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EXHIBIT 1.1
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
FORM OF UNDERWRITING AGREEMENT
, 1999
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▇▇▇▇▇▇-▇▇▇▇ Securities, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ corp., a Florida corporation (the
"Company"), hereby confirms its agreement with ▇▇▇▇▇▇-▇▇▇▇ Securities, Inc.
(being referred to herein as "you" or the "Underwriter"), as follows:
1. Introduction. The Company proposes to engage you to sell on
its behalf, 2,250,000 shares of Common Stock (the "Shares"). The Shares are
hereinafter referred to as the "Firm Securities." The Company also proposes to
issue and sell to you, pursuant to the terms of the Underwriter's Warrant
Agreement, warrants (the "Underwriter's Warrants") for the purchase of up to an
additional 225,000 Redeemable Warrants to Purchase 225,000 shares of Common
Stock. The Underwriter's Warrants shall be exercisable during the four year
period commencing one year from the date of the Prospectus at an exercise price
of 120% of the Offering Price per Warrant, subject to adjustments in the number
of Shares issuable upon the exercise thereof and in the exercise price of the
Underwriter's Warrants as a result of certain events, including subdivisions and
combinations of the Common Stock. The Shares and the Underwriter's Warrants are
more fully described in the Registration Statement and the Prospectus referred
to below.
2. Representations and Warranties of the Company. The Company
represents and warrants to the Underwriter that:
a. The Company has filed with the Securities and Exchange
Commission (the "SEC") a registration statement and an amendment or amendments
thereto, on Form SB-2 (No. 333-75119), including any related preliminary
prospectus (the "Preliminary Prospectus"), for the registration of the Shares
and the Underwriter's Warrants (the "Common Shares"), under the Securities Act
of 1933, as amended (the "Act"), which registration statement and amendment or
amendments have been prepared by the Company in conformity with the requirements
of the Act, and the rules and regulations (the "Regulations") of the SEC
promulgated under the Act. The Company will promptly file a further amendment to
said registration statement, which has been similarly prepared, in the form
heretofore delivered to you and will not, before the registration statement
becomes effective, file any other amendment thereto to which you shall have
reasonably objected after having been furnished with a copy thereof. Except as
the context may otherwise
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require, such registration statement, as amended, on file with the SEC at the
time the registration statement becomes effective (including the prospectus,
financial statements, schedules, exhibits and all other documents filed as a
part thereof or incorporated therein and all information deemed a part thereof
as of such time pursuant to paragraph (b) of Rule 430(A) of the Regulations), is
hereinafter called the "Registration Statement," and the form of prospectus, in
the form first filed with the SEC pursuant to Rule 424(b) of the Regulations, is
hereinafter called the "Prospectus."
b. On the date upon which the Registration Statement is
declared effective by the SEC (the "Effective Date") and all times subsequent
thereto up to the Closing Date (as such term is defined in Section 4.c. hereof),
the Registration Statement and the Prospectus will comply in all material
aspects with the applicable provisions of the Act and the Regulations; 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, in light of the circumstances under which they were made,
not misleading. When any Preliminary Prospectus was first filed with the SEC
(whether filed as a part of the Registration Statement for the registration of
the securities or any amendment thereto or pursuant to Rule 424(a) of the
Regulations) and when any amendment thereof or supplement thereto was first
filed with the SEC, such Preliminary Prospectus complied or will comply in all
material respects with the applicable provisions of the Act and the Regulations
and did not and will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The representation and warranty made in this Section
2.b. does not apply to statements made or statements omitted in reliance upon
and in conformity with written information furnished to the Company with respect
to the Underwriter by the Underwriter expressly for use in the Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
c. This Agreement and the Underwriter's Warrant Agreement have
been (or as of the Closing Date will have been) duly and validly authorized by
the Company, and this Agreement constitutes and the Underwriter's Warrant
Agreement, when executed and delivered pursuant to this Agreement, will
(assuming due execution by the Underwriter) constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) as enforceability of any indemnification provision may be
limited under the federal and state securities laws, and (iii) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and the discretion of the court before
which any proceeding therefor may be brought. The Shares, the Underwriter's
Warrants and the Shares issuable upon exercise of the Underwriter's Warrants to
be issued and sold by the Company pursuant to this Agreement, have been duly
authorized and, when issued and paid for pursuant to the terms of the
Underwriter's Warrant, will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal liability by
reason of being such holders; the Shares and the Underwriter's Warrants are not
and will not be subject to the preemptive rights of any holders of any security
of
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the Company or similar contractual right granted by the Company; and all
corporate action required to be taken for the authorization, issuance and sale
of the Shares and the Underwriter's Warrants has been duly and validly taken.
The Underwriter's Warrants constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, to issue and sell, upon
exercise in accordance with the terms thereof, the number and type of the
Company's securities called for thereby; except (i) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and the discretion of
the court before which any proceeding therefor may be brought.
d. All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
the issuance and sales of all such securities complied in all respects with
applicable federal and state securities laws; the holders thereof have no rights
of rescission with respect thereto, and are not subject to personal liability by
reason of being such holders; and none of such securities were issued in
violation of the preemptive rights of any holders of any security of the Company
or similar contractual rights granted by the Company.
e. The Company has good and marketable title to, or valid and
enforceable contractual or leasehold estate in, all items of real and personal
property stated in the Prospectus to be owned or leased by it, free and clear of
all liens, encumbrances, claims, security interests, defects and restrictions of
any material nature whatsoever, other than those referred to in the Prospectus
and liens for taxes not yet due and payable.
f. There is no action, suit, proceeding, inquiry,
investigation, litigation or governmental proceeding pending or threatened
against, or involving the properties or business of the Company which might
materially and adversely affect the financial position, or prospects, or
business of the Company, except as referred to in the Prospectus.
g. All contracts and other documents required to be described
in the Registration Statement or the Prospectus fairly present the financial
position and the results of operations of the Company 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. There has been no material adverse change in
financial condition or results of operations of the Company or development
involving a prospective change in the condition or prospects of the Company,
financial or otherwise, since the date of the financial statements included in
the Prospectus, except as disclosed therein.
▇. ▇▇▇▇▇▇, Jasco + Company, P.A., whose report is filed with
the SEC as part of the Registration Statement, are independent accountants as
required by the Act and the Regulations, and are qualified in all respects to
provide the services contemplated by this Agreement.
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i. The Company has no subsidiaries. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of its state of incorporation. Except as otherwise set forth in the
Prospectus, the Company does not own, directly or indirectly, an interest in any
corporation, partnership, joint venture, trust or other business entity. The
Company is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which operations require such qualification
or licensing. The Company has all requisite corporate power and authority, and
the Company has all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials and
bodies (collectively, the "Approvals"), to own or lease its properties and
conduct its business as described in the Prospectus, except where the failure to
have such Approvals would not have a material adverse effect on the Company. The
Company is and has been doing business in compliance with all such material
authorizations, approvals, orders, licenses, certificates and permits and all
federal state and local laws, rules and regulations except where the failure to
do so would not have a material adverse effect on the Company. The Company has
all requisite corporate power and authority to enter into this Agreement and the
Underwriter's Warrant Agreement and to carry out the provisions and conditions
hereof, and all consents, authorizations, approvals and orders required in
connection therewith have been obtained. No consent, authorization or order of,
and no filing with, any court, government agency or other body is required for
the issuance of the Shares and the Underwriter's Warrant Agreement, pursuant to
the Agreement, and as contemplated by the Prospectus, except with respect to
applicable federal and state securities laws.
j. The outstanding debt, the property and the business of the
Company, conform in all material respects to the descriptions thereof contained
in the Registration Statement and Prospectus.
k. The Shares and the Underwriter's Warrants and other
securities issued or to be issued by the Company on or before the Closing Dates
described herein conform, or will conform when issued, in all material respects,
to all statements with respect thereto contained in the Registration Statement
and the Prospectus.
l. No material default exists in the due performance and
observance of any term, covenant or condition of any license, contract,
indenture, mortgage, deed of trust, note, loan or credit agreement, or any other
agreement or instrument evidencing instrument to which the Company, is a party
or by which the Company may be bound or to which any of the property or assets
of the Company, is subject.
m. The Company is not in violation of any term or provision of
its respective Articles of Incorporation or By-laws. Neither the execution and
delivery of this Agreement, nor the issue and sale of the Shares, the
Underwriter's Warrants, nor the consummation of any of the transactions
contemplated herein, nor the compliance by the Company with the terms and
provisions hereof has materially conflicted with or will materially conflict
with, or has resulted in or will result in a material breach of, any of the
terms and provisions of, or has constituted or will constitute a material
default under, or has resulted in or will result in the creation or imposition
of any lien,
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charge or encumbrance upon the property or assets of the Company, pursuant to
the terms 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 is a
party or by which the Company is or may be bound or to which any of the property
or assets of the Company, is subject; nor will such action result in any
material violation of the provisions of the respective Articles of Incorporation
or the By-laws of the Company or any contract or agreement, or any statute or
any order, rule or regulation applicable to the Company or any other regulatory
authority or other governmental body having jurisdiction over the Company.
n. All taxes which are due from the Company have been paid in
full, and the Company has no tax deficiency or claim outstanding or assessed
against it.
o. Subsequent to the respective dates as of which information
is given in the most recently circulated Preliminary Prospectus included as a
part of the Registration Statement, and except as may otherwise be indicated or
contemplated herein or therein, the Company has not issued any securities
(except for the issuance of securities described under the caption
"Capitalization") or (ii) declared or paid any dividend or made any other
distribution on or in respect to its capital stock; and the Company has not (i)
incurred any liability or obligation, direct or contingent, for borrowed money;
or (ii) entered into any transaction other than in the ordinary course of
business.
p. The SEC has not issued any order preventing or suspending
the use of any Preliminary Prospectus or part thereof.
q. On the Effective Date, (i) the authorization of capital
stock of the Company is as set forth in Registration Statement, and (ii) not
more than an aggregate of 100,000,000 shares of Common Stock shall be issued and
outstanding (including any and all (A) securities with equivalent rights as the
Common Stock, (B) 2,250,000 shares of Common Stock, or such equivalent
securities, issuable upon exercise of options, warrants and other contract
rights, and (C) securities convertible, directly or indirectly, into shares of
Common Stock or such equivalent securities, and excluding any warrants issuable
to the Underwriter in connection with the public offering of the Shares and any
options which may be outstanding to employees).
r. Except for the registration rights granted under the
Underwriter's Warrant Agreement, no holders of any securities of the Company or
of any options, warrants or convertible of exchangeable securities of the
Company exercisable for or convertible or exchangeable for securities of the
Company have the right to include any securities issued by the Company in the
Registration Statement or any registration statement to be filed by the Company.
s. The Company has entered employment agreements with ▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, E. ▇▇▇▇▇▇ zum ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in the form
filed as Exhibit 10.4 to the Registration Statement, and intends to procure
keyman life insurance policies in the amount of $2,000,000 on the lives of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
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t. The Company has filed a Registration Statement with the SEC
pursuant to Section 12(g) of the Exchange Act, and has used its best efforts to
have same declared effective by the SEC on an accelerated basis on the Effective
Date. In addition, the Company has taken all actions necessary to qualify the
Shares for listing on the Nasdaq Stock Market System ("Nasdaq") on the Effective
Date.
u. 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 Securities
hereunder or any other arrangements, agreements, understandings, commitments,
payments or issuances of securities with respect to the Company that may affect
the Underwriters' compensation, as determined by the National Association of
Securities Dealers, Inc. ("NASD").
v. Neither the Company nor any of its officers, directors or
partners, nor, to the knowledge of the Company, any of its employees, agents or
any other person acting on behalf of the Company has, directly or indirectly,
given or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer, supplier or official or
governmental agency or instrumentality of any government (domestic or foreign)
or person who was, is, or may be in a position to help or hinder the business of
the Company (or assist it in connection with any actual or proposed transaction)
which (i) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not given in the
past, might have had a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Prospectus, or (iii) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
w. The Company owns or possesses the requisite licenses or
rights to use all trademarks, service marks, service names, trade names, patents
and patent applications, copyrights, methods, protocols, techniques,
technologies, procedures and other rights (collectively the "Intangibles")
described as owned or used by the Company in the Registration Statement. There
is no claim, action or proceeding by any person pending or, to the Company's
knowledge, threatened, which pertains to or challenges the rights of the Company
with respect to any Intangibles used in the conduct of the business of the
Company, except as described in the Prospectus. To the Company's knowledge, the
Company's current products, services and processes do not infringe on any
Intangibles held by any third party.
x. Except as set forth in the Registration Statement, the
Company is under no obligation to pay royalties or fees of any kind whatsoever
to any third party with respect to Intangibles it has developed, uses, employees
or intends to use or employ.
y. The Company has generally enjoyed a satisfactory
employer/employee relationship with its respective employees and is in
compliance in all material respects with all federal, state and local laws and
regulations respecting the employment of their respective employees
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and employment practices, terms and conditions of employment wages and hours
relating thereto. There are no pending or, to the Company's knowledge,
threatened investigations involving the Company by the U.S. Department of Labor,
or any other governmental agency responsible for the enforcement of such
federal, state or local laws and regulations. There is no unfair labor practice
charge or complaint against the Company pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute, threatened against
or involving the Company, or any predecessor entity, and none has occurred. No
representation question exists respecting the employees of the Company. No
collective bargaining agreement or modification thereof is currently being
negotiated by the Company. No grievance or arbitration proceeding is pending
under any expired or existing collective bargaining agreements of the Company.
z. Neither the Company nor, to the Company's knowledge, any
of its employees, directors or shareholders has taken, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result 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 Shares.
aa. Except as described in the Registration Statement and
financial statements included therein, the Company does not maintain or has not
maintained, sponsored or contributed to any program or arrangement that is an
"employee pension benefit plan," and "employee welfare benefit plan" or a
"multi-employer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA Plans"), except for the Company's 1999 Stock Option
Plan. The Company does not presently maintain or contribute to or at any time in
the past, maintained or contributed to a defined benefit plan, as defined in
Section 3(35) of ERISA. The Company has never completely or partially withdrawn
from a "multi-employer plan."
ab. Except as set forth in the Prospectus under "Certain
Transactions," the Company is not a party to any agreement with any officer,
director or shareholder of the Company, or any affiliate or associate of any
such person or entity which is required to be disclosed in the Prospectus
pursuant to Regulation S-B. Except as set forth in the Prospectus, to the
Company's knowledge, no officer, director or shareholder of the Company or any
"affiliate" or "associate" (as these terms are defined in Rule 405 promulgated
under the Regulations) of any such person or entity or the Company, has or has
had, either directly or indirectly, (i) an interest in any person or entity
which (A) furnishes or sells services or products which are furnished or sold or
are proposed to be furnished or sold by the Company, or (B) purchases from or
sells or furnishes to the Company, any goods or services, or (ii) a beneficial
interest in any contract or agreement to which the Company is a party or by
which it may be bound or affected.
ac. The minute books of the Company have been made available
to Underwriter's counsel and contain a complete summary of all meetings and
actions by unanimous consent of directors and shareholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
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ad. The number of Shares to be offered to the public pursuant
to the Registration Statement represents at least 20% of the issued and
outstanding shares of the Common Stock after giving effect to the conversion of
all convertible securities and the exercise of all outstanding options and
warrants (excluding the shares reserved for issuance under the Company's Stock
Option Plan, Overallotment Option and the Underwriter's Warrant), and any
securities issued with the Underwriter's prior written consent.
ae. The Company is in the process of reviewing its operations
and any third parties with which the Company has a material relationship to
evaluate the extent to which the business or operations of the Company will be
affected by the Year 2000 Problem. As a result of such review to date, the
Company has no reason to believe, and does not believe, that the Year 2000
Problem will have a material adverse effect or result in any material loss or
interference with the Company's business or operations. The "Year 2000 Problem,"
as used herein, means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
af. Each officer and director of the Company and each record
owner of shares of Common Stock named in Schedule A hereto has agreed in writing
that such person will not, for a period of one year after the date of the
Prospectus (the "Lock-Up Period"), offer to sell, contract to sell, or otherwise
sell, dispose of, loan, pledge or grant any rights with respect to
(collectively, a "Disposition") any shares of Common Stock, any options or
warrants to purchase any shares of Common Stock or any securities convertible
into or exchangeable for shares of Common Stock (collectively, "Securities") now
owned or hereafter acquired directly by such person or with respect to which
such person has or hereafter acquires the power of disposition, otherwise than
(i) as a bona fide gift or a distribution to limited partners, members or
partners or shareholders of such person, provided that the donees or
distributees thereof (as the case may be) agree in writing to be bound by the
terms of this restriction or (ii) with the prior written consent of the
Underwriter. The foregoing restriction has been expressly agreed to preclude the
holder of the Securities from engaging in any hedging or other transaction which
is designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-Up Period, even if such Securities would be disposed
of by someone other than such holder. Such prohibited hedging or other
transactions would include any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including any put or call option) with
respect to any Securities or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives any
significant part of its value from the Securities. Notwithstanding the
foregoing, this restriction shall not prohibit (i) the sale of Option Shares to
the Underwriters pursuant to this Agreement or (ii) resales of shares of Common
Stock acquired either in the public offering to which the Registration Statement
relates or in subsequent open-market purchases. Furthermore, such person also
has agreed and consented to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of the Securities held by such
person except in compliance with this restriction. The Company has provided to
▇▇▇▇▇▇ &
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▇▇▇▇▇▇, LLP, counsel for the Underwriter ("Underwriters' Counsel"), a complete
and accurate list of all security holders of the Company and the number and type
of securities held by each security holder. The Company has provided to
Underwriters' Counsel true, accurate and complete copies of all of the
agreements pursuant to which its officers, directors and shareholders have
agreed to such or similar restrictions (the "Lock-Up Agreements") presently in
effect or effected hereby. The Company hereby represents and warrants that it
will not release any of its officers, directors or other shareholders from any
Lock-Up Agreements currently existing or hereafter effected without the prior
written consent of the Underwriter.
ag. In accordance with the provisions of Section 517.075,
Florida Statutes, the Company represents and warrants that it does not now do
business nor has it ever done business in or with the government of Cuba
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITER. The
Underwriter represents and warrants to the Company that it is a member of the
NASD and registered as a broker/dealer with the SEC. There are no past, pending
or, to the best of the Underwriter's knowledge, threatened proceedings involving
the NASD, the Commission or any state regulatory authority which would impair
the ability of the Underwriter to conduct the Offering contemplated hereunder.
4. PURCHASE, SALE AND DELIVERY OF THE SECURITIES AND
UNDERWRITER'S WARRANTS.
a. On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriter 2,250,000 Shares, and the Underwriter agrees
to purchase from the Company such 2,250,000 Shares at a purchase price of 90% of
the public offering price per Share at the time described herein to be sold by
the Underwriter, at an initial purchase price of $7.00 per Share.
b. On the Closing Date, the Company shall issue and sell to
the Underwriter, the Underwriter's Warrants at a total purchase price of $0.001
per warrant, which warrants shall entitle the holders thereof to purchase an
aggregate of up to 225,000 Shares. All of the Underwriter's Warrants shall be
exercisable for a period of four (4) years commencing one year from the date of
the Prospectus at an initial exercise price of 120% of the Offering Price per
Share. The Underwriter's Warrant Agreement and form of Warrant Certificate shall
be substantially in the form filed as Exhibit 4.1 to the Registration Statement.
c. Payment for the Underwriter's Warrants shall be made on the
Closing Date. Payment for the Firm Securities shall be made on the Closing Date
at the Underwriter's election by certified or bank cashier's check in New York
Clearing House funds, payable to the order of the Company at the offices of the
Underwriter or at such other place as agreed upon by the Underwriter or at such
other place as agreed upon by the Underwriter and the Company by wire transfer,
upon delivery of certificates (in form and substance satisfactory to the
Underwriter) representing the Securities or by confirmation of electronic
transfer of the Securities by or on behalf of the Company
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to the Underwriter, through the facilities of the Depository Trust Company
("DTC"), for the account of such Underwriter, against payment by or on behalf of
such Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to the Underwriter at
least forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). Delivery and payment for the Firm Securities shall be made at 10:00
a.m. New York time, on or before the fifth business day following each of the
closings or at such other time as shall be agreed upon by the Underwriter and
the Company. The hour and date of delivery and payment for the Firm Securities
are called the "Closing Date." The Firm Securities shall be registered in such
name or names and in such authorized denominations as the Underwriter may
request in writing at lease two (2) full business days prior to the Closing
Date. The Company will permit the Underwriter to examine and package any
certificates representing the Firm Securities for delivery, at least one (1)
full business day prior to the Closing Date.
d. The Company shall not be obligated to sell or deliver Firm
Securities except upon tender of payment by the Underwriter for the Firm
Securities.
5. PUBLIC OFFERING. The Underwriter is to make a public offering
of the Firm Securities, on a firm commitment basis. The Securities are to be
initially offered to the public at the offering price set forth on the cover
page of the Prospectus (such price being hereinafter called the "Public Offering
Price"). The Underwriter may, at its own expense, enter into one or more
agreements as the Underwriter, in its sole discretion, deems advisable, with one
or more broker-dealers who shall act as dealers in connection with such public
offering.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees
that it will:
a. Use its best efforts to cause the Registration Statement to
become effective and will notify the Underwriter immediately and confirm the
notice in writing, (i) when the Registration Statement and any post-effective
amendment thereto becomes effective, (ii) of the issuance by the SEC of any stop
order or of the initiation, or the threatening, of any proceeding for that
purpose, (iii) of the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Shares, or the
Underwriter's Warrants for offering or sale in any jurisdiction or of the
initiation, or the threatening, of any proceeding for that purpose, and (iv) of
the receipt of any comments from the SEC. If the SEC or any state securities
commission shall enter a stop order or suspend such qualification at anytime,
the Company will make every reasonable effort to obtain promptly the lifting of
such order.
b. File the Prospectus (in form and substance satisfactory to
the Underwriter) or transmit the Prospectus by a means reasonably calculated to
result in filing with the SEC in accordance with Rule 424.
c. During the time when a prospectus is required to be
delivered under the Act,
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use all reasonable efforts to comply with all requirements imposed upon it by
the Act and the Exchange Act, as now and hereafter amended and by the
Regulations, as from time to time are in force, so far as necessary to permit
the continuance of sales of or dealings in the Shares and the Underwriter's
Securities in accordance with the provisions hereof and the Prospectus. If at
any time when a prospectus relating to the Shares is required to be delivered
under the Act, any event shall have occurred as a result of which, in the
opinion of counsel for the Company or counsel for the Underwriter 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 in light
of the circumstances under which they were made, not misleading or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Underwriter promptly and prepare and file with the SEC
an appropriate amendment or supplement in accordance with Section 10 of the Act.
d. Deliver to the Underwriter, without charge, such number of
copies of each Preliminary Prospectus and the Prospectus as the Underwriter may
reasonably request and, as soon as the Registration Statement or any amendment
or supplement thereto becomes effective, deliver to the Underwriter two signed
copies of the Registration Statement, including exhibits, and all post-effective
amendments thereto and copies of all exhibits filed therewith or incorporated
therein by reference and signed copies of all consents of certified experts.
e. Endeavor in good faith, in cooperation with the
Underwriter, at or prior to the time the Registration Statement becomes
effective, to qualify the Shares and the Underwriter's Securities for offering
and sale under the securities' laws of such jurisdictions as the Underwriter may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Underwriter agrees that such
action is not at the time necessary or advisable, use all reasonable efforts to
file and make such statements or reports at such times as are or may reasonably
be required by the laws of such jurisdiction.
f. Make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar
month following the Closing Date, an earnings statement (which need not be
certified by independent public or independent certified public accounts unless
required by the Act or the Regulations, but which shall satisfy the provisions
of Section 11(a) of the Act) covering a period of at least twelve consecutive
months beginning after the Effective Date.
g. For a period of five years from the Effective Date, furnish
to the Underwriter copies of such financial statements and other periodic and
special reports as the Company from time to time furnishes generally to holders
of any class of its securities, and promptly furnish to the Underwriter (i) a
copy of each periodic report the Company shall be required to file with the SEC,
(ii) a copy of each press release and every news item and article with respect
to the Company or any Subsidiary or their respective affairs which was released
by the Company, (iii) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or
13E-4 received or prepared by the Company, and (iv) such
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additional documents and information with respect to the Company or any
Subsidiary and their respective affairs or any future subsidiaries of the
Company as the Underwriter may from time to time reasonably request.
h. Apply the net proceeds from the offering received by it in
a manner consistent with the caption "USE OF PROCEEDS" in the Prospectus.
i. Deliver to the Underwriter, prior to filing, any amendment
or supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and not file any such amendment or supplement to which
the Underwriter shall reasonably object, after being furnished such copy, in
writing with reasonable specificity as to the nature and extent of any
objection.
j. Furnish to the Underwriter as early as practicable prior to
the date hereof and the Closing Date, but not later than two (2) full business
days prior thereto, a copy of the latest available unaudited interim financial
statements of the Company (which in no event shall be as of a date more than
thirty (30) days prior to the Effective Date) which have been read by the
Company's independent accountants as stated in their letter to be furnished to
the Underwriter pursuant to Section 8(g) hereof.
k. For a period of three (3) years from the Closing Date,
provide the Underwriter, upon its request, at the Company's sole expense, with
access to daily consolidated financial transfer sheets and weekly Depository
Trust Company reports, relating to the Common Stock, such Common Stock reports
to be transmitted by facsimile and designate American Securities Transfer &
Trust Company, Inc., as transfer agent for the Company's securities or such
other transfer agent mutually agreeable by the Company and the Underwriter.
l. For a period of three (3) years after the Effective Date,
engage an advisor (the "Advisor") designated in writing by the Underwriter to
the Board of Directors of the Company (the "Board"), if requested by the
Underwriter. In the event the Underwriter shall not have designated such
individual at the time of any meeting of the Board of such person is unavailable
to serve, the Company shall notify the Underwriter of each meeting of the Board.
All individual designated by the Underwriter shall receive all notices and other
correspondence and communications sent by the Company to members of the Board.
In addition, such Advisor shall 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 not less than four (4) formal and
"in person" meetings of its Board of Directors in each such year at which
meetings such Advisor shall be permitted to attend as set forth herein; said
meetings shall be held quarterly each year and thirty (30) days advance notice
of such meetings shall be given to the Advisor. Further, during such three (3)
year period, the Company and its principal stockholders shall give notice to the
Underwriter with respect to any proposed acquisitions, mergers, reorganizations
or other similar transactions.
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The Company agrees to indemnify and hold the Underwriter and
such Advisor harmless against any and all claims, actions, damages, costs and
expenses, and judgments arising solely out of the attendance and participation
of the Advisor at any such meeting described herein. In the event the Company
maintains a liability insurance policy affording coverage for the acts of its
officers and directors, it agrees, if possible (without any additional premium
or other related cost to the Company) to include the Advisor as an insured under
such policy.
m. Until the sooner of (i) seven (7) years from the date
hereof, or (ii) the sale to the public of the Underwriter's Warrant Shares, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Form SB-2 (or other appropriate form) for the registration
under the Act of the Underwriter's Securities.
n. For a period of five (5) years from the date hereof, use
its best efforts to maintain the quotation by Nasdaq of the Common Stock.
o. Supply the Underwriter with one, and ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
counsel to the Underwriter, with two (2) bound volumes of the underwriting
materials within a reasonable time after the latest Closing Date.
p. For a period of two years from the Effective Date, not
issue any shares of Common Stock or Preferred Stock or any warrants, options or
other rights to purchase Common Stock or Preferred Stock at a price less than
120% of the initial public offering price without the prior written consent of
the Underwriter; provided, however, that the Company may issue securities upon
the conversion of any securities outstanding on the date hereof pursuant to the
terms thereof and upon the exercise of any warrants or options outstanding on
the date hereof pursuant to the terms thereof.
q. So long as the Shares or Underwriter's Securities are
registered under the Exchange Act, the Company will hold an annual meeting of
shareholders for the election of directors within 180 days after the end of each
of the Company's fiscal years or at such other date as mutually agreed upon by
and between the Underwriter and the Company, and, within 150 days after the end
of each of the Company's fiscal years will provide the Company's shareholders
with the audited financial statements of the Company as of the end of the fiscal
year just completed prior thereto. Such financial statements shall be those
required by Rule 14a-3 under the Exchange Act and shall be included in an annual
report pursuant to the requirements of such Rule.
r. Enter into the Underwriter's Warrant Agreement in
substantially the form filed as Exhibit 4.1 to the Registration Statement.
s. The Company has or shall purchase term keyman insurance on
the lives of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in the amount of $2,000,000
naming the Company as the sole beneficiary thereof, as soon as possible after
the Closing Date.
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t. Take all necessary and appropriate actions to be included
in Standard and Poor's Corporation Descriptions.
7. PAYMENT OF EXPENSES.
a. The Company hereby agrees to pay all reasonable expenses
(other than fees of counsel to the Underwriter, except as provided in (iii)
below) in connection with the offering, including but not limited to, (i) the
preparation, printing, filing and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement and the Prospectus and
the printing and mailing of this Agreement and related documents, including the
cost of all copies thereof and of the Preliminary Prospectus and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriter in quantities of herein above state, (ii) the printing, engraving,
issuance, and delivery of the Shares and the Underwriter's Warrants, including
any transfer or other taxes payable thereon, (iii) the qualification of the
Shares and the Underwriter's Warrants under state or foreign securities or "Blue
Sky" laws and determination of the status of such securities under legal
investment laws, including the costs of printing and mailing the "Preliminary
Blue Sky Memorandum," and "Legal Investments Survey," if any, and fees of
counsel for the Underwriter (which fees shall be payable by the Company in the
sum of up to $25,000) and disbursements of counsel for the Underwriter, (iv)
advertising costs and expenses including but not limited to the costs and
expenses in connection with the "road show", information meetings and
presentations, bound volumes and "tombstones" in publications selected by the
Underwriter and prospectus memorabilia, (v) costs and expenses in connection
with due diligence investigations, including but not limited to the fees of any
independent counsel or consultant retained, and all reasonable travel and
lodging expenses incurred by you and/or counsel to the Underwriter in connection
with visits to, and examination of, the Company's premises, (vi) fees and
expenses of the transfer agent and warrant agent, (vii) applications for
assignments of a rating of the Securities by qualified rating agencies, and
(viii) the fees payable to NASD and Nasdaq. The $25,000 payment to counsel for
the Underwriter shall not include fees of special counsel if same is required to
be incurred in a merit review state which may require local counsel. In this
connection, Blue Sky applications shall be made in such states and jurisdictions
as shall be requested by the Underwriter. Payments with regard to items (iii),
(iv), and (v) shall be made on or before the Closing Date. The Underwriter shall
provide the Company with a written statement itemizing such expenses. In
addition to the foregoing, the Company shall subscribe to Blue Sky Data, a data
and reporting concern, for the purpose of tracking and maintaining compliance
with all applicable Blue Sky laws.
b. The Company additionally agrees to pay to the Underwriter
an aggregate non-accountable expense allowance in addition to the expenses
payable, pursuant to Section 6(a), equal to three (3%) percent of the gross
proceeds received by the Company from the sale of Firm Securities and, on its
part, the Underwriter agrees to deduct from the said three (3%) percent
allowance $40,000 previously paid by the Company to the Underwriter as an
advance against payment due pursuant to the provisions of this Section 6(b). In
the event the Underwriter terminates the offering or is unable to consummate the
offering within one year of the date hereof, the advances toward the
non-accountable expenses shall be non-refundable and deemed fully earned in
connection
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with its due diligence efforts and all services provided to the date of such
termination.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriter to purchase and pay for the Securities, as provided herein,
shall be subject to the continuing accuracy of the representations and
warranties of the Company as of the date hereof and as of the Closing Date, to
the accuracy of the statements of officers of the Company made pursuant to the
provisions hereof and to the performance by the Company of its obligations
hereunder and to the following conditions:
a. The Registration Statement shall have become effective not
later than 5:00 p.m., New York time, on the date of this Agreement or such later
date and time as shall be consented to in writing by you, and, at the Closing
Date, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or contemplated by the SEC and any request on the
part of the SEC for additional information shall have been complied with to the
reasonable satisfaction of Underwriter's Counsel.
b. At the Closing Date, the Underwriter shall have received
the favorable opinion of Broad and ▇▇▇▇▇▇, counsel to the Company dated the
Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriter's Counsel, to the effect that:
(1) the Company (A) has been incorporated under the Florida
Business Corporations Act and its status is active, (B) is qualified
and in good standing as a foreign corporation in each jurisdiction in
which, to such counsel's knowledge, its ownership or leasing of any
properties or the character of its operations requires such
qualifications, except where failure to do so would have a material
adverse effect on the Company, and (C ) has all requisite power and
authority to own or lease its properties and conduct its business as
described in the Prospectus;
(2) the Shares, Underwriter's Warrants and the Common Shares
have been duly authorized and are, or in the case of the Underwriter's
Warrants, will be, upon exercise and payment therefor, validly issued,
fully paid and non-assessable securities of the Company, and the
holders thereof are not and will not be subject to personal liability
by reason of being such holders; none of the Shares, Underwriter's
Warrants or the Common Shares (i) are subject to any preemptive or
similar contractual rights of any stockholder of the Company by reason
of the Company's certificate of incorporation, as amended, or any
applicable statute; or (ii) are subject to any preemptive, or, to such
counsel's knowledge, similar contractual rights of any stockholder of
the Company by reason of any agreement to which the Company is a party;
all corporate action required to be taken for the authorization, issue
and sale of such securities has been duly and validly taken; if issued,
the Underwriter's Warrants shall constitute, valid and binding
obligations of the Company to issue and sell, upon exercise thereof and
payment therefor, the number and type of securities of the Company
called for thereby; and the certificates representing the Shares and
the
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Underwriter's Warrant are in due and proper form;
(3) except as described in the Prospectus, to such counsel's
knowledge, the Company does not own an interest in any corporation,
partnership, joint venture, trust or other business entity.
(4) this Agreement and the Underwriter's Warrant Agreement
have each been duly and validly authorized, executed and delivered by
the Company, assuming due execution by the parties thereto other than
the Company, and are valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective
terms, except (A) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (B) as enforceability of any indemnification provision may
be limited under the federal and state securities laws, and C) that the
remedy of specific performance, injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought;
(5) to such counsel's knowledge, there are no contracts or
other documents required to be described in the Prospectus or to be
filed as exhibits to the Registration Statement other than those
described and filed as required, and to such counsel's knowledge, there
are no statutes, rules or regulations or legal governmental proceedings
required to be described in the Prospectus which are not described as
required and no legal or governmental proceedings pending or threatened
which could materially adversely affect the business or financial
conditions of the Company which have not been disclosed in the
Prospectus;
(6) the Registration Statement is effective under the Act, and
to such counsel's knowledge, no proceedings for a stop order are
pending or, to such counsel's knowledge threatened under the Act;
(7) all consents, approvals, authorizations or orders of any
court or governmental agency or body (other than such as may be
required under Blue Sky laws, as to which no opinion need be rendered)
required in connection with the consummation of the transactions
contemplated by this Agreement have been obtained and are in effect;
(8) neither the execution and delivery of this Agreement, the
Underwriter's Warrant Agreement nor the issue and sale of the Shares,
Underwriter's Warrants or the Common Shares, nor the consummation of
the transactions contemplated hereby, nor the compliance by the Company
with the terms and provisions hereof, constitute a default under, any
agreement that the Company is a party to, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to the terms of any mortgage, deed of
trust, note, indenture or loan or credit agreement or any other
agreement or instrument known to such counsel (after due inquiry) to
which the Company is a party or by which the Company may be bound or
which any of the property or assets of
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the Company is subject; nor will such action result in any violation
of the provisions of the Articles of Incorporation or the By-laws of
the Company, or any statute or any order, rule or regulation
applicable to the Company of any court or of any federal, state or
other regulatory authority or other governmental body having
jurisdiction over the Company;
(9) the Registration Statement, each preliminary Prospectus
and the Prospectus and any post-effective amendments or supplements
thereto (other than the financial statements included therein, as to
which no opinion need be rendered) comply as to form in all material
respects with the requirements of the Act and Regulations. Such counsel
shall state that such counsel has participated in conferences with
officers and other representatives of the Company, representatives of
the independent public accounts for the Company and representatives of
the Underwriter at which the contents of the Registration Statement,
the Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in
the Registration Statement and Prospectus, on the basis of the
foregoing, no facts have come to the attention of such counsel which
lead them to believe that either the Registration Statement or any
amendment thereto at the time such Registration Statement or amendment
became effective or the Prospectus as of the date of such opinion
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial
statements and schedules and other financial and statistical data
included in the Registration Statement or Prospectus);
(10) the terms and provisions of the Shares, the Underwriter's
Warrants, the Common Shares and all other securities issued or issuable
by the Company conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(11) to such counsel's knowledge, the Company is not in breach
of, or in default under, any term or provision of any indenture,
mortgage, deed of trust, lease, 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 is a
party or by which the Company or any of their respective properties may
be bound or affected; the Company is not in violation of any term or
provision of its Articles of Incorporation or By-laws, and the Company
is not in violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, except as referred to in
the Prospectus;
(12) the statements in the Prospectus under "RISK FACTORS",
"BUSINESS", "CERTAIN TRANSACTIONS", "MANAGEMENT" and "DESCRIPTION OF
SECURITIES" have been reviewed by such counsel, and insofar as they
refer to statements of law, descriptions of statutes, licenses, rules
or regulations or legal conclusions are correct in all material
aspects;
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(13) the authorized and outstanding capital stock of the
Company is as set forth under the caption stock of the Company is as
set forth under the caption "CAPITALIZATION" in the Prospectus; all of
the issued and outstanding capital stock, options and warrants of the
Company have been duly authorized and validly issued and all of the
issued and outstanding shares of capital stock of the Company are fully
paid and non-assessable; and none of such securities or interests were
issued in violation of the preemptive rights or similar rights of any
holder of any security of interest of the Company or of any applicable
federal or state securities law;
(14) to such counsel's knowledge, the Company is conducting
its operations in compliance with applicable federal, state and local
laws, statutes, rules and regulations;
(15) to such counsel's knowledge, the Company has good and
marketable title to, or valid and enforceable leasehold estates in the
item of real and personal property stated in the Prospectus to be owned
or leased by it as lessee, free and clear of all liens, encumbrances,
claims, security interests, defects and restrictions of any material
nature whatsoever, other than those referred to in the Prospectus and
liens for taxes not yet due and payable;
(16) to such counsel's knowledge, 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
Securities hereunder or financial consulting arrangement or any other
arrangements, agreements, understandings, payments or issuances that
may affect the Underwriter's compensation, as determined by the NASD;
(17) to such counsel's knowledge, persons listed under the
caption "PRINCIPAL STOCKHOLDERS" in the Prospectus are the respective
"beneficial owners" (as such phrase is defined in Regulation 13d-3
under the Exchange Act) of the shares of Common Stock set forth
opposite their respective names thereunder as and to the extent set
forth herein;
(18) to such counsel's knowledge, other than as set forth 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 therefore; and
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such option, if at all, upon an opinion or
opinions (in form and substance reasonably satisfactory to Underwriter's
counsel) of other counsel reasonably acceptable to Underwriter's counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates and written statements of responsible officers of
the Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided that copies of any
such statements or certificates shall be delivered to Underwriter's counsel if
requested. The opinion of such counsel for the Company shall state that
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the opinion of any such other counsel is in form satisfactory to such counsel
and, in their opinion, the Underwriter and they are justified in relying
thereon.
c. On or prior to the Closing Date, counsel for the
Underwriter shall have been furnished such documents, certificates and opinions
as they may reasonably require for the purpose of enabling them to review or
pass upon the matters referred to in Section 8(b.), or in order to evidence the
accuracy, completeness or satisfaction of any of the representation, warranties
or conditions herein contained.
d. Prior to the Closing Date, (i) there shall have been no
material adverse change nor development involving a prospective change in the
condition or prospects of the business activities, financial or otherwise, of
the Company 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, not in the ordinary course of business, entered into by the Company
from the latest date as of which the financial condition of the Company is set
forth in the Registration Statement and Prospectus which is materially adverse
to the Company; (iii) the Company shall not be in default under any provision of
any instrument relating to any outstanding indebtedness which default would have
a material adverse effect on the Company; (iv) no material amount of the assets
of the Company shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus; (v) no action, suit or proceeding, at law
or in equity, shall have been pending or threatened against the Company wherein
any unfavorable result or decision could materially adversely affect any of
their respective properties or business before or by any court or federal or
state commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially adversely affect the business,
operations, prospects of financial condition or income of the Company, except as
set forth in the Registration Statement and Prospectus; (vi) no stop order shall
have been issued under the Act and no proceedings thereof shall have been
initiated or threatened by the SEC; and (vii) the market for securities in
general or for the Company's Shares in particular, or political, financial or
economic conditions shall have materially changed from those reasonably
foreseeable as of the date hereof as to render it impracticable in the
Underwriter's judgment to make a public offering of the Shares, or there has
been a material adverse change in market levels for securities in general (or
those of the Company in particular) or financial or economic conditions which
render it inadvisable in the Underwriter's judgment to proceed.
e. At the Closing Date, the Underwriter shall have received a
certificate of the Company signed by the Chairman of the Board or the President
and Secretary of the Company, dated the Closing Date to the effect that the
conditions set forth in subsections d. (i) through (vi) above have been
satisfied and that, as of the Closing Date, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct.
f. By the Closing Date, the Underwriter shall have received
clearance from NASD as to the amount of compensation allowable or payable to the
Underwriter, as described in the Registration Statement.
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g. At the time this Agreement is executed, and at the Closing
Date, the Underwriter shall have received a letter, addressed to the Underwriter
and in form and substance satisfactory in all respects (including the
non-material nature of the changes or decreases, if any, referred to in clause
(iii) below) to the Underwriter and to ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the
Underwriter, from ▇▇▇▇▇▇, Jasco + Company, P.A. dated, respectively, as of the
date of this Agreement and as of the Closing Date.
(1) confirming that they are independent accountants with
respect to the Company within the meaning of the Act and the applicable
Regulations, appropriately qualified to perform the services
contemplated by their engagement;
(2) stating that in their opinion the financial statements of
the Company included in the Registration Statement and Prospectus
comply as to form in all material respects with the applicable
accounting requirements of the Act and the published Regulations
thereunder;
(3) stating that, on the basis of a reading of the latest
available minutes of the stockholders and board of directors and the
various committees of the board of directors of the Company,
consultations with officers and other employees of the Company
responsible for financial and accounting matters and other specified
procedures and inquiries, nothing has come to their attention which
would lead them to believe that (A) either the audited financial
statements for the years ended January 31, 1998 and 1999 of the Company
in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the Act, and
the Regulations or are not fairly presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements of the Company included in the Registration
Statement, (B) at a date not later than five (5) days prior to the
Effective Date, there was any change in the capital stock or long-term
debt of the Company, or any decrease in the stockholders' equity of the
Company as compared with amounts shown in the January 31, 1999 balance
sheet included in the Registration Statement, other than as set forth
in or contemplated by the Registration Statement, or, if there was any
decrease, setting forth the amount of such decrease, and (C) during the
period from ____________ to a specified date not more than five (5)
days prior to the Effective Date there was any decrease in net
revenues, increase in net losses or increases in net losses per common
share of the Company, in each case as compared with the corresponding
period beginning ______________ other than as set forth in or
contemplated by the Registration Statement, or, if there was any such
decrease, setting forth the amount of such decrease;
(4) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
account records, including worksheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified
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readings, inquiries and other appropriate procedures (which procedures
do not constitute an examination in accordance with generally accepted
auditing standards) set forth in the letter and found them to be in
agreement; and
(5) statements as to such other matters incident to the
transaction contemplated hereby as the Underwriter may reasonably
request.
h. All proceedings taken in connection with the authorization,
issuance or sale of the Shares, the Underwriter's Warrants and the Common Shares
as herein contemplated shall be satisfactory in form and substance to the
Underwriter and to Underwriter's Counsel.
i. On the Closing Date, there shall have been duly tendered to
you for your account the appropriate number of Securities and individually for
your own account the Underwriter's Warrants.
j. No order suspending the sale of the Securities in any
jurisdiction designated by you pursuant to Section 5(d) hereof shall have been
issued on the Closing Date (unless requested by the Underwriter), and no
proceedings for that purpose shall have been instituted or to its knowledge or
that of the Company shall be contemplated.
Any certificate signed by any officer of the Company and
delivered to the Underwriter or to counsel to the Underwriter shall be deemed a
representation and warranty by the Company to the Underwriter as to the
statements made therein. If any condition to the Underwriter's obligations
hereunder to be fulfilled prior to or at the Closing Date is not so fulfilled,
the Underwriter may terminate this Agreement or, if the Underwriter so elects,
may waive any such conditions which have not been fulfilled or extend the time
for their fulfillment.
9. INDEMNIFICATION.
(1) The Company shall indemnify and hold the Underwriter, and
each person, if any, who controls the Underwriter ("Controlling Person") within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act),
harmless against any and all liabilities, claims, lawsuits, including any and
all awards and/or judgments to which it may become subject under the Act, the
Exchange Act or any other federal or state statute, at common law or otherwise,
insofar as said liabilities, claims and lawsuits (including awards and/or
judgments) arise out of or are in connection with the Registration Statement,
Prospectus and related Exhibits filed under the Act. In addition, the Company
shall also indemnify and hold the Underwriter harmless against any and all costs
and expenses, including reasonable counsel fees, incurred or relating to the
foregoing.
The Underwriter shall give the Company prompt notice of
any such liability, claim or lawsuit which the Underwriter contends is the
subject matter of the Company's indemnification, and the Company thereupon shall
be granted the right to take any and all necessary and proper action, at its
sole cost and expense, with respect to such liability, claim and lawsuit,
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including the right to settle, compromise and dispose of such liability, claim
or lawsuit, excepting therefrom any and all proceedings or hearings before any
regulatory bodies and/or authorities.
The Underwriter shall indemnify and hold the Company, and
each Controlling Person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, harmless against any
and all liabilities, claims, lawsuits, including any and all awards and/or
judgments to which it may become subject under the Act, the Exchange Act or any
other federal or state statute, at common law or otherwise, insofar as said
liabilities, claims and lawsuits (including awards and/or judgments) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact required to be stated or necessary to make the statement therein,
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Company by or on behalf of the
Underwriter for inclusion in the Registration Statement or Prospectus or any
amendment or supplement thereto. In addition, the Underwriter shall also
indemnify and hold the Company harmless against any and all costs and expenses,
including reasonable counsel fees, incurred or relating to the foregoing.
The Company shall give to the Underwriter prompt notice
of any such liability, claim or lawsuit which the Company contends is the
subject matter of the Underwriter's indemnification and the Underwriter
thereupon shall be granted the right to take any and all necessary and proper
action, at its sole cost and expense, with respect to such liability, claim and
lawsuit, including the right to settle, compromise or dispose of such liability,
claim or lawsuit, excepting therefrom any and all proceedings or hearings before
any regulatory bodies and/or authorities.
In order to provide for just and equitable contribution
under the Act in any case in which (i) any person entitled to indemnification
under this Section 9 makes claim for indemnification pursuant hereto but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced
notwithstanding the fact that this Section 9 provides for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
such person for which indemnification is provided under this Section 9, then,
and in each such case, the Company and the Underwriter shall contributed to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after any contribution from others) in such proportion taking into
consideration the relative benefits received by each party from the offering
covered by the Prospectus (taking into account the portion of the proceeds of
the offering realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was assessed,
the opportunity to correct and prevent any statement or omission and other
equitable considerations appropriate under the circumstances; provided, however,
that notwithstanding the above in no event shall the Underwriter be required to
contribute any amount in excess of 10% of the initial public offering price of
the Securities; and provided, that, in any such case, no person guilty of a
fraudulent misrepresentation (within the meaning of Section 11 (f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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Within fifteen (15) days after receipt of 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 to be 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 relive it from any liability which 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 of his or its representatives 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 Section 9 are in addition to any other rights or remedies
which either party hereto may have with respect to the other or hereunder.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except
as the context otherwise required, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at the Closing Date and such representations,
warranties and agreements of the Underwriter and the Company, including the
indemnity agreements contained in Section 9 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
any of the Underwriter, the Company or any controlling person, and shall survive
termination of this Agreement or the issuance and delivery of the Securities to
the Underwriter until the earlier of the expiration of any applicable statue of
limitations and the seventh anniversary of the Closing Date, at which time the
representations, warranties and agreements shall terminate and be of no further
force and effect.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION HEREOF.
(1) This Agreement shall become effective at 9:30 a.m., New
York time, on the first full business day following the day on which the
Registration Statement becomes effective or at the time of the initial public
offering by the Underwriter of the Securities, whichever is earlier. The time of
the initial public offering, for the purpose of this Section 11, shall mean the
time, after the Registration Statement becomes effective, of the release by the
Underwriter for publication of the first newspaper advertisement which is
subsequently published relating to the Securities or the time, after the
Registration Statement becomes effective, when the Securities are first released
by the Underwriter for offering by the Underwriter or dealers by letter or
telegram, whichever shall first occur. The Underwriter may prevent this
Agreement from becoming effective without liability to any other party, except
as noted below, by giving the notice indicated below in this Section 11 before
the time this Agreement becomes effective. The Underwriter agrees to give the
undersigned notice of the commencement of the offering described herein.
(2) The Underwriter shall have the right to terminate this
Agreement if any of the conditions enumerated in Section 8 are not fulfilled or
waived by the Underwriter on or before any
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Closing Date.
(3) If the Underwriter elects to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this Section
11, the Company shall be notified on the same day as such election is made by
the Underwriter by telephone or telegram, confirmed by letter.
(4) Anything herein to the contrary notwithstanding, the
Underwriter shall retain the initial non-refundable $40,000 advance against
expenses, previously paid.
Notwithstanding any contrary provision contained in this
agreement, any election hereunder or termination of this Agreement, and whether
or not this Agreement is otherwise carried out, the provisions of Section 9
shall not be in any way affected.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Witnesses: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ corp.
By:
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Name:
-------------------------------
Title:
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▇▇▇▇▇▇-▇▇▇▇ SECURITIES, INC.
By:
---------------------------- ---------------------------------
Name:
---------------------------- -------------------------------
Title:
---------------------------- ------------------------------
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