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1,500,000 SHARES OF COMMON STOCK
PENTASTAR COMMUNICATIONS, INC.
UNDERWRITING AGREEMENT
________, 1999
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Dear Sirs:
PentaStar Communications, Inc., a Delaware corporation (the "Company"),
hereby confirms its agreement with you (who are sometimes hereinafter referred
to as the "Representative") and with the other members of the underwriting group
(the "Underwriters") named on Schedule 1 hereto as follows:
1. Introductory. Subject to the terms and conditions herein contained,
the Company proposes to sell to the several Underwriters an aggregate of
1,500,000 shares (the "Firm Shares") of the Company's Common Stock, par value
$.001 per share (the "Common Stock"). The Company also proposes to sell to the
several Underwriters not more than 225,000 additional shares of Common Stock
(15% of the number of shares constituting the Firm Shares) if requested by the
Representative as provided in Section 3 of this Agreement. Any and all shares of
Common Stock to be purchased by the Underwriters pursuant to such option are
referred to herein as the "Additional Shares." The Firm Shares and any
Additional Shares are collectively referred to herein as the "Shares."
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
a. The Company has filed with the United States Securities and
Exchange Commission (the "Commission") a registration statement, and
may have filed one or more amendments thereto, on Form SB-2
(Registration No. 333-______), including in such registration statement
and each such amendment a facing sheet, the information called for by
Part I, audited consolidated financial statements for the past three
fiscal years or such other period as may be appropriate, the
information called for by Part II, the undertakings to deliver
certificates, file reports and file post-effective amendments, the
required signatures, consents of experts, exhibits, a related
preliminary prospectus (a "Preliminary Prospectus") and any other
information or documents which are required for the registration of the
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Shares, and the warrants referred to in Section 5(p) (the
"Representative's Warrants") and the shares referred to in Section 5(p)
purchasable upon exercise of the Representative's Warrants (the
"Representative's Warrant Shares"), under the Securities Act of 1933,
as amended (the "Act"). As used in this Agreement, the term
"Registration Statement" means such registration statement, including
incorporated documents, all exhibits and consolidated financial
statements and schedules thereto, as amended, when it becomes
effective, and shall include the information with respect to the
Shares, the Representative's Warrants, and the Representative's Warrant
Shares and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A
of the General Rules and Regulations promulgated under the Act (the
"Regulations"), which information is deemed to be included therein when
it becomes effective as provided by Rule 430A; the term "Preliminary
Prospectus" means each prospectus included in the Registration
Statement, or any amendments thereto, before it becomes effective under
the Act and any prospectus filed by the Company with the consent of the
Representative pursuant to Rule 424(a) of the Regulations; and the term
"Prospectus" means the final prospectus included as part of the
Registration Statement, except that if the prospectus relating to the
securities covered by the Registration Statement in the form first
filed on behalf of the Company with the Commission pursuant to Rule
424(b) of the Regulations shall differ from such final prospectus, the
term "Prospectus" shall mean the prospectus as filed pursuant to Rule
424(b) from and after the date on which it shall have first been used.
b. When the Registration Statement becomes effective, and at
all times subsequent thereto, to and including the Closing Date (as
defined in Section 3) and each Additional Closing Date (as defined in
Section 3), and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Representative
or any dealer, and during such longer period until any post-effective
amendment thereto shall become effective, the Registration Statement
(and any post-effective amendment thereto) and the Prospectus (as
amended or as supplemented if the Company shall have filed with the
Commission any amendment or supplement to the Registration Statement or
the Prospectus) will contain all statements which are required to be
stated therein in accordance with the Act and the Regulations, will
comply with the Act and the Regulations, and will not 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, and no event will have occurred which should
have been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such
an amendment or supplement; and no Preliminary Prospectus, as of the
date filed with the Commission, included any untrue statement of a
material fact
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or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; except that no
representation or warranty is made in this Section 2(b) with respect to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company as stated in Section 8(b)
with respect to the Underwriters by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto.
c. Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of the Shares, the
Representative's Warrants, and the Representative's Warrant Shares, nor
has any of such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order.
d. Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease, or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to or has been incorporated as an exhibit by
reference into the Registration Statement.
e. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
with full power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other
tribunals, to own, lease, license, and use its properties and assets
and to carry on the business in the manner described in the Prospectus.
Each of the Subsidiaries of the Company (the "Subsidiaries") is a
corporation duly organized and validly existing in good standing under
the laws of the jurisdiction of its organization, with full corporate
power and authority to own, lease, and operate its properties and to
conduct its business as described in the Prospectus. The Company and
each Subsidiary is duly qualified to do business and is in good
standing in every jurisdiction in which its ownership, leasing,
licensing, or use of property and assets or the conduct of its business
makes such qualifications necessary. The Company has no Subsidiaries
except as disclosed in the Prospectus.
f. The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, of which _________ shares of Common
Stock are issued and
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outstanding, ___________ shares of Common Stock are reserved for
issuance upon the exercise of currently outstanding options, warrants,
and convertible notes and associated warrants, _________ shares of
Common Stock are reserved for issuance upon the exercise of the
remaining options authorized under the Company's option plan; and
1,000,000 shares of Preferred Stock, none of which are issued or
outstanding. Each outstanding share of Common Stock is validly
authorized, validly issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, and has not been
issued and is not owned or held in violation of any preemptive rights
of stockholders. There is no commitment, plan, or arrangement to issue,
and no outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of the Company or any security
or other instrument which by its terms is convertible into, exercisable
for, or exchangeable for capital stock of the Company, except as set
forth above, and as may be properly described in the Prospectus.
g. The consolidated financial statements of the Company
included in the Registration Statement and the Prospectus fairly
present in all material respects with respect to the Company the
consolidated financial position, the results of operations, and the
other information purported to be shown therein at the respective dates
and for the respective periods to which they apply. Such consolidated
financial statements have been prepared in accordance with generally
accepted accounting principles, except to the extent that certain
footnote disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
consistently applied throughout the periods involved, are correct and
complete in all material respects, and are in accordance with the books
and records of the Company. The accountants whose reports on the
audited consolidated financial statements are filed with the Commission
as a part of the Registration Statement are, and during the periods
covered by their reports included in the Registration Statement and the
Prospectus were, independent certified public accountants with respect
to the Company within the meaning of the Act and the Regulations. No
other financial statements are required by Form S-1 or otherwise to be
included in the Registration Statement or the Prospectus. There has at
no time been a material adverse change in the consolidated financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company from the latest
information set forth in the Registration Statement or the Prospectus,
except as may be properly described in the Prospectus.
h. There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending, or, to
the knowledge of the Company, threatened, or proposed with respect to
the Company or any of its Subsidiaries, operations,
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businesses, properties, or assets, except as may be properly described
in the Prospectus or such as individually or in the aggregate do not
now have and will not in the future have a material adverse effect upon
the operations, business, properties, or assets of the Company. The
Company and each Subsidiary is not in violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or decree
except as may be properly described in the Prospectus or such as in the
aggregate do not now have and will not in the future have a material
adverse effect upon the operations, business, properties, or assets of
the Company, nor is the Company required to take any action in order to
avoid any such violation or default.
i. The Company has good and marketable title in fee simple
absolute to all real properties and good title to all other properties
and assets which the Prospectus indicates are owned by it, free and
clear of all liens, security interests, pledges, charges, encumbrances,
and mortgages except as may be properly described in the Prospectus or
such as in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business,
properties, or assets of the Company. No real property owned, leased,
licensed, or used by the Company lies in an area which is, or to the
knowledge of the Company will be, subject to zoning, use, or building
code restrictions which would prohibit, and no state of facts relating
to the actions or inaction of another person or entity or his or its
ownership, leasing, licensing, or use of any real or personal property
exists which would prevent, the continued effective ownership, leasing,
licensing, or use of such real property in the business of the Company
as presently conducted or as the Prospectus indicates it contemplates
conducting, except as may be properly described in the Prospectus or
such as in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business,
properties, or assets of the Company.
j. Neither the Company nor any other party is now or is
expected by the Company to be in violation or breach of, or in default
with respect to complying with, any material provision of any contract,
agreement, instrument, lease, license, arrangement, or understanding
which is material to the Company, and each such contract, agreement,
instrument, lease, license, arrangement, and understanding is in full
force and is the legal, valid, and binding obligation of the parties
thereto and is enforceable as to them in accordance with its terms. The
Company enjoys peaceful and undisturbed possession under all material
leases and licenses under which it is operating. The Company is not a
party to or bound by any contract, agreement, instrument, lease,
license, arrangement, or understanding, or subject to any charter or
other restriction, which has had or could reasonably be expected to
have in the future have a material adverse effect on the financial
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condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company. The Company and each
of the Subsidiaries is not in violation or breach of, or in default
with respect to, any term of its Articles of Incorporation (or other
charter document) or by-laws.
k. All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
technology, know-how and other intangible properties and assets that
are material to the Company (all of the foregoing being herein called
"Intangibles") that the Company owns or has pending, or under which it
is licensed, are uncontested to the Company's knowledge. Except as
otherwise disclosed in the Registration Statement, the Intangibles are
owned by the Company, free and clear of all liens, security interests,
pledges, and encumbrances. The Company has filed an application with
the United States Patent and Trademark Office to register
"____________________" as a registered trademark. There is no right
under any Intangible necessary to the business of the Company as
presently conducted or as the Prospectus indicates it contemplates
conducting (except as may be so designated in the Prospectus). The
Company has not infringed, is not infringing, and has not received
notice of infringement with respect to asserted Intangibles of others,
except for such infringements which in the aggregate will not result in
a material adverse effect on the Company. To the knowledge of the
Company, there is no infringement by others of Intangibles of the
Company. To the knowledge of the Company, there is no Intangible of
others which has had or which could reasonably be expected in the
future to have a materially adverse effect on the financial condition,
results of operations, business, properties, assets, liabilities, or
future prospects of the Company.
l. Neither the Company nor any of the Subsidiaries, nor any
director, officer, agent, employee, or other person associated with or
acting on behalf of the Company has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment, or
other unlawful expenses relating to political activity; made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended by the International Anti-Bribery Act
of 1998; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment. Each of the Company and the
Subsidiaries has not accepted any material advertising allowances or
marketing allowances from suppliers to the Company or, to the extent
any advertising allowance has been accepted, the Company has provided
proper documentation to the supplier with respect to advertising as to
which the advertising allowance has been granted.
m. The Company has all requisite power and authority to
execute and deliver,
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and to perform thereunder each of this Agreement and the
Representative's Warrants. All necessary corporate proceedings of the
Company have been duly taken to authorize the execution and delivery,
and performance thereunder by the Company of this Agreement and the
Representative's Warrants. This Agreement has been duly authorized,
executed, and delivered by the Company, is a legal, valid, and binding
obligation of the Company, and is enforceable as to the Company in
accordance with its terms. The Representative's Warrants have been duly
authorized by the Company and, when executed and delivered by the
Company, will each be a legal, valid, and binding obligation of the
Company, and will be enforceable against the Company in accordance with
its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or
other tribunal is required by the Company for the execution and
delivery, or performance thereunder by the Company of this Agreement or
the Representative's Warrants except filings under the Act which have
been or will be made before the Closing Date and such consents
consisting only of consents under "blue sky" or securities laws which
are required in connection with the transactions contemplated by this
Agreement and which have been obtained at or prior to the date of this
Agreement. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which the
Company is a party, or to which any of its properties or assets are
subject, is required for the execution or delivery, or performance
thereunder of this Agreement or the Representative's Warrants; and the
execution and delivery, and performance thereunder of this Agreement
and the Representative's Warrants will not violate, result in a breach
of, conflict with, or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a
default under any such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any
term of the Articles of Incorporation or by-laws of the Company, or
violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or to
which any of its operations, businesses, properties, or assets are
subject.
n. The issued and outstanding shares of Common Stock and all
other securities issued and sold or exchanged by the Company were not
required to be registered under any applicable state or federal
securities laws and regulations when issued and sold or exchanged and
were issued and sold or exchanged in compliance with applicable
exemptions from registration under federal and state securities laws.
o. The Shares, the Representative's Warrants and the
Representative's Warrant Shares are validly authorized and reserved for
issuance. The Shares, when issued and delivered in accordance with this
Agreement and the Representative's Warrant Shares,
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when issued and delivered upon exercise of the Representative's
Warrants, and upon payment of the exercise price therefor, will be
validly issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders, and the
Underwriters will receive good title to the Shares purchased, the
Representative will receive good title to the Representative's Warrants
purchased and any purchaser of the Representative 's Warrant Shares
will receive good title thereto, all such title free and clear of all
liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts.
p. The Shares, the Representative's Warrants and the
Representative's Warrant Shares conform to all statements relating
thereto contained in the Registration Statement and the Prospectus.
q. Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may otherwise be properly described in the Prospectus, the Company
has not (i) issued any securities or incurred any liability or
obligation, primary or contingent, for borrowed money, (ii) entered
into any transaction not in the ordinary course of business, or (iii)
declared or paid any dividend on its capital stock.
r. The Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a
broker or finder in connection with the trans actions contemplated by
this Agreement.
s. The Company has obtained from each officer, director and
person or entity that beneficially owns the Company's Common Stock his,
her or its enforceable written agreement that for a period of 12 months
from the Effective Date, he, she or it will not, without the
Representative's prior written consent, sell, the Company's Common
Stock owned by such person prior to the Effective Date. Notwithstanding
the foregoing, commencing 180 days after the Effective Date, the
stockholders of the Company who are not officers or directors of the
Company shall have the right to sell up to 20% of the shares of Common
Stock owned by them, up to a maximum aggregate amount of 150,000 shares
of Common Stock, through and until expiration of the 12 month
restriction provided herein. Any such sales will comply with applicable
exemptions from the registration requirements of the Act. For a period
of three (3) years from the Effective Date, all public sales of the
Company's Common Stock by officers, directors and stockholders of the
Company shall be effected through or with the Representative on an
exclusive basis, provided that the Representative offers or matches the
best price reasonably available to the selling holders. The foregoing
provisions shall not apply to sales of Common Stock in an underwritten
public offering. Further, public or private sales of Common Stock by
such persons shall not
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include gifts, intra-family transfers or transfers for estate planning
purposes, which shall be exempt from the foregoing provisions. The
Company agrees not to sell its Common Stock 2 months from the Effective
Date except (i) with the Representative's prior written consent, (ii)
in an underwritten public offering, (iii) in connection with an
acquisition, (iv) upon the exercise of currently outstanding options or
warrants, (v) upon the conversion of currently outstanding convertible
debt, (vi) upon the exercise of options granted pursuant to the
Company's stock option plan, or (vii) upon exercise of the
Representative's Warrants.
t. The Company and its Subsidiaries have not, directly or
indirectly (except for the sale of Securities under this Agreement),
(i) taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, or (ii)
since the filing of the Registration Statement, and except for the
transactions contemplated herein, (A) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of the Securities, or
(B) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
u. The Company is not an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and this
transaction will not cause the Company to become an investment company
subject to registration under the 1940 Act.
v. The Company and the Subsidiaries have not distributed and,
prior to the later of (A) the Closing Date or any Additional Closing
Date and (B) the completion of the distribution of the Securities, will
not distribute any written offering material in connection with the
offering and sale of the Securities other than the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or other materials,
if any, permitted by the Act.
w. The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which
they are engaged; and neither the Company nor its Subsidiaries has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect,
except as describe in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus).
x. Neither the Company nor its Subsidiaries is presently doing
business with the government of Cuba or with any person or affiliate
located in Cuba.
y. In the event the Company presents a "road show" over the
Internet, the
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Company and any contractor engaged by it to prepare and transmit such
"road show" presentation by means of the Internet shall comply with
that certain no-action request form Net Roadshow, Inc. to the
Securities and Exchange Commission on July 23, 1997, as responded to by
the Securities and Exchange Commission on July 30, 1997.
z. Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), and to the Company's best knowledge after reasonable
investigation, all hardware, firmware, software and computer systems of
the Company and its Subsidiaries and, to the Company's knowledge, of
respective material vendors and suppliers of the Company and its
Subsidiaries, will be by the Closing Date, year 2000 Compliant (as
defined below) and will continue to function in accordance with their
independent purpose without material error or material interruption as
a result of the transition to the year 2000, to the extent that data
submitted or processed is unambiguous and date specific, except such
errors or interruptions which in the aggregate would not reasonably be
expected to have a material adverse effect on the Company . The Company
will not incur any additional material costs for the Company or its
Subsidiaries to become year 2000 Compliant. For purposes of this
paragraph, "year 2000 Compliant" means, with respect to the Company,
its Subsidiaries, or its respective material vendors and suppliers,
that the hardware, firmware, software and computer systems of each of
the foregoing (i) will completely and accurately address, produce,
store and calculate data involving dates before, on or after January 1,
2000 and will not produce abnormally ending or incorrect results
involving such dates as used in any forward or regression dated based
functions, and (ii) will provide that date related functionalities and
data fields include the indication of century and millennium and will
perform calculations that involve a four-digit year.
aa. Except as otherwise provided in the Registration
Statement, no person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of
the filing or effectiveness of the Registration Statement.
bb. The Company is eligible to use Form SB-2 for registration
of the Shares, the Representative's Warrants and the Representative's
Warrant Shares.
cc. No unregistered securities of the Company, of an affiliate
of the Company or of a predecessor of the Company have been sold within
three years prior to the date hereof, except as described in the
Registration Statement.
dd. Except as set forth in the Registration Statement, there
is and at the Closing Date there will be no action, suit or proceeding
before any court, arbitration tribunal or governmental agency,
authority or body pending or, to the knowledge of the Company,
threatened which could reasonably be expected to result in judgments
against the Company not adequately covered by insurance or which
collectively could reasonably be expected to
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result in any material adverse change in the condition (financial or
otherwise), the business or the prospects of the Company or would
materially affect the properties or assets of the Company.
ee. 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 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.
ff. Except as set forth in the Registration Statement:
i. The Company has obtained all permits, licenses and
other authorizations which are required under the
Environmental Laws for the ownership, use and operation of
each location operated or leased by the Company (the
"Property"), all such permits, licenses and authorizations, if
any, obtained are in effect, no appeal nor any other action is
pending to revoke any such permit, license or authorization,
and the Company is in full compliance with all terms and
conditions of all such permits, licenses and authorizations,
if any, obtained by the Company.
ii. To the best knowledge of the Company's executive
officers, the Company and the Property are in compliance with
all Environmental Laws including, without limitation, all
restrictions, conditions, standards, limitations,
prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
iii. The Company has not, and to the best knowledge
of the Company's executive officers, no other person has,
released, placed, stored, buried or dumped any Hazardous
Substances, Oils, Pollutants or Contaminants or any other
wastes produced by, or resulting from, any business,
commercial, or industrial activities, operations, or
processes, on, beneath, or adjacent to the Property or any
property formerly owned, operated or leased by the Company
except for inventories of such substances to be used, and
wastes generated therefrom, in the ordinary course of business
of the Company (which inventories and wastes, if any, were and
are stored or disposed of in accordance with applicable laws
and regulations and in a manner such that there has been no
release of any such substances into the environment).
iv. Except as provided to the Representative, there
exists no written or tangible report, synopsis or summary of
any asbestos, toxic waste or Hazardous
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Substances, Oils, Pollutants or Contaminants investigation
made with respect to all or any portion of the assets of the
Company (whether or not prepared by experts and whether or not
in the possession of the executive officers of the Company).
v. Definitions: As used herein:
(1) Environmental Laws means all federal,
state and local laws, regulations, rules and
ordinances relating to pollution or protection of the
environment, including, without limitation, laws
relating to Releases or threatened Releases of
Hazardous Substances, Oils, Pollutants or
Contaminants into the indoor or outdoor environment
(including, without limitation, ambient air, surface
water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
(2) Hazardous Substances, Oils, Pollutants
or Contaminants means all substances defined as such
in the National Oil and Hazardous Substances
Pollutant Contingency Plan, 40 C.F.R. Section 300.6,
or defined as such under any Environmental Law.
(3) Release means any release, spill,
emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environmental
(including, without limitation, ambient air, surface
water, groundwater, and surface or subsurface strata)
or into or out of any property, including the
movement of Hazardous Substances, Oils, Pollutants or
Contaminants through or in the air, soil, surface
water, groundwater or any property.
3. Purchase, Sale, and Delivery of the Shares. On the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters, severally and not jointly, and the
Underwriters, severally and not jointly, agree to purchase from the Company the
number of Firm Shares set forth opposite the Underwriters' names in Schedule 1
hereto.
The purchase price per Firm Share to be paid by the Underwriters shall
be $______. The initial public offering price of the Shares shall be $______.
Payment for the Firm Shares by the Underwriters shall be made by wire
transfer or by certified or official bank check in clearing house funds, payable
to the order of the Company at the offices of ▇▇▇▇▇▇▇▇▇ Securities, Inc., ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place in
Denver, Colorado as the Representative shall determine and advise the Company by
at least two full days' notice in writing, upon delivery of the Shares to the
13
Representative. Such delivery and payment shall be made at 10:00 a.m., Mountain
Time, on the third business day following the time of the initial public
offering, as defined in Section 10(a) hereof, unless the Commission declares the
Registration Statement effective after 4:30 p.m. Eastern time, in which event
delivery and payment shall be made on the fourth (4th) business day following
the time of the initial public offering. The time and date of such delivery and
payment are herein called the "Closing Date."
In addition, the Company hereby grants to the Representative the option
to purchase all or a portion of the Additional Shares as may be necessary to
cover over-allotments, at the same purchase price per Additional Share as the
price per Firm Share provided for in this Section 3. The Representative may
purchase Additional Shares when exercising such option, in its sole discretion.
This option may be exercised by the Representative on the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, at any time
and from time to time on or before the 45th day following the Effective Date of
the Registration Statement, by written notice by the Representative to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the time and date, as determined
by the Representative, when such Additional Shares are to be delivered (such
time and date are herein called an "Additional Closing Date"); provided,
however, that no Additional Closing Date shall be earlier than the Closing Date
nor earlier than the third business day after the date on which the notice of
the exercise of the option shall have been given nor later than the eighth
business day after the date on which such notice shall have been given; and
further provided, that not more than two Additional Closings shall be noticed
and held following purchase of Additional Shares by the Representative.
Payment for the Additional Shares shall be made by wire transfer or by
certified or official bank check in clearing house funds payable to the order of
the Company at the offices of ▇▇▇▇▇▇▇▇▇ Securities, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or at such other place in Denver, Colorado as you
shall determine and advise the Company by at least two full days' notice in
writing, upon delivery of certificates representing the Additional Shares to
you.
Certificates for the Shares purchased shall be registered in such name
or names and in such authorized denominations as you may request in writing at
least two full business days prior to the Closing Date or Additional Closing
Date, as applicable. The Company shall permit you to examine and package such
certificates for delivery at least one full business day prior to any such
closing with respect thereto.
If for any reason one or more Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 10 hereof) to purchase and pay for the
number of Firm Shares agreed to be purchased by such Underwriter, the Company
shall immediately give notice thereof to the Representative, and the
non-defaulting
14
Underwriters shall have the right within 24 hours after the receipt by the
Representative of such notice, to purchase or procure one or more other
Underwriters to purchase, in such proportions as may be agreed upon among the
Representative and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, the Firm Shares which such defaulting Underwriter or
Underwriters agreed to purchase. If the non-defaulting Underwriters fail to make
such arrangements with respect to all such Firm Shares, the number of Firm
Shares which each non-defaulting Underwriter is otherwise obligated to purchase
under the Agreement shall be automatically increased pro rata to absorb the
remaining Firm Shares which the defaulting Underwriter or Underwriters agreed to
purchase; provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the Firm Shares which the defaulting Underwriter or
Underwriters agreed to purchase in excess of 10% of the total number of Shares
which such non-defaulting Underwriter agreed to purchase hereunder, and provided
further that the non-defaulting Underwriters shall not be obligated to purchase
any Firm Shares 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 total number of Firm Shares which the defaulting Underwriter or Underwriters
agreed to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company shall have the right, within 24 hours next
succeeding the 24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to the Representative for the purchase
of such Firm Shares on the terms herein set forth. In any such case, either the
Representative or the Company shall have the right to postpone the Closing for
not more than seven business days after the date originally fixed as the Closing
in order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made. If neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
24-hour periods stated above for the purchase of all the Firm Shares which the
defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter, except
the Company shall be liable for actual expenses incurred by the Representative
as provided in Section 10 hereof, and without any liability on the part of any
non-defaulting Underwriter to the Company.
Nothing contained herein shall relieve any defaulting Underwriter of
its liability, if any, to the Company or to the remaining Underwriters for
damages occasioned by its default hereunder.
4. Offering. The Underwriters are to make a public offering of the
Shares as soon, on or after the effective date of the Registration Statement, as
the Representative deems it advisable so to do. The Shares are to be initially
offered to the public at the initial public offering price as provided for in
Section 3 (such price being herein called the "public offering price"). After
the
15
initial public offering, you may from time to time increase or decrease the
price of the Shares in your sole discretion, by reason of changes in general
market conditions or otherwise.
5. Covenants of the Company. The Company covenants that it will:
a. Use its best efforts to cause the Registration Statement to
become effective as promptly as possible. If the Registration Statement
has become or becomes effective with a form of Prospectus omitting
certain information pursuant to Rule 430A of the Regulations, or filing
of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus, properly completed, pursuant to Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to you of such timely filing.
b. Notify you immediately, and confirm such notice in writing,
(i) when the Registration Statement and any post-effective amendment
thereto become effective, (ii) of the receipt of any comments from the
Commission or the "blue sky" or securities authority of any
jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement
thereto, and (iii) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding with
respect to a Stop Order. The Company will use its best efforts to
prevent the issuance of any Stop Order and, if any Stop Order is
issued, to obtain the lifting thereof as promptly as possible.
c. During the time when a prospectus relating to the Shares is
required to be delivered hereunder or under the Act or the Regulations,
comply so far as it is able with all requirements imposed upon it by
the Act, as now existing and as hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Shares and
Representative's Warrant Shares in accordance with the provisions
hereof and the Prospectus. If, at any time when a prospectus relating
to the Shares or Representative's Warrant Shares is required to be
delivered hereunder or under the Act or the Regulations, any event
shall have occurred as a result of which, in the reasonable opinion of
counsel for the Company or counsel for the Representative, the
Registration Statement or the Prospectus, as then amended or
supplemented, 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 not misleading, or if, in the opinion of
either of such counsel, it is necessary at any time to amend or
supplement the Registration Statement or the Prospectus to comply with
the Act or the Regulations, the Company will immediately notify you and
promptly prepare and file with the Commission an appropriate amendment
or supplement (in form and substance satisfactory to you) which will
correct such statement or omission or which will effect such compliance
and will use its best efforts to have any such amendment declared
effective as soon as possible.
16
d. Deliver without charge to you such number of copies of each
Preliminary Prospectus as you may reasonably request and, as soon as
the Registration Statement or any amendment thereto becomes effective
or a supplement is filed, deliver without charge to you two signed
copies of the Registration Statement or such amendment thereto, as the
case may be, including exhibits, and two copies of any supplement
thereto, and deliver without charge to you such number of copies of the
Prospectus, the Registration Statement, and amendments and supplements
thereto, if any, without exhibits, as you may reasonably request for
the purposes contemplated by the Act.
e. Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to
qualify the Shares and Representative's Warrant Shares for offering and
sale under the "blue sky" or securities laws of such jurisdictions as
you may designate; provided, however, that no such qualification shall
be required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a
foreign corporation doing business in such jurisdiction to which it is
not then subject. In each jurisdiction where such qualification shall
be effected, the Company will, unless you agree in writing that such
action is not at the time necessary or advisable, file and make such
statements or reports at such times as are or may be required by the
laws of such jurisdiction.
f. Make generally available (within the meaning of Section
11(a) of the Act and the Regulations) to its security holders as soon
as practicable, but not later than fifteen (15) months after the date
of the Prospectus, an earnings statement (which need not be certified
by independent certified public accountants unless required by the Act
or the Regulations, but which shall satisfy the provisions of Section
11(a) of the Act and the Regulations) covering a period of at least 12
months beginning after the effective date of the Registration
Statement.
g. For a period of 12 months after the date of the Prospectus,
not, without your prior written consent, offer, issue, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or any security or
other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock) except as provided in
Section 3 and except (i) with the Representative's prior written
consent, (ii) in an underwritten public offering, (iii) in connection
with an acquisition, (iv) upon the exercise of currently outstanding
options or warrants, (v) upon the conversion of currently outstanding
convertible debt, (vi) upon the exercise of options granted pursuant to
the Company's stock option plan, or (vii) upon exercise of the
Representative's Warrants.
17
h. For a period of five years after the Effective Date of the
registration statement, furnish you, without charge, the following:
i. Within 105 days after the end of each fiscal year,
three copies of consolidated financial statements certified by
independent certified public accountants, including a balance
sheet, statement of operations, and statement of cash flows of
the Company and its then existing Subsidiaries, with
supporting schedules, prepared in accordance with generally
accepted accounting principles, at the end of such fiscal year
and for the 12 months then ended;
ii. As soon as practicable after they have been sent
to stockholders of the Company or filed with the Commission,
three copies of each annual and interim financial and other
report or communication sent by the Company to its
stockholders or filed with the Commission;
iii. As soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company;
iv. Notice of any regular or special meeting of the
Company's Board of Directors concurrently with the sending of
such notice to the Company's directors; and
v. Such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its Subsidiaries as you may from time to time reasonably
request.
i. Designate an Audit Committee and a Compensation Committee,
the members of which shall be subject to your reasonable approval,
which will generally supervise the financial affairs of the Company and
review executive compensation, respectively.
j. Furnish to you as early as practicable prior to the Closing
Date and any Additional Closing Date, as the case may be, but not less
than two full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the
Company which have been read by the Company's independent certified
public accountants, as stated in their letters to be furnished pursuant
to Section 7(e).
k. File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the
Effective Date of the Registration Statement, unless such filing shall
comply with the Act and the Regulations and unless you shall previously
have been advised of such filing and furnished with a copy thereof, and
you and counsel for the Representative shall have approved such filing
in writing within a reasonable time of receipt thereof.
18
l. Comply with all periodic reporting and proxy solicitation
requirements which may from time to time be applicable to the Company
as a result of the Company's registration under the Exchange Act on a
registration statement on Form 8-A.
m. Comply with all provisions of all undertakings contained in
the Registration Statement.
n. Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication,
directly or indirectly, and hold no press conference and grant no
interviews with respect to the Company, the financial condition,
results of operations, business, properties, assets, or liabilities of
the Company, or this offering, without your prior written consent.
o. Appoint ___________________, Inc. as its transfer agent.
p. On or prior to the Closing Date, sell to the Representative
for a total purchase price of $10, Representative's Warrants entitling
the Representative or its assigns to purchase one share of Common Stock
for each 10 Firm Shares sold to the public at a price equal to 120% of
the public offering price of the Shares, with the terms of the
Representative's Warrants, including exercise period, anti-dilution
provisions, exercise price, exercise provisions, transferability, and
registration rights, to be in the form filed as an exhibit to the
Registration Statement.
q. Until expiration of the Representative's Warrants, keep
reserved sufficient shares of Common Stock for issuance as
Representative's Warrant Shares upon full exercise of the
Representative's Warrants.
r. Adopt procedures for the application of the net proceeds it
receives from the sale of the Shares and apply the net proceeds from
the sale of the Shares substantially in the manner set forth in the
Registration Statement, which does not contemplate repayment of debt to
officers, directors, stockholders or affiliates of the Company, unless
any deviation from such application is in accordance with the
Registration Statement and occurs only after approval by the Board of
Directors of the Company and then only after the Board of Directors has
obtained the written opinion of recognized legal counsel experienced in
federal and state securities laws as to the propriety of any such
deviation.
s. Within the time period which the Prospectus is required to
be delivered under the Act, comply, at its own expense, with all
requirements imposed upon it by the Act, as now or hereafter amended,
by the Rules and Regulations, as from time to time may be enforced, and
by any order of the Commission, so far as necessary to permit the
continuance of sales or dealing in the Shares.
t. At the Closing, deliver to the Representative true and
correct copies of the Articles of Incorporation of the Company and all
amendments thereto, all such copies to be certified by the Secretary of
the Company; true and correct copies of the by-laws of the
19
Company and of the minutes of all meetings of the directors and
stockholders of the Company held prior to the Closing which in any way
relate to the subject matter of this Agreement or the Registration
Statement.
u. Use all reasonable efforts to comply or cause to be
complied with the conditions precedent to the several obligations of
the Underwriters in Section 7 hereof.
v. File with the Commission all required information
concerning use of proceeds of the Public Offering in Forms 10-Q and
10-K in accordance with the provisions of the Exchange Act and to
provide a copy of such reports to the Representative and its counsel.
w. Supply to the Representative and the Representative's
counsel at the Company's cost, two bound volumes each containing
material documents relating to the offering of the Shares within a
reasonable time after the Closing, not to exceed 90 days.
x. As soon as possible prior to the Effective Date, and as a
condition of the Underwriter's obligations hereunder, (i) if requested
by the Representative, have the Company listed on an accelerated basis,
and to maintain such listing for not less than ten years from the
Closing Date, in Standard & Poor's Standard Corporation Records; and
(ii) have the Common Stock quoted on the Nasdaq SmallCap Market as of
the Effective Date, on the Closing Date, on the Additional Closing Date
and thereafter for at least ten years provided the Company is in
compliance with the Nasdaq SmallCap Market maintenance requirements.
y. Continue, for a period of at least five years following the
Effective Date of the Registration Statement, to appoint such auditors
as are reasonably acceptable to the Representative, which auditors
shall (i) prepare consolidated financial statements in accordance with
Regulation S-X under the General Rules and Regulations of the Act and
(ii) examine (but not audit) the Company's consolidated financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of the
Company's 10-Q quarterly report and the mailing of quarterly financial
information to security holders.
z. Within 90 days of the Effective Date of the Registration
Statement, obtain "key man" life insurance policies in the amount of
$1,000,000 each on the lives of ____________ and ___________, with the
Company designated as the beneficiary of such policy, and pay the
annual premiums thereon for a period of not less than five years from
the Effective Date of the Registration Statement.
aa. Cause its transfer agent to furnish the Representative a
duplicate copy of the daily transfer sheets prepared by the transfer
agent during the six-month period commencing on the Effective Date of
the Registration Statement and instruct the transfer agent to timely
provide, upon the request of the Representative, duplicate copies of
such
20
transfer sheets and/or a duplicate copy of a list of stockholders, all
at the Company's expense, for a period of 4 1/2 years after such
six-month period.
bb. Refrain from filing a Form S-8 registration statement for
a period of 90 days from the Effective Date of the Registration
Statement without the Representative's prior written consent. The
Company will also obtain from each holder of options to acquire Common
Stock of the Company such person's written enforceable agreement not to
sell shares of Common Stock pursuant to the exemption afforded by Rule
701 under the 1933 Act for a minimum period of 90 days from the
Effective Date without the prior written consent of the Representative.
cc. Afford the Representative the right, but not the
obligation, commencing on the Effective Date and surviving for a period
of three years, to designate an observer to attend meetings of the
Board of Directors. The designee, if any, and the Representative will
receive notice of each meeting of the Board of Directors in accordance
with Colorado law. Any such designee will receive reimbursement for all
reasonable costs and expenses incurred in attending meetings of the
Board of Directors, including but not limited to, food, lodging and
transportation, together with such other fee or compensation (but
excluding options or securities) as is paid by the Company to other
members of the Board of Directors. Moreover, to the extent permitted by
law, the Representative and its designee shall be indemnified for the
actions of such designee as an observer to the Board of Directors and
in the event the Company maintains a liability insurance policy
affording coverage for the acts of its officers and/or directors, to
the extent permitted under such policy, each of the Representative and
its designee shall be an insured under such policy.
dd. The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities, or (ii) for a period of 12 months
after the date hereof (A) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities, or (B) pay or
agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
ee. The Company will use its best efforts to maintain
insurance of the types and in the amounts which it deems adequate for
its business consistent with insurance coverage maintained by companies
of similar size and engaged in similar businesses including, but not
limited to, general liability insurance covering products and services
sold or distributed by the Company, all real and personal property
owned or leased by the Company and its Subsidiaries, and providing
coverage for theft, damage, destruction, acts of vandalism and all
other risks customarily insured against.
ff. Inform the Florida Department of Banking and Finance at
any time prior to
21
the consummation of the distribution of the Firm Securities and the
Additional Securities by the Representatives if it commences engaging
in business with the government of Cuba or with any person or affiliate
located in Cuba. Such information will be provided within 90 days after
the commencement thereof or after a change occurs with respect to
previously reported information.
gg. After the Effective Date, the Company will continue to
adopt annual business plans and monthly financial projections
(including balance sheet, profit/loss statement, statement of cash
flows, revenue and earnings) and an annual budget which are agreeable
to the Board of Directors.
6. Payment of Expenses. The Company hereby agrees to pay all expenses
(subject to the last sentence of this Section 6) in connection with the
offering, including but not limited to (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement and the Prospectus,
including NASD, SEC, Nasdaq filing and/or application fees, and the printing,
filing, distribution, and mailing of this Agreement, any Agreement Among
Underwriters, Selected Dealers Agreement, preliminary and final Blue Sky
Memorandums, material to be circulated to the Underwriters by you and other
incidental or related documents, including the cost of all copies thereof and of
the Preliminary Prospectuses and of the Prospectus, and any amendments or
supplements thereto, supplied to the Representative in quantities as herein
above stated, (b) the issuance, sale, transfer, and delivery of the Firm Shares,
Additional Shares, the Representative's Warrants and the Representative's
Warrant Shares, including, without limitation, any original issue, transfer or
other taxes payable thereon and the costs of preparation, printing and delivery
of certificates representing such securities, as applicable, (c) the
qualification of the Firm Shares, Additional Shares, the Representative's
Warrants and the Representative's Warrant Shares under state or foreign "blue
sky" or securities laws, which qualification shall be undertaken by counsel to
the Representative at the Company's expense, (d) the fees and disbursements of
counsel for the Company and the accountants for the Company, (e) the listing of
the Shares on the Nasdaq SmallCap Market and (f) the Representative's
non-accountable expense allowance equal to 3% of the aggregate gross proceeds
from the sale of the Shares. Prior to or immediately following the Closing Date,
the Company shall bear the costs of tombstone announcements if requested to do
so by the Representative.
The Company has previously remitted to the Representative the sum of
$25,000, which sum has been credited as a partial payment in advance of the
non-accountable expense allowance provided for in Section 6(f) above.
7. Conditions of Underwriters' Obligations. The Underwriters'
obligation to purchase and pay for the Firm Shares and Additional Shares, as
provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
you, as of the
22
date hereof and as of the Closing Date (or the Additional Closing Date, as the
case may be), to the performance by the Company of its obligations hereunder,
and to the following conditions:
a. The Registration Statement shall have become effective not
later than 5:00 p.m., Mountain time, on the date of this Agreement or
such later date and time as shall be consented to in writing by you.
b. At the Closing Date and any Additional Closing Date, you
shall have received the favorable opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.,
counsel for the Company, dated the date of delivery, addressed to you,
and in form and scope satisfactory to your counsel, to the effect that:
i. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Delaware, with full power and authority, and, after
reasonable investigation, counsel has no knowledge that the
Company does not have all necessary consents, authorizations,
approvals, orders, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other
tribunals, to own, lease, license, and use its properties and
assets and to conduct its business in the manner described in
the Prospectus. The Company is duly qualified to do business
and is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets
or the conduct of its business makes such qualification
necessary;
ii. Each Subsidiary is a corporation duly organized
and validly existing in good standing under the laws of the
jurisdiction of its organization, with full corporate power
and authority to own, lease, and operate its properties and to
conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement
thereto); and all the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned by the
Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any perfected security
interest, or, to the best knowledge of such counsel after
reasonable inquiry, any other security interest, lien, adverse
claim, equity or other encumbrance;
iii. The authorized capital stock of the Company as
of the date of this Agreement consisted of 20,000,000 shares
of Common Stock, of which _________ shares of Common Stock are
issued and outstanding, ________ shares of Common Stock are
reserved for issuance upon the exercise of outstanding
options, warrants and convertible notes and associated
warrants, and ________ shares of Common Stock are reserved for
issuance upon the exercise of the remaining options authorized
under the Company's option plan; and 1,000,000 shares of
Preferred
23
Stock, none of which are issued and outstanding; and there
have been no changes in the authorized and outstanding capital
stock of the Company since the date of this Agreement, except
as contemplated by the Registration Statement and the
Prospectus. Each outstanding share of capital stock is validly
authorized, validly issued, fully paid, and nonassessable,
with no personal liability attaching to the ownership thereof,
has not been issued and is not owned or held in violation of
any preemptive right of stockholders. There is no commitment,
plan, or arrangement to issue, and no outstanding option,
warrant, or other right calling for the issuance of, any share
of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable
for, or exchangeable for capital stock of the Company, except
as set forth above, and except as is properly described in the
Prospectus. There is outstanding no security or other
instrument which by its terms is convertible into or
exchangeable for capital stock of the Company, except as
described in the Prospectus;
iv. To the knowledge of counsel, there is no
litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending,
threat ened, or proposed (or any basis therefor) with respect
to the Company or any of its respective operations,
businesses, properties, or assets, except as is properly
described in the Prospectus or such as individually or in the
aggregate do not now have and will not in the future have a
material adverse effect upon the operations, business,
properties, or assets of the Company;
v. Neither the Company nor any Subsidiary is in
material violation or material breach of, or in material
default with respect to, any term of its Articles of
Incorporation or by-laws;
vi. The Company has all requisite power and authority
to execute and deliver and to perform thereunder this
Agreement and the Representative's Warrants. All necessary
corporate proceedings of the Company have been taken to
authorize the execution and delivery and performance
thereunder by the Company of this Agreement and the
Representative's Warrants. Each of this Agreement and the
Representative's Warrants have been duly authorized, executed
and delivered by the Company, and is a legal, valid, and
binding obligation of the Company, and enforceable as to the
Company in accordance with its respective terms. No consent,
authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority is required by
the Company for the execution or delivery, or performance
thereunder by the Company of this Agreement or the
Representative's Warrants (except filings under the Act which
have been made prior to the Closing Date, and
24
consents consisting only of consents under "blue sky" or
securities laws which are required in connection with the
transactions contemplated by this Agreement, and which counsel
has been advised by counsel to the underwriters have been
obtained on or prior to the date the Registration Statement
becomes effective under the Act). No consent of any party to
any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party,
or to which any of its properties or assets are subject, is
required for the execution or delivery, or performance
thereunder of this Agreement or the Representative's Warrants;
and the execution and delivery and performance thereunder of
this Agreement and the Representative's Warrants will not
violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under any
such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a
breach of any term of the Articles of Incorporation or by-laws
of the Company, or violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree
binding on the Company or to which any of its operations,
businesses, properties, or assets are subject;
vii. The Shares are, and the Representative's Warrant
Shares will be upon exercise of the Representative's Warrants,
validly authorized, validly issued, fully paid, and
nonassessable and are not issued in violation of any
preemptive rights of shareholders, and the Underwriters will
have received good title to the Shares purchased by them from
the Company upon payment therefor, free and clear of all
liens, security interests, pledges, charges, encumbrances,
shareholders' agreements, and voting trusts. The
Representative's Warrant Shares have been duly and validly
reserved for issuance pursuant to the terms of the
Representative's Warrants. The Shares, the Representative's
Warrants and the Representative's Warrant Shares conform to
all statements relating thereto contained in the Registration
Statement or the Prospectus;
viii. To the knowledge of counsel, all contracts,
agreements, instruments, leases, and licenses that are
required to be described in the Registration Statement or the
Prospectus have been properly described therein. To the
knowledge of counsel, all contracts, agreements, instruments,
leases, or licenses required to be filed as an exhibit to the
Registration Statement have been filed with the Commission as
an exhibit to or have been incorporated as an exhibit by
reference into the Registration Statement;
ix. Insofar as statements in the Prospectus purport
to summarize the status of litigation or the provisions of
laws, rules, regulations, orders, judgments,
25
decrees, contracts, agreements, instruments, leases, or
licenses such statements have been prepared or reviewed by
such counsel and to the knowledge of such counsel accurately
reflect the status of such litigation and provisions purported
to be summarized and are correct in all material respects;
x. Except as provided in the Registration Statement,
no person or entity has the right to require registration of
shares of Common Stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement;
xi. The Registration Statement has become effective
under the Act. No Stop Order has been issued and no
proceedings for that purpose have been instituted or
threatened;
xii. The Registration Statement and the Prospectus,
and any amendment or supplement thereto, comply as to form in
all material respects with the requirements of the Act and the
Regulations;
xiii. After reasonable investigation, such counsel
has no knowledge that either the Registration Statement or the
Prospectus, or any amendment or supplement thereto, contains
any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading (except that no
opinion need be expressed as to the consolidated financial
statements and other financial data and schedules which are or
should be contained therein);
xiv. After reasonable investigation, such counsel has
no knowledge of any event which has occurred since the
Effective Date which should have been set forth in an
amendment or supplement to the Registration Statement or the
Prospectus that has not been set forth in such an amendment or
supplement;
xv. The Company is not currently offering any
securities for sale except as described in the Registration
Statement;
xvi. After reasonable investigation, such counsel has
no knowledge of any promoters, affiliates, parents or
Subsidiaries of the Company except as are described in the
Registration Statement;
xvii. The Company and its Subsidiaries own or
possess, free and clear of all liens or encumbrances and
rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, copyrights,
service marks, service names, trade names and licenses
necessary to conduct business (including without limitation,
any such licenses or rights described in the Registration
Statement as being owned or possessed by the Company or any
Subsidiary) (all of which are collectively referred to herein
as the "Intellectual Property"); there is no actual or, to the
knowledge of counsel, pending, or threatened claim, proceeding
or action by
26
any person pertaining to or which challenges the exclusive
rights of the Company with respect to any of the Company's
Intellectual Property; based on a review of all the Company's
products, proposed products and Intellectual Property, to the
knowledge of counsel, such products, proposed products or
Intellectual Property do not and will not infringe on any
trademarks, copyrights, service marks, service names, trade
names or valid patents or patents pending held by third
parties known to the Company and such counsel;
xviii. The Company is not a party to any agreement
giving rise to any obligation by the Company or any Subsidiary
to pay any third-party royalties or fees of any kind
whatsoever with respect to any technology developed, employed,
used or licensed by the Company or any Subsidiary, other than
is disclosed in the Prospectus; and
xix. The Shares are eligible for quotation on the
Nasdaq SmallCap Market.
Such opinion shall be governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA
Section of Business Law (1991) and shall be subject to the
qualifications, exceptions, definitions, limitations on coverage and
other limitations set forth therein and in such opinion. Qualifications
in such opinion as to knowledge or the absence of knowledge shall be
based upon and limited to the "Actual Knowledge" (as defined in the
Accord) of the "Primary Lawyer Group" (as identified in such opinion).
In rendering such opinion, such legal counsel shall be entitled to rely
upon Public Authority Documents and upon information provided by client
officials in written Certificates provided that copies of such Public
Authority Documents and Certificates are attached as exhibits to the
written opinion of legal counsel. The term "Public Authority Documents"
shall have the meaning ascribed to it in the Legal Opinion Accord of
the ABA Section of Business Law (1991).
c. On or prior to the Closing Date and any Additional Closing
Date, as the case may be, you shall have been furnished such
information, documents, certificates, and opinions as you may
reasonably require for the purpose of enabling you to review the
matters referred to in this Section 7, and in order to evidence the
accuracy, completeness, or satisfaction of any of the representations,
warranties, covenants, agreements, or conditions herein contained, or
as you may reasonably request.
d. At the Closing Date and any Additional Closing Date, as the
case may be, you shall have received a certificate of the chief
executive officer and of the chief financial officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect that the conditions set forth in Section 7(a) have
been satisfied, that as of the date of this Agreement and as of the
Closing Date or such Additional Closing
27
Date, as the case may be, the representations and warranties of the
Company contained herein were and are accurate, and that as of the
Closing Date or such Additional Closing Date, as the case may be, the
obligations to be performed by the Company hereunder on or prior
thereto have been fully performed.
e. At the time this Agreement is executed and at the Closing
Date and any Additional Closing Date, as the case may be, you shall
have received letters from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Certified Public
Accountants, addressed to you and dated the date of delivery but
covering a period within three business days of such date, in form and
substance satisfactory to you.
f. All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Firm Shares and the Additional
Shares shall be satisfactory in form and substance to you and to
counsel for the Representative, and you shall have received a favorable
opinion from counsel to the Company, dated as of the Closing Date or
the Additional Closing Date, as the case may be, with respect to such
of the matters set forth under Sections 7(b) and 7(c) and with respect
to such other related matters as you may reasonably request.
g. The NASD, upon review of the terms of the public offering
of the Firm Shares and the Additional Shares shall not have objected to
your participation in such offering.
h. The Company shall have received notice that the Common
Stock will be quoted on the Nasdaq SmallCap Market as of the Effective
Date.
Any certificate or other document signed by any officer of the Company
and delivered to you or to counsel for the Representative shall be deemed a
representation and warranty by such officer individually and by the Company
hereunder to the Representative as to the statements made therein. If any
condition to your obligations hereunder to be fulfilled prior to or at the
Closing Date or any Additional Closing Date, as the case may be, is not so
fulfilled, you may terminate this Agreement or, if you so elect, in writing
waive any such conditions which have not been fulfilled or extend the time for
their fulfillment.
8. Indemnification and Contribution.
a. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Underwriters, the
Representative, and each of their officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls
the Representative or any one of the Underwriters within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any
and all loss, liability, claim, damage, and expense whatsoever (which
shall include, for all purposes of this Section 8, but not be limited
to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim
28
whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon, or in
connection with (i) any untrue statement or alleged untrue statement of
a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement, or the Prospectus (as from time to time amended
and supplemented), or any amendment or supplement thereto, or (B) in
any application or other document or communication (in this Section 8
collectively called an "application") in any jurisdiction in order to
qualify the Common Stock under the "blue sky" or securities laws
thereof or filed with the Commission or any securities exchange; or any
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or (ii) any breach of any representation, warranty,
covenant, or agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any liability
the Company may otherwise have, including liabilities arising under
this Agreement; however, the Company shall have no liability under this
Section 8 if such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company as
stated in Section 8(b) with respect to the Underwriters by or on behalf
of the Underwriters expressly for inclusion in any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may
be.
If any action is brought against the Underwriters, the
Representative or any of their officers, directors, partners,
employees, agents, or counsel, or any controlling persons of an
Underwriter or the Representative (an "indemnified party") in respect
of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but
the failure so to notify shall not relieve the Company from any
liability it may have other than pursuant to this Section 8(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in
connection with the defense of such action or the Company shall not
have promptly employed counsel satisfactory to such indemnified party
or parties to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses
shall be borne by the Company. Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any
29
settlement of any such claim or action effected without its written
consent. The Company agrees promptly to notify the Underwriters and the
Representative of the commencement of any litigation or proceedings
against the Company or against any of its officers or directors in
connection with the sale of the Shares, any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or any application.
b. The Underwriters agree to indemnify and hold harmless the
Company, the Company's counsel, each director of the Company, each
officer of the Company who shall have signed the Registration
Statement, each other person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to
the Underwriters in Section 8(a), but only with respect to statements
or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement, or the Prospectus (as from time to time amended
and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written
information furnished to the Company as stated in this Section 8(b)
with respect to the Underwriters by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto,
or in any application, as the case may be; provided, however, that the
obligation of the Underwriters to provide indemnity under the
provisions of this Section 8(b) shall be limited to the amount which
represents the product of the number of Firm Shares and Additional
Shares sold hereunder and the initial public offering price per Share
set forth on the cover page of the Prospectus. For all purposes of this
Agreement, the amounts of the selling concession and reallowance set
forth in the Prospectus, the information under "Underwriting" and the
identification of counsel to the Representative under "Legal Matters"
constitute the only information furnished in writing by or on behalf of
the Underwriters expressly for inclusion in any Preliminary Prospectus,
the Registration Statement, or the Prospectus (as from time to time
amended or supplemented), or any amendment or supplement thereto, or in
any application, as the case may be. If any action shall be brought
against the Company or any other person so indemnified based on any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto, or any application, and in
respect of which indemnity may be sought against the Underwriters
pursuant to this Section 8(b), the Underwriters shall have the rights
and duties given to the Company, and the Company and each other person
so indemnified shall have the rights and duties given to the
indemnified parties, by the provisions of Section 8(a).
c. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 8 is for any reason held to be unavailable to the Underwriters
or the Company, then the Company shall contribute to the
30
damages paid by the several Underwriters, and the several Underwriters
shall contribute to the damages paid by the Company; provided, however,
that 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. In determining the amount of contribution to which
the respective parties are entitled, there shall be considered the
relative benefits received by each party from the sale of the Firm
Shares and Additional Shares (taking into account the portion of the
proceeds of the offering realized by each), the parties' relative
knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent
any statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Underwriters
agree that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose). No
Underwriter or person controlling such Underwriter shall be obligated
to make contribution hereunder which in the aggregate exceeds the total
public offering price of the Firm Shares and Additional Shares
purchased by such Underwriter under this Agreement, less the aggregate
amount of any damages which such Underwriter and its controlling
persons have otherwise been required to pay in respect of the same or
any substantially similar claim. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section,
each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the Act,
shall have the same rights to contribution as the Company. Anything in
this Section 8(c) to the contrary notwithstanding, no party shall be
liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 8(c) is
intended to supersede any right to contribution under the Act, the
Exchange Act, or otherwise.
9. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Representative, the Underwriters or
any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 8(b), and shall survive
termination of this Agreement or the delivery of the Firm Shares and Additional
Shares to
31
the Underwriters for a period equal to the statute of limitations for claims
related hereto, but not to exceed an aggregate of five years from the date
hereof. In addition, the provisions of Sections 5(a), 6, 8, 9, 10, and 12 shall
survive termination of this Agreement, whether such termination occurs before or
after the Closing Date or any Additional Closing Date.
10. Effective Date of This Agreement and Termination Thereof.
a. This Agreement shall be executed within 24 hours of the
Effective Date of the Registration Statement and shall become effective
on the Effective Date or at the time of the initial public offering of
the Shares, whichever is earlier. The time of the initial public
offering shall mean the time, after the Registration Statement becomes
effective, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating
to the Shares or the time, after the Registration Statement becomes
effective, when the Shares are first released by the Representative for
offering by dealers by letter or telegram, whichever shall first occur.
The Representative or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party,
except as noted below in this Section 10, by giving the notice
indicated in Section 10(c) before the time this Agreement becomes
effective.
b. The Representative shall have the right to terminate this
Agreement at any time prior to the Closing Date or any Additional
Closing Date, as the case may be, by giving notice to the Company if
there shall have been a general suspension of, or a general limitation
on prices for, trading in securities on the New York Stock Exchange or
the American Stock Exchange or in the over-the-counter market; or if
there shall have been an outbreak of major hostilities or other
national or international calamity; or if a banking moratorium has been
declared by a state or federal authority; or if a moratorium in foreign
exchange trading by major international banks or persons has been
declared; or if there shall have been a material interruption in the
mail service or other means of communication within the United States;
or if the Company shall have sustained a material or substantial loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage, or
other calamity or malicious act which, whether or not such loss shall
have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the offering, sale, or delivery of the Firm
Shares and Additional Shares, as the case may be; or if there shall
have been such material and adverse change in the market for securities
in general so as to make it inadvisable to proceed with the offering,
sale, and delivery of the Shares, as the case may be, on the terms
contemplated by the Prospectus due to the impaired investment quality
of the Shares; or if the Dow ▇▇▇▇▇ Industrial Average shall have fallen
by 15% or more from its closing price on the day immediately preceding
the date that the Registration Statement is declared effective by the
Commission.
32
c. If the Representative elects to prevent this Agreement from
becoming effective as provided in this Section 10, or to terminate this
Agreement, it shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects
to prevent this Agreement from becoming effective, the Company shall
notify the Representative promptly by telephone, telex, or telegram,
confirmed by letter.
d. Anything in this Agreement to the contrary notwithstanding
other than Section 10(e), if this Agreement shall not become effective
by reason of an election pursuant to this Section 10 or if this
Agreement shall terminate or shall otherwise not be carried out prior
to __________, 2000 because (i) of any reason solely within the control
of the Company or its stockholders and not due to the breach of any
representation, warranty or covenant or bad faith of the
Representative, (ii) the Company unilaterally withdraws the proposed
Public Offering from the Representative in favor of another
underwriter, (iii) the Company does not permit the Registration
Statement to become effective, (iv) of any material discrepancy in any
representation by the Company and/or its officers, directors,
stockholders, agents, advisers or representatives, made in writing,
including but not limited to the Registration Statement, to the
Representative, (v) the Company is, directly and/or indirectly,
negotiating with other persons or entities of whatsoever nature
relating to a possible Public Offering of its securities, or (vi) of
any failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to be
performed or satisfied, then, in any of such events, the Company shall
be obligated to reimburse the Representative for its out-of-pocket
expenses on an accountable basis. Should the Representative be required
to account for "out-of-pocket" expenses, any expense incurred by the
Representative shall be deemed to be reasonable and unobjectionable
upon a reasonable showing by the Representative that such expenses were
incurred, directly or indirectly, in connection with the proposed
transaction and/or relationship of the parties hereto, as described
herein. In no event will the Representative be entitled to
reimbursement of accountable expenses exceeding $100,000, inclusive of
the $25,000 advanced against the non-accountable expense allowance. The
Representative will return to the Company any portion of the $25,000
payment previously received that is not used in the payment of
accountable expenses if the Public Offering is not completed.
e. Notwithstanding any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 5(a), 6, 8, 9, and 10 shall not
be in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
11. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the
Representative, shall be mailed, delivered, or
33
sent by facsimile transmission and confirmed by original letter, to ▇▇▇▇▇▇▇▇▇
Securities, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Berliner ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇; or if sent to the Company shall be mailed, delivered, or telexed or
telegraphed and confirmed by letter, to PentaStar Communications, Inc., ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ____________, with a copy to
▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. ,▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ____
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. All notices hereunder shall be effective upon receipt by
the party to which it is addressed.
12. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company, and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Firm Shares and
Additional Shares) and no other person shall have or be construed to have any
legal or equitable right, remedy, or claim under or in respect of or by virtue
of this Agreement or any provision herein contained.
13. Construction. This Agreement shall be construed in accordance with
the laws of the State of Colorado, without giving effect to conflict of laws.
Time is of the essence in this Agreement. The parties acknowledge that this
Agreement was initially prepared by the Representative, and that all parties
have read and negotiated the language used in this Agreement. The parties agree
that, because all parties participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which construes
ambiguous language in favor of or against any party by reason of that party's
role in drafting this Agreement.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
PENTASTAR COMMUNICATIONS, INC.
By:
, President
-----------
By: , Executive Vice President
-----------
Accepted as of the date first above written.
Denver, Colorado
34
▇▇▇▇▇▇▇▇▇ SECURITIES, INC.
for itself and any other Underwriters:
By:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
35
PENTASTAR COMMUNICATIONS, INC.
(A DELAWARE CORPORATION)
SCHEDULE 1
This Schedule sets forth the name of each Underwriter referred to in
the Underwriting Agreement and the number of Shares to be sold by the Company.
NUMBER OF
NAME SHARES
-------------------------- ---------
▇▇▇▇▇▇▇▇▇ Securities, Inc.
Total 1,500,000
=========