PROPOSED
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UNDERWRITING AGREEMENT
Gentlemen:
SUMMA METALS CORP. (the "Company"), a Nevada corporation, incorporated on
March 8, 1994, desires to offer for Sale to the public, an aggregate of 510,000
Units of its Common Stock $.001 par value (the "Units"). The Units will be
offered to the public at an offering price of $6.00 per share for an aggregate
of $3,060,000.
The Company desires to offer such Units for sale through you, Boe & Co. (the
"Underwriter"). The offering will be undertaken by the Underwriter as agent for
the Company on a "best efforts, 130,000 Units or none" basis as to a minimum of
130,000 Units and on a "best efforts" basis thereafter up to a maximum of
510,000 Units. In the event $780,000 for the minimum purchase of 130,000 Units
is not received within the agreed period, no Units will be sold and the
Underwriter will not be entitled to any compensation other than as set forth
herein.
1. Appointment of Underwriter
--------------------------
The Company hereby appoints Underwriter, on all the terms and conditions
hereinafter set forth, as the Company's exclusive agent to use its best efforts
to sell on behalf of the Company up to 510,OOO Units at the public offering
price set forth herein.
2. Representations and Warranties of the Company
---------------------------------------------
As an inducement to and to obtain the reliance of the Underwriter in
connection herewith, the Company represents, warrants and agrees with the
Underwriter as follows:
(a) The Company has prepared and filed with the United States
Securities and Exchange commission (the "Commission") , a Registration
Statement on Form SB-2, including a Prospectus, relating to the Units in
accordance with Section 5 of the Securities Act of 1933, as amended, and
the Rules and Regulations of the commission promulgated thereunder
(collectively referred to hereinafter as the "Act") As used in this
Agreement, the term "Registration Statement" means such Registration
Statement, including exhibits, financial statements and schedules, as
amended, when the post-effective amendment thereto naming the Underwriter
as "underwriter" becomes effective and the term "Prospectus" means the
Prospectus filed with said Registration Statement. (The Registration
Statement and Prospectus, as defined herein, are herein-after collectively
referred to as the "Filing") . The company will utilize its best efforts to
cause the Registration Statement to become effective and to maintain its
effectiveness during the term hereof.
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(b) The Commission has not issued and to the knowledge and belief of
the Company does not have cause to issue an order preventing or suspending
the use of the Prospectus; the Registration Statement and Prospectus
conform in all material respects with the requirements of the Act and the
rules and regulations of the Commission promulgated thereunder (the
"Regulations") and do not include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
and on the Effective Date (as hereinafter defined) and at all times
subsequent thereto up to the Termination Date (as hereinafter defined) ,
the Filing and any amendment or supplement thereto will fully comply with
the provisions of the Act and the Regulations, and will not contain any
untrue statements of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided that the foregoing
representations and warranties shall not apply to statements in or
omissions from the Filing, or any amendments or supplements thereto, made
in reliance upon and in conformity with information furnished herein or in
writing to the Company by or on behalf of the Underwriter expressly for use
therein.
(c) The Company has no subsidiaries.
(d) Except as reflected in or contemplated by the Filing, since the
respective dates as of which information is given in the Filing, there has
not been and on the Effective Date there will not have been, any material
adverse changes in the condition of the Company, financial or otherwise, or
in the results of its operations.
(e) The authorized capital stock of the Company consists of 25,000,000
shares of common stock, par value $.001, of which 4,555,000 shares of
common stock are duly and validly authorized and issued, are fully paid and
non-assessable, and conform to the description thereof contained in the
Filing. On the Termination Date, the Units (as hereafter defined) will be
duly and validly authorized, and, when issued and paid for in accordance
with this Agreement, will be validly issued, fully paid and non-assessable,
and will conform to the description thereof contained in the Filing. The
execution and delivery of, and compliance with, this Agreement, and the
issuance of the Units will not conflict with or constitute a breach of or
default under the Articles of Incorporation or By-Laws of the Company, and
any indenture, agreement or other instrument by which the company is bound
or any order, decree, rule or regulation of any court, or any law or
administrative regulation, applicable to the Company.
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Nevada, with
an authorized and outstanding capitalization as set forth in the Filing and
with full corporate power and authority to carry on the business in which
it is now engaged. The Company is qualified or licensed and in good
standing as a foreign corporation in each jurisdiction in which the
ownership or leasing of any properties or the character of its operations
requires such `qualification or licensing. The Company has all requisite
corporate power and authority, and all material and necessary
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authorizations, approvals, orders, licenses,certificates and permits of and
from all governmental regulatory officials and bodies to own or lease its
properties and conduct its businesses as described in the Prospectus, and
the Company is doing business in strict compliance with all such
authorizations, approvals, orders, licenses, certificates and permits and
all federal, state and local laws, rules and regulations concerning the
business in which the company is engaged. The disclosures in the Filing
concerning the effects of federal, state and local regulations on the
Company's business as currently conducted and as contemplated are correct
in all material respects and do not omit to state a material fact. The
Company has all corporate power and authority to enter into this Agreement
and to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have
been obtained or will have been obtained prior to the Closing Date. No
consent, authorization or order of, and no filing with any court,
governmental agency or other body is required for the issuance of the Units
pursuant to the Prospectus and the Registration Statement, except with
respect to applicable federal and State securities laws.
(g) The Filing contains or will contain on the Effective Date an
audited balance sheet of the Company as of October 31, 1997 ("the Balance
Sheet") ; the related audited statements of operations, changes, in
stockholders' equity and changes in financial position of the Company for
the period from inception to said date including the notes hereto, together
with the opinion of ▇▇▇▇▇▇▇▇▇ & Associates certified public accountants,
with respect thereto (the "Financial Statements"). Such Financial
Statements have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods
indicated, except as otherwise indicated in the notes thereto. The Balance
Sheet presents fairly as of its date the financial condition of the
Company; the Company did not have, as of the date of such Balance Sheet,
except as and to the extent reflected or reserved against in such Balance
Sheet (including the notes thereto) , any liabilities or obligations
(absolute or contingent) of a nature customarily reflected in a balance
sheet or the notes thereto prepared in accordance with generally accepted
accounting principles. The statement of income included in the Financial
Statements present fairly the results of operations of the Company for the
period indicated. The statement of stockholders' equity and changes in
financial position present fairly the information which should be presented
therein in accordance with generally accepted accounting principles.
(h) Except as set forth in the Filing, there is no action, suit or
proceeding before any court or government agency, authority or body pending
or, to the knowledge of the Company, threatened which night result in
judgments against the Company which is not adequately covered by insurance,
or which is pending or, to the knowledge of the Company, threatened by any
public body, agency or authority, which might result in any material
adverse change in the condition (financial or otherwise) , business or
prospects of the Company or would materially affect its properties or
assets.
(i) The execution and delivery of this Agreement, the consummation of
the transactions herein contemplated, and compliance with the terms and
provisions hereof will not conflict with, or constitute a breach of, any of
the terms provisions or conditions of any agreement or instrument to which
the Company is a party, nor will any one or any combination of the
foregoing have such a result.
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(j) The Company has the legal right, power and authority to enter into
this Agreement, and the execution, delivery and, except as otherwise
indicated in this Agreement, performance thereof by the Company do not
require the consent or approval of any governmental body, agency or
authority which has not been obtained.
(k) The Company is not a party to any material contract (meaning
thereby a contract materially affecting its business or properties) that is
not referred to in the Filing. No default of any material significance
exists in the due performance and observance by the company of any term,
covenant or condition of any such contract; all such contracts are in full
force and effect and are binding upon the parties thereto in accordance
with their terms; and, to the knowledge of the Company, no other party to
any such material contract has threatened or instituted any action or
proceeding wherein the Company is alleged to be in default thereunder.
(1) No stock options or warrants are or will be outstanding or issued
during the period covered by this Agreement except as set forth in the
Filing.
(m) The Company is not delinquent in the filing of any tax return or
in the payment of any taxes, knows of no proposed redetermination or
assessment of taxes; and has paid or provided for adequate reserves for all
known tax liabilities.
(n) The Company has obtained a CUSIP number for its Shares.
(o) During the period of the offering of the Shares and for six (6)
months from the Effective Date, the Company will not sell any securities
without the Underwriter's prior written consent, which will not be
unreasonably withheld.
(p) The Company's securities, however characterized, are not subject
to pre-emptive rights.
(q) The Company will have the legal right and authority to enter into
this Agreement upon its execution, to effect the proposed sale of the
Units, and to effect all other transactions contemplated by this Agreement.
(r) The Company knows of no person who rendered any services in
connection with the introduction of the Company to the Underwriter. No
broker's or other finder's fees are due and payable by the Company and none
will be paid by it.
(s) The Company and its affiliates are not currently offering any
securities nor has the Company or its affiliates offered or sold any
securities except as required to be described in the Prospectus.
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(t) All original documents and other information relating to the
Company's affairs have and will continue to be made available upon request
to the Underwriter and to its counsel at the Underwriter's office or at the
office of the Underwriter's counsel and copies of any such documents will
be furnished upon request to the Underwriter and to its counsel. Included
within the documents made available have been at least the Articles of
Incorporation and any Amendments, Minutes of all of the meetings of the
Incorporators and Directors and Shareholders, all financial statements and
copies of all contracts, leases, patents, copyrights, licenses or
agreements to which the Company is a part or in which the Company has an
interest.
(u) The Corporation will use the proceeds from the sale of the Shares
as set forth in the Prospectus.
(v) There are no contracts or other documents required to be described
in the Prospectus or to be filed as exhibits to the Prospectus which have
not been described or filed as required.
(w) The Company has not made any representations, whether oral or in
writing, to anyone, whether an existing shareholder or not, that any of the
units will be reserved for or directed to them during the proposed
offering.
(x) The Company has caused each of its current shareholders to agree
in writing with respect to shares acquired by them prior to the effective
date that they have acquired the shares for investment purposes only and,
they acknowledge that they hold "restricted securities" as defined in Rule
144.
3. Employment of the Underwriter
-----------------------------
Upon the foregoing representations, agreements, and warranties and subject
to the terms and conditions of this Agreement:
(a) The Company hereby employs the Underwriter as its, exclusive agent
to sell for the company's account up to 510,000 Units of Common Stock. The
Underwriter agrees to use its best efforts as agent, promptly following the
receipt of written notice of the Effective Date of the Registration
Statement, to offer for sale the aggregate of 510,000 Units subject to the
terms, provisions, and conditions hereinafter set forth.
(b) In the event the Underwriter does not find subscribers for the
minimum number of Shares having a total aggregate purchase price of
$780,000 within 90 days following the Effective Date (unless extended for
up to an additional 90 days by written agreement of the Company and the
Underwriter) , this Agreement shall terminate and neither party to this
Agreement shall have any obligations to the other party hereunder except
for certain expenses payable to the Underwriter. Appropriate arrangements
for placing all funds received for the Shares in escrow shall be made prior
to the commencement of the offering hereunder, with provisions for refund
to the purchasers as set forth above or for delivery to the Company of the
net proceeds therefrom if more than $780,000 in cash has been received from
the sale of Shares hereunder.
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(c) The 510,000 Units shall be offered to the general public at the
initial public offering price of $6 00 per Unit.
(d) The Underwriter is granted irrevocable authority as agent for the
Company to declare any contract to purchase Units offered to the public
hereunder in default if such Units are not paid for in cash within seven
(7) days after the contract date. The Underwriter shall deposit promptly
pursuant to the requirements of Rule 15c2-4 promulgated under the
Securities Exchange Act of 1934 the gross proceeds from sales of Units in
the amount with the escrow agent until $ 780,000 is received from said
sale. In no event shall the deposit in escrow of any proceeds required
hereunder be made later than noon of the business day after receipt of such
funds by the Underwriter. Said deposit shall include all cash and checks
received with respect to the offering and all checks received from
customers shall be made payable to the escrow agent.
(e) As its compensation and subject to the sale of the minimum number
of Units , the Underwriter shall be entitled to receive a commission of 10%
of the sales price per Unit and a non-accountable expense allowance of 2%
of the sales price per Unit. If this Agreement terminates prior to the sale
of the Units , accountable expenses of the Underwriter shall be paid by the
Company.
(f) The Company agrees to issue or have issued such Units in such
names and denominations as nay be specified by the Underwriter, and to
deliver certificates representing the Units against payment to the Company
in cash or cashier's check in the amount of the selling price of the Units
less the Underwriter's sales commission and expenses as provided herein.
Such payment and delivery shall be made to _____________________ at such a
date and time within three (3) days following the sale of the minimum
number of Units as provided in subparagraph 3 (b) hereof as shall be agreed
upon by the Underwriter and the Company (the "Closing Date"). The
Underwriter's requisitions for certificates shall be in writing shall be
given to the Company before the delivery date. The Underwriter agrees to
deliver certificates to the buyers of the Units within seven (7) days of
the delivery of certificates to the Underwriter as provided herein. For
purposes of expediting the checking and packaging of the certificates, the
Company agrees to make the certificates available for inspection by the
Underwriter, the transfer agent or other authorized representative at the
Company's principal office at least 24 hours prior to the time of each
closing.
(g) The Underwriter is hereby authorized to organize a group of
participating dealers consisting exclusively of members of the National
Association of Securities Dealers, Inc. (the "selling group"). Such members
of the selling group are to act as agents, and shall be allowed to purchase
from the Underwriter at a price which provides a concession out of the
Underwriter's commission in such amount as the underwriter nay determine.
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(h) Prior to the Effective Date, the Company will appoint a
duly-licensed, qualified and bonded transfer agent, subject to approval by
the Underwriter.
4. Representations and Warranties of the Underwriter
-------------------------------------------------
As an inducement and to obtain the reliance of the Company in connection
herewith, the Underwriter represents, warrants and agrees with the Company as
follows:
(a) The Underwriter is duly registered as a securities broker-dealer
in accordance with the Securities Exchange Act of 1934 and the states in
which the offering shall be sold by it.
(b) The Underwriter will not publish, issue or circulate or authorize
the publication, issuance or circulation of any circular, notice or
advertisement which offers the Units, for sale which shall not have
previously been approved by the Company and its counsel, except for
so-called "tombstone" advertisements, and which has not been approved by
the commission prior to its use, if such prior approval is required.
(c) The Underwriter is, to the best of its information and belief, in
good standing with and in full and current compliance in all material
respects with the rules of the National Association of Securities Dealers,
Inc., ("NASD"). It is understood that any Dealer to whom an offer may be
made as hereinbefore provided shall be a member of the NASD or a foreign
dealer not eligible for membership in the NASD who agrees not to re-offer,
resell or deliver the Stock in the United States of to persons to whom it
has reason to believe are citizens or residents of the United States and,
in making sales, to comply with the NASD's Interpretation with Respect to
Free-riding and Withholding and Sections 8, 24 and 36 of Article III of the
NASD's Rules of Fair Practice as if such foreign dealer were an NASD member
and Section 25 of such Article III as it applies to a non-member broker or
dealer in a foreign country.
5. Covenants by the Company
------------------------
In further consideration of the agreements by the Underwriter herein
contained, the Company covenants as follows:
(a) At least 48 hours prior to submission of the Filing or any
amendment or supplement thereto to the Commission, the Underwriter and its
counsel shall be provided with a copy of such Filing or amendment, and no
such Filing will be made to which the Underwriter or its counsel shall
object within the 48 hour period.
(b) The Company will use its best efforts to cause the Registration
Statement to become effective and will not at any time, whether before, on
or after the Effective Date, file any amendments to the Filing or
supplement to the Prospectus without first obtaining the Underwriter's
approval. Such approval shall be obtained by compliance with subsection (a)
above. Said Filings or any amendments or supplements thereto shall be in
compliance with the Act and the Regulations of the commission to best of
the company's knowledge, information and belief.
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(c) As soon as the Company is advised thereof, the Company will advise
the Underwriter and confirm the advice in writing (i) as to when the
Registration ` Statement has become effective; (ii) of any request made by
the Commission for amendment of the Filing, for supplementing the
Prospectus or for additional information with respect thereto; and (iii) of
the issuance by commission of any stop order suspending the effectiveness
of the Registration Statement or of any amendment thereto or the
initiation, or threat of initiation, of any proceedings for such purpose,
and the company will use its best efforts to prevent the issuance of any
such order and to obtain as soon as possible the lifting thereof, if
issued.
(d) The Company will deliver to the Underwriter and members of the
selling group, as designated by the Underwriter, prior to the Effective
Date, preliminary prospectuses and, on the Effective Date of the
Registration Statement, without charge and from time to time thereafter,
Prospectuses and amendments thereto as required by law to be delivered in
connection with sales, in such quantities as the Underwriter may request.
(e) The company will deliver to the Underwriter, without charge, one
manually executed copy and one conformed copy of the Registration Statement
together with all required exhibits, as filed and all amendments thereto
with exhibits which have not previously been furnished to the Underwriter,
and will deliver to the Underwriter and to members of the selling group, as
designated by the Underwriter, without charge, such reasonable number of
copies of the Registration Statement and Prospectus (excluding exhibits)
and all amendments thereto as the Underwriter may reasonable request.
(f) Prior to the Termination Date if, in the opinion of the
Underwriter's counsel, any statements are contained in the Prospectus which
are misleading or inaccurate in light of the circumstances under which they
are made, the Underwriter may require the Company to amend or supplement
the Prospectus to correct said statements and may request such reasonable
number of copies of any amended or supplemented Prospectus as may be
necessary to comply with the Act and Regulations.
(g) The Company will secure, on or before the Effective Date of the
Registration Statement, and maintain for such period as may be required for
distribution, such exemptions, registrations and qualifications of the
Units as will permit the public offering thereof under the securities or
"blue sky" laws of the states of Colorado, New York, Illinois and Florida
and any additional states as the Underwriter and the Company shall agree
upon; provided, that no such qualification shall be required if, as a
result thereof, the Company would be made subject to service or general
process or would be required to qualify for authority to do business as a
foreign corporation in any jurisdiction where it is not now so subject or
qualified.
(h) The Company will pay all costs and expenses incident to the
performance of its obligations under this Agreement, including (i) all
expenses incident to its insurance and delivery of the Shares, (ii) the
fees and expenses incident to the preparation, printing and filing of the
Registration Statement and Prospectus
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(including all exhibits thereto) with the Commission, the various "blue
sky" agencies and the National Association of Securities Dealers, Inc., and
(iii) the costs of furnishing the Underwriter copies of the Registration
Statement, Prospectus and preliminary prospectuses. The Company shall not,
however, be required to pay for transfer tax stamps on any sales of the
Units which the Underwriter may make; or to pay for any of the
Underwriter's expenses or those of any other dealers other than as herein
set forth.
(i) For a period of five years from the Effective Date, the Company
will furnish the Underwriter with (i) all reports and financial statements,
if any, filed with or furnished by the Company to the commission or any
stock exchange upon which the securities of the company are listed, (ii)
such other periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its stock, (iii) every press
release and every news item and article with respect to the affairs of the
Company which was released by the Company, and (iv) such additional
documents and information with respect to the affairs of the company which
was released by the Company, if any, as the Underwriter may from time to
time reasonably request. For 180 days following the Effective Date of the
Registration Statement, the Company will cause its transfer agent or agents
to furnish to the Underwriter weekly transfer sheets covering the transfers
of the Company's securities, including the Shares.
(j) The Company will mail or otherwise make generally available to its
security holders as soon as practicable, but in no event more than fifteen
months after the close of the fiscal quarter ending after the Effective
Date of the Registration Statement, an earnings statement, which need not
be audited, covering a period of at least twelve months beginning after the
Effective Date of the Registration Statement.
(k) The Company will, as promptly as practicable after the end of each
fiscal year, release to the press an appropriate report covering its
operations for such year, and send to the Underwriter, to all holders of
record of the Company's common stock and to recognize statistical services,
a report covering operations for such year, including a balance sheet of
the Company and statements of earnings and of retained earnings, as
examined by the Company's independent accountants.
(1) The Company will apply the net proceeds from the offering received
by it in substantially the manner set forth in the Prospectus.
(m) The Company will comply with the reporting requirements to which
it is subject pursuant to Section 15(d) of the Securities Exchange Act of
1934.
(n) The Company will file with the Commission the required Reports on
Form SR and will file with the appropriate state securities commissioners
any sales and other reports, required by the rule and regulations of such
agencies and will supply copies to the Underwriter.
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(o) Except with the Underwriter's approval, the Company agrees that
the Company will not do the following unit (a) the completion of the
offering of the Shares, or (b) the termination of this Agreement, or (c) 90
days after the Effective Date, whichever occurs later:
(i) Undertake or authorize any change in its capital structure or
authorize, issue, or permit any public or private offering of
additional securities;
(ii) Authorize, create, issue, or sell any funded obligations,
notes or other evidences of indebtedness, except in the ordinary
course of business and within 12 months from their creation;
(iii) Consolidate or merge with or into any other corporation;
or
(iv) Create any mortgage or any lien upon any of its properties
or assets except in the ordinary course of its business.
(p) The Company agrees to have the Units listed in the "Pink Sheets"
of the National Quotation Bureau on the first day of trading in the Units.
(q) With ` in 30 days after the successful termination of the offering
of the Units, the Company agrees to submit information about the Company to
be included in various securities manuals, including Standard & Poor's
Standard Corporation Records to facilitate secondary trading in the Units.
(r) The Company agrees to cause the stock certificates of all of the
current shareholders of the Company and of any future officers or directors
of the Company to be clearly legended as being restricted against transfer
without compliance with the Act and to cause the Company's transfer agent
to put stop transfer instructions against such stock certificates.
6. Reciprocal Indemnification
--------------------------
(a) The Company agrees to indemnify and hold harmless the Underwriter
and members of the selling group and any person who may be deemed to be in
control of the Underwriter or any member of the selling group within the
meaning of Section 15 of the Act; and
(b) The Underwriter agrees to indemnify and hold harmless the Company,
its directors, such of its officers as sign the Registration Statement and
any person who may be deemed to control and company within the meaning of
the Act, and to obtain a similar indemnification from each of the members
of the selling group; against any and all losses, claims, damages or
liabilities whatsoever (including, but not limited to, any and all legal or
other expenses whatsoever reasonably incurred in investigating, preparing
or defending against any actions or threatened actions or claims) based on
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or arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or Prospectus (as
from time to time amended or supplemented) or any application or other
document filed in any state in order to register, qualify or obtain an
exemption for the Shares under the laws thereof ("blue sky application") ,
as the case may be, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by any of the
indemnifying parties of any provisions of the Act or any Regulation, or of
common or statutory law, and against any and all losses, claims, damages or
liabilities whatsoever to the extent of the aggregate amount paid in
settlement of any action, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission or any such
violation (including but not limited to any and all legal or other expenses
whatsoever reasonably incurred in investigation, preparing or defending
against any such actions or claims) if such settlement is effected with the
written consent of any indemnifying party. The indemnification by the
Underwriter and members of the selling group shall not extend to any such
statements or omissions made in reliance upon and in conformity with
written information furnished by the Company to the Underwriter or members
of the selling group.
Each of the foregoing indemnifications is expressly conditioned upon the
indemnifying parties being notified by the person seeking indemnification,, by
letter or by telegram confirmed by letter, of any action commenced against such
person, within a reasonable time after such person shall have been served with
the Summons or other first legal process giving information as to the nature and
basis of the claim, and in any event at least ten days' prior to the entry of
any judgment in such action, but the failure to give such notice shall not
relieve any indemnifying party of any liability which such party may have to
such person otherwise than on account of this indemnity agreement. Any party
whose indemnification is being relied upon shall assume the defense of any
action or claim, including the employment of counsel and the payment of all
expenses. Any indemnified party shall have the right to separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof shall have been specifically authorized by the indemnifying
party of (ii) the indemnifying party shall have failed to assume the defense and
employ counsel.
The indemnification contained above in this Section 6, and the
representations and warranties of the Company set forth in this Agreement will
remain operative and in full force and effect, regardless of any investigations
made by or on behalf of the Underwriter or any controlling person thereof, or by
or on behalf of the Company or its directors or officers and will survive
delivery of and payment for the Shares.
7. Conditions to Obligations of the Company
----------------------------------------
The obligation of the Company to deliver the Units being sold by the
Underwriter hereunder is subject to the conditions that (i) the Registration
Statement shall have become effective not later than 5:00 p.m., West Coast Time
the twenty-fifth business day following the date hereof or such later time and
date as is acceptable to the Company; and (ii) no stop order suspending the
effectiveness of the Registration Statement shall have been issued and shall be
in effect at the time of closing and no proceeding for that purpose shall have
been initiated or, to the knowledge of the Company, threatened by the
Commission, it being understood that the Company shall use its best efforts to
prevent the issuance of any such stop order and, if one has been issued, to
obtain the lifting thereof. In the event that the Units (or any part thereof)
are not delivered by virtue of the provisions of clause (i) of this paragraph,
the Company shall not be liable to the Underwriter.
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8. Conditions to the Obligations of the Underwriter
------------------------------------------------
The several obligations of the Underwriter hereunder are subject to the
accuracy, as of the date hereof and on the Closing Date of the representations
and warranties made herein by the Company; to the accuracy in all material
respects of the statements of the officers of the Company made pursuant to the
provisions hereof; to the performance by the Company of its obligations
hereunder required on its part to be performed or complied with prior to or at
such Closing Date; and to the following additional conditions:
(a) The Registration Statement and Prospectus shall have fully
complied with the provisions of the Act and the Regulations, and neither
document shall 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; provided, however, that statements
or omissions in the Registration Statement or Prospectus in reliance upon,
and, in conformity with, information furnished in writing by or on behalf
of the Underwriter expressly for use therein shall not be considered within
the scope of this provision.
(b) The Underwriter shall not have advised the company that the
Registration Statement or prospectus, or any amendment or supplement
thereto, contains an untrue statement or fact which, in the opinion of
counsel for the Underwriter, is material, or omits to state a fact which,
in the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) The Registration Statement shall have become effective not later
than the date specified in Section 7, or such later time and date as is
acceptable by the Underwriter, and prior to the Closing Date no stop order
shall have been issued by the Commission with respect to the Registration
Statement and Prospectus, no proceedings therefor shall have been initiated
by the Commission, and to the knowledge of the Company or the Underwriter,
no such proceedings shall be contemplated by the Commission.
(d) Each contract to which the Company is a party and which is filed
as an exhibit to the Registration Statement shall be in full force and
effect at the Closing Date, or shall have been terminated, in accordance
with its terms; no party to any such contract shall have given any notice
of cancellation, or to the knowledge of the Company, shall have threatened
to cancel any such contract; and there shall be no material misstatement in
any description of a contract contained in the Registration Statement or
Prospectus.
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(e) From the date hereof until the Closing Date, no material
litigation or legal proceedings of any nature shall have been commenced or
threatened against the Company, nor any litigation of the transactions
herein contemplated; and no substantial change, financial or otherwise,
shall have occurred in or relating to the condition, business or assets of
the Company which shall render such condition, business or assets
substantially less favorable, in the Underwriter's judgment, than as set
forth in the Filing.
(f) The Underwriter shall have received at the Closing Date an
opinion, addressed to the Underwriter, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, counsel for
the Company, dated as of the Closing Date and in a form and substance
satisfactory to counsel for the Underwriter, to the following effect:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Nevada,
with power and authority to own its properties, hold its franchises
and conduct its business, as described in the Prospectus, and, to the
best of the knowledge and information of said counsel, is duly
qualified to do business and is in good standing in every other
jurisdiction where the location of its properties or the conduct of
its business makes such qualification necessary;
(ii) The Company has authorized capital stock as set forth in the
Prospectus; the Units and all other outstanding shares of common stock
of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable; and the description of the capital
stock of the company made in the Registration Statement and Prospectus
accurately set forth matters respecting such shares required to be set
forth therein;
(iii) The Agreement has been duly authorized, executed and
delivered by the company and constitutes a valid and binding agreement
of the Company;
(iv) The certificates to be issued for the Units, are in due and
proper form;
(v) The Registration Statement has become, and at the Closing
Date is, effective under the Act, and is effective in each state in
which the Units are sold and, to the best of the knowledge of such
counsel, no proceedings for a stop order are pending or threatened
under the Regulations and the Act; (vi) The Registration Statement and
Prospectus (except as to the financial statements contained therein,
with respect to which said counsel need express no opinion) comply
13
as to form in all material respects with the requirements of the Act
and the applicable Regulations, and said counsel has no reason to
believe that either the Registration Statement or Prospectus as then
amended or supplemented contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading;
(vii) All contracts and documents summarized in the Registration
Statement and Prospectus are accurately summarized, such summaries
fairly presented the information required to be show; and such counsel
does not know of any contract or document required to be summarized `
disclosed or filed which have not been so summarized, disclosed or
filed;
(viii) Such counsel knows of no material legal proceedings
pending or threatened against the Company except as set forth in the
Prospectus; and
(ix) To the best of said counsels knowledge, the consummation of
the transactions contemplated herein did not and will not conflict
with or result in a breach of any of the terms, provisions or
conditions of any agreement or instrument to which the Company is a
party or by which the Company may be bound.-
Such counsel may rely, as to matters of local law, upon opinions of local
counsel satisfactory to him, and, as to matters of fact, upon affidavits or
certifications of officers of the Company.
(g) The Company shall have furnished to the Underwriter a certificate
of the president or vice president and any financial officer of the
Company, dated as of the Closing Date, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct at and as of the Closing Date, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
first Closing Date.
(ii) The Registration Statement has become effective and no order
suspending the effectiveness of the Registration Statement has been
issued; and to the best of the knowledge of the respective signers, no
proceeding for that purpose has been initiated or is threatened by the
Commission.
14
(iii) The respective signers have each carefully examined the
Registration Statement and the Prospectus and any amendments and
supplements thereto, and to the best of their knowledge the
Registration Statement and the Prospectus and any amendments and
supplements thereto and all statements contained therein are true and
`correct, and neither the Registration Statement nor any amendment or
supplement thereto includes 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, and since the
effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented
Prospectus which has not been so set forth.
(iv) Except as set forth in the Registration Statement and
Prospectus, since the respective dates as of which or periods for
which information is given in the Registration Statement and
Prospectus, and prior to the date of such certificate, (A) there has
not been any substantially adverse change, financial or otherwise, in
the affairs or condition of the Company, and (B) the Company has not
incurred any liabilities, direct or contingent, or entered into any
transactions otherwise than in the ordinary course of business.
(h) The Company shall have furnished to the Underwriter, at each
Closing Date, such other certificates, additional to those specifically
mentioned herein, as the Underwriter may have reasonably requested as to
the accuracy and completeness, at the Closing Date, of any statement in the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, as to the accuracy, at the Closing Date, of the representations
and warranties of the Company herein and as to the performance by the
company of its obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to its obligations hereunder, which are
required to be performed or fulfilled on or prior to the Closing Date.
(i) The Company shall have furnished to the Underwriter a letter
of auditors to the company, in form and substance satisfactory to the
Underwriter, to the effect that:
(i) They are independent accountants within the meaning of the
Act and the Regulations.
(ii) In the opinion of said auditor, the financial statements of
the Company included in the Prospectus and covered by their opinion
thereon comply as to form in all material respect with the applicable
accounting requirements of the Act and the Regulations.
(iii) on the basis of a limited review (but not an audit or
"examination" as used in accountants' opinions) of the latest
available financial statements of the Company, a reading of the
minutes of the Company and consultations with and inquiries of
officers of the company responsible for financial and accounting
matters, said auditor has no reason to believe that during the period
from March 8, 1994, to a specified date not more than five business
days prior to the Closing Date, there has been any material change in
the capital stock, or funded or current debts of the Company, or any
significant increases or decreases in the financial position, or
results of operations, if any, of the Company from that set forth in
the financial statements included in the prospectus, except as set
forth or contemplated therein.
15
(iv) On the basis of the examination referred to in their opinion
included in the Prospectus, the other procedures referred to in
subdivision (iii) above and such other procedures as the Underwriter
may specify, nothing came to their attention which in their judgment
would indicate that the statements appearing in the Registration
Statement and the information of a financial or accounting nature
pertaining to the Company set forth in the Prospectus under the
captions "Use of Proceeds", "Capitalization", "Dilution", "Description
of the Common Stock" to the extent such statements and information are
derived from the general accounting records of the Company, and
excluding any questions requiring interpretation by legal counsel, are
not in all material respects a fair and reasonable presentation of the
information purported to be shown.
All the opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to the Underwriter, whose approval shall not be unreasonably withheld. The
Underwriter reserves the right to waive any of the conditions hereinabove set
forth.
(j) All proceedings taken and to be taken in connection with the sale
of the Units pursuant to this Agreement shall be satisfactory as to legal
aspects to counsel to the Underwriter.
(k) If (`i) any of the foregoing conditions shall not have been
fulfilled as above provided; or (ii) prior to the Closing Date, the
conditions of the securities market, or any material factor, whether of an
economic or military or political nature or otherwise, bearing upon the
marketability of the Shares proposed to be sold shall be such as, in the
Underwriter's reasonable judgment, would seriously affect the offering,
sale or delivery to the public of the Units , or would render such delivery
at the initial public offering price impracticable or inadvisable, the
Underwriter shall have the right to terminate its obligations under this
Agreement forthwith, by written or telegraphic notice to the Company,
without any liability on the part of the Underwriter.
(1) If at any time prior to the closing Date (i) trading in securities
on the New York Stock Exchange shall be suspended, (ii) minimum prices
shall be established on said Exchange by action of said Exchange or the
Commission, (iii) there shall be an outbreak of hostilities between the
United States and any foreign power which resulted in the declaration of a
national emergency or declaration of war or there shall be an outbreak of
civil disorder within the United States which has resulted in the
declaration of a national emergency, the Underwriter shall have the right
to terminate its obligations under this Agreement forthwith, by written or
telegraphic notice to the Company, without any liability on the part of the
Underwriter.
16
If the sale of the Units as herein contemplated shall not be carried out
because of any of the conditions set forth in Sections 7 or 8 hereof shall not
have been fulfilled, then the Company shall not be liable to the Underwriter for
lost profits or expenses incurred by it in connection herewith; provided that
the Underwriter shall be entitled to retain the accountable legal expenses
allowance to the extent necessary to reimburse it for legal expenses actually
incurred. In no event shall the Underwriter be liable to the Company for lost
profits or for expenses incurred in connection herewith.
9. Definitions
-----------
(a) "Effective Date" shall mean the date, following any required waiting
period, when the Registration Statement shall have been declared effective by
the Commission.
(b) "Termination Date" shall mean the date specified below which first
occurs:
(i) The date which is 90 days following the Effective Date, or the
date 180 days from the Effective Date if the company and the Underwriter
have agreed to so extend the offering period.
(ii) The date upon which all offered Shares are sold and payment
received therefor by the company.
11. Miscellaneous Provisions
------------------------
(a) This Agreement contains the entire agreement of the parties hereto and
cannot be altered except in a writing signed by both parties hereto and which
makes specific reference to this Agreement.
(b) The representations and warranties contained herein shall be effective
regardless of any investigations made or participation in the preparation of the
Filing, or any amendment or supplement thereto and shall survive the Termination
Date and the delivery of and payment of the Units contemplated herein.
(c) This Agreement has been and is made solely for the benefit of the
Underwriter, the Company and their respective successors, and, to the extent
expressly provided herein, for the benefit of the directors of the Company, the
officers of the company who signed the Filing, or authorized the same, the
persons controlling the Underwriter or the Company, and their respective
successors and assigns, and no other person or persons shall acquire or have any
right under or by virtue of this Agreement. The term "successor" shall not
include any purchaser, as such, of any Units from the Underwriter.
(d) Each of the parties hereto hereby respectively warrant and represent
that the person executing this Agreement on its behalf has full power and
authority to execute, acknowledge and deliver this Agreement for and on behalf
of such corporation.
(e) Except as otherwise provided herein, all communications hereunder shall
be in writing and, if sent to the Underwriter, shall be mailed, delivered or
telegraphed to it at the following address:
17
with copies to:
Or, if sent to the Company, shall be mailed, delivered or telegraphed and
confirmed to it at the following address:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(f) In the event that any party prevails in any action or suit brought by
them to obtain relief for any default under the terms hereof, the non-prevailing
party shall be liable to the prevailing party for all costs', including
reasonable attorney's fees, incurred in connection with such action or suit.
(g) The representations, warranties and undertakings herein on the part of
the Company and the Underwriter shall not create any rights in or duties to any
person not a party to this Agreement. It is expressly understood and agreed that
such persons as shall purchase Units in the public offering described herein,
shall be entitled to rely solely and only on the statements and representations
made in the Prospectus.
(h) This Agreement may be executed in one or more counterparts which taken
together shall constitute one and the same instrument.
As evidence of our understanding, this Agreement has been signed, accepted
and copies thereof delivered by or on behalf of, and to, the Company and the
Underwriter, on ____________________________, 1997.
Very truly yours,
BY
-----------------------------------
Duly Authorized Officer
The foregoing Underwriting Agreement is accepted on the date first above
written.
By
-----------------------
Duly Authorized Officer
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