERT B. KRONER
2. Principal Place of Business.--The principal place of business of the
Corporation is Suite 224, 7 Lincoln Highway, Edison, New Jersey
3. Other Places of Business.--Branch or subordinate places of business or
offices may be established at any time by the Board at any place or places where
the Corporation is qualified to do business.
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ARTICLE II
SHAREHOLDERS
1. Annual Meeting.--The annual meeting of shareholders shall be held upon
not less than ten nor more than sixty days written notice of the time, place,
and purposes of the meeting at 10:00 o'clock a.m. on the 16th day of the month
of August of each year at Suite 224, 7 Lincoln Highway, Edison, New Jersey or at
such other time and place as shall be specified in the notice of meeting, in
order to elect directors and transact such other business as shall come before
the meeting. If that date is a legal holiday, the meeting shall be held at the
same hour on the next succeeding business day.
2. Special Meetings.--A special meeting of shareholders may be called for
any purpose by the president or the Board. A special meeting shall be held upon
not less than ten nor more than sixty days written notice of the time, place,
and purposes of the meeting.
3. Action Without Meeting.--The shareholders may act without a meeting by
written consent in accordance with N.J.S.A. 14A:5-6. Such
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consents may be executed together, or in counterparts, and shall be filed in the
Minute Book. Special rules apply to the annual election of directors, mergers,
consolidations, acquisitions of shares or the sales of assets.
4. Quorum.--The presence at a meeting in person or by proxy of the holders
of shares entitled to cast 8 majority of the votes shall constitute a quorum.
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ARTICLE III
BOARD OF DIRECTORS
1. Number and Term of Office.--The Board shall consist of no more than 5
and no less then 2 members. The Board shall be divided into three classes of
directors. Each class shall be elected for a term of three years, provided
however that upon adoption of this By Law Amendment, Class I shall serve for 1
year, Class II shall serve for 2 years and Class III shall serve for 3 years.
Each Director shall be elected by the shareholders and hold office until the
annual meeting of shareholders at the conclusion of their term and until that
director's successor shall have been elected and qualified.
2. Regular Meetings.--A regular meeting of the Board shall be held without
notice immediately following and at the same place as the annual shareholders'
meeting for the purposes of electing officers and conducting such other business
as may come before the meeting. The Board, by resolution, may provide for
additional regular meetings which may be held without notice, except to members
not present at the time of the adoption of the resolution.
3. Special Meeting--A special meeting of the Board may be called at any
time by the president or by directors for any purpose. Such meeting shall be
held upon 1 days notice if given orally, (either by telephone or in
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person,) or by telegraph, or by 2 days notice if given by depositing the notice
in the United States mails, postage prepaid. Such notice shall specify the time
and place of the meeting.
4. Action Without Meeting.--The Board may act without a meeting if, prior
or subsequent to such action, each member of the Board shall consent in writing
to such action. Such written consent or consents shall be filed in the minute
book.
5. Quorum.--2/3 of the entire Board shall constitute a quorum for the
transaction of business.
6. Vacancies in Board of Directors.--Any vacancy in the Board may be filled
by the affirmative vote of a majority of the remaining directors, even though
less than a quorum of the Board, or by a sale remaining director.
7. Removal of Directors.--Any director may be removed for cause, or without
cause unless otherwise provided in the certificate of incorporation, by a
majority vote of shareholders.
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8. Presence at Meetings.--Where appropriate communication facilities are
reasonably available, any or all directors shall have the right to participate
in all or any part of a meeting of the board or a committee of the board by
means of conference telephone or any means of communication by which all persons
participating in the meeting are able to hear each other.
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ARTICLE IV
WAIVERS OF NOTICE
Any notice required by these by-laws, by the certificate of incorporation,
or by the New Jersey Business Corporation Act may be waived in writing by any
person entitled to notice. The waiver or waivers may be executed either before
or after the event with respect to which notice is waived. Each director or
shareholder attending a meeting without protesting, prior to its conclusion, the
lack of proper notice shall be deemed conclusively to have waived notice of the
meeting.
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ARTICLE V
OFFICERS
1. Election.--At its regular meeting following the annual meeting of
shareholders, the Board shall elect a president, a treasurer, a secretary, and
it may elect such other officers, including one or more vice presidents, as it
shall deem necessary. One person may hold two or more offices.
2. Duties and Authority of President.--The president shall be chief
executive officer of the Corporation. Subject only to the authority of the
Board, he shall have general charge and supervision over, and responsibility
for, the business and affairs of the Corporation. Unless otherwise directed by
the Board, all other officers shall be subject to the authority and supervision
of the President. The president may enter into and execute in the name of the
Corporation contracts or other instruments in the regular course of business or
contracts or other instruments not in the regular course of business which are
authorized, either generally or specifically, by the Board. He shall have the
general powers and duties of management usually vested in the office of
president of a corporation.
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3. Duties and Authority of Vice President. The vice president shall perform
such duties and have such authority as from time to time may be delegated to him
by the president or by the Board. In the absence of the president or in the
event of his death, inability, or refusal to act, the vice president shall
perform the duties and be vested with the authority of the president.
4. Duties and Authority of Treasurer.--The treasurer shall have the
custody of the funds and securities of the Corporation and shall keep or cause
to be kept regular books of account for the Corporation. The treasurer shall
perform such other duties and possess such other powers as are incident to that
office or as shall be assigned by the president or the Board.
5. Duties and Authority of Secretary.--The secretary shall cause notices
of all meetings to be served as prescribed in these by-laws and shall keep or
cause to be kept the minutes of all meetings of the shareholders and the Board.
The secretary shall have charge of the seal of the Corporation.
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The secretary shall perform such other duties and possess such other powers as
are incident to that office or as are assigned by the president or the Board.
6. Removal and Resignation of Officers; Filling of Vacancies.
A. Any officer elected by the board may be removed by the board with or
without cause. An officer elected by the shareholders may be removed, with
or without cause, only by vote of the shareholders but his authority to act
as an officer may be suspended by the board for cause. The removal of an
officer shall be without prejudice to his contract rights, if any. Election
of an officer shall not of itself create contract rights.
B. An officer may resign by written notice to the corporation. The resignation
shall be effective upon receipt thereof by the corporation or at such
subsequent time as shall be specified in the notice of resignation.
C. Any vacancy occurring among the officers, however caused, shall be filled
by the board.
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ARTICLE VI
AMENDMENTS TO AND EFFECT OF BY-LAWS;
FISCAL YEAR
1. Force and Effect of By-Laws.--These by-laws are subject to the
provisions of the New Jersey Business Corporation Act and the Corporation's
certificate of incorporation, as it may be amended from time to time. If any
provision in these by-laws is inconsistent with a provision in the Act or the
certificate of incorporation, the provision of that Act or the certificate of
incorporation shall govern.
2. Wherever in these by-laws references are made to more than one
incorporator, director, or shareholder, they shall, if this is a sole
incorporator, director, shareholder corporation, be construed to mean the
solitary person; and all provisions dealing with the quantum of majorities or
quorums shall be deemed to mean the action by the one person constituting the
corporation.
3. Amendments by By-laws.--These by-laws may be altered, amended, or
repealed by the shareholders or the board. Any by-law adopted, amended, or
repealed by the shareholders may be amended or repealed by the Board, unless the
resolution of the shareholders adopting such by-law
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expressly reserves to the shareholders the right to amend or repeal it.
4. Fiscal Year.--The fiscal year of the Corporation shall begin on the
first day of January of each year.
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WARRANT AGREEMENT
AGREEMENT, dated as of this ____ day of _______, 1997, by and between
ALL COMMUNICATIONS CORPORATION, a New Jersey corporation ('Company'), and
American Stock Transfer & Trust Company, as Warrant Agent (the 'Warrant Agent').
WITNESSETH:
WHEREAS, in connection with a public offering of up to 632,500 Units,
each consisting of two (2) shares of Common Stock, no par value per share, and
two (2) Class A Redeemable Common Stock Purchase Warrants (the 'Warrants')
pursuant to an underwriting agreement (the 'Underwriting Agreement') dated
__________, 1997 between the Company and Monroe Parker Securities, Inc.
('Monroe'), and the issuance to Monroe or its designees of a Purchase Option to
purchase 55,000 additional Units, consisting of 110,000 shares of Common Stock
and 110,000 Warrants (the 'Purchase Option'), and the issuance to certain bridge
lenders of 375,000 bridge units, consisting of 375,000 shares of Common Stock
and 375,000 Warrants (the 'Bridge Warrants') the Company will issue up to
1,750,000 Warrants;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and redemption of the Warrants, the
issuance of certificates representing the Warrants, the exercise of the
Warrants, and the rights of the holders thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
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1. Definitions. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) 'Common Stock' shall mean the common stock of the Company of
which at the date hereof consists of __________ authorized shares, no par value
per share, and shall also include any capital stock of any class of the Company
thereafter authorized which shall not be limited to a fixed sum or percentage in
respect to the rights of the holders thereof to participate in dividends and in
the distribution of assets upon the voluntary liquidation, dissolution, or
winding up of the Company; provided, however, that the shares issuable upon
exercise of the Warrants shall include (1) only shares of such class designated
in the Company's Certificate of Incorporation as Common Stock on the date of the
original issue of the Warrants or (ii), in the case of any reclassification,
change, consolidation, merger, sale, or conveyance of the character referred to
in Section 9(c) hereof, the stock, securities, or property provided for in such
section or (iii), in the case of any reclassification or change in the
outstanding shares of Common Stock issuable upon exercise of the Warrants as a
result of a subdivision or combination or consisting of a change in par value,
or from par value to no par value, or from no par value to par value, such
shares of Common Stock as so reclassified or changed.
(b) 'Corporate Office' shall mean the office of the Warrant Agent
(or its successor) at which at any particular time its principal business shall
be administered, which office is located at the date hereof at 40 Wall Street,
New York, New York 10005.
(c) 'Exercise Date' shall mean, as to any Warrant, the date on
which the Warrant Agent shall have received both (a) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, and (b)
payment in cash, or by official bank or certified check made payable to the
Company, of an amount in lawful money of the United States of America equal to
the applicable Purchase Price.
(d) 'Initial Warrant Exercise Date' shall mean ______, 1998 (one
(1) year from the Effective Date).
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(e) 'Purchase Price' shall mean the purchase price per share to
be paid upon exercise of each Warrant in accordance with the terms hereof, which
price shall be $4.25 per share, subject to adjustment from time to time pursuant
to the provisions of Section 9 hereof, and subject to the Company's right, in
its sole discretion, to reduce the Purchase Price upon notice to all
warrantholders.
(f) 'Redemption Price' shall mean the price at which the Company
may, at its option, redeem the Warrants, in accordance with the terms hereof,
which price shall be $0.10 per Warrant.
(g) 'Registered Holder' shall mean as to any Warrant and as of
any particular date, the person in whose name the certificate representing the
Warrant shall be registered on that date on the books maintained by the Warrant
Agent pursuant to Section 6.
(h) 'Transfer Agent' shall mean American Stock Transfer & Trust
Company, as the Company's transfer agent, or its authorized successor, as such.
(i) 'Warrant Expiration Date' shall mean 5:00 P.M. (New York
time) on __________, 2001 or the Redemption Date as defined in Section 8,
whichever is earlier; provided that if such date shall in the State of New York
be a holiday or a day on which banks are authorized or required to close, then
5:00 P.M. (New York time) on the next following day which in the State of New
York is not a holiday or a day on which banks are authorized or required to
close. Upon notice to all warrantholders the Company shall have the right to
extend the warrant expiration date.
2. Warrants and Issuance of Warrant Certificates.
(a) A Warrant initially shall entitle the Registered Holder of
the Warrant representing such Warrant to purchase one share of Common Stock upon
the exercise thereof, in accordance with the terms hereof, subject to
modification and adjustment as provided in Section 9.
(b) Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants sold pursuant to the Underwriting Agreement
shall be executed by the Company and delivered to the Warrant Agent. Upon
written order of the Company
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signed by its President or Chairman or a Vice President and by its Secretary or
an Assistant Secretary, the Warrant Certificates shall be countersigned, issued,
and delivered by the Warrant Agent.
(c) From time to time, up to the Warrant Expiration Date, the
Transfer Agent shall countersign and deliver stock certificates in required
whole number denominations representing up to an aggregate of 1,750,000 shares
of Common Stock, subject to adjustment as described herein, upon the exercise of
Warrants in accordance with this Agreement.
(d) From time to time, up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in required
whole number denominations to the persons entitled thereto in connection with
any transfer or exchange permitted under this Agreement; provided that no
Warrant Certificates shall be issued except (i) those initially issued
hereunder, (ii) those issued on or after the Initial Warrant Exercise Date, upon
the exercise of fewer than all Warrants represented by any Warrant Certificate,
to evidence any unexercised warrants held by the exercising Registered Holder,
(iii) those issued upon any transfer or exchange pursuant to Section 6; (iv)
those issued in replacement of lost, stolen, destroyed, or mutilated Warrant
Certificates pursuant to Section 7; (v) those issued pursuant to the Purchase
Option; and (vi) those issued at the option of the Company, in such form as may
be approved by the its Board of Directors, to reflect any adjustment or change
in the Purchase Price, the number of shares of Common Stock purchasable upon
exercise of the Warrants or the Redemption Price therefor made pursuant to
Section 9 hereof.
(e) Pursuant to the terms of the Purchase Option, Monroe may
purchase up to 55,000 Units, consisting of 110,000 shares of Common Stock and
110,000 Warrants. The Purchase Option shall not be transferred, sold, assigned
or hypothecated for a period of one (1) year from the Effective Date, except
that it may be transferred to persons who are officers of Monroe or selling
group members in the offering.
3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in
the form annexed hereto as Exhibit A (the provisions of which are
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hereby incorporated herein) and may have such letters, numbers, or other marks
of identification or designation and such legends, summaries, or endorsements
printed, lithographed, or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Warrants may be listed, or to conform to usage or to the requirements of Section
2(b). The Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange, or in lieu of mutilated,
lost, stolen, or destroyed Warrant Certificates) and issued in registered form.
Warrant Certificates shall be numbered serially with the letter W.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President, or any Vice President and by
its Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a facsimile of the
Company's seal. Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be an officer of the Company or to hold the
particular office referenced in the Warrant Certificate before the date of
issuance of the Warrant Certificates or before countersignature by the Warrant
Agent and issue and delivery thereof, such Warrant Certificates may nevertheless
be countersigned by the Warrant Agent, issued and delivered with the same force
and effect as though the person who signed such Warrant Certificates had not
ceased to be an officer of the Company or to hold such office. After
countersignature by the Warrant Agent, Warrant Certificates shall be delivered
by the Warrant Agent to the Registered Holder without further action by the
Company, except as otherwise provided by Section 4 hereof.
4. Exercise. Each Warrant may be exercised by the Registered Holder
thereof at any time on or after the Initial Exercise Date, but not after the
Warrant Expiration Date, upon the terms and subject to the conditions set forth
herein and in the applicable Warrant Certificate. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the Exercise
Date and the person entitled to receive the securities
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deliverable upon such exercise shall be treated for all purposes as the holder
of those securities upon the exercise of the Warrant as of the close of business
on the Exercise Date. As soon as practicable on or after the Exercise Date the
Warrant Agent shall deposit the proceeds received from the exercise of a Warrant
and shall notify the Company in writing of the exercise of the Warrants.
Promptly following, and in any event within five days after the date of such
notice from the Warrant Agent, the Warrant Agent, on behalf of the Company,
shall cause to be issued and delivered by the Transfer Agent, to the person or
persons entitled to receive the same, a certificate or certificates for the
securities deliverable upon such exercise (plus a certificate for any remaining
unexercised Warrants of the Registered Holder), unless prior to the date of
issuance of such certificates the Company shall instruct the Warrant Agent to
refrain from causing such issuance of certificates pending clearance of checks
received in payment of the Purchase Price pursuant to such Warrants. Upon the
exercise of any Warrant and clearance of the funds received, the Warrant Agent
shall promptly remit the payment received for the Warrant (the 'Warrant
Proceeds') to the Company or as the Company may direct in writing.
5. Reservation of Shares; Listing; Payment of Taxes, etc.
(a) The Company covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of Warrants, such number of shares of Common Stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of the Warrants shall, at the time of delivery, be duly and validly issued,
fully paid, nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof, (other than those which the Company shall promptly
pay or discharge) and that upon issuance such shares shall be listed on each
national securities exchange or eligible for inclusion in each automated
quotation system, if any, on which the other shares of outstanding Common Stock
of the Company are then listed or eligible for inclusion.
(b) The Company covenants that if any securities to be reserved
for the purpose of exercise of Warrants hereunder require registration with, or
approval of, any governmental authority under any federal securities law before
such securities may be validly
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issued or delivered upon such exercise, then the Company will, to the extent the
Purchase Price is less than the Market Price (as hereinafter defined), in good
faith and as expeditiously as reasonably possible, endeavor to secure such
registration or approval and will use its reasonable efforts to obtain
appropriate approvals or registrations under state 'blue sky' securities laws.
With respect to any such securities, however, Warrants may not be exercised by,
or shares of Common Stock issued to, any Registered Holder in any state in which
such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp, or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance, or delivery of any shares upon exercise
of the Warrants; provided, however, that if the shares of Common Stock are to be
delivered in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized to
requisition the Company's Transfer Agent from time to time for certificates
representing shares of Common Stock issuable upon exercise of the Warrants, and
the Company will authorize the Transfer Agent to comply with all such proper
requisitions. The Company will file with the Warrant Agent a statement setting
forth the name and address of the Transfer Agent of the Company for shares of
Common Stock issuable upon exercise of the Warrants.
6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its Corporate Office, and
upon satisfaction of the terms and provisions hereof, the Company shall execute
and the Warrant Agent shall countersign, issue, and deliver in exchange therefor
the Warrant Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
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(b) The Warrant Agent shall keep at its office books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof in accordance with its regular
practice. Upon due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the Warrant Agent
shall issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription form on
the reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company and the Warrant Agent, duly executed by the Registered Holder or his
attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the Warrant Agent for any
exchange or registration of transfer of Warrant Certificates. In addition, the
Company may require payment by such holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly cancelled
by the Warrant Agent and thereafter retained by the Warrant Agent until
termination of this Agreement or resignation as Warrant Agent, or disposed of or
destroyed, at the direction of the Company.
(f) Prior to due presentment for registration of transfer
thereof, the Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof and of each
Warrant represented thereby (notwithstanding any notations of ownership or
writing thereon made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be affected by any
notice to the contrary. The Warrants which are being publicly offered with
shares of Common Stock pursuant to the Underwriting Agreement will be
immediately detachable from the Common Stock and transferable separately
therefrom.
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7. Loss or Mutilation. Upon receipt by the Company and the Warrant Agent
of evidence satisfactory to them of the ownership of and loss, theft,
destruction, or mutilation of any Warrant Certificate and (in case of loss,
theft, or destruction) of indemnity satisfactory to them, and (in the case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall (in the absence of notice to the Company and/or
Warrant Agent that the Warrant Certificate has been acquired by a bona fide
purchaser) countersign and deliver to the Registered Holder in lieu thereof a
new Warrant Certificate of like tenor representing an equal aggregate number of
Warrants. Applicants for a substitute Warrant Certificate shall comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
8. Redemption.
(a) Subject to the provisions of paragraph 2(e) hereof, on not
less than thirty (30) days notice given at any time after six (6) months after
the Initial Warrant Exercise Date, or earlier with the consent of Monroe, the
Warrants may be redeemed, at the option of the Company, at a redemption price of
$0.10 per Warrant, provided the Market Price of the Common Stock receivable upon
exercise of the Warrant shall equal or exceed 250% of the then exercise price of
the Warrants per share (the 'Target Price'), subject to adjustment as set forth
in Section 8(f) below. Market Price for the purpose of this Section 8 shall mean
the average closing sale price for all twenty (20) consecutive trading days
ending on the third day prior to the date of the notice of redemption, which
notice shall be mailed no later than five days thereafter, of the Common Stock
as reported by the National Association of Securities Dealers, Inc. Automatic
Quotation System or any national securities exchange on which the Common Stock
is traded.
(b) If the conditions set forth in Section 8(a) are met, and the
Company desires to exercise its right to redeem the Warrants, it shall mail a
notice of redemption to each of the Registered Holders of the Warrants to be
redeemed, first class, postage prepaid, not later than the thirtieth day before
the date fixed for redemption, at their last address as shall appear on the
records maintained pursuant to Section 6(b). Any notice mailed in the manner
provided herein shall be conclusively presumed to have
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been duly given whether or not the Registered Holder receives such notice.
(c) The notice of redemption shall specify (i) the redemption
price, (ii) the date fixed for redemption, (iii) the place where the Warrant
Certificates shall be delivered and the redemption price paid, and (iv) that the
right to exercise the Warrant shall terminate at 5:00 P.M. (New York time) on
the business day immediately preceding the date fixed for redemption. The date
fixed for the redemption of the Warrant shall be the Redemption Date. No failure
to mail such notice nor any defect therein or in the mailing thereof shall
affect the validity of the proceedings for such redemption except as to a
Registered Holder (a) to whom notice was not mailed or (b) whose notice was
defective. An affidavit of the Warrant Agent or of the Secretary or an Assistant
Secretary of the Company that notice of redemption has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 P.M.
(New York time) on the business day immediately preceding the Redemption Date.
On and after the Redemption Date, Holders of the Warrants shall have no further
rights except to receive, upon surrender of the Warrant, the Redemption Price.
(e) From and after the Redemption Date specified for, the Company
shall, at the place specified in the notice of redemption, upon presentation and
surrender to the Company by or on behalf of the Registered Holder thereof of one
or more Warrant Certificates evidencing Warrants to be redeemed, deliver or
cause to be delivered to or upon the written order of such Holder a sum in cash
equal to the redemption price of each such Warrant. From and after the
Redemption Date and upon the deposit or setting aside by the Company of a sum
sufficient to redeem all the Warrants called for redemption, such Warrants shall
expire and become void and all rights hereunder and under the Warrant
Certificates, except the right to receive payment of the redemption price, shall
cease.
(f) If the shares of the Company's Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, the Target
Price shall be proportionally adjusted by the ratio which the total number of
shares of Common Stock outstanding immediately prior to such event bears to the
total
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number of shares of Common Stock to be outstanding immediately after such event.
9. Adjustment of Exercise Price and Number of Shares of
Common Stock or Warrants.
(a) Subject to the exceptions referred to in Section 9(g) below,
in the event the Company shall, at any time or from time to time after the date
hereof, sell any shares of Common Stock for a consideration per share less than
the Market Price of the Common Stock (as defined in Section 8) on the date of
the sale or issue any shares of Common Stock as a stock dividend to the holders
of Common Stock, or subdivide or combine the outstanding shares of Common Stock
into a greater or lesser number of shares (any such sale, issuance, subdivision,
or combination being herein called a 'Change of Shares'), then, and thereafter
upon each further Change of Shares, the Purchase Price in effect immediately
prior to such Change of Shares shall be changed to a price (including any
applicable fraction of a cent) determined by multiplying the Purchase Price in
effect immediately prior thereto by a fraction, the numerator of which shall be
the sum of the number of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares and the number of shares of Common Stock
which the aggregate consideration received (determined as provided in subsection
9(f)(G) below) for the issuance of such additional shares would purchase at such
current market price per share of Common Stock, and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
Upon each adjustment of the Purchase Price pursuant to this
Section 9, the total number of shares of Common Stock purchasable upon the
exercise of each Warrant shall (subject to the provisions contained in Section
9(b) hereof) be such number of shares (calculated to the nearest tenth)
purchasable at the Purchase Price in effect immediately prior to such adjustment
multiplied by a fraction, the numerator of which shall be the Purchase Price in
effect immediately prior to such adjustment and the denominator of which shall
be the Purchase Price in effect immediately after such adjustment.
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(b) The Company may elect, upon any adjustment of the Purchase
Price hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the exercise
of each Warrant as hereinabove provided, so that each Warrant outstanding after
such adjustment shall represent the right to purchase one share of Common Stock.
Each Warrant held of record prior to such adjustment of the number of Warrants
shall become that number of Warrants (calculated to the nearest tenth)
determined by multiplying the number one by a fraction, the numerator of which
shall be the Purchase Price in effect immediately prior to such adjustment and
the denominator of which shall be the Purchase Price in effect immediately after
such adjustment. Upon each adjustment of the number of Warrants pursuant to this
Section 9, the Company shall, as promptly as practicable, cause to be
distributed to each Registered Holder of Warrant Certificates on the date of
such adjustment Warrant Certificates evidencing, subject to Section 10 hereof,
the number of additional Warrants to which such Holder shall be entitled as a
result of such adjustment or, at the option of the Company, cause to be
distributed to such Holder in substitution and replacement for the Warrant
Certificates held by him prior to the date of adjustment (and upon surrender
thereof, if required by the Company) new Warrant Certificates evidencing the
number of Warrants to which such Holder shall be entitled after such adjustment.
(c) In case of any reclassification, capital reorganization, or
other change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization, or other change of outstanding shares of Common Stock), or in
case of any sale or conveyance to another corporation of the property of the
Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage, or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a warrant then outstanding shall
have the right thereafter, by exercising such Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization, or other change,
consolidation, merger, sale, or conveyance by a holder of the number of shares
of Common Stock that
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might have been purchased upon exercise of such Warrant immediately prior to
such reclassification, capital reorganization, or other change, consolidation,
merger, sale, or conveyance. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 9. The Company shall not effect any
such consolidation, merger, or sale unless prior to or simultaneously with the
consummation thereof the successor (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing assets or other
appropriate corporation or entity shall assume, by written instrument executed
and delivered to the Warrant Agent, the obligation to deliver to the holder of
each Warrant such shares of stock, securities, or assets as, in accordance with
the foregoing provisions, such holders may be entitled to purchase and the other
obligations under this Agreement. The foregoing provisions shall similarly apply
to successive reclassification, capital reorganizations, and other changes of
outstanding shares of Common Stock and to successive consolidations, mergers,
sales, or conveyances.
(d) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 2(d) hereof, continue to express the Purchase Price per
share, the number of shares purchasable thereunder, and the Redemption Price
therefor as the Purchase Price per share, and the number of shares purchasable
and the Redemption Price therefore were expressed in the Warrant Certificates
when the same were originally issued.
(e) After each adjustment of the Purchase Price pursuant to this
Section 9, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant after such adjustment, and, if the
Company shall have elected to adjust the number of Warrants, the number of
Warrants to which the registered holder of each Warrant shall then be entitled,
and the adjustment in Redemption Price resulting therefrom, and (iii) a brief
statement of the facts accounting for such adjustment. The Company will promptly
file such certificate
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with the Warrant Agent and cause a brief summary thereof to be sent by ordinary
first class mail to Monroe and to each registered holder of Warrants at his last
address as it shall appear on the registry books of the Warrant Agent. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary or
an Assistant Secretary of the Company that such notice has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts stated therein.
(f) For purposes of Section 9(a) and 9(b) hereof, the following
provisions (i) to (vii) shall also be applicable:
(i) The number of shares of Common Stock outstanding at any
given time shall include shares of Common Stock owned or held by or for the
account of the Company and the sale or issuance of such treasury shares or the
distribution of any such treasury shares shall not be considered a Change of
Shares for purposes of said sections.
(ii) No adjustment of the Purchase Price shall be made unless
such adjustment would require an increase or decrease of at least $.10 in such
price; provided that any adjustments which by reason of this subsection (ii) are
not required to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment which, together with any
adjustment(s) so carried forward, shall require an increase or decrease of at
least $.10 in the Purchase Price then in effect hereunder.
(iii) In case of (1) the sale by the Company for cash of any
rights or warrants to subscribe for or purchase, or any options for the purchase
of, Common Stock or any securities convertible into or exchangeable for Common
Stock without the payment of any further consideration other than cash, if any
(such convertible or exchangeable securities being herein called 'Convertible
Securities'), or (2) the issuance by the Company, without the receipt by the
Company of any consideration therefor, of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or Convertible
Securities, in each case, if (and only if) the consideration
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payable to the Company upon the exercise of such rights, warrants, or options
shall consist of cash, whether or not such rights, warrants, or options, or the
right to convert or exchange such Convertible Securities, are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such rights, warrants, or options or upon the conversion or exchange
of such Convertible Securities (determined by dividing (x) the minimum aggregate
consideration payable to the Company upon the exercise of such rights, warrants,
or options, plus the consideration received by the Company for the issuance or
sale of such rights, warrants, or options, plus, in the case of such Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
other than such Convertible Securities, payable upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common Stock issuable upon
the exercise of such rights, warrants, or options or upon the conversion or
exchange of such Convertible Securities issuable upon the exercise of such
rights, warrants, or options) is less than the fair market value of the Common
Stock on the date of the issuance or sale of such rights, warrants, or options,
then the total maximum number of shares of Common Stock issuable upon the
exercise of such rights, warrants, or options or upon the conversion or exchange
of such Convertible Securities (as of the date of the issuance or sale of such
rights, warrants, or options) shall be deemed to be outstanding shares of Common
Stock for purposes of Sections 9(a) and 9(b) hereof and shall be deemed to have
been sold for cash in an amount equal to such price per share.
(iv) In case of the sale by the Company for cash of any
Convertible Securities, whether or not the right of conversion or exchange
thereunder is immediately exercisable, and the price per share for which Common
Stock is issuable upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the total amount of consideration received by the
Company for the sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, other than such Convertible
Securities, payable upon the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities) is less than the fair market value or
the Common Stock on the date of the sale of such Convertible Securities, then
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of such Convertible Securities (as of the
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date of the sale of such Convertible Securities) shall be deemed to be
outstanding shares of Common Stock for purposes of Sections 9(a) and 9(b) hereof
and shall be deemed to have been sold for cash in an amount equal to such price
per share.
(v) In case the Company shall modify the rights of
conversion, exchange, or exercise of any of the securities referred to in
subsection (iii) above or any other securities of the Company convertible,
exchangeable, or exercisable for shares of Common Stock, for any reason other
than an event that would require adjustment to prevent dilution, so that the
consideration per share received by the Company after such modification is less
than the market price on the date prior to such modification, the Purchase Price
to be in effect after such modification shall be determined by multiplying the
Purchase Price in effect immediately prior to such event by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding
multiplied by the market price on the date prior to the modification plus the
number of shares of Common Stock which the aggregate consideration receivable by
the Company for the securities affected by the modification would purchase at
the market price and of which the denominator shall be the number of shares of
Common Stock outstanding on such date plus the number of shares of Common Stock
to be issued upon conversion, exchange, or exercise of the modified securities
at the modified rate. Such adjustment shall become effective as of the date upon
which such modification shall take effect.
(vi) On the expiration of any such right, warrant, or option
or the termination of any such right to convert or exchange any such Convertible
Securities, the Purchase Price then in effect hereunder shall forthwith be
readjusted to such Purchase Price as would have obtained (a) had the adjustments
made upon the issuance or sale of such rights, warrants, options, or Convertible
Securities been made upon the basis of the issuance of only the number of shares
of Common Stock theretofore actually delivered (and the total consideration
received therefor) upon the exercise of such rights, warrants, or options or
upon the conversion or exchange of such Convertible Securities and (b) had
adjustments been made on the basis of the Purchase Price as adjusted under
clause (a) for all transactions (which would have affected such adjusted
Purchase Price) made after the issuance or sale of such rights, warrants,
options, or Convertible Securities.
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(vii) In case of the sale for cash of any shares of Common
Stock, any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company therefore shall be deemed
to be the gross sales price therefor without deducting therefrom any expense
paid or incurred by the Company or any underwriting discounts or commissions or
concessions paid or allowed by the Company in connection therewith.
(g) No adjustment to the Purchase Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of each Warrant
will be made, however,
(i) upon the sale or exercise of the Warrants, including
without limitation the sale or exercise of any of the Warrants comprising the
Purchase Option; or
(ii) upon the sale of any shares of Common Stock in the
Company's initial public offering, including, without limitation, shares sold
upon the exercise of any over-allotment option granted to the Underwriters in
connection with such offering; or
(iii) upon the issuance or sale of Common Stock or
Convertible Securities upon the exercise of any rights or warrants to subscribe
for or purchase, or any options for the purchase of, Common Stock or Convertible
Securities, whether or not such rights, warrants, or options were outstanding on
the date of the original sale of the Warrants or were thereafter issued or sold
other than issuances of preferred stock in connection with acquisitions by the
Company; or
(iv) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, whether or not any
adjustment in the Purchase Price was made or required to be made upon the
issuance or sale of such Convertible Securities and whether or not such
Convertible Securities were outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold; or
(v) upon the issuance or sale of Common Stock or Convertible
Securities in a private placement unless the issuance
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or sale price is less than 85% of the fair market value of the Common Stock on
the date of issuance, in which case the adjustment shall only be for the
difference between 85% of the fair market value and the issue or sale price; or
(vi) upon the issuance or sale of Common Stock or Convertible
Securities to shareholders of any corporation which merges into the Company or
from which the Company acquires assets and some or all of the consideration
consists of equity securities of the Company, in proportion to their stock
holdings of such corporation immediately prior to the acquisition but only if no
adjustment is required pursuant to any other provision of this Section 9.
(h) Intentionally Omitted.
(i) Any determination as to whether an adjustment in the Purchase
Price in effect hereunder is required pursuant to Section 9, or as to the amount
of any such adjustment, if required, shall be binding upon the holders of the
Warrants and the Company if made in good faith by the Board of Directors of the
Company.
(j) If and whenever the Company shall grant to the holders of
Common Stock, as such, rights or warrants to subscribe for or to purchase, or
any options for the purchase of, Common Stock or securities convertible into or
exchangeable for or carrying a right, warrant, or option to purchase Common
Stock, the Company shall concurrently therewith grant to each Registered Holder
as of the record date for such transaction of the Warrants then outstanding, the
rights, warrants, or options to which each Registered Holder would have been
entitled if, on the record date used to determine the stockholders entitled to
the rights, warrants, or options being granted by the Company, the Registered
Holder were the holder of record of the number of whole shares of Common Stock
then issuable upon exercise (assuming, for purposes of this section 9(j), that
exercise of warrants is permissible during periods prior to the Initial Warrant
Exercise Date) of his Warrants. Such grant by the Company to the holders of the
Warrants shall be in lieu of any adjustment which otherwise might be called for
pursuant to this Section 9.
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10. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Common Stock purchasable upon the
exercise of each Warrant is adjusted pursuant to Section 9 hereof, the Company
nevertheless shall not be required to issue fractions of shares, upon exercise
of the Warrants or otherwise, or to distribute certificates that evidence
fractional shares. With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the current market value of such fractional share,
determined as follows:
(i) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the NASDAQ Quotation System, the current value shall be the last
reported sale price of the Common Stock on such exchange on the last business
day prior to the date of exercise of this Warrant or if no such sale is made on
such day, the average of the closing bid and asked prices for such day on such
exchange; or
(ii) If the Common Stock is not listed or admitted to
unlisted trading privileges, the current value shall be the mean of the last
reported bid and asked prices reported by the National Quotation Bureau, Inc. on
the last business day prior to the date of the exercise of this Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
current value shall be an amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
11. Warrant Holders Not Deemed Stockholders. No holder of Warrants
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Warrants, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue or
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reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, or conveyance or otherwise), or to receive notice
of meetings, or to receive dividends or subscription rights, until such Holder
shall have exercised such Warrants and been issued shares of Common Stock in
accordance with the provisions hereof.
12. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Warrant Agent or of
the holder of any other Warrant, may, in his own behalf and for his own benefit,
enforce against the Company his right to exercise his Warrants for the purchase
of shares of Common Stock in the manner provided in the Warrant Certificate and
this Agreement.
13. Agreement of Warrant Holders. Every holder of a Warrant, by his
acceptance thereof, consents and agrees with the Company, the Warrant Agent and
every other holder of a warrant that:
(a) The warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by his attorney duly
authorized in writing and only if the Warrant Certificates representing such
Warrants are surrendered at the office of the Warrant Agent, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to the Warrant Agent
and the Company in their sole discretion, together with payment of any
applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the holder and as the
absolute, true, and lawful owner of the Warrants represented thereby for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice or knowledge to the contrary, except as otherwise expressly provided in
Section 7 hereof.
14. Cancellation of Warrant Certificates. If the Company shall purchase
or acquire any Warrant or Warrants, the Warrant Certificate or Warrant
Certificates evidencing the same shall thereupon be delivered to the Warrant
Agent and cancelled by it and retired. The Warrant Agent shall also cancel
Common Stock following exercise of any or all of the Warrants represented
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thereby or delivered to it for transfer, splitup, combination, or exchange.
15. Concerning the Warrant Agent. The Warrant Agent acts hereunder as
agent and in a ministerial capacity for the Company, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not, by
issuing and delivering Warrant Certificates or by any other act hereunder be
deemed to make any representations as to the validity, value, or authorization
of the Warrant Certificates or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant or whether
any stock issued upon exercise of any Warrant is fully paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price or the Redemption Price provided in this
Agreement, or to determine whether any fact exists which may require any such
adjustments, or with respect to the nature or extent of any such adjustment,
when made, or with respect to the method employed in making the same. It shall
not (i) be liable for any recital or statement of facts contained herein or for
any action taken, suffered, or omitted by it in reliance on any warrant
Certificate or other document or instrument believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties,
(ii) be responsible for any failure on the part of the Company to comply with
any of its covenants and obligations contained in this Agreement or in any
Warrant Certificate, or (iii) be liable for any act or omission in connection
with this Agreement except for its own negligence or wilful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory
to it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order, or
demand of the Company shall be sufficiently evidenced by an instrument signed by
the Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary, (unless other evidence in respect thereof is herein
specifically
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prescribed). The Warrant Agent shall not be liable for any action taken,
suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order, or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation
for its services hereunder and to reimburse it for its reasonable expenses
hereunder; it further agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses, and liabilities, including judgments,
costs, and counsel fees, for anything done or omitted by the Warrant Agent in
the execution of its duties and powers hereunder except losses, expenses, and
liabilities arising as a result of the Warrant Agent's negligence or wilful
misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own negligence or wilful misconduct), after giving 60
days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall appoint a new
warrant agent in writing. If the Company shall fail to make such appointment
within a period of 30 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Registered Holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed by
the Company or by such a court, shall be a bank or trust company having a
capital and surplus, as shown by its last published report to its stockholders,
of not less than $10,000,000 or a stock transfer company. After acceptance in
writing of such appointment by the new warrant agent is received by the Company,
such new warrant agent shall be vested with the same powers, rights, duties, and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act, or deed; but if for any reason
it shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act, or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the
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resigning Warrant Agent. Not later than the effective date of any such
appointment the Company shall file notice thereof with the resigning warrant
Agent and shall forthwith cause a copy of such notice to be mailed to the
Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant
agent may be converted or merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party or any corporation succeeding to the trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as successor to the
Warrant Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its
or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
16. Modification of Agreement. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; or (ii) that they may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant Certificates; provided,
however, that this Agreement shall not otherwise be modified, supplemented, or
altered in any respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than 50% of the Warrants
then outstanding; and provided, further, that no change in the number or nature
of the securities purchasable upon the exercise of any Warrant, or the Purchase
Price therefor, or the acceleration of the Warrant Expiration Date, shall be
made without the consent in writing of the Registered Holder of the Warrant
Certificate
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representing such Warrant, other than such changes as are specifically
prescribed by this Agreement as originally executed or are made in compliance
with applicable law.
17. Notices. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first class registered or certified mail, postage prepaid as
follows: if to the Registered Holder of a Warrant Certificate, at the address of
such holder as shown on the registry books maintained by the Warrant Agent; if
to the Company, 1450 Route 22 West, Suite 103, Mountainside, NJ 07092,
Attention: President, with a copy sent to Singer Zamansky LLP, 48 Exchange
Place, 20th Floor, New York, NY 10005, Attention: Alexander Bienenstock, Esq. or
at such other address as may have been furnished to the Warrant Agent in writing
by the Company; and if to the Warrant Agent, at its Corporate office.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws.
19. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and, the Warrant Agent and their respective
successors and assigns, and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy, or claim, in equity or at law,
or to impose upon any other person any duty, liability, or obligation.
20. Termination. This Agreement shall terminate at the close of business
on the Warrant Expiration Date of all the Warrants or such earlier date upon
which all Warrants have been exercised, except that the Warrant Agent shall
account to the Company for cash held by it and the provisions of Section 15
hereof shall survive such termination.
21. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
24
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ALL COMMUNICATIONS CORPORATION
By: _____________________________
Richard Reiss
Its: President
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By: ______________________________
Its: Authorized Officer
25
<PAGE>
<PAGE>
EXHIBIT A
[Form of Face of Warrant Certificate]
No. W Warrants
Void after ________ __, 2001
STOCK PURCHASE WARRANT CERTIFICATE FOR PURCHASE OF COMMON STOCK
ALL COMMUNICATIONS CORPORATION
This certifies that For Value Received
or registered assigns (the 'Registered Holder') is the owner of the number of
Redeemable Common Stock Purchase Warrants ('Warrants') specified above. Each
Warrant initially entitles the Registered Holder to purchase, subject to the
terms and conditions set forth in this Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and nonassessable share of Common Stock, no
par value per share ('Common Stock'), of ALL COMMUNICATIONS CORPORATION, a
Delaware corporation (the 'Company'), at any time between the Initial Warrant
Exercise Date and the Expiration Date (as hereinafter defined), upon the
presentation and surrender of this Warrant Certificate with the Subscription
Form on the reverse hereof duly executed, at the corporate office of AMERICAN
STOCK TRANSFER & TRUST COMPANY as Warrant Agent, or its successor (the 'Warrant
Agent'), accompanied by payment of $4.25 (the 'Purchase Price') in lawful money
of the United States of America in cash or by official bank or certified check
made payable to Chem International, Inc.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the 'Warrant Agreement') dated ________ __,
1996, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modifications or adjustment.
<PAGE>
<PAGE>
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
The term 'Initial Warrant Exercise Date' shall mean ________ __, 1998.
The term 'Expiration Date' shall mean 5:00 p.m. (New York time) on
________ __, 2001, or such earlier date as the Warrants shall be redeemed. If
such date shall in the State of New York be a holiday or a day on which the
banks are authorized to close, then the Expiration Date shall mean 5:00 p.m.
(New York time) the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended, with respect to such securities is
effective. This Warrant shall not be exercisable by a Registered Holder in any
state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment with any transfer fee in addition
to any tax or other governmental charge imposed in connection therewith, for
registration of transfer of this Warrant Certificate at such office, a new
Warrant Certificate or Warrant Certificates representing an equal aggregate
number of Warrants will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
2
<PAGE>
<PAGE>
This Warrant may be redeemed at the option of the Company, at a
redemption price of $.10 per Warrant at any time after ________ __, 1998 or
earlier with the consent of Monroe Parker Securities, Inc., provided the Market
Price (as defined in the Warrant Agreement) for the securities issuable upon
exercise of such Warrant shall exceed 250% of the then exercise price of the
Warrants. Notice of redemption shall be given not later than the thirtieth day
before the date fixed for redemption, all as provided in the Warrant Agreement.
On and after the date fixed for redemption, the Registered Holder shall have no
rights with respect to this Warrant except to receive the $.10 per Warrant upon
surrender of this Certificate.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
ALL COMMUNICATIONS CORPORATION
By: ______________________________
E. Gerald Kay
Its: President
Date: ______________________________
[Seal]
3
<PAGE>
<PAGE>
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By: ______________________________
Its: Authorized Officer
4
<PAGE>
<PAGE>
[Form of Reverse of Warrant Certificate]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably elects to exercise
_____ Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
____________________________________________
(please insert social security or other identifying number)
and be delivered to
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below:
____________________________________________
____________________________________________
____________________________________________
(Address)
<PAGE>
<PAGE>
____________________________________________
(Date)
____________________________________________
(Taxpayer Identification Number)
If this Warrant has been solicited by a member of the National Association of
Securities Dealers, Inc., the name of such firm is:__________:
SIGNATURE GUARANTEED
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, hereby sells, assigns, and transfers unto
____________________________________________
(please insert social security or other identifying number)
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
of the Warrants represented by this Warrant Certificate, and hereby irrevocably
constitutes and appoints _________________________________ Attorney to transfer
this Warrant Certificate on the books of the Company, with full power of
substitution in the premises.
2
<PAGE>
<PAGE>
____________________________________________
(Date)
SIGNATURE GUARANTEED
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN RULE 17Ad-15 UNDER THE
SECURITIES AND EXCHANGE ACT OF 1934) WHICH MAY INCLUDE A COMMERCIAL BANK OR
TRUST COMPANY, SAVINGS ASSOCIATION, CREDIT UNION OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
3
<PAGE>
<PAGE>
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF
THE STATE OF
NEW JERSEY
[LOGO]
ALL COMMUNICATIONS CORPORATION
100,000,000 SHARES COMMON STOCK, NO PAR VALUE
This Certifies that ____________________________________________ is the owner of
_____________________________________________________________________ fully paid
and non-assessable Shares of the Capital Stock of the above named Corporation
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney upon surrender of this Certificate properly
endorsed.
In Witness Whereof, the said Corporation has cuased this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ____________ day of ____________ A.D. 19__
_____________________________________ _______________________________________
SECRETARY/TREASURER PRESIDENT
<PAGE>
<PAGE>
EXPLANATION OF ABBREVIATIONS
The following abbreviations, when used in the inscription of ownership on the
face of this certificate, shall be construed as if they were written out in full
according to applicable laws of regulations. Abbreviations, in addition to those
appearing below, may be used.
<TABLE>
<S> <C> <C> <C>
JT TEN As joint tenants with right of survivorship TEN ENT As tenants by the entireties
and not as tenants in common UNIF GIFT MIN ACT Uniform Gifts to Minors Act
TEN COM As tenants in common CUST Custodian for
</TABLE>
For Value Received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
________________________________________________________________________________
_______________________________________________ Shares represented by the within
Certificate, and do hereby irrevocably constitute and appoint __________________
___________________________________________ Attorney to transfer the said Shares
on the books of the within named Corporation with full power of substitution in
the premises.
Dated __________________________ 19__
In presence of
_____________________________________ _______________________________________
(Illegible copy here)
CERTIFICATE
FOR
SHARES
OF
Issued to
Dated
<PAGE>
<PAGE>
[Form of Face of Warrant Certificate]
No. W Warrants
VOID AFTER _____________ __, 2001
STOCK PURCHASE WARRANT CERTIFICATE FOR PURCHASE OF COMMON STOCK
ALL COMMUNICATIONS CORPORATION
THIS CERTIFIES THAT FOR VALUE RECEIVED
or registered assigns (the 'Registered Holder') is the owner of the number of
Redeemable Common Stock Purchase Warrants ('Warrants') specified above. Each
Warrant initially entitles the Registered Holder to purchase, subject to the
terms and conditions set forth in this Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and nonassessable share of Common Stock, no
par value per share ('Common Stock'), of ALL COMMUNICATIONS CORPORATION, a
Delaware corporation (the 'Company'), at any time between the Initial Warrant
Exercise Date and the Expiration Date (as hereinafter defined), upon the
presentation and surrender of this Warrant Certificate with the Subscription
Form on the reverse hereof duly executed, at the corporate office of AMERICAN
STOCK TRANSFER & TRUST COMPANY as Warrant Agent, or its successor (the 'Warrant
Agent'), accompanied by payment of $4.25 (the 'Purchase Price') in lawful money
of the United States of America in cash or by official bank or certified check
made payable to Chem International, Inc.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the 'Warrant Agreement') dated ____________ __,
1996, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modifications or adjustment.
<PAGE>
<PAGE>
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
The term 'Initial Warrant Exercise Date' shall mean ____________ __, 1998.
The term 'Expiration Date' shall mean 5:00 p.m. (New York time) on
____________ __, 2001, or such earlier date as the Warrants shall be redeemed.
If such date shall in the State of New York be a holiday or a day on which the
banks are authorized to close, then the Expiration Date shall mean 5:00 p.m.
(New York time) the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended, with respect to such securities is
effective. This Warrant shall not be exercisable by a Registered Holder in any
state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment with any transfer fee in addition
to any tax or other governmental charge imposed in connection therewith, for
registration of transfer of this Warrant Certificate at such office, a new
Warrant Certificate or Warrant Certificates representing an equal aggregate
number of Warrants will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
2
<PAGE>
<PAGE>
This Warrant may be redeemed at the option of the Company, at a redemption
price of $.10 per Warrant at any time after ____________ __, 1998 or earlier
with the consent of Monroe Parker Securities, Inc., provided the Market Price
(as defined in the Warrant Agreement) for the securities issuable upon exercise
of such Warrant shall exceed 250% of the then exercise price of the Warrants.
Notice of redemption shall be given not later than the thirtieth day before the
date fixed for redemption, all as provided in the Warrant Agreement. On and
after the date fixed for redemption, the Registered Holder shall have no rights
with respect to this Warrant except to receive the $.10 per Warrant upon
surrender of this Certificate.
Prior to due presentment for registration of transfer thereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
ALL COMMUNICATIONS CORPORATION
By: ___________________________
E. Gerald Kay
Its: President
Date: _________________________________ .
[Seal]
3
<PAGE>
<PAGE>
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By: ___________________________________
Its: Authorized Officer
4
<PAGE>
<PAGE>
[Form of Reverse of Warrant Certificate]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably elects to exercise
______ Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
__________________________________________________
(please insert social security or other identifying number)
and be delivered to
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below:
__________________________________________________
__________________________________________________
__________________________________________________
(Address)
<PAGE>
<PAGE>
__________________________________________________
(Date)
__________________________________________________
(Taxpayer Identification Number)
If this Warrant has been solicited by a member of the National Association of
Securities Dealers, Inc., the name of such firm is:__________:
SIGNATURE GUARANTEED
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, hereby sells, assigns, and transfers unto
__________________________________________________
(please insert social security or other identifying number)
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
(please print or type name and address)
of the Warrants represented by this Warrant Certificate, and hereby irrevocably
constitutes and appoints ______________________________ Attorney to transfer
this Warrant Certificate on the books of the Company, with full power of
substitution in the premises.
2
<PAGE>
<PAGE>
__________________________________________________
(Date)
SIGNATURE GUARANTEED
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN RULE 17Ad-15 UNDER THE
SECURITIES AND EXCHANGE ACT OF 1934) WHICH MAY INCLUDE A COMMERCIAL BANK OR
TRUST COMPANY, SAVINGS ASSOCIATION, CREDIT UNION OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
3
<PAGE>
<PAGE>
PREFERRED VENDOR AGREEMENT
THIS PREFERRED VENDOR AGREEMENT (the 'Agreement') dated as of the 9th day
of December 1966 between HFS INCORPORATED ('HFS'), a Delaware Corporation having
an office located at 6 Sylvan Way, Parsippany, New Jersey 07054 and ALL
COMMUNICATIONS CORPORATION ('Vendor'), a corporation having an office located at
1450 Route 22 West, Suite 103, Mountainside, New Jersey 07092.
W I T N E S S E T H:
-------------------
WHEREAS, HFS is the parent of the franchisors (the 'Franchisors'),
respectively, of the CENTURY 21'r', ERA'r' and Coldwell Banker'r' real estate
brokerage franchise systems (the 'Chains'); and
WHEREAS, Vendor desires to be recommended by HFS to the franchisees of the
Franchisors (the 'Franchisees') as a vendor of telephone communication systems
and voice mail equipment as more fully described in Exhibit A attached hereto
and made a part hereof (the 'Products'); and
WHEREAS, Vendor and Coldwell Banker Corporation entered into an Exclusive
Master Purchase/Maintenance Agreement, dated January 16, 1996 (the 'Purchase
Agreement').
NOW, THEREFORE, in consideration of the promises and covenants contained
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Preferred Vendor. (a) HFS hereby agrees that, for the term of
this Agreement as described below, Vendor shall be a non-exclusive preferred
vendor of the Products recommended by HFS to the Franchisees; provided, however,
that HFS shall not, during the term of this Agreement, enter into a preferred
vendor agreement with more than two (2) additional vendors or suppliers
('Additional Preferred Vendor') of telephone communication systems and voice
mail equipment (other than Vendor) whereby such Additional Preferred Vendors are
recommended by HFS to the Franchisees as providers of telephone communication
systems and/or voice mail equipment. Notwithstanding anything contained herein
to the contrary, the Additional Preferred Vendor shall not mean or include any
vendor or supplier of a component or element of the Products (excluding voice
mail equipment) which vendor or supplier has or shall enter into a preferred
vendor agreement or similar arrangement with HFS to be recommended or promoted
to the Franchisees as the vendor or supplier of such component or element.
Further, Vendor acknowledges that HFS through HFS's Communication Services
Division may purchase from time to time various goods and services (including
telephone systems) for resale to certain Franchisees. In no event shall HFS,
through the operations of its Communication Services Division, or the suppliers
to HFS's
<PAGE>
<PAGE>
Communication Services Division, be considered or construed as an 'Additional
Preferred Vendor'.
(b) HFS agrees that it will actively promote Vendor and the Products to the
Franchisees. For marketing purposes, HFS shall make available to Vendor a list
containing the names, business addresses, contact telephone numbers of the
Franchisees. From time to time during the term of this Agreement, HFS shall
provide Vendor with an updated list of such information. Notwithstanding
anything contained herein to the contrary, Vendor acknowledges and agrees that
the Products constitute a telephone communication system which system is
comprised of various components and parts (including without limitation the
voice mail component) which together, in combination, constitute such system. As
such, the Products shall be promoted and marketed to the Franchisees under this
Agreement as a system or unit and in no event shall components or elements of
the system be promoted or marketed to Franchisees under this Agreement on an
individual basis or as a component independent of such system; provided,
however, that such restriction shall not apply to voice mail equipment provided
by Vendor under this Agreement.
(c) During the Term, Vendor shall offer the Products, including
installation of the Products and maintenance service contracts relating to the
Products, to the Franchisees through programs developed in cooperation with HFS.
Vendor shall provide, at its cost, a toll-free telephone number for each Chain
for placement of orders for the Products. Vendor shall dedicate and commit
Vendor representatives to handle Franchisees' accounts, orders and customer
service inquiries. All orders of the Products shall be processed by Vendor and
Vendor shall contact the Franchisee to coordinate and schedule delivery and
installation of the Products. Vendor shall be responsible for all invoicing and
collection of payment relating to each Franchisee order. Vendor shall provide
Franchisees with training instruction for the Products purchased. Training shall
be conducted by Vendor's qualified personnel and shall include any and all
necessary training materials and literature. Vendor's current price schedule is
set forth in Exhibit A which price schedule shall remain in effect for the Term.
(d) Vendor shall, at its expense and in conjunction with a designated
representative of HFS's preferred vendor group, develop marketing materials for
use in connection with promoting the Products to the Franchisees. All such
materials shall be subject to the prior approval of HFS and shall identify
Vendor's toll-free telephone number(s). Further, within sixty (60) days from the
signing of this Agreement by the parties, HFS shall announce the the Franchisees
the appointment of Vendor by HFS as a preferred vendor of the Products.
-2-
<PAGE>
<PAGE>
(e) For each purchase of the Products by a Franchisee, Vendor and
Franchisee shall enter into an agreement as mutually agreed to by Vendor and
Franchisee. A form of agreement is attached hereto and made part hereof as
Exhibit B. Vendor shall negotiate the terms of the agreement in good faith.
Vendor agrees that it will provide Franchisees purchasing the Products the
warranties described in Exhibit C, which is attached hereto and made part
hereof.
Section 2. Term. The term of this Agreement (the 'Term') shall commence on
December 9, 1996 and shall terminate on December 8, 2000, unless earlier
terminated in accordance with the terms herein set forth.
Section 3. Access Fee. Concurrently with the execution of this Agreement,
Vendor shall pay to HFS, in immediately available funds, the sum of Fifty
Thousand Dollars ($50,000) as compensation to HFS for providing access to the
Franchisees. Said fee is fully earned upon payment and shall not be subject to
refund or reduction regardless of the termination of this Agreement for any
reason.
Section 4. Commissions. (a) During the Term, Vendor shall pay to HFS
commissions on the gross amount of all sales of Products (excluding labor, taxes
and shipping) made by Vendor to the Franchisees ('Gross Sales') for each
category described below, based on sales and not collections, as follows:
<TABLE>
<CAPTION>
Percentage of Gross Sales Category
------------------------- --------
<S> <C>
7% *All Products, excluding
voice mail
13% Voice Mail
</TABLE>
*Commissions for the sale of the Products (excluding voice mail) made to
the National Realty Trust by Vendor (if any) shall be payable at a rate of
2% of the Gross Sales for the Products (excluding voice mail). Commissions
for the sale of voice mail equipment made to the National Realty Trust by
Vendor (if any) shall be payable at the rate stated above.
(b) In addition to the commissions in subsection (a) above and during the
Term, Vendor shall pay to HFS commissions on the gross amount of revenue from
all maintenance services contracts entered into or renewed by Vendor with the
Franchisees ('Gross Revenues'), based on sales and not collections, in the
amount of 10% of Gross Revenues.
(c) The commissions payable with respect to Gross Sales and Gross Revenues
made in each calendar quarter shall be paid not more than fifteen (15) days
after the end of such calendar quarter. Vendor shall provide HFS with each such
payment a report, certified
-3-
<PAGE>
<PAGE>
as true and correct by a duly authorized representative of Vendor, detailing the
sales made to the Franchisees and the calculation of the commissions paid
thereon. In addition to the certified report submitted with each payment, Vendor
shall furnish to HFS on January 31st of each year during the Term and one (1)
year thereafter a report detailing the sales made to the Franchisees and the
calculation of the commissions paid thereon for the preceding calendar year.
This report shall be certified as true and correct by Vendor's independent
public accountants.
Section 5. Conferences; Publications. Vendor shall participate as an
exhibitor at each national conference for the Chains (with each Chain holding a
single national conference on an annual basis.) Vendor shall be obligated to
follow all rules and procedures established for each conference. Basis booth
costs are expected to be $2,500 per booth. Vendor shall be responsible for booth
costs and all other costs relating to its participation in the conferences and
booth set-up.
Section 6. Insurance and Indemnity. (a) During the Term and for a period of
not less than six (6) months after the termination of this Agreement, Vendor
will secure and maintain comprehensive general liability insurance on an
occurrence basis (including, independent contractors, contractual, personal
injury, products and completed operations, and broad form property damage) with
combined single limits of not less than One Million Dollars ($1,000,000) per
occurrence. Such insurance shall name HFS and its affiliates, and their
respective officers, directors, employees and agents as additional insureds and
shall be primary for all purposes. All policies shall be endorsed with a
statement that the coverage may not be cancelled, altered or permitted to lapse
or expire without thirty (30) days advance written notice to HFS, that the
coverage shall be primary and that any insurance carried by HFS or its
affiliates shall be non-contributory to such coverage. The names of the Vendor
and HFS as identified in the policies shall be identical to the names of the
Vendor and HFS as identified in this Agreement. If an umbrella policy is used to
satisfy any required coverage of this Section 6, such policy shall be at least
'Follow-Form' with the requirements described in this Section 6 and not limit
the coverage of any other policies used to provide coverage under this Section
6.
(b) Simultaneously with the execution of this Agreement, annually
thereafter, and each time a change is made in any insurance policy or insurance
carrier, Vendor will furnish to HFS a certificate of insurance evidencing the
insurance coverages in effect, the named insured and additional insureds, and
endorsed with a statement that the coverage may not be cancelled, altered or
permitted to lapse or expire without thirty (30) days advance written notice to
HFS. Failure to demand such certificates or other evidence of full compliance
with these insurance requirements or failure of HFS to identify a deficiency
from evidence that is
-4-
<PAGE>
<PAGE>
provided, shall not be construed as a waiver of obligation to maintain such
insurance.
(c) All policies required by this Agreement shall be written by insurance
carriers rated 'A' or better by A.M. Best and approved by and satisfactory to
HFS. No 'cut through' endorsements shall be acceptable. All policies shall
provide that the insurer waives any right of subrogation against HFS. By
requiring insurance as provided in this Section 6, HFS does not represent that
coverage and limits will be necessarily adequate to protect HFS and its
affiliates, and their officers, directors, employees and agents, and such limits
shall not be deemed as a limitation of Vendor's liability under this Agreement.
(d) Vendor will indemnify HFS and its affiliates against, hold each
harmless from, and promptly reimburse each for any and all payments of money
(fines, damages, legal fees, expenses) arising out of any demand, claim, tax,
penalty, administrative or judicial proceedings, or actions relating to any
claimed occurrence with respect to the Products (even where HFS's negligence is
alleged) and any act, omission or obligation of Vendor or anyone associated or
affiliated with Vendor or the Products. Vendor waives any right of recovery
against HFS for any direct or indirect loss arising out of any occurrence
relating to the Products.
In the event that HFS is required to respond to any claim, action, demand
or proceeding relating to the Products, Vendor will, at HFS's election, respond
and defend HFS and its affiliates against such claims and demands in any actions
or proceedings. In the event that Vendor fails to defend HFS when requested,
Vendor will reimburse HFS for all costs and expenses, including attorney fees,
incurred by HFS. Regardless of Vendor's obligation to indemnify and defend under
this Section, HFS has the right, through counsel of its choice, and at Vendor's
expense to control any matter to the extent said matter could directly or
indirectly adversely affect HFS. The obligations of Vendor pursuant to this
subsection (d) shall survive termination of this Agreement.
Section 7. Books and Records; Audit. Vendor shall keep accurate and
complete records of the Gross Sales and Gross Revenues made by Vendor for
Franchisee accounts. All such records and all accounting systems with respect
thereto shall be available for inspection, copy and audit by HFS or its
representatives on reasonable notice to Vendor during normal business hours
throughout the Term of this Agreement and for one (1) year thereafter. Vendor
shall fully cooperate with HFS in such inspection and audit. Neither HFS's
acceptance of any information nor HFS's inspection or audit of Vendor's records
shall waive HFS's right later to dispute the accuracy or completeness of any
information supplied by Vendor. In the event any such audit established an
underpayment of commissions, Vendor shall pay the amount of the deficit within
five
-5-
<PAGE>
<PAGE>
(5) business days of notification of such deficiency. In the event such audit
identifies an overpayment of commissions, such overpayment shall be a credit
against future commissions to become due from Vendor to HFS. If an audit
establishes an underpayment of commissions greater than five percent (5%) of the
total commissions then due and payable to HFS, Vendor shall pay for the costs
and expenses of such audit. In the event of a dispute over the result of any
such audit, the amount so disputed shall be deposited by the party to be charged
with an escrow agent acceptable to both parties and pursuant to an escrow
agreement acceptable to both parties and such escrow agent until such time as
the dispute is resolved.
Section 8. Acknowledgements. (a) Vendor acknowledges that HFS and its
affiliates are the franchisors, and not the owners or operators of real estate
brokerage offices and that, as such, HFS does not purchase the Products for its
own use and cannot compel or guarantee any level of sales of the Products.
Vendor further acknowledges that, although HFS will recommend the purchase of
the Products from Vendor to the Franchisees, each Franchisee will be making an
independent buying decision which may or may not be affected by HFS's
recommendation of the Products. Neither HFS nor any Franchisor shall be
responsible for any amounts owed to Vendor by any Franchisee.
(b) The parties acknowledge that Vendor and Coldwell Banker Corporation
entered into the Purchase Agreement, dated January 16, 1996, for the sale of
telecommunication systems and related services and that subsequent to the
execution of the Purchase Agreement HFS acquired Coldwell Banker Corporation. As
a result of the acquisition, Coldwell Banker Corporation has become and remains
a subsidiary of HFS. Upon the execution of this Agreement by HFS and Vendor, HFS
(acting on behalf of Coldwell Banker Corporation ) and Vendor agree that the
Purchase Agreement shall automatically terminate without penalty or further
notice. Notwithstanding the termination of the Purchase Agreement, vendor
acknowledges and agrees to honor all its obligations and responsibilities under
the Purchase Agreement which obligations and responsibilities are existing or
outstanding as of the date of termination of the Purchase Agreement, including
without limitation, any warranty and maintenance service obligations and
responsibilities.
Section 9. Termination. (a) When fully executed, this Agreement will
constitute a binding obligation of both parties which may not be terminated by
either party except that either party may terminate in the event of a material
breach of the terms of this Agreement by the other party. In the event of a
material breach as set forth above, the breaching party shall be given written
notice of such breach and the opportunity to cure such breach within thirty (30)
days of the date of such notice (ten (10) days in the case of a payment
default). Failure to cure such breach within the applicable period stated above
shall result in
-6-
<PAGE>
<PAGE>
termination of the Agreement without the necessity of any further notice.
(b) In addition to the parties' right of termination set forth in
subsection (a) above, this Agreement may be terminated by HFS as follows. If HFS
receives a bona fide offer in writing from a supplier for the services provided
by Vendor under this Agreement at pricing that is at least five percent (5%)
less than the pricing provided herein, HFS may elect to notify Vendor of the
receipt of such a written bona fide offer, including the terms thereof. Within
fifteen (15) days after such notice, Vendor may offer to HFS the same pricing
and services offered by such other supplier. If Vendor does not make such
offer to HFS within the fifteen (15) days, HFS may, in its sole discretion,
terminate this Agreement upon thirty (30) days written notice to Vendor.
Section 10. Representations. (a) Each party has full power and authority
and has been duly authorized, to enter into and perform its obligations under
this Agreement, all necessary approvals of any Board of Directors, shareholders,
partners, co-tenants and lenders having been obtained. The execution, delivery
and performance of this Agreement by each party will not violate , create a
default under of breach of any charter, bylaws, agreement or other contract,
license, permit, indebtedness, certificate, order, decree or security instrument
to which such party or any of its principals is a party or is subject. Neither
party is the subject of any current or pending dissolution, receivership,
bankruptcy, reorganization, insolvency, or similar proceeding on the date this
Agreement is executed by such party and was not within the three years preceding
such date. The persons signing this Agreement on behalf of each party personally
represent and warrant to the other party that they are authorized to execute
this Agreement for and on behalf of such party and have full authority to so
bind such party.
(b) All written information provided to HFS about Vendor, the principal
owners of Vendor or the finances or any such persons or entities, was or will be
at the time delivered, true, accurate and complete, and such information
contained no misrepresentation of a material fact, and does not omit any
material fact necessary to make the information disclosed not misleading
under the circumstances in which it is disclosed.
Section 11. Trademarks. Vendor specifically acknowledges that this
Agreement does not confer upon Vendor any interest in or right to use any
trademark, service mark or other intellectual property right of HFS, the
Franchisors or their affiliates (collectively referred to as the 'Intellectual
Property Rights') in connection with the Products unless Vendor receives the
prior written consent of HFS which consent HFS may grant or withhold in its sole
discretion. Vendor further agrees that upon termination of this Agreement,
Vendor shall immediately cease and discontinue all use
-7-
<PAGE>
<PAGE>
of the Intellectual Property Rights. Further, if Vendor wishes to utilize
the Intellectual Property Rights in advertising or promotional materials, it
must submit such materials to HFS for final approval before utilizing them. In
no event may Vendor or any affiliated or associated person or entity utilize the
Intellectual Property Rights in connection with any products or services other
than the Products. Vendor further acknowledges that this Agreement does not
create or grant any rights in Vendor to use any Intellectual Property Rights
owned or controlled by any Franchisee or its affiliates, nor does HFS have any
right to grant any such rights.
Section 12. Relationship to Parties. Vendor is an independent contractor.
Neither party is the legal representative or agent of, or has the power to
obligate (or have the right to director supervise the daily affairs of) the
other or any other party for any purpose whatsoever. HFS and Vendor expressly
acknowledge that the relationship intended by them is a business relationship
based entirely on and circumscribed by the express provisions of this Agreement
and that no partnership, joint venture, agency, fiduciary or employment
relationship is intended or created by reason of this Agreement.
Section 13. Assignments. This Agreement may be freely assigned by HFS
without recourse. This Agreement may not be assigned by Vendor without the
consent of HFS, which consent shall not be unreasonably withheld.
Section 14. Confidentiality. (a) Vendor acknowledges that any information
regarding this Agreement, the transactions contemplated herein, and any
information conveyed to or obtained by Vendor in connection with this Agreement,
including, but not limited to information regarding Franchisees, is confidential
and proprietary to HFS and the Franchisors (the 'Confidential Information').
Vendor agrees that in no event shall Vendor disclose, transfer, copy, duplicate,
or publish any Confidential Information to any third party without the prior
written consent of HFS, which consent may be withheld in HFS's sole discretion;
provided, however, that no such consent shall be required for disclosures to
Vendor's attorneys, accountants, securities underwriters, and associated lending
institutions which disclosures are made during the ordinary course of Vendor's
business and which disclosures shall be treated as confidential information by
such parties. Vendor further agrees that it shall not utilize any Confidential
Information for any purpose whatsoever other than for the purpose of performing
its obligations under this Agreement. Vendor shall only make available the
Confidential Information to its employees on a need-to-know basis and shall
advise such employees on a need-to-know basis and shall advise such employees of
the restriction set forth with respect to the use of such Confidential
Information. Vendor shall be responsible for the unauthorized disclosure of any
Confidential Information by its employees. Notwithstanding anything contained
herein to the
-8-
<PAGE>
<PAGE>
contrary, Vendor may furnish, in good faith, information pertaining to this
Agreement to the applicable authorities or agencies to the extent necessary to
meet the requirements of (i) any applicable Federal and state security laws and
regulations or (ii) any applicable stock exchange organization or association
of securities dealers in connection with the offering of shares of stock of
Vendor; provided, however, that Vendor provides HFS with a copy of such
information in advance of such disclosure and Vendor reasonably attempts, in
good faith, to secure from such parties their agreement to maintain such
information in a confidential manner.
(b) Vendor acknowledges that the Confidential Information is a valuable
asset of the originating party and that the breach of this Section 14 would
cause the originating party irreparable harm for which there is no adequate
remedy at law. Accordingly, in the event of a breach or alleged breach of this
Section 14, the originating party or parties shall be allowed injunctive relief
and any other equitable remedies in addition to remedies afforded by law.
(c) The obligations of Vendor pursuant to this Section 14 shall survive the
termination of this Agreement.
Section 15. Partial Invalidity. Should any part of this Agreement, for any
reason, be declared invalid, such decision shall not affect the validity of any
remaining portion of this Agreement.
Section 16. No Waiver. No failure or delay in requiring strict compliance
with any obligation of this Agreement (or in the exercise of any right or remedy
provided herein) and no custom or practice at variance with the requirements
hereof shall constitute a waiver or modification of any such obligation,
requirement, right or remedy or preclude exercise of any such right or remedy or
the right to require strict compliance with any obligation set forth herein. No
waiver of any particular default or any right or remedy with respect to such
default shall preclude, affect or impair enforcement of any right or remedy
provided herein with respect to any subsequent default. No approval or consent
of HFS shall be effective unless in writing and signed by an authorized
representative of HFS, and HFS's consent or approval may be withheld for so long
as Vendor is in default of any of its obligations under this Agreement.
Section 17. Notices. Notices will be effective hereunder when and only when
they are reduced to writing and delivered, by next day delivery service, with
proof of delivery, or mailed by certified or registered mail, return receipt
requested, to the appropriate party at its address stated below or to such
person and at such address as may be designated by notice hereunder. Notices
shall be deemed given on the date delivered or date of attempted delivery, if
service is refused.
-9-
<PAGE>
<PAGE>
Vendor: HFS:
- ------- ----
ALL COMMUNICATIONS CORPORATION HFS INCORPORATED
1450 Route 22 West, Suite 103 3838 East Van Buren
Mountainside, NJ 07092 Phoenix, AZ 85008
Attn: President Attn: Vice President
Reservations
Section 18. Miscellaneous. The remedies provided in this Agreement are not
exclusive. This Agreement will be construed in accordance with the laws of the
State of New Jersey, except for New Jersey's conflict of laws principles. Vendor
consents to the personal jurisdiction of the courts of the State of New Jersey
and the United States District Court for the District of New Jersey and further
waives objection to venue in any such court. This Agreement is exclusively for
the benefit of the parties hereto and may not give rise to liability to a third
party. No agreement between HFS and anyone else is for the benefit of Vendor.
Neither party will interfere with contractual relations of the other. The
section headings in this Agreement are for convenience of reference only and
will not affect its interpretation.
This Agreement, together with all instruments, exhibits, attachments and
schedules hereto, constitutes the entire agreement (superseding all prior
agreements and understandings, oral or written including without limiting the
Purchase Agreement) of the parties hereto with respect to the subject matter
hereof and shall not be modified or amended in any respect except in writing
executed by all such parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first stated above.
HFS INCORPORATED
BY: [SIGNATURE]
---------------------------------
Vice President - Reservations
ATTEST: [SIGNATURE]
-----------------------
(Assistant) Secretary
ALL COMMUNICATIONS CORPORATION
BY: [SIGNATURE]
---------------------------------
Vice President
ATTEST: [SIGNATURE]
-----------------------
(Assistant) Secretary
-10-
<PAGE>
<PAGE>
EXHIBIT A
DESCRIPTION OF PRODUCTS & RELATED SERVICES
WITH PRICE SCHEDULE
A description of the Products (hardware and software) with pricing is set
forth on Schedule A of this Exhibit A (Pages A-1 through A-4). In addition to
the pricing identified in Schedule A, the National Realty Trust shall be
entitled to a five percent (5%) discount off all purchases of the Products
(excluding voice mail equipment and installation services).
As part of the Products provided under this Agreement, Vendor shall provide
installation services. Such services and the cost relating thereto are set forth
in Schedule B of this Exhibit A (Page B-1).
Vendor shall offer to the purchasing Franchisees its standard maintenance
service contract to commence after the applicable warranty period for the
Products (See Exhibit C). A description of the maintenance service contracts
(including maintenance service contract forms) and the cost relating thereto are
set forth in Schedule C of this Exhibit A (Pages C-1).
<PAGE>
<PAGE>
EXHIBIT A (SCHEDULE A)
HARDWARE/SOFTWARE ANNEX/PRICE LIST
<TABLE>
<CAPTION>
CABINETS
<S> <C> <C>
MODEL# DESCRIPTION PRICE
VB-43030 DBS 40 Port Cabinet $ 728.00
VB-43050 DBS 72 Port Cabinet $1,196.00
VB-43060 DBS 96 Port Cabinet $1,651.00
COMMON EQUIPMENT CARDS
VB-43412 CPC-AII $ 865.00
VB-43411 CPC-B $1,600.00
VB-43420 SCC-A $ 199.00
VB-43421 SCC-B $ 351.00
TRUNK CARDS
VB-43510 4 Circuit Loop Start Trunk Card $ 249.00
VB-43511A 8 Circuit Loop Start Trunk Card $ 377.00
VB-43531 8 Circuit Ground Start Trunk Card $ 509.00
VB-43541 8 Circuit Direct Inward Dial (DID)
Trunk Card $1,274.00
STATION CARDS
VB-43611 8 Circuit Digital Station Card $ 189.00
VB-43621A 8 Circuit Analog Station Card $ 259.00
STATION EQUIPMENT
VB-41200 Digital Single Line Telephone-Gray $ 101.00
VB-42210 16 Button Standard - Gray $ 120.00
VB-42210B 16 Button Standard - Black $ 120.00
VB-42211 16 Button Speakerphone-Gray $ 160.00
</TABLE>
A-1
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
VB-43220 22 Button Standard - Gray $ 154.00
VB-43223 22 Button Display - Gray $ 184.00
VB-4322B 22 Button Display - Black $ 184.00
VB-43225 22 Button Large Screen Display
Gray $ 297.00
VB-43225B 22 Button Large Screen Display
Black $ 297.00
VB-43230 34 Button Standard - Gray $ 182.00
VB-43233 34 Button Display - Gray $ 292.00
VB-43233B 34 Button Display - Black $ 292.00
VB-43310 24 Button Expansion Module-Gray $ 159.00
VB-43320 72 Button DSS/BLF - Gray $ 268.00
VB-43320B 72 Button DSS/BLF - Black $ 296.00
STATION EQUIPMENT 44000 SERIES PHONES
VB-42210G 16 Button Standard-Gray $ 124.00
VB-42210B 16 Button Standard-Black $ 124.00
VB-42220G 22 Button Standard-Gray $ 154.00
VB-42220B 22 Button Standard-Black $ 154.00
VB-44223G 22 Button Display-Gray $ 188.00
VB-44223B 22 Button Display-Black $ 188.00
VB-44225G 22 button Large Screen Display-Gray $ 301.00
VB-44225B 22 Button Large Screen Display-Blk $ 301.00
VB-44230G 34 Button Standard-Gray $ 186.00
VB-44230B 34 Button Standard-Black $ 186.00
VB-44233G 34 Button Display-Gray $ 296.00
VB-44233B 34 Button Display-Black $ 296.00
VB-44310G 24 Button Expansion Module-Gray $ 159.00
VB-44310B 24 Button Expansion Module-Black $ 159.00
VB-44320G 72 Button DSS/BLF Gray $ 268.00
VB-44320B 72 Button DSS/BLF Black $ 268.00
VB-44100G Analog Adapter-Large Screen Display
Gray $ 95.00
VB-44100B Analog Adapter-Large Screen Display
Black $ 95.00
</TABLE>
A-2
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
MODEL # DESCRIPTION PRICE
INTERFACE UNIT
VB-43431 DTMF Receiver $ 229.00
VB-2089P SLT Ringer Box $ 110.00
VB-43702 Off Premise Extension (OPX) Adaptor $ 195.00
VB-43708 Voice Announce Unit $ 481.00
VB-43701 Doorphone Adapter $ 149.00
VB-43706 Remote Administration Interface
(RAI)A $ 69.00
VB-43707 Remote Administration Interface
(RAI)B $ 150.00
VB-43705 Doorphone Unit (DPH) $ 42.00
VB-43703 Power Fail Transfer Unit (PFTU) $ 64.00
VB-43110 Cable Connection Kit $ 995.00
VB-43120 Trunk Expansion Connector $ 60.00
VB-43121 Extension Expansion Connector $ 50.00
VB-43130 Battery Back-Up Unit $ 110.00
COMPUTER TELEPHONY INTERFACES
VB-43941 TSAPI Interface Kit $1,820.00
VB-43720 TAPI Interface Kit $ 215.00
T-1 TRUNK INTERFACE
VB-43561 T-1 Trunk Card $2,847.00
VB-43562 T-1 MDF Connector $ 240.00
VB-43563 T-1 Synchronization Unit $ 637.00
VB-43564 T-1 Cable $ 81.00
CALLER I.D. INTERFACE
VB-43551 Caller I.D. Interface Board $ 533.00
</TABLE>
A-3
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
DBS 32 SYSTEM PRICING
VB-42050 DBS 32 Cabinet $ 403.00
VB-42450 CPC-S $ 266.00
VB-42451 CPC-M $ 533.00
VB-42651 208 Hybrid Expansion Card $ 332.00
VB-43711 Doorphone Adapter $ 150.00
VB-43709 SLT Adapter $ 266.00
VB-42431 DTMF Receiver (MFRU) $ 133.00
VB-42712 Serial Interface Unit $ 199.00
VB-43130 Battery BackUp Unit $ 110.00
VOICE MAIL PRICING
Configuration A2 Port 30 Hour $4,800.00
Configuration A4 Port 30 Hour $5,852.00
Configuration B6 Port 100 Hour $6,780.00
Configuration B8 Port 100 Hour $7,432.00
Configuration B12 Port 100 Hour $9,332.00
</TABLE>
A-4
<PAGE>
<PAGE>
EXHIBIT A (SCHEDULE B)
NATIONAL INSTALLATION COST SCHEDULE FOR PANASONIC DBS
AND VOICE MAIL SYSTEMS
*Reuse existing cable $75.00 per station including RJ11C jacks
*New cable run $90.00 per station including RJ11C jacks
Installation, programming common equipment.
<TABLE>
<S> <C> <C>
72 Port Cabinet $150.00
96 Port Cabinet $200.00
192 Port Cabinet $350.00
Training 1 Session N/C
Additional Training 1/2 day $160.00
Add on work same as above
Post installation programming $60.00 per hour
Installation Cost schedule Voice Processing System
Voice Mail System 2 Port $400.00
4 Port $400.00
6 Port $600.00
8 Port $600.00
12 Port $800.00
</TABLE>
B-1
<PAGE>
<PAGE>
[LETTERHEAD]
Page of
QUOTATION/PURCHASE AGREEMENT
Date: Quotation No.
Company PO No: Quotation Expires on:
Company Account No: Taxable:
Salesperson: Tax Exemption No:
SOLD TO: SHIPPED TO:
Customer (Company)
Phone:
Special Remarks: Requested Delivery Date: Shipping Method:
EXHIBIT A (SCHEDULE C)
ACC hereby quotes to Company the following:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Item Quantity Model No. Description Unit Price Amount
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAINTENANCE AGREEMENT
All Communications Corporation
will service and maintain
your telephone system for
the price of $3.50
per phone per month. This
rate will not increase by
more than 5% per year for
the next year.
Your system is currently
equipped with ______ phones
leaving a monthly charge of
$______ per month and an annual
charge of $_____ per year plus
tax.
Under this Maintenance
Agreement, ACC agrees to:
Promptly respond to all
maintenance calls. Isolate the
trouble to the line or
equipment. Repair or replace the
equipment. Ensure the problems
are resolved by Telco carrier.
Check all Battery Back-Up System
annually
*Excluded from this agreement
are 'Acts of God' such as
lightning, flood, etc. as well
as Fire, Liquid Damage, Abuse of
Negligence
This agreement incorporates by
reference all terms and
conditions referred to in
Section 6 of the
Purchase/Maintenance Agreement.
(illegible copy here)
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Company: All Communications:
By: By:
- --------------------------------------- ---------------------------------------
(Authorized Signature) (Authorized Signature)
Print Name: Print Name:
- --------------------------------------- ---------------------------------------
Print Title: Date: Print Title: Date:
- --------------------------------------- ---------------------------------------
</TABLE>
C-1
<PAGE>
<PAGE>
EXHIBIT B
PRODUCTS PURCHASE ORDER FORM
BETWEEN
VENDOR & FRANCHISEE
<PAGE>
<PAGE>
EXHIBIT B
TERMS AND CONDITIONS
PURCHASE/MAINTENANCE AGREEMENT
All Communications Corporation ('Seller'), with offices at 1450 Route 22 West,
Mountainside, N.J. 07092 and ___________________________________, ('Customer'),
with offices at _______________________________________________________________
Agree as follows:
1. PURCHASE OF THE SYSTEM PRICE AND PAYMENT TERMS
Seller agrees to sell and Customer agrees to buy the 'System' consisting of the
hardware ('Hardware') and ('Software') listed in the Hardware/Software
Annex.
The purchase price for the System and the services described in this
'Agreement' is the amount specified as the 'Purchase/Price' in the box
below. The initial installment and all subsequent installments of the
Purchase Price will be due and payable as described in the attached Payment
Schedule Annex. Seller's obligations under this Agreement are subject to
Seller's credit approval of Customer.
The initial installment of the Purchase Price must be paid to Seller by
Customer at the time Customer signs and delivers this Agreement to Seller.
All other installments will be invoiced upon the occurrence of the applicable
event that makes the installment due and payable. All other charges authorized
by this Agreement or by subsequent authorization of Customer will be invoiced
when incurred, or when specified in other sections of this Agreement, and
will be due and payable 30 days from the invoice date.
The Purchase Price does not include applicable taxes. In addition to the
Purchase Price Customer is responsible for the payment of all taxes applicable
to this sale or Seller's performance of this Agreement, except for any tax on
Seller's net income.
2. DELIVERY, INSTALLATION, TESTING AND ACCEPTANCE
The System will be installed at the 'Installation Site' (described above) by
Seller according to the Manufacturer's installation specifications and the
standard practices of the telecommunications industry. Customer shall allow
Seller's employees, representatives and subcontractors reasonable access to
the necessary premises for installation. Before and during installation
Customer is responsible to ensure the timely and adequate delivery,
installation and functioning of the electrical and telecommunications
connections and other environmental requirements, specified in Seller's
instructions, including those connections required for Customer's choice of
local and long distance telecommunications services.
If Customer causes a delay of the System, Customer shall be responsible for
storage and other costs incurred by Seller, and any installments of the Purchase
Price due after the delay shall be due and payable on the date specified in the
Project Schedule Annex. Additional charges may apply if Seller must perform
extra services or bear additional costs (such as overtime wages) because of an
unprepared Installation Site, or due to Customer's acts of omissions, or
conditions at the Installation Site about which Seller was not aware when it
signed this Agreement.
When the installation has been completed the System will be tested by Seller
according to the manufacturer's diagnostic and readiness test specifications and
Customer will notified when the System is ready to be placed into use
('Cutover'). Within 10 days after Cutover, Customer must either accept the
System or notify Seller in reasonable detail of the items and manner in which
the System does not materially comply with this Agreement. Seller shall promptly
correct any such items. Upon such correcting if Customer does not notify Seller
of any material non-compliance within such time, acceptance of the System shall
be deemed to occur. Customer shall not unreasonably withhold acceptance.
<PAGE>
<PAGE>
3. REGULATORY COMPLIANCE
The installation and the System shall comply in all material respects with
applicable federal, state and local laws and regulations in force on the
effective date of this Agreement. If any changes in laws or regulations become
effective after the effective date of this agreement which are applicable to the
System or installation when installed, Seller will comply with the new
requirements, and Customer agrees to pay Seller's then current labor and
material charges in connection with such compliance.
4. TRAINING
Seller shall provide Customer with its standard user training for the System at
no additional charge. The Standard user training for a given system type
consists of instructional materials, and may include training sessions with an
instructor. Other materials and training are available at an additional charge.
5. LIMITED WARRANTIES
Seller warrants that for 48 months after the date of Cutover ('Warranty
Period'): (a) the Hardware shall be free from equipment defects and faulty
workmanship. (b) the installation of the system shall conform to the
manufacturer's installation specifications (collectively
referred to as the 'Warranties') Warranties related to any additions to the
Hardware or Software installed during the Warranty Period shall terminate at
the end of the Warranty Period for the System.
Customer must notify Seller promptly of any claimed defect or failure of any of
the Warranties. The procedures for this are described in section 6, Maintenance
Service. Seller's sole obligation and Customer's exclusive remedy for any defect
or failure of any Warranty during the Warranty Period will be for Seller to
perform Maintenance Service. The fact that Seller performs any Maintenance
Service during the Warranty Period will not extend or restart the Warranty
Period.
The Limited Warranties described above in this section, and the remedies for a
failure, defect or breach of any of those limited warranties which are described
in Section 6 are exclusive. They are given to customer in lieu of all other
warranties, written or oral, statutory, express or implied, including without
limitation, the Warranties of merchantability and fitness for a particular
purpose, which seller specifically disclaims. The limited warranties may also be
voided by certain acts or omissions of customer described in detail in Section
6.
6. MAINTENANCE SERVICE
'Maintenance Service' consists of the repair or replacement, at Seller's option,
of malfunctioning Hardware. Seller may repair or replace malfunctioning Hardware
using either new or like new Hardware. Title to any replacement Hardware shall
pass to Customer upon installation, and title to the replaced Hardware shall
pass to the Seller at the same time.
A defect or failure that has a substantially adverse effect on the call
processing or other material capability of the system shall be deemed an
'Emergency'. If Seller is unable to remotely correct the defect or failure,
it shall dispatch a technician to the Installation Site within 2 hours of
Customer's request for Maintenance Service, without regard to the time of day
or day of the week. Maintenance Service for a defect or failure to the System
that is not an Emergency shall be performed by Seller between 8:00 AM and
5:00 PM, local time, Monday through Friday, except Seller holiday. If Seller
is unable to remotely correct a non-Emergency defect or failure, Seller shall
dispatch a technician to the Installation Site with 24 hours of Customer's
request for Maintenance Service, except when the request for non emergency
services is made on or the day before a weekend day or a holiday observed by
Seller, in which case a technician will be dispatched by Seller's next business
day. Customer must provide Seller with an access necessary to perform
Maintenance Service. A Report of a defect or failure of the System and request
for Maintenance Service may be made by Customer 24 hours a day, 7 days a week
by calling Seller's designated toll free maintenance hotline number.
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The limited Warranties specified in this Agreement may be voided and Seller
will be relieved of its obligation to perform Maintenance Service if, during
Warranty Period or subsequent Maintenance Service terms, Customer (a) fails
to follow applicable operations, maintenance, or environmental requirements
described in any of the manufacturer's manuals, Seller's manuals, and other
materials provided to Customer, including without limitation manufacturer's
product bulletins, (b) makes additions to, alters, modifies, enhances,
repairs or disassembles the System (itself or using a third party), without
Seller's written consent, (c) mishandles, abuses, misuses or damages the
System (either itself or by others doing so), or (d) relocates the System
without Seller's written consent (other than telephone instruments relocated
in accordance with the manufacturer's specifications).
Maintenance Service does not cover (a) damage to the System due to fire,
explosion, power irregularities, power surges, Acts of God (including,
without limitation, earthquakes, rains, floods or lightning), or any other
cause not attributable to Seller, or (b) battery failures which occur
following the Warranty Period, or wiring or cabling installed by persons
other than Seller, or consumable supplies.
If Customer requests Seller to perform Maintenance Service and (a) it was
required as a result of any of the causes described in either of the two
proceeding paragraphs, or (b) it is determined that a defect or failure of
the System did not exist (e.g. the problem was caused by facilities provided
by Customer's local or long distance carriers or service provides, or
non-system equipment interfacing with the System), Seller reserves the right
to charge Customer at Seller's then current time and material rates for any
work performed and materials supplied as an additional charge.
7. INDEMNITIES
Each party shall indemnify the other with respect to any third party claim
alleging bodily injury, including death, or damage to tangible property, to
the extent such injury or damage is caused by the negligence or willful
misconduct of the indemnifying party (except that in all cases Customer
shall indemnify Seller with respect to any claim that the location where a
telephone instrument, console or other device intended to be used by an
individual user, including any wires or cables connected to it, was placed
or installed was the cause of injury or damage).
Seller shall also indemnify Customer with respect to any claim alleging that
Customer's use of the System constitutes an infringement of any United
States patent or copyright, if Seller has been notified and permitted to
defend the suit as required by the following paragraph. If a court of
competent jurisdiction issues an injunction against Customer prohibiting it
from using the System because of such claim, Seller, at its option, shall
either obtain for customer the right to continue using the System, or
replace or modify the System so that Customer's use is not subject to the
injunction. If Seller cannot either acquire the right to use the System or
replace or modify it in a commercially reasonable and timely manner, then
Customer's remedy is to return the System to Seller (after giving written
notice to Seller and receiving instructions for the return). If the System
is returned neither party shall have any further obligation or liability
under this Agreement, except that Seller shall refund the depreciated
value of the System (excluding the value of the wiring and cabling portion
thereof) as carried on Customer's books at the time of such return. This
indemnity shall not apply to claims arising in respect to the use of the
System in a manner not contemplated under this Agreement, or if the claims
are based on the use of the System in conjunction with products not
provided to Customer by Seller. This Section 7 describes Seller's entire
obligation with respect to any infringement claims.
A condition precedent to any obligation of a party to indemnify shall be for
the other party to promptly advise the indemnifying party of the claim and
turn over its defense. The party being indemnified must cooperate in the
defense or settlement of the claim, but the indemnifying party shall have
sole control over the defense or settlement. If the defense is properly and
timely tendered to the indemnifying party, then it must pay all litigation
costs, reasonable attorney's fees, settlement payments and any damages
awarded (but this may not be construed to require the indemnifying party to
reimburse attorney's fees or related costs of the other party that the other
party incurs either to fulfil its obligation to cooperate, or to monitor
litigation being defended by the indemnifying party).
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8. RISK, TITLE, AND SECURITY AGREEMENT
Title to the Hardware shall pass to Customer when the Purchase Price has
been paid in full. Risk of loss or damage to the System or any of its
components shall pass to Customer upon delivery to the Installation Site.
Until Customer pays the Purchase Price in full, customer grants to Seller a
purchase money security interest in the System and its proceeds. Seller's
filing costs will be invoiced as an additional charge to Customer and
Customer agrees to sign any financing statement or other document Seller
considers necessary to protect Seller's rights under the security interest.
9. CUSTOMERS'S OBLIGATIONS AND CONDITIONS OF PERFORMANCE
In addition to the obligations described in this Agreement, Customer shall
timely complete the tasks identified as its duties in the attached Project
Schedule Annex.
The Purchase Price is based in part upon the understanding that (a) Seller
may use its own employees or subcontractors of its choosing to perform all
or some of its services, and (b) those areas at the Installation Site where
Seller's employees or subcontractors are required to work do not contain any
asbestos or other hazardous material. If Seller is restricted by Customer in
managing it utilization of employees or subcontractors, of if any asbestos
or hazardous material exists at work sites, Seller may increase the Purchase
Price to reflect increased costs and extend the time of performance to
reflect reasonable additional time require to adjust for unanticipated
activities. In addition, with respect to the presence of asbestos or other
hazardous material. Customer must, at its own expense, have the materials
removed or notify Seller to install the applicable portion of the System in
areas at the Installation Site not containing such material. The Purchase
Price does not include charges for doing installation work or performing
other services outside Seller's normal working hours, except for Maintenance
Service required for an emergency, or a Cutover scheduled for an evening or
weekend in the Project Schedule Annex. If Customer asks that certain work or
services be done outside of Seller's normal work hours, or takes other
actions that require such work, then Seller may increase the Purchase Price
to reflect Seller's then current charges for work during such hours.
10. DEFAULT AND REMEDIES
If any material breach of this Agreement continues uncorrected for more than
30 days after written notice from the aggrieved party describing the breach,
the aggrieved party shall be entitled to declare a default and pursue any
and all remedies available at law or equity. In addition, if Customer is the
aggrieved party, Customer may suspend its payment obligation relation to the
breach until Seller's breach is corrected, and if Seller is the aggrieved
party, Seller may suspend performance of its obligations until Customer's
breach is corrected.
11. FORCE MAJEURE
Neither party shall be liable for delays, loss, damages or other
consequences of acts, omissions or events beyond a party's control and which
may not be overcome by due diligence, or caused by strikes or labor strife
and unrest.
12. GENERAL
A. Customer warrants that the person signing this Agreement for Customer is
authorized to do so, and that Customer has obtained all internal and
external approvals and resolutions necessary to enter into this Agreement
and make the Agreement binding upon Customer.
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B. This Agreement constitute the entire agreement between the parties with
respect to the described Transaction. It supersedes all prior
negotiations, proposals, commitments, advertisements, publications or
understandings of any nature, whether oral or written. Any amendment or
modification to this Agreement and any waiver of rights under this
Agreement must be in writing clearly intending to modify or waive rights
under this Agreement that is signed by authorized representatives of both
parties to be effective. In interpreting this Section it is agreed that
any preprinted or added terms and conditions in a purchase order form or
like forms used by Customer to implement or change System or product
orders under this Agreement are void with respect to this Agreement, even
if acknowledged in writing by Seller.
C. If any provision of this Agreement is held invalid, the remaining
provisions shall continue in full force and effect and the parties shall
substitute for the invalid provision a valid provision which most closely
approximates the economic effect and intent of the invalid provision.
D. If Seller delivers additional Hardware of Software, or provides time and
material maintenance or other incidental services relating to the System,
the terms of this Agreement will govern, subject to Sellers price quotes,
unless there is a separate written agreement between the parties covering
those items.
E. Unless limited by other sections of this Agreement, either party may
assign or otherwise transfer this agreement and its rights and
obligations under this Agreement upon written notice to the other party,
except that no such assignment or other transfer shall relieve a party
from primary responsibility for its performance in accordance with this
Agreement.
F. A failure by either party to exercise its rights under this Agreement
shall not be a waiver.
G. This Agreement shall be governed by the laws of the state in which the
Installation Site is located.
H. This Agreement is not effective or binding upon Seller and does not
constitute an offer subject to being accepted by Customer until it has
been executed by a duly authorized representative of Seller. The
effective date of this Agreement shall be the date of Seller's execution
of this Agreement. Seller may deposit any check tendered by Customer, but
if Seller elects not to execute this Agreement, Seller shall promptly
refund such amount to Customer. Any such deposit may not be construed as
an acceptance or agreement by Seller to this Agreement becoming
effective.
The following annexes and addendum are attached to and made a part of this
Agreement.
Hardware/Software Annex
Project Schedule Annex
Payment Schedule Annex
INSTALLATION SITE_______________________________________________________________
_____________________________________________PURCHASE PRICE $___________________
ACCEPTED BY ALL COMMUNICATIONS CORP. DATE ACCEPTED BY (CUSTOMER) DATE
_________________________________________ _________________________ ________
By (Authorized Signature) By (Authorized Signature)
_________________________________________ ___________________________________
Name (Type or Print) Name (Type or Print)
_________________________________________ ___________________________________
Title ___________________________________ Title _____________________________
<PAGE>
<PAGE>
EXHIBIT C
PRODUCTS WARRANTY
Warranty: Vendor warrants for the applicable warranty period (as defined below)
that the Products (including voice mail equipment) shall be free from defects
and faulty workmanship and the installation of the Products shall conform to the
manufacturer's installation specifications.
Warranty Period: The warranty period for the Products (including voice mail
equipment) shall be for a period of 24 months from the date on which the
Products is ready for use; provided, however, that for sales made to the
National Realty Trust the warranty period for the Products (excluding voice mail
equipment) shall be for a period of 48 months from the date on which the
Products are ready for use (24 months for voice mail equipment).
Warranty Remedy: Vendor shall correct any failure, defect or non-conformity by
repair or replacement of the Products (including the voice mail equipment) at
Vendor's cost and expense.
<PAGE>
<PAGE>
DEALER AGREEMENT
BUSINESS TELEPHONE SYSTEMS DIVISION
PANASONIC COMMUNICATIONS & SYSTEMS COMPANY, DIVISION OF
MATSUSHITA ELECTRIC CORPORATION OF AMERICA
AGREEMENT effective as of 19 by and between
PANASONIC COMMUNICATIONS & SYSTEMS COMPANY, DIVISION OF MATSUSHITA ELECTRIC
CORPORATION OF AMERICA, a Delaware corporation with its principal place of
business at Two Panasonic Way, Secaucus, New Jersey 07094 ('PCSC') and
All Communications
- --------------------------------------------------------------------------------
(Full legal name under which dealer conducts business)
a Corporation
-------------------------------------------------------------------------------
(corporation partnership sole proprietorship)
with its principal place of business at 7 Lincoln Highway Suite 224, Tower Bld
----------------------------------------
(Street Address)
Edison, Middlesex, New Jersey 08820
- --------------------------------------------------------------------------------
(City, County, State, Zip Code)
('DEALER')
WITNESSETH:
WHEREAS, PCSC sells and desires to sell through others in the United States
certain DBS business telephone systems and related products hereinafter set
forth; and
WHEREAS, DEALER desires to sell at retail and to service those certain DBS
business telephone systems and related products of PCSC upon the terms and
conditions set forth herein;
WHEREAS, DEALER desires to sell those certain DBS business telephone
systems and related products of PCSC at retail and to become an Authorized
Dealer thereof, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein set forth, the parties agree as follows:
1. DEFINITIONS:
As used herein, the following terms shall have the following meanings:
1.1 'Products', as used herein, shall mean only the DBS business telephone
systems and related products therefor which are set forth on Exhibit A
attached hereto and made a part hereof. PCSC shall have the right, at
any time and from time to time, in its sole and absolute discretion, to
make any deletion from, amendment or addition to, or modification
or substitution of, said Exhibit A, upon written notice to DEALER.
1.2 'Territory', as used herein, shall mean only that geographic area set
forth in Exhibit B attached hereto and made a part hereof. PCSC shall
have the right, at any time and from time to time, in its sole
discretion, to make any deletion from, amendment or addition to, or
modification or substitution of, Said Exhibit B, upon written notice to
DEALER.
1.3 'Duly authorized representative', as used herein with respect to PCSC,
shall mean only a General Manager or officer of PCSC, and, as used
herein with respect to DEALER, shall mean any person who holds himself
out or purports to be a duly authorized representative of DEALER, except
if PCSC has actual knowledge to the contrary.
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2. APPOINTMENT AS AN AUTHORIZED DEALER OF THE PRODUCTS:
PCSC hereby appoints DEALER as a non-exclusive retail Authorized Dealer of
the Products in the Territory and authorizes DEALER to sell Products only at
retail (i.e., to end-use customers) to customers with facilities located in the
Territory and only from the sales location(s) set forth in Exhibit C, attached
hereto and made a part hereof, in accordance with the terms, provisions and
conditions of this Agreement. Notwithstanding anything to the contrary herein,
PCSC reserves the unrestricted right to solicit and make direct sales of the
Products to anyone, anywhere, and to appoint additional dealers of the Products
and/or distributors, sales agent or sales representatives for the Products in
the Territory and elsewhere, as in PCSC's best judgment may from time to time be
desirable, without any obligation to DEALER of any kind, including, without
limitation, for any commissions or other charges upon or in respect of any such
sales or sales. PCSC reserves the absolute right in its sole discretion for any
reason whatsoever to increase or decrease the number and locations of Authorized
Dealers at any time without notice to DEALER.
3. ACCEPTANCE OF APPOINTMENT AS AN AUTHORIZED DEALER:
3.1 DEALER hereby accepts appointment as a non-exclusive retail Authorized
Dealer of the Products in the Territory, agrees to sell the Products
only at retail (i.e., to end-use customers) to customers with facilities
located in the Territory and only from the sales location(s) set forth
in Exhibit C in accordance with the terms, provisions and conditions of
this Agreement. DEALER shall not engage in the sale of the Products at
any other sales location or outlet in which DEALER has, or hereafter
acquires, any interest, directly or indirectly, without obtaining PCSC's
prior writeen approval for such location or outlet, in the form of an
amendment to Exhibit C. DEALER shall, upon request by PCSC, provide PCSC
with a current and accurate list of all of its retail selling locations
or outlets. DEALER also agrees and undertakes to use and devote its best
efforts to promote and to maximize the sale at retail of the Products to
all end-use customers and all potential end-use customers thereof in the
Territory, and to develop, promote and maintain the goodwill and
reputation of PCSC and of the Products throughout the Territory.
3.2 In accepting this appointment, DEALER agrees to perform a retail
function only. DEALER shall not sell, assign or transfer any Products to
any person or entity for resale, without PCSC's prior written consent.
4. DEALER'S RIGHT TO PURCHASE THE PRODUCTS:
4.1 As an Authorized Dealer of the Products, DEALER shall have, during the
term hereof, the non-assignable and non-transferable right to purchase
the Products from PCSC upon such terms and conditions, and at such
prices, as may be established or modified by PCSC, in its sole and
absolute discretion, from time to time; provided, however, that in
addition to all of its other rights hereunder, PCSC shall have the
absolute right to limit its sales of the Products hereunder to
quantities which PCSC believes, in its sole and absolute discretion, are
sufficient to satisfy DEALER's retail requirments.
4.2 PCSC agrees that DEALER may submit orders on its purchase order form, if
any; provided, however, that the terms of this Agreement shall solely
govern the sale of the Products, and that any printed terms of DEALER's
purchase order, and any other terms, provisions or conditions in
DEALER's purchase order which vary from, or are inconsistent with,
contrary to, or in addition to, the terms, provisions and conditions of
this Agreement, shall be null and void.
4.3 (a) Any purchase order submitted to PCSC by DEALER shall be subject to
PCSC's confirmation, and, upon confirmation by PCSC, shall be firm
and uncancellable, and shall not be subject to rescheduling by
DEALER, except upon the prior written consent of PCSC. PCSC shall
have the right, in its sole and absolute discretion, to reject any
purchase order of DEALER in whole or in part and to allocate a
limited supply of Products among PCSC's customers, including DEALER.
(b) PCSC does not warrant to DEALER the continued availability of any of
the Products, and DEALER hereby expressly releases PCSC from
liability for any loss or damage to DEALER in any way arising out of
or by virtue of the failure of PCSC to accept or fill any orders.
4.4 PCSC reserves the right to change the design of any of the Products, or
to discontinue the sale thereof, from time to time and at any time. If
any such change in design is made, PCSC shall have no obligation to
modify any of the Products previously delivered to DEALER, or to install
or furnish any other or different parts that were included in any such
Products when delivered to DEALER.
5. MINIMUM PURCHASE QUOTA:
PCSC shall establish Minimum Purchase Quotas for the Products which DEALER
will be expected to purchase from PCSC.
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6. SHIPMENT; DELIVERY; TITLE AND RISK OF LOSS; DEFECTS; RETURNS:
6.1 All deliveries of Products shall be 'F.O.B. Secaucus, New Jersey' which
means that title and risk of loss shall pass to DEALER, or to such
financing institution or party as DEALER may have designated, when the
Products are put into the possession of the carrier, at which time PCSC
shall be deemed to have completed good delivery. PCSC reserves the right
to select the means of shipment, point of shipment and routing. Each
purchase order submitted by DEALER to PCSC for any Products hereunder
shall require delivery to be made only to the sales location(s) set forth
in Exhibit C.
6.2 Delivery dates set forth in any confirmation or acknowledgement of
purchase order shall be deemed to be estimated only, and PCSC shall not be
liable for any losses or damages whatsoever, including, without
limitation, direct, indirect, special, consequential or incidental
damages, that may arise out of the failure to delivery, or the prevention
of, or delay in the delivery of, any shipment or any part of any shipment
with respect to the Products, due to any cause or reason whatsoever. PCSC
will ship any such order or portion thereof subject to availability of the
Products and DEALER will accept shipment of such order of any portion
thereof (in the event that the entire order cannot be filled for any
reason) at the time it is delivered. If DEALER refuses to accept any such
shipment, the shipment, at PCSC's option, may be held for DEALER's account
and DEALER shall be invoiced, and shall promptly pay, for such shipment,
including all freight handling, warehouse and other related costs
associated with DEALER's refusal to accept such shipment.
6.3 DEALER shall, not later than fifteen (15) days following receipt of
delivery of any Products, notify PCSC in writing of any defects in such
Products. If DEALER shall fail to provide such written notice to PCSC
within this period, the Products shall be deemed conclusively to have been
received by DEALER without defects.
6.4 DEALER understands and agrees that no Products may be returned to PCSC,
and will be rejected by PCSC, unless DEALER has prior thereto received a
written Return Merchandise Authorization from PCSC. DEALER shall be solely
responsible for all freight charges in connection with the return of
Products to PCSC (and the rejection thereof by PCSC if no Return
Merchandise Authorization has been obtained).
7. PAYMENT:
7.1 DEALER shall pay each PCSC invoice for Products according to its terms,
without any set-off or claim, except in the amounts of any written credit
memorandum issued by PCSC to DEALER prior to the due date of the
outstanding invoice. Each shipment of Products to DEALER shall constitute
a separate sale, obligating DEALER to pay therefor, whether any such
shipment be in whole or partial fulfillment of any purchase order of
DEALER or confirmation by PCSC issued in connection therewith.
7.2 If DEALER shall fail to pay any invoice for Products within the terms
provided for, or in the event that PCSC, in its sole and absolute
discretion, deems DEALER's financial condition inadequate or
unsatisfactory to PCSC for any reason whatsoever, PCSC shall have the
right, in addition to its other rights hereunder or otherwise, to cancel
any order(s) of DEALER for Products theretofore accepted, or to delay any
further shipments to DEALER, or to require payment for the Products in
cash prior to their delivery to DEALER, without incurring any liability
for loss of damage of any kind occasioned by reason of any such
cancellation or delay. PCSC reserves the right at any time to decrease,
eliminate or otherwise limit the amount or duration of credit extended to
DEALER in general and/or with respect to any specific purchase order.
7.3 Any payments to be made by DEALER to PCSC which are not made according to
the terms and within the time provided for shall be subject to late
payment charges of the lesser of (i) 1-1/2% per month or (ii) the then
maximum legal monthly rate of interest in the state(s) in which DEALER's
authorized sales location(s) is (are) located, which DEALER hereby agrees
to pay.
7.4 In the event that DEALER is entitled, pursuant to PCSC's policies and
procedures, to a credit for any Products that have been properly returned
subsequent to payment therefor, a credit shall be issued to DEALER against
any future payments to be made by DEALER to PCSC for purchases of
Products, or if DEALER is not, at the time such credit arises, an
Authorized Dealer of the Products, DEALER will be reimbursed therefor if
it is not then indebted to PCSC and has no undelivered orders for Products
at the time any such credit arises.
7.5 DEALER represents and warrants that all Products purchased hereunder are
for resale only in the Territory and at retail in the ordinary course of
DEALER's business only from the sales location(s) set for in Exhibit C and
that DEALER has complied and/or will comply with all applicable state and
local laws relating to the collection and/or payment by DEALER of sales,
use and similar taxes applicable to all such resale transactions. DEALER
agrees to indemnify and to save and hold PCSC harmless from all costs
whatsoever, including without limitation, reasonable attorney's fees and
litigation costs, arising out of DEALER's breach of this warranty and/or
failure to collect or pay any of the aforementioned taxes. DEALER will be
charged sales tax by PCSC unless it has on file with PCSC a valid resale
certificate.
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8. DEALER'S SALE AND SERVICE OF PRODUCTS:
8.1 During the term of this Agreement, DEALER agrees to purchase from PCSC,
and to maintain in inventory at all times, a quantity of Products
sufficient for and consistent with the needs of DEALER's customers in the
Territory.
8.2 (a) DEALER agrees to establish and maintain a sales and marketing
organization, with competent personnel of high character who are
expert in the specifications and features of the products,
sufficient to develop to PCSC's satisfaction the marketing potential
for the sale of the Products in the Territory, and facilities and a
distribution organization in the Territory sufficient to make the
Products available for immediate shipment by DEALER, if requested,
on receipt of orders therefor from customers in the Territory.
(b) DEALER hereby agrees that it shall:
1. promote, display and demonstrate the Products in a manner
which is attractive and is consistent with the Products'
reputation for high quality, and which is at least equivalent
to DEALER's promotion, display and demonstration of competing
products;
2. at all times, stock demonstrator equipment which is
representative of the Products, properly maintained and
adequate for the purpose of demonstrating the same to end-use
customers and potential end-use customers thereof and shall
make such demonstrations, by sales staff sufficiently educated
and with such ability, as shall be necessary and appropriate
to promote the sale of the Products; and
3. attractively display and make available to prospective end-use
customers such Product literature as may be provided by PCSC
from time to time.
(c) DEALER shall call upon and service all of its customers with
reasonable frequency. DEALER shall also solicit potential new
customers for the Products in all parts of the Territory and shall
cooperate in such advertising and sales promotion programs for the
Products as PCSC nay provide so as to promote and maximize the sale
of the Products throughout the Territory.
(d) DEALER agrees that its sales and service personnel shall, at
DEALER's expense, attend such product sales and service training
sessions as PCSC may offer from time to time.
(e) DEALER agrees that, in connection with the conduct of its business,
it shall adhere to and comply with all applicable sales and
marketing policies and programs of PCSC.
(f) DEALER shall at all times comply with all applicable present and
future Federal, state and local statutes, laws, rules, regulations
and ordinances.
(g) it is an express condition of this Agreement that at all times
during the term of this Agreement DEALER be fully qualified,
equipped and prepared to provide customers in the Territory with
technical assistance and service with regard to the installation,
use, maintenance and repair of the Products in accordance with any
policies and procedures that may be established by PCSC from time to
time.
9. WARRANTY; DISCLAIMER:
9.1. If any Product furnished hereunder is believed to be initially defective,
i.e., defective at the time of delivery to DEALER, DEALER shall return the
Product to PCSC for replacement. If PCSC, in its sole and absolute
discretion, determines that the returned Product was not initially
defective, it shall be repaired, if necessary, as returned to DEALER each
at DEALER's sole cost and expense, and DEALER shall be invoiced for the
cost of the replacement unit. The foregoing constitutes DEALER's sole
remedy with respect to initially defective Products; DEALER shall have no
right to reject all or any part of any shipment of Products furnished
hereunder because any or all of such Products may be initially defective.
9.2 PCSC warrants to DEALER only that each unit of Products which is sold to
DEALER hereunder shall be free from defects in materials, design or
workmanship for a period of one (1) year from the date of delivery of such
unit to DEALER at the F.O.B. point. In the event that a unit of the
Products shall prove to be defective in materials, design or workmanship
during the aforesaid warranty period, PCSC shall, in its sole discretion,
repair said defective Product unit, replace it or credit DEALER's account
for the cost to DEALER of the same from PCSC and DEALER shall, at PCSC's
option, return the defective Product unit to PCSC or dispose of it at
DEALER's cost and expense. This warranty does not cover damage which
results from a failure to perform recommended normal maintenance,
alteration, accident, misuse or abuse; nor does it cover defects in or
which result from the use of defective accessories, parts or supplies not
sold by PCSC.
9.3 THE WARRANTIES SET FORTH IN THIS PARAGRAPH 9 ARE EXCLUSIVE AND ARE IN LIEU
OF ALL OTHER WARRANTIES, OTHER THAN WARRANTY OF TITLE, WHETHER ORAL OR
WRITTEN, EXPRESS OR
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IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A
PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY WAIVED BY DEALER. The
employees and agents of PCSC are not authorized to make modifications to
such warranties, or additional warranties binding on PCSC; accordingly,
additional statements, whether oral or written, do not constitute
warranties and should not be relied upon by DEALER. PCSC's liability under
such warranties shall be limited solely to the cost of any necessary
repairs to, replacements of or refunds of DEALER's purchase price for, the
Products, and PCSC assumes no risk of, and shall not in any case be liable
for, any other damages, including, without limitation, any special,
incidental, consequential or punitive damages, arising from breach of
warranty or contract, negligence or any other legal theory, including,
without limitation, loss of goodwill, profits or revenue, loss of use of
the Products or any associated equipment, cost of capital, cost of any
substitute equipment, facilities or services, downtime costs, or claims of
any party dealing with DEALER for such damages.
9.4 No suit shall be brought on an alleged breach of PCSC's warranty more than
eighteen (18) months following delivery of the Product to DEALER.
9.5 This warranty allocates the risks of Product failure between PCSC and
DEALER, as authorized by the Uniform Commercial Code and other applicable
law. PCSC's Product pricing reflects this allocation of risk and the
limitations of liability contained in this Agreement.
10. SALES MATERIALS:
10.1 (a) PCSC shall, at PCSC's cost, furnish DEALER with sales, advertising
and promotional material, specification sheets and other collateral
materials relating to the Products, if any, in quantities to be
determined by PCSC, in its sole and absolute discretion. Additional
quantities of such literature and materials may be purchased by
DEALER from PCSC at prices established by PCSC from time to time.
DEALER may not copy or reproduce any such materials without the
prior written consent of PCSC, and such materials shall be used by
DEALER solely in connection with the sale of the Products hereunder.
(b) All sales, advertising, promotional and other material provided to
DEALER by PCSC without charge which are not furnished by DEALER to
its customers shall at all times remain the property of PCSC, and
DEALER agrees to immediately return all such material in the
possession of DEALER whenever requested to do so by PCSC and, in any
event, immediately upon expiration or earlier termination of this
Agreement. DEALER shall be responsible to PCSC for any loss of, or
damage to, such materials.
11. INDEMNITY; INSURANCE:
11.1 PCSC shall maintain products liability insurance on the Products with a
broad form vendors' endorsement. A certificate of insurance shall be
provided to DEALER upon DEALER's written request therefor.
11.2 DEALER agrees to and shall indemnify and hold PCSC harmless against any
and all liability, damage or expense (including costs and attorney's fees
and expenses) by reason of, arising out of, or relating to, any acts,
duties, obligations or omissions of DEALER or of DEALER's employees,
representatives or agents, in connection with DEALER's performance under
this Agreement, and DEALER shall, at the request of PCSC, assume the
defense of any demand, claim, action, suit or proceeding brought against
PCSC by reason thereof and pay any and all damages assessed against, or
that are payable by, PCSC as the result of the disposition of any such
demand, claim, action, suit or proceeding. Notwithstanding the foregoing,
PCSC may be represented in any such action, suit or proceeding at its own
expense and by its own counsel. In addition, DEALER agrees to reimburse
PCSC for any and all costs and attorney's fees and expenses incurred by
PCSC in successfully enforcing the provisions of this paragraph, whether
by prosecution of a lawsuit or otherwise. The provisions of this paragraph
shall survive indefinitely the termination of this Agreement.
11.3 DEALER shall procure and maintain, in full force and effect, a
comprehensive general liability insurance policy or policies with the
standard Insurance Service Office broad form endorsement, deleting
exclusion B1 from the personal injury section, protecting DEALER and PCSC
and their officers and employees against any loss, liability or expense
whatsoever, including, without limitation, any loss, liability or expense
due to personal injury, death or property damage or otherwise arising out
of or occurring in connection with the business of DEALER. PCSC shall be
an additional insured in such policy or policies, which shall be written
by a responsible insurance company or companies licensed to do business in
the states in which DEALER conducts its business and not unacceptable to
PCSC, with a combined single limit of not less than $1,000,000 for bodily
injury or death and for property damage. Such policy or policies shall
provide that they will not be cancelled or altered without at least thirty
(30) days prior written notice to PCSC. Within ten (10) days after
execution of this Agreement, DEALER shall furnish PCSC with a certificate
of such insurance,
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together with satisfactory evidence that the premiums therefor have
been paid. Maintenance of such insurance and the performance by DEALER
of its obligations under this paragraph shall not relieve DEALER of
liability under the indemnity provisions hereinabove set forth in
Paragraph 11.2.
11.4 DEALER shall procure and maintain, in full force and effect, Worker's
Compensation Insurance, within the limits required by applicable
Federal and state statutes. Within ten (10) days after execution of
this Agreement, DEALER shall furnish PCSC with a certificate or
certificates of such insurance, together with satisfactory evidence
that the premiums therefor have been paid.
12. RECORDS; REPORTS:
12.1 DEALER shall at all times keep and maintain at its place of business
herein set forth accurate books, records, correspondence and data of
all transactions pertaining to this Agreement, and shall at all times
make available and permit PCSC or its authorized representatives to
examine or take extracts or copies of the same during normal business
hours. All such books, records, correspondence and data shall be
retained by DEALER during the term of this Agreement and for a period
of one (1) year after the date of termination or expiration of this
Agreement, and thereafter PCSC's rights with respect to the same shall
cease.
12.2 DEALER shall at all times make available to PCSC such of its records as
are necessary for PCSC to fulfill any recall or other obligations PCSC
deems necessary under Federal, state or local statutes, laws, rules or
regulations, and such obligations shall survive and continue
indefinitely after termination or expiration of this Agreement.
12.3 DEALER shall prepare and forward, as required by PCSC, any and all
reports PCSC deems necessary for the carrying on of the mutual business
of DEALER and PCSC.
13. FINANCIAL STATEMENTS; SECURITY INTEREST:
13.1 DEALER agrees to maintain adequate capital to operate its entire
business and carry out its obligations and responsibilities hereunder.
DEALER shall, annually and at any reasonable time upon written request,
furnish PCSC with a current Balance Sheet and Profit and Loss Statement
certified by DEALER's Chief Financial Officer or a certified public
accountant, together with such additional information relating to
DEALER's financial condition as PCSC may reasonably require. If DEALER
is a corporation or partnership, it shall provide PCSC at any time upon
written request with a list of its shareholders and their respective
shareholdings, or of its partners and their respective interests, as
the case may be.
13.2 DEALER has represented to PCSC, as an inducement to PCSC to enter into
this Agreement, that the financial statements of DEALER provided to
PCSC as part of its application for this Agreement are complete and
accurate, and that Dealer is not only solvent, but is in good,
substantial and stable financial condition. DEALER does not possess any
information that would indicate that DEALER will not continue to be in
good substantial financial condition in the future.
13.3 PCSC shall have, and is hereby granted, a security interest in all
inventory of Products sold by PCSC to DEALER pursuant hereto, and in
all proceeds and products therefrom, whether now held or hereafter
acquired, including, without limitation, all accounts receivable, notes
receivable, contract rights and other commercial paper of any kind
arising from the sale by DEALER of the Products covered hereby, to
secure the full and prompt payment and/or performance of all
obligations hereunder and otherwise of DEALER to PCSC. DEALER hereby
expressly agrees to execute such documents as are deemed necessary by
PCSC to effectuate and perfect the security interest granted herein and
further authorizes and irrevocably appoints PCSC as its
attorneys-in-fact to sign and file in DEALER's name Uniform Commercial
Code Financing Statement(s) and such other documents as PCSC may
request, including, with limitation, a security agreement, to implement
the foregoing, without DEALER's signature for the express purposes set
forth herein. It is understood and intended by DEALER that said power
of attorney is coupled with an interest.
14. ASSIGNMENT:
14.1 (a) Neither this Agreement nor any of the rights or interests of DEALER
hereunder may be assigned, transferred or conveyed by operation of
law or otherwise, nor shall this Agreement nor any rights of DEALER
hereunder inure to the benefit of any trustee in bankruptcy,
receiver, creditor, trustee of, or successor to, DEALER's business
or its property, whether by operation of law or otherwise, or to a
purchaser, transferee, assignee of, or successor to, all or any
part, of the capital stock, if any, the business, or the assets, of
DEALER, without the prior written consent of PCSC.
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(b) DEALER agrees to give PCSC immediate notice in writing of (i) any
transaction affecting ownership of more than five percent (5%) of
DEALER's capital stock, if DEALER is a corporation, or (ii) any
change in the representative interests of the partners, if DEALER
is a partnership, or (iii) any transaction affecting the ownership
of any part of the business, if DEALER is a sole proprietorship.
14.2 The relationship created by this Agreement is not an asset or property
of DEALER, or any partner, stockholder, employee, agent, principal or
other individual in any manner associated with DEALER or his or her or
its estate or other legal representative, and cannot be sold.
15. DEALER'S STATUS:
15.1 Except as otherwise provided in Paragraph 13.3 above, the relationship
between PCSC and DEALER is intended to, and shall, be that of buyer and
seller and DEALER and its employees, agents and representatives shall
under no circumstances be considered employees, agents, partners, joint
venturers or representatives of PCSC. DEALER shall not act or attempt
to act, or represent itself, directly or by implication, as agent,
joint venturer, partner or representative of PCSC; nor shall DEALER in
any manner assume or attempt to assume or create any obligation or
liability of any kind, nature or sort, express or implied, on behalf of
or in the name of PCSC.
15.2 The relationship created by this Agreement is not intended by the
parties to constitute the granting of a franchise to DEALER by PCSC,
and no Federal or state franchise statute, law, regulation or rule
is intended by the parties to apply to such relationship; nor shall
any such franchise statute, law, regulation or rule be deemed or
construed to apply to the formation, operation, administration or
termination of this Agreement.
15.3 All personnel employed or otherwise engaged by DEALER to perform the
obligations and duties of DEALER under this Agreement shall be deemed
to be the agents, servants and employees of DEALER only, and PSCS shall
incur no obligations or liabilities of any kind, nature of sort,
express or implied, by virtue of, or with respect to, the conduct of
any such personnel in carrying out their obligations and duties to
DEALER or otherwise. DEALER shall pay all costs and expenses of
whatsoever nature incurred by DEALER in connection with this Agreement,
including, without limitation, any commissions or other compensation
paid to agents, representatives or employees engaged or employed by
DEALER, any expenses for travel, entertainment or offices and any taxes
or other assessments.
16. TRADEMARKS AND OTHER PROPRIETARY MARKS:
16.1 DEALER is authorized, but not required, to refer to and advertise
itself as an Authorized Dealer of the Products in the Territory. Any
use of the name 'PANASONIC' by DEALER in connection with its promotion
or sale of the Products or advertising of the same shall be at DEALER's
sole cost and expense.
16.2 DEALER hereby acknowledges the validity of the trademark 'PANASONIC' as
well as of all other proprietary marks which are affixed to the
Products and agrees that the aforesaid trademark and proprietary marks
are, and shall remain, the property of PCSC's corporate parent, or of
any subsidiary or affiliate thereof. DEALER acknowledges that it
acquires no rights in the name 'PANASONIC' alone or in combination by
virtue of this Agreement or its sale of the Products hereunder or in
the name 'PANASONIC COMMUNICATIONS & SYSTEMS COMPANY' or in any other
trademark, proprietary mark or trade name adopted by PCSC or PCSC's
corporate parent, or by any subsidiary or affiliate thereof, and that
it has not and will not compensate PCSC in any way for the right to use
any of such marks or names. DEALER agrees that it shall not use any of
PCSC's trade names, trademarks, service marks, logo-types or other
proprietary marks belonging to PCSC or PCSC's corporate parent, or to
any subsidiary or affiliate thereof, or any names or marks or related
characteristics which in PCSC's opinion resemble any of the same, as
part of DEALER's corporate or business name or trade style, or in any
manner which PCSC, in its sole discretion and opinion, considers
confusingly similar, misleading, detrimental or otherwise. DEALER may
indicate on stationery, calling cards or other printed material that it
is an Authorized Dealer of the Products in the Territory, and may have
PCSC's name or trade names listed in the classified section of the
telephone directory on a cross-reference basis (for example: 'Panasonic
Business Telephone Systems -- See X Y Z Co., Inc.').
16.3 DEALER shall not do anything to infringe upon, harm, or contest the
validity of the trademark 'PANASONIC' or any trademark, trade name,
service mark, logo-type or other proprietary mark of PCSC or its
corporate parent, or of any subsidiary or affiliate thereof.
16.4 DEALER agrees that it shall not remove or alter the trademark
'PANASONIC' or any other trademark, trade name, service mark, logo-type
or other proprietary mark which is affixed to the Products or the
packaging therefor; nor shall DEALER affix any additional trademarks or
trade designations to any Products or the
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packaging therefor which bear the trademark 'PANASONIC' or any other
trademark, trade name, service mark, logo-type or other proprietary
mark of PCSC or its corporate parent, or of any subsidiary or affiliate
thereof.
16.5 DEALER agrees that, in the event that PCSC at any time(s) makes a
request therefor in writing, DEALER shall submit to PCSC, of PCSC's
prior written approval, any advertising or other printed material
employing the name 'PANASONIC' or any other trademark, trade name,
service mark, logo-type or other proprietary mark belonging to PCSC or
PCSC's corporate parent, or to any subsidiary or affiliate thereof,
prior to any use thereof by DEALER.
16.6 DEALER shall at no time engage in any unfair trade practices and shall
not make any false or misleading statements or representations with
respect to PCSC or any of the Products covered by this Agreement or
otherwise. DEALER shall make no warranties or representations with
respect to the Products covered by this Agreement, except as may be
previously approved in writing by PCSC.
16.7 Upon termination of this Agreement for any reason, DEALER shall
immediately refrain thereafter from any and all use of the trademark
'PANASONIC' and any other trademark, trade name, service mark,
logo-type or other proprietary mark adopted by PCSC or PCSC's corporate
parent, or by any subsidiary or affiliate thereof, and shall refrain
from the use of any marks confusingly similar thereto in connection
with any products whatsoever, and shall immediately refrain from
referring to itself as a dealer of the Products; provided, however,
that, except as otherwise provided in Paragraph 18 hereof, nothing
herein shall be construed as preventing DEALER from selling such
inventory of the Products as DEALER possesses on the effective date of
termination of this Agreement after said date. DEALER shall remove from
public view any signs, banners, wall charts, certificates, plaques or
ornamentations stating or suggesting that DEALER is authorized by PCSC
to sell, promote or install the Products.
17. TERM; TERMINATION:
17.1 This Agreement shall be deemed effective upon the date of execution by
a duly authorized representative of PCSC and shall continue until
December 31 of the current year. Thereafter, this Agreement shall renew
automatically for successive one-year additional terms unless
terminated by either party in writing no less than thirty (30) days
prior to the expiration date of the then current term. Anything to the
contrary of this Agreement notwithstanding, either PCSC or DEALER may
terminate this Agreement, and the appointment of DEALER as an
Authorized Dealer of the Products, with or without cause, at any time
upon written notice to the other to that effect, and said termination
shall become effective thirty (30) days following the mailing of such
notice, except where a shorter period for termination is provided in
this Agreement.
17.2 During the period between the giving of any notice of non-renewal or of
termination provided for in Paragraph 17.1 above and the effective date
of expiration or of termination set forth in any such notice, delivery
of Products to DEALER may, at the option of PCSC, be conditioned upon
payment by certified check or in cash by DEALER upon or prior to
delivery.
17.3 PCSC may immediately terminate this Agreement upon written notice to
that effect upon the occurrence of any of the following events:
(a) DEALER is in default in any material respect in the performance of
any of its obligations under this Agreement or under any purchase
order submitted by DEALER hereunder, including, without
limitation, DEALER's obligations, under Paragraphs 2 and 3 above,
to perform a retail function only, to sell the Products only to
customers with facilities located in the Territory and to sell
Products only from the sales location(s) set forth on Exhibit C,
and, under Paragraph 7.1 above, to pay each PCSC invoice for
Products according to its terms; or
(b) Bankruptcy or insolvency proceedings are instituted by or against
DEALER, or DEALER, is adjudicated a bankrupt, becomes insolvent,
makes an assignment for the benefit of creditors, or a receiver is
appointed for all, or a substantial part, of DEALER's assets, or
DEALER proposes or makes any arrangements for the liquidation of
its debts, and any such proceedings, assignment or appointment is
not dismissed or vacated within thirty (30) days.
17.4 The expiration or termination of this Agreement at any time shall,
unless otherwise expressly agreed to in writing by PCSC, automatically
operate, as of the effective date thereof, as a cancellation of any
further deliveries or Products to DEALER, and shall be construed as an
automatic cancellation of all purchase orders and releases of DEALER
for Products, whether or not any such orders have theretofore been
accepted by PCSC.
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17.5 In addition to such other remedies for non-payment as are otherwise
provided herein or by law, in the event DEALER shall default in the payment
of any indebtedness due to PCSC pursuant to the terms of this Agreement
when and as the same become due and payable, then all liabilities and
obligations of DEALER to PCSC pursuant to this Agreement, any other
agreement, or otherwise, whether or not then due, shall become immediately
due and payable, without further notice to DEALER.
17.6 Except as otherwise provided in Paragraph 17.5 above, DEALER shall pay all
monies owed to PCSC at the time of the expiration or termination of this
Agreement within thirty (30) days of the effective date of such expiration
or termination regardless of the terms of payment that may have otherwise
been granted to DEALER by PCSC prior to the effective date of expiration or
termination; provided, however, that if any terms of payment for payment of
any invoice to PCSC by DEALER at the time of such expiration or termination
then provide for payment thereof in less than thirty (30) days, such
invoice shall be payable to the applicable terms of payment.
17.7 Anything herein to the contrary notwithstanding, expiration or termination
of DEALER's appointment as an Authorized Dealer of the products shall in no
way affect any outstanding obligations for payments due and owing from
DEALER to PCSC, whether then due or to become due to PCSC, under this
Agreement or otherwise or any other obligation of DEALER to PCSC pursuant
hereto or otherwise, all of which obligations, if any, existing at the
time of any such expiration or termination, DEALER hereby agrees to fulfill
and perform.
17.8 Neither PCSC nor DEALER shall be liable to the other, or to any other
party, by virtue of the expiration or termination of this Agreement due to
any reason whatsoever, or due to no reason, or by virtue of the
cancellation, pursuant to Paragraph 17.4 above, of any orders for Products
that are undelivered on the effective date of any expiration or
termination of this Agreement, including, without limitation, any
liability for direct, indirect, special consequential or incidental
damages sustained by reason of such expiration or termination, including,
without limitation, any claim for loss or profits or prospective profits
in respect of sales or anticipated sales of Products, or on account of any
expenditures, investments, leases, capital improvements or any other
commitments made by either of the parties in connection with their
respective businesses made in reliance upon or by virtue of DEALER's
appointment as an Authorized Dealer of the Products or otherwise; not shall
PCSC or DEALER have the right to any equitable remedies by reason of the
expiration or termination of this Agreement.
18. OPTION TO REPURCHASE PRODUCTS:
18.1 PCSC shall have the option, in its sole and absolute discretion,
exercisable upon written notice to DEALER mailed within fourteen (14) days
following the mailing of a notice of termination of this Agreement by
either DEALER or PCSC, but shall have no obligation hereunder or otherwise,
to repurchase from DEALER or from DEALER's legal representatives (in the
event of the insolvency or, if DEALER is a sole proprietorship, the death
of DEALER at the time of such repurchase) all or any part of DEALER's
inventory of Products existing on the effective date of any termination of
DEALER's appointment as an Authorized Dealer of the Products.
18.2 Following the mailing of the notice of exercise of the option set forth in
Paragraph 18.1 above, but in no event later than the effective date of
termination of this Agreement, PCSC and DEALER shall take an inventory of
all Products in the possession of DEALER.
18.3 The purchase price for Products which are undamaged and in their original
containers upon such repurchase shall be DEALER's net purchase price
therefor from PCSC or PCSC's price for Products to its Authorized Dealers
of the Products at the time of such repurchase, whichever is lower. If PCSC
elects, in its sole and absolute discretion, to purchase Products which are
not then on PCSC's current price sheet or which are damaged or not in their
original containers, the parties hereto agree to negotiate the price
thereof in good faith.
18.4 In the event PCSC exercises its option to repurchase all or any part of
DEALER's inventory of the Products, DEALER hereby agrees to sell to PCSC
such of its inventory of Products as PCSC elects to purchase, as of the
effective date of termination of DEALER's appointment as an Authorized
Dealer of the Products, and to promptly thereafter deliver the same to
PCSC, at DEALER's sole cost and expense, at such time(s) and to such
place(s) as PCSC shall designate, free and clear of any liens or
encumbrances thereon.
18.5 In the event and to the extent PCSC fails to exercise its option, DEALER
shall thereafter promptly dispose of its remaining inventory of the
Products in the ordinary course of its business pursuant to the terms of
this Agreement.
18.6 PCSC shall pay DEALER for the inventory of Products repurchased within
thirty (30) days after receipt of the repurchased Products by PCSC. PCSC
shall have the right to offset against any monies payable hereunder any
monies that are due and owing from DEALER to PCSC as of the date any such
payment is due.
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19. EXCUSABLE DELAY:
19.1 PCSC shall not be liable for any direct, indirect, special, incidental or
consequential damages arising out a total or partial failure to perform
hereunder, or delay in such performance, by reason of any event or
occurrence beyond the control of PCSC, including without limitation,
non-performance or delays of a supplier to PCSC, acts of God, wars, acts of
a public enemy, acts of the Governments of any state of political
subdivision or any department or regulatory agency thereof or entity
created thereby (whether or not valid), quotas, embargoes, acts of any
person engaged in subversive activity or sabotage, fires, floods,
explosions, or other catastrophes, epidemics or quarantine restrictions,
strikes, lockouts or other labor stoppages, slowdowns or disputes.
19.2 It is understood and agreed that the provision hereinabove shall have the
effect of permitting delay under this Agreement for such time as is
occasioned by any of the aforesaid conditions, but such delay shall not in
any event be deemed to lessen the full amount of the Products purchased and
sold hereunder, but only as deferring delivery in the event and to the
extent herein provided for.
20. ENTIRE AGREEMENT:
20.1 This Agreement sets forth the entire understanding, and hereby supersedes
any and all prior agreements, oral or written, heretofore made, between the
parties with respect to the subject matter of this Agreement, and there are
no representations, warranties, convenants, agreements or collateral
understandings, oral or otherwise, expressed or implied, affecting this
instrument that are not expressly set forth herein; provided, however, that
nothing herein contained shall be construed as relieving DEALER from any
pre-existing obligation owing to PCSC, including, without limitation,
payment of any monies payable to PCSC.
20.2 No delay on the part of either party in exercising any of its respective
rights hereunder or the failure to exercise the same, nor the acquiescence
in or waiver of a breach of any term, provision or condition of this
Agreement shall be deemed or construed to operate as a waiver of such
rights or acquiescence thereto except in the specific instance for which
given.
20.3 None of the terms, conditions or provisions of this Agreement shall be
deemed to have been waived, modified or altered by any act, course or
conduct or knowledge of either party, its respective agents, servants or
employees, and the terms, provisions and conditions of this Agreement may
not be changed, waived, varied or modified except by a statement in writing
signed by duly authorized representatives of both parties.
21. NOTICES:
Any notice, request, consent, demand or other communication given or
required to be given under this Agreement shall be effective only if in
writing and shall be deemed to have been given when mailed by first-class
registered or certified mail, postage prepaid, return receipt requested,
addressed to the respective addresses of the parties as follows:
To: General Manager, Business Telephone Systems Division
Panasonic Communications & Systems Company
Division of Matsushita Electric Corporation of America
Two Panasonic Way
Secaucus, New Jersey 07094
Copy to: General Counsel
Panasonic Communications & Systems Company
Division of Matsushita Electric Corporation of America
One Panasonic Way
Secaucus, New Jersey 07094
To: DEALER at the address set forth on the first page hereof
or to such other addressee as many hereafter be designated by like notice.
22. APPLICABLE LAW:
This Agreement shall be governed and interpreted under the laws of the State
of New York, without regard to its conflict-of-laws rules.
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23. SEVERABILITY:
The invalidity or unenforceability of any provision of this Agreement
pursuant to any applicable law shall not affect the validity or enforceability
of the remaining provisions hereof, but this Agreement shall be construed
as if not containing the provision held invalid or unenforceable in the
jurisdiction in which so held, unless, in the reasonable opinion of either
party hereto, such invalid or unenforceable provisions comprise an integral
part of, or are otherwise inseparable from the remainder of, this Agreement,
in which case this Agreement, in such jurisdiction, shall immediately
terminate and be of no further force and effect.
24. EXECUTION:
24.1 This Agreement may be executed in two or more counterparts, each of which
shall be an original, and all of which, taken together, shall constitute
one and the same Agreement.
24.2 PCSC and DEALER each represent and warrant to the other that the person
executing this Agreement on its behalf is its duly authorized
representative.
25. HEADINGS:
Paragraph headings used herein do not form a part of this Agreement, but are
for convenience only and shall not limit or be deemed or construed in any way to
affect or limit the meaning of the language of the paragraphs.
PANASONIC COMMUNICATIONS
& SYSTEMS COMPANY
DIVISION OF MATSUSHITA
Dealer Name All Communications Corp. ELECTRIC CORPORATION OF AMERICA
------------------------
By: /s/ Richard Reiss, Pres. By: /s/ [SIGNATURE]
---------------------------------- ----------------------------
(Name & Title) (Name & Title)
Richard Reiss, President
5/20/92
Date:_________________________________ Date:___________________________
<PAGE>
<PAGE>
EFFECTIVE DATE:
Panasonic
Note: The effective date of this supersedes
all prior dated Exhibits.
-------------------------------------------------
All Communications Corp.
------------------------
DEALER NAME
7 Lincoln Highway Suite 224
---------------------------
ADDRESS
Edison, New Jersey 08820
------------------------
CITY, STATE, ZIP
EXHIBIT A
---------
PRODUCTS:
- ---------
ALL PANASONIC DBS AND RELATED PRODUCTS.
- --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE: AUTHORIZED SIGNATURE:
/S/ Richard Reiss, Pres. /S/ [SIGNATURE]
- ------------------------- --------------------------------
DEALER Panasonic Communications & Systems Company
Division of Matsushita Electric Corp. of
America
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
EFFECTIVE DATE: January 1, 1997
Panasonic
Note: The effective date of this supersedes
all prior dated Exhibits.
-------------------------------------------------
All Communications Inc.
------------------------
DEALER NAME
1450 Route 22 West Suite 103
----------------------------
ADDRESS
Mountainside, NJ 07092
----------------------
CITY, STATE, ZIP
EXHIBIT B
---------
TERRITORY
---------
STATE COUNTY STATE COUNTY
1. NJ Sussex 16. NJ Atlantic
------ --------------------- ----- --------------------
2. NJ Passaic 17. NJ Gloucester
------ --------------------- ----- --------------------
3. NJ Bergen 18. NJ Salem
------ --------------------- ----- --------------------
4. NJ Morris 19. NJ Cumberland
------ --------------------- ----- --------------------
5. NJ Warren 20. NJ Cape May
------ --------------------- ----- --------------------
6. NJ Hunterdon 21. NY Richmond
------ --------------------- ----- --------------------
7. NJ Essex 22. NY Kings
------ --------------------- ----- --------------------
8. NJ Union 23. NY Queens
------ --------------------- ----- --------------------
9. NJ Somerset 24. NY Nassau
------ --------------------- ----- --------------------
10. NJ Middlesex 25. NY Suffolk
------ --------------------- ----- --------------------
11. NJ Mercer 26. NY New York
------ --------------------- ----- --------------------
12. NJ Monmouth 27. NY Bronx
------ --------------------- ----- --------------------
13. NJ Ocean 28. NY Westchester
------ --------------------- ----- --------------------
14. NJ Burlington 29. NY Rockland
------ --------------------- ----- --------------------
15. NJ Camden 30. NY Orange
------ --------------------- ----- --------------------
- --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE: AUTHORIZED SIGNATURE:
/S/ Richard Reiss, Pres. /S/ [SIGNATURE]
- ------------------------- --------------------------------
DEALER Panasonic Communications & Systems Company
Division of Matsushita Electric Corp. of
America
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
EFFECTIVE DATE: January 1, 1997
Panasonic
Note: The effective date of this supersedes
all prior dated Exhibits.
-------------------------------------------------
All Communications Inc.
------------------------
DEALER NAME
1450 Route 22 West Ste. 103
----------------------------
ADDRESS
Mountainside, NJ 07092
----------------------
CITY, STATE, ZIP
EXHIBIT B-1
-----------
TERRITORY
---------
In addition to the stated Exhibit B Territories of authorization by county
Panasonic also authorizes All Communications, Inc. to sell the Digital Business
System and related equipment to the following National Accounts and Government
Agencies:
1. HFS INCORPORATED
6 Sylvan Way
Parsippany, NJ 07054
HFS is the parent of the franchisors Century 21, ERA, and Coldwell Banker.
2. Department of Justice
Washington, DC
These National Accounts and Government agencies have offices located throughout
the United States. All Communications, Inc. is authorized to solicit these
individual locations and sell the Panasonic Digital Business System to them
independently.
- --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE: AUTHORIZED SIGNATURE:
/S/ Richard Reiss, Pres. /S/ [SIGNATURE]
- ------------------------- --------------------------------
DEALER Panasonic Communications & Systems Company
Division of Matsushita Electric Corp. of
America
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
EFFECTIVE DATE: January 1, 1997
Panasonic
Note: The effective date of this supersedes
all prior dated Exhibits.
-------------------------------------------------
All Communications Inc.
------------------------
DEALER NAME
1450 Route 22 West Ste. 103
----------------------------
ADDRESS
Mountainside, NJ 07092
----------------------
CITY, STATE, ZIP
EXHIBIT C
---------
SALES AND SERVICE LOCATIONS
---------------------------
1. 521 5th Ave. 29th Floor NY, NY 10175
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AUTHORIZED SIGNATURE: AUTHORIZED SIGNATURE:
/S/ Richard Reiss, Pres. /S/ [SIGNATURE]
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DEALER Panasonic Communications & Systems Company
Division of Matsushita Electric Corp. of
America
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Reseller Agreement
Page 1 of 8
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1996 RESELLER AGREEMENT
SONY BUSINESS AND PROFESSIONAL PRODUCTS GROUP
SONY ELECTRONICS INC.
ARTICLE I PARTIES TO THIS AGREEMENT
This Agreement is entered into and is effective as of the first day of April,
1996 ('Effective Date') by and between:
<TABLE>
<S> <C> <C>
Sony Business and Professional Products Group All Communications Corporation
Sony Electronics Inc. and DBA:
3 Paragon Drive 1450 Route 22 West
Montvale, New Jersey 07645-1735 Suite 103
Mountainside, NJ 07092
(hereinafter referred to as the 'Division') (hereinafter referred to as the 'Reseller')
</TABLE>
ARTICLE II PREMISES OF THIS AGREEMENT
WHEREAS, the Division is engaged in the sale and distribution (or, in the case
of software, license) throughout the United States of various electronic
products, related accessories and software and, in addition to its own marketing
efforts, desires to secure the facilities of persons or firms capable of selling
such items on a non-exclusive basis in the United States subject to the terms
and conditions of this Agreement; and
WHEREAS, the Reseller desires and is willing to sell (or, in the case of
software, license) such products, accessories and software and represents that
it is capable of providing the necessary facilities therefor.
NOW THEREFORE, by reason of the foregoing premises and in consideration of the
mutual covenants hereinafter set forth, the parties agree as follows.
ARTICLE III THE TERM AND DEFINITIONS
(a) Term: This Agreement shall commence as of the Effective Date and expire on
March 31, 1997 (the 'Term') unless earlier terminated in accordance with Section
11.0 of Article IV.
(b) Products: The term 'Product(s)' refer(s) to those products, accessories and
software of the Division which the Reseller is authorized to purchase and resell
(or, in the case of software, license) pursuant to each Schedule of this
Agreement.
(c) Schedules: Each Schedule of this Agreement identifies those Products which
the Reseller is authorized to purchase and resell (or, in the case of software,
license), and contains terms and conditions regarding those Products which may
be in addition to or different from the General Terms and conditions set forth
in Article IV. The Customers, the Territory and other requirements may vary from
Schedule to Schedule. The following Schedules are attached to and incorporated
in this Agreement:
VIDEOCONFERENCING SYSTEMS ROLLABOUT
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Reseller Agreement
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(d) GENERAL DEFINITIONS:
The term 'Business Location' refers to the Reseller's address in Article I above
to which all communications including bulletins and notices hereunder are sent
and such other locations as provided in any incorporated Schedule.
The term 'Customer(s)' refer(s) to those third parties to whom the Reseller is
authorized to resell Products pursuant to the Customer definition set forth in
each Schedule.
The term 'Sale' or 'Resale' (in any tense or form) whenever used in this
Agreement shall mean license in the case of software Products.
The term 'Territory' refers to the geographical area identified in each
Schedule. In any Schedule, a smaller geographical area may also be designated as
a 'Primary Area of Responsibility' to which additional obligations may be
related.
ARTICLE IV GENERAL TERMS AND CONDITIONS
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SECTION 1.0: APPOINTMENT
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1.1 APPOINTMENT: The Division hereby appoints the Reseller for the Term hereof,
on a non-exclusive basis, to sell and promote the sale of the Products to the
Customers in the Territory, subject to the terms and conditions of this
Agreement and any additional and/or different terms and conditions set forth in
each Schedule. The Division may, in its sole discretion, appoint additional
resellers and/or other types of resellers in the Territory and/or sell the
Products directly or indirectly to the Customers.
1.2 STATUS AS INDEPENDENT CONTRACTOR: The relationship establishment between the
Division and the Reseller by this Agreement is that of a vendor to its vendee
and nothing herein contained shall be deemed to establish or otherwise create a
relationship of principal and agent between the Division and the Reseller. The
Reseller represents that it is an independent contractor who will not be deemed
an agent of the Division for any purpose whatsoever and neither the Reseller nor
any of it agents or employees will have any right or authority to assume or
create any obligation of any kind, whether express or implied, on behalf of the
Division. This Agreement is not a franchise agreement and does not create a
franchise relationship between the parties and if any provision of this
Agreement is deemed to create a franchise between the parties, then this
Agreement will be deemed null and void and will automatically terminate as if
such provision had been deemed unenforceable by a court as provided in Section
16.5 hereof.
1.3 SOLE COMPENSATION: The Reseller's sole compensation under this Agreement
shall be the proceeds it may receive, if any, on the resale of the Products
pursuant hereto. The Reseller represents that the Division has not required the
Reseller to pay nor has the Reseller paid any fee as a condition of or in
connection with entering into this Agreement.
1.4 ACCESS AND AUDIT: In order to verify the Reseller's compliance with this
Agreement, the Reseller shall give the Division reasonable access to the
Reseller's facilities during normal business hours to make inspections of the
Reseller's premises and to audit the books and records of the Reseller relating
to the Products purchased and/or serviced by the Reseller, including the right
to make copies of or abstracts from such books and records.
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SECTION 2.0: GENERAL RESELLER PERFORMANCE REQUIREMENTS
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During the Term, the Reseller shall:
(a) use its best efforts to support, promote and increase sales of the
Products in accordance with this Agreement and any applicable Schedules;
(b) only promote and sell the Products to the Customers located within
the Territory;
(c) NOT, WITHOUT THE DIVISION'S PRIOR EXPRESS WRITTEN PERMISSION,
KNOWINGLY SELL OR OTHERWISE PARTICIPATE IN THE SELLING OF THE PRODUCTS TO
ANY THIRD PARTY WHERE THE END PRODUCT IN WHICH THE PRODUCTS MAY BE
INCORPORATED COULD BE TERMED OR CLASSIFIED AS MEDICAL LIFE SUPPORT OR
AIRCRAFT INSTRUMENTATION;
(d) purchase the Products in sufficient volume to satisfy the Minimum
Purchase Requirement ('MPR'), if any, set forth in a Schedule. Any such MPR
will be calculated on the basis of the Division's aggregate net invoice
prices for the Products purchased by the Reseller and covered by that
Schedule. Purchases of test equipment or parts for service of the Products
do not count towards satisfaction of any MPR. No MPR shall be construed as
a take or pay obligation, but the Reseller's achievement of same is
one criteria which the Division will use to determine if a new agreement
or Schedule will be offered to the Reseller after the expiration or
termination hereof;
(e) maintain an adequate staff of sales personnel to meet the
Reseller's obligations hereunder and/or pursuant to any Schedule who are
trained in and capable of the effective demonstration, use and sale of the
Products;
(f) immediately forward to the Division information concerning all
complaints or claims of damage relating to any of the Products that may
come to the Reseller's attention;
(g) maintain, for purposes of warranty verification and/or product
safety notifications, during the Term and for four (4) years thereafter,
a record of its sales of the Products, including at least the Customer's
name and addresses and the Product's model, serial number and date of sale;
(h) at all times conduct its business in a manner that will reflect
favorably on the Products and their quality image and reputation and on the
good name, goodwill and reputation of the Division, and not by itself or
with others participate in any illegal, deceptive, misleading or unethical
practices, or unfair competitive practices, including without limitation,
product disparagement and bait and switch practices, or any other practices
that are or might be detrimental to the Division or any subsidiary or
parent Company;
(i) obtain and maintain in full force and effect all necessary
licenses, permits and other authorization required by law to operate its
busines;
(j) take all reasonable, prompt and efficient action to assist the
Division in resolving all complaints from the Customers concerning the
Products or the manner or method by which they were sold, delivered or
serviced (if the Reseller services the Products) by the Reseller; and
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Reseller Agreement
Page 3 of 8
(k) unless otherwise consented to by the Division in writing, which consent
shall not be unreasonably withheld, safeguard and hold in trust and confidence
and neither directly or indirectly disclose to any third party or use (except
for the purposes designated by the Division) during the Term hereof and for
one(1) year thereafter any of the Division's proprietary, business, pricing
and/or confidential technical information (i) disclosed by the Division, its
agents or employees to the Reseller hereunder: or (ii) obtained or learned
from the Division as a result of activities of the Division and the Reseller
hereunder.
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SECTION 3.0: SALE OF PRODUCTS
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3.1 TERMS OF SALE: The Division shall sell the Products to the Reseller upon the
terms and conditions set forth in this Agreement and the applicable Schedules
and upon such other and additional terms and conditions as the Division, from
time to time, may stipulate upon notice.
3.2 PRICES: The Division may change the prices of any of the Products. Any new
prices shall be effective on the date set forth in the announcement issued by
the Division.
3.3 RESALE OF THE PRODUCTS: The Reseller shall unilaterally establish its own
resale prices and terms with respect to the Products. The Division and its
employees will neither have authority to instruct the Reseller as to what such
prices must be, nor to interfere with the Reseller's independent establishment
of such prices.
3.4 ALLOCATIONS: The Division may, in its sole discretion, allocate its
inventory of the Products.
3.5 AVAILABILITY/CHANGES IN PRODUCTS: The Division may, in its sole discretion,
discontinue the sale of, or effect changes to, any of the Products or
parts/accessories thereto (except where continued availability is required by
law) without advance notice thereof to the Reseller and without obligation to
modify or change any Product previously delivered to or supply new Product in
accordance with earlier specifications.
3.6 TAXES: The Reseller shall bear the cost of any taxes (exclusive of taxes
based on Sony Electronics Inc.'s net income), levies, duties and fees of any
kind, nature or description whatsoever applicable to any of the Products
supplied by the Division to the Reseller. The Reseller shall pay to the Division
all such sums upon demand unless the Reseller provides the Division, at the time
of the submission of its purchase orders, tax exemption certificates or licenses
acceptable to the appropriate taxing authorities.
3.7 PRODUCT RETURNS; RESTOCKING CHARGE: If the Reseller wishes to return A Class
Products to the Division, and the Division agrees thereto in advance in writing,
then the Reseller may do so freight prepaid for credit less a restocking fee
equal to fifteen percent (15%) of the original net invoice price. THE TERM 'A
CLASS PRODUCTS' SHALL MEAN ONLY NEW AND UNUSED PRODUCTS WHICH ARE EITHER IN THE
ORIGINAL FACTORY SEALED CARTONS, OR IN OPEN CARTOONS WITH ALL FACTORY PACKAGING.
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SECTION 4.0: PURCHASE ORDERS; SHIPMENTS
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4.1 PREVAILING TERMS: If any purchase orders, acceptances or other documents are
used by the Reseller in connection with the purchase of the Products, then,
notwithstanding any provisions therein contained to the contrary, same shall be
governed by the provisions of this Agreement, and any terms thereof which are
inconsistent, different from, or in addition to the provisions of this Agreement
shall be deemed null and void.
4.2 PURCHASE ORDERS: The Reseller's orders are subject to acceptance by the
Division in writing or by shipment of the Products and will be used by the
Division only for its internal bookkeeping to identify the Products, quantities
and delivery dates requested by the Reseller. The Division may, in its sole
discretion, cancel any of the Reseller's orders accepted by the Division or stop
the shipment thereof if the Reseller fails to meet payment schedules or credit
requirements establishments by the Division, or if the Reseller is in default of
this Agreement.
4.3 SHIPMENTS: The Reseller shall bear all costs and expenses incident to the
Division's shipment of the Products to it, except in the case of any shipment
which qualifies for prepaid freight under the Division's program then in effect.
The Division shall select the method of shipment and the carrier.
4.4 TITLE & RISK OF LOSS: Title to all the Products sold by the Division to the
Reseller shall pass upon the Division's delivery thereof to the carrier. Risk of
loss or damage to any of the Products in transit, without regard to whether the
Division paid the shipping charges therefor or whether any third party is
designated as consignee thereof, is the Reseller's, whose responsibility it will
be to file claims with the carrier.
4.5 TIME OF DELIVERY: Delivery dates set forth in any Reseller order or the
Division's confirmation thereof shall be deemed to be estimated.
4.6 ADJUSTMENTS: If the prices at which the Products are sold represent a price
which has been reduced based on a representation by the Reseller that the
Reseller would make certain volume purchases, and the Reseller fails to make
such volume purchases, then the Division may, in its sole discretion, adjust the
prices to the otherwise prevailing price(s) for the number of the Products
actually purchased, and the Reseller will pay the Division such price
differential promptly upon receipt of the Division's invoice therefor.
4.7 SEPARATE TRANSACTION: Each Reseller order shall be deemed a separate
transaction and each shipment of the Product will constitute a separate sale,
obligating the Reseller to pay therefor, whether such shipment in whole or
partial fulfillment of an order.
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SECTION 5.0: CREDIT, INDEBTEDNESS
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5.1 MAINTENANCE OF CREDIT LINE: The Reseller shall maintain a credit line
sufficient to support its purchases of the Products and to pay any indebtedness
to the Division when due. The Division may, in its sole discretion, either
generally or with respect to any specific Reseller order vary, change or limit
the amount or duration of credit allowed to the Reseller. The Reseller will make
available to the Division such statements of its financial condition as the
Division may, from time to time, reasonably request.
5.2 UNAUTHORIZED DEDUCTIONS/STOPPED PAYMENTS: The Reseller shall not make any
deductions of any kind from any payments due the Division unless the Reseller
shall have received an official credit memorandum from the Division authorizing
such deduction. The Reseller will not stop payment on any check or other
instrument of payment issued to the Division.
5.3 DEFAULT: ACCELERATION OF OBLIGATIONS AND CHARGE FOR LATE PAYMENT: The
Reseller's payment for the Products shall be considered past due if it is not
received by the Division by the due date shown on the Division's invoice. If any
payment is past due, then in addition to any other remedy available to the
Division under this Agreement or at law therefore, the Division may: (a)
declare, by notice to the Reseller, all of the liabilities and obligations of
the Reseller to the Division, whether then due or not, to be immediately due
unless the past due payment is received by the time specified in the notice;
and/or (b) impose a monthly finance charge on all amounts past due or declared
due by (a) above equal to the lesser of one and one half percent (1 1/2%) or the
maximum allowable by law; and (c) charge Reseller for the Division's reasonable
expenses of the collection therefor, including, but not limited to, attorneys'
and experts' fees and court costs.
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Reseller Agreement
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SECTION 6.0: SOFTWARE OWNERSHIP
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6.1 RETENTION OF RIGHTS: The Reseller acknowledges that the Division or, in
applicable instances, the Division's licensor, retains the entire right, title
and interest to the intellectual property (including, without limitation, all
copyrights) related to any item of software and related documentation which the
Division provides to the Reseller. The Division shall permit the Reseller to use
such software and documentation internally or to distribute such software and
documentation to the Customers for the Products, and the Reseller will use such
software and documentation or distribute such software and documentation only to
the Customers, on such terms and conditions as the Division may from time to
time impose. The Reseller shall not itself, or permit others to, decompile,
disassemble, reverse engineer or otherwise attempt to derive the source code of
any such software; and the Reseller shall not itself, or permit others to,
remove, obscure or alter any copyright, trade secret, trademark, patent, or
other proprietary rights notice affixed to or displayed on any such software or
documentation, or affixed to or printed on any of its factory packaging. Nothing
contained herein shall: (a) prohibit the Reseller from setting a price to its
Customers for software and documentation where copies of the software and
documentation are sold to the Reseller as one of the Products; or, (b) allow the
Reseller to make copies of the software or documentation.
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SECTION 7.0: TRADEMARKS/TRADE NAMES
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The Division does not grant and the Reseller acknowledges that it shall have no
right to or interest in any trademarks and/or trade names owned, used or claimed
now or in the future by Sony Electronics Inc., Sony Corporation of America, Sony
Corporation (Japan) or the subsidiary or affiliate companies of said
corporations.
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SECTION 8.0: INSPECTION/ACCEPTANCE -- LIMITED WARRANTIES/DISCLAIMERS
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8.1 INSPECTION/ACCEPTANCE: Within twenty (20) days of the Reseller's receipt of
any of the Products under this Agreement, the Reseller shall inspect same and
furnish the Division with any claim it may have for shortages, incorrect
materials, invoicing mistakes, or defects in material, workmanship or failure to
meet specifications. The Reseller's failure to make such a claim within that
period will be deemed to constitute the Reseller's acceptance of the Products
and leave the Reseller with only those warranty-related remedies otherwise
provided in this Section 8.0. In the case of any claim involving shortages or
invoicing errors, the Division will, upon confirmation of the claim, promptly
furnish the Reseller with a credit memorandum. In the case of any claim
involving incorrect materials, defects in material or workmanship or failure to
meet specifications, the Reseller must return the affected Products to the
Division and the Division will, upon confirmation of the claim, promptly furnish
the Reseller with a credit memorandum for the Products returned and subject to
availability ship the Reseller replacement Products with an invoice therefor.
8.2 LIMITED WARRANTY: THE DIVISION'S WARRANTY FOR THE PRODUCTS SHALL BE AS SET
FORTH IN THE DIVISION'S LIMITED WARRANTY CARD ENCLOSED WITH OR ACCOMPANYING THE
PRODUCT. IF ANY PRODUCTS ARE NOT ACCOMPANIED BY WARRANTY CARDS, THE DIVISION'S
THEN CURRENT WARRANTY APPLICABLE TO THOSE PRODUCTS WILL APPLY. UPON THE REQUEST
OF ANY CUSTOMER, THE RESELLER SHALL PROVIDE A COPY OF THE APPROPRIATE LIMITED
WARRANTY CARD TO SUCH CUSTOMER.
8.3 COMPLIANCE: The Reseller shall at all times comply with applicable federal,
state and local laws, regulations, and ordinances applicable to the sale of the
Products, including but not limited, to the delivery of warranties to Customers.
8.4 DISCLAIMER OF WARRANTY: THE RESELLER ACKNOWLEDGES THAT EXCEPT FOR THE
WARRANTY PROVIDED IN THE DIVISION'S LIMITED WARRANTY CARD ENCLOSED WITH OR
ACCOMPANYING THE PRODUCTS, NO WARRANTIES WITH REGARD TO THE PRODUCTS, WHETHER OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, ARE CREATED BY
THIS AGREEMENT. THE DIVISION HEREBY DISCLAIMS AND EXCLUDES ALL IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ANY WARRANTY
AGAINST INFRINGEMENT THAT MAY BE PROVIDED IN SECTION 2-312(3) OF THE UNIFORM
COMMERCIAL CODE AND/OR IN ANY OTHER COMPARABLE STATE STATUTE IS EXPRESSLY
DISCLAIMED.
8.5 COMPATIBILITY: The Division hereby disclaims any representations or warranty
that the Products are compatible with any combination of non-Sony products the
Reseller and/or its Customer may choose to connect to the Products. It shall be
the Reseller's responsibility to determine for itself and the Customers the
suitability and compatibility of the Products in each instance.
8.6 PROHIBITED REPRESENTATIONS: Other than the provision of a copy of the
Division's Limited Warranty Card to the Customers as provided in Section 8.2,
the Reseller shall make no warranties or representations on behalf of the
Division to the Customers or to the trade with respect to any of the Products,
unless expressly approved in writing by the Division.
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SECTION 9.0: INDEMNITY BY THE RESELLER
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THE RESELLER SHALL INDEMNIFY AND HOLD HARMLESS THE DIVISION, SONY ELECTRONICS
INC., ITS PARENT COMPANY, SONY CORPORATION OF AMERICA, AND THE SUBSIDIARY AND
AFFILIATED COMPANIES OF EACH AND THEIR RESPECTIVE OFFICERS, DIRECTORS AND
EMPLOYEES FROM AND AGAINST ANY CLAIMS, SUITS, LIABILITIES, LOSSES, FINES,
PENALTIES, DAMAGES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' AND EXPERTS'
FEES AND COSTS) ARISING FROM OR INCIDENT TO THE RESELLER'S BREACH OF ITS
OBLIGATIONS UNDER SECTIONS 1.2, 2.0(c), 2.0(h) OR 8.6 HEREOF.
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SECTION 10.0: TIME FOR BRINGING SUIT
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All causes of action by the Reseller against the Division must be brought within
two (2) years following the date on which the event which first gave rise to the
cause of action occurred or within two (2) years following expiration or
termination of this Agreement, whichever is earlier.
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SECTION 11.0: TERMINATION OF AGREEMENT
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11.1 TERMINATION WITHOUT CAUSE: This Agreement may be terminated without cause
by either party upon sixty (60) days prior written notice to the other, in which
event this Agreement shall terminate on the date set forth in such notice.
11.2 TERMINATION FOR CAUSE: The Division may immediately terminate this
Agreement by giving the Reseller notice if the Reseller:
(A) DEFAULTS IN THE PERFORMANCE OF ANY OF ITS OBLIGATIONS UNDER THE TERMS OR
CONDITIONS OF THIS AGREEMENT WHICH DEFAULT IS NOT REMEDIED BY THE RESELLER TO
THE DIVISION'S SATISFACTION IN ITS SOLE DISCRETION WITHIN TEN (10) DAYS AFTER
THE DIVISION GIVES THE RESELLER NOTICE THEREOF; OR,
(B) DEFAULTS IN THE PERFORMANCE OF ANY OF ITS OBLIGATIONS UNDER THE TERMS AND
CONDITIONS OF THIS AGREEMENT, WHICH DEFAULT BY ITS NATURE, CANNOT BE REMEDIED BY
THE RESELLER; OR,
(C) ISSUES ANY PRESS RELEASE, ADVERTISING, BROCHURE OR OTHER RELEASE OF
INFORMATION TO ANY OF THE CUSTOMERS,
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RESELLER AGREEMENT
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THE TRADE OR THE GENERAL PUBLIC CONCERNING OR IN ANY WAY REFERRING TO THIS
AGREEMENT OR ANY OTHER AGREEMENT OR RELATIONSHIP WITH THE DIVISION AND/OR SONY
ELECTRONICS INC. WITHOUT THE PRIOR WRITTEN APPROVAL OF THE DIVISION, WHICH
APPROVAL OR REJECTION SHALL BE GIVEN IN THE DIVISION'S SOLE DISCRETION; OR,
(D) ENGAGES DIRECTLY OR INDIRECTLY IN ANY ATTEMPT OR SCHEME TO DEFRAUD THE
DIVISION; OR,
(E) SELLS OR TRANSFERS THE PRODUCTS TO ANY PARTY OTHER THAN CUSTOMERS OR SELLS
THE PRODUCTS OUTSIDE OF THE TERRITORY SPECIFIED IN THE SCHEDULE FOR SUCH
PRODUCTS; OR,
(F) IS UNABLE TO PAY ANY AND/OR ALL OF ITS DEBTS AS THEY BECOME DUE OR BECOMES
INSOLVENT OR CEASES TO PAY ANY AND/OR ALL OF ITS DEBTS AS THEY MATURE IN THE
ORDINARY COURSE OF BUSINESS, OR MAKES AN ASSIGNMENT FOR THE BENEFIT OF ITS
CREDITORS; OR,
(G) IS LIQUIDATED OR DISSOLVED OR IF ANY PROCEEDINGS ARE COMMENCED BY, FOR OR
AGAINST IT UNDER ANY BANKRUPTCY, INSOLVENCY, REORGANIZATION OF DEBTS OR DEBTORS
RELIEF LAW, OR LAW PROVIDING FOR THE APPOINTMENT OF A RECEIVER OR TRUSTEE IN
BANKRUPTCY; OR,
(H) CEASES TO CONDUCT ITS BUSINESS IN THE ORDINARY COURSE BY, FOR EXAMPLE,
LAYING OFF A LARGE PART OF ITS STAFF OR SUBSTANTIALLY CURTAILING OPERATING HOURS
OR TELEPHONE SERVICE.
The Division may also immediately terminate this Agreement by notice: 1)
pursuant to Sections 11.5; or 2) upon the occurrence of, or the Reseller's
failure to give notice of, any of the events referenced in Section 14.1(a)-(c).
This Agreement shall terminate on the date set forth in any notice issued
pursuant to this Section 11.2.
11.3 ADDITIONAL REMEDIES FOR BREACH: If the Reseller is in breach or in default
hereof, the Division may, in additional to any other remedies available to it
hereunder or allowed by law thereof: (1) suspend doing business with the
Reseller under all or any of the Schedules or, (2) terminate one or more of the
Schedules; or, (3) curtail or suspend the Reseller's privileges under any
promotional incentives, and/or suspend or terminate the Reseller's participation
in other sales programs of the Division.
11.4 EFFECT OF TERMINATION: Upon the termination of this Agreement, Sony
Electronics Inc. may, in its sole discretion, upon notice to the Reseller,
immediately terminate any other agreements which may then be in effect between
the Division and/or Sony Electronics Inc. and the Reseller. Such right of
termination shall be in addition to and, to the extent necessary, supersede any
right of termination which may be provided for in any of such other agreements.
11.5 SET-OFF: If the Reseller defaults with respect to this Agreement or any
other agreement(s) with the Division or any other division of Sony Electronics
Inc. including, but not limited to, the Reseller's failure to pay any monies
when due either pursuant to this Agreement or any other such agreement, then the
Division may, in its sole discretion, set off against any monies due and owing
the Reseller such sum or sums of money due and owing from the Reseller to the
Division and/or Sony Electronics Inc. pursuant to this Agreement or such other
agreement(s), and/or to terminate this Agreement.
11.6 CESSATION OF REPRESENTATION AS AUTHORIZED RESELLER: Upon the expiration or
termination of this Agreement or the termination of any Schedule hereof, the
Reseller shall immediately remove and discontinue all displays, signs and decals
of the Division's trademarks and service marks related to the affected Products,
cease to represent itself as an authorized Reseller of the Division with respect
to those Products and shall otherwise desist from all conduct or representations
which might lead the public to believe that the Reseller continues to be
authorized by the Division to sell those Products; provided, however, that the
Reseller may sell, in accordance with the provisions of this Agreement, those
Products which shall be in its inventory on the date of any such termination or
expiration and which the Division shall not have repurchased pursuant to Section
12.0.
11.7 SURVIVING OBLIGATIONS AND LIMITATIONS: Neither the expiration nor
termination of this Agreement nor the termination of any of the agreements
referred to in this Section shall release either party from the obligation to
pay any monies that may be owing to the other party or operate to discharge any
liability that had been incurred by either party prior to any such expiration or
termination.
11.8 ORDER PROCEDURE AFTER NOTICE OF TERMINATION: During the period between the
Division giving the Reseller notice of this Agreement's termination and the
effective date of such termination, all Reseller orders not then fulfilled and
all new Reseller orders for the Products which are accepted by the Division will
be shipped to the Reseller only on a cash in advance basis.
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SECTION 12.0: DIVISON'S OPTION TO REPURCHASE PRODUCTS
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Upon the expiration or termination of this Agreement or the termination of any
Schedule, the Division may repurchase from the Reseller any of the affected A
Class Products (as defined in Section 3.7) remaining in the Reseller's inventory
at the lesser of the then prevailing price or the price paid therefor by the
Reseller. To enable the Division to determine if it will repurchase any of such
Products the Reseller shall, within five (5) days after the effective date of
such expiration or termination, submit to the Division a written schedule
listing all such Products remaining in the Reseller's inventory by model, and
serial number. Within a reasonable period of time after the Division's receipt
of such schedule the Reseller shall permit the Division to inspect such
inventory; and within ten (10) days after completion of such inspection, the
Division shall give the Reseller notice of the Products it elects to purchase.
Upon receipt of the Division's notice, the Reseller shall deliver the specified
Products freight prepaid to a carrier designated by the Division. Payment of the
repurchase price will be made to the Reseller either by: (1) the issuance of a
credit against any indebtedness of the Reseller to the Division or Sony
Electronics Inc.; or (2) if the repurchase price exceeds such indebtedness, by
payment of such excess to the Reseller within thirty (30) days after the
delivery of the Products to the Division.
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SECTION 13.0: SERVICE
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If the Reseller is obligated to perform warranty and/or out-of-warranty service
for any of the Products pursuant to the provisions of any Schedule, the Reseller
shall perform such service in accordance with the Division's Dealer Service
Policy ('DSP') then in effect for such Products. If a Schedule does not require
the Reseller to service the Products which are the subject of that Schedule, the
Division shall perform or otherwise delegate such service, provided, however,
that the Reseller shall facilitate such service if required by and in the manner
provided in any Schedule. The Division reserves the right from time to time to
modify any DSP and any or all service procedures upon notice to the Reseller.
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SECTION 14.0: NOTICES
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14.1 CHANGE IN STATUS: The Reseller shall give the Division immediate notice in
writing of: (a) any transaction affecting the ownership of ten percent (10%) or
more of the Reseller's capital stock, or any significant portion of the
Reseller's assets, if the Reseller is a corporation; or, (b) any change in the
respective interests of the partners, if the Reseller is a partnership; or, (c)
any
<PAGE>
<PAGE>
Reseller Agreement
Page 6 of 8
transaction affecting the ownership of any part of the business, if the Reseller
is an individual proprietorship.
14.2 CHANGE OF NAME OR ADDRESS OF THE RESELLER: The Reseller shall give the
Division immediate notice of any change in the: (a) name of the Reseller; or,
(b) address of the Reseller's Business Locations; or, (c) address of the
Reseller's principal office.
14.3 METHOD OF TRANSMISSION: Any notices given under this Agreement shall be
given in writing and will be deemed to have been sufficiently given when
delivered by hand or sent by facsimile transmission (which is acknowledged by
the recipient), overnight courier service or by certified or registered mail,
postage and other charges prepaid, to the parties at the addresses first above
written or as subsequently changed by notice duly given. The date of mailing or
transmission of any written notice will be deemed the date on which such notice
is given unless otherwise specified in the notice.
- --------------------------------------------------------------------------------
SECTION 15.0: GOVERNMENT CONTRACTS AND PROGRAMS
- --------------------------------------------------------------------------------
15.1 CONTRACTS WITH THE GOVERNMENT: The Division may enter into contracts with:
1) the government of the United States of America or any of its departments,
agencies, or other instrumentalities; or, 2) any state or local government or
any of their departments, agencies or other instrumentality, to sell any or all
of the Products, including one or more General Services Administration ('GSA')
contracts. If the Reseller participates in any of the Division's GSA contracts,
such participation will be governed by a Rider G which will be attached to and
made part hereof.
15.2 GOVERNMENT CONTRACT PROVISIONS: No provision of any United States
government or state or local government contract or subcontract related thereto
shall be a part of this Agreement, and this Agreement will not be deemed an
acceptance of any government provisions that may be included or referred to in
any purchasing document received by the Division from the Reseller.
- --------------------------------------------------------------------------------
SECTION 16.0 PRODUCT LOANS
- --------------------------------------------------------------------------------
16. 1 GENERAL: If the Division elects to loan any Products or other equipment to
the Reseller, such loan(s) will be governed by the terms and conditions of this
Section unless otherwise agreed in writing signed by both parties.
16.2 LOAN CONFIRMATION: The Division shall acknowledge each loan of Products or
equipment in writing to the Reseller setting forth the particular loaned
Products and equipment, term of the loan, the address for return of the loaned
Products and equipment, the purpose of the loan, any insurance requirements and
any other pertinent requirements.
16.3 DELIVERY/LOCATION: The Division shall, at its own cost and expense, and at
its risk of loss or damage, deliver each shipment of the loaned Products and
equipment to the Reseller at the address set forth in the loan acknowledgement.
16.4 TERM: The Division shall provide the loaned Products and equipment to the
Reseller for the term stated in the loan acknowledgment. Upon the expiration or
earlier termination of any loan, the Reseller will return the loaned Products
and equipment to the Division, at its own cost and expense, and at its own risk
of loss or damage, to the location set forth in the loan acknowledgment. If the
Reseller does not return the loaned Products and equipment within three (3) days
of the expiration or earlier termination of any loan, or returns them in an
unrepairable condition, the Reseller will be deemed to have purchased them at
the price in the loan acknowledgment on the terms and conditions set forth in
this Agreement.
16.5 ACKNOWLEDGMENT: The Reseller acknowledges: (1) title to any loaned Products
and equipment is and will at all times remain in the Division's name; (2) the
loaned Products and equipment may not be transferred to any person other than
the Reseller without the prior written consent of the Division; (3) the loaned
Products and equipment may not be sold, leased, mortgaged or otherwise
hypothecated or encumbered.
16.6 DISCLAIMER OF WARRANTIES: THE DIVISION MAKES NO WARRANTIES, WHETHER
EXPRESS OR IMPLIED, WITH REGARD TO THE LOANED PRODUCTS AND EQUIPMENT. ALL
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE
HEREBY EXPRESSLY DISCLAIMED. ALL IMPLIED WARRANTIES AGAINST INFRINGEMENT ARE
HEREBY EXPRESSLY DISCLAIMED.
16.7 LICENSE: Any License Agreement enclosed in the original factory packaging
for the loaned Products and equipment will state those additional terms and
conditions of any license granted to the Reseller applicable to them.
16.8 TERMINATION: If the Reseller breaches any of the provisions of this Section
16.0 with regard to any particular loan or loans, the Division may, in addition
to its other rights or remedies hereunder or at law, terminate that loan or all
outstanding loans upon notice to the Reseller. If this Agreement is terminated
or expires, all outstanding loans will be deemed immediately terminated upon
such termination or expiration without need of further notice from the Division.
16.9 INSURANCE: If required by the Division in the loan acknowledgment, the
Reseller will obtain and maintain insurance on the loaned Products and equipment
in an amount at least as great as the price designated in the loan
acknowledgment against loss by fire, vandalism, casualty and all other hazards
normally insured under 'all risks' policies pursuant to appropriate endorsements
naming the Division as a loss payee of the proceeds thereof without deductibles
or allocations and requiring the carrier to give the Division at least thirty
(30) days' notice of cancellation, non-renewal or material change in coverage.
The Reseller will also provide the Division with a certificate or an endorsement
evidencing the existence of such insurance when such insurance is required in
the loan acknowledgement.
16.10 SECURITY INTEREST; RIGHT OF REPOSSESSION: The Reseller hereby grants the
Division a security interest in and to any loaned Products and equipment the
Reseller has been deemed to have purchased under Section 16.4 of this Agreement
and the Division will have all the rights of a secured party/creditor for and
with respect to such loaned Products and equipment including those provided
under the Uniform Commercial Code. The Reseller will execute such forms and
financing statements as the Division may request to evidence, perfect or
continue any such security interest and the Reseller hereby grants the Division
an irrevocable power of attorney to execute and file any of such forms or
statements on the Reseller's behalf if the Reseller fails to do so promptly upon
the Division's request including, but not limited to, the right of the Division
to file a copy of this Agreement, together with the loan acknowledgement, as a
financing statement. Notwithstanding Section 16.4 of this Agreement and the
preceding two sentences, the Division may elect not to treat the loaned Products
and equipment as having been sold to the Reseller, and retain its title thereto
and a right of prepossession therein. In such event, the Reseller hereby grants
the Division the right to enter peaceably upon its premises where the loaned
Products and equipment may be located and take possession thereof and the
Reseller hereby waives all claims for trespass or damage caused by such
peaceable entrance and repossession.
- --------------------------------------------------------------------------------
SECTION 17.0: GENERAL
- --------------------------------------------------------------------------------
17.1 ASSIGNMENT: The Reseller shall not assign or otherwise transfer this
Agreement or any interest or right hereunder or delegate the performance of any
of its obligations hereunder to any third party without the prior written
consent of the Division which consent may be withheld in the Division's sole
discretion. Any such attempted assignment, transfer or delegation without the
prior written consent of the Division, will be deemed null and void and result
in the immediate termination of this Agreement without necessity of any notice.
<PAGE>
<PAGE>
Reseller Agreement
Page 7 of 8
17.2 WAIVERS: Waiver by either party of any default, or either party's failure
to enforce any of the terms and conditions of this Agreement shall not in any
way affect, limit or waive such party's right thereafter to enforce and compel
strict performance of every term and conditions hereof.
17.3 LITIGATION: In the event of any litigation between the parties with respect
to this Agreement, the prevailing party (the party entitled to recover costs of
suit, at such time as all appeals have been exhausted or the time for taking
such appeals has expired) shall be entitled to recover reasonable attorneys' and
experts' fees, and costs in addition to such other relief as the court may
award.
17.4 HEADINGS: The headings of Articles and Sections in this Agreement are for
convenience and reference only, and they shall in no way define, limit, or
describe the scope of the provisions or be considered in the interpretation,
construction or enforcement hereof.
17.5 INVALIDITY: If and to the extent that any term or condition of this
Agreement is specifically determined by any court to be in whole or in part
invalid or unenforceable, then this Agreement shall be immediately terminated
upon such determination. However, such termination will not operate to discharge
either party from the obligation to pay the other party any sum due such other
party or discharge any liability that had been incurred prior thereto.
17.6 NON-EXCLUSIVENESS; REMEDIES: Any specific right or remedy provided in this
Agreement shall not be exclusive but will be cumulative of all other rights and
remedies set forth herein and allowed at law.
17.7 SURVIVAL: Sections 2.0(c), (g) and (k), 3.7, 4.6, 5.2, 5.3, 6.1, 7.0, 8.0,
9.0, 10.0, 11.4, 11.5, 11.6, 11.7, 12.0, 13.0, 15.0, 17.3, 17.5, 17.6, 17.7,
18.0, 19.0, 20.0 and 21.0 as well as any term or condition in any incorporated
Schedule or Rider G, if incorporated, where such survival is indicated in or
intended by the terms of any such provision shall survive termination or
expiration of this Agreement.
- --------------------------------------------------------------------------------
SECTION 18.0: LIMITATION ON LIABILITY
- --------------------------------------------------------------------------------
THE LIABILITY OF THE DIVISION, IF ANY, AND THE RESELLER'S SOLE AND EXCLUSIVE
REMEDY FOR DAMAGES FOR ANY CLAIM OF ANY KIND WHATSOEVER, REGARDLESS OF LEGAL
THEORY, AND WHETHER ARISING IN TORT OR CONTRACT, WITH REGARD TO THIS AGREEMENT,
REGARDLESS OF THE DELIVERY OR NON-DELIVERY OF THE PRODUCTS, OR WITH RESPECT TO
THE PRODUCTS, SHALL NOT BE GREATER THAN THE ACTUAL PURCHASE PRICE, AND ALL
TRANSPORTATION AND CUSTOMARY HANDLING CHARGES PAID FOR THE PRODUCTS WITH RESPECT
TO WHICH SUCH CLAIM IS MADE. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE
TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND. SUCH DAMAGES INCLUDE, BUT ARE NOT LIMITED TO, COMPENSATION,
REIMBURSEMENT OR DAMAGES ON ACCOUNT OF THE LOSS OF PRESENT OR PROSPECTIVE
PROFITS, EXPENDITURES, INVESTMENTS OR COMMITMENTS, WHETHER MADE IN THE
ESTABLISHMENT, DEVELOPMENT OR MAINTENANCE OF BUSINESS REPUTATION OR GOODWILL,
FOR LOSS OF DATA, COST OF SUBSTITUTE PRODUCTS, COST OF CAPITAL, AND THE CLAIMS
OF THIRD PARTIES, INCLUDING CUSTOMERS, OR FOR ANY OTHER REASON WHATSOEVER.
- --------------------------------------------------------------------------------
SECTION 19.0: FORCE MAJEURE
- --------------------------------------------------------------------------------
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY DELAY IN THE PERFORMANCE OF
ANY OF ITS OBLIGATIONS HEREUNDER DUE TO ANY CAUSE BEYOND SUCH PARTY'S REASONABLE
CONTROL OR DUE TO ACTS OF GOD, ACTS OF CIVIL OR MILITARY AUTHORITIES, FIRES,
LABOR DISTURBANCES, FLOODS, EPIDEMICS, GOVERNMENTAL RULES OR REGULATIONS, WAR,
RIOT, DELAYS IN TRANSPORTATION OR SHORTAGES IN RAW MATERIALS OR OTHER PRODUCTS.
THIS SECTION SHALL NOT RELIEVE OR RELEASE EITHER PARTY FROM ITS OBLIGATION TO
MAKE PAYMENT WHEN DUE OF ANY MONIES WHICH EITHER PARTY MAY OWE TO THE OTHER.
- --------------------------------------------------------------------------------
SECTION 20.0: GOVERNING LAW AND VENUE
- --------------------------------------------------------------------------------
THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LOCAL LAW OF THE STATE OF NEW JERSEY. THE PARTIES HEREBY CONSENT TO AND
SUBMIT TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE STATE
OF NEW JERSEY, AND ANY ACTION OR SUIT HEREUNDER WILL ONLY BE BROUGHT BY THE
PARTIES IN THE FEDERAL OR START COURT WITH APPROPRIATE JURISDICTION OVER THE
SUBJECT MATTER ESTABLISHED OR SITTING IN THAT STATE. THE PARTIES SHALL NOT RAISE
IN CONNECTION THEREWITH, AND HEREBY WAIVE ANY DEFENSES BASED UPON THE VENUE, THE
INCONVENIENCE OF THE FORUM, THE LACK OF PERSONAL JURISDICTION, THE SUFFICIENCY
OF SERVICE OF PROCESS OR THE LIKE IN ANY SUCH ACTION OR SUIT BROUGHT IN THE
STATE OF NEW JERSEY.
- --------------------------------------------------------------------------------
SECTION 21.0: WAIVER OF TRIAL BY JURY
- --------------------------------------------------------------------------------
IN THE EVENT OF ANY LITIGATION BETWEEN THE PARTIES RELATING TO OR ARISING IN ANY
WAY OUT OF THIS AGREEMENT, THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHT TO
TRIAL BY JURY.
ARTICLE V SCHEDULES
This space is intentionally left blank.
<PAGE>
<PAGE>
All Communications Corporation Article V - Videoconferencing Rollabout Products
Mountainside, NJ 07092 Page 1 of 2
------------------------------------------------------
ARTICLE V SCHEDULE
VIDEOCONFERENCING SYSTEMS ROLLABOUT PRODUCTS
1. Definition of Products and Appointment: This Schedule authorizes the
Reseller to purchase and resell the 'Videoconferencing Systems Rollabout
Products' identified in the Division's current Videoconferencing Systems
Rollabout Products Price Lists, as said Price List, from time to time, may be
amended by the Division by adding or deleting Products therefrom.
2. Definition of Customers: The Reseller will sell Videoconferencing Systems
Rollabout Products to end users only, unless otherwise agreed to in writing by
the Division.
3. Definition of Territory: The Reseller may sell Videoconferencing Systems
Rollabout Products to Customers only within the 48 continguous states of the
United States and the state of Alaska (the 'Territory'). The Reseller's Primary
Area of Responsibility for Videoconferencing Systems Rollabout Products is
described below by three-digit zip code.
Primary Area of Responsibility
070-079; 085-089; 100-117
5. Service Requirements: The Reseller hereby agrees to establish and maintain
the capability to service the Videoconferencing Systems Rollabout Products in
accordance with the Dealer Service Policy, as such Policy may be amended by the
Division, from time to time. The Reseller also agrees to provide the following
services for its Customers within the Reseller's Primary Area of Responsibility,
and for providing or coordinating these services for its Customers outside of
the Reseller's Primary Area of Responsibility: i.e., maintenance, installation,
operation/application training and support, customer inquiries, technical
assistance, trouble reporting and isolation, technical assistance and similar
customer satisfaction matters. The Reseller agrees to be the point-of-contact
for all customer inquiries. The Reseller may coordinate these services outside
of its Primary Area of Responsibility with an authorized service center as
directed by the Division.
Service Location
All Communications Corporation
1450 Route 22 West
Suite 103
Mountainside, NJ 07092
6. Minimum Purchase Requirement ('MPR'): The MPR for the Term of the Agreement
is 45 units of the PCS-5000 Rollabout Product. If the Reseller fails to purchase
at least 15 units of such Product during the first six months of this Agreement,
this Schedule shall be subject to termination.
7. Shipment and Installation: The Reseller may place orders for the
Videoconferencing Systems Rollabout Products with the 'ship-to' address of the
Customer. The Division will ship the products ordered to that address and bill
the Reseller.
If the Reseller has purchased installation services from the Division, the
Division will ship the Products to the Customer and provide the installation
services as described in the Videoconferencing Systems Rollabout Products Price
List. In that case, the Division will bill the Reseller for the Products and the
installation services.
All shipping charges will be invoiced to the Reseller in accordance with the
Division's program then in effect for prepaid freight.
8. Pricing: The Videoconferencing Systems Rollabout Products Price List sets
forth annual (i.e., for the Term) minimum quantity commitment levels and a
Reseller purchase price for each such level. The Reseller agrees with the
Division to purchase the Videoconferencing Systems Rollabout Products at the
annual minimum quantity commitment level also indicated.
Quantity Commitment Level:
50+
The Reseller shall purchase Videoconferencing Systems Rollabout Products during
the Term of this Agreement at the price set forth in the then Videoconferencing
Systems Rollabout Products Price List for the annual quantity commitment level
agreed to above. If, however, the Reseller fails to purchase during the first
six (6) months of this Agreement at least thirty-three percent (33%) of the
above agreed upon annual minimum quantity commitment level (based on the lowest
unit number in the commitment level range), then the pricing for the
Videoconferencing Systems Rollabout Products for the remainder of the Term shall
be adjusted to the pricing that corresponds to the annual minimum quantity
commitment level which equates to the Reseller's actual purchases for said six
(6) months divided by thirty-three percent (33%).
<PAGE>
<PAGE>
All Communications Corporation Article V - Videoconferencing Rollabout Products
Mountainside, NJ 07092 Page 2 of 2
9. Advertising: The Reseller shall not advertise the Videoconferencing Systems
Rollabout Products outside of the Reseller's Primary Area of Responsibility. In
addition, the Reseller will create and publish all of its advertisements
referencing the Products which are the subject of this Schedule in conformity
with the Division's Dealer Ad Kit as issued and as may be modified by the
Division, from time to time, as well as related policies issued by the Division,
from time to time. By execution of this Agreement, the Reseller acknowledges
receipt of the Division's Dealer Ad Kit.
10. Demonstration of Videoconferencing Products Rollabout Products. The Reseller
acknowledges that Videoconferencing Systems Rollabout Products are best promoted
and understood by Customers by demonstration of their operation, features and
technology. For this reason, the Reseller shall during the Term, have available
for demonstration at least two Videoconferencing Rollabout units.
<PAGE>
<PAGE>
SCHEDULE A
TRINICOM 5000 -- SYSTEM LIST PRICING & QUALITY DISCOUNT STRUCTURE
<TABLE>
<CAPTION>
MODEL NAME LIST PRICE
- ----- ---- ----------
<S> <C> <C>
PCS-5000/1 Codec/Camera/Audio/Bonding Board 19,650.00
PCS-F500 27'' Cart 1,200.00
PCS-F510 32'' Cart 2,100.00
PCS-T500 Tablet 949.00
PCS-G500 VGA Board (required for dual monitor systems) 1,350.00
PCS-D200US Document Scanner (requires PCS-K01US & PCSK01TUS) 2,200.00
PCS-MC10 IC Memory Card 549.00
PCS-R500 Regular Remote Control 229.00
PCS-R510 Button Remote Control 399.00
PCS-I500 V.35 I/F Board 649.00
PCS-K32 V.35 Cable 399.00
PCS-I520 RS-449 I/F Board 399.00
PCS-K40 RS-449 Cable 196.00
PCS-A510 Add'l Audio Unit 1,399.00
</TABLE>
2CONFER DISCOUNT STRUCTURE
- --------------------------
<TABLE>
<CAPTION>
UNIT COMMITMENT DISCOUNT OFF OF LIST PRICE
- --------------- --------------------------
<S> <C>
50+ Systems 35%
</TABLE>
COMPANY CONFIDENTIAL
REVISED 4/12/96
<PAGE>
<PAGE>
SCHEDULE B
TRINICOM 5000 -- PERIPHERAL EQUIPMENT -- RESELLER PRICING
The following peripheral equipment may be added at the prices shown below:
<TABLE>
<CAPTION>
MODEL NAME LIST PRICE RESELLER PRICE
- ----- ---- ---------- --------------
<S> <C> <C> <C>
KV-27V15Gray 27'' Monitor 750.00 526.30
KV-32S12Gray 32'' Monitor 1,050.00 691.00
YC-30EV S-Video Cable 50.00 30.00
(required for dual monitor systems)
PCS-K01US Document Scanner Cable 93.00 65.00
(required with Document Scanner)
PCS-K01TUS Document Scanner Terminator 65.00 45.00
(required with Document Scanner)
VID-P100 Object Camera (requires SYC-5 & PCS-K06//A) 3,650.00 2,575.00
SYC-5 Object Camera Video Camera 42.25 29.85
PCS-K06/A Object Camera Control Cable 24.00 16.80
PCS-K03US RJ-45 ISDN Cable (14') 17.00 12.00
PCS-K21 B&W Printer Cable 199.00 159.20
</TABLE>
Schedule B peripheral pricing is not eligible for additional discounting.
COMPANY CONFIDENTIAL
REVISED 4/12/96
<PAGE>
<PAGE>
TRINICOM 5000 - EXAMPLE USING GOLD RESELLER & LIST PRICING
- ----------------------------------------------------------
<TABLE>
<CAPTION>
EXAMPLE 1: SINGLE 27-INCH MONITOR SYSTEM
- -----------------------------------------
MODEL QTY NAME RESELLER PRICE LIST PRICE
- ----- --- ---- -------------- -----------
<S> <C> <C> <C> <C>
KV27V15 Gray 1 27" Monitor 526.30 750.00
PCS-5000/1 1 Codec/Camera/Audio/Bonding Board 12,772.50 19,650.00
PCS-F500 1 27" Cart 780.00 1,200.00
TOTAL PRICE $14,078.80 $21,600.00
<CAPTION>
EXAMPLE 2: DUAL 27-INCH MONITOR SYSTEM
- --------------------------------------
MODEL QTY NAME RESELLER PRICE LIST PRICE
- ----- --- ---- -------------- -----------
KV27V15Gray 2 27" Monitor 1,052.60 1,500.00
PCS-5000/1 1 Codec/Camera/Audio/Bonding Board 12,772.50 19,650.00
PCS-F500 2 27" Cart 1,560.00 2,400.00
PCS-G500 1 VGA Board 877.50 1,350.00
YC-30EV 1 S-Video Cable 30.00 50.00
TOTAL PRICE $16,292.60 $24,950.00
</TABLE>
<PAGE>
<PAGE>
Reseller Agreement
Page 8 of 8
ARTICLE VI INCORPORATION/ENTIRETY OF AGREEMENT
This Agreement supersedes, terminates and otherwise renders null and void any
and all prior written and/or oral agreements between the Reseller and the
Division with respect to the matters hereinabove expressly set forth, except
that nothing herein contained shall be construed as intended to relieve or
release either party from its obligation to make payment of any monies which
either party may owe to the other party. This Agreement represents and
incorporates the entire understanding of the parties hereto with respect to the
matters herein expressly set forth and each party acknowledges that there are no
warranties, representations, covenants or understandings of any kind, nature or
description whatsoever made by either party to the other, except as are herein
expressly set forth. This Agreement may be modified only be a written instrument
signed by the parties to this Agreement, which instrument makes specific
reference to this Agreement and the changes to be made hereto.
The Reseller hereby warrants and represents that the individual executing this
Agreement is duly authorized and empowered to bind the Reseller. This Agreement
shall be subject to acceptance by the Division through its execution in the
space provided below by an authorized representative only.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the dates
first above written.
SONY BUSINESS AND PROFESSIONAL PRODUCTS GROUP
A DIVISION OF
All Communications Corporation SONY ELECTRONICS INC.
- ------------------------------
(Name of Reseller)
By: [SIGNATURE] By: /s/ Douglas Rogers
---------------------------- -----------------------------------
(Authorized Signature) (Authorized Signature)
Print Name: [SIGNATURE] Print Name: Douglas Rogers
--------------------- ---------------------------
*Title: VP. Title: National Sales Manager
------------------------- --------------------------------
Date of Acceptance: 5/14/96
------------
* EXECUTION OF THIS AGREEMENT: If the Reseller is a corporation, indicate the
office of the person signing the Agreement on behalf of the corporation. If
the Reseller is a partnership, the same should be signed by a general
partner, who should so indicate by use of the word "General Partner". If
the Reseller is an individual proprietorship, the same should be indicated
by use of the title "Sole Proprietor".
<PAGE>
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, made this 2nd day of January, 1997, by and between ALL
COMMUNICATIONS CORPORATION, a duly organized and existing New Jersey corporation
having a usual place of business in 1450 RT. 22 Mountainside, New Jersey,
(hereinafter called the 'Company'), and RICHARD A. REISS of 10 Timber Acres
Road, Springfield, New Jersey (hereinafter called 'Employee').
Witnesseth: 1. EMPLOYMENT AND DUTIES. The Company hereby employs the said
Employee in the capacity of President and Chief Executive Officer and to perform
such other duties consistent with his executive status, as may be determined and
assigned to him by the Board of Directors of the Company.
2. PERFORMANCE. The Employee agrees to devote all of his time and efforts
to the performance of his duties as Chief Executive Officer of the Company and
to the performance of such other duties consistent with his executive status as
are assigned to him from time to time by the Board of Directors of the Company.
3. TERM. Except in the case of earlier termination, as hereinafter
specifically provided, the term of this contract shall be for five (5) years,
commencing on January 1, 1997.
1
<PAGE>
<PAGE>
4. COMPENSATION. For all the services to be rendered by Employee in any
capacity hereunder including services as Chief Executive Officer, Director or
any other duties assigned to him by the Board of Directors of the Company, the
Company agrees to pay Employee for the five year term of this contract as
follows:
(a) $138,000.00 for the first year;
(b) $175,000.00 for the second year;
(c) $210,000.00 for the third year; and
(d) Such compensation for the fourth and fifth year as recommended
by the Compensation Committee of the Board of Directors and approved
by the Board of Directors, but in no event less than $210,000.00 per
annum.
5. STOCK OPTION. Employee is granted an option under the Company's
Qualified Stock Option Plan for 100,000 shares of the Company's common stock.
25,974 of such shares shall be deemed an incentive option, exercisable at $3.85
per share and 74,026 of such shares shall be deemed a non-qualified option
exercisable at $3.50.
6. INSURANCE. The Company, at its expense, shall provide Employee with
family coverage in a quality medical and hospitalization insurance program. The
Company, at its expense, shall also provide Employee with disability income
insurance protection and any group life insurance that is provided for any
2
<PAGE>
<PAGE>
other executive of the Company. In addition the Company shall secure a life
insurance policy in the amount of $1,000,000.00 payable to Employee's designated
beneficiary or his estate.
7. PENSIONS AND PROFIT SHARING. The Company shall include Employee in all
Company pension and profit-sharing plans in a comparable manner as provided for
its other executives.
8. MISCELLANEOUS BENEFITS. The Company agrees to provide Employee with the
following benefits at its sole expense:
(a) A luxury automobile and all expenses including insurance, state
property taxes and maintenance.
(b) Dues and program costs for all business related
3
<PAGE>
<PAGE>
organization memberships and clubs and continuing educational programs deemed
reasonably necessary by Employee.
(c) Four weeks of paid vacation per calendar year.
(d) All expenses, including meals, lodging, transportation and
miscellaneous, for business and related travel. The Company agrees to
reimburse the Employee for said travel expenses upon written request.
(e) Disability benefits, as set forth in paragraph 15(c).
9. NON DISCLOSURE. Employee covenants and agrees with the Company that he
will not either during the term of his employment, or at any time thereafter,
disclose to anyone any confidential information concerning the business or
affairs of the Company, except as authorized by the Board of Directors or if
otherwise privileged.
10. NON-COMPETE. The Employee acknowledges that his services and
responsibilities are of particular significance to the Company and that his
position with the Company does and will continue to give him an intimate
knowledge of its business. Because of this, it is important to the Company that
the Employee be restricted from competing with the Company in the event of the
termination of his
4
<PAGE>
<PAGE>
employment. Therefore, the Employee agrees that he shall not compete directly or
indirectly with the Company or its business for a period of one (1) year
anywhere in the United States.
11. Conflict of Interest. Employee represents and warrants to Company that
he is not now under any obligation of a contractual or other nature to any
person, firm or corporation which is inconsistent or in conflict with this
agreement or which would prevent him from performing his obligation hereunder.
12. ASSIGNMENT. The performance of this agreement shall be nonassignable by
either party hereto without the prior written consent of both parties. Any
attempted assignment hereof shall in all events be null and void. The rights and
obligations of this contract shall inure to and be binding upon the parties and
their respective heirs and successors.
13. WAIVER. The waiver by either party of a breach of any provision of this
agreement shall not operate or be construed as a waiver of any subsequent breach
of this agreement.
14. PARTIAL INVALIDITY. Should any part of this contract for any reason be
declared invalid, such shall not affect the validity of any remaining portion
hereof, which remaining portion shall continue in force and effect as if this
contract had been executed with such invalid portion eliminated, and it is
hereby declared the
5
<PAGE>
<PAGE>
intention of the parties hereof that they would have executed the remaining
portion of this contract without including any such part, parts or portion which
may for any reason be hereafter declared invalid.
15. AMENDMENTS AND CHOICE OF FORUM. This agreement supercedes any and all
prior written or oral agreements between the Employee and the Company and this
agreement may not be changed except by a writing executed by each party hereto.
This agreement is executed and delivered in the State of New Jersey and shall be
construed and enforced in accordance with the laws and decisions of such state.
In the event of any litigation at any time arising hereunder it is specifically
agreed among the parties that the venue of such litigation shall be the State of
New Jersey and such venue shall be exclusive in all events unless otherwise
agreed by the parties.
16. TERMINATION. This Agreement may be terminated before its normal
expiration date as follows:
(a) By the EMPLOYEE giving of ninety days written notice to EMPLOYER.
(b)EMPLOYER may terminate this agreement upon written notice to
EMPLOYEE for cause, which said cause shall be limited to the following:
6
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<PAGE>
1) EMPLOYEE's habitual intoxification or drug addiction;
2) EMPLOYEE's being convicted of a felony involving moral
turpitude;
3) A final adjudication by a court of competent jurisdiction of
EMPLOYEE being mentally incompetent as that term is defined in
accordance with the statutes of the state of New Jersey; or
4) For EMPLOYEE's substantial or material breach of loyalty to the
EMPLOYER.
(c) EMPLOYER shall have the right to terminate this Agreement after
giving to EMPLOYEE ninety (90) days written notice of its intention to do
so, should EMPLOYEE, because of 'total and permanent disability' be unable
to perform any duties required of EMPLOYEE hereunder for a period of one
hundred twenty (120) consecutive days; the term 'total and permanent
disability' shall mean the existence of a permanent mental or physical
disability, determined by a physician in accordance with generally accepted
medical principles, which renders EMPLOYEE totally unable to perform the
7
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<PAGE>
duties of EMPLOYEE under the terms of this Agreement. In the event of
termination in accordance with the foregoing, EMPLOYEE shall continue to be
entitled to receive from EMPLOYER any and all salaries, bonuses, and benefits
for the remainder of the term of this Agreement.
(d) If EMPLOYER terminates this Agreement for any reason set forth in
paragraph 15b above EMPLOYEE shall not be entitled to any compensation
provided for herein for any remainder of the term of this Agreement.
8
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<PAGE>
17. CONTINUED COMPENSATION. In the event Employee's employment terminates
for any reason other than as provided in paragraph 16b, Company shall be obliged
to continue Employee's compensation for the entire balance of the term of this
Agreement. In addition company shall be required at Employee's request to
purchase from Employee, any or all shares of the Company owned by Employee at
the mean market price for the 30 day period prior to termination. In such event
Company shall pay Employee 20% of the purchase price in cash on delivery of the
shares and issue its secured promissory note to Employee payable in 60 equal
monthly installments with interest at the floating prime rate then charged by
the Bank of New York or other national bank servicing the Company's accounts.
Employee shall be entitled upon such termination to delivery of the insurance
policies referred to in paragraph 6.
9
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<PAGE>
In Witness Whereof, the parties hereto have signed this agreement as a
sealed instrument in the day and year first above written.
ALL COMMUNICATIONS CORPORATION
By: /S/ J. SCOTT TANSEY
--------------------
J. Scott Tansey
----------------------------------
Vice President
/S/ RICHARD REISS
-----------------
RICHARD REISS
10
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<PAGE>
EMPLOYMENT AGREEMENT
This Agreement made this 2nd day of January, 1997 between All
Communications Corporation having its principal place of business at 1450 Route
22, Mountainside, New Jersey hereinafter referred to as the "Employer" and
Joseph Scotti residing at 14 Blackberry Place, Long Valley, NJ 07853,
hereinafter referred to as the "Employee".
In consideration of the mutual promises set forth herein and for other good
and valuable consideration, the parties hereby agree as follows:
1. EMPLOYMENT.
EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE hereby accepts employment
from EMPLOYER for the period commencing January 1, 1997 ("Commencement Date")
and ending three years thereafter on December 31, 1999, specifically subject to
prior termination as herein provided.
2. DUTIES.
EMPLOYEE shall be employed by EMPLOYER as EMPLOYER's Vice President of
Telephone Sales and Marketing. The parties hereby agree as follows:
A) EMPLOYEE shall execute any and all duties required of him in
accordance with the terms of this Agreement at the principal place of
business of EMPLOYER, or at such time or other places as may be
directed by EMPLOYER; provided, however, that EMPLOYEE will be
permanently located in Union County, New Jersey.
B) EMPLOYEE agrees to render such other services to EMPLOYER of the
kind as may be from time to time required of EMPLOYEE by EMPLOYER.
3. COMPENSATION.
As compensation for services rendered by EMPLOYEE to EMPLOYER, EMPLOYER
shall pay EMPLOYEE as follows:
A) EMPLOYER shall pay EMPLOYEE the following cash sums as compensation
for EMPLOYEE's services.
1
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<PAGE>
<TABLE>
<S> <C>
1997........................................................... $104,000.00
1998........................................................... 114,000.00
1999........................................................... 124,000.00
</TABLE>
B) EMPLOYER shall pay EMPLOYEE bianually 1/2 of 1% of net sales. Net
sales shall not include taxes, transportation, commissions and fees to
non-employees or similar charges. Payment under this subparagraph (B)
shall cease upon Employee's termination of employment for any reason.
C) Any amount to which EMPLOYEE is entitled as compensation, bonus, or
any other form of compensation subject to withholding, shall be
subject to usual deductions for appropriate federal and state tax
obligations of EMPLOYEE.
4. BENEFITS.
EMPLOYER shall provide EMPLOYEE the following benefits in addition to
compensation:
A) EMPLOYEE shall in the first instance secure hospital, surgical,
medical and other health insurance through EMPLOYEE wife's insurance
coverage. In the event such health coverage shall become unavailable,
then EMPLOYER shall provide EMPLOYEE and his dependents with group
health insurance available to all employees of EMPLOYER on the same
basis.
B) EMPLOYEE shall be entitled, as of the Commencement Date of this
agreement, to an annual paid vacation leave of two weeks at full
compensation in the first and second years. For the third year of the
term of employment EMPLOYEE shall be entitled to three weeks vacation
at full compensation. Vacation time may not be accrued beyond each
year.
C) Beginning with the Commencement Date and for each consecutive
calendar month thereafter, EMPLOYEE shall be entitled to receive from
EMPLOYER the sum of four hundred dollars ($400.00) per month as
reimbursement for vehicle expense.
D) EMPLOYER shall reimburse EMPLOYEE, on a monthly basis for all
expenditures made by employee in connection with travel, entertainment
and miscellaneous expenses, provided such expenses have been incurred
by EMPLOYEE in connection with the furtherance of EMPLOYER'S business
and are substantiated in writing. EMPLOYEE shall submit documentary
evidence (such as receipts for paid bills, etc.) in form satisfactory
to EMPLOYER, which states
2
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<PAGE>
sufficient information to establish the amount, date, place, and the
character of the expenditure for any expense incurred by EMPLOYEE in
furtherance of EMPLOYER'S business.
EMPLOYER does not have any disability plan in effect at the present time.
It is EMPLOYER'S intention to effectuate a plan for the benefit of
all employees at the discretion of the EMPLOYER'S Board of Directors at
such time as the financial condition of EMPLOYER may make the implementation
of a disability plan feasible.
5. TERMINATION
This Agreement may be terminated before its normal expiration date as
follows:
A) By the EMPLOYEE giving of ninety days written notice to EMPLOYER.
B) EMPLOYER may terminate this agreement upon written notice to EMPLOYEE for
cause, which said cause shall be limited to the following:
1) EMPLOYEE'S habitual intoxication or drug addiction;
2) EMPLOYEE'S being convicted of a felony involving moral turpitude;
3) A final adjudication by a court of competent jurisdiction of
EMPLOYEE being mentally incompetent as that term is defined in
accordance with the statutes of the state of New Jersey; or
4) For EMPLOYEE'S substantial or material breach of loyalty to the
EMPLOYER.
C) This Agreement shall automatically terminate as of EMPLOYEE'S death and
all monetary obligations of EMPLOYER to EMPLOYEE as set forth herein
(exclusive of any death benefits for which EMPLOYEE'S beneficiaries are
entitled to hereunder;) shall be prorated to the date of death and paid to
EMPLOYEE's estate including but not limited to the salary, bonuses,
compensation, vehicle reimbursement, other reimbursements, insurance,
compensation and benefits.
D) EMPLOYER shall have the right to terminate this Agreement after giving to
EMPLOYEE ten (10) days written
3
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<PAGE>
notice of its intention to do so, should EMPLOYEE, because of 'total and
permanent disability' be unable to perform any duties required of EMPLOYEE
hereunder for a period of ninety (90) consecutive days; the term 'total and
permanent disability' shall mean the existence of a permanent mental or
physical disability, determined by a physician in accordance with generally
accepted medical principles, which renders EMPLOYEE totally unable to
perform the duties of EMPLOYEE under the terms of this Agreement. In the
event of termination in accordance with the foregoing, EMPLOYEE shall
continue to be entitled to receive from EMPLOYER any and all salaries,
bonuses, benefits, during the foregoing ninety (90) day period.
E) If EMPLOYER terminates this Agreement for any reason set forth in
paragraph 5B above EMPLOYEE shall not be entitled to any compensation
provided for herein for any remainder of the term of this Agreement.
7. NONDISCLOSURE COVENANT.
EMPLOYEE shall not directly or indirectly disclose or use at any time,
either following or subsequent to the term of employment as set forth in this
Agreement, any of the following that are secret or confidential unless EMPLOYEE
shall first secure the written consent of EMPLOYER: Information, knowledge, or
data of EMPLOYER whether or not obtained, acquired or developed by EMPLOYEE. On
termination of this Agreement, EMPLOYEE shall return to EMPLOYER all notes,
memorandum, notebooks, or other documents made by, compiled by or delivered to
EMPLOYEE concerning any customers, distributors, systems, products, apparatus
used, developed or investigated by EMPLOYEE during his employment, it being
agreed that same and, to the extent recognized by law all information contained
therein, are at all times the property of EMPLOYER.
8. BUSINESS COVENANT.
During the term of this Agreement, EMPLOYEE shall devote his entire
productive time, ability, and attention to the business of EMPLOYER. EMPLOYEE
shall not during normal business hours, directly or indirectly render any
services of a business, commercial or professional nature to any other person or
organization, whether for compensation or otherwise without the prior written
consent of EMPLOYER.
9. NON COMPETE
The Employee acknowledges that his services and responsibilities are of
particular significance to the Company and that his position with the Company
does and will continue to give
4
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<PAGE>
him an intimate knowledge of its business. Because of this, it is important to
the Company that the Employee be restricted from competing with the Company in
the event of the termination of his employment. Therefore, the Employee agrees
that he shall not compete directly or indirectly with the Company or its
business for a period of one (1) year anywhere in the United States.
10. NOTICES.
All notices required or permitted to be given hereunder shall be in writing
and shall be deemed to have been given if mailed by certified or registered
mail, return receipt requested, addressed to the intended recipient as follows
or such other address provided by either party to the other:
A) To EMPLOYER, 1450 Route 22, Mountainside, New Jersey, 07092 Attention:
Richard A. Reiss, President, with copy to Robert B. Kroner, Esq., 111
Northfield Avenue, West Orange, New Jersey, 07052.
B) To EMPLOYEE, 14 Blackberry Place Long Valley, New Jersey, 07853
11. INSURANCE
At the present time EMPLOYER does not have in effect any key man insurance
on the life of Richard A. Reiss or any other employee. It is EMPLOYER'S
intention to purchase such insurance on the life of Richard A. Reiss at the
discretion of EMPLOYER'S Board of Directors.
12. MISCELLANEOUS
This Agreement contains the entire agreement of the parties hereto and
shall not be modified or changed in any respect except by writing executed by
the parties hereto. This Agreement supersedes all previous Employment Agreements
between EMPLOYER and EMPLOYEE. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the state of New Jersey. Captions in
this Agreement are totally for convenience, and are not a substantive part of
this Agreement, and shall not in any manner alter or vary the interpretation or
construction of this Agreement. All of the terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their heirs, successors and personal representatives. EMPLOYEE may not assign
this Agreement.
5
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<PAGE>
In Witness Whereof the parties have executed this Agreement on the date and
year first above set forth.
ALL COMMUNICATIONS CORPORATION
/s/ Richard A. Reiss, Pres.
- --------------------------------------
RICHARD A. REISS, PRESIDENT
/s/ Joseph Scotti
- --------------------------------------
JOSEPH SCOTTI
6
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<PAGE>
EMPLOYMENT AGREEMENT
This Agreement made this 2nd day of January 1, 1997 between All
Communications Corporation having its principal place of business at 1450 Route
22, Mountainside, New Jersey hereinafter referred to as the 'EMPLOYER' and Leo
Flotron residing at 30 Happy Valley Road, Westerly, Rhode Island 02891,
hereinafter referred to as the 'EMPLOYEE'.
In consideration of the mutual promises set forth herein and for other good
and valuable consideration, the parties hereby agree as follows:
1. EMPLOYMENT.
EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE hereby accepts employment
from EMPLOYER for the period commencing January 1, 1997 ('Commencement Date')
and ending three years thereafter on December 31, 1999, specifically subject to
prior termination as herein provided.
2. EMPLOYEE shall be employed by EMPLOYER as EMPLOYER's Vice President of
Video Sales and Marketing. The parties hereby agree as follows:
A) EMPLOYEE shall execute any and all duties required of him in
accordance with the terms of this Agreement at the principal place of
business of EMPLOYER, or at such times or other places as may be directed
by EMPLOYER; provided, however, that EMPLOYEE will be permanently located
in Union County, New Jersey.
B) EMPLOYEE agrees to render such other services to EMPLOYER of the
kind as may be from time to time required of EMPLOYEE by EMPLOYER.
3. COMPENSATION.
As compensation for services rendered by EMPLOYEE to EMPLOYER, EMPLOYER
shall pay EMPLOYEE as follows:
A) EMPLOYER shall pay EMPLOYEE the following cash sums as compensation
for EMPLOYEE's services.
<TABLE>
<S> <C>
1997.................................................... $104,000.00
1998.................................................... 114,000.00
1999................................................... 124,000.00
</TABLE>
B) EMPLOYER will pay EMPLOYEE biannually 1/2 of 1% of
1
<PAGE>
<PAGE>
net sales. Net sales shall not include taxes, transportation,
commissions and fees to non-employees or similar charges. Payment under
this subparagraph (B) shall cease upon Employee's termination of employment
for any reason.
(C) Any amount to which EMPLOYEE is entitled as compensation, bonus,
or any other form of compensation subject to withholding, shall be subject
to usual deductions for appropriate federal and state tax obligations of
EMPLOYEE.
4. BENEFITS.
EMPLOYER shall provide EMPLOYEE the following benefits in addition to
compensation:
A) EMPLOYEE shall in the first instance secure hospital, surgical,
medical and other health insurance through EMPLOYEE wife's insurance
coverage. In the event such health coverage shall become unavailable, then
EMPLOYER shall provide EMPLOYEE and his dependents with group health
insurance available to all employees of EMPLOYER on the same basis.
(B) EMPLOYEE shall be entitled, as of the Commencement Date of this
agreement, to an annual paid vacation leave of two weeks at full
compensation in the first and second years. For the third year of the term
of employment EMPLOYEE shall be entitled to three weeks vacation at full
compensation. Vacation time may not be accrued beyond each year.
C) Beginning with the Commencement Date and for each consecutive
calendar month thereafter, EMPLOYEE shall be entitled to receive from
EMPLOYER the sum of four hundred dollars ($400.00) per month as
reimbursement for vehicle expense.
D) EMPLOYER shall reimburse EMPLOYEE, on a monthly basis for all
expenditures made by employee in connection with travel, entertainment and
miscellaneous expenses, provided such expenses have been incurred by
EMPLOYEE in connection with the furtherance of EMPLOYER's business and are
substantiated in writing. EMPLOYEE shall submit documentary evidence (such
as receipts for paid bills, etc.) in form satisfactory to EMPLOYER, which
states sufficient information to establish the amount, date, place, and the
character of the expenditure for any expense incurred by EMPLOYEE in
furtherance of EMPLOYER's business.
2
<PAGE>
<PAGE>
EMPLOYER does not have any disability plan in effect at the present time.
It is EMPLOYER's intention to effectuate a plan for the benefit of all employees
at the discretion of the EMPLOYER's Board of Directors at such time as the
financial condition of EMPLOYER may make the implementation of a disability plan
feasible.
5. TERMINATION.
This Agreement may be terminated before its normal expiration date as
follows:
A) By the EMPLOYEE giving of ninety days written notice to EMPLOYER.
B) EMPLOYER may terminate this agreement upon written notice to
EMPLOYEE for cause, which said cause shall be limited to the following:
1) EMPLOYEE's habitual intoxication or drug addiction;
2) EMPLOYEE's being convicted of a felony involving moral
turpitude;
3) A final adjudication by a court of competent jurisdiction of
EMPLOYEE being mentally incompetent as that term is defined in
accordance with the statutes of the state of New Jersey; or
4) For EMPLOYEE's substantial or material breach of loyalty to the
EMPLOYER.
C) This Agreement shall automatically terminate as of EMPLOYEE's death
and all monetary obligations of EMPLOYER to EMPLOYEE as set forth herein
(exclusive of any death benefits for which EMPLOYEE's beneficiaries are
entitled to hereunder;) shall be prorated to the date of death and paid to
EMPLOYEE's estate including but not limited to the salary, bonuses,
compensation, vehicle reimbursement, other reimbursements, insurance,
compensation and benefits.
D) EMPLOYER shall have the right to terminate this Agreement after
giving to EMPLOYEE ten (10) days written notice of this intention to do so,
should EMPLOYEE, because of 'total and permanent disability' be unable to
perform any duties required of EMPLOYEE hereunder for a period of ninety
(90) consecutive days; the term 'total and permanent disability shall mean
the existence of a
3
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<PAGE>
permanent mental or physical disability, determined by a physician in
accordance with generally accepted medical principles, which renders
EMPLOYEE totally unable to perform the duties of EMPLOYEE under the terms of
this Agreement. In the event of termination in accordance with the
foregoing, EMPLOYEE shall continue to be entitled to receive from EMPLOYER
any and all salaries, bonuses, benefits, during the foregoing ninety (90)
day period.
E) If EMPLOYER terminates this Agreement for any reason set forth in
paragraph 5B above EMPLOYEE shall not be entitled to any compensation
provided for herein for any remainder of the term of this Agreement.
7. NONDISCLOSURE COVENANT.
EMPLOYEE shall directly or indirectly disclose or use at any time, either
following or subsequent to the term of employment as set forth in this
Agreement, any of the following that are secret or confidential unless EMPLOYEE
shall first secure the written consent of EMPLOYER: Information, knowledge, or
data of EMPLOYER whether or not obtained, acquired or developed by EMPLOYEE. On
termination of this Agreement, EMPLOYEE shall return to EMPLOYER all notes,
memorandum, notebooks or other documents made by, compiled by or delivered to
EMPLOYEE concerning any customers, distributors, systems, products, apparatus
used, developed or investigated by EMPLOYEE during his employment, it being
agreed that same and, to the extent recognized by law all information contained
therein, are at all times the property of EMPLOYER.
8. BUSINESS COVENANT.
During the term of this Agreement, EMPLOYEE shall devote his entire
productive time, ability, and attention to the business of EMPLOYER. EMPLOYER
shall not during normal business hours, directly or indirectly render any
services of a business, commercial or professional nature to any other person or
organization, whether for compensation or otherwise without the prior writen
consent of EMPLOYER.
9. NON COMPETE
The Employee acknowledges that his services and responsibilities are of
particular significance to the Company and that his position with the Company
does and will continue to give him an intimate knowledge of its business.
Because of this, it is important to the Company that the Employee be restricted
from competing with the Company in the event that he terminates his employment.
Therefore the Employee agrees that in the event that this Agreement is
terminated by Employee pursuant to paragraph 5a
4
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<PAGE>
above he shall not compete directly or indirectly with the Company or its
business anywhere in the United States for a period of 1 year after the
termination of his employment, but in no event shall this restriction continue
after December 31, 1999.
10. NOTICES.
All notices required or permitted to be given hereunder shall be in writing
and shall be deemed to have been given if mailed by certified or registered
mail, return receipt requested, addressed to the intended recipient as follows
or such other address provided by either party to the other:
A) To EMPLOYER, 1450 Route 22, Mountainside, New Jersey, 07092
Attention: Richard A. Reiss, President, with copy to Robert B. Kroner, Esq,
111 Northfield Avenue, West Orange, New Jersey, 07052.
B) To EMPLOYEE, 180 Riverside Drive, Apartment 2D, New York, New York
10024.
11. INSURANCE
At the present time EMPLOYER does not have in effect any key man insurance
on the life of Richard A. Reiss or any other employee. It is EMPLOYER's
intention to purchase such insurance on the life of Richard A. Reiss at the
discretion of EMPLOYER's Board of Directors.
12. MISCELLANEOUS
This Agreement contains the entire agreement of the parties hereto and
shall not be modified or changed in any respect except by writing executed by
the parties hereto. This Agreement supersedes all previous Employment Agreements
between EMPLOYER and EMPLOYEE. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the state of New Jersey. Captions in
this Agreement are totally for convenience, and are not a substantive part of
this Agreement, and shall not in any manner alter or vary the interpretation or
construction of this Agreement. All of the terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their heirs, successors and personal representatives, EMPLOYEE may not assign
this Agreement.
5
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<PAGE>
In Witness Whereof the parties have executed this Agreement on the date and
year first above set forth.
ALL COMMUNICATIONS CORPORATION
/s/ RICHARD A. REISS
--------------------------------------
RICHARD A. REISS
PRESIDENT
/s/ LEO FLOTRON
--------------------------------------
LEO FLOTRON
6
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<PAGE>
LEASE AGREEMENT
BY AND BETWEEN:
MOUNTAIN PLAZA ASSOCIATES,
a New Jersey Partnership,
'Landlord'
- -and-
ALL COMMUNICATIONS CORPORATION,
a New Jersey Corporation,
'Tenant'
- ---------------------------------------------------
DATED: APRIL 13, 1995
- ---------------------------------------------------
LAW OFFICES
EPSTEIN, EPSTEIN, BROWN & BOSEK
A Professional Corporation
245 Green Village Road
P.O Box 901
Chatham Township, NJ 07928-0901
(201) 593-4900
April 11, 1995
#13740-352
#505
<PAGE>
<PAGE>
OFFICE LEASE AGREEMENT
BY AND BETWEEN:
MOUNTAIN PLAZA ASSOCIATES,
a New Jersey Partnership,
as 'Landlord'
-and-
ALL COMMUNICATIONS CORPORATION,
a New Jersey Corporation,
as 'Tenant'
PREMISES: 1450 Route 22
Mountainside, New Jersey 07092
DATED: APRIL 13, 1995
PREPARED BY: ROBERT K. BROWN, ESQ.
#13740-352
Disk #505
April 11, 1995
<PAGE>
<PAGE>
TABLE OF CONTENTS
1. DEMISE, PREMISES, TERM ................................................ 1
2. RENTS ................................................................. 2
3. COMPLETION OF CONSTRUCTION OF THE BUILDING AND PREPARATION OF THE
DEMISED PREMISES ...................................................... 4
4. USE ................................................................... 6
5. ADJUSTMENT OF RENTS ................................................... 6
6. REPAIRS AND MAINTENANCE ............................................... 10
7. LANDLORD'S SERVICES ................................................... 11
8. INABILITY TO PERFORM .................................................. 12
9. INSURANCE ............................................................. 13
10. LANDLORD'S ACCESS FOR FUTURE CONSTRUCTION ............................. 13
11. FIXTURES .............................................................. 14
12. GLASS ................................................................. 14
13. MISCELLANEOUS ......................................................... 15
14. FIRE AND CASUALTY ..................................................... 16
15. COMPLIANCE WITH LOCAL RULES AND REGULATIONS ........................... 17
16. TERMINATION ........................................................... 20
17. INSPECTION BY LANDLORD ................................................ 22
18. NOTICES ............................................................... 22
19. NON-WAIVER ............................................................ 22
20. RIGHT OF TENANT TO MAKE ALTERATIONS AND IMPROVEMENTS .................. 23
21. NON-LIABILITY OF LANDLORD ............................................. 24
22. CONDEMNATION .......................................................... 24
23. INCREASE OF INSURANCE RATES ........................................... 24
24. MORTGAGE PRIORITY ..................................................... 25
25. QUIET ENJOYMENT ....................................................... 25
26. SIGNS ................................................................. 25
27. CHANGES IN OR ABOUT PREMISES .......................................... 26
28. LIMIT OF LANDLORD'S LIABILITY ......................................... 26
29. LANDLORD'S REMEDIES AND EXPENSES ...................................... 26
30. LANDLORD'S RESERVED RIGHTS ............................................ 26
31. ASSIGNMENT AND SUBLETTING ............................................. 27
32. BROKERAGE ............................................................. 29
33. SECURITY .............................................................. 30
<PAGE>
<PAGE>
TABLE OF CONTENTS (Cont'd)
34. SURRENDER OF PREMISES........ ......................................... 26
35. SURVIVAL OF OBLIGATION.......... ...................................... 26
36. FINANCIAL STATEMENTS...... ............................................ 26
37. EXECUTION AND DELIVERY ................................................ 27
38. OPTION TO RENEW ....................................................... 29
Schedule 'A' - Floor Plan
Schedule 'B' - Landlord's Workletter
Schedule 'C' - Building Maintenance Specifications
Schedule 'D' - Building Rules and Regulations
Schedule 'E' - Legal Description
<PAGE>
<PAGE>
THIS LEASE AGREEMENT, made this 13th day of April 1995, between MOUNTAIN
PLAZA ASSOCIATES, a New Jersey Partnership, having an office at 14A Worlds Fair
Drive, Franklin Township, New Jersey 08873 (having a mailing address at P.O. Box
5850, Somerset, New Jersey 08875-5850), hereinafter called the 'Landlord'; and
ALL COMMUNICATIONS CORPORATION, a New Jersey corporation, having an office at 7
Lincoln Highway, Suite 224, Tower Building, Edison, New Jersey 08820,
hereinafter called the 'Tenant'.
WITNESSETH: --
1. DEMISE, PREMISES, TERM
1.1 Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
for a term of five (5) years [the 'Term' (as the same may be adjusted by Article
1.4)] to commence on the Commencement Date hereinafter defined, the premises
described in Article 1.2 in the building ('Building') situate at 1450 Route 22,
Mountainside, New Jersey 07092, which Building is located on the lands and
premises (the 'Land') described on Schedule 'E' annexed hereto and made a part
hereof.
1.2 Such premises are shown on the floor plan annexed hereto as Schedule
'A' and have a rentable area of 3,828 square feet (including 435 square feet
attributable to common area and core space). The Building has a total rentable
area of 41,531 square feet. Square footage has been computed on the basis of
outside dimensions to center line of common wall as applicable. The demised
premises, all fixtures and equipment now or hereafter attached thereto (except
items constituting Tenant's Property, as hereinafter defined) are hereinafter
referred to as the 'Demised Premises'.
1.3 The Term shall commence on the date ('Commencement Date') when a
Certificate of Occupancy permitting Tenant's use of the Demised Premises as
provided in Article 4 shall be issued.
1.4 The Term shall end ('Expiration Date'), unless sooner terminated
pursuant hereto or by law, on the last day of the
<PAGE>
<PAGE>
calendar month in which the day preceding the fifth (5th) anniversary of the
Commencement Date occurs.
1.5 Effective as of the Commencement Date and as a condition of Tenant's right
to possession, the Tenant covenants and agrees that it will furnish to the
Landlord a statement that it accepts the Demised Premises and agrees to pay rent
from the Commencement Date, which statement shall survive the Commencement Date
and the Expiration Date and, shall be in recordable form if required by the
Landlord. Tenant further agrees that it will execute, subsequent to the
Commencement Date, an estoppel letter as may be required from Landlord's
mortgagee from time to time, certifying among other things the Commencement Date
and Expiration Date of the lease, status of current rent payments by Tenant, and
any other pertinent information as may be reasonably required by such mortgagee.
1.6 In the event any act or omission of Tenant delays completion of Landlord's
work, the Commencement Date shall be deemed the date when the conditions
required would have been satisfied, but for such act or omission.
1.7 The Demised Premises shall be conclusively deemed to have been in
satisfactory condition at the Commencement Date, unless, within thirty (30)
days thereafter, Tenant notifies Landlord of any respect in which the Demised
Premises were not then in such condition.
2. RENTS
2.1 Tenant shall pay Landlord during the Term annual fixed rent ('Fixed
Rent') as follows:
(a) During the first and second years of the Term, Tenant shall pay
Fixed Rent in the amount of FORTY NINE THOUSAND FIVE HUNDRED AND 00/100
($49,500.00) DOLLARS per annum, in equal installments of FOUR THOUSAND ONE
HUNDRED TWENTY FIVE AND 00/100 ($4,125.00) DOLLARS per month.
(b) During the third, fourth and fifth years of the Term, Tenant shall
pay Fixed Rent in the amount of FIFTY SEVEN THOUSAND FOUR HUNDRED TWENTY
AND 00/100 ($57,420.00) DOLLARS
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per annum, in equal installments of FOUR THOUSAND SEVEN HUNDRED EIGHTY FIVE AND
00/100 ($4,785.00) DOLLARS per month.
(c) The foregoing monthly installments of Fixed Rent shall be payable in advance
on the first day of each month during the Term (except that the first
installment shall be paid on the execution of the lease).
2.2 Fixed Rent does not include the cost of electricity furnished to the
whole Building, including each Tenant's use of ordinary lighting and business
equipment. Such cost shall be paid for proportionately by Tenant, as required in
accordance with Article 5.
2.3 Additional rent ('Additional Rent') shall consist of all other sums
which are payable by Tenant to Landlord hereunder (for default in payment of
which Landlord shall have the same rights and remedies as for a default in the
payment of Fixed Rent).
2.4 All Fixed Rent and Additional Rent (collectively sometimes hereinafter
referred to as 'rent') shall be paid promptly, without demand, setoff or
deduction, in lawful money of the United States of America, to Landlord at its
office, or at such other place as Landlord may designate by notice to Tenant.
2.5 The rentable area set forth in Article 1.2 has been determined from the
plans for the Building. If any change in such plans modifies the rentable area
of the Demised Premises or the Building, the parties shall promptly execute and
exchange a recordable agreement, specifying the resulting modifications of the
Fixed Rent and Tenant's Proportionate Share (as hereinafter defined). If the
parties cannot agree within fifteen (15) days after Landlord notifies Tenant of
any such modification, the matter shall be determined by Stephen W. Schwartz,
A.I. A., 20 Northfield Road, West Orange, New Jersey.
2.6 If the Commencement Date occurs on a day other than the first day of a
calendar month, the Fixed Rent and Additional Rent for such partial month shall
be prorated.
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2.7 The Demised Premises include the right, in common with other
tenants of the Building, to use the common entranceways, lobby, corridors,
lavatories, stairways, elevators and parking areas without additional
charge or rent. Notwithstanding the above, there shall be four (4) assigned
parking spaces available for the use of Tenant and its employees and
invitees. Landlord shall locate two (2) of the above assigned parking
spaces adjacent to the current location of the Building's garbage dumpster.
2.8 Simultaneously with the execution hereof, the Tenant has delivered
to the Landlord the first monthly installment of Fixed Rent payable
hereunder, together with the security deposit referred to herein.
2.9 Any installment of Fixed Rent or Additional Rent accruing
hereunder, and any other sum payable hereunder by Tenant to Landlord which
is not paid prior to the tenth (10th) day of any lease month, shall bear a
late charge of ten (10%) percent of such Fixed Rent or Additional Rent, to
be paid therewith, and the failure to pay such charge shall be a default.
Such late charge shall be deemed to be Additional Rent hereunder. It is
expressly understood and agreed that the foregoing late charge is not a
penalty, but agreed upon compensation to the Landlord for administrative
costs incurred by Landlord in connection with any such late payment. In
addition, any payment of Fixed Rent or Additional Rent, which is not paid
within thirty (30) days of the date upon which it is due shall require the
payment of interest at the rate of one and one-half (1 1/2%) percent per
month, calculated from the date that such payment was due through the date
that any such payment is actually made.
3. COMPLETION OF CONSTRUCTION OF THE BUILDING AND
PREPARATION OF THE DEMISED PREMISES
3.1 The Demised Premises shall be completed as set forth in Schedule 'B'
('Landlord's Workletter') and in accordance with Tenant's floor plans ('Tenant's
Plan'). Tenant's Plan shall incorporate the work to be performed pursuant to
Landlord's Workletter and shall be limited to such work.
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3.2 Tenant shall deliver to Landlord, within two (2) weeks after
execution of this lease, a single line floor plan setting forth Tenant's
design requirements, based upon which Landlord shall then complete Tenant's
Plan hereinabove referred to. In the event Tenant's single line drawing
shall exceed the specifications set forth in Landlord's Workletter, such
excess requirements of Tenant shall be paid for at Tenant's sole cost and
expense, in accordance with a written change order to be mutually approved
by Landlord and Tenant with respect to the scope and cost of such
Workletter, which cost shall be determined on the basis of Owner's actual
cost for labor, material and fixtures, plus 10% of such aggregate cost for
profit and 10% for overhead. Landlord shall submit monthly requisitions to
Tenant as to the cost of such work, and Tenant shall pay the same within
ten (10) days after receipt.
3.3 Landlord may make any changes in Tenant's Plan which may be
necessary to comply with the requirements of governmental authorities
having jurisdiction and the applicable Board of Fire Underwriters. The work
to be performed by Landlord pursuant to Tenant's Plan and Schedule 'B' is
referred to as 'Landlord's Work'.
3.4 Anything hereinabove contained to the contrary, it is expressly
understood and agreed that the Landlord's construction obligation shall be
limited to the installation of all improvements hereinabove set forth in
Article 3. In the event that any changes or additions are required to the
work to be performed by Landlord by any governmental or quasi-governmental
entity having jurisdiction over the Tenant or its use and occupancy of the
Demised Premises, any such changes or additions shall be performed by the
Landlord at the Tenant's sole cost and expense. In addition, in the event
that the performance of any such changes or additions shall delay the
Commencement Date hereunder, the commencement date shall be established as
of the date that the Demised Premises would otherwise have been
substantially completed
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by the Landlord, but for such additional requirements which are applicable
to the Tenant.
4. USE
4.1 The Tenant shall use and occupy the Demised Premises for general
offices and for no other purpose.
4.2 In amplification of this Article 4, and not by way of limitation,
business machines, mechanical equipment, and any other installations made
by Tenant in the conduct of its business of the Demised Premises which
interfere with the reasonable use or enjoyment of other tenants or
occupants of their premises or the common area and core space of the
Building, shall be placed and maintained by Tenant, at Tenant's expense, in
settings of cork, rubber or springtype vibration eliminators sufficient to
eliminate noise or vibration.
4.3 Tenant shall not move any safe, heavy equipment or bulky matter in
or out of the Building without Landlord's written consent, which shall not
be unreasonably withheld. If the movement of such items requires special
handling, all such work shall be done in full compliance with applicable
laws, rules, codes and regulations and all other governmental requirements.
All such movements shall be made during hours designated by Landlord which
will least interfere with the normal operations of the Building, and all
damage caused by such movement shall be promptly repaired by Landlord at
Tenant's expense.
5. ADJUSTMENT OF RENTS
5.1 For all purposes hereof:
(a) 'Taxes' shall include all real estate taxes ('Base Taxes' as
hereinafter defined) assessments, sewer rents and other governmental
charges imposed upon the Building and the Land, or any governmental charges
levied in substitution thereof;
(b) 'Base Taxes' shall mean the taxes assessed against the Building
and the Land for the calendar year 1995;
(c) 'Tenant's Proportionate Share' for all lease purposes shall be
9.2%.
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5.2 If Taxes for any calendar year during the Term exceed the Base Taxes,
Tenant shall pay to Landlord Tenant's Proportionate Share of such excess ('Tax
Payment'), prorated for any portion of a calendar year not within the applicable
Term. Tenant's Tax Payment shall be paid monthly in twelve (12) equal
installments, together with the rent to be paid pursuant to Article 2 based on a
written Tax Payment estimate to be furnished by Landlord to Tenant for any
period for which Tenant shall be responsible for its Tax Payment as hereinabove
provided. Landlord shall furnish to Tenant a computation and breakdown of
Tenant's Tax Payment as soon as ascertained and Tenant shall be credited with,
or shall pay to Landlord in a lump sum, within thirty (30) days after demand any
required adjustment applicable to Tenant's Tax Payment.
5.3 If Landlord receives a refund of Taxes for any calendar year for which
Tenant has made a Tax Payment, Landlord shall repay Tenant's Proportionate Share
of the refund (not to exceed Tenant's Tax Payment in any event) after first
deducting the reasonable cost and expenses incurred by Landlord in effecting the
refund.
5.4 If at any time during the Term of this lease the method or scope of
taxation prevailing at the date of execution of this lease shall be altered,
modified or enlarged so as to cause the method of taxation to be changed, in
whole or in part, so that in substitution for the Taxes, there may be a capital
levy or other imposition based on the value of the Land and Building, or the
rents received therefrom, or some other form of assessment based in whole or in
part on some other valuation of the Landlord's real property including the
Demised Premises, then and in such event, such substituted tax or imposition
shall be payable and discharged pro rata, in accordance with the obligations set
forth in this Article 5. Such substitute tax shall be computed as if the Land
and Building of which the Demised Premises are a part were the only property
owned by the Landlord.
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5.5 No provision hereof shall be deemed to require Tenant to pay municipal,
state or federal income, capital levy, estate, succession, inheritance or
corporate franchise taxes imposed upon Landlord unless such taxes are reasonably
deemed imposed in substitution for Taxes.
5.6 For all purposes hereof:
(a) 'Operating Expenses' shall mean all expenses incurred by Landlord
in connection with the operation, maintenance, repair and replacement of
the Building, Land and all related improvements during any calendar year
including, without limitation, (i) wages and fringe benefit payments to
persons engaged in such operation, maintenance and repair; (ii) the cost of
building and cleaning supplies and service and maintenance contracts with
independent contractors; and (iii) all charges for insurance coverage on
the Land, Building, improvements and building operations, including fire
and casualty insurance in broad form, public liability insurance, rent
insurance and such other insurance reasonably required by Landlord or other
parties having an insurable interest. Landlord reserves the right to adjust
the amount of coverage from time to time as may be required to provide
adequate coverage consistent with then existing economic conditions.
Operating Expenses shall not include expenses for any capital improvements
made to the Land or Building, except that capital expenses for improvements
which result in savings of labor, energy, utility or material costs shall
be included at the lesser of the cost of such improvement amortized over
the useful life of the improvement or the annual savings in costs resulting
from the improvement. If in the Base Year, or in any Operational Year the
Building is partially unoccupied, the Operating Expenses for such year
shall consist of the Operating Expenses actually paid in such year plus
such additional amount as Landlord reasonably determines would have been
paid for Operating Expenses in such year if the Building had been fully
occupied.
(b) 'Base Year' shall mean the calendar year 1995.
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(c) The utility rate ('Utility Rate') shall be the rate in effect as
of the date of execution of this lease applied to the total consumption for
the year 1995, projected as if the Building were 100% occupied, to
established the Base Year's Operating Expense for each utility service,
excepting electric for which Tenant shall pay its proportionate share of
all electric consumption in the Building of which the Demised Premises are
a part, as hereinabove referred to in Articles 2.1(b) and 5.10(i).
(d) 'Operational Year' shall mean each calendar year during the Term
after the Base Year.
5.7 (i) The Landlord shall make a reasonable estimate of the Operating
Expenses for each Operational Year after the Base Year, and if it is estimated
that the Operating Expenses will be greater than the Operating Expenses for the
Base Year, then the Tenant shall pay as Additional Rent Tenant's Proportionate
Share of any such increase in twelve (12) equal monthly installments beginning
in January of the Operational Year in question.
(ii) At the end of each calendar year, Landlord will furnish to Tenant a
statement of actual Operating Expenses for the Operational Year just elapsed and
the parties shall adjust in a single payment from the Tenant or the Landlord, as
the case may be, any difference between the estimated and actual Operating
Expenses.
(iii) Any required payment to Landlord or Tenant as applicable shall be
made within thirty (30) days after Landlord's furnishes the required statement
of Operating Expenses.
5.8 Every statement forwarded by Landlord to Tenant pursuant to this
Article 5 shall be binding upon Tenant unless, within thirty (30) days after the
receipt of such statement, Tenant notifies Landlord, in detail, of Tenant's
objections thereto. Any unresolved dispute as to such statement shall be
determined by arbitration in accordance with the rules of the American
Arbitration Association at the equal administrative cost of Landlord and Tenant,
except that Tenant shall pay the disputed
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amount to Landlord and such sums shall be repaid or adjusted as may be required
upon resolution of the arbitration hereinabove referred to.
5.9 If the last year of the Term ends on any day other than the last day of a
calendar year, any payment due to Landlord or to Tenant by reason of any
increase or decrease in Operating Expenses shall be pro-rated as applicable
within thirty (30) days of written notice. This covenant shall survive the
expiration or termination of this lease.
5.10 (i) Tenant shall pay, as Additional Rent, Tenant's Proportionate Share of
the cost of all electrical consumption in the Building of which the Demised
Premises are a part, in connection with its use and operation. Each Tenant,
however, shall pay for any electrical services furnished in excess of the
electric to be furnished to each Tenant as hereinafter provided in Article 5.10
(ii).
(ii) If Tenant uses any electrical equipment other than ordinary business
equipment (such as typewriters, personal computers, telefax machines or normal
office copiers), the charge for the increased power consumption by Tenant shall
be determined by an independent consultant selected by Landlord, whose fee shall
be paid by Tenant. Tenant shall pay the full additional charge attributable to
the increased power consumption by Tenant. Said payment shall be made within
thirty (30) days after demand, and Landlord shall furnish a breakdown and
computation of such charged based on the report of the independent consultant.
Landlord warrants that the foregoing covenant shall be applicable to each Tenant
of the Building.
6. REPAIRS AND MAINTENANCE
6.1 During the Term, the Landlord, at its cost and expense (but subject to
the provisions of Article 5.6), shall keep in good order, safe condition and
repair the structural parts of the Building, including the walls, roof, concrete
floor, foundation and structural steel, together with plumbing, utility lines
and facilities serving the Demised Premises, except for repairs or
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maintenace occasioned by the negligence or deliberate act of Tenant, or its
agents, servants, employees and invitees, which shall be then repaired by
Landlord at the cost and expense of the Tenant.
6.2 Subject to the provisions of Article 5, the Landlord shall take good
care of and maintain, repair and replace the lawns, shrubbery, driveway,
sidewalks, entranceways, foyers, curbs and parking area on the Property, and the
Landlord shall provide snow removal.
6.3 Tenant agrees to keep the Demised Premises in as good repair as they
are at the beginning of the Term, reasonable use and wear thereof and damage by
fire or other casualty not caused by Tenant excepted. Tenant further agrees not
to damage, overload, deface or commit waste of the Demised Premises. Tenant
shall be responsible for all damage of any kind or character to the Demised
Premises, including the windows, glass (subject to the terms of Article 12
hereof), floors, walls and ceilings, caused by Tenant or by anyone using or
occupying the Demised Premises by, through or under the Tenant. Landlord shall
repair the same, and Tenant agrees to pay the costs incurred therefor to
Landlord upon demand. Anything hereinabove contained to the contrary
notwithstanding, it is expressly understood and agreed that the Tenant shall, at
its sole cost and expense, be responsible for the repair, maintenance and
replacement of any items installed by Landlord for Tenant's use as leasehold
improvements over and above the improvements furnished by Landlord, as part of
Landlord's Work.
6.4 Anything hereinabove contained to the contrary notwithstanding, Tenant
shall, at its own cost and expense, replace all light bulbs, fluorescent
fixtures and ballasts after their initial installation by Landlord at the
commencement of the lease Term.
7. LANDLORD'S SERVICES
7.1 Subject to the provisions of Article 5, the Landlord shall furnish the
services for which the Building is equipped, to the extent that then existing
facilities for such
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services permit, except that heat and air-conditioning, as required, shall be
furnished only between the hours of 8:00 A.M. and 8:00 P.M. Monday through
Friday and between 9:00 A.M. and 1:00 P.M. Saturdays (Sundays and State and
Federal holidays excluded). In the event Tenant uses the Demised Premises
beyond the regular work week, the Tenant shall be responsible for the cost of
heating and air conditioning services furnished to the Demised Premises at the
rate of $22.00 per hour. The said $22.00 per hour charge shall be increased
from time to time as may be required in the event of escalations of any
applicable utility service, so as to provide an equitable adjustment as may
be required to incorporate such increased cost. Any such increase shall be
in writing and shall incorporate information as to any applicable utility rate
increase justifying the per hour escalation cost. Tenant agrees that it will
cooperate with Landlord in metering Tenant's use of the heating and
air-conditioning system, in accordance with any energy or other use measuring
systems which Landlord may install on the Demised Premises, or in lieu thereof,
Landlord may request Tenant to keep a log of such overtime use.
7.2 Janitorial services are as referred to on Schedule 'C' annexed hereto
and made a part hereof.
8. INABILITY TO PERFORM
If by reason of strike, labor disputes, or other cause outside Landlord's
control, including but not limited to, governmental preemption in connection
with a national emergency or any rule, order or regulation of any governmental
agency, or conditions of supply and demand which are affected by war or other
emergency or acts of God, Landlord shall be unable to fulfill its obligations
under this lease or shall be unable to supply any service which Landlord is
obligated to supply, this lease and Tenant's obligation to pay rent hereunder
shall not be affected, impaired or excused. Landlord agrees, however, that it
will use all reasonable efforts to obtain restoration of services based on the
then existing circumstances.
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9. INSURANCE
9.1 The Tenant covenants and agrees that it will carry liability insurance
in the minimum amount of ONE MILLION AND 00/000 ($1,000,000.00) DOLLARS per
accident and TWO HUNDRED FIFTY THOUSAND AND 00/000 ($250,000.00) DOLLARS for
property damage. The Tenant further covenants and agrees that it will add the
Landlord as a name party insured by such policy and furnish Landlord with a
certificate of said liability insurance prior to the commencement of the Term of
this lease and thereafter on an annual basis. The Tenant agrees that such
insurance coverage will be maintained in full force and effect during the Term.
In addition, it is expressly understood and agreed that Tenant's liability
policy shall (i) name as insureds the Tenant, the Landlord, and, if Landlord
requests, the Landlord's mortgagees; (ii) be written on a form reasonably
satisfactory to Landlord by a good and solvent insurance company of recognized
standing, admitted to do business in the State of New Jersey and reasonably
satisfactory to Landlord; and (iii) provide that it will be non-cancellable,
except on thirty (30) days' prior written notice to the Landlord and, if
requested by the Landlord, the Landlord's mortgagees.
9.2 The Tenant, at its own cost and expense, shall insure its own fixtures,
equipment and contents.
9.3 The Landlord and Tenant mutually waive all right of recovery against
each other, their agents, servants or employees, for any loss, damage or injury
of any nature whatsoever to property or person for which either party is
insured. Each party shall obtain from its insurance carrier waivers of
subrogation rights under their respective policies which shall be included
within the terms of the policies and will furnish evidence of such waiver upon
request.
10. LANDLORD'S ACCESS FOR FUTURE CONSTRUCTION
The Landlord reserves the right to enter the Building, Land and Demised
Premises in connection with the construction and erection of any additions or
improvements to the Building and Land of which the Demised Premises are a part,
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provided that in the use of such right the Landlord shall not unreasonably
interfere with the use of the parking areas and driveways or the Tenant's
business.
11. FIXTURES
The Tenant is given the right and privilege of installing and removing
property, machinery, equipment and fixtures in the Demised Premises during the
Term of the lease subject to compliance with applicable rules and regulations of
governmental boards and bureaus having jurisdiction thereof, at the cost and
expense of Tenant. However, if the Tenant is in default and moves out, or is
dispossessed, and fails to remove any property, machinery, equipment and
fixtures or other property (including all computer, data and telephone cabling
and equipment which is installed within the Demised Premises, including any of
the foregoing which has been installed above the ceiling) prior to such default,
dispossess or removal, then and in that event, the said property, machinery,
equipment and fixtures or other property shall be deemed, at the option of the
Landlord, to be abandoned; or in lieu thereof, at the Landlord's option, the
Landlord may remove such property and charge the reasonable cost and expense of
removal, storage and disposal to the Tenant, together with an additional twenty
one (21%) per cent of such costs for Landlord's overhead and profit, which total
costs shall be deemed to be Additional Rent hereunder. The Tenant shall be
liable for any damage which it causes in the removal of said property from the
Demised Premises.
12. GLASS
Tenant shall be solely responsible for the maintenance, repair and
replacement of the plate glass within or forming a part of the Demised Premises,
but Tenant is herewith granted the continuing option either to insure the risk
or to self insure the same. Notwithstanding the foregoing, Tenant shall not be
responsible for the maintenance, repair and replacement of the perimeter
plateglass if such plateglass is damaged or destroyed from any cause arising
from outside the building such as from
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weather conditions or rock throwing except if the damage from outside of the
building is caused by or due to Tenant's negligence or intentional misconduct,
Tenant shall remain solely responsible for such maintenance, repair and
replacement.
13. MISCELLANEOUS
13.1 Tenant shall comply with the rules and regulations annexed hereto and
made a part hereof as Schedule 'D'. The Landlord reserves the right to adopt,
amend or repeal, from time to time, reasonable rules and regulations (the
'Rules') concerning the use and occupancy of the Demised Premises, which shall
be applicable to all tenants of the Building. Notice of the Rules, if any, shall
be given to the Tenant in writing.
13.2 The term 'Landlord', as used herein, shall mean the named Landlord
hereunder and any successor to its interest in the Building. If Landlord assigns
such interest, it shall thereupon cease to be liable for any subsequently
accruing obligations under the lease, which obligations shall be the sole
liability of the assignee of such interest.
13.3 The term 'Tenant', as used herein, shall mean the named Tenant
hereunder, any permitted assignee of this lease and/or any permitted subtenant
of all or any portion of the Demised Premises.
13.4 Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim arising under or in connection with the lease.
13.5 Any cleaning or other maintenance work caused by Tenant to be
performed in the Demised Premises shall be performed by a maintenance company
designated by Landlord.
13.6 This lease shall be governed by the Laws of the State of New Jersey.
13.7 The invalidity or unenforceability of any provision of this lease in
any instance shall have no effect upon the validity or enforceability of the
remainder of the lease or the validity or enforceability of such provision in
any other instance.
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13.8 This lease contains the entire agreement between the parties
concerning the Demised Premises, and its execution has not been induced by any
representation or warranty by Landlord or Tenant not set forth herein.
13.9 This lease may be modified and the provisions hereof may be waived
only by the signed written agreement of the parties.
13.10 This lease shall be binding upon and inure to the benefit of the
parties and their respective heirs, administrators, successors, executors and
permitted assigns and shall be deemed to run with the Land.
13.11 The captions herein are for convenience of reference only and shall
not be deemed to define, limit or describe the scope or intendment of any
provision of the lease.
13.12 The neuter gender, when used herein and in the acknowledgment
hereafter set forth, shall include all persons, firms and corporations, and
words used in the singular shall include words in the plural where the text of
the instrument so requires.
14. FIRE AND CASUALTY
14.1 In case of any damage to the Building by fire or other casualty
occurring during the Term or previous thereto, this renders the Demised
Premises wholly untenantable so that the same cannot be repaired within one
hundred eighty (180) days from the happening of such damage, then the Term
hereby created shall, at the option of the Landlord, terminate from the date of
such damage. If the Landlord elects to terminate the lease, Landlord shall
notify the Tenant of such election within thirty (30) days of the happening of
the fire or casualty, and in such event the Tenant shall immediately surrender
the Demised Premises and shall pay Fixed Rent and Additional Rent only to the
time of such damage and the Landlord may re-enter and repossess the Demised
Premises, discharged from this lease. In the event the Landlord can restore the
Demised Premises within one hundred eighty (180) days, it shall advise the
Tenant of such fact, and the lease shall remain in full
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force and effect during the period of Landlord's restoration, except that Fixed
Rent and Additional Rent shall abate, upon the happening of fire or casualty,
and while the repairs and restorations are being made, but the rent shall
recommence upon restoration of the Demised Premises and delivery of the same by
the Landlord to the Tenant. Landlord agrees that it will undertake
reconstruction and restoration of the Demised Premises with due diligence and
reasonable speed and dispatch, subject to the terms and conditions of Article 8.
14.2 If the Building shall be damaged, but the damage is repairable within
one hundred eighty (180) days the Landlord agrees to repair the same with due
diligence and reasonable speed and dispatch subject to the terms and conditions
of Article 8. In such event, the rent accrued and accruing shall not abate,
except for that portion of the Demised Premises that has been rendered
untenantable and as to that portion the rent shall abate, based on equitable
adjustments.
14.3 The Tenant shall immediately notify the Landlord in case of fire or
other damage to the Demised Premises.
14.4 Notwithstanding anything contained in Article 14.1 or 14.2 above, if
such repairs and for any reason not completed within two hundred ten (210) days,
then the Tenant shall have the right to terminate this lease upon written notice
to the Landlord of such election, and in such event of termination Landlord and
Tenant shall thereupon be released of liability one to the other, and the within
lease shall be deemed null and void.
14.5 Rent, as referred to in this Article 14, is intended to include Fixed
Rent, Additional Rent and all other lease charges required to be paid by Tenant
pursuant to this lease.
15. COMPLIANCE WITH LOCAL RULES AND REGULATIONS
15.1 Landlord convenants and agrees with Tenant that upon the Commencement
Date, the Demised Premises will comply with all statutes, ordinances, rules,
orders, regulations and requirements of the Federal, State and Municipal
Government and of any and all their departments and bureaus, and with the
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requirements of the Board of Fire Underwriters, or their equivalent in the State
of New Jersey, which are applicable to the use and construction of the same.
15.2 the Tenant convenants and agrees that upon and after the Commencement
Date, it will promptly execute and comply with all statutes, ordinances, rules,
orders, regulations and requirements of the Federal, State and Municipal
Government and of any and all their departments and bureaus (provided same are
applicable to Tenant's occupancy or use of the Demised Premises) and with any
reasonable Rules promulgated by the Landlord in writing, for the correction,
prevention and abatement of nuisances, violations or other grievances, in, upon
or connected with said Demised Premises during said Term and arising from the
operations of the Tenant therein, and the Tenant's cost and expense, subject to
the right of the Tenant to contest the decision by any such department or
bureau. In the event contests any such governmental decision, it shall
indemnify, defend and save the Landlord harmless from any fine, penalty, costs
and liability imposed upon the Landlord as a result of Tenant's failure so to
comply, or as a result of said contest by Tenant. The Tenant convenants and
agrees, at its own cost and expense, to comply with such regulations or requests
as may be required by the fire or liability insurance carriers providing
insurance for the Demised Premises, and will further comply with such other
requirements that may be promulgated by the Board of Fire Underwriters or their
equivalent in connection with the use and occupancy of the Demised Premises by
the Tenant in the conduct of its business. Anything hereinabove to the contrary
notwithstanding, it is expressly understood and agreed that the Tenant shall not
be required to make structural changes in the Building if the same are required
by governmental regulation, as the same may be applicable as a matter of general
application to the Building, provided that the Tenant shall be required to make
structural changes that may be required by governmental regulation if directly
attributable and resulting
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from Tenant's occupancy and use of the Demised Premises in the conduct of its
business.
15.3 Without limiting anything hereinabove contained in this Article 15,
Tenant expressly covenants and agrees to fully comply with the provisions of the
New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6, et seq.) hereinafter
referred to as 'ISRA', and all regulations promulgated thereto (or under its
predecessor statute, the New Jersey Environmental Cleanup Responsibility Act)
prior to the expiration or earlier termination of the within lease, or at any
time that any action of the Tenant triggers the applicability of ISRA. In
particular, the Tenant agrees that it shall comply with the provisions of ISRA
in the event of any 'closing, terminating or transferring' of Tenant's
operations, as defined by and in accordance with the regulations which have been
promulgated pursuant to ISRA. In the event evidence of such compliance is not
delivered to the Landlord prior to the surrender of the Demised Premises by the
Tenant to the Landlord, it is understood and agreed that the Tenant shall be
liable to pay to the Landlord an amount equal to two times the Fixed Rent then
in effect, prorated on a monthly basis, together with all applicable additional
rent from the date of such surrender until such time as evidence of
compliance with ISRA has been delivered to the Landlord, and together with any
costs and expenses incurred by Landlord in enforcing Tenant's obligations under
this Article 15.3. Evidence of compliance, as used herein, shall mean a 'letter
of non-applicability' issued by the New Jersey Department of Enviromental
Protection, hereinafter referred to as 'NJDEP', or an approved 'no further
action letter' or a 'remediation action workplan' which has been fully
implemented and approved by NJDEP. Evidence of compliance shall be delivered to
the Landlord, together with copies of all submissions made to, and received
from, the NJDEP, including all environmental reports, test results and other
supporting documentation. In addition to the above, Tenant hereby agrees that it
shall cooperate with Landlord in the event of the termination or expiration of
any other lease affecting the
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Property, or a transfer of any portion of the property indicated on Schedule
'A', or any interest therein, which triggers the provisions of ISRA. In such
case, Tenant agrees that it shall fully cooperate with Landlord in connection
with any information or documentation which may be requested by the NJDEP. In
the event that any remediation of the Property is required in connection with
the conduct by Tenant of its business in the Demised Premises, Tenant expressly
covenants and agrees that it shall be responsible for that portion of said
remediation which is attributable to the Tenant's use and occupancy thereof.
Tenant hereby represents and warrants that its Standard Industrial
Classification No. is , and that Tenant shall not generate,
manufacture, refine, transport, treat, store, handle or dispose of 'hazardous
substances' as the same are defined under ISRA and the regulations promulgated
pursuant thereto. Tenant hereby agrees that it shall promptly inform Landlord of
any change in its SIC number or the nature of the business to be conducted in
the Demised Premises. The within covenants shall survive the expiration or
earlier termination of the lease Term.
16. TERMINATION
16.1 If there should occur any default on the part of the Tenant in the
performance of any conditions and covenants herein contained, or should the
Tenant be evicted by summary proceedings or otherwise, the Landlord, in addition
to any other remedies herein contained or as may be permitted by law, may
without being liable for damages, reenter the said Demised Premises and take
possession thereof; and, without being obligated to re-let the Demised Premises
as agent for the Tenant or otherwise, the Landlord may at its option re-let the
Demised Premises and receive the rents therefor and apply the same, first to the
payment of such expenses, including real estate brokerage, reasonable attorney
fees and costs, as the Landlord may have been put to in re-entering and
repossessing the same and in making such repairs and and alterations as may be
necessary; and second to the payment of rents due hereunder. The tenant shall
remain liable for such rents as may be in arrears
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and also the rents as may accrue subsequent to the re-entry by the Landlord, to
the extent of the difference between the rents reserved hereunder and the rents,
if any, received by the Landlord during the remainder of the unexpired Term,
after deducting the aforementioned expenses, fees and costs; the same to be paid
as such deficiencies arise and are ascertained.
16.2 Each of the following shall be deemed a default by Tenant and breach
of this lease:
(1) (i) filing of a petition by the Tenant for adjudication as a
bankrupt, or for reorganization, or for an arrangement under any federal or
state statute.
(ii) voluntary dissolution or liquidation of the Tenant.
(iii) appointment of a permanant receiver or a permanent trustee
of all or substantially all the property of the Tenant and such receiver
or trustee shall not be discharged within thirty (30) days after such
appointment.
(iv) taking possession of the property of the Tenant by a governmental
officer or agency pursuant to statutory authority for dissolution,
rehabilitation, reorganization or liquidation of the Tenant.
(v) making by the Tenant of an assignment for the benefit of
creditors.
(vi) abandonment, desertion or vacation of the Demised Premises by the
Tenent.
If any event mentioned in this subdivision (1) shall occur, Landlord may
thereupon or at any time thereafter elect to cancel this lease by ten (10) days'
notice to the Tenant, and this lease shall terminate on the day in such notice
specified with the same force and effect as if that date were the date herein
fixed for the expiration of the Term of the lease.
(2) (i) Default in the payment of the Fixed Rent or additional Rent
herein reserved or any part thereof for a period of seven (7) days after
the same is due and payable as in this lease required. In addition, any
continuing pattern of late payment of rent shall be a default under this
lease.
(ii) A default in the performance of any other covenant or condition
of this lease on the part of the Tenant to be performed for a period of
thirty (30) days after notice. For purposes of this subdivision (2) (ii)
hereof, no default on the part of Tenant in performance of work required to
be performed or acts to be done or conditions to be modified shall be
deemed to exist if steps shall have been commenced by Tenant diligently
after notice to rectify the same and shall be prosecuted to completion with
reasonable diligence, subject, however, to unavoidable delays.
16.3 In case of any such default under Article 16.2(2) and at any time
thereafter following the expiration of the respective grace periods above
mentioned, Landlord may serve a
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notice upon the Tenant electing to terminate this lease upon a specified date
not less than seven (7) days after the date of serving such notice and this
lease shall then expire on the date so specified as if that date has been
originally fixed as the Expiration Date of the Term herein granted; however, a
default under Article 16.2(2) hereof shall be deemed waived if such default is
made good before the date specified for termination in the notice of termination
served on Tenant.
17. INSPECTION BY LANDLORD
The Tenant agrees that the said Landlord's agents, and other
representatives, shall have the right, during normal business hours, to enter
into and upon the Demised Premises, or any part thereof, with prior notice at
all reasonable hours for the purpose of examining the same, or making such
repairs or alterations therein as may be necessary for the safety and
preservation thereof, without unduly or unreasonably disturbing the operations
of the Tenant (except in the event of emergency).
18. NOTICES
All notices required or permitted to be given to the Landlord shall be
given by certified mail, return receipt requested, addressed to the Landlord at
the address set forth at the head of this agreement or such other place as the
Landlord shall designate in writing. All notices required or permitted to be
given to the Tenant shall be given by certified mail, return receipt requested,
addressed to the Tenant at the Demised Premises, or at the address set forth at
the head of the lease, or such other place as the Tenant shall designate in
writing.
19. NON-WAIVER
The failure of the Landlord to insist upon strict performance of any of the
covenants or conditions of this lease or to exercise any option herein conferred
in any one or more instances, shall not be construed as a waiver or
relinquishment of any such covenants, conditions or options, but the same shall
be and remain in full force and effect. If the Landlord pursues any remedy
granted by the terms of this lease or the terms of
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applicable law, it shall not be construed as a waiver or relinquishment of any
other remedy afforded thereby.
20. RIGHT OF TENANT TO MAKE ALTERATIONS AND IMPROVEMENTS
20.1 The Tenant may make alterations, additions or improvements to the
Demised Premises only with the prior written consent of the Landlord, which
consent shall not be unreasonably withheld, provided such alterations, additions
or improvements do not require structural changes in the Demised Premises, or do
not lessen the value of the Demised Premises. Any consent which Landlord may
give shall be conditioned upon Tenant furnishing to Landlord, detailed plans and
specifications with respect to any such changes, to be approved by Landlord in
writing. As a condition of such consent, Landlord reserves the right to require
Tenant to remove, at Tenant's sole cost and expense, any such alterations or
additions prior to the expiration of the lease Term. If Landlord does not
require such removal, any such alterations or additions shall be deemed to be
part of the realty upon installation. Landlord and Tenant hereby agree that they
shall conduct a walkthrough inspection of the Demised Premises at least ninety
(90) days prior to the Expiration Date of this lease, at which time Landlord
shall determine which alterations and improvements will need to be removed by
the Tenant at Tenant's sole cost and expense, and which shall remain. All such
alterations, additions or improvements shall be only in conformity with
applicable governmental and insurance company requirements and regulations
applicable to the Demised Premises. Tenant shall hold and save Landlord harmless
and indemnify Landlord against any claim for damage or injury in connection with
any of the foregoing work which Tenant may make as hereinabove provided.
20.2 Nothing herein contained shall be construed as a consent on the part
of the Landlord to subject the estate of the Landlord to liability under the
Construction Lien Law of the State of New Jersey, it being expressly understood
that the Landlord's estate shall not be subject to such liability.
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21. NON-LIABILITY OF LANDLORD
21.1 The Landlord, its agents, servants or employees shall not be liable
for any damage or injury to property or person caused by or resulting from
steam, electricity, gas, water, rain, ice or snow, or any leak or flow from or
into any part of the Building, or from any damage or injury resulting or arising
from any other cause or happening whatsoever. The within covenant by Tenant is
an express inducement to the Landlord to enter into the within lease.
21.2 Anything hereinabove contained to the contrary notwithstanding, the
Tenant in all events shall assume all risk of damage or loss to its property,
equipment and fixtures occurring in or about the Demised Premises, whatever the
cause of such damage or loss, including Landlord's negligence.
22. CONDEMNATION
If the whole or part of the Demised Premises shall be acquired by Eminent
Domain for any public or quasi-public use or purpose so that the Demised
Premises cannot be used for its intended leased purposes, then and in that
event, the Term shall cease and terminate from the date that possession of the
Demised Premises is taken by the condemning authority in the Eminent Domain
proceeding, or as the result of the delivery of a deed in lieu of condemnation.
The Tenant shall have no claim against the Landlord for the value of any
unexpired Term. No part of any award made to the Landlord shall belong to the
Tenant, nor shall the Tenant make any claim against the condemning authority for
the valaue of its leasehold. Anything hereinabove contained to the contrary
notwithstanding, it is expressly understood and agreed that without affecting
Landlord's award as hereinabove referred to, the Tenant may make such
independent claims as the law may allow with respect to Tenant's leasehold
improvements, if any, trade fixtures and equipment.
23. INCREASE OF INSURANCE RATES
If the rate which the Landlord must pay to obtain fire and casualty
insurance with full extended coverage shall be
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increased because of any change in occupancy or use of the Demised Premises by
the Tenant, or because of the Tenant's non-compliance with the rules,
regulations or requests of the fire insurance carrier, then such increase shall
be paid by the Tenant to the Landlord as Additional Rent.
24. MORTGAGE PRIORITY
This lease shall not be a lien against the Demised Premises, the Building
or the lands described on Schedule 'E' (the 'Land') in respect to any
mortgages that are now or may hereafter be placed upon the Demised Premises,
Building or Land. The recording of such mortgage or mortgages shall have
preference and precedence and be superior and prior in lien to this lease,
irrespective of the date of recording, and the Tenant agrees to execute any
instruments, without cost, which may be deemed necessary or desirable, to
further effect the subordination of this lease to any such mortgage or
mortgages.
25. QUIET ENJOYMENT
The Landlord covenants and represents that the Landlord is the owner of
the Demised Premises herein leased and has the right and authority to enter
into, execute and deliver this lease, and does further covenant that the Tenant
on paying the rent and performing the conditions and covenants herein contained,
shall and may peaceably and quietly have, hold and enjoy the Demised Premises
for the Term.
26. SIGNS
Landlord agrees that it will provide a directory in the lobby area of the
Building, and Tenant may, with Landlord's prior written consent, identify its
business name by lettering on the entrance doorway to the Demised Premises.
Tenant shall not have the right to place any other signs in or about the Demised
Premises, the Building or Land. If Tenant requires a listing of more than one
identification, the cost of such listing shall be at Tenant's sole cost and
expense.
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27. CHANGES IN OR ABOUT PREMISES
This lease shall not be affected or impaired by any change in the sidewalk,
alley or street adjacent to or around the Building, or in parking regulations of
the Borough of Mountainside or any County or State Agency or Office.
28. LIMIT OF LANDLORD'S LIABILITY
Tenant shall look solely to Landlord's estate and property in the Building
and Land for the enforcement of any judgment or decree requiring the payment of
money to Tenant by reason of any default or breach by Landlord under the lease.
In no event shall there by any personal liability on the part of Landlord beyond
its interest in the Building and Land and no other assets of Landlord or its
partners shall be subject to levy, execution, attachment or any other legal
process.
29. LANDLORD'S REMEDIES AND EXPENSES
29.1 All rights and remedies of Landlord herein enumerated shall be
cumulative, and none shall exclude any other right or remedy allowed by law. For
the purposes of any suit brought or based hereon, this lease shall be construed
to be a divisible contract, to the end that successive actions may be maintained
on this lease on successive periodic sums which mature hereunder.
Notwithstanding the foregoing, Landlord agrees that all cognizable claims shall
be filed in one action.
29.2 Tenant shall pay, upon demand, all of the Landlord's costs, charges
and expenses, including the reasonable fees of counsel, agents and others
retained by Landlord, incurred in enforcing Tenant's obligations hereunder.
30. LANDLORD'S RESERVED RIGHTS
Landlord reserves the following rights:
(a) During the last ninety (90) days of the Term if, during or prior
to that time, Tenant vacates the Demised Premises, to decorate, remodel,
repair, alter or otherwise prepare the Demised Premises for re-occupancy.
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(b) To show the Demised Premises to prospective tenants or brokers
during the last twelve (12) months of the Term or any extension thereof
(or during any period of time during which Tenant is in default hereunder)
and to prospective purchasers or mortgagees, at all reasonable times,
provided prior oral notice to Tenant in each case is given and Tenant's
use and occupancy of the Demised Premises shall not be materially
inconvenienced by any such action of Landlord. Landlord may enter upon the
Demised Premises and may exercise any or all of the foregoing rights hereby
reserved without being deemed guilty of an eviction or disturbance of
Tenant's use or possession and without being liable in any manner to
Tenant.
31. ASSIGNMENT AND SUBLETTING
31.1 Tenant shall neither assign this lease nor sublet all or any portion
of the Demised Premises without Landlord's prior consent, which consent shall
not be unreasonably withheld, subject to Landlord's rights hereinafter provided
in Article 31.4. Landlord may withhold such consent if, in the reasonable
exercise of its judgment, it determines that any of the following enumerated
conditions are applicable:
(a) the proposed assignee's or subtenant's financial condition is not
sufficient to meet its obligations undertaken in such assignment or
sublease;
(b) the proposed use of the Demised Premises is not appropriate for
the Building or in keeping with the character of its existing tenancies;
(c) such assignee's or subtenant's occupancy will cause an excessive
density of traffic or make excessive demands on the Building's services,
maintenance or facilities;
(d) such assignee or subtenant is a tenant of and is vacating premises
in the Building, or any other building owned by or through the persons
constituting Landlord hereunder, including any corporation in which
Landlord's principals are majority stockholders, and any affiliates,
subsidiaries or parent of such corporation;
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(e) the rental obligation of such assignee or subtenant would be less than
Tenant's rental obligations hereunder;
(f) less than ninety (90%) per cent of the Building's rentable area is then
rented; or
(g) Landlord wishes to accept the offer as provided in Article 31.4.
31.2 Any request by Tenant for Landlord's consent to an assignment of the
lease shall state the proposed assignee's address and be accompanied by a profit
and loss and balance statements of the proposed assignee for the prior three (3)
years, as well as duplicate original of the instrument of assignment (wherein
the assignee assumes, jointly and severally with Tenant, the performance of
Tenant's obligations hereunder).
31.3 Any request by Tenant for Landlord's consent to a sublease shall state
the proposed subtenant's address and be accompanied by profit and loss and
balance statements of the proposed subtenant for the prior three (3) years, as
well as a duplicate original of the instrument of sublease (wherein Tenant and
the proposed subtenant agree that such sublease is subject to the lease and such
subtenant agrees that, if the lease is terminated because of Tenant's default,
such subtenant shall, at Landlord's option, attorn to Landlord).
31.4 Any request by Tenant for Landlord's consent to an assignment of the
lease or a sublease of all or substantially all of the Demised Premises shall
clearly set forth the proposed terms of such proposed assignment or sublease and
shall constitute Tenant's offer to cancel the lease. Landlord may accept such
offer by notice to Tenant within ninety (90) days after Landlord's receipt
thereof, in which event, the lease shall terminate as of the end of the month
following the month in which such notice is sent (with the same effect as if
such date were the date fixed herein for the natural expiration for the Term),
Fixed Rent and Additional Rent shall be apportioned to such date, Tenant shall
surrender the Demised Premises on such date as herein provided, and subject to
payment of required lease adjustments, the parties shall
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thereafter have no further liability one to the other. If Landlord fails to send
such notice, Tenant, within twenty (20) days after the expiration of such ninety
(90) day period, may assign the lease or sublet all or substantially all of the
Demised Premises to the proposed assignee or subtenant and upon the terms
specified in such request, subject, however, to Landlord's rights under Article
31.1(a) through (f). In any event, Tenant shall pay to Landlord, as Additional
Rent, fifty (50%) percent of all amounts received by Tenant from the assignee or
subtenant in excess of the Fixed Rent and Additional Rent payable by Tenant
hereunder.
31.5 In the event of a permitted assignment, Landlord may collect Fixed
Rent and Additional Rent directly from the assignee. In the event of a permitted
sublease, Landlord may, if Tenant defaults hereunder, collect Fixed Rent and
Additional Rent directly from the subtenant. In either such event, Landlord may
apply any amounts so collected to the Fixed Rent and Additional Rent hereunder
without thereby waiving any provisions hereof or releasing Tenant from liability
for the performance of its obligations hereunder.
31.6 Landlord's consent to any assignment or sublease hereunder shall not
be deemed a consent to any further proposed assignment or sublease by Tenant or
any one claiming under or through the Tenant, except in accordance with this
Article 31.
31.7 It is expressly understood and agreed that Tenant's Option to Renew,
as hereinafter set forth in Article 38, shall be personal to Tenant only, and
may not be exercised by any permitted assignee or subtenant hereunder. It is
understood and agreed that Tenant's Option to Renew shall be null and void in
the event that fifty (50%) percent or more of the Demised Premises have been
sublet by the Tenant prior to the date set for the exercise by Tenant of the
Option to Renew hereinafter set forth.
32. BROKERAGE
The parties mutually represent to each other that CHARLES KLATSKIN COMPANY,
INC., 400 Hollister, Road, Teterboro, New Jersey 07608 and THE BLAU & BERG
COMPANY, 140 Mountain Avenue,
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Springfield, New Jersey 07081 are the sole brokers who negotiated and
consummated the within transaction, and that neither party dealt with any other
broker in connection with the within agreement, it being understood and agreed
that the Landlord shall be responsible, at its sole cost and expense, to pay the
real estate brokerage commission in connection with this transaction. Landlord
agrees to indemnify, defend and save harmless Tenant in connection with the
claims of any other real estate broker claiming commissions in connection with
the within transaction and claiming authority from Landlord. Tenant agrees to
indemnify, defend and save harmless Landlord in connection with the claims of
any other real estate broker claiming commissions in connection with the within
transaction and claiming authority from Tenant.
33. SECURITY
33.1 Upon execution of this lease, the Tenant shall deposit with the
Landlord the sum of EIGHT THOUSAND NINE HUNDRED TEN AND 00/100 (8,910.00)
DOLLARS as security (the 'Security') for the full an faithful performance of
this lease upon the part of the Tenant to be performed. Upon termination of this
lease, and providing the Tenant is not in default hereunder and has performed
all of the conditions of this lease, the Landlord shall return the Security.
Anything herein contained to the contrary nothwithstanding, it is expressly
understood and agreed that the Security shall not bear interest. Tenant
covenants and agrees that it will not assign, pledge, hypothecate, mortgage or
otherwise encumber the Security during the Term. It is expressly understood and
agreed that the Landlord shall have the right to co-mingle the Security with its
general funds and the Security shall not be required to be segregated. Such
Security may be transferred to any purchaser of Landlord's interest hereunder
provided as a condition of such transfer transferee assumes, in writing, the
obligation to hold the same pursuant to this Article, and upon such transfer,
Landlord hereunder shall be relieved of any obligation with respect thereto.
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33.2 Anything in this Article 33 to the contrary notwithstanding, the
Tenant acknowledges, covenants and agrees that in the event Landlord's mortgagee
shall become mortgagee-in-possession or take title by foreclosure or deed in
lieu of foreclosure, then, in either of such events, Landlord's mortgagee shall
only be liable in connection with Landlord's obligations under this Article 33
to the extent that the Security or any part thereof has actually been
transferred to Landlord's mortgagee by the Landlord.
34. SURRENDER OF PREMISES
On the last day, or earlier permitted termination of the lease Term, Tenant
shall quit and surrender the Demised Premises in good and orderly condition and
repair (reasonable wear and tear, and damage by fire or other casualty excepted)
and shall deliver and surrender the Demised Premises to the Landlord peaceably,
together with all alterations, additions and improvements in, to or on the
Demised Premises made by Tenant as permitted under the lease. The Landlord
reserves the right, however, to require the Tenant at its cost and expense to
remove any alterations or improvements installed by the Tenant and not permitted
or consented to by the Landlord pursuant to the terms and conditions of the
lease, which covenant shall survive the surrender and the delivery of the
Demised Premises as provided hereunder. Prior to the expiration of the lease
Term the Tenant shall remove all of its property, fixtures, equipment and trade
fixtures from the Demised Premises. All property not removed by Tenant shall be
deemed abandoned by Tenant, and Landlord reserves the right to charge the
reasonable cost of removal, storage and/or disposal of such property to the
Tenant, which obligation shall survive the lease termination and surrender
hereinabove provided. If the Demised Premises are not surrendered at the end of
the Term, Tenant shall indemnify Landlord against loss or liability resulting
from delay by Tenant in surrendering the Demised Premises, including, without
limitation any claims made by any succeeding tenant founded on the delay.
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35. SURVIVAL OF OBLIGATION
It is expressly understood and agreed that in the event there are any
obligations of Tenant with respect to payment or performance as required under
the terms and conditions of this lease that shall have not been performed prior
to the expiration or termination of the lease in accordance with its terms, such
obligation, including the obligation to make rent adjustments and other lease
adjustments, shall survive the expiration or termination of the Term and
surrender of the Demised Premises by the Tenant to the Landlord. Notwithstanding
the foregoing, to the extent any payment or performance obligations required by
the terms of the lease are so paid and performed in full during the term,
including, but not limited to, insurance, repairs, glass repair and replacement
or financial statements, such obligations, in such event, shall not survive the
expiration or termination of the Term as aforesaid.
36. FINANCIAL STATEMENTS
The Tenant agrees, at the request of the Landlord, to be made not more than
once during any lease year, to furnish its latest current income and balance
statements, certified to by an officer of the corporation.
37. EXECUTION AND DELIVERY
The submission of the within lease by Landlord to Tenant for review and
approval shall not be deemed an option to lease, an offer to lease, or a
reservation of the Demised Premises in favor of Tenant, it being intended that
no rights or obligations shall be created by Landlord or Tenant until the
execution and delivery of the within lease by Landlord and Tenant, one to the
other.
38. OPTION TO RENEW
Provided the Tenant is not in default pursuant to the terms and conditions
of this lease, the Tenant is hereby given the right and privilege to renew the
within lease, for one (1) three (3) year renewal period, to commence at the end
of the
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initial Term of this lease, which renewal shall be upon the same terms and
conditions as in this lease contained, except as follows:
(1) During the three (3) year renewal period, Tenant shall pay Fixed
Rent in the amount of SIXTY NINE THOUSAND EIGHT HUNDRED SIXTY ONE AND
00/100 ($69,861.00) DOLLARS per annum, in equal installments of FIVE
THOUSAND EIGHT HUNDRED TWENTY ONE AND 75/100 ($5,821.75) DOLLARS per month
in the same manner as hereinabove provided in Article 2.
(2) The right, option, and privilege of the Tenant to renew this lease
as hereinabove set forth is expressly conditioned upon the Tenant
delivering to the Landlord, in writing, by certified mail, return receipt
requested, twelve (12) months' prior notice of its intention to renew,
which notice shall be given to the Landlord by the Tenant no later than
twelve (12) months prior to the date fixed for termination of the original
Term of this lease.
(3) The obligation to pay Fixed Rent as hereinabove provided shall
include the obligation to pay applicable tax escalations and cost
escalations of Operational Services as required pursuant to the terms and
conditions of the within lease computed from the initial Commencement Date
of the within lease as applicable.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
or caused these presents to be signed by its proper corporate officers and
caused its proper corporate seal to be hereunto affixed, the day and year first
above written.
WITNESS: MOUNTAIN PLAZA ASSOCIATES
/s/ SONDRA STEINBERG BY: [signature] (L.S.)
- ----------------------------- ---------------------------------
Partner
ATTEST: ALL COMMUNICATIONS CORPORATION
/s/ SONDRA STEINBERG BY: /s/ RICHARD REISS
- ----------------------------- ---------------------------------
Richard Reiss
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STATE OF NEW JERSEY )
) SS.:
COUNTY OF SOMERSET )
BE IT REMEMBERED, that on this 13TH day of APRIL, 1995 before me, the
subscriber, SONDRA A. STEINBERG personally appeared HERBERT PUNIA Partner of
MOUNTAIN PLAZA ASSOCIATES, a New Jersey Partnership, who, I am satisfied, is the
Landlord mentioned in the within Instrument, and thereupon he acknowledged that
he signed, sealed and delivered the same as his act and deed, for the uses and
purposes therein expressed.
/s/ SONDRA A. STEINBERG
-----------------------------------
SONDRA A. STEINBERG
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Nov. 23, 1995
STATE OF NEW JERSEY )
) SS.
COUNTY OF SOMERSET )
BE IT REMEMBERED, that on this day of , 1995 before me,
the subscriber, SONDRA A. STEINBERG personally appeared RICHARD REISS who, I am
satisfied, is the person who signed the within Instrument as PRESIDENT of ALL
COMMUNICATIONS CORPORATION, a New Jersey corporation, the Tenant named therein,
and he thereupon acknowledged that the said instrument made by the corporation
and sealed with its corporate seal, was signed, sealed with the corporate seal
and delivered by him as such officer and is the voluntary act and deed of the
corporation, made by virtue of authority from its Board of Directors.
/s/ SONDRA A. STEINBERG
-----------------------------
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<PAGE>
SCHEDULE 'B'
WORK LETTER (OFFICE BLDG.)
I. LANDLORD'S OBLIGATIONS
Landlord agrees to provide the following items of basic construction (or
make allowances indicated) subject to the terms and conditions hereinafter
provided:
A. GENERAL CONSTRUCTION
1. FLOORS
a) Carpet will be provided throughout rental area from selection
provided by landlord. If tenant selects different carpeting, an allowance
of $9.00/ yard installed will be given towards tenant's selection.
b) Floors will be finished in non-carpeted areas in Vinyl Composite
tiles 9'' X 9'' or 12'' X 12'' X 1/8'', at the landlord's option. Color of
vinyl composition title to be selected by tenant from building standard
color. Special patterns, diagonals, etc. will be at an extra cost.
c) Vinyl base (brown or black) shall be installed in tile or carpeted
areas along the partitions.
d) Floor loads are designed for live loads of fifty (50) pounds per
square foot.
2. CEILINGS
Ceilings will be 2'0'' X 4'0'' acoustic title of natural fissured
mineral fiber installed with exposed grid. Ceiling heights to be 8'4''.
3. PARTITIONS
a) Partitions between tenant's walls of leased premises on multiple
tenancy floors and between tenant's and public corridors will be firecode C
gypsum board and shall have sound deadening insulation and to be taped and
spackled. All partitions shall extend from floor to underside of acoustical
ceilings.
b) Partitions within tenant's space will extend from floor to
suspended ceiling and will consist of 2 1/2'' metal studs with taped,
spackled and painted 1/2'' thick gypsum wallboard on both sides as follows:
There will be one (1) linear foot of partition for every fifteen (15)
square feet of usable space.
c) Partitions terminating at the building exterior wall shall meet a
mullion or a column. Where partitions are offset to this condition, the
offset shall occur 2 feet 0 inches minimum will be not wider than 4 inches
for a minimum of approximately 2 feet from the exterior building wall.
4. DOORS
Doors shall be wood doors 1 3/4'' X 3' 0'' X 6'8'', flush. From public
corridors one solid core
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SCHEDULE 'B' (CONTINUED)
door shall be provided for tenants having less than 2,000 square feet of
rentable space, and two doors shall be provided for tenants having more
than 2,000 square feet of rentable space. Within the leased premises one
door will be provided for every 25 linear feet interior partition.
5. HARDWARE
Latch sets, hinges and door stops for all interior doors. Entrance
door lock to be keyed with master building system.
6. PAINTING
All partitions are to receive two coats of paint. Painting shall be in
pastel colors to be selected by tenant from the building color chart, not
to exceed one color per room or two colors in any large open space. Dark
colors and additional colors, (graphics included), shall be at tenant's
expense as additional work.
7. VENETIAN BLINDS
Building standard metal venetian blinds will be installed on all
windows by landlord.
B. ELECTRICAL CONSTRUCTION
1. WIRING
Facilities sufficient for 2 watts per square foot of rentable area
connected load at 110 - 120 V. single phase for general use, and facilities
sufficient for 3 watts per square foot of rentable area connected load at
265 V., 3 phase for fluorescent lighting.
2. LIGHTING
Furnish and install one (1) - 2 foot X 4 foot recessed fluorescent
unit in building standard ceiling grid containing four 40 watt rapid start
lamps and acrylic diffuser for every 96 square feet of usable space.
Initial installation of lamps for the fixtures to be supplied by the
landlord at its expense. Replacement of lamps and all parts by tenant at
tenant's expense.
3. ELECTRICAL OUTLETS
Furnish and install one duplex electrical receptacle outlet for every
125 square feet of usable area to be located on interior partitions at a
height of 18'' above finished floor.
4. SWITCHES
Install on partition wall one (1) silent on/off light switch for an
average of one (1) every six (6) 24'' X 48'' fixtures.
5. TELEPHONE OUTLETS
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SCHEDULE 'B' (CONTINUED)
Tenant shall make arrangements with the Telephone Company and pay for
required installations. Tenant will cause Telephone Company work to be
performed at a time compatible with landlord's work.
C. HEATING, VENTILATION AND AIR CONDITIONING
The heating, ventilation and air conditioning is designed to maintain
78 degrees F and 50% relative humidity indoors in the summer when the
outdoor temperature is 95 degrees FDB and 75 degrees FWB. In the winter the
building will be maintained at 70 degrees F when the outdoor temperature is
0 F with a 15 MPH wind. The performance standard indicated by design
criteria are based upon and limited to an occupancy of not more than one
(1) person per one hundred (100) square feet of usable area. There are no
provisions in the cooling design for any heat producing equipment, exhaust
fans, or ventilating hoods that might be used in your operations.
II. TENANT'S OBLIGATIONS
A. SCHEDULE OF DELIVERY OF TENANT'S DRAWINGS
Tenant shall furnish landlord, for its approval the following complete
descriptive information and drawings, including Basic Construction and Finish
Work on or before the dates listed below: (15 copies of each drawing shall be
furnished to landlord).
1. On or Before _____________________________________________
a) The location and extent of floor loading and floor openings in
excess of building standard.
b) Any special air-conditioning needs by location and general
description of need.
c) Location and description of any special plumbing requirements.
d) Estimated total electrical load, including lighting for entire
space. Show amount and location of areas requiring loads in excess of
building standard.
e) Location, loads, and dimensions of telephone equipment rooms.
2. On or Before _____________________________________________
a) Partition locations and type.
b) Door locations, size and type, hardware schedule.
c) Reflected ceiling plans.
d) Location of electrical outlets.
e) Any structural architectural installations.
f) Specific plumbing requirements, including plans and specifications.
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SCHEDULE 'B' (Continued)
g) Non-building standard ceiling heights and/or materials, and any
other information not delineated in C below.
h) Any special required undercut of door measurement.
3. On or Before____________________________________________
a) Decorative plans, including plant schedule, floor coverings, wall
coverings.
b) Non-structural architectural detailing.
All drawings to show inside dimensions and to identify outer perimeter
columns as per plans showing rentable spece attached to lease. If tenant
fails to furnish such drawings and information within the time prescribed
(or any further information within five (5) days after written demand),
landlord may complete the leased premises in a manner satisfactory to the
landlord.
B. FILING OF PLANS
All such plans and specifications are expressly subject to landlord's
written approval, which landlord covenants it will not unreasonably
withhold. Tenant covenants and agrees that said plans, along with
mechanical and electrical plans and specifications detailed in Paragraph
II. A. hereof, to be filed at tenant's sole cost and expense with
the appropriate governmental agencies in such form (building notice,
alteration or other form) as landlord may reasonably direct.
C. BUILDING STANDARD PLANS
Landlord, at landlord's sole cost and expense shall cause to be
prepared complete mechanical and electrical plans and specifications where
necessary for installation of building standards.
D. TENANT'S FINISH WORK
1. Landlord further agrees to perform at tenant's request, and upon
submission by tenant of necessary plans and specifications any
additional or non-standard work, work over and above that specified in
Section I hereof. Such work shall be performed by landlord, at tenant's
sole expense, as a tenant's extra. Prior to commencing any such work
requested by tenant, landlord will submit to tenant written estimates
of the cost of any such work. If tenant shall fail to approve in
writing any such estimate within ten (10) working days, the same shall
be deemed disapproval in all respects by tenant, and landlord shall not
be authorized or obligated to proceed thereon.
2. Tenant may, at its option after occupancy of premises, employ its own
subcontractors for finishing trades work, such as carpentry, millwork,
cabinet work, carpeting and draperies as may be initially furnished and
installed by tenant in the demised premises, provided such
subcontractors work in harmony with, and do not interfere or cause
4
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<PAGE>
SCHEDULE 'B' (Continued)
jurisdictional labor disputes with the labor forces employed by the
landlord, its contractors or any other tenant or their contractors, and
otherwise comply with the provisions of the lease, and provided
tenant's subcontractors accept the administrative supervision of
landlord's representatives, as to work scheduling. Workmen's
Compensation, public liability insurance and property damage insurance,
with a Hold Harmless provision, all in amounts and with companies
reasonably satisfactory to landlord, shall be maintained by such finish
trades subcontractors; certificates of such insurance shall be
furnished to landlord prior to commencement of work.
3. No credit is intended nor shall any be allowed for the unused portion
of work allowed by the landlord.
E. BILLING
Tenant agrees to pay landlord the actual cost of all such work
together with 10% of all aggregate cost as provided to reimburse landlord
with respect to expenses in furnishing such non-standard work. Tenant
agrees that the same shall be collectable as additional rent pursuant to
the lease and in default of payment thereof, landlord (in addition to
all other remedies) has the same rights as in the event of default of
payment of rent.
Landlord or its agent may submit statements to tenant for sums due
it hereunder monthly, of the work performed to date and/or for materials
delivered to the job site during the previous month, and the same shall
be payable by tenant to landlord or its designee within ten (10) days
thereafter.
F. SUBSTITUTIONS
All finish work shall require the installations of new materials at
least comparable to the quality installed in the building. Tenant may
substitute material, equipment and fixtures (except venetian blinds) for
those specified for Basic Construction of equal or better quality. Tenant
shall pay landlord the cost to landlord for such substitute items which
are in excess of such items included in Basic Construction. The cost to
tenant for such substitution shall be landlord's cost for the substitute
item less the allowance, if any, for the Basic Construction item plus 10%
overhead and 10% profit in connection with landlord's expenses in the
handling of the substitution. Tenant may also request landlord to omit the
installation of any item not theretofore installed provided such omission
shall not delay landlord's work and landlord thereafter shall not be
obligated to install the same. Tenant shall not be entitled to any credit
for such item omitted against any additional item or any item of a
different kind or character. Any changes or deletions or additions
required by appropriate government agencies, shall be considered as
approved by tenant and treated as additional tenant finish work and be
billed accordingly. There shall be no cash credits or allowances.
Tenant, within ten (10) days of acceptance of this document,
shall designate in writing to landlord an
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<PAGE>
SCHEDULE 'B' (CONTINUED)
authorized representative, to coordinate with landlord's work to be
performed hereunder.
Nothing in this Work Letter shall be construed as being building
standard, unless affirmatively stated as being supplied by landlord.
The provisions of the Work Letter are specifically subject to
the provisions of the lease, and shall be incorporated as Exhibit B in the
lease.
6
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<PAGE>
SCHEDULE 'C'
BUILDING MAINTENANCE SPECIFICATIONS
1. General (Five Nights per Week)
A. All ceramic, tile and other unwaxed flooring to be swept nightly and
washed as necessary.
B. All composition tile to be swept.
C. All carpeting and rugs to be vacuumed.
D. All furniture, fixtures, pictures, ledges, chair rails and other
furniture and window sills to be hand-dusted and cleaned.
E. All ashtrays to be emptied and damp-wiped clean.
F. All waste receptacles to be emptied and refuse removed to a designated
area of the building.
G. Interiors of all waste disposal cans and baskets will be kept clean by
inserting a plastic liner in each.
H. All water coolers to be washed and polished.
I. All door louvres and other ventilating louvres within reach to be dusted
as necessary.
J. All telephones to be hand-dusted.
K. All bright work to be wiped clean and polished.
L. All fingerprints and smudges to be removed from painted verticle
surfaces whenever and whenever practicable.
M. All stairways to be swept and dusted nightly or mopped when necessary.
N. The elevators to be swept, dusted and vacuumed nightly.
2. Lavatories (Five nights per week)
A. All lavatory rooms to be swept and washed nightly with a disinfectant.
B. All mirrors, shelves, bright work and enameled surfaces in lavatories to
be washed and polished.
C. All basins, bowls and urinals to be scour-washed with a disinfectant.
D. All toilet seats to be scour-washed and disinfected.
E. All partitions, tile walls, dispensers and receptacles to be hand-dusted
and washed when necessary.
F. Landlord will furnish all paper towels, toilet tissue and plastic bags.
Units should be checked and replenished daily by Custodial.
G. All wall tile and stall surfaces to be washed and polished as often as
necessary.
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<PAGE>
3. High Dusting
A. All pictures, frames, charts and similar wall hangings not reached in
daily cleaning to be dusted once per week.
B. All vents, moldings, grill work and exposed pipes not reached in daily
cleaning to be dusted once per week.
4. Floor Care
A. Vacumm all carpeted areas nightly.
B. Sweep and/or dust mop all non-carpet areas nightly.
C. Spot clean spillage in non-carpeted areas.
D. Spot clean all carpeted areas (once carpets have been thoroughly
cleaned).
E. Wet mop all lavatory floors using a disinfectant and a deodorant.
F. Computer Flooring: Sweep, dry mop or vacuum as applicable.
G. Damp mop marble flooring in main lobby nightly.
H. Maintain all composition tile floor surfaces using an approved, low
alkaline, non-injurious detergent as well as an Underwriters Laboratory
approved floor finish that is non-staining and provides a high degree of
slip prevention as necessary.
5. Window Cleaning
A. Inside and outside
B. Once per year
(a) perimeter windows
(b) Mirror walls
(c) Domes and glass wall
D. Twice per month
Railings and Entrance
6. Janitorial Services
Five nights per week.
7. Carpet Shampooing
Upon request at additional charge.
<PAGE>
<PAGE>
SCHEDULE 'D'
BUILDING RULES AND REGULATIONS
1. Tenant shall not obstruct or permit its agents, clerks or servants to
obstruct, in any way, the sidewalks, entry passages, corridors, halls, stairways
or elevators of the Building, or use the same in any other way than as a means
of passage to and from the offices of Tenant; bring in, store, test or use any
materials in the Building which could cause a fire or an explosion or produce
any fumes or vapor; make or permit any improper noises in the Building; smoke in
the elevators; throw substances of any kind out of the windows or doors, or down
the passages of the Building, or in the halls or passageways; sit on or place
anything upon the window sills; or clean the windows.
2. Waterclosets and urinals shall not be used for any purpose other than
those for which they are constructed; and no sweepings, rubbish, ashes,
newspaper, paper towels or any other substances of any kind shall be thrown into
them. Waste and excessive or unusual use of electricity or water is prohibited.
3. The windows, doors, partitions and lights that reflect or admit light
into the halls or other places of the Building shall not be obstructed. NO
SIGNS, ADVERTISEMENTS OR NOTICES SHALL BE INSCRIBED, PAINTED, AFFIXED OR
DISPLAYED IN, ON, UPON OR BEHIND ANY WINDOWS, except as may be required by law
or agreed upon by the parties; and no sign, advertisement or notice shall be
inscribed painted or affixed on any doors, partitions or other part of the
inside of the Building, without the prior written consent of Landlord. If such
consent be given by Landlord, any such sign, advertisement, or notice shall be
inscribed, painted or affixed by Landlord, but the cost of the same shall be
charged to and be paid by Tenant, and Tenant agrees to pay the same promptly, on
demand. Landlord agrees that Tenant shall be suitably identified.
4. No contract of any kind with any supplier of towels, water, toilet
articles, waxing, rug shampooing, venetian blind washing, furniture polishing,
lamp servicing, cleaning of electrical fixtures, removal of waste paper, rubbish
or garbage, or other like service shall be entered by Tenant, nor shall any
vending machine of any kind be installed in the Building, without the prior
written consent of Landlord.
5. When electric wiring of any kind is introduced, it must be connected as
directed by Landlord, and no stringing or cutting of wires will be allowed,
except with the prior written consent of Landlord, and shall be done only by
contractors approved by Landlord. The number and location of telephones,
telegraph instruments, electric appliances, call boxes, etc., shall be approved
by Landlord. No tenant shall lay linoleum or other similar floor covering so
that the same shall be in direct contact with the floor of the Premises; and if
linoleum or other similar floor covering is desired to be used, in inter-lining
of builder's deadening felt shall be first affixed to the floor by a paste or
other material, the use of cement or other similar adhesive material being
expressly prohibited.
6. Landlord shall have the right to prescribe the weight, size and position
of all safes and other bulky or heavy equipment and all freight brought into the
Building by the Tenant; and also the times of moving the same in and out of the
Building; and all such moving must be done under the supervision of the
Landlord. Landlord will not be responsible for loss of or damage to any such
equipment or freight from any cause; but all damage done to the Building by
moving or maintaining any such equipment or freight shall be repaired at the
expense of Tenant. All safes shall stand on a base of such size as shall be
designated by the Landlord. The Landlord reserves the right to inspect all
freight to be brought into the building and to exclude from the building all
freight which violates the lease.
<PAGE>
<PAGE>
SCHEDULE 'D' (Continued)
7. No machinery of any kind or articles of unusual weight or size will be
allowed in the Building without the prior written consent of Landlord. Business
machines and mechanical equipment shall be placed and maintained by Tenant, at
Tenant's expense, in settings sufficient in Landlord's judgement to absorb and
prevent vibration, noise and annoyance.
8. No additional lock or locks shall be placed by Tenant on any door in the
Building, without prior written consent of Landlord. Two keys will be furnished
Tenant by Landlord; two additional keys will be supplied to Tenant by Landlord,
upon request, without charge; any additional keys requested by Tenant shall be
paid for by Tenant. Tenant, its agents and employees, shall not change any
locks. All keys to doors and washrooms shall be returned to Landlord at the
termination of the tenancy, and in the event of loss of any keys furnished,
Tenant shall pay Landlord the cost thereof.
9. Tenant shall not employ any person or persons other than Landlord's
janitors for the purpose of cleaning the premises, without prior written consent
of Landlord. Landlord shall not be responsible to Tenant for any loss due to
theft or vandalism from the Demised Premises however occasioned.
10. No animals of any kind shall be brought into or kept in or about the
Premises.
11. The requirements of Tenant will be attended to only upon the
application at the office of the Building. Employees of Landlord shall not
perform any work for Tenant or do anything outside of their regular duties,
unless under special instructions from the office of Landlord. Landlord agrees
to keep Tenant advised at all times of how to contact the Building Manager.
12. The Premises shall not be used for lodging or sleeping purposes, and
cooking therein is prohibited. Vending machines for coffee and rolls are
permitted, only upon written consent of Landlord, which consent shall not be
unreasonably withheld.
13. Tenant shall not conduct, or permit any other person to conduct any
auction on the premises. The Tenant shall not store goods, wares or merchandise
upon the Premises, except for the storage of usual supplies and inventory to be
used by Tenant in the conduct of its business; permit the Premises to be used
for gambling, make any unusual noises in the Building; permit to be played any
musical instrument in the premises; permit to be played any radio, television,
recorded or wire music in such a loud manner so as to disturb or annoy other
tenants; or permit any unusual odors to be produced upon the Premises.
14. No awnings or other projections shall be attached to the outside walls
of the Building. No curtains, blinds, shades or screens shall be attached or
hung in, or used in connection with any window or door of the Premises, without
the prior written consent of Landlord. Such curtains, blinds and shades must be
of a quality, type, design, and color and attached in a manner approved by
Landlord.
15. Canvassing, soliciting and peddling in the Building are prohibited, and
Tenant shall cooperate to prevent the same.
16. There shall not be used in the Premises or in the Building, either by
Tenant or by others, in the delivery or receipt of merchandise, any hand trucks
except those equipped with rubber tires and side guards, and no hand trucks will
be allowed in passenger elevators.
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SCHEDULE 'D' (Continued)
17. Each Tenant, before closing and leaving the Premises, shall ensure that
all windows are closed and all entrance doors locked.
18. Landlord shall have the right to prohibit any advertising by Tenant
which in Landlord's opinion tends to impair the reputation of the Building or
its desirability as a building for offices, and upon written notice from
Landlord, Tenant shall refrain from or discontinue such advertising.
19. Landlord hereby reserves to itself any and all rights not granted to
Tenant hereunder, including, but not limited to, the following rights which are
reserved to Landlord for its purposes in operating the Building.
(a) the exclusive right to the use of the name of the Building for all
purposes, except that Tenant may use the name as its business address and
for no other purpose;
(b) the right to change the name or address of the Building, without
incurring any liability to Tenant for so doing;
(c) the right to install and maintain a sign or sings on the exterior
of the building;
(d) the exclusive right to use or dispose of the use of the roof of
the building;
(e) the right to limit the space on the directory of the Building to
be allotted to Tenant;
(f) the right to grant to anyone the right to conduct any particular
business or undertaking in the Building.
3
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(Note: there are 3 existing dedicated outlets on the front wall
make them standard 110v duplex outlets and use the existing dedicate lines for)
[FLOOR PLAN]
1. Replace ceiling tiles to match in rooms #8-9-10-14.
2. Clean all HVAC defusers.
3. Change all lightswitch and outlet covers to off white.
4. Blance lighting by relocating or adding in rooms #1-2-4-5. Note, room # 8 as
shown add 2x4 floor light.
5. Replace light fixture room # 5.
6. Check light fixture room # 10.
7. Carpet selection Philadelphia Norway Green rooms # 2-3-4-5-6-8-9-10-11-12.
8. Carpet selection Philadelphia Up Tempo Magellan 23398 rooms 1 & 7.
9. Paint selection Conlux Chalet White rooms 1 to 15.
10. Base cabinet and top selection Formica Almond #920 matte finish.
11. V.C.T. Kentile Hazeltine #1455 rooms #13 and 14.
12. Base molding (upgrade) Kentile Base Group II KC-24 beige @ $420.00
ALL COMMUNICATIONS CORPORATION
RT. 22 WEST MOUNTAINSIDE, N.J. FIRST FLOOR
Richard Reiss 7-12-95
<PAGE>
<PAGE>
FIRST AMENDMENT TO LEASE, made this 27th day of JUNE, 1996, between
MOUNTAIN PLAZA ASSOCIATES, a New Jersey Partnership, having an office at 14A
Worlds Fair Drive, Franklin Township, New Jersey 08873 (having a mailing address
at P.O. Box 5850, Somerset, New Jersey 08875-5850), hereinafter called the
'Landlord'; and ALL COMMUNICATIONS CORPORATION, a New Jersey corporation, having
an office at 1450 Route 22, Mountainside, New Jersey 07092, hereinafter called
the 'Tennant'.
W I T N E S S E T H:-
WHEREAS, the Landlord owns certain lands and premises in the Borough of
Mountainside, County of Union and State of New Jersey, which lands and premises
are known as 1450 Route 22, upon which there has been erected a office building
containing approximately 41,531 square feet, hereinafter called the 'Building';
and
WHEREAS, the Landlord and Tenant have heretofore entered into a certain
lease agreement dated April 13, 1995, hereinafter called the 'Lease', pursuant
to which Tenant has leased 3,828 square feet of space in the Building,
hereinafter called the 'Original Demised Premises', all in accordance with the
terms and conditions of the Lease; and
WHEREAS, the Landlord has agreed to provide and lease to Tenant additional
space containing 324 rentable square feet, hereinafter called the 'Additional
Demised Premises', as shown on Schedule 'A' annexed hereto and made a part
hereof, as said Additional Demised Premises shall be delivered by Landlord to
Tenant in the Building hereinabove referred to in accordance with the terms and
conditions hereinafter provided; and
WHEREAS, the Landlord and Tenant by this First Amendment to Lease wish to
modify, supplement and amend the terms and conditions of the Lease to provide
for additional rent and other
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<PAGE>
Lease obligations as the same shall be required and attributable to the
Additional Demised Premises,
NOW, THEREFORE, in consideration of the sum of ONE ($1.00) DOLLAR and other
good and valuable consideration, the parties hereto covenant and agree as
follows:
1. The Demised Premises shall consist of the Original Demised Premises
containing 3,828 square feet, together with the Additional Demised Premises
containing 324 square feet located on the second floor of the Buildling, to be
delivered by Landlord to Tenant, which total leased speace shall comprise 4,152
square feet, hereinafter called the 'Revised Demised Premises', and Article 1.2
of the Lease is hereby modified accordingly.
2. (a) The Lease term under the Lease as to the Additional Demised Premises
shall commence on or about July 1, 1996, subject to the provisions of paragraph
2(b) hereof, and shall expire, as to the Revised Demised Premises on May 31,
2000, in accordance with the terms and conditions of the Lease.
(b) In the event the Additional Demised Premises are delivered to the
Tenant prior to or after July 1, 1996, the Term, as applicable to the Additional
Demised Premises, shall commence on the date of delivery of possession of the
Additional Demised Premises to the Tenant (the 'Additional Commencement Date')
and shall continue, as to the Revised Demised Premises, until May 31, 2000 (the
'Expiration Date'). In the event the Additional Commencement Date is not the
first day of a calendar month, the Fixed Rent and additional rent payable for
such month shall be prorated accordingly.
3. Tenant shall pay Fixed Rent for the Revised Demised Premises in the same
manner as provided in Article 2 of the Lease, except as follows:
(a) Commencing upon delivery of the Additional Demised Premises in
accordance with the terms and conditions of the
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<PAGE>
within Amendment and continuing through the balance of the second year of the
Term, Tenant shall pay Fixed Rent in the amount of FIFTY FOUR THOUSAND THREE
HUNDRED SIXTY AND 00/100 ($54,360.00) DOLLARS per annum, in equal installments
of FOUR THOUSAND FIVE HUNDRED THIRTY AND 00/100 ($4,530.00) DOLLARS per month.
(b) During the third, fourth and fifth years of the Term, Tenant shall pay
Fixed Rent in the amount of SIXTY TWO THOUSAND TWO HUNDRED EIGHTY AND 00/100
($62,280.00) DOLLARS per annum, in equal installments of FIVE THOUSAND ONE
HUNDRED NINETY AND 00/100 ($5,190.00) DOLLARS per month.
(c) Tenant shall pay, in addition to the Fixed Rent hereinabove provided,
all other charges as in the Lease required and as may be attributable to the
Revised Demised Premises.
4. Anything herein contained to the contrary notwithstanding, it is
expressly understood and agreed that the Tenant shall take the Additional
Demised Premises and improvements as of the Additional Commencement Date in an
'as is' condition.
5. Effective as of the date of delivery of the Additional Demised Premises
to the Tenant, Tenant's Proportionate Share for additional rent and other
charges provided in the Lease as applicable to taxes, repairs, insurance and
other Lease obligations shall be revised from 9.2% to 10%, wherever applicable,
which revision and readjustment is attributable to the incorporation of the
Additional Demised Premises in and to the Revised Demised Premises as herein
referred to.
6. Article 38(1) of the Lease is hereby modified as follows:
'(1) During the first three (3) year renewal period, Tenant shall pay Fixed
Rent in the amount of SEVENTY FIVE THOUSAND SEVEN HUNDRED SEVENTY FOUR AND
00/100 ($75,774.00) DOLLARS per annum, in equal installments of SIX THOUSAND
THREE HUNDRED
3
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<PAGE>
FOURTEEN AND 50/100 ($6,314.50) DOLLARS per month, payable as hereinabove
provided in Article 2.'
7. The within Amendment is subject to and conditioned upon the Landlord
entering into a valid and binding Lease Termination Agreement with CHARLIE
BROWN'S, INC., a New Jersey Corporation, which Agreement is applicable to the
Additional Demised Premises. In the event such Agreement is not fully executed,
the within Amendment shall be null and void and of no further force and effect.
8. Except as in this First Amendment to Lease provided, all other terms and
conditions of the Lease shall remain in full force and effect and shall be
applicable to the Additional Demised Premises upon the Additional Commencement
Date.
9. This Agreement shall be binding on the parties hereto, their heirs,
successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals or
cause these presents to be signed by its proper corporate officers and caused
its proper corporate seal to be hereunto affixed, the day and year first above
written.
<TABLE>
<S> <C>
WITNESS: MOUNTAIN PLAZA ASSOCIATES
[SIGNATURE] By: /s/ HERBERT PUNIA (L.S.)
................................... ....................................
Herbert Punia, Partner
ATTEST: ALL COMMUNICATIONS CORPORATION
/s/ ANDREA GRASSO By: /s/ RICHARD REISS, Pres.
................................... ....................................
Richard Reiss, President
(Affix Corporate Seal here)
</TABLE>
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STATE OF NEW JERSEY )
) SS.:
COUNTY OF SOMERSET )
BE IT REMEMBERED, that on this 27th day of JUNE, 1996, before me, the
subscriber, SONDRA A. STEINBERG personally appeared Herbert Punia, Partner of
MOUNTAIN PLAZA ASSOCIATES, a New Jersey Partnership, who, I am satisfied, is the
Landlord mentioned in the within Instrument, and thereupon he acknowledged that
he signed, sealed and delivered the same as his act and deed, for the uses and
purposes therein expressed.
/s/ SONDRA A. STEINBERG
.....................................
SONDRA A. STEINBERG
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Nov. 23, 2000
STATE OF NEW JERSEY )
) SS.
COUNTY OF )
BE IT REMEMBERED, that on this 27th day of June, 1996, before me, the
subscriber, Vonda W. Wright personally appeared Richard Reiss, who, I am
satisfied, is the person who signed the within Instrument as President of ALL
COMMUNICATIONS CORPORATION, a New Jersey corporation, the Tenant named therein,
and he thereupon acknowledged that the said instrument made by the corporation
and sealed with its corporate seal, was signed, sealed with the corporate seal
and delivered by him as such officer and is the voluntary act and deed of the
corporation, made by virtue of authority from its Board of Directors.
/s/ VONDA W. WRIGHT
.....................................
Vonda W. Wright
Notary Public of NJ
My Commission Expires
January 7, 1997
PREPARED BY: ROBERT K. BROWN, ESQ.
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SCHEDULE A
[FLOOR PLAN]
CONSTRUCTION CLASSIFICATION: TYPE "2-C"
USE GROUP: "B"
OCCUPANT LOAD: 30 PEOPLE
-----------------------------------------------------
CHARLIE BROWN ROOM #1
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ALL COMMUNICATIONS ROOM #2
-----------------------------------------------------
1450 US RT. 22 WEST, MOUNTAINSIDE, N.J.
4-10-96 EXCL SCALE 1/8" = 1'-0" CODE ALLCOM
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FIRST AMENDMENT TO LEASE
BY AND BETWEEN:
MOUNTAIN PLAZA ASSOCIATES,
a New Jersey Partnership,
'Landlord'
-and-
ALL COMMUNICATIONS CORPORATION,
a New Jersey Corporation,
'Tenant'
DATED: JUNE 27, 1996
LAW OFFICES
EPSTEIN, EPSTEIN, BROWN & BOSEK
A Professional Corporation
245 Green Village Road
P.O. Box 901
Chatham Township, NJ 07928-0901
#13740352.1AM
RKB#601
June 19, 1996
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June 28, 1996 WRITER'S DIRECT DIAL NUMBER
(202) 508-3532
(202) 508-3571
E-Mail [email protected]
</TABLE>
Mr. Richard Reiss
All Communications
521 Fifth Avenue
29th Floor
New York, NY 10175
Re: 1130 Connecticut Avenue, NW, Suite 425
Dear Richard:
This Letter Agreement outlines the terms and conditions under which ALL
COMMUNICATIONS CORP. (hereinafter referred to as 'Subtenant') will lease space
from CHARLES L. FISHMAN, P.C. (hereinafter referred to as 'Sublandlord') at 1130
Connecticut Avenue, NW (hereinafter referred to as 'Building').
DEMISED PREMISES:
Demised Premises shall consist of one individual office within Suite 425.
TERM:
The initial Sublease term shall be for one year.
COMMENCEMENT DATE:
Shall be July 1, 1996.
BASE RENTAL RATE:
First office shall be two thousand five hundred dollars per month ($2,500)
Second office shall be one thousand two hundred fifty dollars ($1,250.00) per
month.
First research assistant station shall be seven hundred dollars ($700.00) per
month.
Second research assistant station and each secretarial bay shall be five hundred
dollars ($500.00) per month.
SERVICES:
The Base Rental Rate shall include all building services provided by the
Landlord in the Prime Lease Agreement and is inclusive of all rent escalation's,
increases, operating expenses and real estate taxes. In addition all general
office services including, use of the fax and phone for local services,
excluding long distance fax, phone and postage, and normal use of the copier,
conference room, kitchen and workroom.
[LOGO]
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SECURITY DEPOSIT AND FIRST MONTHS RENT:
Security deposit is equal to one months rent. Both the first months and security
deposit shall be due and payable upon commencement.
SIGNAGE:
The Subtenant shall provide suite entry identification at its sole cost and
expense.
TERMINATION:
Either party shall reserve the right to terminate this agreement for any reason
by giving thirty (30) days prior written notice.
ADDITIONAL CONDITIONS:
Subtenant shall agree in writing, by signing this letter of agreement, to abide
by all of the terms and provisions of the Prime Lease Agreement without
exception, except for the payment of rent and additional rent.
Subtenant shall not remove any of the Landlord's or Sublandlord's personalty
from the demised premises without the Landlord's or Sublandlord's express
written consent.
Subtenant shall not at any onetime locate more than six (6) persons on the
premises.
Kindly demonstrate your acceptance of the aforementioned terms and conditions by
signing below and returning one copy to us at your earliest convenience.
Sincerely,
BARNS, MORRIS, PARDOE & FOSTER, INC.
/s/ MICHAEL J. OLSEN
Michael J. Olsen
Vice President
/s/ CHRISTOPHER M CAMPAGNA
Christopher M. Campagna
Leasing Associate
<PAGE>
<PAGE>
AGREED AND ACCEPTED:
<TABLE>
<S> <C>
Charles L. Fishman, P.C. All Communications Corporation
By: /s/ CHARLES L. FISHMAN BY: /s/ RICHARD REISS
DATE: 7/1/96 DATE: 7/2/96
</TABLE>
Attachment:
Prime Lease Agreement between Acquiport Four Corporation and Charles L. Fishman,
P.C.
<PAGE>
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ALL COMMUNICATIONS CORPORATION
STOCK OPTION PLAN
SECTION 1. PURPOSE.
All Communications Corporation (The 'Company') depends on the initiative,
effort and judgment of its employees for the successful conduct of its business.
The purpose of this Stock Option Plan (The 'Plan') is to provide long-term
incentive compensation to certain employees whose performance can make a
substantial contribution to the long-term growth and prosperity of the Company.
The Plan is designed to encourage existing and future employees to increase the
long-term value of the Company to its stockholders by affording such employees
opportunities to become stockholders and thereby to share the risks and rewards
which accompany such status.
SECTION 2. DEFINITIONS.
As used in this Stock Option Plan the following terms have the meanings
stated in this Section 2. The singular includes the plural, and the masculine
gender includes the feminine and neuter genders, and vice versa, as the context
requires. The word 'person' includes any natural person an any coporation, firm,
partnership or other form of association.
'Board' means the Board of Directors of the Company.
'Code' means the Internal Revenue Code of 1986, as it may be amended from
time to time.
'Committee' means a committee of two or more Non-Employee Directors.
'Company' means All Communications Corporation.
'Date of Grant' means the date on which the Board acts to make the award of
a Stock Option hereunder, or such later date as it specifies when it makes the
award.
'Director' means a member of the Board.
'Disability' means a permanent and total disability as defined in Section
22(e) (3) of the Code.
'Employee' shall mean (i) with respect to an Incentive Stock option, any
person including an officer or employee-director
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of the Company, who, at the time an Incentive Stock Option is granted to such
person hereunder, is employed on a full-time basis by any member of the Group,
and (ii) with respect to a Non-Statutory Stock Option, any person employed by or
performing services for any member of the Group, including, without limitation,
employee-directors and officers.
'Exercise Date' means the date on which the Company receives a notice of
the exercise of a Stock Option, which notice meets the requirements of this
Plan.
'Fair Market Value' for purposes of valuing Stock shall be determined as
follows:
(i) If the Stock is principally traded on an exchange or market in
which prices are reported on a bid and asked basis, the mean between the
bid and the asked price for the Stock at the close of trading on the Date
of Grant;
(ii) If the Stock is principally traded on a national securities
exchange, the closing price of the Stock on the Date of Grant; and
(iii) If the Stock is neither traded on the over-the-counter market
nor listed on a national securities exchange, such value as the Board, in
good faith, shall determine.
'Group' means the Company, each parent corporation to the Company, and each
of the Company's subsidiaries, as these terms are defined in Section 424 of the
Code.
'Incentive Stock Option' means a Stock Option intended to qualify as an
incentive stock option under Section 422 of the Code.
'Non-Employee Director' shall have the meaning given it in Section 16b-3 of
the Securities Exchange Act.
'Participant' means an individual to whom a Stock Option has been awarded
hereunder.
'Plan' means this Stock Option Plan of the Company.
'Qualified Person' means a Participant's legal guardian or legal
representative or a deceased Participant's heir or legatee who has a legal right
to or in respect of a Stock Option of that Participant.
'Securities Exchange Act' means the Securities Exchange Act of 1934, as it
may be amended from time to time.
'Share' means a share of Stock.
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'Stock' means common stock of the Company having no par value.
'Stock Option' means an Incentive Stock Option or a Non-Statutory Stock
Option.
'Stock Option Agreement' means the form of agreement described in Section
5.01(d).
SECTION 3. ADMINISTRATION.
3.01 Administrative Body. Subject to Section 3.02, the Plan shall be
administered by the Board. The Board may in its sole discretion, but subject to
Section 3.02, delegate the authority to administer the Plan to the Committee. If
the Committee has been delegated the authority to administer the Plan, all
references to the Board in this Plan (except in this Section 3.01, Section 3.02
and Section 9) shall mean and refer to the Committee.
3.02. Public Company. If any member of the Group has any stock registered
under Section 12 of the Securities Exchange Act, This Section 3.02 shall apply.
(a) The Board shall delegate the authority to administer the Plan to
the Committee.
(b) In the event that compensation of the Participant which when added
to compensation attributable to Stock Options granted to Such Participant
hereunder, will cause such Participant to earn compensation in excess of
the limitations set forth under Section 162 (m), this Subsection (b) shall
apply. In such event, the Board shall delegate the authority to establish
the performance goal under which Stock Options will be awarded hereunder
pursuant to Section 4.01 to a Committee comprised solely of two or more
'outside directors' as that term is defined under Treasury Regulation
Section 1.162-27 (e) (3).
3.03. Authority. The Board or the Committee, as the case may be, shall have
the sole authority and discretion to:
(a) grant Stock Options under this Plan,
(b) subject to the limitations set forth in Section 5 hereof,
determine the terms and conditions of all Stock Options, including, without
limitation. (i) selecting the Participants who are to be granted Stock
Options hereunder; (ii) designating whether any Stock Option to be granted
hereunder is to be an Incentive Stock Option or a Non-Statutory Stock
Option; (iii) establishing the number of shares of Stock that may be issued
under each Stock Option; (iv) determining the time and the conditions
subject to which Stock Options may be exercised in whole or in
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part; (v) determining the form of the consideration that may be used to
purchase shares of Common Stock upon exercise of any Stock Option
(including the circumstances under which the issued and outstanding shares
of Common Stock may be used by a Participant to exercise a Stock Option);
(vi) imposing restrictions and/or conditions with respect to shares of
Common Stock acquired upon exercise of a Stock Option; (vii) determining
the circumstances under which shares of Common Stock acquired upon exercise
of any Stock Option may be subject to repurchase by the Company; (viii)
determining the circumstances and conditions subject to which shares
acquired upon exercise of a Stock Option may be sold or otherwise
transferred, including without limitation, the circumstances and conditions
subject to which a proposed sale of shares of Common Stock acquired upon
exercise of a Stock Option may be subject to the Company's right of first
refusal as well as the terms and conditions of any such right of first
refusal; (ix) establishing a vesting provision for any Stock Option
relating to the time (or the circumstance) when the Stock Option may be
exercised by a Participant, including vesting provisions which may be
contingent upon the Company meeting specified financial goals; (x)
accelerating the time when outstanding Stock Options may be exercised,
provided, however, that any Incentive Stock Options shall be 'accelerated'
within the meaning of Section 424 (h) of the Code, and (xi) establishing
any other terms, restrictions and/or conditions applicable to any Stock
Option not inconsistent with the provisions of this Plan; provided,
however, that the terms, conditions and restrictions of Stock Options may
vary from Participant to Participant and from award to award.
(c) prescribe the form of agreements awarding and governing the Stock
Options as provided in Section 5.01 (d),
(d) interpret the Plan,
(e) establish any rules or regulations relating to the Plan and
(f) make all other determinations for the proper administration of the
Plan.
The Board's decisions on matters relating to the Plan shall be final and
conclusive on the Group and Participants and their respective successors,
assigns, transferees, heirs and representatives.
SECTION 4. ELIGIBILITY.
4.01. Designation of Individuals Eligible to Participate. Stock Options may
be granted to any Employee. The Board shall have the sole authority to select
the persons to whom Stock Options are to be granted hereunder, and to determine
whether a person is to be granted hereunder, and to determine whether a person
is to be granted a Non-Statutory Stock Option or an
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Incentive Stock Option or any combination thereof. No person shall have any
right to participate in the Plan.
4.02. Participants. The Board may consider any factor in determining the
type (Incentive and/or Non-Statutory) and amount of a Participant's Stock
Option, including, but not limited to, (a) the current or anticipated financial
condition of the Group, (b) the contributions by the Participant to the Group
and (c) the other compensation provided to the Participant. The Board's award of
a Stock Option to a person in any year shall not require the Board to award any
Stock Option to that person in any other year.
SECTION 5. TERMS AND CONDITIONS OF STOCK OPTIONS.
5.01. General. All Stock Options shall be subject to the following
conditions:
(a) Except as provided in Section 7.04, each Stock Option shall have
an option price at lease equal to the Fair Market Value of the Shares
subject to the option on the Date of Grant, as determined by the Board.
(b) Each Stock Option shall expire on the tenth anniversary (10th) of
the Date of Grant.
(c) Each Stock Option shall be exercisable by the Participant during
his lifetime only by him; shall be transferable by him only by will or
under the laws of descent and distribution and shall be exercisable during
its term as determined by the Board. After a Participant's death or upon a
Participant's legal incapacity, each Stock Option may be exercised only by
the Participant's Qualified Person.
(d) Each Stock Option shall be evidenced by a written option agreement
(the 'Stock Option Agreement') identifying the type or types of Stock
Options awarded and stating the price, term and method of exercise of the
Stock Option, the number of Shares as to which the Stock Option is granted,
the disposition of the Stock Option to the extent unexercised upon the
termination of the Participant's employment by the Company, and such other
terms and conditions as the Board considers advisable that are not
inconsistent with the Plan, including, but not limited to, transfer
restrictions, rights of first refusal, forfeiture provisions,
representations and warranties of the Participant and provisions to ensure
compliance with all applicable laws, regulations and rules and compliance
with the terms of the Plan. The participant must execute and deliver the
Stock Option Agreement to the Company as a condition to the
effectiveness of the Stock Option. The Board may also determine to enter
into agreements with Participants to reclassify or convert certain
outstanding options, within the terms of the Plan, as Incentive Stock
Options or as Non-Statutory Stock
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Options.
(e) Upon the forfeiture of a Stock Option it may be granted to another
Participant.
5.02. Types of Stock Options. In the discretion of the Board, a Participant
may be awarded Non-Statutory Stock Options, Incentive Stock Options, or any
combination of the foregoing.
5.03. Incentive Stock Options. Incentive Stock Options shall be subject to
the additional requirements set forth at Section 7.
5.04. Other Conditions. At its sole discretion, the Board may impose
additional or other conditions on Stock Options, provided that such conditions
are not inconsistent herewith. The grant of Stock Options and issuance of shares
of Stock pursuant to any Stock Option shall be subject to the condition that if
at any time the Board shall determine, in its discretion, that the registration,
qualification or listing or such Stock Options or shares of Stock under any
state or federal law or upon any securities exchange, or the consent or approval
of any government regulatory authority or evidence of the investment intent of
the Participant, is necessary or desirable as a condition to the granting of
such Stock Option or the Issuance of such shares, such Stock Option or issuance
may not be made, in whole or in part, unless and until such registration,
qualification listing, consent or compliance, or evidence thereof, shall have
been effected or obtained free of any conditions not acceptable to the Board.
Without limiting the foregoing, the Board may impose such restrictions on the
transferability of shares issued pursuant to a Stock Option as may be necessary
to ensure compliance with all applicable securities laws.
SECTION 6. EXERCISE OF STOCK OPTIONS
6.01. (a) General. A Stock option granted under the Plan may be exercised
by delivery to the Secretary or any Assistant Secretary of the Company of
written notice of election to exercise, signed by the Participant or by his
Qualified Person, specifying the number of shares with respect to which the
Stock Option is being exercised and specifying a date, which shall be a business
day not less than seven (7) nor more than fifteen (15) days after delivery of
such notice to the Company, on which date the Company shall deliver, or cause to
be delivered to the participant, or to his Qualified Person, a certificate or
certificates for the number of shares specified against receipt of the entire
purchase price therefor. The notice shall be accompanied by full payment of the
purchase price for the Shares (a) in United States dollars in cash or by
certified check, (b) at the discretion of the Board, by delivery of previously
acquired Shares having a Fair Market Value equal on the date of exercise to the
cash exercise price of the
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Stock Option, or (c) at the discretion of the Board, by a combination of (a) and
(b) above.
(b) The Participant shall have no rights of a stockholder with respect to
such Shares until such Shares are issued and delivered as herein provided.
6.02. Vesting. The right to exercise a Stock Option is limited as
hereinafter provided:
(a) A Stock Option may be exercised as hereinafter provided only to the
extent that it has become vested as provided herein.
(b) A Stock Option shall vest to the extent of one hundred (100%) percent
of the shares of Stock covered by the Stock Option on the first anniversary of
the Date of Grant, provided that the Participant shall have been continuously
employed by a member of the Group from the Date of Grant to such anniversary
thereof as may be applicable.
6.03. Time Limits. (a) A Stock Option shall terminate in all respects on,
and no exercise as to any Shares covered by a Stock Option shall be honored on
or after the expiration of ten (10) years from the Date of Grant thereof.
(b) Except as provided in Section 7.04, a Stock Option may be exercised, to
the extent it is vested, at any time.
(c) If a Stock Option is not exercised for all shares of Stock as to which
the Stock Option has vested, it shall be exercised only in blocks of 10 shares
or more except that for the purpose of purchasing all of the shares as to which
a Stock Option has vested at the time of exercise, the Stock Option may be
exercised the entire balance of shares as to which such Stock Option has then
vested. The holder of more than one vested and outstanding Stock Option may
exercise such Stock Options concurrently for the purpose of obtaining blocks of
10 shares or more.
(d) If a Participant's employment is terminated for any reason other than
the Participant's death or Disability, any Stock option held by such
Participant, to the extent that such Stock Option or Stock Options have become
vested under Subsection 6.02(b) hereof prior to or on the date of such
termination of Participant's employment, shall be exercisable to the extent so
vested within but only within the period of three (3) months next succeeding
such termination of Participant's employment. Any such Stock Option not
exercised as aforesaid shall terminate.
(e) A Stock Option held by a Participant who dies while in the employ of a
member of the Group or terminates employment
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with a member of the Group by reason of Disability as determined by the Board
shall, to the extent that such Stock Option or Stock Options have become vested
under Subsections 6.02(b) hereof prior to or on the date of such Participant's
death or termination by reason of Disability, be exercisable by him or his
Qualified Person, as the case may be, within but only within the period of one
year next succeeding such Participant's death or termination as aforesaid and
then only to the extent of such vesting. Any such Stock Option not exercised as
aforesaid shall be terminated.
6.04. Other Conditions. (a) Except as provided above, no Stock Option may
be exercised unless the Participant is in the employ of a member of the Group on
the date of delivery to the Company of the Participant's written notice of
election to exercise the Stock Option pursuant to Subsection 6.01 (a) hereof and
unless the Participant shall have been continuously employed by a member of the
Group from the Date of Grant of the Stock Option to the date of delivery of said
written notice. Anything herein to the contrary notwithstanding, employment
shall be deemed to have ceased on the date specified by the Company whether or
not the Participant shall thereafter receive severance pay or other benefits or
render additional services to a member of the Group, provided nevertheless that
for all purposes of the Plan a Participant's employment by a member of the Group
shall be considered as continuing during the period of any authorized leave of
absence unless the authorization provides otherwise.
(b) It is a condition of the grant, acceptance or exercise of a Stock
Option that no claim or cause of action for loss of any benefits under the Plan
or any individual Stock Option Agreement thereunder shall accrue to the
Participant by reason of any termination of employment whether by reason of
retirement or for any other reason including discharge with or without cause.
(c) Any attempted transfer, assignment, pledge, hypothecation or other form
of change of ownership of a Stock Option otherwise than by will or by the laws
of descent and distribution shall be an invalid transaction. The Company shall
have no obligation to issue shares or to make any payment pursuant to such
invalid transaction, and the Board may in its discretion terminate the Stock
Option which is the subject of such invalid transaction. Any attempted levy of
attachment or like proceeding on such Stock Option shall be null and void.
SECTION 7. INCENTIVE STOCK OPTION
7.01. Compliance With Code Section 422. It is intended that Incentive Stock
Options granted under the Plan shall constitute Incentive Stock Options within
the meaning of Section 422 of the Code. Each Stock Option Agreement referred to
in Section 5.01(d) and which awards Incentive Stock Options shall contain or be
deemed to contain all provisions required in order to
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qualify such Stock Options as Incentive Stock Options under Section 422 of the
Code, and the provisions of this Plan shall be interpreted and construed to
effect such treatment under that Section.
7.02. Limitations on Amounts. The aggregate Fair Market Value on the Date
of Grant of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Participant during any calendar year
(under all Stock Option Agreements with the Group) shall not exceed ONE HUNDRED
THOUSAND DOLLARS ($100,000).
7.03. Time of Grant. All Incentive Stock Options must be granted within ten
(10) years from the earlier of (i) the date on which this Plan is adopted by the
Board or (ii) the date this Plan is approved by the shareholders of the Company.
7.04. Special Rule for Ten Percent Shareholders. No incentive Stock Option
shall be granted to any Participant who, at the time the Stock Option is
granted, owns (within the meaning of Section 422 of the Code) stock having more
than 10% of the total combined voting power of all classes of stock of the
Company or any member of the Group, unless the option price is equal to at least
110% of the Fair Market Value of the Shares subject to the Stock Option on the
Date of Grant and the Stock Option is not exercisable later than five years from
the Date of Grant.
SECTION 8. RESERVATION OF SHARES AND CHANGES IN CAPITALIZATION.
8.01. The Company hereby reserves five hundred thousand (500,000) shares of
its authorized but unissued Stock or Treasury Stock for issuance pursuant to the
exercise of Incentive Stock Options or Non-Statutory Stock Option as the Board
shall determine. The maximum number of shares with respect to which Stock
Options may be granted during any twelve (12) month period to a Participant is
one hundred thousand (100,000). The Company may issue either authorized but
unissued Stock or Treasury Stock upon exercise of any Stock Option. The number
of Shares of authorized but unissued Stock reserved for such issuance shall be
reduced by any shares of Treasury Stock issued upon exercise of any Stock
Option. The aggregate number and types of Shares reserved under the Plan to
which Stock Options may be granted to any individual shall be appropriately
adjusted in the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering or any
other change in capitalization in order to prevent dilution as provided in
Section 8.03.
8.02. Expiration and Cancellation. If a Stock Option granted under the Plan
expires, is terminated or is otherwise cancelled before exercise, that Stock
Option and the related Shares shall apply toward the limits provided in Section
8.01. If Shares
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issued or awarded under this Plan are forfeited, cancelled, terminated or
reacquired by the Company, those forfeited, cancelled, terminated or reacquired
Shares, shall not apply toward the limits provided in Section 8.01 and shall be
available immediately for the grant of Stock Options.
8.03 Dilution and Other Changes: (a) The Board shall adjust the number of
shares and types of securities subject to Stock Options and the exercise price
of the Stock Options as may be appropriate to prevent the dilution of
Participant's rights or to preserve the Company's position in the event of a
reorganization, recapitalization, stock split, reverse stock split, stock
dividend, exchange or combination of shares, merger, consolidation, rights
offering or any change in capitalization. The determination of the Board as to
any adjustments shall be binding upon the Participants and their legal
representatives.
(b) If at any time prior to the expiration or complete exercise of a Stock
Option, the Company shall be consolidated with, or merged into, any other
corporation, lawful provision shall be made as part of the terms of each such
consolidation or merger, so that there may thereafter be purchased upon the
exercise of such Stock Option, in lieu of each share remaining under such Stock
Option, but at the same option price, the same kind and amount of securities or
property (including in such terms, stock of any class or classes or cash) as may
be issuable, distributable or payable upon such consolidation or merger with
respect to each share of stock (of the class called for by such Stock Option) of
the Company outstanding immediately prior to such consolidation or merger;
provided, however, that the Board may require that the exercise of the Stock
Option under the provisions of this Subsection 8.03(b) must be made within a
specified period of time after the effective date of the consolidation or merger
of the Company and provided further that the Stock Option may be exercised only
to the extent it had vested before or on such effective date.
SECTION 9. GENERAL.
9.01. Effective Date. This Plan was adopted by the Board as of December 6,
1996. The Plan is subject to stockholder approval. If approved by the
stockholders, the Plan will take effect as of December 6, 1996. Unless so
approved within one year of the Plan's adoption by the Board, the Plan shall not
be effective for any purpose and shall be null and void. Before that approval by
the stockholders, the Board may award Stock Options; provided, however, that no
Stock Option may be exercised before that approval. If that approval is not
received within one year, then those previously awarded Stock Options shall be
of no effect and shall be null and void.
9.02. Duration. Unless the Plan is terminated earlier, the Plan shall
terminate 10 years from the date on which
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the Plan is adopted by the Board. No Stock Option or other rights under the Plan
shall be granted thereafter. The Board, without further approval of the
Company's stockholders, may at any time before that date terminate the Plan.
After termination of the Plan, no further Stock Options may be granted under the
Plan. Stock Options granted before any termination shall continue to be
exercisable in accordance with the terms of the Stock Option.
9.03. Notices. Every direction, revocation or notice authorized or required
by the Plan shall be deemed delivered to the Company (1) on the date it is
personally delivered to the Secretary of the Company at its principal executive
offices or (2) three business days after it is sent by registered or certified
mail, postage prepaid, addressed to the Secretary at such offices, and shall be
deemed delivered to an optionee (1) on the date it is personally delivered to
him or her or (2) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to him or her at the last address
shown for him or her on the records of the Company.
9.04. Withholding. Upon the exercise of any Stock Option, the Company shall
have the right to require the optionee to remit to the Company an amount
sufficient to satisfy all federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for shares of Common
Stock. Upon the disposition of any Common Stock acquired by the exercise of a
Stock Option, the Company shall have the right to require the optionee to remit
to the Company an amount sufficient to satisfy all federal, state and local
withholding tax requirements as a condition to the registration of the transfer
of such Common Stock on its books. Whenever under the Plan, payments are to be
made by the Company in cash or by check, such payments shall be net of any
amounts sufficient to satisfy all federal, state and local withholding tax
requirements.
9.05. No Right To Continued Employment. No Participant under the Plan shall
have any right to continue in the employ of the Company or any member of the
Group for any period of time because of his or her participation in the Plan.
9.06. No Right as Stockholder. No participant or Qualified Person shall
have the rights of a stockholder with respect to the Shares covered by a Stock
Option unless a stock certificate is issued to that person for the Shares. No
adjustment shall be made for cash dividends or similar rights for which the
record date is before the date on which such stock certificate is issued.
9.07. Amendment of the Plan. The Board may amend the Plan from time to time
in such respects as the Board deems advisable. No such amendment, however, shall
(a) change or impair a Stock Option without the consent of the Participant or
Qualified
11
<PAGE>
<PAGE>
Person holding that Stock Option, or (b) without the prior approval of the
Company stockholders (i) increase the limits provided in Section 8.01 (except by
adjustment under Section 8.03), (ii) change or expand the types of stock Options
that may be granted under the Plan, (iii) change the class of persons eligible
to receive Stock Options under the Plan, (iv) materially increase either the
benefits accruing to Participants under the Plan or the cost of the Plan to the
Company, (v) effect a change relating to Incentive Stock Option granted
hereunder which is inconsistent with Section 422 of the Code or regulations
issued thereunder, or (vi) make any other change that requires approval of the
Company stockholders under applicable law.
9.08. Fractional Shares. In no event shall a fraction of a Share be
purchased or issued under the Plan without Board approval.
9.09. Application of Funds. The proceeds received by the Company from the
sale of Shares under the Plan shall be used for general corporate purposes.
9.10. Other Incentives and Plans. Nothing in this Plan shall prohibit any
member of the Group from establishing other employee incentives and plans.
9.11. Governing Law. The validity and construction of the Plan and of each
Stock Option Agreement shall be governed by the laws of the State of New Jersey,
excluding the conflict-of-laws principles thereof.
12
<PAGE>
<PAGE>
EXHIBIT 11.1
ALL COMMUNICATIONS CORPORATION
COMPUTATION OF INCOME PER SHARE
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Net income............................................................................ $ 51,603 $ 9,220
---------- ----------
---------- ----------
Weighted average number of common shares outstanding.................................. 1,816,804 1,723,287
Add -- Shares issuable from assumed conversion of 12% Convertible Subordinated Notes
(as determined by the application of the treasury stock method in accordance with
SAB 83, Topic 4-D).................................................................. 160,714 160,714
---------- ----------
Weighted average number of common shares outstanding, as adjusted..................... 1,977,518 1,884,001
---------- ----------
---------- ----------
Net income per share.................................................................. $.03 $.01
---------- ----------
---------- ----------
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<PERIOD-TYPE> 12-MOS 12-MOS
<CASH> 646 154
<SECURITIES> 0 0
<RECEIVABLES> 706 357
<ALLOWANCES> 25 10
<INVENTORY> 497 145
<CURRENT-ASSETS> 1845 654
<PP&E> 166 99
<DEPRECIATION> 37 7
<TOTAL-ASSETS> 2083 755
<CURRENT-LIABILITIES> 1097 601
<BONDS> 0 0
<COMMON> 90 53
0 0
0 0
<OTHER-SE> 80 29
<TOTAL-LIABILITY-AND-EQUITY> 2083 755
<SALES> 3883 2641
<TOTAL-REVENUES> 3885 2641
<CGS> 2501 1782
<TOTAL-COSTS> 1264 811
<OTHER-EXPENSES> 0 25
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 29 7
<INCOME-PRETAX> 90 17
<INCOME-TAX> 38 8
<INCOME-CONTINUING> 52 9
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 52 9
<EPS-PRIMARY> .03 .01
<EPS-DILUTED> 0 0
<PAGE>
