UNDERWRITING AGREEMENT
TABLE OF CONTENTS
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Page
Underwriting Agreement.................................................... 1
SECTION 1................................................................. 1
Description of Securities................................................. 1
SECTION 2................................................................. 2
Representations and Warranties of the Company............................. 2
2.01. Registration Statement and Prospectus...................... 2
2.02. Accuracy of Registration Statement and Prospectus.......... 2
2.03. Financial Statements....................................... 3
2.04. Independent Public Accountant.............................. 3
2.05. No Material Adverse Change................................. 3
2.06. No Defaults................................................ 3
2.07. Incorporation and Standing................................. 3
2.08. Legality of Outstanding Stock.............................. 4
2.09. Legality of Stock, Warrants and Representative's Warrants.. 4
2.10. Prior Sales................................................ 4
2.11. Litigation................................................. 4
2.12. Warrants and Representative's Warrants..................... 4
2.13. Finder..................................................... 5
2.14. Exhibits................................................... 5
2.15. Tax Returns................................................ 5
2.16. Property................................................... 5
2.17. Patents & Trademarks....................................... 5
2.18. Authority.................................................. 6
2.19. Environmental Laws......................................... 6
2.20. ERISA...................................................... 6
2.21. No NASD Affiliation........................................ 6
2.22. Foreign Corrupt Practices Act.............................. 6
SECTION 3................................................................. 6
Purchase and Sale of the Units............................................ 6
3.01. Purchase of Stock and Over-Allotment Option................ 6
3.01.01. Default by an Underwriter......................... 7
3.01.02. Liability of Defaulting Underwriter............... 7
3.01.03. Right of Remaining Underwriters................... 7
3.02. Public Offering Price...................................... 7
3.02.01. Payment For Units................................. 8
3.02.02. Closing........................................... 8
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3.02.03. Inspection of Certificates........................ 8
3.03. Sale of Representative's Warrants.......................... 8
3.04. Representative's Expense Allowance......................... 8
3.05. Representations of the Parties............................. 9
3.06. Post-Closing Information................................... 9
3.07. Re-Offers By Selected Dealers.............................. 9
SECTION 4................................................................. 9
Registration Statement and Prospectus..................................... 9
4.01. Delivery of Registration Statements........................ 9
4.02. Delivery of Preliminary Prospectus......................... 9
4.03. Delivery of Prospectus..................................... 10
4.04. Further Amendments and Supplements......................... 10
4.05. Use of Prospectus.......................................... 10
SECTION 5................................................................. 11
Covenants of the Company.................................................. 11
5.01. Objection of Representatives to Amendments or Supplements.. 11
5.02. Company's Best-Efforts to Cause Registration
Statement to Become Effective............................ 11
5.03. Preparation and Filing of Amendments and Supplements....... 11
5.04. Blue-Sky Qualification..................................... 11
5.05. Financial Statements....................................... 12
5.06. Reports and Financial Statements to the Representatives.... 12
5.07. Expenses Paid by the Company............................... 12
5.08. Reports to Shareholders.................................... 13
5.09. Section 11(a) Financials................................... 13
5.10. Post-Effective Availability of Prospectus.................. 13
5.11. Application of Proceeds.................................... 13
5.12. Undertakings of Certain Shareholders....................... 13
5.13. Delivery of Documents...................................... 13
5.14. Cooperation With Representative's Due Diligence............ 14
5.15. No Sale Period............................................. 14
5.16. Appointment of Transfer Agent.............................. 14
5.17. Compliance With Conditions Precedent....................... 14
5.18. Section 462(b) Registration Statement...................... 14
5.19. Registration Under the Exchange Act........................ 14
5.20. Designation of Member of Company's Board of Directors...... 14
5.21. Key Man Insurance.......................................... 14
5.22. Application to Xxxxx'x or Standard & Poors................. 15
5.23. AMEX Listing............................................... 15
5.24. Exclusivity................................................ 15
5.25. Consulting................................................. 15
SECTION 6................................................................. 15
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Indemnification........................................................... 15
6.01. Indemnification By Company................................. 15
6.02. Indemnification By Underwriters............................ 17
SECTION 7................................................................. 17
Effectiveness of Agreement................................................ 17
SECTION 8................................................................. 18
Conditions of the Underwriters' Obligations............................... 18
8.01. Effectiveness of Registration Statement.................... 18
8.02. Accuracy of Registration Statement......................... 18
8.03. Casualty and Other Calamity................................ 18
8.04. Litigation and Other Proceedings........................... 18
8.05. Lack of Material Change and Other Conditions............... 18
8.06. AMEX Listing Approval...................................... 19
8.07. Accountant's Comfort Letter and Update..................... 19
8.08. Review By and Opinion of Underwriter's Counsel............. 19
8.09. Opinion of Counsel......................................... 19
8.10.01. Accountant's Letter..................................... 21
8.10.02. Conformed Copies of Accountant's Letter................. 22
8.11. Officer's Certificate...................................... 22
8.12. Secretary's Certificate.................................... 23
8.13. Tender of Delivery of Units................................ 23
8.14. Blue-Sky Qualification..................................... 23
8.15. Approval of Representative's Counsel....................... 23
8.16. Officers' Certificate As a Company Representative.......... 24
8.17. Acquisition of Tepual S.A. and Profeed, Inc................ 24
SECTION 9................................................................. 24
Termination............................................................... 24
9.01. Termination Because of Non-Compliance...................... 24
9.02. Market Out Termination..................................... 24
9.03. Company's Right to Terminate............................... 24
9.04. Effect of Termination Hereunder............................ 25
SECTION 10................................................................ 25
Underwriter's Representations and Warranties.............................. 25
10.01. Registration as Broker-Dealer and Member of NASD.......... 25
10.02. No Pending Proceedings.................................... 25
SECTION 11................................................................ 25
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Rights and Obligations.................................................... 25
11.01. Consultation With Representative.......................... 25
11.02. Exercise of Warrants...................................... 25
SECTION 12................................................................ 26
Notice.................................................................... 26
12.01. Notice to the Company 26 12.02. Notice to the Underwriters 26
SECTION 13................................................................ 27
Miscellaneous............................................................. 27
13.01. Benefit................................................... 27
13.02. Survival.................................................. 27
13.03. Governing Law............................................. 27
13.04. Underwriters' Information................................. 27
13.05. Counterparts.............................................. 27
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500,000 Units
BIO-AQUA SYSTEMS, INC.
Each Unit Consisting of Two Shares of Class A Common Stock and
Two Redeemable Common Stock Purchase Warrants
Underwriting Agreement
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Institutional Equity Corporation
Capital West Securities, Inc.
As Representatives of the Underwriters
c/o Institutional Equity Corporation
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
Bio-Aqua Systems, Inc., a Florida company (together with subsidiaries,
the "Company"), of 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000,
hereby confirms its agreement with the representative of the Underwriters,
Institutional Equity Corporation and Capital West Securities, Inc.
(collectively, the "Representatives"), and other members of the Underwriting
Group (hereinafter the "Underwriting Group" or "Underwriters") as follows:
SECTION 1
Description of Securities
The Company's authorized and outstanding capitalization when the
offering of the securities contemplated hereby is permitted to commence and at
the Closing Date (hereinafter defined), will be as set forth in the Registration
Statement and Prospectus included therein (hereinafter defined). The Company
proposes to issue and sell to the Underwriting Group an aggregate of 500,000
units (the "Units"), each consisting of two shares of the Company's Class A
Common Stock, $.0001 par value (the "Stock"), and two redeemable common stock
purchase warrants (the "Warrants") and Redeemable Representative's Warrants
entitling the Representative to purchase an aggregate of 50,000 units containing
100,000 shares of Stock and 100,000 warrants, similar but not identical to the
Units ("Representative's Warrants"). The Units, together with (a) the shares of
Stock and Warrants comprising the Units and (b) the shares of Stock issuable
upon exercise of the Warrants are collectively referred to as the "Underwritten
Securities." The Stock and Warrants will automatically separate thirty (30) days
from the Effective Date (hereinafter defined), after which the Stock and
Warrants will trade separately. The Underwriting Group shall also have an
over-allotment option to purchase up to an additional 75,000 units containing
150,000 shares of Stock and 150,000 Warrants at the initial public offering
minus the Underwriter's discount as provided in Section 3.01 hereof.
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SECTION 2
Representations and Warranties of the Company
In order to induce the Underwriting Group to enter into this Agreement
the Company hereby represents and warrants to and agrees with the Underwriting
Group as follows:
2.01. Registration Statement and Prospectus. A registration statement
on Form SB-2 (File No. 333-81829) (the "Registration Statement") with respect to
the Units, including the related Prospectus, copies of which have heretofore
been delivered by the Company to the Underwriter, has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations ("Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder, and said
Registration Statement has been filed with the Commission under the Act; one or
more amendments to said Registration Statement, copies of which have heretofore
been delivered to the Representative, has or have heretofore been filed; and the
Company may file on or prior to the effective date additional amendments to said
Registration Statement, including the final Prospectus.
As used in this Agreement: the term "Registration Statement" refers to
and means said Registration Statement on Form SB-2 and all amendments thereto,
including the Prospectus, all exhibits and financial statements, as it becomes
effective; the term "Prospectus" refers to and means the Prospectus included in
the Registration Statement when it becomes effective; and the term "Preliminary
Prospectus" refers to and means any prospectus included in said Registration
Statement before it becomes effective. The terms "Effective Date" and
"Effective" refer to the date the Commission declares the Registration Statement
filed with the Electronic Data Gathering, Analysis and Retrieval system
("XXXXX") effective pursuant to Section 8 of the Act.
2.02. Accuracy of Registration Statement and Prospectus. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus with respect to the Units, and each Preliminary
Prospectus has conformed in all material respects with the requirements of the
Act and the applicable Rules and Regulations of the Commission thereunder, and
to the best of the Company's knowledge, has not included at the time of filing
any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading. When the Registration
Statement becomes Effective and on the Closing Date (as hereinafter defined),
the Registration Statement and Prospectus, and any further amendments or
supplements thereto, will contain all statements which are required to be stated
therein in accordance with the Act and the Rules and Regulations for the
purposes of the proposed public offering of the Units, and all statements of
material fact contained in the Registration Statement and Prospectus will be
true and correct, and neither the Registration Statement nor the Prospectus will
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein necessary to make the statements therein not
misleading; provided, however, the Company does not make any representations or
warranties as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon written information furnished by
the Representative on behalf of the Underwriters specifically for use therein.
2.03. Financial Statements. The financial statements of the Company
together with related schedules and notes as set forth in the Registration
Statement and Prospectus will present fairly the
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financial position of the Company and the results of its operations and the
changes in its financial position at the respective dates and for the respective
periods for which they apply; such financial statements have been prepared in
accordance with generally accepted principles of accounting consistently applied
throughout the periods concerned except as otherwise stated therein or with
respect to quarterly periods, normal recurring adjustments.
2.04. Independent Public Accountant. Spear, Safer, Xxxxxx & Co., P.A.,
which has certified, or shall certify, certain of the financial statements
filed, or to be filed, with the Commission as part of the Registration Statement
and Prospectus, are independent certified public accountants within the meaning
of the Act and the Rules and Regulations.
2.05. No Material Adverse Change. Except as may be reflected in or
contemplated by the Registration Statement or the Prospectus, subsequent to the
dates as of which information is given in the Registration Statement and
Prospectus, and prior to the Closing Date, (i) there shall not be any material
adverse change in the condition, financial or otherwise, of the Company or in
its business taken as a whole; (ii) there shall not have been any material
transaction entered into by the Company or its subsidiaries other than
transactions in the ordinary course of business; (iii) neither the Company nor
any of its subsidiaries shall have incurred any material obligations, contingent
or otherwise, which are not disclosed in the Prospectus; (iv) there shall not
have been, nor will there be, any change in the capital stock or long-term debt
(except current payments) of the Company; (v) the Company has not, and will not,
have paid or declared any dividends or other distributions on its common stock;
and (vi) there are no currency exchange control laws or withholding taxes of any
applicable country which govern the payment of dividends on the stock of the
Company or the stock of any of the subsidiaries of the Company except as set
forth in the Prospectus and Registration Statement.
2.06. No Defaults. Neither the Company nor any of its subsidiaries is
in any default which has not been waived in the performance of any material
obligation, agreement or condition contained in any debenture, note or other
evidence of indebtedness or any indenture or loan agreement of the Company. The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated, and compliance with the terms of this
Agreement will not conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, the articles of
incorporation, as amended, or bylaws of the Company, any note, indenture,
mortgage, deed of trust or other agreement or instrument to which the Company is
a party or by which it or any of its property is bound, or any existing law,
order, rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality, agency or body, arbitration tribunal or court,
domestic or foreign, having jurisdiction over the Company or its property. The
consent, approval, authorization, or order of any court or governmental
instrumentality, agency or body is not required for the consummation of the
transactions herein contemplated except such as may be required under the Act or
under the blue sky or securities laws of any state or jurisdiction.
2.07. Incorporation and Standing. The Company is, and at the Closing
Date will be, duly incorporated and validly existing in good standing as a
corporation under the laws of the State of Florida and the Company and/or its
subsidiaries is duly authorized to do business in all other states and
applicable foreign jurisdictions, including Chile, with authorized and
outstanding capital stock as set forth in the Registration Statement and the
Prospectus, and with full power and authority
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(corporate and other) to own its property and conduct its business, present and
proposed, as described in the Registration Statement and Prospectus; the Company
has full power and authority to enter into this Agreement; and the Company is
duly qualified and in good standing as a foreign corporation in each
jurisdiction in which it owns or leases real property or transacts business
requiring such qualification except where failure to so qualify would not have a
material adverse effect on the Company. The Company has no subsidiaries other
than as shown in Exhibit 21 to the Registration Statement.
2.08. Legality of Outstanding Stock. The outstanding common stock of
the Company has been duly and validly authorized, issued and is fully paid and
non-assessable and will conform in all material respects to all statements with
regard thereto contained in the Registration Statement and Prospectus. No sales
of securities have been made by the Company in violation of the registration
provisions of the Securities Act of 1933.
2.09. Legality of Stock, Warrants and Representative's Warrants. All
outstanding shares of Stock (including, without limitation, the shares of Stock
underlying (i) the Units to be sold by the Company hereunder, (ii) the Warrants,
and (iii) the Representative's Warrants) have been duly and validly authorized
and, when issued and delivered against payment therefor as provided in this
Agreement, will be validly issued, fully paid and non-assessable. The
Underwritten Securities and Representative's Warrants upon issuance will not be
subject to the preemptive rights of any shareholders of the Company. The
Warrants and Representative's Warrants when sold and delivered, will constitute
valid and binding obligations of the Company enforceable in accordance with the
terms thereof subject to bankruptcy, insolvency, auditors' rights generally and
equitable principles of law. A sufficient number of shares of Stock and Warrants
have been reserved for issuance upon exercise of the Warrants and
Representative's Warrants. The Underwritten Securities and Representative's
Warrants will conform to all statements with regard thereto in the Registration
Statement and Prospectus.
2.10. Prior Sales. No securities of the Company, of an affiliate or of
a predecessor of the Company have been sold within one year prior to the date
hereof, except as set out in the Registration Statement.
2.11. Litigation. Except as set forth in the Registration Statement
and Prospectus, there is, and at the Closing Date there will be, no action, suit
or proceeding before any court or governmental agency, authority or body pending
or to the knowledge of the Company threatened which might result in judgments
against the Company not adequately covered by insurance or which collectively
might result in any material adverse change in the condition (financial or
otherwise), the business or the prospects of the Company, or would materially
affect the properties or assets of the Company.
2.12. Warrants and Representative's Warrants. Upon delivery of and
payment for the Warrants and Representative's Warrants to be sold by and to the
Company as set forth in Section 3.03 of this Agreement, the Underwriter and the
Underwriter's designees will receive good and marketable title thereto, free and
clear of all liens, encumbrances, charges and claims whatsoever, except for any
encumbrances imposed under Securities laws or as contained in this Agreement;
and the Company will have on the Effective Date of the Registration Statement
and at the time of delivery of such Warrants or Representative's Warrants full
legal right and power and all
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authorization and approval required by law to sell, transfer and deliver such
Warrants or Representative's Warrants in the manner provided hereunder.
2.13. Finder. The Company knows of no outstanding claims for services
in the nature of a finder's fee or origination fee with respect to the sale of
the Units hereunder resulting from its acts for which the Representative may be
responsible.
2.14. Exhibits. There are no contracts or other documents which are
required to be filed as exhibits to the Registration Statement by the Act or by
the Rules and Regulations which have not been so filed and each contract to
which the Company or any of its subsidiaries is a party and to which reference
is made in the Prospectus has been duly and validly executed, is or will be at
the Effective Date, in full force and effect in all material respects in
accordance with their respective terms, including but not limited to the
Employment Agreement between the Company and Xxx Xxxxxx, Exhibit No. 10.10, the
Employment Agreement between Xxxxxxxxx Xxxxxx and the Company, Exhibit No.
10.11, and the various distribution and licensing agreements in Exhibits
10.2-10.8, and none of such contracts have been assigned by the Company; and the
Company knows of no present situation or condition or fact which would prevent
compliance with the terms of such contracts, as amended to date. Except for
amendments or modifications of such contracts in the ordinary course of
business, the Company has no intention of exercising any right which it may have
to cancel any of its obligations under any of such contracts, and has no
knowledge that any other party to any of such contracts has any intention not to
render full performance under such contracts.
2.15. Tax Returns. The Company has filed all federal and state tax
returns which are required to be filed by it and has paid all taxes shown on
such returns and on all assessments received by it to the extent such taxes have
become due. The Company has filed all tax returns required by it in any foreign
jurisdictions. All taxes with respect to which the Company is obligated have
been paid or adequate accruals have been set up to cover any such unpaid taxes.
2.16. Property. Except as otherwise set forth in or contemplated by
the Registration Statement and Prospectus, the Company has good title, free and
clear of all liens, encumbrances and defects, except liens for current taxes not
due and payable, to all property and assets which are described in the
Registration Statement and the Prospectus as being owned by the Company, subject
only to such exceptions as are not material and do not adversely affect the
present or prospective business of the Company.
2.17. Patents & Trademarks. Except as disclosed in the Registration
Statement or Prospectus, the Company has sufficient licenses, permits and other
governmental authorizations currently necessary for the conduct of its business
or the ownership of its properties as described in the Prospectus and is in all
material respects complying therewith and owns or possesses adequate rights to
use all material patents, patent applications, trademarks, service marks,
trade-names, trademark registrations, service xxxx registrations, copyrights and
licenses necessary for the conduct of such business and has not received any
notice of conflict with the asserted rights of others in respect thereof. To the
best knowledge of the Company, none of the activities or business of the Company
are in violation of, or cause the Company to violate, any law, rule, regulation
or order of the United States, any state, county or locality, or of any agency
or body of the United States or of any state, county or locality, the violation
of which would have a material adverse effect.
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2.18. Authority. The execution and delivery by the Company of this
Agreement has been duly authorized by all necessary corporate action and this
Agreement is the valid, binding and legally enforceable obligation of the
Company.
2.19. Environmental Laws. Neither the Company nor any of its
subsidiaries has violated any foreign, federal, state or local law relating to
the protection of human health and safety, the environmental or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
or incurred costs or liabilities associated with these Environmental Laws,
except for such violations which singly or in the aggregate would not have a
material adverse effect on the business, prospects, financial condition or
results of the Company and its subsidiaries taken as a whole.
2.20. ERISA. Neither the Company nor any of its subsidiaries has
violated any provisions of the Employee Retirement Income Security Act of 1974,
as amended, or the rules and regulations promulgated thereunder, in each case
that is applicable to the Company or such subsidiary, except for such violations
which singly or in the aggregate would not have a material adverse effect on the
business, financial condition or results of the Company and its subsidiaries
taken as a whole.
2.21. No NASD Affiliation. Except as previously disclosed in writing
by the Company to the Representative, no officer, director or 10% stockholder of
the Company has any National Association of Securities Dealers, Inc. (the
"NASD") affiliation.
2.22. Foreign Corrupt Practices Act. The Company has not, directly or
indirectly, at any time (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contribution in violation
of law or (ii) made any payment to any state, federal or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments or contributions required or allowed by applicable
law. The Company's internal accounting controls and procedures are sufficient to
cause the Company to comply in all material respects with the Foreign Corrupt
Practices Act of 1977, as amended.
SECTION 3
Purchase and Sale of the Units
3.01. Purchase of Stock and Over-Allotment Option. The Company hereby
agrees to sell to members of the Underwriting Group named in Schedule I hereto
(for all of whom the Representative is acting), severally and not jointly, and
each member of the Underwriting Group, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
agrees to purchase from the Company, severally and not jointly, the number of
Units set forth opposite their respective names in Schedule I hereto at a
purchase price of $_____ per Unit, less the underwriting discounts. The
Representative is also granted Representative's Warrants entitling it to
purchase an aggregate of 50,000 Units containing 100,000 shares of Stock and
100,000 Warrants at a purchase price of $_____ per unit, at 165% of the initial
public offering price of the Units. The Representative's Warrants are
exercisable for a period of four years commencing one year following the
Effective Date. Pursuant to NASD Rule 2710(a)(7)(A) the Representative's
Warrants and warrants acquired by the Representative will be restricted from
sale, transfer, assignment, or hypothecation for a period of one year from the
Effective Date of the
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Registration Statement, except to officers or partners (not directors) of the
Representative and members of the selling group and/or their officers or
partners.
The Company hereby grants to the Representative an over allotment
option (the "Over-allotment Option") for a period of forty-five days after the
Effective Date to purchase at the initial public offering price of $_____ per
Unit up to 75,000 Units containing 150,000 shares of Stock and 150,000 Warrants,
less the underwriting discounts, in order to cover over-allotments.
3.01.01. Default by an Underwriter. If any of the Underwriters shall
fail to purchase the entire number of Units set opposite its name in Schedule I
hereto, and such failure to purchase shall constitute a default by such
Underwriter in the performance of its obligations under this Agreement, the
remaining Underwriters shall have the right and shall be obligated to take up
and pay for (in the respective proportions which the number of Units set
opposite the names of the several remaining Underwriters bears to the aggregate
number of Units set opposite the names of all the remaining Underwriters) the
entire amount of Units which the defaulting Underwriter agreed but failed to
purchase, provided, however, that the aggregate amount of all such increases for
all non-defaulting Underwriters shall not exceed _____ Units and provided,
further, that in the event that such additional Units shall exceed the foregoing
maximum, the remaining Underwriters shall have the right, but shall not be
obligated, to take up and pay for (in such proportions as may be agreed upon
among them) the entire amount (but not less than all) of the remaining Units
which all defaulting Underwriters agreed but failed to purchase. The foregoing
obligations shall be subject to Section 8 hereof.
3.01.02. Liability of Defaulting Underwriter. Nothing contained in
this Section 3.01.02 shall relieve any defaulting Underwriter of its liability,
if any, to the Company or to the remaining Underwriters for damages occasioned
by its default hereunder.
3.01.03. Right of Remaining Underwriters. If any of the Underwriters
shall fail to purchase the entire number of Units set opposite its name and such
failure to purchase shall not constitute a default by such Underwriter in the
performance of its obligations under this Agreement, the remaining Underwriters
shall have the right, but shall not be obligated, to take up and pay for (in
such proportions as may be agreed upon among them) the entire amount (but not
less than all) of the Units which all withdrawing Underwriters agreed but failed
to purchase.
3.02. Public Offering Price. After the Commission notifies the Company
that the Registration Statement has become Effective, the Underwriters propose
to offer the Units to the public at a public offering price of $_____ per Unit,
as set forth in the Prospectus. The Underwriters may allow a discount of $______
upon sales of Units to selected dealers as may be determined from time to time
by the Representative.
3.02.01. Payment For Units. Payment for the Units (including the
Over-allotment Option Units) which the Underwriters agree to purchase shall be
made to the Company or its order by wire transfer, certified or official bank
check or checks (in immediately available funds), in the amount of the purchase
price by or on behalf of the Representative at the offices of the Representative
in Dallas, Texas, upon delivery to the Representative of certificates for the
Underwritten Securities in
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definitive form in such numbers and registered in such names as the
Representative requests in writing at least one full business day prior to such
delivery.
3.02.02. Closing. The time and date of delivery and payment hereunder
is herein called the "Closing" and shall take place at the office of
Institutional Equity Corporation at 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000, or at such other place that shall be agreed upon by the
Company and the Underwriters, on the third business day following the effective
date of this Agreement (unless postponed in accordance with Section 9) or such
other time not later than ten business days after such date as shall be agreed
upon by the Representative and the Company ("Closing Date"). Should the
Representative elect to exercise any part of the Over-allotment Option pursuant
to Section 3.01 herein above, the time and date of delivery and payment for said
over-allotment units shall be as mutually agreed, but not later than the 45th
calendar day after the Effective Date. Said date is hereinafter referred to, as
the "Over-Allotment Closing Date."
3.02.03. Inspection of Certificates. For the purpose of expediting the
checking and packaging of the certificates for the Underwritten Securities, the
Company agrees to make the certificates available for inspection by the
Representative at the office of Institutional Equity Corporation, set forth
above in Dallas, Texas at least one full business day prior to the proposed
delivery date.
3.03. Sale of Representatives Warrants. The Representative may
purchase for nominal consideration, at the closing of the sale of all the Units
contemplated by this Underwriting Agreement, Representative's Warrants entitling
the Representative to 50,000 Units containing 100,000 shares of Stock and
100,000 Warrants, which shall not be exercisable or transferable for a twelve
month period following the Effective Date. The Representative's Warrants shall
be exercisable for a period of four years commencing one year following the
Effective Date at 165% of the initial public offering price, upon the terms and
conditions provided in the Representative's Warrants. The Company shall not be
obligated to sell and deliver the Representative's Warrants, and the
Representative will not be obligated to purchase and pay for the
Representative's Warrants, except upon payment for the Units pursuant to Section
3.02.01 hereof.
3.04. Representatives Expense Allowance. It is understood that the
Company shall reimburse the Representative for its expenses on a non-accountable
basis in the total amount of 3% of the gross proceeds from the offering,
including proceeds from the sale of the over-allotment units, if exercised. At
the Closing and, if applicable, on the Over-Allotment Closing Date, the Company
shall pay to the Representative the unpaid balance of such allowance to defray
the expenses incurred by the Representative in connection with the offering. The
Representative shall be solely responsible for all expenses incurred by it in
connection with the offering including, but not limited to, the expenses of its
own counsel except as set forth in Section 5.07 hereof.
3.05. Representations of the Parties. The parties hereto respectively
represent that as of the Closing Date the representations herein contained and
the statements contained in all the certificates theretofore or simultaneously
delivered by any party to another, pursuant to this Agreement, shall in all
material respects be true and correct.
8
3.06. Post-Closing Information. The Representative covenants that
reasonably promptly after the Closing Date, it will supply the Company with all
information required from the Underwriters for the completion of any applicable
forms and such additional information as the Company may reasonably request to
be supplied to the securities commissions of such states in which the
Underwritten Securities have been qualified for sale.
3.07. Re-Offers By Selected Dealers. On each sale by the Underwriters
of any of the Units to selected dealers, the Representatives shall require the
selected dealer purchasing any such Units to agree to re-offer the same on the
terms and conditions of the offering set forth in the Registration Statement and
Prospectus.
SECTION 4
Registration Statement and Prospectus
4.01. Delivery of Registration Statements. The Company shall deliver
to the Representative without charge two signed copies of the Registration
Statement, including all financial statements and exhibits filed therewith and
any amendments or supplements thereto, and shall deliver without charge to the
Representative five conformed copies of the Registration Statement and any
amendment or supplement thereto, including such financial statements and
exhibits. The signed copies of the Registration Statement so furnished to the
Representative will include signed copies of any and all consents and
certificates of the independent public accountant certifying to the financial
statements included in the Registration Statement and Prospectus and signed
copies of any and all consents and certificates of any other persons whose
profession gives authority to statements made by them and who are named in the
Registration Statement or Prospectus as having prepared, certified, or reviewed
any part thereof.
4.02. Delivery of Preliminary Prospectus. The Company will deliver to
the Representative, without charge, as many copies of each Preliminary
Prospectus filed with the Commission bearing in red ink the statement required
by Regulation S-B Item 501(6) and (7) as may be required by the Underwriters.
The Company consents to the use of such documents by the Underwriters and by
dealers prior to the Effective Date of the Registration Statement. The Company
will deliver at its expense such copies of the Preliminary Prospectus as the
Representative may deem necessary in order to recirculate the Preliminary
Prospectus and/or to permit compliance with the provisions of Rule 15c2-11. For
purposes of this paragraph, the term "Preliminary Prospectus" shall be deemed to
include after the Effective Date of the Registration Statement a Rule 430A
subject to completion prospectus and the Company will deliver to the
Representative, after the effective date at its expense such copies of the Rule
430A prospectus subject to completion as the Representative deems necessary in
connection with the offering.
4.03. Delivery of Prospectus. The Company will deliver, at its
expense, as many printed copies of the Prospectus as the Underwriters may
require for the purposes contemplated by this Agreement and shall deliver said
printed copies of the Prospectus to the Representative as soon as practicable on
effectiveness of this Agreement, but in no event more than one business day
after the effective date of this Agreement. The Company will deliver such
additional copies at its expense as may be necessary to permit dealers to comply
with the requirements of Rule 174. If the Representative determines to use a
Term Sheet together with a prospectus subject to completion
9
in accordance with Rule 434 to satisfy the delivery of prospectus requirement,
the Company shall furnish the Representative with such number of copies of the
Term Sheet meeting the requirements of Rule 434 and will file such number of
copies with the Commission as required by Rule 424(b) to permit the
Representative to deliver the final prospectus to purchasers in the offering in
this manner.
4.04. Further Amendments and Supplements. If, during such period of
time as in the opinion of the Representative or its counsel a Prospectus
relating to this financing is required to be delivered under the Act, any event
occurs or any event known to the Company relating to or affecting the Company
shall occur as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made not misleading, or if it is necessary
at any time after the Effective Date of the Registration Statement to amend or
supplement the Prospectus to comply with the Act, the Company will forthwith
notify the Representative thereof and prepare and file with the Commission such
further amendment to the Registration Statement or supplemental or amended
Prospectus as may be required and furnish and deliver to the Representative and
to others whose names and addresses are designated by the Representative, all at
the cost of the Company, the number of copies of the amended or supplemented
Prospectus designated by the Representative, which is so amended or supplemented
to not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the Prospectus not misleading in the
light of the circumstances when it is delivered to a purchaser or prospective
purchaser, and which will comply in all respects with the Act.
4.05. Use of Prospectus. The Company authorizes the Underwriters in
connection with the distribution of the Units and all dealers to whom any of the
Units may be sold by the Underwriters to use the Prospectus as from time to time
amended or supplemented, in connection with the offering and sale of the Units,
and in accordance with the applicable provisions of the Act and the applicable
Rules and Regulations and applicable state blue sky or securities laws.
SECTION 5
Covenants of the Company
The Company covenants and agrees with the Underwriters that:
5.01. Objection of Representatives to Amendments or Supplements. After
the date hereof, the Company will not at any time, whether before or after the
Effective Date of the Registration Statement, file any amendment or supplement
to the Registration Statement or Prospectus, unless and until a copy of such
amendment or supplement has been previously furnished to the Representative
within a reasonable time period prior to the proposed filing thereof, or of
which the Representative or counsel for the Representative has reasonably
objected to, in writing, on the ground that such amendment or supplement is not
in compliance with the Act or the Rules and Regulations.
5.02. Company's Best-Efforts to Cause Registration Statement to Become
Effective. The Company will use its best efforts to cause the Registration
Statement and any post-effective amendment subsequently filed, to become
effective as promptly as reasonably practicable and will
10
promptly advise the Representative, and will confirm such advice in writing (i)
when the Registration Statement shall have become effective and when any
amendment thereto shall have become Effective and when any amendment of or
supplement to the Prospectus shall be filed with the Commission; (ii) when the
Commission shall make a request or suggestion for any amendment to the
Registration Statement or the Prospectus or for additional information and the
nature and substance thereof; and (iii) of the issuance by the Commission of an
order suspending the effectiveness of the Registration Statement pursuant to
Section 8 of the Act or of the initiation of any proceedings for that purpose;
(iv) of the happening of any event which in the judgment of the Company makes
any material statement in the Registration Statement or Prospectus untrue or
which requires the making of any changes in the Registration Statement or
Prospectus in order to make the statements therein not misleading; and (v) of
the refusal to qualify or the suspension of the qualification of the Units for
offering or sale in any jurisdiction, or of the institution of any proceedings
for any of such purposes. The Company will use every reasonable effort to
prevent the issuance of any such order or of any order preventing or suspending
such use, to prevent any such refusal to qualify or any such suspension, and to
obtain as soon as possible a lifting of any such order, the reversal of any such
refusal and the termination of any such suspension.
5.03. Preparation and Filing of Amendments and Supplements. The Company
will prepare and file promptly with the Commission, upon request of the
Representative, such amendments or supplements to the Registration Statement or
Prospectus, in form satisfactory to counsel to the Company, as in the opinion of
counsel to the Representative and of counsel to the Company, may be necessary in
connection with the offering or distribution of the Units and will use its best
efforts to cause the same to become effective as promptly as possible.
5.04. Blue-Sky Qualification. The Company will, when and as requested
by the Representative, use reasonable efforts to qualify the Underwritten
Securities or such part thereof as the Representative may determine for sale
under the so-called blue sky laws of the State of Florida, and of so many other
states as the Representative may reasonably request, and to continue such
qualification in effect so long as required for the purposes of the distribution
of the Units.
5.05. Financial Statements. The Company, at its own expense, will
prepare and give and will continue to give such financial statements and other
information to and as may be required by the Commission, or the proper public
bodies of the states in which the Underwritten Securities may be qualified.
5.06. Reports and Financial Statements to the Representatives. During
the period of five years from the Closing Date, the Company will deliver to the
Representative, copies of each annual report of the Company and (i) within 105
days after the close of each fiscal year of the Company, a financial report of
the Company and its subsidiaries, if any, on a consolidated basis, and a similar
financial report of all unconsolidated subsidiaries, if any, all such reports to
include a balance sheet as of the end of the preceding fiscal year, an income
statement, a statement of changes in financial condition and an analysis of
shareholders' equity covering such fiscal year, and all to be in reasonable
detail and certified by independent public accountants for the Company; (ii)
within 50 days after the end of each quarterly fiscal period of the Company
other than the last quarterly fiscal period in any fiscal year, copies of the
consolidated income statement and statement of changes in financial condition
for that period, and the balance sheet as of the end of that period of the
Company
11
and its subsidiaries, if any, and the income statement, statement of changes in
financial condition and the balance sheet of each unconsolidated subsidiary, if
any, of the Company for that period, all subject to year-end adjustment,
certified by the principal financial or accounting officer of the Company; (iii)
copies of all other statements, documents, or other information which the
Company shall mail or otherwise make available to any class of its security
holders, or shall file with the Commission; and (iv) upon request in writing
from the Underwriter, furnish to the Underwriter such other information as may
reasonably be requested and which may be properly disclosed to the
Representative with reference to the property, business and affairs of the
Company and its subsidiaries, if any.
5.07. Expenses Paid by the Company. The Company will pay, whether or
not the transactions contemplated hereunder are consummated or this Agreement is
prevented from becoming effective or is terminated, all costs and expenses
incident to the performance of its obligations under this Agreement including:
all expenses incident to the authorization of the Underwritten Securities and
their issue and delivery to the Representative; any original issue taxes in
connection therewith; all transfer taxes, if any, incident to the initial sale
of the Units to the public; the Blue Sky fees and expenses of the
Representative's counsel and accountants; the costs and expenses incident to the
preparation, printing and filing under the Act and with the National Association
of Securities Dealers, Inc. of the Registration Statement, any Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto; the
cost of printing, reproducing and filing all exhibits to the Registration
Statement, the underwriting documents and the Selected Dealers Agreement, the
cost of printing and furnishing to the Representative copies of the Registration
Statement and copies of the Prospectus as herein provided; and, the cost of
qualifying the Underwritten Securities under the state securities or Blue Sky
laws as provided in Section 5.04 herein, including expenses and disbursements of
the Representative incurred in connection with such qualification.
5.08. Reports to Shareholders. During the period of five years from
the Closing Date, the Company will, as promptly as possible, not to exceed 120
days, after each annual fiscal period render and distribute reports to its
shareholders which will include audited statements of its operations and changes
of financial position during such period and its balance sheet as of the end of
such period, as to which statements the Company's independent certified public
accountants shall have rendered an opinion.
5.09. Section 11(a) Financials. The Company will make generally
available to its security holders and will deliver to the Representative, as
soon as practicable, but in no event later than the first day of the sixteenth
full calendar month following the Effective Date of the Registration Statement,
an earnings statement (as to which no opinion need be rendered but which will
satisfy the provisions of Section 11(a) of the Act) covering a period of at
least 12 months beginning after the Effective Date of the Registration
Statement.
5.10. Post-Effective Availability of Prospectus. Within the time
during which the Prospectus is required to be delivered under the Act, the
Company will comply, at its own expense, with all requirements imposed upon it
by the Act, as now or hereafter amended, by the Rules and Regulations, as from
time to time may be in force, and by any order of the Commission, so far as
necessary to permit the continuance of sales or dealings in the Units.
12
5.11. Application of Proceeds. The Company will apply the net proceeds
from the sale of the Units substantially in the manner set forth in the
Registration Statement and Prospectus. No NASD member shall receive 10% or more
of the net proceeds.
5.12. Undertakings of Certain Shareholders. The Company will deliver
to the Representative, prior to or simultaneously with the execution of this
Agreement, the undertaking by its existing shareholders immediately prior to the
Effective Date that shares of common stock and any other securities issued for a
period of twelve months from the Effective Date (other than those offered in
connection with this Offering, including the underlying securities, the
representative's warrants and the underlying securities) that such person shall
not directly or indirectly offer or sell to the public any portion of the shares
of common stock owned prior to the effective date of this Agreement or hereafter
acquired by exercise of an option for a period of twenty-four months, with the
exception of 35,294 shares of Class A Common Stock issued in connection with
bridge financing in the principal amount of $150,000, which are subject only to
a six month lock-up period. The lock-up periods begin on the later of the date
of issuance or the Effective Date, and are subject to early termination at the
sole discretion of the Representative. An appropriate legend referring to these
restrictions will be marked on the face of the certificates representing all
such securities.
5.13. Delivery of Documents. At the Closing, the Company will deliver
to the Representative true and correct copies of the articles of incorporation
and certificate of incorporation of the Company and Tepual S.A. and all
amendments thereto, all such copies to be certified by the Secretary of State of
appropriate jurisdiction; true and correct copies of the bylaws of the Company
and Tepual S.A. and of the minutes of all meetings of the directors and
shareholders of the Company and Tepual S.A. held prior to the Closing Date which
in any way relate to the subject matter of this Agreement; and true and correct
copies of all material contracts to which the Company and/or Tepual S.A. is a
part, other than contracts for the sale of products or services in the normal
course of business.
5.14. Cooperation With Representatives Due Diligence. At all times
prior to the Closing Date, the Company will cooperate with the Representative in
such investigation as the Representative may make, or cause to be made, of all
the properties, business and operations of the Company in connection with the
purchase and public offering of the Units, and the Company will make available
to the Representative in connection therewith such information in its possession
as the Representative may reasonably request.
5.15. No Sale Period. No offering, sale or other disposition of any
common stock, equity or long-term debt will be made within one year after the
Effective Date of the Prospectus, directly or indirectly, by the Company,
without the Representative's prior written consent.
5.16. Appointment of Transfer Agent. The Company has appointed
American Stock Transfer Trust Company as Transfer Agent for the Units subject to
the Closing. The Company will not change or terminate such appointment for a
period of three years from the Effective Date without first obtaining the prior
written consent of the Representative, which consent shall not be unreasonably
withheld.
13
5.17. Compliance With Conditions Precedent. The Company will use all
reasonable efforts to comply or cause to be complied with the conditions
precedent to the several obligations of the Underwriters in Section 8 hereof.
5.18. Section 462(b) Registration Statement. The Company shall, upon
the demand of the Representative, file a Registration Statement pursuant to
Section 462(b) covering up to an additional 23% of the Securities offered.
5.19. Registration Under the Exchange Act. The Company shall, within
90 days after the Effective Date, register the class of equity securities which
constitutes the Underwritten Securities by filing with the Securities and
Exchange Commission a Registration Statement (and such copies thereof as the
Commission may require) with respect to such securities, containing such
information and documents as the Commission may specify comparable to that which
is required in an application to register a security pursuant to subsection (g)
of Section 12 of the Act, as amended.
5.20. Designation of Member of Company's Board of Directors. The
Representative shall have the right to designate as a member of the Board of
Directors or at the Representative's option, an individual to attend the
meetings of the Board of Directors of the Company for a period of five years
after the Effective Date. The attending individual shall not be compensated for
attendance in excess of any fee paid to any other members of the Board of
Directors, provided however that in the event Xxxxxx X. Xxxxx, III, a principal
of the Representative, is designated as a director, he shall receive a fee of
$1,000.00 per month.
5.21. Key Man Insurance. The Company, as of the Effective Date, will
use its best efforts and in good faith attempt to obtain one million dollar
($1,000,000) key man life insurance policy, from a qualified insurance company,
on Xxx Xxxxxx, the Chief Executive Officer, President and Chairman of the Board
of the Company, for which the Company will be the beneficiary. The Company will
use its best efforts to maintain such insurance for 5 years from Effective Date.
5.22. Application to Xxxxx'x or Standard & Poors. The Company shall,
within 120 days after the Effective Date, apply for listing in either Xxxxx'x
Over-the-Counter Manual or Standard & Poors and shall use its best efforts to
have the Company listed in such manual.
5.23. AMEX Listing. For a period of five years from the Effective Date
of the Registration Statement, the Company will use its best efforts, at its
cost and expense, to effect and maintain the quotation of the Underwritten
Securities on the American Stock Exchange and will file with the American Stock
Exchange all documents and notices required by the American Stock Exchange for
companies that have securities that are traded in the over the counter market
and quotations for which are reported by the American Stock Exchange.
5.24. Exclusivity. The Company agrees that it will not negotiate with
any underwriter or other person relating to a possible offering of the Company's
securities through March 15, 2000. The Company represents and warrants that,
except as disclosed to the Representative, the Company's subsidiaries are wholly
owned by the Company, and that it has not granted any other person any right to
underwrite or register shares thereof or entered into any agreement to pay any
finder's or financial services fee that would be triggered by consummation of
this offering.
14
5.25. Consulting. The Company has agreed to engage the Representative
as consultants for a period of two (2) years from the Closing of the offering at
a fee of $60,000 per annum payable to the Representative commencing on the
Effective Date and continuing for a period of two years. The Representative
agrees to provide (1) general financial consulting services and advice
pertaining to the Company's business affairs, (2) assistance in developing,
studying and evaluating financing and capital structure, (3) mergers and
acquisitions activity and corporate financing proposals, (4) preparation of
reports and studies, and (5) assistance in negotiations and discussions
pertaining to the above. The Company shall execute and deliver to the
Representative a Financial Consulting Agreement, in form attached as Annex A.
SECTION 6
Indemnification
6.01. Indemnification By Company. The Company agrees to indemnify and
hold harmless the Underwriters and each person who controls any underwriter
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act or any other statute
or at common law and to reimburse persons indemnified as above for any legal or
other expenses (including the cost of any investigation and preparation)
incurred by them in connection with any litigation, whether or not resulting in
any liability, but only insofar as such losses, claims, damages, liabilities and
litigation arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereto or any application or other document filed in order to qualify
the Underwritten Securities under the blue sky or securities laws of the states
where filings were made, 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, all as of the date when the Registration Statement or
such amendment, as the case may be, becomes effective, or any untrue statement
or alleged untrue statement of a material fact contained in the Prospectus (as
amended or supplemented if the Company shall have filed with the Commission any
amendments thereof or supplements thereto), or the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the indemnity agreement contained in this
Section 6.01 shall not apply to amounts paid in settlement of any such
litigation if such settlements are effected without the consent of the Company,
nor shall it apply to the Underwriter or any person controlling the Underwriters
in respect of any such losses, claims, damages, liabilities or actions arising
out of or based upon any such untrue statements or alleged untrue statement, or
any such omission or alleged omission, if such statement or omission was made in
reliance upon information peculiarly within the knowledge of the Underwriter and
furnished in writing to the Company by the Underwriter specifically for use in
connection with the preparation of the Registration Statement and Prospectus or
any such amendment or supplement thereto. This indemnity agreement is in
addition to any other liability which the Company may otherwise have to the
Underwriters. The Underwriters agree within ten days after the receipt by them
of written notice of the commencement of any action against them or against any
person controlling them as aforesaid, in respect of which indemnity may be
sought from the Company on account of the indemnity agreement
15
contained in this Section 6.01 to notify the Company in writing of the
commencement thereof. The failure of the Underwriters so to notify the Company
of any such action shall relieve the Company from any liability which it may
have to the Underwriters or any person controlling them as aforesaid on account
of the indemnity agreement contained in this Section 6.01, but shall not relieve
the Company from any other liability which it may have to the Underwriters or
such controlling person. In case any such action shall be brought against the
Underwriters or any such controlling person and the Underwriters shall notify
the Company of the commencement thereof, the Company shall be entitled to
participate in (and, to the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be conducted by counsel of
recognized standing and reasonably satisfactory to the Representative or such
controlling person or persons, defendant or defendants in such litigation. The
Company agrees to notify the Representative promptly of commencement of any
litigation or proceedings against it or any of its officers or directors, of
which it may be advised, in connection with the issue and sale of any of its
securities and to furnish to the Representative, at its request, copies of all
pleadings therein and permit the Representative to be an observer therein and
appraise the Representative of all developments therein, all at the Company's
expense. Provided, however, that in no event shall the indemnification agreement
contained in this Section 6.01 inure to the benefit of the Representative (or
any person controlling the Representative) on account of any losses, claims,
damages, liabilities or actions arising from the sale of the Units upon the
public offering to any person by such Representative if such losses, claims,
damages, liabilities or actions arise out of, or are based upon, an untrue
statement or omission or alleged untrue statement or omission in a Preliminary
Prospectus and if the Prospectus shall correct the untrue statement or omission
or the alleged untrue statement or omission which is the basis of the loss,
claim, damage, liability or action for which indemnification is sought and a
copy of the Prospectus had not been sent or given to such person at or prior to
the confirmation of such sale to him in any case where such delivery is required
by the Securities Act, unless such failure to deliver the Prospectus was a
result of non-compliance by the Company with Section 4.03 hereof.
6.02. Indemnification By Underwriters. The Underwriters severally
agree, to the extent of and only to the extent of their commitment pursuant to
Schedule I, in the same manner as set forth in Section 6.01 above, to indemnify
and hold harmless the Company, the directors of the Company and each person, if
any, who controls the Company with respect to any statement in or omission from
the Registration Statement or any amendment thereto, or the Prospectus (as
amended or as supplemented, if amended or supplemented as aforesaid) or any
application or other document filed in any state or jurisdiction in order to
qualify the Underwritten Securities under the blue sky or securities laws
thereof, or any information furnished pursuant to Section 3.05 hereof, if such
statement or omission was made in reliance upon information peculiarly within
its knowledge and furnished in writing to the Company by the Representative on
its behalf specifically for use in connection with the preparation thereof or
supplement thereto. The Underwriters shall not be liable for amounts paid in
settlement of any such litigation if such settlement was effected without the
consent of the Representative. In case of commencement of any action in respect
of which indemnity may be sought from the Underwriters on account of the
indemnity agreement contained in this Section 6.02, each person agreed to be
indemnified by the Underwriters shall have the same obligation to notify the
Underwriters as the Underwriters have toward the Company in Section 6.01 above,
subject to the same loss of indemnity in the event such notice is not given, and
the Underwriters shall have the same right to participate in (and, to the extent
that they shall wish, to direct) the defense of such action at their own
expense, but such defense shall be conducted by counsel of recognized standing
and satisfactory to the Company. The Underwriters agree to notify the Company
promptly of the commencement of any litigation or proceeding against the
Underwriters or against any such controlling person, of which it may be advised,
in connection with
16
the issue and sale of any of the securities of the Company, and furnish to the
Company at its request copies of all pleadings therein and apprize it of all the
developments therein, all at the Company's expense, and permit the Company to be
an observer therein.
SECTION 7
Effectiveness of Agreement
This Agreement shall become effective upon release by the
Representative of the Units for offering after the Effective Date. The time of
the release by the Representative of the Units for offering, for the purposes of
this Section 7, shall mean the time of the release by the Representative of the
Units for public sale pursuant to the Registration Statement. The Representative
agrees to notify the Company immediately after the Representative shall have
released the Units, that this Agreement has become effective. This Agreement
shall nevertheless, become effective at such time earlier than the time
specified above, after the Effective Date, as the Representative may determine
by notice to the Company.
SECTION 8
Conditions of the Underwriters' Obligations
The Underwriters' obligations hereunder to purchase the Units and to
make payment to the Company hereunder on the Closing Date shall be subject to
the accuracy, as of the Closing Date, of the representations and warranties on
the part of the Company herein contained, to the performance by the Company of
all its agreements herein contained, to the fulfillment of or compliance by the
Company with all covenants and conditions hereof, and to the following
additional conditions:
8.01. Effectiveness of Registration Statement. The Registration
Statement shall have become effective on or prior to 12:00 Noon EST time, on the
Effective Date hereof, or such later date as the Underwriter may agree to. On or
prior to the Closing Date, no order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission or be pending; any
request for additional information on the part of the Commission (to be included
in the Registration Statement or Prospectus or otherwise) shall have been
complied with to the satisfaction of the Commission; and neither the
Registration Statement or the Prospectus nor any amendment thereto shall have
been filed to which counsel to the Representative shall have reasonably objected
in writing or have not given their consent.
8.02. Accuracy of Registration Statement. The Representative shall not
have disclosed in writing to the Company that the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel to the Representative, is
material, or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein, or is necessary to make the
statements therein not misleading.
8.03. Casualty and Other Calamity. Between the date hereof and the
Closing Date, the Company shall not have sustained any loss on account of fire,
explosion, flood, accident, calamity or any other cause, of such character as
materially adversely affects its business or property considered as an entire
entity, whether or not such loss is covered by insurance and the President of
17
the Company shall not have suffered any injury or disability of a nature which
would materially adversely affect his ability to properly function as an officer
and director of the Company.
8.04. Litigation and Other Proceedings. Between the date hereof and
the Closing Date, there shall be no litigation instituted or threatened against
the Company before or by any federal or state commission, regulatory body or
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding would materially adversely affect the
business, franchises, licenses, patents, operations or financial condition or
income of the Company considered as an entity.
8.05. Lack of Material Change and Other Conditions. Except as
contemplated herein or as set forth in the Registration Statement and
Prospectus, during the period subsequent to the date of the last audited balance
sheet included in the Registration Statement and prior to the Closing Date, the
Company (A) shall have conducted its business in the usual and ordinary manner
as the same was being conducted on the date of the last audited balance sheet
included in the Registration Statement, (B) except in the ordinary course of its
business, the Company shall not have incurred any liabilities or obligations
(direct or contingent) or disposed of any of its assets, or entered into any
material transaction or suffered or experienced any substantially adverse change
in its condition, financial or otherwise.
8.06. AMEX Listing Approval. The American Stock Exchange shall have
approved the Company's listing application under the symbols "SEAU" for the
Units, "SEA" for the Stock and "SEAW" for the Warrants.
8.07. Accountant's Comfort Letter and Update. At the Closing the
Representative shall have received from Spear, Safer, Xxxxxx & Co. a letter
dated such date, in form and substance satisfactory to the Representative,
containing statements and information of the type ordinarily included in
accountants' "comfort letter" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and Prospectus; and, at the Closing, the Representative shall also
have received from Spear, Safer, Xxxxxx & Co. a letter, dated at the Closing
Date, to the effect that they reaffirm the statements made in the letter
furnished pursuant to the previous clause, except that the specified date
referred to shall be a date not more than three days prior to the Closing Date.
At the Closing Date, the capital stock and surplus accounts of the Company shall
be substantially the same as at the date of the last audited balance sheet
included in the Registration Statement, without considering the proceeds from
the sale of the Units, other than as may be set forth in the Prospectus.
8.08. Review By and Opinion of Underwriter's Counsel. The
authorization of the Underwritten Securities, the Representative's Warrants, the
Registration Statement, the Prospectus and all corporate proceedings and other
legal matters incident thereto and to this Agreement shall be reasonably
satisfactory in all respects to counsel to the Representative. The
Representative shall have received an opinion dated as of the Closing Date from
its counsel, substantially in the form of the opinion called for by Section
8.09(viii), qualified in such manner as the Representative may deem acceptable.
18
8.09. Opinion of Counsel. The Company (which term shall include any
subsidiaries of the Company) shall have furnished to the Representative the
opinions, dated the Closing Date, addressed to the Representative, from Atlas,
Xxxxxxxx P.A. and Abud, Vivanco & Vergara, counsels to the Company, to the
effect that based upon a review by them of the Registration Statement,
Prospectus, the Company's certificate of incorporation, bylaws, and relevant
corporate proceedings, an examination of such statutes they deem necessary and
such other investigation by such counsel as they deem necessary to express such
opinion:
(i) Bio-Aqua Systems, Inc. has been duly incorporated and is a
validly existing corporation in good standing under the laws of Florida, with
full corporate power and authority to own and operate its properties and to
carry on its business as set forth in the Registration Statement and Prospectus.
(ii) The Company is duly qualified or registered as a foreign
corporation in any applicable state or foreign jurisdiction cognizant that the
Company's ownership of property and its conduct of business requires such
qualification or registration and that the failure to so qualify would have a
material adverse effect on its operations.
(iii) To its knowledge, Bio-Aqua Systems, Inc. has authorized
an outstanding capital stock as set forth in the Registration Statement and
Prospectus; the outstanding common stock of the Company and the Underwritten
Securities conform in all material respects to the statements concerning them in
the Registration Statement and Prospectus; the outstanding common stock of
Bio-Aqua Systems, Inc. has been duly and validly issued and is fully-paid and
nonassessable and to its knowledge contains no preemptive rights; the Stock has
been, and the shares of Warrant Stock issuable upon exercise of the Warrants
will be, duly and validly authorized and, upon issuance thereof and payment
therefor in accordance with this Agreement and the Warrants, will be duly and
validly issued, fully paid and nonassessable, and to its knowledge will not be
subject to the preemptive rights of any shareholder of Bio-Aqua Systems, Inc.
(iv) The Warrants and Representative's Warrants have been duly
and validly authorized and issued and are valid and binding instruments
enforceable in accordance with their terms.
(v) To the Company's knowledge, a sufficient number of shares
of Stock and Warrants have been duly reserved for issuance upon exercise of the
Warrants and the Representative's Warrants.
(vi) No consents, approvals, authorizations or orders of
agencies, officers or other (United States) regulatory authorities are known to
such counsel which are necessary for the valid authorization, issue or sale of
the Underwritten Securities hereunder, except as required under the Act or blue
sky or state securities laws.
(vii) The issuance and sale of the Underwritten Securities,
Representative's Warrants and the consummation of the transactions herein
contemplated and compliance with the terms of this Agreement will not conflict
with or result in a breach of any of the terms, conditions, or provisions of or
constitute a default under the certificate of incorporation, or bylaws of
Bio-Aqua Systems, Inc.,
19
or any note, indenture, mortgage, deed of trust, or other agreement or
instrument known to such counsel to which the Company is a party or by which the
Company or any of its property is bound or any existing law (provided this
paragraph shall not relate to federal or state securities laws), order, rule,
regulation, writ, injunction, or decree known to such counsel of any government,
governmental instrumentality, agency, body, arbitration tribunal, or court
domestic or foreign, having jurisdiction over the Company or its property.
(viii) The Registration Statement has become effective under
the Act and, to the best of the knowledge of such counsel, after such counsel
has conducted a reasonable investigation, no order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending by the Commission under the Act; and
the Registration Statement and Prospectus, and each amendment and supplement
thereto, comply as to form in all material respects with the requirements of the
Act and the Rules and Regulations thereunder, and nothing has come to such
counsel's attention that either the Registration Statement or the Prospectus or
any such amendment or supplement contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which made (except that no opinion need be expressed as to
financial statements and the notes thereto contained in the Registration
Statement or Prospectus).
(ix) Such counsel is familiar with all contracts referred to
in the Registration Statement or Prospectus and such contracts are sufficiently
summarized or disclosed therein or filed as exhibits thereto as required, and
such counsel does not know of any further contracts required to be summarized or
disclosed or filed, and such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company is the subject of such a
character required to be disclosed in the Registration Statement or the
Prospectus which are not disclosed and properly described therein.
(x) This Agreement has been duly authorized and executed by
the Company and is a valid and binding agreement of the Company.
(xi) Simultaneously with the Closing, the Company shall have
acquired good and marketable title to a 99% equity interest in Tepual S.A., a
Chilean company ("Tepual"), and acquired all of the rights to the InualTM and
TepualTM brands by acquiring all of the issued and outstanding stock of Profeed,
Inc., a Bahamian company ("Profeed"), free and clear of any adverse claims,
liens or encumbrances. All of such equity interests and shares of common stock
were duly authorized, validly issued, fully paid and non-assessable. Tepual and
Profeed are duly organized and are validly existing and in good standing in
their respective jurisdictions, and they are duly qualified as a foreign
corporation and in good standing in all states in which failure to qualify would
have a material adverse effect. InualTM and TepualTM have been duly and validly
registered as trademarks in Chile, Colombia, Taiwan, China, Ecuador, Mexico
(only TepualTM ), Japan, Peru and South Africa. There are no claims for
trademark infringement pending or, to our knowledge, threatened against Profeed.
As to routine factual matters such as the issuance of stock
certificates and receipt of payment therefor, the states and countries in which
the Company transacts business, the adoption of resolutions reflected by the
Company's minute book and the like, such counsel may rely on the
20
certificate of an appropriate officer of the Company. Such opinion shall also
cover such other matters incident to the transactions contemplated by this
Agreement as the Underwriter or their Counsel shall reasonably request.
8.10.01. Accountant's Letter. The Underwriter shall have received a
letter addressed to it and dated the date of this Agreement and the Closing
Date, respectively, from Spear, Safer, Xxxxxx & Co., independent public
accountants for the Company, stating that (i) with respect to the Company they
are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and the response to Item
509 of Regulation S-K as reflected by the Registration Statement is correct
insofar as it relates to them; (ii) in their opinion, the financial statements
examined by them of the Company at all dates and for all periods referred to in
their opinion and included in the Registration Statement and Prospectus, comply
in all material respects with the applicable accounting requirements of the Act
and the published Rules and Regulations thereunder with respect to registration
statements on Form S-B2; (iii) on the basis of certain indicated procedures (but
not an examination in accordance with generally accepted accounting principles),
including examinations of the instruments of the Company set forth under
"Capitalization" in the Prospectus, a reading of the latest available interim
unaudited financial statements of the Company, whether or not appearing in the
Prospectus, inquiries of the officers of the Company or other persons
responsible for its financial and accounting matters regarding the specific
items for which representations are requested below and a reading of the minute
books of the Company, nothing has come to their attention which would cause them
to believe that during the period from the last audited balance sheet included
in the Registration Statement to a specified date not more than five days prior
to the date of such letter (a) there has been any change in the capital stock or
other securities of the Company or any payment or declaration of any dividend or
other distribution in respect thereof or exchange therefor from that shown on
its audited balance sheets or in the debt of the Company from that shown or
contemplated under "Capitalization" in the Registration Statement or Prospectus
other than as set forth in or contemplated by the Registration Statement or
Prospectus; (b) there have been any material decreases in net current assets or
net assets as compared with amounts shown in the last audited balance sheet
included in the Prospectus so as to make said financial statements misleading;
and (c) on the basis of the indicated procedures and discussions referred to in
clause (iii) above, nothing has come to their attention which, in their
judgment, would cause them to believe or indicate that (1) the unaudited
financial statements and schedules set forth in the Registration Statement and
Prospectus do not present fairly the financial position and results of the
Company, for the periods indicated, in conformity with the generally accepted
accounting principles applied on a consistent basis with the audited financial
statements, and (2) the dollar amounts, percentages and other financial
information set forth in the Registration Statement and Prospectus under the
captions "Prospectus Summary," "Risk Factors," "Dilution," "Capitalization,"
"Exchange Rates", "Remuneration," "Bridge Financing", "Business", "Principal
Shareholders," and "Certain Relationships and Related Transactions" are not in
agreement with the Company's general ledger, financial records or computations
made by the Company therefrom.
8.10.02. Conformed Copies of Accountant's Letter. The Representative
shall be furnished without charge, in addition to the original signed copies,
such number of signed or photostatic or conformed copies of such letters as the
Representative shall reasonably request.
21
8.11. Officer's Certificate. The Company shall have furnished to the
Representative its certificate by the Chief Executive Officer and the Chief
Financial Officer, dated as of the Closing Date, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct at and as of the Closing Date, and the Company
has complied in all material respects with all the agreements and has satisfied
all the conditions on its part to be performed or satisfied at or prior to the
Closing Date.
(ii) The Registration Statement has become effective and no
order suspending the effectiveness of the Registration Statement has been issued
and to the best of the knowledge of the respective signers, no proceeding for
that purpose has been initiated or is threatened by the Commission.
(iii) The respective signers have each carefully examined the
Registration Statement and Prospectus and any amendments and supplements
thereto, and to the best of their knowledge the Registration Statement and the
Prospectus and any amendments and supplements thereto contain all statements
required to be stated therein, and all statements contained therein are true and
correct in all material respects, and neither the Registration Statement nor
Prospectus nor any amendment or supplement thereto includes any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances when made, not misleading and, since the effective date of the
Registration Statement, there has occurred no event required to be set forth in
an amended or a supplemented Prospectus which has not been so set forth.
(iv) Except as set forth in the Registration Statement and
Prospectus since the respective dates as of which the periods for which
information is given in the Registration Statement and Prospectus and prior to
the date of such certificate, (A) there has not been any material adverse
change, financial or otherwise, in the affairs or condition of the Company, and
(B) the Company has not incurred any liabilities, direct or contingent, or
entered into any transactions, otherwise than in the ordinary course of
business.
(v) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, no dividends or
distribution whatever have been declared and/or paid on or with respect to the
common stock of the Company.
8.12. Secretarys Certificate. The Company shall have furnished to the
Representative a certificate of the Secretary of the Company certifying as to
certain information and other matters as the Representative may reasonably
request.
8.13. Tender of Delivery of Units. All of the Units being offered by
the Company and the Warrants being purchased from the Company by the
Representative shall be tendered for delivery in accordance with the terms and
provisions of this Agreement.
8.14. Blue-Sky Qualification. The Underwritten Securities shall be
qualified in such states as the Underwriters through their Representative may
reasonably request pursuant to Section 5.04, and each such qualification shall
be in effect and not subject to any stop order or other proceeding on the
Closing Date.
22
8.15. Approval of Representatives Counsel. All opinions, letters,
certificates and evidence mentioned above or elsewhere in this Agreement shall
be deemed to be in compliance with the provisions hereof only if they are in
form and substance satisfactory to counsel to the Representative, whose approval
shall not be unreasonably withheld. The suggested form of such documents shall
be provided to the counsel for the Representative, at least one business day
before the Closing Date. The Representative's counsel will provide a written
memorandum stating such closing documents which they deem necessary for their
review. Such memorandum shall be delivered at least three business days before
the Closing Date to counsel for the Company.
8.16. Officers' Certificate As a Company Representative. Any
certificate signed by an officer of the Company and delivered to the
Representative or to counsel for the Representative will be deemed a
representation and warranty by the Company to the Representative as to the
statements made therein.
8.17. Acquisition of Tepual S.A. and Profeed, Inc. Simultaneously with
the Closing, the Company shall have acquired good and marketable title to a 99%
equity interest in Tepual, and acquired all of the rights to the InualTM and
TepualTM brands by acquiring all of the issued and outstanding stock of Profeed
free and clear of any adverse claims, liens or encumbrances.
SECTION 9
Termination
9.01. Termination Because of Non-Compliance. This Agreement may be
terminated by the Representative by notice to the Company in the event that
there has been, since the time of execution of this Agreement or since the
respective dates as of which the information is given in the Prospectus, any
material adverse change in the financial condition, or business affairs of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or if the Company shall have failed
or been unable to comply with any of the terms, conditions or provisions of this
Agreement on the part of the Company to be performed, complied with or fulfilled
(including but not limited to those specified in Sections 2, 3, 4, 5, and 8
hereof) within the respective times herein provided for, unless compliance
therewith or performance or satisfaction thereof shall have been expressly
waived by the Representative in writing.
9.02. Market Out Termination. This Agreement may be terminated by the
Representative by notice to the Company at any time if payment for and delivery
of the Units is rendered impracticable or inadvisable because (i) trading in
securities generally on the New York Stock Exchange, American Stock Exchange, or
NASDAQ (including NASDAQ SmallCap) shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking activities in New York
or Florida shall have been declared by either federal or state authorities, or
(iii) there has occurred a material adverse change in the financial markets in
the United States or elsewhere including, but not limited to: a war, new
outbreak of hostilities or escalation thereof, or any other national calamity
shall have occurred, or any development involving a crisis or change in
political, financial, or economic conditions, the effect of which on the
financial markets of the United States
23
or overseas is such as it would be impracticable or inadvisable for the
Representative to proceed or continue with this Agreement or with the public
offering. Notice of such termination may be given to the Company by telegram,
telecopy or telephone and shall subsequently be confirmed by letter.
9.03. Company's Right to Terminate. In the event any action or
proceeding of the type referred to in subparagraph 9.02 above shall be
instituted or threatened against the Underwriters at any time prior to the
effective date hereunder, the Underwriters fail to comply with subparagraphs
10.01 and 10.02, or in the event there shall be filed by or against the Company
in any court pursuant to any federal, state, local or municipal statute, a
petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of its assets or if it makes an assignment
for the benefit of creditors, the Company shall have the right on three days'
written notice to the Representative to terminate this Agreement without any
liability to the Underwriters of any kind except for the payment of all expenses
as provided herein.
9.04. Effect of Termination Hereunder. Any termination of this
Agreement pursuant to this Section 9 shall be without liability of any character
(including, but not limited to, loss of anticipated profits or consequential
damages) on the part of any party thereto; except that the Company shall remain
obligated to pay the costs and expenses provided to be paid by it specified in
Section 5.07 unless terminated under 9.03; and the Company and the
Representative shall be obligated to pay, respectively, all losses, claims,
damages or liabilities, joint or several, under Section 6.01 in the case of the
Company and Section 6.02 in the case of the Representative.
SECTION 10
Underwriter's Representations and Warranties
The Underwriters represent and warrant to and agree with the Company
that:
10.01. Registration as Broker-Dealer and Member of NASD. Each
Underwriter is registered as a broker-dealer with the Securities and Exchange
Commission and is registered as a broker-dealer in all states in which it
conducts business and is a member in good standing of the National Association
of Securities Dealers, Inc.
10.02. No Pending Proceedings. There is not now pending or threatened
against the Underwriters any action or proceeding of which it has been advised,
either in any court of competent jurisdiction, before the Securities and
Exchange Commission or any state securities commission concerning its activities
as a broker or dealer, nor have any of the Underwriters been named as a "cause"
in any such action or proceeding.
SECTION 11
Rights and Obligations
11.01. Consultation With Representative s. See Section 5.25.
Consulting. In reference to the rights and obligations of the Representative
provided in the Consulting Agreement, the Company shall not be required to
consult with the Underwriters concerning any borrowings from banks and
institutional lenders or concerning financing under any equipment leasing or
similar arrangements.
24
11.02. Exercise of Warrants. Upon the exercise of any Warrants after
the Effective Date, the Company will pay the Representative, as principal and
not in its representative capacity, a fee of four percent (4%) of the difference
between the initial offering price and the aggregate exercise price of the
Warrants if: (i) the market price of the Company's Stock is greater than the
exercise price of the Warrants on the date of exercise; (ii) the exercise of the
Warrants was solicited by a member of the NASD; (iii) the Warrants are not held
in a discretionary account; (iv) the disclosure of compensation arrangements has
been made in documents provided to customers, both as part of the original
offering and at the time of the exercise; (v) the solicitation of the exercise
of the Warrants was not in violation of Regulation M promulgated under the
Exchange Act; and (vi) the solicitation of the exercise of the Warrants is in
compliance with NASD Notice to Members 81-38. The warrant solicitation fee is to
be received only by brokers designated in writing by the Company. The Company
agrees not to solicit the exercise of any Warrants through brokers or dealers
other than through the Representative provided that the Company shall not be
required to pay the Representative any solicitation fee as to any Warrants
solicited solely by the Company without any action on the part of the
Representative and provided the Company is permitted by applicable laws to so
solicit the exercise of the Warrants. The Company will not authorize any other
dealer to engage in such solicitation without the prior written consent of the
Representative. The exercise of the Warrants other than through the
Representative will be presumed to be unsolicited unless the customer has
indicated in writing that the transaction was not unsolicited and has designated
the broker/dealer which is to receive compensation for the exercise. The warrant
solicitation fee to be paid upon the exercise of the warrants will not be paid
before (12) twelve months after the effective date of the offering.
SECTION 12
Notice
Except as otherwise expressly provided in this Agreement:
12.01. Notice to the Company. Whenever notice is required by the
provisions of this Underwriting Agreement to be given to the Company, such
notice shall be in writing addressed to the Company as follows:
Bio-Aqua Systems, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Attention: Xxxxx Xxxxx
With a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
Atlas, Xxxxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
25
12.02. Notice to the Underwriters. Whenever notice is required by the
provisions of this Agreement to be given to the Underwriters, such notice shall
be given in writing addressed to the Representative at the address set out at
the beginning of this Agreement, with a copy to:
Institutional Equity Corporation
Capital West Securities, Inc.
c/o Institutional Equity Corporation
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx, III
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx, Xxxxxx & Xxxxxx, LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
SECTION 13
Miscellaneous
13.01. Benefit. This Agreement is made solely for the benefit of the
Underwriters, the Company, their respective officers and directors and any
controlling person, and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successor" or the term "successors and assigns" as used in this Agreement
shall not include any purchasers, as such, of any of the Units.
13.02. Survival. The respective indemnities, agreements,
representations, warranties, covenants and other statements of the Company or
its officers as set forth in or made pursuant to this Agreement and the
indemnity agreements of the Company and the Underwriters contained in Section 6
hereof shall survive and remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company or the Underwriters or any
such officer or director thereof or any controlling person of the Company or of
the Underwriters, (ii) delivery of or payment for the Stock, (iii) the Closing
Date, and (iv) any successor of the Company and the Underwriters or any
controlling person, officer or director thereof, as the case may be, shall be
entitled to the benefits hereof.
13.03. Governing Law. The validity, interpretation and construction of
this Agreement and of each part hereof will be governed by the laws of the State
of Texas, with venue and jurisdiction lying in the federal or state courts of
Dallas County, Texas.
26
13.04. Underwriters' Information. The statements with respect to the
public offering of the Stock on the cover page of the Prospectus and under the
caption "Underwriting"' in the Prospectus constitute the written information
furnished by or on behalf of the Underwriters referred to in Section 2.02
hereof, in Section 6.01 hereof and Section 6.02 hereof.
13.05. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth our Agreement.
Very truly yours,
BIO-AQUA SYSTEMS, INC.
By:
-------------------
ATTEST:
---------------------------
Secretary
WE HEREBY CONFIRM AS OF THE DATE HEREOF THAT THE ABOVE LETTER SETS FORTH THE
AGREEMENT BETWEEN THE COMPANY AND US.
INSTITUTIONAL EQUITY CORPORATION
CAPITAL WEST SECURITIES, INC.
AS REPRESENTATIVES
BY: INSTITUTIONAL EQUITY CORPORATION
By:
-----------------------------
27
ANNEX A
INSTITUTIONAL EQUITY CORPORATION
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
CONSULTING AGREEMENT
--------------------
February ___, 2000
Bio-Aqua Systems, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxx Xxxxxx
Chairman of the Board, President and Chief Executive Officer
Dear Sirs:
This will confirm the arrangements, terms and conditions pursuant to
which Institutional Equity Corporation and Capital West Securities, Inc.
(collectively, the "Consultant") has been retained to serve as consultants and
advisors to Bio-Aqua Systems, Inc., a Florida corporation (the "Company"), for
the term set forth in Section 3 below. The undersigned hereby agrees to the
following terms and conditions:
1. Engagement. The Company hereby retains the Consultant to perform
consulting and advisory services, and the Consultant hereby accepts such
retention and agrees to do and perform consulting and advisory services, upon
the terms and conditions set forth herein.
2. Duties of the Consultant.
(a) Consulting Services. The Consultant will provide such
general financial consulting services and advice pertaining to the Company's
business affairs (as further set forth below), as and when the Company may from
time to time reasonably request upon reasonable notice. Without limiting the
generality of the foregoing, the Consultant will assist the Company in
developing, studying and evaluating financing and capital structure, mergers and
acquisitions activity and corporate financing proposals, prepare reports and
studies thereon when advisable, and assist in negotiations and discussions
pertaining thereto.
(b) Financing. The Consultant will assist and represent the
Company in obtaining both short and long-term financing, when so requested by
the Company in the Company's sole discretion. The Consultant will be entitled to
additional compensation under such terms as may be agreed to by the parties in
connection therewith.
(c) Wall Street Liaison. The Consultant will, when
appropriate, arrange meetings between representatives of the Company and
individuals and financial institutions in the investment community, such as
security analysts, portfolio managers and market makers.
The services described in this Section 2 shall be rendered by the
Consultant in consultation with the Company at such time and place and in such
manner (whether by conference, telephone, letter or otherwise) as the Consultant
and the Company may reasonably determine.
3. Term. The term of this Agreement shall commence on the date hereof
and continue for a period of two years from the date hereof (the "Term").
4. Compensation. As compensation in full for the Consultant's services
hereunder during the Term, the Company shall pay to the Consultant $60,000 per
annum, in equal monthly installments, commencing on the effective date.
5. Expenses. The Company shall pay and reimburse the Consultant for all
reasonable out-of-pocket expenses incurred by the Consultant and approved in
advance in writing by the Company in the performance of their services under
this Agreement.
6. Relationship. Nothing herein shall constitute Consultant as an
employee or agent of the Company. Except as might hereinafter be expressly
agreed, the Consultant shall not have the authority to obligate or commit the
Company in any manner whatsoever. Nothing herein shall preclude the Company from
enjoying the services of any other investment banking firm during the term of
this Agreement or any entity providing similar services as the Consultant.
7. Confidentiality. Except in the course of the performance of its
duties hereunder, and in such case, only upon express written consent of the
Company, the Consultant agrees that they shall not disclose any trade secrets,
know-how, or other proprietary information not in the public domain learned as a
result of this Agreement unless and until such information becomes generally
known or is in the public domain.
8. Finder's or Broker's Fees. The Company acknowledges and agrees that,
with the written agreement and at the request of the Company, the Consultant may
act as a finder or financial consultant in various business transactions in
which the Company or any of its subsidiaries may be involved, such as mergers,
acquisitions, joint ventures or investments and that the Consultant may be
entitled to receive a finder's fee or brokerage commission or other rights,
profits or payments in connection with such transactions provided, however, that
the Company and the Consultant has entered into an agreement prior thereto
regarding the services to be performed by and the fee to be paid to the
Consultant.
9. Permitted Activities. Nothing contained in this Agreement shall
limit or restrict the right of the Consultant or of any officer, director,
shareholder, employee, agent or representative of the Consultant to be a
partner, owner, director, officer, employee, agent or representative of, or
engage in, any other business, whether of a similar nature or not, or limit or
restrict the right of the Consultant to render services of any kind to any other
corporation, firm, individual or other entity.
2
Nothing contained in this Agreement shall limit or restrict the right of the
Company to retain the services of other investment bankers or financial
consultants.
10. Assignment and Termination. This Agreement shall not be assignable
by any party except to a successor to all or substantially all of the business
of either party without the prior written consent of the other party, which
consent may be arbitrarily withheld by the party whose consent is required.
11. Notices. All notices hereunder shall be in writing and shall be
validly given, made or served if in writing and delivered in person or when
received by facsimile transmission, or five days after being sent first class
certified or registered mail, postage prepaid or one day after being sent by
nationally recognized overnight courier to the party for whom intended at the
addresses as set forth above or at such other address as may be provided.
12. Governing Law; Submission to Jurisdiction. This agreement shall be
interpreted, construed, governed and enforced according to the laws of the State
of Florida without giving effect to the conflicts of law rules thereof. The
Company and the Consultant hereby agree that any action, proceeding or claim
against it arising out of, or relating in any way to, this Agreement shall be
brought and enforced in the courts of the State of Florida or of the United
States of America in Florida, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company and the Consultant hereby
irrevocably waive any objection to such exclusive jurisdiction or inconvenient
forum and also hereby irrevocably waive any right or claim to trial by jury in
connection with any such action, proceeding or claim.
13. Amendments. No amendment or modification of the terms or conditions
of this Agreement shall be valid unless in writing and signed by the parties
hereto.
14. Indemnification. As a consultant for the Company, the Consultant
must at times rely upon the information supplied to the Consultant by the
Company's officers, directors, agents and employees as to accuracy and
completeness. Therefore, the Company agrees to indemnify, hold harmless and
defend the Consultant, its directors, officers, employees and agents from and
against any and all claims, actions, proceedings, losses, liabilities, costs and
expenses (including without limitation, reasonable attorneys' fees) incurred by
any of them in connection with or as a result of any inaccuracy, incompleteness
or omission of information given to the Consultant in writing by the Company's
officers, directors, agents or employees in connection with the rendering of
services by the Consultant requested by the Company hereunder.
15. Counterparts. This Agreement may be executed in one or more
counterparts which, taken together, shall constitute one and the same
instrument, and this Agreement shall become effective when one or more
counterparts have been signed by each of the parties. It shall not be necessary
in making proof of this Agreement or any counterpart hereof to account for more
than one such counterpart.
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Very truly yours,
INSTITUTIONAL EQUITY CORPORATION
By:
-----------------------------------
Name:
---------------------------
Title: ---------------------------
CAPITAL WEST SECURITIES, INC.
By:
-----------------------------------
Name:
---------------------------
Title: ---------------------------
AGREED AND ACCEPTED:
BIO-AQUA SYSTEMS, INC.
By: /s/ Xxx Xxxxxx
---------------------------
Xxx Xxxxxx
Chairman of the Board, President and
Chief Executive Officer
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