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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRSTLINK COMMUNICATIONS, INC.
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INDEX OF EXHIBITS
EXHIBIT NO. TITLE
1.1 Form of Underwriting Agreement.
1.2 Form of Representative's Share Option Agreement.
1.3 Form of Representative's Warrant Option Agreement.
3.1 Articles of Incorporation.
3.2 Bylaws.
4.1 Specimen Certificate for Common Stock.
4.2 Warrant Agreement.
4.3 Form of Lock Up Agreement with certain Securityholders.
4.4 Specimen Certificate for Warrant (1)
5.1 Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇.
▇▇.▇ ▇▇▇▇ ▇▇▇▇▇ Option Plan.
10.2 Office Lease (190 ▇▇ ▇▇▇▇▇▇▇▇, Portland, OR)
10.3 Telecommunications Services Agreement between Registrant and Oregon
Portland Associates (Portland Center Apartments)
10.4 Telecommunications Services Agreement between Registrant and
Riverplace II Joint Venture (Riverplace Development)
10.5 Telecommunications Services Agreement between Registrant and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ U/A Trust Dated ▇/▇/▇▇ (▇▇▇▇▇ ▇▇. ▇▇▇▇▇)
10.6 Telecommunications Services Agreement between Registrant and
▇▇▇▇▇ Place Apartments Limited Partnership (▇▇▇▇▇ Place)
10.7 Telecommunications Services Agreement between Registrant and ▇▇▇▇▇▇
Investment Corp. (King Tower Apartments)
10.8 Telecommunications Services Agreement between Registrant and ▇▇▇▇▇▇
Investment Corp. (Park Plaza Apartments)
10.9 Telecommunications Services Agreement between Registrant and
Security Investments; LP (▇▇▇▇ Plaza Apartments)
10.10 Telecommunications Services Agreement between Registrant and Housing
Authority of Portland (Pearl Court Apartments)
10.11 Telecommunications Services Agreement between Registrant and ▇▇▇▇▇▇
Investment Corp. (The ▇▇▇▇ ▇▇▇▇▇▇ Apartments)
10.12 Telecommunications Services Agreement between Registrant and
Crossing Development Corporation (Legends)
10.13 Telecommunications Services Agreement between Registrant and
Parkside Place (Parkside Plaza)
10.14 Telecommunications Services Agreement between Registrant and Housing
Authority of the City of Vancouver, Washington (Cougar Creek Apartments)
10.15 Telecommunications Services Agreement between Registrant and Housing
Authority of the City of Vancouver, Washington (ParkLane Apartments)
10.16 Telecommunications Services Agreement between Registrant and Housing
Authority of the City of Vancouver, Washington (Willow Creek Apartments)
10.17 Telecommunications Services Agreement between Registrant and ▇▇▇▇▇▇
Development Corp. (▇▇▇▇▇▇▇ Tower)
10.18 Telecommunications Services Agreement between Registrant and ▇▇▇▇▇▇
Development Corp. (The ▇▇▇▇▇▇▇▇▇)
10.19 Telecommunications Services Agreement between Registrant and ▇▇▇▇▇▇
Development Corp. (Regency Tower Apartments)
10.20 Telecommunications Services Agreement between Registrant and ▇▇▇▇▇▇
Development Corp. (Syl-Mar Estates)
23.1 Consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLC. (included in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP.
24 Power of Attorney (included on page II-6).
Exhibit No. 1.1 Form of Underwriting Agreement.
Exhibit 1.1
UNDERWRITING AGREEMENT
_______________, 1998
▇▇▇▇▇▇▇ Davidson Securities Corporation
As Representative of the Several
Underwriters Named in Schedule I Hereto
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
FirstLink Communications, Inc., an Oregon corporation (the "Company"),
hereby confirms its agreement with you (the "Representative") and with the other
Underwriters, including the Representative, named in Schedule I hereto
(hereinafter "the Underwriters") as follows:
SECTION 1
DESCRIPTION OF SECURITIES
The Company proposes to issue and sell to the Underwriters shares (the
"Shares") of Common Stock, no par value per share, and Redeemable Common
Stock Purchase Warrants (the "Warrants") (the Shares and the Warrants shall
collectively be referred to as the "Securities"). The Underwriters propose
to purchase 1,000,000 Shares ("Firm Shares") and 1,000,000 Warrants
(collectively, the "Firm Securities") at a purchase price of $_______ PER
SHARE and $______ PER WARRANT. The Shares and the Warrants may be purchased
by the Underwriters only together on the basis of one Share and one Warrant.
The Underwriters shall also have options (the "Over-allotment Options") to
purchase up to an additional 150,000 Shares ("Over-allotment Shares") and/or
150,000 Warrants ("Over-allotment Warrants") (collectively, the
"Over-allotment Securities"), as provided in Section 3.1 hereof.
Two Warrants shall entitle the holder to purchase one share of Common Stock
at $______ PER SHARE UNTIL __________ __, 2001. The Company may redeem the
Warrants on forty-five (45) days' written notice at a price of $.05 per Warrant
at such time as the market price of the Common Stock exceeds $ _______ PER SHARE
for 20 of the 30 trading days ending within 30 days preceding the date of the
notice of redemption. To redeem the Warrants, the Company must have in effect a
current registration statement registering the Common Stock issuable upon
exercise of the Warrants. The shares of Common Stock underlying the Warrants are
referred to herein as the "Warrant Shares."
The Company proposes to issue and sell to the Representative and its
designees on the Closing Date (hereinafter defined) for an aggregate purchase
price of $100, options ("Share Options") to purchase 100,000 shares of Common
Stock and options ("Warrant Options") to purchase 100,000 Warrants. Each Share
Option shall be exercisable at $______ PER SHARE; and each Warrant Option is
exercisable at $______ PER WARRANT. The Share Options and the Warrant Options
are collectively referred to as the "Representative's Options." The terms of
the warrants receivable upon exercise of the Warrant Options (the
"Representative's Warrants"), including the exercise price, shall be identical
to the terms of the Warrants.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Underwriters to enter into this Agreement, the
Company hereby represents and warrants to and agrees with each Underwriter that:
2.1 REGISTRATION STATEMENT AND PROSPECTUS. A registration statement on
Form (FILE NO. 333-_____________) has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder, and said registration statement has
been filed with the Commission. Copies of such
registration statement and any amendments, and all forms of the related
prospectuses contained therein, have been delivered to the Representative.
Such registration statement, including the prospectus, Part II, and documents
incorporated by reference therein and financial schedules and exhibits
thereto, as amended at the time when it shall become effective, is herein
referred to as the "Registration Statement," and the prospectus included as
part of the Registration Statement on file with the Commission when it shall
become effective or, if the procedure in Rule 430A of the Rules and
Regulations (as defined below) under the Securities Act is followed, the
prospectus that discloses all the information that was omitted from the
prospectus on the effective date pursuant to such Rule, and in either case,
together with any changes contained in any prospectus filed with the
Commission by the Company with your consent after the effective date of the
Registration Statement, is herein referred to as the "Final Prospectus." If
the procedure in Rule 430A is followed, the prospectus included as part of
the Registration Statement on the date when the Registration Statement became
effective is referred to herein as the "Effective Prospectus." Any
prospectus included in the Registration Statement and in any amendments
thereto prior to the effective date of the Registration Statement is referred
to herein as a "Preliminary Prospectus." For purposes of this Agreement,
"Rules and Regulations" mean the rules and regulations adopted by the
Commission under the Securities Act.
Included in the Registration Statement are the Firm Securities and the
Over-allotment Securities; and an additional shares of Common Stock reserved
against exercise of the Firm Warrants, the Over-allotment Warrants, and the
Representative's Options.
As used in this Agreement, the term "Effective Date" refers to the date the
Commission declares the Registration Statement effective pursuant to Section 8
of the Securities Act.
2.2 ACCURACY OF REGISTRATION STATEMENT AND PROSPECTUS. The Commission
has not issued any order preventing or suspending the use of any Preliminary
Prospectus with respect to the Securities, and each Preliminary Prospectus has
conformed in all material respects with the requirements of the Securities Act
and the applicable Rules and Regulations and to the best of the Company's
knowledge has not included at the time of filing any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; except that the
foregoing shall not apply to statements in or omissions from any Preliminary
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by the Representative, or from any Underwriter through
the Representative, specifically for use in the preparation thereof.
When the Registration Statement becomes effective and on the Closing Date
(hereinafter defined), the Registration Statement, the Effective Prospectus (and
on the Closing Date, the Final Prospectus) will contain all statements which are
required to be stated therein in accordance with the Securities Act and the
Rules and Regulations. No such document will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; except that the
foregoing does not apply to information contained in or omitted from the
Registration Statement or the Effective Prospectus or Final Prospectus in
reliance upon written information furnished by the Representative, or by any
Underwriter through the Representative, specifically for use in the preparation
thereof. The Company will not at any time hereafter file any amendments to the
Registration Statement or in accordance with Rule 424(b) of the Rules and
Regulations of which the Representative shall not have been previously advised
in advance of filing or to which the Representative shall reasonably object in
writing.
2.3 FINANCIAL STATEMENTS. KPMG Peat Marwick LLC, whose reports appear
in the Effective Prospectus and the Final Prospectus, are, and during the
periods covered by their reports were, independent accountants as required by
the Securities Act and the applicable Rules and Regulations. The financial
statements and schedules (including the related notes) included in the
Registration Statement, any Preliminary Prospectus or the Effective Prospectus
or the Final Prospectus, present fairly the financial position, the results of
operations, and changes in financial position of the entities purported to be
shown thereby at the dates and for the periods indicated; and such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated.
Underwriting Agreement
March 26, 1998
2
The PRO FORMA financial information and related notes and schedules
included in the Registration Statement, any Preliminary Prospectus or the Final
Prospectus comply in all material respects with the requirements of the
Securities Act and the Rules and Regulations and present fairly the PRO FORMA
financial position of the Company and its subsidiaries as of the dates
indicated, and the PRO FORMA results of operation for the periods therein
specified. Such PRO FORMA financial information, including the related notes
and schedules, have been prepared on a basis consistent with the historical
financial statements included in the Registration Statement, the Preliminary
Prospectus and the Final Prospectus, except for the PRO FORMA adjustments
specified herein, and give effect to assumptions made on a reasonable basis to
give effect to historical and proposed transactions described in the
Registration Statement, any Preliminary Prospectus and the Final Prospectus.
The PRO FORMA financial information and statistical data, and other data, set
forth in the Final Prospectus under the captions "Prospectus Summary--Financial
and Operating Data," "Selected Consolidated Financial Data," "Pro forma
Financial Information," "______________" and "Capitalization" are derived from
and prepared on a basis consistent with such PRO FORMA financial information.
2.4 NO MATERIAL ADVERSE CHANGE. Except as may be reflected in or
contemplated by the Effective Prospectus or the Final Prospectus, subsequent to
the dates as of which information is given in the Effective Prospectus or the
Final Prospectus, and prior to the Closing Date, (a) there shall not have been
any material adverse change in the condition, financial or otherwise, of the
Company or in its business taken as a whole; (b) there shall not have been any
material transaction entered into by the Company other than transactions in the
ordinary course of business; (c) the Company shall not have incurred any
material liabilities, obligations or claims, contingent or otherwise, which are
not disclosed in the Effective Prospectus or the Final Prospectus; (d) except in
the ordinary course of business and with the consent of the Representative,
there shall not have been nor will there be any change in the capital stock or
long-term debt (except current payments) of the Company; and (e) the Company has
not and will not have paid or declared any dividends or other distributions on
its capital stock.
2.5 NO DEFAULTS. Other than as disclosed in the Effective Prospectus or
the Final Prospectus, the Company is not in any default (which has not been
waived) in the performance of any obligation, agreement or condition contained
in any debenture, note or other evidence of indebtedness or any indenture or
loan agreement. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated, and compliance with the
terms of this Agreement will not conflict with or result in a breach of any of
the terms, conditions or provisions of, or constitute a default under, the
articles of incorporation, as amended, or by-laws of the Company; any note,
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company is a party or by which it or any of its property is bound,
other than for which the Company has received a consent or waiver of such
conduct, breach or default or except where such default would not have a
material adverse effect on the business of the Company; or any existing law,
order, rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality, agency or body, arbitration tribunal or court,
domestic or foreign, having jurisdiction over the Company or its property. The
consent, approval, authorization, or order of any court or governmental
instrumentality, agency or body is not required for the consummation of the
transactions herein contemplated except such as may be required under the
Securities Act or under the securities laws of any state or jurisdiction.
2.6 INCORPORATION AND STANDING. The Company is, and at the Closing Date
(hereinafter defined) and the Over-allotment Closing Date (hereinafter defined)
will be, duly incorporated and validly existing in good standing as a
corporation under the laws of the jurisdiction of its organization, with full
power and authority (corporate and other) to own its property and conduct its
business, present and proposed, as described in the Effective Prospectus and the
Final Prospectus; the Company has full power and authority to enter into this
Agreement; is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties (owned or
leased) or the nature of its business makes such qualification necessary except
where the failure to be so qualified would not have a material adverse effect on
the Company; and each of the Company and its Subsidiaries holds all material
licenses, certificates, and permits from governmental authorities necessary for
the conduct of its business as described in the Effective Prospectus and Final
Prospectus.
Underwriting Agreement
March 26, 1998
3
2.7 CAPITALIZATION. The Company's authorized and outstanding
capitalization on the Effective Date and on the Closing Date (hereinafter
defined), and on the Over-allotment Closing Date (hereinafter defined) are and
will be as set forth under the caption "Capitalization" in the Effective
Prospectus and the Final Prospectus. The Common Stock, the Warrants, and the
Representative's Options conform to the description thereof contained under the
captions "Description of Securities" and "Underwriting" in the Effective
Prospectus and the Final Prospectus. The outstanding shares of Common Stock
have been, and the Securities, upon issuance and delivery against payment
therefor in the manner described herein, will be, duly authorized and validly
issued, fully paid and nonassessable. No sales of securities have been made by
the Company in violation of the registration or anti-fraud provisions of the
Securities Act or in violation of any other federal law or laws of any state or
jurisdiction.
2.8 LEGALITY OF SECURITIES. The Shares, the Warrants, the
Representative's Options, and the Common Stock and Representative's Warrants
issuable upon the exercise of the Representative's Options have been duly and
validly authorized and, when issued and delivered against payment therefor as
provided in this Agreement, will be validly issued, fully paid and
nonassessable. There are no preemptive rights or other rights to subscribe for
or to purchase, or any restriction upon the voting or transfer of, any shares of
Common Stock pursuant to the Company's articles of incorporation, by-laws or
other governing documents or any agreement or other instrument to which the
Company or any of its Subsidiaries is a party or by which any of them may be
bound. Neither the filing of the Registration Statement nor the offering or
sale of the Securities as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or relating to
the registration of any shares of Common Stock. All of the outstanding shares
of capital stock of each Subsidiary of the Company are owned directly or
indirectly by the Company, free and clear of any claim, lien, encumbrance or
security interest. The Warrants and the Representative's Options, when sold and
delivered, will constitute valid and binding obligations of the Company
enforceable in accordance with the terms thereof. A sufficient number of shares
of Common Stock of the Company has been reserved for issuance upon exercise of
the Warrants, the Representative's Options and the Representative's Warrants.
2.9 PRIOR SALES. No unregistered securities of the Company, of an
affiliate or of a predecessor of the Company have been sold within three years
prior to the date hereof, except as disclosed in the Registration Statement.
2.10 LITIGATION. Except as set forth in the Effective Prospectus and the
Final Prospectus, there is, and at the Closing Date there will be, no action,
suit or proceeding before any court, arbitration tribunal or governmental agency
pending, or to the knowledge of the Company, threatened, which might result in
judgments against the Company not adequately covered by insurance or which
collectively might result in any material adverse change in the condition
(financial or otherwise), the business or the prospects of the Company, or which
would materially affect the properties or assets of the Company.
2.11 REPRESENTATIVE'S OPTIONS. Upon delivery of and payment for the
Representative's Options to be sold by the Company as set forth in Section 3.4
of this Agreement, the Representative and designees of the Representative will
receive good and marketable title thereto, free and clear of all liens,
encumbrances, charges and claims whatsoever; and the Company will have on the
Effective Date and at the time of delivery of such Representative's Options the
requisite power and authority to sell, transfer and deliver such
Representative's Options in the manner provided hereunder.
2.12 FINDER. The Company knows of no outstanding claims against it for
compensation for services in the nature of a finder's fee, origination fee or
financial consulting fee with respect to the offer and sale of the Securities
hereunder except as previously disclosed in writing to the Representative.
2.13 EXHIBITS; CONTRACTS; AGREEMENTS. There are no contracts or other
documents which are required to be filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have not
been so filed and each contract to which the Company is a party and to which
reference is made in the Effective Prospectus and the Final Prospectus has been
duly and validly executed by the Company and, to the best of the Company's
knowledge, is in full force and effect in all material respects in accordance
with its terms, and none of such contracts have been assigned by the Company;
and the Company knows of no present situation or condition or fact which
Underwriting Agreement
March 26, 1998
4
would prevent compliance with the terms of such contracts, as amended to
date. Except for amendments or modifications of such contracts in the
ordinary course of business, the Company has no intention of exercising any
right which it may have to cancel any of its obligations under any of such
contracts, and has no knowledge that any other party to any of such contracts
has any intention not to render full performance under such contracts. All
material terms of each contract, agreement, plan, arrangement or
understanding to which the Company is a party, or to which it may reasonably
be expected to become a party, have been fully disclosed in the Effective
Prospectus and Final Prospectus.
2.14 TAX RETURNS. The Company has filed all federal and state tax
returns which are required to be filed by it and has paid all taxes shown on
such returns and on all assessments received by it to the extent such taxes have
become due. All taxes with respect to which the Company is obligated have been
paid or adequate accruals have been set up to cover any such unpaid taxes.
2.15 PROPERTY. Except as otherwise set forth in or contemplated by the
Effective Prospectus and the Final Prospectus, the Company and its Subsidiaries
have good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects, except such as are described in
the Effective Prospectus and the Final Prospectus or such as do not materially
effect the value of such property and do not interfere with the use made or
proposed to be made of such property by the Company or such Subsidiaries; and
any real property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, existing, and enforceable leases with
such exceptions as are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company and such
Subsidiaries.
2.16 AUTHORITY. The execution and delivery by the Company of this
Agreement has been duly authorized by all necessary corporate action and this
Agreement is the valid, binding and legally enforceable obligation of the
Company, except as rights to indemnity hereunder may be limited by federal or
state securities laws or public policy and except as enforceability may be
limited by bankruptcy, insolvency, or similar laws affecting creditors rights
generally and by general equitable principles.
2.17 LOCK-UP. The Company has obtained from each of its officers,
directors, and 1% or greater shareholders, his written agreement that for a
period of nine (9) months from the Effective Date he will not, without the
prior written consent of the Representative, sell or otherwise dispose of any
shares of Common Stock of the Company owned directly or indirectly or
beneficially by him.
2.18 USE OF FORM SB-2. The Company is eligible to use Form SB-2 for the
offer and sale of the Securities.
2.19 GOVERNMENTAL COMPLIANCE. Neither the Company nor any Subsidiary is
in violation of any law, ordinance, governmental rule or regulation or court
decree to which it may be subject which violation might reasonably be expected
to have a material adverse effect on the condition (financial or other),
properties, prospective results of operations or net worth of the Company and
its Subsidiaries.
2.20 STABILIZATION. The Company has not taken and may not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares or the Warrants.
2.21 CUSIP NUMBER. The Company has obtained CUSIP numbers for the Common
Stock and the Warrants.
2.22 SUBSIDIARIES. The Company has no Subsidiaries and it has no present
intention of acquiring or forming any subsidiaries, except as disclosed in the
Effective Prospectus or the Final Prospectus.
Underwriting Agreement
March 26, 1998
5
2.23 BOOKS AND ACCOUNTS. The books, records and accounts of the Company
and each of its subsidiaries accurately and fairly reflect, in reasonable
detail, the transactions in and dispositions of the assets of the Company and
each of its subsidiaries. The systems of internal accounting controls
maintained by the Company and each of its subsidiaries are sufficient to provide
reasonable assurances that (w) transactions are executed in accordance with
management's general or specific authorization; (x) transactions are recorded as
necessary (A) to permit preparation of financial statements in conformity with
generally accepted accounting principles and (B) to maintain accountability for
assets; and (z) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
2.24 EMPLOYEES. No labor disturbance by the employees of the Company or
any of its subsidiaries exists or is imminent; and the Company is not aware of
any existing or imminent labor disturbance by the employees of any principal
suppliers, contract manufacturing organizations, manufacturers, authorized
dealers or distributors that might be expected to result in any material adverse
change in the condition (financial or otherwise), earnings, operations, business
or prospects of the Company and its subsidiaries, considered as a whole. No
collective-bargaining agreement exists with any of the Company's or any of the
Company's subsidiaries' employees and, to the best knowledge of the Company, no
such agreement is imminent.
2.25 POLITICAL CONTRIBUTIONS. Neither the Company nor any of its
subsidiaries has, directly or indirectly, at any time (x) made any contributions
to any candidate for political office, or failed to disclose fully any such
contribution, in violation of law; (y) 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 required or allowed by all
applicable laws; or (z) violated nor is it in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended.
2.26 ENVIRONMENTAL LIABILITIES. Neither the Company nor any of its
subsidiaries has any liability, known or unknown, matured or not matured,
absolute or contingent, assessed or unassessed, imposed or based upon any
provision of, or has received notice of any potential liability under, any
foreign, federal, state or local law, rule or regulation or the common law, or
any tort, nuisance or absolute liability theory, or under any code, order,
decree, judgment or injunction applicable to the Company or any of its
subsidiaries relating to public health or safety, worker health or safety or
pollution, damage to or protection of the environment, including, without
limitation, laws relating to damage to natural resources, emissions, discharges,
releases or threatened releases of hazardous materials into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), or otherwise relating to the manufacture,
processing, use treatment, storage, generation, disposal, transport or handling
of hazardous materials. As used herein, "hazardous material" includes chemical
substances, wastes, pollutants, contaminants, hazardous or toxic substances,
constituents, materials or wastes, whether solid, gaseous or liquid in nature.
2.27 INVESTMENT COMPANY ACT. The Company is familiar with the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it will not become an "investment
company" within the meaning of the 1940 Act and such rules and regulations.
2.28 PATENTS. The Company owns or possesses adequate rights to use all
material trademarks, service marks, trade names and copyrights described or
referred to in the Final Prospectus as owned by or used by it, or which are
necessary for the conduct of its business as described in the Final Prospectus;
and the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any trade secrets, know-how,
trademarks, service marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, might
have a material adverse effect on the business, properties, condition (financial
or otherwise), prospects or results of operations of the Company.
Underwriting Agreement
March 26, 1988
6
SECTION 3
PURCHASE AND SALE OF THE SECURITIES
3.1 PURCHASE OF SECURITIES AND OVER-ALLOTMENT OPTION. Subject to the
terms and conditions and upon the basis of the representations and warranties
herein set forth, the Company agrees to issue and sell to the Underwriters, and
each of the Underwriters agrees to purchase from the Company at a price of
$_____ PER SHARE AND $______ PER WARRANT, severally and not jointly, the number
of Shares and Warrants set forth opposite their respective names in Schedule I
hereto. The Underwriters agree to offer the Shares and Warrants to the public
as set forth in the Final Prospectus.
The Company hereby grants to the Underwriters an option to purchase from
the Company, solely for the purpose of covering over-allotments in the sale of
Firm Securities, all or any portion of the Over-allotment Shares and/or the
Over-allotment Warrants for a period of forty-five (45) days after the Effective
Date at the purchase price set forth above. The Representative shall notify the
Company of its intention to exercise the Over-allotment Option at least three
(3) days prior to such exercise or exercises.
3.2 SUBSTITUTION OF UNDERWRITERS. If any Underwriter defaults in its
obligation to purchase the number of Securities which it has agreed to purchase
under this Agreement, the non-defaulting Underwriters shall be obligated to
purchase (pro rata in proportion to the number of Securities set forth opposite
the name of each non-defaulting Underwriter in Schedule I hereto) the total
number of Securities which the defaulting Underwriter agreed but failed to
purchase; except that the non-defaulting Underwriters shall not be obligated to
purchase any of the Securities if the total number of Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase exceeds
9.09% of the total number of Securities, and any non-defaulting Underwriter
shall not be obligated to purchase more than 110% of the number of Securities
set forth opposite its name in Schedule I hereto purchasable by it pursuant to
the terms of Section 3.1; and provided further that the non-defaulting
Underwriters shall not be obligated to purchase any Securities which the
defaulting Underwriter or Underwriters agreed to purchase if such additional
purchase would cause the Underwriter to be in violation of the net capital rule
of the Commission or other applicable law. If the foregoing maximums are
exceeded, the non-defaulting Underwriters, and any other underwriters
satisfactory to the Representative who so agree, shall have the right, but will
not be obligated, to purchase (in such proportions as may be agreed upon among
them) all the Securities. In any such case, the Representative shall have the
right to postpone the Closing determined as provided in Section 3.3.2 hereof for
not more than seven Business Days after the date originally fixed as the Closing
pursuant to said Section 3.3.2 in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If the non-defaulting Underwriters or the other underwriters
satisfactory to the Representative do not elect to purchase the Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Company except for the payment of expenses to be borne by the
Company and the Underwriters as provided in Section 3.5 and the indemnity and
contribution agreements of the Company and the Underwriters contained in Section
6 hereof.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or to the non-defaulting Underwriters for
damages caused by its default hereunder.
3.3 PUBLIC OFFERING PRICE. After the Commission notifies the Company
that the Registration Statement has become effective, the Underwriters propose
to offer the Firm Securities to the public at an initial public offering price
of $_______ PER SHARE AND $______ PER WARRANT as set forth in the Final
Prospectus. The Underwriters may allow such discounts and concessions upon
sales to selected dealers as may be determined from time to time by the
Representative.
3.3.1 PAYMENT FOR SECURITIES. Payment for the Securities
(including any Securities included in the Over-allotment Option which the
Underwriters agree to purchase) shall be made to the Company or its order
by certified or official bank check or checks, in the amount of the
purchase price by or on behalf of the Underwriters at the offices of the
Representative in Englewood, Colorado, upon delivery to the Representative
Underwriting Agreement
March 26, 1998
7
or its designee of certificates for the Shares and Warrants in definitive
form in such numbers and registered in such names as the Representative
requests in writing at least three full business days prior to such
delivery. At the request of the Representative, the Company shall deliver
the Securities to the Underwriters through the facilities of The Depository
Trust Company or as otherwise directed.
3.3.2 CLOSING. The time and date of delivery and payment
hereunder is herein called the "Closing Date" and shall take place at the
office of the Representative in Englewood, Colorado, or at such other
location as may be specified by the Representative, on the fourth Business
Day (as hereinafter defined) following the Effective Date; provided,
however, that such date may be extended for not more than an additional
seven business days by the Representative. Should the Underwriters elect
to exercise any part of the Over-allotment Option pursuant to Section 3.1
above, the time and date of delivery and payment for such Over-allotment
Shares and/or Over-allotment Warrants shall be the third Business Day
following such exercise of the Over-allotment Option, or each earlier date
as may be agreed upon by the Representative and the Company. Said date is
referred to as the "Over-allotment Closing Date."
3.3.3 INSPECTION OF CERTIFICATES. For the purpose of expediting
the checking and packaging of the certificates for the Securities, if
requested by the Representative, the Company agrees to make the
certificates available for inspection by the Representative at the main
office of the Representative in Sarasota, Florida, at least two full
business days prior to the proposed delivery date.
3.4 SALE OF REPRESENTATIVE'S OPTIONS. On the Closing Date the Company
will sell and deliver to the Representative and its designees, for a purchase
price of $100, Share Options and Warrant Options dated as of the date of the
Prospectus substantially in the form filed as an Exhibit to the Registration
Statement with such changes therein, if any, as may be agreed upon by the
Company and the Representative, to purchase 100,000 SHARES AT $______ PER SHARE
AND 100,000 WARRANTS AT $______ PER WARRANT. The Company shall not be obligated
to sell and deliver the Representative's Options, and the Representative will
not be obligated to purchase and pay for the Representative's Options, except
upon payment for the Securities pursuant to Subsection 3.3.1 hereof.
The Representative's Options shall be non-transferable for a period of one
(1) year following the Effective Date except to the Underwriters and their
respective officers or partners. The Representative's Options shall also contain
anti-dilution provisions for stock splits, recombinations and reorganizations, a
one-time demand registration provision, customary piggyback registration rights
and shall otherwise be in form and substance satisfactory to the Representative.
The Representative's Options will be exercisable during the four year period
commencing one (1) year after the Effective Date.
3.5 REPRESENTATIVE'S EXPENSE ALLOWANCE. It is understood that the
Company shall reimburse the Representative, for itself alone and not on behalf
of the other Underwriters, for its expenses on a nonaccountable basis in the
amount of three percent (3%) of the gross proceeds from the sale of the Shares
and the Warrants ($_____ PER SHARE AND $______ PER WARRANT) including proceeds
from the sale of the Over-allotment Shares and/or the Over-allotment Warrants
(hereinafter the "Expense Allowance"). The Representative acknowledges receipt
of $25,000 of said Expense Allowance. On the Closing Date and, if applicable,
on the Over-allotment Closing Date, the Representative shall be entitled to
withhold the unpaid balance of such Expense Allowance. The Representative shall
be solely responsible for all expenses incurred by it in connection with the
offering including, but not limited to, the expenses of its own counsel except
as set forth in Section 5.7 hereof. Notwithstanding the foregoing, if the
Registration Statement does not become effective, or the offering is never
commenced after it becomes effective, or if this Agreement is terminated as
provided herein, the Representative will retain so much of the Expense Allowance
which has been or should have been received by the Representative from the
Company as is equal to its actual accountable out-of-pocket expenses and
reimburse the remainder, if any, to the Company, provided that the amount to be
reimbursed will not exceed $25,000. The Representative's expenses shall
include, but are not to be limited to, a fee to compensate the Representative
for the services and time of Representative's counsel plus any additional
expenses and fees, including but not limited to, travel expenses, postage
expenses, duplication expenses, confirmation and other record preparation
Underwriting Agreement
March 26, 1998
8
expenses, long-distance telephone expenses, consultant and investigator
expenses and other expenses incurred by the Representative in connection with
the proposed offering.
3.6 REPRESENTATIONS OF THE PARTIES. The parties hereto respectively
represent that as of the Closing Date the representations herein contained
and the statements contained in all the certificates theretofore or
simultaneously delivered by any party to another, pursuant to this Agreement,
shall in all material respects be true and correct.
3.7 POST-CLOSING INFORMATION. The Representative covenants that
reasonably promptly after the Closing Date, it will supply the Company with
all information required from the Representative which must be supplied to
the Commission, if any, and such additional information as the Company may
reasonably request to be supplied to the securities authorities for such
states in which the Securities have been qualified for sale.
3.8 RE-OFFERS BY SELECTED DEALERS. On each sale by the Underwriters
of any of the Securities to selected dealers, the Representative shall
require the selected dealer purchasing any such Securities to agree to
re-offer the same on the terms and conditions of the offering set forth in
the Final Prospectus.
SECTION 4
REGISTRATION STATEMENT AND PROSPECTUS
4.1 DELIVERY OF REGISTRATION STATEMENTS. The Company shall deliver to
the Representative without charge two (2) manually signed copies of the
Registration Statement, including all financial statements and exhibits filed
therewith and any amendments or supplements thereto, and shall deliver
without charge to the Representative ten (10) conformed copies of the
Registration Statement and any amendment or supplement thereto, including
such financial statements and exhibits. The signed copies of the
Registration Statement so furnished to the Representative will include
manually signed copies of any and all consents and certificates of the
independent public accountant certifying to the financial statements included
in the Registration Statement and signed copies of any and all opinions,
consents and certificates of any other persons whose profession gives
authority to statements made by them and who are named in the Registration
Statement as having prepared, certified, or reviewed any part thereof.
4.2 DELIVERY OF PRE-EFFECTIVE PROSPECTUS. The Company will cause to
be delivered to the Underwriters and to other broker-dealers, without
charge, prior to the Effective Date, as many copies of each Preliminary
Prospectus filed with the Commission bearing in red ink the statement
required by Item 501(c)(8) of Regulation S-K (Reg. 229.501(c)(8)) as may be
required by the Representative. The Company consents to the use of such
documents by the Underwriters and by selected dealers prior to the Effective
Date of the Registration Statement.
4.3 DELIVERY OF PROSPECTUS. The Company will deliver, without charge,
copies of the Effective Prospectus and the Final Prospectus at such addresses
and in such quantities as may be required by the Underwriters for the
purposes contemplated by this Agreement and shall deliver said printed copies
of the Effective Prospectus and the Final Prospectus to the Underwriters and
to selected dealers within one business day after the Effective Date.
4.4 FURTHER AMENDMENTS AND SUPPLEMENTS. If during such period of time
as in the opinion of the Representative or its counsel the Final Prospectus
is required to be delivered under the Securities Act, any event occurs or any
event known to the Company relating to or affecting the Company shall occur
as a result of which the Final Prospectus as then amended or supplemented
would include an untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time after the Effective Date to amend or supplement the
Final Prospectus to comply with the Securities Act, the Company will
forthwith notify the Representative thereof and prepare and file with the
Commission such further amendment to the Registration Statement or supplement
the Final Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance. The Company shall furnish
and deliver to the Representative and to others whose names and addresses are
designated by the Representative, all at the cost of the Company, a
reasonable number of copies of the amended or supplemented Prospectus which
as so amended or supplemented will not contain any untrue statement of a
material fact or omit to state any material fact
9
necessary in order to make the Prospectus not misleading in the light of the
circumstances as of the date of such Prospectus, amendment, or supplement,
and which will comply in all respects with the Securities Act. In the event
the Underwriters are required to deliver a Prospectus beyond completion of
their participation in the public offering, upon request the Company will
prepare promptly such Prospectus or Prospectuses as may be necessary to
permit continued compliance with the requirements of Section 10 of the
Securities Act.
4.5 USE OF PROSPECTUS. The Company authorizes the Underwriters and
all selected dealers to whom any of the Securities may be sold to use the
Effective Prospectus and the Final Prospectus, as from time to time amended
or supplemented, in connection with the offer and sale of the Securities and
in accordance with the applicable provisions of the Securities Act, the Rules
and Regulations and state Blue Sky or securities laws.
SECTION 5
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Underwriters that:
5.1 OBJECTION OF REPRESENTATIVE TO AMENDMENTS OR SUPPLEMENTS. The
Company will not at any time, whether before or after the Effective Date,
file any amendment or supplement to the Registration Statement or Prospectus,
unless and until a copy of such amendment or supplement has been furnished
to the Representative a reasonable period of time prior to the proposed
filing thereof; or to which the Representative or counsel for the
Representative have reasonably objected, in writing, on the ground that such
amendment or supplement is not in compliance with the Securities Act or the
Rules and Regulations.
5.2 COMPANY'S BEST-EFFORTS TO CAUSE REGISTRATION STATEMENT TO BECOME
EFFECTIVE. The Company will use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the Rules
and Regulations is followed, comply with the provisions of and make all
requisite filings with the Commission pursuant to such Rule and to notify the
Representative promptly (in writing, if requested) of all such filings. The
Company shall promptly advise the Representative, and will confirm such
advice in writing (a) when the Registration Statement shall become effective
and when any amendment thereto shall have become effective and when any
amendment of or supplement to the Effective Prospectus or the Final
Prospectus shall be filed with the Commission; (b) when the Commission makes
a request or suggestion for any amendment to the Registration Statement or
the Effective Prospectus or the Final Prospectus or for additional
information and the nature and substance thereof; and (c) of the happening of
any event which in the judgment of the Company makes any material statement
in the Registration Statement or Effective Prospectus or the Final Prospectus
untrue or which requires the making of any changes in the Registration
Statement or the Effective Prospectus or Final Prospectus in order to make
the statements therein not misleading. The Company shall also promptly
notify the Representative, and confirm such notice in writing, when the
Company has knowledge of the issuance by the Commission of an order
suspending the effectiveness of the Registration Statement pursuant to
Section 8 of the Securities Act, suspending or preventing the use of any
Preliminary Prospectus or the Effective Prospectus or Final Prospectus or
suspending the qualification of the Securities for offering or sale in any
jurisdiction, or of the institution of any proceedings for any such purpose.
The Company will use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or refusing
or suspending the qualification of the Securities, and to obtain as soon as
possible a lifting of any such suspension order, the reversal of any such
refusal to qualify, and the termination of any such suspension.
5.3 PREPARATION AND FILING OF AMENDMENTS AND SUPPLEMENTS. The Company
agrees to prepare and file promptly with the Commission, upon request of the
Representative, such amendments or supplements to the Registration Statement
or Final Prospectus, in form satisfactory to counsel to the Company, as may
be necessary, in the opinion of counsel to the Representative and of counsel
to the Company; and it shall use its best efforts to cause the same to become
effective as promptly as possible.
5.4 BLUE SKY QUALIFICATION. The Company has used and will use its
best efforts to qualify (blue-sky) the sale of the Securities in those states
as may be agreed upon by the Company and the Representative. Copies of all
10
applications for the registration of securities and related documents (except
for the Registration Statement and Preliminary or Final Prospectus) filed by
the Representative's counsel with the various states have been supplied to
the Company's counsel, concurrently with their transmission to the various
states, and copies of all comments and orders received from the various
states have been and shall be immediately supplied to the Company's counsel.
Immediately prior to the Effective Date, counsel for the Representative shall
advise the Representative in writing of all states wherein the offering is
exempt or has been registered for sale, canceled, withdrawn or denied, the
date of such event(s) and the number of Securities registered for sale in
each such state. After settlement and closing, the Representative shall
notify its counsel of the number of Securities sold in each such jurisdiction.
5.5 FINANCIAL STATEMENTS. The Company at its own expense will prepare
and give such financial statements and other information to the Commission,
or the proper public bodies of the states in which the Securities may be
registered or qualified, as may be required by them.
5.6 REPORTS AND FINANCIAL STATEMENTS TO THE REPRESENTATIVE. During
the period ending three years from the Closing Date, the Company will deliver
to the Representative copies of each annual report of the Company, and will
deliver to the Representative, within 90 days after the close of each fiscal
year of the Company, a financial report of the Company and its Subsidiaries,
if any, on a consolidated basis, and a similar financial report of all
unconsolidated Subsidiaries, if any. All such reports will include a balance
sheet as of the end of the preceding fiscal year, a statement of operations,
a statement of cash flows and an analysis of shareholders' equity covering
such fiscal year, and all will be in reasonable detail and certified by
independent public accountants for the Company. These requirements will be
satisfied if the Company provides to the Representative copies of its Forms
10-K, Forms 10-Q and Forms 8-K (or other appropriate forms) when they are
filed with the Commission.
If the Company shall fail to furnish the Representative with financial
statements as herein provided, within the times specified herein, the
Representative, after giving reasonable notice of not less than 30 days (and
if the financial statements are not provided within such 30 day period),
shall have the right to have such financial statements prepared by
independent public accountants of its own choosing and the Company agrees to
furnish such independent public accountants such data and assistance and
access to such records as they may reasonably require to enable them to
prepare such statements and to pay their reasonable fees and expenses in
preparing the same.
During the period ending three years from the Closing Date the Company
shall also provide to the Representative copies of all other statements,
documents, or other information which the Company shall mail or otherwise
make available to any class of its security holders, or which it shall file
with the Commission; and, upon request in writing from the Representative,
the Company shall furnish to the Representative such other information as may
reasonably be requested and which may be properly disclosed to the
Representative with reference to the property, business and affairs of the
Company and its Subsidiaries, if any; provided such written request includes
an agreement to keep confidential any information which should not be
disclosed to the public.
5.7 EXPENSES PAID BY THE COMPANY. The Company will pay or cause to be
paid, whether or not the transactions contemplated hereunder are consummated
or the Registration Statement is prevented from becoming effective or this
Agreement is terminated, (a) all expenses (including stock transfer taxes)
incurred in connection with the delivery to the several Underwriters of the
Securities; (b) all fees and expenses (including, without limitation, fees
and expenses of the Company's accountants and counsel, but excluding fees and
expenses of counsel for the Underwriters in connection with the preparation,
printing, filing, delivery and shipping of the Registration Statement
(including financial statements therein and all amendments and exhibits
thereto), each Preliminary Prospectus, the Effective Prospectus and the Final
Prospectus as amended or supplemented, and the printing, delivery and
shipping of this Agreement and other underwriting documents, including
Underwriter's Questionnaires, Underwriters' Powers of Attorney, Blue Sky
Memoranda, Agreements Among Underwriters, and Selected Dealer Agreements; (c)
the filing fee of the National Association of Securities Dealers, Inc.; (d)
any applicable listing fees; (e) the cost of printing certificates
representing the Shares and Warrants; (f) the cost and charges of any
transfer agent or registrar, and the Warrant agent; and (g) all other costs
and expenses incident to the performance of its obligations hereunder which
are not otherwise provided for in this Section. It is understood, however,
that, except as provided in this Section, the Underwriters shall
11
pay all of their own costs and expenses, including the fees of their counsel,
stock transfer taxes on resale of any of the Securities by them, and any
advertising expenses connected with any offers they may make.
5.8 REPORTS TO SHAREHOLDERS. During the period ending five years from
the Closing Date the Company will, as promptly as possible, but not later
than 180 days after the end of its annual fiscal year, render and distribute
reports to its shareholders which will include audited statements of its
operations and cash flows during such period and its balance sheet as of the
end of such period, as to which statements the Company's independent
certified public accountants shall have rendered an opinion.
5.9 SECTION 11(a) FINANCIALS. The Company will make generally
available to its security holders and will deliver to the Representative, as
soon as practicable, an earnings statement (as to which no opinion need be
rendered but which will satisfy the provisions of Section 11(a) of the
Securities Act) covering a period of at least 12 months beginning after the
Effective Date. Compliance by the Company with Rule 158 promulgated under the
Securities Act shall satisfy the requirements of this Section 5.9.
5.10 POST-EFFECTIVE AVAILABILITY OF PROSPECTUS. The Company will
comply, at its own expense, with all requirements imposed upon it by the
Securities Act, as now or hereafter amended, by the Rules and Regulations, as
from time to time may be in force, and by any order of the Commission, so far
as necessary to permit the continuance of sales or dealings in the Shares and
the Warrants and the exercise of the Warrants.
5.11 APPLICATION OF PROCEEDS. The Company will apply the net proceeds
from the sale of the Securities substantially in the manner specifically set
forth in the Final Prospectus. Any deviation from such application must be in
accordance with the Final Prospectus and may occur only after approval by the
board of directors of the Company and then only after the board of directors
has obtained the written opinion as to the propriety of any such deviation
provided by recognized legal counsel well versed in the federal and state
securities laws.
5.12 AGREEMENTS OF CERTAIN SHAREHOLDERS. The Company has delivered to
the Representative, prior to the execution of this Agreement, the agreement
of each officer, director, and one percent (1%) or greater shareholder, that
for a period of from the Effective Date such persons shall not sell,
contract to sell, pledge, hypothecate, grant any option to purchase or
otherwise dispose of any portion of the shares of Common Stock owned
directly, indirectly or beneficially by such person prior to the Effective
Date, without the Representative's prior written consent.
5.13 DELIVERY OF DOCUMENTS. At the Closing, the Company has delivered
to the Representative true and correct copies of the articles of
incorporation of the Company and all amendments thereto; true and correct
copies of the by-laws of the Company and of the minutes of all meetings of
the directors and shareholders of the Company held prior to the Closing Date
which in any way relate to the subject matter of this Agreement. All such
copies shall be certified by the Secretary of the Company.
5.14 COOPERATION WITH REPRESENTATIVE'S DUE DILIGENCE. At all times
prior to the Closing Date, the Company will cooperate with the Representative
in such investigation as the Representative may make or cause to be made of
all the properties, management, business and operations of the Company, and
the Company will make available to the Representative in connection therewith
such information in its possession as the Representative may reasonably
request.
5.15 APPOINTMENT OF TRANSFER AGENT AND WARRANT AGENT. The Company has
appointed , as Transfer Agent for the Common Stock and Warrant Agent for the
Warrants, subject to the closing of the offering. The Company will not
change or terminate such appointment for a period of three years from the
Effective Date without first obtaining the written consent of the
Representative, which consent shall not be unreasonably withheld.
5.16 COMPLIANCE WITH CONDITIONS PRECEDENT. The Company will use all
reasonable efforts to comply or cause to be complied with the conditions
precedent to the several obligations of the Underwriters in Section 8 hereof.
12
5.17 FILING OF FORM SR. If required under the Securities Act, the
Company agrees to file with the Commission all required reports on Form SR in
accordance with the provisions of Rule 463 promulgated under the Securities
Act and to provide a copy of such reports to the Representative and its
counsel.
5.18 BOUND VOLUME. The Company shall supply to the Representative and
the Representative's counsel, at the Company's cost, three bound volumes each
of all of the public offering materials within a reasonable time after the
closing, not to exceed three months.
5.19 LISTING IN ▇▇▇▇▇'▇ AND STANDARD & POOR'S. The Company has applied
to have the Company listed in ▇▇▇▇▇'▇ Over-The-Counter Manual or Standard &
Poor's Standard Corporation Records, and it agrees to maintain such listings.
5.20 NASDAQ. The Company has applied to have the Common Stock and
Warrants quoted on the Nasdaq Stock Market ("NASDAQ") on the Effective Date
and it shall continue such listing on NASDAQ or on a national securities
exchange during the entire period each such security is outstanding; provided
that the Company is in compliance with NASDAQ maintenance requirements. The
NASDAQ symbols shall be mutually agreeable to the Company and the
Representative.
5.21 SECONDARY TRADING QUALIFICATION. The Company agrees to use its
best efforts to qualify the Common Stock and Warrants for secondary trading
as soon as legally possible in such states as are requested by the
Representative from time to time, including, without limitation, California
and Texas.
5.22 RIGHT OF INSPECTION. For a period of three years after the
Effective Date, the Representative, at the Representative's expense, will
have the right to have a person or persons selected by the Representative
review the books and records of the Company upon seven days' written notice
and at reasonable times. Such person or persons will be required to execute
a confidentiality agreement which will, in part, prohibit disclosure of
information to any party except the Representative, which information shall
be held in confidence unless otherwise specifically agreed to by the Company
in writing.
5.23 OUTSIDE DIRECTORS, COMMITTEES, EXECUTIVE COMPENSATION. The
Company shall use its best efforts to have at least two members elected to
its board of directors who are not officers or employees of the Company
("outside directors") on the Effective Date of the Registration Statement,
and to cause two such outside directors to be nominated as directors for two
additional one-year terms. The Company will form independent audit and
compensation committees which shall be comprised of at least three of the
Company's directors, at least a majority of whom shall be outside directors.
5.24 REGISTRATION UNDER THE EXCHANGE ACT. The Company has filed a
Registration Statement under Section 12(g) of the Exchange Act with respect
to the Common Stock and the Warrants. The Company has delivered a copy of
such filing to the Representative and to legal counsel for the
Representative. The Company shall use its best efforts to cause the
registration statement under the Exchange Act to become effective not later
than the Effective Date, or as soon thereafter as possible.
SECTION 6
INDEMNIFICATION AND CONTRIBUTION
6.1 INDEMNIFICATION BY COMPANY. The Company shall indemnify and hold
harmless each Underwriter against any and all loss, claim, damage or
liability, joint or several, to which such Underwriter may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
or liability (or action with respect thereto) arises out of or is based upon
(a) any violation of any registration requirements; (b) any improper use of
sales literature by the Company; (c) any untrue statement or alleged untrue
statement made by the Company in Section 2 hereof; (d) any untrue statement
or alleged untrue statement of a material fact contained (i) in the
Registration Statement, any
13
Preliminary Prospectus, the Effective Prospectus, or the Final Prospectus or
any amendment or supplement thereto, or (ii) in any application or other
document, executed by the Company specifically for such application or based
upon written information furnished by the Company, filed in order to qualify
the Securities under the securities laws of the states where filings were
made (any such application, document, or information being hereinafter called
"Blue Sky Application"); or (e) the omission or alleged omission to state in
the Registration Statement, any Preliminary Prospectus, the Effective
Prospectus, or the Final Prospectus or any amendment or supplement thereto or
in any Blue Sky Application a material fact required to be stated therein or
necessary to make the statements therein not misleading; and shall reimburse
each Underwriter for any legal or other reasonable expenses incurred by such
Underwriter in connection with investigating or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments
for such expenses might later be held to be improper, in which case the
person receiving them shall promptly refund them; except that the Company
shall not be liable in any such case to the extent, but only 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 through the Representative by or on behalf of any
Underwriter specifically for use in the preparation of the Registration
Statement, any Preliminary Prospectus, the Effective Prospectus and the Final
Prospectus or any amendment or supplement thereto, or any Blue Sky
Application.
6.2 INDEMNIFICATION BY UNDERWRITERS. Each Underwriter severally, but
not jointly, shall indemnify and hold harmless the Company against any and
all loss, claim, damage or liability, joint or several, to which the Company
may become subject under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability (or action in respect thereto) arises out of
or are based upon (a) any untrue statement or alleged untrue statement of a
material fact contained (i) in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or the Final Prospectus or any amendment
or supplement thereto or (ii) in any Blue Sky Application; or (b) the
omission or alleged omission to state in the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or the Final Prospectus or
any amendment or supplement thereto or in any Blue Sky Application a material
fact required to be stated therein or necessary to make the statements
therein not misleading; except that such indemnification shall be available
in each such 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 information and in conformity with written information
furnished to the Company through the Representative or on behalf of such
Underwriter specifically for use in the preparation thereof; and shall
reimburse any legal or other expenses reasonably incurred by the Company in
connection with the investigation or defending against any such loss, claim,
damage, liability, or action.
6.3 RIGHT TO PROVIDE DEFENSE. Promptly after receipt by an
indemnified party under Section 6.1 or 6.2 above of written notice of the
commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such
section, notify the indemnifying party in writing of the claim or the
commencement of that action; the failure to notify the indemnifying party
shall not relieve it of any liability which it may have to an indemnified
party, except to the extent that the indemnifying party did not otherwise
have knowledge of the commencement of the action and the indemnifying party's
ability to defend against the action was prejudiced by such failure. Such
failure shall not relieve the indemnifying party from any other liability
which it may have to the indemnified party or any person identified in
Section 6.4 below. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under such section for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; except that the Representative shall have
the right to employ counsel to represent the Representative and those other
Underwriters who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against the
Company under such section if, in the Representative's reasonable judgment,
it is advisable for the Representative and those Underwriters to be
represented by separate counsel, and in that event the fees and expenses of
such separate counsel shall be paid by the Company.
14
6.4 CONTRIBUTION. If the indemnification provided for in Sections 6.1
and 6.2 of this Agreement is unavailable or insufficient to hold harmless an
indemnified party, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, or liabilities referred to in Sections 6.1 or 6.2 above (a)
in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other
from the offering of the Securities; or (b) if the allocation provided by
clause (a) above is not permitted by applicable law, in such proportion as is
appropriate to reflect the relative benefits referred to in clause (a) above
but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, or liabilities, as well as
any other relevant equitable considerations. The relative benefits received
by the Company and the Underwriters shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and un-itemized expenses received by the Underwriters, in each case as set
forth in the table on the cover page of the Final Prospectus. Relative fault
shall be determined by reference to, among other things, whether the untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Company or the Underwriter and the parties'
relative intent, knowledge, access to information, and opportunity to correct
or prevent such untrue statement or omission. For purposes of this Section
6.4, the term "damages" shall include any counsel fees or other expenses
reasonably incurred by the Company or the Underwriters in connection with
investigating or defending any action or claim which is the subject of the
contribution provisions of this Section 6.4. Notwithstanding the provisions
of this Section 6.4, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of any such untrue statements or
omissions. No person adjudged guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Under this Section 6.4, each Underwriter's obligations to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it shall promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in Section 6.4 hereof).
6.5 EXTENSION OF OBLIGATIONS. The obligations of the Company under
this Section 6 shall be in addition to any other liability which the Company
may otherwise have, and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Underwriter within the meaning of the
Securities Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability that the respective Underwriters may
otherwise have, and shall extend, upon the same terms and conditions, to each
director of the Company (including any person who, with his consent, is named
in the Registration Statement as about to become a director of the Company),
to each officer of the Company who has signed the Registration Statement, and
to each person, if any, who controls the Company within the meaning of the
Securities Act.
6.6 REIMBURSEMENT OF UNDERWRITERS. In addition to its obligations
under Section 6.1 of this Agreement, the Company agrees that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any loss, claim, damage, or
liability described in Section 6.1 of this Agreement, it will reimburse the
Underwriters, and each of them, on a monthly basis (or more often, if
requested) for all reasonable legal or other expenses incurred in connection
with investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's
obligation to reimburse the Underwriters for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any portion, or all, of
any such interim reimbursement payments are so held to have been improper,
the Underwriters receiving the same shall promptly return such amounts to the
Company together with interest, compounded daily, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the highest
credit rating) announced from time to time by Norwest Bank of Denver, Denver,
Colorado (the "Prime Rate"). Any such interim reimbursement payments that
15
are not made to the Underwriters within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request until the date paid.
6.7 REIMBURSEMENT OF THE COMPANY. In addition to their obligations
under Section 6.2 of this Agreement, the Underwriters agree that, as an
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any loss, claim,
damage or liability described in Section 6.2 of this Agreement, they will
reimburse the Company on a monthly basis (or more often, if requested) for
all reasonable legal or other expenses incurred by the Company in connection
with investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Underwriters'
obligation to reimburse the Company for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any portion, or all, of any such
interim reimbursement payments are so held to have been improper, the Company
shall promptly return such amounts to the Underwriters together with
interest, compounded daily, determined on the basis of the Prime Rate. Any
such interim reimbursement payments that are not made to the Company within
30 days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request until the date paid.
SECTION 7
EFFECTIVENESS OF AGREEMENT
This Agreement shall become effective (a) at 10:00 a.m., Eastern Time,
on the first full business day after the Effective Date, or (b) upon release
by the Representative of the Securities for sale after the Effective Date,
whichever shall first occur. The Representative shall notify the Company
immediately after the Representative shall have taken any action, by release
or otherwise, whereby this Agreement shall have become effective. For
purposes of this Agreement, the release of the initial public offering of the
Firm Securities for sale to the public shall be deemed to have been made when
the Representative releases, by telegram or otherwise, firm offers of the
Firm Securities to securities dealers or release for publication of a
newspaper advertisement relating to the Firm Securities, whichever occurs
first. This Agreement shall, nevertheless, become effective at such time
earlier than the time specified above, after the Effective Date, as the
Representative may determine by notice to the Company.
SECTION 8
CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS
The obligations of the several Underwriters hereunder to purchase the
Securities and to make payment to the Company hereunder on the Closing Date
and on the Over-allotment Closing Date, if any, shall be subject to the
accuracy, as of the Closing Date and the Over-allotment Closing Date, of each
of the representations and warranties on the part of the Company herein
contained, to the performance by the Company of all its agreements herein
contained, to the fulfillment of or compliance by the Company with all
covenants and conditions hereof, and to the following additional conditions:
8.1 EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement and all post-effective amendments thereto filed with the Commission
prior to the Closing Date or the Over-allotment Closing Date shall have
become effective and any and all filings required by Rule 424 and Rule 430A
of the Rules and Regulations shall have been made; no stop order suspending
the effectiveness of the Registration Statement or any amendment or
supplement thereto shall have been issued; no proceeding for that purpose
shall have been initiated or threatened by the Commission or be pending; any
request for additional information on the part of the Commission (to be
included in the Registration Statement or Final Prospectus or otherwise)
shall have been complied with to the satisfaction of the Commission; and
neither the Registration Statement, the Effective Prospectus or Final
Prospectus, nor any amendment thereto shall have been filed to which counsel
to the Representative shall have reasonably objected in writing or have not
given their consent.
8.2 ACCURACY OF REGISTRATION STATEMENT. The Representative shall not
have advised the Company that the Registration Statement or the Effective
Prospectus or Final Prospectus or any amendment thereof or supplement
16
thereto contains an untrue statement of a fact which, in the opinion of
counsel to the Representative, is material, or omits to state a fact which,
in the opinion of such counsel, is material and is required to be stated
therein, or is necessary to make the statements therein not misleading.
8.3 CASUALTY AND OTHER CALAMITY. Since the Effective Date the Company
shall not have sustained any loss on account of fire, explosion, flood,
accident, calamity or any other cause, of such character as materially
adversely affects its business or property considered as an entire entity,
whether or not such loss is covered by insurance, and no officer or director
of the Company shall have suffered any injury, sickness or disability of a
nature which would materially adversely affect his or her ability to properly
function as an officer or director of the Company.
8.4 LITIGATION AND OTHER PROCEEDINGS. Other than as disclosed in the
Registration Statement or Prospectus, there shall be no litigation instituted
or threatened against the Company and there shall be no proceeding instituted
or threatened against the Company before or by any federal or state
commission, regulatory body or administrative agency or other governmental
body, domestic or foreign, wherein an unfavorable ruling, decision or finding
would materially adversely affect the business, management, licenses,
operations or financial condition or income of the Company considered as an
entity.
8.5 LACK OF MATERIAL CHANGE. Except as contemplated herein or as set
forth in the Registration Statement and Final Prospectus, during the period
subsequent to the date of the last audited balance sheet included in the
Registration Statement, the Company (a) shall have conducted its business in
the usual and ordinary manner as the same was being conducted on the date of
the last audited balance sheet included in the Registration Statement, and
(b) except in the ordinary course of its business, the Company shall not have
incurred any liabilities, claims or obligations (direct or contingent) or
disposed of any of its assets, or entered into any material transaction or
suffered or experienced any substantially adverse change in its condition,
financial or otherwise. The capital stock and surplus accounts of the
Company shall be substantially the same as at the date of the last audited
balance sheet included in the Registration Statement, without considering the
proceeds from the sale of the Securities, other than as may be set forth in
the Final Prospectus, and except as the surplus reflects the result of
continued profits or losses from operations consistent with prior periods.
8.6 REVIEW BY REPRESENTATIVE'S COUNSEL. The authorization of the
Shares, the Warrants, the Warrant Shares, the Representative's Options and
the Common Stock and Warrants issuable upon the exercise of the
Representative's Options, the Registration Statement, the Effective
Prospectus and the Final Prospectus and all corporate proceedings and other
legal matters incident thereto and to this Agreement shall be reasonably
satisfactory in all respects to counsel to the Representative.
8.7.1 OPINION OF COUNSEL. The Company shall have furnished to the
Representative the opinion, dated the Closing Date and, if applicable, the
Over-allotment Closing Date, addressed to the Representative, from ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, LLC, counsel to the Company, to the effect that based upon a review
by them of the Registration Statement, Effective Prospectus and the Final
Prospectus, the Company's articles of incorporation, by-laws, and relevant
corporate proceedings and contracts, and examination of such statutes they
deem necessary and such other investigation by such counsel as they deem
necessary to express such opinion:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of,
and has the corporate power and authority to own its properties and to
carry on its business as described in the Registration Statement and
Effective Prospectus and the Final Prospectus.
(b) The Company is duly qualified and in good standing as a
foreign corporation authorized to do business in all jurisdictions in which
the character of the properties owned or held under lease or the nature of
the business conducted requires such qualification except where the failure
to qualify would not have a material adverse effect on the business of the
Company.
17
(c) The authorized and outstanding capital stock of the
Company is as set forth in the Effective Prospectus and Final Prospectus;
the Common Stock of the Company, the Warrants, and the Representative's
Options conform in all material respects to the statements concerning them
in the Effective Prospectus and Final Prospectus; the outstanding Common
Stock of the Company contains no preemptive rights; the Shares, the
Warrants, and the Representative's Options have been, and the Common Stock
issuable upon exercise of the Share Options and the Representative's
Options, will be, duly and validly authorized and, upon issuance thereof
and payment therefor in accordance with this Agreement, validly issued,
fully paid and nonassessable, and will not be subject to the preemptive
rights of any shareholder of the Company.
(d) A sufficient number of shares of Common Stock have been duly
reserved for issuance upon the exercise of the Warrants, the
Representative's Options and the Warrants issuable upon exercise of the
Representative's Options.
(e) To such counsel's knowledge, no consents, approvals,
authorizations or orders of agencies, officers or other regulatory
authorities are required for the valid authorization, issuance or sale of
the Common Stock, the Warrants and the Representative's Options
contemplated by this Agreement, except for those consents, approvals,
authorizations, and orders which the Company has obtained and which are in
full force and effect under the Securities Act, the Exchange Act, and under
applicable state securities laws in connection with the purchase and
distribution of such securities by the Underwriters, and the clearance of
the underwriting compensation by the NASD.
(f) The issuance and sale of the Securities and the
Representative's Options, the consummation of the transactions herein
contemplated, and the compliance with the terms of this Agreement will not
conflict with or result in a breach of any of the terms, conditions, or
provisions of or constitute a default under the articles of incorporation
or by-laws of the Company; nor, to such counsel's knowledge, will they
conflict with or result in a breach of any of the terms, conditions, or
provisions of any note, indenture, mortgage, deed of trust, or other
agreement or instrument to which the Company is a party or by which the
Company or any of its property is bound, other than for which the Company
has received a consent or waiver of such conflict, breach or default, or
where such conflict or breach would not have a material adverse effect on
the business of the Company; or any existing law (provided this paragraph
shall not relate to federal or state securities laws), order, rule,
regulation, writ, injunction, or decree known to such counsel of any
government, governmental instrumentality, agency, body, arbitration
tribunal, or court, domestic or foreign, having jurisdiction over the
Company or its property.
(g) On the basis of a reasonable inquiry by such counsel,
including participation in conferences with representatives of the Company
and its accountants at which the contents of the Registration Statement and
the Effective Prospectus and the Final Prospectus and related matters were
discussed, and without expressing any opinion as to the financial
statements or other financial data contained therein: (i) nothing has come
to such counsel's attention which leads them to believe that the
Registration Statement and the Final Prospectus, as amended or supplemented
by any amendments or supplements thereto made by the Company prior to the
Closing Date, do not comply as to form in all material respects with the
requirements of the Securities Act; (ii) nothing has come to their
attention which leads them to believe that the Registration Statement or
the Final Prospectus, as amended or supplemented by any such amendments or
supplements thereto, contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; (iii) they do not know of any contract or
other document required to be described in or filed as an exhibit to the
Registration Statement which is not so described or filed; and (iv) the
Registration Statement has become effective under the Securities Act, and,
to the best of their knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated by the
Commission.
18
(h) This Agreement has been duly authorized and executed by
the Company and is a valid and binding agreement of the Company, except as
rights to indemnity hereunder may be limited by federal or state securities
laws or public policy and except as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting creditors rights
generally and by general equitable principles.
(i) The Company is not in default of any of the contracts, licenses,
leases or agreements to which it is a party, and the offering of the
Shares, the Warrants and the Representative's Options will not cause the
Company to become in default of any of its contracts, licenses, leases or
agreements.
(j) To such counsel's knowledge the Company is not currently
offering any securities for sale except as described in the Registration
Statement.
(k) Counsel has no knowledge of any promoter, affiliate,
parent or subsidiaries of the Company except as are described in the
Registration Statement and Final Prospectus.
(l) To the knowledge of counsel, and without making any
statement as to title, the Company owns all properties described in the
Registration Statement as being owned by it; the properties are free and
clear of all liens, charges, encumbrances or restrictions except as
described in the Registration Statement; all of the leases, subleases and
other agreements under which the Company holds its properties are in full
force and effect; the Company is not in default under any of the material
terms or provisions of any of the leases, subleases or other agreements;
and there are no claims against the Company concerning its rights under the
leases, subleases and other agreements and concerning its right to
continued possession of its properties.
(m) To the knowledge of counsel, the Company has been issued
by the appropriate federal, state and local regulatory authorities the
required licenses, certificates, authorizations or permits necessary to
conduct its business as described in the Registration Statement and to
retain possession of its properties. Counsel is unaware of any notice of
any proceeding relating to the revocation or modification of any of these
certificates or permits.
(n) To the knowledge of counsel, the Company has paid all
taxes which are shown as due and owing on the financial statements included
in the Registration Statement and Final Prospectus.
As to all factual matters, including without limitation the issuance of
stock certificates and receipt of payment therefor, the states in which the
Company transacts business, and the adoption of resolutions reflected by the
Company's minute book, such counsel may rely on the certificate of an
appropriate officer of the Company. Counsel's opinion as to the validity and
enforceability of any and all contracts and agreements referenced herein may
exclude any opinion as to the validity or enforceability of any
indemnification or contribution provisions thereof, or as the validity or
enforceability of any such contract or agreement may be limited by bankruptcy
or other laws relating to or affecting creditors' rights generally and by
equitable principles.
8.8 ACCOUNTANT'S LETTER. The Representative shall have received
letters addressed to it dated the Effective Date, the Closing Date and, if
applicable, the Over-allotment Closing Date, respectively, and a draft of
such letter at least five days prior to the Effective Date, the Closing Date
and, if applicable, the Over-allotment Closing Date, from KPMG Peat Marwick
LLC, confirming that they are independent public accountants with respect to
the Company within the meaning of the Act and the published Rules and
Regulations. In the letter dated the date of this Agreement, they shall state
their conclusions and findings with respect to such financial, accounting,
and statistical information and other matters contained in the Registration
Statement as have been approved by the Representative prior to the execution
of this Agreement. In the letter dated the Closing Date (and if applicable,
the Over-allotment Closing Date), they shall state as of such date (or, with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Final
Prospectus, as of a date not more than five days prior to the date of such
letter) their conclusions and findings with respect to the financial
information and other matters covered by their letter dated the date of this
Agreement, the purpose of the letter to be delivered on the Closing Date
(and, if applicable,
19
the Over-allotment Closing Date) being to update in all respects the
conclusions and findings set forth in the prior letter or letters. The
Representative shall be furnished without charge, in addition to the original
signed copies, such number of signed or photostatic or conformed copies of
such letters as the Representative shall reasonably request.
8.9 OFFICER'S CERTIFICATE. The Company shall furnish to the
Representative certificates, each signed by the President and Chief Financial
Officer of the Company, one dated as of the Effective Date, one dated as of
the Closing Date, and, if applicable, one dated as of the Over-allotment
Closing Date, to the effect that:
(a) The representations and warranties of the Company in this
Agreement are true and correct at and as of the date of the certificate, and
the Company has complied with all the agreements and has satisfied all the
conditions on its part to be performed or satisfied at or prior to the date
of the certificate.
(b) The Registration Statement has become effective and to the
best of the knowledge of the respective signers no order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been initiated or is threatened by the Commission.
(c) The respective signers have each examined the Registration
Statement and the Final Prospectus and any amendments and supplements
thereto, and to the best of their knowledge the Registration Statement and
the Final Prospectus and any amendments and supplements thereto contain all
statements required to be stated therein, do 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 not misleading and, since
the Effective Date, there has occurred no event required to be set forth in
an amended or a supplemented Prospectus which has not been so set forth.
8.10 TENDER OF DELIVERY OF SECURITIES. All of the Securities being
offered by the Company and being purchased from the Company by the
Underwriters, and the Representative's Options being purchased from the
Company by the Representative, shall be tendered for delivery in accordance
with the terms and provisions of this Agreement.
8.11 BLUE-SKY REGISTRATION OR QUALIFICATION. The Shares and the
Warrants shall be registered or qualified in such states as the
Representative and the Company may agree pursuant to Section 5.4, and each
such registration or qualification shall be in effect and not subject to any
stop order or other proceeding on the Closing Date or the Over-allotment
Closing Date. On the Effective Date, on the Closing Date and, if applicable,
the Over-allotment Closing Date, the Representative shall receive from
counsel for the Representative, written information which contains the
following:
(a) the names of the states in which applications to register or
qualify the Shares, the Warrants and the Warrant Shares have been filed;
(b) the status of such registrations or qualifications in such
states as of the date of such letter;
(c) a list containing the name of each such state in which the
Shares, the Warrants and the Warrant Shares may be legally offered and sold
by a dealer licensed in such state and the number of each which may be
legally offered and sold in the offering in each such state as of the date of
such letter;
(d) with respect to the written information provided on the
Effective Date, a representation that such counsel will promptly update such
written information if counsel receives actual notice of any material changes
in the information provided therein between the Effective Date and the
Closing Date and, if applicable, Over-allotment Closing Date;
(e) the names of the states in which the offer and sale of the
Shares and Warrants in the offering is exempt from registration or
qualification; and
(f) a statement that the Underwriters and selected dealers in the
offering may rely upon the information contained therein.
20
8.12 APPROVAL OF REPRESENTATIVE'S COUNSEL. All opinions, letters,
certificates and evidence mentioned above or elsewhere in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they
are in form and substance satisfactory to counsel to the Representative,
whose approval shall not be unreasonably withheld. The suggested form of
such documents shall be provided to the counsel for the Representative at
least three business days before the dates they are to be provided, that is,
the Effective Date, the Closing Date, and the Over-allotment Closing Date, if
applicable.
8.13 OFFICERS' CERTIFICATE AS A COMPANY REPRESENTATION. Any
certificate signed by an officer of the Company and delivered to the
Representative or counsel for the Representative shall be deemed a
representation and warranty by the Company to the Underwriters as to the
statements made therein.
8.14 OPINION OF REPRESENTATIVE'S COUNSEL. The Representative shall
have received from ▇▇▇▇ ▇. ▇▇▇▇, Esq., counsel for the Representative, an
opinion dated the Closing Date, with respect to the issuance and sale of the
Securities, and such other related matters as the Representative may
reasonably require, and the Company shall have furnished such counsel with
all documents which they may request for the purpose of enabling them to pass
upon such matter.
SECTION 9
TERMINATION
9.1 TERMINATION BECAUSE OF NONCOMPLIANCE. This Agreement may be
terminated in its entirety by the Representative by notice to the Company
prior to its effectiveness in the event that the Company shall have failed or
been unable to comply with any of the terms, conditions or provisions of this
Agreement which the Company is required by this Agreement to be performed,
complied with or fulfilled (including but not limited to those specified in
Sections 2, 3, 4, 5, and 8 hereof) within the respective times herein
provided for, unless compliance therewith or performance or satisfaction
thereof shall have been expressly waived by the Representative in writing.
9.2 MARKET OUT TERMINATION. This Agreement may be terminated by the
Representative by notice to the Company at any time if, in the sole judgment
of the Representative, payment for and delivery of the Securities is rendered
impracticable or inadvisable because of:
(a) Material adverse changes in the Company's business,
business prospects, management, earnings, properties or conditions, financial
or otherwise;
(b) Any action, suit, or proceedings, at law or in equity,
hereafter threatened or filed against the Company by any person or entity, or
by any federal, state or other commission, board or agency wherein any
unfavorable result or decision could materially adversely affect the
business, business prospects, properties, financial condition or income or
earnings of the Company;
(c) Additional material governmental restrictions not in force and
effect on the date hereof shall have been imposed upon the trading in
securities generally, or new offering or trading restrictions shall have been
generally established by a registered securities exchange, the Commission,
NASD or other applicable regulatory authority, or trading in securities
generally on any such exchange, NASDAQ or otherwise, shall have been
suspended, or a general moratorium shall have been established by federal or
state authorities;
(d) Substantial and material changes in the condition of the
market beyond normal fluctuations such that it would be undesirable,
impracticable or inadvisable in the judgment of the Representative to proceed
with this Agreement or with the public offering of the Securities;
(e) Any outbreak or escalation of major hostilities in which the
United States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the
21
judgment of the Representative, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Securities; or
(f) Any suspension of trading in the securities of the Company in
the over-the-counter market or the interruption or termination of quotations
of any security of the Company on the NASDAQ System.
9.3 EFFECT OF TERMINATION HEREUNDER. Any termination of this
Agreement pursuant to this Section 9 shall be without liability of any
character (including, but not limited to, loss of anticipated profits or
consequential damages) on the part of any party hereto, except that the
Company shall remain obligated to pay the costs and expenses provided to be
paid by it specified in Sections 3.5 and 5.7; and the Company and the
Underwriters shall be obligated to pay, respectively, all losses, claims,
damages or liabilities, joint or several, under Sections 6.1 or 6.4 in the
case of the Company and Sections 6.2 or 6.4 in the case of the Underwriters.
SECTION 10
REPRESENTATIVE'S REPRESENTATIONS AND WARRANTIES
The Representative represents and warrants to and agrees with the
Company that:
10.1 REGISTRATION AS BROKER-DEALER AND MEMBER OF NASD. The
Representative is registered as a broker-dealer with the Commission and is
registered as a securities broker-dealer in all states in which it will sell
Securities and is a member in good standing of the National Association of
Securities Dealers, Inc.
10.2 NO PENDING PROCEEDINGS. There is not now pending or threatened
against the Representative any action or proceeding of which it has been
advised, either in any court of competent jurisdiction, before the Commission
or any state securities regulatory authority concerning activities as a
broker or dealer which are foreseen as affecting the Representative's
capacity to complete the terms of this Agreement.
10.3 COMPANY'S RIGHT TO TERMINATE. In the event any action or
proceeding of the type referred to in Section 10.2 above shall be instituted
or threatened against the Representative at any time prior to the Effective
Date hereunder, or in the event there shall be filed by or against the
Representative in any court pursuant to any federal, state, local or
municipal statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of its assets
or if it makes an assignment for the benefit of creditors, the Company shall
have the right on three days' written notice to the Representative to
terminate this Agreement without any liability to the Representative or the
Company of any kind except for the payment of all expenses as provided herein.
10.4 REPRESENTATIVE'S COVENANTS. The Representative covenants and
agrees with the Company that (a) it will not offer or sell the Securities in
any state or other jurisdiction where it has not been advised in writing by
legal counsel for the Company that the Securities are qualified for the offer
and sale therein or exempt from such requirements; (b) it will not make any
representation to any person in connection with the offer and sale of the
Securities covered hereby except as set forth in the Registration Statement
or as authorized in writing by the Company and the Representative; (c) it
will comply in good faith with all laws, rules and regulations applicable to
the distribution of the securities, including the Rules of Fair Practice of
the NASD; and (d) the Representative has the authority to execute this
Agreement on behalf of all of the Underwriters.
SECTION 11
NOTICE
Except as otherwise expressly provided in this Agreement:
11.1 NOTICE TO THE COMPANY. Whenever notice is required by the
provisions of this Underwriting Agreement to be given to the Company, such
notice shall be in writing addressed to the Company as follows:
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FirstLink Communications, Inc.
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: A. ▇▇▇▇▇ ▇▇▇▇▇, President
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11.2 NOTICE TO THE REPRESENTATIVE. Whenever notice is required by the
provisions of this Agreement to be given to the Representative, such notice
shall be given in writing addressed to the Representative as follows:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
11.3 EFFECTIVE DATE OF NOTICES. Such notices shall be effective on the
date of delivery set forth on the receipt if the notice is sent by registered
or certified mail or any expedited delivery, or, if sent regular mail, three
days from the day of mailing.
SECTION 12
MISCELLANEOUS
12.1 BENEFIT. This Agreement is made solely for the benefit of the
Representative, other Underwriters, the Company, their respective officers,
directors and controlling persons referred to in Section 15 of the Securities
Act and such other persons as are identified in this Agreement, and their
respective successors and assigns, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successor" or the
term "successors and assigns" as used in this Agreement shall not include any
purchasers, as such, of any of the Securities.
12.2 SURVIVAL. The respective indemnities, agreements,
representations, warranties, and covenants of the Company or its officers and
the Representative or the Underwriters as set forth in or made pursuant to
this Agreement and the indemnity and contribution agreements contained in
Section 6 hereof of the Company and the Underwriters (as defined in Section
6) shall survive and remain in full force and effect, regardless of (a) any
investigation made by or on behalf of the Company or the Underwriters or any
such officer or director thereof or any controlling person of the Company or
of the Underwriters, (b) delivery of or payment for the Securities, and (c)
the Closing Date and, if applicable, the Over-allotment Closing Date, and any
successor of the Company or the Underwriters or any controlling person,
officer or director thereof, as the case may be, shall be entitled to the
benefits hereof.
12.3 GOVERNING LAW. The validity, interpretation and construction of
this Agreement and of each part hereof will be governed by the laws of the
State of Colorado.
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12.4 ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding between the parties hereto, and supersedes all agreements
and understandings including, but not limited to, the Letter of Intent dated
December ___ , 1997.
12.5 REPRESENTATIVE'S INFORMATION. The statements with respect to the
public offering of the Securities on the inside and outside of both the front
and back cover pages of the Prospectus and under the caption "Underwriting"
in the Final Prospectus constitute the written information furnished by or on
behalf of the Representative referred to in Section 2.2 hereof, in Section
6.1 hereof and Section 6.2 hereof.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together will constitute one and the same instrument.
12.7 DEFINITION OF "BUSINESS DAY" AND "SUBSIDIARY". For purposes of
this Agreement, (a) "Business Day" means any day on which the New York Stock
Exchange, Inc. is open for trading and (b) "Subsidiary" has the meaning set
forth in Rule 405 of the Rules and Regulations.
Please confirm that the foregoing correctly sets forth the Agreement
between you and the Company.
Very truly yours,
ATTEST:
FIRSTLINK COMMUNICATIONS, INC.
By By
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Secretary A. ▇▇▇▇▇ ▇▇▇▇▇, President
WE HEREBY CONFIRM AS OF THE DATE HEREOF THAT THE ABOVE SETS FORTH THE
AGREEMENT BETWEEN THE COMPANY AND US.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
(for itself and as Representative of
the several Underwriters named in
Schedule I hereto)
By
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
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FIRSTLINK COMMUNICATIONS, INC.
(An Oregon Corporation)
SCHEDULE I
This Schedule sets forth the name of each Underwriter referred to in the
Underwriting Agreement and the number of Shares and Warrants to be purchased
by each Underwriter.
Number
Name of shares and warrants
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Securities Corporation
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Total 1,000,000
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