EXHIBIT 1
ADVANCED ELECTRONIC SUPPORT PRODUCTS,INC.
750,000 Shares of Common Stock
UNDERWRITING AGREEMENT
As of _______________, 199_
XX XXXXXXX SECURITIES, INC.
CORPORATE SECURITIES GROUP, INC.
000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Gentlemen:
Advanced Electronic Support Products, Inc., a Florida corporation (the
"Company") confirms its agreement with XX Xxxxxxx Securities, Inc., an Iowa
corporation and Corporate Securities Group, Inc., a Florida corporation,
(collectively, the "Representatives") as representatives and members of the
group of several underwriters, if any, named in Schedule I attached hereto (the
"Underwriters" or "you", and if there is no Schedule I attached, all references
in this Agreement to the "Underwriters" or "you" shall be deemed to refer only
to the Representatives) as follows:
1. THE SHARES. Subject to the terms and conditions set forth herein,
the Company proposes to sell to you on a "firm commitment" basis, an aggregate
of 750,000 shares ("Firm Shares") of the Company's authorized but unissued
common stock, par value $.001 per share (the "Common Stock"). The Company also
proposes to grant to you an option to purchase up to an additional 75,000 shares
of Common Stock for the sole purpose of covering over-allotments, if any (the
"Option Shares"). The Firm Shares and the Option Shares are more fully described
in the Registration Statement and the Prospectus referred to herein and are
hereinafter sometimes collectively referred to as the "Shares."
2. REGISTRATION STATEMENT AND PROSPECTUS. A registration statement on
Form SB-2 (File No. 333-________) together with exhibits and including a
preliminary form of prospectus for the registration of the Shares, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended, and all applicable instructions, rules and regulations
(collectively, the "Securities Act") of the Securities and Exchange Commission
(the "Commission"), and has been filed with the Commission. There have been
delivered to you, copies of each Preliminary Prospectus and the Final
Prospectus. Such registration statement, including the Prospectus, Part II, any
documents incorporated by reference therein and all financial schedules and
exhibits thereto, as amended at the time when it shall become effective, is
herein referred to as the "Registration Statement," and the prospectus included
as part of the Registration Statement on file with the Commission when it shall
become effective or, if the procedure in Rule 430A of the Rules and Regulations
(as defined below) is followed, the prospectus that discloses all the
information that was omitted from the prospectus on the
effective date of the Registration Statement pursuant to such rule, and in
either case, together with any changes contained in any prospectus filed with
the Commission by the Company with your consent after the effective date of the
Registration Statement, is herein referred to as the "Final Prospectus." If the
procedure in Rule 430A is followed, the prospectus included as part of the
Registration Statement on the date when the Registration Statement became
effective is referred to herein as the "Effective Prospectus." Any prospectus
included in the Registration Statement of the Company and in any amendments
thereto prior to the effective date of the Registration Statement is referred to
herein as a "Pre-Effective Prospectus." For purposes of this Agreement, "Rules
and Regulations" mean the rules and regulations adopted by the Commission under
either the Securities Act or the Securities Exchange Act of 1934 (the "Exchange
Act"), as applicable.
3. AGREEMENTS TO SELL AND PURCHASE.
(a) SHARES. The Company agrees to sell to you, and upon the
basis of the representations, warranties and agreements of the Company herein
contained and subject to the terms and conditions hereof, you shall purchase
from the Company, the Firm Shares at a purchase price of $4.50 per Share. This
purchase price represents the public offering price of $5.00 per Share, less a
discount, equaling ten percent (10%), in the amount of $.50 per Share that the
Company has agreed to allow the Underwriter. All or any portion of such discount
may be reallowed by you for sales through licensed securities dealers who are
members of the National Association of Securities Dealers, Inc. (the "NASD").
The Company also grants you an option to purchase, upon
your written notice to the Company, the Option Shares for the sole purpose of
covering over-allotments, if any, at the per Firm Share purchase price and on
the same terms as set forth above for the Firm Shares. The Option Shares may be
purchased, in whole or in part, at any time for a period of forty-five (45) days
following the effective date of the Registration Statement. The notice from you
to the Company shall specify the number of Option Shares to be purchased and the
date and time of payment and delivery thereof (the "Option Closing Date"). You,
as the Underwriters, in your sole discretion, shall determine the number of
Option Shares, if any, to be purchased as provided herein. Such over-allotment
option shall not be exercised more than on one occasion.
(b) UNDERWRITER'S WARRANTS. On the Closing Date (as defined
herein), the Company shall further issue and sell to you or, at your direction,
to your bona fide officers and directors, warrants entitling the holders thereof
to purchase 75,000 shares of Common Stock (the "Underwriter's Warrants") for a
purchase price of $.001 per Underwriter's Warrant. The Underwriter's Warrants
are exercisable at any time during the five year period commencing on the
effective date of the Registration Statement (the "Term"), at a price of $6.00
per share (i.e., 120% of the public offering price). For a period of one (1)
year after the effective date of the Registration Statement, the Underwriter's
Warrants and underlying securities may not be sold, assigned, transferred,
pledged or hypothecated except to officers of the Underwriter or members of the
selling group. Such transfers will only be made if they do not violate the
registration
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provisions of the Securities Act. The total number of Underwriter's Warrants
which may be purchased will be ten percent (10%) of the number of Firm Shares
sold in the offering. The Underwriter's Warrants shall contain terms and
provisions as set forth more particularly in the Underwriter's Warrant Agreement
including, but not limited to, provisions protecting the holders against
dilution by reason of the issuance of securities below the exercise price, stock
dividends, stock splits, combinations, recapitalizations, mergers and
consolidations or otherwise and such other terms as are agreed upon by the
Company and you. As provided in the Underwriter's Warrant Agreement, you may
designate that the Underwriter's Warrants be issued in varying amounts directly
to your officers and not the Underwriters, and to other underwriters, if any,
and their designees. Such designation will be made by you only if you determine
that such issuances would not violate the interpretation of the Board of
Governors of the NASD relating to the review of corporate financing
arrangements.
At any time during the Term, other than at a time when the Warrant
Securities (as defined below) are already covered for sale or resale by an
effective and current registration statement that permits the method of
distribution desired by the holders thereof, the Underwriters or the then
holders of a majority of the then outstanding Underwriters' Warrants and shares
of Common Stock issued upon the exercise of the Underwriters' Warrants
(collectively, the "Warrant Securities"), shall have the right to require the
Company (i) to prepare and file with the Commission up to two new registration
statements under the Securities Act (or, in lieu of either, a post-effective
amendment or amendments to the Registration Statement, if then permitted under
the Securities Act), covering all or any portion of the Warrant Securities and
to use its best efforts to obtain promptly and maintain the effectiveness
thereof for at least one hundred twenty (120) days and (ii) to register or
qualify the subject Warrant Securities for sale in up to ten (10) states
identified by the Underwriters or such holders. The Company shall bear all
expenses, other than expenses of the Underwriter counsel, incurred in the
preparation and filing of the first such registration statement or
post-effective amendment (and related state registrations, to the extent
permitted by applicable law) and the furnishing of copies of the preliminary and
final prospectus thereof to the Underwriters or such holders of Warrant
Securities. The expenses of any second such registration statement or
post-effective amendment (and matters attendant thereto) shall be borne by the
Underwriters or the holders requiring the same.
In addition, if at any time during the five years after the effective
date of the Registration Statement, the Company shall prepare and file one or
more post-effective amendments to the Registration Statement, or new
registration statements under the Securities Act, with respect to a public
offering of equity or debt securities of the Company, or of any such securities
of the Company held by its shareholders, the Company will include in any such
post-effective amendment such information as may be required to permit a public
offering of the Warrant Securities held by the Underwrites and their designees
or transferees or will include in any such new registration statement such
information as is required, and such number of Warrant Securities held by the
Underwriters and its designees or transferees as may be requested, to permit a
public offering of the Warrant Securities so requested; provided, however, that
if, in the written opinion of the Company's managing underwriter, if any, for
such offering, the
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inclusion of the Warrant Securities requested to be registered, when added to
the securities being registered by the Company, will exceed the maximum amount
of the Company's securities which can be marketed without otherwise materially
and adversely affecting the entire offering, then the Company may exclude from
such offering all or any portion of the Warrant Securities requested to be so
registered, but only if no securities are included in such post-effective
amendment or registration statement other than securities being sold for the
account of the Company. Each holder of Warrant Securities for the account of
which any such securities are included in such registration statement shall
agree, if requested by the Company with respect to an offering by the Company of
its own securities, not to sell any other shares of Common Stock or securities
through which Common Stock may be acquired, for a period of 90 days after the
effective date of such post-effective amendment or new registration statement;
provided that in no event shall the restriction imposed on such holders be
greater than those required of other selling shareholders. The Company shall
bear all fees and expenses incurred by it in connection with the preparation and
filing of such post-effective amendment or new registration statement. In the
event of any such proposed registration, the Company shall furnish the then
holders of outstanding Warrant Securities with not less than thirty (30) days'
written notice prior to the proposed date of filing of such post-effective
amendment or new registration statement. Such notice shall continue to be given
by the Company to such holders of outstanding Warrant Securities until such time
as all of the Warrant Securities have been registered. The holders of the
Warrant Securities shall exercise the "piggy-back" rights provided for herein by
giving written notice, within twenty (20) days of receipt of the Company's
notice of its intention to file a post-effective amendment or new registration
statement.
The Underwriters' Warrants shall be transferable after one year from
the effective date of the Registration Statement pursuant to available
exemptions from registration (if not otherwise covered by an effective
registration statement) under the Securities Act, provided, however, that the
Underwriters' Warrant may not be transferred to a direct competitor of the
Company without the Company's prior written consent. Further, the Underwriters
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or otherwise necessary to make any
such statement therein not misleading.
4. DELIVERY AND PAYMENT. Delivery of and payment for the Firm Shares
shall be made at 10:00 A.M., Miami Time, on ____________, 199 (such time and
date are referred to herein as the "Closing Date") at your office, 000 Xxxxx
Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000. The Closing Date and the
time and the place of delivery of and payment for the Firm Shares may be varied
by agreement between you and the Company.
If you elect to purchase and take delivery of any Option Shares,
delivery of and payment for such Option Shares shall be made at said office or
at such place as may be agreed upon in writing by you and the Company, on the
Option Closing Date, which may be the same as the Closing Date but shall in no
event be earlier than the Closing Date or earlier than one or later than ten
business days after the giving of the written notice referenced in Section 3
hereof from you to the Company of the determination to purchase a number,
specified in said notice, of Option Shares. Such notice may be given by you to
the Company at any time within forty-
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five (45) days after the date of the Final Prospectus. The Option Closing Date
may be varied by agreement between you and the Company. On the Option Closing
Date, if any, there shall be delivered to you supplemental opinions and
certificates, dated such Option Closing Date, to the same effect as those
required to be delivered on the Closing Date pursuant to Section 8 hereof. The
Closing Date and the Option Closing Date are hereinafter collectively referred
to as the "Closing Date."
Delivery of certificates for the shares of Common Stock which
comprise the Firm Shares (in definitive form and registered in such names and in
such denominations as you shall request prior to the Closing Date) shall be made
to you against payment of the purchase price therefor by certified or official
bank check or checks payable to the order of the Company in the amount of
$_____, which shall be in New York Clearing House funds. For the purpose of
expediting the checking and packaging of certificates for the shares of Common
Stock, the Company and agrees to make such certificates available for inspection
at least 24 hours prior to the Closing Date. Time shall be of the essence and
delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriter.
5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company further
covenants and agrees with you as follows:
(a) FILING OF REGISTRATION STATEMENT. The Company shall use
its best efforts to cause the Registration Statement to become effective or, if
the procedure in Rule 430A of the Rules and Regulations is followed, comply with
the provisions of and make all requisite filings with the Commission pursuant to
such Rules and Regulations. The Company will give you advance notice of its
intention to file or make any amendment or post-effective amendment to the
Registration Statement or any amendment or supplement to the Prospectus and will
submit all such amendments or supplements to you and to your counsel as soon as
possible, but not later than five (5) business days before the Company proposes
to file such amendments or supplements with the Commission. The Company will not
file any such amendment or supplement to which you shall object in writing
within a reasonable time after being furnished copies thereof. The Company will
not allow the Registration to be declared effective by the Commission without
your approval.
(b) NOTICE TO UNDERWRITERS. The Company will advise you
immediately and confirm that advice in writing (i) when any post-effective
amendment to the Registration Statement, shall have become effective, (ii) of
the mailing or the delivery to the Commission for filing of any amendment or
post-effective amendment to the Registration Statement or any amendment or
supplement to the Prospectus, (iii) of any request by the Commission for
amendment or supplement to the Registration Statement or the Prospectus, or for
additional information, immediately supplying you with copies of all comment
letters and all other correspondence with the Commission, (iv) of the issuance
by the Commission of any stop order suspending effectiveness of the Registration
Statement or of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, or of the initiation or threat of any proceeding
for any such purpose, (v) of the issuance by any state securities commission or
other
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regulatory authority of any order suspending the qualification or the exemption
from qualification of the Shares under state securities or Blue Sky laws or the
initiation or threat of any proceedings for that purpose and (vi) of the
happening of any event during the period mentioned in Section 5(d) hereof that
makes any statement made in the Registration Statement or the Prospectus untrue
in any material respect or which requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements therein
not misleading in any material respect. The Company will use its best efforts to
prevent the issuance of any stop order or suspension order and to obtain the
withdrawal of any such stop order or suspension order at the earliest possible
moment.
(c) NASDAQ LISTING. On the effective date of the Registration
Statement, the Common Stock shall be listed for quotation on the NASDAQ SmallCap
Market, and the Company shall use its best efforts to maintain such listing for
not less than five (5) years, provided, however, that the Company may withdraw
the listing of its securities on the NASDAQ if the Company lists Common Stock on
the NASDAQ National Market System or on the New York or American Stock Exchange.
In addition to the foregoing, the Company shall, pursuant to Schedule D of the
NASD By-Laws, prepare and file with NASD any required notification along with
applicable fees to list the Shares on the NASDAQ system. The Company shall
prepare and file as promptly as practicable a Report by Issuer of Securities
Quoted on NASDAQ Interdealer Quotation System on Form 10-C with respect to the
shares of Common Stock.
(d) POST-EFFECTIVE AMENDMENT. Within the time during which a
Final Prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company shall comply with all requirements imposed upon it
by the Securities Act and by the Rules and Regulations, as from time to time in
force, so far as is necessary to permit the continuance of sales of or dealings
in the Shares as contemplated by the provisions hereof and the Final Prospectus.
If at any time when a prospectus relating to the Shares is required to be
delivered under the Securities Act, any event occurs as a result of which, in
the judgment of the Company and its counsel, the Prospectus as then amended or
supplemented would include any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which made, not misleading in any material respect, or if it
is necessary at any time to amend or supplement the Prospectus to comply with
the Securities Act or any other applicable law, the Company will promptly notify
you, and the Company shall promptly prepare and file with the Commission an
amendment or supplement to the Registration Statement which will correct such
statement or omission, or an amendment or supplement which will effect such
compliance, and deliver to you in connection therewith such prospectus or
prospectuses in such quantity as may be necessary to permit compliance with the
requirements of the Securities Act.
(e) BLUE SKY QUALIFICATION. Prior to any public offering of
the Shares by you, the Company will endeavor in good faith, using your counsel,
and in cooperation with you and your counsel in taking such action as may be
necessary to register or qualify the Shares for offer and sale under the
applicable securities or Blue Sky laws of any states or jurisdictions of the
United States as you may reasonably designate and will maintain such
qualifications in effect for
6
so long as may be required for the distribution of the Shares. The foregoing
shall be subject to the reasonable consent of the Company as to any state or
jurisdiction that seeks to impose an escrow requirement with respect to
insiders' shares or some other restrictive condition upon the Company that
exceeds the insiders lock-up provision of Section 5(h) (other than because no
escrow is required herein) or a comparable condition contained herein. Copies of
all applications and related documents for the registration or qualification of
securities (except for the Registration Statement and Prospectus) filed with the
various states shall be sent to the Company's counsel not later than the next
business day following their transmission to the various states, and copies of
all comments and orders received from the various states shall be made available
to the Company's counsel. As information is received from various states and
immediately prior to the effective date of the Registration Statement, counsel
for the Underwriters shall advise counsel for the Company in writing of all
states where the offering has been registered or qualified for sale or has been
canceled, withdrawn or denied, the date(s) of such event(s), and the number of
Shares (and amount of other securities, if any) registered or qualified for sale
in each state. The Company shall be responsible for the cost of state
registration filing fees and legal fees and expenses of Underwriters' counsel in
connection with such filings, which filing fees shall be paid to Underwriters'
counsel in advance of such filings. The Underwriters' counsel's legal fees with
respect to blue sky filing shall be $1,000 for each state in which application
for registration or qualification is made, up to an aggregate of $35,000 for all
states combined.
The Company shall, as soon as practicable after the Closing
Date, apply for listing in Standard and Poor's Stock Guide and use its best
efforts to effect and maintain such listing for at least five (5) years. The
Company further agrees, at any time during the two (2) year period following the
Closing Date, to engage, within sixty (60) days of written request by the
Underwriter, the services of an investor relations firm reasonably acceptable to
the Underwriters and to maintain such services from the date of engagement until
up to two (2) years following the Closing Date.
(f) INFORMATION TO THE UNDERWRITERS. The Company will deliver
to you, for a period of at least five (5) years from the Closing Date: (i) as
soon as practicable, but in any event within ninety-five (95) days after the
close of each fiscal year of the Company, or as soon thereafter as practicable,
a financial report of the Company and its subsidiaries, if any, on a
consolidated basis, and a similar financial report of all unconsolidated
subsidiaries, if any, all such reports to include a balance sheet as of the end
of the preceding fiscal year, a statement of operations, a statement of changes
in financial condition and a statement of stockholders' equity covering such
fiscal year, and all to be in reasonable detail and certified by independent
public accountants who may, however, be the regularly employed independent
public accountants of the Company; (ii) within one hundred and five (105) days
after the end of each quarterly fiscal period of the Company, other than the
last quarterly fiscal period in any fiscal year, or as soon thereafter as
practicable, copies of the consolidated statement of operations, the statement
of stockholders' equity and statement of changes in financial condition for that
period, and the balance sheet as of the end of that period of the Company and
its subsidiaries, if any, the statement of operations, the statement of
stockholders' equity and statement of changes in
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financial condition and the balance sheet of each unconsolidated subsidiary, if
any, of the Company for that period, all subject to year-end adjustment,
certified by the principal financial or accounting officer of the Company; (iii)
copies of all other statements, documents, or other information which the
Company shall mail or otherwise make available to any class of its security
holders, to the financial press or to the public, or shall file with the
Commission, including, but not limited to periodic reports required to be filed
under Sections 13 and 15 of the Exchange Act, in particular Forms 10-K, 10-Q and
8-K (which shall be provided within the same period such reports are required to
be filed with the Commission); and (iv) upon request in writing, such other
information as may reasonably be requested with reference to the property,
business, stockholders and affairs of the Company and its subsidiaries, if any.
(g) SECTION 11(A) EARNINGS STATEMENT. The Company will, as
promptly as possible after the close of each fiscal year of the Company, prepare
and distribute reports to its stockholders which will include audited statements
of its operations and changes of financial position during such period and its
balance sheet as of the end of such period. The Company will make generally
available to its stockholders and will deliver to you, as soon as practicable,
but in no event later than the first day of the 15th full calendar month
following the effective date of the Registration Statement, an earnings
statement (which need not be audited but which will satisfy the provisions of
Section 11(a) of the Securities Act) covering a period of at least twelve (12)
months beginning after the effective date of the Registration Statement.
(h) LOCK-UP AGREEMENTS. The Company will cause each of its
officers, directors, holders of the Company's Common Stock, and any other
persons deemed to be "affiliates" as defined in Rule 144 under the Securities
Act immediately prior to the effective date of the Registration Statement, to
agree in writing (the "Lock-Up Agreement") that: (i) such person shall not sell,
including a short sale or sale against the box, or otherwise dispose of any
shares of the Common Stock owned directly, indirectly, or beneficially (as
defined by the Exchange Act and the Rules and Regulations promulgated
thereunder) by him, her or it for a period of twenty-four (24) months from the
effective date of the Registration Statement ("Lock-Up Period") without the
Underwriters' prior written consent); and (ii) such person will permit all
certificates evidencing his, her or its shares of Common Stock to be affixed
with an appropriate restrictive legend, and will cause the transfer agent for
the Company to note such restrictions on the transfer books and records of the
Company. Additionally, for a period of forty-eight (48) months following the
effective date of the Registration Statement, the Company's officers, directors,
shareholders and affiliates will agree to sell any shares of Common Stock it so
desires to sell through the Representatives if the price and terms of execution
offered by the Representatives are at least as favorable as may be obtained from
other brokerage firms. On or before the effective date, the Company shall have
furnished to the Representatives the Lock-Up Agreements, which shall be in a
form reasonably acceptable to the Representatives and which shall be duly
executed, and shall be valid and binding obligations of such persons enforceable
against such persons in accordance with their respective terms.
(i) PRESS RELEASES. For a period commencing on the date hereof
and ending two years after the date of the Prospectus, neither the Company nor
any of its officers or
8
directors will issue news releases or permit other such publicity about the
Company regarding the financial condition or any significant event of the
Company without the approval of the Company's legal counsel named in the
Prospectus under the heading "Legal Opinions," or such other counsel as may be
approved by you. During such period, the Company will deliver to you copies of
such news releases or other publicity about the Company promptly after
distribution thereof.
(j) UNDERWRITERS' COPIES. The Company will promptly deliver to
you, without charge: (i) two complete copies (one of which is manually signed)
of the Registration Statement, as originally filed, and of each amendment
thereto, and of each post-effective amendment thereto filed at any time when a
prospectus relating to the Shares is required to be delivered under the
Securities Act, in each such case manually executed by the proper officers and a
majority of the directors of the Company (or, in case of amendments, by their
duly constituted attorneys-in-fact) and including signed copies of each consent
of experts named in the Registration Statement and all financial statements,
schedules and exhibits filed therewith (including those incorporated by
reference to the extent not previously furnished to you), and (ii) such number
of conformed copies of the Registration Statement, as originally filed, and of
each amendment and post-effective amendment thereto (in each such case excluding
exhibits), as you may reasonably require. The Company will promptly deliver,
without charge, to you or such others whose names and addresses are designated
by you as soon as possible after the effective date of the Registration
Statement, and thereafter from time to time during the period when delivery of a
prospectus relating to the Shares is required by the Securities Act, as many
printed copies as you may reasonably request of the Final Prospectus and of any
amended or supplemented prospectus. The Company will promptly deliver, without
charge, as soon as practicable following the public offering or sale of the
Shares, and thereafter from time to time for such period as delivery of a
prospectus or any amendment or supplement thereto may be required, to you or any
dealers to whom Shares may be issued, as many copies as you reasonably request
of the Prospectus and any amendment or supplement thereto.
(k) NASD MATTERS. The Company shall supply your counsel with
the following as appropriate to satisfy the NASD filing requirements: (i) such
copies of any amendment or supplement to the Registration Statement and the
preliminary prospectus or Final Prospectus; and (ii) the statutory filing fee in
the form of a certified or cashier's check. The Company shall further supply to
your counsel, no later than one (1) week before the effective date of the
Registration Statement, a written representation as to (i) the existence or
nonexistence of any NASD affiliation or association of any officer, director, or
five percent (5%) or greater shareholder of the Company, and, if a shareholder
of the Company is a corporation, the existence or nonexistence of any direct or
indirect NASD affiliation or association of any officer, director, or five
percent (5%) or greater shareholder of such corporation, (ii) whether or not any
unregistered securities of the Company have been acquired by any NASD affiliated
persons during the twelve (12) month period prior to filing the Registration
Statement, and (iii) whether or not key-man life insurance has been or will be
provided for any officer or director of the Company by any NASD affiliate.
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(l) EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement becomes effective or is
terminated, the Company shall bear all costs and expenses incident to the
issuance, offer, sale, and delivery of the Shares, including, but not limited
to, stock transfer taxes, all expenses and fees incident to the filing of the
Registration Statement and the registration statements with the Commission
pursuant to the Securities Act and the Exchange Act, the costs, filing fees and
reasonable counsel fees related to qualification under state securities laws,
fees and disbursements of counsel and accountants for the Company, NASD filing
fees, NASDAQ system fees, costs of preparing and printing the Registration
Statement and as many copies of the preliminary prospectus and Prospectus as you
may reasonably deem necessary, including all amendments and supplements to the
Registration Statement, and the printing, delivery, and shipping of this
Agreement and other underwriting documents, including underwriters'
questionnaires, underwriters' powers of attorney, Blue Sky memoranda, and
selected dealers' agreements, the cost of printing certificates representing the
Shares, the costs and charges of the Transfer Agent, and all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise provided for in this Agreement. The Company shall also bear all costs
of holding informational meetings and "road shows" to acquaint securities
dealers with the affairs of the Company. The Company, at its sole expense, shall
make a representative of its management available at the offices of the
Underwriters, at mutually convenient times, prior to the effective date of the
Registration Statement and shall likewise make representatives available at the
Company for due diligence or other informational meetings. The Company will also
pay the out-of-pocket travel expenses of the Underwriters and their counsel or
the professionals designated by the Underwriters to visit the Company's
facilities (as well as those of any significant supplier to, or customer of, the
Company) for purposes of discharging their due diligence responsibilities. The
Prospectus (preliminary and definitive) shall be printed by a financial printer
selected by the Company and approved by the Underwriters. The Company agrees to
supply the Underwriters (within six weeks of the Closing Date) at the Company's
sole cost and expense six (6) bound volumes of all the documents, papers and
exhibits, correspondence and records forming the materials included in the
public offering, and twelve (12) Lucite cubes containing a miniature definitive
Prospectus. In addition, the Company agrees to pay for all pre- and post-closing
advertisements relating to the public offering.
In addition to the foregoing, the Company shall reimburse you
for your expenses on the basis of a nonaccountable expense allowance in the
amount of 3% of the gross offering proceeds; all of your costs in excess of the
nonaccountable expense allowance shall be paid by you. Expenses to which the
allowance shall be applied include fees of your counsel, but shall not include
the following: fees of the Company's counsel; Commission or state filing fees;
reasonable Blue Sky counsel fees and expenses; NASD filing fees; NASDAQ listing
fees; printing; tombstone advertisements; and any and all other expenses
customarily paid by the issuer in a public offering. The Company represents that
such payment will be made in full.
Notwithstanding any other provisions of this Agreement, if (i)
(a) there is a material adverse change in the business or financial condition of
the Company, (b) there exists any material misrepresentation of the Company
contained herein or otherwise, (c) you discover
10
in the course of your due diligence examination of the Company facts which you
determine, in your sole discretion, could adversely affect the sale of the
Shares, or (d) market conditions, in your sole judgment, do not justify an
offering on the terms set forth in the Registration Statement, and in any such
event you elect to terminate the underwriting or (ii) there is any judicial,
administrative or other regulatory or governmental judgment, decree, order,
injunction or similar action or proceeding enjoining, suspending, prohibiting,
limiting or otherwise restricting you from engaging in underwriting activities
or sales of securities, and in any such event you elect to terminate the
underwriting, the Company, agrees that in addition to paying the Company's own
expense, you will be entitled to be reimbursed by us, on an accountable basis,
for all of its accountable out-of-pocket costs incurred in connection with the
offering of securities contemplated by the Registration Statement. Furthermore,
if the Company should fail to pay the agreed upon amounts set forth above to
you, your successors or assigns, the Company, shall, furthermore, be liable to
you for reasonable attorney's fees and costs incurred in the collection of said
amounts.
(m) TRANSFER SHEETS. The Company shall furnish to you a list
of the names and addresses of all stockholders subsequent to the Closing Date
and shall cause the Transfer Agent to furnish to you a copy of all transfer
sheets for a period of three years from the later of the Closing Date or the
Option Closing Date.
(n) UNDERTAKINGS AND USE OF PROCEEDS. The Company will comply
with all of the undertakings contained in the Registration Statement and shall
apply the net proceeds of the sale of the Firm Shares substantially in
accordance with the description set forth in the Prospectus.
(o) FINANCIAL ADVISORY AGREEMENT. On the Closing Date, the
Company shall execute a Financial Advisory Agreement with you for services,
which shall include without limitation (i) advising the Company in connection
with possible acquisitions (ii) facilitating shareholder communications and
relations, including the preparation of the Company's annual report and (iii)
advising and assisting the Company with long-term financial planning, corporate
reorganization, expansion and capital structure and other financial matters.
Such agreement shall have a term of two years and provide for compensation of
$2,000 per month which amount shall be prepaid in full on the Closing Date. The
Financial Advisory Agreement shall further provide that during the term of such
agreement, in the event that you (i) introduce, negotiate or arrange on the
Company's behalf a non-public equity financing or (ii) arrange on the Company's
behalf a non-public debt financing or (iii) arrange for the purchase or sale of
assets, or for a merger acquisition or joint venture for the Company,then the
Company will compensate you (based on the Transaction Value, as defined below)
for such services in an amount equal to:
6% on the first $5,000,000 of the Transaction Value;
5% on the amount from $5,000,001 to $6,000,000;
4% on the amount from $6,000,001 to $7,000,000;
3% on the amount from $7,000,001 to $8,000,000;
2% on the amount from $8,000,001 to $9,000,000;
1% on the amount in excess of $9,000,000.
11
"Transaction Value" shall mean the aggregate value of all
cash, securities and other property (i) paid to the Company, its affiliates or
their shareholders in connection with any transaction referred to above
involving any investment in or acquisition of the Company or any affiliates (or
the assets of either), (ii) paid by the Company or any affiliate in any such
transaction involving an investment in or acquisition of another party or its
equity holdings by the Company or any affiliate, or (iii) paid or contributed by
the Company or any affiliate and by the other party or parties in the event of
any such transaction involving a merger, consolidation, joint venture or similar
joint enterprise or undertaking. The value of any such securities (whether debt
or equity) or other property shall be the fair market value thereof as
determined by mutual agreement of the Company and the Underwriters or by an
independent appraiser jointly selected by the Company and the Underwriters.
(p) RIGHT OF FIRST REFUSAL. The Company agrees that the
Underwriter shall, for a period of twenty-four (24) months after the Closing
Date, have a right of first refusal with respect to managing any public offering
or private placement of securities by the Company, any future subsidiary of the
Company or any successor to the Company; provided, however, that the
Underwriters, within twenty (20) days after receiving written notice of such
offering or placement containing the terms proposed by any third party, offer
terms at least as favorable to any proposed financing offered by the Company by
any third party.
(q) EXCHANGE ACT REGISTRATION. The Company shall prepare and
file a registration statement with the Commission pursuant to Section 12(g) of
the Exchange Act. Such registration statement under the Exchange Act shall be
declared effective contemporaneously with the effectiveness of the registration
statement. The Company shall comply with the Securities Act, the Exchange Act
and the Rules and Regulations promulgated thereunder, the applicable rules and
regulations of the NASD and applicable states securities laws so as to permit
the continuance of sales of and dealings in the Shares in compliance with
applicable provisions of such laws, rules, and regulations, including the filing
with the Commission and the NASD of all reports required to be so filed by each,
and the Company will deliver to the holders of the shares all reports required
to be provided to such holders pursuant to such laws, rules, or regulations.
(r) REDEMPTION AND DIVIDENDS. For a period of two years from
the Closing Date, the Company shall not, either directly or through a
subsidiary, (i) redeem or purchase any of its securities outstanding as of the
Closing Date, other than redemptions that may be required in connection with
possible termination of employment with the Company under the terms of
employment agreements in effect on the Closing Date, or redemptions as otherwise
provided for herein, or (ii) pay any dividends, or make any other cash
distribution in respect of its securities, in excess of the amount of the
Company's current or retained earnings derived after the Closing Date, without
the prior written consent of the Underwriters, which consent may be withheld for
any reason. The Underwriter shall either approve or disapprove, in writing of
such contemplated stock redemption or dividend or distribution within five (5)
business days after the date the Underwriters receive written notice of the
proposed action.
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6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to you that:
(a) ACCURACY OF REGISTRATION STATEMENT AND PROSPECTUS. To its
knowledge, the Commission has not issued any order preventing or suspending the
use of any preliminary prospectus or Prospectus, no proceedings for that purpose
have been instituted and each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto
or filed pursuant to Rule 424 under the Securities Act in all material respects,
at the time of the filing thereof, complied with the Securities Act and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; when the Registration Statement becomes effective, and when the
Prospectus is filed with the Commission, and at all times subsequent thereto up
to and including the Closing Date and the Option Closing Date, or for such
longer period as the Prospectus is required under the Securities Act to be
delivered in connection with sales by you or a dealer selected by you, the
Registration Statement and the Prospectus and any amendments or supplements
thereto will comply with the Securities Act; when the Registration Statement
becomes effective, the Registration Statement will contain all statements
required to be stated therein in accordance with the Securities Act and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and when the Prospectus is filed with the Commission, it will
contain all statements required to be stated therein in accordance with the
Securities Act and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the Company makes no
representations or warranties as to information contained in or omitted from any
preliminary prospectus or the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information (or oral information to the extent such information relates to the
private ongoing investigation of you by the Commission) furnished to the Company
with respect to you by or on behalf of you expressly for use with reference to
you (or any person who may be deemed to be affiliated with you or an associated
person of yours) in connection with the preparation thereof.
(b) FINANCIAL STATEMENTS. The financial statements and the
related schedules and notes included in the Registration Statement and in the
Prospectus present fairly the financial position, results of operations and
changes in financial position of the Company and its subsidiaries, at the dates
and for the periods specified therein. The accountants who have audited the
financial statements filed with the Commission as a part of the Registration
Statement and the Prospectus are independent accountants with respect to the
Company as required by the Securities Act. The pro forma financial statements
included in the Registration Statement and the Prospectus present fairly the
financial position and results of operation of the Company at the dates and for
the periods specified therein.
13
(c) NO ADVERSE CHANGE. Except as reflected in the Registration
Statement and in the Prospectus or any amendment or supplement thereto, since
the respective dates as of which information is given in the Registration
Statement and in the Prospectus or any amendment or supplement thereto and prior
to the Closing Date, or Option Closing Date, as the case may be, the Company has
conducted its business in substantially the same manner as of November 8, 1996,
and neither the Company nor any of its subsidiaries have incurred, or will have
incurred, any liabilities or obligations, direct or contingent (other than in
the normal course of business except as disclosed in the Registration
Statement), and there has not been any change in the capital stock, short-term
debt (other than in the normal course of business) or long-term debt of the
Company or its subsidiaries or any adverse change, or any development involving
a change in the condition (financial or otherwise), net worth, results of
operations, the affairs or business prospects of the Company or its
subsidiaries, which might be adverse to the Company or its subsidiaries and no
event has occurred concerning the Company or its subsidiaries and which might
result in an adverse change or effect in or on the general affairs, management,
financial position, stockholders' equity or results of operations of the Company
or its subsidiaries except as disclosed in the Registration Statement.
(d) AUTHORITY. This Agreement and the Underwriter's Warrant
Agreement have been duly authorized and validly executed and delivered by the
Company, and are legal, valid and binding agreements of the Company enforceable
against the Company, in accordance with their respective terms.
(e) INCORPORATION AND STANDING. Each of the Company and its
subsidiaries, is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation and is duly
registered or qualified to do business and is in good standing as a foreign
corporation in each jurisdiction that requires such qualification and in which
the failure to qualify could have a material adverse effect on the Company and
its subsidiaries, taken as a whole. Each of the Company and its subsidiaries has
full power and authority (corporate, governmental, regulatory and other) to own
and lease its properties and to conduct its business as described in the
Registration Statement and in the Prospectus and has corporate power and
authority (corporate, governmental, regulatory and other) to enter into this
Agreement and to issue the Underwriter's Warrants. The Company has no
subsidiaries other than its subsidiaries disclosed in the Registration Statement
and in the Prospectus. A complete and correct copy of the Articles of
Incorporation of the Company and the Articles of Incorporation or Memorandum of
Association of each subsidiary, as the case may be, each as certified by the
Secretary of the State of Florida or such other jurisdiction of incorporation,
and the bylaws of the Company, and the bylaws, of each subsidiary, as currently
in effect, and as certified by the Secretary of the Company and each subsidiary,
respectively, has been delivered to you, and no changes therein will be made
subsequent to the date hereof and prior to the Closing Date or the Optional
Closing Date.
(f) NO DEFAULTS. Neither the Company nor any of its
subsidiaries is in material violation of its corporate charter or bylaws,
respectively, and, except as disclosed in the Registration Statement and the
Prospectus, in material default in any respect in the
14
performance of any material obligation, agreement, covenant or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any indenture, mortgage, deed of trust or other agreement or instrument of
any of them or by which any of their respective property is bound, and there
exists, and through the Closing Date and the Optional Closing Date, if any,
there shall exist no condition which, with the passage of time or otherwise,
would constitute a default under any such agreement or instrument or result in
the imposition of any penalty or acceleration of any indebtedness. No other
party under any agreement or instrument referred to in the immediately preceding
sentence to which the Company or its subsidiaries is a party or by which their
respective property is bound is in default in any material respect thereunder.
The execution and delivery of this Agreement and the Underwriter's Warrant
Agreement, the issue and sale of the Shares, the Underwriter's Warrants and the
Warrant Securities and the compliance by the Company with all of the provisions
of this Agreement and the Underwriter's Warrant Agreement, will not conflict
with or result in a material breach or violation of any of the terms and
provisions of, or constitute a material default (or an event which with notice
or lapse of time, or both, would constitute a default) under, or result in the
creation or imposition of any material lien, charge or encumbrance upon any of
the property or assets of the Company or any of its subsidiaries pursuant to the
terms of, any material indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries
are subject (and no consent under any thereof which has not been obtained is
required for any such action), nor will such action result in a material
violation of the provisions of the certificate of incorporation or bylaws of the
Company or any of its subsidiaries, or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective property; and
no consent, approval, authorization, order, registration or qualification of or
with any court or any regulatory authority or other governmental body is
required for the issue and sale of the Shares, the Underwriter's Warrants or the
Warrant Securities or in connection with the consummation of the other
transactions contemplated by this Agreement and the Underwriter's Warrant
Agreement, except such consents, approvals, authorizations, registrations or
qualifications as may be required under applicable Federal and state securities
or Blue Sky laws in connection with the purchase and distribution of the Shares
by you and the purchase of the Underwriter's Warrants and the Warrant
Securities.
(g) CAPITAL STOCK. The authorized, issued and outstanding
capital stock of the Company and its subsidiaries conforms to the descriptions
thereof in the Registration Statement and in the Prospectus. The issued and
outstanding capital stock has been duly and validly authorized and issued, is
fully paid and nonassessable and is free of preemptive or redemption rights.
There are no outstanding options, warrants, or other rights calling for the
issuance of, and no commitment, plan or arrangement to issue or to register, any
share of capital stock of the Company or any security convertible into or
exchangeable for capital stock of the Company other than as disclosed in the
Registration Statement and the Prospectus. No holder of any securities of the
Company has the right to require registration of shares of the Common Stock or
other securities of the Company by reason of the filing of the Registration
Statement or
15
otherwise, except as set forth in the Registration Statement. The Company
covenants and agrees that it will not amend any of its stock option plans to
increase the number of shares of Common Stock granted under any of such option
plans for a period two (2) years from the effective date of the Registration
Statement without the prior written consent of the Underwriters.
(h) LEGALITY OF SHARES. The Shares have been duly authorized
by the Company and conform to the descriptions thereof in the Registration
Statement and in the Prospectus. The Shares when sold and paid for in accordance
with the terms of this Agreement, will be duly and validly issued, fully paid
and nonassessable and free of preemptive and redemption rights.
(i) UNDERWRITER'S WARRANT AGREEMENT. The Underwriter's Warrant
Agreement conforms to the description thereof in the Registration Statement and
in the Prospectus and, when sold to and paid for by you, will be duly
authorized, will be validly issued and will be the valid and binding obligation
of the Company. The Warrant Securities have been duly and validly authorized and
reserved for issuance upon exercise of the Underwriter's Warrants and, when
issued upon such exercise in accordance with the terms of the Underwriter's
Warrant Agreement at the price therein provided, will be validly issued, fully
paid and nonassessable and free of preemptive and redemption rights.
(j) PROPERTY. The Company and each of its subsidiaries has
good and marketable title to all properties and assets described in the Final
Prospectus as being owned by it (including securities) that are material to
their respective businesses free and clear of all material liens, charges,
encumbrances or restrictions of every kind and nature, except such as are
disclosed in the Registration Statement and in the Prospectus and except for
taxes not yet due, materialmen's, workmen's and other similar liens incurred in
the ordinary course of business which, individually or in the aggregate, do not
have a materially adverse effect on the value or use of such properties or
assets in the hands of the Company or any of its subsidiaries taken as a whole
and any other liens which, individually or in the aggregate, are not material to
the Company and its subsidiaries taken as a whole. The Company and each of its
subsidiaries owns or leases all such properties, real, personal and mixed,
tangible and intangible, as are necessary to carry on its operations as
heretofore conducted and, except as otherwise stated in the Registration
Statement and in the Prospectus, as proposed to be conducted, as set forth in
the Registration Statement and in the Prospectus.
(k) LITIGATION. Except as set forth in the Registration
Statement and in the Prospectus, there is not now pending or, to the knowledge
of the Company, threatened (i) any action, suit or proceeding to which the
Company or any of its subsidiaries or any of their respective officers or
directors is or will be a party or of which the business or property of the
Company or any of its subsidiaries is or will be the subject before or by any
court or governmental agency or body which might adversely affect the condition
(financial or other), business or prospects of the Company or any of its
subsidiaries, or might materially adversely affect the properties or assets of
the Company or any of its subsidiaries taken as a whole, (ii) any actions, suits
or proceedings related to environmental matters or related to discrimination on
the basis of age, sex, religion, race or national origin except as disclosed in
the Registration
16
Statement and the Prospectus, (iii) any existing or threatened labor disturbance
by the employees of the Company or any of its subsidiaries which might be
expected to materially adversely affect the conduct of the business, property,
operations, financial condition or earnings of the Company or any of its
subsidiaries, or (iv) any material contingent liability.
(l) TAX RETURN. Except as set forth in the Registration
Statement and in the Prospectus, the Company and each of its subsidiaries, has
filed, or has obtained currently effective extensions for, all necessary
federal, state, municipal and foreign income and franchise tax returns and has
paid all taxes shown as due thereon; and, except as set forth in the
Registration Statement and in the Prospectus, neither the Company nor any of its
subsidiaries has knowledge of any tax deficiency which has been or might be
asserted against the Company or any of its subsidiaries which would materially
adversely affect the business or operations of the Company and any of its
subsidiaries taken as a whole.
(m) PRIOR SALES. No securities of the Company have been sold
by the Company or by, or on behalf of, or for the benefit of the Company within
three years prior to the date hereof, except as set forth in the Registration
Statement or Prospectus.
(n) AUTHORIZATIONS. Except as disclosed in the Registration
Statement and the Prospectus, the Company and each of its subsidiaries have such
franchises, licenses, permits, approvals and other governmental authorizations
required for the present conduct of its business, such franchises, licenses,
permits, approvals and other governmental authorizations are in full force and
effect and the Company and its subsidiaries are in material compliance therewith
and the Company and its subsidiaries have not received notice of conflict with
the asserted rights of others in respect thereof. Except as set forth in the
Registration Statement and in the Prospectus, (i) the expiration of any material
contract, agreement, franchise, license, permit, approval or other governmental
authorization would not materially adversely affect the operation of the Company
or its subsidiaries, and (ii) none of the activities, businesses or properties
of the Company or its subsidiaries is in material violation of, or could cause
the Company or its subsidiaries to violate, any law, rule, regulation, or order
of the United States, any state, county or other jurisdiction, or of any agency
thereof.
(o) EXHIBITS. There are no material contracts, agreements or
other documents required to be described in the Registration Statement or in the
Prospectus or to be filed as exhibits to the Registration Statement by the
Securities Act which have not been described or filed as required, and neither
the Company nor its subsidiaries is in material violation of, and no material
default exists in the performance, observance or fulfillment of, any material
obligation, agreement, covenant or condition contained in any of such contracts,
agreements or documents except as disclosed in the Registration Statement and
the Prospectus.
(p) FINDER OR BROKER. The Company has not retained o dealt
with any broker or finder with respect to the transactions contemplated hereby,
and the Company knows of no outstanding claims for services in the nature of a
finder's fee or origination fee with respect to the sale of the Shares. The
Company will indemnify and hold harmless the Underwriters with
17
respect to any claim for a finder's fee by any party claiming to be owed such
fee based on contacts, conversations or arrangements with the Company.
Furthermore, as set forth in the Registration Statement and in the Prospectus,
the Company has no management or financial consulting agreement with anyone.
Except as set forth in the Registration Statement and in the Prospectus or
otherwise disclosed to you in writing prior to the date hereof, no promoter,
officer, director or five percent or greater stockholder of the Company is,
directly or indirectly, associated with an NASD member broker/dealer.
(q) INTERNAL ACCOUNTING CONTROLS. The books, records and
accounts of the Company and its subsidiaries, if any, accurately and fairly
reflect, in reasonable detail, the transactions and dispositions of the assets
of the Company and its subsidiaries, as the case may be. The system of internal
accounting controls maintained by the Company and its subsidiaries is sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary (a) to permit preparation of financial
statements in conformity with generally accepted accounting principles and (b)
to maintain accountability for assets, (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
difference.
(r) PATENTS. The Company and each of its subsidiaries have
such proprietary know-how, and such patents and governmental or other
authorizations as currently are required for their respective businesses and the
Company and each of its subsidiaries are, except as set forth in the
Registration Statement, in all respects in compliance with such patents and
governmental or other authorizations. Except as set forth in the Prospectus, the
services performed or products sold by the Company or its subsidiaries do not
violate or infringe any patent or governmental or other authorizations held or
owned by any third party. Neither the Company nor its subsidiaries has received
from or on behalf of any third party, any notice of violation or infringement of
or conflict with the rights of such third party with respect to any such patents
or governmental or other authorizations owned or used by the Company or its
subsidiaries.
(s) 1940 ACT MATTERS. Neither the Company nor any of its
subsidiaries will be operated so as to become an "investment company" or a
person "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(t) STABILIZATION. Neither the Company, its subsidiaries, nor
any of their respective officers, directors or affiliates (as defined under the
Securities Act) have taken, directly or indirectly, any action to cause or
result in, or which has constituted, or might reasonably be expected to
constitute, the stabilization or manipulation of the price of the Common Stock
to facilitate the sale or the resale thereof, within the meaning of the
Securities Act or the Exchange Act.
18
(u) REASON FOR SALE. The sale of the Shares by the Company
pursuant to this Agreement is not prompted by any information concerning the
Company which is not set forth in the Registration Statement.
(v) EMPLOYMENT AGREEMENTS. The employment agreements between
the Company and its officers described in the Registration Statement are binding
and enforceable obligations upon the respective parties thereto in accordance
with their respective terms.
(w) LIQUIDATION. The Company's articles of incorporation
provide that (A) any liquidation of the Company, or (B) any business combination
in which the Company is not the surviving corporation or any sale of all or
substantially all of its assets (which combination or sale occurs during the
five-year period immediately following the Closing Date), must be approved by a
vote of the holders of a majority of the outstanding shares of the capital stock
entitled to vote; and (ii) all "affiliates," as such term is defined in Rule 144
promulgated under the Securities Act, of the Company on the Closing Date shall
agree to vote, during the two-year period immediately following the closing date
of the Public Offering, all shares of voting capital stock of the Company owned
by them (or over which they have the power to direct the vote) in the same
proportion as the votes cast by non-affiliates voting shares of the same class
or series, with respect to the above-referenced matters on which a vote of
stockholders is taken.
(x) ADDITIONAL REPRESENTATIONS. (i) no director, officer, or
key employee of the Company has been convicted of any felony, experienced a
personal bankruptcy, or been an officer, director, or key employee of any
company that during their tenure with such company experienced any bankruptcy
other than as disclosed to the Managing Underwriters in writing and disclosed in
the Registration Statement as required, or had any trustee, receiver, or
conservator appointed with respect to its business or assets; (ii) prior to the
Closing Date, the Company has not repay (or agree to repay), other than in the
ordinary course of business, any indebtedness to any of its shareholders (or
incur any indebtedness with any other lender, any part of the proceeds of which
is to be used to repay indebtedness to any of its shareholders) unless the terms
thereof have been approved in advance by the Underwriters, nor has the Company
make any other extraordinary distributions or payments to its shareholders
(other than distributions to Messrs. Xxxxx and Xxxxxxx in the amount of the
income tax withholding payments for the Company's income payable by them due to
the Company's status as an S corporation as set forth in the Registration
Statement); and (iii) no more than an aggregate of $200,000 may be paid from the
proceeds of the offering to Messrs. Xxxxx and Xxxxxxx in satisfaction of the
Principal Stockholder's Notes described in the Registration Statement, provided,
however, that if the Underwriters exercise, in full, the over-allotment option,
the Company may prepay an additional $100,000 in the aggregate, toward such
notes.
7. INDEMNIFICATION.
(a) BY COMPANY. The Company agrees to indemnify and hold
harmless you and each person, if any, who controls you within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from and
against any and all losses, liabilities, claims,
19
damages and expenses (including but not limited to reasonable attorneys' fees
and any and all reasonable expenses incurred in investigating, preparing or
defending against any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which you or they
or any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or in any blue sky application or other document executed by
the Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application") or arise out of or are based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in any material respect.
Notwithstanding the preceding sentence, the Company will not be liable in any
such case to the extent, but only to the extent that, any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of you expressly for use therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have, including under this Agreement. The Company agrees to pay any reasonable
legal or other expenses for which it is liable under this subsection from time
to time (but not more frequently than monthly) within 30 days after its receipt
of a xxxx therefor; and further provided, however, that the foregoing provisions
are subject to the condition that, insofar as they relate to any untrue
statement, alleged untrue statement, omission or alleged omission made in any
Preliminary Prospectus but eliminated or remedied in the Prospectus, such
indemnity provision shall not inure to you or any person who controls you within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act if a copy of the Prospectus was not sent or given to such person with or
prior to the written confirmation of sale of such Shares to such person. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) BY UNDERWRITERS. You agree to indemnify and hold harmless
the Company, each of the officers of the Company who shall have signed the
Registration Statement and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, from and against any and all losses, liabilities, claims, damages
and reasonable expenses whatsoever (including but not limited to attorneys' fees
and any and all reasonable expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, as originally filed or
any
20
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or in any Blue Sky Application,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by you expressly for use therein; PROVIDED,
HOWEVER, that in no case shall you be liable or responsible for any amount in
excess of the underwriting discounts and commissions received by you, as set
forth on the cover page of the Prospectus. You agree to pay any legal or other
expenses for which you are liable under this subsection (b) from time to time
(but not more frequently than monthly) within 30 days after receipt of a xxxx
therefor. This indemnity agreement will be in addition to any liability which
you may otherwise have.
(c) PROCEDURES IN CASE OF INDEMNIFICATION. Promptly after
receipt by an indemnified party under subsection (a) or (b) above of notice of
the commencement of any action or proceeding (including any governmental
investigation), such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 7 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may have otherwise). In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the indemnified party and the payment of all expenses. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by one of the
indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
the indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
(d) CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7(a) and (b)
hereof is for any reason held to be unavailable from the Company, or you, or is
insufficient to hold harmless a party indemnified
21
thereunder, in lieu of indemnifying such indemnified party, the Company, and you
shall contribute to the aggregate losses, claims, damages, liabilities and
reasonable expenses of the nature contemplated by such indemnification
provisions (including any investigation, legal and other reasonable expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and reasonable expenses suffered by the
Company or you any contribution received by the Company or you from persons who
may also be liable for contribution, including persons who control the Company
or you within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, officers of the Company who signed the Registration
Statement and directors of the Company) to which the Company or you may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company and by you from the offering of the Shares or, if such
allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7(d) hereof in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and you in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and by you shall be deemed to be in the same proportion as (a) the
total proceeds from the offering (before deducting expenses) received by the
Company bear to (b) the total underwriting discounts and commissions received by
you in each case as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company and of you shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by you or any agent expressly
authorized by you to supply such information and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and you agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7(d), (i) in no case shall you be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased hereunder and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7(e), each person, if
any, who controls an underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as you, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 7(e). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 7(e), notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom
22
contribution may be sought from any obligation it or they may have under Section
7(e) or otherwise. No party shall be liable for contribution with respect to any
action or claim settled without its consent; PROVIDED, HOWEVER, that such
consent was not unreasonably withheld. The indemnity and contribution agreements
contained in this Agreement shall remain operative and in full force and effect
regardless of (A) any investigation made by or on behalf of you or any person
controlling you or by or on behalf of the Company, (B) acceptance of any of the
Shares and payment therefore or (C) any termination of this Agreement. A
successor to the Company, its directors or officers or any person controlling
the Company or to the Underwriter, shall be entitled to the benefits of the
indemnity, contribution, and reimbursement agreements contained in this Section
7.
8. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. Your obligation to
purchase and pay for the Firm Shares on the Closing Date shall be subject to the
accuracy of and compliance with the representations and the warranties of the
Company herein contained and in each certificate and document contemplated to be
delivered to you hereunder as of the date hereof and the Closing Date, to the
performance by the Company of its obligations herein contained and to the
following additional terms and conditions:
(a) EFFECTIVE REGISTRATION STATEMENT. The Registration
Statement shall have become effective not later than 5:00 P.M., Miami time, on
the date of this Agreement, or at such later time or on such later date as you
may agree to in writing and any and all filings required by Rule 424 and Rule
430A of the Rules and Regulations shall have been made. At or prior to the
Closing, no stop order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the Blue Sky
laws of any jurisdiction (whether or not a jurisdiction which you shall have
specified) shall have been issued and no proceeding for that purpose shall have
been initiated or shall be threatened by the Commission or the authorities of
any such jurisdiction. Any request for additional information on the part of the
Commission or any such authorities shall have been complied with to the
satisfaction of the Commission or such authorities and counsel for you. The
NASD, upon review of the terms of the public offering of the Shares, shall not
have objected to such offering, such terms, or your participation in the same.
After the date hereof no amendment or supplement shall have been filed to the
Registration Statement or the Prospectus without your prior written consent.
(b) ACCURACY OF REGISTRATION STATEMENT. No person shall have
discovered and advised the Company prior to the Closing Date that the
Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of material fact which, in your opinion, is
material, or that the Registration Statement or any amendment or supplement
thereto omits to state a fact which, in your opinion after consultation with
legal counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
23
(c) LITIGATION. Between the time of the execution and delivery
of this Agreement and the Closing, there shall be no material litigation
instituted against the Company, any of its subsidiaries or any of their
respective officers or directors, and between such dates there shall be no
proceeding instituted or threatened against the Company, any of its subsidiaries
or any of their respective officers or directors before or by any Federal,
state, county or local commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding could materially adversely affect the
Company, any of its subsidiaries or their respective businesses, business
prospects, properties, financial conditions or results of operations.
(d) REVIEW BY UNDERWRITER'S COUNSEL. The authorization and
issuance of the Shares, the sale and delivery thereof, the Registration
Statement, the Prospectus and all other documents and corporate proceedings
incident thereto shall be satisfactory in all respects to you and your counsel,
and your counsel shall be furnished on the Closing Date with such documents and
opinions as they may reasonably require for the purpose of enabling them to pass
upon the matters referred to in this Section 8(d).
(e) OPINION OF LEGAL COUNSEL. You shall have received an
opinion dated the effective date of the Registration Statement, and an updated
version of such opinion dated the Closing Date, satisfactory in form and
substance to you and your counsel, Xxxxx, Mandler, Croland, Xxxxxxxxx & Xxxxxxx,
P.A., from Akerman, Senterfitt & Xxxxxx, P.A., counsel for the Company, to the
effect that:
(i) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing, in good standing under
the laws of the jurisdiction of its respective incorporation and is
registered or qualified in good standing to do business as a foreign
corporation in each jurisdiction wherein the Company and its
subsidiaries own or lease any properties or conduct any business and in
which the failure to so qualify, could, in the aggregate, have a
material adverse effect on the business, properties or results of
operations of the Company and its subsidiaries taken as a whole. To
such counsel's knowledge after having conducted a due diligence
investigation, each of the Company and its subsidiaries has corporate
power and authority (corporate, governmental and regulatory to own and
lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus and the Company has corporate
power and authority (corporate, governmental and regulatory) to enter
into this Agreement. The Company has no subsidiaries to the knowledge
of such counsel after having conducted a due diligence investigation
other than those disclosed in the Registration Statement and the
Prospectus.
(ii) The Registration Statement has become effective
under the Securities Act, and, (a) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are, to the
knowledge of counsel after reasonable inquiry, threatened, pending or
contemplated under the Securities Act, except as may be disclosed in
the Prospectus; the
24
Registration Statement and the Prospectus and each amendment or
supplement thereto (except for the financial statements, schedules and
other financial and statistical data included therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Securities Act; and (b) such
counsel has participated in the preparation of the Registration
Statement and the Prospectus and such counsel has no reason to believe
that either the Registration Statement, or any such amendment thereto,
at the time such Registration Statement or amendment became effective,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus, as of
its date, or any supplement thereto as of its date, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) The Company has all requisite corporate power and
authority to enter into this Agreement and this Agreement has been
authorized, executed, and delivered by the Company and is a legal,
valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except (a) that this Agreement
may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights, (b) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor
may be brought, and (c) as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or the
public policy underlying such laws.
(iv) The authorized, issued and outstanding capital
stock of the Company and all other outstanding securities of the
Company and its subsidiaries (collectively, the "Securities") conform
to the descriptions thereof in the Registration Statement and in the
Prospectus under the section entitled "Description of Securities." The
issued and outstanding capital stock, prior to the issuance of the
Shares sold by the Company hereunder, has been authorized and validly
issued, is fully paid and nonassessable and is free of preemptive
rights except as described in the Prospectus. To the best knowledge of
such counsel after having conducted a due diligence investigation,
there are no outstanding options, warrants, or other rights calling for
the issuance of, and no commitment, plan or arrangement to issue or
register, any share of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company other
than as disclosed in the Registration Statement and the Prospectus.
(v) The Shares to be issued and sold to the Underwriter
by the Company have been authorized by the Company and will conform to
the description thereof in the Registration Statement and in the
Prospectus. The Firm Shares, when sold and fully paid for in accordance
with the terms of this Agreement, will be validly issued, fully paid
and nonassessable and free of preemptive rights. Such opinion delivered
at the
25
Closing Date shall state that each of the Firm Shares is validly
issued, fully paid and non-assessable and not subject to preemptive
rights.
(vi) The Underwriter's Warrant Agreement will conform
to the description thereof in the Registration Statement and in the
Prospectus and has been authorized, and when issued will be validly
issued and will be a valid and binding obligation of the Company. The
Warrant Securities have been validly authorized and reserved for
issuance upon exercise of the Underwriter's Warrant Agreement and, when
issued upon such exercise in accordance with the terms of the
Underwriter's Warrant Agreement at the price therein provided, will be
validly issued, fully paid and non-assessable and not subject to
preemptive rights.
(vii) The certificates used to evidence the Shares and
the Warrant Shares are each in due and proper form as required by the
laws of the State of Florida.
(viii) Neither the Company nor any of its subsidiaries
is in material violation of its corporate charter or bylaws,
respectively, or, to the knowledge of counsel after having conducted a
due diligence investigation, any franchise, license, permit, judgment,
decree, order, statute, regulation, rule or ordinance of any court or
administrative agency, arbitration panel or authority applicable to the
Company or any of its subsidiaries except as described in the
Prospectus, where the consequences of any such violation would be
material to the Company or any of its subsidiaries. To the knowledge of
such counsel after due diligence investigation, except as described in
the Prospectus neither the Company nor any of its subsidiaries is in
default in any material respect in the performance of any material
obligation, agreement, lease, covenant or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
indenture, mortgage, deed of trust or other material agreement or
instrument (collectively, the "Material Agreements") of which counsel
after having conducted a due diligence investigation, is aware to which
the Company or any of its subsidiaries, or by which the Company's or
any of its subsidiaries' properties are bound where the consequences of
any such default would be material to the Company or any of its
subsidiaries. To the best of such counsel's knowledge after having
conducted a due diligence investigation, there exists no condition
which, with the passage of time or otherwise, would constitute a
material default under any Material Agreement or instrument or result
in the imposition of any material penalty or acceleration of any
material indebtedness.
(ix) The execution and delivery of this Agreement and
the Underwriter's Warrant Agreement, the Financial Advisory Agreement,
the issuance and sale of the Shares, the Underwriter's Warrants, and
the Warrant Securities and the compliance by the Company with all of
the provisions of this Agreement and the Underwriter's Warrants will
not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default (or an event which
with notice or lapse of time, or both, would constitute a default)
under, or result in the creation or
26
imposition of any lien, charge or encumbrance upon any of the property
or assets of the Company or its subsidiaries pursuant to the terms of
any Material Agreement of the Company or any of its subsidiaries or by
which any of the Company's or its subsidiaries' properties is bound,
known to such counsel after having conducted a due diligence
investigation. To the best of such counsel's knowledge after having
conducted a due diligence investigation, there exists no condition
which, with the passage of time or otherwise, would constitute a
default under any such agreement or instrument or result in the
imposition of any penalty or acceleration of any such indebtedness,
where the consequences of any such default would be material to the
Company or any of its subsidiaries, nor will such action result in a
violation of the provisions of the corporate charter or bylaws of the
Company or any of its subsidiaries, or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties, where the consequences of any such violation would
be material to the Company and its subsidiaries. No consent, approval,
authorization, order, registration or qualification of or with any
court or any regulatory authority or other governmental body is
required for the issue and sale of the Shares, the Underwriter's
Warrant Agreement or the Warrant Securities or the consummation of the
other transactions contemplated by this Agreement and the Underwriter's
Warrant Agreement, except the registration of the Shares, the
Underwriter's Warrant Agreement and the Warrant Securities under the
Securities Act, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by you and the purchase of the Underwriter's
Warrant Agreement by you.
(x) To the best knowledge of such counsel after having
conducted a due diligence investigation, the Company and each of its
subsidiaries has such licenses, registrations, permits, approvals,
qualifications and certificates of authority from the appropriate
regulatory authorities as are necessary to transact its business as
described in the Registration Statement and in the Prospectus in the
jurisdictions in which the Company and each of its subsidiaries
transacts its business or owns or leases property, and in which the
failure to have such licenses, registrations, permits, approvals,
qualifications and certificates could have a material adverse effect on
the business, properties or results of operation of the Company and its
subsidiaries taken as a whole.
(xi) To the best knowledge of such counsel after having
conducted a due diligence investigation, except as disclosed in the
Registration Statement and in the Prospectus, there is no pending or
threatened material action, suit or proceeding before or by any court
or governmental agency or body or arbitration panel, to which the
Company or any of its subsidiaries or any of their respective officers
or directors is a party, or which any property of the Company or any of
its subsidiaries is subject, which might result in a material adverse
change in the business, financial condition or results of operations or
materially affect the properties or assets of the Company or any of its
subsidiaries taken as a whole.
27
(xii) Such counsel has reviewed all contracts referred
to in the Registration Statement and the Prospectus and such contracts
conform in all material respects to their descriptions therein. To the
best knowledge of such counsel after having conducted a due diligence
investigation, no contracts or documents of a character required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement have not been so
described or filed. Such counsel does not know of any statutes or
regulations or pending or threatened legal or governmental proceedings
required to be described in the Prospectus which are not described as
required.
(xiii) To the best knowledge of such counsel after
having conducted a due diligence investigation, there are no holders of
securities of the Company having rights to the registration of shares
of Common Stock or other securities because of the filing of the
Registration Statement by the Company, except as disclosed in the
Registration Statement and the Prospectus.
(xiv) The sale of securities by the Company and/or its
subsidiaries described in Item 26, Part II of the Registration
Statement did not require registration under the Securities Act or any
state securities laws.
In giving such opinion, such counsel may rely as to
matters of fact upon statements and certifications of officers of the Company or
public officials as to matters of fact of which the maker of such certificate
has knowledge, and as to matters of law of jurisdictions other than Delaware and
Florida, such counsel may rely on opinions of local counsel acceptable to you,
copies of which opinions shall be attached to the said opinion, provided that
such counsel state in their opinion that they believe that they and you are
justified in relying upon such opinions of local counsel.
(f) PRESIDENT'S CERTIFICATE. The Company shall have furnished
to you on the Closing Date a certificate of its President, or other principal
executive officer of the Company dated as of the Closing Date, to the effect
that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been commenced or are, to the knowledge of each signer of
such certificate, threatened or contemplated by the Commission; no stop
order suspending the qualification or registration of any of the Shares
under the Blue Sky laws of any jurisdiction (whether or not a
jurisdiction you shall have specified) has been issued, and no material
proceedings for such purpose have been commenced or are, to the
knowledge of each signer of such certificate after reasonable inquiry,
threatened or contemplated by any jurisdiction; and the conditions,
separately set forth in such certificate, contained in Section 8 hereof
have been complied with in all material respects.
28
(ii) The respective signers and each other member of
the Company's Board of Directors have each read the Registration
Statement and Prospectus and any amendments and supplements thereto,
and the Registration Statement and the Prospectus and any amendments
and supplements thereto and all statements contained therein are true
and correct in all material respects, and neither the Registration
Statement nor Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and, since the effective date of the
Registration Statement, they are not aware of any event required to be
set forth in an amendment to the Registration Statement or a supplement
to the Prospectus which has not been so set forth.
(iii) Except as reflected in the Registration Statement
and Prospectus or any amendment or supplement thereto, since the
respective dates as of which information is given in the Registration
Statement and Prospectus or any amendment or supplement thereto and
prior to the date of such certificate, (a) there has not been any
material adverse change, financial or otherwise, in the affairs or
condition of the Company and of its subsidiaries taken as a whole, and
(b) the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, otherwise than in the ordinary course of business.
(iv) There are no legal proceedings pending or, to the
knowledge of the Company after reasonable inquiry, threatened against
the Company or any of its subsidiaries, of a character affecting the
validity of this Agreement or required to be disclosed in the
Prospectus which are not disclosed therein; there are no material
transactions or contracts which are required to be summarized therein
which are not so summarized; and there are no material contracts or
documents required to be filed as exhibits to the Registration
Statement which are not so filed.
(v) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
no dividends or distribution whatever have been declared and/or paid on
or with respect to any securities of the Company.
(vi) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
the Company has not sustained any material loss or damage to its
property, whether or not insured.
(vii) At and as of the Closing Date, the
representations and warranties contained in Section 6 of this Agreement
are true and correct in all material respects; the Company has complied
with all the agreements and has satisfied all the conditions on its
29
part to be performed or satisfied at or prior to the Closing Date, and
the matters set forth in Section 8 of this Agreement are true and
correct as therein set forth.
(g) CHIEF FINANCIAL OFFICER'S CERTIFICATE. The Company shall
have furnished to you on the Closing Date a certificate of its Chief
Financial Officer, or other principal executive financial officer or
accounting officer of the Company, dated as of the Closing Date, to the
effect that:
(i) To the knowledge of such officer after reasonable
inquiry no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have
been commenced or are, to the knowledge of each signer of such
certificate, threatened or contemplated by the Commission; no stop
order suspending the qualification or registration of any of the Shares
under the Blue Sky laws of any jurisdiction (whether or not a
jurisdiction you shall have specified) has been issued, and no
proceedings for such purpose have been commenced or are, to the
knowledge of each signer of such certificate, threatened or
contemplated by any jurisdiction; and the conditions, separately set
forth in such certificate, contained in subsection 8 hereof have been
complied with.
(ii) The Prospectus and any amendments and supplements
thereto and all statements contained therein are true and correct, and
to his knowledge, after reasonable inquiry, neither the Registration
Statement nor Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and, since the effective date of the
Registration Statement, he is not aware of any event required to be set
forth in an amendment to the Registration Statement or a supplement to
the Prospectus which has not been so set forth.
(iii) Except as reflected in the Registration Statement
and Prospectus or any amendment or supplement thereto, since the
respective dates as of which information is given in the Registration
Statement and Prospectus or any amendment or supplement thereto and
prior to the date of such certificate, (a) there has not been any
material adverse change, financial or otherwise, in the affairs or
condition of the Company or any of its subsidiaries taken as a whole,
and (b) the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, otherwise than in the ordinary course of business.
(iv) There are no material legal proceedings pending or
to his knowledge after reasonable inquiry, threatened against the
Company or any of its subsidiaries, of a character affecting the
validity of this Agreement or required to be disclosed in the
Prospectus which are not disclosed therein; there are no transactions
or contracts which are required to be summarized therein which are not
so summarized; and there are no material contracts or documents
required to be filed as exhibits to the Registration Statement which
are not so filed.
30
(v) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
no dividends or distribution whatever have been declared and/or paid on
or with respect to any securities of the Company.
(vi) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
the Company has not sustained any material loss or damage to its
property, whether or not insured.
(vii) At and as of the Closing Date, to his knowledge
after reasonable inquiry, the representations and warranties contained
in Section 6 of this Agreement are true and correct; the Company has
complied with all the agreements and has satisfied all the conditions
on its part to be performed or satisfied at or prior to the Closing
Date, and the matters set forth in Section 8 of this Agreement are true
and correct as therein set forth.
(h) ACCOUNTANT'S LETTER. You shall have received from the
independent certified public accountants that audited the financial statements
of the Company included in the Registration Statement, at least two letters each
addressed to you, substantially in the form heretofore approved by you, one
dated the effective date of the Registration Statement and the second, the
Closing Date.
(i) UNDERWRITER'S WARRANT AGREEMENT. The Company shall have
executed the Underwriter's Warrant Agreement and shall have delivered such
properly executed Warrant Agreement to you simultaneously with the closing of
the sale of the Firm Shares.
(j) LOCK-UP AGREEMENTS. You shall have received the executed
"lock-up" letters described in Section 5(h) of this Agreement.
(k) EMPLOYMENT AGREEMENTS. Prior to the effective date of the
Registration Statement, the Company will enter into and deliver to the
Underwriters employment agreements with President, Vice President and other
significant employees, which employment agreements will be subject to the
Underwriter's approval.
(l) NASDAQ LISTING. The Shares must be qualified for listing
on the Nasdaq SmallCap Market on the effective date of the Registration
Statement.
(m) BLUE SKY QUALIFICATION. The Shares shall be qualified in
such states as determined under Section 5(e) above and each qualification shall
be in effect and not subject to an estop order or other proceeding on the
Closing Date.
All such opinions, certificates, letters and documents delivered
pursuant to this Agreement will be in compliance with the provisions of this
Section 8 only if they are satisfactory to you and your counsel. The Company
shall furnish to you such conformed copies
31
of such opinions, certificates, letters and documents in such quantities as you
shall reasonably request.
If any of the conditions hereunder to be satisfied at or prior to the
Closing Date are not so satisfied, or subsequently waived, you may terminate
this Agreement without liability on your part or on the part of the Company,
except for the expenses to be paid or reimbursed by the Company pursuant to
Section 5(l) of this Agreement and except for any liability under Section 8 of
this Agreement.
Your obligation to purchase and pay for all or any portion of the
Option Shares on the Option Closing Date upon the exercise of the option
contained in Section 3 hereof shall be subject to the accuracy of and compliance
with the representations and the warranties of the Company herein contained as
of the date hereof and the Closing Date and Option Closing Date, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(A) You shall have purchased the Firm Shares from the
Company (which purchase may occur simultaneously with the purchase of the Option
Shares from the Company).
(B) The condition set forth in paragraphs (a), (b)
and (c) of this Section 8 shall be satisfied as of the Option Closing Date.
(C) There shall have been tendered for delivery in
accordance with the terms and provisions of this Agreement the Option Shares
being purchased on the Option Closing Date from the Company.
(D) You shall have received an opinion of counsel for
the Company, dated the Option Closing Date, confirming their opinion delivered
pursuant to Section 8(e) hereof as of the Option Closing Date. In each instance
in which the opinion referred to in Section 8(e) refers to the Firm Shares, the
opinion delivered pursuant hereto shall also refer to the Option Shares.
(E) You shall have received from the independent
certified public accountants that audited the financial statements of the
Company included in the Registration Statement, a letter addressed to you,
substantially in the form heretofore approved by you, dated the Option Closing
Date.
(F) You shall have received a certificate, dated the
Option Closing Date, of the Company, confirming the matters stated in the
certificate delivered pursuant to Section 8(f) hereof as of the Option Closing
Date and stating further that the Company has performed or a waiver has been
given for all or a part of the agreements herein contained to be performed on
its part at or prior to such Option Closing Date.
32
(G) You shall have received a certificate, dated the
Option Closing Date, of the Company, confirming the matters stated in the
certificate delivered pursuant to Section 8(g) hereof as of the Option Closing
Date and stating further that the Company has performed or a waiver has been
given for all or a part of the agreements herein contained to be performed on
its part at or prior to such option Closing Date.
9. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective when you and the
Company shall have received notification of the effectiveness of the
Registration Statement.
(b) This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Company if in your judgment it is
impracticable to offer for sale or to enforce contracts made by you for the
resale of the Shares agreed to be purchased hereunder by reason of (i) the
Company or its subsidiaries having sustained a loss by reason of fire, flood,
accident or other calamity, which, in your opinion, substantially affects the
value of the properties of the Company or its subsidiaries or which materially
interferes with the operation of the business of the Company or any of its
subsidiaries regardless of whether such loss shall have been insured, (ii) the
existing financial, political or economic conditions in the United States or
elsewhere having undergone such material change as in your opinion would make it
inadvisable to proceed with the offering, sale and delivery of the Shares on the
terms contemplated by the Prospectus, (iii) a banking moratorium shall have been
declared by either federal or New York authorities, (iv) a war involving the
United States or other national calamity shall have occurred, (v) any material
adverse change in the condition or obligations of the Company and any of its
subsidiaries taken as a whole or in the earnings, operations, management or
business prospects of the Company and any of its subsidiaries taken as a whole,
(vi) any action, suit or proceeding shall be threatened or pending, at law or in
equity, against the Company and any of its subsidiaries taken as a whole, by any
Federal, state or other commission, board or agency, which is not disclosed in
the Prospectus and in which an unfavorable result or decision could materially
adversely affect the business, prospects, property, financial condition or
income or earnings of the Company and any of its subsidiaries taken as a whole,
(vii) an action, suit or proceeding that is threatened or pending, which has
been previously disclosed in the Prospectus, shall have worsened in any way such
that an unfavorable result or decision could materially adversely affect the
business, prospects, property, financial condition or income or earnings of the
Company and/or any of its subsidiaries, or (viii) during the course of your due
diligence investigation of the Company, facts arise which vary materially in an
adverse manner from representations which have been previously made concerning
the Company's business and financial condition. In addition, this Agreement may
be terminated by you by prompt written notice to the Company (i) at any time
before it becomes effective or (ii) in the event that the Company shall have
failed to comply with any of the provisions of this Agreement to be performed by
it at or prior to any Closing Date which have not been waived by you, or if any
of the representations, warranties, covenants, agreements or conditions of, or
applicable to, the Company herein contained shall not have been complied with or
satisfied within the time specified unless waived by you.
33
(c) At any time after the Closing Date, if you should (i)
cease to be a broker-dealer registered with the Commission, (ii) be suspended
from such registration for any period of time in excess of 30 days, (iii) cease
to be a member of the NASD or other self-regulatory organization or (iv) become
subject to a proceeding, action or notification under Section 6 of the
Securities Investor Protection Act of 1970, the obligations of the Company under
this Agreement shall cease without any liability on the part of the Company.
10. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES AND COVENANTS.
The respective indemnities of the Company and the Underwriter and the respective
representations, warranties and covenants of the Company and the Underwriter set
forth in this Agreement will remain in full force and effect, regardless of any
investigations made by or on behalf of the Company or the Underwriter or any of
their respective officers, directors, partners or any controlling person, and
will survive delivery of and payment for the Shares or termination of this
Agreement pursuant to Section 11 hereof as the case may be.
11. MISCELLANEOUS.
(a) This Agreement shall inure to the benefit of the Company
and the Underwriter, the officers and directors of such parties, each
controlling person referred to in Section 8 hereof and their respective
successors. Nothing in this Agreement is intended or shall be construed to give
to any other person, firm or corporation any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
The term "successor" as used in this Agreement shall not include any purchaser
of any Shares from the Underwriter.
(b) This Agreement constitutes the entire agreement among the
parties concerning the subject matter hereof and supersedes all prior agreements
and understandings.
(c) All notices and other communications hereunder (unless
otherwise expressly provided for herein) shall be in writing and shall be deemed
given when delivered in person on the business (before 5:00 P.M.) sent by
facsimile transmission, or on the date indicated on the return receipt if sent
registered or certified mail return receipt requested) to the party to receive
the same at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to the Company: Advanced Electronic Support Products, Inc.
0000 Xxxxxxxxx 000xx Xxxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attn: Messrs. Xxxx Xxxxx and Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
With a Copy to: Akerman, Senterfit & Xxxxxx, P.A.
SunTrust International Center, 00xx Xxxxx
Xxx Xxxxxxxxx Xxxxx Xxxxxx
00
Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Underwriters: XX Xxxxxxx Securities, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxx
Xxxxx 000-X
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxx, Vice President
Facsimile: (000) 000-0000
Corporate Securities Group, Inc.
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxx, President
Facsimile: (000) 000-0000
With a Copy to: Xxxxx, Mandler, Croland, Xxxxxxxxx &
Xxxxxxx, P.A.
Xxxxxxx Bank Tower
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(d) This Agreement was executed and delivered in, and its
validity, interpretation and construction shall be governed by the internal laws
of, the State of Florida applicable to agreements made and to be performed
wholly within such State. This Agreement may be executed in any number of
counterparts. Each counterpart, when executed and delivered, shall be an
original contract, but all counterparts, when taken together, shall constitute
one and the same Agreement.
(e) The Company hereby acknowledges that the breach of
material terms contained in this Agreement (whether or not specifically
designated as such) would cause irreparable damage and substantial prejudice to
your rights. Accordingly, the Company agrees that in the event of any such
breach or threatened breach, you shall have, in addition to its and your legal
remedies, the right to injunctive or other equitable relief, as permitted by
law, to prevent the Company's violation of their obligations hereunder.
(f) Titles and headings to sections herein are inserted for
the convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
35
(g) Any consent or approval of the Underwriters required
hereunder to any action of the Company shall not be unreasonably withheld, and
notwithstanding any other provisions hereof, such consent or approval shall not
be required if the Company obtains an opinion from counsel acceptable to the
Underwriters that the requirement of such consent or approval constitutes an
abrogation of the Board of Directors' duties under the corporate law of such
jurisdiction.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
Advanced Electronics Support Products, Inc.
By: _______________________________________
___________________________________________
Accepted and agreed to as of
the date first above written:
XX XXXXXXX SECURITIES, INC. CORPORATE SECURITIES GROUP, INC.
By: _________________________ By: _______________________________________
36
