<PAGE>
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act
of 1934
Date of Report (Date of earliest event reported) June 19, 1996
CPI AEROSTRUCTURES, INC.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
New York 1-11398 11-2520310
- -----------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
200A Executive Drive, Edgewood, NY 11717
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(516) 586-5200
- -----------------------------------------------------------------------------
Registrant's telephone number, including area code
=============================================================================
<PAGE>
Item 5. Other Events.
On June 19, 1996, CPI Aerostructures, Inc. (the "Company") completed a
private placement (the "Private Placement") under Regulation D promulgated under
the Securities Act of 1933, as amended, of 82 Units (the "Units"), each Unit
consisting of 25,000 shares (the "Shares") of common stock, $.001 par value per
share (the "Common Stock") of the Company and 5-year Common Stock Purchase
Warrants (the "Warrants") to purchase 12,500 shares of Common Stock at $2.00 per
share, for a total purchase price of $2,050,000 ($25,000 per Unit), through
Barber & Bronson Incorporated, as placement agent (the "Placement Agent"). The
net proceeds of the Private Placement, along with working capital, were used to
repay all of the Company's indebtedness to Chrysler Capital Corporation. The
purchasers were granted certain demand and piggyback registration rights with
respect to the shares included in the Units and underlying the Warrants.
The Company paid the Placement Agent a selling commission of 10% of the
gross proceeds of the Private Placement and a non-accountable expense allowance
in an amount equal to 3% of the gross proceeds of the Private Placement. The
Company also sold to the Placement Agent, for nominal consideration, five-year
warrants (the "Placement Agent Warrants") to purchase 8.2 additional Units at a
purchase price of $25,000 per Unit. The Company previously retained the
Placement Agent, pursuant to a financial consulting agreement (the "Consulting
Agreement"), to provide financial consulting services for a period of 24 months
commencing on April 3, 1996, for an aggregate of $72,000 payable at the rate of
$3,000 per month. The Placement Agent received five-year warrants to purchase
300,000 shares of Common Stock at an exercise price of $1.00 per share (the
"Consulting Warrants"). The Placement Agent has been granted certain demand and
piggy-back registration rights with respect to the shares of Common Stock
underlying the Placement Agent Warrants and the Consulting Warrants.
Furthermore, the Consulting Agreement provides for finder's fee arrangements and
a three-year right of first refusal for the Placement Agent to serve as the
underwriter or placement agent for any future public or private offering
effected by the Company.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Information and Exhibits.
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits.
4.1 Form of Registration Rights Agreement dated June 17, 1996.
4.2 Form of Subscription Agreement.
4.3 Form of Placement Agent Warrants dated June 17, 1996.
4.4 Form of Consultant's Warrants dated April 3, 1996.
4.5 Form of Redeemable Common Share Purchase Warrant dated
June 17, 1996.
10.1 Placement Agent Agreement dated May 10, 1996 between the
Company and the Placement Agent.
10.2 Financial Consulting Agreement dated April 3, 1996 between
the Company and the Placement Agent.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CPI AEROSTRUCTURES, INC.
Date: June 25, 1996 By: /s/ Theodore J. Martines
------------------------
Theodore J. Martines
Executive Vice President
4
<PAGE>
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of June 17, 1996
(this "Agreement"), is made by and between CPI AEROSTRUCTURES, INC., a New York
corporation (the "Company"), and the investor named on the signature page hereto
(the "Initial Investor").
WITNESSETH:
WHEREAS, upon the terms and subject to the conditions of the
Subscription Agreement dated as of June , 1996, between the Initial Investor and
the Company (the "Subscription Agreement"), the Company has agreed to issue and
sell to the Initial Investor Units (the "Unit"), each Unit consisting of 25,000
Common Shares (the "Placement Shares") and Redeemable Class B Common Share
Purchase Warrants (the "Purchase Warrants") to purchase 12,500 Common Shares
(the "Warrant Shares"), par value $.001 per share, at $2.00 per share, until the
fifth anniversary date of the closing, at a purchase price per Unit of $25,000;
and
WHEREAS, to induce the Initial Investor to execute and deliver
the Subscription Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Placement Shares and Warrant Shares.
NOW, THEREFORE, is consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have
the following meanings:
(i) "Investor" means the Initial Investor and any
transferee or assignee who agrees to become bound the provisions of this
Agreement in accordance with Section 6 hereof.
(ii) "Register," "Registered," and "Registration"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or ordering
of effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the Placement
Shares and the Warrant Shares.
<PAGE>
(iv) "Registration Statement" means a registration
statement of the Company under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Subscription
Agreement.
2. Registration Rights.
(a) The Company shall file by September 5, 1996, a
registration statement with the SEC registering the Registrable Securities,
issued in the Company's May 1996 Private Placement (the "1996 Placement"). In
the event that after September 5, 1996, the Company has not filed such a
registration statement, the Holder or Holders of a majority in number
(hereinafter, "a majority in interest") of the Registrable Securities on two
occasions during the period commencing on the Closing of the 1996 Placement and
ending on the sixth anniversary of such issuance (the "Registration Period")
shall have two "demand" registration rights for the Registrable Securities. The
Company will give written notice of such registration rights for the Registrable
Securities and will include in any such registration the shares of Common Stock
with respect to which the Company has received written requests for inclusion
therein within fifteen (15) business days after the receipt by the applicable
holder of the Company's notice of such registration request. All requests for
inclusion in the demand registration shall specify the number of Registrable
Securities to be registered. The Company will use its best efforts to cause the
registration statement to be declared effective by the Commission as soon as is
practically possible following the filing of same.
(b) Each time that the Company, during the Registration Period
of the Registrable Securities, registers an offering of Common Stock with the
SEC on a registration statement other than Form S-8 or Form S-4, the Company
shall give to holders of the Registrable Securities twenty (20) days' notice of
the filing of such registration statement, and if any holders of the Registrable
Securities request registration of the Registrable Securities, such Registrable
Securities (all such Common Stock, the "Shares") shall be included for issuance
and resale in such registration statement. These "piggy-back" rights may be
exercised only subject to the discretion of any underwriter of the Company's
securities requesting that the Shares not be sold for a period not to exceed 180
days from the effective date of an underwritten public offering. If the
underwriter believes that the total amount of the Shares and other securities to
be included in such offering exceeds the amount of securities that the
underwriter believes can be marketed without otherwise materially and adversely
affecting the entire offering, then the Company shall be required to include in
the offering and in the following order: first, the pro rata number of
securities requested by the Investor along with all other holders of securities
requesting registration pursuant to registration rights which were granted on or
prior to the date hereof and are described in the Company's confidential Private
Placement Memorandum, dated May 10, 1996; and, second, the pro rata number of
securities requested by all other holders of securities requesting registration
pursuant to other registration rights. The Holder shall give the Company notice
that he wishes to avail himself of the rights granted to him pursuant to this
Section 2 by personal delivery, registered mail or overnight courier service.
2
<PAGE>
(c) If and whenever the Company is required by any of the
provisions of Section 2 to use its reasonable best efforts to effect the
registration of any of the Registrable Securities under the Securities Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible;
(i) prepare and file with the SEC a registration
statement with respect to such securities and use its reasonable best efforts to
cause such registration statement to become effective and remain effective until
(i) all the Registrable Securities have been sold or (ii) the date all of the
Investors receive an opinion of counsel that the Registrable Securities may be
sold under the provisions of Rule 144(k) of the Securities Act without any
limitations on the number of Registrable Securities sold:
(ii) prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities covered by such registration
statement whenever the holder or holders of such securities shall desire to sell
or otherwise dispose of the same;
(iii) furnish to each Investor such number of copies
of a registration statement and prospectus, including a preliminary prospectus
or any amendment or supplement to any prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such Investor
may reasonably request in order to facilitate the public sale or other
disposition of the securities owned by such Investor;
(iv) use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as each Investor shall request, and do any
and all other acts and things which may be necessary or advisable to enable such
Investor to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Investor, except that the Company
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction, wherein it is not so qualified or to
file therein any general consent to service of process;
(v) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
shareholders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, beginning with the first fiscal quarter
beginning after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
(vi) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(vii) notify each Investor covered by such
registration statement, at any time
3
<PAGE>
when a prospectus relating thereto covered by such registration statement is
required to be delivered under the Securities Act, of the happening of any event
of which it has knowledge as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(viii) take such other actions as shall be reasonably
requested by any Investor to facilitate the registration of the Registrable
Securities.
(d) All expenses incident to the Company's performance of or
compliance with this Section 2, including without limitation, the following,
will be borne by the Company, regardless of whether the registration statement
becomes effective:
(i) All registration and filing fees (including SEC
registration fees and fees with respect to filing required to be made with the
National Association of Securities Dealers, Inc. ("NASD"));
(ii) Fees and expenses of compliance with securities
or blue sky laws (including fees and disbursements of counsel for the
underwriters or selling securityholders in connection with blue sky
qualifications of the Common Stock and determination of their eligibility for
investment under the laws of all such jurisdictions as the managing underwriters
or holders of the Common Stock being sold may designate);
(iii) Printing, messenger, telephone and delivery
expenses; including, but not limited to the distribution of copies of the
Preliminary and Final Prospectus to the Placement Agent, any underwriter and any
selling securityholders;
(iv) Fees and disbursements of counsel for the
Company;
(v) Fees and disbursements of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals relating to the distribution of the
Common Stock and legal expenses of any person other than the Company).
(e) The Holders will be responsible for expenses of their
counsel, any commissions or other selling expenses.
3. Indemnification.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement, to the extent permitted by law, the
Company will indemnify and hold harmless each Investor who holds such
Registrable Securities, the directors, officers, partners, employees, agents and
advisors, if any, of such Investor, each person, if any, who controls any
Investor within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any
4
<PAGE>
losses, claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or otherwise, insofar as such Claims arise out of or are based upon any of
the following statements, omissions or violations:
(a) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any post-effective
amendment thereof or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading,
(b) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made not misleading or
(c) any violation of alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule
securities law (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). The Company shall reimburse the Investors, promptly
as such expenses are incurred and are due and payable, for any legal fees or
other reissuable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 3(a) shall not
(I) apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity which information furnished in writing to the
Company by or on behalf of any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement; (II) with respect to any preliminary
prospectus, inure to the benefit of any such person from whom the person
asserting any such Claim purchased the Registrable Securities that are the
subject thereof (or to the benefit of any person controlling such person) if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company; or (III) apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld. To the extent permitted by law, each Investor, severally
and not jointly, will indemnify the Company and its officers, directors, agent
and advisors against any Claims arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company, by or on behalf of such Investor, expressly for use in
connection with the preparation of the Registration Statement, subject to such
limitations and conditions as are applicable to the Indemnification provided by
Company pursuant to this Section 3. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investors pursuant to this Section 3. In any event, each Investor's
obligation to indemnify hereunder shall not exceed the net proceeds received by
an Investor from the sale of Registrable Securities included in the Registration
Statement.
5
<PAGE>
4. Contribution.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 3 to the fullest extent permitted by law; provided, however, that
(a) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 2; (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation; and (c) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
5. Reports under Exchange Act.
With a view to making available to the Investors the benefits
of Rule 144 promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
6. Assignment of the Registration Rights.
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assigned by the Investors to
any transferee of all or any portion of Registrable Securities only if: (a) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or assigned; (c)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and applicable state securities laws;
6
<PAGE>
and (d) at or before the time the Company received the written notice
contemplated by clause (b) of this sentence the transferee or assignee agrees in
writing with the Company to be bound by all of the provisions contained herein.
7. Amendment of Registration Rights.
Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and Investors who held a majority in interest of the Registrable
Securities; provided that no amendment that adversely affects the rights of any
Investor shall be effective against such Investor unless such Investor consents
thereto in writing. Any amendment or waiver effected in accordance with this
Section 7 shall be binding upon each Investor and the Company.
8. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall
be in writing and shall be deemed to be sufficiently given when personally
delivered (by hand, by courier, by telephone line facsimile transmission,
receipt confirmed, or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid (i) if to the
Company, CPI AEROSTRUCTURES, INC., 200A Executive Drive, Edgewood, NY 11717 ATT:
President, with a copy to Elliot H. Lutzker, Esq., Snow Becker Krauss P.C., 605
Third Avenue, New York, New York 10158; (ii) if to the Initial Investor, at the
address set forth under its name in the Subscription Agreement with a copy to
Barber & Bronson Incorporated, 2101 West Commercial Blvd., Suite 1500, Fort
Lauderdale, FL 33309 and (iii) if to any other Investor, at such address as such
Investor shall have provided in writing to the Company or at such other address
as each such party furnishes by notice given in accordance with this Section
8(b), and shall be effective, when personally delivered, upon receipt and, when
so sent by certified mail, four (4) calendar days after deposit with the United
States Postal Service.
(c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of Florida applicable to
agreements made and to be performed entirely within such State. In the event
that any provision of this Agreement is invalid or unenforceable under any
applicable statue or rule of law, then such provision shall be deemed
inoperative to the
7
<PAGE>
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not effect the validity or enforceability
of any other provision hereof.
(e) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(f) Subject to the requirements of Section 6 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
(i) The Company acknowledges that any failure by the Company
to perform its obligation under this Agreement, including, without limitation,
the Company's obligations under Section 2(a), or any delay in such performance
could result in direct damages to the Investors and the Company agrees that, in
addition to any other liability the Company may have by reason of any such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay. Neither party shall be liable for consequential
damages.
(j) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
CPI AEROSTRUCTURES, INC.
By:------------------------
Name: Arthur August
Title: President
8
<PAGE>
- ------------------------------------
- ------------------------------------
Signature of Investor
(Name of Investor - Please Print)
- -----------------------------------
Social Security Number
of Investor
- -----------------------------------
- -----------------------------------
Address of Investor
Note: If two investors are signing, please check the manner in which the
ownership is to be legally held (the indicated manner shall be construed as if
written out in full accordance with applicable laws or regulations):
_____ JT TEN: As joint tenants with right of survivorship and not
as tenants in common.
_____ TEN COM: As tenants in common.
_____ TEN ENT: As tenants by the entireties.
9
<PAGE>
SPECIAL EXECUTION PAGE FOR AN ENTITY
(Not applicable to registration by individuals)
IN WITNESS WHEREOF, the undersigned has completed this Registration
Rights Agreement with CPI Aerostructures, Inc., on this day of , 1996.
_____ TRUST -- (Include copy of trust agreement)
_____ CORPORATION -- (Attach certified corporate resolution authorizing
signature and a copy of the articles of incorporation)
_____ PARTNERSHIP -- (Attach a copy of the partnership agreement)
(Please print the following information exactly as you wish it to appear on the
Common Stock.)
- ----------------------------- ------------------------------
(Name of Investor) (Address)
- ----------------------------- ------------------------------
(Tax Identification Number)
- ---------------------------- ------------------------------
(Telephone)
The undersigned trustee, partner or corporate officer certifies that he
has full power and authority from the beneficiaries, partners or directors of
the entity named below to execute this Registration Rights Agreement on behalf
of the entity and to make the representations and warranties made herein on
their behalf and that this agreement has been affirmatively authorized by the
governing board of such entity and is not prohibited by the governing documents
of the entity.
Dated:_________________________, 1996 ______________________________________
(Print Name of Entity)
__________________________ By: __________________________________________
(Print Name and Capacity) (Signature of authorized trustee, partner,
or corporate officer)
10
<PAGE>
EXHIBIT 4.2
SUBSCRIPTION AGREEMENT
To: CPI Aerostructures, Inc.
200A Executive Drive
Edgewood, NY 11717
1. Subject to the terms and conditions hereinafter set forth, the
undersigned, with an address set forth on the signature page attached hereto
(the "Purchaser"), hereby subscribes for and purchases the number of units (the
"Units"), set forth on the signature page hereof, each Unit consisting of (i)
25,000 shares of common stock, par value $.001 per share (the "Common Stock"),
of CPI Aerostructures, Inc. (the "Company"), a New York corporation, with
offices at 200A Executive Drive, Edgewood, NY 11717, and (ii) warrants (the
"Warrants") to purchase 12,500 shares of Common Stock at an exercise price of
$2.00 per share. The Units will be sold at $25,000 per Unit. The Units being
purchased hereby are part of a private placement of an aggregate of 80 Units
(the "Offering").
2. Upon acceptance of this Agreement by the Company, it will issue and
sell to the Purchaser the number of Units subscribed for at a price of $25,000
per Unit. The purchase price for the Units is payable upon execution of this
Agreement in United States Dollars either by bank cashier's check or by wire
transfer payable to the order of the Escrow Agent. Such purchase price shall be
payable against delivery of Common Stock and Warrant certificates in definitive
form which shall be registered in the Purchaser's name.
3. The Purchaser hereby represents that the Purchaser has been
furnished by the Company with all information regarding the Company which the
Purchaser had requested or desired to know, including the Company's Annual
Report on Form 10-KSB, as amended, for the year ended December 31, 1995; Proxy
Statement dated December 11, 1995, relating to its Annual Meeting of
Stockholders held on January 12, 1996; and any Form 10-QSB for any quarter of
the Company's fiscal year ending December 31, 1996, or any Form 8-K, that the
Company filed prior to the dated of this Agreement (collectively the "Public
Documents"), which are exhibits to the Company's Confidential Private Placement
Memorandum dated May 10, 1996 (the "Memorandum"), for the purpose of evaluating
the merits and risks of the purchase of the Units. The Company has also provided
the Purchaser or the Purchaser's representative with an opportunity to meet and
confer with its principals regarding all aspects of the Company's business.
4. The Purchaser is aware that:
(a) An investment in the Units to be sold hereby involves a
high degree of risk and restricted transferability. Accordingly, the Purchaser
acknowledges that the Purchaser can afford a loss of the Purchaser's entire
investment. Neither the United States Securities and Exchange Commission ("SEC")
nor any state agency nor any other agency or authority outside the United
<PAGE>
States has passed upon the adequacy or accuracy of this offering or made any
finding or determination as to the fairness of this investment. Any
representation to the contrary is a criminal offense.
(b) Neither the Units nor any of the securities included
therein have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state or the laws or
regulations of any jurisdiction outside the United States. The Units will be
offered and sold in reliance on exemptions from the registration requirements of
these laws, including, but not limited to, Section 4(2) of the Securities Act
and Regulation D promulgated by the SEC thereunder.
Notwithstanding the restricted nature of this investment,
the Company has agreed to file by September 5, 1996, a registration statement to
register the Common Stock included in the Units and the Common Stock issuable
upon exercise of the Warrants in accordance with the terms and conditions for
registration set forth in a Registration Rights Agreement attached as an exhibit
to the Memorandum.
(c) An investment in the Company depends on the Purchaser's
particular circumstances. No information concerning the Company other than that
described above in Section 3, or disclosed herein has been provided to the
Purchaser. The Purchaser is cautioned not to construe this Subscription
Agreement, the Memorandum or any prior or subsequent communications as
constituting legal advice. The Company and its officers, directors, employees
and representatives make no representations or warranties with respect to the
Company except as specifically set forth herein.
(d) This Subscription Agreement does not constitute an offer
to sell the Units to or a solicitation of an offer to buy the Units from anyone
in any state or in any other jurisdiction in which an offer or solicitation is
not authorized.
No other offering literature or advertising in any form
is being employed in the sale and purchase of the Units except for this
Subscription Agreement, the Memorandum and the Public Documents (collectively,
the "Offering Documents"). No person is authorized to give any information or to
make any representation not contained in the Offering Documents. Any
representation not contained herein must not be relied upon as having been
authorized by the Company or its officers. Any distribution or reproduction of
the Offering Documents, in whole or in part, or the divulgence of any of its
contents, without the prior written consent of the Company, is prohibited.
(f) The Purchaser recognizes that: (i) the Purchaser must bear
the economic risk of investment in the Company for an indefinite period of time
since the Units have not been registered under the Securities Act and,
therefore, cannot be sold unless they are subsequently registered under the
Securities Act or an exemption from such registration is available and a
favorable opinion of counsel for the Company to such effect is obtained; (ii)
the Company will place a legend on the certificate(s) evidencing the Common
Stock and Warrants stating that they have not been registered
2
<PAGE>
under the Securities Act and may not be sold, transferred, pledged, hypothecated
or otherwise disposed of in the absence of either an effective registration
statement or an available exemption from the registration provisions of the
Securities Act; (iii) the Company will instruct its transfer agent to make a
notation in its records with respect to the restrictions on the sale, transfer
or disposition of the Units; and (iv) because of the relatively large number of
shares of Common Stock issuable in this Offering in comparison to the number of
shares currently outstanding and held by the public, this investment in the
Company is not likely to be a fully liquid investment even after registration.
(g) The Purchaser agrees that this subscription is and shall
be irrevocable, but the Purchaser's obligations hereunder will terminate if this
subscription is not accepted by the Company pursuant to the terms contained
herein.
5. The Purchaser represents and warrants to the Company and the
Placement Agent that:
(a) The Purchaser has sufficient available financial resources
to provide adequately for the Purchaser's current needs, including all possible
contingencies, and can bear the economic risk of a complete loss of the
Purchaser's investment hereunder without materially affecting the Purchaser's
financial condition.
(b) The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of an investment in the Company and of making an informed
investment decision. The Purchaser acknowledges that the Purchaser also has
significant prior investment experience, and that the Purchaser recognizes the
highly speculative nature of this investment.
(c) The Purchaser is familiar with the financial condition and
prospects of the Company's business, has reviewed the Company's most recent
financial statements, has been furnished any materials relating to the Company
and its activities, the sale and purchase of the Units or anything set forth in
this Subscription Agreement which the Purchaser has requested and has been
afforded the opportunity to obtain any additional information necessary to
verify the accuracy of any representations or information set forth in this
Agreement.
(d) The Company, its officers, directors and employees, have
answered all inquiries that the Purchaser has put to them concerning the Company
and its activities and the purchase and sale of the Units.
(e) The Purchaser has not been furnished any offering
literature other than the Offering Documents, and the Purchaser has relied only
on the information contained herein and therein and in the information furnished
or made available to the Purchaser by the Company as described in subparagraphs
(c) and (d) above.
Furthermore, as set forth above, no representations or warranties have
been made to the Purchaser, or to the Purchaser's advisers, by the Company, or
its officers, directors, employees or representatives with respect to the
business of the Company, the financial condition of the Company,
3
<PAGE>
and/or the economic, tax, or any other aspects or consequences of a purchase of
Units, and the Purchaser has not relied upon any information concerning this
sale and purchase of the Units, written or oral, other than contained in this
Agreement or provided by the Company upon request.
(f) The Purchaser is relying upon the Purchaser's own counsel,
accountant, business advisor(s) and/or others, concerning legal, tax, business
and related aspects of the Purchaser's subscription hereunder and the
Purchaser's investment in the Company.
(g) The Purchaser is acquiring the Units for which the
Purchaser hereby subscribes for the Purchaser's own account, as principal, for
investment purposes only, and no other person has a direct or indirect
beneficial interest in the Units. The Purchaser agrees that the Purchaser will
not sell, transfer or otherwise dispose of any of the Units unless they are
registered under the Securities Act or unless an exemption from such
registration is available.
(h) The Purchaser is not directly or indirectly in any way
affiliated with any entity that is a competitor of the Company, exclusive of an
equity ownership of not more than 5% in any publicly owned corporation.
(i) All of the information which the Purchaser has furnished
to the Company with respect to the Purchaser's financial position and business
experience and all representations provided by the Purchaser are correct and
complete as of the date of this Agreement.
(j) The Purchaser is authorized and qualified to become a
shareholder in, and authorized to make its investment in, the Company and any
person signing this Agreement on behalf of the Purchaser has been authorized to
do so.
(k) The Purchaser understands that neither the Units nor the
securities included therein have been registered under the Securities Act and
that the issuance of the securities is being effectuated pursuant to an
exemption from the registration requirements under the Securities Act, in
accordance with Regulation D, and that reliance on such exemption is based, in
part, upon the information being supplied hereunder by the Purchaser.
(l) All the information which the Purchaser has furnished the
Company with respect to Purchaser's financial position and business experience
is correct and complete as of the date of this Agreement and, if there should be
any material change in such information prior to the consummation of the
Purchaser's investment in the Company, the Purchaser will immediately furnish
such revised or corrected information to the Company.
6. The Company shall give to the Purchaser the registration rights
specified in the Registration Rights Agreement.
7. The representations and warranties of the Purchaser and the Company
contained herein shall survive the delivery of this Agreement, the receipt of
payment for the Units by the Company and the issuance and delivery of the Units.
The Purchaser, on the one hand, and the Company and
4
<PAGE>
the Placement Agent, on the other, agree to hold each other and their respective
directors, officers, employees, agents, trustees, counsel and controlling
persons (and their respective heirs, representatives, successors and assigns)
harmless and to indemnify them against all liabilities, costs and expenses
incurred by them as a result of any breach by either the Purchaser or the
Company of any such representations and warranties, or as a result of any
violation of any securities laws.
8. The Company hereby makes the following representations, warranties
and covenants to the Purchaser, each of which is true and correct as of the date
hereof:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite corporate power and authority to own and lease its properties, to
carry on its business as currently conducted and to consummate all of the
transactions contemplated by this Agreement. The Company is duly qualified as a
foreign corporation for the transaction of business and is in good standing as a
foreign corporation in each jurisdiction in which the conduct of its business or
ownership or leasing of its properties requires it to be so qualified, except
where the failure to be so qualified would not have a material adverse effect on
the business, financial condition or prospects of the Company.
(b) The authorized capital stock of the Company consists only
of 10,000,000 shares, $.001 par value, of Common Stock. As of the date hereof,
the issued and outstanding capital stock of the Company consists of 3,728,304
shares of Common Stock. All such issued and outstanding shares of the Company
are duly authorized, validly issued, fully paid and non-assessable.
(c) The Company has all requisite corporate power to enter
into this Agreement and to carry out and perform its obligations under the terms
of this Agreement, including the issuance and delivery of the Units and the
underlying Common Stock. The Company has all requisite power and authority
necessary to own or hold its properties and conduct its business and holds all
licenses, permits and other required authorizations from governmental
authorities necessary for the conduct of its business.
(d) The Company is not in violation or material default under,
nor will its execution, delivery and performance of this Agreement result in a
material violation of, or constitute a material default under, the Certificate
of Incorporation, as amended, or Amended and Restated Bylaws of the Company or
any instrument of indebtedness, mortgage or security agreement, lease or other
agreement or instrument to which the Company is a party or by which it or any of
its properties may be bound.
(e) There are no pending or threatened legal or governmental
proceedings to which the Company is a party which could materially and adversely
affect the business, property, financial condition or operations of the Company.
(f) The Units and the reservation of the underlying Common
Stock have been duly and validly authorized and, when issued and paid for in
accordance with the terms of this Agreement, all such securities will be fully
paid and nonassessable.
5
<PAGE>
(g) This Agreement is a legal, valid and binding agreement of
the Company enforceable in accordance with its terms except as enforceability
may be limited by bankruptcy, insolvency or other laws affecting the rights of
creditors generally or by equitable principles.
(h) With respect to the Company, this Agreement and the
Offering Documents do not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
9. The Purchaser agrees that the Purchaser cannot cancel, terminate or
revoke this Agreement or any of the Purchaser's agreements hereunder and that
this Agreement is not transferable or assignable by the Purchaser; provided,
however, the obligation hereunder will terminate if this subscription is not
accepted by the Company pursuant to the terms contained herein.
10. The primary application of the proceeds to be realized by the Company
in the Offering will be for repayment of the Company's indebtedness to Chrysler
Capital Corporation, with the balance, if any, for working capital purposes.
11. Miscellaneous.
(a) All notices or other communications given or made
hereunder shall be in writing and shall be delivered by hand, against written
receipt, sent by overnight courier service or mailed by registered or certified
mail, return receipt requested, postage prepaid, to the Purchaser at the
Purchaser's address set forth below and to the Company at its address set forth
above. Notices shall be deemed given on the date of receipt or, if mailed, five
business days after mailing, except notices of change of address, which shall be
deemed given when received.
(b) Notwithstanding the place where this Agreement may be
executed by the Purchaser or the Company, the parties agree that all the terms
and provisions hereof shall be construed in accordance with and governed by the
laws of the State of Florida without regard to principles of conflict of laws.
(c) This Agreement constitutes the entire agreement between
the Purchaser and the Company with respect to the subject matter hereof and may
be amended only by a writing executed by each of them.
(d) If the Purchaser is more than one person, the obligations
of the Purchaser shall be joint and several and the representations and
warranties herein contained shall be deemed to be made by, and be binding upon
each such person and such person's heirs, executors, administrators, successors
and assigns. This Agreement shall be binding upon and inure to the benefit of
each of the Purchaser and the Company and their respective heirs, legal
representatives, successors and assigns.
(e) The Purchaser and the Company each hereby submit to the
exclusive jurisdiction of the courts of the State of Florida located in Miami,
Florida, and of the federal courts located in
6
<PAGE>
the Miami, Florida, with respect to any action or legal proceeding commenced by
either of them with respect to this Agreement or to the Units. Each of them
irrevocably waives any objection they now have or hereafter may have respecting
the venue of any such action or proceeding brought in such a court or respecting
the fact that such court is an inconvenient forum and consents to the service of
process in any such action or proceeding by means of registered or certified
mail, return receipt requested, in care of the address set forth above or below
or at such other address as either of them shall furnish in writing to the
other.
(f) The Purchaser and the Company each hereby waive trial by
jury in any action or proceeding involving any matter (whether sounding in tort,
contract, fraud or otherwise) in any way arising out of or relating to this
Agreement or to the Units.
(g) In order to discourage frivolous claims, should it become
necessary for any party to institute legal action to enforce the terms and
conditions of this Agreement, the successful party will be awarded reasonable
attorneys' fees at all trial and appellate levels, expenses and costs.
(h) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(i) The waiver by either the Purchaser or the Company of a
breach of any provision of this Agreement shall not operate, or be construed, as
a waiver of any subsequent breach of any provision of this Agreement.
(j) The Purchaser and the Company agree to execute and deliver
all further documents, agreements and instruments and to take such other further
action as may be necessary or appropriate to carry out the purposes and intent
of this Agreement.
(k) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
7
<PAGE>
IN WITNESS WHEREOF, the Purchaser has signed this Subscription
Agreement as of the date indicated below.
Dated:__________________ , 1996
Number of Units
subscribed for: __________.
Amount of check enclosed: $____________ .
Dated:_______________ , 1996
____________________________________
Signature of Investor
(Name of Investor - Please Print)
____________________________________
Social Security Number of Investor
____________________________________
____________________________________
Address of Investor
____________________________________
Signature of Investor
(Name of Investor - Please Print)
Note: If two investors are signing, please check the manner in which the
ownership is to be legally held (the indicated manner shall be construed as if
written out in full accordance with applicable laws or regulations):
8
<PAGE>
_____ JT TEN: As joint tenants with right of survivorship and not
as tenants in common.
_____ TEN COM: As tenants in common.
_____ TEN ENT: As tenants by the entireties.
Accepted:
Dated: June 17, 1996
CPI Aerostructures, Inc.
By:_____________________
Arthur August
President
9
<PAGE>
SPECIAL EXECUTION PAGE FOR SUBSCRIPTION BY AN ENTITY
(Not applicable to subscriptions by individuals)
IN WITNESS WHEREOF, subject to acceptance by the Company, the
undersigned has completed this Subscription Agreement to evidence its
subscription to CPI Aerostructures, Inc., on this___ day of__________ , 1996.
Amount of Commitment
$_____________ for___________ Units
____ TRUST -- (Include copy of trust
agreement)
____ CORPORATION -- (Attach certified corporate resolution authorizing
signature and a copy of the articles of incorporation)
____ PARTNERSHIP -- (Attach a copy of the partnership agreement)
(Please print the following information exactly as you wish it to appear on the
Company records.)
______________________________ ____________________________
(Name of Subscriber) (Address)
______________________________ _____________________________
(Tax Identification Number)
______________________________ _____________________________
(Telephone)
The undersigned trustee, partner or corporate officer certifies that he
has full power and authority from the beneficiaries, partners or directors of
the entity named below to execute this Subscription Agreement on behalf of the
entity and to make the representations and warranties made herein on their
behalf and that investment in the Company has been affirmatively authorized by
the governing board of such entity and is not prohibited by the governing
documents of the entity.
Dated:______________, 1996 ___________________________________________
(Print Name of Entity)
10
<PAGE>
________________________________
(Print Name and Capacity)
By:_____________________________________
(Signature of authorized trustee,
partner, or corporate officer)
11
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF )
) ss.:
COUNTY OF )
On this ______ day of ____________ , 1996, before me personally came
________________ to be known, being by me duly sworn, did acknowledge that he
resides at _________ , that he is the __________ of ___________ , the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
----------------------------------
Notary Public
PARTNERSHIP ACKNOWLEDGMENT
STATE OF )
) ss.:
COUNTY OF )
On this ________ day of ___________ , 1996, before me personally came
___________ to be known, to be a partner in ___________ , a partnership, and
known to be the person described in and who executed the foregoing instrument in
the partnership name, and said ______________ duly acknowledged that he executed
the foregoing instrument on behalf of said partnership.
----------------------------------
Notary Public
12
<PAGE>
CERTAIN NOTICES UNDER STATE SECURITIES LAWS
BLUE SKY NOTICES
ALL STATES
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH, OR
APPROVED OR DISAPPROVED BY, THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
FOR FLORIDA RESIDENTS ONLY
PURSUANT TO SECTION 517.061(11)(a)(5) OF THE FLORIDA SECURITIES ACT,
YOU HAVE A RIGHT TO RESCIND YOUR SUBSCRIPTION BY GIVING NOTICE OF SUCH
RESCISSION BY TELEPHONE, TELEGRAPH OR LETTER, WITHIN THREE DAYS AFTER YOU FIRST
TENDER CONSIDERATION, TO CPI AEROSTRUCTURES, INC. IF NOTICE IS NOT RECEIVED BY
SUCH TIME, THE FOREGOING RIGHT OF RESCISSION SHALL BE NULL AND VOID.
FOR PENNSYLVANIA RESIDENTS
EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM
REGISTRATION BY SECTION 203(d) DIRECTLY FROM AN ISSUER OR AFFILIATE OF AN ISSUER
SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY
TO THE SELLER, UNDERWRITER (IF ANY) OR ANY PERSON, WITHIN TWO BUSINESS DAYS FROM
THE DATE OF RECEIPT BY THE ISSUER
13
<PAGE>
OF HIS WRITTEN BINDING CONTRACT OF PURCHASE, OR, IN THE CASE OF A TRANSACTION IN
WHICH THERE IS NO WRITTEN BINDING CONTRACT OF PURCHASE, WITHIN TWO BUSINESS DAYS
AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED.
YOUR WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO
ACCOMPLISH THIS WITHDRAWAL, YOU NEED ONLY SEND A LETTER OR TELEGRAM TO THE
ISSUER (OR UNDERWRITER) INDICATING YOUR INTENTION TO WITHDRAW. SUCH LETTER OR
TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED
SECOND BUSINESS DAY. IF YOU ARE SENDING A LETTER, IT IS PRUDENT TO SEND IT BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO
TO EVIDENCE THE TIME WHEN IT WAS MAILED. SHOULD YOU MAKE THE REQUEST ORALLY, YOU
SHOULD ASK FOR WRITTEN CONFIRMATION THAT YOUR REQUEST HAS BEEN RECEIVED.
14
<PAGE>
EXHIBIT 4.3
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR OTHERWISE
DISPOSED OF, IN WHOLE OR IN PART, UNLESS ANY SUCH TRANSACTION IS REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER SAID ACT IS AVAILABLE, AND THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL TO SUCH EFFECT, WHICH OPINION IS REASONABLY
SATISFACTORY TO THE COMPANY.
CPI AEROSTRUCTURES, INC.
PLACEMENT AGENT'S WARRANT TO PURCHASE UNITS
1. Securities Subject to Placement Agent's Warrant to Purchase Units.
Subject to the terms and conditions hereinafter set forth, (1) (the "Holder"),
is entitled to purchase from CPI Aerostructures, Inc., a New York corporation
(the "Company"), at any time and from time to time during the period from June
17, 1996 (the "Commencement Date") until 5:00 p.m., Miami, Florida Time, on June
16, 2001 (the "Expiration Date"), at which time this Placement Agent's Warrant
to Purchase Units (the "Warrant") shall expire and become void, an aggregate of
(2) unit (the "Units"), each Unit consisting of 25,000 shares (the "Unit
Shares") of the Company's common stock, $.001 par value per share (the "Common
Stock"), and common stock purchase warrants (the "Underlying Warrants") to
purchase an aggregate of 12,500 shares of Common Stock (the "Warrant Shares"),
which number of Unit Shares and Warrant Shares is subject to adjustment from
time to time, as described below, upon payment therefor of the exercise price of
$25,000 per Unit in lawful funds of the United States of America, such amounts
(the "Basic Unit Exercise Price") being subject to adjustment in the
circumstances set forth hereinbelow. This applicable Basic Unit Exercise Price,
until such adjustment is made and thereafter as adjusted from time to time, is
called the "Unit Exercise Price." This Warrant is one of a series of Placement
Agent's Warrants to Purchase Units dated June 17, 1996. The terms and conditions
of the Placement Agent's Warrants to Purchase Units shall be identical in all
material respects except that the number of Units to which the holder is
entitled to purchase may differ. The Underlying Warrants shall entitle the
holder to purchase an aggregate of 12,500 Warrant Shares at $2.00 per share and
shall be in substantially the form of Exhibit A attached hereto.
2. Exercise of Warrant. This Warrant may be exercised in whole or in
part at any time from and after the Commencement Date and on or before the
Expiration Date, provided however, if such Expiration Date is a day on which
Federal or State chartered banking institutions located in the State of Florida
are authorized by law to close, then the Expiration Date shall be deemed to be
the next succeeding day which shall not be such a day, by presentation and
surrender to the Company at its principal office, or at the office of any
transfer agent for the Warrants ("Transfer Agent"), designated by the Company,
of this Warrant accompanied by the form of election to purchase on the last page
hereof signed by the Holder and upon payment of the Unit Exercise Price for the
Units purchased thereby, by cashier's check or by wire transfer of immediately
available
<PAGE>
funds. If this Warrant is exercised in part only, the Company or Transfer Agent
shall, promptly after presentation of this Warrant upon such exercise, execute
and deliver a new Warrant, dated the date hereof, evidencing the rights of the
Holder to purchase the balance of the Units purchasable hereunder upon the same
terms and conditions herein set forth. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
Units or other securities issuable upon such exercise shall be treated for all
purposes as the holder of such shares of record as of the close of business on
such date. As promptly as practicable, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of Unit Shares and Underlying Warrants issuable upon such
exercise, together with cash in lieu of any fraction of a share as provided
below. The Unit Shares and Underlying Warrants contained in the Units will be
immediately detachable and separately transferable.
3. Registration Rights.
3.1 If, at any time prior to the Expiration Date, the Holders of a
majority of the Warrants, Unit Shares and Warrant Shares (collectively, the
"Securities") shall give notice to the Company requesting that the Company file
with the Securities and Exchange Commission (the "Commission") a registration
statement (the "Registration Statement") relating to the Unit Shares and Warrant
Shares (collectively, the "Shares"), the Company shall promptly give written
notice of such proposed Registration Statement to the Holders of such
Securities, and to any subsequent permissible transferee of any of the
Securities (at the address of such persons appearing on the books of the Company
or its transfer agent) which notice shall offer to include the Shares in the
requested Registration Statement. The Company shall, as expeditiously as
possible, file and use its best efforts to cause to become effective under the
Securities Act of 1933, as amended (the "Securities Act"), the Registration
Statement covering such of the Shares as the Company has been requested to
register for disposition by the Holders thereof, to the extent required to
permit the public sale or other public disposition thereof by the Holders. The
Company shall cause the Registration Statement to remain effective until such
date as all of the Shares have been sold or the Warrants expire (the "Effective
Period"). The Holders shall have the right to demand registration of the Shares
as described above on at least two separate occasions.
3.2 In addition, if at any time during the five (5) years after the
Commencement Date, the Company shall prepare and file one or more registration
statements under the Securities Act, with respect to a public offering of equity
or debt securities of the Company, or of any such securities of the Company held
by its security holders, the Company will include in any such registration
statement such information as is required, and such number of Shares held by the
Holders thereof or their respective designees or transferees as may be requested
by them, to permit a public offering of the Shares so requested; provided,
however, that if, in the written opinion of the Company's managing underwriter,
if any, for such offering, the inclusion of the Shares requested to be
registered, when added to the securities being registered by the Company or the
selling security holder(s), would exceed the maximum amount of the Company's
securities that can be marketed without otherwise materially and adversely
affecting the entire offering, then the Company may exclude from such offering
that portion of the Shares requested to be so registered, so that the total
2
<PAGE>
number of securities to be registered is within the maximum number of shares
that, in the opinion of the managing underwriter, may be marketed without
otherwise materially and adversely affecting the entire offering, provided that
the Company shall be required to include in the offering and in the following
order: first, the pro rata number of securities requested by the Holder along
with all other holders of securities requesting registration pursuant to
registration rights which were granted on or prior to the date hereof and are
described in the Company's confidential Private Placement Memorandum, dated May
10, 1996; and, second, the pro rata number of securities requested by all other
holders of securities requesting registration pursuant to other registration
rights. The Company shall bear all fees and expenses incurred by it in
connection with the preparation and filing of such registration statement. In
the event of such a proposed registration, the Company shall furnish the then
Holders with not less than thirty (30) days' written notice prior to the
proposed date of filing of such registration statement. The Company shall use
its best efforts to ensure that such registration statement is declared
effective and remains effective until such time as all of the Shares have been
registered or may be sold without registration under the Securities Act or
applicable state securities laws and regulations, and without limitation as to
volume, pursuant to Rule 144 of the Securities Act. The holders of Shares shall
exercise the rights provided for in this Subsection 3.2 by giving written notice
to the Company, within twenty (20) days of receipt of the Company's notice of
its intention to file a registration statement.
3.3 The Company shall bear all expenses, incurred in the preparation and
filing of such registration statements or post-effective amendment (and related
state registrations, to the extent permitted by applicable law) and the
furnishing of copies of the preliminary and final prospectus thereof to the
Holder, other than expenses of the Holder's counsel, and other than sales
commissions incurred by the then holders with respect to the sale of such
securities. Notwithstanding anything contained herein to the contrary, with
respect to demand registration rights described in Subsection 3.2 above (the
"Demand Registration Rights"), the Company shall only be obligated to bear all
of such expenses with respect to the first Demand Registration Right requested
by a majority of the then holders of the Shares, provided that with respect to
any second Demand Registration Right, the expenses shall be borne by the holders
of the Shares included thereunder on a pro-rata basis.
3.4 Any demand registration rights with respect to the securities issued
upon exercise of the Placement Agent's Warrants and upon exercise of the Common
Stock Purchase Warrants issued to Barber & Bronson Incorporated pursuant to the
Financial Consulting Agreement dated April 3, 1996 (collectively, the
"Consultant Warrant Securities") will be deemed to include the Shares, and to
the extent said demand registration rights are exercised, the demand
registration rights provided under this Section 3 shall also be deemed
exercised. In addition, any demand registration rights with respect to the
Shares will be deemed to include the Consultant Warrant Securities and to the
extent said demand registration rights under this Section 3 shall be exercised,
the demand registration rights provided for in this Warrant shall also be deemed
exercised.
4. Reservation of Common Stock. The Company covenants that, during the
period this Warrant is exercisable, the Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares of Common Stock to
provide for the issuance of the Shares upon the exercise of this Warrant and the
Underlying Warrants. This Company agrees that its issuance of this
3
<PAGE>
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for Shares upon the exercise of this Warrant and the Underlying
Warrants.
5. No Shareholder Rights. This Warrant, as such, shall not entitle the
Holder to any rights of a shareholder of the Company, until the Holder has
exercised this Warrant in accordance with Section 2 hereof.
6. Adjustment of Exercise Price and Number of Shares.
6.1 The number and kind of securities issuable upon the exercise of this
Warrant shall be subject to adjustment from time to time, and the Company agrees
to provide notice upon the happening of certain events, as follows:
a. If the Company is recapitalized through the subdivision or
combination of its outstanding shares of Common Stock into a larger or smaller
number of shares of Common Stock, the number of shares of Common Stock for which
this Warrant and the Underlying Warrants may be exercised shall be increased or
reduced, as of the record date for such recapitalization, in the same proportion
as the increase or decrease in the outstanding shares of Common Stock, and the
exercise price for the Underlying Warrants (the "Exercise Price") shall be
adjusted so that the aggregate amount payable for the purchase of all of the
Shares issuable hereunder immediately after the record date for such
recapitalization shall equal the aggregate amount so payable immediately before
such record date.
b. If the Company declares a dividend on its Common Stock
payable in shares of its Common Stock or securities convertible into shares of
its Common Stock, the number of shares of Common Stock for which this Warrant
and the Underlying Warrants may be exercised shall be increased as of the record
date for determining which holders of Common Stock shall be entitled to receive
such dividend, in proportion to the increase in the number of outstanding shares
of Common Stock (and shares of Common Stock issuable upon conversion of all such
securities convertible into shares of Common Stock) as a result of such
dividend, and the Exercise Price shall be adjusted so that the aggregate amount
payable for the purchase of all the Shares issuable hereunder immediately after
the record date for such dividend shall equal the aggregate amount so payable
immediately before such record date.
c. If the Company effects a general distribution to holders of
its Common Stock, other than as part of the Company's dissolution or liquidation
or the winding up of its affairs, of any shares of its capital stock, any
evidence of indebtedness or any of its assets (other than cash, shares of Common
Stock or securities convertible into shares of Common Stock), the Company shall
give written notice to the Holder of any such general distribution at least
fifteen (15) days prior to the proposed record date in order to permit the
Holder to exercise this Warrant and the Underlying Warrants on or before the
record date. There shall be no adjustment in the number of shares of Common
Stock for which this Warrant and the Underlying Warrants may be exercised, or in
the Exercise Price, by virtue of any such general distribution, except as
otherwise provided herein.
4
<PAGE>
d. If the Company offers rights or warrants (other than the
Warrant and the Underlying Warrants) to all holders of its Common Stock which
entitle them to subscribe to or purchase additional shares of Common Stock or
securities convertible into shares of Common Stock, the Company shall give
written notice of any such proposed offering to the Holder at least fifteen (15)
days prior to the proposed record date in order to permit the Holder to exercise
this Warrant and the Underlying Warrants on or before such record date.
e. In the event an adjustment in the Exercise Price or the
number of Shares issuable hereunder is made under subsection a. or b. above, and
such an event does not occur, then any adjustments in the Exercise Price or
number of Shares issuable upon exercise of this Warrant and the Underlying
Warrants that were made in accordance with such subsection a. or b. shall be
re-adjusted to the Exercise Price and number of Shares as were in effect
immediately prior to the record date for such an event.
f. If and whenever the Company issues or sells, or in
accordance with Subsection 6.1 is deemed to have issued or sold, any shares of
its Common Stock for a consideration per share less than the Exercise Price in
effect immediately prior to the time of such issuance or sale (except for the
issuance or deemed issuance of securities in a transaction described in
paragraph g. of this Subsection 6.1), then immediately upon such issuance or
sale the Exercise Price will be reduced to an Exercise Price determined by
multiplying the Exercise Price in effect immediately prior to the issuance or
sale by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding prior to the issuance or sale plus (ii) the
number of Shares issuable hereunder that the maximum aggregate amount of
consideration receivable by the Company upon such issuance or sale would
purchase at the Exercise Price in effect immediately prior to the issuance or
sale, and the denominator of which shall be the number of shares of Common Stock
deemed outstanding, as hereinafter determined, immediately after such issuance
or sale.
g. The following securities or transactions shall be excluded
from the operation of paragraph f. of this Subsection 6.1:
(i) The existence and any exercise of any option,
convertible promissory note, warrant, or other right to purchase Common Stock
that is outstanding on the date hereof; and
(ii) Any grant or exercise of options for Common
Stock granted under the Company's stock option plans, in existence as of the
date hereof, provided said grant or exercise is not effectuated as a result of
any amendment to such plans subsequent to the date hereof, with an exercise
price equal to at least the fair market value of the shares of Common Stock on
the date of grant.
h. If the Company in any manner grants any rights or options
to subscribe for or to purchase Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock (such rights or options being
herein called "Rights" and such convertible or exchangeable stock or securities
being herein called "Convertible Securities"), and the price per share for which
Common Stock is issuable upon the exercise of such Rights or upon conversion or
5
<PAGE>
exchange of such Convertible Securities is less than the Exercise Price in
effect immediately prior to the time of the granting of such Rights, then the
total maximum number of shares of Common Stock issuable upon the exercise of
such Rights or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Rights will be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of this Section, the "price per share for which Common
Stock is issuable upon exercise of such Rights or upon conversion or exchange of
such Convertible Securities" will be determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
granting of such Rights, plus the minimum aggregate amount of additional
consideration payable to the Company upon exercise of all such Rights, plus, in
the case of Rights that relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
issuance or sale of such Convertible Securities and the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock then
issuable upon the exercise of such Rights or upon the conversion or exchange of
all Convertible Securities issuable upon the exercise of such Rights. Except as
otherwise provided in Subsections j. and k. below, no adjustment of the Exercise
Price will be made when Convertible Securities are actually issued upon the
exercise of such Rights or when Common Stock is actually issued upon the
exercise of such Rights or the conversion or exchange of such Convertible
Securities.
i. If the Company in any manner issues or sells any
Convertible Securities, and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Exercise Price in
effect immediately prior to the time of such issuance or sale, then the maximum
number of shares of Common Stock then issuable upon conversion or exchange of
all such Convertible Securities will be deemed to be outstanding and to have
been issued and sold by the Company for such price per share, as determined
below. For the purposes of this Section, the "price per share for which Common
Stock is issuable upon such conversion or exchange" will be determined by
dividing (i) the total amount received or receivable by the Company as
consideration for the issuance or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock then issuable upon the conversion or exchange
of all such Convertible Securities. Except as otherwise provided in Subsections
j. and k. below, no adjustment of the Exercise Price will be made when Common
Stock is actually issued upon the conversion or exchange of such Convertible
Securities, and if any such issuance or sale of such Convertible Securities is
made upon exercise of any Convertible Securities for which adjustments of the
Exercise Price had been or are to be made pursuant to other provisions of this
Section 6, no further adjustment of the Exercise Price will be made by reason of
such issuance or sale.
j. If the purchase price provided for in any Rights, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time (other
than under or by reason of provisions that are designed to protect against
dilution of the type set forth in this Section 6 and are no more favorable to
the holders of such Rights or Convertible Securities than this Section 6 would
have been if this Section 6 were included in such
6
<PAGE>
Rights or Convertible Securities), then the Exercise Price in effect at the time
of such change will be re-adjusted to the Exercise Price that would have been in
effect at such time had such Rights or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration, or changed
conversion rate, as the case may be, at the time initially granted, issued, or
sold; and such adjustment of the Exercise Price will be made whether the result
thereof is to increase or reduce the Exercise Price then in effect under this
Warrant, provided that no such adjustment shall increase the Exercise Price
above the initial Exercise Price hereof and that such adjustments shall be made
by the Board of Directors of the Company, who shall promptly provide notice of
the new Exercise Price to the Holder.
k. Upon the expiration of any Right, or the termination of any
right to convert or exchange any Convertible Security, without the exercise of
such Right, or the conversion of such Convertible Security, the Exercise Price
then in effect hereunder will be adjusted to the Exercise Price that would have
been in effect at the time of such expiration or termination had such Right or
Convertible Security never been issued, but such subsequent adjustment shall not
affect the number of shares of Common Stock issued upon any exercise of this
Warrant prior to the date such adjustment is made.
l. If any shares of Common Stock, Rights, or Convertible
Securities are issued or sold or deemed to have been issued or sold for
consideration that includes cash, then the amount of cash consideration actually
received by the Company will be deemed to be the cash portion thereof. If any
shares of Common Stock, Rights, or Convertible Securities are issued or sold or
deemed to have been issued or sold for a consideration part or all of which is
other than cash, then the amount of the consideration other than cash received
by the Company will be the fair value of such consideration as determined by the
Board of Directors of the Company, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the market value thereof as of the date of receipt. If any shares of
Common Stock, Rights, or Convertible Securities are issued in connection with
any merger or consolidation in which the Company is the surviving corporation,
then the amount of consideration therefor will be deemed to be the fair value of
such portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Rights, or Convertible Securities, as the
case may be.
m. If any Right is issued in connection with the issuance or
sale of other securities of the Company, together comprising one integrated
transaction in which no specific consideration is allocated to such Right by the
parties thereto, the Right will be deemed to have been issued without
consideration.
n. The number of shares of Common Stock deemed outstanding at
any given time shall include the number of shares of Common Stock outstanding,
as adjusted as provided herein, but shall not include shares owned or held by or
for the account of the Company, and the disposition of any shares so owned or
held will be considered an issuance or sale of Common Stock hereunder.
o. No adjustment of the Exercise Price shall be made if the
amount of such adjustment would be less than one cent per Share, but in such
case any adjustment that otherwise
7
<PAGE>
would be required to be made shall be carried forward and shall be made at the
time and together with the next subsequent adjustment that, together with any
adjustment or adjustments so carried forward, shall amount to not less than one
cent per Share.
6.2 In the event of any reorganization or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or from no
par value to par value, or from par value to no par value, or as a result of a
subdivision or combination) or in the event of any consolidation or merger of
the Company with another entity at any time prior to the expiration of this
Warrant and the Underlying Warrants, the Holder shall have the right to exercise
this Warrant and the Underlying Warrants. Upon such exercise, the Holder shall
have the right to receive the same kind and number of shares of capital stock
and other securities, cash or other property as would have been distributed to
the Holder upon such reorganization, reclassification, consolidation or merger.
The Holder shall pay upon such exercise the Exercise Price that otherwise would
have been payable pursuant to the terms of this Warrant and the Underlying
Warrants. If any such reorganization, reclassification, consolidation or merger
results in a cash distribution in excess of the then applicable Exercise Price,
the Holder may, at the Holder's option, exercise this Warrant and the Underlying
Warrants without making payment of the Exercise Price, and in such case the
Company shall, upon distribution to the Holder, consider the Exercise Price to
have been paid in full, and in making settlement to the Holder, shall deduct an
amount equal to the Exercise Price from the amount payable to the Holder. In the
event of any such reorganization, merger or consolidation, the corporation
formed by such consolidation or merger or the corporation which shall have
acquired the assets of the Company shall execute and deliver a supplement hereto
to the foregoing effect, which supplement shall also provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in the Warrant and the Underlying Warrants.
6.3 If the Company shall, at any time before the expiration of this
Warrant and the Underlying Warrants, dissolve, liquidate or wind up its affairs,
the Holder shall have the right to exercise this Warrant and the Underlying
Warrants. Upon such exercise the Holder shall have the right to receive, in lieu
of the shares of Common Stock of the Company that the Holder otherwise would
have been entitled to receive, the same kind and amount of assets as would have
been issued, distributed or paid to the Holder upon any such dissolution,
liquidation or winding up with respect to such stock receivable upon exercise of
this Warrant on the date for determining those entitled to receive any such
distribution. If any such dissolution, liquidation or winding up results in any
cash distribution in excess of the Exercise Price provided by this Warrant and
the Underlying Warrants, the Holder may, at the Holder's option, exercise this
Warrant and the Underlying Warrants without making payment of the Exercise Price
and, in such case, the Company shall, upon distribution to the Holder, consider
the Exercise Price to have been paid in full and, in making settlement to the
Holder, shall deduct an amount equal to the Exercise Price from the amount
payable to the Holder.
6.4 Upon each adjustment of the Exercise Price pursuant to Section 6
hereof, the Holder shall thereafter (until another such adjustment) be entitled
to purchase, at the adjusted Exercise Price in effect on the date this Warrant
is exercised, the number of Unit Shares and Warrant Shares, calculated to the
nearest number of Shares, determined by (a) multiplying the number of Shares
purchasable hereunder immediately prior to the adjustment of the Exercise Price
by the Exercise
8
<PAGE>
Price in effect immediately prior to such adjustment, and (b) dividing the
product so obtained by the adjusted Exercise Price in effect on the date of such
exercise. The provisions of Section 9 shall apply, however, so that no
fractional share of Common Stock or fractional Warrant shall be issued upon
exercise of this Warrant and the Underlying Warrants.
6.5 The Company may retain a firm of independent public accountants of
recognized standing (who may be any such firm regularly employed by the Company)
to make any computation required under this Section 6, and a certificate signed
by such firm shall be conclusive evidence of the correctness of any computation
made under this Section 6.
7. Notice to Holder. So long as this Warrant shall be outstanding (a) if
the Company shall pay any dividends or make any distribution upon the Common
Stock otherwise than in cash or (b) if the Company shall offer generally to the
holders of Common Stock the right to subscribe to or purchase any shares of any
class of capital stock or securities convertible into capital stock or any
similar rights or (c) if there shall be any capital reorganization of the
Company in which the Company is not the surviving entity, recapitalization of
the capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or other transfer of all or substantially
all of the property and assets of the Company, or voluntary or involuntary
dissolution, liquidation or winding up of the Company, then in such event, the
Company shall cause to be mailed by registered or certified mail to the Holder,
at least thirty (30) days prior to the relevant date described below (or such
shorter period as is reasonably possible if thirty (30) days is not reasonably
possible), a notice containing a description of the proposed action and stating
the date or expected date on which a record of the Company's shareholders is to
be taken for the purpose of any such dividend, distribution of rights, or such
reorganization, recapitalization, consolidation, merger, sale, lease or
transfer, dissolution, liquidation or winding up is to take place and the date
or expected date, if any is to be fixed, as of which the holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such event.
8. Certificate of Adjustment. Whenever the Exercise Price or number or
type of securities issuable upon exercise of this Warrant and the Underlying
Warrants is adjusted, as herein provided, the Company shall promptly deliver to
the Holder of this Warrant and the Underlying Warrants and/or a certificate of
an officer of the Company setting forth the nature of such adjustment and a
brief statement of the facts requiring such adjustment.
9. No Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any subscription hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined in good faith by the
Company's Board of Directors.
10. Transfer or Loss of Warrant.
10.1 All or any part of this Warrant may be transferred to any of the
shareholders,
9
<PAGE>
directors, officers, employees or partners of the Holder or any successor upon
the delivery of this Warrant as specified in Section 2 hereof accompanied by a
certificate from the Holder that each of the transferees have such status with
the Holder. Except as provided in the preceding sentence, prior to any proposed
transfer of the Securities, unless there is in effect a registration statement
under the Securities Act, covering the proposed transfer, the Holder thereof
shall give written notice to the Company of such Holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer in sufficient detail, and shall, if the Company so
requests, be accompanied by an unqualified written opinion of legal counsel who
shall be reasonably satisfactory to the Company addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of the Securities may be effected without
registration under the Securities Act, whereupon the Holder of the Securities
shall be entitled to transfer the Securities in accordance with the terms of the
notice delivered by the Holder to the Company. Each certificate evidencing the
Securities transferred as above provided shall not bear such restrictive legends
if in the opinion of counsel for the Company such legends are not required in
order to establish compliance with any provisions of the Securities Act.
10.2 Upon receipt by the Company of evidence satisfactory to it of loss,
theft, destruction or mutilation of this Warrant and, in the case of loss, theft
or destruction, of reasonably satisfactory indemnification, or, in the case of
mutilation, upon surrender of this Warrant, the Company will execute and
deliver, or instruct the Transfer Agent to execute and deliver, a new Warrant of
like tenor and date and any such lost, stolen or destroyed Warrant thereupon
shall become void.
11. Notices. Notices and other communications to be given to the Holder
shall be deemed sufficiently given if delivered by hand, or five (5) days after
mailing by registered or certified mail, postage prepaid, to the Holder at 2101
West Commercial Boulevard, Suite 1500, Fort Lauderdale, Florida 33309. Notices
or other communications to the Company shall be deemed to have been sufficiently
given if delivered by hand or five (5) days after mailing if mailed by
registered or certified mail postage prepaid, to the Company at 200 A Executive
Drive, Edgewood, New York 11717. A party may change the address to which notice
shall be given by notice pursuant to this Section 11.
10
<PAGE>
12. Entire Agreement and Modification. The Company and the Holder of this
Warrant hereby represent and warrant that this Warrant is intended to and does
contain and embody all of the understandings and agreements, both written and
oral, of the parties hereto with respect to the subject matter of this Warrant,
and that there exists no oral agreement or understanding, express or implied,
whereby the absolute, final and unconditional character and nature of this
Warrant shall be in any way invalidated, impaired or affected. A modification or
waiver of any of the terms, conditions or provisions of this Warrant shall be
effective only if made in writing and executed with the same formality of this
Warrant.
13. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Florida, without application of the
principles of conflicts of laws.
IN WITNESS WHEREOF, the Company has executed this Warrant as
of the 17th day of June, 1996.
CPI AEROSTRUCTURES, INC., a New York
corporation
By:_________________________________
Name:_______________________________
Title:______________________________
11
<PAGE>
ELECTION TO PURCHASE
TO: CPI Aerostructures, Inc.
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Placement Agent's Purchase Warrant to Purchase Units to
purchase ____________________ shares of Common Stock and Warrants to purchase
________________ shares of Common Stock issuable upon the exercise of such
Warrants and requests that certificates for such shares and Warrants be issued
in the name of:
_____________________________________________________________________________
(Please insert social security or other identifying number)
_____________________________________________________________________________
(Please print name and address)
Dated: ____________________, 19__ _______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
12
<PAGE>
EXHIBIT 4.4
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
OTHERWISE DISPOSED OF, IN WHOLE OR IN PART, UNLESS ANY SUCH TRANSACTION IS
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS UNDER SAID ACT IS AVAILABLE, AND THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL TO SUCH EFFECT, WHICH OPINION IS REASONABLY
SATISFACTORY TO THE COMPANY.
CPI AEROSTRUCTURES, INC.
COMMON STOCK PURCHASE WARRANT
1. Number and Price of Shares of Common Stock Subject to Common Stock
Purchase Warrant. Subject to the terms and conditions hereinafter set forth,
(the "Holder"), is entitled to purchase from CPI Aerostructures, Inc., a New
York corporation (the "Company"), at any time and from time to time during the
period from April 3, 1996 (the "Commencement Date") until 5:00 p.m., Miami,
Florida Time, on April 2, 2001 (the "Expiration Date"), at which time this
Common Stock Purchase Warrant (the "Warrant") shall expire and become void, an
aggregate of shares (the "Warrant Shares") of the Company's common stock, $.001
par value per share (the "Common Stock"), which number of Warrant Shares is
subject to adjustment from time to time, as described below, upon payment
therefor of the exercise price of $1.00 per Warrant Share in lawful funds of the
United States of America, such amounts (the "Basic Exercise Price") being
subject to adjustment in the circumstances set forth hereinbelow. This
applicable Basic Exercise Price, until such adjustment is made and thereafter as
adjusted from time to time, is called the "Exercise Price." This Warrant is one
of a series of Common Stock Purchase Warrants dated April 3, 1996. The terms and
conditions of the Common Stock Purchase Warrants shall be identical in all
material respects except that the number of Warrant Shares to which the holder
is entitled to purchase may differ.
2. Exercise of Warrant. This Warrant may be exercised in whole or in
part at any time from and after the Commencement Date and on or before the
Expiration Date, provided however, if such Expiration Date is a day on which
Federal or State chartered banking institutions located in the State of Florida
are authorized by law to close, then the Expiration Date shall be deemed to be
the next succeeding day which shall not be such a day, by presentation and
surrender to the Company at its principal office, or at the office of any
transfer agent for the Warrants ("Transfer Agent"), designated by the Company,
of this Warrant accompanied by the form of election to purchase on the last page
hereof signed by the Holder and upon payment of the Exercise Price for the
Warrant Shares purchased thereby, by cashier's check or by wire transfer of
immediately available funds. Notwithstanding anything contained herein to the
contrary, the Exercise Price for the Warrant may be satisfied by the delivery of
an unexercised portion of this Warrant to the Company or the Transfer Agent for
cancellation having a market value, as determined by the spread as of the date
of surrender equal to the difference between the then Exercise Price and the
market
<PAGE>
price of the shares of Common Stock underlying this Warrant, equal to the
aggregate Exercise Price of the portion of this Warrant desired to be then
exercised. If this Warrant is exercised in part only, the Company or Transfer
Agent shall, promptly after presentation of this Warrant upon such exercise,
execute and deliver a new Warrant, dated the date hereof, evidencing the rights
of the Holder to purchase the balance of the Warrant Shares purchasable
hereunder upon the same terms and conditions herein set forth. This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the Warrant Shares or other securities issuable upon
such exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As promptly as practicable, the
Company shall issue and deliver to the person or persons entitled to receive the
same a certificate or certificates for the number of full Warrant Shares
issuable upon such exercise, together with cash in lieu of any fraction of a
share as provided below.
3. Registration Rights.
3.1 If, at any time prior to the Expiration Date, the Holders of a
majority of the Warrants Shares shall give notice to the Company requesting that
the Company file with the Securities and Exchange Commission (the "Commission")
a registration statement (the "Registration Statement") relating to the Warrant
Shares, the Company shall promptly give written notice of such proposed
Registration Statement to the Holders of such Warrants or Warrant Shares, and to
any subsequent permissible transferee of any of the Warrants or Warrant Shares
(at the address of such persons appearing on the books of the Company or its
transfer agent) which notice shall offer to include the Warrant Shares in the
requested Registration Statement. The Company shall, as expeditiously as
possible, file and use its best efforts to cause to become effective under the
Securities Act of 1933, as amended (the "Securities Act"), the Registration
Statement covering such of the Warrant Shares as the Company has been requested
to register for disposition by the Holders thereof, to the extent required to
permit the public sale or other public disposition thereof by the Holders. The
Company shall cause the Registration Statement to remain effective for a period
of at least one hundred twenty (120) days from the effective date of the
Registration Statement or such earlier date as all of the Warrant Shares have
been sold or the Warrants expire (the "Effective Period"). The Holders shall
have the right to demand registration of the Warrant Shares as described above
on at least two separate occasions.
3.2 In addition, if at any time during the five (5) years after the
Commencement Date, the Company shall prepare and file one or more registration
statements under the Securities Act, with respect to a public offering of equity
or debt securities of the Company, or of any such securities of the Company held
by its security holders, the Company will include in any such registration
statement such information as is required, and such number of Warrant Shares
held by the Holders thereof or their respective designees or transferees as may
be requested by them, to permit a public offering of the Warrant Shares so
requested; provided, however, that if, in the written opinion of the Company's
managing underwriter, if any, for such offering, the inclusion of the Warrant
Shares requested to be registered, when added to the securities being registered
by the Company or the selling security holder(s), would exceed the maximum
amount of the Company's securities that can be marketed without otherwise
materially and adversely affecting the entire offering, then the
2
<PAGE>
Company may exclude from such offering that portion of the Warrant Shares
requested to be so registered, so that the total number of securities to be
registered is within the maximum number of shares that, in the opinion of the
managing underwriter, may be marketed without otherwise materially and adversely
affecting the entire offering, provided that at least a pro rata amount of the
securities that otherwise were proposed to be registered for other shareholders
is also excluded. The Company shall bear all fees and expenses incurred by it in
connection with the preparation and filing of such registration statement. In
the event of such a proposed registration, the Company shall furnish the then
Holders of Warrant Shares with not less than thirty (30) days' written notice
prior to the proposed date of filing of such registration statement. Such notice
shall continue to be given by the Company to Holders of Warrant Shares, with
respect to subsequent registration statements or post-effective amendments filed
by the Company, until such time as all of the Warrant Shares have been
registered or may be sold without registration under the Securities Act or
applicable state securities laws and regulations, and without limitation as to
volume, pursuant to Rule 144 of the Securities Act. The holders of Warrant
Shares shall exercise the rights provided for in this Subsection 3.2 by giving
written notice to the Company, within twenty (20) days of receipt of the
Company's notice of its intention to file a registration statement.
3.3 The Company shall bear all expenses, incurred in the preparation
and filing of such registration statements or post-effective amendment (and
related state registrations, to the extent permitted by applicable law) and the
furnishing of copies of the preliminary and final prospectus thereof to the
Holder, other than expenses of the Holder's counsel, and other than sales
commissions incurred by the then holders with respect to the sale of such
securities. Notwithstanding anything contained herein to the contrary, with
respect to demand registration rights described in Subsection 3.2 above (the
"Demand Registration Rights"), the Company shall only be obligated to bear all
of such expenses with respect to the first Demand Registration Right requested
by a majority of the then holders of the Warrant Shares, provided that with
respect to any second Demand Registration Right, the expenses shall be borne by
the holders of the Warrant Shares included thereunder on a pro-rata basis with
the expenses to be borne by the Company with respect to any securities included
therein on behalf of the investors in the private offering to be conducted by
the Company pursuant to the letter of intent dated March 5, 1996 between the
Company and the Holder, and which pro-rata allocation shall be based on the
percentage of shares (including derivative securities) being registered
thereunder.
3.4 In the event Placement Agent's Warrants are issued to Holder in
connection with the private placement contemplated by the letter of intent dated
March 5, 1996 between the Company and the Holder, any demand registration rights
with respect to the securities issued upon exercise of the Placement Agent's
Warrants and upon exercise of the warrants included in the Placement Agent's
Warrants (collectively, the "Placement Agent's Warrant Securities") will be
deemed to include the Warrant Shares, and to the extent said demand registration
rights are exercised, the demand registration rights provided under this Section
3 shall also be deemed exercised. In addition, any demand registration rights
with respect to the Warrant Shares will be deemed to include the Placement
Agent's Warrant Securities and to the extent said demand registration rights
under this Section 3 shall be exercised, the demand registration rights provided
for in the Placement Agent's Warrants shall also be deemed exercised.
3
<PAGE>
4. Reservation of Common Stock. The Company covenants that, during the
period this Warrant is exercisable, the Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares of Common Stock to
provide for the issuance of the Warrant Shares upon the exercise of this
Warrant. This Company agrees that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for Warrant Shares
upon the exercise of this Warrant.
5. No Shareholder Rights. This Warrant, as such, shall not entitle the
Holder to any rights of a shareholder of the Company, until the Holder has
exercised this Warrant in accordance with Section 2 hereof.
6. Adjustment of Exercise Price and Number of Warrant Shares.
6.1 The number and kind of securities issuable upon the exercise of
this Warrant shall be subject to adjustment from time to time, and the Company
agrees to provide notice upon the happening of certain events, as follows:
a. If the Company is recapitalized through the subdivision or
combination of its outstanding shares of Common Stock into a larger or smaller
number of shares of Common Stock, the number of shares of Common Stock for which
this Warrant may be exercised shall be increased or reduced, as of the record
date for such recapitalization, in the same proportion as the increase or
decrease in the outstanding shares of Common Stock, and the Exercise Price shall
be adjusted so that the aggregate amount payable for the purchase of all of the
Warrant Shares issuable hereunder immediately after the record date for such
recapitalization shall equal the aggregate amount so payable immediately before
such record date.
b. If the Company declares a dividend on its Common Stock
payable in shares of its Common Stock or securities convertible into shares of
its Common Stock, the number of shares of Common Stock for which this Warrant
may be exercised shall be increased as of the record date for determining which
holders of Common Stock shall be entitled to receive such dividend, in
proportion to the increase in the number of outstanding shares of Common Stock
(and shares of Common Stock issuable upon conversion of all such securities
convertible into shares of Common Stock) as a result of such dividend, and the
Exercise Price shall be adjusted so that the aggregate amount payable for the
purchase of all the Warrant Shares issuable hereunder immediately after the
record date for such dividend shall equal the aggregate amount so payable
immediately before such record date.
c. If the Company effects a general distribution to holders of
its Common Stock, other than as part of the Company's dissolution or liquidation
or the winding up of its affairs, of any shares of its capital stock, any
evidence of indebtedness or any of its assets (other than cash, shares of Common
Stock or securities convertible into shares of Common Stock), the Company shall
give written notice to the Holder of any such general distribution at least
fifteen (15) days prior to the proposed record date in order to permit the
Holder to exercise this Warrant on or before the record date. There shall be no
adjustment in the number of shares of Common Stock for which this
4
<PAGE>
Warrant may be exercised, or in the Exercise Price, by virtue of any such
general distribution, except as otherwise provided herein.
d. If the Company offers rights or warrants (other than the
Warrant) to all holders of its Common Stock which entitle them to subscribe to
or purchase additional shares of Common Stock or securities convertible into
shares of Common Stock, the Company shall give written notice of any such
proposed offering to the Holder at least fifteen (15) days prior to the proposed
record date in order to permit the Holder to exercise this Warrant on or before
such record date.
e. In the event an adjustment in the Exercise Price or the
number of Warrant Shares issuable hereunder is made under subsection a. or b.
above, and such an event does not occur, then any adjustments in the Exercise
Price or number of Warrant Shares issuable upon exercise of this Warrant that
were made in accordance with such subsection a. or b. shall be re-adjusted to
the Exercise Price and number of Warrant Shares as were in effect immediately
prior to the record date for such an event.
f. If and whenever the Company issues or sells, or in
accordance with Subsection 6.1 is deemed to have issued or sold, any shares of
its Common Stock for a consideration per share less than the Exercise Price in
effect immediately prior to the time of such issuance or sale (except for the
issuance or deemed issuance of securities in a transaction described in
paragraph g. of this Subsection 6.1), then immediately upon such issuance or
sale the Exercise Price will be reduced to an Exercise Price determined by
multiplying the Exercise Price in effect immediately prior to the issuance or
sale by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding prior to the issuance or sale plus (ii) the
number of Warrant Shares issuable hereunder that the maximum aggregate amount of
consideration receivable by the Company upon such issuance or sale would
purchase at the Exercise Price in effect immediately prior to the issuance or
sale, and the denominator of which shall be the number of shares of Common Stock
deemed outstanding, as hereinafter determined, immediately after such issuance
or sale.
g. The following securities or transactions shall be excluded
from the operation of paragraph f. of this Subsection 6.1:
(i) The existence and any exercise of any option,
convertible promissory note, warrant, or other right to purchase Common Stock,
that is outstanding on the date hereof; and
(ii) Any grant or exercise of options for Common
Stock granted under the Company's stock option plans, in existence as of the
date hereof, provided said grant or exercise is not effectuated as a result of
any amendment to such plans subsequent to the date hereof, with an exercise
price equal to at least the fair market value of the shares of Common Stock on
the date of grant.
h. If the Company in any manner grants any rights or options
to subscribe for or to purchase Common Stock or any stock or other securities
convertible into or exchangeable for
5
<PAGE>
Common Stock (such rights or options being herein called "Rights" and such
convertible or exchangeable stock or securities being herein called "Convertible
Securities"), and the price per share for which Common Stock is issuable upon
the exercise of such Rights or upon conversion or exchange of such Convertible
Securities is less than the Exercise Price in effect immediately prior to the
time of the granting of such Rights, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Rights or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Rights will be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For purposes of
this Section, the "price per share for which Common Stock is issuable upon
exercise of such Rights or upon conversion or exchange of such Convertible
Securities" will be determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the granting of such
Rights, plus the minimum aggregate amount of additional consideration payable to
the Company upon exercise of all such Rights, plus, in the case of Rights that
relate to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock then issuable upon the exercise of such
Rights or upon the conversion or exchange of all Convertible Securities issuable
upon the exercise of such Rights. Except as otherwise provided in Subsections j.
and k. below, no adjustment of the Exercise Price will be made when Convertible
Securities are actually issued upon the exercise of such Rights or when Common
Stock is actually issued upon the exercise of such Rights or the conversion or
exchange of such Convertible Securities.
i. If the Company in any manner issues or sells any
Convertible Securities, and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Exercise Price in
effect immediately prior to the time of such issuance or sale, then the maximum
number of shares of Common Stock then issuable upon conversion or exchange of
all such Convertible Securities will be deemed to be outstanding and to have
been issued and sold by the Company for such price per share, as determined
below. For the purposes of this Section, the "price per share for which Common
Stock is issuable upon such conversion or exchange" will be determined by
dividing (i) the total amount received or receivable by the Company as
consideration for the issuance or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock then issuable upon the conversion or exchange
of all such Convertible Securities. Except as otherwise provided in Subsections
j. and k. below, no adjustment of the Exercise Price will be made when Common
Stock is actually issued upon the conversion or exchange of such Convertible
Securities, and if any such issuance or sale of such Convertible Securities is
made upon exercise of any Convertible Securities for which adjustments of the
Exercise Price had been or are to be made pursuant to other provisions of this
Section 6, no further adjustment of the Exercise Price will be made by reason of
such issuance or sale.
j. If the purchase price provided for in any Rights, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any
6
<PAGE>
time (other than under or by reason of provisions that are designed to protect
against dilution of the type set forth in this Section 6 and are no more
favorable to the holders of such Rights or Convertible Securities than this
Section 6 would have been if this Section 6 were included in such Rights or
Convertible Securities), then the Exercise Price in effect at the time of such
change will be re-adjusted to the Exercise Price that would have been in effect
at such time had such Rights or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration, or changed
conversion rate, as the case may be, at the time initially granted, issued, or
sold; and such adjustment of the Exercise Price will be made whether the result
thereof is to increase or reduce the Exercise Price then in effect under this
Warrant, provided that no such adjustment shall increase the Exercise Price
above the initial Exercise Price hereof and that such adjustments shall be made
by the Board of Directors of the Company, who shall promptly provide notice of
the new Exercise Price to the Holder.
k. Upon the expiration of any Right, or the termination of any
right to convert or exchange any Convertible Security, without the exercise of
such Right, or the conversion of such Convertible Security, the Exercise Price
then in effect hereunder will be adjusted to the Exercise Price that would have
been in effect at the time of such expiration or termination had such Right or
Convertible Security never been issued, but such subsequent adjustment shall not
affect the number of shares of Common Stock issued upon any exercise of this
Warrant prior to the date such adjustment is made.
l. If any shares of Common Stock, Rights, or Convertible
Securities are issued or sold or deemed to have been issued or sold for
consideration that includes cash, then the amount of cash consideration actually
received by the Company will be deemed to be the cash portion thereof. If any
shares of Common Stock, Rights, or Convertible Securities are issued or sold or
deemed to have been issued or sold for a consideration part or all of which is
other than cash, then the amount of the consideration other than cash received
by the Company will be the fair value of such consideration as determined by the
Board of Directors of the Company, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the market value thereof as of the date of receipt. If any shares of
Common Stock, Rights, or Convertible Securities are issued in connection with
any merger or consolidation in which the Company is the surviving corporation,
then the amount of consideration therefor will be deemed to be the fair value of
such portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Rights, or Convertible Securities, as the
case may be.
m. If any Right is issued in connection with the issuance or
sale of other securities of the Company, together comprising one integrated
transaction in which no specific consideration is allocated to such Right by the
parties thereto, the Right will be deemed to have been issued without
consideration.
n. The number of shares of Common Stock deemed outstanding at
any given time shall include the number of shares of Common Stock outstanding,
as adjusted as provided herein, but shall not include shares owned or held by or
for the account of the Company, and the disposition of any shares so owned or
held will be considered an issuance or sale of Common Stock hereunder.
7
<PAGE>
o. No adjustment of the Exercise Price shall be made if the
amount of such adjustment would be less than one cent per Warrant Share, but in
such case any adjustment that otherwise would be required to be made shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment that, together with any adjustment or adjustments so
carried forward, shall amount to not less than one cent per Warrant Share.
6.2 In the event of any reorganization or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or from no
par value to par value, or from par value to no par value, or as a result of a
subdivision or combination) or in the event of any consolidation or merger of
the Company with another entity at any time prior to the expiration of this
Warrant, the Holder shall have the right to exercise this Warrant. Upon such
exercise, the Holder shall have the right to receive the same kind and number of
shares of capital stock and other securities, cash or other property as would
have been distributed to the Holder upon such reorganization, reclassification,
consolidation or merger. The Holder shall pay upon such exercise the Exercise
Price that otherwise would have been payable pursuant to the terms of this
Warrant. If any such reorganization, reclassification, consolidation or merger
results in a cash distribution in excess of the then applicable Exercise Price,
the Holder may, at the Holder's option, exercise this Warrant without making
payment of the Exercise Price, and in such case the Company shall, upon
distribution to the Holder, consider the Exercise Price to have been paid in
full, and in making settlement to the Holder, shall deduct an amount equal to
the Exercise Price from the amount payable to the Holder. In the event of any
such reorganization, merger or consolidation, the corporation formed by such
consolidation or merger or the corporation which shall have acquired the assets
of the Company shall execute and deliver a supplement hereto to the foregoing
effect, which supplement shall also provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in the
Warrant.
6.3 If the Company shall, at any time before the expiration of this
Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have the
right to exercise this Warrant. Upon such exercise the Holder shall have the
right to receive, in lieu of the shares of Common Stock of the Company that the
Holder otherwise would have been entitled to receive, the same kind and amount
of assets as would have been issued, distributed or paid to the Holder upon any
such dissolution, liquidation or winding up with respect to such stock
receivable upon exercise of this Warrant on the date for determining those
entitled to receive any such distribution. If any such dissolution, liquidation
or winding up results in any cash distribution in excess of the Exercise Price
provided by this Warrant, the Holder may, at the Holder's option, exercise this
Warrant without making payment of the Exercise Price and, in such case, the
Company shall, upon distribution to the Holder, consider the Exercise Price to
have been paid in full and, in making settlement to the Holder, shall deduct an
amount equal to the Exercise Price from the amount payable to the Holder.
6.4 Upon each adjustment of the Exercise Price pursuant to Section 6
hereof, the Holder shall thereafter (until another such adjustment) be entitled
to purchase, at the adjusted Exercise Price in effect on the date this Warrant
is exercised, the number of Warrant Shares, calculated to the nearest number of
Warrant Shares, determined by (a) multiplying the number of Warrant Shares
purchasable hereunder immediately prior to the adjustment of the Exercise Price
by the Exercise
8
<PAGE>
Price in effect immediately prior to such adjustment, and (b) dividing the
product so obtained by the adjusted Exercise Price in effect on the date of such
exercise. The provisions of Section 9 shall apply, however, so that no
fractional share of Common Stock or fractional Warrant shall be issued upon
exercise of this Warrant.
6.5 The Company may retain a firm of independent public accountants of
recognized standing (who may be any such firm regularly employed by the Company)
to make any computation required under this Section 6, and a certificate signed
by such firm shall be conclusive evidence of the correctness of any computation
made under this Section 6.
7. Notice to Holder. So long as this Warrant shall be outstanding (a)
if the Company shall pay any dividends or make any distribution upon the Common
Stock otherwise than in cash or (b) if the Company shall offer generally to the
holders of Common Stock the right to subscribe to or purchase any shares of any
class of capital stock or securities convertible into capital stock or any
similar rights or (c) if there shall be any capital reorganization of the
Company in which the Company is not the surviving entity, recapitalization of
the capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or other transfer of all or substantially
all of the property and assets of the Company, or voluntary or involuntary
dissolution, liquidation or winding up of the Company, then in such event, the
Company shall cause to be mailed by registered or certified mail to the Holder,
at least thirty (30) days prior to the relevant date described below (or such
shorter period as is reasonably possible if thirty (30) days is not reasonably
possible), a notice containing a description of the proposed action and stating
the date or expected date on which a record of the Company's shareholders is to
be taken for the purpose of any such dividend, distribution of rights, or such
reorganization, recapitalization, consolidation, merger, sale, lease or
transfer, dissolution, liquidation or winding up is to take place and the date
or expected date, if any is to be fixed, as of which the holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such event.
8. Certificate of Adjustment. Whenever the Exercise Price or number or
type of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, the Company shall promptly deliver to the Holder of this Warrant a
certificate of an officer of the Company setting forth the nature of such
adjustment and a brief statement of the facts requiring such adjustment.
9. No Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any subscription hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined in good faith by the
Company's Board of Directors.
10. Transfer or Loss of Warrant.
10.1 All or any part of this Warrant may be transferred to any of the
shareholders, directors, officers, employees or partners of the Holder or any
successor upon the delivery of this
9
<PAGE>
Warrant as specified in Section 2 hereof accompanied by a certificate from the
Holder that each f the transferees have such status with the Holder. Except as
provided in the preceding sentence, prior to any proposed transfer of this
Warrant or the Warrant Shares received on the exercise of this Warrant (the
"Securities"), unless there is in effect a registration statement under the
Securities Act, covering the proposed transfer, the Holder thereof shall give
written notice to the Company of such Holder's intention to effect such
transfer. Each such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and shall, if the Company so requests,
be accompanied by an unqualified written opinion of legal counsel who shall be
reasonably satisfactory to the Company addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Securities may be effected without registration
under the Securities Act, whereupon the Holder of the Securities shall be
entitled to transfer the Securities in accordance with the terms of the notice
delivered by the Holder to the Company. Each certificate evidencing the
Securities transferred as above provided shall not bear such restrictive legends
if in the opinion of counsel for the Company such legends are not required in
order to establish compliance with any provisions of the Securities Act.
10.2 Upon receipt by the Company of evidence satisfactory to it of
loss, theft, destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, of reasonably satisfactory indemnification, or, in the
case of mutilation, upon surrender of this Warrant, the Company will execute and
deliver, or instruct the Transfer Agent to execute and deliver, a new Warrant of
like tenor and date and any such lost, stolen or destroyed Warrant thereupon
shall become void.
11. Notices. Notices and other communications to be given to the Holder
shall be deemed sufficiently given if delivered by hand, or five (5) days after
mailing by registered or certified mail, postage prepaid, to the Holder at 2101
West Commercial Boulevard, Suite 1500, Fort Lauderdale, Florida 33309. Notices
or other communications to the Company shall be deemed to have been sufficiently
given if delivered by hand or five (5) days after mailing if mailed by
registered or certified mail postage prepaid, to the Company at 200 A Executive
Drive, Edgewood, New York 11717. A party may change the address to which notice
shall be given by notice pursuant to this Section 11.
12. Entire Agreement and Modification. The Company and the Holder of
this Warrant hereby represent and warrant that this Warrant is intended to and
does contain and embody all of the understandings and agreements, both written
and oral, of the parties hereto with respect to the subject matter of this
Warrant, and that there exists no oral agreement or understanding, express or
implied, whereby the absolute, final and unconditional character and nature of
this Warrant shall be in any way invalidated, impaired or affected. A
modification or waiver of any of the terms, conditions or provisions of this
Warrant shall be effective only if made in writing and executed with the same
formality of this Warrant.
13. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Florida, without application of the
principles of conflicts of laws.
10
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Warrant as of the 3rd
day of April, 1996.
CPI AEROSTRUCTURES, INC., a New York
corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
11
<PAGE>
ELECTION TO PURCHASE
TO: CPI Aerostructures, Inc.
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Common Stock Purchase Warrant to purchase
____________________ shares of Common Stock issuable upon the exercise of such
Warrants and requests that certificates for such shares be issued in the name
of:
______________________________________________________________________________
(Please insert social security or other identifying number)
______________________________________________________________________________
(Please print name and address)
Dated: ____________________, 19__ __________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
12
<PAGE>
EXHIBIT 4.5
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO
TRANSFER OF THE SECURITIES WILL BE MADE BY THE COMPANY OR ITS TRANSFER AGENT, IN
THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Warrant No. W-__________ __________ Shares
Void after 5:00 p.m. New York City Time, on June 17, 2001.
REDEEMABLE WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
CPI AEROSTRUCTURES, INC.
This Is To Certify That, FOR VALUE RECEIVED,___________________________
_____________________ is entitled to purchase, subject to the provisions of this
Warrant, from CPI Aerostructures, Inc., a New York corporation (the
"Company"),____________________ fully paid, validly issued and non-assessable
shares of Common Stock ("Common Stock") of the Company, par value $.001 per
share, which number of shares is subject to adjustment from time to time, at an
exercise price of $2.00 per share at any time or from time to time during the
period from the date hereof until 5:00 p.m. New York City Time, on June 17, 2001
(unless sooner redeemed, as described below). Notwithstanding anything contained
herein to the contrary, if at such time as the Warrant is due to expire, there
is not currently outstanding an effective and current registration statement on
file with the U.S. Securities and Exchange Commission ("SEC") enabling the
holder to exercise the Warrant and sell the securities issuable in connection
therewith, the expiration date of this Warrant shall be extended until such time
as there is an effective and current registration statement on file with the
SEC. The Company will keep the registration statement effective until the
securities underlying the Warrant have been sold. The shares of Common Stock
deliverable upon such exercise are hereinafter sometimes referred to as "Warrant
Shares", and the exercise price of a Warrant Share is hereinafter sometimes
referred to as the "Exercise Price". This Warrant is being issued together as a
unit (the "Units") with shares of Common Stock of the Company (the "Placement
Shares").
(a) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part
at any time or from time to time on or after the date hereof and until June 17,
2001 (unless earlier redeemed, as described below); provided, however, that if
such day is a day on which banking institutions in the State of New York are
authorized by law to close, then this Warrant may be exercised on the
<PAGE>
next succeeding day which shall not be such a day. This Warrant may be exercised
by presentation and surrender hereof to the Company at its principal office or
to the Company's warrant agent, if any has been so appointed, with the Purchase
Form annexed hereto duly executed and accompanied by payment of the Exercise
Price, in cash or by certified or bank cashier's check, for the number of
Warrant Shares specified in such form. Notwithstanding anything contained herein
to the contrary, the Exercise Price for the Warrant may be satisfied by the
delivery of an unexercised portion of this Warrant to the Company or its warrant
agent for cancellation having a market value, as determined by the spread as of
the date of surrender equal to the difference between the then Exercise Price
and the market price of the shares of Common Stock underlying this Warrant,
equal to the aggregate Exercise Price of the portion of this Warrant desired to
then be exercised. The Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of any such exercise,
provided such exercise is in accordance with the provisions set forth herein. As
soon as practicable after each such exercise of the Warrant, the Company shall
issue or cause to be issued and delivered to the Holder a certificate or
certificates for the Warrant Shares, registered in the name of the Holder. If
this Warrant should be exercised in part only, the Company shall, upon surrender
of this Warrant for cancellation, execute and deliver a new Warrant evidencing
the rights of the holder thereof to purchase the balance of the Warrant Shares
purchasable thereunder. Upon exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Warrant Shares shall not then be
physically delivered to the Holder.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants. The Company agrees that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
Warrant Shares upon the exercise of this Warrant.
(c) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share remaining upon exercise hereof, the Company
shall issue the next lower number of full shares and, if the Holder has paid any
amount in excess of the exercise price for such lower number of full shares,
return to the Holder such amount.
(d) LOSS OF WARRANT. Upon receipt by the Company or its warrant agent, if
any, of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
(e) TRANSFER OF WARRANT. All or part of this Warrant may be transferred to
any of the shareholders, directors, officers, employees or partners of the
Holder or any successor upon the delivery of this Warrant as specified in
Section (a) hereof accompanied by a certificate from the
2
<PAGE>
Holder that each of the transferees have such status with the Holder. Except as
provided in the preceding sentence, prior to any proposed transfer of this
Warrant or the Warrant Shares received on the exercise of this Warrant (the
"Securities"), unless there is in effect a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), covering the proposed
transfer, the Holder thereof shall give written notice to the Company of such
Holder's intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail, and
shall, if the Company so requests, be accompanied by an unqualified written
opinion of legal counsel who shall be reasonably satisfactory to the Company
addressed to the Company and reasonably satisfactory in form and substance to
the Company's counsel, to the effect that the proposed transfer of the
Securities may be effected without registration under the Securities Act,
whereupon the Holder of the Securities shall be entitled to transfer the
Securities in accordance with the terms of the notice delivered by the Holder to
the Company. Each certificate evidencing the Securities transferred as above
provided shall not bear such restrictive legends if in the opinion of counsel
for the Company such legends are not required in order to establish compliance
with any provisions of the Securities Act.
(f) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
The acceptance of this Warrant by the Holder shall be deemed consent by the
Holder for the Company to enter into any such warrant agreement with a warrant
agent, provided such warrant agreement does not adversely affect any of the
rights of the Holder set forth in this Warrant.
(g) CALL OPTION. At any time prior to the expiration of this Warrant, except
as provided below, the Company shall have the right and option, upon notice
mailed to the Holder, to call, redeem and acquire all of the Warrants remaining
outstanding and unexercised at the date fixed for such redemption in such
notice, which redemption date shall be at least 30 days after the date of such
notice, for an amount equal to $.05 per underlying share (the "Redemption
Price"); provided, that the Company may exercise such right and option only if,
for 20 consecutive trading days ending within 15 days prior to the redemption
notice date, the closing price per share of the Common Stock equals or exceeds
$3.00. The Holder shall have the right, during the 20-day period immediately
following the date of such notice, to exercise the Warrants. If any Warrants are
exercised during such 20-day period, this Call Option shall be deemed not to
have been exercised by the Company as to the Warrant Shares so exercised by the
Holder. Said notice of redemption shall require the Holder to surrender to the
Company, on or before the redemption date, at the offices of the Company, or its
warrant agent, if any, the certificate or certificates representing the Warrants
to be redeemed. Notwithstanding the fact that any Warrants called for redemption
have not been surrendered for redemption and cancellation on the redemption
date, after the redemption date, such Warrants shall be deemed to be expired and
all rights of the Holder with respect to such unsurrendered Warrants shall cease
and terminate, other than the right to receive the Redemption Price. The rights
of the Company pursuant to this Paragraph are conditioned upon the registration
by the Company of the issuance and resale of the Warrant Shares under the
Securities Act of 1933, as amended, pursuant to a registration statement which
is kept current by the Company for at least
3
<PAGE>
120 days after the notice of redemption.
(h) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES PURCHASABLE.
The Per Share Exercise Price and the number of shares of Common Stock issuable
upon exercise shall be adjusted from time to time as follows:
(i) Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Per Share
Exercise Price shall forthwith be decreased in the case of subdivision or
increased in the case of combination in inverse proportion to the subdivision or
combination, so that the Holder will be entitled, after the changes, to convert
the Warrant for the number of shares that he or she would have held after the
change if he or she had converted the Warrant immediately before the change.
(ii) Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value, or as a result of a
subdivision or combination), or in the case of any consolidation of the Company
with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of all or substantially all
of the property of the Company, the Holder shall thereafter have the right to
receive the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holder were the owner of the shares of Common Stock
underlying the Warrant immediately prior to any such events.
(iii) Sales at Less than Fair Market Value. If and whenever the Company
issues or sells any shares of its Common Stock for a consideration per share
less than the Fair Market Value (as defined below) in effect immediately prior
to the time of such issuance or sale, then immediately upon such issuance or
sale the Per Share Exercise Price will be reduced to a Per Share Exercise Price
determined by multiplying the Per Share Exercise Price in effect immediately
prior to the issuance or sale by a fraction, the numerator of which shall be the
sum of (a) the number of shares of Common Stock outstanding prior to the
issuance or sale plus (b) the number of shares of Common Stock issuable
hereunder that the maximum aggregate amount of consideration receivable by the
Company upon such issuance or sale would purchase at the Per Share Exercise
Price in effect immediately prior to the issuance or sale, and the denominator
of which shall be the number of shares of Common Stock deemed outstanding, as
hereinafter determined, immediately after such issuance or sale.
As used herein, the phrase "Fair Market Value" at any date shall be deemed
to be the average of the last reported sale price, or, in case no such reported
sale takes place on such day, the average of the last reported sale prices for
the last three trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or as reported in the NASDAQ National Market System, or, if the Common
Stock is not listed or admitted
4
<PAGE>
to trading on any national securities exchange or quoted on the NASDAQ National
Market System, the closing bid price as furnished by the National Association of
Securities Dealers, Inc. through NASDAQ or similar organization if NASDAQ is no
longer reporting such information, or if the Common Stock is not quoted on
NASDAQ, as determined in good faith by resolution of the Board of Directors of
the Company, based on the best information available to it for the day
immediately preceding such issuance or sale, the day of such issuance or sale
and the day immediately after such issuance or sale.
(iv) No Adjustment of Per Share Exercise Price in Certain Cases.
No adjustment of the Per Share Exercise Price shall be made: (1) if the
amount of said adjustment shall be less than 1 cent ($.01) per share; provided,
however, that in such case any adjustment that would otherwise be required to be
made shall be carried forward and shall be made at the time of and together with
the next subsequent adjustment which, together with any adjustment so carried
forward, shall amount to at least 1 cent ($.01) per share.
(2) Upon the grant of any options under the Company's existing 1992 and 1995
employee stock option plans or upon the exercise of options previously granted
or to be granted thereunder or upon the exercise of any other options, warrants,
convertible promissory notes, or other rights to purchase Common Stock
outstanding on the date hereof and as described in the Company's Private
Placement Memorandum dated May 10, 1996; or
(3) Upon the issuance of shares of Common Stock in connection with the
acquisition by the Company of all or part of another entity provided such shares
are issued at Fair Market Value (as defined above); or
(4) As the result of the issuance of securities, including Placement Shares
and Placement Agent Warrants, issued in connection with the May 1996 private
placement (the "1996 Placement"), pursuant to which this Warrant was issued.
(v) Certification of Adjustment. Whenever the Per Share Exercise Price shall
be adjusted as required by the provisions of this Section h, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Per Share Exercise Price determined as herein
provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional share of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder,
and the Company shall, after each such adjustment, mail a copy by certified mail
of such certificate to the Holder.
(i) NOTICE TO HOLDER. So long as this Warrant shall be outstanding (a) if
the Company shall pay any dividends or make any distribution upon the Common
Stock otherwise than in cash or (b) if the Company shall offer generally to the
holders of Common Stock the right to subscribe to or purchase any shares of any
class of capital stock or securities convertible into capital stock or any
5
<PAGE>
similar rights or (c) if there shall be any capital reorganization of the
Company in which the Company is not the surviving entity, recapitalization of
the capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or other transfer of all or substantially
all of the property and assets of the Company, or voluntary or involuntary
dissolution, liquidation or winding up of the Company, then in such event, the
Company shall cause to be mailed by registered or certified mail to the Holder,
at least thirty (30) days prior to the relevant date described below (or such
shorter period as is reasonably possible if thirty (30) days is not reasonably
possible), a notice containing a description of the proposed action and stating
the date or expected date on which a record of the Company's shareholders is to
be taken for the purpose of any such dividend, distribution of rights, or such
reorganization, recapitalization, consolidation, merger, sale, lease or
transfer, dissolution, liquidation or winding up is to take place and the date
or expected date, if any is to be fixed, as of which the holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such event.
(j) INVESTMENT REPRESENTATIONS. The Holder, by acceptance hereof, represents
and warrants that (a) it is acquiring this Warrant for its own account for
investment purposes only and not with a view to its distribution and (b) it has
no present intention to distribute all or part of this Warrant. Other than
pursuant to registration under federal and applicable state securities laws or
an exemption from such registration, the availability of which the Company shall
determine in its sole discretion, neither this Warrant nor any Warrant Shares
may be sold, pledged, assigned or otherwise disposed of (whether voluntarily or
involuntarily). The Company may condition such sale, pledge, assignment or other
disposition on the receipt from the party to whom this Warrant is to be
transferred or to whom Warrant Shares are to be issued or transferred of any
representations and agreements requested by the Company in order to permit such
issuance or transfer to be made pursuant to exemptions from registration under
federal and applicable state securities laws. Each certificate representing this
Warrant (or any part thereof) and any Warrant Shares shall bear appropriate
legends setting forth these restrictions on transferability. The Holder, by
acceptance hereof, agrees to give written notice to the Company before
transferring this Warrant or any Warrant Shares of the Holder's intention to do
so, describing briefly the manner of any proposed transfer. Within ten (10) days
after receiving such written notice, the Company shall notify the Holder as to
whether such transfer may be effected and of the conditions to any such
transfer.
(k) NOTICES. All notices and other communications which are required or may
be given under this Warrant shall be in writing and shall be deemed to have been
duly given when delivered in person or transmitted by fax, one day after being
sent by overnight courier service, or three (3) days after being mailed,
first-class postage prepaid, in the case of the Company to 200A Executive Drive,
Edgewood, New York 11717, and in the case of the Holder to the address set forth
in the register of Holders kept by the Company or its warrant agent, as the case
may be, or to such other address as such party shall have specified by notice to
the other party hereto. If notice is given by registered or certified first
class mail, postage prepaid, return receipt requested, the return receipt shall
be conclusive evidence of the notice having been mailed on the date set forth.
6
<PAGE>
(l) MISCELLANEOUS. This Agreement contains the entire Agreement and
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Warrant may not
be changed orally, but only by an agreement in writing signed by the party
against whom any waiver, change, amendment, modification or discharge is sought,
provided however, that this Warrant may be amended or modified without the
consent of the Holder if such amendment or modification does not adversely
affect the rights of the Holder hereunder. This Agreement will not be assigned
by either party hereto and shall be interpreted under the laws of the State of
New York without application of the principles of conflicts of laws.
CPI AEROSTRUCTURES, INC.
By:_________________________
Arthur August, President
Dated: June 17, 1996
7
<PAGE>
PURCHASE FORM
Dated __________ , 19__
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing___________ shares of Common Stock and hereby makes
payment of $________ in payment of the actual exercise price thereof.
________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name______________________________________________
(Please typewrite or print in block letters)
Address___________________________________________
Social Security Number____________________________
Taxpayer Identification Number____________________
Signature_______________________
8
<PAGE>
EXHIBIT 10.1
As of May 10, 199
Barber & Bronson Incorporated
2101 West Commercial Boulevard
Suite 1500
Fort Lauderdale, Florida 33309
Ladies and Gentlemen:
CPI Aerostructures, Inc., a New York corporation (the "Company"),
hereby confirms its agreement with you (the "Placement Agent") as follows:
I. Description of Transaction. The Company proposes to issue and sell
through the Placement Agent, in a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), to a limited number
of persons meeting certain criteria for "Accredited Investor" status or other
suitability criteria (as more fully described in the confidential private
placement memorandum and exhibits thereto, as the same may be supplemented from
time to time (the "Memorandum"), 80 units (the "Units"), each consisting of (i)
25,000 shares of the Company's common stock, $.001 par value per share (the
"Common Stock"), and (ii) warrants (the "Warrants") to purchase 12,500 shares of
the Company's Common Stock, at an exercise price of $2.00 per share, on a
"best-efforts, all-or-none" basis, as described in the Memorandum (the
"Placement"). The purchase price for the Units shall be $25,000 per Unit (the
"Offering Price"). The full terms of the Placement, and the securities included
therein and to be received upon exercise thereof, are more fully described in
the Memorandum. The Units, Shares, Warrants and shares of Common Stock issuable
upon exercise of the Warrants are hereinafter collectively referred to as the
"Securities". Capitalized terms not defined herein shall have the meaning set
forth in the Memorandum.
II. Appointment of the Placement Agent. On the basis of the
representations, warranties, covenants and agreements of the Placement Agent
contained herein and subject to the conditions contained herein, the Company
hereby appoints the Placement Agent as its exclusive agent to offer and sell to
qualified investors 80 Units on a "best efforts, all-or-none" basis, until the
earlier of (i) the date on which all of the Units from the Placement have been
sold; or (ii) August 10, 1996 (the "Offering Termination Date") unless (A)
extended by the mutual written agreement of the Company and Placement Agent for
an additional forty-five (45) days; or (B) terminated earlier, at any time, by
mutual written agreement of the Company and the Placement Agent (the "Offering
Expiration Date"). The Placement Agent, on the basis of the representations,
warranties, covenants and agreements of the Company contained herein, and
subject to the conditions contained herein, accepts such appointment and agrees
to use its best efforts to sell the Units. It is understood that the Placement
Agent has no commitment to sell the Units other than to use its best efforts.
III. Purchase, Sale and Delivery of Units. On the basis of the
representations and
<PAGE>
warranties contained herein, and subject to the terms and conditions set forth
herein, the parties agree that:
1. Regulation D Placement. Neither the offer nor the sale of
the Units has been or will be registered with the Securities and Exchange
Commission ("SEC"). The Units will be offered and sold in reliance upon the
exemption from registration provided by Regulation D ("Reg D") adopted under the
Securities Act, and will only be sold to "Accredited Investors" as such term is
defined under Reg D; the Units will be offered for sale only in states in which
the Units have been qualified or registered for sale or are exempt from such
qualification or registration and the conditions for such exemption have been
met; and the Company will provide the Placement Agent for delivery to all
offerees and purchasers and their representatives, if any, with any information,
documents and instruments which the Placement Agent and the Company deem
necessary to comply with the rules, regulations and judicial and administrative
interpretations concerning compliance with applicable federal and state statutes
and regulations.
2. Subscription for Units. Subscription for Units shall occur
by execution and delivery by the subscriber (the "Subscriber") of a subscription
agreement (the "Subscription Agreement") in the form annexed to the Memorandum,
together with such other documents and instruments as are set forth in the
Memorandum and payment of the required subscription amount all in accordance
with the terms of the Subscription Agreement.
3. Distribution of Proceeds; Closing; Termination of
Placement. The proceeds of the Placement will be held in a segregated
interest-bearing escrow account at a bank selected by the Placement Agent until
such funds are released to the Company at the closing of the Placement (the
"Closing Date"). The Company shall deliver to the Placement Agent on the Closing
Date, on behalf of the Subscribers, the certificates evidencing the Shares and
Warrants against payment therefor, after deducting the amounts set forth in
Section 4 below.
4. Registration Rights. The Company will file by September 5,
1996 a Registration Statement with the SEC for the purpose of registering the
Securities. The investors in the Placement will be granted demand registration
rights on two occasions and "piggy back" registration rights at any time from
the Closing Date and for a period of five years thereafter and on such other
specific terms as the Placement Agent and its counsel deem appropriate. The
Company shall bear all expenses incurred in the preparation and filing of such
registration statements or post-effective amendments thereto (and related state
registrations, to the extent permitted by applicable law) and the furnishing of
copies of the preliminary and final prospectus thereof to the Placement Agent
and such holders of securities, other than expenses of the Placement Agent's
counsel, and other than sales commissions incurred by the then holders with
respect to the sale of such securities.
IV. Compensation of Placement Agent.
1. As compensation for its services rendered as Placement
Agent under this Agreement, the Placement Agent shall receive: (i) a sales
commission equal to 10% of the gross proceeds from the sale of the Units,
payable by deducting the sales commission from such gross
2
<PAGE>
proceeds on the Closing Date; and (ii) a non-accountable expense allowance equal
to 3% of the gross proceeds from the sale of the Units, of which the sum of
$20,000 has already been paid and the balance of which shall be payable upon
Closing.
2. Placement Agent's Units. In addition, on the Closing Date,
the Company will sell to the Placement Agent or its designee five-year warrants
(the "Placement Agent's Warrants") for an aggregate price of $100 for the
purchase of 8 Units at an exercise price of $25,000 per unit (the "Placement
Agent's Units"). Each Placement Agent's Unit shall consist of 25,000 shares of
Common Stock and Warrants to purchase 12,500 shares of the Company's Common
Stock (the "Underlying Warrants"). The Placement Agent's Units and the
securities included therein may be transferable to shareholders, directors,
officers, employees or partners of the Placement Agent.
At any time during the term of the Placement Agent's Warrants,
other than a time when the Warrant Securities (as defined below) are already
covered for sale or resale by an effective and current registration statement
that permits the method of distribution desired by the holders thereof, the
Placement Agent or the then holders of the securities issued upon the exercise
of the Placement Agent's Warrants (collectively, the "Warrant Securities"),
shall have the right to require the Company (i) upon written request of a
majority of the Warrant Securities, to prepare and file with the SEC up to two
new registration statements under the Securities Act (the "Demand Registration
Rights"), covering all or any portion of the Warrant Securities and to use its
best efforts to obtain promptly and maintain the effectiveness thereof for at
least one hundred twenty (120) days, or upon the request of any holder of
Warrant Securities to include the securities included in the Placement Agent's
Units and underlying the Placement Agent's Warrants in any Registration
Statement filed by the Company and (ii) to register or qualify the subject
Warrant Securities for sale in up to ten (10) states identified by the Placement
Agent or such holders. The Company shall bear all expenses incurred in the
preparation and filing of such registration statements or post-effective
amendments thereto (and related state registrations, to the extent permitted by
applicable law) and the furnishing of copies of the preliminary and final
prospectus thereof to the Placement Agent or such holders of Warrant Securities,
other than expenses of the Placement Agent's counsel, and other than sales
commissions incurred by the then holders with respect to the sale of such
securities. Notwithstanding anything contained herein to the contrary, with
respect to Demand Registration Rights, the Company shall only be obligated to
bear all of such expenses with respect to the first Demand Registration Right
requested by a majority of the then holders of the Warrant Securities, provided
that with respect to any second Demand Registration Right, the expenses shall be
borne by the holders of the Warrant Securities included thereunder on a pro-rata
basis with the expenses to be borne by the Company with respect to any
securities included therein on behalf of the investors in the Placement, as
described above, and which pro-rata allocation shall be based on the percentage
of shares (including derivative securities) being registered thereunder.
V. Representations and Warranties of the Company. The Company
represents and warrants to the Placement Agent that:
1. Memorandum. The Company has prepared, or will by the
commencement of the Placement have prepared, the Memorandum, which contains
information, accurate as of the date specified therein, of the kind specified by
applicable statutes and regulations. The
3
<PAGE>
Memorandum, as of its date and at all times subsequent thereto up to and
including the Closing Date, does not and will not include 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 in which they were made, not misleading.
2. Additional Information. The Company has provided, and shall
provide to the Placement Agent, such information, documents and instruments as
may be required under Reg D for an offer made to qualified investors pursuant to
Reg D.
3. Reg D Qualification. The Company has used its best efforts
to ensure that the offer and sale of the Units by the Company has satisfied, and
on the Closing Date will have satisfied, in all material respects, all of the
requirements of Reg D; the Units are not disqualified from the exemption under
Rule 505 contained in Reg D by virtue of the disqualifications contained in Rule
505(b)(2)(iii), except that no representation or warranty is made hereunder by
the Company as to any disqualification based upon Rule 262(b) and (c) of
Regulation A as it may be applied to the Placement Agent.
4. Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, with full power and authority to own or lease and
operate its properties and to conduct its business as described in the
Memorandum and to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. The Company is duly qualified to do
business as a foreign corporation and is in good standing in all jurisdictions
where such qualification is necessary and where failure to so qualify could have
a material adverse effect on the financial condition, results of operations,
business or properties of the Company. The Company has no subsidiaries or
predecessors.
5. Corporate Authorization. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, or other similar laws or arrangements affecting
creditors' rights generally and subject to principles of equity and public
policy considerations, including with respect to indemnification and
contribution for liabilities under the Securities Act and the Securities
Exchange Act of 1934 (the "Exchange Act"). The execution, delivery and
performance of this Agreement by the Company, the consummation by the Company of
the transactions herein contemplated, and the compliance by the Company with the
terms of this Agreement have been duly authorized by all necessary corporate
action and do not and will not, with or without the giving of notice or the
lapse of time, or both: (i) result in any violation of the Certificate of
Incorporation, as amended ("Certificate of Incorporation"), or Amended and
Restated Bylaws ("Bylaws") of the Company; (ii) result in a material breach of
or material conflict with any of the terms or provisions of, or constitute a
default under, or result in the modification or termination of, or result in the
creation or imposition of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company pursuant to any indenture,
mortgage, note, contract, commitment or other agreement or instrument to which
the Company is a party or by which the Company or any of its properties or
assets are or may be bound or affected;
4
<PAGE>
(iii) violate any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its properties or business except for
violations which, individually, or in the aggregate, would not have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company; or (iv) 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.
6. Consents. No authorization, approval, consent, order,
registration, license or permit of any court or governmental agency or body,
other than under the Securities Act, the rules and regulations of the Commission
promulgated pursuant thereto (the "Regulations"), and the rules and regulations
of the state securities laws of the states in which offers or sales will be
made, is required for the valid authorization, issuance, sale and delivery of
the Securities in accordance herewith or the consummation by the Company of the
transactions contemplated by this Agreement.
7. Capitalization. The Company had at the date or dates
indicated in the Memorandum a duly authorized and outstanding capitalization as
set forth in the Memorandum. Based on the assumptions stated in the Memorandum,
the Company will have on the Closing Date the capitalization set forth therein.
Except as set forth in the Memorandum, on the Closing Date, there will be no
options to purchase, warrants, or other rights to subscribe for securities, or
any securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of the Company's capital stock or any such warrants,
convertible securities or obligations. Except as set forth in the Memorandum, no
holder of any of the Company's securities has any rights, "demand," "piggyback"
or otherwise, to have such securities registered under the Securities Act.
8. Material Contracts. The descriptions in the Memorandum of
contracts and other agreements of the Company do not include any untrue
statement of 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 in which they are made, not misleading and present fairly the
information required to be disclosed, and there are no material contracts or
other agreements which have not been so described.
9. Financial Statements. Goldstein Golub Kessler & Company,
P.C. the accountants who have audited the financial statements attached as an
exhibit to the Memorandum, are independent public accountants within the meaning
of the Securities Act and the Regulations. The financial statements and
schedules and the notes thereto incorporated by reference in the Memorandum and
made a part thereof are complete and correctly and fairly present the financial
position of the Company as of the dates thereof, and the results of operations
and cash flows of the Company for the periods indicated therein, all in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved except as otherwise stated in the
Memorandum.
10. Taxes. The Company has filed with the appropriate federal,
state and local governmental agencies, and all foreign countries and political
subdivisions thereof, all tax returns, including franchise tax returns, which
are required to be filed or have duly obtained extensions of
5
<PAGE>
time for the filing thereof and have paid all taxes shown on such returns and
all assessments received by them to the extent that the same have become due;
and the provisions for income taxes payable, if any, shown on the financial
statements included as part of the Memorandum are sufficient for all accrued and
unpaid foreign and domestic taxes, whether or not disputed, and for all periods
to and including the dates of such financial statements. Except as disclosed in
writing to the Placement Agent, the Company has not executed or filed with any
taxing authority, foreign or domestic, any agreement extending the period for
assessment or collection of any income taxes and is not a party to any pending
action or proceeding by any foreign or domestic governmental agency for
assessment or collection of taxes; and no claims for assessment or collection of
taxes have been asserted against the Company.
11. Authorization of Outstanding Shares. The outstanding
shares of Common Stock and outstanding options to purchase shares of Common
Stock have been duly authorized and validly issued. The outstanding shares of
Common Stock are fully paid and non-assessable. The outstanding options to
purchase shares of Common Stock, all as disclosed in the Memorandum, constitute
the valid and binding obligations of the Company, enforceable in accordance with
their terms. None of the outstanding shares of Common Stock or options to
purchase shares of Common Stock has been issued in violation of the preemptive
rights of any shareholder of the Company. None of the holders of the outstanding
shares of Common Stock are subject to personal liability solely by reason of
being such a holder. The authorized shares of Common Stock and outstanding
options to purchase shares of Common Stock and all promissory notes conform to
the descriptions thereof contained in the Memorandum. Except as set forth in the
Memorandum, on the Closing Date, there will be no outstanding options, warrants,
debentures or notes for the purchase of, or other outstanding rights to
purchase, Common Stock or securities convertible into Common Stock.
12. Authorization of Units. The issuance and sale of the Units
and the Placement Agent's Units have been duly authorized and, upon closing of
the Placement and delivery to the Company of the net proceeds therefrom, the
Units, the Placement Agent's Units, Placement Agent's Warrants, the Shares and
the Warrant Securities will be validly issued, fully paid and (with respect to
the shares of Common Stock only) non-assessable, and holders thereof will not be
subject to personal liability solely by reason of being such holders. Except as
described in the Memorandum, the Common Stock is not and will not be subject to
preemptive rights of any shareholder of the Company. The Securities and the
Warrant Securities conform to the descriptions thereof contained in the
Memorandum.
13. Noncontravention. The Company is not in violation of, or
in default under: (i) any term or provision of its Certificate of Incorporation
or Bylaws; (ii) any material term or provision or any financial covenants of any
indenture, mortgage, contract, commitment or other agreement or instrument to
which it is a party or by which it or its property or business is or may be
bound or affected; or (iii) any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any its properties or business
except for violations which, individually or in the aggregate, do not have a
material adverse effect on the financial condition, results of operations,
business or properties of the Company. The Company owns, possesses or has
obtained all governmental and other (including those obtainable from third
parties) licenses, permits, certifications, registrations,
6
<PAGE>
approvals or consents and other authorizations necessary to own or lease, as the
case may be, and to operate its properties, whether tangible or intangible, and
to conduct any of the business or operations of the Company as presently
conducted and all such licenses, permits, certifications, registrations,
approvals, consents and other authorizations are outstanding and in good
standing, and there are no proceedings pending or, to the best knowledge of the
Company, threatened or, to the best of knowledge of the Company, any basis
therefor, seeking to cancel, terminate or limit such licenses, permits,
certifications, registrations, approvals or consents or other authorizations.
14. Litigation. Except as set forth in the Memorandum, there
are no pending actions, suits, proceedings, or arbitrations, and the Company is
not aware of any claims, investigations or inquiries, before any governmental
agency, court or tribunal, domestic or foreign, or before any private
arbitration tribunal against the Company or involving its properties or business
that, if determined adversely to the Company, would, individually or in the
aggregate, result in any materially adverse change in the financial condition,
shareholders' equity, results of operations, properties, business, management,
affairs or business prospects of the Company or that question the validity of
the capital stock of the Company or this Agreement or of any action taken or to
be taken by the Company pursuant to, or in connection with, this Agreement; to
the best knowledge of the Company, there is no basis for any such action, suit,
proceeding, arbitration, claim, investigation or inquiry. There are no
outstanding orders, judgments or decrees of any court, governmental agency or
other tribunal naming the Company and enjoining the Company from taking, or
requiring the Company to take, any action, or to which the Company, its
properties or businesses are bound or subject.
15. Finder's Fees. The Company has not incurred any liability
for any finder's fees or payments in connection with the transaction herein
contemplated, except as specifically provided in this Agreement.
16. Intangibles. As of the date of this Agreement, the Company
owns, possesses, and has the right to use, or has pending applications for the
requisite licenses or other rights to use all trademarks, service marks, service
names, trade names, inventions, product processes and formulations (the
"Intangibles") utilized in the conduct of its business as now conducted or
proposed to be conducted without, to the Company's knowledge, infringing upon or
otherwise acting adversely to the right or claimed right of any person,
corporation or other entity under or with respect to any of the foregoing. The
Company is not obligated or under any liability whatsoever to make any payments
by way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, trademark, service mark, trade name, or other
intangible asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise. The Company has no knowledge of any
conflicting rights which might impair the Company's use of the Intangibles and
has not received any notice of conflict with the asserted rights of others with
respect to the Intangibles that could, singly or in the aggregate, materially
and adversely affect its business as presently conducted, prospects, financial
condition or results of operations, and the Company knows of no basis therefor;
and, to the Company's knowledge, no other persons or entities have infringed
upon or are infringing upon the Intangibles of the Company.
17. No Adverse Change. Since the respective dates as of which
information is
7
<PAGE>
given in the Memorandum and the Company's latest financial statements, the
Company has not incurred any material liability or obligation, direct or
contingent, or entered into any material transaction, whether or not in the
ordinary course of business, and has not sustained any material loss or
interference with its business from fire, storm, explosion, flood or other
casualty, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree; there have not been, and prior to
the Closing Date there will not be, any changes in the capital stock or any
material increases in the long-term debt of the Company or any materially
adverse change in or affecting the general affairs, management, financial
condition, shareholders' equity, results of operations or prospects of the
Company, other than as set forth in the Memorandum.
18. Title to Properties. The Company has good and marketable
title in fee simple to all real property and good title to all personal property
(tangible and intangible) owned by it, free and clear of all security interests,
charges, mortgages, liens, encumbrances and defects, except as are described in
the Memorandum. The leases, licenses or other contracts or instruments under
which the Company leases, holds or is entitled to use any property, real or
personal, are valid, subsisting and enforceable, except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium or other similar
laws or arrangements affecting creditors' rights generally and subject to
principles of equity and public policy considerations. All rentals, royalties or
other payments accruing thereunder that became due prior to the date of this
Agreement have been duly paid, and neither the Company nor any other party is in
default thereunder, and no event has occurred that, with the passage of time or
the giving of notice, or both, would constitute a default thereunder. The
Company is not in violation of any applicable law, ordinance, regulation, order
or requirement relating to its owned or leased properties except for violations
which, individually or in the aggregate, do not have a material adverse effect
on the financial condition, results of operations, business or properties of the
Company, and has not received any notice of an alleged violation. The Company
has adequately insured its properties against loss or damage by fire or other
casualty and maintains, in adequate amounts, such other insurance as is usually
maintained by companies engaged in the same or similar businesses located in its
geographical area.
19. Enforceability of Contracts. Each contract or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and to which
reference is made in the Memorandum has been duly and validly executed, is in
full force and effect in all material respects and is enforceable against the
parties thereto in accordance with its terms, and none of such contracts or
instruments has been assigned by the Company and neither the Company nor any
other party is in default thereunder, and no event has occurred that, with the
lapse of time or the giving of notice, or both, would constitute a default
thereunder. None of the material provisions of such contracts or instruments
violates any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court having jurisdiction over the Company
or any of its assets or businesses except for violations which, individually or
in the aggregate, do not have a material adverse effect on the financial
condition, results of operations, business or properties of the Company.
20. Employee Benefit Plans. Except as set forth in the
Memorandum, the Company has no employee benefit plans (including, without
limitation, profit sharing and welfare
8
<PAGE>
benefit plans) or deferred compensation arrangements that are subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
21. Labor Relations. No labor problem exists with any of the
Company's employees or is imminent that could reasonably be expected to
materially and adversely affect the Company.
22. Foreign Corrupt Practices Act. The Company has not,
directly or indirectly, at any time (i) made any contributions to any candidate
for political office in violation of law or failed to disclose fully any such
contribution, or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments or contributions required or allowed by
applicable law. The Company's internal accounting controls and procedures are
sufficient to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
Any certificate signed by an officer of the Company and
delivered to the Placement Agent or to counsel for the Placement Agent shall be
deemed to be a representation and warranty by the Company to the Placement Agent
as to the matters covered thereby.
VI. Covenants of the Company.
1. Memorandum. The Company will furnish the Placement Agent,
during the Placement, with as many copies of the Memorandum (and any amendments
or supplements thereto) as the Placement Agent may reasonably request. If,
during the Placement, any event occurs as a result of which the Memorandum, as
then amended or supplemented, would include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made in light of the circumstances in which they were made not misleading, or if
it otherwise shall be necessary to amend or supplement the Memorandum to comply
with applicable law, the Company will forthwith notify the Placement Agent
thereof, and furnish to the Placement Agent in such quantities as may be
reasonably requested, an amendment, supplement or amended or supplemented
Memorandum which corrects such statements or omissions or causes the Memorandum
to comply with applicable law. No copies of the Memorandum, or any exhibit
thereto, or any material prepared by the Company in connection with the
Placement will be given, without the prior written permission of the Placement
Agent, by the Company or its counsel or by a principal or agent of the Company
to any person not a party to this Agreement, unless such person is a director or
principal shareholder of, or directly employed by, the Company, or unless
required by law.
2. State Securities Registration. The Company will provide
Placement Agent's counsel with all information which such counsel reasonably
determines to be necessary, and otherwise cooperate with such counsel, to permit
such counsel to take all necessary action and file all necessary forms and
documents in order to qualify or register the Securities for sale under the
securities laws of the states in which offers or sales will be made, such states
to be mutually agreed upon between the Company and the Placement Agent, or to
take any necessary action and file any
9
<PAGE>
necessary forms which are required to obtain an exemption from such
qualification or registration in such jurisdictions. The Company will promptly
advise the Placement Agent:
a. If any securities regulator of any state shall
make a request or suggestion of or to the Company of any
amendment to the Memorandum or any registration materials or
for any additional information, including the nature and
substance thereof; and
b. Of the issuance of a stop order suspending the
qualification of the Securities for sale in any state,
including the initiation or threatening of any proceeding for
such purpose, and the Company will use its reasonable best
efforts to prevent the issuance of such a stop order, or if
such an order shall be issued, to obtain the withdrawal
thereof at the earliest reasonably practicable date.
The Company will provide the Placement Agent with any
additional information, documents and instruments which the Placement Agent's
counsel shall determine to be necessary to comply with the rules, regulations
and judicial and administrative interpretations in those states and
jurisdictions where the Units are to be offered for sale or sold for delivery to
all offerees and purchasers. The Company will file all post-offering forms,
documents or materials and take all other actions required by states in which
the Units have been offered or sold. The Placement Agent will not make offers or
sales of the Units in any jurisdiction in which the Units have not been
qualified or registered, or are not exempt from such qualification or
registration.
3. Use of Proceeds and the Chrysler Debt. The Company will
apply the net proceeds from this offering in the manner set forth in the
Memorandum. Specifically, within fifteen (15) days of the Closing Date, the
Company will use the net proceeds of this offering and, if necessary, available
cash to satisfy the Company's debt to Chrysler Credit Corporation in its
entirety and obtain a release of the collateral.
4. Reg D Compliance. The Company will use its reasonable best
efforts to determine whether a Subscriber is an "Accredited Investor" or
otherwise qualified, and the Company will comply in all respects with the terms
and conditions of Reg D and applicable state securities laws with respect to the
offering and the sale of the Units to qualified investors.
VII. Representations, Warranties and Covenants of the Placement Agent.
The Placement Agent represents, warrants and covenants to the Company that:
1. Duly Registered. The Placement Agent is duly registered,
pursuant to the applicable provisions of the Exchange Act, as a dealer, and is a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD"), and is duly registered as a broker-dealer in such states as the
Placement Agent is required to be registered in order to complete the Placement
contemplated by this Agreement and the Memorandum. In connection with the
Placement, the Placement Agent shall have the right to form a syndicate of
selected dealers who will assist it in the Placement. Any firm with which the
Placement Agent associates will be (i) a fully registered broker-dealer and a
member of the NASD or (ii) a foreign broker-dealer and/or a member of a national
10
<PAGE>
stock exchange of its country of origin who is lawfully registered or licensed
to act in such jurisdiction.
2. No General Solicitation or Advertising. The Placement Agent
has not and will not offer or sell the Units by means of general solicitation or
general advertising.
3. Furnish Memoranda. A reasonable time prior to the Closing
Date, the Placement Agent will furnish to each offeree of the Units a copy of
the Memorandum, each supplement or amendment thereto, the Subscription Agreement
and Confidential Subscriber Questionnaire (the "Subscription Documents").
Notwithstanding the foregoing, the delivery of the Memorandum shall not
constitute an offer to sell the Units to any person. Such sale may be made only
upon acceptance by the Company of a Subscriber's subscription, after a
determination that the Subscriber satisfies all of the applicable requirements.
4. Reg D Compliance. The Placement Agent is not disqualified
from participation in the Placement by reason of Rules 262(b) and (c) of
Regulation A and Reg D. The Placement Agent will not conduct the Placement
contrary to any of the provisions of Reg D or corresponding state statutes or
regulations.
5. Blue Sky Compliance. The Placement Agent will solicit
purchasers of the Units only in those jurisdictions where such solicitation
could and can be made in and which it is so qualified to act and will conduct
the Placement in such jurisdictions in full compliance with all applicable state
statutes and regulations.
6. Authorization. This Agreement has been duly authorized,
executed and delivered by the Placement Agent and is enforceable in accordance
with its 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 herein may be limited by federal or state
securities laws or public policy underlying such laws.
7. Litigation. There are no pending actions, suits,
proceedings, or arbitrations, and the Placement Agent is not aware of any claims
investigations or inquiries, before any governmental agency, court or tribunal,
domestic or foreign, or before any private arbitration tribunal, against or
involving the Placement Agent or its business that question the validity of this
Agreement or of any action taken or to be taken by the Placement Agent pursuant
to or in connection with this Agreement.
VIII. Conditions to Obligations.
1. Conditions to Placement Agent's Obligations. The
obligations of the Placement Agent hereunder will be subject to the accuracy of
the representations and warranties of the Company herein contained as of the
date hereof and as of the Closing Date, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
11
<PAGE>
a. Due Qualification or Exemption. (A) The
Placement contemplated by this Agreement will become qualified
or be exempt from qualification under the securities laws of
the several states pursuant to Subsection 6(b) above not later
than the Closing Date, and (B) at the Closing Date, no stop
order suspending the sale of the Units shall have been issued,
and no proceeding for that purpose shall have been initiated
or threatened;
b. No Material Misstatements; Satisfactory
Memorandum. (A) The Placement Agent will not have notified the
Company that the Blue Sky qualification materials or the
Memorandum, or any amendment or supplement thereto, contains
an untrue statement of a fact which in its opinion is
material, or omits to state a fact, which in its opinion is
material and is required to be stated therein, or is necessary
to make the statements therein not misleading, and (B) the
Memorandum shall be reasonably satisfactory in form and in
substance to the Placement Agent and its legal and accounting
advisors;
c. Compliance with Agreements. The Company will
have complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior
to the Closing Date;
d. Corporate Action. The Company will have taken
all necessary corporate action, including, without limitation,
obtaining the approval of the Company's board of directors for
the execution and delivery of this Agreement, the Securities,
the Placement Agent's Units and the Warrant Securities and the
performance by the Company of its obligations hereunder and
thereunder, if applicable, and the consummation of the
Placement;
e. Certificate of President. At the Closing Date,
the Company will have delivered a certificate of its President
as to the conditions set forth in this Subsection 8(a).
f. Opinion of Counsel. On the Closing Date, the
Placement Agent will have received from the Company's counsel,
Snow Becker Krauss P.C. ("Company Counsel"), a signed opinion,
reasonably satisfactory to Placement Agent's counsel,
substantially to the effect of Exhibit A attached hereto.
In rendering its opinion, Company Counsel may
rely upon (1) opinions of counsel reasonably acceptable to
Placement Agent's counsel with respect to matters relating to
the laws of any jurisdiction other than New York and federal
law or matters to which Company Counsel was not significantly
involved, (2) the certificates of government officials and
officers of the Company as to matters of fact, (3) the
genuineness of all signatures, and (4) the authenticity of the
books and records of the Company and such other qualifications
and conditions consistent with the Company Counsel's opinion
practices, provided that Company Counsel shall state that they
have no reason to believe, and do not believe, that they are
not justified in relying upon any
12
<PAGE>
of the foregoing. It is agreed and understood that the
Placement Agent's requirements for the opinion of Company
Counsel, and Company Counsel's ability to render such opinion,
may be modified as a result of due diligence investigations in
connection with the Placement. Notwithstanding the foregoing,
it is further agreed and understood that a condition precedent
to the Placement Agent's obligations hereunder shall be
receipt by the Placement Agent of a satisfactory opinion of
Company Counsel. Nothing herein shall be construed as a waiver
of the Placement Agent's right to require further or
additional opinions in connection with a public offering of
the Company's securities.
g. Due Diligence. Due diligence satisfactory to
the Placement Agent and its legal and accounting advisors.
h. Representations and Warranties. The
representations and warranties of the Company remain accurate
and in full force and effect.
2. Conditions to the Company's Obligations. The obligations of
the Company hereunder will be subject to the accuracy of the representations,
warranties and covenants of the Placement Agent contained herein as of the date
hereof and as of the Closing Date, to the performance by the Placement Agent of
its obligations hereunder and to the following additional conditions:
a. Absence of Certain Events. No stop order or
other judicial or administrative action suspending the sale of
the Units will have been issued, and no proceeding for that
purpose will have been initiated or threatened;
b. No Material Misstatements. The Company will not
have notified the Placement Agent that the Blue Sky
qualification materials, or the Memorandum, or any amendment
or supplement thereto, contains an untrue statement of a fact,
which in its opinion is material, or omits to state a fact,
which in its opinion is material and is required to be stated
therein or is necessary to make the statements therein not
misleading, in each case only with respect to information
contained therein concerning the Placement Agent;
c. Compliance with Agreements. The Placement
Agent will have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date; and
d. Corporate Action. The Placement Agent will have
taken all necessary corporate action, including, without
limitation, obtaining the approval of the Placement Agent's
board of directors for the execution and delivery of this
Agreement and the performance by the Placement Agent of its
obligations hereunder and the consummation of the Placement.
e. Registration. The Placement Agent will
continue to be duly registered
13
<PAGE>
as a member in good standing of the NASD and as a
broker-dealer in states required for the Placement.
f. Representations and Warranties. The
representations and warranties of the Placement Agent remain
accurate and in full force and effect.
IX. Expenses of Sale. The Company will pay all of its expenses in
addition to those provided in Section 4 herein, incident to the proposed sale of
Units, whether or not the Placement is consummated, including, without
limitation, (a) the fees, disbursements and expenses of its counsel and
accountants, (b) all fees and expenses of registering or qualifying the Units
for offer and sale in the applicable states, or obtaining exemptions therefrom,
and (c) all other expenses relating to the offering of the Units. The Placement
Agent shall be responsible for the fees, disbursements and expenses of its
counsel with the exception of the fees and expenses of the Placement Agent's
counsel in connection with the registering and qualifying of the Units in such
jurisdictions as the Placement Agent deems appropriate. If the Placement is not
completed because (i) of any reason solely within the control of the Company or
its management, (ii) the Company unilaterally withdraws the Placement from the
Placement Agent, or (iii) of any material discrepancy in any representation made
to the Placement Agent or the failure of the Company to meet any of its material
obligations under this Agreement, then the Company will be obligated to
reimburse the Placement Agent for its actual costs, expenses and legal fees
incurred in connection herewith (which amount shall include the $20,000 initial
payment). If the Placement is not completed for reasons solely within the
control of the Placement Agent, then the Company will only be responsible for
the Placement Agent's actual expenses. It is understood and agreed by the
parties hereto that any expenses incurred by the Placement Agent will be deemed
to be reasonable and unobjectionable upon demonstration by the Placement Agent
that such expenses were incurred, directly or indirectly, in connection with the
proposed transaction and/or relationship of the parties hereto, as described
herein.
X. Indemnification and Contribution.
1. Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Placement Agent and each person, if any, who
controls the Placement Agent within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which the Placement Agent or such controlling person may become
subject, under the Securities Act or otherwise, to the extent and only to the
extent such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Memorandum, or (B) in
any Blue Sky Application (as hereinafter defined) or other document executed by
the Company specifically for that purpose or based upon false or misleading
written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Units under the securities
laws thereof (any such application, document or information being hereinafter
called a "Blue Sky Application"), (ii) the omission or alleged omission to state
in the Memorandum or in any Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Memorandum or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary in order to make the
14
<PAGE>
statements therein, in the light of the circumstances under which they were
made, not misleading; and will reimburse the Placement Agent and each such
controlling person for any legal or other expenses reasonably incurred by the
Placement Agent or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent or Blue Sky counsel specifically for use in the
preparation of the Memorandum or any such Blue Sky Application.
2. Indemnification by the Placement Agent. The Placement Agent
agrees to indemnify and hold harmless the Company, its directors and officers
and each person, if any, who controls the Company within the meaning of the
Securities Act and the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such controlling person
may become subject, under the Securities Act or otherwise to the extent such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Memorandum, or (B) in any Blue Sky
Application, or (ii) the omission or alleged omission to state in the Memorandum
or in any Blue Sky Application a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) any untrue
statement or alleged untrue statement of a material fact contained in the
Memorandum, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; in each case to the extent but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by the Placement Agent or Blue Sky counsel specifically for use in the
preparation of the Memorandum or any such Blue Sky Application.
3. Procedure. Promptly after receipt by an indemnified party
under this Section 10 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 10, notify in writing the indemnifying
party of the commencement thereof; and the omission so to notify the
indemnifying party will relieve it from any liability under this Section 10 as
to the particular item for which indemnification is then being sought, but not
from any other liability which it may have to any indemnified party. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent that it may wish, jointly
with any other indemnifying party, similarly notified, to assume the defense
thereof, with counsel who shall be to the reasonable satisfaction of such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. Any such indemnifying party shall not be liable to any
such indemnified party on account of any settlement of any claim or action
effected without the consent of such indemnifying party.
15
<PAGE>
4. Contribution. If the indemnification provided for in this
Section 10 is unavailable to any indemnified party with respect to any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, will
contribute to the amount paid or payable by such indemnified party, as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand, and the Placement Agent on the other hand, from the offering of
the Units or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand, and of the Placement Agent on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand, and the Placement Agent on the other hand, shall be deemed to be in
the same proportion as the total proceeds from the Placement (net of sales
commissions and non-accountable expense allowance, but before deducting
expenses) received by the Company relative to the commissions and
non-accountable expense allowance received by the Placement Agent. The relative
fault of the Company on the one hand, and the Placement Agent on the other hand,
will be determined with reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the Company or the Placement Agent, and
its relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The amount payable by a party as a result
of the losses, claims, damages, liabilities or expenses referred to above will
be deemed to include, subject to the limitations set forth in Subsection 10(e)
below, any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
5. Equitable Considerations. The Company and the Placement
Agent agree that it would not be just and equitable if contribution pursuant to
this Section 10 were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in the immediately preceding paragraph. No person committing
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution or indemnification from any
person not committing such fraudulent misrepresentation.
XI. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements of the Company and of the Placement
Agent herein will survive the delivery and execution hereof and the closings
hereunder, and shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Placement Agent or any person who
controls the Placement Agent within the meaning of the Securities Act, or by the
Company or any person who controls the Company within the meaning of the
Securities Act, and will survive delivery of the securities constituting the
Units hereunder and any termination of this Agreement.
16
<PAGE>
XII. Termination. Either the Placement Agent or the Company will have
the right to terminate this Agreement by giving written notice as herein
specified, at any time, at or prior to the Closing Date:
a. If the other shall have failed, refused, or been unable,
at or prior to the date of termination of this Agreement, to perform
any of its respective obligations hereunder;
b. If any other condition to its obligations hereunder is
not fulfilled; or
c. If there has occurred an event materially or adversely
affecting the value of the Units or any of the Securities.
If the Placement Agent or the Company elects to terminate this
Agreement pursuant to Subsections (i), (ii) or (iii) hereof, notice will be
provided to the non-terminating party promptly by telephone, telecopier or
telegram, and such notification will be confirmed by written notice as provided
for in Section 13 below.
XIII. Notices. Any notice hereunder shall be in writing and shall be
effective when delivered, or mailed by certified or registered mail, postage
prepaid, return receipt requested, to the appropriate party or parties, at the
following addresses: if to the Placement Agent, to Barber & Bronson
Incorporated, 2101 West Commercial Boulevard, Fort Lauderdale, Florida 33309,
Attention: Mr. Steven N. Bronson; with a copy to Broad and Cassel, Miami Center,
201 South Biscayne Boulevard, Suite 3000, Miami, Florida 33131, Attention:
William C. Phillippi, P.A.; if to the Company, CPI Aerostructures, Inc., 200A
Executive Drive, Edgewood, New York 11717, Attention: Mr. Arthur August,
President; with a copy to Snow Becker Krauss P.C., 605 Third Avenue, New York,
New York 10158, Attention: Elliot H. Lutzker, Esquire; or, in each case, to such
other address as the parties may hereinafter designate by like notice.
XIV. Parties. This Agreement will inure to the benefit of and be
binding upon the Placement Agent, the Company and their respective successors
and assigns. This Agreement is intended to be, and is for the sole and exclusive
benefit of the parties hereto and the persons described in Subsections 10(a) and
10(b) hereof, and their respective successors and assigns, and for the benefit
of no other person, and no other person will have any legal or equitable right,
remedy or claim under, or in respect of this Agreement and the parties hereto
may not assign their rights or obligations hereunder. No purchaser of any of the
Units will be construed as successor or assign merely by reason of such
purchase.
XV. Amendment and/or Modification. Neither this Agreement, nor any term
or provision hereof, may be changed, waived, discharged, amended, modified or
terminated orally, or in any manner other than by an instrument in writing
signed by each of the parties hereto.
XVI. Further Assurances. Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
17
<PAGE>
XVII. Validity. In case any term of this Agreement will be held
invalid, illegal or unenforceable, in whole or in part, the validity of any of
the other terms of this Agreement will not in any way be affected thereby.
XVIII. Non-Waiver. The failure of any party hereto to insist upon
strict performance of any of the covenants and agreements herein contained, or
to exercise any option or right herein conferred in any one or more instances,
will not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, and the same will be and remain
in full force and effect.
XIX. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the entire subject matter hereof,
and there are no representations, inducements, promises or agreements, oral or
otherwise, not embodied herein. Any and all prior discussions, negotiations,
commitments and understanding relating thereto are superseded hereby. There are
no conditions precedent to the effectiveness of this Agreement other than as
stated herein, and there are no related collateral agreements existing between
the parties that are not referred to herein.
XX. Counterparts. This Agreement may be executed in counterparts and
each of such counterparts will for all purposes be deemed to be an original, and
such counterparts will together constitute one and the same instrument.
XXI. Law. This Agreement will be deemed to have been made and delivered
in Miami, Florida, and will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of Florida, without application of the principles of conflicts of law. The
Company (a) agrees that any legal suit, action or proceeding arising out of or
relating to this Agreement will be instituted exclusively in the appropriate
state court in Dade County, Florida, or in the United States District Court for
the Southern District of Florida; (b) waives any objection which the Company may
have now or hereafter to the venue of any such suit, action or proceeding, and
(c) irrevocably consents to the jurisdiction of the state courts of the State of
Florida in Dade County and the United States District Court for the Southern
District of Florida in any such suit, action or proceeding. The Company further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the state courts of Dade
County, Florida, or in the United States District Court for the Southern
District of Florida and agrees that service of process upon the Company mailed
by certified mail to the Company's address will be deemed in every respect
effective service of process upon the Company in any suit, action or proceeding.
18
<PAGE>
If the foregoing correctly sets forth our understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
will constitute a binding agreement between us.
CPI AEROSTRUCTURES, INC., a New York
corporation
By:___________________________________
Arthur August, President
CONFIRMED and ACCEPTED, this _____ day of May, 1996 by the undersigned
authorized representative.
BARBER & BRONSON INCORPORATED, a
Florida corporation
By:_______________________________
Steven N. Bronson, President
19
<PAGE>
EXHIBIT A
OPINION OF COMPANY COUNSEL
1. The Company has been duly organized, is validly existing as a
corporation under the laws of the State of New York and is in good standing
under the laws of its jurisdiction of incorporation.
2. The Company is registered or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the nature of
the activities conducted by it or the character of the assets owned or leased by
it makes such registration or qualification necessary, except for such
jurisdictions where the failure to so register or qualify in such jurisdiction
has not and will not have a material adverse effect on the condition, financial
or otherwise, prospects, properties, business, net worth or results of operation
of the Company.
3. The Company has full corporate power and authority to own or lease
its properties and conduct its business as presently conducted and as described
in the Memorandum. To such counsel's knowledge1, the Company does not own,
directly or indirectly, any shares of stock or any other securities of any
corporation, or have any equity interest in any firm, partnership, joint
venture, association or other entity.
4. The Company has full corporate power and authority to execute,
deliver and perform the Financial Consulting Agreement, Common Stock Purchase
Warrant, Placement Agreement, Warrants, and the Placement Agent's Warrants
(collectively, the "Transaction Documents"), and to consummate the transactions
provided for therein. The execution and delivery of the Transaction Documents by
the Company, the performance of its obligations thereunder, the consummation by
the Company of the transactions contemplated thereby and the Company's
compliance with the terms of the Transaction Documents has been duly authorized
by all necessary corporate action on the part of the Company. The Transaction
Documents have been duly executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except to the extent that (i)
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general equitable principles, and (ii) enforceability of the
indemnification and contribution provisions set forth in the Placement Agreement
may be limited by federal or state securities laws or public policy underlying
such laws.
5. None of (i) the Company's issuance and sale of the Units, Shares,
Warrants, the
- --------
1 Knowledge = actual current recollection of those lawyers in the firm
who have given substantive attention to the Offering or to the client's
matters. This definition should be included in the opinion.
A-1
<PAGE>
Placement Agent's Warrants, and the shares of Common Stock included in the
Placement Agent's Units and issuable upon the exercise of the Warrants and
Placement Agent's Warrants (collectively, the "Securities"), and (ii) the
execution and delivery of the Transaction Documents, performance of the
Company's obligations thereunder, consummation of the transactions contemplated
therein or the conduct by the Company of its business as described in the
Memorandum, conflicts with, or will conflict with, results in, or will result
in, any breach or violation of any of the terms or provisions of, constitutes,
or will constitute, a default under, or results in, or will result in, the
creation of any lien, charge, claim, encumbrance or security interest of any
kind or nature whatsoever upon any properties of the Company pursuant to (A) the
Certificate of Incorporation or Bylaws of the Company, (B) to such counsel's
knowledge after discussion with the Company's officers, any note, contract,
commitment, indenture, deed of trust, mortgage, voting trust agreement,
shareholders' agreement, license or other agreement or instrument to which the
Company is a party, by which it is bound or to which any of its properties may
be subject, or (C) any federal, state or local law, rule or regulation
applicable to the Company or any judgment, order or decree of any court,
arbitrator, regulatory, administrative or other governmental agency or body
having jurisdiction over the Company or any of its properties or business.
6. No consent, approval, authorization or order of, and no registration
or filing with, any third party or any court, regulatory body, administrative
agency or other governmental agency or official (other than pursuant to the
Securities Act, the Regulations and applicable state securities or blue sky
laws, as to which such counsel need not express an opinion) is required for the
valid authorization, issuance, sale and delivery of the Securities pursuant to
the Transaction Documents, for the execution, delivery and performance by the
Company of its obligations under the Transaction Documents and for the
consummation by the Company of the transactions contemplated by the Transaction
Documents.
7. There are no laws, rules or regulations, judgments, orders or
decrees, required to be described in the Memorandum other than those described
in the Memorandum. The statements in the Memorandum, insofar as such statements
constitute a summary of laws, rules, regulations or legal conclusions, are
accurate summaries and fairly and correctly present in all material respects the
information called for in the Securities Act with respect to such laws, rules,
regulations or conclusions.
8. There are no agreements, contracts or other documents or instruments
required to be described in the Memorandum or required to be attached as an
exhibit to the Memorandum other than those described in the Memorandum and
attached as exhibits thereto.
9. Except as described in the Memorandum, to such counsel's knowledge,
there are no claims, payments, issuances, arrangements or understandings for
services in the nature of a finder's or origination fee with respect to the
Units.
10. The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
A-2
<PAGE>
11. No transfer tax, stamp duty or other tax, levy, impost, deduction,
charge or withholding is payable by or on behalf of the Placement Agent in
connection with (i) the issuance by the Company of the Securities, (ii) the
purchase by the Placement Agent of the Placement Agent's Units or the purchase
of the shares of Common Stock by the Placement Agent (or its permitted
assignees) upon receipt of the Placement Agent's Units and/or the exercise of
the Placement Agent's Warrant, and (iii) the execution, delivery or performance
by the Company of any of its obligations under the Transaction Documents or the
certificates and instruments representing the Securities.
12. All of the Company's material contracts, agreements, documents or
instruments have been duly and validly authorized, executed and delivered by the
Company and constitute legal, valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general equitable principles. None
of the provisions of any such agreements, contracts, documents or instruments
violates any existing applicable law, rule, or regulation, or any judgment,
order or decree or any governmental agency or court having jurisdiction over the
Company or its properties or business, except where such violation has not and
will not have a material adverse effect on the condition, financial or
otherwise, prospects, properties, business, net worth or results of operation of
the Company ("Material Adverse Effect").
13. Except as described in the Memorandum, the Company is not in
violation of, breach of, or default under (i) its Certificate of Incorporation
or Bylaws, (ii) to such counsel's knowledge after discussion with the Company's
officers, any material license, contract, indenture, mortgage, installment
contract, deed of trust, lease, voting trust agreement, stockholders agreement,
note, loan or credit agreement, or other agreement or instrument to which the
Company is a party, by which the Company is bound or to which any of its
properties is subject, or (iii) any law, rule or regulation applicable to the
Company or any of its properties, or any judgment, decree or order of any
arbitrator, court, regulatory, administrative or other governmental agency or
body having jurisdiction over the Company or any of its properties or business.
14. Except for such licenses, permits, certificates, registrations,
approvals, consents and exemptions, the absence of which would not have a
Material Adverse Effect on the Company or its business and properties, to such
counsel's knowledge after due inquiry, the Company holds all licenses, permits,
certifications, registrations, approvals, consents and franchises from all
governmental or regulatory authorities, officials or agencies necessary to own
or lease and operate its properties and to conduct its business as described in
the Memorandum.
15. There are no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries pending, or, to such counsel's knowledge after
discussion with the Company's officers, threatened against or involving the
Company or any of its properties (i) that are required to be disclosed in the
Memorandum and are not so disclosed, (ii) which question the validity of the
capital stock of the Company, (iii) which question the validity, performance or
enforceability of the Placement Agreement or any action taken or to be taken by
the Company pursuant thereto or in connection therewith, or (iv) which, in such
counsel's opinion, if adversely determined, would have a Material Adverse
Effect.
A-3
<PAGE>
16. Except as disclosed in the Memorandum (i) there is no claim or
action by any person pertaining to, or proceeding pending or, to such counsel's
knowledge, threatened, that challenges the ownership or use by the Company of
any patent, trademark, service mark, service name and trade name used by the
Company in the conduct of its business; and (ii) the Company owns and has full
right, title and interest in and to, or has the valid and exclusive right to,
all trademarks, service marks, trade names and copyrights necessary in the
conduct of its business as presently conducted, or as proposed to be conducted
as described in the Memorandum, except where such failure has not and will not
have a Material Adverse Effect.
17. The Company has the capitalization set forth in the Memorandum. All
of the issued and outstanding shares of Common Stock of the Company have been
duly authorized, validly issued and are fully paid and nonassessable, and (i)
the holders thereof have no rights of rescission with respect thereto and are
not subject to personal liability solely by reason of being such holders, and
(ii) none of such securities were issued in violation of any preemptive or
similar right. Except as described in the Memorandum, the Company is not a party
to or bound by any outstanding options, warrants or similar rights to subscribe
for, or contractual rights or obligations to issue, sell, transfer or acquire,
any of the capital stock of the Company or any securities convertible into or
exchangeable for any of the capital stock of the Company. All issuances of
capital stock by the Company prior to the date hereof which were not made
pursuant to the registration requirements of the Securities Act were not subject
to such requirements and were made in full compliance with all applicable
federal or state laws, rules and regulations.
18. The documents representing the Shares, Warrants and Placement
Agent's Warrants are in due and proper form. The Securities conform to the
descriptions thereof set forth in the Memorandum.
19. Except as described in the Memorandum or in the Company's reports
filed with the Commission, no person (i) has the right to require the Company to
file any registration statement or, if filed, to include any security in any
registration statement filed by the Company, or (ii) holds any anti-dilution
rights with respect to any securities of the Company.
20. Each of (i) the Shares and Warrants to be sold by the Company and
the Placement Agent, (ii) the shares of Common Stock to be sold in connection
with the exercise of the Warrants, (iii) the Placement Agent's Warrants to be
sold by the Company under the Placement Agreement, (iv) the shares of Common
Stock to be issued or sold by the Company in connection with the Placement
Agent's Units and upon the exercise of the Placement Agent's Warrant have been
duly authorized, are not and will not be in violation of any pre-emptive rights
or any similar rights, and, when issued, paid for and delivered in accordance
with their terms, will be validly issued, fully paid and nonassessable. The
holders thereof will not be subject to any restriction on the voting or transfer
thereof or to any personal liability solely by reason of being such holders, and
the issuance thereof will not be in violation of any preemptive or similar
right.
21. All corporate action required to be taken for the authorization,
issue and sale of (i) the Units, (ii) the Shares, (iii) the Warrants, (iv) the
Placement Agent's Warrants, and (v) the shares of Common Stock issuable upon the
exercise of the Warrants, issuance of the Placement Agent's Units
A-4
<PAGE>
and exercise of the Placement Agent's Warrants, and for the reservation of the
shares of Common Stock required to be reserved, have been duly and validly
taken.
22. The shares of Common Stock issuable upon exercise of the Warrants,
issuance of the Placement Agent's Units and exercise of the Placement Agent's
Warrants have been duly reserved for issuance.
23. The Placement Agent will, upon the issuance and delivery of the
shares of Common Stock pursuant to the Placement Agent's Units and Placement
Agent's Warrants against payment therefor pursuant to the Placement Agreement
and the Placement Agent's Warrants, acquire good and marketable title to the
shares of Common Stock, free and clear of any and all liens, charges, claims,
encumbrances, pledges, security interest, defects or other restrictions or
equities of any kind or nature whatsoever (except those arising out of acts or
claims against the Placement Agent).
24. Counsel has participated in conferences with officers and other
representatives of the Company, representatives of the Company's accountants and
representatives of the Placement Agent, at which the contents of the Memorandum
and related matters were discussed. Although counsel is not passing upon and
does not assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Memorandum, on the basis of the foregoing, no facts
or circumstances have come to its attention which lead it to believe that, on
the Closing Date, the Memorandum contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (other than the
financial statements and other financial and statistical data included therein,
as to which such counsel need not express an opinion).
A-5
<PAGE>
EXHIBIT 10.2
FINANCIAL CONSULTING AGREEMENT
THIS FINANCIAL CONSULTING AGREEMENT, made as of this 3rd day of April,
1996, is by and between CPI Aerostructures, Inc., a New York corporation (the
"Company"), with its principal place of business at 200 A Executive Drive,
Edgewood, New York 11717, and Barber & Bronson Incorporated, a Florida
corporation ("B&B"), having its principal place of business at 2101 West
Commercial Boulevard, Suite 1500, Fort Lauderdale, Florida 33309.
R E C I T A L S:
A. The Company is a public company with a class of equity securities
publicly traded, and desires to retain B&B to provide certain financial
consulting services.
B. B&B desires to provide certain financial consulting services to the
Company in accordance with the terms and conditions contained hereinafter.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto hereby agree as follows:
1. Consulting Services. During the term of this Agreement, B&B is
hereby retained by the Company to provide financial consulting services to the
Company, as said services relate to corporate finance matters. B&B shall provide
such financial consulting services as reasonably requested by the Company during
the term of this Agreement, provided that nothing hereunder shall require B&B to
devote a minimum number of hours per calendar month toward the performance of
services hereunder. Such services shall include, but not be limited to, advice
and assistance regarding mergers, acquisitions, consolidations, reorganizations,
recapitalization, business combinations or other transactions pursuant to which
the Company acquires, is acquired by, or combines with another entity. Unless
otherwise agreed to by B&B, all services hereunder shall be performed by B&B, in
its sole discretion, at its principal place of business or other offices.
Notwithstanding anything contained herein to the contrary, the services to be
performed by B&B hereunder may be performed by any employee or consultant to
B&B.
2. Term. The term of this Agreement shall be for two years commencing
as of the date first written above and terminating one day prior to the 2nd
anniversary hereof. Thereafter, this Agreement shall be renewed for subsequent
one year terms upon mutual agreement of the parties. Notwithstanding anything
contained herein to the contrary, this Agreement will terminate on December 31,
1996 in the event the private placement (the "Private Placement") contemplated
by the letter of intent dated March 5, 1996 between B&B and the Company has not
closed by such date.
A-1
<PAGE>
3. Compensation.
(a) In consideration for the performance of services
hereunder, the Company hereby agrees to pay B&B the aggregate sum of $3,000 per
month during the term of this Agreement. The initial monthly payment shall be
made as of the date hereof, and each subsequent monthly payment shall be due and
payable on each successive monthly anniversary of such date. The Company agrees
to pay on a pre-approval basis all out-of-pocket expenses incurred by B&B in
connection with such services to be rendered hereunder. B&B may, from time to
time, deem it to be in the best interests of the Company to retain an outside
consultant in connection with certain specific acquisitions or proposed
transactions. In such event, the Company agrees to pay any and all fees and
expenses of such consultant on a pre-approval basis.
(b) In addition, and in consideration of the payment of $100,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company hereby grants B&B five (5) year warrants, which
warrants may be assigned to shareholders, directors, officers, employees or
partners of B&B or any successor, to purchase an aggregate 300,000 shares of the
Company's Common Stock, exercisable at $1.00 per share. The warrants shall be
immediately exercisable and shall be in substantially the form attached hereto
as Exhibit A, and incorporated herein by reference. Such warrants shall be
delivered to Broad and Cassel, counsel to B&B, 201 South Biscayne Boulevard,
Suite 3000, Miami, Florida 33131. The warrants shall be held in escrow by Broad
and Cassel pursuant to the terms of an escrow agreement between B&B, the Company
and Broad and Cassel entered into simultaneously with this Agreement and
attached hereto as Exhibit B.
At any time during the term of these warrants, the then
holders (the "Holders") of a majority of the warrants issued under this
Agreement, and/or the shares of Common Stock which were issued upon exercise
thereof, shall have the right upon written notice to the Company and on at least
two occasions to demand registration of the shares of Common Stock underlying
the warrants or the shares of Common Stock which previously were issued upon
exercise thereof (the "Demand Registration Rights"). Upon such notice, the
Company shall use its best efforts to prepare and file with the Securities and
Exchange Commission (the "SEC"), at the Company's sole cost and expense with
respect to the exercise of the first Demand Registration Rights, a registration
statement to permit the public sale of such shares of Common Stock. The Company
will use its best efforts to cause said registration statement to be declared
effective by the SEC as soon as possible and shall continue to use its best
efforts to cause such registration statement to be deemed current for at least
one hundred twenty (120) days after the effective date thereof. Notwithstanding
anything contained herein to the contrary, the Holders shall have the right to
demand registration of the afore-described shares on two separate occasions;
with each of such demand registration rights being deemed satisfied hereunder
when said registration statement relating thereto is declared effective by the
SEC, provided the other provisions hereunder are complied with by the Company.
In addition, if at any time commencing after the date hereof and
expiring five years thereafter, the Company proposes to register any of its
securities under the Securities Act of 1933, as amended (other than in
connection with a merger or pursuant to Form S-8, S-4 or comparable registration
statement), it will give written notice by registered mail, at least twenty (20)
days prior to the filing of each registration statement, to the Holders of its
intention to do so. If such Holders
A-2
<PAGE>
notify the Company within twenty (20) days after receipt of any such notice of
its or their desire to include any of the afore-described shares in such
proposed registration statement, the Company shall afford such Holders the
opportunity to have any such shares registered under such registration
statement, at the Company's sole cost and expense. The Company shall also use
its best efforts to cause the sale of such shares to be registered in up to ten
(10) states identified by the Holders, at the Company's sole cost and expense.
The Company shall bear all expenses, incurred in the preparation and
filing of such registration statements or post-effective amendment (and related
state registrations, to the extent permitted by applicable law) and the
furnishing of copies of the preliminary and final prospectus thereof to the
Holders, other than fees and expenses of Holders' counsel, and other than sales
commissions incurred by the then holders with respect to the sale of such
securities. Notwithstanding anything contained herein to the contrary, with
respect to Demand Registration Rights, the Company shall only be obligated to
bear all of such expenses with respect to the first Demand Registration Right
requested by a majority of the Holders, provided that with respect to any second
Demand Registration Right, the expenses shall be borne by the Holders included
thereunder on a pro-rata basis with the expenses to be borne by the Company with
respect to any securities included therein on behalf of the investors in the
Private Placement, as described above, and which pro-rata allocation shall be
based on the percentage of shares (including those shares underlying derivative
securities) being registered thereunder.
In the event Placement Agent Warrants are issued to B&B in
connection with the Private Placement, any demand registration rights with
respect to the securities issued upon exercise of the Placement Agent's Warrants
and upon exercise of the Warrants included in the Placement Agent's Warrants
(collectively, the "Warrant Securities") will be deemed to include the warrants
issuable pursuant to this Agreement and shares of common stock underlying the
warrants, and to the extent said demand registration rights are exercised, the
demand registration rights provided under this Section 3 shall also be deemed
exercised. In addition, any demand registration rights with respect to the
afore-described warrants and shares of Common Stock underlying the warrants,
will be deemed to include the Warrant Securities and to the extent said demand
registration rights under this Section 3 shall be exercised, the demand
registration rights provided for in the Placement Agent Warrants shall also be
deemed exercised.
4. Right of First Refusal. For a period of three years from the date of
this Agreement, the Company hereby agrees to afford to B&B the right to act as
the Company's exclusive managing underwriter or placement agent, as the case may
be, in any public offering(s) and private placement(s) to be effectuated by or
on behalf of the Company, on such terms no less favorable than any other
underwriter, broker-dealer, or placement agent, and with such compensation to be
determined on a deal-by-deal basis. Notwithstanding anything contained in this
Section 4 to the contrary, the foregoing right of first refusal shall not be
applicable to "Institutional Debt" financing arranged solely by the Company. For
purposes of the foregoing sentence, "Institutional Debt" shall mean indebtedness
for money borrowed from banks, or other traditional long-term institutional
lenders, such as insurance companies and pension funds. In the event B&B
determines not to so participate in any such financing and the terms thereof are
then subsequently changed, the Company shall afford B&B the opportunity to act
as the exclusive managing underwriter or placement agent,
A-3
<PAGE>
as the case may be, in any such financing as modified. Notwithstanding anything
contained in this Section 4 to the contrary, nothing hereunder shall obligate
B&B to so participate in any such financing.
5. Finder's Fee. In the event the Company effectuates a merger,
acquisition, consolidation, reorganization, recapitalization, business
combination or other transaction pursuant to which the Company acquires, is
acquired by or combines with another entity subsequent to the date hereof and on
or prior to one year from the date of termination of this Agreement,
irrespective of any reason for such termination, and such merger, acquisition,
consolidation, reorganization, recapitalization, business combination or other
transaction is effectuated as a result or consequence of any introduction made
directly or indirectly by B&B, including, without limitation, any introduction
made by any third party to whom the Company was initially introduced, directly
or indirectly, by B&B, or which transaction was initiated, directly or
indirectly, by B&B, then the Company hereby agrees to pay B&B the following cash
consideration, which payment shall be due and payable in cash on the date of any
such closing with respect thereto:
5% of the consideration from $1 and up to $5,000,000, plus
4% of the consideration in excess of $5,000,000 and up to
$10,000,000, plus
3% of the consideration in excess of $10,000,000 and up to
$15,000,000, plus
2% of the consideration in excess of $15,000,000 and up to
$20,000,000, plus
1% of the consideration paid in excess of $20,000,000.
In addition, the Company shall pay B&B a finders' fee in the event the
Company participates in any merger, acquisition, consolidation, reorganization,
recapitalization, business combination or other transaction not arranged,
directly or indirectly, by B&B, but for which B&B provides consulting services
to the Company, equal to the following percentages based upon the value of the
transaction:
3% of the consideration from $1 to $5,000,000, plus
2% of the consideration from $5,000,001 to $10,000,000, plus
1% of the consideration paid in excess of $10,000,000.
For purposes of this Agreement, "consideration" shall mean the value of
the transaction described herein and shall include all cash, the principal of
any notes executed as part of the purchase price for such acquisition, the
value, as determined in good faith by B&B, of any securities paid or exchanged
in connection with the transaction, and the amounts of any loans or other
obligations owed by the acquired entity and which are paid by the acquiring
entity as part of the purchase price for the acquisition. In the event B&B
agrees to assist the Company in raising capital to finance an acquisition, the
parties hereto hereby agree that the compensation to be paid to B&B for said
assistance shall be the subject an agreement, the terms of which are to be
mutually agreed to by and between the parties hereto.
6. Representations of the Company. The Company hereby represents and
warrants that any and all information supplied hereunder to B&B in connection
with any and all services to be performed hereunder by B&B for and on behalf of
the Company shall be true, complete and correct
A-4
<PAGE>
as of the date of such dissemination and shall not fail to state a material fact
necessary to make any of such information not misleading. The Company hereby
acknowledges that the ability of B&B to adequately provide financial consulting
services hereunder is dependent upon the prompt dissemination of accurate,
correct and complete information to B&B. The Company further represents and
warrants hereunder that this Agreement and the transactions contemplated
hereunder, including the issuance of the warrants hereunder, have been duly and
validly authorized by all requisite corporate action; that the Company has the
full right, power and capacity to execute, deliver and perform its obligations
hereunder; and that this Agreement, upon execution and delivery of the same by
the Company, will represent the valid and binding obligation of the Company
enforceable in accordance with its terms. The representations and warranties set
forth herein shall survive the termination of this Agreement.
7. Indemnification.
(a) The Company hereby agrees to indemnify, defend and hold
harmless B&B, its officers, directors, principals, employees, affiliates, and
shareholders, and their successors and assigns from and against any and all
claims, damages, losses, liability, deficiencies, actions, suits, proceedings,
costs or legal expenses (collectively the "Losses") arising out of or resulting
from: (i) any breach of a representation, or warranty by the Company contained
in this Agreement; or (ii) any activities or services performed hereunder by
B&B, unless such Losses were the result of the intentional misconduct or gross
misconduct of B&B or were the result of any information supplied by B&B; or
(iii) any and all costs and expenses (including reasonable attorneys' and
paralegals' fees) related to the foregoing, and as more fully described below.
(b) If B&B receives written notice of the commencement of any
legal action, suit or proceeding with respect to which the Company is or may be
obligated to provide indemnification pursuant to this Section 7, B&B shall,
within thirty (30) days of the receipt of such written notice, give the Company
written notice thereof (a "Claim Notice"). Failure to give such Claim Notice
within such thirty (30) day period shall not constitute a waiver by B&B of its
right to indemnity hereunder with respect to such action, suit or proceeding.
Upon receipt by the Company of a Claim Notice from B&B with respect to any claim
for indemnification which is based upon a claim made by a third party ("Third
Party Claim"), B&B may assume the defense of the Third Party Claim with counsel
of its own choosing, as described below. The Company shall cooperate in the
defense of the Third Party Claim and shall furnish such records, information and
testimony and attend all such conferences, discovery proceedings, hearings,
trial and appeals as may be reasonably required in connection therewith. B&B
shall have the right to employ its own counsel in any such action, but the fees
and expenses of such counsel shall be at the expense of B&B unless the Company
shall not have promptly employed counsel to assume the defense of the Third
Party Claim, in which event such fees and expenses shall be borne solely by the
Company. The Company shall not satisfy or settle any Third Party Claim for which
indemnification has been sought and is available hereunder, without the prior
written consent of B&B. If the Company shall fail with reasonable promptness
either to defend such Third Party Claim or to satisfy or settle the same, B&B
may defend, satisfy or settle the Third Party Claim at the expense of the
Company and the Company shall pay to B&B the amount of any such Loss within ten
(10) days after written demand therefor. The indemnification provisions
hereunder shall survive the termination of this Agreement.
A-5
<PAGE>
8. Amendment. No modification, waiver, amendment, discharge or change
of this Agreement shall be valid unless the same is evidenced by a written
instrument, executed by the party against which such modification, waiver,
amendment, discharge, or change is sought.
9. Notices. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given when
delivered in person or transmitted by facsimile transmission or on the third
calendar day after being mailed by United States registered or certified mail,
return receipt requested, postage prepaid, to the addresses herein above first
mentioned or to such other address as any party hereto shall designate to the
other for such purpose in the manner hereinafter set forth.
10. Entire Agreement. This Agreement, along with the Escrow Agreement
and Common Stock Purchase Warrant entered into simultaneously herewith and the
Confidentiality, Proprietary Information and Inventions Agreement dated March
18, 1996, contains all of the understandings and agreements of the parties with
respect to the subject matter discussed herein. All prior agreements, whether
written or oral, are merged herein and shall be of no force or effect.
11. Severability. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision
of this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any one or
more of the provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Construction and Enforcement. This Agreement shall be construed in
accordance with the laws of the State of Florida, without application of the
principles of conflicts of laws. If it becomes necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
the successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs. Any suit, action or proceeding with
respect to this Agreement shall be brought in the state or federal courts
located in Dade County in the State of Florida. The parties hereto hereby accept
the exclusive jurisdiction of those courts for the purpose of any such suit,
action or proceeding. Venue for any such action, in addition to any other venue
permitted by statute, will be Dade County, Florida. The parties hereto hereby
irrevocably waive, to the fullest extent permitted by law, any objection that
any of them may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement or any judgment
entered by any court in respect thereof brought in Dade County, Florida, and
hereby further irrevocably waive any claim that any suit, action or proceeding
brought in Dade County, Florida, has been brought in an inconvenient forum.
13. Binding Nature. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the parties, and their respective
successors and assigns.
14. Counterparts. This Agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as original
signatures. All executed counterparts
A-6
<PAGE>
shall constitute one Agreement, notwithstanding that all signatories are not
signatories to the original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CPI AEROSTRUCTURES, INC., a New York
corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
BARBER & BRONSON INCORPORATED, a Florida
corporation
By:__________________________________
Steven N. Bronson, President
A-7
