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EXHIBIT 1.1
850,000 UNITS(1)
2CONNECT EXPRESS, INC.
UNDERWRITING AGREEMENT
April , 1997
Sterne, Agee & Xxxxx, Inc.
As Representative of the several Underwriters
named in Schedule I attached hereto
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Gentlemen:
The undersigned, 2Connect Express, Inc., a Florida corporation (the
"Company"), hereby confirms its agreement with Sterne, Agee & Xxxxx, Inc.
(individually, "Sterne Agee"), as representative (the "Representative") of the
several underwriters named in Schedule I hereto (the "Underwriters"), as
follows:
1. INTRODUCTION.
(a) The Company proposes to issue and sell to the Underwriters
850,000 Units ("Units"), each Unit of which shall consist of three shares of the
Company's authorized and unissued common stock, par value $.01 per share (the
"Common Stock"), and one Common Stock Purchase Warrant (the "Warrant") as set
forth in Schedule 1 hereto and pursuant to the Underwriters' agreement to
purchase the Units in Section 3(a) hereof. The Units to be purchased pursuant to
Section 3(a) of this Agreement may be hereinafter referred to as the "Firm
Units". Each Warrant is exercisable pursuant to the warrant agreement in
substantially the form attached hereto as Exhibit A ("Warrant Agreement") to
purchase one share of Common Stock at $3.75 per share at any time during a
period of 60 days commencing April__, 1998 (one year from the date of the
Company's final prospectus) after which time the Warrants
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(1) Plus an option to purchase up to 127,500 additional units from the
Company to cover over-allotments.
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will expire and no longer be of any force and effect. Neither the shares of
Common Stock nor the Warrants are detachable or separately transferable from the
Units until April __, 1998 (one year from the date of the Company's final
prospectus).
(b) Solely for the purpose of covering over-allotments, if
any, the Company proposes to grant to the Underwriters a one-time option (the
"Over-allotment Option") to purchase from the Company in the aggregate, up to an
additional 127,500 Units pursuant to the terms and conditions of Section 3(b)
herein. Such Units are hereinafter referred to as the "Option Units."
(c) The Company proposes to sell to Sterne Agee, individually
and not as Representative, 59,500 warrants (the "Representative's Warrants") to
purchase up to an aggregate of 59,500 Units ("Warrant Units") for an aggregate
purchase price of $5.95. The Representative's Warrants shall be substantially in
the form attached hereto as Exhibit B and as filed as an exhibit to the
Registration Statement (as hereinafter defined). The Representative's Warrants
and the Warrant Units are hereinafter referred to collectively as the
"Representative's Securities."
(d) The Company agrees to appoint one individual designated by
Sterne Agee at the Closing Date to serve on the Board of Directors of the
Company until the next annual meeting of the shareholders of the Company. The
Company further agrees to nominate for a vote of the shareholders at each annual
meeting of the shareholders of the Company one individual designated by Sterne
Agee; provided that, Sterne Agee designate such individual no later than 30 days
prior to the proposed distribution by the Company of a proxy statement for the
solicitation of proxies in connection with such annual meeting of the
shareholders of the Company. The Company further agrees to use its best efforts
to solicit the necessary votes of the shareholders in favor of the election of
such designee to the Board of Directors of the Company if the Company uses the
services of a proxy solicitation firm in connection with such annual meeting.
2. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form SB-2 (File No. 333-15567)
with respect to the Units, including a prospectus subject to completion, has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the applicable rules and
regulations (the "Rules and
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Regulations") of the Securities and Exchange Commission (the "Commission") under
the Act and has been filed with the Commission; such amendments to such
registration statement, such amended prospectuses subject to completion and such
abbreviated registration statements pursuant to Rule 462(b) of the Rules and
Regulations as may have been required prior to the date hereof have been
similarly prepared and filed with the Commission; and the Company will file such
additional amendments to such registration statement, such amended prospectuses
subject to completion and such abbreviated registration statements as may
hereafter be required. Copies of such registration statement and amendments, of
each related prospectus subject to completion (the "Preliminary Prospectuses")
and of any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations have been delivered to Sterne Agee.
If the registration statement relating to the Units has been declared
effective under the Act by the Commission, the Company will prepare and promptly
file with the Commission the information omitted from the registration statement
pursuant to Rule 430A(a) or, if Sterne Agee, on behalf of the Underwriters,
shall agree to the utilization of Rule 434 of the Rules and Regulations, the
information required to be included in any term sheet filed pursuant to Rule
434(b) or (c), as applicable, of the Rules and Regulations pursuant to
subparagraph (1), (4) or (7) of Rule 424(b) of the Rules and Regulations or as
part of a post-effective amendment to the registration statement (including a
final from of prospectus). If the registration statement relating to the Units
has not been declared effective under the Act by the Commission, the Company
will prepare and promptly file an amendment to the registration statement,
including a final form of prospectus, or, if Sterne Agee on behalf of the
Underwriters, shall agree to the utilization of Rule 434 of the Rules and
Regulations, the information required to be included in any term sheet filed
pursuant to Rule 434(b) or (c), as applicable, of the Rules and Regulations. The
term "Registration Statement" as used in this Agreement shall mean such
registration statement, including financial statements, schedules and exhibits,
in the form in which it became or becomes, as the case may be, effective
(including, if the Company omitted information from the registration statement
pursuant to Rule 430A(a) or files a term sheet pursuant to Rule 434 of the Rules
and Regulations, the information deemed to be a part of the registration
statement at the time it became effective pursuant to Rule 430A(b) or Rule
434(d) of the Rules and Regulations) and, in the event of any amendment thereto
or the filing of any abbreviated registration statement pursuant to Rule 462(b)
of the Rules and Regulations relating thereto after the effective date of such
registration statement, shall also mean (from and after the effectiveness of
such amendment or the filing of such
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abbreviated registration statement) such registration statement as so amended,
together with any such abbreviated registration statement. The term "Prospectus"
as used in this Agreement shall mean the prospectus relating to the Units as
included in such Registration Statement at the time it becomes effective
(including, if the Company omitted information from the Registration Statement
pursuant to Rule 430A(a) of the Rules and Regulations, the information deemed to
be a part of the Registration Statement at the time it became effective pursuant
to Rule 430A(b) of the Rules and Regulations); PROVIDED, HOWEVER, that if in
reliance on Rule 434 of the Rules and Regulations and with the consent of Sterne
Agee, on behalf of the several Underwriters, the Company shall have provided to
the Underwriters a term sheet pursuant to Rule 434(b) or (c), as applicable,
prior to the time that a confirmation is sent or given for purposes of Section
2(10)(a) of the Act, the term "Prospectus" shall mean the "prospectus subject to
completion" (as defined in Rule 434(g) of the Rules and Regulations) last
provided to the Underwriters by the Company and circulated by the Underwriters
to all prospective purchasers of the Units (including the information deemed to
be a part of the Registration Statement at the time it became effective pursuant
to Rule 434(d) of the Rules and Regulations). Notwithstanding the foregoing, if
any revised prospectus shall be provided to the Underwriters by the Company for
use in connection with the offering of the Units that differs from the
prospectus referred to in the immediately preceding sentence (whether or not
such revised prospectus is required to be filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Underwriters for such use. If in reliance on Rule 434 of the Rules and
Regulations and with the consent of Sterne Agee on behalf of the Underwriters,
the Company shall have provided to the Underwriters a term sheet pursuant to
Rule 434(b) or (c), as applicable, prior to the time that a confirmation is sent
or given for purposes of Section 2(10)(a) of the Act, the Prospectus and the
term sheet, together, will not be materially different from the prospectus in
the Registration Statement.
(b) The Commission has not issued an order (a "Stop Order")
suspending the effectiveness of, or preventing or suspending the use of, the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, refusing to permit the effectiveness of the
Registration Statement, or suspending the registration or qualification of the
Units nor has any such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order. In the event a Stop Order is issued by
any "blue sky" or securities authority of any
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jurisdiction, then either the Company or the Representative may abandon the
Registration Statement or void this Agreement. The Registration Statement,
Preliminary Prospectus and Prospectus and any amendments and supplements thereto
have conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, as of its date, has not included any untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement became or
becomes, as the case may be, effective and at all times subsequent thereto up to
and on the Closing Date (hereinafter defined) and on any later date on which
Option Units are to be purchased, (i) the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained and will
contain all material information required to be included therein by the Act and
the Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, (ii) the Registration
Statement, and any amendments or supplements thereto, did not and will not
include any 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 (iii) the Prospectus, and any amendments or supplements thereto,
did not and will not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties contained in this subparagraph
(b) shall apply to information contained in or omitted from the Registration
Statement or Prospectus, or any amendment or supplement thereto, in reliance
upon, and in conformity with, written information relating to any Underwriter
furnished to the Company by such Underwriter specifically for use in the
preparation thereof.
(c) The Company has no subsidiaries as defined in the
Regulations. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation with full power and authority (corporate and other) to own, lease
and operate its properties and conduct is business as described in the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
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Company; no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification; the Company is in possession of and operating in
compliance with all authorizations, licenses, certificates, consents, orders and
permits from state, federal and other regulatory authorities which are material
to the conduct of its business, all of which are valid and in full force and
effect; the Company is not in violation of its charter or bylaws or in default
in the performance or observance of any material obligation, agreement, covenant
or condition contained in any material bond, debenture, note or other evidence
of indebtedness, or in any material lease, contract, indenture, mortgage, deed
of trust, loan agreement, joint venture or other agreement or instrument to
which the Company is a party or by which it or its properties may be bound; and
the Company is not in material violation of any law, order, rule, regulation,
writ, injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over the Company or any
of its subsidiaries or over its properties of which it has knowledge.
(d) The Company has all requisite power and authority to
execute, deliver, and perform each of this Agreement, the Warrant Agreement and
the Representative's Warrants. All necessary corporate proceedings of the
Company have been duly taken to authorize the execution, delivery, and
performance by the Company of this Agreement, the Warrant Agreement and the
Representative's Warrants. This Agreement, the Warrant Agreement and the
Representative Warrants, respectively, have been duly authorized, executed, and
delivered by the Company, are, respectively, legal, valid, and binding
obligations of the Company, and each are enforceable as to the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws affecting the rights of creditors
generally. No consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is required by the
Company for the execution, delivery, or performance by the Company of this
Agreement, the Warrant Agreement or the Representative's Warrants, except
filings under the Act which have been or will be made before the Closing Date.
No consent of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party, or to which any
of its properties or assets is subject, is required for the execution, delivery,
or performance of this Agreement, the Warrant Agreement and the Representative's
Warrants; and the execution, delivery, and performance of this Agreement, the
Warrant Agreement and the Representative's
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Warrants will not violate, result in a breach of, conflict with, result in the
creation or imposition of any lien, charge, or encumbrance upon any properties
or assets of the Company pursuant to the terms of, or, with or without the
giving of notice or the passage of time or both, entitle any party to terminate
or call a default under, any such contract, agreement, instrument, lease,
license, arrangement, or understanding, or violate, result in a breach of, or
conflict with any term of the certificate of incorporation (or other charter
document) or by-laws of the Company, or violate, result in a breach of, or
conflict with, any law, rule, regulation, order, judgment, or decree binding on
the Company or to which any of its operations, businesses, properties, or assets
are subject.
(e) The Firm Units (and the component Common Stock and
Warrants thereof) are validly authorized and, upon the issuance and delivery for
payment thereof in accordance with this Agreement and the Warrant Agreement,
will be validly issued, fully paid and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be issued in
violation of any preemptive or similar rights of shareholders, and the
Underwriters will receive good title to the Firm Units (and the component Common
Stock and Warrants thereof) purchased by them, respectively, free and clear of
all liens, security interests, pledges, charges, encumbrances, shareholders'
agreements, and voting trusts. The Option Units (and the component Common Stock
and Warrants thereof) are validly authorized and duly and validly reserved for
issuance and, upon issuance and delivery for payment therefor in accordance with
the terms hereof, will be validly issued, fully paid and nonassessable, without
any personal liability attaching to the ownership thereof, and will not be
issued in violation of any preemptive or similar rights of stockholders, and the
Underwriters will receive good title to the Option Units (and the component
Common Stock and Warrants thereof), if any, purchased by them, respectively,
free and clear of all liens, security interests, pledges, charges, encumbrances,
shareholders' agreements, and voting trusts. The Firm Units and Option Units
conform to all statements relating thereto contained in the Registration
Statement and the Prospectus. The shares of Common Stock to be issued upon
exercise of the Warrants are validly authorized and have been duly and validly
reserved for issuance and, when issued and delivered upon exercise of the
Warrants in accordance with the terms of the Warrant Agreement, will be validly
issued, fully paid and non-assessable without any personal liability attaching
to the ownership thereof and will not be issued in violation of any preemptive
or similar rights of stockholders and the holders of the Warrants will receive
good title
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to the securities purchased by them upon exercise of the Warrants, free and
clear of all liens, security interest, pledges, charges, encumbrances,
stockholders agreements and voting trusts.
(f) There is not any pending or, to the best of the Company's
knowledge, threatened action, suit, claim or proceeding against the Company, or
any of its officers or any of its properties, assets or rights before any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or over its officers or properties or otherwise
(including, but not limited to, any pending or threatened action, suit, claim or
proceeding by Communicate! Powerstores, Inc.) which (i) might result in any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company or might materially
and adversely affect its properties, assets or rights, (ii) might prevent
consummation of the transactions contemplated hereby or (iii) is required to be
disclosed in the Registration Statement or Prospectus and is not so disclosed;
and there are no agreements, contracts, leases or documents of the Company of a
character required to be described or referred to in the Registration Statement
or Prospectus or to be filed as an exhibit to the Registration Statement by the
Act or the Rules and Regulations which have not been accurately described in all
material respects in the Registration Statement or Prospectus or filed as
exhibits to the Registration Statement.
(g) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company as of December 31, 1996
is as set forth in the Prospectus under the caption "Capitalization" and
conforms in all material respects to the statements relating thereto contained
in the Registration Statement and the Prospectus (and such statements correctly
state the substance of the instruments defining the capitalization of the
Company); the Firm Units and the Option Units have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company against payment therefor in accordance with
the terms of this Agreement, will be duly and validly issued and fully paid and
nonassessable, and will be sold free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest; and no preemptive right,
co-sale right, registration right, right of first refusal or other similar right
of stockholders exists with respect to any of the Firm Units or Option Units or
the issuance and sale thereof other than those
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that have been expressly waived prior to the date hereof and those that will
automatically expire upon the consummation of the transactions contemplated on
the Closing Date. No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance and
sale or transfer of the Units except as may be required under the Act or under
state or other securities or Blue Sky laws. Except as disclosed in or
contemplated by the Prospectus and the financial statements of the Company, and
the related notes thereto, included in the Prospectus, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(h) KPMG Peat Marwick, L.L.P., which has examined the
financial statements of the Company, together with the related schedules and
notes, as of December 31, 1996 and for the period beginning upon the date of the
Company's incorporation on April 19, 1996 until December 31, 1996 filed with the
Commission as a part of the Registration Statement, which are included in the
Prospectus, are independent accountants within the meaning of the Act and the
Rules and Regulations; the audited financial statements of the Company, together
with the related schedules and notes, and the unaudited financial information,
forming part of the Registration Statement and Prospectus, fairly present the
financial position and the results of operations of the Company at the
respective dates and for the respective period to which they apply; and all
audited financial statements of the Company, together with the related schedules
and notes, filed with the Commission as part of the Registration Statement, have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as may be otherwise
stated therein. The selected financial data included in the Registration
Statement present fairly the information shown therein and have been compiled on
a basis consistent with the audited financial statements presented therein. No
other financial statements or schedules are required to be included in the
Registration Statement.
(i) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, there has not been (i)
any material adverse change in the condition (financial or otherwise),
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earnings, operations, business or business prospects of the Company, (ii) any
transaction that is material to the Company, except transactions entered into in
the ordinary course of business, (iii) any obligation, direct or contingent,
that is material to the Company, incurred by the Company, except obligations
incurred in the ordinary course of business, (iv) any change in the capital
stock or outstanding indebtedness of the Company that is material to the
Company, (v) any dividend or distribution of any kind declared, paid or made on
the capital stock of the Company, or (vi) any loss or damage (whether or not
insured) to the property of the Company which has been sustained or will have
been sustained which has a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company.
(j) Except as set forth in the Registration Statement and
Prospectus, (i) the Company has good and marketable title to all properties and
assets described in the Registration Statement and Prospectus as owned by it,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than such as would not have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company, (ii) the agreements to which the Company is a
party described in the Registration Statement and Prospectus are valid
agreements, enforceable by the Company, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights, generally or by
general equitable principles and, to the best of the Company's knowledge, the
other contracting party or parties thereto are not in material breach or
material default under any of such agreements, and (iii) the Company has valid
and enforceable leases for all properties described in the Registration
Statement and Prospectus as leased by it, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Except as set forth in the Registration Statement
and Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted.
(k) The Company has timely filed all necessary federal, state
and foreign income and franchise tax returns and have paid all taxes shown
thereon as due, and there is no tax deficiency that has been or, to the best of
the Company's knowledge, might be asserted against the Company or any of its
subsidiaries that might have a material
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adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company; and all tax liabilities are
adequately provided for on the books of the Company.
(l) The Company maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts generally
deemed adequate for their respective businesses and consistent with insurance
coverage maintained by similar companies in similar businesses, including, but
not limited to, insurance covering real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect; the Company has not been refused any insurance coverage sought or
applied for; and the Company has no reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company; and the Company maintains insurance on the life of
Xxxx Xxxxxxx in an amount of not less than $5 million.
(m) To the best of the Company's knowledge, no labor
disturbance by the employees of the Company exists or is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, value added resellers,
subcontractors, authorized dealers or other distributors that might be expected
to result in a material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company.
No collective bargaining agreement exists with any of the Company's employees
and, to the best of the Company's knowledge, no such agreement is imminent.
(n) Other than the potential claim of Two Connect, Inc., a
Florida corporation, (a) the Company owns or possesses adequate rights to use
all patents, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names and copyrights which are necessary to conduct its
businesses as described in the Registration Statement and Prospectus; the
expiration of any patents, patent rights, trade secrets, trademarks, service
marks, trade names or copyrights would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company; (b) the Company has not received any notice of, and
has no knowledge of, any infringement of or conflict with asserted rights of the
Company by others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights; and
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(c) the Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company.
(o) The Units and the Common Stock have each been approved for
quotation on the Nasdaq SmallCap Market, subject to official notice of issuance.
(p) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it will not become an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the 1940 Act and such rules and regulations.
(q) The Company has not distributed and will not distribute
prior to the later of (i) the Closing Date or the Option Closing Date, as the
case may be, and (ii) completion of the distribution of the Firm Units, any
offering material in connection with the offering and sale of the Firm Units or
the Option Units, as the case may be, other than any Preliminary Prospectuses,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Act.
(r) The Company has not at any time since its inception (i)
made any unlawful contribution to any candidate for foreign office or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof.
(s) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Units or the
component Common Stock and Warrant to facilitate the sale or resale of the
Units.
(t) Each officer and director of the Company has agreed in
writing that such person will not, from the date of the lock-up agreement
through a period of 18 months after the effective date of the Registration
Statement (the "Lock-up Period"), offer to sell, contract to sell, or otherwise
sell (including without limitation in a short
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sale), dispose of, loan, pledge or grant any rights with respect to any Units or
any shares of Common Stock, or any securities convertible into or exchangeable
for Common Stock, any options or warrants to purchase any shares of Common
Stock, or any securities convertible into or exchangeable for shares of Common
Stock (collectively, "Securities") now owned or hereafter acquired directly by
such person or with respect to which such person has or hereafter acquires the
power of disposition (collectively, a "Disposition"), otherwise than (i) as a
bona fide gift or gifts, provided the donee or donees thereof agree in writing
to be bound by this restriction or (ii) with the prior written consent of Sterne
Agee, provided that the foregoing shall not apply to any shares sold to the
Underwriters pursuant to the Underwriting Agreement. Following the expiration of
the 18 month period, the undersigned may dispose of such Common Stock free of
any contractual obligation hereunder. Furthermore, such person will also agree
and consent to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the securities held by such person,
except in compliance with this Agreement. The Company has provided to counsel
for the Underwriters a complete and accurate list of all security-holders of the
Company and the number and type of securities held by each security-holder. The
Company has provided to counsel for the Underwriters true, accurate and complete
copies of all of the agreements pursuant to which its officers, directors and
security-holders have agreed to such or similar restrictions (the "Lock-up
Agreements") presently in effect or effected hereby. The Company hereby
represents and warrants that it will not release any of its officers, directors
or security-holders from any Lock-up Agreements currently existing or hereafter
effected without the prior written consent of Sterne Agee.
(u) Except as set forth in the Registration Statement and
Prospectus, (i) the Company is in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental Laws")
which are applicable to its business, (ii) the Company has received no notice
from any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the Registration
Statement and the Prospectus, (iii) to the best of the Company's knowledge, the
Company will not be required to make future material capital expenditures to
comply with Environmental Laws and (iv) no property which is owned, leased or
occupied by the Company has been designated as a Superfund site pursuant to the
Comprehensive Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. ss. 9601, et seq.), or otherwise designated as a contaminated site under
applicable state or local law.
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(v) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus.
(x) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government of Cuba
or with any person or affiliate located in Cuba.
3. PURCHASE, SALE, AND DELIVERY OF THE STOCK, WARRANTS AND THE
REPRESENTATIVE'S WARRANTS.
(a) On the basis of the representations, warranties,
covenants, and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
the several Underwriters, and, each of the Underwriters, severally and not
jointly, agree to purchase from the Company, the Firm Units as set forth
opposite the respective names of the Underwriters in Schedule I hereto:
Delivery of the definitive certificates for the Firm Units to
be purchased by the Underwriters pursuant to this Section 3 shall be made
against payment of the purchase price therefor by the several Underwriters in
same-day federal funds by wire transfer to the Company at the offices of Xxxxx &
XxXxxxxx, Xxxxxxx Tower, Suite 1600, 000 Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx
00000-0000 (or at such other place as may be agreed upon between the
Representative and the Company), at 10:00 A.M., Miami time either (a) on the
third (3rd) full business day following the first day that Units are traded on
the Nasdaq SmallCap Market, (b) if this Agreement is executed and delivered
after 3:30 P.M., Miami time, the fourth (4th) full business day following the
day that this Agreement is executed and delivered or (c) at such other time and
date not later than seven (7) full business days following the first day that
Units are traded on the Nasdaq
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SmallCap Market as the Representative and the Company may determine (or at such
time and date to which payment and delivery shall have been postponed pursuant
to Section 9 hereof), such time and date of payment and delivery being herein
called the "Closing Date;" PROVIDED, HOWEVER, that if the Company has not made
available to the Representative copies of the Prospectus within the time
provided in Section 5(d) hereof, the Representative may, in its sole discretion,
postpone the Closing Date until no later than two (2) full business days
following delivery of copies of the Prospectus to the Representative. The
certificates for the Firm Units (and the component Common Stock and Warrants
thereof) to be so delivered will be made available to Sterne Agee at such office
or such other location including, without limitation, in New York City, as
Sterne Agee may reasonably request for checking at least one (1) full business
day prior to the Closing Date and will be in such names and denominations as
Sterne Agee may request, such request to be made at least two (2) full business
days prior to the Closing Date. If the Representative so elects, delivery of the
Firm Units may be made by credit through full fast transfer to the accounts at
The Depository Trust Company designated by the Representative.
(b) The Company hereby grants to the Underwriters the
Over-allotment Option to purchase up to 127,500 Units, as may be necessary to
cover over-allotments, at the same purchase price per Unit as applicable, to be
paid by the several Underwriters to the Company for the Firm Units as provided
for in this Section 3 hereof. The Over-allotment Option may be exercised only to
cover over-allotments in Units by the Underwriters. The Over-allotment Option
may be exercised as to all or any part of the 127,500 Units included therein at
any time (but only once) within 45 days after the date the Registration
Statement becomes effective. The Underwriters shall not be under any obligation
to purchase any Option Units prior to the exercise of such option. The
Over-allotment Option may be exercised by the Representative of the several
Underwriters, by giving written notice to the Company setting forth the number
of Option Units to be purchased from the Company and the date and time for
delivery of and payment for such Option Units and stating that the Option Units
therein are to be used for the purpose of covering over-allotments in connection
with the distribution and sale of the Firm Units. If such notice is given prior
to the Closing Date, the date set forth therein for such delivery and payment
shall not be earlier than two full business days thereafter or the Closing Date,
whichever occurs later. If such notice is given on or after the Closing Date,
the date set forth therein for such delivery and payment shall not be earlier
than five full business days thereafter. In either event, the date so set forth
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shall not be more than 15 full business days after the date of such notice. The
date and time set forth in such notice, or such other time not later than the
seventh full business day thereafter as the Representative and the Company may
determine, is herein called the "Option Closing Date". Upon exercise of the
option, the Company shall become obligated to sell to the Representative for the
account of the several Underwriters, and, subject to the terms and conditions
herein set forth, the Representative shall become obligated to purchase, for the
account of each Underwriter, from the Company, the number of Option Units
specified in such notice. The number of Option Units to be purchased for the
account of each Underwriter shall bear the same ratio to the total number of
Option Units to be purchased for the account of all Underwriters as the total
number of Firm Units to be purchased from the Company set forth opposite the
name of such Underwriter on Schedule 1 hereto bears to the total number of Firm
Units to be purchased by all the Underwriters from the Company, subject in each
case to such adjustments as the Representative in its discretion may make so
that allocations may be made to each Underwriter in round lot amounts to the
extent practicable.
(c) The Company hereby agrees to issue and sell to Sterne Agee
and/or its designees on the Closing Date the Representative's Warrants to
purchase the Warrant Units for an aggregate purchase price of $5.95. Delivery
and payment for the Representative's Warrants shall be made on the Closing Date.
The Company shall deliver to Sterne Agee, upon payment therefor, certificates
representing the Representative's Warrants in the name or names and in such
authorized denominations as Sterne Agee may request. The Representative's
Warrants shall be exercisable at an initial exercise price equal to $9.90 per
Warrant Unit for a period of time commencing on that date which is 11 months
after the issuance of the Representative's Warrant and ending on that date on
which the Units terminate, 12 months after the date the Registration Statement
was declared effective under the Act.
(d) It is understood that the Representative may (but shall
not be obligated to) make any and all payments required pursuant to this Section
3 on behalf of any Underwriters whose check or checks shall not have been
received by the Representative at the time of delivery of the Firm Units or any
Option Units to be purchased by such Underwriter or Underwriters. Any such
payment by the Representative shall relieve any such Underwriter or Underwriters
of any of its or their obligations hereunder.
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4. OFFERING.
(a) After the Registration Statement becomes effective, the
several Underwriters intend to offer for sale to the public the Firm Units and
the Option Units, if any, which may be sold at the price and upon the terms set
forth in the Prospectus.
(b) The information set forth in the last paragraph on the
front cover page (insofar as such information relates to the Underwriters) and
under the second paragraph and the last two sentences of the third paragraph
under the caption "Underwriting" in any Preliminary Prospectus and in the final
form of Prospectus filed pursuant to Rule 424(b) constitutes the only
information furnished by the Underwriters to the Company for inclusion in any
Preliminary Prospectus, the Prospectus or the Registration Statement, and Sterne
Agee, on behalf of the respective Underwriters, represents and warrants to the
Company that the statements made therein do not include any 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 the light of the circumstances
under which they were made, not misleading.
5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with
the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto, to
become effective as promptly as possible; the Company will use its best efforts
to cause any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; the
Company will notify Sterne Agee, promptly after it shall receive notice thereof,
of the time when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has become
effective or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Rules and
Regulations, the Company will provide evidence satisfactory to Sterne Agee that
the Prospectus contains such information and has been filed, within the time
period prescribed, with the Commission pursuant to subparagraph (1) or (4) of
Rule 424(b) of the Rules and Regulations or as part of a post-effective
amendment to such Registration Statement as originally declared effective which
is declared effective by the Commission; if the Company files a term sheet
pursuant to Rule 434 of the Rules and
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Regulations, the Company will provide evidence satisfactory to Sterne Agee that
the Prospectus and term sheet meeting the requirements of Rule 434(b) or (c), as
applicable, of the Rules and Regulations, have been filed, within the time
period prescribed, with the Commission pursuant to subparagraph (7) of Rule
424(b) of the Rules and Regulations; if for any reason the filing of the final
form of Prospectus is required under Rule 424(b)(3) of the Rules and
Regulations, it will provide evidence satisfactory to Sterne Agee that the
Prospectus contains such information and has been filed with the Commission
within the time period prescribed; it will notify Sterne Agee promptly of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; promptly upon Sterne
Xxxx'x request, it will prepare and file with the Commission any amendments or
supplements to the Registration Statement or Prospectus which, in the opinion of
counsel for several Underwriters ("Underwriters' Counsel"), may be necessary or
advisable in connection with the distribution of the Units by the Underwriters;
it will promptly prepare and file with the Commission, and promptly notify
Sterne Agee of the filing of, any amendments or supplements to the Registration
Statement or Prospectus which may be necessary to correct any statements or
omissions, if, at any time when a prospectus relating to the Units is required
to be delivered under the Act, any event shall have occurred as a result of
which the Prospectus or any other prospectus relating to the Units as then in
effect would include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement in connection with the sale of
the Units, it will prepare promptly upon request, but at the expense of such
Underwriter, such amendment or amendments to the Registration Statement and such
prospectus or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act; and it will file no amendment or
supplement to the Registration Statement or Prospectus which shall not
previously have been submitted to Sterne Agee a reasonable time prior to the
proposed filing thereof or to which Sterne Agee shall reasonably object in
writing, subject, however, to compliance with the Act and the Rules and
Regulations and the provisions of this Agreement. The Company shall, at its own
expense, file such post-effective amendments to the Registration Statement as
may be required in order to ensure the existence of a current prospectus with
respect to the issuance and resale of the Common Stock issuable upon the
exercise of the Warrants and Representative's Warrants (including Warrants
contained in the
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Warrant Units) for such period as the Warrants and Representative's Warrants
shall remain outstanding, subject, however, to the Regulations and policies of
the Commission and the staff thereof, and shall, at its own expense, maintain
the state securities or blue sky law registrations and qualifications or
exemptions therefrom with respect to the Common Stock issued pursuant to the
exercise of the Warrants and the Representative's Warrants for such period.
(b) The Company will advise Sterne Agee, promptly after it
shall receive notice or obtain knowledge, of the issuance of any stop order by
the Commission suspending the effectiveness of the Registration Statement or of
the initiation or threat of any proceeding for that purpose; and it will
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(c) The Company will use its best efforts to qualify the Units
for offering and sale under the securities laws of such jurisdictions as Sterne
Agee may designate and to continue such qualifications in effect for so long as
may be required for purposes of the distribution of the Units, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process. In each
jurisdiction in which the Units shall have been qualified as above provided, the
Company will make and file such statements and reports in each year as are or
may be reasonably required by the laws of such jurisdiction.
(d) The Company will deliver without charge to each of the
several Underwriters such number of copies of each Preliminary Prospectus as may
reasonably be requested by the Underwriters and, as soon as the Registration
Statement, or any amendment thereto, becomes effective under the Act or a
supplement is filed with the Commission, deliver without charge to the
Representative who signed copies of the Registration Statement, including
exhibits, or such amendment thereto, as the case may be, and two copies of any
supplement thereto, and delivery without charge to each of the several
Underwriters such number of copies of the Prospectus, the Registration
Statement, and amendments and supplements thereto, if any, without exhibits, as
the Representative may reasonably request for the purposes contemplated by the
Act.
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(e) The Company will make generally available to its
security-holders a soon as practicable, but in any event not later than the
forty-fifth (45th) day following the end of the fiscal quarter first occurring
after the first anniversary of the effective date of the Registration Statement,
an earnings statements (which will be in reasonable detail but need not be
audited) complying with the provisions of Section 11(a) of the Act and covering
a twelve (12) month period beginning after the effective date of the
Registration Statement.
(f) During a period of three (3) years after the date hereof,
the Company will furnish to its stockholders as soon as practicable after the
end of each respective period, annual reports (including financial statements
audited by independent certified public accountants), and will furnish to
Sterne, Agee and the other several Underwriters hereunder, (i) concurrently with
furnishing to its stockholders, a balance sheet of the Company as of the end of
such fiscal year, together with statements of operations, of stockholders'
equity, and of cash flows of the Company or such fiscal year, accompanied by a
copy of the certificate or report thereon of independent certified public
accountants, (ii) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders, (iii) as soon as they are
available, copies of all reports and financial statements furnished to or filed
with the Commission, any securities exchange or the National Association of
Securities Dealers, Inc. (the "NASD"), (iv) every material press release and
every material news item or article in respect of the Company or its affairs
which was generally released to stockholders or prepared by the Company or any
of its subsidiaries, and (v) any additional information of a public nature
concerning the Company or its subsidiaries, or its business which Sterne Agee
may reasonably request. During such three (3) year period, if the Company shall
have active subsidiaries, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company and any
subsidiaries are consolidated, and shall be accompanied by similar financial
statements for any significant subsidiary which is not so consolidated.
(g) The Company will apply the net proceeds from the sale of
the Units being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for the Unit and, after
dissolution of the Unit, its Common Stock.
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(i) The Company will file Form SR in conformity with the
requirements of the Act and the Rules and Regulations.
(j) The Company will file timely with the Commission an
appropriate form to register the Units and the Common Stock pursuant to Section
12(g) of the Securities Exchange Act of 1934 ("Exchange Act") and comply with
all registration, filing, and reporting requirements of the Exchange Act, which
may from time to time be applicable to the Company.
(k) The Company will comply with all provisions of all
undertakings contained in the Registration Statement.
(l) Prior to the Closing Date or the Option Closing Date, as
the case may be, the Company will issue no press release or other communication,
directly or indirectly, and hold no press conference with respect to the
Company, the financial condition, results of operations, business, properties,
assets, liabilities of the Company, or this offering, without the prior consent
of the Representative, which consent shall not be unreasonably withheld.
(m) Until expiration of the Warrants and Representative's
Warrants, the Company will keep reserved sufficient shares of Common Stock for
issuance upon exercise of the Warrants and Representative's Warrants (including
the Warrants which are a component of the Warrant Units).
(n) Use its best efforts to list itself in Xxxxx'x OTC
Industrial Manual within ten days of the date hereof, and maintain such listing
for a period of at least five years from the date hereof.
(o) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed hereunder or to
fulfill any condition of the Underwriters' obligations hereunder, or if the
Underwriters shall terminate this Agreement pursuant to Section 11(b)), the
Company will reimburse the several Underwriters for all out-of-pocket expenses
(including fees and disbursement of Underwriters' Counsel) incurred by the
Underwriters in investigating or preparing to market or marketing any Units.
(p) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which, in the
opinion of Sterne Agee, the market price of the Units has been or is likely to
be materially affected (regardless of
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whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus), the Company will, after written notice from Sterne
Agee advising the Company to the effect set forth above, forthwith prepare,
consult with Sterne Agee concerning the substance of and disseminate a press
release or other public statement, reasonably satisfactory to Sterne Agee
responding to or commenting on such rumor, publication or event.
(q) During a period of ninety (90) days from the effective
date of the Registration Statement, the Company will not file a registration
statement registering shares under the 2Connect Express, Inc. 1996 Stock Option
Plan, the 2Connect Express, Inc. 1996 Directors Stock Option Plan or other
employee benefit plan.
(r) The Company will not list the Commmon Stock for trading on
any national securities exchange, NASDAQ or other interdealer quotation system
(all as defined in the Exchange Act) for a period of one year from the date of
the Company's final prospectus (the date of the expiration of the Units) without
the prior written consent of Sterne Agee.
6. PAYMENT OF EXPENSES. The Company hereby agrees to pay all expenses
(other than fees of counsel of the Underwriters, except as provided in Section
6(c), below), in connection with (a) the preparation , printing, filing,
distribution, and mailing of the Registration Statement and the Prospectus and
the printing, filing, distribution, and mailing of this Agreement and the Master
Agreement Among Underwriters, any Master Selected Dealer Agreement, and related
documents, including the cost of all copies thereof and of the Preliminary
Prospectuses and of the Prospectus and any amendments or supplements thereto
supplied to the Underwriters in quantities as hereinabove stated, (b) the
issuance, offer, sale, transfer, and delivery (as applicable) of the Units (and
each of the component Common Stock and Warrants thereof), including any transfer
or other taxes payable thereon, (c) the qualification of the Units (and each of
the component Common Stock and Warrants thereof) under state or foreign "blue
sky" or securities laws, including the costs of printing and mailing the
preliminary and final "Blue Sky Survey" and the fees of counsel for the
Underwriters, which shall not exceed $10,000 and the disbursements in connection
therewith, (d) the filing fees payable to the Commission, the NASD, and the
jurisdictions in which such qualification is sought, (e) any fees relating to
the listing of the Units and the Common Stock on Nasdaq SmallCap Market, (f) the
cost of printing certificates representing the Units (and the component Common
Stock and Warrants thereof), (g) the fees of the transfer agent for the Units
and the
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Common Stock, and (h) the cost of a Company "roadshow" including, without
limitation, expenses associated with presentations of the Company and the
preparation of visual materials associated therewith.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Firm Units and the Option Units
and Representative's Securities, as provided herein, and the obligation of
Sterne Agee to purchase and pay for the Representative's Warrants, each as
provided herein, shall be subject, in the discretion of the Representative, to
the continuing accuracy in all material respects, of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to the Underwriters, as of the
date hereof and as of the Closing Date (or the Option Closing Date, as the case
may be), to the performance by the Company of its obligations hereunder, and to
the following conditions:
(a) The Registration Statement shall have become effective
under the Act not later than 6:00 P.M., Florida local time, on the date of this
Agreement or such later date and time as shall be consented to in writing by the
Representative; on or prior to the Closing Date, or the Option Closing Date, as
the case may be, no Stop Order shall have been issued and no proceeding shall
have been initiated or threatened with respect to a Stop Order; and any request
by the Commission for additional information shall have been complied with by
the Company to the reasonable satisfaction of the Representative. If required,
the Prospectus shall have been filed with the Commission in the manner and
within the time period required by Rule 424(b) under the Act.
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and delivery of the
Units, shall have been reasonably satisfactory to Underwriters' Counsel, and
such counsel shall have been furnished with such papers and information as they
may reasonably have requested to enable them to pass upon the matters referred
to in this Section.
(c) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date, there shall not have been any change in the
condition (financial or otherwise), earnings, operations, business, or business
prospects of the Company from that set forth in the Registration Statement or
Prospectus, which, in Sterne Xxxx'x sole judgment, is material and adverse and
that makes it, in Sterne Xxxx'x sole judgment, impracticable or inadvisable to
proceed with the public offering of the Units as contemplated by the Prospectus.
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(d) At the Closing Date and the Option Closing Date, as the
case may be, Sterne Agee shall have received the Opinion of Xxxxx & XxXxxxxx,
counsel for the Company, dated the date of delivery, addressed to the
Underwriters, and in form and scope satisfactory to the Representative, with
reproduced copies or signed counterparts thereof for each of the Underwriters,
to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation.
(ii) The Company has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus.
(iii) The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction, if any, in
which the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified or be
in good standing would not have a material adverse effect on the condition
(financial or otherwise), earnings, operations or business of the Company. To
such counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity.
(iv) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" as of the dates stated therein, the issued and outstanding
shares of capital stock of the Company have been duly and validly issued and are
fully paid and nonassessable, and, to such counsel's knowledge, will not have
been issued in violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right.
(v) To the knowledge of such counsel, other than
potential claims by Xxxxxxx Xxxxxxxx relating to the termination from his
employment with the Company as its Vice President - Operations, there is no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation, pending or threatened with respect to the Company
or any of its operations, businesses, properties, or assets, except as may be
properly described in the Prospectus or such as individually or in the aggregate
do not now have, and will not in the future have, a material adverse effect upon
the operations, business, properties, or assets of the Company. To the knowledge
of such counsel, the Company is not in violation of, or in default with respect
to, any law, rule, regulation,
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order, judgment, or decree, except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in the
future be reasonably expected to have a material adverse effect upon the
operations, business, properties, or assets of the Company, nor is the Company
required to take any action in order to avoid any such violation or default.
(vi) To the knowledge of such counsel, neither the
Company, nor any other party is now, or is expected by the Company to be, in
violation or breach of, or in default with respect to, any provision of any
contract, agreement, instrument, lease, license, arrangement, or understanding
which is material to the Company, and, to the knowledge of such counsel, each
such material contract, agreement, instrument, lease, license, arrangement, or
understanding is in full force and effect and is the legal, valid, and binding
obligation of the parties thereto and is enforceable in accordance with its
terms.
(vii) The Company is not in violation or breach of, or
in default with respect to, any term of its certificate of incorporation (or
other charter document) or by-laws.
(viii) The Company has all requisite power and
authority to execute, deliver, and perform this Agreement, the Warrant
Agreement, and the Representative's Warrants. All necessary corporate
proceedings of the Company have been taken to authorize the execution, delivery,
and performance by the Company of this Agreement, the Warrant Agreement and the
Representative's Warrants. This Agreement, the Warrant Agreement, and the
Representative's Warrant have been duly authorized, executed, and delivered by
the Company, are, respectively, legal, valid, and binding obligations of the
Company, and, subject to applicable bankruptcy, insolvency, and other laws
affecting the enforceability of creditors' rights generally, are enforceable as
to the Company in accordance with their respective terms. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by the Company for the
execution, delivery, or performance by the Company of this Agreement, the
Warrant Agreement or the Representative's Warrants, except filings under the Act
which have been made prior to the Closing Date or the Option Closing Date, as
the case may be, and consents consisting only of consents under "blue sky" or
securities laws in connection with the purchase and the distribution of the
Units by the Underwriters. No consent of any party to any material contract,
agreement, instrument, lease, license, arrangement, or understanding known to
such counsel to which
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the Company is a party, or to which any of its properties or assets are subject,
is required for the execution, delivery, or performance of this Agreement, the
Warrant Agreement, and the Representative's Warrants; and to the knowledge of
counsel, the execution, delivery, and performance of this Agreement, the Warrant
Agreement and the Representative's Warrants will not violate, result in a breach
of, conflict with, result in the creation of imposition of any lien, charge, or
encumbrance upon any properties or assets of the Company pursuant to the terms
of, or, with or without the giving of notice or the passage of time or both,
entitle any party to terminate or call a default under, any such material
contract, agreement, instrument, lease, license, arrangement, or understanding
known to such counsel, violate or result in a breach of, or conflict with any
term of the certificate of incorporation (or other charter document) or by-laws
of the Company, or violate, result in a breach of, or conflict with any law,
rule, or regulation, or, to the knowledge of such counsel, any order, judgment,
or decree binding on the Company to which any of its operations, businesses,
properties, or assets are subject.
(ix) The Firm Units (and the component Common Stock
and Warrants thereof) to be delivered on the Closing Date as part of the Units
are validly authorized and, upon issuance and delivery against payment therefor
in accordance with the terms hereof and thereof, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and will not be issued in violation of any preemptive or
similar rights of shareholders. The Option Units (and the component Common Stock
and Warrants thereof) to be issued upon exercise by Sterne Agee of any Option
Unit to be delivered on the Option Closing Date are validly authorized and, upon
issuance and delivery against payment therefor in accordance with the terms
hereof and thereof, will be validly issued, fully paid, and nonassessable,
without any personal liability attaching to the ownership thereof, and will not
be issued in violation of any preemptive or similar rights of shareholders. The
Underwriters will receive good title to the Firm Units and the Option Units (and
the component Common Stock and Warrants of the Firm Units and Option Units)
purchased by them, respectively, free and clear of all liens, security
interests, pledges, charges, encumbrances, shareholders' agreements, and voting
trusts. The Firm Units and the Option Units (and the component Common Stock and
Warrants of the Firm Units and Option Units) conform in all material respect to
the statements relating thereto contained in the Registration Statement or the
Prospectus. Shares of Common Stock underlying the
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Warrants are validly authorized and have been duly and validly reserved for
issuance pursuant to the terms of the Warrant Agreement.
(x) The Representative's Warrants have been duly and
validly issued and delivered. The Warrant Units (and the component Common Stock
and Warrants thereof) are validly authorized and have been duly and validly
reserved for issuance pursuant to the terms of this Agreement and the
Representative's Warrants. The Warrant Units (and each of the component Common
Stock and Warrants thereof) issuable upon exercise of the Representative's
Warrants will be free and clear of all liens, security interest, pledges,
charges, encumbrances, shareholders' agreements, and voting trusts. The Warrant
Units (and each of the component Common Stock and Warrants thereof) conform in
all material respects to the statements relating thereto contained in the
Registration Statement or the Prospectus. Shares of Common Stock underlying the
Warrants contained in the Warrant Units are validly authorized and have been
duly and validly reserved for issuance pursuant to the terms of the Warrant
Agreement associated therewith.
(xi) To the knowledge of such counsel, each contract,
agreement, instrument, lease, or license required to be described in the
Registration Statement or the Prospectus has been properly described therein,
and each contract, agreement, instrument, lease, or license required to be filed
as an exhibit to the Registration Statement has been filed with the Commission
as an exhibit to the Registration Statement.
(xii) Insofar as statements in the Prospectus purport
to summarize the status of litigation or the provisions of laws, rules,
regulations, orders, judgments, decrees, contracts, agreements, instruments,
leases, or licenses, such statements have been prepared or reviewed by such
counsel and accurately reflect the status of such litigation and provisions
purported to be summarized and are correct in all material respects.
(xiii) The Company is not an "investment company" as
defined in the Investment Company Act and the rules and regulations thereunder
and, if the Company conducts its business as set forth in the Prospectus, will
not become an "investment company", and will not be required to be registered
under the Investment Company Act.
(xiv) The Registration Statement has become effective
under the Act, the Prospectus has been filed in accordance with Rule 424(b) of
the Regulations, including the applicable time periods set forth therein,
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or such filing is not required. To the knowledge of such counsel, no Stop Order
has been issued and no proceeding for that purpose has been instituted or
threatened. On that basis of the participation of such counsel in conferences at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed, but without independent verification by such counsel of
the accuracy, completeness, or fairness of the statements contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
such counsel has no knowledge that (other than financial statements and other
financial data and schedules which are or should be contained therein, as to
which such counsel need express no opinion): (A) the Registration Statement, any
Rule 430A Prospectus, and the Prospectus, and any amendment or supplement
thereto, does not appear on its face to comply as to form in any material
respects with the requirements of the Act and the Regulations; (B) the
Registration Statement, any Rule 430A Prospectus, or the Prospectus, or any
amendment or supplement thereto, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (c) since the date
of effectiveness under the Act or the Registration Statement, any event has
occurred which should have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not been set forth in such an
amendment or supplement.
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the State of Florida upon
opinions of local counsel, and as to questions of fact upon representations or
certificates of officers of the Company and of government officials, in which
case their opinion is to state that they are so relying and that they have no
knowledge of any material misstatement or inaccuracy in any such opinion,
representation or certificate. Copies of any opinion, representation or
certificate so relied upon shall be delivered to Sterne Agee, as Representative
of the Underwriters, and to Underwriters' Counsel.
(e) On or prior to the Closing Date and the Option Closing
Date, as the case may be, the Underwriters shall have been furnished such
information, documents, certificates, and opinions as they may reasonably
require for the purpose of enabling them to review the matters referred to in
Section 7(d), and in order to evidence the accuracy, completeness, or
satisfaction of any of the representations, warranties, covenants, agreements,
or conditions herein contained, or as the Representative may reasonably request.
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(f) At the Closing Date or the Option Closing Date, as the
case may be, (i) the Registration Statement and the Prospectus and any
amendments or supplements thereto shall contain all statements which are
required to be stated therein in accordance with the Act and the Regulations,
and in all material respects conform to the requirements thereof, and neither
the Registration Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein no misleading, (ii) there shall have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, no material adverse change, or any development involving a
prospective material adverse change, in the business, properties, or condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt, or general affairs of the Company from that set forth in the
Registration Statement and the Prospectus, except changes which the Registration
Statement and Prospectus indicate might occur after the date on which the
Registration Statement becomes effective under the Act, and the Company shall
not have incurred any material liabilities or entered into any agreements not in
the ordinary course of business other than as referred to in the Registration
Statement and Prospectus, (iii) except as set forth in the Prospectus, no
litigation, arbitration, claim, governmental, or other proceeding (formal or
informal) or investigation shall be pending, or, to our knowledge threatened or
in prospect (or any basis therefor), with respect to the Company or any of its
operations, businesses, properties, or assets which would be required to be set
forth in the Registration Statement, wherein an unfavorable decision, ruling, or
finding would materially adversely affect the business, property, condition
(financial or otherwise), results of operations, or general affairs of the
Company, and (iv) the Units be quoted upon the Nasdaq SmallCap Market.
(g) At the Closing Date and the Option Closing Date, as the
case may be, Sterne Agee shall have received a certificate of the chief
executive officer and the chief financial officer of the Company, dated the
Closing Date or the Option Closing Date, as the case may be, to the effect,
among other things, that (i) the conditions set forth in Section 7(a) and 7(f)
have been satisfied, (ii) as of the date of this Agreement and as of the Closing
Date or the Option Closing Date, as the case may be, the representations and
warranties of the Company contained herein were and are accurate and correct in
all material respects, and (iii) as of the Closing Date or the Option Closing
Date, as the case may
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be, the obligations to be performed by the Company hereunder on or prior to such
time have been fully performed in all material respects.
(h) At the time this Agreement is executed and at the Closing
Date and the Option Closing Date, as the case may be, Representative shall have
received a letter, addressed to the Underwriters, and in form and substance
reasonably satisfactory to the Representative, from KPMG Peat Marwick, L.L.P.,
independent public accountants for the Company, dated the date of delivery:
(i) confirming that they are, and during the period
covered by their report(s) included in the Registration Statement and the
Prospectus were, independent certified public accountants with respect to the
Company within the meaning of the Act and the published Regulations and stating
that the disclosure under the heading entitled "Experts" in the Registration
Statement is correct insofar as it relates to them;
(ii) stating that, in their opinion, the financial
statements and the footnotes thereto of the Company included in the Registration
Statement examined by them comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations;
(iii) stating that, on the basis of procedures
(but not an examination made in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited interim
consolidated financial statements of the Company (with an indication of the date
of the latest available unaudited interim financial statements), a reading of
the latest available minutes of the shareholders and Boards of Directors of the
Company and committees of such Board of Directors, inquiries to certain officers
and other employees of the Company responsible for financial and accounting
matters, and other specified procedures and inquiries, nothing has come to their
attention that caused them to believe that: (A) the unaudited financial
statements and schedules of the Company included in the Registration Statement
and Prospectus, if any, do not comply in form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and the
related published Rules and Regulations under the Act or the Exchange Act or are
not fairly presented in conformity with generally accepted accounting principles
(except to the extent that certain footnote disclosures regarding any stub
period may have been omitted in accordance with the applicable rules of the
Commission under the Exchange Act) applied on a basis consistent with that of
the audited financial statements appearing therein, (B) there was any change in
the capital stock or long-term debt of the Company
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or any decrease in the net current assets or shareholders' equity of the Company
as of the date of the latest available monthly financial statements of the
Company as of a specified date not more than five business days prior to the
date of such letter, each as compared with the amounts shown in the December 31,
1996 balance sheet included in the Registration Statement and Prospectus, other
than as properly described in the Registration Statement and Prospectus or any
change or decrease (which shall be set forth therein) which, in the sole
discretion of the Representative, the Representative shall accept, or (C) there
was a net decrease in net sales or an increase in total or per share losses of
the Company during the period from December 31, 1996 to the date of the latest
available monthly financial statements of the Company or to a specified date nor
more than five business days prior to the date of such letter, each as compared
to the period from inception to December 31, 1996, other than as properly
described in the Registration Statement and Prospectus or any decrease (which
shall be set forth therein) which, at the sole discretion of the Representative,
the Representative shall accept; and
(iv) stating that they have compared specific numerical
data and financial information pertaining to the Company set forth in the
Registration Statement (including, but not limited to, the number of
shareholders of the Company and the number of issued and outstanding shares of
the Common Stock of the Company as of December 31, 1996), which have been
specified by the Representative prior to the date of this Agreement, to the
extent that such data and information may be derived from the general accounting
records of the Company, and excluding any questions requiring any interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries, and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter, and found them to be in agreement.
(i) All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the securities offered by the Registration
Statement and Prospectus shall be reasonably satisfactory in form and substance
to the Representative and to counsel for the Underwriters, and the Underwriters
shall have received from such counsel for the Underwriters the opinion, dated as
of the Closing Date and the Option Closing Date, as the case may be, with
respect to the sufficiency of all such corporate proceedings and other legal
matters relating to this Agreement and the transactions contemplated hereby as
the representative may reasonably require, and the Company shall have furnished
to such counsel such documents as they may have requested for the purpose of
enabling them to pass upon such matters.
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(j) The NASD, upon review of the terms of the public offering
of the Stock shall not have objected to the Underwriters' participation in such
offering.
(k) Prior to or on the Closing Date, the Company shall have
entered into the Warrant Agreement and Representative's Warrants with the
Representative.
(l) Prior to or on the Closing Date, the Company shall have
provided to the Representative, or its counsel, copies of the agreements
referred to in Section 2(t).
Any certificate or other document signed by any officer of the Company
and delivered to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company hereunder to the
Underwriters as to the statements made therein. If any condition to the
Underwriters' obligations hereunder to be fulfilled prior to or at the Closing
Date or the Option Closing Date, as the case may be, is not so fulfilled, the
Representative may, on behalf of the several Underwriters, terminate this
Agreement or, if the Representative so elects, in writing waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including, without
limitation, in its capacity as an Underwriter or as a "qualified independent
underwriter" within the meaning of SCHEDULE E OF THE BYLAWS OF THE NASD), under
the Act, the Exchange Act or otherwise, specifically including, but not limited
to, losses, claims, damages or liabilities, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any breach of representation, warranty, agreement or covenant of the
Company herein contained, (ii) any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement or any amendment or
supplement thereto, or 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, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state therein 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, no misleading, and agrees to reimburse each Underwriter
for any legal or other expenses reasonably incurred by it in
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connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
such Preliminary Prospectus or the Prospectus, or any such amendment or
supplement thereto, in reliance upon, and in conformity with, written
information relating to any Underwriter furnished to the Company by such
Underwriter, directly or through Sterne Agee, specifically for use in the
preparation thereof and, PROVIDED FURTHER, that the indemnity agreement provided
in this Section 8(a) with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any losses,
claims, damages, liabilities or actions based upon any untrue statement or
alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Units, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the time
required by the Act and the Rules and Regulations, unless such failure is the
result of noncompliance by the Company with Section 5(d) hereof.
The indemnity agreement in this Section 8(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if any,
who controls any Underwriter within the meaning of the Act or the Exchange Act.
This indemnity agreement shall be in addition to any liabilities which the
Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company against any losses, claims, damages or
liabilities, joint or several, to which the Company may become subject under the
Act or otherwise, specifically including, but not limited to, losses, claims,
damages or liabilities, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any breach of
any representation, warranty, agreement or covenant of such Underwriter herein
contained, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or supplement
thereto, or 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, or (ii) any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein not misleading,
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or (iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 8(c) to the extent, but only to the
extent, that such untrue statements or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter, directly or through
Sterne Agee, specifically for use in the preparation thereof, and agrees to
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action.
The indemnity agreement in this Section 8(c) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer of the
Company who signed the Registration Statement and each director of the Company,
and each person, if any, who controls the Company within the meaning of the Act
or the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which each Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought against
any indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it shall elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon
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receipt of notice from the indemnifying party to such indemnified party of the
indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with appropriate local
counsel) approved by the indemnifying party representing all the indemnified
parties under Section 8(a) or 8(b) hereof who are parties to such action), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
(no more than fifteen (15) days) after notice of commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. In no event shall
any indemnifying party be liable in respect of any amounts paid in settlement of
any action unless the indemnifying party shall have approved the terms of such
settlement; provided that such consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party or indemnification
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) In order to provide for just and equitable contribution in
any action in which a claim for indemnification is made pursuant to this Section
8 but it is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 8 provided for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that, except as set forth
in Section 8(f) hereof, the Underwriters severally and not jointly are
responsible pro rata for the portion represented by the percentage that the
underwriting discount bears to the initial public offering price, and the
Company are responsible for the remaining portion, PROVIDED, HOWEVER, that (i)
no Underwriter shall be required to contribute any amount in excess
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of the underwriting discount applicable to the Units purchased by such
Underwriter in excess of the amount of damages which such Underwriter has
otherwise required to pay and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this Section 8(e) shall extend
upon the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls the Underwriters or the Company within the meaning
of the Act or the Exchange Act and each officer of the Company who signed the
Registration Statement and each director of the Company.
(e) The parties of this Agreement hereby acknowledge that they
are sophisticated business persons who are represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 8, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 8 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
9. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Units or Option Units hereunder, and if the
number of Firm Units or Option Units to which the defaults of all Underwriters
in the aggregate relate does not exceed 10% of the aggregate number of Firm
Units or Option Units, as the case may be, which all Underwriters have agreed to
purchase hereunder, then such Firm Units or Option Units to which such defaults
relate shall be purchased by the non-defaulting Underwriters in proportion to
their respective commitments hereunder.
(b) If such defaults exceed in the aggregate 10% of the number
of shares of Firm Units or Option Units, as the case may be, which all
Underwriters have agreed to purchase hereunder, the Representative may, in its
discretion, arrange to purchase itself or for another party or parties to
purchase such shares of Firm Units or Option Units, as the case may be, to which
such default relates on the terms contained herein. If the Representative does
not arrange for the purchase of such Firm Units or Option Units, as the case may
be, within one business day after the occurrence of defaults relating to in
excess of 10% of the Firm Units and Option Units, as the case may be, then the
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Company shall be entitled to a further period of three business days within
which to procure another party or parties reasonably satisfactory to the
Representative to purchase Firm Units or the Option Units, as the case may be,
on such terms. If the Representative or the Company does not arrange for the
purchase of Firm Units or the Option Units, as the case may be, to which such
defaults relate as provided in this Section 9(b), this Agreement may be
terminated by the Representative or by the Company without liability on the part
of the Company (except that the provisions of Sections 5(a)(1), 6, 8, 10 and 13
shall survive such termination) or the several Underwriters, but nothing in this
Agreement shall relieve a default Underwriter of its liability, if any, to the
other several Underwriters and to the Company for any damages occasioned by its
default hereunder.
(c) If the Firm Units or Option Units to which such defaults
relate are to be purchased by the non-defaulting Underwriters, or are to be
purchased by another party or parties as aforesaid, the Representative or the
Company shall have the right to postpone the Closing Date or the Option Closing
Date, as the case may be, for a reasonable period but in any event not more than
seven business days in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements with respect to the Firm Units or the Option Units,
and the Company agrees to prepare and file promptly any amendment or supplement
to the Registration Statement or the Prospectus which in the opinion of counsel
for the Underwriters may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any party substituted under this Section 9
as if such party had originally been a party to this Agreement and had been
allocated the number of shares of Firm Units and Option Units actually purchased
by it as a result this Section 9.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and the Option Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by, or on behalf of, any Underwriter or any indemnified
person, or by, or on behalf of, the Company, or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Firm Units and the Option Units, if any,
to the several Underwriters. In addition, the provisions of Sections 5(a)(1), 6,
8, 10,
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11 and 13 shall survive termination of this Agreement, whether such termination
occurs before or after the Closing Date or the Option Closing Date.
Notwithstanding anything in the second sentence of Section 6 hereof to the
contrary, and in addition to the obligations assumed by the Company pursuant to
the first sentence of Section 6 hereof, if the offering should be terminated,
the Company shall be liable to the Underwriters only for out-of-pocket expenses
incurred by the Underwriters in connection with this Agreement or the proposed
offer, sale, and delivery of the Firm Units, Option Units and the
Representative's Warrants.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
(a) This Agreement shall become effective at the earlier of
(i) 9:30 A.M., New York City local time, on the first full business day
following the day on which the Registration Statement becomes effective under
the Act or (ii) the time of the initial public offering of any of the Units by
the Underwriters after the Registration Statement becomes effective. The time of
the initial public offering shall mean the time of the release by Sterne Agee,
for publication, of the first newspaper advertisement relating to the Units, or
the time at which the Units are first generally offered by the Underwriters to
the public by letter, telephone, telegram or telecopy, whichever shall first
occur. The Representative or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party, except as
provided in Section 5(p), Section 6 and Section 8, by giving the notice
indicated in Section 11(c) before the time this Agreement becomes effective
under this Section 11(a).
(b) In addition to the right to terminate this Agreement
pursuant to Sections 7 and 9 hereof, the Representative shall have the right to
terminate this Agreement at any time prior to the Closing Date or the Option
Closing Date, as the case may be, by giving notice to the Company, and, if
exercised, the Over-allotment Option, at any time prior to the Option Closing
Date, by giving notice to the Company in the event of the following: (i) if any
domestic or international event, act, or occurrence has materially and adversely
disrupted, or, in the reasonable opinion of the Representative, will in the
immediate future materially and adversely disrupt, the securities markets; or
(ii) if there shall have been a general suspension of, or a general limitation
on prices for, trading in securities on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market; or (iii) if there
shall have been an outbreak or increase in the level of major hostilities or
other national or international calamity; or (iv) if a banking moratorium has
been declared by a state or federal authority; or (v) if a moratorium in foreign
exchange trading by
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major international banks or persons has been declared; or (vi) if there shall
have been a material interruption in the mail service or other means of
communication within the United States; or (vii) if the Company shall have
sustained a material or substantial loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage, or other calamity or malicious act, whether or not
such loss shall have been insured, or from any labor dispute or court or
government action, order, or decree, which will, in the reasonable opinion of
the Representative, make it inadvisable to proceed with the offering, sale, or
delivery of the Firm Units or the Option Units, as the case may be; or (viii) if
any material governmental restrictions shall have been imposed on trading in
securities in general, which restrictions are not in effect on the date hereof,
or (ix) if there shall be passed by the Congress of the United States or by any
state legislature any act or measure, or adopted by any governmental body or
authoritative accounting institute or board, or any governmental executive, any
orders, rules, or regulations, which the Representative believes likely to have
a material adverse effect on the business, financial condition, or financial
statements of the Company or the market for the Common Stock; or (x) if there
shall have been such material and adverse change in the market for the Company's
securities or securities in general or in political, financial, or economic
conditions as in the reasonable judgment of the Representative makes it
inadvisable to proceed with the offering, sale, and delivery of the Firm Units
or the Option Units, as the case may be, on the terms contemplated by the
Prospectus.
(c) If the Representative elects to prevent this Agreement
from becoming effective, as provided in this Section 11, or to terminate this
Agreement pursuant to Section 7 of this Agreement or this Section 11, the
Representative shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects to prevent
this Agreement from becoming effective or to terminate this Agreement, the
Company shall notify he Representative promptly by telephone, telex, or
telegram, confirmed by letter.
(d) Notwithstanding anything herein to the contrary, if this
Agreement shall not become effective by reason of the election of the Company
pursuant to Section 11(a) or if this Agreement shall terminate or shall
otherwise not be carried out within the time specified herein by reason of any
failure on the part of the Company to perform any covenant or agreement of this
Agreement or satisfy any condition of this Agreement by it to be performed or
satisfied, the sole liability of the Company to the several Underwriters, in
addition to the obligations the Company assumed pursuant to the first sentence
of Section 6, will be to reimburse the several Underwriters for such
out-of-pocket
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expenses (including the fees and disbursements of their counsel) as shall have
been incurred by them in connection with this Agreement or the proposed offer,
sale, and delivery of the Firm Units, Option Units and Representative's
Warrants, and, upon demand, the Company agrees to pay promptly the full amount
thereof to the Representative for the respective accounts of the Underwriters up
to a maximum reimbursement of $75,000. Anything in this Agreement to the
contrary notwithstanding other than Section 11(e), if this Agreement shall not
be carried out within the time specified herein for any reason other than the
failure on the part of the Company to perform any covenant or agreement or
satisfy any condition of this Agreement by it to be performed or satisfied, the
Company shall have no liability to the several Underwriters other than for
obligations assumed by the Company pursuant to Section 6.
(e) Notwithstanding any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise carried out,
the provisions of Sections 5(a)(1), 6, 8, 10 and 13 shall not be in any way
affected by such election or termination or failure to carry out the terms of
this Agreement or any part hereof.
12. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
by letter, to such Underwriter, c/o Sterne, Agee & Xxxxx, Inc., 0000 Xxxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxx 00000-0000, Attention: Xxxxx X.
Xxxxxxxx, Xx., with a copy to Xxxx & Xxxxxx LLP, 3100 SouthTrust Tower, 000
Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxxxx, Esq., or if sent to the Company, shall be mailed, delivered, or
telexed or telegraphed and confirmed by letter, to the Company, 2 Connect
Express, Inc., 0000 XX 00xx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxx
X. Xxxxxxx, President, with a copy to Xxxxx & XxXxxxxx, Xxxxxxx Tower, Suite
1600, 000 Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000-0000, Attention: Xxxxxx Xxxxx,
Esq. All notices hereunder shall be effective upon receipt by the party to which
it is addressed.
13. PARTIES. Sterne Agee represents that it is authorized to act as
Representative on behalf of the several Underwriters named in Schedule I hereto,
and the Company shall be entitled to act and rely on any request, notice,
consent, waiver, or agreement purportedly given on behalf of the Underwriters
when the same shall have been given by Sterne Agee on such behalf. This
Agreement shall inure solely to the benefit of, and shall be binding upon, the
several Underwriters and the Company and the persons and entities referred to in
Section 8 who are entitled to indemnification or contribution, and their
respective successors, legal representatives, and assigns (which shall not
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include any buyer, as such, of the Firm Units or the Option Units), and no other
person shall have, or be construed to have, any legal or equitable right,
remedy, or claim under, in respect of, or by virtue of this Agreement or any
provision herein contained. Notwithstanding anything contained in this Agreement
to the contrary, all of the obligations of the Underwriters hereunder are
several and not joint.
14. CONSTRUCTION. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Alabama, without giving effect to
conflict of laws. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. CONSENT TO JURISDICTION. The Company irrevocably consents to the
jurisdiction of the courts of the State of Alabama and of any federal court
located in such state in connection with any action or proceeding arising out
of, or relating to, this Agreement, any document or instrument delivered
pursuant to, in connection with, or simultaneously with this Agreement, or a
breach of this Agreement or any such document or instrument. In any such action
or proceeding, the Company waives personal service of any summons, complaint, or
other process and agrees that service thereof may be made in accordance with
Section 12.
16. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.
If the foregoing correctly sets forth the understandings between the
Representative and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
2CONNECT EXPRESS, INC.
By:
---------------------------
Xxxx X. Xxxxxxx, President
ACCEPTED as of the date first above
written in Boca Raton, Florida
STERNE, AGEE & XXXXX, INC.*
By:
-----------------------------------
Xxxxx X. Xxxxxxxx, Xx., President
*On behalf of itself and the other several
Underwriters named in Schedule I hereto
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SCHEDULE I
TOTAL
NUMBER
OF UNITS
TO BE
Underwriter PURCHASED
----------- ---------
Sterne, Agee & Xxxxx, Inc. ..................................... 850,000
-------
Total ................................................. 850,000
=======
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EXHIBIT A
WARRANT AGREEMENT
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EXHIBIT B
REPRESENTATIVE'S WARRANT AGREEMENT
44
