EAST COAST VENTURE CAPITAL, INC.
1,250,000 Units, such Units consisting of
in the aggregate 1,250,000 shares of
Common Stock, $.01 par value, and
1,250,000 Redeemable Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
_________________, 1998
First Liberty Investment Group, Inc.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: XXXXXXX X. XXXXXX
Dear Sirs:
East Coast Venture Capital, Inc., a Delaware corporation (the
"Company"), hereby confirms its agreement with you (the "Representative"), as
follows:
1. DESCRIPTION OF THE SECURITIES.
The Company proposes to issue and sell to the Representative an
aggregate of 1,250,000 Units (the "Units"), each Unit consisting of one share of
common stock, $.001 par value per share (the "Common Stock") and one redeemable
common stock purchase warrant (the "Warrant") with an exercise price of $5.50
per share (the "Exercise Price") (the Common Stock and Warrants are collectively
referred to as the "Securities") at an offering price of $4.10 per Unit. The
Warrants shall be exercisable during the period (the "Warrant Exercise Period")
commencing the earlier of (i) 24 months after the date of the Prospectus, or
(ii) 12 months after the date of the Prospectus with the Representative's prior
written consent, and ending five years after the date of the Prospectus.
The Company proposes to grant to the Representative an option (the
"Representative's Option") to purchase up to 125,000 additional Units, each
exercisable for $6.15 per Unit, or 150% of the initial public offering price per
Unit, including Common Stock and Warrants exercisable for $8.25 per share,
subject to
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adjustment. The Company also proposes to grant to the Representative an option
(the "Overallotment Option"), exercisable during the 30-day period after the
Closing Date hereof, to purchase, at the initial public offering price less
underwriting discounts, up to an additional 187,500 Units (the "Overallotment
Units", and collectively with the Overallotment Option and the Common Stock and
Warrants included in the Overallotment Units, the "Overallotment Securities"),
on the same terms as the Units are offered to the public, solely to cover
overallotments. The Representative's Securities (as defined hereafter) and
Overallotment Securities shall collectively be referred to as the "Additional
Securities". The offering of Securities and Additional Securities contemplated
hereby may sometimes be referred to as the "Offering."
(a) REPRESENTATIVE'S OPTION
The Company will sell to the Representative, the
Representative's Option to purchase, for $.001 per Unit underlying the
Representative's Option, one Unit for each ten Units sold in this Offering (the
"Representative's Units") excluding the Additional Securities (a maximum of
125,000 Units) at an exercise price of $6.15 per Unit (the Representative's
Option, the Representative's Units and the Common Stock (the "Representative's
Shares") and Warrants (the "Representative's Warrants") included therein,
collectively may be referred to as the "Representative's Securities"). The
Representative's Warrants shall be exercisable at $8.25 per share, subject to
adjustment, during the Warrant Exercise Period. The Representative's Option
shall be exercisable for a four-year period commencing one year from the date of
this Offering. The Representative's Securities shall be non-exercisable and
non-transferable (other than to (i) officers of the Representative, and (ii)
members of the selling group and their officers or partners) for a period of 12
months following the Effective Date. The Representative and/or holders of a
majority interest in the Representative's Securities may, upon two occasions,
during the four-year period commencing one year from the date of this Offering,
demand that the Company prepare and file a post-effective amendment to this
registration statement, or a new registration statement, permitting the sale of
the Representative's Securities, and to use its best efforts to keep such
registration statement effective for a nine-month period following its effective
date. The Company shall bear all costs relating or incident to the first such
registration statement, and the holders will bear all costs relating or incident
to the second such registration statement. In addition, the Representative
and/or holders of a majority interest in the Representative's Securities will
have the right, subject to certain conditions, to include all or part of the
Representative's Securities, at the Company's expense, in any
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registration statement relating to an equity offering filed under the Securities
Act of 1933, as amended (the "1933 Act").
(b) THE OVERALLOTMENT OPTION
The Company also proposes to grant to the Representative the
Overallotment Option, exercisable during the 30-day period after the Closing
Date hereof, to purchase, at the initial public offering price less underwriting
discounts, up to an additional 187,500 Units, on the same terms as the Units are
offered to the public, solely to cover overallotments. The Overallotment
Securities shall be registered for sale to the public and included in the
Registration Statement filed in connection with the Offering.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND VERITAS
FINANCIAL CORP.
The Company and Veritas Financial Corp. ("Veritas"), a ___________
corporation and principal shareholder of the Company, make the following
representations and warranties to the Representative, as the case may be, that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission"), a registration statement on Form N-2
(File No. 333-58681), including any related preliminary prospectus ("Preliminary
Prospectus"), for the registration of the Securities under the 1933 Act and
under the Investment Company Act of 1940, as amended (the "1940 Act") (the 1933
Act and 1940 Act, collectively, the "Acts"), which has been prepared in
conformity with the Acts and the Rules and Regulations of the Commission
promulgated thereunder. The Company will file further amendments to said
registration statement in the form to be delivered to you and will not, before
the registration statement becomes effective, file any other amendment thereto
to which you shall have objected in writing after having been furnished with a
copy thereof. Except as the context may otherwise require, such registration
statement, as amended, on file with the Commission at the time the registration
statement becomes effective (including the prospectus, financial statements,
exhibits and all other documents filed as a part thereof or incorporated
therein), is hereinafter called the "Registration Statement," and the
prospectus, in the form filed with the Commission pursuant to Rule 424(b) of the
General Rules and Regulations of the Commission under the Act (the
"Regulations") or, if no such filing is made, the definitive prospectus used in
the Offering, is hereinafter called the "Prospectus." The Company has delivered
to you copies of each Preliminary Prospectus as filed with the Commission and
has consented to the use of such copies for purposes permitted by the Act. For
purposes hereof, "Rules" and "Regulations" mean the
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rules and regulations adopted by the Commission under either the 1933 Act, the
1940 Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or the Investment Advisers Act of 1940, as amended (the "Advisers Act").
(b) Neither the Commission nor any state regulatory authority
have issued any orders preventing or suspending the use of any Preliminary
Prospectus, and each Preliminary Prospectus has conformed in all material
respects with the requirements of the Act and has not included 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,
subject to the provisions set forth below and except as such untrue statement or
omission has been cured in the a subsequent preliminary prospectus or in the
final prospectus.
(c) When the Registration Statement becomes effective under
the Act and at all times subsequent thereto including the Closing Date (as
hereinafter defined) and the Option Closing Date (as hereinafter defined) and
for such longer periods as in the opinion of counsel for the Representative, a
Prospectus is required to be delivered in connection with the sale of the
Securities by the Representative and the several Underwriters ("Underwriters"),
as the case may be, the Registration Statement and Prospectus, and any amendment
thereof or supplement thereto, will contain all material statements which are
required to be stated therein in accordance with the Act and the Regulations,
and will in all material respects conform to the requirements of the Act and the
Regulations, and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, not misleading; provided, however,
that this representation and warranty does not apply to statements or omissions
made in reliance upon and in conformity with express written information
furnished to the Company by you, for use in connection with the preparation of
the Registration Statement or Prospectus, or in any amendment thereof or
supplement thereto. It is understood that the statements set forth under the
heading "Underwriting" in the Prospectus with respect to (i) the amounts of the
selling concession and reallowance; (ii) the identity of counsel to the
Representative under the heading "Legal Matters;" and (iii) the information
concerning the NASD affiliation of the Representative; constitute for purposes
of this Paragraph the only information furnished in writing by or on behalf of
the Representative for inclusion in the Registration Statement and Prospectus,
as the case may be.
(d) Each of the Company and Veritas is, and at each of the
Closing Date and the Option Closing Date will be, a corporation
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duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each of the Company and Veritas is duly
qualified or licensed and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing, except
those jurisdictions in which the failure to so qualify would not have a material
adverse effect. Each of the Company and Veritas has all requisite corporate
powers and authority, and, except as set forth in the Registration Statement,
the Company and Veritas have all material and necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies to own or lease its properties and
conduct its business as described in the Prospectus, including its license from
the federal Small Business Administration ("SBA") to operate as a Specialized
Small Business Investment Company ("SSBIC"), and applicable laws or rules and
regulations promulgated by the SBA and/or the Internal Revenue Service ("IRS")
relating to SSBICs or to which SSBICs are subject, and the Company and Veritas
are doing business and have been doing business during the period described in
the Registration Statement in compliance with all such material authorizations,
approvals, orders, licenses, certificates and permits and all material federal,
state and local laws, rules and regulations concerning the business in which the
Company and Veritas are engaged, including its license from the federal Small
Business Administration ("SBA") to operate as a Specialized Small Business
Investment Company ("SSBIC"), and applicable laws or rules and regulations
promulgated by the SBA and/or the Internal Revenue Service ("IRS") relating to
SSBICs or to which SSBICs are subject. The disclosures in the Registration
Statement concerning the effects of federal, state and local regulation on the
business of the Company, as currently conducted and as contemplated are correct
in all material respects and do not omit to state a material fact. The
authorized, issued and outstanding capital stock of the Company as of April 30,
1998 and as of the date of the Prospectus is as set forth in the Prospectus
under "Capitalization"; the shares of issued and outstanding capital stock of
the Company set forth thereunder have been duly authorized, validly issued and
are fully paid and non-assessable; except as set forth in the Prospectus, no
options, warrants or other rights to purchase, agreements or other obligations
to issue, or agreements or other rights to convert any obligation into, any
shares of capital stock of the Company, have been granted or entered into by the
Company, as the case may be, with respect to any of the Company's securities;
and the Units, the Common Stock and Warrants included in the Units and the
Common Stock underlying such Warrants, the Representative's Securities and the
Overallotment Securities conform, in all material respects, to all statements
relating thereto contained in the Registration Statement and Prospectus.
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(e) The Company and Veritas have all corporate power and
authority to enter into this Agreement and carry out the provisions and
conditions hereof, and all consents, authorizations, approvals and orders
required in connection therewith have been obtained or will have been obtained
prior to the Closing Date. This Agreement has been duly and validly authorized
and executed by the Company and Veritas. The Securities to be issued and sold by
the Company pursuant to this Agreement, the Representative's Shares and
Representative's Warrants issuable upon exercise of the Representative's Option
and payment therefor, the Overallotment Option and the Overallotment Units and
Common Stock and Warrants (including Common Stock issuable upon the exercise
thereof) included in the Overallotment Units issuable upon the exercise thereof,
have all been duly authorized (and, in the case of the Common Stock underlying
the Representative's Warrant and the Common Stock underlying the Warrants
included in the Overallotment Units issuable upon exercise of the Overallotment
Option, have been duly reserved for issuance) and, when issued and paid for in
accordance with this Agreement (and, in the case of the Common Stock underlying
the Representative's Warrants, upon exercise of such Representative's Warrants
and payment to the Company of the exercise price therefor), the Common Stock
included in the Units and Common Stock issuable upon exercise of the Warrants
included in the Units will be validly issued, fully paid and non-assessable;
none of the Units, Common Stock or Warrants included therein or the Common Stock
underlying such Warrants, the Representative's Securities and the Overallotment
Securities are and will be subject to the preemptive rights of any stockholder
of the Company, and none of the capital stock of the Company is and will be
subject to the preemptive rights of any stockholder of the Company, and all of
such securities conform and at all times up to and including their issuance will
conform in all material respects to all statements with regard thereto contained
in the Registration Statement and Prospectus; the holders thereof will not be
subject to any liability under the laws of the State of New York as currently in
effect solely as such holders; and all corporate action required to be taken for
the authorization, issuance and sale of the Units, the Common Stock and Warrants
included therein (including the Common Stock underlying the Warrants),
Representative's Securities and the Overallotment Securities has been taken, and
this Agreement constitutes a valid and binding obligation of the Company or
Veritas, enforceable in accordance with its terms, to issue and sell, upon
exercise in accordance with the terms thereof, the number and kind of securities
called for thereby; and upon the issuance and delivery of the Units sold
hereunder pursuant to the terms hereof, the purchasers of such Units will
acquire good and marketable title to such Units and the underlying securities,
free and clear of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever.
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(f) The Company had all corporate power and authority to enter
into a merger with (the "Merger") East Coast Venture Capital, Inc., a New York
corporation ("East Coast-NY"), to which the Company is the successor, and to
carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith or to
effectuate such Merger under both New York and Delaware law have been obtained
or will have been obtained prior to the Closing Date.
(g) Except as set forth in the Prospectus, the consummation of
the transactions contemplated by this Agreement or the Warrant Agreement or
Consulting Agreement, and the fulfillment of the terms hereof or thereof, will
not result in a breach or violation of any of the terms or provisions of, or
constitute a default under, the Articles of Incorporation, as amended, or Bylaws
of the Company or Veritas or of any evidence of material indebtedness, lease,
contract or other agreement or instrument to which the Company or Veritas is a
party or by which the Company or Veritas or any of their material properties is
bound, or under any applicable law, rule, regulation, judgment, order or decree
of any government, professional advisory body, administrative agency or court,
domestic or foreign, having jurisdiction over the Company or Veritas, including
those of the SBA which relate to SSBICs or to which SSBICs are subject, or their
respective properties which are material to the Company or Veritas or their
businesses, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the properties or assets of the Company or Veritas; and
no consent, approval, authorization or order of any court or governmental or
other regulatory agency or body, including the SBA, is required for the
consummation by the Company or Veritas of the transactions on its part herein
contemplated or the issuance of the Units, the Common Stock or the Warrants
included in the Units, except such as may be required under the Act or under
state securities or blue sky laws, except where a breach, violation or failure
to obtain such consent would not have a material adverse effect upon the
business or operation of the Company or Veritas.
(h) Subsequent to the date hereof, and prior to the Closing
Date and the Option Closing Date, the Company will not issue or acquire any
equity securities or securities or instruments convertible into or exchangeable
for equity securities or other like convertible or exchangeable securities or
instruments, and except as described in the Registration Statement, the Company
does not have, and at the Closing Date will not have, outstanding any options to
purchase or rights or warrants to subscribe for, or any securities or
obligations convertible into or exchangeable for, or any contracts or
commitments to issue or sell shares of its Preferred Stock, Common Stock or any
such options, warrants, convertible securities or instruments, or obligations.
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(i) The financial statements and notes thereto included in the
Registration Statement and the Prospectus fairly present the financial position
and the results of operations of the Company, of which all its capital stock was
at the dates and for the periods to which they apply; and such financial
statements have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved.
(j) Except as set forth in the Registration Statement, neither
the Company nor Veritas is, and at each of the Closing Date and the Option
Closing Date will be, in violation or breach of, or default in, the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, note, loan or credit agreement, or any other agreement
or instrument evidencing an obligation for borrowed money, or any other
agreement or instrument to which the Company or Veritas is a party or by which
the Company or Veritas is or may be bound or to which any of the property or
assets of the Company or any of its subsidiaries are subject, which violations,
breaches, default or defaults, singularly or in the aggregate, would have a
material adverse effect on the Company or Veritas or their subsidiaries. Neither
the Company nor Veritas have or will have taken any action in material violation
of the provisions of the Articles of Incorporation, as amended, or the By-laws
of the Company or Veritas or any statute or any order, rule or regulation of any
court or regulatory authority or governmental body having jurisdiction over or
application to the Company or Veritas or their businesses or properties.
(k) The Company had all corporate power and authority to enter
into all agreements pertaining to, and carry out the provisions and conditions
thereof, the Company's private placement of approximately 301,500 shares of
Common Stock in October 1997 (the "1997 Placement"), and the agreements thereto
were duly and validly authorized and executed by the Company. The Common Stock
issued in the 1997 Placement were duly authorized, validly issued, fully paid
and non-assessable.
(l) (i) The financial statements and schedules of the Company
included as part of the Registration Statement or the Prospectus present fairly
and financial condition of the Company as of the dates thereof, and the results
of operations of the Company for the periods covered thereby, all in conformity
with generally accepted accounting principles and the Rules and Regulations
applied on a consistent basis throughout the entire periods involved; (ii)
Xxxxxxx X. Xxxxxxxxxxx, C.P.A. (the "Company's Accountants"), who have reported
on such financial statements and schedules of the Company, are independent
accountants with respect to the Company, as required by the Acts and the Rules
and Regulations; and (iii) no other financial statements or schedules
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of the Company are required to be included in the Registration Statement or the
Prospectus.
(m) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus and prior to the
Closing Date or the Option Closing Date, except as set forth in or contemplated
by the Registration Statement and the Prospectus, (i) each of the Company and
Veritas have and will have conducted its business in substantially the same
manner as on April 30, 1998; (ii) neither the Company nor Veritas have incurred
or will have incurred any material liability or obligation, direct or
contingent, or has entered into or will have entered into any material
transaction; (iii) neither the Company nor Veritas have or will have paid or
declared any dividend or other distribution on its capital stock, (iv) there has
not been and will not have been any change in (A) the capitalization of the
Company, (B) the business, properties, prospects, financial condition or results
of operations of the Company, or (C) the value of the assets of the Company,
arising for any reason whatsoever; and (v) neither the Company nor Veritas have,
or at the Closing Date or the Option Closing Date will have, any material
contingent obligation.
(n) The Company has, and at the Closing Date and at the Option
Closing Date will have, good and marketable title to all properties and assets
described in the Registration Statement and the Prospectus as owned by them,
free and clear of all liens, charges, encumbrances, claims, security interests,
restrictions and defects of any material nature whatsoever, except such as are
described or referred to in the Registration Statement and the Prospectus. All
of the material leases and subleases under which the Company is the lessor or
sublessor of properties or assets or under which the Company holds properties or
assets as lessee as described in the Prospectus are, and will on the Closing
Date and the Option Closing Date be, in full force and effect, and except as
described in the Prospectus, the Company is not and will not be in default in
respect to any of the terms or provisions of any of such leases or subleases,
and no claim has been asserted by anyone adverse to rights of the Company as
lessor, sublessor, lessee or sublessee under any of the leases or subleases
mentioned above, or affecting or questioning the right of the Company to
continue possession of the leased or subleased premises or assets under any such
lease or sublease except as described or referred to in the Prospectus, and the
Company owns or leases all such properties as are necessary to its operations as
now conducted and, except as otherwise stated in the Prospectus, as proposed to
be conducted set forth in the Prospectus.
(o) Except as set forth in the Prospectus, the Company does
not own or control any capital stock or securities of, or have
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any proprietary interest in, or otherwise participate in any other corporation,
partnership, joint venture, firm, association or business organization;
provided, however, that this provision shall not be applicable to the
investment, if any, of the net proceeds from the sale of the Securities sold by
the Company in certificates of deposits, savings deposits, short-term
obligations of the United States Government, money market instruments or other
short-term investments.
(p) Except as disclosed in the Prospectus, there is no
business relationship, arrangement or conflict of interest between the Company
and Veritas which could have a material adverse effect upon the Company,
Veritas, or their respective businesses.
(q) To the knowledge of the Company, the Company's
accountants, who have given their reports on certain financial statements filed
and to be filed with the Commission as a part of the Registration Statement,
which are incorporated in the Prospectus, are with respect to the Company,
independent public accountants as required by the Act and the Rules and
Regulations promulgated thereunder.
(r) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, and except as otherwise
expressly set forth herein or therein, the Company has not (i) issued any
securities or incurred any material liability or obligation, direct or
contingent, for borrowed money; or (ii) entered into any material transaction
other than in the ordinary course of business; or (iii) declared or paid any
dividend or made any other distribution on or in respect to its capital stock.
(s) There is no litigation or governmental proceeding pending,
or to the knowledge of the Company, threatened against, or involving the
properties or business of, either the Company or Veritas, which might materially
adversely affect the value, assets or the operation of the properties or the
business of the Company, except as expressly set forth in the Prospectus.
Further, except as referred to in the Prospectus, there are no pending actions,
suits or proceedings related to environmental matters or related to
discrimination on the basis of age, sex, religion or race, nor is the Company
charged with or, to its knowledge, under investigation with respect to any
violation of any statutes or regulations of any regulatory authority having
jurisdiction over its business or operations, and no labor disturbances by the
employees of the Company exist or, to the knowledge of the Company, have been
threatened.
(t) Each of the Company and Veritas have, and at the Closing
Date and at the Option Closing Date will have, filed all
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xxxxxxxxx xxxxxxx, xxxxx and foreign income and franchise tax returns or has
requested extensions thereof (except in any case where the failure to so file
would not have a material adverse effect on the Company or Veritas, as the case
may be, and has paid all taxes which it believes in good faith were required to
be paid by it except for any such tax that currently is being contested in good
faith or as described in the Prospectus.
(u) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Representative in connection with (i) the
issuance by the Company of the Units, including the Common Stock and Warrants
underlying the Units, (ii) the purchase of the Units by the Representative,
(iii) the consummation by the Company of any of its obligations under this
Agreement, or (iv) any tax deficiency or claims outstanding, proposed or
assessed against it.
(v) Either the Company or Veritas maintains insurance policies
including, but not limited to, general liability and property insurance, which
sufficiently insures the Company and its employees against such losses and risks
generally insured against by comparable businesses, and neither the Company nor
Veritas (i) have failed to give notice or present any insurance claim with
respect to any matter, including, but not limited to, the Company's business,
property or employees, under the insurance policy or surety bond in a due and
timely manner, (ii) have any disputes or claims against any underwriter of such
insurance policies or surety bonds or has not failed to pay any premiums due and
payable thereunder, or (iii) have failed to comply with all conditions contained
in such insurance policies and surety bonds. There are no facts or circumstances
under any such insurance policy or surety bond which would relieve any insurer
of its obligation to satisfy in full any valid claim of the Company or of
Veritas on behalf of the Company.
(w) The Company is in compliance with the requirements of
Section 13(b)(2) of the Securities Exchange Act of 1934, as amended, and all
rules and regulations promulgated thereunder (the "Exchange Act") and, except as
disclosed in the Prospectus, to the Company's knowledge, neither the Company nor
Veritas, nor any of their respective employees, officers, directors, agents or
affiliates, have made, directly or indirectly, any payment of funds of such
entity or received or retained funds in violation of any law, rule or
regulation, which payment, receipt on retention is of a character which is
required to be disclosed in the Prospectus.
(x) Neither the Company nor any of its employees, directors,
stockholders, or affiliates (as defined by the Rules and Regulations) of any of
the foregoing (including Veritas) have taken or will take, directly or
indirectly, any action designed to or which has constituted or which might be
expected to cause or result
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in, under the Exchange Act, or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Units or Warrants or Common Stock underlying such Units.
(y) Neither the Company nor Veritas have at any time (i) made
any contribution to any candidate for political office, or failed to disclose
fully any such contribution, in violation of law, or (ii) made any payment to
any state, federal, foreign governmental or professional regulatory agency,
officer or official or other person charged with similar public, quasi-public or
professional regulatory duties, other than payments or contributions required or
allowed by applicable law.
(z) Except as set forth in the Registration Statement, to the
knowledge of the Company, neither the Company, nor any officer, director,
employee or agent of the Company (including Veritas), has made any payment or
transfer of any funds or assets of any such entity or conferred any personal
benefit by use of such entity's assets or received any funds, assets or personal
benefit in violation of any law, rule or regulation, which is required to be
stated in the Registration Statement or necessary to make the statements therein
not misleading.
(aa) There are no contracts, agreements, securities,
instruments, certificates, or other documents of the Company or Veritas, which
are of a character required to be described in the Registration Statement or
Prospectus or filed as exhibits to the Registration Statement, which have not
been so described or filed.
(bb) The Company will apply the net proceeds from the sale of
the Securities sold by it for the purposes and in the manner set forth in the
Registration Statement and Prospectus under the heading "Use of Proceeds."
(cc) The Company shall maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specified
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (3) access to assets is
permitted only in accordance with management's general or specific
authorizations; and (4) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(dd) Except as set forth in the Registration Statement,
no holder of any securities of the Company has the right to require
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registration of any securities because of the filing or effectiveness of the
Registration Statement.
(ee) Neither the Company nor Veritas shall have taken and at
the Closing Date will have taken, directly or indirectly, any action designed to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Units, Common Stock or Warrants to facilitate the sale or resale of such
securities.
(ff) To the best of the Company's and Veritas' knowledge,
there are no claims for services in the nature of a finder's origination fee
with respect to the sale of the Securities hereunder.
(gg) No right of first refusal exists with respect to any sale
of securities by the Company, except that right of first refusal granted by the
Company to the Representative to (1) underwrite or place any public or private
offering of any debt or equity securities of the Company (excluding sales to
employees of the Company) or any of its subsidiaries or affiliates, or (2) act
as its investment banker with respect to any merger, acquisition or disposition
of assets of the Company or any of its subsidiaries, for two years following the
Closing Date, and as to which the Representative shall have twenty (20) days
after its receipt of written notice thereof to accept or decline such offering.
If the Representative declines to participate in such offering and if thereafter
the terms of such offering are modified, the Representative shall have up to ten
(10) days thereafter to accept or decline the modified terms.
(hh) No statement, representation, warranty or covenant made
by the Company or Veritas, as the case may be, in this Agreement or made in any
certificate or document required by this Agreement to be delivered to the
Representative was, when made, or as of the Closing Date or as of the Option
Closing Date, will be materially inaccurate, untrue or incorrect.
(ii) The Company and Veritas have generally enjoyed
satisfactory employer/employee relationships with their respective employees and
are in compliance with all federal, state and local laws and regulations
respecting the employment of their respective employees and employment
practices, terms and conditions of employment and wages and hours relating
thereto. To the knowledge of the Company and Veritas, there are no pending or
threatened investigations involving the Company by the U.S. Department of Labor
or any other federal, state or local agency responsible for the enforcement of
such laws and regulations. To the knowledge of the Company and Veritas, there
are no unfair labor practice charges or complaints against the Company or
Veritas or any subsidiary
-13-
pending before the National Labor Relations Board or any strikes, picketing,
boycotts, disputes, slowdowns or stoppage pending or threatened against or
involving the Company or Veritas or any subsidiary, or any predecessor entity,
and none has occurred. No collective bargaining agreements or modifications
thereof are currently in effect or being negotiated by the Company or Veritas or
any subsidiary and their respective employees. No grievance or arbitration
proceeding is pending under any expired or existing collective bargaining
agreements of the Company, Veritas and any subsidiary.
(jj) Neither the Company nor Veritas has not maintained or
contributed to any deferred compensation, profit sharing, savings, retirement,
pension or other benefit plan or arrangements with or for the benefit of any
person resulting from a relationship with the Company, except as may be
disclosed in the Prospectus.
(kk) Each of the Company and Veritas is in compliance with all
federal and state laws, rules and regulations relating to consumer protection,
occupational safety and health and to the storage, handling or transportation of
hazardous or toxic materials and the Company and Veritas have received all
permits, licenses or other approvals required of the Company under applicable
federal and state occupational safety and health and environmental laws and
regulations to conduct its business and the Company and Veritas are in
compliance with all terms and conditions of any such permit, license or
approval, except any such violation of law or regulation, failure to receive
required permits, licenses or other approvals which would not, singly or in the
aggregate, result in a material adverse change in the condition (financial or
otherwise), business, net worth or results of operations of the Company, except
as the case may be, as may be described in or contemplated by the Prospectus.
(ll) Any certificate signed by any officer of the Company or
Veritas, respectively, and delivered to the Representative or counsel to the
Representative shall be deemed a representation and warranty by the Company or
Veritas, respectively, to the Representative as to the matters covered thereby.
(mm) The minute books of the Company have been made available
to the Representative and contain a complete summary of all meetings and actions
of the directors and stockholders of the Company, since the time of its
incorporation, and reflect all transactions referred to in such minutes
accurately in all material respects.
(nn) The Company is or will be registered with the Commission
under the 1940 Act as an investment company upon the consummation of this
Offering. The Company is, and at all times
-14-
through the Closing Date and Option Closing Date, will be in compliance with the
terms and provisions of the Acts in all material respects. The Company will take
all best efforts to maintain such registration as an investment company under
the 1940 Act with the Commission. No person is serving or acting as an officer
or director of, or investment adviser to, the Company or Veritas, respectively,
except in accordance with the provisions of the 1940 Act, the Advisers Act, and
the Rules and Regulations thereunder.
(oo) The Company has purchased "key man" life insurance
policies on the life of Zindel Zelmanovitch, of which the Company is the sole
beneficiary, on terms and conditions satisfactory to the Representative.
(pp) The Company has received, and promptly presented to the
Representative and counsel for the Representative, copies of all duly executed
and delivered "lock-up" letters from each of the officers, directors and
shareholders of the Company regarding any Common Stock of the Company or
securities convertible into or exchangeable for such Common Stock, that each of
the foregoing is thereby restricted from selling, hypothecating, pledging or
otherwise disposing of any shares of Common Stock or securities convertible into
or exchangeable for Common Stock, for eighteen (18) months from the Effective
Date (or one year with the prior written consent of the Representative).
(qq) The Company has received, and promptly presented to the
Representative and counsel for the Representative, "10b-5" letters from each of
the officers, directors and holders of at least five percent of the outstanding
shares of any class of equity stock of the Company (both before and after giving
effect to the Acquisitions), whereby such individuals stated that the
information contained in the Registration Statement and the Prospectus was
accurate, and affirmed that he or she has not, in the five years preceding the
Effective Date (or as disclosed in the Registration Statement and Prospectus),
been the subject of any court order, judgment or decree restricting in any way
such person's involvement in the securities or commodities industries, convicted
in or named in a criminal proceeding, the subject of any bankruptcy petition, or
found by a court of competent jurisdiction of violating any securities or
federal commodities law.
3. COVENANTS OF THE COMPANY AND VERITAS.
The Company and Veritas covenant and agree, as the case may be, that:
(a) The Company will cause the Units, the Common Stock and
Warrants included in the Units and the Common Stock underlying
-15-
such Warrants to be registered pursuant to Section 12 of the Exchange Act, not
later than the Effective Date.
(b) The Company will file with NASDAQ, as long as the
Securities are quoted on the NASDAQ National Market System or SmallCap Market,
all documents required thereby to maintain listing or quotation thereupon, and
will take any and all actions required to comply with and maintain all
continuing requirements for listing thereupon.
(c) The Company will notify the Representative immediately of
any actual or threatened or impending investigations (formal or informal) or any
delisting or other proceedings brought by NASDAQ, the NASD, SEC or any other
governmental or regulatory agency or body or any exchange.
(d) The Company will deliver to the Representative, without
charge, two conformed copies of each Registration Statement and of each
amendment or supplement thereto, including all financial statements and
exhibits.
(e) The Company has delivered to the Representative, and each
of the Underwriters and dealers selected by the Representative (the "Selected
Dealers") which are registered broker-dealers under the Exchange Act of 1934, as
amended, if any, without charge, as many copies as have been requested of each
Preliminary Prospectus heretofore filed with the Commission in accordance with
and pursuant to the Commission's Rule 430 under the Act and will deliver to the
Representative and to others whose names and addresses are furnished by the
Underwriter or a Selected Dealer, without charge, on the Effective Date of the
Registration Statement, and thereafter from time to time during such reasonable
period as you may request if, in the opinion of counsel for the Representative,
the Prospectus is required by law to be delivered in connection with sales by
the underwriter or a selected dealer, as many copies of the Prospectus (and, in
the event of any amendment of or supplement to the Prospectus, of such amended
or supplemented Prospectus) as the underwriter or selected dealer may reasonably
request for the purposes contemplated by the Act. The Company will take all
necessary actions to furnish to whomever directed by the Representative, when
and as requested by the Representative, all necessary documents, exhibits,
information, applications, instruments and papers as may be reasonably required
or, in the written opinion of counsel to the Representative desirable, in order
to permit or facilitate the sale of the Securities.
(f) The Company has authorized the Representative to use, and
make available for use by prospective dealers, the Preliminary Prospectus, and
authorizes the underwriters and all
-16-
selected dealers in connection with the distribution of the Securities to be
purchased by the Representative and all dealers to whom any of such Securities
may be sold by the Representative or by any Underwriter or Selected Dealer, to
use the Prospectus, as from time to time amended or supplemented, in connection
with the sale of the Securities in accordance with the applicable provisions of
the Act, the applicable Regulations and applicable state law, until completion
of the distribution of the Securities and for such longer period as you may
request if the Prospectus is required under the Act, the applicable Regulations
or applicable state law to be delivered in connection with sales of the
Securities by the Representative or the Underwriters or Selected Dealers.
(g) The Company will use its best efforts to cause the
Registration Statement to become effective and will notify the Representative
immediately, and confirm the notice in writing: (i) when the Registration
Statement or any post-effective amendment thereto becomes effective, if the
provisions of Rule 497 promulgated under the Acts will be relied upon and when
the Prospectus has been filed in accordance with said Rule 497; (ii) of the
issuance by the Commission of any stop order or of the initiation, or to the
best of the Company's knowledge, the threat of any proceedings for that purpose;
(iii) of the suspension of the qualification of the Securities, the
Representative's Warrants and the Representative's Securities, or underlying
securities, for offering or sale in any jurisdiction or of the initiating, or to
the best of the Company's knowledge the threatening, of any proceeding for that
purpose; and (iv) of the receipt of any comments from the Commission. If the
Commission shall enter a stop order at any time, the Company will make every
reasonable effort to obtain the lifting of such order at the earliest possible
moment.
(h) During the time when a prospectus is required to be
delivered under the 1933 Act and 1940 Act, the Company will comply with all
requirements imposed upon it by the 1933 Act, the 1940 Act and the Exchange Act,
as now and hereafter amended and by the Rules and Regulations, as from time to
time in force, as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus. If
at any time when a prospectus relating to the Securities is required to be
delivered under the Acts, any event shall have occurred as a result of which, in
the opinion of counsel for the Company or counsel for the Representative, the
Prospectus as then amended or supplemented includes an 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, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify you promptly and prepare and file with the Commission an
appropriate amendment or supplement in accordance
-17-
with Section 10 of the 1933 Act and will furnish to you copies thereof.
(i) The Company shall file the Prospectus (in form and
substance satisfactory to the Representative and counsel to the Representative)
or transmit the Prospectus by a means reasonably calculated to result in filing
with the Commission pursuant to Rule 497 not later than the Commission's close
of business on the earlier of (i) the second business day following the
execution and delivery of this Agreement, and (ii) the fifth business day after
the Effective Date of the Registration Statement or post-effective amendment
thereto.
(j) The Company will endeavor in good faith, in cooperation
with you, at or prior to the time the Registration Statement becomes effective,
to qualify the Securities for offering and sale under the securities laws or
blue sky laws of such jurisdictions as you may reasonably designate. In each
jurisdiction where such qualification shall be effected, the Company will,
unless you agree that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or may reasonably
be required by the laws of such jurisdiction.
(k) The Company shall cause the Units and Common Stock and
Warrants underlying the Units to be listed on NASDAQ SmallCap or NASDAQ/NMS and,
for a period of seven (7) years from the date hereof, use its best efforts to
maintain NASDAQ quotation of the Units, Common Stock and Warrants to the extent
each security remains outstanding.
(l) The Company will make generally available to its
securityholders, as soon as practicable, but in no event later than the first
day of the fifteenth full calendar month following the Effective Date of the
Registration Statement, an earnings statement of the Company, which will be in
reasonable detail but which need not be audited, covering a period of at least
twelve months beginning after the Effective Date of the Registration Statement,
which earnings statements shall satisfy the requirements of Section 11(a) of the
Act and the Regulations as then in effect. The Company may discharge this
obligation in accordance with Rule 158 of the Rules and Regulations.
(m) During the period of seven years commencing on the
Effective Date of the Registration Statement, the Company will make available to
its stockholders an annual report (including financial statements audited by its
independent public accountants), in reasonable detail, and, at its expense,
furnish the Representative (i) within 90 days after the end of each fiscal year
of the Company, a consolidated balance sheet of the Company and a separate
-18-
balance sheet of each subsidiary of the Company the accounts of which are not
included in such consolidated balance sheet as of the end of such fiscal year,
and consolidated statements of operations, stockholders' equity and cash flows
of the Company and separate statements of operations, stockholders' equity and
cash flows of any subsidiaries of the Company the accounts of which are not
included in such consolidated statements, for the fiscal year then ended all in
reasonable detail and all certified by independent accountants (within the
meaning of the Act and the Regulations), (ii) within 45 days after the end of
each of the first three fiscal quarters of each fiscal year, similar balance
sheets as of the end of such fiscal quarter and similar statements of
operations, stockholders' equity and cash flows for the fiscal quarter then
ended, all in reasonable detail, and subject to year end adjustment, all
certified by the Company's principal financial officer or the Company's
principal accounting officer as having been prepared in accordance with
generally accepted accounting principles applied on a consistent basis, (iii) as
soon as available, each report furnished to or filed with the Commission or any
securities exchange and each report and financial statement furnished to the
Company's shareholders generally, and (iv) as soon as available, such other
material as the Representative may from time to time reasonably request
regarding the financial condition and operations of the Company. During such
seven-year period, if the Company has active subsidiaries, the foregoing
financial statements will be on a consolidated basis to the extent that the
accounts of the Company and its subsidiaries are consolidated, and will be
accompanied by similar financial statements for any significant subsidiary which
is not so consolidated.
(n) As soon as practicable, but in any event not later than 45
days after the end of the 12-month period beginning on the day after the end of
the fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its securityholders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Representative, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules
and Regulations, which statement need not be audited unless required by the
Acts, covering a period of at least 12 months after the Effective Date of the
Registration Statement.
(o) For a period of eighteen months from the Closing Date, the
Company, at its expense, shall cause its regularly engaged independent certified
public accountants to review (but not audit), the Company's financial statements
for each of the first three quarters prior to the announcement of quarterly
financial
-19-
information, the filing of the Company's 10-Q quarterly report and the mailing
of quarterly financial information to stockholders.
(p) For a period of three (3) years after the Effective Date
of the Registration Statement, the Representative shall have a preferential
right on the terms and subject to the conditions set forth in this paragraph, to
purchase for its account, or to sell for the account of the Company, any
securities of the Company, with respect to which the Company may seek a public
offering and sale of such securities; and the Company will consult with the
Representative with regard to any such offering and will offer to the
Representative the opportunity, on terms not more favorable to the Company than
they can secure elsewhere, to purchase or sell any such securities. If the
Representative fails to accept in writing such proposal made by the Company
thereof within fifteen (15) business days after receipt of a notice containing
such proposal, then the Representative shall have no further claim or right with
respect to the proposal contained in such notice. If, thereafter such proposal
is modified, the Company shall again consult with the Representative in
connection with such modification and shall in all respects have the same
obligations and adopt the same procedures with respect to such proposal as are
provided hereinabove with respect to the original proposal.
(q) Prior to the filing of the Registration Statement, the
Company shall have provided to the Representative the results of any title,
lien, Uniform Commercial Code or other search as the Representative or its
counsel may request.
(r) Prior to the Closing Date or the Option Closing Date,
neither the Company nor Veritas will issue, directly or indirectly, without your
prior written consent and that of counsel for the Representative, any press
release or other public announcement or hold any press conference with respect
to the Company or its activities with respect to this Offering.
(s) The Company will deliver to you prior to filing, any
amendment or supplement to the Registration Statement or Prospectus proposed to
be filed after the Effective Date of the Registration Statement and will not
file any such amendment or supplement to which you shall reasonably object after
being furnished such copy.
(t) During the period of 120 days commencing on the date
hereof, neither the Company nor Veritas will at any time take, directly or
indirectly, any action designed to, or which will constitute or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Securities to facilitate the sale or resale of any of the
Securities.
-20-
(u) The Company will apply the net proceeds from the Offering
received by it in the manner, and subject to the conditions, set forth under the
section entitled "Use of Proceeds" in the Prospectus. No portion of the net
proceeds will be used, directly or indirectly, to acquire any securities issued
by the Company.
(v) The Company will retain counsel, an accounting firm, and
financial printer, and maintain a Transfer Agent and, if necessary under the
jurisdiction of incorporation of the Company, a Registrar (which may be the same
entity as the Transfer Agent and Warrant Agent) for its Common Stock and
Warrants, all of whom shall be reasonably acceptable to the Representative.
(w) Counsel for the Company, the Company's accountants, and
the officers and directors of the Company will, respectively, furnish the
opinions, the letters and the certificates referred to in subsections of
Paragraph 9 hereof, and, in the event that the Company shall file any amendment
to the Registration Statement relating to the offering of the Securities or any
amendment or supplement to the Prospectus relating to the offering of the
Securities subsequent to the Effective Date of the Registration Statement, such
counsel, such accountants, such officers and directors, respectively, will, at
the time of such filing or at such subsequent time as you shall specify, so long
as securities being registered by such amendment or supplement are being
underwritten by the Representative and the Underwriters, as the case may be,
furnish to you such opinions, letters and certificates, each dated the date of
its delivery, of the same nature as the opinions, the letters and the
certificates referred to in said Paragraph 9, as you may reasonably request, or,
if any such opinion or letter or certificate cannot be furnished by reason of
the fact that such counsel or such accountants or any such officer or director
believes that the same would be inaccurate, such counsel or such accountants or
such officer or director will furnish an accurate opinion or letter or
certificate with respect to the same subject matter.
(x) The Company and Veritas, as the case may be, will comply
with all of the provisions of any undertakings contained in the Registration
Statement in all material respects.
(y) The Company will reserve and keep available for issuance
that maximum number of its authorized but unissued shares of Common Stock which
are issuable upon exercise of the Warrants underlying the Units,
Representative's Warrants, and the Overallotment Option and any Warrants
issuable upon the exercise thereof, and any shares of capital stock issuable
upon the exercise or conversion of any other options, warrants, instruments or
loans outstanding from time to time.
-21-
(z) During a period of three years commencing on the Effective
Date, the Company will furnish to you and any Underwriters or Selected Dealers,
who may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representative and such Underwriters or Selected Dealers who may request a copy
of each annual or other report which the Company is required to file with the
Commission.
(aa) The Company agrees that it will, upon the Closing Date,
have obtained approval from the SBA to engage, for a period of no less than
three (3) years, a designee of the Representative as an advisor (the "Advisor")
to its Board of Directors where such Advisor shall attend meetings of the Board,
receive all notices and other correspondence and communications sent by the
Company to members of its Board of Directors and shall be entitled to receive
compensation therefor equal to the entitlement of all non-employee directors.
Such Advisor shall also be entitled to receive reimbursement for all reasonable
costs incurred in attending such meetings including, but not limited to, food,
lodging, and transportation. The Company further agrees that during said three
(3) year period, it shall schedule no less than four (4) formal and "in person"
meetings of its Board of Directors in each such year and fifteen (15) days
advance notice of such meetings shall be given to the Advisor. Further, during
such three (3) year period, the Company shall give notice to the Representative
with respect to any proposed acquisitions, mergers, reorganizations or other
similar transactions. The Representative shall have the right during such
three-year periods in its sole discretion, to designate one person for election
as a Director of the Company and the Company will utilize its best efforts to
obtain the election of such person who shall be entitled to receive the same
compensation, expense reimbursements and other benefits set forth above.
Both the Company and Veritas agree to indemnify and hold the
Representative and such Advisor or Director harmless against any and all claims,
actions, damages, costs and expenses, and judgments arising solely out of the
attendance and participation of your designee at any such meeting described
herein. In the event the Company maintains a liability insurance policy
affording coverage for the acts of its of officers and directors, it agrees, if
possible, to include the Representative's designee as an insured under such
policy.
(bb) The Company agrees that it will, upon the Closing Date,
enter into a Financial Consulting Agreement with the Representative, whereby it
shall engage the Representative as a financial consultant for a three (3) year
term and for an annual
-22-
fee of $36,000, which full amount for the entire three year term shall be paid
in advance and in full upon the Closing Date.
(cc) As soon as practicable, but (i) in no event more than
five (5) business days before the Effective Date of the Registration Statement,
the Company shall file a Form 8-A with the Commission providing for the
registration under the Exchange Act of the Units, Common Stock and Warrants, and
(ii) in no event more than 30 days after the Effective Date of the Registration
Statement, apply for listing in Standard and Poor's Corporation Reports or
Xxxxx'x OTC Guide, and use its best efforts to have the Company included in such
publications and continue such inclusion for at least five years from the
Closing Date.
(dd) For a period of eighteen (18) months from the Effective
Date, no officer, director or holder of any securities of the Company prior to
the Offering will, directly or indirectly, offer, sell (including any short
sale), grant any option for the sale of, acquire any option to dispose of, or
otherwise dispose of any shares of Common Stock into public markets, including
shares of Common Stock issuable upon exercise of options, warrants or any
convertible securities of the Company, without the prior written consent of the
Representative, and other than as set forth in the Registration Statement. In
order to enforce this covenant, the Company shall impose stop-transfer
instructions with respect to the securities owned by every stockholder prior to
the Offering until the end of such period (subject to any exceptions to such
limitation on transferability set forth in the Registration Statement).
Notwithstanding the foregoing, the Company's current stockholders shall be
permitted to make transfers for estate planning purposes or in private sales, so
long as the transferee agrees in writing to be bound by the foregoing
provisions. If necessary to comply with any applicable Blue-sky Law, the shares
held by such stockholders will be escrowed with counsel for the Company or
otherwise as required. In addition, prior to the end of such eighteen (18) month
period, the Company will not permit its counsel to issue any opinions to remove
any legends from any of its securities.
(ee) Except for the issuance of shares of capital stock by the
Company in connection with the exercise of warrants or options outstanding as of
the Closing Date and Option Closing Date and as disclosed in the Registration
Statement, the Company shall not, for a period of eighteen (18) months following
the Closing Date, directly or indirectly, offer, sell, issue, agree to issue or
transfer any of its debt, equity or other securities of any kind, including any
security exchangeable or exercisable for, or convertible into, shares of its
capital stock or register any of such securities (under any form of registration
statement, including Form S-8), without the prior written consent of the
-23-
Representative. Options granted pursuant to plans as described in or permitted
under the Registration Statement must be exercisable at the fair market value on
the date of grant.
(ff) For so long as any of the Warrants underlying the Units
remain outstanding, the Company shall maintain "key person" life insurance
payable to the Company on the life of Zindel Zelmanovitch, its Chief Executive
Officer, in the amount of at least $1,000,000, unless his employment with the
Company is earlier terminated. In such event, the Company will obtain a
comparable policy on the life of his successor for the balance of such period.
(gg) The Company will use its best efforts to obtain, as soon
after the Closing Date as is reasonably possible, liability insurance covering
its officers and directors.
(hh) The Company agrees that any conflict of interest arising
between a member of the Company's Board of Directors or any officer and the
Company in connection with such Director's dealing with, or obligations to, the
Company or Veritas, shall be resolved by a vote of the majority of the
independent members of the Board of Directors of the Company, which members
shall also not be board members or officers of Veritas.
(ii) The Company agrees that it will employ the services of a
financial public relations firm reasonably acceptable to the Representative for
a period of at least twelve months following the Effective Date.
(jj) For a period of five (5) years from the Effective Date,
at the request of the Representative, the Company shall provide promptly, at its
expense, copies of the Company's daily transfer sheets furnished to it by its
transfer agent and copies of the securities positions provided to it by the
Depository Trust Company, and the list of holders of all of the Company's
securities.
(kk) The Company shall take all actions necessary or required
to effectuate and preserve the registration rights granted to the Representative
pursuant to the Representative's Warrant.
4. SALE, PURCHASE AND DELIVERY OF SECURITIES: CLOSING DATE.
(a) The Company agrees to sell to the Representative, and the
Representative, on the basis of the warranties, representations and agreements
of the Company herein, and subject to the terms and conditions herein, agrees to
purchase the Securities from the Company at a price of $4.10 per Unit, less an
underwriting discount of ten percent (10%) of the offering price thereof. The
Representative may allow a concession not exceeding
-24-
$.____ per Unit to Selected Dealers who are members of the National Association
of Securities Dealers, Inc ("NASD"), and to certain foreign dealers.
(b) Delivery of the Securities and payment therefor shall be
made at 10:00 a.m., New York time on the Closing Date, as hereinafter defined,
at the offices of the Representative or such other location as may be agreed
upon by you and the Company. Delivery of certificates for the Common Stock (in
definitive form and registered in such names and in such denominations as you
shall request by written notice to the Company delivered at least two business
days' prior to the Closing Date), shall be made to you against payment of the
purchase price therefor by certified or bank check or wire transfer payable in
New York Clearing House funds to the order of the Company. The Company will make
such certificates available for inspection at least two business days prior to
the Closing Date at such place as you shall designate.
(c) Unless otherwise agreed, the "Closing Date" shall be
_____________, 1998, or such other date not later than the sixth business day
following the effective date of the Registration Statement as you shall
determine and advise the Company.
(d) The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Securities by the Company to
the Representative and the Underwriters shall be borne by the Company. The
Company will pay and hold the Representative and the Underwriters, as the case
may be, and any subsequent holder of the Securities, harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
federal and state stamp taxes, if any, which may be payable or determined to be
payable in connection with the original issuance or sale to the Representative
and the Underwriters, as the case may be, of the Securities or any portions
thereof.
5. SALE, PURCHASE AND DELIVERY OF THE OVERALLOTMENT SECURITIES:
OPTION CLOSING DATE.
(a) The Company agrees to sell to the Representative, and upon
the basis of the representations, warranties and agreements of the Company
herein contained, subject to the satisfaction of all the terms and conditions of
this Agreement, the Representative shall have the option (the "Overallotment
Option") to purchase the Overallotment Securities from the Company, at the same
price per Security as set forth in Paragraph 4(a) above. Overallotment
Securities may be purchased solely for the purpose of covering overallotments
made in connection with the distribution and sale of the Securities.
-25-
(b) The Overallotment Option to purchase all or part of the
Overallotment Securities covered thereby is exercisable by you at any time and
from time to time before the expiration of a period of 30 calendar days from the
date of the Effective Date of the Registration Statement (the "Option Period")
by written notice to the Company setting forth the number of Overallotment
Securities for which the Option is being exercised, the name or names in which
the certificates for such Overallotment Securities are to be registered and the
denominations of such certificates. Upon each exercise of the Overallotment
Option, the Company shall sell to the Representative the aggregate number of
Overallotment Securities specified in the notice exercising such Overallotment
Option.
(c) Delivery of the Overallotment Securities with respect to
which the Overallotment Option shall have been exercised and payment therefor
shall be made at 10:00 a.m., New York time on the Option Closing Date, as
hereinafter defined, at the offices of the Representative or at such other
locations as may be agreed upon by you and the Company. Delivery of certificates
for Overallotment Securities shall be made to you against payment of the
purchase price therefor by certified or bank check or wire transfer in New York
Clearing House Funds to the order of the Company. The Company will make
certificates for Overallotment Securities to be purchased at the Option Closing
Date available for inspection at least two business days prior to such Option
Closing Date at such place as you shall designate.
(d) The "Option Closing Date" shall be the date not later than
five business days after the end of the Option Period as you shall determine and
advise the Company by at least three full business days' notice, unless some
other time is agreed upon between you and the Company.
(e) The obligations of the Representative to purchase and pay
for Overallotment Securities at such Option Closing Date shall be subject to
compliance as of such date with all the conditions specified in Paragraph 2
herein and the delivery to you of opinions, certificates and letters, each dated
such Option Closing Date, substantially similar in scope to those specified in
Paragraph 9 herein.
(f) The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Overallotment Securities by the
Company to the Representative shall be borne by the Company. The Company will
pay and hold the Representative, and any subsequent holder of Overallotment
Securities, harmless from any and all liabilities with respect to or resulting
from any failure or delay in paying federal and state stamp taxes, if any, which
may be payable or determined to be payable in connection with
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the original issuance or sale to the Representative of the Overallotment
Securities or any portion thereof.
6. WARRANT SOLICITATION FEE.
The Company agrees to pay the Representative a fee (the "Warrant
Solicitation Fee") of four percent (4%) of the aggregate exercise price of the
Warrants if: (i) the market price of the Common Stock is greater than the
exercise price of the Warrants on the date of exercise; (ii) the exercise of the
Warrants are solicited by the Representative or any other member of the NASD and
the customer states in writing that the transaction was solicited and designates
in writing the broker-dealer to receive compensation for the exercise; (iii) the
disclosure of compensation arrangements was made both at the time of the
Offering and at the time of the exercise of the Warrant; and (iv) the
solicitation of the Warrant is not in violation of Regulation M promulgated
under the Exchange Act. The Company agrees not to solicit the exercise of any
Warrants other than through the Representative and will not authorize any other
dealer to engage in such solicitation without the prior written consent of the
Representative which will not be unreasonably withheld. The Warrant Solicitation
Fee will not be paid in a non-solicited transaction. No Warrant solicitation by
the Representative will occur prior to one year from the Effective Date.
7. REPRESENTATIONS AND WARRANTIES OF THE REPRESENTATIVE.
The Representative represents and warrants to the Company that:
(a) The Representative is a member in good standing of the
National Association of Securities Dealers, Inc., and has complied with all NASD
requirements concerning net capital and compensation to be received in
connection with the Offering.
(b) To the Representative's knowledge, there are no claims for
services in the nature of a finder's origination fee with respect to the sale of
the Securities hereunder to which the Company is, or may become, obligated to
pay.
(c) Neither the Representative, the Underwriters or Selected
Dealers, nor any of their registered representatives, respectively, have
provided purchasers of the Securities with any information concerning the
Company other than the Preliminary Prospectus and the Prospectus.
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8. PAYMENT OF EXPENSES.
(a) The Company will pay and bear all costs, fees, taxes and
expenses incident to and in connection with: (i) the issuance, offer, sale and
delivery of the Securities, including all expenses and fees incident to the
preparation, printing, filing and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement (including all exhibits
thereto), each Preliminary Prospectus, the Prospectus, and amendments and
post-effective amendments thereof and supplements thereto, and this Agreement
and related documents, Preliminary and Final Blue Sky Memoranda, including the
cost of preparing and copying all copies thereof in quantities deemed necessary
by the Underwriters; (ii) the costs of preparing transaction closing binders and
lucite cube mementos in such quantity as the Representative specifies, and the
preparing and printing all "Tombstone" and other appropriate advertisements in
THE WALL STREET JOURNAL, THE NEW YORK TIMES and other publications selected by
the Representative; (iii) the printing, engraving, issuance and delivery of the
Unit Certificates, Common Stock, Warrants, and any of the Additional Securities,
including any transfer or other taxes payable thereon in connection with the
original issuance thereof; (iv) the qualification of the Units, Common Stock and
Warrants under the state or foreign securities or "Blue Sky" laws selected by
the Representative and the Company, and all legal fees of counsel for the
Representative in connection therewith (in the amount of $20,000) plus all
disbursements and filing fees incurred by such counsel for such states; (v) fees
and disbursements of counsel and accountants for the Company, including those
incurred in connection with the actions specified in the foregoing clause (i);
(vi) other expenses and disbursements reasonably incurred on behalf of the
Company; (vii) the filing fees payable to the Commission and the National
Association of Securities Dealers, Inc. ("NASD"); and (viii) any application for
listing of the Units, Common Stock and Warrants on a securities exchange, or
application for quotation thereof on NASDAQ.
(b) In addition to the expenses to be paid and borne by the
Company referred to in Paragraph 8(a) above, the Company shall reimburse you at
closing for expenses incurred by you in connection with the Offering (for which
you need not make any accounting), in the amount of three percent (3%) of the
price to the public of the Securities and Additional Securities sold in the
Offering. This 3% non-accountable expense allowance shall cover the fees of your
legal counsel, but shall not include any expenses for which the Company is
responsible under Paragraph 8(a) above, including the reasonable fees and
disbursements of your legal counsel with respect to Blue Sky matters.
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(c) In the event that the Company does not or cannot, for any
reason whatsoever other than a default by the Representative, proceed with the
Offering, or if any of the representations, warranties or covenants contained in
this Agreement are not materially correct or cannot be complied with by the
Company, or business prospects or obligations of the Company are adversely
affected and the Company does not commence or continue with the Offering at any
time or terminates the proposed transaction prior to the Closing Date, the
Company shall reimburse the Representative on an accountable basis for all
out-of-pocket expenses actually incurred in connection with the Underwriting,
this Agreement and all of the transactions hereby contemplated (including,
without limitation, your legal fees and expenses) and the Representative shall
not be responsible for any expense of the Company or others or for any change or
claim related to the Offering contemplated by hereunder in the event that the
Offering is not consummated.
9. CONDITIONS OF REPRESENTATIVE'S OBLIGATIONS.
The obligations of the Representative to consummate the transactions
contemplated by this Agreement shall be subject to the continuing accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of the Closing Date, the accuracy of the statements of the
Company and its officers and directors made pursuant to the provisions hereof,
and to the performance by the Company of its covenants and agreements hereunder
and under any and all covenants and agreements contemplated herein and under
each certificate, opinion and document contemplated hereunder and to the
following additional conditions:
(a) The Registration Statement, in form and substance
satisfactory to the Representative and counsel to the Representative, shall have
become effective not later than 5:00 p.m., New York time, on the date following
the date of this Agreement, or such later date and time as shall be consented to
in writing by you and, on or prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement or the qualification or
registration of the Securities under the securities laws of any jurisdiction
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or to your knowledge or the knowledge of the
Company, shall be contemplated by the Commission or any such authorities of any
jurisdiction and any request on the part of the Commission or any such
authorities for additional information shall have been complied with to the
reasonable satisfaction of the Commission or such authorities and counsel to the
Representative, and after the date hereof no amendment or supplement shall have
been filed to the Registration Statement or Prospectus without your prior
consent. If
-29-
the Company has elected to rely upon Rule 430A of the Rules and Regulations, the
price of the Units and the Common Stock and Warrants included therein, and the
exercise price of the Warrants included therein and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 497 of the Rules and Regulations within the prescribed
time period, and the Company shall have provided evidence satisfactory to the
Representative of such timely filing, or a post-effective amendment providing
such information shall have been promptly filed and declared effective in
accordance with Rule 497.
(b) The Registration Statement or the Prospectus or any
amendment thereof or supplement thereto shall not contain an untrue statement of
a fact which is material, or omit to state a fact which is material and is
required to be stated therein or is necessary to make the statements therein,
not misleading.
(c) Between the time of the execution and delivery of this
Agreement and the Closing Date, there shall be no litigation instituted against
the Company, Veritas or any of its officers or directors and between such dates
there shall be no proceeding instituted or, to the Company's knowledge,
threatened against the Company, Veritas or any of its officers or directors
before or by any federal, state or county commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, in which
litigation or proceeding an unfavorable ruling, decision or finding would have a
material adverse effect on the Company or its business, business prospects or
properties, or have a material adverse effect on the financial condition or
results of operation of the Company.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall have
been no litigation instituted against the Company, Veritas or any officer or
director of the Company or Veritas, and since such dates there shall have been
no proceeding instituted or threatened against the Company, Veritas or any
officer or director of the Company or Veritas, before or by any federal, state
or local court, commission, regulatory body, administrative agency or other
governmental agency or body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling, decision or finding could materially affect
the business, properties, prospects, financial condition or results of
operations of the Company, and (ii) no executive officer of the Company listed
as such in the Prospectus shall have died, become physically or mentally
disabled, resigned or been removed or discharged.
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(e) Each of the representations and warranties of the Company
or Veritas, as the case may be, contained herein and each certificate and
document contemplated under this Agreement to be delivered to you shall be true
and correct at the Closing Date as if made at the Closing Date, and all
covenants and agreements contained herein and in each such certificate and
document to be performed on the part of the Company or Veritas, as the case may
be, and all conditions contained herein and in each such certificate and
document to be fulfilled or complied with by the Company at or prior to the
Closing Date shall be fulfilled or complied with.
(f) At the Closing Date, you shall have received the opinion
of Berlack, Israels & Xxxxxxxx, LLP, counsel to the Company, dated as of such
Closing Date, addressed to the Representative and in form and substance
satisfactory to counsel to the Representative, to the effect that:
(i) Each of the Company and Veritas is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, with full corporate power and
authority, and all licenses, permits, certifications, registrations, approvals,
consents and franchises to own or lease and operate its properties and to
conduct their businesses as described in the Registration Statement. Each of the
Company and Veritas is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions wherein such qualification is
necessary and failure so to qualify could have a material adverse effect on the
financial condition, results of operations, business or properties of the
Company; and the disclosure in the Registration Statement concerning the effects
of federal, state and local laws, rules and regulations on the Company's
business as currently conducted and as contemplated are correct in all material
respects and do not omit to state a fact necessary to make the statements
contained therein not misleading in light of the circumstances in which they
were made;
(ii) The Company has full corporate power and
authority to execute, deliver and perform the Underwriting Agreement, Warrant
Agreement and Consulting Agreement issue the Units, the Common Stock and
Warrants included in the Units, the Representative's Securities and
Overallotment Securities, and issue and reserve for issuance any securities
underlying any of the Additional Securities, as the case may be, and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of the Underwriting Agreement, Warrant Agreement, Consulting
Agreement and issuance of the Units, Common Stock and Warrants included in the
Units, Securities, the consummation by the Company of the transactions therein
contemplated and the compliance by the Company and Veritas with the terms of the
Underwriting
-31-
Agreement, Warrant Agreement and Consulting Agreement, and the issuance of the
Units, Common Stock and Warrants included in the Units, and the Additional
Securities have been duly authorized by all necessary corporate action, and each
of the Underwriting Agreement, Warrant Agreement and Consulting Agreement, and
the Units, Common Stock and Warrants underlying the Units, and the Additional
Securities have been duly executed and delivered by the Company. The
Underwriting Agreement, Warrant Agreement and Consulting Agreement, and the
Units, Common Stock and Warrants included in the Units, and the Additional
Securities are valid and binding obligations of the Company (and in the case of
the Underwriting Agreement, a valid and binding obligation of Veritas),
enforceable in accordance with their respective terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally and the
discretion of courts in granting equitable remedies and except that
enforceability of the indemnification provisions and the contribution provisions
set forth in the Underwriting Agreement may be limited by the federal securities
laws or public policy underlying such laws;
(iii) The execution, delivery and performance of
the Underwriting Agreement, Warrant Agreement and Consulting Agreement, and the
Securities (including the Additional Securities) by the Company and Veritas, as
the case may be, the consummation by the Company of the transactions therein
contemplated and the compliance by the Company with the terms of the
Underwriting Agreement and the Securities (including the Additional Securities)
do not, and will not, with or without the giving of notice or the lapse of time,
or both, (A) result in a violation of the Articles of Incorporation, as the same
may be amended, or By-laws of the Company or Veritas, (B) to the best of our
knowledge, result in a breach of, or conflict with, any terms or provisions of
or constitute a default under, or result in the modification or termination of,
or result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company or Veritas
pursuant to, any indenture, mortgage, note, contract, commitment or other
material agreement or instrument to which the Company or Veritas is a party or
by which the Company or Veritas or any of their properties or assets are or may
be bound or affected, except where any of the foregoing would not result in a
material adverse effect upon the Company's business or operations; (C) to the
best of our knowledge, violate any existing applicable law, rule or regulation
or judgment, order or decree known to us of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or Veritas or any of
their respective properties or businesses; or (D) to the best of our knowledge,
have any effect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company or Veritas to own or lease and
-32-
operate their properties and to conduct their business or the ability of the
Company or Veritas to make use thereof;
(iv) To the knowledge of counsel to the Company,
neither the Company nor Veritas owns an equity interest in any other
corporation, partnership, joint venture, trust or other business entity, except
as disclosed in the Prospectus;
(v) To the best of our knowledge, no
authorization, approval, consent, order, registration, license or permit of any
court or governmental agency or body (other than under the Act, the Rules and
Regulations and applicable state securities or Blue Sky laws) is required for
the valid authorization, issuance, sale and delivery of the Securities, the
Additional Securities, or the Representative's Warrants and the underlying
shares, and the consummation by the Company of the transactions contemplated by
the Underwriting Agreement or the Representative's Warrants;
(vi) The Registration Statement was declared
effective under the 1933 Act and under the 1940 Act, on ___________, 1998; to
the best our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been instituted or are pending, threatened or contemplated under the Act or
applicable state securities laws;
(vii) The Registration Statement and the
Prospectus, as of the Effective Date (except for the financial statements and
other financial data included therein or omitted therefrom, as to which we
express no opinion), comply as to form in all material respects with the
requirements of the Act and Regulations and the conditions for use of a
registration statement on Form SB-2 have been satisfied by the Company;
(viii) The description in the Registration Statement
and the Prospectus of statutes, regulations, contracts and other documents have
been reviewed by us, and, based upon such review, are accurate in all material
respects and present fairly the information required to be disclosed, and to the
best of our knowledge, there are no material statutes or regulations, or, to the
best of our knowledge, material contracts or documents, of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement, which are not so described or filed
as required, and to the best of our knowledge, none of the material provisions
of the contracts or instruments described above violates any existing applicable
law, rule or regulation or judgment, order or decree known to us of any United
States governmental agency or court
-33-
having jurisdiction over the Company or any of its assets or businesses;
(ix) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and any amendment or
supplement thereto, under the heading "Capitalization", and the Company is not a
party to or bound by any instruments, agreement or other arrangement providing
for it to issue any capital stock, warrants, options or other securities, except
for this Agreement and as described in the Prospectus. The outstanding
securities of the Company has been duly authorized, validly issued, fully paid
and nonassessable. None of the outstanding securities of the Company have been
issued in violation of the preemptive rights of any securityholder of the
Company. All of the issued and outstanding securities of the Company offered in
this Offering, will be owned by the holders thereof free and clear of any
mortgage, pledge, lien, charge or encumbrance, except as set forth in the
Registration Statement and the Prospectus. None of the holders of the
outstanding securities of the Company is subject to personal liability solely by
reason of being such a holder. The authorized securities conforms to the
description thereof contained in the Registration Statement and Prospectus. To
the best of our knowledge, except as set forth in the Prospectus, no holders of
any of the Company's securities have any rights, "demand," "piggyback" or
otherwise, to have such securities registered under the Act. All corporate
action required to be taken for the authorization, issuance and sale of the
securities has been duly, validly and sufficiently taken. Neither the
Securities, the Additional Securities, nor the Common Stock are subject to
preemptive rights of any stockholder of the Company. The certificates
representing the Securities are in proper legal form;
(x) The issuance and sale of the Securities has
been duly authorized and, when paid for, the Securities issued and delivered
pursuant to the terms of the Representative's Warrants, as the case may be, and
the Representative's Warrants will constitute the valid and binding obligations
of the Company, enforceable in accordance with their terms, to issue and sell
the Representative's Warrants and underlying Representative's Shares. The shares
of Common Stock have been duly authorized by the Company to be offered in the
form of the Securities. The Representative's Warrants and underlying
Representative's Shares conform to the descriptions thereof contained in the
Registration Statement and Prospectus;
(xi) The Representative will have acquired good
title to the Securities upon consummation of the Offering and will be able to
acquire good title to the Additional Securities upon the exercise of the
Overallotment Option or Representative's Option, as the case may be, free and
clear of all liens, encumbrances,
-34-
equities, security interests and claims, provided that the Representative is a
bona fide purchaser as defined in ss.8-302 of the Uniform Commercial Code, as
amended;
(xii) Assuming that the Representative exercises
the Overallotment Option to purchase the Additional Securities and make payments
therefor in accordance with the terms of the Underwriting Agreement, upon
delivery of the Additional Securities to the Representative thereunder, the
Representative will acquire good title to the Additional Securities, free and
clear of any liens, encumbrances, equities, security interests and claims,
provided that the Representative is a bona fide purchaser as defined in ss.8-302
of the Uniform Commercial Code;
(xiii) The Registration Statement is effective under
the Acts, and, if applicable, filing of all pricing information has been timely
made in the appropriate form under Rule 430A, and, to such counsel's knowledge,
after due inquiry, no stop order suspending the use of the Preliminary
Prospectus, the Registration Statement or Prospectus or any part of any thereof
or suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
threatened or contemplated under the Acts;
(xiv) To the best of our knowledge, after due
inquiry, there are no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries before any governmental agency, court or tribunal,
foreign or domestic, or before any private arbitration tribunal, pending or
threatened against the Company or Veritas or involving their properties or
businesses, other than as described in the Prospectus, such description being
accurate, and other than litigation incident to the kind of business conducted
by the Company which, individually and in the aggregate, is not material, and,
except as otherwise disclosed in the Prospectus and the Registration Statement,
the Company and Veritas have complied with all federal and state laws, statutes
and regulations concerning the business of the Company and Veritas;
(xv) All sales of the Company's securities have
been made in compliance with or under an exemption from the registration
requirements of the Act, and no purchaser of such securities in any such sale
has a right of action against the Company for failure to comply with the
registration or filing requirements of any state;
(xvi) Each of the Company and Veritas owns or
possesses, free and clear of all liens or encumbrances and rights thereto or
therein by third parties, the requisite licenses or other rights to use all
trademarks, service marks, copyrights, service names, trade names, patents,
patent applications and
-35-
licenses necessary to conduct its business (including, without limitation, any
such licenses or rights described in the Prospectus as being owned or possessed
by the Company or Veritas, as the case may be), and to the best of such
counsel's knowledge after reasonable investigation, there is no claim or action
by any person pertaining to, or proceeding, pending, or threatened, which
challenges the exclusive rights of the Company or Veritas, as the case may be,
with respect to any trademarks, service marks, copyrights, service names, trade
names, patents, patent applications and licenses used in the conduct of the
Company's business (including, without limitations, any such licenses or rights
described in the Prospectus as being owned or possessed by the Company or
Veritas);
(xvii) Except as described in the Prospectus,
neither the Company nor Veritas (a) maintains, sponsors or contributes to any
ERISA Plans, (b) maintains or contributes, now or at any time previously, to a
defined benefit plan, as defined in Section 3(35) of ERISA, and (c) have either
completely or partially, withdrawn from a "multiemployer plan," with respect to
any employees of or who perform duties on behalf of the Company.
(xviii) The Company has no subsidiaries;
(xix) We have participated in reviews and
discussions in connection with the preparation of the Registration Statement and
the Prospectus. Although we are not passing upon and do not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, no facts came to our attention which
lead us to believe that (A) the Registration Statement (except as to the
financial statements and other financial data contained therein, as to which we
express no opinion), on the Effective Date, contained any untrue statement of 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, or that (B) the Prospectus (except as to the financial statements
and other financial data contained therein, as to which we express no opinion)
contains any untrue statement or a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xx) The Prospectus has been reviewed by such
counsel, and insofar as it refers to statements of law, descriptions of
statutes, licenses, rules or regulations or legal conclusions is correct in all
material respects;
(xxi) To Company counsel's knowledge, the persons
listed in the Principal Stockholders or Management sections of the
-36-
Prospectus are the respective "beneficial owners" (as such phrase is defined in
Regulation 13d-3 promulgated under the Exchange Act) of the securities set forth
opposite their respective names thereunder as and to the extent set forth
therein;
(xxii) To such counsel's knowledge, except as
described in the Prospectus, no person, corporation, trust, partnership,
association or other entity has the right to include and/or register any
securities of the Company in the Registration Statement, require the Company to
file any registration statement or, if filed, to include any security in such
registration statement;
(xxiii) To such counsel's knowledge, except as
described in the Prospectus, there are no claims, payments, issuances,
arrangements or understandings for services in the nature of a finder's or
origination fee with respect to the sale of the Shares hereunder or the
financial consulting arrangement or any other arrangements, agreements,
understandings, payments or issuances that may affect the Representative's
compensation, as determined by the NASD;
(xxiv) The Company has, or will have before the
Effective Date, gained approval for quotation of each of the Units, Common Stock
and Warrants by the NASDAQ SmallCap Market and will maintain and fulfill all
requirements for continued quotation thereby;
(xxv) The Company is, or will before the Effective
Date have become, duly registered with the Commission under the 1940 Act as an
investment company, and all action under the Acts necessary to consummate the
public offering and sale of the Units thereunder as provided in this Agreement
has or will have been taken by the Company, and all rules and regulations of the
SBA or IRS, as the case may be, for which compliance is necessary to gain and
maintain status as a SSBIC, have or will have been complied with as of or by the
Effective Date. The provisions of the Certificate of Incorporation and By-Laws
of the Company comply as to form in all material respects with the Acts and the
Rules and Regulations;
(xxvi) The Company shall have obtained, and provided
copies to the Representative and counsel to the Representative of, duly executed
and delivered "lock-up" letters from each of the Company's officers, directors
and shareholders whereby each such person agrees not to sell, issue, pledge,
hypothecate or otherwise transfer, any of such person's shares of Common Stock
for a period of eighteen (18) months from the Closing Date, which "lock-up"
letters are legal, valid and binding obligations of the parties thereto,
enforceable against each such
-37-
party and any subsequent holder of the securities subject thereto in accordance
with its terms.
(g) The sections in the Prospectus substantially entitled as
or relating to "Tax Considerations" have been reviewed by counsel to the Company
or special tax counsel to the Company, with expertise sufficient in tax matters.
(h) On or prior to the Closing Date, counsel for the
Representative shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of enabling them to
review the matters referred to in this Paragraph 9, or in order to evidence the
accuracy, completeness or satisfaction of any of the representations, warranties
or conditions herein contained.
(i) Prior to the Closing Date:
(i) There shall have been no material adverse
change in the condition or prospects or the business activities, financial or
otherwise, of the Company or Veritas, from the latest dates as of which such
condition is set forth in the Registration Statement and Prospectus;
(ii) There shall have been no transaction, outside
the ordinary course of business, entered into by the Company or Veritas, from
the latest date as of which the financial condition of the Company, is set forth
in the Registration Statement and Prospectus which is material to the Company,
which is either (x) required to be disclosed in the Prospectus or Registration
Statement and is not so disclosed, or (y) likely to have a material adverse
effect on the business or financial condition of the Company;
(iii) The Company shall be in default under any
material provision of any instrument relating to any outstanding indebtedness,
except as described in the Prospectus;
(iv) No material amount of the assets of any of
the Company or Veritas shall have been pledged, mortgaged or otherwise
encumbered, except as set forth in the Registration Statement and Prospectus;
(v) No action, investigation suit or proceeding,
at law or in equity, shall have been pending or to the best of their knowledge
threatened against the Company or Veritas or affecting any of their respective
properties or businesses before or by any court or federal or state commission,
board or other administrative agency wherein an unfavorable decision, ruling or
finding would materially and adversely affect the business,
-38-
operations, prospects or financial condition or income of the Company, taken as
a whole, except as set forth in the Registration Statement and Prospectus;
(vi) No stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated or, to the best of
the knowledge of the Company threatened by the Commission; and
(vii) Each of the representations and warranties of
any of the Company and Veritas contained in this Agreement and in each
certificate and document contemplated under this Agreement to be delivered to
you was, when originally made and is at the time such certificate is dated, true
and correct.
(j) Concurrently with the execution and delivery of this
Agreement and at the Closing Date, you shall have received a certificate of the
Company signed by the Chief Executive Officer of each of the Company and Veritas
and the principal financial officer of each of the Company and Veritas, dated as
of the Closing Date, to the effect that the conditions set forth in subparagraph
(i) above have been satisfied and that, as of the Closing Date, the
representations and warranties of the Company and Veritas set forth in Paragraph
2 herein and the statements in the Registration Statement and Prospectus were
and are true and correct in all material respects. Any certificate signed by any
officer of the Company or Veritas, and delivered to you or for counsel for the
Representative shall be deemed a representation and warranty by the Company or
Veritas, as the case may be, to the Representative as to the statements made
therein.
(k) At the time this Agreement is executed, and at the Closing
Date, you shall have received a "cold comfort" letter, addressed to the
Representative and in form and substance satisfactory in all respects to you and
counsel for the Representative, from Xxxxxxx X. Xxxxxxxxxxx, C.P.A., auditors
for the Company, with regards to the Company's financial statements, dated as of
the date of this Agreement and as of the Closing Date.
(l) All proceedings taken in connection with the
authorization, issuance or sale of the Units, Common Stock and Warrants included
therein, Representative's Warrants, the Representative's Securities, and the
Overallotment Securities as herein contemplated shall be satisfactory in form
and substance to you and to counsel to the Representative, and the
Representative shall have received from such counsel an opinion, dated as the
Closing Date with respect to such of these proceedings as you may reasonably
require.
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(m) The Company and Veritas, as the case may be, shall have
furnished to you such certificates, additional to those specifically mentioned
herein, as you may have reasonably requested in a timely manner as to the
accuracy and completeness, at the Closing Date, of any statement in the
Registration Statement or the Prospectus, as to the accuracy, at the Closing
Date, of the representations and warranties of each of the Company and Veritas,
as the case may be, herein and in each certificate and document contemplated
under this Agreement to be delivered to you, as to the performance by the
Company and Veritas of their obligations hereunder and under each such
certificate and document or as to the fulfillment of the conditions concurrent
and precedent to your obligations hereunder.
(n) On or before the Closing Date, the Company shall cause to
be provided, and the Representative shall have received, from each officer,
director and shareholder of the Company, "lockup" agreements from each such
person restricting any sales, transfers, pledges or other hypothecations of such
person's shares of any class of equity security of the Company for a period of
eighteen (18) months from the Closing Date.
(o) The obligation of the Representative to purchase any
Securities hereunder is subject to the accuracy of the representations and
warranties of the Company contained herein on and as of the Option Closing Date
and to the satisfaction on and as of the Option Closing Date of the conditions
set forth herein.
(p) On the Closing Date there shall have been duly tendered to
you for your account the appropriate number of shares of Common Stock and
Warrants constituting the Securities.
(q) No action shall have been taken by the Commission or the
NASD the effect of which would make it improper, at any time prior to the
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Securities and no proceedings for the taking of such action shall
have been instituted or shall be pending, or, to the knowledge of the
Representative, the Company shall be contemplated by the Commission or the NASD.
The Company and the Representative represent that at the date hereof each has no
knowledge that any such action is in fact contemplated against any of them by
the Commission or the NASD.
(r) Prior to the Effective Date, the Company will make all
filings required, including registration under the Exchange Act, to obtain, and
shall have obtained and shall use its best efforts to maintain, the listing of
the Common Stock on the NASDAQ SmallCap Market.
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(s) If any of the conditions herein provided for in this
Paragraph shall not have been fulfilled, or all "lock-up" letters restricting
sales, pledges, transfers or hypothecations of any kind by officers, directors
or shareholders of the Company for eighteen (18) months after the Closing Date
have not been received, as of the date indicated, this Agreement and all
obligations of the Representative under this Agreement may be canceled at, or at
any time prior to, each Closing Date by the Representative notifying the Company
of such cancellation in writing or by telegram at or prior to the applicable
Closing Date. Any such cancellation shall be without liability of the
Representative to the Company or to Veritas.
10. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the conditions set forth below, each of the
Company and Veritas, jointly and severally, agrees to indemnify and hold
harmless the Representative and each of the Representatives and each person, if
any, who controls such Representative (such person, a "controlling person")
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act, and any of its agents including its attorneys, against any and all losses,
liabilities, claims, damages, actions and expenses or liability, joint or
several, whatsoever (including but not limited to any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, including those
regarding legal fees), joint or several, to which it or such controlling persons
may become subject under the Act, the Exchange Act or under any other statute or
at common law or otherwise or under the laws of foreign countries, arising out
of or based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any Preliminary Prospectus or
the Prospectus (as from time to time amended and supplemented); in any
post-effective amendment or amendments or any new registration statement and
prospectus in which is included the shares of the Company issued or issuable
upon exercise of the Representative's Warrants, or in any application or other
document or written communication (in this Paragraph 10 collectively called
"application") executed by the Company and Veritas or based upon written
information furnished by the Company filed in any jurisdiction in order to
qualify the Common Stock, Additional Securities, Representative's Warrants and
Representative's Shares underlying the Representative's Warrant under the
securities laws thereof or filed with the Commission or any securities exchange;
or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus, in the light of the circumstances under which they
were made), unless such statement or omission was made
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in reliance upon or in conformity with written information furnished to the
Company with respect to the Representative by or on behalf of the Representative
expressly for use in any Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment or supplement thereof, or in application, as the
case may be. Notwithstanding the foregoing, the Company shall have no liability
under this Paragraph 10(a) if any such untrue statement or omission made in a
Preliminary Prospectus, is cured in the Prospectus and the Representative failed
to deliver to the person or persons alleging the liability upon which
indemnification is being sought, at or prior to the written confirmation of such
sale, a copy of the Prospectus. This indemnity will be in addition to any
liability which the Company or Veritas may otherwise have.
(b) The Representative agrees to indemnify and hold harmless
the Company and each of the officers and directors of the Company who have
signed the Registration Statement and each other person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the Exchange Act, to the same extent as the foregoing indemnity from the Company
to the Representative in Paragraph 10(a), but only with respect to any untrue
statement or alleged untrue statement of any material fact contained in or any
omission or alleged omission to state a material fact required to be stated in
the Registration Statement or Prospectus or any amendment or supplement thereof
or necessary to make the statements therein not misleading or in any application
made solely in reliance upon, and in conformity with, written information
furnished to the Company by you specifically expressly for use in the
preparation of the Registration Statement or Prospectus directly relating to the
transactions effected by the Representative and the Representatives in
connection with this Offering. This indemnity agreement will be in addition to
any liability which the Representative may otherwise have. Notwithstanding the
foregoing, the Representative shall have no liability under this Paragraph 10(b)
if any such untrue statement or omission made in a Preliminary Prospectus is
cured in the Prospectus, and the Prospectus is delivered to the person or
persons alleging the liability upon which indemnification is being sought.
(c) If any action is brought against any indemnified party
(the "Indemnitee") in respect of which indemnity may be sought against another
party pursuant to the foregoing (the "Indemnitor"), the Indemnitor shall assume
the defense of the action, including the employment and fees of counsel
(reasonably satisfactory to the Indemnitee) and payment of expenses. Any
Indemnitee 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
Indemnitee unless the employment of such counsel shall have been authorized in
writing by the Indemnitor in
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connection with the defense of such action. If the Indemnitor shall have
employed counsel to have charge of the defense or shall previously have assumed
the defense of any such action or claim, the Indemnitor shall not thereafter be
liable to any Indemnitee in investigating, preparing or defending any such
action or claim. Each Indemnitee shall promptly notify the Indemnitor of the
commencement of any litigation or proceedings against the Indemnitee in
connection with the issue and sale of the Common Stock, Additional Securities,
Representative's Warrants or Representative's Shares, or in connection with the
Registration Statement or Prospectus.
(d) In order to provide for just and equitable contribution
under the 1933 Act in any case in which: (i) the Representative makes a claim
for indemnification pursuant to Paragraph 10 hereof, but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the time to appeal has expired or the last right of appeal has
been denied) that such indemnification may not be enforced in such case
notwithstanding the fact that this Paragraph 10 provides for indemnification of
such case; or (ii) contribution under the 1933 Act may be required on the part
of the Representative in circumstances for which indemnification is provided
under this Paragraph 10, then, and in each such case, the Company and the
Representative shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after any contribution from others) in
such proportion so that the Representative is responsible for the portion
represented by dividing the total compensation received by the Representative
herein by the total purchase price of all Securities sold in the public offering
and the Company is responsible for the remaining portion; provided, that in any
such case, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11 (f) of the 0000 Xxx) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The foregoing contribution agreement shall in no way affect
the contribution liabilities of any persons having liability under Section 11 of
the 1933 Act other than the Company, Veritas, and the Representative. As used in
this Paragraph 10, the term "Representative" includes any officer, director, or
other person who controls the Representative within the meaning of Section 15 of
the 1933 Act, and the word "Company" includes any officer, director or person
who controls the Company or Veritas, within the meaning of Section 15 of the
1933 Act. If the full amount of the contribution specified in this paragraph is
not permitted by law, then the Representative and each person who controls the
Representative shall be entitled to contribution from the Company to the full
extent permitted by law. No contribution shall be
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requested with regard to the settlement of any matter from any party who did not
consent to the settlement.
(e) Within fifteen (15) days after receipt by any party to
this Agreement (or its Representative) of notice of the commencement of any
action, suit or proceeding, such party will, if a claim for contribution in
respect thereof is made against another party (the "contributing party"), notify
the contributing party of the commencement thereof, but the omission so to
notify the contributing party will not relieve it from any liability it may have
to any other party other than for contribution hereunder.
In case any such action, suit or proceeding is brought against
any party, and such party notifies a contributing party or his or its
Representative of the commencement thereof within the aforesaid fifteen (15)
days, the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution without the written consent of such contributing
party. The indemnification provisions contained in this Paragraph 10 are in
addition to any other rights or remedies which either party hereto may have with
respect to the other or hereunder.
11. REPRESENTATIONS, WARRANTIES, AND AGREEMENTS TO SURVIVE
DELIVERY.
The respective indemnity and contribution agreements by the
Representative, Veritas and the Company contained in Paragraph 10 hereof, and
the covenants, representations and warranties of the Company, Veritas and the
Representative set forth in this Agreement, shall remain operative and in full
force and effect regardless of (i) any investigation made by the Representative
or on its behalf or by or on behalf of any person who controls the
Representative, or by the Company or Veritas, or any controlling person of the
Company, or any director or any officer of the Company or Veritas, (ii)
acceptance of any of the Securities and payment therefor, or (iii) any
termination of this Agreement, and shall survive the delivery of the Securities
and any successor of the Representative or the Company or Veritas, or of any
person who controls you or the Company or Veritas, or any other indemnified
party, as the case may be, shall be entitled to the benefit of such respective
indemnity and contribution agreements. The respective indemnity and contribution
agreements by the Representative and the Company or Veritas contained in this
Paragraph 11 shall be in addition to any liability which the Representative and
the Company or Veritas may otherwise have.
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12. DEFAULT.
If one or more underwriters default in their obligations to purchase
Securities hereunder and the aggregate number of such Securities that such
defaulting underwriter or underwriters agreed but failed to purchase is ten
percent or less of the aggregate number of Securities to be purchased by all of
the underwriters at such time hereunder, the other underwriters, as the case may
be, may make arrangements satisfactory to the Representative, as the case may
be, for the purchase of such Securities by other persons (who may include one or
more of the non-defaulting underwriters, including the Representative), but if
no such arrangements are made by the Closing Date or Option Closing Date, as the
case may be, the other underwriters shall be obligated severally in proportion
to their respective commitments hereunder to purchase the Securities that such
defaulting underwriter or underwriters agreed but failed to purchase. If one or
more underwriters so default with respect to an aggregate number of Securities
that is more than ten percent of the aggregate number of Securities, as the case
may be, to be purchased by all of the underwriters at such time hereunder, and
if arrangements satisfactory to the Representative or Representative are not
made within 36 hours after such default for the purchase by other persons (who
may include one or more of the non-defaulting underwriters, including the
Representative) of the Securities with respect to which such default occurs,
this Agreement will terminate without liability on the part of any
non-defaulting underwriter or the Company, except as provided herein. In the
event of any default by one or more underwriters as described in this Section 9,
the Representative shall have the right to postpone the Closing Date on the
Option Closing Date for not more than seven business days in order that any
necessary changes may be made in the arrangements or documents for the purchase
and delivery of the Securities. As used in this Section 12, the term
"underwriter" includes any Underwriter, any co-underwriter, selected dealer or
syndicate member, and any person substituted for an underwriter under this
Section, unless otherwise specified. Nothing herein shall relieve any defaulting
underwriter from liability for its default.
13. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
(a) This Agreement shall become effective at 10:00 a.m., New
York time, on the first full business day following the day on which you and the
Company receive notification that the Registration Statement became effective.
(b) This Agreement may be terminated by the Representative by
notifying the Company at any time on or before the Closing Date, if any domestic
or international event or act or occurrence has in your sole opinion, materially
disrupted, or in your sole opinion will in the immediate future materially
disrupt,
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securities markets; or if trading on the New York Stock Exchange, the American
Stock Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or NASDAQ or by order of the Commission or any other
governmental authority having jurisdiction; or if a moratorium in foreign
exchange trading by major international banks or persons has been declared; or
if the Company shall have sustained a loss material or substantial to the
Company taken as a whole by fire, flood, accident, hurricane, earthquake, theft,
sabotage or other calamity or malicious act which, whether or not such loss
shall have been insured, will, in your sole opinion, make it inadvisable to
proceed with the delivery of the Securities; or if there shall have been a
material adverse change in the conditions of the securities market in general,
as in your reasonable judgment would make it inadvisable to proceed with the
offering, sale and delivery of the Securities; or if there shall have been a
material adverse change in the financial or securities markets, particularly in
the over-the-counter market, in the United States having occurred since the date
of this Agreement; or your clearing agent has refused to grant you credit in
connection with the purchase of the Units, Common Stock or Warrants; or the
NASDAQ Stock Market, Inc. has refused to release the Units, Common Stock or
Warrants for trading on the NASDAQ SmallCap market.
(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Paragraph 13, the
Company shall be notified promptly by you by telephone or facsimile, confirmed
by letter.
(d) If this Agreement shall not become effective or if this
Agreement shall not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any undertaking, or to
materially satisfy any condition of this Agreement by it to be performed or
satisfied, the sole liability of the Company to the Representative, in addition
to the obligations assumed by the Company pursuant to Paragraph 8 herein, will
be to reimburse the Representative for the following: (i) Blue Sky counsel fees
and expenses to the extent set forth in Paragraph 8; (ii) Blue Sky filing fees;
and (iii) such reasonable out-of-pocket expenses of the Representative
(including the fees and disbursements of their counsel), to the extent set forth
in Paragraph 8(c), in connection with this Agreement and the proposed offering
of the Securities.
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Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Paragraph 8 and 10 hereof shall not be in any way affected by such election or
termination or failure to carry out the terms of this Agreement or any part
hereof.
14. NOTICES.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to the Representative, shall be
mailed by registered or certified mail, postage prepaid, return receipt
registered, or delivered personally with receipt acknowledged or by a
nationally-recognized next-day courier service with delivery confirmed to the
Representative at First Liberty Investment Group, Inc., 00 Xxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxx, Vice President,
with a copy thereof to Xxxxxxxx X. Xxxxxxx, Esq., Gusrae, Xxxxxx & Xxxxx, 000
Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, if sent to the Company, shall
be mailed or delivered as set forth above to the Company at East Coast Venture
Capital, Inc., 00 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Zindel Zelmanovitch, President, with a copy thereof to Berlack,
Israels & Xxxxxxxx, LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx Xxxxxxxxx, Esq., and if sent to Veritas, to Veritas Financial
Corp., c/o East Coast Venture Capital, Inc., 00 Xxxx 00xx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Zindel Zelmanovitch, President.
15. PARTIES.
This Agreement shall inure solely to the benefit of and shall be
binding upon, the Representative and any underwriters or selected dealers as to
which the Representative shall or may act hereunder as Representative, the
Company, Veritas and the controlling persons, directors and officers referred to
in Paragraph 10 hereof, and their respective successors, legal representatives
and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained.
16. CONSTRUCTION.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York and shall supersede any
agreement or understanding, oral or in writing, express or implied, between any
of the Company, Veritas and you relating to the sale of any of the Securities.
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17. JURISDICTION AND VENUE.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York with respect to contracts made and to be fully
performed therein, without regard to the conflicts of laws principles thereof.
The parties hereto hereby agree that any suit or proceeding arising under this
Agreement, or in connection with the consummation of the transactions
contemplated hereby, shall be brought solely in a federal or state court located
in the City, County and State of New York, or in any court of competent
jurisdiction selected by the Holder. By its execution hereof, the Company hereby
consents and irrevocably submits to the IN PERSONAM jurisdiction of the federal
and state courts located in the City, County and State of New York (or any such
other court of competent jurisdiction selected by the Representative) and agrees
that any process in any suit or proceeding commenced in such courts under this
Agreement may be served upon it personally or by certified or registered mail,
return receipt requested, or by Federal Express or other courier service, with
the same force and effect as if personally served upon it in New York City (or
in the city or county in which such other court is located). The parties hereto
each waive any claim that any such jurisdiction is not a convenient forum for
any such suit or proceeding and any defense of lack of IN PERSONAM jurisdiction
with respect thereto.
18. COUNTERPARTS.
This Agreement may be executed in counterparts.
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If the foregoing correctly sets forth the understanding between the
Representative and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
EAST COAST VENTURE CAPITAL, INC.
By:
---------------------------------------
Zindel Zelmanovitch, President
VERITAS FINANCIAL CORP.
By:
---------------------------------------
Name:
Title:
Accepted as of the date first above written:
FIRST LIBERTY INVESTMENT GROUP, INC.,
as Representative
By:
-----------------------------------------
Xxxxxxx X. Xxxxxx, Vice President
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