EXHIBIT 1
GALACTICOMM TECHNOLOGIES, INC.
Up to 1,725,000 Shares of Common Stock
and 1,725,000 Redeemabe Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
As of _________, 1998
Security Capital Trading, Inc.
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First Equity Corporation of Florida
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Gentlemen:
Galacticomm Technologies, Inc., a Florida corporation (the "Company")
confirms its agreement with Security Capital Trading, Inc. ("Security Capital")
and First Equity Corporation of Florida ("First Equity") (collectively, the
"Representatives") as representatives and members of the group of several
underwriters, if any, named in Schedule I attached hereto (the "Underwriters" or
"you", and if there is no Schedule I attached, all references in this Agreement
to the "Underwriters" or "you" shall be deemed to refer only to the
Representatives) as follows:
1. THE SHARES AND THE WARRANTS. Subject to the terms and
conditions set forth herein, the Company proposes to sell to you on a "firm
commitment" basis (i) an aggregate of One Million Five Hundred Thousand
(1,500,000) shares (sometimes collectively referred to herein as the "Firm
Shares"), of the Company's authorized but unissued common stock (each a
"Share"), par value $.0001 per share (the "Common Stock") and (ii) One Million
Five Hundred Thousand (1,500,000) (sometimes collectively referred to herein as
the "Firm Warrants") Redeemable Common Stock Purchase Warrants (the "Warrants"),
each Warrant entitling the holder thereof to purchase one (1) share of Common
Stock on the basis of an exercise price of $7.50 [125% of the offering price of
a Share] per share pursuant to a warrant agreement (the "Warrant Agreement")
between the Company and Continental Stock Transfer & Trust Company ("Warrant
Agent"). The Company also proposes to grant to you an option to purchase up to
an additional Two Hundred Twenty Five Thousand (225,000) Shares (such Shares,
"Option Shares") and/or an additional Two Hundred Twenty Five Thousand (225,000)
Warrants (such Warrants, "Option Warrants") for the sole purpose of covering
over-allotments, if any.
The shares of Common Stock issuable upon exercise of the Warrants are sometimes
collectively referred to herein as the "Warrant Shares." The Firm Shares and the
Firm Warrants are sometimes collectively referred to herein as the "Firm
Securities"; the Option Shares ad the Option Warrants are sometimes collectively
referred to herein as the "Option Securities." The Firm Securities, the Option
Securities and the Warrant Shares are more fully described in the Registration
Statement and the Prospectus referred to herein and are hereinafter sometimes
collectively referred to as the "Securities."
2. REGISTRATION STATEMENT AND PROSPECTUS. A registration
statement on Form SB- 2 (File No. 333-39805) together with exhibits and
including a preliminary form of prospectus for the registration of the
Securities has been prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended, and all applicable instructions,
rules and regulations (collectively, the "Securities Act") of the Securities and
Exchange Commission (the "Commission"), and has been filed with the Commission.
There have been delivered to you copies of each Preliminary Prospectus and the
Final Prospectus. Such registration statement, including the Prospectus, Part
II, any documents incorporated by reference therein and all financial schedules
and exhibits thereto, as amended at the time when it shall become effective, is
herein referred to as the "Registration Statement," and the prospectus included
as part of the Registration Statement on file with the Commission when it shall
become effective or, if the procedure in Rule 430A of the Rules and Regulations
(as defined below) is followed, the prospectus that discloses all the
information that was omitted from the prospectus on the effective date of the
Registration Statement pursuant to such rule, and in either case, together with
any changes contained in any prospectus filed with the Commission by the Company
with your consent after the effective date of the Registration Statement, is
herein referred to as the "Final Prospectus." If the procedure in Rule 430A is
followed, the prospectus included as part of the Registration Statement on the
date when the Registration Statement became effective is referred to herein as
the "Effective Prospectus." Any prospectus included in the Registration
Statement of the Company and in any amendments thereto prior to the effective
date of the Registration Statement is referred to herein as a "Pre-Effective
Prospectus." For purposes of this Agreement, "Rules and Regulations" mean the
rules and regulations adopted by the Commission under either the Securities Act
or the Securities Exchange Act of 1934 (the "Exchange Act"), as applicable.
3. AGREEMENTS TO SELL AND PURCHASE.
a. FIRM SHARES AND FIRM WARRANTS. The Company agrees
to sell to you, and upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to the terms and
conditions hereof, you shall, severally but not jointly, purchase from the
Company, the Firm Shares at a purchase price of $5.40 per Firm Share and the
Firm Warrants at a price of $.09 per Firm Warrant. This purchase price of the
Firm Shares and the Firm Warrants represents the public offering price of such
securities ($6.00 per Firm Share and $.10 per Firm Warrant), less a discount,
equaling ten percent (10%), that the Company has agreed to allow the
Underwriters. All or any portion of such discount may be reallowed by you for
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sales through licensed securities dealers who are members of the National
Association of Securities Dealers, Inc. (the "NASD").
b. OPTION SECURITIES. The Company also grants you an
option to purchase, upon your written notice to the Company, up to an
additional Two Hundred Twenty Five Thousand (225,000) Option Shares and/or an
additional Two Hundred Twenty Five Thousand (225,000) Option Warrants for the
sole purpose of covering over-allotments, if any, at the purchase price and on
the same terms as set forth in the preceding paragraph. The Option Shares and/or
Option Warrants may be purchased, in whole or in part, at any time for a period
of forty-five (45) days following the effective date of the Registration
Statement. The notice from you to the Company shall specify the number of Option
Shares and/or Option Warrants to be purchased and the date and time of payment
and delivery thereof (the "Option Closing Date"). You, as the Underwriters, in
your sole discretion, shall determine the number of Option Shares and/or Option
Warrants, if any, to be purchased as provided herein. Such over-allotment option
shall not be exercised more than on one occasion.
c. REPRESENTATIVES' WARRANTS. On the Closing Date (as
defined herein) for the Firm Securities, the Company shall further issue and
sell to the Representatives warrants (the "Representatives' Warrants") to
purchase One Hundred Fifty Thousand (150,000) Shares and/or One Hundred Fifty
Thousand (150,000) warrants similar, but not identical to, the Warrants (such
Shares and the Shares issuable upon exercise of the Representatives' Underlying
Warrants, the "Representatives' Underlying Shares" and such warrants, the
"Representatives' Underlying Warrants") for an aggregate purchase price of
$75.00 pursuant to a warrant agreement (the "Representatives' Warrant
Agreement") between the Company and the Representatives in form satisfactory to
the Representatives to be entered into on the Closing Date. The Representatives'
Warrants shall be exercisable at any time during the four year period commencing
one-year after the initial Closing Date (the "Term"), at a price per
Representatives' Underlying Share equal to $9.90 (165% of the public offering
price of a Share) and at a price per Representatives' Underlying Warrant equal
to $.165 (165% of the public offering price of a Warrant). The Representatives'
Underlying Warrants shall be exercisable at a price per share equal to $12.375
(165% of the exercise price of a Warrant) and shall not be redeemable. For a
period of one (1) year after the effective date of the Registration Statement,
the Representatives' Warrants (and the Representatives Securities, as
hereinafter defined) may not be sold, assigned, transferred, pledged or
hypothecated except to officers and partners of the Representatives or NASD
members who are part of the selling group (and their officers or partners). Such
transfers will only be made if they do not violate the registration provisions
of the Securities Act. The Representatives' Warrants and the Representatives'
Securities shall be transferable after one year from the effective date of the
Registration Statement pursuant to available exemptions from registration (if
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not otherwise covered by an effective registration statement) under the
Securities Act, provided, however, that the Representatives' Warrants may not be
transferred to a direct competitor of the Company without the Company's prior
written consent. Except as otherwise set forth in the Representatives' Warrant
Agreement, you may designate that the Representatives' Warrants be issued in
varying amounts directly to your officers or partners and not the
Representatives, and to other NASD members who are part of the selling group, if
any, and their officers or partners. Such designation will be made by you only
if you determine that such issuances would not violate the interpretation of the
Board of Governors of the NASD relating to the review of corporate financing
arrangements. The Representatives' Warrants, the Representatives' Underlying
Shares and the Representatives' Underlying Warrants (collectively sometimes
referred to herein as the "Representatives' Securities") shall be entitled to
piggyback and demand registration rights as set forth in the Representatives'
Warrant Agreement.
4. DELIVERY AND PAYMENT. Delivery of and payment for the Firm
Securities shall be made at 10:00 A.M., ▇▇▇▇▇ ▇▇▇▇, ▇▇ , ▇▇▇▇ (such time and
date are referred to herein as the "Closing Date") at the offices of Akerman,
Senterfitt & ▇▇▇▇▇▇, P.A., SunTrust International Center, 28th Floor, ▇▇▇
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the place of delivery of and payment for the Firm Securities may be varied by
agreement between you and the Company.
If you elect to purchase and take delivery of any Option
Securities, delivery of and payment for such Option Securities shall be made at
said office or at such place as may be agreed upon in writing by you and the
Company, on the Option Closing Date, which may be the same as the Closing Date
but shall in no event be earlier than the Closing Date or earlier than one or
later than ten business days after the giving of the written notice referenced
in Section 3 hereof from you to the Company of the determination to purchase a
number, specified in said notice, of Option Securities. Such notice may be given
by you to the Company at any time within forty-five (45) days after the date of
the Final Prospectus. The Option Closing Date may be varied by agreement between
you and the Company. On the Option Closing Date, if any, there shall be
delivered to you supplemental opinions and certificates, dated such Option
Closing Date, to the same effect as those required to be delivered on the
Closing Date pursuant to Section 9 hereof. The Closing Date and the Option
Closing Date are heretofore and hereinafter collectively referred to as the
"Closing Date."
Delivery of certificates for the shares of Common Stock which
comprise the Shares and the certificates for the Warrants (in definitive form
and registered in such names and in such denominations as you shall request
prior to the Closing Date) shall be made to you against payment of the purchase
price for the Firm Securities and Option Securities, as applicable, by certified
or official bank check or wire transfer of immediately available funds payable
to the order of the Company (less all amounts payable to the Underwriters under
this Agreement and any agreement referred to herein). For the purpose of
expediting the checking and packaging of certificates for the Shares and the
Warrants, the Company agrees to make such certificates available for inspection
at
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least 24 hours prior to the Closing Date. Time shall be of the essence and
delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriter.
5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company
further covenants and agrees with you as follows:
a. FILING OF REGISTRATION STATEMENT. The Company
shall use its best efforts to cause the Registration Statement to become
effective or, if the procedure in Rule 430A of the Rules and Regulations is
followed, comply with the provisions of and make all requisite filings with the
Commission pursuant to such Rules and Regulations. The Company will give you
advance notice of its intention to file or make any amendment or post-effective
amendment to the Registration Statement or any amendment or supplement to the
Prospectus and will submit all such amendments or supplements to you and to your
counsel as soon as possible, but not later than five (5) business days before
the Company proposes to file such amendments or supplements with the Commission.
The Company will not file any such amendment or supplement to which you shall
reasonably object in writing within a reasonable time after being furnished
copies thereof. The Company will not allow the Registration Statement to be
declared effective by the Commission without your approval.
b. NOTICE TO UNDERWRITERS. The Company will advise
you promptly and confirm that advice in writing (i) when any post-effective
amendment to the Registration Statement shall have become effective, (ii) of the
mailing or the delivery to the Commission for filing of any amendment or
post-effective amendment to the Registration Statement or any amendment or
supplement to the Prospectus, (iii) of any request by the Commission for
amendment or supplement to the Registration Statement or the Prospectus, or for
additional information, immediately supplying you with copies of all comment
letters and all other correspondence with the Commission, (iv) of the issuance
by the Commission of any stop order suspending effectiveness of the Registration
Statement or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threat of any
proceeding for any such purpose, (v) of the issuance by any state securities
commission or other regulatory authority of any order suspending the quali
fication or the exemption from qualification of the Securities under state
securities or Blue Sky laws or the initiation or threat of any proceedings for
that purpose and (vi) of the happening of any event during the period mentioned
in Section 5.d hereof that makes any statement made in the Registration
Statement or the Prospectus untrue in any material respect or which requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements therein not misleading in any material respect. The
Company will use its best efforts to prevent the issuance of any stop order or
suspension order and to obtain the withdrawal of any such stop order or
suspension order at the earliest possible moment.
c. NASDAQ LISTING. On the effective date of the
Registration Statement, the Securities shall be listed for quotation on the
NASDAQ SmallCap Market, and the Company shall use its best efforts to maintain
such listing for not less than five (5) years, provided,
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however, that the Company may withdraw the listing of its securities on the
NASDAQ if the Company lists the Securities on the NASDAQ National Market System
or on the New York or American Stock Exchange. In addition to the foregoing, the
Company shall, pursuant to Schedule D of the NASD By-Laws, prepare and file with
the NASD any required notification along with applicable fees to list the
Securities on the NASDAQ system. The Company shall, as required, prepare and
file as promptly as practicable a Report by Issuer of Securities Quoted on
NASDAQ Interdealer Quotation System on Form 10-C (or any successor form) with
respect to the shares of Common Stock and the Warrants.
d. POST-EFFECTIVE AMENDMENT. Within the time during
which a Final Prospectus relating to the Securities is required to be delivered
under the Securities Act, the Company shall comply with all requirements imposed
upon it by the Securities Act and by the Rules and Regulations, as from time to
time in force, so far as is necessary to permit the continuance of sales of or
dealings in the Securities as contemplated by the provisions hereof and the
Final Prospectus. If at any time when a prospectus relating to the Securities is
required to be delivered under the Securities Act, any event occurs as a result
of which, in the judgment of the Company and its counsel, the Prospectus as then
amended or supplemented would include any untrue statement of a material fact,
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which made, not misleading in any material
respect, or if it is necessary at any time to amend or supplement the Prospectus
to comply with the Securities Act or any other applicable law, the Company will
promptly notify you, and the Company shall promptly prepare and file with the
Commission an amendment or supplement to the Registration Statement which will
correct such statement or omission, or an amendment or supplement which will
effect such compliance, and deliver to you in connection therewith such
prospectus or prospectuses in such quantity as may be necessary to permit
compliance with the requirements of the Securities Act.
e. BLUE SKY QUALIFICATION. Prior to any public
offering of the Securities by you, the Company will endeavor in good faith,
using your counsel, and in cooperation with you and your counsel in taking such
action as may be necessary to register or qualify the Securities for offer and
sale under the applicable securities or Blue Sky laws of any states or
jurisdictions of the United States as you may reasonably designate (provided
such states or jurisdictions do not require the Company to qualify as a foreign
corporation or to file a general consent to service of process) and will
maintain such qualifications in effect for so long as may be required for the
distribution of the Securities. The foregoing shall be subject to the reasonable
consent of the Company as to any state or jurisdiction that seeks to impose an
escrow requirement with respect to insiders' shares or some other restrictive
condition upon the Company that exceeds the insiders lock-up provision of
Section 5.k (other than because no escrow is required herein) or a comparable
condition contained herein. Copies of all applications and related documents for
the registration or qualification of securities (except for the Registration
Statement and Prospectus) filed with the various states shall be sent to the
Company's counsel not later than the next business day following their
transmission to the various states, and copies of all comments and orders
received from the various states shall be made available to the Company's
counsel. As information is received from various states and
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immediately prior to the effective date of the Registration Statement, counsel
for the Underwriters shall advise counsel for the Company in writing of all
states where the offering has been registered or qualified for sale or has been
canceled, withdrawn or denied, the date(s) of such event(s), and the number of
Securities (and amount of other securities, if any) registered or qualified for
sale in each state. The Company shall be responsible for the cost of state
registration filing fees and legal fees and expenses of Underwriters' counsel in
connection with such filings, which filing fees shall be paid to Underwriters'
counsel in advance of such filings. The Underwriters' counsel's legal fees with
respect to blue sky filing shall be $2,000 for each state in which application
for registration, qualification or exemption is made. All outstanding fees and
expenses of the Underwriters' counsel solely with respect to Blue Sky matters
shall be paid by the Company on or prior to the Closing Date. Prior to the
effective date of the Registration Statement, Company's counsel shall be
responsible for providing the Underwriters with information pertaining to the
permissibility of sales of the Securities in the secondary market and shall take
such steps as shall be reasonably required to qualify the Securities in those
states or jurisdictions reasonably requested by the Underwriters.
f. STANDARD AND POOR'S. The Company shall, as soon as
practicable after the Closing Date, apply for listing in Standard and Poor's
Stock Guide and use its best efforts to effect and maintain such listing for at
least five (5) years.
g. INVESTOR RELATIONS. The Company further agrees, no
later than the 25 days after the Closing Date, to engage the services of an
investor relations firm (which firm shall also be qualified to act and shall
serve as the financial publicist of the Company) reasonably acceptable to the
Representatives and to maintain such services from the date of engagement for
two (2) years following the Closing Date.
h. ISSUANCES OF ADDITIONAL SECURITIES. Except as
provided in this Agreement and except for options granted pursuant to the
Company's 1997 Stock Option Plan (the "Plan") and other convertible securities
outstanding on the effective date of, and as described in, the Registration
Statement, the Company will not, and will cause any of its subsidiaries not to,
sell, offer to sell, solicit an offer to buy, contract to sell or otherwise
dispose of any of their respective securities or any securities convertible into
or exercisable or exchangeable for any of their respective securities or grant
any options or warrants to purchase any of their respective securities, for a
period of twelve (12) months after the effective date of the Registration
Statement, without the written consent of the Representatives, which consent
shall not be unreasonably withheld or delayed. The Underwriters acknowledge that
the Company intends to file a Form S-8 registration statement with respect to
the granting of the stock options to be issued under the Plan and the sale of
the shares of Common Stock underlying such options.
i. INFORMATION TO THE UNDERWRITERS. The Company will
deliver to you, for a period of at least five (5) years (or such earlier date if
the Representatives' Warrants and the Representatives' Underlying Warrants have
been exercised in full) from the Closing Date: (i) as soon as practicable, but
in any event within ninety-five (95) days after the close
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of each fiscal year of the Company, or as soon thereafter as practicable, a
financial report of the Company and its subsidiaries, if any, on a consolidated
basis, and a similar financial report of all unconsolidated subsidiaries, if
any, all such reports to include a balance sheet as of the end of the preceding
fiscal year, a statement of operations, a statement of changes in financial
condition and a statement of shareholders' equity covering such fiscal year, and
all to be in reasonable detail and certified by independent public accountants
who may, however, be the regularly employed independent public accountants of
the Company; (ii) within one hundred and five (105) days after the end of each
quarterly fiscal period of the Company, other than the last quarterly fiscal
period in any fiscal year, or as soon thereafter as practicable, copies of the
consolidated statement of operations, the statement of shareholders' equity and
statement of changes in financial condition for that period, and the balance
sheet as of the end of that period of the Company and its subsidiaries, if any,
the statement of operations, the statement of shareholders' equity and statement
of changes in financial condition and the balance sheet of each unconsolidated
subsidiary, if any, of the Company for that period, all subject to year-end
adjustment, certified by the principal financial or accounting officer of the
Company; (iii) copies of all other statements, documents, or other information
which the Company shall mail or otherwise make available to any class of its
security holders, to the financial press or to the public, or shall file with
the Commission, including, but not limited to periodic reports required to be
filed under Sections 13 and 15 of the Exchange Act, in particular Forms 10-KSB,
10-QSB and 8-K (which shall be provided within the same period such reports are
required to be filed with the Commission); (iv) a copy of each "weekly position
sheet" generated by the Depository Trust Corporation pursuant to a subscription
for such service that the Company shall maintain at its expense; and (v) upon
request in writing, such other information as may reasonably be requested with
reference to the property, business, shareholders and affairs of the Company and
its subsidiaries, if any.
j. SECTION 11(A) EARNINGS STATEMENT. The Company
will, as promptly as possible after the close of each fiscal year of the
Company, prepare and distribute reports to its shareholders which will include
audited statements of its operations and changes of financial position during
such period and its balance sheet as of the end of such period. The Company will
make generally available to its shareholders and will deliver to you, as soon as
practicable, but in no event later than the first day of the 15th full calendar
month following the effective date of the Registration Statement, an earnings
statement (which need not be audited but which will satisfy the provisions of
Section 11(a) of the Securities Act) covering a period of at least twelve (12)
months beginning after the effective date of the Registration Statement.
k. LOCK-UP AND CERTAIN VOTING AGREEMENTS.
(1) LOCK-UP AGREEMENTS. The Company will
cause each of its officers, directors and holders of the Company's Common Stock,
and any other persons deemed to be "affiliates" as defined in Rule 144 under the
Securities Act immediately prior to the effective date of the Registration
Statement, to agree in writing (the "Lock-Up Agreement") that: (i) such person
shall not, directly or indirectly, offer for sale, sell, including a short sale
or sale against the box, transfer, pledge, assign, hypothecate or otherwise
encumber or dispose of any securities (including
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options, warrants and convertible securities) of the Company owned directly,
indirectly, or beneficially (as defined by the Exchange Act and the Rules and
Regulations) by him, her or it (including shares of Common Stock hereinafter
acquired through the exercise or conversion of derivative securities or
otherwise but excluding securities of the Company acquired in the public
offering for the initial public offering price and securities purchased in the
marketplace after the effective date of the Registration Statement), under Rule
144 or otherwise, for a period of twelve (12) months from the effective date of
the Registration Statement ("Lock-Up Period") without the Representatives' prior
written consent; and (ii) such person will permit all certificates evidencing
his, her or its shares of Common Stock, warrants, options or notes to be affixed
with an appropriate restrictive legend, and will cause the transfer agent for
the Company to note such restrictions on the transfer books and records of the
Company. Notwithstanding the foregoing, (i) such person may sell or otherwise
dispose of such shares in a privately negotiated transaction, provided that: (a)
the purchaser agrees in advance in writing with the Underwriters to the
restrictions on transfer of securities as set forth herein and to vote the
Common Stock as set forth in the Lock-Up Agreements and (b) the disposition is
otherwise in accordance with the federal securities and other laws, and (ii)
such person may make gifts and transfers of Common Stock to the undersigned's
immediate family (as such term is defined in rules promulgated under the
Securities Exchange Act of 1934, as amended). On or before the effective date of
the Registration Statement, the Company shall have furnished to the
Representatives the Lock-Up Agreements, which shall be in a form reasonably
acceptable to the Representatives and which shall be duly executed, and shall be
valid and binding obligations of such persons enforceable against such persons
in accordance with their respective terms.
(2) CERTAIN VOTING AGREEMENT. The Company
shall cause Messrs. ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to agree in writing (the
"Liquidation Voting Agreement") that, in the event that a vote of shareholders
of the Company shall be taken upon (A) any liquidation of the Company, or (B)
any business combination in which the Company is not the surviving corporation
or any sale of all or substantially all of its assets (which combination or sale
occurs during the two-year period immediately following the Closing Date), such
persons shall, during the two-year period immediately following the Closing
Date, vote all shares of voting capital stock of the Company beneficially owned
by them (or over which they have the power to direct the vote) in the same
proportion as the votes cast by non-affiliates voting shares of the same class
or series, with respect to the above-referenced matters on which a vote of
shareholders is taken. On or before the Closing Date of the offering, the
Company shall have furnished to the Representatives the Liquidation Voting
Agreements, which shall be in a form reasonably acceptable to the
Representatives and which shall be duly executed, and shall be valid and binding
obligations of such persons enforceable against such persons in accordance with
their respective terms.
l. PRESS RELEASES. For a period commencing on the
date hereof and ending two years after the date of the Prospectus, neither the
Company nor any of its officers or directors will issue news releases or permit
other such publicity about the Company regarding the financial condition or any
significant event of the Company without the approval of the Company's legal
counsel named in the Prospectus under the heading "Legal Opinions," or such
other counsel
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as may be approved by you. During such period, the Company will deliver to you
copies of such news releases or other publicity about the Company promptly after
distribution thereof.
m. UNDERWRITERS' COPIES. The Company will promptly
deliver to you, without charge: (i) two complete copies (one of which is
manually signed) of the Registration Statement, as originally filed, and of each
amendment thereto, and of each post-effective amendment thereto filed at any
time when a prospectus relating to the Securities is required to be delivered
under the Securities Act, in each such case manually executed by the proper
officers and a majority of the directors of the Company (or, in case of
amendments, by their duly constituted attorneys-in-fact) and including signed
copies of each consent of experts named in the Registration Statement and all
financial statements, schedules and exhibits filed therewith (including those
incorporated by reference to the extent not previously furnished to you), and
(ii) such number of conformed copies of the Registration Statement, as
originally filed, and of each amendment and post-effective amendment thereto (in
each such case excluding exhibits), as you may reasonably require. The Company
will promptly deliver, without charge, to you or such others whose names and
addresses are designated by you as soon as possible after the effective date of
the Registration Statement, and thereafter from time to time during the period
when delivery of a prospectus relating to the Securities is required by the
Securities Act, as many printed copies as you may reasonably request of the
Final Prospectus and of any amended or supplemented prospectus. The Company will
promptly deliver, without charge, as soon as practicable following the public
offering or sale of the Securities, and thereafter from time to time for such
period as delivery of a prospectus or any amendment or supplement thereto may be
required, to you or any dealers to whom Securities may be issued, as many copies
as you reasonably request of the Prospectus and any amendment or supplement
thereto.
n. NASD MATTERS. The Company shall supply your
counsel with the following as appropriate to satisfy the NASD filing
requirements: (i) such copies of any amendment or supplement to the Registration
Statement and the preliminary prospectus or Final Prospectus; and (ii) the
statutory filing fee in the form of a certified or cashier's check. The Company
shall further supply to your counsel, no later than one (1) week before the
effective date of the Registration Statement, a written representation as to:
(i) the existence or nonexistence of any NASD affiliation or association of any
officer, director, or five percent (5%) or greater shareholder of the Company,
and, if a shareholder of the Company is a corporation, the existence or
nonexistence of any direct or indirect NASD affiliation or association of any
officer, director, or five percent (5%) or greater shareholder of such
corporation, (ii) whether or not any unregistered securities of the Company have
been acquired by any NASD affiliated persons during the twelve (12) month period
prior to filing the Registration Statement, and (iii) whether or not key-man
life insurance has been or will be provided for any officer or director of the
Company by any NASD affiliate.
o. EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement becomes
effective or is terminated, the Company shall bear all costs and expenses
incident to the issuance, offer, sale, and delivery of the Securities,
including, but not limited to, stock transfer taxes, all expenses and fees
incident to the filing of the Registration Statement and the registration
statements with the Commission pursuant to the
- 10 -
Securities Act and the Exchange Act, the costs, filing fees and (subject to
Section 1.e. hereof) counsel fees related to qualification under state
securities laws, fees and disbursements of counsel and accountants for the
Company, NASD filing fees, NASDAQ system fees, costs of preparing and printing
the Registration Statement and as many copies of the preliminary prospectus and
Prospectus as you may reasonably deem necessary, including all amendments and
supplements to the Registration Statement, and the printing, delivery, and
shipping of this Agreement and other underwriting documents, including
Underwriters' questionnaires, Underwriters' powers of attorney, Blue Sky
memoranda, and selected dealers' agreements, the cost of printing certificates
representing the Shares and the Warrants, the costs and charges of the Transfer
Agent and Warrant Agent, and all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise provided for in
this Agreement. The Company shall also bear all costs of holding informational
meetings and "road shows" (with the Company's approval) to acquaint securities
dealers with the affairs of the Company, provided that the Company shall not be
responsible for any Representatives' travel, meals and/or lodging expenses in
the continental United States. The Company, at its sole expense, shall make a
representative of its management available at the offices of the Underwriters,
at mutually convenient times, prior to the effective date of the Registration
Statement and shall likewise make representatives available at the Company for
due diligence or other informational meetings. The Company will also pay the
reasonable out-of-pocket travel expenses of the Underwriters and their counsel
or the professionals designated by the Underwriters to visit the Company's
facilities (as well as those of any significant supplier to, or customer of, the
Company) for purposes of discharging their due diligence responsibilities. The
Prospectus (preliminary and definitive) shall be printed by a financial printer
selected by the Company and approved by the Underwriters. The Company agrees to
supply the Underwriters (within ten weeks of the Closing Date) at the Company's
sole cost and expense up to five (5) bound volumes of all the documents, papers
and exhibits, correspondence and records forming the materials included in the
public offering. In addition, the Company agrees to pay for all pre- and
post-closing advertisements relating to the public offering.
In addition to the foregoing, the Company shall reimburse you
for your expenses on the basis of a nonaccountable expense allowance in the
amount of 3% of the gross offering proceeds, including over-allotment proceeds,
less, as to First Equity, the sum of Twenty Five Thousand Dollars ($25,000)
previously paid to it and less, as to Security Capital, the sum of Twenty Five
Thousand Dollars ($25,000) previously paid to it; all of your costs in excess of
the nonaccountable expense allowance shall be paid by you. Expenses to which the
allowance shall be applied include, without limitation, fees of your counsel,
but shall not include the following: fees of the Company's counsel; Commission
or state filing fees; Blue Sky counsel fees (subject to Section 1.e. hereof) and
expenses (as described herein); NASD filing fees; NASDAQ listing fees; printing;
tombstone advertisements; and any and all other expenses customarily paid by the
issuer in a public offering. The Company represents that such payment will be
made in full through a deduction from the payment by the Underwriters for the
Firm Securities or Option Securities, as applicable, on each Closing Date.
Notwithstanding any other provisions of this Agreement, if (i)
(a) there is a material adverse change in the business or financial condition of
the Company, (b) there exists any material
- 11 -
misrepresentation of the Company contained herein or otherwise, (c) you discover
in the course of your due diligence examination of the Company facts which you
determine, in your sole discretion, could materially adversely affect the sale
of the Securities, or (d) market conditions, in your sole judgment, do not
justify an offering on the terms set forth in the Registration Statement, and in
any such event you elect to terminate the underwriting, (ii) there is any
judicial, administrative or other regulatory or governmental judgment, decree,
order, injunction or similar action or proceeding enjoining, suspending,
prohibiting, limiting or otherwise restricting you from engaging in underwrit
ing activities or sales of securities, and in any such event you elect to
terminate the underwriting, or (iii) if the transactions contemplated by this
Agreement or related thereto are not consummated because the Company decides not
to proceed with the offering, the Company agrees that in addition to paying the
Company's own expense, you will be entitled to be reimbursed by us, on an
accountable basis, for all of its reasonable accountable out-of-pocket costs
incurred in connection with the offering of securities contemplated by the
Registration Statement (including, as to each of the Representatives, the Twenty
Five Thousand Dollars ($25,000) previously paid to each). Furthermore, if the
Company should fail to pay the agreed upon amounts set forth above to you, your
successors or assigns, the Company, shall, furthermore, be liable to you for
reasonable attorney's fees and costs incurred in the collection of said amounts.
p. TRANSFER SHEETS. The Company shall furnish to you
a list of the names and addresses of all shareholders subsequent to the Closing
Date and shall cause the Transfer Agent to furnish to you a copy of all transfer
sheets for a period of three years from the later of the Closing Date or the
Option Closing Date.
q. UNDERTAKINGS AND USE OF PROCEEDS. The Company will
comply with all of the undertakings contained in the Registration Statement and
shall apply the net proceeds of the sale of the Securities substantially in
accordance with the description set forth in the Prospectus.
r. INTENTIONALLY OMITTED.
s. EXCHANGE ACT REGISTRATION. The Company shall
prepare and file a registration statement with the Commission pursuant to
Section 12(g) of the Exchange Act. Such registration statement under the
Exchange Act shall be declared effective contemporaneously with the
effectiveness of the Registration Statement. The Company shall comply with the
Securities Act, the Exchange Act and the Rules and Regulations, the applicable
rules and regulations of the NASD and applicable states securities laws so as to
permit the continuance of sales of and dealings in the Securities in compliance
with applicable provisions of such laws, rules, and regulations, including the
filing with the Commission and the NASD of all reports required to be so filed
by each, and the Company will deliver to the holders of the shares all reports
required to be provided to such holders pursuant to such laws, rules, or
regulations. The Company will use its best efforts to maintain its registration
under the Exchange Act in effect for a period of five (5) years from the Closing
Date.
t. STOCK OPTION PLANS. The Company shall not amend
any of its stock option plans to increase the number of shares of Common Stock
available for grant under any of
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such option plans by more than 20%, in the aggregate, for a period of two years
from the effective date of the Registration Statement without the prior written
consent of the Representatives.
u. REDEMPTION AND DIVIDENDS. For a period of two
years from the Closing Date, the Company shall not, either directly or through a
subsidiary, (i) redeem or purchase any of its securities outstanding as of the
Closing Date, other than redemptions of the Warrants permitted by the Warrant
Agreement, or that may be required in connection with possible termination of
employment with the Company under the terms of employment agreements in effect
on the Closing Date, or redemptions as otherwise provided for herein, or (ii)
pay any dividends, or make any other cash distribution in respect of its
securities, in excess of the amount of the Company's current or retained
earnings derived after the Closing Date, without the prior written consent of
the Representatives, which consent may be withheld for any reason. The
Representatives shall either approve or disapprove, in writing of such
contemplated stock redemption or dividend or distribution within five (5)
business days after the date the Representatives receive written notice of the
proposed action. Failure by the Representatives to provide a response to within
such five (5) day period shall be deemed to be an approval of the redemption or
dividend.
v. DESIGNATION OF DIRECTORS AND ATTENDANCE AT BOARD
MEETINGS. The Representatives together shall have the right, for the three (3)
year period following the effective date of the Registration Statement, to
designate one (1) nominee (the "Nominees") for election to the Company's Board
of Directors. The officers, directors, and principal shareholders of the Company
shall agree in writing at or prior to the Closing Date to vote all shares of
voting capital stock owned by them (or over which they have the power to direct
the vote) during such three-year period in favor of the election of the Nominee
designated by the Representatives and shall solicit proxies in support of such
nomination. If the Representatives shall not have designated a Nominee at the
time of any meeting of the Board or such person shall not have been elected or
shall be unavailable to serve, the Company shall notify the Representatives of
each meeting of the Board. If a Nominee is not serving on the Board, an
individual selected by the Representatives shall be permitted to attend all
meetings of the Board and to receive all notices and other correspondence and
communications sent by the Company to members of the Board. The Nominee (or
attendee) shall receive no more or less compensation than is paid to other
non-officer directors of the Company for attendance at Board Meetings and shall
be entitled to receive reimbursement for all reasonable costs incurred in
connection with attending such meetings including, without limitation, food,
lodging and transportation. The Company agrees to indemnify and hold such
Nominee (or attendee) harmless, to the maximum extent permitted by law, against
any and all claims, actions, awards and judgments arising out of his or her
service as a director or advisor and, in the event that the Company maintains a
liability insurance policy affording coverage for the acts of its officers and
directors, to include such director or attendee as an insured under such policy.
The rights and benefits of such indemnification and the benefits of such
insurance shall, to the extent possible, extend to the Representatives insofar
as it may be or may be alleged to be responsible for such director or attendee.
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w. DIRECTORS' AND OFFICERS' INSURANCE. The Company
has obtained directors' and officers' insurance naming the Representatives as
additional insured parties, in an amount equal to twenty-five percent (25%) of
the gross proceeds of the offering, and will maintain such insurance for a
period of at least five (5) years from the Closing Date.
x. CONSULTING AGREEMENT. The Company agrees to employ
the Representatives as financial consultants on a non-exclusive basis for a
period of two (2) years from the Closing Date, pursuant to a separate written
consulting agreement ("Consulting Agreement") between the Company and the
Representatives, at a monthly rate of Five Thousand Dollars ($5,000) per month
(exclusive of any accountable out-of-pocket expenses), payable in full, in
advance, on the Closing Date. The Company further agrees to deliver a duly and
validly executed copy of said consulting agreement, in form and substance
acceptable to the Representatives, on the Closing Date.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to you that:
a. CONDITIONS FOR USE OF A REGISTRATION STATEMENT ON
FORM SB-2. The conditions for use of a registration statement on Form SB-2 set
forth in the General Instructions to Form SB-2 have been satisfied with respect
to the Company, the transactions contemplated herein and in the Registration
Statement. The Company has prepared in conformity with the requirements of the
Securities Act and the Rules and Regulations and filed with the Commission the
Registration Statement. Each Preliminary Prospectus was endorsed with the legend
required by Item 501(a)(5) of Regulation S-B of the Rules and Regulations,
including, if applicable, Rule 430A thereof.
b. ACCURACY OF REGISTRATION STATEMENT AND PROSPECTUS.
To its knowledge, neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any preliminary prospectus
or Prospectus, no proceedings for that purpose have been threatened or
instituted and each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto or filed
pursuant to Rule 424 under the Securities Act in all material respects, at the
time of the filing thereof, complied with the Securities Act and did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; when the Registration Statement becomes effective, and when the
Prospectus is filed with the Commission, and at all times subsequent thereto up
to and including the Closing Date and the Option Closing Date, or for such
longer period as the Prospectus is required under the Securities Act to be
delivered in connection with sales by you or a dealer selected by you, the
Registration Statement and the Prospectus and any amendments or supplements
thereto will comply with the Securities Act; when the Registration Statement
becomes effective, the Registration Statement will contain all statements
required to be stated therein in accordance with the Securities Act and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and when the Prospectus is filed with the Commission, it will
contain all statements required to be stated therein in accordance with the
Securities Act and will not
- 14 -
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to
information contained in or omitted from any preliminary prospectus or the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information (or oral information to
the extent such information relates to the private ongoing investigation of you
by the Commission) furnished to the Company with respect to you by or on behalf
of you expressly for use with reference to you (or any person who may be deemed
to be affiliated with you or an associated person of yours) in connection with
the preparation thereof.
c. ORGANIZATION AND GOOD STANDING. The Company and
each of its subsidiaries are Florida corporations duly organized, validly
existing and in good standing under the laws of the State of Florida, with full
power and authority, corporate and other, to own or lease and operate their
respective properties and to conduct their business as described in the
Registration Statement and in the Prospectus. The Company and the Subsidiary
(hereinafter defined) are duly qualified to do business as foreign corporations
and are in good standing in all jurisdictions where such qualification is
necessary and where failure to so qualify could have a material adverse effect
on the financial condition, results of operations, business or properties of the
Company or the Subsidiary. The Company has one subsidiary, Galacticomm, Inc., a
Florida corporation (the "Subsidiary") of which it owns 8,885,607 of the
Subsidiary's 10,000,000 shares of outstanding capital stock. No changes will be
made in the Articles of Incorporation or bylaws of the Company or any subsidiary
subsequent to the date hereof and prior to the Closing Date or the Option
Closing Date without the prior written consent of the Representatives.
d. CORPORATE AUTHORIZATION. The Company has full
power and authority, corporate and other, to execute, deliver and perform this
Agreement, the Representatives' Warrant Agreement and the Representatives'
Warrants and to consummate the transactions contemplated hereby and thereby.
This Agreement has been, and the Warrant Agreement, Representatives' Warrant
Agreement, the Warrants, the Representatives' Warrants and the Consulting
Agreement will be on the Closing Date, duly executed and delivered by the
Company and, as to this Agreement, constitutes, and, as to the Warrant
Agreement, the Representatives' Warrant Agreement, the Representatives' Warrants
(when sold to and paid for by you) and the Consulting Agreement, will
constitute, as applicable, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms except
as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, or other similar laws or arrangements affecting creditors' rights
generally and the discretion of courts in granting equitable remedies and except
that enforceability of the indemnification provisions and the contribution
provisions set forth herein may be limited by federal or state securities laws
or public policy underlying such laws. The execution, delivery and performance
by the Company of this Agreement, the Warrant Agreement, the Warrants, the
Representatives'
- 15 -
Warrant Agreement, the Representatives' Warrants and the Consulting Agreement,
the consummation by the Company of the transactions herein and therein
contemplated, the issuance and sale of the Securities and the Representatives'
Securities and the compliance by the Company with the terms of such agreements
have been duly authorized by all necessary corporate action and do not and will
not, with or without the giving of notice or the lapse of time, or both: (i)
result in any violation of the Articles of Incorporation or Bylaws of the
Company; (ii) result in a material breach of or conflict with any of the 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 pursuant to any indenture, mortgage, note, contract, commitment or other
agreement or instrument to which the Company or the Subsidiary is a party or by
which the Company or the Subsidiary or any of their respective properties or
assets are or may be bound or affected; (iii) violate in any material respect
any existing applicable law, rule or regulation, or any judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or the Subsidiary or any of their respective
properties or business; or (iv) have any material effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company or the Subsidiary to own or lease and operate their prospective
properties and to conduct their business or the ability of the Company or the
Subsidiary to make use thereof.
e. CONSENTS. No authorization, approval, consent,
order, registration, license or permit of any court or governmental agency or
body, is required for the valid authorization, issuance, sale and delivery of
the Securities and the Representatives' Securities or in connection with the
consummation of the other transactions contemplated by this Agreement, the
Consulting Agreement, the Warrant Agreement, the Representatives' Warrant
Agreement and the Representatives' Warrants, other than under the Securities
Act, the Rules and Regulations, and the rules and regulations of the state
securities laws of the states in which offers or sales will be made in
connection with the purchase and distribution of the Securities by you and the
purchase of the Representatives' Securities.
f. CAPITALIZATION - THE COMPANY. The duly authorized,
issued and outstanding capital stock of the Company and the Subsidiary conforms
to the description thereof in the Registration Statement and in the Prospectus.
Except as set forth in the Registration Statement and the Prospectus, there are
no outstanding options to purchase, warrants, or other rights to subscribe for
securities, or any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of the Company's capital stock or any
such warrants, convertible securities or obligations. Except as set forth in the
Registration Statement and the Prospectus, no holder of any of the Company's
securities has any rights, "demand", "piggyback" or otherwise, to have such
securities registered under the Securities Act.
g. CAPITALIZATION - THE SUBSIDIARY. The Subsidiary
has on the date hereof 10,000,000 shares of Common Stock, par value $.01, duly
authorized of which 8,891,207 are issued
- 16 -
and outstanding. There are no outstanding options to purchase, warrants, or
other rights to subscribe for securities, or any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
the Subsidiary's capital stock (including, without limitation, rights pursuant
to any phantom stock or stock option plan) or any such warrants, convertible
securities or obligations. No holder of any of the Subsidiary's securities has
any rights, "demand", "piggyback" or otherwise, to have such securities
registered under the Securities Act.
h. MATERIAL CONTRACTS. The descriptions in the
Registration Statement and in the Prospectus of contracts and other agreements
of the Company or the Subsidiary are accurate in all material respects and
present fairly the information required to be disclosed, and there are no
material contracts or other agreements which have not been so described.
i. FINANCIAL STATEMENTS. The financial statements and
schedules and the notes thereto included in the Registration Statement and in
the Prospectus comply as to form in all material respects with the requirements
of the Securities Act and fairly present the financial position of the Company
as of the dates thereof, and the results of operations and changes in financial
position and cash flows of the Company and its subsidiaries for the periods
indicated therein, all in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods. The pro forma
financial statements included in the Registration Statement and the Prospectus
and any amendment or supplement thereto, have been prepared on a basis
consistent with such historical financial statements, except for the pro forma
adjustments specified therein, and give effect to assumptions made on a
reasonable basis and present fairly the financial position and results of
operations of the Company at the dates and for the periods specified therein.
The other financial and statistical data included in the Registration Statement
and in the Prospectus, historical and pro forma, are, in all material respects,
fairly presented and prepared on a basis consistent with such financial
statements and the books and records of the entities covered thereby. The
selected financial data set forth in the Registration Statement and in the
Prospectus present fairly the information shown therein and have been compiled
on a basis consistent with that of the audited and unaudited financial
statements included in the Registration Statement and in the Prospectus.
j. ACCOUNTING CONTROLS. The books, records and
accounts of the Company and its subsidiaries, if any, accurately reflect, in
reasonable detail, the transactions and dispositions of the assets of the
Company and its subsidiaries, as the case may be. The Company and its
subsidiaries maintained, and the Company and its subsidiaries maintains, a
system of internal accounting controls sufficient to provide reasonable
assurances that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any difference.
- 17 -
k. ACCOUNTANTS. The accountants, KPMG Peat Marwick
LLP (the "Accountants"), who have audited the financial statements filed with
the Commission as a part of the Registration Statement and the Prospectus are
independent accountants with respect to the Company as required by the
Securities Act.
l. COMPLIANCE WITH DOCUMENTS AND LAWS. Neither the
Company nor the Subsidiary is in violation of its respective Articles of
Incorporation, Bylaws, or other governing documents, or, except as disclosed in
the Registration Statement and the Prospectus, in material default in the due
performance of any material obligation, lease or other material contract,
indenture, mortgage, deed of trust, note, loan, or other material agreement or
instrument to which the Company or the Subsidiary, as applicable, is a party or
by which it, or any of its properties or businesses is subject or any applicable
material license, franchise, certificate, permit, authorization, statute, rule
or regulation of or from any public, regulatory, or governmental agency or
authority having jurisdiction over the Company or the Subsidiary or any of their
respective properties or assets, or any approval, consent, order, judgment or
decree, except such as could not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), earnings, business,
assets, results of operations of the Company and, to the knowledge of the
Company after reasonable investigation, there exists, and through the Closing
Date and the Option Closing Date, if any, there shall exist, no condition which,
with the passage of time or otherwise, would constitute a default under any of
the foregoing or result in the imposition of any penalty or acceleration of any
indebtedness.
m. TAXES. The Company and the Subsidiary have filed
with the appropriate federal, state and local governmental agencies, and all
foreign countries and political subdivisions thereof, all tax returns, including
franchise tax returns, which are required to be filed or have duly obtained
extensions of time for the filing thereof and have paid all taxes shown on such
returns and all assessments received by them to the extent that the same have
become due; and the provisions for income taxes payable, if any, shown on the
financial statements included as part of the Registration Statement and in the
Prospectus are sufficient for all accrued and unpaid foreign and domestic taxes,
whether or not disputed, and for all periods to and including the dates of such
financial statements. Except as disclosed in the Registration Statement and in
the Prospectus , (i) neither the Company nor the Subsidiary have executed or
filed with any taxing authority, foreign or domestic, any agreement extending
the period for assessment or collection of any income taxes and neither is a
party to any pending action or proceeding by any foreign or domestic
governmental agency for assessment or collection of taxes; and (ii) no claims
for assessment or collection of taxes have been, or to its knowledge might be,
asserted against the Company or the Subsidiary.
n. AUTHORIZATION OF OUTSTANDING SECURITIES - THE
COMPANY. The outstanding Common Stock and outstanding options and warrants to
purchase Common Stock of the Company have been duly authorized and validly
issued. The outstanding Common Stock is fully paid and non-assessable. The
outstanding options and warrants to purchase Common Stock, all as described in
the Registration Statement and in the Prospectus, constitute the valid and
binding obligations of the Company, enforceable in accordance with their terms.
None of the outstanding
- 18 -
Common Stock, options or warrants to purchase Common Stock have been issued in
violation of the preemptive rights of any shareholder of the Company. None of
the holders of the outstanding Common Stock are subject to personal liability
solely by reason of being such a holder. The offers and sales of such
outstanding shares of Common Stock, and outstanding options, warrants and other
securities to purchase Common Stock were at all relevant times either registered
under the Securities Act and the applicable state securities or Blue Sky laws,
or exempt from such registration or prospectus filing requirements. The
authorized Common Stock and outstanding options and warrants to purchase Common
Stock and all promissory notes conform to the descriptions thereof contained in
the Registration Statement and in the Prospectus.
o. AUTHORIZATION OF OUTSTANDING SECURITIES - THE
SUBSIDIARY. The outstanding capital stock (and previously issued but no longer
outstanding options and warrants to purchase capital stock) of the Subsidiary
have been duly authorized and validly issued. The outstanding capital stock is
fully paid and non-assessable. None of the outstanding capital stock of the
Subsidiary (and previously issued but no longer outstanding options or warrants
to purchase capital stock) has been issued in violation of the preemptive rights
of any shareholder of the Subsidiary. None of the holders of the outstanding
capital stock of the Subsidiary are subject to personal liability solely by
reason of being such a holder. The offers and sales of such outstanding shares
of capital stock (and previously issued but no longer outstanding options,
warrants and other securities to purchase capital stock of the Subsidiary) were
at all relevant times either registered under the Securities Act and the
applicable state securities or Blue Sky laws, or exempt from such registration
or prospectus filing requirements.
p. AUTHORIZATION OF THE OFFERED SECURITIES. The
Securities and the Representatives' Securities have been duly authorized. The
Securities, when sold and paid for in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable and free of
preemptive and, with the exception of the Warrants, redemption rights, and
holders thereof will not be subject to personal liability solely by reason of
being such holders. The Warrant Shares, when paid for in accordance with the
terms of the Warrants, will be validly issued, fully paid non-assessable and
free of preemptive and redemption rights. The Representatives' Securities, when
sold to and paid for by you, will be validly issued, and the Representatives'
Shares, when issued upon exercise of the Representatives' Warrants in accordance
with the terms and at the price therein provided, will be validly issued, fully
paid and non-assessable and free of preemptive and redemption rights. The
Securities and the Representatives' Securities conform to the descriptions
thereof contained in the Registration Statement and in the Prospectus. The
Company has reserved for issuance the number of shares of Common Stock issuable
upon exercise of the Warrants, the Representatives' Warrants and the
Representatives' Underlying Warrants.
- 19 -
q. CONSENTS, ETC. Each of the Company and the
Subsidiary owns, possesses or has obtained all material governmental and other
(including those obtainable from third parties) licenses, permits,
certifications, registrations, approvals or consents and other authorizations
necessary to own or lease, as the case may be, and to operate its properties,
whether tangible or intangible, and to conduct any of the business or operations
of the Company or the Subsidiary, as applicable, as presently conducted and all
such licenses, permits, certifications, registrations, approvals, consents and
other authorizations are in full force and effect, the Company and the
Subsidiary are in material compliance therewith and there are no proceedings
pending or, threatened, or any basis therefor, seeking to cancel, terminate or
limit such licenses, permits, certifications, registrations, approvals or
consents or other authorizations.
r. LITIGATION. Except as set forth in the
Registration Statement and in the Prospectus, there are no pending actions,
suits, proceedings, arbitrations, and the Company is not aware of any pending or
threatened claims, investigations or inquiries, before any governmental agency,
court or tribunal, domestic or foreign, or before any private arbitration
tribunal against the Company or the Subsidiary or involving their respective
properties or business that, if determined adversely to the Company or the
Subsidiary, would, individually or in aggregate, result in any materially
adverse change in the financial condition, shareholders' equity, results of
operations, properties, business, management, or affairs of the Company or the
Subsidiary or that relate to environmental matters or discrimination on the
basis of age, sex, religion, race or national origin or that question the
validity of the capital stock of the Company or the Subsidiary or this Agreement
or of any action taken or to be taken by the Company or the Subsidiary pursuant
to, or in connection with, this Agreement; there is no basis for any such
action, suit, proceeding, arbitration, claim, investigation or inquiry. There
are no outstanding orders, judgments or decrees of any court, governmental
agency or other tribunal naming the Company or the Subsidiary and enjoining the
Company or the Subsidiary from taking, or requiring the Company or the
Subsidiary to take, any action, or to which the Company or the Subsidiary, their
respective properties or businesses are bound or subject. Except as set forth in
the Registration Statement and in the Prospectus, there is not now pending or,
to the knowledge of the Company, threatened, any material contingent liability.
s. FOREIGN CORRUPT PRACTICES ACT. Neither the Company
nor the Subsidiary nor any of their respective directors or officers acting in
any capacity on behalf of the Company or the Subsidiary nor any of the Company's
or the Subsidiary's foreign sales agents, directly or indirectly, has used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment. The
Company's internal accounting controls and procedures are sufficient to cause
the Company to comply in all material respects with the Foreign Corrupt
Practices Act of 1977, as amended.
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t. CERTAIN PERSONS. Neither the Company, the
Subsidiary nor any of their respective directors, officers or beneficial owners
of ten percent or more of any class of its equity securities:
(1) Has filed a registration statement which
is the subject of a currently effective order denying, suspending or revoking
effectiveness of the registration statement, which order has been entered
pursuant to any state's law within five years prior to the date of this
Agreement;
(2) Was, or was named as an underwriter of
any securities (A) covered by any registration statement which is the subject of
any pending proceeding or examination under Section 8 of the Securities Act, or
is the subject of any refusal order or stop order entered thereunder within five
years prior to the date of this Agreement, or (B) covered by any filing which is
subject to any pending proceeding under Rule 261 of Regulation A promulgated
under the Securities Act relating to the temporary or permanent suspension of an
exemption from registration or any similar rule adopted under Section 3(b) of
the Securities Act, or an order entered thereunder within five years prior to
the date of this Agreement;
(3) Has been convicted or has pleaded nolo
contendere prior to the date of this Agreement of any felony or misdemeanor in
connection with the offer, purchase or sale of any franchise or commodity or any
felony involving fraud, deceit or intentional wrongdoing, including but not
limited to forgery, embezzlement, obtaining money under false pretenses,
larceny, theft or conspiracy to defraud;
(4) Has been convicted within five years
prior to the date of this Agreement of any felony or misdemeanor of which fraud
is an essential element, or which is a violation of the securities laws or
regulations of any state or of the United States or any foreign jurisdiction, or
which is a crime involving moral turpitude, or which is a criminal violation of
statutes designed to protect investors or consumers against unlawful practices
involving insurance, securities, commodities or commodities futures, real
estate, franchises, business opportunities, consumer goods or other goods and
services;
(5) Has been convicted or pleaded nolo
contendere within ten years prior to the date of this Agreement of any felony or
misdemeanor (A) in connection with the offer, purchase or sale of any security,
(B) involving the making of any false filing with the Commission or any state or
(C) arising out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer or investment adviser;
(6) Has been or is currently subject to any
order or judgment (including an injunction) entered or obtained by the
Commission or any state securities commission or administrator within five years
prior to the date of this Agreement; or (B) has been or is currently subject to
any administrative order or judgment (including an injunction) issued by state
or federal authorities within five years prior to the date of this agreement
which order or judgment (1) includes
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or is based upon a finding or stipulation of fraud, fraudulent conduct, deceit
(including the making of any untrue statement of a material fact or omitting to
state a material fact) or intentional wrongdoing, (2) has the effect of
enjoining such person from activities subject to federal or state statutes
designed to protect investors or consumers against unlawful or deceptive
practices involving securities, insurance, commodities or commodities futures,
real estate, franchises, business opportunities, consumer goods or other goods
and services;
(7) Is subject to any judgment, order or
decree of any court entered within five years prior to the date of this
Agreement which (A) temporarily or permanently restrains or enjoins such person
from engaging in or continuing any conduct or practice (1) in connection with
the offer, purchase or sale of any security or commodity, (2) involving the
making of any false filing with the Commission or any state, or (3) arising out
of the conduct of the business of an underwriter, broker, dealer, municipal
securities dealer or investment adviser, or (B) restrains or enjoins such person
from activities subject to federal or state statutes designed to protect
consumers against unlawful or deceptive practices involving insurance,
commodities or commodities futures, real estate, franchises, business
opportunities, consumer goods or other goods and services;
(8) Is currently subject to any order or
judgment entered or obtained by any federal or state authority which prohibits,
denies or revokes the use of any exemption from registration in connection with
the offer, purchase or sale of any security;
(9) Is suspended or expelled from membership
in, or suspended or barred from association with a member of, an exchange
registered as a national securities exchange pursuant to Section 6 of the
Exchange Act, an association registered as a national securities association
under Section 15A of the Exchange Act, or a Canadian securities exchange or
association for any act or omission to act constituting conduct inconsistent
with just and equitable principles of trade;
(10) Is subject to a United States Postal
Service false representation order entered under Section 3005 of title 39,
United States Code, within five years prior to the date of this agreement, or is
subject to a restraining order or preliminary injunction entered under Section
3007 of title 39, United States Code, with respect to conduct alleged to have
violated Section 3005 of title 39, United States Code; or
(11) Has experienced a personal bankruptcy,
or been an officer, director, or key employee of any company that during their
tenure with such company experienced any bankruptcy other than as disclosed in
the Registration Statement and in the Prospectus as required, or had any
trustee, receiver, or conservator appointed with respect to its business or
assets.
u. PRIOR SALES. No securities of the Company have
been sold by the Company or by, or on behalf of, or for the benefit of the
Company within three years prior to the date hereof, except as set forth in the
Registration Statement and in the Prospectus.
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v. EXHIBITS. There are no material contracts,
agreements or other documents required to be described in the Registration
Statement or in the Prospectus or to be filed as exhibits to the Registration
Statement by the Securities Act which have not been described or filed as
required, and neither the Company nor its subsidiaries is in material violation
of, and no material default exists in the performance, observance or fulfillment
of, any material obligation, agreement, covenant or condition contained in any
of such contracts, agreements or documents except as disclosed in the
Registration Statement and the Prospectus.
w. EMPLOYMENT AGREEMENTS. The employment agreements
between the Company and its officers described in the Registration Statement are
valid, binding and enforceable obligations upon the respective parties thereto
in accordance with their respective terms, subject to the effect of bankruptcy
or similar proceedings and the effect and application of general principles of
equity.
x. INTENTIONALLY OMITTED.
y. FINDER OR BROKER. The Company has not retained or
dealt with any broker or finder with respect to the transactions contemplated
hereby, and the Company knows of no outstanding claims for services in the
nature of a finder's fee or origination fee with respect to the sale of the
Securities. The Company will indemnify and hold harmless the Underwriters with
respect to any claim for a finder's fee by any party claiming to be owed such
fee based on contacts, conversations or arrangements with the Company.
Furthermore, except as set forth in the Registration Statement and in the
Prospectus, the Company has no management or financial consulting agreement with
anyone. Except as set forth in the Registration Statement and in the Prospectus
or otherwise disclosed to you in writing prior to the date hereof, no promoter,
officer, director or five percent or greater shareholder of the Company is,
directly or indirectly, associated with an NASD member broker/dealer.
z. STABILIZATION. Neither the Company, its
subsidiaries, nor any of their respective officers, directors or affiliates (as
defined under the Securities Act) has taken, directly or indirectly, any action
to cause or result in, or which has constituted, or might reasonably be expected
to constitute, the stabilization or manipulation of the price of the Common
Stock to facilitate the sale or the resale thereof, within the meaning of the
Securities Act or the Exchange Act.
aa. NASDAQ LISTING. The Securities have been approved
for listing on the NASDAQ SmallCap Market.
bb. NO ADVERSE CHANGE. Except as reflected in the
Registration Statement and in the Prospectus or any amendment or supplement
thereto, since the respective dates as of which information is given in the
Registration Statement and in the Prospectus or any amendment or supplement
thereto and prior to the Closing Date, or Option Closing Date, as the case may
be, the Company and the Subsidiary have each conducted its respective business
in substantially the same
- 23 -
manner as of November 7, 1997, neither the Company nor the Subsidiary has
incurred, or will have incurred, any material liability or obligation, direct or
contingent, or entered into any material transaction, whether or not in the
ordinary course of business, nor has or will have sustained any material loss or
interference with its business from fire, storm, explosion, flood or other
casualty, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree; and there have not been, and
prior to the Closing Date or Option Closing Date, as the case may be, there will
not be, any changes in the capital stock or any material increases in the
long-term or short-term debt of the Company or the Subsidiary or any materially
adverse change in or affecting the general affairs, management, financial
condition, shareholders' equity, results of operations or prospects of the
Company, and no event has occurred concerning the Company or its subsidiaries
and which might result in a material adverse change or effect in or on the
general affairs, management, financial condition, shareholders' equity, results
of operations or prospects of the Company or the Subsidiary, except as disclosed
in the Registration Statement.
cc. TITLE TO PROPERTIES. Each of the Company and the
Subsidiary has good title to all property (tangible and intangible) and assets
owned by it, free and clear of all security interests, charges, mortgages,
liens, encumbrances and defects, except as are described in the Registration
Statement and in the Prospectus and except those which are not material in
amount and do not adversely affect the use made and proposed to be made of such
property by the Company or the Subsidiary. Each of the Company and the
Subsidiary owns or leases all such properties, real, personal and mixed,
tangible and intangible, as are necessary to carry on its operations as
heretofore conducted and, except as otherwise stated in the Registration
Statement and in the Prospectus, as proposed to be conducted, as set forth in
the Registration Statement and in the Prospectus. The leases, licenses or other
contracts or instruments under which the Company or the Subsidiary leases, holds
or is entitled to use any property, real or personal, are valid, subsisting and
enforceable, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws or arrangements
affecting creditors' rights generally and subject to principles of equity and
public policy considerations. All rentals, royalties or other payments accruing
thereunder that became due prior to the date of this Agreement have been duly
paid, and neither the Company nor, to the Company's knowledge, any other party
is in default thereunder and, to the Company's knowledge, no event has occurred
that, with the passage of time or the giving of notice, or both, would
constitute a default thereunder. Neither the Company nor the Subsidiary is in
violation of any applicable law, ordinance, regulation, order or requirement
relating to its owned or leased properties material to the conduct of its
business and has not received any notice of an alleged violation. Each of the
Company and the Subsidiary has adequately insured its properties against loss or
damage by fire or other casualty and maintains, in adequate amounts, such other
insurance as is usually maintained by companies engaged in the same or similar
businesses located in its geographical area.
dd. ENFORCEABILITY OF CONTRACTS. Each material
contract or other instrument (however characterized or described) to which the
Company and/or the Subsidiary is a party or by which its property or business is
or may be bound or affected has been duly and validly executed, is in full force
and effect in all material respects and is enforceable against the parties
thereto in accordance with its terms, and none of such contracts or instruments
has been assigned by the
- 24 -
Company and/or the Subsidiary and, except as disclosed in the Registration
Statement and in the Prospectus, neither the Company, the Subsidiary nor, to the
Company's knowledge, any other party is in default thereunder, and no event has
occurred that, with the lapse of time or the giving of notice, or both, would
constitute a default thereunder. None of the material provisions of such
contracts or instruments violates any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court having
jurisdiction over the Company or the Subsidiary or any of their respective
assets or businesses.
ee. EMPLOYEE BENEFIT PLANS. Except as set forth in
the Registration Statement and in the Prospectus, neither the Company nor the
Subsidiary has any employee benefit plans (including, without limitation, profit
sharing and welfare benefit plans) or deferred compensation arrangements that
are subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
ff. LABOR RELATIONS. No labor problem exists with any
of the Company's or the Subsidiary's employees or is imminent, which labor
problem could materially and adversely affect the Company or the Subsidiary, and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or its Subsidiary's principal suppliers, contractors or
customers that could be expected to materially adversely affect the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company or the Subsidiary.
gg. RELATED PARTY TRANSACTIONS. Except as disclosed
in the Registration Statement and in the Prospectus, no present officer or
director of the Company or the Subsidiary or any related party or affiliate of
any such/ person, (i) has any material direct or indirect interest in (A) any
entity which does any material business with the Company or the Subsidiary, or
(B) any material property, asset or right which is used in the conduct of the
Company's or the Subsidiary's business, or (ii) has any material contractual
relationship with the Company or the Subsidiary other than such relationship as
attaches to being an officer or director of the Company or the Subsidiary.
hh. INTELLECTUAL PROPERTY. The Company and the
Subsidiary own or possess all patents, trademarks, trademark registrations,
service marks, service ▇▇▇▇ registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights described in the Registration Statement and
in the Prospectus as being owned by them or any of them or necessary for the
conduct of their respective businesses and, except as disclosed in the
Registration Statement and in the Prospectus, the Company is not aware of any
claim to the contrary or any challenge by any other person to the rights of the
Company and the Subsidiary with respect to the foregoing.
ii. INVESTMENT COMPANY. Neither the Company nor any
of its subsidiaries is now, or after the sale of the securities hereunder and
application of the net proceeds from such sale as described in the Registration
Statement and in the Prospectus will be, and will not be operated so as to
become, an "investment company" or a person "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
- 25 -
jj. BUSINESS WITH CUBA. As of the date hereof, the
Company is in compliance with all provisions of Florida Statutes, Section
517.075, relating to issuers doing business with Cuba.
kk. ENVIRONMENTAL LAWS; HEALTH AND SAFETY. The
Company and the Subsidiary are: (i) in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii) in
receipt of all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Company and
the Subsidiary. Neither the Company nor the Subsidiary has been named as a
"potentially responsible party" under the Comprehensive Environmental
Compensation Liability Act of 1980, as amended.
ll. DUE DILIGENCE MATERIALS. The Company has provided
Akerman, Senterfitt & ▇▇▇▇▇▇, P.A., the Representatives' counsel, all
agreements, certificates, correspondence and other items, documents and
information requested by such counsel's due diligence review memorandum.
Any certificate signed by an officer of the Company and
delivered to you or to your or the Representatives' counsel shall be deemed to
be a representation and warranty by the Company to you as to the matters covered
thereby.
7. REPRESENTATIONS AND WARRANTIES OF THE REPRESENTATIVES. Each
Representative, as to itself and, as to each Underwriter based upon written
representations made by them to the Representatives, severally represents and
warrants to the Company that:
a. REGISTRATION AS BROKER-DEALER AND MEMBER OF NASD.
Each Underwriter is either (i) registered as a broker-dealer with the
Commission, is registered as a broker-dealer in all states in which it shall
offer the Firm Securities and the Option Securities is a member in good standing
of the NASD or (ii) a dealer with its principal place of business located
outside the United States, its territories and its possessions and not eligible
for membership in the NASD nor registered as a broker dealer under the Exchange
Act who has agreed not to make any sales within the United States, its
territories or its possessions or to persons who are nationals thereof or
residents therein (except sales to Selected Dealers) and to comply with the
NASD's Interpretation with respect to free-riding and withholding and to comply,
as though it were a member of the NASD, with Rules 2730 and 2750 of such Rules,
and to comply with Rule 2420 thereof as that Rule applies to a non-member
foreign dealer.
- 26 -
b. NO PENDING PROCEEDINGS. There is not now pending
or threatened against any Underwriter any action or proceeding of which it has
been advised, either in any court of competent jurisdiction, before the
Commission or any state securities commission concerning its activities as a
broker or dealer, nor has it been named as a "cause" in any such action or
proceeding, which, if determined adversely to such Underwriter, would have a
material adverse effect on such Underwriter.
c. NO UNTRUE STATEMENTS. With respect to information
about each Underwriter contained in the Registration Statement furnished to the
Company by or on behalf of any Underwriter, the information therein is correct
and is not misleading as it relates to such Underwriter.
8. INDEMNIFICATION.
a. BY COMPANY. The Company agrees to indemnify and
hold harmless you and each person, if any, who controls you within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from
and against any and all losses, liabilities, claims, damages and expenses
(including but not limited to reasonable attorneys' fees and any and all
reasonable expenses incurred in investigating, preparing or defending against
any claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which you or they or any of them may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, as originally filed
or any amendment thereof, or any related preliminary prospectus or the
Prospectus, or in any supplement thereto or amendment thereof, or in any blue
sky application or other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company filed in any
state or other jurisdiction in order to qualify any or all of the Securities
under the securities laws thereof (any such application, document or information
being hereinafter called a "Blue Sky Application") or arise out of or are based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in any material respect, or arise out of or are based upon any failure of the
Company to comply with any provision of this Underwriting Agreement resulting in
a claim or loss to the Underwriters. Notwithstanding the preceding sentence, the
Company will not be liable in any such case to the extent, but only to the
extent that, any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of you expressly for use
therein. This indemnity agreement will be in addition to any liability which the
Company may otherwise have, including under this Agreement. The Company agrees
to pay any reasonable legal or other expenses for which it is liable under this
subsection from time to time (but not more frequently than monthly) within 30
days after its receipt of a ▇▇▇▇ therefor; and further provided, however, that
the foregoing provisions are subject to the condition that, insofar as they
- 27 -
relate to any untrue statement, alleged untrue statement, omission or alleged
omission made in any Preliminary Prospectus but eliminated or remedied in the
Prospectus, such indemnity provision shall not inure to you or any person who
controls you within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act if a copy of the Prospectus was not sent or given to
such person with or prior to the written confirmation of sale of such Securities
to such person. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
b. BY UNDERWRITERS. You agree to indemnify and hold
harmless the Company, each of the officers of the Company who shall have signed
the Registration Statement and each other person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, from and against any and all losses, liabilities, claims,
damages and reasonable expenses whatsoever (including but not limited to
attorneys' fees and any and all reasonable expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or any related preliminary prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or in any
Blue Sky Application, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by you
expressly for use therein; PROVIDED, HOWEVER, that in no case shall you be
liable or responsible for any amount in excess of the underwriting discounts and
commissions received by you, as set forth on the cover page of the Prospectus.
You agree to pay any legal or other expenses for which you are liable under this
subsection (b) from time to time (but not more frequently than monthly) within
30 days after receipt of a ▇▇▇▇ therefor. This indemnity agreement will be in
addition to any liability which you may otherwise have.
c. PROCEDURES IN CASE OF INDEMNIFICATION. Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of the commencement of any action or proceeding (including any
governmental investigation), such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 8 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may have otherwise). In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party shall assume the
defense thereof, including the employment of counsel
- 28 -
reasonably satisfactory to the indemnified party and the payment of all
expenses. Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless (i) the employment of such counsel shall have been authorized
in writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel
reasonably satisfactory to the indemnified party to have charge of the defense
of such action within a reasonable time after notice of commencement of the
action, or (iii) such indemnified party or parties shall have reasonably
concluded and have been so advised in a written opinion from counsel that there
may be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
d. CONTRIBUTION. In order to provide for contribution
in circumstances in which the indemnification provided for in Section 8.a and b
hereof is for any reason held to be unavailable from the Company, or you, or is
insufficient to hold harmless a party indemnified thereunder, in lieu of
indemnifying such indemnified party, the Company, and you shall contribute to
the aggregate losses, claims, damages, liabilities and reasonable expenses of
the nature contemplated by such indemnification provisions (including any
investigation, legal and other reasonable expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting in the case of losses, claims, damages,
liabilities and reasonable expenses suffered by the Company or you any
contribution received by the Company or you from persons who may also be liable
for contribution, including persons who control the Company or you within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, officers of the Company who signed the Registration Statement and directors
of the Company) to which the Company or you may be subject, in such proportions
as is appropriate to reflect the relative benefits received by the Company and
by you from the offering of the Securities or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 8.d
hereof in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and you in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and by
you shall be deemed to be in the same proportion as (a) the total proceeds from
the offering (before deducting expenses) received by the Company bear to (b) the
total underwriting discounts and commissions received by you in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Company and of you shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by you or any agent expressly authorized by
- 29 -
you to supply such information and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 8.d were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8.d, (i) in no case shall you be liable or responsible for any
amount in excess of the underwriting discount applicable to the Securities
purchased hereunder and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8.d, each person, if any, who
controls an underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as you, and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 8.d. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 8.d, notify such party or parties from whom contribution may
be sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under Section 8.d or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
PROVIDED, HOWEVER, that such consent was not unreasonably withheld. The
indemnity and contribution agreements contained in this Agreement shall remain
operative and in full force and effect regardless of (A) any investigation made
by or on behalf of you or any person controlling you or by or on behalf of the
Company, (B) acceptance of any of the Securities and payment therefore or (C)
any termination of this Agreement. A successor to the Company, its directors or
officers or any person controlling the Company or to the Underwriter, shall be
entitled to the benefits of the indemnity, contribution, and reimbursement
agreements contained in this Section 8.
9. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. Your
obligation to purchase and pay for the Firm Securities on the Closing Date shall
be subject to the accuracy of and compliance with the representations and the
warranties of the Company herein contained and in each certificate and document
contemplated to be delivered to you hereunder as of the date hereof and the
Closing Date, to the performance by the Company of its obligations herein
contained and to the following additional terms and conditions:
a. EFFECTIVE REGISTRATION STATEMENT. The Registration
Statement shall have become effective not later than 5:00 P.M., Miami time, on
the date of this Agreement, or at such later time or on such later date as you
may agree to in writing and any and all filings required by Rule 424 and Rule
430A of the Rules and Regulations shall have been made. At or prior to the
Closing, no stop order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Securities under the Blue
Sky laws of any jurisdiction (whether or not a
- 30 -
jurisdiction which you shall have specified) shall have been issued and no
proceeding for that purpose shall have been initiated or shall be threatened by
the Commission or the authorities of any such jurisdiction. Any request for
additional information on the part of the Commission or any such authorities
shall have been complied with to the satisfaction of the Commission or such
authorities and counsel for you. The NASD, upon review of the terms of the
public offering of the Securities, shall not have objected to such offering,
such terms, or your participation in the same. After the date hereof no
amendment or supplement shall have been filed to the Registration Statement or
the Prospectus without your prior written consent.
b. ACCURACY OF REGISTRATION STATEMENT. No person
shall have discovered and advised the Company prior to the Closing Date that the
Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of material fact which, in your opinion, is
material, or that the Registration Statement or any amendment or supplement
thereto omits to state a fact which, in your opinion after consultation with
legal counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
c. LITIGATION. Between the time of the execution and
delivery of this Agreement and the Closing, there shall be no material
litigation instituted against the Company, any of its subsidiaries or any of
their respective officers or directors, and between such dates there shall be no
proceeding instituted or threatened against the Company, any of its subsidiaries
or any of their respective officers or directors before or by any Federal,
state, county or local commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding could materially adversely affect the
Company, any of its subsidiaries or their respective businesses, business
prospects, properties, financial conditions or results of operations.
d. REVIEW BY UNDERWRITERS' COUNSEL. The authorization
and issuance of the Securities, the sale and delivery thereof, the Registration
Statement, the Prospectus and all other documents and corporate proceedings
incident thereto shall be satisfactory in all material respects to you and your
counsel, and your counsel shall be furnished on the Closing Date with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the matters referred to in this Section 9.
e. TENDER. There shall have been tendered to the
Representatives certificates representing the Firm Securities to be sold on the
Closing Date in accordance with the terms and provisions of this Agreement.
f. STANDARD & POOR'S/▇▇▇▇▇'▇. The Company shall have
registered with (a) the Corporation Records Service published by Standard &
Poor's Corporation or (b) ▇▇▇▇▇'▇ Industrial Manual (excluding ▇▇▇▇▇'▇ OTC
Industrial Manual).
- 31 -
g. INDEPENDENT DIRECTORS. The Company shall have
serving on its Board of Directors at least two (2) persons who satisfy the
criteria for "independent director" set forth in Rule 4460(c) of the NASD rules.
h. OPINION OF LEGAL COUNSEL. You shall have received
an opinion dated the effective date of the Registration Statement, and an
updated version of such opinion dated the Closing Date, satisfactory in form and
substance to you and your counsel, from ▇▇▇▇▇, Mandler, Croland, Bronstein,
Garbett, Stiphany & ▇▇▇▇▇▇▇▇, P.A., counsel for the Company, in the form of
Exhibit "A" hereto.
In giving such opinion, such counsel may rely as to
matters of fact upon statements and certifications of officers of the Company or
public officials as to matters of fact of which the maker of such certificate
has knowledge, and as to matters of law of jurisdictions other than Florida,
such counsel may rely on opinions of local counsel acceptable to you, copies of
which opinions shall be attached to the said opinion, provided, however, that
such counsel may not rely on an opinion if he has actual knowledge that such
opinion is not correct or knows that the facts or law on which the opinion of
local counsel is based are not correct.
i. PRESIDENT'S CERTIFICATE. The Company shall have
furnished to you on the Closing Date a certificate of its President, or other
principal executive officer of the Company dated as of the Closing Date, to the
effect that:
(1) No stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for such purpose have been commenced or are, to the
knowledge of each signer of such certificate, threatened or
contemplated by the Commission; no stop order suspending the
qualification or registration of any of the Securities under the Blue
Sky laws of any jurisdiction (whether or not a jurisdiction you shall
have specified) has been issued, and no material proceedings for such
purpose have been commenced or are, to the knowledge of each signer of
such certificate after reasonable investigation, threatened or
contemplated by any jurisdiction; and the conditions, separately set
forth in such certificate, contained in Section 9 hereof have been
complied with in all material respects.
(2) The respective signers and each other
member of the Company's Board of Directors have each read the
Registration Statement and Prospectus and any amendments and
supplements thereto, and the Registration Statement and the Prospectus
and any amendments and supplements thereto and all statements contained
therein are true and correct in all material respects, and neither the
Registration Statement nor Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact re quired to be stated therein or necessary to
make the statements therein not misleading and, since the effective
date of the Registration Statement, they are not aware of any
- 32 -
event required to be set forth in an amendment to the Registration
Statement or a supplement to the Prospectus which has not been so set
forth.
(3) Except as reflected in the Registration
Statement and Prospectus or any amendment or supplement thereto, since
the respective dates as of which information is given in the
Registration Statement and Prospectus or any amendment or supplement
thereto and prior to the date of such certificate, (a) there has not
been any material adverse change, financial or otherwise, in the
affairs or condition of the Company and of its subsidiaries taken as a
whole, and (b) the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, otherwise than in the ordinary course of business.
(4) There are no legal proceedings pending
or, to the knowledge of the Company after reasonable investigation,
threatened against the Company or any of its subsidiaries, of a
character affecting the validity of this Agreement or required to be
disclosed in the Prospectus which are not disclosed therein; there are
no material transactions or contracts which are required to be sum
marized therein which are not so summarized; and there are no material
contracts or documents required to be filed as exhibits to the
Registration Statement which are not so filed.
(5) Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, no dividends or distribution whatever have been declared
and/or paid on or with respect to any securities of the Company.
(6) Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, the Company has not sustained any material loss or damage
to its property, whether or not insured.
(7) At and as of the Closing Date, the
representations and warranties contained in Section 6 of this Agreement
are true and correct in all material respects; the Company has complied
with all the agreements and has satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date, and
the matters set forth in Section 9 of this Agreement have been
satisfied and/or complied with, as applicable.
(8) The Company and each of its
subsidiaries has such licenses, registrations, permits, approvals,
qualifications and certificates of authority from the appropriate
regulatory authorities as are necessary to transact its business as
described in the Registration Statement and in the Prospectus in the
jurisdictions
- 33 -
in which the Company and each of its subsidiaries transacts its
business or owns or leases property, and in which the failure to have
such licenses, registrations, permits, approvals, qualifications and
certificates could have a material adverse effect on the business,
properties or results of operation of the Company and its subsidiaries
taken as a whole.
j. CHIEF FINANCIAL OFFICER'S CERTIFICATE. The Company
shall have furnished to you on the Closing Date a certificate of its
Chief Financial Officer, or other principal executive financial officer
or accounting officer of the Company, dated as of the Closing Date, to
the effect that:
(1) To the knowledge of such officer after
reasonable inquiry no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been commenced or are, to the knowledge of each signer of
such certificate, threatened or contemplated by the Commission; no stop
order suspending the qualification or registration of any of the
Securities under the Blue Sky laws of any jurisdiction (whether or not
a jurisdiction you shall have specified) has been issued, and no
proceedings for such purpose have been commenced or are, to the
knowledge of each signer of such certificate, threatened or
contemplated by any jurisdiction; and the conditions contained in
Section 9 of this Agreement have been satisfied and/or complied with,
as applicable.
(2) The Prospectus and any amendments and
supplements thereto and all statements contained therein are true and
correct, and to his knowledge, after reasonable inquiry, neither the
Registration Statement nor Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading and, since the effective
date of the Registration Statement, he is not aware of any event
required to be set forth in an amendment to the Registration Statement
or a supplement to the Prospectus which has not been so set forth.
(3) Except as reflected in the Registration
Statement and Prospectus or any amendment or supplement thereto, since
the respective dates as of which information is given in the
Registration Statement and Prospectus or any amendment or supplement
thereto and prior to the date of such certificate, (a) there has not
been any material adverse change, financial or otherwise, in the
affairs or condition of the Company or any of its subsidiaries taken as
a whole, and (b) the Company has not incurred any material liabilities
or obligations, direct or contingent, or entered into any material
transactions, otherwise than in the ordinary course of business.
(4) There are no material legal proceedings
pending or to his knowledge after reasonable inquiry, threatened
against the Company or any of its subsidiaries, of a character
affecting the validity of this Agreement or required to be
- 34 -
disclosed in the Prospectus which are not disclosed therein; there are
no transactions or contracts which are required to be summarized
therein which are not so summarized; and there are no material
contracts or documents required to be filed as exhibits to the
Registration Statement which are not so filed.
(5) Subsequent to the respective dates as
of which information is given in the Registration Statement and the
Prospectus, no dividends or distribution whatever have been declared
and/or paid on or with respect to any securities of the Company.
(6) Subsequent to the respective dates as
of which information is given in the Registration Statement and the
Prospectus, the Company has not sustained any material loss or damage
to its property, whether or not insured.
(7) At and as of the Closing Date, to his
knowledge after reasonable inquiry, the representations and warranties
contained in Section 6 of this Agreement are true and correct; the
Company has complied with all the agreements and has satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date, and the conditions set forth in Section 9 of this
Agreement have been satisfied and/or complied with, as applicable.
k. ACCOUNTANT'S LETTER. You shall have received from
the independent certified public accountants that audited the financial
statements of the Company included in the Registration Statement, at least two
letters each addressed to you, substantially in the form heretofore approved by
you, one dated the effective date of the Registration Statement and the second,
the Closing Date.
l. REPRESENTATIVES' WARRANTS. The Company shall have
executed and delivered to the Representatives the Representatives' Warrant
Agreement and properly executed certificates evidencing the Representatives'
Warrants simultaneously with the closing of the sale of the Firm Securities.
m. LOCK-UP AGREEMENTS. You shall have received the
executed "lock-up" and voting agreements described in Sections 5.k and 5.v of
this Agreement.
n. NASDAQ LISTING. The Common Stock (including the
Warrant Shares) and the Warrants shall have been qualified for listing on the
Nasdaq SmallCap Market on the effective date of the Registration Statement and
continue to be so qualified.
o. BLUE SKY QUALIFICATION. The Securities shall be
qualified in such states as determined under Section 5.e above and each
qualification shall be in effect and not subject to an stop order or other
proceeding on the Closing Date.
- 35 -
p. WARRANT AGREEMENT. The Company and the Warrant
Agent shall have executed and delivered the Warrant Agreement.
All such opinions, certificates, letters and documents delivered
pursuant to this Agreement will be in compliance with the provisions of this
Section 9 only if they are reasonably satisfactory to you and your counsel. The
Company shall furnish to you such conformed copies of such opinions,
certificates, letters and documents in such quantities as you shall reasonably
request.
If any of the conditions hereunder to be satisfied at or prior to the
Closing Date are not so satisfied, or subsequently waived, you may terminate
this Agreement without liability on your part or on the part of the Company,
except for the expenses to be paid or reimbursed by the Company pursuant to
Section 5.o of this Agreement and except for any liability under Section 8 of
this Agreement.
Your obligation to purchase and pay for all or any portion of the
Option Securities on the Option Closing Date upon the exercise of the option
contained in Section 3 hereof shall be subject to the accuracy of and compliance
with the representations and the warranties of the Company herein contained as
of the date hereof and the Closing Date and Option Closing Date, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(A) You shall have purchased the Firm
Securities from the Company (which purchase may occur simultaneously with the
purchase of the Option Securities from the Company).
(B) The conditions set forth in paragraphs
a., b. and c. of this Section 9 shall be satisfied as of the Option Closing
Date.
(C) There shall have been tendered for
delivery in accordance with the terms and provisions of this Agreement the
Option Securities being purchased on the Option Closing Date from the Company.
(D) You shall have received an opinion of
counsel for the Company, dated the Option Closing Date, confirming their opinion
delivered pursuant to Section 9.h hereof as of the Option Closing Date. In each
instance in which the opinion referred to in Section 9.h refers to the Firm
Securities, the opinion delivered pursuant hereto shall also refer to the Option
Securities.
(E) You shall have received from the
independent certified public accountants the audited financial statements of the
Company included in the Registration Statement, a letter addressed to you,
substantially in the form heretofore approved by you, dated the Option Closing
Date.
- 36 -
(F) You shall have received a certificate,
dated the Option Closing Date, of the Company, confirming the matters stated in
the certificate delivered pursuant to Section 9.i hereof as of the Option
Closing Date and stating further that the Company has performed or a waiver has
been given for all or a part of the agreements herein contained to be performed
on its part at or prior to such Option Closing Date.
(G) You shall have received a certificate,
dated the Option Closing Date, of the Company, confirming the matters stated in
the certificate delivered pursuant to Section 9.j hereof as of the Option
Closing Date and stating further that the Company has performed or a waiver has
been given for all or a part of the agreements herein contained to be performed
on its part at or prior to such option Closing Date.
10. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
a. This Agreement shall become effective when you and
the Company shall have received notification of the effectiveness of the
Registration Statement.
b. This Agreement may be terminated at any time prior
to the Closing Date by you by written notice to the Company if in your judgment
it is impracticable to offer for sale or to enforce contracts made by you for
the resale of the Securities agreed to be purchased hereunder by reason of (i)
the Company or its subsidiaries having sustained a loss by reason of fire,
flood, accident or other calamity, which, in your opinion, substantially affects
the value of the properties of the Company or its subsidiaries or which
materially interferes with the operation of the business of the Company or any
of its subsidiaries regardless of whether such loss shall have been insured,
(ii) the existing financial, political or economic conditions in the United
States or elsewhere having undergone such material change as in your opinion
would make it inadvisable to proceed with the offering, sale and delivery of the
Securities on the terms contemplated by the Prospectus, (iii) a banking
moratorium shall have been declared by either federal or New York authorities,
(iv) a war involving the United States or other national calamity shall have
occurred, (v) any material adverse change in the condition or obligations of the
Company and any of its subsidiaries taken as a whole or in the earnings,
operations, management or business prospects of the Company and any of its
subsidiaries taken as a whole, (vi) any action, suit or proceeding shall be
threatened or pending, at law or in equity, against the Company and any of its
subsidiaries taken as a whole, by any Federal, state or other commission, board
or agency, which is not disclosed in the Prospectus and in which an unfavorable
result or decision could materially adversely affect the business, prospects,
property, financial condition or income or earnings of the Company and any of
its subsidiaries taken as a whole, (vii) an action, suit or proceeding that is
threatened or pending, which has been previously disclosed in the Prospectus,
shall have worsened in any way such that an unfavorable result or decision could
materially adversely affect the business, prospects, property, financial
condition or income or earnings of the Company and/or any of its subsidiaries,
or (viii) during the course of your due diligence investigation of the Company,
facts arise which vary materially in an adverse manner from representations
which have been previously made concerning the Company's business and financial
condition. In addition, this Agreement may be terminated by you by prompt
written notice
- 37 -
to the Company (i) at any time before it becomes effective or (ii) in the event
that the Company shall have failed to comply with any of the provisions of this
Agreement to be performed by it at or prior to any Closing Date which have not
been waived by you, or if any of the representations, warranties, covenants,
agreements or conditions of, or applicable to, the Company herein contained
shall not have been complied with or satisfied within the time specified unless
waived by you.
c. At any time after the Closing Date, if you should
(i) cease to be a broker-dealer registered with the Commission, (ii) be
suspended from such registration for any period of time in excess of 30 days,
(iii) cease to be a member of the NASD or other self-regulatory organization or
(iv) become subject to a proceeding, action or notification under Section 6 of
the Securities Investor Protection Act of 1970, the obligations of the Company
under this Agreement shall cease without any liability on the part of the
Company.
11. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES AND
COVENANTS. The respective indemnities of the Company and the Underwriters and
the respective representations, warranties and covenants of the Company and the
Underwriters set forth in this Agreement will remain in full force and effect,
regardless of any investigations made by or on behalf of the Company or the
Underwriters or any of their respective officers, directors, partners or any
controlling person, and will survive delivery of and payment for the Securities
or termination of this Agreement pursuant to Section 9 hereof as the case may
be.
12. INFORMATION FURNISHED BY UNDERWRITERS. The Company
acknowledges that the statements set forth in the last paragraph on the cover
page, the stabilization legend on the inside cover page, and the statements in
the first, third, twelfth (except for the first sentence thereof) and thirteenth
paragraphs under the caption "Underwriting" in any Preliminary Prospectus and in
the Prospectus, constitute the only information furnished by or on behalf of any
Underwriter through the Representatives or on its behalf as such information is
referred to in Sections 6.b., 7.c. and 8 hereof.
13. MISCELLANEOUS.
a. This Agreement shall inure to the benefit of the
Company and the Underwriters, the officers and directors of such parties, each
controlling person referred to in Section 8 hereof and their respective
successors. Nothing in this Agreement is intended or shall be construed to give
to any other person, firm or corporation any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
The term "successor" as used in this Agreement shall not include any purchaser
of any Securities from the Underwriter.
b. This Agreement constitutes the entire agreement
among the parties concerning the subject matter hereof and supersedes all prior
agreements and understandings.
c. All notices and other communications hereunder
(unless otherwise expressly provided for herein) shall be in writing and shall
be deemed given when delivered in
- 38 -
person on the business (before 5:00 P.M.) sent by facsimile transmission, or on
the date indicated on the return receipt if sent registered or certified mail
return receipt requested) to the party to receive the same at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to the Company: Galacticomm Technologies, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇, Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to: ▇▇▇▇▇, Mandler, Croland, Bronstein, Garbett,
Stiphany & ▇▇▇▇▇▇▇▇, P.A.
▇▇▇▇▇▇▇ Bank Tower
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Underwriters: Security Capital Trading, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇, Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
First Equity Corporation of Florida
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Senior Vice
President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to: Akerman, Senterfitt & ▇▇▇▇▇▇, P.A.
SunTrust International Center, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
d. This Agreement was executed and delivered in, and
its validity, interpretation and construction shall be governed by the internal
laws of, the State of Florida appli cable to agreements made and to be performed
wholly within such State. This Agreement may be executed in any number of
counterparts. Each counterpart, when executed and delivered, shall be
- 39 -
an original contract, but all counterparts, when taken together, shall
constitute one and the same Agreement.
e. The Company hereby acknowledges that the breach of
material terms contained in this Agreement (whether or not specifically
designated as such) would cause irreparable damage and substantial prejudice to
your rights. Accordingly, the Company agrees that in the event of any such
breach or threatened breach, you shall have, in addition to its and your legal
remedies, the right to injunctive or other equitable relief, as permitted by
law, to prevent the Company's violation of their obligations hereunder.
f. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
g. Any consent or approval of the Underwriters
required hereunder to any action of the Company shall not be unreasonably
withheld, and notwithstanding any other provisions hereof, such consent or
approval shall not be required if the Company obtains an opinion from counsel
acceptable to the Underwriters that the requirement of such consent or approval
constitutes an abrogation of the Board of Directors' duties under the corporate
law of such jurisdiction.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and us in accordance with its terms.
Very truly yours,
Galacticomm Technologies, Inc.
By:
--------------------------------------
▇▇▇▇▇ ▇▇▇▇, Chief Executive Officer
Accepted and agreed to as of
the date first above written:
Security Capital Trading, Inc.
By:_________________________________
Name:_______________________________
- 40 -
Title:_____________________________
First Equity Corporation of Florida
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Senior Vice President
- 41 -
SCHEDULE I
UNDERWRITERS
- 42 -
EXHIBIT A
OPINION OF
▇▇▇▇▇, MANDLER, CROLAND, BRONSTEIN,
GARBETT, STIPHANY & ▇▇▇▇▇▇▇▇
A-1