EXHIBIT 1.1
ADVANCED ELECTRONIC SUPPORT PRODUCTS, INC.
800,000 Shares of Common Stock
800,000 Redeemable Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
As of February 13, 1997
CORPORATE SECURITIES GROUP, INC.
000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
ARGENT SECURITIES, INC.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Gentlemen:
Advanced Electronic Support Products, Inc., a Florida corporation (the
"Company") confirms its agreement with Corporate Securities Group, Inc., a
Florida corporation, and Argent Securities, Inc., a Georgia corporation
(collectively, the "Representatives") as representatives and members of the
group of several underwriters, if any, named in Schedule I attached hereto (the
"Underwriters" or "you", and if there is no Schedule I attached, all references
in this Agreement to the "Underwriters" or "you" shall be deemed to refer only
to the Representatives) as follows:
1. The Shares and the Warrants. Subject to the terms and conditions set
forth herein, the Company proposes to sell to you on a "firm commitment" basis,
an aggregate of 800,000 shares ("Shares") of the Company's authorized but
unissued common stock, par value $.001 per share (the "Common Stock") and
800,000 Redeemable Common Stock Purchase Warrants, (the "Warrants"), each
Warrant entitling the holder thereof to purchase one share of Common Stock at an
exercise price of per share pursuant to a warrant agreement (the "Warrant
Agreement") between the Company and Continental Stock Transfer & Trust ("Warrant
Agent"). The Company also proposes to grant to you an option to purchase up to
an additional 120,000 shares of Common Stock and 120,000 Warrants for the sole
purpose of covering over-allotments, if any (the "Option Securities"). The
Shares and the Warrants are sometimes collectively referred to herein as the
"Firm Securities". The Firm Securities and the Option Securities are more fully
described in the Registration Statement and the Prospectus referred to herein
and are hereinafter sometimes collectively referred to as the "Securities."
2. Registration Statement and Prospectus. A registration statement on
Form SB- 2 (File No. 333-15967) together with exhibits and including a
preliminary form of prospectus for the registration of the Securities, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended, and all applicable instructions,
rules and regulations (collectively, the "Securities Act") of the Securities and
Exchange Commission (the "Commission"), and has been filed with the Commission.
There have been delivered to you, copies of each Preliminary Prospectus and the
Final Prospectus. Such registration statement, including the Prospectus, Part
II, any documents incorporated by reference therein and all financial schedules
and exhibits thereto, as amended at the time when it shall become effective, is
herein referred to as the "Registration Statement," and the prospectus included
as part of the Registration Statement on file with the Commission when it shall
become effective or, if the procedure in Rule 430A of the Rules and Regulations
(as defined below) is followed, the prospectus that discloses all the
information that was omitted from the prospectus on the effective date of the
Registration Statement pursuant to such rule, and in either case, together with
any changes contained in any prospectus filed with the Commission by the Company
with your consent after the effective date of the Registration Statement, is
herein referred to as the "Final Prospectus." If the procedure in Rule430A is
followed, the prospectus included as part of the Registration Statement on the
date when the Registration Statement became effective is referred to herein as
the "Effective Prospectus." Any prospectus included in the Registration
Statement of the Company and in any amendments thereto prior to the effective
date of the Registration Statement is referred to herein as a "Pre-Effective
Prospectus." For purposes of this Agreement, "Rules and Regulations" mean the
rules and regulations adopted by the Commission under either the Securities Act
or the Securities Exchange Act of 1934 (the "Exchange Act"), as applicable.
3. Agreements to Sell and Purchase.
(a) Firm Securities. The Company agrees to sell to you,
and upon the basis of the representations, warranties and agreements of the
Company herein contained and subject to the terms and conditions hereof, you
shall purchase from the Company, the Shares at a purchase price of $_____ per
Share and the Warrants at a purchase price of $____ per Warrant. This purchase
price of the Shares and the Warrants represents the public offering price of
such securities, less a discount, equaling ten percent (10%), that the Company
has agreed to allow the Underwriters. All or any portion of such discount may be
reallowed by you for sales through licensed securities dealers who are members
of the National Association of Securities Dealers, Inc. (the "NASD").
(b) Option Securities. The Company also grants you an
option to pur- chase, upon your written notice to the Company, the Option
Securities for the sole purpose of covering over-allotments, if any, at the
purchase price and on the same terms as set forth in the preceding paragraph.
The Option Securities may be purchased, in whole or in part, at any time for a
period of forty-five (45) days following the effective date of the Registration
Statement. The notice from you to the Company shall specify the number of Option
Securities to be purchased and the date and time of payment and delivery thereof
(the "Option Closing Date"). You, as the Underwriters, in your sole discretion,
shall determine the number of Option Securities, if any, to be purchased as
provided herein. Such over-allotment option shall not be exercised more than on
one occasion.
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(c) Underwriters' Purchase Option. On the Closing Date
(as defined herein), the Company shall further issue and sell to you or, at your
direction, to your bona fide officers and directors, an option (the
"Underwriters' Purchase Option") pursuant to the Purchase Option Agreement for
the purchase of an aggregate of 80,000 shares of Common Stock (the
"Underwriters' Shares") and 80,000 Common Stock Purchase Warrants (the
"Underwriters' Warrants") for an aggregate purchase price of $80.00. The
Underwriters' Purchase Option shall be exercisable at any time during the four
year period commencing one-year after the effective date of the Registration
Statement (the "Term"), at a price of equal to 130% of the respective public
offering price of the Shares and the Warrants. For a period of one (1) year
after the effective date of the Registration Statement, the Underwriters'
Purchase Option (and the Purchase Option Securities, as hereinafter defined) may
not be sold, assigned, transferred, pledged or hypothecated except to officers
of the Underwriters or members of the selling group. Such transfers will only be
made if they do not violate the registration provisions of the Securities Act.
The Underwriters' Purchase Option and the Purchase Option Securities shall be
transferable after one year from the effective date of the Registration
Statement pursuant to available exemptions from registration (if not otherwise
covered by an effective registration statement) under the Securities Act,
provided, however, that the Underwriters' Purchase Option may not be transferred
to a direct competitor of the Company without the Company's prior written
consent. Except as otherwise set forth in the Purchase Option Agreement, you may
designate that the Underwriters' Purchase Option be issued in varying amounts
directly to your officers and not the Underwriters, and to other underwriters,
if any, and their designees. Such designation will be made by you only if you
determine that such issuances would not violate the interpretation of the Board
of Governors of the NASD relating to the review of corporate financing
arrangements. The Underwriters' Shares, the Underwriters' Warrants and the
shares of Common Stock underlying the Underwriters' Warrant (collectively
sometimes referred to herein as the "Purchase Option Securities") shall be
entitled to piggyback and demand registration rights acceptable to you and your
counsel and as set forth in the Purchase Option Agreement.
4 Delivery and Payment. Delivery of and payment for the Firm
Securities shall be made at 10:00 A.M., Miami Time, on February 19, 1997 (such
time and date are referred to herein as the "Closing Date") at the offices of
Akerman, Senterfitt & Xxxxxx, P.A., SunTrust International Center, 28th Floor,
Xxx Xxxxxxxxx 0xx Xxxxxx, Xxxxx, Xxxxxxx 00000. The Closing Date and the time
and the place of delivery of and payment for the Firm Securities may be varied
by agreement between you and the Company.
If you elect to purchase and take delivery of any Option
Securities, delivery of and payment for such Option Securities shall be made at
said office or at such place as may be agreed upon in writing by you and the
Company, on the Option Closing Date, which may be the same as the Closing Date
but shall in no event be earlier than the Closing Date or earlier than one or
later than ten business days after the giving of the written notice referenced
in Section 3 hereof from you to the Company of the determination to purchase a
number, specified in said notice, of Option Securities. Such notice may be given
by you
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to the Company at any time within forty-five (45) days after the date of the
Final Prospectus. The Option Closing Date may be varied by agreement between you
and the Company. On the Option Closing Date, if any, there shall be delivered to
you supplemental opinions and certificates, dated such Option Closing Date, to
the same effect as those required to be delivered on the Closing Date pursuant
to Section 8 hereof. The Closing Date and the Option Closing Date are
hereinafter collectively referred to as the "Closing Date."
Delivery of certificates for the shares of Common Stock which
comprise the Shares and the certificates for the Warrants (in definitive form
and registered in such names and in such denominations as you shall request
prior to the Closing Date) shall be made to you against payment of the purchase
price therefor by certified or official bank check or checks payable to the
order of the Company in the amount of $_____. For the purpose of expediting the
checking and packaging of certificates for the Shares and the Warrants, the
Company and agrees to make such certificates available for inspection at least
24 hours prior to the Closing Date. Time shall be of the essence and delivery at
the time and place specified in this Agreement is a further condition to the
obligations of the Underwriter.
5. Covenants and Agreements of the Company. The Company further
covenants and agrees with you as follows:
(a) Filing of Registration Statement. The Company shall use
its best efforts to cause the Registration Statement to become effective or, if
the procedure in Rule 430A of the Rules and Regulations is followed, comply
with the provisions of and make all requisite filings with the Commission
pursuant to such Rules and Regulations. The Company will give you advance notice
of its intention to file or make any amendment or post-effective amendment to
the Registration Statement or any amendment or supplement to the Prospectus and
will submit all such amendments or supplements to you and to your counsel as
soon as possible, but not later than five (5) business days before the Company
proposes to file such amendments or supplements with the Commission. The Company
will not file any such amendment or supplement to which you shall reasonably
object in writing within a reasonable time after being furnished copies thereof.
The Company will not allow the Registration Statement to be declared effective
by the Commission without your approval.
(b) Notice to Underwriters. The Company will advise you
promptly and confirm that advice in writing (i) when any post-effective
amendment to the Registration Statement shall have become effective, (ii) of the
mailing or the delivery to the Commission for filing of any amendment or
post-effective amendment to the Registration Statement or any amendment or
supplement to the Prospectus, (iii) of any request by the Commission for
amendment or supplement to the Registration Statement or the Prospectus, or for
additional information, immediately supplying you with copies of all comment
letters and all other correspondence with the Commission, (iv) of the issuance
by the Commission of any stop order suspending effectiveness of the Registration
Statement or of the suspension
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of the qualification of the Securities for offering or sale in any jurisdiction,
or of the initiation or threat of any proceeding for any such purpose, (v) of
the issuance by any state securities commission or other regulatory authority of
any order suspending the qualification or the exemption from qualification of
the Securities under state securities or Blue Sky laws or the initiation or
threat of any proceedings for that purpose and (vi) of the happening of any
event during the period mentioned in Section 5(d) hereof that makes any
statement made in the Registration Statement or the Prospectus untrue in any
material respect or which requires the making of any changes in the Registration
Statement or the Prospectus in order to make the statements therein not
misleading in any material respect. The Company will use its best efforts to
prevent the issuance of any stop order or suspension order and to obtain the
withdrawal of any such stop order or suspension order at the earliest possible
moment.
(c) NASDAQ Listing. On the effective date of the Registration Statement, the
Common Stock and the Warrants shall be listed for quotation on the NASDAQ
SmallCap Market, and the Company shall use its best efforts to maintain such
listing for not less than five (5) years, provided, however, that the Company
may withdraw the listing of its securities on the NASDAQ if the Company lists
Common Stock and the Warrants on the NASDAQ National Market System or on the New
York or American Stock Exchange. In addition to the foregoing, the Company
shall, pursuant to Schedule D of the NASD By- Laws, prepare and file with NASD
any required notification along with applicable fees to list the Securities on
the NASDAQ system. The Company shall, as required, prepare and file as promptly
as practicable a Report by Issuer of Securities Quoted on NASDAQ Interdealer
Quotation System on Form 10-C (or any successor form) with respect to the shares
of Common Stock and the Warrants.
(d) Post-Effective Amendment. Within the time during which a Final Prospectus
relating to the Securities is required to be delivered under the Securities Act,
the Company shall comply with all requirements imposed upon it by the Securities
Act and by the Rules and Regulations, as from time to time in force, so far as
is necessary to permit the continuance of sales of or dealings in the Securities
as contemplated by the provisions hereof and the Final Prospectus. If at any
time when a prospectus relating to the Securities is required to be delivered
under the Securities Act, any event occurs as a result of which, in the judgment
of the Company and its counsel, the Prospectus as then amended or supplemented
would include any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which made, not misleading in any material respect, or if it
is necessary at any time to amend or supplement the Prospectus to comply with
the Securities Act or any other applicable law, the Company will promptly notify
you, and the Company shall promptly prepare and file with the Commission an
amendment or supplement to the Registration Statement which will correct such
statement or omission, or an amendment or supplement which will effect such
compliance, and deliver to you in connection therewith such prospectus or
prospectuses in such quantity as may be necessary to permit compliance with the
requirements of the Securities Act.
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(e) Blue Sky Qualification. Prior to any public
offering of the Securities by you, the Company will endeavor in good faith,
using your counsel, and in cooperation with you and your counsel in taking such
action as may be necessary to register or qualify the Securities for offer and
sale under the applicable securities or Blue Sky laws of any states or
jurisdictions of the United States as you may reasonably designate and will
maintain such qualifications in effect for so long as may be required for the
distribution of the Securities. The foregoing shall be subject to the reasonable
consent of the Company as to any state or jurisdiction that seeks to impose an
escrow requirement with respect to insiders' shares or some other restrictive
condition upon the Company that exceeds the insiders lock-up provision of
Section 5(h) (other than because no escrow is required herein) or a comparable
condition contained herein. Copies of all applications and related documents for
the registration or qualification of securities (except for the Registration
Statement and Prospectus) filed with the various states shall be sent to the
Company's counsel not later than the next business day following their
transmission to the various states, and copies of all comments and orders
received from the various states shall be made available to the Company's
counsel. As information is received from various states and immediately prior to
the effective date of the Registration Statement, counsel for the Underwriters
shall advise counsel for the Company in writing of all states where the offering
has been registered or qualified for sale or has been canceled, withdrawn or
denied, the date(s) of such event(s), and the number of Securities (and amount
of other securities, if any) registered or qualified for sale in each state. The
Company shall be responsible for the cost of state registration filing fees and
legal fees and expenses of Underwriters' counsel in connection with such
filings, which filing fees shall be paid to Underwriters' counsel in advance of
such filings. The Underwriters' counsel's legal fees with respect to blue sky
filing shall be $1,000 for each state in which application for registration or
qualification is made, up to an aggregate of $35,000 for all states combined.
All outstanding fees and expenses of the Underwriters' counsel solely with
respect to Blue Sky matters shall be paid by the Company on or prior to the
Closing Date.
The Company shall, as soon as practicable after the Closing
Date, apply for listing in Standard and Poor's Stock Guide and use its best
efforts to effect and maintain such listing for at least five (5) years. The
Company further agrees, no later than the 25 days after the Closing Date, to
engage the services of an investor relations firm (which firm shall also be
qualified to act and shall serve as the financial publicist of the Company)
reasonably acceptable to the Representatives and to maintain such services from
the date of engagement for two (2) years following the Closing Date. Further,
the Company shall use its best efforts to obtain for a period of two years
commencing sixty (60) days after the Closing Date at least three firms (one of
which shall be Argent Securities, Inc. and one of which shall be Standard &
Poor's Stock Reports Professional Edition) which are reasonably acceptable to
the Representatives to provide industry research and advice to the Company. Any
such research and advice provided by a Representative shall be at no fee
(exclusive of the Financial Advisory Agreement referred to in Section 5(p)
hereof) to the Company.
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(f) Information to the Underwriters. The Company will
deliver to you, for a period of at least five (5) years (or such earlier date if
the Underwriters' Purchase Option and the Underwriters' Warrant have been
exercised in full) from the Closing Date: (i) as soon as practicable, but in any
event within ninety-five (95) days after the close of each fiscal year of the
Company, or as soon thereafter as practicable, a financial report of the Company
and its subsidiaries, if any, on a consolidated basis, and a similar financial
report of all unconsolidated subsidiaries, if any, all such reports to include a
balance sheet as of the end of the preceding fiscal year, a statement of
operations, a statement of changes in financial condition and a statement of
stockholders' equity covering such fiscal year, and all to be in reasonable
detail and certified by independent public accountants who may, however, be the
regularly employed independent public accountants of the Company; (ii) within
one hundred and five (105) days after the end of each quarterly fiscal period of
the Company, other than the last quarterly fiscal period in any fiscal year, or
as soon thereafter as practicable, copies of the consolidated statement of
operations, the statement of stockholders' equity and statement of changes in
financial condition for that period, and the balance sheet as of the end of that
period of the Company and its subsidiaries, if any, the statement of operations,
the statement of stockholders' equity and statement of changes in financial
condition and the balance sheet of each unconsolidated subsidiary, if any, of
the Company for that period, all subject to year-end adjustment, certified by
the principal financial or accounting officer of the Company; (iii) copies of
all other statements, documents, or other information which the Company shall
mail or otherwise make available to any class of its security holders, to the
financial press or to the public, or shall file with the Commission, including,
but not limited to periodic reports required to be filed under Sections 13 and
15 of the Exchange Act, in particular Forms 10-K, 10-Q and 8-K (which shall be
provided within the same period such reports are required to be filed with the
Commission); (iv) a copy of each "weekly position sheet" generated by the
Depository Trust Corporation pursuant to a subscription for such service that
the Company shall maintain at its expense; and (v) upon request in writing, such
other information as may reasonably be requested wiTh reference to the property,
business, stockholders and affairs of the Company and its subsidiaries, if any.
(g) Section 11(a) Earnings Statement. The Company will,
as promptly as possible after the close of each fiscal year of the Company,
prepare and distribute reports to its stockholders which will include audited
statements of its operations and changes of financial position during such
period and its balance sheet as of the end of such period. The Company will make
generally available to its stockholders and will deliver to you, as soon as
practicable, but in no event later than the first day of the 15th full calendar
month following the effective date of the Registration Statement, an earnings
statement (which need not be audited but which will satisfy the provisions of
Section 11(a) of the Securities Act) covering a period of at least twelve (12)
months beginning after the effective date of the Registration Statement.
(h) Lock-Up Agreements. The Company will cause each of
its officers, directors, holders of the Company's Common Stock, any other
persons deemed to be
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"affiliates" as defined in Rule 144 under the Securities Act and Xxx Xxxxxxx
immediately prior to the effective date of the Registration Statement, to agree
in writing (the "Lock-Up Agreement") that: (i) such person shall not sell,
including a short sale or sale against the box, or otherwise dispose of any
shares of the Common Stock owned directly, indirectly, or beneficially (as
defined by the Exchange Act and the Rules and Regulations promulgated
thereunder) by him, her or it (including shares of Common Stock hereinafter
acquired through the exercise or conversion of derivative securities or
otherwise) for a period of twenty-four (24) months from the effective date of
the Registration Statement ("Lock-Up Period") without the Underwriters' prior
written consent; and (ii) such person will permit all certificates evidencing
his, her or its shares of Common Stock, Warrants, Options or Notes to be affixed
with an appropriate restrictive legend, and will cause the transfer agent for
the Company to note such restrictions on the transfer books and records of the
Company. Additionally, for a period of forty-eight (48) months following the
effective date of the Registration Statement, the Company's officers, directors,
shareholders, affiliates and Xxx Xxxxxxx will agree to sell any shares of Common
Stock it so desires to sell through the Representatives if the price and terms
of execution offered by the Representatives are at least as favorable as may be
obtained from other brokerage firms. On or before the effective date, the
Company shall have furnished to the Representatives the Lock-Up Agreements,
which shall be in a form reasonably acceptable to the Representatives and which
shall be duly executed, and shall be valid and binding obligations of such
persons enforceable against such persons in accordance with their respective
terms.
(i) Issuance of Additional Securities. For a period of
five (5) years (or such earlier date if the Underwriters' Purchase Option and
the Underwriters' Warrants have been exercised in full) commencing on the
Closing Date, except with the written consent of the Underwriters, which consent
shall not be unreasonably withheld, the Company will not issue or sell, directly
or indirectly, any shares of its capital stock, or sell or grant options, or
warrants or rights to purchase any shares of its capital stock, except pursuant
to (i) this Agreement, (ii) the Underwriters' Purchase Option and the
Underwriters' Warrants, (iii) warrants and options of the Company heretofore
issued and described in the Prospectus, (iv) after two years (or such erlier
date if the Underwriters' Purchase Option nd the Underwriters' Warrants have
been exercised in full) from the closing date, at less than far market value;
and (v) the grant of options and the issuance of shares issued upon exercise of
options issued or to be issued under the Company's stock option plan which is
described in the Prospectus; except that, during such two year period, the
Company may issue securities without the underwriters' consent in connection
with an acquisition, merger or similar transaction, provided that such
securities are not publicly registered or issued pursuant to Regulation S of the
Act, and the acquirer of the securities is not granted registration rights with
respect thereto which are effective prior to 12 months after the Closing Date
and until the Underwriters' Purchase Option is exercised, and further provided
that the Representatives shall have granted their consen (which shall not be
unreasonably withheld) with respect to any acquisition, merger or similar
transaction in which securities of the Company are granted to or issued for less
than the then current fair market value of such securities or with respect to
any such transaction with a party that is related to or
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affiliated with the Company or any of its executive officers, directors or ten
percent or greater shareholders. Notwithstanding anything to the contrary set
forth in the prior sentence, the Company may not issue any class or series of
Preferred Stock for a period of 24 months from the Closing Date without the
unanimous vote or consent of all members of the Board of Directors of the
Company. Prior to the Closing Date, the Company will not issue any options or
warrants without the prior written consent of the Underwriters.
(j) Press Releases. For a period commencing on the date
hereof and ending two years after the date of the Prospectus, neither the
Company nor any of its officers or directors will issue news releases or permit
other such publicity about the Company regarding the financial condition or any
significant event of the Company without the approval of the Company's legal
counsel named in the Prospectus under the heading "Legal Opinions," or such
other counsel as may be approved by you. During such period, the Company will
deliver to you copies of such news releases or other publicity about the Company
promptly after distribution thereof.
(k) Underwriters' Copies. The Company will promptly
deliver to you, without charge: (i) two complete copies (one of which is
manually signed) of the Registration Statement, as originally filed, and of each
amendment thereto, and of each post-effective amendment thereto filed at any
time when a prospectus relating to the Securities is required to be delivered
under the Securities Act, in each such case manually executed by the proper
officers and a majority of the directors of the Company (or, in case of
amendments, by their duly constituted attorneys-in-fact) and including signed
copies of each consent of experts named in the Registration Statement and all
financial statements, schedules and exhibits filed therewith (including those
incorporated by reference to the extent not previously furnished to you), and
(ii)such number of conformed copies of the Registration Statement, as
originally filed, and of each amendment and post-effective amendment thereto (in
each such case excluding exhibits), as you may reasonably require. The Company
will promptly deliver, without charge, to you or such others whose names and
addresses are designated by you as soon as possible after the effective date of
the Registration Statement, and thereafter from time to time during the period
when delivery of a prospectus relating to the Securities is required by the
Securities Act, as many printed copies as you may reasonably request of the
Final Prospectus and of any amended or supplemented prospectus. The Company will
promptly deliver, without charge, as soon as practicable following the public
offering or sale of the Securities, and thereafter from time to time for such
period as delivery of a prospectus or any amendment or supplement thereto may be
required, to you or any dealers to whom Securities may be issued, as many copies
as you reasonably request of the Prospectus and any amendment or supplement
thereto.
(l) NASD Matters. The Company shall supply your counsel
with the following as appropriate to satisfy the NASD filing requirements: (i)
such copies of any amendment or supplement to the Registration Statement and the
preliminary prospectus or Final Prospectus; and (ii) the statutory filing fee in
the form of a certified or cashier's check. The Company shall further supply to
your counsel, no later than one (1) week
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before the effective date of the Registration Statement, a written
representation as to (i) the existence or nonexistence of any NASD affiliation
or association of any officer, director, or five percent (5%) or greater
shareholder of the Company, and, if a shareholder of the Company is a
corporation, the existence or nonexistence of any direct or indirect NASD
affiliation or association of any officer, director, or five percent (5%) or
greater shareholder of such corporation, (ii) whether or not any unregistered
securities of the Company have been acquired by any NASD affiliated persons
during the twelve (12) month period prior to filing the Registration Statement,
and (iii) whether or not key-man life insurance has been or will be provided for
any officer or director of the Company by any NASD affiliate.
(m) Expenses. Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement becomes
effective or is terminated, the Company shall bear all costs and expenses
incident to the issuance, offer, sale, and delivery of the Securities,
including, but not limited to, stock transfer taxes, all expenses and fees
incident to the filing of the Registration Statement and the registration
statements with the Commission pursuant to the Securities Act and the Exchange
Act, the costs, filing fees and reasonable counsel fees related to qualification
under state securities laws, fees and disbursements of counsel and accountants
for the Company, NASD filing fees, NASDAQ system fees, costs of preparing and
printing the Registration Statement and as many copies of the preliminary
prospectus and Prospectus as you may reasonably deem necessary, including all
amendments and supplements to the Registration Statement, and the printing,
delivery, and shipping of this Agreement and other underwriting documents,
including underwriters' questionnaires, underwriters' powers of attorney, Blue
Sky memoranda, and selected dealers' agreements, the cost of printing
certificates representing the Shares and the Warrants, the costs and charges of
the Transfer Agent and Warrant Agent, and all other costs and expenses incident
to the performance of its obligations hereunder which are not otherwise provided
for in this Agreement. The Company shall also bear all costs of holding
informational meetings and "road shows" to acquaint securities dealers with the
affairs of the Company. The Company, at its sole expense, shall make a
representative of its management available at the offices of the Underwriters,
at mutually convenient times, prior to the effective date of the Registration
Statement and shall likewise make representatives available at the Company for
due diligence or other informational meetings. The Company will also pay the
reasonable out-of-pocket travel expenses of the Underwriters and their counsel
or the professionals designated by the Underwriters to visit the Company's
facilities (as well as those of any significant supplier to, or customer of, the
Company) for purposes of discharging their due diligence responsibilities. The
Prospectus (preliminary and definitive) shall be printed by a financial printer
selected by the Company and approved by the Underwriters. The Company agrees to
supply the Underwriters (within ten weeks of the Closing Date) at the Company's
sole cost and expense up to seven (7) bound volumes of all the documents, papers
and exhibits, correspondence and records forming the materials included in the
public offering, and up to fifteen (15) Lucite cubes containing a miniature
definitive Prospectus. In addition, the Company agrees to pay for all pre- and
post-closing advertisements relating to the public offering.
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In addition to the foregoing, the Company shall reimburse you
for your expenses on the basis of a nonaccountable expense allowance in the
amount of 3% of the gross offering proceeds; all of your costs in excess of the
nonaccountable expense allowance shall be paid by you. Expenses to which the
allowance shall be applied include fees of your counsel, but shall not include
the following: fees of the Company's counsel; Commission or state filing fees;
reasonable Blue Sky counsel fees and expenses; NASD filing fees; NASDAQ listing
fees; printing; tombstone advertisements; and any and all other expenses
customarily paid by the issuer in a public offering. The Company represents that
such payment will be made in full. The Company further agrees to pay to the
Underwriters any reasonable costs or expenses, including attorneys' fees,
incurred or resulting from any demands or causes of actions brought by the
Underwriters or by third parties against the Underwriters for the Company's
failure to comply with any material provisions of this Underwriting Agreement,
provided that the Underwriters have not caused such non- compliance by the
Company. With respect to any demand or cause of action to be brought by the
Underwriters, the Underwriters shall give the Company written notice of and a
thirty (30) day period to cure any non-compliance by the Company before making a
demand or bringing a cause of action.
11
Notwithstanding any other provisions of this Agreement, if
(i) (a) there is a material adverse change in the business or financial
condition of the Company, (b) there exists any material misrepresentation of the
Company contained herein or otherwise, (c) you discover in the course of your
due diligence examination of the Company facts which you determine, in your sole
discretion, could materially adversely affect the sale of the Securities, or
(d) market conditions, in your sole judgment, do not justify an offering on the
terms set forth in the Registration Statement, and in any such event you elect
to terminate the underwriting or (ii) there is any judicial, administrative or
other regulatory or governmental judgment, decree, order, injunction or similar
action or proceeding enjoining, suspending, prohibiting, limiting or otherwise
restricting you from engaging in underwriting activities or sales of securities,
and in any such event you elect to terminate the underwriting, the Company,
agrees that in addition to paying the Company's own expense, you will be
entitled to be reimbursed by us, on an accountable basis, for all of its
accountable out-of-pocket costs incurred in connection with the offering of
securities contemplated by the Registration Statement. Furthermore, if the
Company should fail to pay the agreed upon amounts set forth above to you, your
successors or assigns, the Company, shall, furthermore, be liable to you for
reasonable attorney's fees and costs incurred in the collection of said amounts.
(n) Transfer Sheets. The Company shall furnish to you a
list of the names and addresses of all stockholders subsequent to the Closing
Date and shall cause the Transfer Agent to furnish to you a copy of all transfer
sheets for a period of three years from the later of the Closing Date or the
Option Closing Date.
(o) Undertakings and Use of Proceeds. The Company will
comply with all of the undertakings contained in the Registration Statement and
shall apply the net proceeds of the sale of the Securities substantially in
accordance with the description set forth in the Prospectus.
(p) Financial Advisory Agreement. On the Closing Date,
the Company shall execute a Financial Advisory Agreement with the
Representatives for financial consulting services, which may include (i)
advising the Company in connection with possible acquisitions (ii) facilitating
shareholder communications and relations, and (iii) advising and assisting the
Company with long-term financial planning, corporate reorganization, expansion
and capital structure and other financial matters. Such agreement shall have a
term of two years and provide for compensation of $23,500 per year which amount
shall be prepaid in full on the Closing Date. The Financial Advisory Agreement
shall further provide that if a Representative, directly or indirectly,
introduces the Company, during the term of such agreement, to any person or
entity that during the term thereof or within 18 months following the term
thereof, provides any investment capital, loan or any other equity or debt
financing to the Company or any affiliate thereof, or becomes a party to a
merger, acquisition, joint venture, private placement or other similar
transaction with the Company or any affiliate thereof, then the Company shall
pay to such Representative a cash finder's fee. Each cash finder's fee payable
to a Representative under this Agreement shall be
12
calculated as a percentage of the Transaction Value (as defined herein and
therein) in accordance with the following scale:
6% on the first $5,000,000 of the Transaction Value;
5% on the amount from $5,000,001 to $6,000,000;
4% on the amount from $6,000,001 to $7,000,000;
3% on the amount from $7,000,001 to $8,000,000;
2% on the amount from $8,000,001 to $9,000,000;
1% on the amount in excess of $9,000,000.
"Transaction Value" shall mean the aggregate value of all
cash, securities and other property (i) paid to the Company, its affiliates or
their shareholders in connection with any transaction referred to above
involving any investment in or acquisition of the Company or any affiliates (or
the assets of either), (ii) paid by the Company or any affiliate in any such
transaction involving an investment in or acquisition of another party or its
equity holdings by the Company or any affiliate, or (iii) paid or contributed by
the Company or any affiliate and by the other party or parties in the event of
any such transaction involving a merger, consolidation, joint venture or similar
joint enterprise or undertaking. The value of any such securities (whether debt
or equity) or other property shall be the fair market value thereof as
determined by mutual agreement of the Company and the Representatives or by an
independent appraiser jointly selected by the Company and the Representatives.
(q) Exchange Act Registration. The Company shall
prepare and file a registration statement with the Commission pursuant to
Section 12(g) of the Exchange Act. Such registration statement under the
Exchange Act shall be declared effective contemporaneously with the
effectiveness of the Registration Statement. The Company shall comply with the
Securities Act, the Exchange Act and the Rules and Regulations promulgated
thereunder, the applicable rules and regulations of the NASD and applicable
states securities laws so as to permit the continuance of sales of and dealings
in the Securities in compliance with applicable provisions of such laws, rules,
and regulations, including the filing with the Commission and the NASD of all
reports required to be so filed by each, and the Company will deliver to the
holders of the shares all reports required to be provided to such holders
pursuant to such laws, rules, or regulations. The Company will use its best
efforts to maintain its registration under the Exchange Act in effect for a
period of five (5) years from the Closing Date.
(r) Redemption and Dividends. For a period of two years
from the Closing Date, the Company shall not, either directly or through a
subsidiary, (i) redeem or purchase any of its securities outstanding as of the
Closing Date, other than redemptions of the Warrants as permitted by the Warrant
Agreement, or that may be required in connection with possible termination of
employment with the Company under the terms of employment agreements in effect
on the Closing Date, or redemptions as otherwise provided for herein, or (ii)
pay any dividends, or make any other cash distribution in respect
13
of its securities, in excess of the amount of the Company's current or retained
earnings derived after the Closing Date, without the prior written consent of
the Representatives, which consent may be withheld for any reason. The
Representatives shall either approve or disapprove, in writing of such
contemplated stock redemption or dividend or distribution within five (5)
business days after the date the Representatives receive written notice of the
proposed action. Failure by the Representatives to provide a response to within
such five (5) day period shall be deemed to be an approval of the redemption or
dividend.
(s) Designation of Directors and Attendance at Board Meetings.
Each Representative shall have the right, for the five (5) year period following
the Closing Date, to designate a nominee (the "Nominees") for election to the
Company's Board of Directors. The officers, directors, and principal
shareholders of the Company shall agree in writing at or prior to the Closing
Date to vote all shares of voting capital stock owned by them (or over which
they have the power to direct the vote) during such five-year period in favor of
the election of the Nominees designated by each of the Representatives. In the
alternative and at its option, each Representative shall have the right, during
such five-year period, to have a representative (the "Attendees") attend all
meetings of the Board of Directors of the Company, which meetings shall be held
at least quarterly. The aforementioned provision notwithstanding, the Company
shall not be obligated to designate Nominees after the Underwriters' Purchase
Option and the Underwriters' Warrants have been exercised in full. The Nominees
may be removed by the Board only for "cause" as such term is defined in the
Employment Agreement between the Company and Xxxx Xxxxx. Any member of the Board
of Directors shall have the right to call a special meeting of the Board of
Directors on forty- eight (48) hours notice. The Company shall reimburse the
Underwriters' Nominees or Attendees for his or her out-of-pocket expenses
reasonably incurred and authorized in advance by the Company in connection with
his or her attendance of the Board meetings and a fee of $6,000 per year (for
all services as a director, including attendance at the board and committee
meetings). The Nominees shall each year be entitled to receive options to
purchase 12,000 shares of Common Stock at a price equal to the then fair market
value of the Common Stock. To the extent permitted by law, the Company agrees to
indemnify and hold the Nominees and the Representatives harmless against any and
all claims, actions, awards and judgments arising out of his or her service as a
director and in the event the Company maintains a liability insurance policy
affording coverage for the action of its officers and directors, to include such
Nominees as an insured under such policy.
(t) Amendments to Employment and Lock-Up Agreements.
The Company shall not amend or alter any term of any written employment
agreement or Lock-Up Agreement between the Company and any executive officer (or
director), during the term thereof, in a manner more favorable to such employee,
without the express written consent of the Representatives until such time as
the Underwriters' Purchase Option and Underwriters' Warrants have been exercised
in full.
(u) Warrant Solicitation. Commencing one (1) year from
the date hereof, upon the exercise of any Warrant, the exercise of which was
solicited by the Representatives
14
in accordance with the applicable rules and regulations of the NASD prevailing
at the time of such solicitation, the Company shall pay to the soliciting
Representative a fee of 5% of the aggregate exercise price of such Warrant (the
"Warrant Solicitation Fee") within five (5) business days of such exercise, so
long as the Representatives provided bona fide services in exchange for the
Warrant Solicitation Fee and the Representatives have been specifically
designated in writing by the holders of the Warrants as the broker. The Company
further agrees that it will not solicit the exercise of any Warrant other than
through the Representatives, unless either: (i) the Representatives cannot
legally solicit the exercise of the Warrants at the time of such solicitation;
(ii) the Representatives decline, in writing, to solicit the exercise of the
Warrants within five (5) business days of such a written request by the Company;
or (iii) the Representatives consent to the solicitation of the exercise of the
Warrants by the Company or another entity.
(v) Internal Accounting Controls. The Company will
continue to maintain a system of internal accounting controls sufficient to
provide reasonable assurance that: (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary in order to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences, and (v) all quarterly reports filed on Form 10-Q shall be reviewed
by the Company's accountant in accordance with SAS71.
(w) Corporate Governance. The Company, for a period of
twenty-four (24) months following the Effective Date (or such earlier date if
the Representative has exercised in full the Underwriters' Purchase Option and
the Underwriters' Warrants) shall adopt and implement all corporate governance
procedures required of companies listed on the NASDAQ National Market System,
including, without limitation, the NASDAQ Stock Markets' Non-Quantitative
Designation Criteria for Issuers. For the period commencing on the Effective
Date and terminating 90 days after the Company has hired a Chief Financial
Officer, the Company shall, on a monthly basis, promptly provide the Board with
a copy of the Company's internally prepared financial statements. Thereafter,
the Company agrees (for a period of twenty-four (24) months following the
Effective Date or such earlier date if the Representative has exercised in full
the Underwriters' Purchase Option and the Underwriters' Warrants) to, no later
than the 20th day of each month, provide the Board with unaudited financial
statements prepared in accordance with GAAP.
(x) Chief Financial Officer. At all times during the
period commencing 90 days after the effective date of the Registration Statement
and terminating upon the earlier of five years after the effective date of the
Registration Statement or such time as the Purchase Option Agreement and
Underwriters' Warrant have been exercised in full, the Company shall retain a
qualified Chief Financial Officer reasonably acceptable to the Representatives.
In the event that, at any time during such period, the Company's Chief
15
Financial Officer resigns or is terminated by the Company, then the Company
shall be allotted 90 days to find a qualified replacement reasonably acceptable
to the Representatives. Notwithstanding anything herein to the contrary, for
each month (or portion thereof) during such period that the Company fails to
comply with this covenant and is not, during such month, diligently pursuing the
search and retention of a Chief Financial Officer or replacement Chief Financial
Officer, Xxxx Xxxxx and Xxxxx Xxxxxxx shall each forfeit $15,000 of compensation
(an aggregate of $30,000) under their respective employment agreement or
consulting agreements with the Company.
6. Representations and Warranties of the Company. The Company
represents and warrants to you that:
(a) Accuracy of Registration Statement and Prospectus.
To its knowledge, the Commission has not issued any order preventing or
suspending the use of any preliminary prospectus or Prospectus, no proceedings
for that purpose have been instituted and each preliminary prospectus filed as
part of the Registration Statement as originally filed or as part of any
amendment thereto or filed pursuant to Rule 424 under the Securities Act in all
material respects, at the time of the filing thereof, complied with the
Securities Act and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; when the Registration Statement becomes
effective, and when the Prospectus is filed with the Commission, and at all
times subsequent thereto up to and including the Closing Date and the Option
Closing Date, or for such longer period as the Prospectus is required under the
Securities Act to be delivered in connection with sales by you or a dealer
selected by you, the Registration Statement and the Prospectus and any
amendments or supplements thereto will comply with the Securities Act; when the
Registration Statement becomes effective, the Registration Statement will
contain all statements required to be stated therein in accordance with the
Securities Act and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and when the Prospectus is filed with the
Commission, it will contain all statements required to be stated therein in
accordance with the Securities Act and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company makes
no representations or warranties as to information contained in or omitted from
any preliminary prospectus or the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with written
information (or oral information to the extent such information relates to the
private ongoing investigation of you by the Commission) furnished to the Company
with respect to you by or on behalf of you expressly for use with reference to
you (or any person who may be deemed to be affiliated with you or an associated
person of yours) in connection with the preparation thereof.
16
(b) Financial Statements. The financial statements and
the related schedules and notes included in the Registration Statement and in
the Prospectus present fairly the financial position, results of operations and
changes in financial position of the Company and its subsidiaries, at the dates
and for the periods specified therein. The accountants who have audited the
financial statements filed with the Commission as a part of the Registration
Statement and the Prospectus are independent accountants with respect to the
Company as required by the Securities Act. The pro forma financial statements
included in the Registration Statement and the Prospectus present fairly the
financial position and results of operation of the Company at the dates and for
the periods specified therein.
(c) No Adverse Change. Except as reflected in the
Registration Statement and in the Prospectus or any amendment or supplement
thereto, since the respective dates as of which information is given in the
Registration Statement and in the Prospectus or any amendment or supplement
thereto and prior to the Closing Date, or Option Closing Date, as the case may
be, the Company has conducted its business in substantially the same manner as
of November 8, 1996, and neither the Company nor any of its subsidiaries have
incurred, or will have incurred, any liabilities or obligations, direct or
contingent (other than in the normal course of business except as disclosed in
the Registration Statement), and there has not been any material adverse change
in the capital stock, short-term debt (other than in the normal course of
business) or long-term debt of the Company or its subsidiaries or any material
adverse change, or any development involving a change in the condition
(financial or otherwise), net worth, results of operations, the affairs or
business prospects of the Company or its subsidiaries, which might be adverse to
the Company or its subsidiaries and no event has occurred concerning the Company
or its subsidiaries and which might result in an adverse change or effect in or
on the general affairs, management, financial position, stockholders' equity or
results of operations of the Company or its subsidiaries except as disclosed in
the Registration Statement.
(d) Authority. This Agreement, the Warrant Agreement
and the Underwriters' Purchase Option have been duly authorized and validly
executed and delivered by the Company, and are legal, valid and binding
agreements of the Company enforceable against the Company, in accordance with
their respective terms.
(e) Incorporation and Standing. Each of the Company and
its subsidiaries, is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation and is duly
registered or qualified to do business and is in good standing as a foreign
corporation in each jurisdiction that requires such qualification and in which
the failure to qualify could have a material adverse effect on the Company and
its subsidiaries, taken as a whole. Each of the Company and its subsidiaries has
full power and authority (corporate, governmental, regulatory and other) to own
and lease its properties and to conduct its business as described in the
Registration Statement and in the Prospectus and has corporate power and
authority (corporate, governmental, regulatory and other) to enter into this
Agreement and to issue the Underwriters' Purchase Option and the
17
Purchase Option Securities. The Company has no subsidiaries other than its
subsidiaries disclosed in the Registration Statement and in the Prospectus. A
complete and correct copy of the Articles of Incorporation of the Company and
the Articles of Incorporation or Memorandum of Association of each subsidiary,
as the case may be, each as certified by the Secretary of the State of Florida
or such other jurisdiction of incorporation, and the bylaws of the Company, and
the bylaws, of each subsidiary, as currently in effect, and as certified by the
Secretary of the Company and each subsidiary, respectively, has been delivered
to you, and no changes therein will be made subsequent to the date hereof and
prior to the Closing Date or the Optional Closing Date.
(f) No Defaults. Neither the Company nor any of its
subsidiaries is in material violation of its corporate charter or bylaws,
respectively, and, except as disclosed in the Registration Statement and the
Prospectus, in material default in any respect in the performance of any
material obligation, agreement, covenant or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any indenture,
mortgage, deed of trust or other agreement or instrument of any of them or by
which any of their respective property is bound, and, to the knowledge of the
Company after reasonable investigation, there exists, and through the Closing
Date and the Optional Closing Date, if any, there shall exist no condition
which, with the passage of time or otherwise, would constitute a default under
any such agreement or instrument or result in the imposition of any penalty or
acceleration of any indebtedness. No other party (to the knowledge of the
Company after investigation) under any agreement or instrument referred to in
the immediately preceding sentence to which the Company or its subsidiaries is a
party or by which their respective property is bound is in default in any
material respect thereunder. The execution and delivery of this Agreement, the
Warrant Agreement and the Purchase Option Agreement, the issue and sale of the
Securities, the Underwriters' Purchase Option and the Purchase Option Securities
and the compliance by the Company with all of the provisions of this Agreement,
the Warrant Agreement and the Purchase Option Agreement, will not conflict with
or result in a material breach or violation of any of the terms and provisions
of, or constitute a material default (or an event which with notice or lapse of
time, or both, would constitute a default) under, or result in the creation or
imposition of any material lien, charge or encumbrance upon any of the property
or assets of the Company or any of its subsidiaries pursuant to the terms of,
any material indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries are
subject (and no consent under any thereof which has not been obtained is
required for any such action), nor will such action result in a material
violation of the provisions of the certificate of incorporation or bylaws of the
Company or any of its subsidiaries, or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective property; and
no consent, approval, authorization, order, registration or qualification of or
with any court or any regulatory authority or other governmental body is
required for the issue and sale of the Securities, the Underwriters' Purchase
Option and
18
Purchase Option Securities or in connection with the consummation of the other
transactions contemplated by this Agreement, the Warrant Agreement and the
Purchase Option Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under applicable Federal and
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by you and the purchase of the Underwriters'
Purchase Option and Purchase Option Securities.
(g) Capital Stock. The authorized, issued and outstanding capital
stock of the Company and its subsidiaries conforms to the descriptions thereof
in the Registration Statement and in the Prospectus. The issued and outstanding
capital stock has been duly and validly authorized and issued, is fully paid and
nonassessable and is free of preemptive or, with the exception of the Warrants,
redemption rights. There are no outstanding options, warrants, or other rights
calling for the issuance of, and no commitment, plan or arrangement to issue or
to register, any share of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company other than as
disclosed in the Registration Statement and the Prospectus. No holder of any
securities of the Company has the right to require registration of shares of the
Common Stock or other securities of the Company by reason of the filing of the
Registration Statement or otherwise, except as set forth in the Registration
Statement. The Company covenants and agrees that it will not amend any of its
stock option plans to increase the number of shares of Common Stock granted
under any of such option plans for a period two (2) years from the effective
date of the Registration Statement without the prior written consent of the
Representatives.
(h) Legality of Securities. The Securities have been duly
authorized by the Company and conform to the descriptions thereof in the
Registration Statement and in the Prospectus. The Securities when sold and paid
for in accordance with the terms of this Agreement, will be duly and validly
issued, fully paid and nonassessable and free of preemptive and, with the
exception of the Warrants, redemption rights.
Underwriters' Purchase Option. The Underwriters'
Purchase Option and the Purchase Option Securities conform to the description
thereof in the Registration Statement and in the Prospectus and, when sold to
and paid for by you, will be duly authorized, will be validly issued and will be
the valid and binding obligation of the Company. The Underwriters' Purchase
Option and Purchase Option Securities have been duly and validly authorized and
reserved for issuance upon exercise of the Underwriters' Purchase Option and the
Underwriters' Warrant and, when issued upon such exercise in accordance with
terms at the price therein provided, will be validly issued, fully paid and
nonassessable and free of preemptive and redemption rights.
Property. The Company and each of its subsidiaries
has good and marketable title to all properties and assets described in the
Final Prospectus as being owned by it (including securities) that are material
to their respective businesses free and clear of all material liens, charges,
encumbrances or restrictions of every kind and nature, except such as are
disclosed in the Registration Statement and in the Prospectus and except for
taxes not yet due, materialmen's, workmen's and other similar liens incurred in
the ordinary course of business which, individually or in the aggregate, do not
have a materially adverse effect on the value or use of such properties or
assets in the hands of the Company or any of its subsidiaries taken as a whole
and any other liens which, individually or in the aggregate, are not material to
the Company and its subsidiaries taken as a whole. The Company and each of its
subsidiaries owns or leases all such properties, real, personal and mixed,
tangible and intangible, as are necessary to carry on its operations as
heretofore conducted and, except as otherwise stated in the Registration
Statement and in the Prospectus, as proposed to be conducted, as set forth in
the Registration Statement and in the Prospectus.
Litigation. Except as set forth in the Registration
Statement and in the Prospectus, there is not now pending or, to the knowledge
of the Company, threatened (i) any action, suit or proceeding to which the
Company or any of its subsidiaries or any of their respective officers or
directors is or will be a party or of which the business or property of the
Company or any of its subsidiaries is or will be the subject before or by any
court or governmental agency or body which might materially adversely affect the
condition (financial or other), business or prospects of the Company or any of
its subsidiaries, or might materially adversely affect the properties or assets
of
19
the Company or any of its subsidiaries taken as a whole, (ii) any actions, suits
or proceedings related to environmental matters or related to discrimination on
the basis of age, sex, religion, race or national origin except as disclosed in
the Registration Statement and the Prospectus, (iii) any existing or threatened
labor disturbance by the employees of the Company or any of its subsidiaries
which might be expected to materially adversely affect the conduct of the
business, property, operations, financial condition or earnings of the Company
or any of its subsidiaries, or (iv) any material contingent liability.
Tax Return. Except as set forth in the Registration
Statement and in the Prospectus, the Company and each of its subsidiaries, has
filed, or has obtained currently effective extensions for, all necessary
federal, state, municipal and foreign income and franchise tax returns and has
paid all taxes shown as due thereon (or has obtained currently effective
extensions); and, except as set forth in the Registration Statement and in the
Prospectus, neither the Company nor any of its subsidiaries has knowledge of any
tax deficiency which has been or might be asserted against the Company or any of
its subsidiaries which would materially adversely affect the business or
operations of the Company and any of its subsidiaries taken as a whole.
Prior Sales. No securities of the Company have been
sold by the Company or by, or on behalf of, or for the benefit of the Company
within three years prior to the date hereof, except as set forth in the
Registration Statement or Prospectus.
Authorizations. Except as disclosed in the
Registration Statement and the Prospectus, the Company and each of its
subsidiaries have such franchises, licenses, permits, approvals and other
governmental authorizations required for the present conduct of its business
(except to the extent that the absence of such authorizations would not have
material adverse effect on the present conduct of its business), such
franchises, licenses, permits, approvals and other governmental authorizations
are in full force and effect and the Company and its subsidiaries are in
material compliance therewith and the Company and its subsidiaries have not
received notice of conflict with the asserted rights of others in respect
thereof. Except as set forth in the Registration Statement and in the
Prospectus, (i) the expiration of any material contract, agreement, franchise,
license, permit, approval or other governmental authorization would not
materially adversely affect the operation of the Company or its subsidiaries,
and (ii) none of the activities, businesses or properties of the Company or its
subsidiaries is in material violation of, or could cause the Company or its
subsidiaries to violate, any law, rule, regulation, or order of the United
States, any state, county or other jurisdiction, or of any agency thereof.
Exhibits. There are no material contracts,
agreements or other documents required to be described in the Registration
Statement or in the Prospectus or to be filed as exhibits to the Registration
Statement by the Securities Act which have not been described or filed as
required, and neither the Company nor its subsidiaries is in material violation
of, and no material default exists in the performance, observance or fulfillment
of, any material obligation, agreement, covenant or condition contained in any
of such contracts, agreements or documents except as disclosed in the
Registration Statement and the Prospectus.
20
Finder or Broker. The Company has not retained or
dealt with any broker or finder with respect to the transactions contemplated
hereby, and the Company knows of no outstanding claims for services in the
nature of a finder's fee or origination fee with respect to the sale of the
Securities. The Company will indemnify and hold harmless the Underwriters with
respect to any claim for a finder's fee by any party claiming to be owed such
fee based on contacts, conversations or arrangements with the Company.
Furthermore, as set forth in the Registration Statement and in the Prospectus,
the Company has no management or financial consulting agreement with anyone.
Except as set forth in the Registration Statement and in the Prospectus or
otherwise disclosed to you in writing prior to the date hereof, no promoter,
officer, director or five percent or greater stockholder of the Company is,
directly or indirectly, associated with an NASD member broker/dealer.
Internal Accounting Controls. The books, records
and accounts of the Company and its subsidiaries, if any, accurately and fairly
reflect, in reasonable detail, the transactions and dispositions of the assets
of the Company and its subsidiaries, as the case may be. The system of internal
accounting controls maintained by the Company and its subsidiaries is sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization,
(ii) transactions are recorded as necessary (a) to permit preparation of
financial statements in conformity with generally accepted accounting principles
and (b) to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any difference.
Patents. The Company and each of its subsidiaries
have such proprietary know-how, and such patents and governmental or other
authorizations as currently are required for their respective businesses and the
Company and each of its subsidiaries are, except as set forth in the
Registration Statement, in all material respects in compliance with such patents
and governmental or other authorizations. Except as set forth in the Prospectus,
the services performed or products sold by the Company or its subsidiaries do
not violate or infringe any patent or governmental or other authorizations held
or owned by any third party. Neither the Company nor its subsidiaries has
received from or on behalf of any third party, any notice of violation or
infringement of or conflict with the rights of such third party with respect to
any such patents or governmental or other authorizations owned or used by the
Company or its subsidiaries.
1940 Act Matters. Neither the Company nor any of
its subsidiaries will be operated so as to become an "investment company" or a
person "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Stabilization. Neither the Company, its
subsidiaries, nor any of their respective officers, directors or affiliates (as
defined under the Securities Act) have taken, directly or indirectly, any action
to cause or result in, or which has constituted, or might reasonably be
21
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or the resale thereof, within the meaning of
the Securities Act or the Exchange Act.
Reason for Sale. The sale of the Securities by the
Company pursuant to this Agreement is not prompted by any information concerning
the Company which is not set forth in the Registration Statement.
Employment Agreements. The employment agreements
between the Company and its officers described in the Registration Statement are
valid, binding and enforceable obligations upon the respective parties thereto
in accordance with their respective terms, subject to the effect of bankruptcy
or similar proceedings and the effect and application of general principles of
equity.
Liquidation. The Company's articles of incorporation
provide that (A) any liquidation of the Company, or (B) any business combination
in which the Company is not the surviving corporation or any sale of all or
substantially all of its assets (which combination or sale occurs during the
five-year period immediately following the Closing Date): (i) must be approved
by a vote of the holders of a majority of the outstanding shares of the capital
stock entitled to vote; and (ii) all "affiliates," as such term is defined in
Rule 144 promulgated under the Securities Act, of the Company on the Closing
Date shall agree to vote, during the two-year period immediately following the
closing date of the Public Offering, all shares of voting capital stock of the
Company owned by them (or over which they have the power to direct the vote) in
the same proportion as the votes cast by non-affiliates voting shares of the
same class or series, with respect to the above- referenced matters on which a
vote of stockholders is taken.
Additional Representations. (i) no director, officer,
or key employee of the Company has been convicted of any felony, experienced a
personal bankruptcy, or been an officer, director, or key employee of any
company that during their tenure with such company experienced any bankruptcy
other than as disclosed to the Representatives in writing and disclosed in the
Registration Statement as required, or had any trustee, receiver, or conservator
appointed with respect to its business or assets; (ii) prior to the Closing
Date, the Company has not repaid (or agreed to repay), other than in the
ordinary course of business or as disclosed in the Registration Statement, any
indebtedness to any of its shareholders (or incur any indebtedness with any
other lender, any part of the proceeds of which is to be used to repay
indebtedness to any of its shareholders) unless the terms thereof have been
approved in advance by the Underwriters, nor has the Company make any other
extraordinary distributions or payments to its shareholders (other than
distributions to Messrs. Xxxxx and Xxxxxxx in the amount of the income tax
withholding payments for the Company's income payable by them due to the
Company's status as an S corporation as set forth in the Registration
Statement); and (iii) no more than an aggregate of $200,000 may be paid from the
proceeds of the offering to Messrs. Xxxxx and Xxxxxxx in satisfaction of the
Principal Stockholder's Notes described in the Registration Statement, provided,
however, that if the Underwriters exercise, in full, the over- allotment option,
the Company may prepay an additional $100,000 in the aggregate, toward such
notes.
22
Principal Shareholders' Options and Notes. Each of
the following agreements with the Company's principal shareholders conforms to
the description thereof in the Registration Statement and the Prospectus, and
are valid, binding and enforceable obligations upon the respective parties
thereto in accordance with their respective terms, subject to the effect of
bankruptcy or similar proceedings and the effect and application of general
principles of equity: (i) the stock option agreements between the Company and
each of Xxxx Xxxxx and Xxxxx Xxxxxxx to purchase 100,000 shares of Common Stock
("Principal Stockholders' Options"); (ii) the stock option agreement between the
Company and each of Xxxx Xxxxx and Xxxxx Xxxxxxx to purchase 180,250 shares of
Common Stock ("Principal Stockholders' Contingent Options"); and (iii) the
Convertible Subordinated Promissory Note (the "Principal Stockholders' Note")
from the Company to each of Xxxx Xxxxx and Xxxxx Xxxxxxx. Such agreements
provide, among other things, that in the event that the Company's audited after
tax profit (on a pro forma basis assuming C corporation status) for the year
ended December 31, 1996 is less than $639,000, then the shares of Common Stock
underlying such agreement shall be reduced in an amount equal to the difference
between $639,000 and the actual after tax profit (or loss) divided by the
applicable exercise or conversion price. In order of priority, any reduction in
shares of Common Stock underlying such agreement shall be first to the Principal
Stockholders' Contingent Option, second to the Principal Stockholder Note and
third to the Principal Stockholders' Options. By way of example, if the Company
were to experience a after tax loss of $100,000 for the year ended December 31,
1996, then Messrs. Xxxxx and Xxxxxxx shall each forfeit approximately 61,583
shares of Common Stock underlying the Principal Stockholders' Contingent Options
(assuming a $6.00 exercise price).
Indemnification.
By Company. The Company agrees to indemnify and hold
harmless you and each person, if any, who controls you within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from and
against any and all losses, liabilities, claims, damages and expenses (including
but not limited to reasonable attorneys' fees and any and all reasonable
expenses incurred in investigating, preparing or defending against any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which you or they or any of them may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, as originally filed
or any amendment thereof, or any related preliminary prospectus or the
Prospectus, or in any supplement thereto or amendment thereof, or in any blue
sky application or other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company 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 any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in any material respect, or arise out of or are based upon any failure of the
Company to comply with any provision of this Underwriting Agreement resulting in
a claim or loss to the Underwriters. Notwithstanding the preceding sentence,
23
the Company will not be liable in any such case to
the extent, but only to the extent that, any such loss, liability, claim, damage
or expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of you expressly for use therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have, including under
this Agreement. The Company agrees to pay any reasonable legal or other expenses
for which it is liable under this subsection from time to time (but not more
frequently than monthly) within 30 days after its receipt of a xxxx therefor;
and further provided, however, that the foregoing provisions are subject to the
condition that, insofar as they relate to any untrue statement, alleged untrue
statement, omission or alleged omission made in any Preliminary Prospectus but
eliminated or remedied in the Prospectus, such indemnity provision shall not
inure to you or any person who controls you within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act if a copy of the
Prospectus was not sent or given to such person with or prior to the written
confirmation of sale of such Securities to such person. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
By Underwriters. You agree to indemnify and hold
harmless the Company, each of the officers of the Company who shall have signed
the Registration Statement and each other person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, from and against any and all losses, liabilities, claims,
damages and reasonable expenses whatsoever (including but not limited to
attorneys' fees and any and all reasonable expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or any related preliminary prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or in any
Blue Sky Application, or arise out of or are based upon the omission or 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 any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by you
expressly for use therein; provided, however, that in no case shall you be
liable or responsible for any amount in excess of the underwriting discounts and
commissions received by you, as set forth on the cover page of the Prospectus.
You agree to pay any legal or other expenses for which you are liable under this
subsection (b) from time to time (but not more frequently than monthly) within
30 days after receipt of a xxxx therefor. This indemnity agreement will be in
addition to any liability which you may otherwise have.
Procedures In Case of Indemnification. Promptly after
receipt by an indemnified party under subsection (a) or (b) above of notice of
the commencement of any action or proceeding (including any governmental
investigation), such indemnified party shall, if a claim
24
in respect thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it may have
under this Section 7 except to the extent that it has been prejudiced in any
material respect by such failure or from any liability which it may have
otherwise). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the indemnified party and the payment of all
expenses. Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless (i) the employment of such counsel shall have been authorized
in writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel
reasonably satisfactory to the indemnified party to have charge of the defense
of such action within a reasonable time after notice of commencement of the
action, or (iii) such indemnified party or parties shall have reasonably
concluded and have been so advised in a written opinion from counsel that there
may be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
Contribution. In order to provide for contribution
in circumstances in which the indemnification provided for in Section 7(a) and
(b) hereof is for any reason held to be unavailable from the Company, or you, or
is insufficient to hold harmless a party indemnified thereunder, in lieu of
indemnifying such indemnified party, the Company, and you shall contribute to
the aggregate losses, claims, damages, liabilities and reasonable expenses of
the nature contemplated by such indemnification provisions (including any
investigation, legal and other reasonable expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting in the case of losses, claims, damages,
liabilities and reasonable expenses suffered by the Company or you any
contribution received by the Company or you from persons who may also be liable
for contribution, including persons who control the Company or you within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, officers of the Company who signed the Registration Statement and directors
of the Company) to which the Company or you may be subject, in such proportions
as is appropriate to reflect the relative benefits received by the Company and
by you from the offering of the Securities or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7(d)
hereof in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and you in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
25
equitable considerations. The relative benefits received by the Company and by
you shall be deemed to be in the same proportion as (a) the total proceeds from
the offering (before deducting expenses) received by the Company bear to (b) the
total underwriting discounts and commissions received by you in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Company and of you shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by you or any agent expressly authorized by you to
supply such information and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 7(d), (i) in no case shall you be liable or responsible for any
amount in excess of the underwriting discount applicable to the Securities
purchased hereunder and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(e), each person, if any, who
controls an underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as you, and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 7(e). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7(e), notify such party or parties from whom contribution may
be sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under Section 7(e) or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld. The
indemnity and contribution agreements contained in this Agreement shall remain
operative and in full force and effect regardless of (A) any investigation made
by or on behalf of you or any person controlling you or by or on behalf of the
Company, (B) acceptance of any of the Securities and payment therefore or
(C) any termination of this Agreement. A successor to the Company, its directors
or officers or any person controlling the Company or to the Underwriter, shall
be entitled to the benefits of the indemnity, contribution, and reimbursement
agreements contained in this Section 7.
Conditions of the Underwriters' Obligations. Your obligation
to purchase and pay for the Firm Securities on the Closing Date shall be subject
to the accuracy of and compliance with the representations and the warranties of
the Company herein contained and in each certificate and document contemplated
to be delivered to you hereunder as of the date hereof and the Closing Date, to
the performance by the Company of its obligations herein contained and to the
following additional terms and conditions:
26
Effective Registration Statement. The Registration
Statement shall have become effective not later than 5:00 P.M., Miami time, on
the date of this Agreement, or at such later time or on such later date as you
may agree to in writing and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been made. At or prior to the
Closing, no stop order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Securities under the Blue
Sky laws of any jurisdiction (whether or not a jurisdiction which you shall have
specified) shall have been issued and no proceeding for that purpose shall have
been initiated or shall be threatened by the Commission or the authorities of
any such jurisdiction. Any request for additional information on the part of
the Commission or any such authorities shall have been complied with to the
satisfaction of the Commission or such authorities and counsel for you. The
NASD, upon review of the terms of the public offering of the Securities, shall
not have objected to such offering, such terms, or your participation in the
same. After the date hereof no amendment or supplement shall have been filed to
the Registration Statement or the Prospectus without your prior written consent.
Accuracy of Registration Statement. No person shall
have discovered and advised the Company prior to the Closing Date that the
Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of material fact which, in your opinion, is
material, or that the Registration Statement or any amendment or supplement
thereto omits to state a fact which, in your opinion after consultation with
legal counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
Litigation. Between the time of the execution and
delivery of this Agreement and the Closing, there shall be no material
litigation instituted against the Company, any of its subsidiaries or any of
their respective officers or directors, and between such dates there shall be no
proceeding instituted or threatened against the Company, any of its subsidiaries
or any of their respective officers or directors before or by any Federal,
state, county or local commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding could materially adversely affect the
Company, any of its subsidiaries or their respective businesses, business
prospects, properties, financial conditions or results of operations.
Review by Underwriters' Counsel. The authorization
and issuance of the Securities, the sale and delivery thereof, the Registration
Statement, the Prospectus and all other documents and corporate proceedings
incident thereto shall be satisfactory in all material respects to you and your
counsel, and your counsel shall be furnished on the Closing Date with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the matters referred to in this Section 8(d).
27
Opinion of Legal Counsel. You shall have received
an opinion dated the effective date of the Registration Statement, and an
updated version of such opinion dated the Closing Date, satisfactory in form and
substance to you and your counsel, from Akerman, Senterfitt & Xxxxxx, P.A.,
counsel for the Company, to the effect that:
Each of the Company and its subsidiaries
is, to the knowledge of counsel after limited investigation (as used
herein, such phrase shall have the meaning set forth in the Florida Bar
Report on Standards for Opinions), a corporation duly organized,
validly existing, in good standing under the laws of the jurisdiction
of its respective incorporation and is registered or qualified in good
standing to do business as a foreign cor-
poration in each jurisdiction wherein the Company and its subsidiaries
own or lease any properties or conduct any business and in which the
failure to so qualify, would, in the aggregate, have a material adverse
effect on the business, properties or results of operations of the
Company and its subsidiaries taken as a whole. To such counsel's
knowledge after limited investigation, each of the Company and its
subsidiaries has corporate power and authority to own and lease its
properties and to conduct its business as described in the Registration
Statement and the Prospectus. The Company has no subsidiaries to the
knowledge of such counsel after limited investigation other than those
disclosed in the Registration Statement and the Prospectus.
The Registration Statement has become
effective under the Securities Act, and, (a) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are, to the
knowledge of counsel after limited investigation, threatened, pending
or contemplated under the Securities Act, except as may be disclosed in
the Prospectus; the Registration Statement and the Prospectus and each
amendment or supplement thereto (except for the financial statements,
schedules and other financial and statistical data included therein, as
to which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act; and
(b) such counsel has participated in the preparation of the
Registration Statement and the Prospectus and such counsel has no
reason to believe that either the Registration Statement, or any such
amendment thereto, at the time such Registration Statement or amendment
became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus, as of its date, or any supplement thereto as of its date,
contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Company has all requisite corporate
power and authority to enter into this Agreement and this Agreement has
been authorized, executed, and delivered by the Company and is a legal,
valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except (a) that this Agreement
may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter
28
in effect relating to creditors' rights, (b) that the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought, and (c) as rights
to indemnity and contribution hereunder may be limited by federal or
state securities laws or the public policy underlying such laws.
The authorized, issued and outstanding
capital stock of the Company and all other outstanding securities of
the Company and its subsidiaries conform to the descriptions thereof in
the Registration Statement and in the Prospectus under the section
entitled "Description of Securities." The issued and outstanding
capital stock, prior to the issuance of the Securities sold by the
Company hereunder, has been authorized and validly issued, is fully
paid and nonassessable and is free of preemptive rights except as
described in the Prospectus. To the knowledge of such counsel after
limited investigation, there are no outstanding options, warrants, or
other rights calling for the issuance of, and no commitment, plan or
arrangement to issue or register, any share of capital stock of the
Company or any security convertible into or exchangeable for capital
stock of the Company other than as disclosed in the Registration
Statement and the Prospectus.
The Securities to be issued and sold to the
Underwriters by the Company have been authorized by the Company and
will conform in all material respects to the description thereof in the
Registration Statement and in the Prospectus. The Firm Securities, when
sold and fully paid for in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable and free of
preemptive rights. Such opinion delivered at the Closing Date shall
state that each of the Firm Securities is validly issued, fully paid
and non-assessable and not subject to preemptive rights.
The Purchase Option Agreement conforms to
the description thereof in the Registration Statement and in the
Prospectus and has been authorized, and when issued will be validly
issued and will be a valid and binding obligation of the Company. The
Underwriters' Purchase Option and the Purchase Option Securities have
been validly authorized and reserved for issuance upon exercise of the
Underwriters' Purchase Option and the Underwriters' Warrants and, when
issued upon such exercise in accordance with the terms of the Purchase
Option Agreement at the price therein provided, will be validly issued,
fully paid and non-assessable and not subject to preemptive rights.
The certificates used to evidence the
Securities, the Underwriters' Purchase Option and the Purchase Option
Securities are each in due and proper form as required by the laws of
the State of Florida.
Neither the Company nor any of its
subsidiaries is, to the knowledge of such counsel, in material
violation of its corporate charter or bylaws, respectively, or, to the
knowledge of counsel after limited investigation, any franchise,
license, permit, judgment, decree, order, statute, regulation, rule or
ordinance of any court or administrative
29
agency, arbitration panel or authority applicable to the Company or any
of its subsidiaries except as described in the Prospectus, where the
consequences of any such violation would be material to the Company or
any of its subsidiaries. To the knowledge of such counsel after limited
investigation, except as described in the Prospectus neither the
Company nor any of its subsidiaries is in default in any material
respect in the performance of any material obligation, agreement,
lease, covenant or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any indenture, mortgage, deed
of trust or other material agreement or instrument (collectively, the
"Material Agreements") of which counsel after limited investigation, is
aware to which the Company or any of its subsidiaries, or by which the
Company's or any of its subsidiaries' properties are bound where the
consequences of any such default would be material and adverse to the
Company or any of its subsidiaries. To such counsel's knowledge after
limited investigation, there exists no condition which, with the
passage of time or otherwise, would constitute a material default under
any Material Agreement or instrument or result in the imposition of any
material penalty or acceleration of any material indebtedness.
The execution and delivery of this
Agreement, the Purchase Option Agreement, the Warrant Agreement, and
the Financial Advisory Agreement, the issuance and sale of the
Securities, the Underwriters' Purchase Option, and the Purchase Option
Securities and the compliance by the Company with all of the provisions
of this Agreement, the Purchase Option Agreement, the Warrant
Agreement, and the Financial Advisory Agreement, will not conflict with
or result in a breach or violation of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of
time, or both, would 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 Agreement of the Company or any of its
subsidiaries or by which any of the Company's or its subsidiaries'
properties is bound, known to such counsel after limited investigation.
To such counsel's knowledge after limited investigation, there exists
no condition which, with the passage of time or otherwise, would
constitute a default under any such agreement or instrument or result
in the imposition of any penalty or acceleration of any such
indebtedness, where the consequences of any such default would be
material and adverse to the Company or any of its subsidiaries, nor
will such action result in a violation of the provisions of the
corporate charter or bylaws of the Company or any of its subsidiaries,
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of its or their properties, where the
consequences of any such violation would be material and adverse to the
Company and its subsidiaries. No consent, approval, authorization,
order, registration or qualification of or with any court or any
regulatory authority or other governmental body is required for the
issue and sale of the Securities, the Underwriters' Purchase Option or
the Purchase Option Securities or the consummation of the other
transactions contemplated by this Agreement, the Purchase Option
Agreement and the Warrant Agreement except the registration of the
Securities and, the Purchase Option Securities under the Securities
Act, and such consents, approvals, authorizations,
30
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by you and the purchase of the
Underwriters' Purchase Option by you.
To the knowledge of such counsel, except
as disclosed in the Registration Statement and in the Prospectus, there
is no pending or threatened material action, suit or proceeding before
or by any court or governmental agency or body or arbitration panel, to
which the Company or any of its subsidiaries or any of their respective
officers or directors is a party, or which any property of the Company
or any of its subsidiaries is subject, which might result in a material
adverse change in the business, financial condition or results of
operations or materially affect the properties or assets of the Company
or any of its subsidiaries taken as a whole.
Such counsel has reviewed all contracts
referred to in the Registration Statement and the Prospectus and such
contracts conform in all material respects to their descriptions
therein. To the knowledge of such counsel after limited investigation,
no contracts or documents of a character required to be described in
the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement have not been so described or
filed. Such counsel does not know of any statutes or regulations or
pending or threatened legal or governmental proceedings required to be
described in the Prospectus which are not described as required.
To the knowledge of such counsel after
limited investigation, there are no holders of securities of the
Company having rights to the registration of shares of Common Stock or
other securities because of the filing of the Registration Statement by
the Company, except as disclosed in the Registration Statement and the
Prospectus.
The sale of securities by the Company
and/or its subsidiaries described in Item 26, Part II of the
Registration Statement did not require registration under the
Securities Act or any state securities laws.
In giving such opinion, such counsel may rely as to
matters of fact upon statements and certifications of officers of the
Company or public officials as to matters of fact of which the maker of
such certificate has knowledge, and as to matters of law of
jurisdictions other than Florida, such counsel may rely on opinions of
local counsel acceptable to you, copies of which opinions shall be
attached to the said opinion, provided, however, that such counsel may
not rely on an opinion if he has actual knowledge that such opinion is
not correct or knows that the facts or law on which the opinion of
local counsel is based are not correct.
President's Certificate. The Company shall have
furnished to you on the Closing Date a certificate of its President, or
other principal executive officer of the Company dated as of the
Closing Date, to the effect that:
31
No stop order suspending the effectiveness
of the Registration Statement has been issued, and no proceedings for
such purpose have been commenced or are, to the knowledge of each
signer of such certificate, threatened or contemplated by the
Commission; no stop order suspending the qualification or registration
of any of the Securities under the Blue Sky laws of any jurisdiction
(whether or not a jurisdiction you shall have specified) has been
issued, and no material proceedings for such purpose have been
commenced or are, to the knowledge of each signer of such certificate
after reasonable investigation, threatened or contemplated by any
jurisdiction; and the conditions, separately set forth in such
certificate, contained in Section 8 hereof have been complied with in
all material respects.
The respective signers and each other
member of the Company's Board of Directors have each read the
Registration Statement and Prospectus and any amendments and
supplements thereto, and the Registration Statement and the Prospectus
and any amendments and supplements thereto and all statements contained
therein are true and correct in all material respects, and neither the
Registration Statement nor Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading and, since the effective
date of the Registration Statement, they are not aware of any event
required to be set forth in an amendment to the Registration Statement
or a supplement to the Prospectus which has not been so set forth.
Except as reflected in the Registration
Statement and Prospectus or any amendment or supplement thereto, since
the respective dates as of which information is given in the
Registration Statement and Prospectus or any amendment or supplement
thereto and prior to the date of such certificate, (a) there has not
been any material adverse change, financial or otherwise, in the
affairs or condition of the Company and of its subsidiaries taken as a
whole, and (b) the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, otherwise than in the ordinary course of business.
There are no legal proceedings pending or,
to the knowledge of the Company after reasonable investigation,
threatened against the Company or any of its subsidiaries, of a
character affecting the validity of this Agreement or required to be
disclosed in the Prospectus which are not disclosed therein; there are
no material transactions or contracts which are required to be
summarized therein which are not so summarized; and there are no
material contracts or documents required to be filed as exhibits to the
Registration Statement which are not so filed.
Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, no dividends or distribution whatever have been declared
and/or paid on or with respect to any securities of the Company.
32
Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, the Company has not sustained any material loss or damage
to its property, whether or not insured.
At and as of the Closing Date, the
representations and warranties contained in Section 6 of this Agreement
are true and correct in all material respects; the Company has complied
with all the agreements and has satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date, and
the matters set forth in Section 8 of this Agreement are true and
correct as therein set forth.
The Company and each of its subsidiaries
has such licenses, registrations, permits, approvals, qualifications
and certificates of authority from the appropriate regulatory
authorities as are necessary to transact its business as described in
the Registration Statement and in the Prospectus in the jurisdictions
in which the Company and each of its subsidiaries transacts its
business or owns or leases property, and in which the failure to have
such licenses, registrations, permits, approvals, qualifications and
certificates could have a material adverse effect on the business,
properties or results of operation of the Company and its subsidiaries
taken as a whole.
Chief Financial Officer's Certificate. The Company
shall have furnished to you on the Closing Date a certificate of its
Chief Financial Officer, or other principal executive financial officer
or accounting officer of the Company, dated as of the Closing Date, to
the effect that:
To the knowledge of such officer after
reasonable inquiry no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been commenced or are, to the knowledge of each signer of
such certificate, threatened or contemplated by the Commission; no stop
order suspending the qualification or registration of any of the
Securities under the Blue Sky laws of any jurisdiction (whether or not
a jurisdiction you shall have specified) has been issued, and no
proceedings for such purpose have been commenced or are, to the
knowledge of each signer of such certificate, threatened or
contemplated by any jurisdiction; and the conditions, separately set
forth in such certificate, contained in subsection 8 hereof have been
complied with.
The Prospectus and any amendments and
supplements thereto and all statements contained therein are true and
correct, and to his knowledge, after reasonable inquiry, neither the
Registration Statement nor Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading and, since the effective
date of the Registration Statement, he is not aware of any event
required to be set forth in an amendment to the Registration Statement
or a supplement to the Prospectus which has not been so set forth.
33
Except as reflected in the Registration
Statement and Prospectus or any amendment or supplement thereto, since
the respective dates as of which information is given in the
Registration Statement and Prospectus or any amendment or supplement
thereto and prior to the date of such certificate, (a) there has not
been any material adverse change, financial or otherwise, in the
affairs or condition of the Company or any of its subsidiaries taken as
a whole, and (b) the Company has not incurred any material liabilities
or obligations, direct or contingent, or entered into any material
transactions, otherwise than in the ordinary course of business.
There are no material legal proceedings
pending or to his knowledge after reasonable inquiry, threatened
against the Company or any of its subsidiaries, of a character
affecting the validity of this Agreement or required to be disclosed in
the Prospectus which are not disclosed therein; there are no
transactions or contracts which are required to be summarized therein
which are not so summarized; and there are no material contracts or
documents required to be filed as exhibits to the Registration
Statement which are not so filed.
Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, no dividends or distribution whatever have been declared
and/or paid on or with respect to any securities of the Company.
Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, the Company has not sustained any material loss or damage
to its property, whether or not insured.
At and as of the Closing Date, to his
knowledge after reasonable inquiry, the representations and warranties
contained in Section 6 of this Agreement are true and correct; the
Company has complied with all the agreements and has satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date, and the matters set forth in Section 8 of this Agreement
are true and correct as therein set forth.
Accountant's Letter. You shall have received from
the independent certified public accountants that audited the financial
statements of the Company included in the Registration Statement, at
least two letters each addressed to you, substantially in the form
heretofore approved by you, one dated the effective date of the
Registration Statement and the second, the Closing Date.
Underwriters' Purchase Option. The Company shall
have executed the Purchase Option Agreement and shall have delivered
properly executed Underwriters' Option Certificates to you
simultaneously with the closing of the sale of the Firm Securities.
Lock-Up Agreements. You shall have received the
executed "lock-up" letters described in Section 5(h) of this Agreement.
34
Employment Agreements. Prior to the effective date
of the Registration Statement, the Company will enter into and deliver
to the Underwriters employment and stock option agreements with Xxxx
Xxxxx and Xxxxx Xxxxxxx, which agreements will be subject to the
Underwriters' approval.
NASDAQ Listing. The Common Stock and Warrants must
be qualified for listing on the Nasdaq SmallCap Market on the effective
date of the Registration Statement. Blue Sky Qualification. The
Securities shall be qualified in such states as determined under
Section 5(e) above and each qualification shall be in effect and not
subject to an stop order or other proceeding on the Closing Date.
All such opinions, certificates, letters and documents delivered
pursuant to this Agreement will be in compliance with the provisions of
this Section 8 only if they are reasonably satisfactory to you and your
counsel. The Company shall furnish to you such conformed copies of such
opinions, certificates, letters and documents in such quantities as you
shall reasonably request.
If any of the conditions hereunder to be satisfied at or prior to the
Closing Date are not so satisfied, or subsequently waived, you may
terminate this Agreement without liability on your part or on the part
of the Company, except for the expenses to be paid or reimbursed by the
Company pursuant to Section 5(l) of this Agreement and except for any
liability under Section 8 of this Agreement.
Your obligation to purchase and pay for all or any portion of the
Option Securities on the Option Closing Date upon the exercise of the
option contained in Section 3 hereof shall be subject to the accuracy
of and compliance with the representations and the warranties of the
Company herein contained as of the date hereof and the Closing Date and
Option Closing Date, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(A) You shall have purchased the Firm Securities from
the Company (which purchase may occur simultaneously with the purchase of the
Option Securities from the Company).
(B) The condition set forth in paragraphs (a), (b)
and (c) of this Section 8 shall be satisfied as of the Option Closing Date.
(C) There shall have been tendered for delivery in
accordance with the terms and provisions of this Agreement the Option Securities
being purchased on the Option Closing Date from the Company.
(D) You shall have received an opinion of counsel for
the Company, dated the Option Closing Date, confirming their opinion delivered
pursuant to Section 8(e) hereof as of the Option Closing Date. In each instance
in which the opinion referred to in Section 8(e) refers to
35
the Firm Securities, the opinion delivered pursuant hereto shall also refer to
the Option Securities.
(E) You shall have received from the independent
certified public accountants that audited the financial statements of the
Company included in the Registration Statement, a letter addressed to you,
substantially in the form heretofore approved by you, dated the Option Closing
Date.
(F) You shall have received a certificate, dated the
Option Closing Date, of the Company, confirming the matters stated in the
certificate delivered pursuant to Section 8(f) hereof as of the Option Closing
Date and stating further that the Company has performed or a waiver has been
given for all or a part of the agreements herein contained to be performed on
its part at or prior to such Option Closing Date.
(G) You shall have received a certificate, dated the
Option Closing Date, of the Company, confirming the matters stated in the
certificate delivered pursuant to Section 8(g) hereof as of the Option Closing
Date and stating further that the Company has performed or a waiver has been
given for all or a part of the agreements herein contained to be performed on
its part at or prior to such option Closing Date.
36
Effective Date of Agreement; Termination.
This Agreement shall become effective when you and
the Company shall have received notification of the effectiveness of the
Registration Statement.
This Agreement may be terminated at any time prior to
the Closing Date by you by written notice to the Company if in your judgment it
is impracticable to offer for sale or to enforce contracts made by you for the
resale of the Securities agreed to be purchased hereunder by reason of (i) the
Company or its subsidiaries having sustained a loss by reason of fire, flood,
accident or other calamity, which, in your opinion, substantially affects the
value of the properties of the Company or its subsidiaries or which materially
interferes with the operation of the business of the Company or any of its
subsidiaries regardless of whether such loss shall have been insured, (ii) the
existing financial, political or economic conditions in the United States or
elsewhere having undergone such material change as in your opinion would make it
inadvisable to proceed with the offering, sale and delivery of the Securities on
the terms contemplated by the Prospectus, (iii) a banking moratorium shall have
been declared by either federal or New York authorities, (iv) a war involving
the United States or other national calamity shall have occurred, (v) any
material adverse change in the condition or obligations of the Company and any
of its subsidiaries taken as a whole or in the earnings, operations, management
or business prospects of the Company and any of its subsidiaries taken as a
whole, (vi) any action, suit or proceeding shall be threatened or pending, at
law or in equity, against the Company and any of its subsidiaries taken as a
whole, by any Federal, state or other commission, board or agency, which is not
disclosed in the Prospectus and in which an unfavorable result or decision could
materially adversely affect the business, prospects, property, financial
condition or income or earnings of the Company and any of its subsidiaries taken
as a whole, (vii) an action, suit or proceeding that is threatened or pending,
which has been previously disclosed in the Prospectus, shall have worsened in
any way such that an unfavorable result or decision could materially adversely
affect the business, prospects, property, financial condition or income or
earnings of the Company and/or any of its subsidiaries, or (viii) during the
course of your due diligence investigation of the Company, facts arise which
vary materially in an adverse manner from representations which have been
previously made concerning the Company's business and financial condition. In
addition, this Agreement may be terminated by you by prompt written notice to
the Company (i) at any time before it becomes effective or (ii) in the event
that the Company shall have failed to comply with any of the provisions of this
Agreement to be performed by it at or prior to any Closing Date which have not
been waived by you, or if any of the representations, warranties, covenants,
agreements or conditions of, or applicable to, the Company herein contained
shall not have been complied with or satisfied within the time specified unless
waived by you.
At any time after the Closing Date, if you should
(i) cease to be a broker-dealer registered with the Commission, (ii) be
suspended from such registration for any period of time in excess of 30 days,
(iii) cease to be a member of the NASD or other self-regulatory organization or
(iv) become subject to a proceeding, action or notification under Section 6 of
the Securities Investor
37
Protection Act of 1970, the obligations of the Company under this Agreement
shall cease without any liability on the part of the Company.
Survival of Indemnities, Representations, Warranties and
Covenants. The respective indemnities of the Company and the Underwriters and
the respective representations, warranties and covenants of the Company and the
Underwriters set forth in this Agreement will remain in full force and effect,
regardless of any investigations made by or on behalf of the Company or the
Underwriters or any of their respective officers, directors, partners or any
controlling person, and will survive delivery of and payment for the Securities
or termination of this Agreement pursuant to Section 10 hereof as the case may
be.
Miscellaneous.
This Agreement shall inure to the benefit of the
Company and the Under- writers, the officers and directors of such parties, each
controlling person referred to in Section 8 hereof and their respective
successors. Nothing in this Agreement is intended or shall be construed to give
to any other person, firm or corporation any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
The term "successor" as used in this Agreement shall not include any purchaser
of any Securities from the Underwriter.
This Agreement constitutes the entire agreement among
the parties concerning the subject matter hereof and supersedes all prior
agreements and understandings.
All notices and other communications hereunder
(unless otherwise expressly provided for herein) shall be in writing and shall
be deemed given when delivered in person on the business (before 5:00 P.M.) sent
by facsimile transmission, or on the date indicated on the return receipt if
sent registered or certified mail return receipt requested) to the party to
receive the same at the following addresses (or at such other address for a
party as shall be specified by like notice):
If to the Company: Advanced Electronic Support Products, Inc.
0000 Xxxxxxxxx 000xx Xxxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attn: Messrs. Xxxx Xxxxx and Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
With a Copy to: Akerman, Senterfit & Xxxxxx, P.A.
SunTrust International Center, 00xx Xxxxx
Xxx Xxxxxxxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
38
If to the Underwriters: Corporate Securities Group, Inc.
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxx, President
Facsimile: (000) 000-0000
Argent Securities, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx, Chairman
Facsimile: (000) 000-0000
With a Copy to: Xxxxx, Mandler, Croland, Bronstein, Garbett,
Stiphany & Xxxxxxxx, P.A.
Xxxxxxx Bank Tower
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Xxxxxxx & Xxxxxxxxxx
One Buckhead Plaza
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
This Agreement was executed and delivered in, and i
ts validity, interpretation and construction shall be governed by the internal
laws of, the State of Florida applicable to agreements made and to be performed
wholly within such State. This Agreement may be executed in any number of
counterparts. Each counterpart, when executed and delivered, shall be an
original contract, but all counterparts, when taken together, shall constitute
one and the same Agreement.
The Company hereby acknowledges that the breach of
material terms contained in this Agreement (whether or not specifically
designated as such) would cause irreparable damage and substantial prejudice to
your rights. Accordingly, the Company agrees that in the event of any such
breach or threatened breach, you shall have, in addition to its and your legal
remedies, the right to injunctive or other equitable relief, as permitted by
law, to prevent the Company's violation of their obligations hereunder.
Titles and headings to sections herein are inserted
for the convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
Any consent or approval of the Underwriters required
hereunder to any action of the Company shall not be unreasonably withheld, and
notwithstanding any other provisions
39
hereof, such consent or approval shall not be required if the Company obtains an
opinion from counsel acceptable to the Underwriters that the requirement of such
consent or approval constitutes an abrogation of the Board of Directors' duties
under the corporate law of such jurisdiction.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
Advanced Electronics Support Products, Inc.
By:
Accepted and agreed to as of
the date first above written:
ARGENT SECURITIES, INC. CORPORATE SECURITIES GROUP, INC.
By: By:
40
