Exhibit 1.1
DECTRON INTERNATIONALE INC.
1,000,000 Shares of Common Stock and
1,000,000 Redeemable
Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
September , 1998
J.P. Turner & Co., L.L.C.
3340 Peachtree Road, Suite 450
Atlanta, Georgia 30326
Klein Maus and Shire Incorporated
110 Wall Street
New York, New York 10005
Dear Sirs:
Dectron Internationale Inc., a Quebec, Canada corporation and its
subsidiaries which include Dectron, Inc. ("Dectron, Inc."), Fibre Mobile Limited
("Klasco"), Refplus, Inc. (Refplus"), Thermoplus Air, Inc. ("Thermoplus"), and
Dectron USA, Inc. ("Dectron USA"), (collectively the "Company"), hereby confirms
its agreement with J.P. Turner & Co., L.L.C. (the "Representative"), and Klein
Maus and Shire Incorporated ("KMS" and collectively with the Representative, the
"Underwriters") as follows:
1. Description of the Securities.
The Company proposes to issue and sell to the Underwriters 1,000,000 shares
of common stock, no par value per share (the "Common Stock"), and 1,000,000
redeemable Common Stock purchase warrants (the "Warrants," and collectively with
the Common Stock, the "Securities") in the amounts set forth on Schedule A
hereto. Each Warrant shall entitle to the holder to purchase one share of Common
Stock for $9.20, subject to adjustment. The Company proposes to grant to the
Underwriters an option to purchase up to 150,000 additional shares of Common
Stock and up to an additional 150,000 Warrants (the "Additional Securities").
The offering of Securities and Additional Securities contemplated hereby may
sometimes be referred to as the "Offering."
(a) The Warrants.
The Warrants are exercisable from one year from the effective date of the
Registration Statement, as defined in Paragraph 2(a) (the "Effective Date"),
until expiration four years thereafter, subject to prior redemption by the
Company. The Warrants will be exercisable at $9.20 per share and expire on
September [ ], 2003. The shares of Common Stock issuable upon the exercise of
the Warrants are hereinafter referred to as the "Warrant Shares."
The Warrants will be redeemable at a price of $.125 per Warrant, commencing
12 months after the Effective Date ( or earlier with the consent of the
Representative) and prior to their expiration upon written notice given within
30 days after 30 consecutive business days ending on the third day prior to the
date the notice of redemption is given during which the Common Stock maintains a
per share closing bid price (or closing sales price if listed on an exchange or
on a reporting system that provides last sales prices) at least equal to 174% of
the then current Warrant exercise price (initially $16.00 per share, subject to
adjustment), subject to the right of the holder to exercise his purchase rights
thereunder until redemption.
(b) Underwriters' Securities.
The Company will sell to the Underwriters, for $10.00, a warrant to
purchase an amount equal to ten percent 10% of the Common Stock and Warrants
sold in this Offering excluding the Additional Securities (a maximum of 100,000
shares of Common Stock and Warrants) (the" Underwriters' Warrants," and
collectively with the Securities underlying the Underwriters' Warrants, the
"Underwriters' Securities"). The Warrants underlying the Underwriters' Warrants
shall be exercisable at a price of $9.20 per share of Common Stock and $.14375
per Warrant. The Underwriters' Securities shall be non-exercisable and
non-transferable (other than to (i) officers of the Underwriters, and (ii)
members of the selling group and their officers or partners) for a period of 12
months following the Effective Date. Thereafter, they are exercisable and
transferable for a period of four years. If the Underwriters' Securities are not
exercised during their term, they shall, by their terms, automatically expire.
The Underwriters' Securities shall be registered for sale to the public and
shall be included in the Registration Statement filed in connection with the
Offering.
2. Representations and Warranties of the Company.
The Company represents and warrants to the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission"), a registration statement on Form SB-2 (File No. 333- ),
including any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Securities under the Securities Act of 1933 (the "Act"). The
Company will file further amendments to said registration statement in the form
to be delivered to you and will not, before the registration statement becomes
effective, file any other amendment thereto to which you shall have objected in
writing after having been furnished with a copy thereof. Except as the context
may otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, exhibits and
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all other documents filed as a part thereof or incorporated therein), is
hereinafter called the "Registration Statement", and the prospectus, in the form
filed with the Commission pursuant to Rule 424(b) of the General Rules and
Regulations of the Commission under the Act (the "Regulations") or, if no such
filing is made, the definitive prospectus used in the Offering, is hereinafter
called the "Prospectus." The Company has delivered to you copies of each
Preliminary Prospectus as filed with the Commission and has consented to the use
of such copies for purposes permitted by the Act.
(b) The Commission has not issued any orders preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects with the requirements of the Act and has not
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, subject to the provisions set forth below and to except as such
untrue statement or omission has been cured in the a subsequent preliminary
prospectus or in the final prospectus.
(c) When the Registration Statement becomes effective under the Act
and at all times subsequent thereto including the Closing Date (hereinafter
defined) and the Option Closing Date (hereinafter defined) and for such longer
periods as in the opinion of counsel for the Underwriters, a Prospectus is
required to be delivered in connection with the sale of the Securities by the
Underwriters, the Registration Statement and Prospectus, and any amendment
thereof or supplement thereto, will contain all material statements which are
required to be stated therein in accordance with the Act and the Regulations,
and will in all material respects conform to the requirements of the Act and the
Regulations, and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty does not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Company by you, or by any of the Selling Shareholders, for use in connection
with the preparation of the Registration Statement or Prospectus, or in any
amendment thereof or supplement thereto. It is understood that the statements
set forth under the heading "Underwriting" in the Prospectus with respect to (i)
the amounts of the selling concession and reallowance; (ii) the identity of
counsel to the Underwriters under the heading "Legal Matters"; and (iii) the
information concerning the NASD affiliation of the Underwriters, constitute the
only information supplied by you for use in the Registration Statement or
Prospectus.
(d) The Company and its subsidiaries are, and at the Closing Date and
the Option Closing Date will be, corporations duly organized, validly existing
and in good standing under the laws of the state of their incorporation. The
Company is duly qualified or licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such qualification or
licensing, except those jurisdictions in which the failure to so qualify would
not have a material adverse effect. The
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Company has all requisite corporate powers and authority, and except as set
forth in the Registration Statement the Company and its employees have all
material and necessary authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental regulatory officials and bodies to own
or lease the Company's properties and conduct its business as described in the
Prospectus and the Company is doing business and has been doing business during
the period described in the Registration Statement in compliance with all such
material authorizations, approvals, orders, licenses, certificates and permits
and all material federal, state and local laws, rules and regulations concerning
the business in which the Company is engaged. The disclosures in the
Registration Statement concerning the effects of federal, state and local
regulation on the Company's business as currently conducted and as contemplated
are correct in all material respects and do not omit to state a material fact.
The Company has all corporate power and authority to enter into this Agreement
and carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have been
obtained or will have been obtained prior to the Closing Date.
(e) This Agreement has been duly and validly authorized and executed
by the Company. The Securities (including the Common Stock and the Warrants),
the Warrant Shares, the Underwriters' Warrants to be issued and sold by the
Company pursuant to this Agreement, the Securities issuable upon exercise of the
Underwriters' Warrants and payment therefor, and the Common Stock and Warrant
Shares underlying such Underwriters' Warrants, have been duly authorized (and,
in the case of the Common Stock and the Warrant Shares, have been duly reserved
for issuance) and, when issued and paid for in accordance with this Agreement
(and, in the case of the Warrant Shares, upon exercise of the Warrants and
payment to the Company of the exercise price therefor), the Common Stock and
Warrant Shares will be validly issued, fully paid and non-assessable; the Common
Stock, Warrants, Warrant Shares, Underwriters' Warrants, Additional Securities
and Underwriters' Warrants Shares are not and will not be subject to the
preemptive rights of any stockholder of the Company and conform and at all times
up to and including their issuance will conform in all material respects to all
statements with regard thereto contained in the Registration Statement and
Prospectus; and all corporate action required to be taken for the authorization,
issuance and sale of the Common Stock, Warrants, Warrant Shares and
Underwriters' Warrants has been taken, and this Agreement constitutes a valid
and binding obligation of the Company, enforceable in accordance with its terms,
to issue and sell, upon exercise in accordance with the terms thereof, the
number and kind of securities called for thereby.
(f) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
the Articles of Incorporation, as amended, or bylaws of the Company or of any
evidence of indebtedness, lease, contract or other agreement or instrument to
which the Company is a party or by which the Company or any of its properties is
bound, or under any applicable law, rule, regulation, judgment, order or decree
of any government, professional advisory body, administrative agency or court,
domestic or foreign, having jurisdiction over the Company or its properties, or
result in the creation or imposition of any lien, charge or encumbrance upon any
of the properties or assets of the Company; and no consent, approval,
authorization or order
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of any court or governmental or other regulatory agency or body is required for
the consummation by the Company of the transactions on its part herein
contemplated, except as such as may be required under the Act or under state
securities or blue sky laws, except where a breach, violation or failure to
obtain such consent would not have a material adverse effect upon the business
or operation of the Company.
(g) Subsequent to the date hereof, and prior to the Closing Date and
the Option Closing Date, the Company will not issue or acquire any equity
securities except that the Company may make short-term investments as
contemplated in the "Use of Proceeds" section of the Prospectus. Except as
described in the Registration Statement, the Company does not have, and at the
Closing Date and at the Option Closing Date will not have, outstanding any
options to purchase or rights or warrants to subscribe for, or any securities or
obligations convertible into, or any contracts or commitments to issue or sell
shares of its Preferred Stock, Common Stock or any such options, warrants,
convertible securities or obligations.
(h) The financial statements and notes thereto included in the
Registration Statement and the Prospectus fairly present the financial position
and the results of operations of the Company at the respective dates and for the
respective periods to which they apply; and such financial statements have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved.
(i) Except as set forth in the Registration Statement, the Company is
not, and at the Closing Date and at the Option Closing Date will not be, in
violation or breach of, or default in, the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust, note,
loan or credit agreement, or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
property or assets of the Company is subject, which violations, breaches,
default or defaults, singularly or in the aggregate, would have a material
adverse effect on the Company. The Company has not and will not have taken any
action in material violation of the provisions of the Articles of Incorporation,
as amended, or the Bylaws of the Company or any statute or any order, rule or
regulation of any court or regulatory authority or governmental body having
jurisdiction over or application to the Company, its business or properties.
(j) The Company has, and at the Closing Date and at the Option Closing
Date will have, good and marketable title to all properties and assets described
in the Prospectus as owned by it, free and clear of all liens, charges,
encumbrances, claims, security interests, restrictions and defects of any
material nature whatsoever, except such as are described or referred to in the
Prospectus and liens for taxes not yet due and payable. All of the material
leases and subleases under which the Company is the lessor or sublessor of
properties or assets or under which the Company holds properties or assets as
lessee as described in the Prospectus are, and will on the Closing Date and the
Option Closing Date be, in full force and effect, and except as described in the
Prospectus, the Company is not and will not be in default in respect to any of
the terms or provisions of any of
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such leases or subleases (which would have a material adverse effect on the
business, business prospects or operations of the Company taken as a whole), and
no claim has been asserted by anyone adverse to rights of the Company as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company to continue
possession of the leased or subleased premises or assets under any such lease or
sublease except as described or referred to in the Prospectus, and the Company
owns or leases all such properties as are necessary to its operations as now
conducted and, except as otherwise stated in the Prospectus, as proposed to be
conducted set forth in the Prospectus (which would have a material adverse
effect on the business, business prospects or operations of the Company taken as
a whole).
(k) The authorized, issued and outstanding capital stock of the
Company as of June 31, 1998 and as of the date of the Prospectus is as set forth
in the Prospectus under "Capitalization"; the shares of issued and outstanding
capital stock of the Company set forth thereunder have been duly authorized,
validly issued and are fully paid and non-assessable; except as set forth in the
Prospectus, no options, warrants or other rights to purchase, agreements or
other obligations to issue, or agreements or other rights to convert any
obligation into, any shares of capital stock of the Company have been granted or
entered into by the Company; and the Common Stock, the Warrants and all such
options and warrants conform in all material respects, to all statements
relating thereto contained in the Registration Statement and Prospectus.
(l) Except as described in the Prospectus, the Company does not own or
control any capital stock or securities of, or have any proprietary interest in,
or otherwise participate in any other corporation, partnership, joint venture,
firm, association or business organization; provided, however, that this
provision shall not be applicable to the investment, if any, of the net proceeds
from the sale of the Securities sold by the Company in certificates of deposits,
savings deposits, short-term obligations of the United States Government, money
market instruments or other short-term investments.
(m) Schwartz Levitsky Feldman, who have given their reports on certain
financial statements filed and to be filed with the Commission as a part of the
Registration Statement, which are incorporated in the Prospectus, are with
respect to the Company, independent public accountants as required by the Act
and the Rules and Regulations.
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may otherwise
be indicated or contemplated herein or therein, the Company has not (i) issued
any securities or incurred any liability or obligation, direct or contingent,
for borrowed money; or (ii) entered into any transaction other than in the
ordinary course of business; or (iii) declared or paid any dividend or made any
other distribution on or in respect to its capital stock.
(o) There is no litigation or governmental proceeding pending or to
the knowledge of the Company threatened against, or involving the properties or
business of the Company which might materially adversely affect the value,
assets or the operation of the properties
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or the business of the Company, except as referred to in the Prospectus.
Further, except as referred to in the Prospectus, there are no pending actions,
suits or proceedings related to environmental matters or related to
discrimination on the basis of age, sex, religion or race, nor is the Company
charged with or, to its knowledge, under investigation with respect to any
violation of any statutes or regulations of any regulatory authority having
jurisdiction over its business or operations, and no labor disturbances by the
employees of the Company exist or, to the knowledge of the Company, have been
threatened.
(p) The Company has, and at the Closing Date and at the Option Closing
Date will have, filed all necessary federal, state and foreign income and
franchise tax returns or has requested extensions thereof (except in any case
where the failure to so file would not have a material adverse effect on the
Company), and has paid all taxes which it believes in good faith were required
to be paid by it except for any such tax that currently is being contested in
good faith or as described in the Prospectus.
(q) The Company has not at any time (i) made any contribution to any
candidate for political office, or failed to disclose fully any such
contribution, in violation of law, or (ii) made any payment to any state,
federal, foreign governmental or professional regulatory agency, officer or
official or other person charged with similar public, quasi-public or
professional regulatory duties, other than payments or contributions required or
allowed by applicable law.
(r) Except as set forth in the Registration Statement, to the
knowledge of the Company, neither the Company nor any officer, director,
employee or agent of the Company has made any payment or transfer of any funds
or assets of the Company or conferred any personal benefit by use of the
Company's assets or received any funds, assets or personal benefit in violation
of any law, rule or regulation, which is required to be stated in the
Registration Statement or necessary to make the statements therein not
misleading.
(s) On the Closing Date and on the Option Closing Date, all transfer
or other taxes, if any (other than income tax) which are required to be paid,
and are due and payable, in connection with the sale and transfer of the
Securities by the Company to the Underwriters will have been fully paid or
provided for by the Company as the case may be, and all laws imposing such taxes
will have been fully complied with in all material respects.
(t) There are no contracts or other documents of the Company which are
of a character required to be described in the Registration Statement or
Prospectus or filed as exhibits to the Registration Statement which have not
been so described or filed.
(u) The Company will apply the net proceeds from the sale of the
Securities sold by it for the purposes and in the manner set forth in the
Registration Statement and Prospectus under the heading "Use of Proceeds."
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(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are executed in
accordance with management's general or specified authorizations; (2)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (3) access to assets is permitted only in
accordance with management's general or specific authorizations; and (4) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) Except as set forth in the Prospectus, no holder of any securities
of the Company has the right to require registration of any securities because
of the filing or effectiveness of the Registration Statement.
(x) The Company has not taken and at the Closing Date will not have
taken, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock or the Warrants
to facilitate the sale or resale of such securities.
(y) To the Company's knowledge, there are no claims for services in
the nature of a finder's origination fee with respect to the sale of the
Securities hereunder, except as set forth in the Prospectus.
(z) No right of first refusal exists with respect to any sale of
securities by the Company.
(aa) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to Underwriters was, when made, or as of the
Closing Date or as of the Option Closing Date will be materially inaccurate,
untrue or incorrect.
3. Covenants of the Company.
The Company covenants and agrees that:
(a) It will deliver to the Representative, without charge, two
conformed copies of each Registration Statement and of each amendment or
supplement thereto, including all financial statements and exhibits.
(b) The Company has delivered to each of the Underwriters, and each of
the Selected Dealers (as hereinafter defined) without charge, as many copies as
have been requested of each Preliminary Prospectus heretofore filed with the
Commission in accordance with and pursuant to the Commission's Rule 430 under
the Act and will deliver to the Underwriters and to others whose names and
addresses are furnished by the Underwriters or a Selected Dealer, without
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charge, on the Effective Date of the Registration Statement, and thereafter from
time to time during such reasonable period as you may request if, in the opinion
of counsel for the Underwriters, the Prospectus is required by law to be
delivered in connection with sales by the Underwriters or a dealer, as many
copies of the Prospectus (and, in the event of any amendment of or supplement to
the Prospectus, of such amended or supplemented Prospectus) as the Underwriters
may request for the purposes contemplated by the Act. The Company will take all
necessary actions to furnish to whomever directed by the Underwriters, when and
as requested by the Underwriters, all necessary documents, exhibits,
information, applications, instruments and papers as may be reasonably required
or, in the opinion of counsel to the Underwriters desirable, in order to permit
or facilitate the sale of the Securities.
(c) The Company has authorized the Underwriters to use, and make
available for use by prospective dealers, the Preliminary Prospectus, and
authorizes the Underwriters, all dealers selected by you in connection with the
distribution of the Securities (the "Selected Dealers") to be purchased by the
Underwriters and all dealers to whom any of such Securities may be sold by the
Underwriters or by any Selected Dealer, to use the Prospectus, as from time to
time amended or supplemented, in connection with the sale of the Securities in
accordance with the applicable provisions of the Act, the applicable Regulations
and applicable state law, until completion of the distribution of the Securities
and for such longer period as you may request if the Prospectus is required
under the Act, the applicable Regulations or applicable state law to be
delivered in connection with sales of the Securities by the Underwriters or the
Selected Dealers.
(d) The Company will use its best efforts to cause the Registration
Statement to become effective and will notify the Representative immediately,
and confirm the notice in writing: (i) when the Registration Statement or any
post-effective amendment thereto becomes effective; (ii) of the issuance by the
Commission of any stop order or of the initiation, or to the best of the
Company's knowledge, the threatening, of any proceedings for that purpose; (iii)
the suspension of the qualification of the Securities and the Underwriters'
Warrants, or underlying securities, for offering or sale in any jurisdiction or
of the initiating, or to the best of the Company's knowledge the threatening, of
any proceeding for that purpose; and (iv) of the receipt of any comments from
the Commission. If the Commission shall enter a stop order at any time, the
Company will make every reasonable effort to obtain the lifting of such order at
the earliest possible moment.
(e) During the time when a prospectus is required to be delivered
under the Act, the Company will comply with all requirements imposed upon it by
the Act and the Securities Exchange Act of 1934 (the "Exchange Act"), as now and
hereafter amended and by the Regulations, as from time to time in force, as
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus. If at any time when a
prospectus relating to the Securities is required to be delivered under the Act,
any event shall have occurred as a result of which, in the opinion of counsel
for the Company or counsel for the Underwriters, the Prospectus as then amended
or supplemented includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
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statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify you promptly and prepare and
file with the Commission an appropriate amendment or supplement in accordance
with Section 10 of the Act and will furnish to you copies thereof.
(f) The Company will endeavor in good faith, in cooperation with you,
at or prior to the time the Registration Statement becomes effective, to qualify
the Securities for offering and sale under the securities laws or blue sky laws
of such jurisdictions as you may reasonably designate. In each jurisdiction
where such qualification shall be effected, the Company will, unless you agree
that such action is not at the time necessary or advisable, file and make such
statements or reports at such times as are or may reasonably be required by the
laws of such jurisdiction.
(g) The Company will make generally available to its security holders,
as soon as practicable, but in no event later than the first day of the
fifteenth full calendar month following the Effective Date of the Registration
Statement, an earnings statement of the Company, which will be in reasonable
detail but which need not be audited, covering a period of at least twelve
months beginning after the Effective Date of the Registration Statement, which
earnings statements shall satisfy the requirements of Section 11(a) of the Act
and the Regulations as then in effect. The Company may discharge this obligation
in accordance with Rule 158 of the Regulations.
(h) During the period of five years commencing on the Effective Date
of the Registration Statement, the Company will furnish to its stockholders an
annual report (including financial statements audited by its independent public
accountants), in reasonable detail, and, at its expense, furnish each of the
Underwriters (i) within the time frame of the jurisdiction of the Company's
domicile and as otherwise required by the federal securities laws, a
consolidated balance sheet of the Company and its consolidated subsidiaries and
a separate balance sheet of each subsidiary of the Company the accounts of which
are not included in such consolidated balance sheet as of the end of such fiscal
year, and consolidated statements of operations, stockholder's equity and cash
flows of the Company and its consolidated subsidiaries and separate statements
of operations, stockholder's equity and cash flows of each of the subsidiaries
of the Company the accounts of which are not included in such consolidated
statements, for the fiscal year then ended all in reasonable detail and all
certified by independent accountants (within the meaning of the Act and the
Regulations), (ii) only at such time that the Company becomes subject to the
filing of such, within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, similar balance sheets as of the end of such
fiscal quarter and similar statements of operations, stockholder's equity and
cash flows for the fiscal quarter then ended, all in reasonable detail, and
subject to year end adjustment, all certified by the Company's principal
financial officer or the Company's principal accounting officer as having been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, (iii) as soon as available, each report furnished to or
filed with the Commission or any securities exchange and each report and
financial statement furnished to the Company's shareholders generally and (iv)
as soon as available, such other material as the Representative may from time to
time reasonably request regarding the financial condition and
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operations of the Company. Other than the annual report, the filing of such
reports and other material with the Commissions shall be deemed furnishing the
same to its stockholders.
(i) Prior to the Closing Date or the Option Closing Date, the Company
will not issue, directly or indirectly, without your prior written consent and
that of counsel for the Representative, any press release or other public
announcement or hold any press conference with respect to the Company or its
activities with respect to this Offering.
(j) The Company will deliver to you prior to filing, any amendment or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date of the Registration Statement and will not file any
such amendment or supplement to which you shall reasonably object after being
furnished such copy.
(k) During the period of 120 days commencing on the date hereof, the
Company will not at any time take, directly or indirectly, any action designed
to, or which will constitute or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Securities to
facilitate the sale or resale of any of the Securities.
(l) The Company will apply the net proceeds from the Offering received
by it in the manner set forth under "Use of Proceeds" in the Prospectus.
(m) Counsel for the Company, the Company's accountants, and the
officers and directors of the Company will, respectively, furnish the opinions,
the letters and the certificates referred to in subsections of Paragraph 9
hereof, and, in the event that the Company shall file any amendment to the
Registration Statement relating to the offering of the Securities or any
amendment or supplement to the Prospectus relating to the offering of the
Securities subsequent to the Effective Date of the Registration Statement, such
counsel, such accountants, such officers and directors, respectively, will, at
the time of such filing or at such subsequent time as you shall specify, so long
as securities being registered by such amendment or supplement are being
underwritten by the Underwriters, furnish to you such opinions, letters and
certificates, each dated the date of its delivery, of the same nature as the
opinions, the letters and the certificates referred to in said Paragraph 9, as
you may reasonably request, or, if any such opinion or letter or certificate
cannot be furnished by reason of the fact that such counsel or such accountants
or any such officer or director believes that the same would be inaccurate, such
counsel or such accountants or such officer or director will furnish an accurate
opinion or letter or certificate with respect to the same subject matter.
(n) The Company will comply with all of the provisions of any
undertakings contained in the Registration Statement in all material respects.
(o) The Company will reserve and keep available for issuance that
maximum number of its authorized but unissued shares of Common Stock which are
issuable upon exercise of the Warrants and issuable upon exercise of the
Underwriters' Warrants (including the underlying securities) outstanding from
time to time.
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(p) Following the Effective Date and from time to time thereafter, so
long as the Warrants are outstanding, the Company will timely prepare and file
at its sole cost and expense one or more post-effective amendments to the
Registration Statement or a new registration statement as required by law as
will permit Warrant holders to be furnished with a current prospectus in the
event Warrants are exercised, and to use its best efforts and due diligence to
have same be declared effective. The Company will deliver a draft of each such
post-effective amendment or new registration statement to the Underwriter at
least ten days prior to the filing of such post-effective amendment or
registration statement.
(q) Following the Effective Date and from time to time thereafter so
long as any of the Warrants remain outstanding, the Company will timely deliver
and supply to its warrant agent sufficient copies of the Company's current
Prospectus, as will enable such Warrant Agent to deliver a copy of such
Prospectus to any Warrant or other holder where such Prospectus delivery is by
law required to be made.
(r) So long as any of the Warrants remain outstanding, the Company
shall continue to employ the services of a firm of independent certified public
accountants reasonably acceptable to the Representative in connection with the
preparation of the financial statements to be included in any registration
statement to be filed by the Company hereunder, or any amendment or supplement
thereto (it being understood that Schwartz Levitsky Feldman is acceptable to the
Representative). During the same period, the Company shall employ the services
of a law firm(s) acceptable to the Representative in connection with all legal
work of the Company, including the preparation of a registration statement to be
filed by the Company hereunder, or any amendment or supplement thereto.
(s) So long as any of the Warrants remain outstanding, the Company
shall continue to appoint a Warrant Agent for the Warrants, who shall be
reasonably acceptable to the Representative.
(t) The Company agrees that it will, upon the Effective Date, for a
period of no less than three (3) years or so long as the Warrants remain
outstanding, engage two designees of the Underwriters as advisors (the
"Advisors") to its Board of Directors or at the option of the Underwriters,
elect two designees of the Underwriters as Directors, where such Advisors or
Directors shall attend meetings of the Board, receive all notices and other
correspondence and communications sent by the Company to members of its Board of
Directors and will receive the same compensation as other Directors. Such
Advisors or Directors shall be entitled to receive reimbursement for all
reasonable costs incurred in attending such meetings including, but not limited
to, food, lodging, and transportation. The Company further agrees that, during
said three (3) year period, it shall schedule no less than four (4) formal and
"in person" meetings of its Board of Directors in each such year. Further,
during such three (3) year period, the Company shall give notice to the
Representative with respect to any proposed acquisitions, mergers,
reorganizations or other similar transactions.
12
The Company agrees to indemnify and hold the Underwriters and such Advisor
or Director harmless against any and all claims, actions, damages, costs and
expenses, and judgments arising solely out of the attendance and participation
of your designee at any such meeting described herein. In the event the Company
maintains a liability insurance policy affording coverage for the acts of its
officers and directors, it agrees, if possible, to include the Underwriters'
designees as an insured under such policy.
(u) Upon the Closing Date, the Company shall have entered into an
agreement with the Underwriters in form reasonably satisfactory to the
Underwriters (the "Consulting Agreement"), pursuant to which the Underwriters
will be retained as management and financial consultants and will be paid a fee
of $4,000 a month for a term of twenty-four months, all of which shall be paid
upon the Closing Date. The Company shall also retain a second public relations
firm at additional cost, which firm shall be acceptable to the Underwriters'. If
the Company does not employ such second firm on or before the Effective Date,
the Underwriters' reserve the right to choose such second firm for the Company.
The Consulting Agreement shall further provide that during the term of such
agreement, in the event that you (i) introduce, negotiate or arrange on the
Company's behalf a non-public equity financing or (ii) arrange on the Company's
behalf a non-public debt financing or (iii) arrange for or assist the Company at
the Company's request with the purchase or sale of assets, or for a merger
acquisition or joint venture for the Company, then the Company will compensate
you (based on the Transaction Value, as defined below) for such services in an
amount equal to:
5% on the first $1,000,000 of the Transaction Value;
4% on the amount from $1,000,001 to $2,000,000; 3% on
the amount from $2,000,001 to $3,000,000; 2% on the
amount from $3,000,000 to $4,000,000; 1% on the
amount from $4,000,000 to $5,000, 000, and 1% on the
amount in excess of $5,000,000.
If the Company identifies and negotiates its own acquisitions without the
assistance of the Underwriters', the Underwriters' will not be entitled to the
above referenced compensation.
"Transaction Value" shall mean the aggregate value of all cash, securities
and other property (i) paid to the Company, its affiliates or their shareholders
in connection with any transaction referred to above involving any investment in
or acquisition of the Company or any affiliates (or the assets of either), (ii)
paid by the Company or any affiliate in any such transaction involving an
investment in or acquisition of another party or its equity holdings by the
Company or any affiliate, or (iii) paid or contributed by the Company or an
affiliate and by the other party or parties in the event of any such transaction
involving a merger, consolidation joint venture or similar joint enterprise or
undertaking. The value of any such securities shall be the fair market value
thereof as determined by mutual agreement of the Company and the Underwriters or
by independent appraiser jointly selected by the Company and the Underwriters.
13
(v) The Company's Common Stock and Warrants shall be listed on the
Nasdaq National Market ("NMS") or Nasdaq SmallCap Market ("Nasdaq") and the
Boston Stock Exchange ("BSE") not later than the Effective Date. Prior to the
Effective Date, the Company will make all filings required, including
registration under the Exchange Act, to obtain the listing of the Common Stock
and Warrants on Nasdaq and will effect and use its best efforts to maintain such
listing (unless the Company is acquired) for at least five years from the date
of this Agreement.
(w) The Company will apply for listing in Standard and Poor's
Corporation Reports or Moodys OTC Guide and shall use its best efforts to have
the Company included in such publications for at least five years from the
Closing Date.
(x) Except as contemplated in the Registration Statement, no person
who is currently an officer or director of the Company nor any stockholder,
warrant holder or option holder of the Company shall, without your written
consent, offer for sale, pledge, contract to sell, or sell or otherwise
dispose of directly or indirectly, any shares of the Common Stock of the
Company owned by such stockholder (including shares issuable upon exercise of
existing options and shares saleable pursuant to Rule 144 under the Act), on
the date of this Agreement for a period of eighteen months from the Closing
Date. The Company has caused Arnold Unger and Renee Unger, its principal
stockholders and any other Unger family interests and other presently
existing stockholders (excluding the Bridge Investors), to deliver to you, on
or before the date of this Agreement, an agreement to this effect, in form
and substance reasonably satisfactory to the Representative and to counsel
for the Representative.
(y) The Company will not, without the prior written consent of the
Representative, issue or sell, or contract to sell or otherwise dispose of any
of its securities, except sales of the Securities (and the Warrant Shares)
pursuant to this Agreement and except for the issuance of options to purchase up
to 10% of the Company's Common Stock outstanding immediately after the Closing
Date, which may be granted under the Company's stock option plan, outstanding
warrants and other shares issuable upon the exercise or conversion of currently
outstanding securities, or as otherwise described in the Prospectus, for a
period of one year from the Effective Date. The Company agrees not to file any
registration statement on Form S-8 for a period of one year from the Effective
Date, without the prior written approval of the Representative.
(z) For so long as any of the Warrants remain outstanding, the Company
shall maintain key person life insurance payable to the Company on the lives of
Renee Unger, President of the Company, and Arnold Unger, Chief Executive Officer
of the Company, in the amounts of Cdn$240,000 respectively, unless their
employment with the Company is earlier terminated. In such event, the Company
will obtain a comparable policies on the lives of their successors for the
balance of such period.
(aa) The Company will use its best efforts to obtain, as soon after
the Closing Date as is reasonably possible, liability insurance covering its
officers and directors.
14
(bb) The Company agrees that any conflict of interest arising between
a member of the Company's Board of Directors and the Company in connection with
such Director's dealing with, or obligations to, the Company, shall be resolved
by a vote of the majority of the independent members of the Board of Directors.
4. Sale, Purchase and Delivery of Securities; Closing Date.
(a) The Company agrees to sell to the Underwriters, and the
Underwriters, on the basis of the warranties, representations and agreements of
the Company herein, and subject to the terms and conditions herein, agree to
purchase, severally and not jointly, the Securities from the Company at a price
of $8.00 per share of Common Stock and $.125 per Warrant, less an underwriting
discount of ten percent (10%) of the offering price for each security. The
Underwriter may allow a concession not exceeding $.[ ] per share of Common Stock
and $0 per Warrant to Selected Dealers who are members of the National
Association of Securities Dealers, Inc ("NASD"), and to certain foreign dealers,
and such dealers may reallow to NASD members and to certain foreign dealers a
concession not exceeding $.[ ] per share of Common Stock and $0 per Warrant.
(b) Delivery of the Securities and payment therefor shall be made at
10:00 A.M., New York time on the Closing Date, as hereinafter defined, at the
offices of the Representative or such other location as may be agreed upon by
you and the Company. Delivery of certificates for the Common Stock and Warrants
(in definitive form and registered in such names and in such denominations as
you shall request by written notice to the Company delivered at least four
business days' prior to the Closing Date), shall be made to you for the account
of the Underwriters against payment of the purchase price therefor by certified
or bank check or wire transfer payable in New York Clearing House funds to the
order of the Company. The Company will make such certificates available for
inspection at least two business days prior to the Closing Date at such place as
you shall designate.
(c) The "Closing Date" shall be September [ ], 1998, or such other
date not later than the fifth business day following the effective date of the
Registration Statement as you shall determine and advise the Company by at least
three full business days' notice, confirmed in writing.
(d) The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of the Securities by the Company to the Underwriters
shall be borne by the Company. The Company will pay and hold the Underwriters,
and any subsequent holder of the Securities, harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
federal and state stamp taxes, if any, which may be payable or determined to be
payable in connection with the original issuance or sale to the Underwriters of
the Securities or any portions thereof.
5. Sale, Purchase and Delivery of Additional Securities; Option Closing
Date.
15
(a) The Company agrees to sell to the Underwriters, and upon the basis
of the representations, warranties and agreements of the Company herein
contained, subject to the satisfaction of all the terms and conditions of this
Agreement, the Underwriters shall have the option (the "Option") to purchase the
Additional Securities from the Company, at the same price per Security as set
forth in Paragraph 4(a) above. Additional Securities may be purchased solely for
the purpose of covering over-allotments made in connection with the distribution
and sale of the Securities.
(b) The Option to purchase all or part of the Additional Securities
covered thereby is exercisable by you at any time and from time to time before
the expiration of a period of 45 calendar days from the date of the Effective
Date of the Registration Statement (the "Option Period") by written notice to
the Company setting forth the number of Additional Securities for which the
Option is being exercised, the name or names in which the certificates for such
Additional Securities are to be registered and the denominations of such
certificates. Upon each exercise of the Option, the Company shall sell to the
Underwriters the aggregate number of Additional Securities specified in the
notice exercising such Option.
(c) Delivery of the Additional Securities with respect to which
Options shall have been exercised and payment therefor shall be made at 10:00
A.M., New York time on the Option Closing Date, as hereinafter defined, at the
offices of the Representative or at such other locations as may be agreed upon
by you and the Company. Delivery of certificates for Additional Securities shall
be made to you for the account of the Underwriters against payment of the
purchase price therefor by certified or bank check or wire transfer in New York
Clearing House Funds to the order of the Company. The Company will make
certificates for Additional Securities to be purchased at the Option Closing
Date available for inspection at least two business days prior to such Option
Closing Date at such place as you shall designate.
(d) The "Option Closing Date" shall be the date not later than five
business days after the end of the Option Period as you shall determine and
advise the Company by at least three full business days' notice, unless some
other time is agreed upon between you and the Company.
(e) The obligations of the Underwriters to purchase and pay for
Additional Securities at such Option Closing Date shall be subject to compliance
as of such date with all the conditions specified in Paragraph 2 herein and the
delivery to you of opinions, certificates and letters, each dated such Option
Closing Date, substantially similar in scope to those specified in Paragraph 9
herein.
(f) The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of the Additional Securities by the Company to the
Underwriters shall be borne by the Company. The Company will pay and hold the
Underwriters, and any subsequent holder of Additional Securities, harmless from
any and all liabilities with respect to or resulting from any failure or delay
in paying federal and state stamp taxes, if any, which may be payable or
determined
16
to be payable in connection with the original issuance or sale to the
Underwriters of the Additional Securities or any portion thereof.
6. Warrant Solicitation Fee.
The Company agrees to pay the Underwriters a fee of five percent (5%) of the
aggregate exercise price of the Warrants if: (i) the market price of the Common
Stock is greater than the exercise price of the Warrants on the date of
exercise; (ii) the exercise of the Warrants are solicited by a member of the
NASD; (iii) the Warrants are not held in a discretionary account; (iv) the
disclosure of compensation arrangements was made both at the time of the
Offering and at the time of the exercise of the Warrant; and (v) the
solicitation of the Warrant is not in violation of Regulation M promulgated
under the Exchange Act. The Company agrees not to solicit the exercise of any
Warrants other than through the Underwriters and will not authorize any other
dealer to engage in such solicitation without the prior written consent of the
Representative which will not be unreasonably withheld. The Warrant solicitation
fee will not be paid in a non-solicited transaction. No Warrant solicitation by
the Underwriters will occur for a period of 12 months from the Effective Date.
7. Representations and Warranties of the Underwriters.
The Underwriters represent and warrant to the Company that:
(a) The Underwriters are each members in good standing of the National
Association of Securities Dealers, Inc., and have complied with all NASD
requirements concerning net capital and compensation to be received in
connection with the Offering.
(b) To the Underwriters' knowledge, there are no claims for services
in the nature of a finder's origination fee with respect to the sale of the
Securities hereunder to which the Company is, or may become, obligated to pay.
8. Payment of Expenses.
(a) The Company will pay and bear all costs, fees, taxes and expenses
incident to and in connection with: (i) the issuance, offer, sale and delivery
of the Securities, including all expenses and fees incident to the preparation,
printing, filing and mailing (including the payment of postage with respect to
such mailing) of the Registration Statement (including all exhibits thereto),
each Preliminary Prospectus, the Prospectus, and amendments and post-effective
amendments thereof and supplements thereto, and this Agreement and related
documents, Preliminary and Final Blue Sky Memoranda, including the cost of
preparing and copying all copies thereof in quantities deemed necessary by the
Underwriters; (ii) the printing, engraving, issuance and delivery of the Common
Stock, Warrants, Warrant Shares, Additional Securities, Underwriters' Warrants
and the securities underlying the Underwriters' Warrant, including any transfer
or other taxes payable thereon in connection with the original issuance thereof;
(iii) the qualification of the
17
Common Stock and Warrants under the state or foreign securities or "Blue Sky"
laws selected by the Underwriters and the Company, and disbursements and
reasonable fees of counsel for the Underwriters in connection therewith (in the
amount of $35,000) plus the filing fees for such states; (iv) fees and
disbursements of counsel and accountants for the Company; (v) other expenses and
disbursements incurred on behalf of the Company; (vi) the filing fees payable to
the Commission and the National Association of Securities Dealers, Inc.
("NASD"); (vii) any listing of the Common Stock and Warrants on a securities
exchange or on Nasdaq.
(b) In addition to the expenses to be paid and borne by the Company
referred to in Paragraph 8(a) above, the Company shall reimburse you at closing
for expenses incurred by you in connection with the Offering (for which you need
not make any accounting), in the amount of 3% of the price to the public of the
Securities and Additional Securities sold in the Offering. This 3%
non-accountable expense allowance shall cover the fees of your legal counsel,
but shall not include any expenses for which the Company is responsible under
Paragraph 8(a) above, including the reasonable fees and disbursements of your
legal counsel with respect to Blue Sky matters. As of the date hereof, $50,000
has been advanced by the Company to the Underwriters with respect to such
non-accountable expense allowance.
(c) In the event that the Company does not or cannot, for any reason
whatsoever other than a default by the Underwriters, expeditiously proceed with
the Offering, or if any of the representations, warranties or covenants
contained in this Agreement are not materially correct or cannot be complied
with by the Company, or business prospects or obligations of the Company are
adversely affected and the Company does not commence or continue with the
Offering at any time or terminates the proposed transaction prior to the Closing
Date, the Company shall reimburse the Underwriters on an accountable basis for
all out-of-pocket expenses actually incurred in connection with the
Underwriting, this Agreement and all of the transactions hereby contemplated,
including, without limitation, your legal fees and expenses, up to an aggregate
total of $100,000 less such sums which have already been paid.
9. Conditions of Underwriters' Obligations.
The obligations of the Underwriters to consummate the transactions
contemplated by this Agreement shall be subject to the continuing accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of the Closing Date, the accuracy of the statements of the
Company and its officers and directors made pursuant to the provisions hereof,
and to the performance by the Company of its covenants and agreements hereunder
and under each certificate, opinion and document contemplated hereunder and to
the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., New York time, on the date following the date of this Agreement,
or such later date and time as shall be consented to in writing by you and, on
or prior to the Closing Date, no stop order suspending the effectiveness of the
Registration Statement or the qualification or registration of the
18
Securities under the securities laws of any jurisdiction shall have been issued
and no proceedings for that purpose shall have been instituted or shall be
pending or to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission or any such authorities of any jurisdiction and
any request on the part of the Commission or any such authorities for additional
information shall have been complied with to the reasonable satisfaction of the
Commission or such authorities and counsel to the Underwriters and after the
date hereof no amendment or supplement shall have been filed to the Registration
Statement or Prospectus without your prior consent.
(b) The Registration Statement or the Prospectus or any amendment
thereof or supplement thereto shall not contain an untrue statement of a fact
which is material, or omit to state a fact which is material and is required to
be stated therein or is necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Between the time of the execution and delivery of this Agreement
and the Closing Date, there shall be no litigation instituted against the
Company or any of its officers or directors and between such dates there shall
be no proceeding instituted or, to the Company's knowledge, threatened against
the Company or any of its officers or directors before or by any federal, state
or county commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, in which litigation or proceeding an
unfavorable ruling, decision or finding would have a material adverse effect on
the Company or its business, business prospects or properties, or have a
material adverse effect on the financial condition or results of operation of
the Company.
(d) Each of the representations and warranties of the Company
contained herein and each certificate and document contemplated under this
Agreement to be delivered to you shall be true and correct in all material
respects at the Closing Date as if made at the Closing Date, and all covenants
and agreements contained herein and in each such certificate and document to be
performed on the part of the Company, and all conditions contained herein and in
each such certificate and document to be fulfilled or complied with by the
Company at or prior to the Closing Date shall be fulfilled or complied with.
(e) At the Closing Date, you shall have received the opinion of
Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP, counsel to the Company,
dated as of such Closing Date, addressed to the Underwriters and in form and
substance satisfactory to counsel to the Underwriters, to the effect that:
(i) The Registration Statement was declared effective under the
Act on October 9, 1997; to the best of our knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or are pending, threatened or
contemplated under the Act or applicable state securities laws;
(ii) The Registration Statement and the Prospectus, as of the
Effective Date (except for the financial statements and other financial data
included therein or
19
omitted therefrom, as to which we express no opinion), comply as to form in all
material respects with the requirements of the Act and Regulations and the
conditions for use of a registration statement on Form SB-2 have been satisfied
by the Company;
(iii) The description in the Registration Statement and the
Prospectus of statutes, regulations, contracts and other documents have been
reviewed by us, and, based upon such review, are accurate in all material
respects and present fairly the information required to be disclosed, and to the
best of our knowledge, there are no material statutes or regulations, or, to the
best of our knowledge, material contracts or documents, of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement, which are not so described or filed
as required.
To the best of our knowledge, none of the material provisions
of the contracts or instruments described above violates any existing applicable
law, rule or regulation or judgment, order or decree known to us of any United
States governmental agency or court having jurisdiction over the Company or any
of its assets or businesses;
(vi) To the best of our knowledge, except as set forth in the
Prospectus, no holders of any of the Company's securities has any rights,
"demand," "piggyback" or otherwise, to have such securities registered under the
Act;
(v) We have participated in reviews and discussions in connection
with the preparation of the Registration Statement and the Prospectus. Although
we are not passing upon and do not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, no facts came to our attention which lead us to believe that (A) the
Registration Statement (except as to the financial statements and other
financial data contained therein, as to which we express no opinion), on the
Effective Date, contained any untrue statement of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that (B) the
Prospectus (except as to the financial statements and other financial data
contained therein, as to which we express no opinion) contains any untrue
statement or a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(f) At the Closing Date, you shall have received the opinion of [NAME
OF CANADIAN LAW FIRM] , special counsel to the Company with respect to Canadian
law, dated as of such Closing Date, addressed to the Underwriters and in form
and substance satisfactory to counsel to the Underwriters, to the effect that:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Province of Ontario, Canada, with
full corporate power and authority, and all licenses, permits, certifications,
registrations, approvals, consents and franchises to own or lease and operate
its properties and to conduct its business as described in the
20
Registration Statement. The Company is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company;
(ii) The Company has full corporate power and authority to
execute, deliver and perform the Underwriting Agreement, the Consulting
Agreement, the Warrant Agreement and the Underwriters' Warrants and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of the Underwriting Agreement, the Consulting Agreement, the Warrant
Agreement and the Underwriters' Warrants by the Company, the consummation by the
Company of the transactions therein contemplated and the compliance by the
Company with the terms of the Underwriting Agreement, the Consulting Agreement,
the Warrant Agreements and the Underwriters' Warrants have been duly authorized
by all necessary corporate action, and each of the Underwriting Agreement, the
Consulting Agreement, the Warrant Agreement and the Underwriters' Warrant has
been duly executed and delivered by the Company. Each of the Underwriting
Agreement, the Consulting Agreement, the Warrant Agreements and the
Underwriters' Warrants is a valid and binding obligation of the Company,
enforceable in accordance with their respective terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the rights of creditors generally and the
discretion of courts in granting equitable remedies and except that
enforceability of the indemnification provisions and the contribution provisions
set forth in the Underwriting Agreement may be limited by the federal securities
laws or public policy underlying such laws;
(iii) The execution, delivery and performance of the Underwriting
Agreement, the Consulting Agreement, the Warrant Agreement and the Underwriters'
Warrants by the Company, the consummation by the Company of the transactions
therein contemplated and the compliance by the Company with the terms of the
Underwriting Agreement, the Consulting Agreement, the Warrant Agreement and the
Underwriters' Warrants do not, and will not, with or without the giving of
notice or the lapse of time, or both, (A) result in a violation of the Articles
of Incorporation, as the same may be amended, or by-laws of the Company, (B) to
the best of our knowledge, result in a breach of, or conflict with, any terms or
provisions of or constitute a default under, or result in the modification or
termination of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to, any indenture, mortgage, note, contract, commitment or
other material agreement or instrument to which the Company is a party or by
which the Company or any of its properties or assets are or may be bound or
affected, except where any of the foregoing would not result in a material
adverse effect upon the Company's business or operations; (C) to the best of our
knowledge, violate any existing applicable law, rule or regulation or judgment,
order or decree known to us of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
business; or (D) to the best of our knowledge, have any effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company to own or lease and operate its properties and to conduct its
business or the ability of the Company to make use thereof;
21
(iv) No authorization, approval, consent or license of any
Canadian governmental or regulatory body, agency or instrumentality is required
in connection with the conduct of the business of the Company as described in
the Prospectus, except with respect to compliance with government environmental
rules and regulations relating to the use of chemicals and other hazardous
materials in the Company's production process;
(v) The Company has obtained, or is in the process of obtaining,
all licenses, permits and other governmental authorizations necessary to conduct
its business as described in the Prospectus, and such licenses, permits and
other governmental authorizations obtained are in full force and effect, and the
Company is in all material respects complying therewith;
(vi) To the best of our knowledge, no authorization, approval,
consent, order, registration, license or permit of any court or governmental
agency or body (other than under the Act, the Regulations and applicable state
securities or Blue Sky laws) is required for the valid authorization, issuance,
sale and delivery of the Securities, the Additional Securities, the Common
Stock, the Warrants, the Warrant Shares, or the Underwriters' Warrants, and the
consummation by the Company of the transactions contemplated by the Underwriting
Agreement, the Consulting Agreement, the Warrant Agreement or the Underwriters'
Warrants;
(vii) The outstanding Common Stock and Warrants have been duly
authorized and validly issued. The outstanding Common stock is fully paid an
nonassessable. To the best of our knowledge, none of the outstanding Common
Stock has been issued in violation of the preemptive rights of any shareholder
of the Company. None of the holders of the outstanding Common Stock is subject
to personal liability solely by reason of being such a holder. The authorized
Common Stock conforms to the description thereof contained in the Registration
Statement and Prospectus.
(viii) The issuance and sale of the Securities, the Additional
Securities, the Common Stock, the Warrants, the Warrant Shares and the
Underwriters' Warrants have been duly authorized and when issued will be validly
issued, fully paid and nonassessable, and the holders thereof will not be
subject to personal liability solely by reason of being such holders. Neither
the Securities, the Additional Securities, nor the Common Stock are subject to
preemptive rights of any stockholder of the Company. The certificates
representing the Securities are in proper legal form;
(ix) The issuance and sale of the Warrant Shares and the
Underwriters' Warrants have been duly authorized and, when paid for, issued and
delivered pursuant to the terms of the Underwriters' Agreement or the
Underwriters' Warrants, as the case may be, the Warrants, the Warrant Shares and
the Underwriters' Warrants will constitute the valid and binding obligations of
the Company, enforceable in accordance with their terms, to issue and sell the
Warrants, the Warrant Shares and/or Underwriters' Warrants. All corporate action
required to be taken for the authorization, issuance and sale of the securities
has been duly, validly and sufficiently
22
taken. The Common Stock and the Warrants have been duly authorized by the
Company to be offered in the form of the Securities. The Warrants, the
Warrant Shares and the Underwriters' Warrants conform to the descriptions
thereof contained in the Registration Statement and Prospectus;
(x) The Underwriters have acquired good title to the
Securities, free and clear of all liens, encumbrances, equities, security
interests and claims;
(xi) Assuming that the Underwriters exercise the over-allotment
option to purchase the Additional Securities and make payments therefor in
accordance with the terms of the Underwriting Agreement, upon delivery of the
Additional Securities to the Underwriters thereunder, the Underwriters will
acquire good title to the Additional Securities, free and clear of any liens,
encumbrances, equities, security interests and claims;
(xii) To the best of our knowledge, there are no claims, actions,
suits, proceedings, arbitrations, investigations or inquiries before any
governmental agency, court or tribunal, foreign or domestic, or before any
private arbitration tribunal, pending or threatened against the Company or
involving its properties or business, other than as described in the Prospectus,
such description being accurate, and other than litigation incident to the kind
of business conducted by the Company which, individually and in the aggregate,
is not material, and, except as otherwise disclosed in the Prospectus and the
Registration Statement, the Company has complied with all federal and state
laws, statutes and regulations concerning its business;
(xiii) Such counsel is familiar with all contracts or other
agreements entered into by the Company with other Canadian companies, entities,
banking institutions or individuals referred to in the Registration Statement
and Prospectus, including the employment agreements with Renee Unger, its
President and Arnold Unger, its Chief Executive Officer (collectively, the
"Canadian Agreements"), and all such Canadian Agreements are valid, binding and
enforceable under Canadian law, and to the knowledge of such counsel, the
Company is not in default under any of the Canadian Agreements;
(xiv) The description in the Registration Statement and the
Prospectus of statutes, regulations, contracts and other documents have been
reviewed by us, and, based upon such review, are accurate in all material
respects and present fairly the information required to be disclosed, and to the
best of our knowledge, there are no material statutes or regulations, or, to the
best of our knowledge, material contracts or documents, of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement, which are not so described or filed
as required.
(xv) The Company is not in violation of or in default under its
Articles of Incorporation or by-laws, or to the knowledge of such counsel, in
the performance or observance of any material obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any contract, indenture, mortgage, loan agreement or
instrument to which the Company is a party or by which it or any of its
properties may
23
be bound, or in violation of any material order, rule, regulation, writ,
injunction or decree of any government or governmental instrumentality or court;
and
(xvi) We have participated in reviews and discussions in
connection with the preparation of the Registration Statement and the
Prospectus. Although we are not passing upon and do not assume responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement, no facts came to our attention which lead us to believe
that (A) the Registration Statement (except as to the financial statements and
other financial data contained therein, as to which we express no opinion), on
the Effective Date, contained any untrue statement of a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or that (B) the
Prospectus (except as to the financial statements and other financial data
contained therein, as to which we express no opinion) contains any untrue
statement or a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(g) On or prior to the Closing Date, counsel for the Underwriters
shall have been furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review the matters
referred to in subparagraphs (e) and (f) of this Paragraph 9, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
(h) Prior to the Closing Date:
(i) There shall have been no material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus;
(ii) There shall have been no transaction, outside the ordinary
course of business, entered into by the Company from the latest date as of which
the financial condition of the Company is set forth in the Registration
Statement and Prospectus which is material to the Company, which is either (x)
required to be disclosed in the Prospectus or Registration Statement and is not
so disclosed, or (y) likely to have material adverse effect on the Company's
business or financial condition;
(iii) The Company shall not be in default under any material
provision of any instrument relating to any outstanding indebtedness, except as
described in the Prospectus;
(iv) No material amount of the assets of the Company shall have
been pledged, mortgaged or otherwise encumbered, except as set forth in the
Registration Statement and Prospectus;
24
(v) No action, suit or proceeding, at law or in equity, shall
have been pending or to its knowledge threatened against the Company or
affecting any of its properties or businesses before or by any court or federal
or state commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding would materially and adversely affect the business,
operations, prospects or financial condition or income of the Company, taken as
a whole, except as set forth in the Registration Statement and Prospectus; and
(vi) No stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or, to the Company's knowledge,
threatened by the Commission.
(vii) Each of the representations and warranties of the Company
contained in this Agreement and in each certificate and document contemplated
under this Agreement to be delivered to you was, when originally made and is at
the time such certificate is dated, true and correct in all material respects.
(i) Concurrently with the execution and delivery of this Agreement and
at the Closing Date, you shall have received a certificate of the Company signed
by the Chief Executive Officer of the Company and the principal financial
officer of the Company, dated as of the Closing Date, to the effect that the
conditions set forth in subparagraph (h) above have been satisfied and that, as
of the Closing Date, the representations and warranties of the Company set forth
in Paragraph 2 herein and the statements in the Registration Statement and
Prospectus were and are true and correct. Any certificate signed by any officer
of the Company and delivered to you or for counsel for the Underwriters shall be
deemed a representation and warranty by the Company to the Underwriters as to
the statements made therein.
(j) At the time this Agreement is executed, and at the Closing Date,
you shall have received a letter, addressed to the Underwriters and in form and
substance satisfactory in all respects to you and counsel for the Underwriters,
and including estimates of the Company's revenues and results of operations for
the period ending at the end of the month immediately preceding the Effective
Date and results of the comparable period during the prior fiscal year, from
Schwartz Levitsky Feldman, dated as of the date of this Agreement and as of the
Closing Date.
(k) All proceedings taken in connection with the authorization,
issuance or sale of the Common Stock, Warrants, Warrant Shares, Additional
Securities, the Underwriters' Warrants and the Underwriters' Warrants Shares as
herein contemplated shall be satisfactory in form and substance to you and to
counsel to the Underwriters, and the Underwriters shall have received from such
counsel an opinion, dated as the Closing Date with respect to such of these
proceedings as you may reasonably require.
(l) The Company shall have furnished to you such certificates,
additional to those specifically mentioned herein, as you may have reasonably
requested in a timely manner as to the accuracy and completeness, at the Closing
Date, of any statement in the Registration Statement
25
or the Prospectus, as to the accuracy, at the Closing Date, of the
representations and warranties of the Company herein and in each certificate and
document contemplated under this Agreement to be delivered to you, as to the
performance by the Company of its obligations hereunder and under each such
certificate and document or as to the fulfillment of the conditions concurrent
and precedent to your obligations hereunder.
(m) The obligation of the Underwriters to purchase Additional
Securities hereunder is subject to the accuracy of the representations and
warranties of the Company contained herein on and as of the Option Closing Date
and to the satisfaction on and as of the Option Closing Date of the conditions
set forth herein.
(n) On the Closing Date there shall have been duly tendered to you for
your account the appropriate number of shares of Common Stock and Warrants
constituting the Securities.
10. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriters and each person, if any, who
controls the Underwriters ("controlling person") within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act, against any and all
losses, liabilities, claims, damages, actions and expenses or liability, joint
or several, whatsoever (including but not limited to any and all expense
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), joint or
several, to which it or such controlling persons may become subject under the
Act, the Exchange Act or under any other statute or at common law or otherwise
or under the laws of foreign countries, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any Preliminary Prospectus or the Prospectus (as from
time to time amended and supplemented); in any post-effective amendment or
amendments or any new registration statement and prospectus in which is included
the Warrant Shares of the Company issued or issuable upon exercise of the
Warrants, or Underwriters' Warrant Shares upon exercise of the Underwriters'
Warrants; or in any application or other document or written communication (in
this Paragraph 10 collectively called "application") executed by the Company or
based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Common Stock, Warrants, Warrant Shares,
Additional Securities, Underwriters' Warrants and Underwriters' Warrant Shares
(including the Shares issuable upon exercise of the Warrants underlying the
Underwriters' Warrants) under the securities laws thereof or filed with the
Commission or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon or in conformity with written information
furnished to the Company with respect to the Underwriters or to the Selling
Shareholders, by or on behalf of the Underwriters or the Selling Shareholders
expressly for use in any Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment or
26
supplement thereof, or in application, as the case may be. Notwithstanding the
foregoing, the Company shall have no liability under this Paragraph 10(a) if any
such untrue statement or omission made in a Preliminary Prospectus, is cured in
the Prospectus and the Underwriters failed to deliver to the person or persons
alleging the liability upon which indemnification is being sought, at or prior
to the written confirmation of such sale, a copy of the Prospectus. This
indemnity will be in addition to any liability which the Company may otherwise
have.
(b) The Underwriters agree to indemnify and hold harmless the Company
and each of the officers and directors of the Company who have signed the
Registration Statement and each other person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to the
Underwriters in Paragraph 10(a), but only with respect to any untrue statement
or alleged untrue statement of any material fact contained in or any omission or
alleged omission to state a material fact required to be stated in any
Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereof or necessary to make the statements therein not
misleading or in any application made solely in reliance upon, and in conformity
with, written information furnished to the Company by you specifically expressly
for use in the preparation of such Preliminary Prospectus, the Registration
Statement or Prospectus directly relating to the transactions effected by the
Underwriters in connection with this Offering. This indemnity agreement will be
in addition to any liability which the Underwriters may otherwise have.
Notwithstanding the foregoing, the Underwriters shall have no liability under
this Paragraph 10(b) if any such untrue statement or omission made in a
Preliminary Prospectus is cured in the Prospectus, and the Prospectus is
delivered to the person or persons alleging the liability upon which
indemnification is being sought.
(c) If any action is brought against any indemnified party (the
"Indemnitee") in respect of which indemnity may be sought against another party
pursuant to the foregoing (the "Indemnitor"), the Indemnitor shall assume the
defense of the action, including the employment and fees of counsel (reasonably
satisfactory to the Indemnitee) and payment of expenses. Any Indemnitee shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such Indemnitee unless
the employment of such counsel shall have been authorized in writing by the
Indemnitor in connection with the defense of such action. If the Indemnitor
shall have employed counsel to have charge of the defense or shall previously
have assumed the defense of any such action or claim, the Indemnitor shall not
thereafter be liable to any Indemnitee in investigating, preparing or defending
any such action or claim. Each Indemnitee shall promptly notify the Indemnitor
of the commencement of any litigation or proceedings against the Indemnitee in
connection with the issue and sale of the Common Stock, Warrants, Warrants
Shares, Additional Securities, Underwriters' Securities or in connection with
the Registration Statement or Prospectus.
(d) In order to provide for just and equitable contribution under the
Act in any case in which: (i) the Underwriters make a claim for indemnification
pursuant to Paragraph 10 hereof, but it is judicially determined (by the entry
of a final judgment or decree by a court of
27
competent jurisdiction and the time to appeal has expired or the last right of
appeal has been denied) that such indemnification may not be enforced in such
case notwithstanding the fact that this Paragraph 10 provides for
indemnification of such case; or (ii) contribution under the Act may be required
on the part of the Underwriters in circumstances for which indemnification is
provided under this Paragraph 10, then, and in each such case, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after any contribution from others) in
such proportion so that the Underwriters are responsible for the portion
represented by dividing the total compensation received by the Underwriters
herein by the total purchase price of all Securities sold in the public offering
and the Company is responsible for the remaining portion; provided, that in any
such case, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
The foregoing contribution agreement shall in no way affect the contribution
liabilities of any persons having liability under Section 11 of the Act other
than the Company and the Underwriters. As used in this Paragraph 10, the term
"Underwriters" includes any officer, director, or other person who controls the
Underwriters within the meaning of Section 15 of the Act, and the word "Company"
includes any officer, director or person who controls the Company within the
meaning of Section 15 of the Act. If the full amount of the contribution
specified in this paragraph is not permitted by law, then the Underwriters and
each person who controls the Underwriters shall be entitled to contribution from
the Company to the full extent permitted by law. No contribution shall be
requested with regard to the settlement of any matter from any party who did not
consent to the settlement.
(e) Within fifteen (15) days after receipt by any party to this
Agreement (or its representative) of notice of the commencement of any action,
suit or proceeding, such party will, if a claim for contribution in respect
thereof is made against another party (the "contributing party"), notify the
contributing party of the commencement thereof, but the omission so to notify
the contributing party will not relieve it from any liability it may have to any
other party other than for contribution hereunder.
In case any such action, suit or proceeding is brought against any party,
and such party notifies a contributing party or his or its representative of the
commencement thereof within the aforesaid fifteen (15) days, the contributing
party will be entitled to participate therein with the notifying party and any
other contributing party similarly notified. Any such contributing party shall
not be liable to any party seeking contribution on account of any settlement of
any claim, action or proceeding effected by such party seeking contribution
without the written consent of such contributing party. The indemnification
provisions contained in this Paragraph 10 are in addition to any other rights or
remedies which either party hereto may have with respect to the other or
hereunder.
28
11. Representations, Warranties, Agreements to Survive Delivery.
The respective indemnity and contribution agreements by the Underwriters and
the Company contained in Paragraph 10 hereof, and the covenants, representations
and warranties of the Company and the Underwriters set forth in this Agreement,
shall remain operative and in full force and effect for a period of one (1) year
regardless of (i) any investigation made by the Underwriters or on its behalf or
by or on behalf of any person who controls the Underwriters, or by the Company
or any controlling person of the Company or any director or any officer of the
Company, (ii) acceptance of any of the Securities and payment therefor, or (iii)
any termination of this Agreement, and shall survive the delivery of the
Securities; and any successor of the Underwriters or the Company, or of any
person who controls you or the Company or any other indemnified party, as the
case may be, shall be entitled to the benefit of such respective indemnity and
contribution agreements. The respective indemnity and contribution agreements by
the Underwriters and the Company contained in this Paragraph 11 shall be in
addition to any liability which the Underwriters and the Company may otherwise
have.
12. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become upon execution by all parties hereto.
It is anticipated that the Agreement be executed on or about 10:00 A.M., New
York time, on the first full business day following the day on which you and the
Company receive notification that the Registration Statement became effective.
(b) This Agreement may be terminated by the Representative by
notifying the Company at any time on or before the Closing Date, if (i) material
governmental restrictions have been imposed on trading in securities generally
(not in force and effect on the date hereof) ; (ii) trading in securities on the
New York Stock Exchange, the American Stock Exchange, or in the over-the-counter
market shall have been suspended or limited; (iii) a banking moratorium has been
declared by Federal or New York State authorities; (iv) an outbreak of
international hostilities or other national or international calamity or crisis
or change in economic or political conditions shall have occurred; (v) the
Company shall have sustained a loss material or substantial to the Company,
whether or not insured, taken as a whole by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act, or from any
labor dispute or court or government action, order or decree; (vi) a pending or
threatened legal or governmental proceeding or action relating generally to the
Company's business, or a notification having been received by the Company of the
threat of any such proceeding or action, which could materially adversely affect
the Company; (vii) except as contemplated by the Prospectus, the Company is
merged or consolidated into or acquired by another company or group or there
exists a binding legal commitment for the foregoing or any other material change
of ownership or control occurs; (viii) the passage by the Congress of the United
States or by any state legislative body or federal or state agency or other
authority of any act, rule or regulation, measure, or the adoption of any
orders, rules or regulations by any governmental body or any authoritative
accounting institute or board, or any governmental executive, which is
reasonably believed likely by the Underwriter to have a material impact on the
business, financial
29
condition or financial statements of the Company or the market for the
securities offered pursuant to the Prospectus; (ix) any adverse change in the
financial or securities markets beyond normal market fluctuations having
occurred since the date of this Agreement, or (x) any material adverse change
having occurred, since the respective dates of which information is given in the
Registration Statement and Prospectus, in the earnings, business prospects or
general condition of the Company, financial or otherwise, whether or not arising
in the ordinary course of business.
(c) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Paragraph 12, the Company shall
be notified promptly by you by telephone or facsimile, confirmed by letter.
(d) If this Agreement shall not become effective by reason of an
election of the Representative pursuant to this Paragraph 12 or if this
Agreement shall not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any material undertaking, or
to satisfy any material condition of this Agreement by it to be performed or
satisfied, the sole liability of the Company to the Underwriters, in addition to
the obligations assumed by the Company pursuant to Paragraph 8 herein, will be
to reimburse the Underwriters for the following: (i) Blue Sky counsel fees and
expenses to the extent set forth in Paragraph 8(a)(iv); (ii) Blue Sky filing
fees; and (iii) such reasonable out-of-pocket expenses of the Underwriters
(including the fees and disbursements of their counsel), to the extent set forth
in Paragraph 8(c), in connection with this Agreement and the proposed offering
of the Securities, but in no event to exceed the sum of $100,000 less such
amounts already paid.
Notwithstanding any contrary provision contained in this Agreement, any
election hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Paragraph 8 and 10 hereof
shall not be in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
13. Notices.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to the Underwriters, shall be mailed,
delivered or telegraphed and confirmed to the Representative at J. P. Turner &
Co., L.L.P., 3340 Peachtree Road, Atlanta, Georgia 30326, Attention: Patrick
Power, with a copy thereof to Gregory Sichenzia, Esq., Sichenzia, Ross &
Friedman L.L.P. 135 West 50th Street, 20th Floor, New York, New York 10020, and,
if sent to the Company, shall be mailed, delivered or telegraphed and confirmed
to the Company at 4300 Poirier Blvd, Montreal Quebec Canada, H4R 2C5, Attention:
Ness Lakdawala, Chief Executive Officer, with a copy thereof to Gersten, Savage,
Kaplowitz & Fredericks LLP 101 East 52nd Street, New York, New York 10022,
Attention: Arthur S. Marcus.
14. Parties.
30
This Agreement shall inure solely to the benefit of and shall be binding
upon, the Underwriters, the Company and the controlling persons, directors and
officers referred to in Paragraph 10 hereof, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
15. Construction.
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Georgia and shall supersede any agreement or
understanding, oral or in writing, express or implied, between the Company and
you relating to the sale of any of the Securities.
16. Jurisdiction and Venue.
The Company agrees that the courts of the State of Georgia shall have
jurisdiction over any litigation arising from this Agreement, and venue shall be
proper in the District of Georgia which includes the city of Atlanta.
17. Counterparts.
This agreement may be executed in counterparts.
31
If the foregoing correctly sets forth the understanding between you and the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
DECTRON INTERNATIONALE INC.
By:
----------------------------------------
Ness Lakdawala, Chief Executive Officer
Accepted as of the date first above written:
J.P. TURNER & CO., LLC.
By:
-----------------------------------------
KLEIN MAUS AND SHIRE INCORPORATED
By:
------------------------------------------
32
SCHEDULE A
Number of Number of
Shares to be Warrants to
Underwriter Purchased be Purchased
- ----------- ----------- ------------
J.P. Turner & Company, LLC 500,000 500,000
Klein Maus and Shire Incorporated 500,000 500,000
Total: 1,000,000 1,000,000
---------- -----------
---------- -----------
33