EXHIBIT 1
_____________ Units
Q Comm International, Inc.
UNDERWRITING AGREEMENT
___________, 2003
▇▇▇▇▇▇▇ Investment Company, Inc.
As Representative of the
Several Underwriters
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Q Comm International, Inc., a Utah corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as Representative (the
"Representative") an aggregate of ___________ Units (the "Firm Units"). Each
Unit will consist two shares (individually, a "Share" and, collectively, the
"Shares")of the common stock, par value $0.001 of the Company ("Common Stock")
and one warrant (individually, a "Warrant" and, collectively, the "Warrants")
each to purchase one share of Common Stock. The Warrants are to be issued under
the terms of a Warrant Agreement (the "Warrant Agreement") by and between the
Company and [Alpha Tech], as warrant agent (the "Warrant Agent"), in each case
substantially in the form most recently filed as an exhibit to the Registration
Statement (hereinafter defined.) The respective number of the Firm Units to be
so purchased by the several Underwriters are set forth opposite their names in
Schedule I hereto. The Company also proposes to grant to the Representative an
option to purchase in aggregate up to ___________ additional Units, identical to
the Firm Units (the "Option Units"), as set forth below.
As the Representative, you have advised the Company (a) that you are
authorized to enter into this Agreement for yourself as Representative and on
behalf of the several Underwriters, and (b) that the several Underwriters are
willing, acting severally and not jointly, to purchase the numbers of Firm Units
set forth opposite their respective names in Schedule I. The Firm Units and the
Option Units (to the extent the aforementioned option is exercised) are herein
collectively called the "Units."
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In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to each of the Underwriters as
follows:
(a) A registration statement on Form SB-2 (File No. 333-_____)
with respect to the Units has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act") and the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462 (b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means (a) the form of prospectus first
filed with the Commission pursuant to Rule 424(b) or (b) the last preliminary
prospectus included in the Registration Statement filed prior to the time it
becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Units, together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus."
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of Utah,
with corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement. Except as described in
the Registration Statement, the Company does not own a controlling interest in
any other corporation or other business entity that has any material assets,
liabilities or operations. Each entity that the Registration Statement discloses
as being controlled by the Company (each a "Subsidiary and, collectively, the
"Subsidiaries") has been duly organized and is validly existing under the laws
of its jurisdiction of organization and has the necessary legal power and
authority to own or lease its properties and to conduct its business as
described in the Registration Statement. The Company and each Subsidiary is duly
qualified to transact business in all jurisdictions in which the conduct of its
business requires such qualification.
(c) The outstanding shares of each class or series of capital
stock or other equity interests of the Company and each Subsidiary have been
duly authorized and validly issued and are
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fully paid and non-assessable and, except as disclosed in the Registration
Statement, have been issued and sold by the Company or the Subsidiary in
compliance in all material respects with applicable securities laws; the
issuance and sale of the Units have been duly authorized by all necessary
corporate action and, when issued and paid for as contemplated herein, the Units
will be validly issued, fully paid and non-assessable; and no preemptive rights
of shareholders exist with respect to any security of the Company or the issue
and sale thereof. Except as set forth in the Registration Statement, neither the
filing of the Registration Statement nor the offering or sale of the Units 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 or other securities of the Company. The Company has duly and
validly reserved, out of its authorized and unissued Common Stock, for issuance
upon exercise of Warrants a number of shares sufficient for such purposes,
including Warrants included in the Option Units and Units obtainable on exercise
of the Representative's Warrants issuable as described in Section 2(d) (the
"Representative's Warrants".)
(d) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct in all material respects.
The Common Stock conforms and the Warrants and the Representative's Warrants
will conform in all material respects to the description thereof contained in
the Registration Statement. The forms of certificates for the Common Stock, the
Warrants and the Representative's Warrants conform in all material respects to
the requirements of the corporate law of Utah.
(e) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Units nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements that are required to be stated therein by the Company,
and will conform in all material respects to, the requirements of the Act and
the Rules and Regulations. The Registration Statement and any amendment thereto
do not contain, and will not contain, any untrue statement of a material fact
and do not omit, and will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and will
not contain, any untrue statement of material fact; and do not omit, and will
not omit, to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or supplement,
in reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of any Underwriter through the Representative,
specifically for use in the preparation thereof and further provided that, with
respect to information included in the Registration Statement and the Prospectus
in reliance on the opinion of experts identified as such in the Prospectus, such
representation is given to the Company's best knowledge.
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(f) The consolidated financial statements of the Company,
together with related notes and schedules as set forth in the Registration
Statement, present fairly the consolidated financial position and the results of
operations and cash flows of the Company and its consolidated subsidiaries at
the indicated dates and for the indicated periods. The impact of each material
accounting judgment made in the preparation of the financial statements included
in the Registration Statement has been fairly and adequately discussed in the
notes thereto or elsewhere in the Registration Statement. Such financial
statements and related schedules have been prepared in accordance with generally
accepted principles of accounting, consistently applied throughout the periods
involved, except as disclosed herein and in the Registration Statement, and all
adjustments necessary for a fair presentation of results for such periods have
been made. The summary financial and statistical data of the Company included in
the Registration Statement presents fairly the information shown therein and
such data has been compiled on a basis consistent with the financial statements
presented therein and the books and records of the Company.
(g) ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, P.C., who have certified certain
of the financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required by the
Act and the Rules and Regulations. There are no facts or circumstances that
would cause the selection and/or engagement of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, P.C. as
auditors of the Company's financial statements included in the Registration
Statement or the Prospectus to constitute a violation of Title II of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 or any rules adopted or proposed to be adopted
pursuant thereto.
(h) There is no action, suit, claim or proceeding pending or,
to the knowledge of the Company, threatened against the Company or any
Subsidiary before any court or administrative agency or otherwise which if
determined adversely to the Company or such Subsidiary might result in any
material adverse change in the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company or prevent the consummation of the transactions contemplated hereby,
except as set forth in the Registration Statement.
(i) The Company and each Subsidiary either has or has disposed
of in the ordinary course of business since December 31, 2002 good and
marketable title to all of its properties and assets, tangible and intangible,
reflected in the consolidated balance sheet of the Company and its consolidated
Subsidiaries as of that date that is a part of the financial statements included
in the Registration Statement, and has good and marketable title to all other
property described in the Registration Statement as owned by the Company or a
Subsidiary, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements (or as described in the
Registration Statement) or which are not material. All of the leases and
subleases under which the Company or any Subsidiary holds properties are in full
force and effect (with only such exceptions as are commonly accepted by prudent
companies engaged in the business of the Company or such Subsidiary) and neither
the Company nor any Subsidiary has received notice of any claim that is
materially adverse to the rights of the Company or any Subsidiary under any of
such leases or subleases.
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(j) The Company, for itself and its Subsidiaries that have
been consolidated for tax purposes, has filed all federal, state, local and
foreign income tax returns which have been required to be filed and has paid all
taxes indicated by said returns and all assessments received by it to the extent
that such taxes have become due and are not being contested in good faith. All
tax liabilities have been adequately provided for in the financial statements of
the Company. Except as described in the Registration Statement, all of the
Subsidiaries are consolidated with the Company for tax purposes.
(k) Since the respective dates as of which information is
given in the Registration Statement, as it may have been amended or
supplemented, there has not been any material adverse change or any development
involving a prospective material adverse change in or affecting the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise), or prospects of the Company or any Subsidiary, whether
or not occurring in the ordinary course of business, and there has not been any
material transaction entered into or any material transaction that is probable
of being entered into by the Company or any Subsidiary, other than transactions
in the ordinary course of business and changes and transactions described in the
Registration Statement, as it may be amended or supplemented. Neither the
Company nor any Subsidiary has any material contingent obligations which are not
disclosed in the Company's financial statements included in the Registration
Statement or elsewhere in the Prospectus.
(l) Neither the Company nor any Subsidiary is, nor, with the
giving of notice or lapse of time or both, will any such entity be, in violation
of or in default under its Articles of Incorporation or Bylaws or other charter
documents or under any agreement, lease, contract, indenture or other instrument
or obligation to which it is a party or by which it, or any of its properties,
is bound and which default is of material significance in respect of the
condition, financial or otherwise of the Company or such Subsidiary or the
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company or such Subsidiary. The
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which any member of the Company is a party, or of the
Articles of Incorporation or Bylaws of the Company or any order, rule or
regulation applicable to the Company of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction.
(m) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Units for public offering by
the Underwriters under state securities or Blue Sky laws) has been obtained or
made and is in full force and effect.
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(n) The Company or a Subsidiary holds all material patents,
patent rights trademarks, trade names, copyrights, trade secrets and licenses of
any of the foregoing (collectively, "Intellectual Property Rights") that are
necessary to the conduct of its businesses; there is no claim pending or, to the
best knowledge of the Company, threatened against the Company or any Subsidiary
or any of their respective officers, directors or employees alleging any
infringement of Intellectual Property Rights, or any violation of the terms of
any license relating to Intellectual Property Rights, nor does the Company know
of any basis for any such claim. The Company knows of no material infringement
by others of Intellectual Property Rights owned by or licensed to the Company or
a Subsidiary. The Company or a Subsidiary has obtained, is in compliance in all
material respect with and maintains in full force and effect all material
licenses, certificates, permits, orders or other, similar authorizations granted
or issued by any governmental agency (collectively "Government Permits")
required to conduct its business as it is presently conducted. No proceeding to
revoke, limit or otherwise materially change any Government Permit has been
commenced or, to the Company's best knowledge, is threatened against the Company
or any Subsidiary, and the Company has no reason to anticipate that any such
proceeding will be commenced against the Company or any Subsidiary. Except as
disclosed or contemplated in the Prospectus, the Company has no reason to
believe that any pending application for a Government Permit will be denied or
limited in a manner inconsistent with the Company's business plan as described
in the Prospectus.
(o) The Company and each Subsidiary is in all material
respects in compliance with all applicable Environmental Laws. The Company has
no knowledge of any past, present or, as anticipated by the Company, future
events, conditions, activities, investigation, studies, plans or proposals that
(i) would interfere with or prevent compliance with any Environmental Law by the
Company or any Subsidiary or (ii) could reasonably be expected to give rise to
any common law or other liability, or otherwise form the basis of a claim,
action, suit, proceeding, hearing or investigation, involving the Company or any
Subsidiary and related to Hazardous Substances or Environmental Laws. Except for
the prudent and safe use and management of Hazardous Substances in the ordinary
course of the Company's business, (i) no Hazardous Substance is or has been
used, treated, stored, generated, manufactured or otherwise handled on or at any
Facility and (ii) to the Company's best knowledge, no Hazardous Substance has
otherwise come to be located in, on or under any Facility. No Hazardous
Substances are stored at any Facility except in quantities necessary to satisfy
the reasonably anticipated use or consumption by the Company. No litigation,
claim, proceeding or governmental investigation is pending regarding any
environmental matter for which the Company or any Subsidiary has been served or
otherwise notified or, to the knowledge of the Company, threatened or asserted
against the Company or any Subsidiary, or the officers or directors of the
Company or any Subsidiary in their capacities as such, or any Facility or the
Company's business. There are no orders, judgments or decrees of any court or of
any governmental agency or instrumentality under any Environmental Law which
specifically apply to the Company or any Subsidiary, any Facility or any of the
Company's or any Subsidiary's operations. Neither the Company nor any Subsidiary
has received from a governmental authority or other person (i) any notice that
it is a potentially responsible person for any Contaminated site or (ii) any
request for information about a site alleged to be Contaminated or regarding the
disposal of Hazardous
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Substances. There is no litigation or proceeding against any other person by the
Company or any Subsidiary regarding any environmental matter. The Company has
disclosed in the Prospectus or made available to the Underwriters and their
counsel true, complete and correct copies of any reports, studies,
investigations, audits, analyses, tests or monitoring in the possession of or
initiated by the Company or any Subsidiary pertaining to any environmental
matter relating to the Company, any Subsidiary, their past or present operations
or any Facility.
For the purposes of the foregoing paragraph, "Environmental Laws" means
any applicable federal, state or local statute, regulation, code, rule,
ordinance, order, judgment, decree, injunction or common law pertaining in any
way to the protection of human health or the environment, including without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Toxic Substances
Control Act, the Clean Air Act, the Federal Water Pollution Control Act and any
similar or comparable state or local law; "Hazardous Substance" means any
hazardous, toxic, radioactive or infectious substance, material or waste as
defined, listed or regulated under any Environmental Law; "Contaminated" means
the actual existence on or under any real property of Hazardous Substances, if
the existence of such Hazardous Substances triggers a requirement to perform any
investigatory, remedial, removal or other response action under any
Environmental Laws or if such response action legally could be required by any
governmental authority; "Facility" means any property currently owned, leased or
occupied by the Company.
(p) Neither the Company, nor to the Company's best knowledge,
any of its affiliates, has taken or intends to take, directly or indirectly, any
action which is designed to cause or result in, or which constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock or the Warrants to facilitate the sale or
resale of the Units.
(q) The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has adopted Disclosure Controls and Procedures, as
defined in Section 13a-14(c) of the rules and regulations adopted under the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") and has
implemented such procedures as adopted and has evaluated the effectiveness of
such Disclosure Controls and Procedures not less than ninety days prior to the
filing date of each report on Form 10-Q or Form 10-K filed by the Company since
August 29, 2002.
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(s) The Company and each Subsidiary carries, or is covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of their respective properties and
as is customary for companies engaged in similar industries.
(t) The Company and each Subsidiary is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any Subsidiary would have any liability; neither
the Company nor any Subsidiary has incurred and the Company does not expect that
it or any Subsidiary will incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company or any Subsidiary would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(u) The Company and each Subsidiary is in material compliance
with all laws, rules, regulations, orders of any court or administrative agency,
operating licenses or other requirements imposed by any governmental body
applicable to it, including, without limitation, all applicable laws, rules,
regulations, licenses or other governmental standards applicable to the
business; and the conduct of the business of the Company and each Subsidiary, as
described in the Prospectus, will not cause the Company or such Subsidiary to be
in violation of any such requirements.
(v) Each of the Warrants and the Representative's Warrants
have been authorized for issuance to the purchasers thereof or to the
Representative or its designees, as the case may be, and will, when issued,
possess rights, privileges, and characteristics as represented in the most
recent form of Warrant Agreement or Representative's Warrants, as the case may
be, filed as an exhibit to the Registration Statement; the securities to be
issued upon exercise of the Warrants and the Representative's Warrants, when
issued and delivered against payment therefor in accordance with the terms
thereof, will be duly and validly issued, fully paid, nonassessable and free of
preemptive rights, and all corporate action required to be taken for the
authorization and issuance of the Warrants and the Representative's Warrants,
and the securities to be issued upon their exercise, have been validly and
sufficiently taken. The execution by the Company of the Warrant Agreement and
the Representative's Warrants has been duly authorized by all required action of
the Company and, when so executed and delivered (and assuming due and valid
execution by the Warrant Agent, in the case of the Warrant Agreement) will
constitute the valid an binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(w) Except as disclosed in the Prospectus, neither the Company
nor any of its officers, directors or affiliates have caused any person, other
than the Underwriters, to be entitled to reimbursement of any kind, including,
without limitation, any compensation that would be includable as underwriter
compensation under the NASD's Corporate Financing Rule with respect to the
offering of the Units, as a result of the consummation of such offering based on
any activity of such person as a finder, agent, broker, investment adviser or
other financial service provider.
(x) Except as described in the Prospectus, the Company does
not directly or indirectly control or have a material interest in any other
business entity.
(y) The Common Stock is traded on the OTC Bulletin Board. The
Units, the Common Stock and the Warrants have been approved for listing on the
American Stock Exchange ("AMEX") upon the effectiveness of the Registration
Statement and the Company has satisfied all of the requirements of AMEX for such
listing and for the trading of its Common Stock, Units and Warrants on AMEX.
(z) The Company has adopted organizational structures and
policies sufficient to comply with the requirements of the AMEX corporate
governance rules in effect as of the date hereof and as proposed to be amended
in accordance with any proposed rules of AMEX published for comment as of the
date hereof (collectively, the "AMEX Corporate Governance Rules".) Without
limiting the generality of the foregoing, the Company's Board of Directors has
validly appointed an Audit Committee and a Compensation Committee whose
composition satisfies the requirements of the AMEX Corporate Governance Rules.
The Board of Directors and/or the Audit Committee or Compensation Committee, as
the case may be, has adopted a charter governing the respective activities of
the Audit and Compensation Committees that satisfies the requirements of the
AMEX Corporate Governance Rules. The Audit Committee and the Compensation
Committee have each acted in accordance with the provisions of their respective
charters, as amended from time to time.
(aa) Neither the Board of Directors nor the Audit Committee
has been informed, nor is any director of the Company aware, of (i) any
significant deficiencies in the design or operation of the Company's internal
controls which could adversely affect the Company's ability to record, process,
summarize and report financial data or any material weakness in the Company's
internal controls; or (ii) any fraud, whether or not material, that involves
management or other employees of the Company who have a significant role in the
Company's internal controls.
(bb) Each of the certifications made by the principal
executive and principal financial officers of the Company pursuant to Section
302 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations adopted
thereunder was correct in all material respects when made.
(cc) The Company and each Subsidiary has complied with all
provisions of Section 517.075 Florida Statutes, relating to doing business with
the Government of Cuba or with any person or affiliate located in Cuba.
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2. Purchase, Sale and Delivery of the Units.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $____ per Unit, the number
of Firm Units set forth opposite the name of each Underwriter in Schedule I
hereof, subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Units to be sold hereunder is to be
made in New York Clearing House funds and, at the option of the Representative,
by bank wire to an account specified by the Company, certified or bank cashier's
checks drawn to the order of the Company, against either uncertificated delivery
of Firm Units or of certificates therefor (which delivery, if certificated,
shall take place in such location in New York, New York as may be specified by
the Representative) to the Representative for the several accounts of the
Underwriters. Such payment is to be made at the offices of the Representative at
the address set forth on the first page of this agreement, at 7:00 a.m., Pacific
time, on the third business day after the date of this Agreement or at such
other time and date not later than five business days thereafter as the
Representative and the Company shall agree upon, such time and date being herein
referred to as the "Closing Date." (As used herein, "business day" means a day
on which the New York Stock Exchange is open for trading and on which banks in
New York are open for business and not permitted by law or executive order to be
closed.) Except to the extent uncertificated Firm Units are delivered at
closing, the certificates for the Firm Units will be delivered in such
denominations and in such registrations as the Representative requests in
writing not later than the second full business day prior to the Closing Date,
and will be made available for inspection by the Representative at least one
business day prior to the Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters to purchase the
Option Units at the price per Unit as set forth in Section 2(a). The option
granted hereby may be exercised in whole or in part by giving written notice (i)
at any time before the Closing Date and (ii) only once thereafter within 45 days
after the date of this Agreement, by the Representative to the Company setting
forth the number of Option Units as to which the Underwriters are exercising the
option, the names and denominations in which the Option Units are to be
registered and the time and date at which certificates representing such Units
are to be delivered. The time and date at which certificates for Option Units
are to be delivered shall be determined by the Representative but shall not be
earlier than three nor later than 10 full business days after the exercise of
such option, nor in any event prior to the Closing Date (such time and date
being herein referred to as the "Option Closing Date"). If the date of exercise
of the option is three or more days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date. The option with
respect to the Option Units granted hereunder may be exercised only to cover
over-allotments in the sale of the Firm Units by the Underwriters. The
Representative may cancel such option at any time prior to its expiration by
giving written notice of such cancellation to
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the Company. To the extent, if any, that the option is exercised, payment for
the Option Units shall be made on the Option Closing Date in New York Clearing
House funds and, at the option of the Representative, by bank wire to an account
specified by the Company, or certified or bank cashier's check drawn to the
order of the Company for the Option Units to be sold by the Company in
consideration either of uncertificated delivery of Option Units or delivery of
certificates therefor (which delivery, if certificated, shall take place in such
location in New York, New York as may be specified by the Representative) to the
Representative for the several accounts of the Underwriters. Except to the
extent uncertificated Option Units are delivered at closing, the certificates
for the Option Units will be delivered in such denominations and in such
registrations as the Representative requests in writing not later than the
second full business day prior to the Option Closing Date, and will be made
available for inspection by the Representative at least one business day prior
to the Option Closing Date.
(d) In addition to the sums payable to the Representative as
provided elsewhere herein, the Representative shall be entitled to receive at
the Closing, for itself alone and not as Representative of the Underwriters, as
additional compensation for its services, Representative's Warrants for the
purchase of up to ________ Units at a price of $____ per Unit, upon the terms
and subject to adjustment and conversion as described in the form of
Representative's Warrants filed as an exhibit to the Registration Statement.
3. Offering by the Underwriters.
It is understood that the several Underwriters are to make a
public offering of the Firm Units as soon as the Representative deems it
advisable to do so. The Firm Units are to be initially offered to the public at
the initial public offering price set forth in the Prospectus. The
Representative may from time to time thereafter change the public offering price
and other selling terms. To the extent, if at all, that any Option Units are
purchased pursuant to Section 2 hereof, the Representative will offer them to
the public on the foregoing terms.
It is further understood that you will act as the
Representative for the Underwriters in the offering and sale of the Units in
accordance with an Agreement Among Underwriters entered into by you and the
several other Underwriters.
4. Covenants of the Company.
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (A) 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, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representative containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and
11
Regulations, and (B) not file any amendment to the Registration Statement or
supplement to the Prospectus of which the Representative shall not previously
have been advised and furnished with a copy or to which the Representative shall
have reasonably objected in writing or which is not in compliance with the Rules
and Regulations.
(b) The Company will advise the Representative promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission, (C)
of any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, and (D) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of the institution of
any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representative in
endeavoring to qualify the Units for sale under the securities laws of such
jurisdictions as the Representative may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representative may reasonably request for distribution of the Units.
(d) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary Prospectus
as the Representative may reasonably request. The Company will deliver to, or
upon the order of, the Representative during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representative may
reasonably request. The Company will deliver to the Representative at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representative such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representative
may reasonably request.
(e) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Units as contemplated in this Agreement and the Prospectus. If during the period
in which a prospectus is required by law to be delivered by an Underwriter or
dealer, any event shall occur as a result of which, in the judgment of the
Company or in the reasonable opinion of the Underwriters, it becomes necessary
to amend or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading, or, if it is necessary at any time to
amend or
12
supplement the Prospectus to comply with any law, the Company promptly will
prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances existing
at the time the Prospectus is so delivered, be misleading, or so that the
Prospectus will comply with the law.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise the Representative in writing when such statement has been so made
available.
(g) The Company will, for a period of five years from the
Closing Date, deliver to the Representative copies of annual reports and copies
of all other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the requirements
of such exchange or with the Commission pursuant to the Act or the Exchange Act.
The Company will deliver to the Representative similar reports with respect to
significant subsidiaries, as that term is defined in the Rules and Regulations,
which are not consolidated in the Company's financial statements.
(h) The Company will make no offering, sale, short sale or
other disposition of any shares of Common Stock of the Company or other
securities convertible into or exchangeable or exercisable for shares of Common
Stock or derivatives of Common Stock (or agreement therefor), directly or
indirectly, for a period of ninety days after the date of this Agreement
otherwise than hereunder, or pursuant to contractual obligations existing on the
date hereof or pursuant to employee benefit plans in effect on the date hereof,
or with the prior written consent of the Representative, which consent will not
be unreasonably withheld.
(i) The Company will use its best efforts to list, subject to
notice of issuance of the Units, the Common Stock and the Warrants on the AMEX
and to cause such listing to remain in effect with respect to each such security
unless and until (i) such security expires; (ii) such security is listed on
another exchange of at least comparable reputation; or (iii) the Company is no
longer required to file reports under Section 12 of the Exchange Act.
(j) The Company has caused each officer and director and each
person who owns, beneficially or of record, shares of the Common Stock
constituting 5% or more of the Common Stock outstanding immediately prior to the
date hereof to furnish to the Representative, on or prior to the date of this
agreement, a letter or letters, in form and substance satisfactory to the
Underwriters ("Lockup Agreements"), pursuant to which each such person has
agreed not to offer, sell, sell short or otherwise dispose of any shares of
Common Stock or other capital stock of the Company, or any other securities
convertible, exchangeable or exercisable for Common Stock or derivatives of
13
Common Stock owned by such person or request the registration for the offer or
sale of any of the foregoing (or as to which such person has the right to direct
the disposition) for a period of one hundred eighty days after the date of this
Agreement, directly or indirectly, except with the prior written consent of the
Representative.
(k) The Company shall apply the net proceeds of its sale of
the Units as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Units and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(l) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Units in such a manner as
would require the Company to register as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act").
(m) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock, and shall comply with the provisions of the Warrant
Agreement with respect to the appointment and maintenance of a Warrant Agent for
the Warrants.
(n) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
5. Costs and Expenses.
(a) The Representative shall be entitled to reimbursement from
the Company, for itself alone and not as Representative of the Underwriters, to
a non-accountable expense allowance equal to 3% of the aggregate initial public
offering price of the Firm Units and any Option Units purchased by the
Underwriters. The Representative shall be entitled to withhold this allowance on
the Closing Date related to the purchase of the Firm Units or the Option Units,
as the case may be. The Company shall receive a credit against this
non-accountable expense allowance for any amounts previously paid to the
Representative.
(b) In addition to the payment described in Paragraph (a) of
this Section 5, the Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus, this Agreement, the AMEX listing application, the costs of due
diligence investigation of the principals of the Company, the Blue Sky Survey
and any supplements or amendments thereto; the filing fees of the Commission;
the filing fees and expenses (including any fees and disbursements) incident to
securing the required review by the NASD Regulation, Inc.) of the underwriting
terms and arrangements; the AMEX listing fee; and the
14
expenses, including the fees and disbursements of counsel for the Underwriters,
incurred in connection with the qualification of the Units under state
securities or Blue Sky laws. Any transfer taxes imposed on the sale of the Units
to the several Underwriters will be paid by the Company. The Company agrees to
pay all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the offer and sale of
directed Units by the Underwriters to employees and persons having business
relationships with the Company. The Company shall not, however, be required to
pay for any of the Underwriters' expenses (other than those related to
qualification under NASD regulation and state securities or Blue Sky laws)
except that, if this Agreement shall not be consummated, then the Company shall
reimburse the several Underwriters for accountable out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred in connection
with investigating, marketing and proposing to market the Units or in
contemplation of performing their obligations hereunder up to a maximum of
$100,000 in the aggregate taking into account all amounts paid to the
Underwriters; but the Company shall not in any event be liable to any of the
several Underwriters for damages on account of loss of anticipated profits from
the sale by them of the Units.
6. Conditions of Obligations of the Underwriters.
The several obligations of the Underwriters to purchase the
Firm Units on the Closing Date and the Option Units, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the Option
Closing Date, as the case may be, of the representations and warranties of the
Company contained herein, and to the performance by the Company of their
covenants and obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto 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, and
any request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representative and complied with to their reasonable satisfaction. No stop order
suspending the effectiveness of the Registration Statement, as amended from time
to time, shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission and no injunction, restraining order, or order of any nature by a
Federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance of the Units.
(b) The Representative shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Morse, Zelnick,
Rose & Lander, LLP, counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters (and
stating that it may be relied upon by counsel to the Underwriters) to the effect
that:
15
(i) (a) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Utah, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement.
(ii) Each Subsidiary has been duly organized and is
validly existing as a business entity in good standing under the laws of its
jurisdiction of formation with all requisite power and authority under the laws
governing such entities to own or lease its properties and conduct its business
as described in the Registration Statement.
(iii) The Company and each Subsidiary is duly
qualified to transact business in all jurisdictions in which the conduct of its
business requires such qualification, or in which the failure to qualify would
have a material adverse effect upon the business of the Company.
(iv) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization" in the Prospectus;
the outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable; all of the securities of the
Company conform to the description thereof contained in the Prospectus; the
certificates for the Common Stock and the Warrants are in due and proper form;
no preemptive rights of shareholders exist with respect to any of the Common
Stock or the issuance or sale thereof pursuant to any applicable statute or the
provisions of the Company's Articles of Incorporation or Bylaws or, to such
counsel's best knowledge, pursuant to any contractual obligation. The Company's
ownership interest in each Subsidiary is, in all material respects, as described
in the Registration Statement.
(v) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Units or the right to have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company.
(vi) The Warrant Agreement and the Warrants have been
duly authorized by the Company. When duly executed, authenticated, issued and
delivered as contemplated in the Registration Statement and the Warrant
Agreement, the Warrant Agreement and the Warrants will constitute legally
binding obligations of the Company, enforceable against it in accordance with
their terms and, in the case of the Warrants, entitled to the benefits of the
Warrant Agreement subject, as
16
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(vii) The Warrants are exercisable to purchase Common
Stock in accordance with the terms of the Warrant Agreement; the shares of
Common Stock initially issuable upon exercise of the Warrants (including
Warrants comprising the Option Units and Warrants issuable on exercise of the
Representative's Warrants) have been duly authorized and reserved for issuance
upon such conversion or exercise, as the case may be, and, when issued upon such
conversion or exercise in accordance with the terms of the Warrant Agreement
will be validly issued, fully paid and nonassessable.
(viii) The Representative's Warrants have been duly
authorized by the Company. When duly executed, issued and delivered as
contemplated in the Registration Statement, the Representative's Warrants will
constitute the legally binding obligation of the Company, enforceable against it
in accordance with its terms subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(ix) The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act.
(x) The Registration Statement, the Prospectus and
each amendment or supplement thereto comply as to form in all material respects
with the requirements of the Act and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the financial
statements and related schedules therein).
(xi) The statements under the captions "Shares
Eligible for Future Sale" and "Description of Securities" in the Prospectus and
in Items 24 and 26 of the Registration Statement, insofar as such statements
constitute a summary of documents referred to therein or matters of law, fairly
summarize in all material respects the information called for with respect to
such documents and matters.
(xii) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are not so filed
or described as required, and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects.
(xiii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or any
Subsidiary.
17
(xiv) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Articles of Incorporation or Bylaws of the
Company, or any agreement or instrument known to such counsel to which the
Company is a party or by which the Company may be bound.
(xv) Each of this Agreement and the Warrant Agreement
has been duly authorized, executed and delivered by the Company.
(xvi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD, as to which such
counsel need express no opinion) except such as have been obtained or made,
specifying the same.
(xvii) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
In rendering such opinion, such counsel may rely as to matters governed
by the laws of states other than New York, or Federal laws on local counsel in
such jurisdictions, provided that in each case such counsel shall state that
they believe that they and the Underwriters are justified in relying on such
other counsel. In addition to the matters set forth above, the opinion of Morse,
Zelnick, Rose & Lander, LLP shall also include a statement to the effect that
nothing has come to the attention of such counsel that has caused them to
believe that (i) the Registration Statement, at the time it became effective
under the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) and as of the Closing Date or the Option
Closing Date, as the case may be, contained an 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, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Morse,
Zelnick, Rose and Lander LLP may state that their belief is based upon the
procedures set forth therein and, to the extent not set forth therein, upon
other investigations of fact and law as would customarily be performed by
knowledgeable and experienced legal counsel in comparable circumstances but is
otherwise without independent check and verification.
(c) The Representative shall have received from Stoel Rives
LLP, counsel for the Underwriters, an opinion dated the Closing Date or the
Option Closing Date, as the case may be, substantially to the effect specified
in subparagraphs (ix) and (x) of Paragraph (b) of this Section 6.
18
In rendering such opinion Stoel Rives LLP may rely as to all matters governed
other than by the laws of the State of Oregon or Federal laws on the opinion of
counsel referred to in Paragraph (b) of this Section 6. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel that has caused
them to believe that (i) the Registration Statement, or any amendment thereto,
as of the time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) and as
of the Closing Date or the Option Closing Date, as the case may be, contained an
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,
and (ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to such
statement, Stoel Rives LLP may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
(d) The Representative shall have received at or prior to the
Closing Date from Stoel Rives LLP a memorandum or summary, in form and substance
satisfactory to the Representative, with respect to the qualification for
offering and sale by the Underwriters of the Units under the state securities or
Blue Sky laws of such jurisdictions as the Representative may reasonably have
designated to the Company.
(e) The Representative, on behalf of the several Underwriters,
shall have received, on each of the dates hereof, the Closing Date and the
Option Closing Date, as the case may be, a letter dated the date hereof, the
Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to the Representative, of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
confirming that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them and included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Act and the related
published Rules and Regulations and containing such other statements and
information as is ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial and
statistical information contained in the Registration Statement and Prospectus.
(f) The Representative shall have received on the Closing Date
or the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them severally represents as follows:
(i) The Registration Statement has become effective
under the Act and no stop order
suspending the effectiveness of the Registration Statement has been issued, and
no proceedings for such purpose have been taken or are, to his knowledge,
contemplated by the Commission;
19
(ii) The representations and warranties of the
Company contained in Section 1 hereof are true and correct as of the Closing
Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant
to Rules 424 or 430A under the Act have been made;
(iv) He has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the condition, financial or otherwise,
of the Company or the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of the
Company, whether or not arising in the ordinary course of business.
(g) The Company shall have furnished to the Representative
such further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representative may reasonably have requested.
(h) The Common Stock and the Warrants have been approved for
listing upon notice of issuance of the Units on AMEX.
(i) The Lockup Agreements described in Section 4(j) are in
full force and effect.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects satisfactory to the Representative and to Stoel Rives
LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 6 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representative by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections 5
and 8 hereof).
20
7. Conditions of the Obligations of the Company.
The obligations of the Company to sell and deliver the portion
of the Units required to be delivered as and when specified in this Agreement
are subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities to which
such Underwriter or any such controlling person may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each Underwriter and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Units, whether or not such Underwriter or
controlling person is a party to any action or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representative
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or
21
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however, that
each Underwriter will be liable in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representative specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a) or (b). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the indemnifying party shall
pay as incurred (or within 30 days of presentation) the fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (iii) the
indemnifying party shall have failed to assume the defense and employ counsel
acceptable to the indemnified party within a reasonable period of time after
notice of commencement of the action. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant to
Section 8(a) and by the Company in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the
22
prior written consent of the indemnified party, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action or
proceeding of which indemnification may be sought hereunder (whether or not any
indemnified party is an actual or potential party to such claim, action or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) 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 Units. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits 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, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Units purchased by such Underwriter, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 8(d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
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(e) In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section 8
hereby consents to the jurisdiction of any court having jurisdiction over any
other contributing party, agrees that process issuing from such court may be
served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Units and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. Default by Underwriters.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion of the
Units which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company), you, as
Representative of the Underwriters, shall use reasonable efforts to procure
within 36 hours thereafter one or more of the other Underwriters, or any others,
to purchase from the Company such amounts as may be agreed upon and upon the
terms set forth herein, the Firm Units or Option Units, as the case may be,
which the defaulting Underwriter or Underwriters failed to purchase. If during
such 36 hours you, as such Representative, shall not have procured such other
Underwriters, or any others, to purchase the Firm Units or Option Units, as the
case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of Units with respect to which
such default shall occur does not exceed 10% of the Firm Units or Option Units,
as the case may be, covered hereby, the other Underwriters shall be obligated,
severally, in proportion to the respective numbers of Firm Units or Option
Units, as the case may be, which they are obligated to purchase hereunder, to
purchase the Firm Units or Option Units, as the case may be, which such
defaulting Underwriter or Underwriters failed to purchase, or (b) if the
aggregate number of Firm Units or Option Units, as the case may be, with respect
to which such default shall occur exceeds 10% of the Firm Units or Option Units,
as the case may be, covered hereby, the Company or you as the Representative of
the Underwriters will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the non-defaulting Underwriters or of the
Company except
24
to the extent provided in Section 8 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or
Option Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representative, may determine in order that the
required changes in the Registration Statement or in the Prospectus or in any
other documents or arrangements may be effected. The term "Underwriter" includes
any person substituted for a defaulting Underwriter. Any action taken under this
Section 9 shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
10. Notices.
All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to ▇▇▇▇▇▇▇
Investment Company, Inc., ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇; with a copy, which shall not constitute notice,
to Stoel Rives LLP, ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇; if to the Company, to Q Comm International, Inc., ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇; with copy, which
shall not constitute notice, to ▇▇▇▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, LLP, Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇.
11. Termination.
This Agreement may be terminated by the Representative by
notice to the Company as follows:
(a) at any time prior to the earlier of (i) the time the Units
are released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m.
on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company, the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company, whether or not arising in
the ordinary course of business, (ii) any outbreak or escalation of hostilities
or declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your reasonable
judgment, make it impracticable to market the Units or to enforce contracts for
the sale of the Units, (iii) the Dow ▇▇▇▇▇ Industrial Average shall have fallen
by 15 percent or more from its closing price on the day immediately preceding
the date that the
25
Registration Statement is declared effective by the Commission, (iv) suspension
of trading in securities generally on the New York Stock Exchange or the AMEX or
limitation on prices (other than limitations on hours or numbers of days of
trading) for securities on either such Exchange, (v) the enactment, publication,
decree or other promulgation of any statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects or may materially and adversely affect the business or
operations of the Company, (vi) declaration of a banking moratorium by United
States or New York State authorities, (vii) any downgrading in the rating of the
Company's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Exchange Act);
(viii) the suspension of trading of the Common Stock or the Warrants by the
Commission or AMEX, or (ix) the taking of any action by any governmental body or
agency in respect of its monetary or fiscal affairs which in your reasonable
opinion has a material adverse effect on the securities markets in the United
States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. Successors.
This Agreement has been and is made solely for the benefit of
the Underwriters, the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Units from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. Information Provided by Underwriters.
The Company and the Underwriters acknowledge and agree that
the only information furnished or to be furnished by any Underwriter to the
Company for inclusion in the Prospectus or the Registration Statement consists
of the information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), legends required by
Item 502(b) of Regulation S-K under the Act and the information under the
caption "Underwriting" in the Prospectus.
14. Miscellaneous.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Units under
this Agreement.
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This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Oregon. All disputes relating to this
Underwriting Agreement shall be adjudicated before a court located in Multnomah
County, Oregon to the exclusion of all other courts that might have
jurisdiction.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
Q Comm International, Inc.
By:
-----------------------------
------------, -----------
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ INVESTMENT COMPANY, INC.
As Representative of the several
Underwriters listed on Schedule I
By: ___________________________________
Authorized Officer
27
SCHEDULE I
Schedule of Underwriters
----------------------------------------------------------- --------------------
Number of Firm Units
Underwriter to be Purchased
----------------------------------------------------------- --------------------
▇▇▇▇▇▇▇ Investment Company, Inc.
Total 500,000
=======
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