Exhibit 10.20
SELLING AGENT AGREEMENT
As of October 28, 2002
The undersigned Selling Agent(s)
Gentlemen:
AESP, Inc. (the "Company"), on the basis of the representations,
warranties, covenants and conditions contained herein, hereby confirms the
agreement made with respect to the retention of each of the undersigned selling
agent(s) (the "Selling Agent") as an agent of the Company to assist the Company
in finding qualified purchasers, pursuant to the terms of this Selling Agent
Agreement (the "Agreement"), for up to an aggregate of 1,500,000 shares of the
Company's Common Stock (the "Shares" or "Securities") on a "best efforts" basis
(the "Offering"). The Securities are more particularly described in the
Memorandum (as defined in paragraph 1(a) below), and it is anticipated that the
Securities will not be registered under the Securities Act of 1933, as amended
(the "Act").
Each of the Company and the Selling Agent confirm the agreements made
by it with respect to the sale of the Securities by the Selling Agent, as
follow:
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with you, the
Selling Agent, as of the date hereof, and as of each Closing Date and until the
last Closing date (which is hereinafter defined in paragraph 10 of this
Agreement) that, to the best of the Company's knowledge, after reasonably
diligent inquiry:
(a) A Confidential Summary Private Offering Memorandum, including all
supplements, exhibits attached thereto (collectively, the "Memorandum"),
relating to the private offering of the Securities, has been prepared by the
Company in order to consummate the Offering pursuant to an exemption contained
in, the Act, and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") promulgated thereunder.
(b) As of the effective date of the Memorandum ("Effective Date") and
at all times subsequent thereto until the last Closing Date, neither the
Memorandum nor any supplement or amendment thereto will include any untrue
statement of a material fact or omit to state any material fact necessary to
make statements therein, in light of the context in which they were made, not
misleading; provided, however, that the Company makes no representations,
warranties or agreement as to information contained in or omitted from the
Memorandum in reliance upon, and in conformity with, written information
furnished to the Company by the Selling Agent specifically for use in the
Memorandum.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority (corporate and other) to own its
properties and conduct its business as described in the Memorandum, and is duly
qualified to do business as a foreign corporation and is in good standing in all
other jurisdictions in which the nature of its business or the character or
location of its properties requires such qualification, except where failure to
so qualify will not materially affect the Company's business, properties or
financial condition.
(d) The authorized, issued and outstanding securities of the Company as
of the Effective Date and each Closing Date of the Offering is as set forth in
the Memorandum; to the best of the Company's knowledge, all of the issued and
outstanding securities of the Company have been duly authorized, validly issued,
fully paid, and non-assessable; the issuances and sales of all such securities
complied in all material respects with applicable Federal and state securities
laws; the holders thereof have no rights of rescission against the Company with
respect thereto, and are not subject to personal liability by reason of being
such holders; none of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company; except as set forth in the Memorandum, 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
securities of the Company have been granted or entered into by the Company; and
all of the securities of the Company, issued and to be issued as set forth in
the Memorandum, conform to all statements relating thereto contained in the
Memorandum.
(e) The Securities are duly authorized, and when issued and delivered
pursuant to this Agreement, will be duly authorized, validly issued, fully paid,
and no personal liability will attach to the ownership thereof.
(f) This Agreement has been duly and validly authorized, executed and
delivered by the Company, and assuming due execution of this Agreement by the
Selling Agent, will constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
the rights of creditors generally or as to limitations on the enforceability of
indemnification provisions by reason of public policy. The Company has full
power and authority to authorize, issue and sell the Securities on, and subject
to, the terms and conditions set forth in the Memorandum, and no consent,
approval, authorization or order of any governmental authority is required in
connection with such authorization, execution and delivery, except such as may
be required under the Act or state securities laws.
(g) Except as described in the Memorandum, the Company is not in
material violation, breach of or default 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 of, or constitute a
material 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 any
of the terms of any material indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company is a party or by which the
Company may be bound or to which any of the property or assets of the Company is
subject, nor will such action result in any material violation of the provisions
of the articles of incorporation or by-laws of the Company, as amended, or any
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statute or any order, rule or regulation applicable to the Company of any court
or of any regulatory authority or other governmental body having jurisdiction
over the Company.
(h) Subject to the qualifications stated in the Memorandum, the Company
has good and marketable title to all properties and assets described in the
Memorandum as owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are set forth in the Memorandum or are not material
to the business, financial condition or results of operations of the Company;
all of the material leases and subleases under which the Company is the lessor
or sublessor of properties or assets or under which the Company holds properties
or assets as lessee or sublessee as described in the Memorandum are in full
force and effect, and, except as described in the Memorandum, the Company is 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 knowledge of the
Company no claim has been asserted by anyone adverse to rights of the Company as
lessor, sublessor, lessee, or sublessee under any of the leases or subleases
mentioned above, or affecting or questioning the right of the Company 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 Memorandum; and
the Company owns or leases all such properties described in the Memorandum as
are necessary to its operations as now conducted and, except as otherwise stated
in the Memorandum, as proposed to be conducted as set forth in the Memorandum.
(i) The financial statements and schedules, together with related
notes, set forth or incorporated by reference in the Memorandum or contained in
the exhibits to the Memorandum present fairly the financial condition, results
of operations and cash flows of the Company, on the basis stated in the
Memorandum, at the respective dates and for the respective periods to which they
apply, provided that financial statements which are not as of the end of any
fiscal year are subject to such adjustments as may be required in the normal
course of preparation of annual financial statements. Said statements and
related notes and schedules have been prepared in accordance with generally
accepted accounting principles applied on a basis which is consistent during the
periods involved. The Company's internal accounting controls and procedures are
sufficient to cause the Company to comply in all material respects with
generally accepted accounting principles applied on a basis which is consistent
during the periods involved.
(j) Subsequent to the respective dates as of which information is set
forth in the Memorandum and to and including each Closing Date, except as set
forth in or contemplated by the Memorandum, (i) the Company has not incurred and
will not have incurred any material liabilities or obligations, direct or
contingent, and has not entered into and will not have entered into any material
transactions other than as contemplated in the Memorandum except in the ordinary
course of business, (ii) the Company has not and will not have paid or declared
any dividends or have made any other distribution on its capital stock; (iii)
there has not been any material change in the capital stock of, or any
incurrence of long-term debt by, the Company; (iv) the Company has not issued
any warrants, options or other rights to purchase any securities of the Company;
and (v) there has not been and will not have been any material adverse change in
the business, financial condition or results of operations of the Company, or in
the book value of the assets of the Company, arising for any reason whatsoever.
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(k) Except as set forth in the Memorandum, there is not now pending or,
to the knowledge of the Company, threatened, any material action, suit,
proceeding, inquiry, arbitration or investigation against the Company or any of
its officers of directors, nor, to the knowledge of the Company, any such
material action, suit proceeding, inquiry, arbitration, or investigation, which
might result in any material adverse change in the condition (financial or
otherwise), business prospects, net worth, or properties of the Company.
(l) Except as disclosed in the Memorandum, the Company has filed
(taking into account all available extensions) all necessary federal, state and
foreign income and franchise tax returns and has paid all taxes shown as due
thereon; and there is no tax deficiency which has been or to the knowledge of
the Company might be asserted against the Company that has not been provided for
in the financial statements.
(m) Except to the extent that it will not cause a material adverse
change, the Company has sufficient licenses, permits and other governmental
authorizations currently required for the conduct of its business or the
ownership of its property as described in the Memorandum and is in all material
respects complying therewith and owns or possesses adequate right to use all
material patents, patent applications trademarks, service marks, trade-names,
trademark registrations, service xxxx registrations, copyrights, and licenses
necessary for the conduct of such business and has 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 are
in violation of, or cause the Company 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 impact upon the condition (financial or
otherwise), business, property, prospective results of operations, or net worth
of the Company.
(n) Except to the extent that it will not cause a material adverse
change, the Company has 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.
(o) On the Closing Date, 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 will have been fully paid or provided for by the
Company and all laws imposing such taxes will have been fully complied with.
(p) Except as set forth in or contemplated by the Memorandum, the
Company does not have (and on the last Closing Date will not have), any material
contingent liabilities outside the ordinary course of business not disclosed in
the Memorandum.
(q) Except as described in the Memorandum, the Company has no
subsidiary corporations. The Company does not have any equity interest in any
partnership, joint venture, association or other entity except as disclosed in
the Memorandum.
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(r) The Company is in compliance in all material respects with all
federal, state and local laws and regulations respecting the employment of its
employees and employment practices, terms and conditions of employment and wages
and hours relating thereto. To the Company's knowledge, there are no pending
investigations involving the Company by the U.S. Department of Labor, or any
other governmental agency responsible for the enforcement of such federal, state
or local laws and regulations. To the Company's knowledge, there is no unfair
labor practice charge or complaint against the Company pending before the
National Labor Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or to the knowledge of the Company, threatened
against or involving the Company or any predecessor entity. No question
concerning representation exists respecting the employees of the Company and no
collective bargaining agreement or modification thereof is currently being
negotiated by the Company. No grievance or arbitration proceeding is pending
under any expired or existing collective bargaining agreements of the Company,
if any.
(s) Based upon written representations received from the officers and
directors of the Company, except as disclosed in the Memorandum, during the past
five years, none of the current officers or directors of the Company have been:
(1) The subject of a petition under the federal bankruptcy
laws or any state insolvency law filed by or against them, or by a
receiver, fiscal agent or similar officer appointed by a court for
their business or property, or any partnership in which any or them was
a general partner at or within two years before the time of such
filing, or any corporation or business association of which any of them
was an executive officer at or within two years before the time of such
filing;
(2) Convicted in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations and other
minor offenses);
(3) The subject of any order, judgment, or decree not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining any of them from, or
otherwise limiting, any of the following activities:
(i) acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant, any
other person regulated by the Commodity Futures Trading
Commission, or an associated person of any of the foregoing,
or as an investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee
of any investment company, bank, savings and loan association
or insurance company, or engaging in or continuing any conduct
or practice in connection with any such activity;
(ii) engaging in any type of business practice; or
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(iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection
with any violation of federal or state securities law or
federal commodity laws.
(4) The subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated of any federal or state
authority barring, suspending or otherwise limiting for more than sixty
(60) days their right to engage in any activity described in paragraph
(3)(i) above, or be associated with persons engaged in any such
activity;
(5) Found by any court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission to have violated
any federal or state securities law, and the judgment in such civil
action or finding by the Commission has not been subsequently reversed,
suspended or vacated; or
(6) Found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or
finding by the Commodity Futures Trading Commission has not been
subsequently reversed, suspended or vacated.
2. APPOINTMENT OF SELLING AGENT TO SELL THE SECURITIES.
(a) Subject to the terms and conditions of this Agreement and based
upon the representations, warranties and agreements herein contained, the
Company hereby appoints the undersigned Selling Agent as an agent of the
Company, until the last Closing Date, to find qualified purchasers for the
Securities in accordance with the Act and the Rules and Regulations, who shall
be accredited investors as that term is defined in Rule 501 of Regulation D
under the Act, and the Selling Agent, on the basis of the representations and
warranties of the Company herein, accepts such appointment and agrees to use its
best efforts to find qualified purchasers for the Securities in accordance with
the Act and the Rules and Regulations. The price at which the Selling Agent
shall sell the Securities to the public, as agent for the Company, shall be
$1.00 per Share (the "Offering Price"), which Shares shall be offered with a
minimum purchase of $10,000.00, unless the Company shall otherwise agree. The
Company shall pay a commission of ten percent (10%) of the Offering Price to the
Selling Agent with respect to each Share sold in the Offering by such Selling
Agent. The Company reserves the right to make the final determination as to
whether any purchasers found by the Selling Agent are qualified purchasers in
accordance with the requirements set forth in the Memorandum, and to reject the
subscriptions of any purchasers the Company deems not be so qualified.
(b) The Selling Agent shall use its best efforts to find qualified
purchasers for the Securities on behalf of the Company, and the Selling Agent
will instruct investors to make all remittances payable to the Company's
counsel. Any and all funds received from such sale, without any deduction
therefrom whatsoever, including, but not limited to, any commission or any
dealer concession or otherwise, shall be held by counsel until the Closing Date
and the last Closing Date. The proceeds from the Offering shall be released from
the escrow account pursuant to a disbursement letter executed by the Selling
Agent and the Company. The Selling
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Agent shall receive compensation relating to sales of Securities sold on each
Closing Date directly from the Company's counsel.
(c) As further compensation to the Selling Agent, the Company will
issue to the Selling Agent warrants to acquire an amount of the Company's common
stock at an exercise price of $1.50 per share, equal to ten percent (10%) of the
total number of shares of the Company's common stock sold in the Offering by
such Selling Agent.
3. DELIVERY OF THE SECURITIES.
Delivery of the Securities sold by the Selling Agent shall take place
at the principal office of the Selling Agent (or at such other place as may be
designated by the Selling Agent), on such date after the last Closing Date as
the Selling Agent shall designate.
4. OFFERING THE SECURITIES ON BEHALF OF THE COMPANY.
It is understood that the Selling Agent proposes to find qualified
purchasers for the Securities in private sales exempt from registration under
the Act as contemplated in the Memorandum, solely as agent for the Company, upon
the terms and conditions set forth in the Memorandum. The Selling Agent shall
commence making such offer as agent for the Company on the Effective Date, or as
soon thereafter as the Selling Agent and the Company deem advisable.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Selling Agent that:
(a) The Company authorizes the Selling Agent to use the Memorandum in
connection with the sale of the Securities during the offering period and until
the last Closing Date, in compliance with the Act and the Rules and Regulations,
and for such period as in the opinion of counsel to the Company and the Selling
Agent the use thereof is required to comply with the applicable provisions of
the Act and the Rules and Regulations. If at any time within the offering
period, there occurs an event of which the Company has knowledge and which in
the opinion of counsel for the Company or counsel for the Selling Agent should
be set forth in a supplement to the Memorandum in order to make the statements
therein not then misleading, in light of the circumstances existing at the time
the Memorandum is required to be delivered to a purchaser of the Securities, or
in case it shall be necessary to amend or supplement the Memorandum to comply
with law or with the Act and the Rules and Regulations, the Company will notify
the Selling Agent promptly and forthwith prepare and furnish to the Selling
Agent copies of such amended Memorandum or of such supplement to be attached to
the Memorandum, in such quantities as the Selling Agent may reasonably request,
in order that the Memorandum, 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 Memorandum, 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 Memorandum shall be
without expense to the Selling Agent. After notice by the Company to the Selling
Agent of the requirement for amendment or supplement to the Memorandum in
accordance with this paragraph, the Selling Agent agrees that it will not
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deliver further copies of the Memorandum to any prospective purchaser until the
appropriate amendment or supplement has been supplied by the Company.
The Company will comply with the Act, the Rules and Regulations
thereunder, and the provisions of the Securities Exchange Act of 1934 (the "1934
Act") and the rules and regulations thereunder in connection with the offering
and issuance of the Securities.
(b) The Company will, at its sole cost and expense, use its best
efforts to qualify and register the Securities for sale under the securities or
"blue sky" laws of such jurisdictions as are reasonably requested by the Selling
Agent, 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 to service of process in any
jurisdiction in order to qualify the offering or sale of the Securities in such
jurisdiction. 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 Selling Agent may reasonably request,
until the last Closing Date.
(c) After the Closing Date, the Company, at its expense, will furnish
to the Selling Agent, and if practicable, to the purchasers of the Securities,
during the period ending three (3) years from the Closing Date, (i) as soon as
practicable after the end of each fiscal year, a balance sheet of the Company
and any of its subsidiaries, as at the end of each fiscal year, together with
statements of income, surplus and source and application of funds 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 they are available, a copy of all reports
(financial or other) mailed to security holders of the Company; (iii) as soon as
they are available, a copy of all non-confidential reports, including annual
reports, periodic reports and financial statements, furnished to or filed with
the Commission under the Act and the 1934 Act; (iv) copies of each press
release, news item and article with respect to the Company's affairs publicly
released by the Company; and (v) such other information as the Selling Agent may
from time to time reasonably request.
(d) In the event the Company has an active subsidiary or subsidiaries,
such financial statements referred to in subsection (c) 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.
(e) The Company will apply the net proceeds from the sale of the
Securities substantially in accordance with the Company's statements as set
forth in the Memorandum.
(f) Prior to the last Closing Date, the Company will not issue,
directly or indirectly, without the Selling Agent's prior consent, any press
release or other communication or hold any press conference with respect to the
Company, or its activities or the offering of the Securities, other than routine
customary advertising of the Company's products and services, and except as
required by any applicable law or the directives of any relevant regulatory
authority in any relevant jurisdiction.
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(g) The Company shall continue to employ the services of a firm of
independent certified public accountants reasonably acceptable to the Selling
Agent in connection with the preparation of the financial statements to be
included in any disclosure document, or any amendment or supplement thereto
during the offering period. In that regard, BDO Xxxxxxx and any Big 4 firm are
hereby approved.
(h) The Company will not use any of the proceeds of the Offering to
repay any principal of any debt due from the Company to any officers, directors
or employees, and any of their respective family members (including, but not
limited to, parents, children and/or siblings).
6. CONDITIONS OF SELLING AGENT'S OBLIGATION. The obligations of the
Selling Agent to act as agent for the Company are subject, as of the date hereof
and as of each Closing Date, to the continuing accuracy of, and compliance with,
the representations and warranties of the Company herein, to the accuracy of
statements of officers of the Company made to the Selling Agent pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) Since the date as of which information is presented in the
Memorandum; (i) there shall not have been any material adverse change in the
capital stock or other securities of the Company or any material adverse change
in the long-term debt of the Company except as set forth in or contemplated by
the Memorandum; (ii) there shall not have been any material adverse change in
the general affairs, business, properties or condition (financial or otherwise),
management, or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, in each case other than as set
forth in or contemplated by the Memorandum; (iii) the Company shall not have
sustained any material interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Memorandum; and (iv) neither the
Memorandum 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, in light of the
circumstance under which they are made, not misleading. The Selling Agent's
obligations to find qualified purchasers under this Agreement shall cease, if in
the judgment of the Selling Agent, any such development referred to in clauses
(i), (ii), (iii) or (iv) makes it impracticable or inadvisable to consummate the
sale and delivery of the Securities by the Selling Agent.
(b) At each Closing Date, except as set forth in the Memorandum, there
is not pending or, to the knowledge of the Company, threatened, any material
action, suit, proceeding, inquiry, arbitration or investigation against the
Company or any of the officers of directors of the Company, nor, to the
Company's knowledge, any such material action, suit, proceeding, inquiry,
arbitration, or investigation, which might materially and adversely affect the
condition (financial or otherwise), business prospects, net worth, or properties
of the Company.
(c) Each of the representations and warranties of the Company contained
herein shall be true and correct as of this date and at each Closing Date as if
made at the Closing Date, and all covenants and agreements herein contained to
be performed on the part of the Company and all
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conditions herein contained to be fulfilled or complied with by the Company at
or prior to the Closing Date shall have been duly performed, fulfilled or
complied with.
(d) The Selling Agent shall have received, as of the last Closing Date,
a certificate dated as of the last Closing Date, signed by the Chief Executive
Officer of the Company, certifying that:
(i) He has carefully examined the Memorandum and, to the best
of his knowledge, neither the Memorandum nor any amendment or
supplement thereto contains an untrue statement of any material fact or
omits to state any material fact required to be stated therein or
necessary to make the statement therein in light of the context in
which they were made, not misleading; and since the Effective Date, to
the best of his knowledge, there has occurred no event required to be
set forth in an amendment or supplement to the Memorandum which has not
been so set forth;
(ii) Since the respective dates as of which information is
given in the Memorandum, there has not been any material adverse change
in the condition of the Company, financial or otherwise, or in the
results of its operations, except as reflected in or contemplated by
the Memorandum;
(iii) Each of the representations and warranties set forth in
the Selling Agent Agreement are true and correct as of the Effective
Date and as of each Closing Date, and the Company has complied with all
of its agreements and performed all of its obligations under the
Selling Agent Agreement;
(iv) The Company is not delinquent in the filing of any United
States or other tax return (after taking into account all available
extensions) or the payment of any United States or other taxes (except
as disclosed in writing to the Selling Agent); he knows of no proposed
redetermination or re-assessment of taxes adverse to the Company, and
the Company has paid or provided by adequate reserves for all known tax
liabilities;
(v) The financial statements and schedules contained in the
Memorandum present fairly the financial position of the Company as of
the dates thereof, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved. Since the respective dates of such financial statements,
there have been no material adverse changes in the condition or general
affairs of the Company, financial or otherwise, other than as referred
to in the Memorandum;
(vi) Except as disclosed in the Memorandum, during the past
five years he has not been:
(1) Subject of a petition under the Federal
bankruptcy laws or any state insolvency law filed by or
against him, or by a receiver, fiscal agent or similar officer
appointed by a court for their business or property, or any
partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or
business association of which he was an executive officer at
or within two years before the time of such filing;
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(2) Convicted in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) The subject of any order, judgment, or decree,
not subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily
enjoining him from, or otherwise limiting, any of the
following activities:
(i) acting as a futures commission merchant,
introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by
the Commodity Futures trading commission, or an
associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or
employee of any investment company, bank, savings and
loan association or insurance company, or engaging in
or continuing any conduct or practice in connection
with any such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in
connection with any violation of Federal or State
securities law or Federal Commodity Laws.
(4) The subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated of any Federal or
State authority barring, suspending or otherwise limiting for
more than 60 days either of his right to engage in any
activity described in paragraph (3)(i) above, or be associated
with persons engaged in any such activity;
(5) Found by any court of competent jurisdiction in a
civil action or by the Securities and Exchange Commission to
have violated any Federal or State securities law, and the
judgment in such civil action or finding by the Commission has
not been subsequently reversed, suspended or vacated; or
(6) Found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to
have violated any Federal Commodities Law, and the judgment in
such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or
vacated.
(e) If any of the conditions provided for in this Section shall not
have been fulfilled as of the date indicated, this Agreement and all obligations
of the Selling Agent under this Agreement may be canceled at, or at any time
prior to, the last Closing Date by the Selling Agent notifying the Company of
such cancellation in writing or by facsimile at or prior to the last Closing
Date. Any such cancellation shall be without liability of the Selling Agent to
the Company.
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7. REPRESENTATIONS AND WARRANTIES OF THE SELLING AGENT. The Selling
Agent hereby represents and warrants to, and agrees with, the Company as to
itself as follows:
(a) Such Selling Agent will not offer or sell any Securities to any
investor which the Selling Agent did not have reasonable grounds to believe and
did not believe, was an "accredited investor" and otherwise met the suitability
standards described in the Memorandum.
(b) Such Selling Agent will not offer or sell any Securities by means
of any form of general solicitation or general advertising, including, without
limitation, the following:
(i) any advertisement, article, notice or other communication
published in any newspaper, magazine, or similar medium or broadcast
over television or radio; and
(ii) any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(c) Such Selling Agent is a member in good standing of the NASD or is a
registered representative thereof and is licensed to offer and sell the
Securities in each jurisdiction in which the Selling Agent has customers to
which the Securities are offered and sold.
(d) Such Selling Agent will only pay a commission to a person licensed
to receive such commission in the particular state in which an investor
purchasing the Securities resides.
(e) Such Selling Agent will not provide any written or oral information
regarding the Offering other than the Memorandum or other mutually approved
Offering materials.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the undersigned
Selling Agent and each person, if any, who controls the Selling Agent within the
meaning of the 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 third-party costs of defense and investigation and
all reasonable attorneys' fees), to which the Selling Agent or such 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 (i) any breach of the warranties and representations contained
herein, or (ii) any untrue statement or alleged untrue statement of any material
fact contained in (a) the Memorandum, or any amendment or supplement thereto,
(b) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information 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
arise out of or are based upon the omission or alleged omission to state in the
Memorandum, 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 liable in any such cases to the extent, but only to the extent, that any
such losses, claim, damages 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
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the Company by or on behalf of the Selling Agent specifically for use in the
preparation of the Memorandum or any such amendment or supplement thereof or any
such Blue Sky Application. This indemnity will be in addition to any liability
which the Company may otherwise have.
(b) Selling Agent will indemnify and hold harmless the Company, each of
its directors, each nominee (if any) for director named in the Memorandum, 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 all 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 (i) any breach of the
warranties and representations contained herein, or (ii) any untrue statement or
alleged untrue statement of any material fact contained in the Memorandum, 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 statements or
alleged untrue statement or omission or alleged omission was made in the
Memorandum, or any amendment or supplement thereto.
(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, promptly 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 promptly 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 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 indemnified party, based upon a written opinion of
its counsel, 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 the 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
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separate firm of attorneys for such 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
indemnifying party, which shall not be unreasonably withheld in light of all
factors of importance to such indemnifying party.
9. CONTRIBUTION.
(a) If the indemnification provided for in this Agreement is
unavailable to any indemnified party in respect to any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, will contribute to the amount paid
or payable by such indemnified party, as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand, and by
the Selling Agent on the other hand, from the Offering, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the Company on
the one hand, and of the Selling Agent on the other hand, in connection with any
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations;
provided, that any contribution hereunder by the Selling Agent shall not exceed
the amount of consideration received by the Selling Agent hereunder. The
relative benefits received by the Company on the one hand, and by the Selling
Agent on the other hand, shall be deemed to be in the same proportion as the
total proceeds from the Offering (net of sales commissions, and the
non-accountable expense allowance, but before deducting expenses) received by
the Company, bear to the commissions and the non-accountable expense allowance
received by the Selling Agent. The relative fault of the Company on the one
hand, and of the Selling Agent on the other hand, will be determined with
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the Company, and its relative intent, knowledge, access
or information and opportunity to correct or prevent such statement or omission.
The Company and the Selling Agent agree that it would not be just and equitable
if contribution pursuant to this Section were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in this paragraph.
(b) Within fifteen (15) days after receipt by any party to this
Agreement (or its representative) of notice of the commencement of any action,
suit, or proceeding, such party will, if a claim for contribution in respect
thereof is to be made against another party ("Contributing Party"), notify the
Contributing Party of the commencement thereof, but the omission to so notify
the Contributing Party will not relieve it from any liability which it may have
to any other party other than for contribution hereunder. In case any such
action, suit or proceeding is brought against any party, and such party notifies
a Contributing Party or its representative of the commencement thereof within
the aforesaid fifteen (15) days, the Contributing Party will be entitled to
participate therein with the notifying party and any other Contributing Party
similarly notified. Any such Contributing Party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding which was effected by such party seeking contribution on account of
any settlement of any claim, action or proceeding effected by such party seeking
contribution without the written consent of such Contributing Party. The
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contribution provisions contained in this Section are intended to supersede, to
the extent permitted by law, any right to contribution under the Act, the
Exchange Act or otherwise available.
10. COSTS AND EXPENSES.
(a) Whether or not the sale of the Securities by the Company 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 of the Memorandum (including the financial statements therein and
all amendments and exhibits thereto); all state filing fees, expenses and
disbursements and legal fees to counsel in connection with the qualification of
the Securities under the state securities or blue sky laws, in such
jurisdictions which the Selling Agent shall reasonably designate; the cost of
printing the certificates evidencing the Securities; the cost of preparing and
delivering to the Selling Agent and its counsel bound volumes containing copies
of all documents and appropriate correspondence, and all closing documents; and
the fees and disbursements of the transfer agent for the Company's securities.
The Company shall pay any and all taxes (including any transfer, franchise,
capital stock or other tax imposed by any jurisdiction) on sales hereunder. The
Company will also pay all costs and expenses incident to the furnishing of any
supplement to be attached to the Memorandum.
(b) In addition to the foregoing expenses, the Company shall pay to the
Selling Agent a non-accountable expense allowance equal to three percent (3%) of
the gross proceeds received from the sale of the Securities by the Selling
Agent. The Company shall pay such non-accountable expenses due the Selling Agent
at such time as the Company remits each payment to the Selling Agent pursuant to
paragraph 2(b) of this Agreement. The Selling Agent shall pay all of its
expenses relating to the Offering of the Securities.
(c) Other than as described in the Memorandum, no person is entitled,
either directly or indirectly, to compensation from the Company, from the
Selling Agent or from any other person for services as a finder in connection
with the proposed offering, and each of the Company and the Selling Agent agrees
to indemnify and hold harmless the other 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 third-party costs of defense and
investigation and all reasonable attorneys' fees, to which the Selling Agent or
the Company 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.
11. CLOSING DATE. The offering will terminate on the last Closing Date,
which shall be:
(a) the Termination Date described in the Memorandum, unless extended
by the Company to a later date;
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(b) the date all of the Securities are sold; or
(c) such earlier date specified in writing by the Company and the
Selling Agent (each, a "Closing Date").
12. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, covenants, conditions,
warranties and other statements of the Company and/or its officers and/or
directors, where appropriate, and the Selling Agent set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Selling Agent, the Company or any
of its officers or directors or any controlling person and will survive delivery
of and payment for the Securities and the termination of this Agreement.
13. NOTICE. All communications hereunder will be in writing and, except
as otherwise expressly provided herein, will be mailed, delivered or faxed and
confirmed:
If to the Selling Agent: Xxxx Xxxxxxxxx
Newbridge Securities Corporation
0000 X. Xxxxxxx Xxxxx Xxxx - Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Xxxxx St. Clair
ViewTrade Securities, Inc.
0000 Xxxx Xxxxxxxx Xxxx Xxxx - Xxxxx 000
Xxxx Xxxxx, XX 00000
If to the Company: Xxxxx Xxxxxxx, Executive Vice President
Advanced Electronic Support Products, Inc.
0000 X.X. 000xx Xxxxxx
Xxxxx Xxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Akerman Senterfitt
One XX 0xx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
14. PARTIES IN INTEREST. This Agreement herein set forth is made solely
for the benefit of the Selling Agent, the Company and, to the extent expressed,
any person controlling the Company or the Selling Agent, and directors of the
Company, nominees for directors (if any) named in the Memorandum, its officers,
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 of the Securities
or other securities from the Selling Agent.
15. APPLICABLE LAW. This Agreement will be governed by, and construed
in accordance with, the laws of the State of Florida applicable to agreement
made and to be entirely performed within Florida. The parties agree that any
action brought by any party against another
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party in connection with any rights or obligations arising out of this Agreement
shall be instituted properly in a federal or state court of competent
jurisdiction with venue only in the Seventeenth Judicial Circuit Court in and
for Broward County, Florida or the United States District Court for the Southern
District of Florida, Ft. Lauderdale Division. A party to this Agreement named as
a Defendant in any action brought in connection with this Agreement in any court
outside of the above named designated county or district shall have the right to
have the venue of said action changed to the above designated county or district
or, if necessary, have the case dismissed, requiring the other party to refile
such action in an appropriate court in the above designated county or federal
district.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
17. ENTIRE AGREEMENT. This Agreement and the agreements referred to
within this Agreement constitute the entire agreement of the parties, and
supersedes all prior agreement, understanding, negotiations and discussions,
whether written or oral, of the parties hereto.
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 Selling Agent in accordance with
its terms.
Very truly yours,
AESP, INC.
By: /s/ Xxxx Xxxxx
----------------------------------------
Xxxx Xxxxx, Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
NEWBRIDGE SECURITIES CORPORATION
By: /s/
----------------------------------------
VIEWTRADE SECURITIES, INC.
By: /s/ Xxxxx St. Clair
----------------------------------------
Xxxxx St. Clair, Chief Financial Officer
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