Exhibit 1 (i)
Form of Underwriting Agreement
June , 2001
Public Securities, Inc.
000 Xxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Gentlemen:
TEMPORARY FINANCIAL SERVICES, a Washington Corporation (the "Company"), with
principal offices located at 000 Xxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxxxx, 00000, has an authorized capitalization of 100,000,000 shares of
Common Stock, $0.001 par value and 5,000,000 shares of Preferred Stock, $0.001
par value ("Preferred Stock"). The Company proposes to issue and sell through
Public Securities, Inc., (the "Underwriter") a minimum of 200,000 shares of
Common Stock and a Maximum of 800,000 shares of Common Stock at the offering
price of $5.00 per share. The shares of Common Stock are being offered on a
"best efforts, minimum or maximum" basis.
The Company wishes to confirm as follows its agreements with you.
1. Certain Definitions
The following shall constitute the definitions of certain terms used in this
Agreement:
(a) "Underwriter" shall refer to Public Securities, Inc.
(b) "Company" shall refer to TEMPORARY FINANCIAL SERVICES, INC., its
affiliates, and subsidiaries.
(c) "Commission" shall refer to the Securities and Exchange Commission.
(d) "Act" shall refer to the Securities Act of 1933 as amended.
(e) "Regulations" shall refer to the rules and regulations of the
Commission.
(f) "Share" shall refer to the Shares of the Company's Common Stock, $0.001
par value. The Shares are being offered on a "best efforts, minimum or maximum"
basis.
(g) "Common Stock" shall refer to the Shares of the Company's Common Stock,
$0.001 par value.
(h) "Effective Date" shall be the first date upon which the Registration
Statement filed pursuant to this Agreement shall be declared effective by the
Commission, i.e., the date when the Shares may be offered for sale to the
public.
(i) "Registration Statement" shall refer to the Registration Statement, Form
S-B2 (File No. ) filed for the
proposed sale of the Common Stock, prospectus, preliminary prospectus,
Underwriter's Common Stock Purchase Warrant, Warrants, Shares, Common Stock,
exhibits and financial statements as finally amended and revised prior to the
Effective Date. Except as the context may otherwise require, such Registration
Statement, as amended, on file with the Commission at the time the Registration
Statement becomes effective (including the prospectus, financial statements, any
schedules, exhibits and all other documents filed as a part thereof or that may
be incorporated therein (including, but not limited to those documents or
information incorporated by reference therein) and all information deemed to be
a part thereof as of such time pursuant to paragraph (b) of Rule 430(A) of the
Rules and Regulations), is hereinafter called the "Registration Statement," and
the form of prospectus in the form first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations, is hereinafter called the
"Prospectus."
(k) "NASD" shall refer to the National Association of Securities Dealers,
Inc.
2. Underwriter's Compensation
(a) The Company hereby appoints the Underwriter as its exclusive agent
during the continuance of the authorization hereunder to sell and obtain
purchasers for 800,000 Shares at a public offering price of $5.00 per Shares and
at an aggregate public offering price of $4,000,000 on a "best efforts, minimum
or maximum basis. Unless 200,000 Shares are sold and payment received by the
Company therefore within 120 days from the Effective Date, no Shares will be
sold, and in that event the Underwriter will not receive any of the commissions
mentioned, but will be entitled to all accountable out-of-pocket expenses, not
to exceed $5,000 . Such exclusive agency shall be good and
irrevocable unless and until terminated as herein and hereinafter set forth.
(1) If the sale of the Securities by the Underwriter is not consummated for
any reason not attributable to the Underwriter, or if (i) the Company
unilaterally withdraws the Registration Statement or does not proceed with the
public offering for reasons other than the affirmative wrongdoing of the
Underwriter, or (ii) the representations in Section 3 hereof are not correct or
the covenants cannot be complied with, or (iii) there has been a materially
adverse change in the condition, prospects or obligations of the Company or a
materially adverse change in stock market conditions from current conditions, or
(iv) the "road show" presentation produced a negative affect on the intended
syndicate members, or (v) the Company unilaterally terminates the financing, the
Company will reimburse the Underwriter for its out-of-pocket expenses up to a
maximum of $5,000 but any funds remaining unused from a $2,500 advance, will be
returned to the Company. In the event of unilateral termination by the Company,
the Underwriter will re-evaluate the Company and the Company agrees to pay the
Underwriter a consulting and restructuring fee of $5,000
(b) Subject to the filing and the becoming effective of the Registration
Statement and a prospectus in compliance with the provisions of the Act and the
availability for sale to the public, pursuant to law, of the offered Shares and
subject to the fulfillment of all of the obligations of the Company and
compliance with all of the terms and conditions hereof by the Company and in
reliance upon the warranties, representations and covenants made by the Company
herein, the Underwriter accepts the foregoing exclusive agency and agrees to use
its best efforts during the term of the within Agreement and the continuance of
the authorization provided herein to sell the offered Shares when and as
issuable at the public offering price set forth above; and to make such public
offering at such time as Underwriter so determines and after the following have
been completed:
(1) Registration Statement and prospectus have become effective.
(2) Approval of offering by NASD.
(3) Blue Sky clearance from the states required by Underwriter.
(4) Shares and/or Certificates are available for public offering.
(5) Company furnishes Underwriter with sufficient number of prospectus.
(c) As compensation for the services of the Underwriter herein, the Company
shall allow the Underwriter, subject to the sale and receipt of funds for
200,000 Shares minimum and 800,000 maximum to be offered herein, a sale's
commission of ten percent (10%) of the public offering price on all offered
Shares to be sold hereunder. The Underwriter may organize a selling group (which
group may include the Underwriter) or associate itself with such other
Underwriters as it may deem necessary as long as such underwriters or members of
the selling group are members of the NASD for the purpose of distributing the
offered Shares and in such event, the Underwriter may allow to members of such
selling group, or such other underwriters, such part of the aforementioned
commission or discount as it may, in its sole discretion determine. Shares sold
by members of the selling group who are not a member of the NASD, including
foreign brokers, and dealers registered pursuant to the Securities Act of 1934,
may only be sold at the price of $5.00 per Share. The Underwriter shall be paid
a non-accountable expense allowance of one percent of the public offering price
on all Shares sold (of which $XXXX has been paid by the Company to the
Underwriter); and Warrants to purchase up to 80,000 shares of Common Stock at
$6.00 per share, at the rate of one Underwriter's Warrant for every ten Shares
sold in this offering. Subject to the sale of the minimum number of Shares, as
set forth in Paragraph 6(p) hereof. Such commission and expense allowance shall
be deductible by the Underwriter prior to remittance by it to the Company on
account of the Shares sold. Up to 80% of these warrants shall be subject to a
call feature by the issuer 12 months from their first exercisable date. Upon
notice in writing to the underwriter, the underwriter shall have 30 days to
exercise those called warrants, or they shall be cancelled.
*After the minimum of $1,000,000 is reached, purchases by "original"
shareholders shall be exempt compensation, with the exception of underwriter's
warrants.
**The offering shall be terminated on December 31, 2001.
(1) Underwriter's Common Stock Purchase Warrant: At the Closing Date, the
Company will sell to the Underwriter for a purchase price of $.01, per warrant,
warrants to purchase Shares at 120% of the offering price of the Shares (the
"Underwriter's Common Stock Purchase Warrant" or "Underwriter's Warrants"). Each
Share will be identical to the Shares except that the Underwriter's Warrants
cannot be exercised until one year after the effective date of the Registration
Statement. The total number of Shares which may be purchased on the exercise of
the Underwriter's Warrants will be 10% of the Shares sold in the offering. The
Underwriter's Warrants shall be nonexercisable and nontransferable for a period
of twelve (12) months after the date of the Prospectus used in the offering.
The Company agrees to register a sufficient number of shares of its Common Stock
pursuant to the Registration Statement so that a sufficient number of shares of
its Common Stock underlying the Underwriter's Warrants are registered and
available to be issued upon the exercise of the Underwriter's Warrants. The
Company will set aside and at all times have available a sufficient number of
registerable shares of its Common Stock to be issued upon the exercise of the
Underwriter's Warrants.
The Company andthe Underwriter agree that, prior to the effective date of the
Company's Registration Statement, the Underwriter may designate that the
Underwriter's Warrants be issued in varying amounts directly to its officers and
not to the Underwriter, and to other Underwriters and their designees, such
designation will only be made by the Underwriter if it determines that such
issuances would not violate the interpretation of the Board of Governors of the
NASD. The Underwriter has disclosed to the Company, and the Company has agreed,
that the Underwriter may transfer, after twelve (12) months from the date of the
Underwriter's Warrants, a portion or all of the Underwriter's Warrants to
certain persons, including, but not limited to, the Underwriter's officers,
directors, shareholders, employees, or registered representatives. The
Underwriter and the Company agree that such transfers will only be made if they
do not violate the registration provisions of the Act and the Underwriter will
deliver an opinion of counsel to that effect to the Company.
Upon written request of the then holder(s) of at least 51% of the total
Underwriter's Warrants and securities issued upon exercise of the Underwriter's
Warrants (originally issued to the Underwriter or his designees), made at any
time within the period commencing twelve (12) months after the date of the
Prospectus and ending four (4) years thereafter, the Company will file, not more
than once, a Post-Effective Amendment, Registration Statement or Notification on
Form l-A under the Act, registering or qualifying, as the case may be, the
Underwriter's Warrants and/or the shares underlying the Underwriter's Warrants.
The Company must file a Registration Statement and will not have a choice
between filing a Registration Statement or a Notification on Form I-A if the
shares underlying them cannot be sold under Regulation A because of the limited
exemption. The Company agrees to use its best efforts to cause the above filing
to become effective. All expenses of such registration or qualification,
including, but not limited to, legal, accounting, "Blue Sky" registration/quali-
fication costs, and printing fees, will be borne by the Company exclusive of any
commissions.
In addition to the above, the Company agrees that if, at any time during the
term of the Underwriter's Warrants, it should file a Registration Statement with
the Commission pursuant to the Act (or file a Notification on Form l-A) under
the Act for a public offering of equity securities for cash, either for the
account of the Company or Selling Shareholders, the Company will at its own
expense, except commissions, offer to said holder(s) the opportunity to register
the shares underlying the Underwriter's Warrants for public offering. This
paragraph is not applicable to a Registration Statement filed with the
Commission on Forms S-4 or S-8.
In addition to the rights above provided, the Company will cooperate with the
then holder(s) of the Underwriter's Warrants and shares issued upon the exercise
of the Underwriter's Warrants in preparing and signing any Registration
Statement or Notification, in addition to the Registration Statement and
Notifications discussed above, required in order to sell or transfer the
aforesaid Underwriter's Warrants and/or underlying shares and will supply all
information required therefor, but such additional Registration Statement or
Notification shall be at the then holder(s) cost and expense.
(d) If at any time, any condition of the obligation of the Company hereunder
shall not have been met or shall cease to be met and the Underwriter shall have
given the Company notice of the desire of the Underwriter to terminate this
Agreement on account of the non-fulfillment of any such condition or obligation,
then upon such notice, the within Agreement shall terminate, saving all such
rights as the respective parties may then by law possess. Any such notice must
be in writing. If the within Agreement shall not be sooner terminated as
provided in the within paragraph, then, and in all events, the Agreement herein
shall terminate at such time as all of the Shares shall have been subscribed for
pursuant to the terms of the public offering herein. The date upon which the
Agreement herein shall terminate for whatever reason is herein sometimes
referred to as the "Termination Date".
3. Representations and Warranties of the Company. As material inducements
to the Underwriter to enter into this Agreement, the Company hereby represents
and warrants to, and agrees with the Underwriter which representations,
warranties and agreements shall survive the closing, as follows:
(a) The Company has prepared and filed with the Commission a registration
statement, and an amendment or amendments thereto, on Form SB-2 (No.333-XXXXXX
), including any related preliminary prospectus ("Preliminary Prospectus"), for
the registration of the Securities, the Representative's Warrant (sometimes
referred to herein collectively as the "Registered Securities"), under the Act,
which registration statement and amendment or amendments have been prepared by
the Company in conformity with the requirements of the Act, and the Rules and
Regulations. The Company will promptly file a further amendment to said
registration statement in the form heretofore delivered to the Underwriter and
will not file any other amendment thereto to which the Underwriter shall have
objected verbally or in writing after having been furnished with a copy thereof.
(b) Neither the Commission nor any state regulatory authority has issued any
order preventing or suspending the use of any Prospectus or the Registration
Statement and no proceeding for an order suspending the effectiveness of the
Registration Statement or any of the Company's Shares has been instituted or is
pending or threatened. Each such Prospectus and/or any supplement thereto has
conformed in all material respects with the requirements of the Act and the
Rules and Regulations and on its date did not include any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading, in light of the circumstances under which they were made
and (i) the Prospectus and/or any supplement thereto will contain all statements
which are required to be stated therein by the Act and Rules and Regulations,
and (ii) the Prospectus and/or any supplement thereto will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
in light of the circumstances under which they were made; provided, however,
that no representations, warranties or agreements are made hereunder as to
information contained in or omitted from the Prospectus in reliance upon, and in
conformity with, the written information furnished to the Company by you as set
forth in Section 2(e) above.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of its incorporation,
with full power and authority (corporate and other) to own its properties and
conduct its businesses as described in the Prospectus and is duly qualified to
do business as a foreign corporation in good standing in all other jurisdictions
in which the nature of its business or the character or location of its
properties requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the business, properties or
operations of the Company and the subsidiaries as a whole.
(d) The Company has full legal right, power and authority to authorize,
issue, deliver and sell the Shares, and to enter into this Agreement, the
Underwriter's Common Stock Purchase Warrant dated as of the initial closing date
to be exercised and delivered by the Company to the Underwriter (the
"Underwriter's Common Stock Purchase Warrant Agreement"), and to consummate the
transactions provided for in such agreements, and each of such agreements has
been duly and properly authorized, and on the Initial Closing Date will be duly
and properly executed and delivered by the Company. This Agreement constitutes
and on the Initial Closing Date the Underwriter's Common Stock Purchase Warrant
will then constitute valid and binding agreements, enforceable in accordance
with their respective terms (except as the enforceability thereof may be limited
by bankruptcy or other similar laws affecting the rights of creditors generally
or by general equitable principles and except as the enforcement of
indemnification provisions may be limited by federal or state Securities laws).
(e) Except as disclosed in the Prospectus, the Company is not in violation
of its respective certificate or articles of incorporation or bylaws or in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any material bond, debenture, note or other
evidence of indebtedness or in any material contract, indenture, mortgage, loan
agreement, lease, joint venture, partnership or other agreement or instrument to
which the Company is a party or by which it may be bound or is not in material
violation of any law, order, rule, regulation, writ, injunction or decree of any
governmental instrumentality or court, domestic or foreign; and the execution
and delivery of this Agreement, the Underwriter's Common Stock Purchase Warrant
and the consummation of the transactions contemplated therein and in the
Prospectus and compliance with the terms of each such agreement will not
conflict with, or result in a material breach of any of the terms, conditions or
provisions of, or constitute a material default under, or result in the
imposition of any material lien, charge or encumbrance upon any of the property
or assets of the Company pursuant to, any material bond, debenture, note or
other evidence of indebtedness or any material contract, indenture, mortgage,
loan agreement, lease, joint venture, partnership or other agreement or
instrument to which the Company is a party nor will such action result in the
material violation by the Company of any of the provisions of its respective
certificate or articles of incorporation or bylaws or any law, order, rule,
regulation, writ, injunction, decree of any government, governmental
instrumentality or court, domestic or foreign, except where such violation will
not have a material adverse effect on the financial condition of the Company.
(f) The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectus and the Company will have the adjusted
capitalization set forth therein on the Initial Closing Date; all of the shares
of issued and outstanding capital stock of the Company set forth therein have
been duly authorized, validly issued and are fully paid and nonassessable; the
holders thereof do not have any rights of rescission with respect therefor and
are not subject to personal liability for any obligations of the Company by
reason of being stockholders under the laws of the State in which the Company is
incorporated; none of such outstanding capital stock is subject to or was issued
in violation of any preemptive or similar rights of any stockholder of the
Company; and such capital stock (including the Shares, and the Underwriter's
Common Stock Purchase Warrant) conforms in all material respects to all
statements relating thereto contained in the Prospectus.
(g) The Company is not a party to or bound by any instrument, agreement or
other arrangement providing for it to issue any capital stock, rights, warrants,
options or other Shares, except for this Agreement or as described in the
Prospectus. The Shares, and the Underwriter's Common Stock Purchase Warrant are
not and will not be subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid for and delivered
in accordance with the terms hereof, will be validly issued, fully paid and
non-assessable and will conform to the respective descriptions thereof contained
in the Prospectus; except for payment of the applicable purchase price paid upon
exercise of the options or warrants, as the case may be the holders thereof will
not be subject to any liability solely as such holders; all corporate action
required to be taken for the authorization, issue and sale of the Shares and the
Underwriter's Common Stock Purchase Warrant has been duly and validly taken; and
the certificates representing the Shares and the Underwriter's Common Stock
Purchase Warrant will be in due and proper form. Upon the issuance and delivery
pursuant to the terms hereof of the Shares, and the Underwriter's Shares to be
sold by the Company hereunder, the Underwriter will acquire good and marketable
title to such Shares and Underwriter's Common Stock Purchase Warrant free and
clear of any lien, charge, claim, encumbrance, pledge, security interest, defect
or other restriction of any kind whatsoever other than restrictions as may be
imposed under applicable securities laws.
(h) The Company has good and marketable title to all properties and assets
described in the Prospectus as owned by it, free and clear of all liens,
charges, encumbrances or restrictions, except such as are described or referred
to in the Prospectus or which are not materially significant or important in
relation to its business or which have been incurred in the ordinary course of
business; except as described in the Prospectus all of the leases and subleases
under which the Company holds properties or assets as lessee or sublessee as
described in the Prospectus are in full force and effect, and the Company is not
in material default in respect of any of the terms or provisions of any of such
leases or subleases, and no claim has been asserted by anyone adverse to the
Company's rights as lessor, sublessor, lessee or sublessee under any of the
leases or subleases mentioned above or affecting or questioning the Company's
right to the continued possession of the leased or subleased premises or assets
under any such lease or sublease; and the Company owns or leases all such
properties as are necessary to its operations as now conducted and as
contemplated to be conducted, except as otherwise stated in the Prospectus.
(i) The financial statements, together with related notes, set forth in the
Prospectus fairly present the financial position and results of operations of
the Company at the respective dates and for the respective periods to which they
apply. Said statements and related notes have been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent
in all material respects during the periods involved but any "stub" period has
not been audited by an independent accounting firm. There has been no material
adverse change or material development involving a prospective change in the
condition, financial or otherwise, or in the prospects, value, operation,
properties, business or results of operations of the Company whether or not
arising in the ordinary course of business, since the date of the financial
statements included in the Registration Statement and the Prospectus.
(j) Subsequent to the respective dates as of which information is given in
the Prospectus as it may be amended or supplemented, and except as described in
the Prospectus, the Company has not, directly or indirectly, incurred any
liabilities or obligations, direct or contingent, not in the ordinary course of
business or entered into any transactions not in the ordinary course of
business, which are material to the business of the Company as a whole and there
has not been any change in the capital stock of, or any incurrence of long term
debts by, the Company or any issuance of options, warrants or rights to purchase
the capital stock of the Company or declaration or payment of any dividend on
the capital stock of the Company or any material adverse change in the condition
(financial or other), net worth or results of operations of the Company as a
whole and the Company has not become a party to, any material litigation whether
or not in the ordinary course of business.
(k) To the knowledge of the Company, there is no pending or threatened,
action, suit or proceeding to which the Company is a party before or by any
court or governmental agency or body, which might result in any material adverse
change in the condition (financial or other), business or prospects of the
Company as a whole or might materially and adversely affect the properties or
assets of the Company as a whole nor are there any actions, suits or proceedings
against the C ompany related to environmental matters or related to
discrimination on the basis of age, sex, religion or race which might be
expected to materially and adversely affect the conduct of the business,
property, operations, financial condition or earnings of the Company as a whole;
and no labor disturbance by the employees of the Company individually exists or
is, to the knowledge of the Company, imminent which might be expected to
materially and adversely affect the conduct of the business, property,
operations, financial condition or earnings of the Company as a whole.
(l) Except as may be disclosed in the Prospectus, the Company has properly
prepared and filed all necessary federal, state, local and foreign income and
franchise tax returns, has paid all taxes shown as due thereon, has established
adequate reserves for such taxes which are not yet due and payable, and does not
have any tax deficiency or claims outstanding, proposed or assessed against it.
(m) The Company has sufficient licenses, permits, right to use trade or
service marks and other governmental authorizations currently required for the
conduct of its business as now being conducted and as contemplated to be
conducted and the Company is in all material respects complying therewith.
Except as set forth in the Prospectus, the expiration of any such licenses,
permits, or other governmental authorizations would not materially affect the
Company's operations. To its knowledge, none of the activities or businesses of
the Company are in material violation of, or cause the Company to materially
violate any law, rule, regulations, or order of the United States, any state,
county or locality, or of any agency or body of the United States or of any
state, county or locality.
(n) The Company has not at any time (i) made any contributions to any
candidate for political office in violation of law, or failed to disclose fully
any such contribution, or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi public duties, other than payments required or allowed by applicable law.
(o) Except as set forth in the Prospectus the Company knows of no
outstanding claims for services either in the nature of a finder's fee,
brokerage fee or otherwise with respect to this financing for which the Company
or the Underwriter may be responsible, or which may affect the Underwriter's
compensation as determined by the National Association of Securities Dealers,
Inc. ("NASD") except as otherwise disclosed in the Prospectus.
(p) The Company has its property adequately insured against loss or damage
by fire and maintains such other insurance as is customarily maintained by
companies in the same or similar business.
(q) The Underwriter's Warrants herein described are duly and validly
authorized and upon delivery to the Underwriter in accordance herewith will be
duly issued and legal, valid and binding obligations of the Company, except as
the enforceability thereof may be limited by bankruptcy or other similar laws
affecting the rights of creditors generally or by equitable principles, and
except as the enforcement of indemnification provisions may be limited by
federal or state securities laws. The Underwriter's securities issuable upon
exercise of any of the Underwriter's Common Stock Purchase Warrant have been
duly authorized, and when issued upon payment of the exercise price therefor,
will be validly issued, fully paid and nonassessable.
(r) Except as set forth in the Prospectus, no default exists in the due
performance and observance of any term, covenant or condition of any material
license, contract, indenture, mortgage, installment sale agreement, lease, deed
of trust, voting trust agreement, stockholders agreement, note, loan or credit
agreement, purchase order, or any other agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or instrument to
which the Company is a party or by which the Company may be bound or to which
the property or assets (tangible or intangible) of the Company is subject or
affected.
(s) To the best of the Company's knowledge it has generally enjoyed a
satisfactory employer-employee relationship with its employees and, to the best
of its knowledge, is in substantial compliance in all material respects with all
federal, state, local, and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours. To the best of the Company's knowledge, there are no pending
investigations involving the Company, by the U.S. Department of Labor, or any
other governmental agency responsible for the enforcement of such federal,
state, local, or foreign laws and regulations. To the best of the Company's
knowledge, there is no unfair labor practice charge or complaint against the
Company pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or to its knowledge involving the Company, or any predecessor entity, and none
has ever occurred. To the best of the Company's knowledge, no representation
question is pending respecting the employees of the Company, and no collective
bargaining agreement or modification thereof is currently being negotiated by
the Company. To the best of the Company's knowledge, no grievance or arbitration
proceeding is pending or to its knowledge threatened under any expired or
existing collective bargaining agreements of the Company. No labor dispute with
the employees of the Company is pending, or, to its knowledge is imminent; and
the Company is not aware of any pending or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors which
may result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of the Company.
(t) Except as may be set forth in the Registration Statement, the Company
does not maintain, sponsor or contribute to any program or arrangement that is
an "employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(l) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute, now or
at any time previously, to a defined benefit plan, as defined in Section 3(35)
of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Internal Revenue Code (the "Code"), which could subject the Company
to any tax penalty on prohibited transactions and which has not adequately been
corrected. Each ERISA Plan is in compliance with all material reporting,
disclosure and other requirements of the Code and ERISA as they relate to any
such ERISA Plan. Determination letters have been received from the Internal
Revenue Service with respect to each ERISA Plan which is intended to comply with
Code Section 401 (a), stating that such ERISA Plan and the attendant trust are
qualified thereunder. The Company has never completely or partially withdrawn
from a "multiemployer plan."
(u) None of the Company, or any of its employees, directors, stockholders,
or affiliates (within the meaning of the Rules and Regulations) has taken or
will take, directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under the Exchange
Act, or otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares, Underwriter's Common
Stock Purchase Warrant, or otherwise.
(v) None of the patents, patent applications, trademarks, service marks,
trade names, copyrights, and licenses and rights to the foregoing presently
owned or held by the Company, are in dispute or, to the best knowledge of the
Company's management are in any conflict with the right of any other person or
entity. The Company (i) except as disclosed in the Prospectus owns or has the
right to use, all patents, trademarks, service marks, trade names and
copyrights, technology and licenses and rights with respect to the foregoing,
used in the conduct of its business as now conducted or proposed to be conducted
without infringing upon or otherwise acting adversely to the right or claimed
right of any person, corporation or other entity under or with respect to any of
the foregoing, and except as set forth in the Prospectus or otherwise disclosed
to the Underwriter in writing, to the best knowledge of the Company's management
is not obligated or under any liability whatsoever to make any material payments
by way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, trademark, service xxxx, trade name, copyright,
know-how, technology or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business or otherwise. There is no
suit, proceeding, inquiry, arbitration, investigation, litigation or
governmental or other proceeding, domestic or foreign, pending or, to the best
of the Company's knowledge, threatened ( or circumstances that may give rise to
the same) against the Company which challenges the rights of the Company with
respect to any trademarks, trade names, service marks, service names,
copyrights, patents, patent applications or licenses or rights to the foregoing
used in the conduct of its business.
(w) Except as disclosed in the Prospectus the Company owns and has adequate
right to use to the best knowledge of the Company's management all trade
secrets, know-how (including all other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), inventions,
designs, processes, works of authorship, computer programs and technical data
and information (collectively herein "intellectual property") required for or
incident to the development, manufacture, operation and sale of all products and
services sold or proposed to be sold by the Company, free and clear of and
without violating any right, lien or claim of others, including without
limitation, former employers of its employees. The Company is not aware of any
such development of similar or identical trade secrets or technical information
by others. The Company has valid and binding confidentiality agreements with all
of its officers, covering its intellectual property (subject to the equitable
powers of any court), which agreements have remaining terms of at least two
years from the effective date of the Registration Statement except where the
failure to have such agreements would not materially and adversely effect the
Company's business taken as a whole. The Company has good and marketable title
to, or valid and enforceable leasehold estates in, all items of real and
personal property stated in the Prospectus, to be owned or leased by it free and
clear of all liens, charges, claims, encumbrances, pledges, security interests,
defects, or other restrictions or equities of any kind whatsoever, other than
those referred to in the Prospectus and liens for taxes not yet due and payable.
(x) XxXxxxxx & Xxxxxxx, whose reports are filed with the Commission as a
part of the Registration Statement, are independent certified public accountants
as required by the Act and the Rules and Regulations.
(y) The Company has agreed to cause to be duly executed, agreements pursuant
to which each of the Company's officers, directors, consultants, and holders of
more than 5% of the outstanding Common Stock calculated as of the date
immediately preceding the commencement of the public offering, and any person or
entity deemed to be an affiliate of the Company pursuant to SEC Rules and
Regulations, has agreed not to, directly or indirectly, sell, assign, transfer,
or otherwise dispose of any shares of Common Stock or securities convertible
into, exercisable or exchangeable for or evidencing any right to purchase or
subscribe for any shares of Common Stock (either pursuant to Rule 144 of the
Rules and Regulations or otherwise) for a period commencing on the effective
date until after 12 months from the effective date of the offering, unless the
price of the Common Stock, adjusted for any splits, trades at 175% of the public
offering price for 20 consecutive days; (iii) or after the first day of the
fourth year from the effective date of the prospectus (the Lock-up). Any shares
of common stock released from the foregoing restrictions will remain restricted
Shares subject however to the resale provisions of Rule 144.
Shares issued upon the exercise of any options held by the Company's officers,
directors or holders of 5% or more of the Company's Common Stock, it is agreed
shall be locked up in accordance with the terms of the preceding paragraph.
The Company will cause the Transfer Agent, as defined below, to xxxx an
appropriate legend on the face of stock certificates representing all of such
Shares and to place "stop transfer" orders on the Company's stock ledgers. The
company president or CEO, company counsel and the Underwriter will have their
signatures on the lock-up agreements. The Company also agrees that it will not
release any Shares subject to this Agreement without the signatures of all
parties referred to.
(z) The Registered Shares have been approved for listing on NASDAQ or an
Exchange.
(aa) Except as set forth in the Prospectus or disclosed in writing to the
Underwriter (which writing specifically refers to this Section), no officer or
director of the Company, holder of 5% or more of Shares of the Company or any
"affiliate" or "associate" (as these terms are defined in Rule 405 promulgated
under the Rules and Regulations) of any of the foregoing persons or entities has
or has had, either directly or indirectly, (i) an interest in any person or
entity which (A) furnishes or sells services or products which are furnished or
sold or are proposed to be furnished or sold by the Company, or (B) purchases
from or sells or furnishes to the Company any goods or services, or (ii) a
beneficiary interest in any contract or agreement to which the Company is a
party or by which it may be bound or affected. Except as set forth in the
Prospectus under "Certain Transactions" or disclosed in writing to the
Underwriter (which writing specifically refers to this Section) there are no
existing agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company, and any officer, director, principal stockholder of the Company, or any
partner, affiliate or associate of any of the foregoing persons or entities.
(bb) Any certificate signed by any officer of the Company, and delivered to
the Underwriter or to the Underwriter's counsel (as defined herein) shall be
deemed a representation and warranty by the Company to the Underwriter as to the
matters covered thereby.
(cc) Each of the minute books of the Company has been made available to the
Underwriter and contains a complete summary of all meetings and actions of the
directors and stockholders of the Company, since the time of its incorporation
and reflect all transactions referred to in such minutes accurately in all
respects.
(dd) As of the Initial Closing Date, the Company will enter into the
Consulting Agreement substantially in the form filed as an exhibit to the
registration statement with respect to the rendering of consulting services by
the Underwriter to the Company. (optional)
(ee) Except and only to the extent described in the Prospectus or disclosed
in writing to the Underwriter (which writing specifically refers to this
Section), no holders of any Shares of the Company or of any options, warrants or
other convertible or exchangeable securities of the Company have the right to
include any Common Stock issued by the Company in the Registration Statement or
any registration statement to be filed by the Company or to require the Company
to file a registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any Common Stock of the Company. Except as
disclosed in the Prospectus, all rights so described or disclosed have been
waived or have not been triggered with respect to the transactions contemplated
by this Agreement and the Underwriter's Common Stock Purchase Warrant (including
the securities issuable thereunder).
(ff) The Company has not entered into any employment agreements with its
executive officers, except as disclosed in the Prospectus.
(gg) No consent, approval, authorization or order of, and no filing with,
any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Registered Securities pursuant to
the Prospectus and the Registration Statement, the issuance of the Underwriter's
Common Stock Purchase Warrant, the performance of this Agreement, and the
transactions contemplated hereby and thereby, including without limitation, any
waiver of any preemptive, first refusal or other rights that any entity or
person may have for the issue and/or sale of any of the Shares, and the
Underwriter's Common Stock Purchase Warrant, except such as have been or may be
obtained under the Act, otherwise or may be required under state securities or
"blue sky" laws in connection with the Underwriter's purchase and distribution
of the Shares and the Underwriter's Common Stock Purchase Warrant to be sold by
the Company hereunder or may be required by the Rules of the National
Association of Securities Dealers, Inc. ("NASD").
(hh) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which its assets, properties or businesses may be subject have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company, in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents are
accurate and fairly present the information required to be shown with respect
thereto by Form SB-1, and there are no contracts or other documents which are
required by the Act to be described in the Registration Statement or filed as
exhibits to the Registration Statement which are not described or filed as
required, and the exhibits which have been filed are complete and correct copies
of the documents of which they purport to be copies.
(ii) Within the past five (5) years, none of the Company's independent
public accountants has brought to the attention of the Company's management any
"material weakness" as defined in the Statement of Auditing Standard No. 60 in
any of the Company's internal controls.
(jj) Except as otherwise may be indicated herein, as of the effective date
of the Prospectus, the Company has not: (1) issued any securities or incurred
any liability or obligation direct or contingent, for borrowed money, or (2)
entered into any material transactions not in the ordinary course of business,
or (3) declared or paid any dividend on its stock.
4. Escrow Account.
(a) Notwithstanding anything contained herein to the contrary, unless the
Underwriter shall sell 200,000 Shares, none of the Shares will be distributed to
the public. The Underwriter agrees to open an appropriate Impound Account
maintained atSterling Savings Bank
, for all monies received from the sale of these Shares. Such monies shall be
deposited in full without any deductions for commissions and/or expenses. In the
event that less than 200,000 Shares are sold and paid for within 90 days, from
the date which the Underwriter commences the sale of said Shares, the proposed
offering herein will be withdrawn and the sums paid will be returned in full to
each such purchaser, without interest thereon or deduction therefrom.
(b) Appropriate arrangements will be made by the Underwriter to provide for
the receipt of funds from the subscribers of the Shares and to provide for the
disposition thereof in accordance with the provisions of this Agreement.
(c) Unless the Underwriter shall have sold 200,000 Shares, it shall not be
entitled to receive any commission (except accountable out-of-pocket expenses as
stated hereinafter).
(d) The Underwriter shall comply in all respects with the requirements of
Rule 15c2-4 of the rules and regulations made by the Commission under the
Securities Exchange Act of 1434, as amended. The Underwriter shall deposit, by
12:00 noon the following business day, the proceeds of the sale of the offered
Shares in an Escrow bank account, as agent for the Company, and the same shall
be held in such bank account by the bank until the Closing Bate, and upon such
Closing Date, the said funds (less the commissions, expenses and fees due to the
Underwriter) shall be promptly transmitted to the Company, who shall at said
time provide such documents, certificates, receipts and any and all other papers
or instruments as counsel for the Underwriter may reasonably deem necessary or
appropriate under the circumstances.
5. Sale of the Shares - Selected Dealers
(a) In offering the Shares for sale, the Underwriter shall offer it solely
as agent for the Company and such offer shall be made upon the terms and subject
to the conditions set forth in the Registration Statement and prospectus. The
Underwriter shall commence making such offer as agent for the Company) after all
conditions of this Agreement have been satisfied.
(b) The Underwriter may offer and sell the Shares for the Company's account
through registered dealers selected by it, except that only members of the NASD
may be included in the selling group pursuant to a form of Selling Agreement
pursuant to which it may allow such concession (out of its underwriting
commission) as it may determine, within the limits set forth in the Registration
Statement and prospectus, but all such sales through selected dealers shall be
made by the Company acting through the Underwriter as agent, and not by the
-Underwriter for its own account. All sales through selected dealers shall be as
agents for the accounts of their customers, and the Underwriter shall not have
authority to employ- such dealers as agents for the Company,
(c) On each sale by the Underwriter of any of the Shares to selected
dealers, the Underwriter shall require the selected dealer purchasing any such
Shares to agree to reoffer the same on the terms and conditions of offering set
forth in the prospectus and to comply with all Commission requirements that the
Underwriter is required to comply with and not to offer or sell the offered
Shares to the Public or to any broker/dealer not a member of the NASD, including
foreign broker/dealer registered pursuant to the Securities Act of 1934, at a
price of less than $5.00 per Unit.
6. Covenants of the Company. The Company covenants and agrees with the
Underwriter as follows:
(a) It will cooperate in all respects in making the Prospectus effective and
will not at any time, whether before or after the effective date, file any
amendment to or supplement to the Prospectus of which Underwriter shall not
previously have been advised and furnished with a copy or to which Underwriter
or Underwriter's counsel shall have reasonably objected or which is not in
material compliance with the Act and the Rules and Regulations or applicable
state law.
(i) As soon as the Company is advised thereof, the Company will advise
Underwriter, and confirm the advice in writing, of the receipt of any comments
of the Commission or any state securities department, when the Registration
Statement becomes effective if the provisions of Rule 430A promulgated under the
Act will be relied upon, when the Prospectus has been filed in accordance with
said Rule 430A, of the effectiveness of any posteffective amendment to the
Registration Statement or Prospectus, or the filing of any supplement to the
Prospectus or any amended Prospectus, of any request made by the Commission or
any state securities department for amendment of the Prospectus or for
supplementing of the Prospectus or for additional information with respect
thereto, of the issuance of any stop order suspending the effectiveness of the
Prospectus or any order preventing or suspending the use of any Prospectus or
any order suspending trading in the Common Stock of the Company, or of the
suspension of the qualification of the Shares, or the Common Stock Purchase
Warrant for offering in any jurisdiction, or of the institution of any
proceedings for any such purposes, and will use its best efforts to prevent the
issuance of any such order and, if issued, to obtain as soon as possible the
lifting or dismissal thereof.
(ii) The Company will or has caused to be delivered to the Underwriter
copies of such Prospectus, and the Company has consented and hereby consents to
the use of such copies for the purposes permitted by law. The Company authorizes
the Underwriter and the dealers to use the Prospectus and such copies of the
Prospectus in connection with the sale of the Shares and the Underwriter's
Common Stock Purchase Warrant for such period as in the opinion of Underwriter's
counsel and the Company's counsel the use thereof is required to comply with the
applicable provisions of the Act and the Rules and Regulations. The Company will
prepare and file with the states, promptly upon the Underwriter's request, any
such amendments or supplements to the Prospectus, and take any other action, as,
in the opinion of Underwriter's counsel, may be necessary or advisable in
connection with the initial sale of the Shares and the Underwriter's Common
Stock Purchase Warrant and will use its best efforts to cause the same to become
effective as promptly as possible.
(iii) The Company shall file the Prospectus (in form and substance
satisfactory to the Underwriter) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to rule
424(b)(1) or pursuant to Rule 424(b)(3) not later than the Commission's close of
business on the earlier of (i) the second business day following the execution
and delivery of this Agreement, and (ii) the fifth business day after the
effective date of the Registration Statement.
(iv) In case of the happening, at any time within such period as a
Prospectus is required under the Act to be delivered in connection with the
initial sale of the Shares and the Underwriter's Common Stock Purchase Warrant
of any event of which the Company has knowledge and which materially affects the
Company, or the securities thereof, and which should be set forth in an
amendment of or a supplement to the Prospectus in order to make the statements
therein not then misleading, in light of the circumstances existing at the time
the Prospectus is required under the Act to be delivered, or in case it shall be
necessary to amend or supplement the Prospectus to comply with the Act, the
Rules and Regulations or any other law, the Company will forthwith prepare and
furnish to the Underwriter copies of such amended Prospectus or of such
supplement to be attached to the Prospectus, in such quantities as Underwriter
may reasonably request, in order that the Prospectus, as so amended or
supplemented, 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 in light of the circumstances under which
they are made. The preparation and furnishing of any such amendment or
supplement to the Prospectus or supplement to be attached to the Prospectus
shall be without expense to the Underwriter.
(iv) The Company will to the best of its ability comply with the Act, the
Exchange Act and applicable state securities laws so as to permit the initial
offer and sales of the Securities, the Representatives Securities under the Act,
the Rules and Regulations, and applicable state securities laws.
(b) It will cooperate to qualify the Shares for initial sale under the
securities laws of such jurisdictions as the Underwriter may designate and will
make such applications and furnish such information as may be required for that
purpose, provided the Company shall not be required to qualify as a foreign
corporation or a dealer in securities. The Company will, from time to time,
prepare and file such statements and reports as are or may be required to
continue such qualification in effect for so long as the Underwriter may
reasonably request.
(c) So long as any of the Shares or the Underwriter's Common Stock Purchase
Warrant remain outstanding in the hands of the public, the Company, at its
expense, will annually furnish to its shareholders a report of its operations to
include financial statements audited by independent public accountants, and will
furnish to the Underwriter as soon as practicable after the end of each fiscal
year, a balance sheet of the Company as at the end of such fiscal year, together
with statements of operations, shareholders' equity, and changes in cash flow of
the Company for such fiscal year, all in reasonable detail and accompanied by a
copy of the certificate or report thereon of independent public accountants.
(d) It will deliver to the Underwriter at or before the Initial Closing Date
three signed copies of the signature pages to the Registration Statement and
three copies of the registration statement including all financial statements
and exhibits filed therewith, whether or not incorporated by reference. The
Company will deliver to the Underwriter, from time to time until the effective
date of the Prospectus, as many copies of the Prospectus as the Underwriter may
reasonably request. The Company will deliver to the Underwriter on the effective
date of the Prospectus and thereafter for so long as a Prospectus is required to
be delivered under the Act and the Rules and Regulations as many copies of the
Prospectus, in final form, or as thereafter amended or supplemented, as the
Underwriter may from time to time reasonably request.
(e) The Company will apply the net proceeds from the sale of the Shares
substantially in the manner set forth under "Use of Proceeds" in the Prospectus.
No portion of the proceeds shall be used, directly or indirectly, to acquire any
securities issued by the Company, without the prior written consent of the
Underwriter.
(f) As soon as it is practicable, but in any event not later than the first
(lst) day of the fifteenth (15th) full calendar month following the effective
date of the Registration Statement, the Company will make available to its
security holders and the Underwriter an earnings statement (which need not be
audited) covering a period of at least twelve (12) consecutive months beginning
after the effective date of the Registration Statement, which shall satisfy the
requirements of Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations.
7. Conditions of Underwriter's Obligations. The Underwriter's obligation to
act as agent of the Company hereunder and to find purchasers for the Shares and
to make payment to the Company on the Closing Date is subject to the accuracy of
and compliance with the representations and warranties an the part of the
Company herein as of the date hereof and as of the~ Closing Date, to the
performance by the Company of its obligations and covenants hereunder, to the
accuracy of certificates of the Company and officers of the Company to be
delivered pursuant to this Agreement, all as at the Closing Date, and to the
following further conditions:
(a) The Registration Statement shall have become effective as and when
cleared by the Commission, and the Underwriter shall have received notice
thereof, on or prior to any closing date no stop order suspending the
effectiveness of the Prospectus shall have been issued and no proceedings for
that or similar purpose shall have been instituted or shall be pending, or, to
your knowledge or to the knowledge of the Company, shall be contemplated by the
Commission; any request on the part of the Commission for additional information
shall have been complied with to the reasonable satisfaction of counsel to the
Underwriter; and qualification, under the securities laws of such states as the
Underwriter may designate, of the issue and sale of the Securities upon the
terms and conditions herein set forth or contemplated and containing no
provision unacceptable to the Underwriter shall have been secured, and no stop
order shall be in effect denying or suspending effectiveness of such
qualification nor shall any stop order proceedings with respect thereto be
instituted or pending or threatened under such law.
(b) On any closing date and, with respect to the letter referred to in
subparagraph (iii), as of the date hereof, the Underwriter shall have received:
(i) the opinion, together with such number of signed or facsimile copies of
such opinion as the Underwriter may reasonably request, addressed to the
Underwriter by Xxxx Xxxxxxx of Workland & Witherspoon, counsel for the Company,
(who may rely on the opinion of other counsel for certain legal matters), in
form and substance reasonably satisfactory to the Underwriter and Xxxxxxx X.
Xxxxxxxxx, P.S., counsel to the Underwriter, dated each such closing date, to
the effect that:
(A) The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the jurisdiction in which it is
incorporated and has all necessary corporate power and authority to carry on its
business as described in the Prospectus.
(B) The Company is qualified to do business in each jurisdiction in which
conducting its business requires such qualification, except where the failure to
be so qualified would not have a material adverse effect on the Company's
business or assets.
(C) The Company has the full corporate power and authority to enter into
this Agreement, the Underwriter's Common Stock Purchase Warrant and to
consummate the transactions provided for therein and each such Agreement has
been duly and validly authorized, executed and delivered by the Company. Each of
this Agreement and the Underwriter's Common Stock Purchase Warrant, assuming due
authorization, execution and delivery by each other party thereto, constitutes a
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency or
similar laws governing the rights of creditors and to general equitable
principles, and provided that no opinion need be given as to the enforceability
of any indemnification or contribution provisions, and none of the Company's
execution or delivery of this Agreement, or the Underwriter's Common Stock
Purchase Warrant, its performance hereunder or thereunder, its consummation of
the transactions contemplated herein or therein, or the conduct of its business
as described in the Registration Statement, the Prospectus, and any amendments
or supplements thereto, conflicts with or will conflict with or results or will
result in any material breach or violation of any of the terms or provisions of,
or constitutes or will constitute a material default under, or result in the
creation or imposition of any material lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction of any kind whatsoever upon, any
property or assets (tangible or intangible) of the Company pursuant to the terms
of (A) the articles of incorporation or by-laws of the Company, (B) to the
knowledge of such counsel, any material license, contract, indenture, mortgage,
deed of trust, voting trust agreement, stockholders' agreement, note, loan or
credit agreement or any other agreement or instrument to which the Company is a
party or by which it is or may be bound, or (C) to the knowledge of such
counsel, any statute, judgment, decree, order, rule or regulation applicable to
the Company, whether domestic or foreign.
(D) The Company had authorized and outstanding capital stock as set forth in
the Prospectus under the heading "Capitalization" as of the date set forth
therein, and all of such issued and outstanding shares of capital stock have
been duly and validly authorized and issued, and to the knowledge of such
counsel are fully paid and nonassessable, and to the knowledge of such counsel
no stockholder of the Company is entitled to any preemptive rights to subscribe
for, or purchase shares of the capital stock and to the knowledge of such
counsel none of such securities were issued in violation of the preemptive
rights of any holders of any securities of the Company.
(E) To the knowledge of such counsel, the Company is not a party to or bound
by any instrument, agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities, except for this
Agreement, the Underwriter's Common Stock Purchase Warrant, and except as
described in the Prospectus. The Shares, underlying Securities, and the
Underwriter's Common Stock Purchase Warrant each conforms in all material
respects to the respective descriptions thereof contained in the Prospectus. The
outstanding Shares, shares of Common Stock and the Underwriter's Common Stock
Purchase Warrant and the underlying securities, upon issuance and delivery and
payment therefore in the manner described herein, the Underwriter's Warrant will
be, duly authorized, validly issued, fully paid and nonassessable. There are no
preemptive or other rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any shares of Common Stock pursuant to the
Company's articles of incorporation, by-laws, other governing documents or any
agreement or other instrument known to such counsel to which the Company is a
party or by which it is bound.
(F) The certificates representing the Shares comprised of the Common Stock
are in due and proper form and the Underwriter's Common Stock Purchase Warrant
has been duly authorized and reserved for issuance and when issued and delivered
in accordance with the respective terms of the Underwriter's Common Stock
Purchase Warrant, will duly and validly issue, fully paid and nonassessable.
(G) To the knowledge of such counsel, there are no claims, suits or other
legal proceedings pending or threatened against the Company in any court or
before or by any governmental body which might materially affect the business of
the Company or the financial condition of the Company as a whole, except as set
forth in or contemplated by the Prospectus.
(H) Based on oral and/or written advice from the staff of the Commission,
the Registration Statement has become effective and, to the knowledge of such
counsel, no stop order suspending the effectiveness of the Prospectus is in
effect and no proceedings for that purpose are pending before, or threatened by,
federal or by a state securities administrator.
(I) To the knowledge of such counsel, there are no legal or governmental
proceedings, actions, arbitrations, investigations, inquiries or the like
pending or threatened against the Company of a character required to be
disclosed in the Prospectus which have not been so disclosed, questions the
validity of the capital stock of the Company or this Agreement or the
Underwriter's Common Stock Purchase Warrant or might adversely affect the
condition, financial or otherwise, or the prospects of the Company or which
could adversely affect the Company's ability to perform any of its obligations
under this Agreement, or the Underwriter's Common Stock Purchase Warrant.
(J) To such counsel's knowledge, there are no material agreements, contracts
or other documents known to such counsel required by the Act to be described in
the Registration Statement and the Prospectus not filed as exhibits to the
Registration Statement and the Prospectus, and to such counsel's knowledge (A)
the exhibits which have been filed are correct copies of the documents of which
they purport to be copies; (B) the descriptions in the Registration Statement
and the Prospectus and any supplement or amendment thereto of contracts and
other documents to which the Company is a party or by which it is bound,
including any document to which the Company is a party or by which it is bound
incorporated by reference into the Prospectus and any supplement or amendment
thereto, are accurate in all material respects and fairly represent the
information required to be shown by Form SB-1.
(K) No consent, approval, order or authorization from any regulatory board,
agency or instrumentality having jurisdiction over the Company, or its
properties (other than registration under the Act or qualification under state
or foreign securities law or approval by the NASD) is required for the valid
authorization, issuance, sale and delivery of the Shares or the Underwriter's
Common Stock Purchase Warrant.
(L) The statements in the Prospectus under "Risk Factors-
", " ", "
" "Description of the Securities," and "Shares Eligible For Future Sale" have
been reviewed by such counsel, and insofar as they refer to statements of law,
descriptions of statutes, licenses, rules or regulations or legal conclusions,
are correct in all material respects.
In addition, such counsel shall state that such counsel has participated in
conferences with officials and other representatives of the Company, the
Underwriter, Underwriters' Counsel and the independent certified public
accountants of the Company, at which such conferences the contents of the
Registration Statement and Prospectus and related matters were discussed, and
although they have not certified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads them to believe that, at the time the
Registration Statement became effective and at all times subsequent thereto up
to and on the Closing Date and on any later date on which Option Shares are to
be purchased, the Registration Statement and any amendment or supplement, when
such documents became effective or were filed with the Commission (other than
the financial statements including the notes thereto and supporting schedules
and other financial and statistical information derived therefrom, as to which
such counsel need express no comment) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or at the Closing
Date or any later date on which any outstanding Warrants may be exercised, as
the case may be, the Prospectus and any amendment or supplement thereto (other
than the financial statements including the notes thereto and other financial
and statistical information derived therefrom, as to which such counsel need
express no comment) contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Such opinion shall also cover such other matters incident to the
transactions contemplated hereby and the offering Prospectus as the Underwriter
or counsel to the Underwriter shall reasonably request. In rendering such
opinion, to the extent deemed reasonable by them, such counsel may rely upon
certificates of any officer of the Company or public officials as to matters of
fact of which the maker of such certificate has knowledge.
(ii) a certificate, signed by the Chief Executive Officer and the Principal
Financial or Accounting Officer of the Company dated the Closing Date, to the
effect that with regard to the Company, each of the conditions set forth in
Section 5(d) have been satisfied.
(iii) a letter, addressed to the Underwriter and in form and substance
satisfactory to the Underwriter in all respects (including the nonmaterial
nature of the changes or decreases, if any, referred to in clause (D) below),
from XxXxxxxx & Xxxxxxx, LLP, respectively, as of the effective date of the
Registration Statement and as of the Closing Date, as the case may be:
(A) Confirming that they are independent public accountants with respect to
the Company and its consolidated subsidiaries, if any, within the meaning of the
Act and the applicable published Rules and Regulations.
(B) Stating that, in their opinion, the financial statements, related notes
and schedules of the Company and its consolidated subsidiaries, if any, included
in the Registration Statement examined by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published Rules and Regulations thereunder.
(C) Stating that, with respect to the period from December 31, 2000, to a
specified date (the specified date") not earlier than five (5) business days
prior to the date of such letter, they have read the minutes of meetings of the
stockholders and board of directors (and various committees thereof) of the
Company and its consolidated subsidiaries, if any, for the period from December
31, 2000 through the specified date, and made inquiries of officers of the
Company and its consolidated subsidiaries, if any, responsible for financial and
accounting matters and, especially as to whether there was any decrease in
sales, income before extraordinary items or net income as compared with the
corresponding period in the preceding year; or any change in the capital stock
of the Company or any change in the long term debt or any increase in the
short-term bank borrowings or any decrease in net current assets or net assets
of the Company or of any of its consolidated subsidiaries, if any, and further
stating that while such procedures and inquiries do not constitute an
examination made in accordance with generally accepted auditing standards,
nothing came to their attention which caused them to believe that during the
period from December 31, 2000, through the specified date there were any
decreases as compared with the corresponding period in the preceding year in
sales, income before extraordinary items or net income; or any change in the
capital stock of the Company or consolidated subsidiary, if any, or any change
in the long term debt or any increase in the short-term bank borrowings (other
than any increase in short-term bank borrowings in the ordinary course of
business) of the Company or any consolidated subsidiary, if any, or any decrease
in the net current assets or net assets of the Company or any consolidated
subsidiary, if any; and
(D) Stating that they have carried out certain specified procedures
(specifically set forth in such letter or letters) as specified by the
Underwriter (after consultations with XxXxxxxx & Xxxxxxx, LLP, CPA's relating to
such procedures), not constituting an audit, with respect to certain tables,
statistics and other financial data in the Prospectus specified by the
Underwriter and such financial data not included in the Prospectus but from
which information in the Prospectus is derived, and which have been obtained
from the general accounting records of the Company or consolidated subsidiaries,
if any, or from such accounting records by analysis or computation, and having
compared such financial data with the accounting records of the Company or the
consolidated subsidiaries, if any, stating that they have found such financial
data to agree with the accounting records of the Company.
(c) All corporate proceedings and other legal matters relating to this
Agreement, the Prospectus and other related matters shall be satisfactory to or
approved by counsel to the Underwriter and the Underwriter shall have received
from Xxxx Xxxxxxx and Workland & Witherspoon, Esq. a signed opinion dated as of
each closing date, with respect to the incorporation of the Company, the
validity of the Shares, the form of the Prospectus, (other than the financial
statements together with related notes and other financial and statistical data
contained in the Prospectus or omitted therefrom, as to which such counsel need
express no opinion), the execution of this Agreement and other related matters
as you may reasonably require.
(d) At each closing date, (i) the representations and warranties of the
Company contained in this Agreement shall be true and correct in all material
respects with the same effect as if made on and as of such closing date; (ii)
the Prospectus and any amendments or supplements thereto shall contain all
statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations and in all material respects conform to the
requirements thereof, and neither the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary, in light of the
circumstances under which they were made, in order to make the statements
therein not misleading; (iii) there shall have been since the respective dates
as of which information is given no material adverse change in the business,
properties or condition (financial or otherwise), results of operations, capital
stock, long term debt or general affairs of the Company from that set forth in
the Prospectus, except changes which the Prospectus indicates might occur after
the effective date of the Prospectus, and the Company shall not have incurred
any material liabilities or material obligations, direct or contingent, or
entered into any material transaction, contract or agreement not in the ordinary
course of business other than as referred to in the Prospectus and which would
be required to be set forth in the Prospectus; and (iv) except as set forth in
the Prospectus, no action, suit or proceeding at law or in equity shall be
pending or threatened against the Company which would be required to be set
forth in the Prospectus, and no proceedings shall be pending or threatened
against the Company or any subsidiary before or by any commission, board or
administrative agency in the United States or elsewhere, wherein an unfavorable
decision, ruling or finding would materially and adversely affect the business,
property, condition (financial or otherwise), results of operations or general
affairs of the Company.
(e) On the Initial Closing Date, the Company shall have executed and
delivered to the Underwriter, (i) the Underwriter's Common Stock Purchase
Warrant substantially in the form filed as an Exhibit to the Registration
Statement in final form and substance satisfactory to the Underwriter, and (ii)
the Representative's Warrants in such denominations and to such designees as
shall have been provided to the Company.
(f) On or before the Initial Closing Date, the Shares shall have been duly
approved for listing on an exchange or on the OTC Bulletin Board.
(g) On or before the Initial Closing Date, there shall have been delivered
to the Underwriter all of the Lock-up Agreements required to be delivered
pursuant to Section 3(ii) and 4(h), in form and substance satisfactory to the
Underwriter and Underwriter's counsel.
(h) The Underwriter shall have received, on the Closing Date, a certificate
dated as of the Closing Date, signed by the President, Treasurer and Secretary
of the company, certifying that: (i) no order suspending the effectiveness of
the Registration Statement of the sale of the Unit is in effect and no
proceedings for such purpose are pending or are, to their knowledge, threatened
by the Commission; (ii) they do not know of any litigation, instituted or
threatened, against the Company of a character required to be disclosed in the
Registration Statement which are not disclosed therein; they do not know of any
contracts which are required to be summarized in the prospectus which are not so
summarized; and they do not know of any material contacts required to be
summarized in the prospectus which are not so summarized; and they do not know
of any material contracts required to be filed as exhibits to the Registration
which are not so filed; (iii) they have each carefully examined the registration
Statement and the prospectus and, to the best of their knowledge, neither the
Registration Statement or the prospectus, nor any amendment or supplement to
either of the foregoing, contains any untrue statement of any material fact or
omits to state any material fact required to be set forth in an amended or
supplemented prospectus which has not been so set forth: (iv) the Shares have
been registered and qualified for sale in all state required by the Underwriter;
(v) since the respective dates as of which information is given in the
Registration Statement and the prospectus, there has not been any material
adverse change in the condition of the Company, financial or otherwise, or in
the results of its operation except as reflected in or contemplated by the
Registration Statement and the prospectus and, except as so reflected or
contemplated since such date, there has not been any material transaction
entered into by the Company; (vi) the representations and warranties set forth
in this Agreement are true and correct and the Company has complied with all of
its agreements herein contained; (vii) the Company is not delinquent in the
filing of any federal ,state, county, and/or municipal taxes; they know of no
proposed redetermination or reassessment of taxes adverse to the Company; and
the Company has paid or provided by adequate reserves, for all known tax
liabilities; (viii) they know of no material obligation or liability of the
Company, contingent or otherwise, not disclosed in the Registration Statement
and prospectus; (ix) this Agreement, the consummation of the transaction herein
contemplated, and the fulfillment of the terms hereof, will not result in the
breach by the Company of any terms or, or constitute a default under its
Certificate of Incorporation or By-Laws, any indenture, mortgage, lease, deed of
trust, bank loan, line of credit, or credit agreement or instrument to
which the Company is now a party or pursuant to which the Company has acquired
any right and/or obligations by succession or otherwise; and any existing
agreement substantially affecting the Company in any way has been filed as an
exhibit to the Registration Statement; (x) the financial statements and
schedules filed with and as part of the registration Statement present fairly
the financial position of the Company as of the dates thereof, all in conformity
with generally accepted accounting principles of accounting applied on a
consistent basis throughout the period involved. Since the respective dates of
such financial statements, there has been no material adverse change in the
condition or general affairs of the Company financial or otherwise, other than
as referred to in the prospectus; and (xi) subsequent to the respective dates as
of which the information is given in the registration Statement and the
prospectus, except as may otherwise be indicated therein, the Company has not,
prior to the closing date, either (A) issued any securities or incurred any
liability or obligation, direct or indirect, contingent or otherwise for
borrowed money, or (B) entered into any material transaction other than in the
ordinary course of business. The Company has not declared, paid, or made any
dividend or distribution of any kind on its capital stock.
If any condition to the Underwriter's obligations hereunder to be fulfilled
prior to or at the Closing Date is not so fulfilled, the Underwriter may
terminate this Agreement or, if the Underwriter so elects, it may waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
8. Indemnification.
(a) The Company, its Board of Directors, will indemnify and hold harmless
the Underwriter, and each person who controls the Underwriter or is affiliated
with the Underwriter within the meaning of the Securities and Exchange Act of
1933 ("Act") and the Securities Exchange Act of 1934 ("Act") (including
officers, directors, employees, controlling persons, affiliates, consultants,
professional advisors, accountants, attorneys, or agents, of the Underwriter or
any broker, underwriter, select dealer/selling agent connected with this
offering of Shares), from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them may
become subject under the Act or under any other statutes or at common law or
otherwise, and will reimburse and indemnify the Underwriter and each such
person/entity specified above for any legal or other expenses [including the
cost of any investigation and preparation] reasonably incurred by them or any of
them in connection with investigating or defending any litigation or claim,
whether or not resulting in any liability insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, any post-effective amendment thereto, any Blue Sky
application, the prospectus as the case may be, or any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus or
preliminary prospectus (as amended or as supplemented thereof) or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; or any negligent misrepresentation of any officer,
director, agent, consultant, accountant, attorney or employee of the Company; or
any failure to perform any of the terms or conditions of this Agreement incident
to any of the foregoing, or arising out of any act or occurrence related to or
connected to this offering of Shares. The defense of such action shall be
conducted by counsel of recognized standing and reasonably satisfactory to the
Underwriter or such other person agreed to be indemnified by the Company. The
Underwriter, each controlling person of the Underwriter, or an affiliate
thereof, agree after their receipt of written notice of the commencement of any
action against them as aforesaid, in respect of which indemnity may be sought
from the Company, its Directors on account of the indemnity agreement contained
in the subsection, to notify the Company promptly in writing of the commencement
thereof. The Company agrees to notify the Underwriter promptly of the
commencement of any litigation or proceeding against it or against any of the
officers or directors of the Company of which it may be advised, in connection
with the issue, offer, and/or sale of any of its securities.
(b) The Underwriter, will indemnify and hold harmless the Company, the
directors of the Company, the officers of the Company who shall have signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities and Exchange Act of 1933 ("Act") and the
Securities Exchange Act of 1934 ("Act"), from and against any and all losses,
claims, damages, expenses or liabilities, joint or several, to which they or any
of them may become subject under the Act or under any other statutes or at
common law or otherwise, and, except as hereinafter provided, will reimburse the
Company and such directors or controlling person identified above for any legal
or other expenses [including the cost of any investigation and preparation]
reasonably incurred by them or any of them in connection with investigating or
defending any litigation or claims, whether or not resulting in any liability,
only insofar as such losses, claims, damages, expenses, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, any post-effective
amendment thereto, any Blue Sky application, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, all as
of the date when the Registration Statement or such post-effective amendment, or
the date the filing of any such Blue Sky application, as the case may be,
becomes effective, or any untrue statement of alleged untrue statement of a
material fact contained in the Preliminary prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendments thereof or supplements thereto), or the@ omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, not misleading, but only if insofar as such statement or
omission was made in reliance upon information furnished in writing to the
Company by the Underwriter specifically for use in connection with the
preparation of the Registration Statement, the preliminary prospectus or the
Prospectus, or any such amendment thereafter supplement hereto or Blue Sky
application. The Underwriter shall not be liable for amounts paid in settlement
of any such litigation, if such settlement was affected without the Underwriter
and its Counsel's consent. In case of the commencement of any action in respect
of which indemnity may be sought from the Underwriter on account of its
indemnity agreement contained in this subsection (), the Company, and each
person to be indemnified by the Underwriter herein, shall have the same
obligation to notify such Underwriter and the underwriter shall have the same
right to participate in (and, to the extent that it shall desire, to direct) as
set forth in subsection (a) above, the defense of such action at its own expense
but such defense shall be conducted by counsel of recognized standing and
reasonably satisfactory to the Company or such other person agreed to be
indemnified by the Underwriter, The Underwriter agrees to notify the Company
promptly of the commencement of any such litigation or proceeding against its or
against any such controlling person of which it may be advised in connection
with the offer, and/or sale of any of securities of the Company.
9. Termination. This Agreement may be terminated:
(a) in the event the Shares are not sold as provided in Paragraphs 2 and 5;
(b) at any time prior to the Closing Date by the Underwriter by written
notice to the Company if, in the sole discretion of the Underwriter, it is
impracticable to offer for sale, the Shares by reason of (i) the Company having
sustained a loss, whether or not insured, by reason of fire, flood, accident,
loan foreclosure, borrowings, litigation, or other calamity, which in the
opinion of the Underwriter substantially affects the value of the property of
the Company or materially interferes with the operation of the business of the
Company, (ii) trading in securities on the New York Stock Exchange, Inc. or the
American Stock Exchange, Inc. or the National Association of Securities Dealers
Automated Quotation System or the over-the-counter market, having been suspended
or limited or minimum prices having been established on such Exchange or NASDAQ
or Bulletin Board; (iii) a banking moratorium having been declared by either
federal or state authorities; (iv) an outbreak of major hostilities or other
national or international calamity having occurred; (v) any action having taken
by any government in respect of its monetary affairs which, in the opinion of
the Underwriter, has a material adverse effect on the securities markets of the
United States; (vi) the Underwriter believes no favorable public market exists
for the sale of Shares, or (vii) misstatement, misrepresentations of the
Company; (viii) failure by the Company to perform any act required by this
Agreement; (ix) or the Securities are not listed on NASDAQ or the Electronic
OTC Bulletin Board.
If this Agreement shall be terminated pursuant to paragraph 7 or this paragraph
9, or if the purchase provided for herein is not consummated because any
conditions to the Underwriter's obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company to
comply with any of the terms or to fulfill any of the conditions of the
Agreement, or if for any reason the Company shall be unable to perform all of
its obligations under this Agreement, the Company shall not be liable to the
Underwriter for damages on account of loss of anticipated profits arising out of
the transactions covered by this Agreement, but the Company shall remain liable
to the extent provided in paragraphs 6,7, and 8 herein. Where termination occurs
pursuant to clauses (i) through (ix) of this paragraph, the Company will pay all
accountable out-of-pocket expenses not to exceed $5,000 incurred by the
Underwriter in contemplation of the performance by it of its obligations
hereunder, including fees and disbursements of counsel for the Underwriter, and
printing and traveling expenses of the Underwriter, "due diligence
investigation" costs of the Underwriter, and any and all other expenses incurred
by the Underwriter in connection with its preparation of the proposed public
offering of Shares herein. Any notice under this paragraph 9 may be given by
telephone, telefacsimile transmission, electronic or digital format but shall be
subsequently confirmed by letter.
10. Miscellaneous.
(a) The Company and the Underwriter know of no claims for services in the
nature of a finder's fee or origination fee with respect to this financing
resulting from the respective acts of their officers, directors, or employees,
for which the Underwriter and Company may be responsible except as disclosed in
the prospectus, and agree to indemnify and hold each other harmless from any
claims for any services of such nature arising from any act of the Underwriter
and the Company and their officers, directors, and employees, unless otherwise
disclosed herein.
(b) The Underwriter is registered as a broker/dealer and is a member of the
National Association of Securities Dealers, Inc.
(c) The Company agrees that immediately upon request of the Underwriter, it
will give instructions to its transfer agent to issue the Shares and Warrants in
the names and denominations submitted to it by the Underwriter at its own
expense. The Underwriter agrees, when funds in sufficient amount as required by
this Agreement are in liquid form, to submit within 5 days thereafter, to the
transfer Agent, a list of the names and addresses of the subscribers and the
dominations of the certificates and warrants to be issued by them. The Transfer
Agent shall be required by the Company to issue said certificates and warrants
within 5 days after receipt of the aforesaid list from the Underwriter and the
delivery of the certificates shall be made to the Underwriter within 5 days
thereafter against receipt of payment as provided in this Agreement. Further,
the Company agrees to pay all expenses for and in connection with the
preparation and issuance of the unit, stock and warrant certificates.
11. Survival of Representations, Warranties and Agreements. The respective
indemnities, agreements, representations, warranties, and other statements of
the Company or its officers, and directors as set forth in or made pursuant to
this Agreement and the indemnity Agreements of the Company contained herein,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Company or the Underwriter or any
controlling person and/or affiliate thereof, and will survive termination of
this Agreement and the delivery of any payment for the Shares and the Closing
Date.
12. Benefits. This Agreement has been made solely for the benefit of and
shall be binding upon the Underwriter, the Company, and the extent expressed,
any person controlling the Company or the Underwriter and the officers,
directors of the Company, and their respective legal representative, successors
and assigns, all as and to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. The term "legal
representatives, successors, and assigns" shall not include any purchaser of any
of the Shares from the Underwriter merely because of such purchase.
13. Washington Law/Arbitration. Any controversy arising out of, connected
to, or relating to any matters herein of the transactions between the Company or
the Underwriter (including for purposes of arbitration, officers, directors,
employees, controlling persons, affiliates, consultants, professional advisors,
accountants, attorneys, or agents, of the Underwriter or Company, or any broker,
underwriter, select dealer, selling agent of the offering of Shares herein), on
behalf of the undersigned, or this Agreement, or the breach thereof, including,
but not limited to any claims of violations of Federal and/or State Securities
Acts, Banking Statutes, Consumer Protection Statutes, Federal and/or State
anti-Racketeering (e.g. RICO) claims as well as any common law claims and any
State Law claims of fraud, negligence, negligent misrepresentations, and/ar
conversion shall be settled by arbitration; and in accordance with this
paragraph and judgment on the arbitrator's award may be entered in any court
having jurisdiction thereof in accordance with the provisions of Revised Code of
Washington, Chapter 7.04. In the event of such a dispute, each party to the
conflict shall select an arbitrator, both of whom shall select a third
arbitrator, which shall constitute the three person arbitration board. The
decision of a majority of the board of arbitrators, who shall render their
decision within thirty (30) days of appointment of the final arbitrator, shall
be binding upon the parties. Venue shall lie in the County of Spokane, Spokane,
Washington. This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington.
14. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail postage prepaid, addressed as follows:
If to the Company, its officers, directors, or shareholders to:
Xxxx X. Xxxxxxx
000 X. Xxxxxx Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
and to:
Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
If to the Underwriter to:
Xxxxxxx X. Xxxx
000 Xxxxx Xxxxxxx Xxxx Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
and to:
Xxxxxxx X. Xxxxxxxxx
Suite 304/ Rock Pointe Center
North 0000 Xxxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
If the foregoing correctly states and sets forth in full the agreement between
us, please indicate by signing this letter in the space provided below for that
purpose. The within Agreement may executed simultaneously in two or more
counterparts, each of which shall be deemed the original, but all of which
together shall constitute one and the some instrument and shall be valid and
binding between us,
Yours Truly,
TEMPORARY FINANCIAL SERVICES, INC.
By:
Xxxx Xxxxxxx
AGREED AND ACCEPTED:
Public Securities, Inc.
By:
Exhibit 1 (ii)
Form of Underwriter's Common Stock Purchase Warrant
FORM OF UNDERWRITER'S COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED FOR RESALE UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT AS TO SUCH
SECURITIES FILED UNDER THE ACT, OR AN EXEMPTION FROM REGISTRATION, AND
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS. THE ISSUER MAY REQUIRE AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER HEREOF THAT SUCH REGISTRATION IS
NOT REQUIRED AND THAT SUCH LAWS ARE COMPLIED WITH. THIS WARRANT MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED PRIOR TO ONE YEAR AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT, AND THE REGISTERED HOLDER OF THIS WARRANT, BY
ITS/HIS/HER ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN
THIS WARRANT PRIOR TO THAT DATE.
VOID AFTER 12:00 P.M., SPOKANE, WASHINGTON TIME, ON , 2006
Warrant to subscribe for and purchase up to 80,000 shares of Common Stock,
$0.001par value, of
TEMPORARY FINANCIAL SERVICES, INC.
This is to Certify That,
FOR VALUE RECEIVED, Public Securities, Inc. (the "Holder") is entitled to
purchase, subject to the provisions of this Warrant, from TEMPORARY FINANCIAL
SERVICES, INC., a Washington Corporation ("Company"), at any time on or after
, 2001, and not later than 12:00 p.m., Spokane, Washington Time, on
, 2006, a total of 000,000 shares of Common Stock of the Company ("Securities")
exercisable at a purchase price of $6.00 for the Securities which is 120% of the
public offering price. The number of Securities to be received upon the exercise
of this Warrant and the price to be paid for the Securities may be adjusted from
time to time as hereinafter set forth. The purchase price of a Security in
effect at any time and as adjusted from time to time is hereinafter sometimes
referred to as the "Exercise Price." This Warrant is or may be one of a series
of Warrants identical in form issued by the Company to purchase an aggregate of
up to 80,000 Shares of Common Stock. The Securities, as adjusted from time to
time, underlying the Warrants are hereinafter sometimes referred to as "Warrant
Securities". The Securities issuable upon the exercise hereof are in all
respects identical to the securities being purchased by the Underwriter for
resale to the public pursuant to the terms and conditions of the Underwriting
Agreement entered into on this date between the Company and Holder.
(1.) Exercise of Warrant. Subject to the provisions of Section (7) hereof,
this Warrant may be exercised in whole or in part at anytime or from time to
time on or after (to be subject to effective date) , 2001, but not later than
12:00 p.m., Spokane, Washington Time on , 2006, or if
, 2006 is a day on which banking institutions are authorized by law to close,
then on the next succeeding day which shall not be such a day, by presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of shares of Common
Stock or Redeemable Warrants, as the case may be as specified in such Form,
together with all federal and state taxes applicable upon such exercise. The
Company agrees to provide notice to the Holder that any tender offer is being
made for the Securities no later than the first business day after the day the
Company becomes aware that any tender offer is being made for the Securities. If
this Warrant should be exercised in part only, the Company shall, upon surrender
of this Warrant for cancellation, execute and deliver a new Warrant evidencing
the right of the Holder to purchase the balance of the shares purchasable
hereunder along with any additional Redeemable Warrants not exercised. Upon
receipt by the Company of this Warrant at the office of the Company or at the
office of the Company's stock transfer agent, in proper form for exercise and
accompanied by the total Exercise Price, the Holder shall be deemed to be the
holder of record of the Securities issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such Securities shall not then be actually delivered
to the Holder.
(2.) Reservation of Securities. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of Securities as shall be required for issuance or
delivery upon exercise of this Warrant. The Company covenants and agrees that,
upon exercise of the Warrants and payment of the Exercise Price therefor, all
Securities and other securities issuable upon such exercise shall be duly and
validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all Securities issuable upon the
exercise of the Warrants to be listed (subject to official notice of issuance)
on all securities exchanges on which the Common Stock issued to the public in
connection herewith may then be listed and/or quoted on NASDAQ.
(3.) Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
(a) If the Securities are listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the current value
shall be the last reported sale price of the Common Stock on such exchange on
the last business day prior to the date of exercise of this Warrant or if no
such sale is made on such day, the average of the closing bid and asked prices
for such day on such exchange; or,
(b) If the Securities are not so listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid and
asked prices reported by the National Association of Securities Dealers
Automated Quotation System (or, if not so quoted on NASDAQ or quoted by the
National Quotation Bureau, Inc.) on the last business day prior to the date of
the exercise of this Warrant; or (c) If the Securities are not so listed or
admitted to unlisted trading privileges and bid and asked prices are not so
reported, the current value shall be an amount, not less than book value,
determined in such reasonable manner as may be prescribed by the Board of
Directors of the Company, such determination to be final and binding on the
Holder.
(4.) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other Warrants of different denominations entitling the Holder thereof to
purchase (under the same terms and conditions as provided by this Warrant) in
the aggregate the same number of Securities purchasable hereunder. This Warrant
may not be sold, transferred, assigned, or hypothecated until after one year
from the effective date of the registration statement except that it may be (i)
assigned in whole or in part to the officers of the "Underwriter(s)", and (ii)
transferred to any successor to the business of the "Underwriter(s)." Any such
assignment shall be made by surrender of this Warrant to the Company, or at the
office of its stock transfer agent, if any, with the Assignment Form annexed
hereto duly executed and with funds sufficient to pay any transfer tax;
whereupon the Company shall, without charge, execute and deliver a new Warrant
in the name of the assignee named in-such instrument of assignment, and this
Warrant shall promptly be canceled. This Warrant may be divided or combined with
other Warrants which carry the same rights upon presentation hereof at the
office of the Company or at the office of its stock transfer agent, if any,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any Warrants issued in substitution for or
replacement of this Warrant, or into which this Warrant may be divided or
exchanged. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not the Warrant so lost, stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
(5.) Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(6.) Notices to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised (i) if the Company shall pay any dividend exclusive
of a cash dividend, or make any distribution upon the Common Stock, or (ii) if
the Company shall offer to the holders of Common Stock for subscription or
purchase by them any shares of stock of any class or any other rights, or (iii)
if any capital reorganization of the Company, reclassification of the capital
stock of the Company, consolidation or merger of the Company with or into
another corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then, in any such case, the Company shall cause to be delivered to the
Holder, at least ten (10) days prior to the date specified in (x) or (y) below,
as the case may be, a notice containing a brief description of the proposed
action and stating the date on which (x) a record is to be taken for the purpose
of such dividend, distribution or rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any, is to be fixed,
as of which the holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for equivalent securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
(7.) Adjustment of Exercise Price and Number of Shares of Common Stock
Deliverable.
(A)
(i) Except as hereinafter provided, in the event the Company shall, at any
time or from time to time after the date hereof, issue any shares of Common
Stock as a stock dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater or lesser number
of shares (any such issuance, subdivision or combination being herein call a
"Change of Shares"), then, and thereafter upon each further Change of Shares,
the Exercise Price of the Common Stock issuable upon the exercise of the Warrant
and the Redeemable Warrant in effect immediately prior to such Change of Shares
shall be changed to a price (including any applicable fraction of a cent to the
nearest cent) determined by dividing (i) the sum of (a) the total number of
shares of Common Stock outstanding immediately prior to such Change of Shares,
multiplied by the Exercise Price in effect immediately prior to such Change of
Shares, and (b) the consideration, if any, received by the Company upon such
issuance, subdivision or combination by (ii) the total number of shares of
Common Stock outstanding immediately after such Change of Shares; provided,
however, that in no event shall the Exercise Price be adjusted pursuant to this
computation to an amount in excess of the Exercise Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock.
For the purposes of any adjustment to be made in accordance with this Section
(7) the following provisions shall be applicable:
(I) Shares of Common Stock issuable by way of dividend or other distribution
on any capital stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(II) The number of shares of Common Stock at any one time outstanding shall
not be deemed to include the number of shares issuable (subject to readjustment
upon the actual issuance thereof) upon the exercise of options, rights or
warrants and upon the conversion or exchange of convertible or exchangeable
securities.
(ii) Upon each adjustment of the Exercise Price pursuant to this Section
(7), the number of shares of Common Stock and Redeemable Warrants purchasable
upon the exercise of each Warrant shall be the number derived by multiplying the
number of shares of Common Stock and Redeemable Warrants purchasable immediately
prior to such adjustment by the Exercise Price in effect prior to such
adjustment and dividing the product so obtained by the applicable adjusted
Exercise Price.
(B) In case of any reclassification or change of outstanding Securities
issuable upon exercise of the Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par value or as a result
of a subdivision or combination), or in case of any consolidation or merger of
the Company with or into another corporation other than a merger with a
"Subsidiary" (which shall mean any corporation or corporations, as the case may
be, of which capital stock having ordinary power to elect a majority of the
Board of Directors of such corporation (regardless of whether or not at the time
capital stock of any other class or classes of such corporation shall have or
may have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned by the Company or by one or more Subsidiaries)
or by the Company and one or more Subsidiaries in which merger the Company is
the continuing corporation and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par value or as a result
of subdivision or combination) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, then, as a condition of such reclassification, change, consolidation,
merger, sale or conveyance, the Company, or such successor or purchasing
corporation, as the case may be, shall make lawful and adequate provision
whereby the Holder of each Warrant then outstanding shall have the right
thereafter to receive on exercise of such Warrant the kind and amount of
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of
securities issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and shall
forthwith file at the principal office of the Company a statement signed on its
behalf by its President or a Vice President and by its Treasurer or an Assistant
Treasurer or its Secretary or an Assistant Secretary evidencing such provision.
Such provisions shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section
(7)(A). The above provisions of this Section (7)(B) shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(C) Irrespective of any adjustments or changes in the Exercise Price or the
number of Securities purchasable upon exercise of the Warrants, the Warrant
Certificates theretofore and thereafter issued shall (unless the Company shall
exercise its option to issue new Warrant Certificates pursuant hereto) continue
to express the Exercise Price per share and the number of shares purchasable
thereunder as the Exercise Price per share and the number of shares purchasable
thereunder as expressed in the Warrant Certificates when the same were
originally issued.
(D) After each adjustment of the Exercise Price pursuant to this Section
(7), the Company will promptly prepare a certificate signed on its behalf by the
President or Vice President, and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Exercise Price as so adjusted, (ii) the number of Securities purchasable upon
exercise of each Warrant, after such adjustment, and (iii) a brief statement of
the facts accounting for such adjustment. The Company will promptly file such
certificate in the Company's minute books and cause a brief summary thereof to
be sent by ordinary first class mail to each Holder at his last address as it
shall appear on the registry books of the Company. No failure to mail such
notice nor any defect therein or in the mailing thereof shall affect the
validity thereof except as to the holder to whom the Company failed to mail such
notice, or except as to the holder whose notice was defective. The affidavit of
an officer or the Secretary or an Assistant Secretary of the Company that such
notice has been mailed shall, in the absence of fraud, be prima facie evidence
of the facts stated therein.
(i) Intent of Provisions. Notwithstanding any provision to the contrary, if
any event occurs as to which, in the opinion of the Board of Directors of the
Company, the other provisions of this Section 7 are not strictly applicable or
if strictly applicable, would not fairly protect the rights of the Holders'
Warrant in accordance with the essential intent and principles of such
provisions, then such Board of Directors shall appoint a firm of independent
certified public accountants (which may be the regular auditors of the Company)
which shall give their opinion upon the adjustment, if any, on a basis
consistent with such essential intent and principles, necessary to preserve,
without dilution, the rights of the Holders. Upon receipt of such opinion by the
Board of Directors of the Company, the Company shall forthwith make the
adjustments described therein
(E) No adjustment of the Exercise Price shall be made as a result of or in
connection with the issuance or sale of Securities if the amount of said
adjustment shall be less than $0.10, provided, however, that in such case, any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment that shall amount, together with any adjustment so carried forward,
to at least $.10. In addition, Holders shall not be entitled to cash dividends
paid by the Company prior to the exercise of any Warrant or Warrants held by
them.
(F) In the event that the Company shall at any time prior to the exercise of
all Warrants declare a dividend consisting solely of shares of Common Stock or
otherwise distribute to its stockholders any assets, property, rights, or
evidences of indebtedness, the Holders of the unexercised Warrants shall
thereafter be entitled, in addition to the Securities or other securities and
property receivable upon the exercise thereof, to receive, upon the exercise of
such Warrants, the same property, assets, rights, or evidences of indebtedness,
that they would have been entitled to receive at the time of such dividend or
distribution as if the Warrants had been exercised immediately prior to such
dividend or distribution. At the time of any such dividend or distribution, the
Company shall make appropriate reserves to ensure the timely performance of the
provisions of this Section (7).
(G)
(G.1) Right to Exercise on a Net Issuance Basis. In lieu of exercising this
Warrant for cash, the Holder shall have the right to exercise this Warrant or
any portion thereof (the "Net Issuance Right") into Common Stock as provided in
this Section G.1 at any time or from time to time during the period specified on
page one of this Warrant Agreement, hereof by the surrender of this Warrant to
the Company with a duly executed and completed Exercise Form marked to reflect
net issuance exercise. Upon exercise of the Net Issuance Right with respect to a
particular number of shares subject to this Warrant and noted on the Exercise
Form (the "Net Issuance Warrant Shares"), the Company shall deliver to the
Holder (without payment by the Holder of any Exercise Price or any cash or other
consideration) (X) that number of shares of fully paid and nonassessable shares
of Common Stock equal to the quotient obtained by dividing the value of this
Warrant (or the specified portion hereof) on the Net Issuance Exercise Date,
which value shall be determined by subtracting (A) the aggregate Exercise price
of the Net Issuance Warrant Shares immediately prior to the exercise of the Net
Issuance Right from (B) the aggregate fair market value of the Net Issuance
Warrant Shares issuable upon exercise of this Warrant (or the specified portion
hereof) on the Net Issuance Exercise Date (as herein defined) by (Y) the fair
market value one share of Common Stock on the Net Issuance Exercise Date (as
herein defined). Expressed as a formula as shown below, such net issuance
exercise shall be computed as follows: X = B-A -- Y Where: X = the number of
shares of Common Stock that may be issued to the Holder Y = the fair market
value ("FMV") of one share of Common Stock as of the Net Issuance Exercise Date
A = the aggregate Exercise Price (i.e. the product determined by multiplying the
Net Issuance Warrant Shares by the Exercise Price) B = the aggregate FMV (i.e.
the product determined by multiplying the FMV by the Net Issuance Warrant
Shares).
(G.1.2) Determination of Fair Market Value. For purposes of this Section G.1.2,
"fair market value" of a share of Common Stock as of the Net Issuance Exercise
Date shall mean:
(i) if the Net Issuance Right is exercised in connection with and contingent
upon a Public Offering, and if the Company's registration Statement relating to
such Public Offering has been declared effective by the SEC, then the initial
"Price to Public" specified in the final Prospectus with respect to such
offering.
(ii) if the Net Issuance Right is not exercised in connection with and
contingent upon a Public Offering, then as follows:
(a) If traded on a securities exchange, the fair market value of the Common
Stock shall be deemed to be the last reported sale price or if no reported sale
takes place, the average of the last reported sale prices for the last three (3)
trading days prior to the Net Issuance Date;
(b) If traded on the Nasdaq National Market or the Nasdaq Small Cap Market,
the fair market value of the Common Stock shall be deemed to be the average of
the last reported sale price of the common Stock on such Market over the last
three (3) trading days prior to the Net Issuance Exercise Date;
(c) If traded over-the-counter other than on the Nasdaq National market or
the Nasdaq SmallCap Market, the fair market value of the Common Stock shall be
deemed to be the average of the midpoint between the closing bid and ask prices
of the Common Stock over the 3-day trading period prior to the Net Issuance
Exercise Date; and,
(d) If there is no public market for the Common Stock, then the fair market
value shall be determined by mutual agreement of the Warrantholder and the
Company, and if the Warrantholder and the company are unable to so agree, at the
Company's sole expense, by an investment banker of national reputation selected
by the Company and reasonably acceptable to the Warrantholder.
(8.) Piggyback Registration. If, at any time commencing one year from the
effective date of the registration statement and expiring four (4) years
thereafter, the Company proposes to register any of its securities under the
Securities Act of 1933, as amended (the "Act") (other than in connection with a
merger or pursuant to Form X-0, X-0 or other comparable registration statement)
it will give written notice by registered mail, at least thirty (30) days prior
to the filing of each such registration statement, to the Holders and to all
other Holders of the Warrants and/or the Warrant Securities of its intention to
do so. If the Holder or other Holders of the Warrants and/or Warrant Securities
notify the Company within twenty (20) days after receipt of any such notice of
its or their desire to include any such securities in such proposed registration
statement, the Company shall afford each of the Underwriter and such Holders of
the Warrants and/or Warrant Securities the opportunity to have any such Warrant
Securities registered under such registration statement. In the event any
underwriter underwriting the sale of securities registered by such registration
statement shall limit the number of securities includable in such registration
by shareholders of the Company, the number of such securities shall be allocated
pro rata among the holders of Warrants and the holders of other securities
entitled to piggyback registration rights. Notwithstanding the provisions of
this Section, the Company shall have the right at any time after it shall have
given written notice pursuant to this Section (irrespective of whether a written
request for inclusion of any such securities shall have been made) to elect not
to file any such proposed registration statement, or to withdraw the same after
the filing but prior to the effective date thereof.
(9.) Demand Registration.
(a) At any time commencing one year from the effective date of the
registration statement and expiring four (4) years thereafter, the Holders of
the Warrants and/or Warrant Securities representing a "Majority" (as hereinafter
defined) of such securities (assuming the exercise of all of the Warrants) shall
have the right (which right is in addition to the registration rights under
Section (i) hereof), exercisable by written notice to the Company, to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Underwriter and Holders, in order to
comply with the provisions of the Act, so as to permit a public offering and
sale of their respective Warrant Securities for nine (9) consecutive months by
such Holders and any other holders of the Warrants and/or Warrant Securities who
notify the Company within ten (10) days after receiving notice from the Company
of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section (i) by any Holder or Holders to all
other registered Holders of the Warrants and the Warrant Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under this Section (9) at any
time commencing one year after the effective date of the registration statement
and expiring four (4) years thereafter, the Holders of Representative's Warrants
and/or Warrant Securities shall have the right, exercisable by written request
to the Company, to have the Company prepare and file, on one occasion, with the
Commission a registration statement so as to permit a public offering and sale
for nine (9) consecutive months by such Holders of its Warrant Securities;
provided, however, that the provisions of Section (9)(b) hereof shall not apply
to any such registration request and registration and all costs incident thereto
shall be at the expense of the Holder or Holders making such request.
(10.) Covenants of the Company With Respect to Registration. In connection
with any registration under Section (8) or (9) hereof, the Company covenants and
agrees as follows:
(a) The Company shall use its best efforts to file a registration statement
within thirty (30) days of receipt of any demand therefor, shall use its best
efforts to have any registration statement declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell Warrant Securities
such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections (h), (i) and (j) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses. If the
Company shall fail to comply with the provisions of Section (10)(a), the Company
shall, in addition to any other equitable or other relief available to the
Holder(s), extend the Exercise Period by such number of days as shall equal the
delay caused by the Company's failure.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as are reasonably requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant Securities to
be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), from
and against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Underwriter contained in Section 7 of the
Underwriting Agreement relating to the offering.
(e) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent with the
same effect as the provisions contained in Section 7 of the Underwriting
Agreement pursuant to which the Underwriter has agreed to indemnify the Company.
(f) The Holder(s) may exercise their Warrants prior to the initial filing of
any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities other than
the Warrant Securities to be included in any registration statement filed
pursuant to Section (9) hereof, or permit any other registration statement to be
or remain effective during the effectiveness of a registration statement filed
pursuant to Section (9) hereof, other than a secondary offering of equity
securities of the Company, without the prior written consent of the Holders of
the Warrants and Warrant Securities representing a Majority of such securities.
(h) The Company shall furnish to each Holder participating in the offering
and to each underwriter, if any, a signed counterpart, addressed to such Holder
or underwriter, of (x) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), and (y) a "cold comfort" letter dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants who have
issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(i) The Company shall as soon as practicable after the effective date of the
registration statement, and in any event within 15 months thereafter, make
"generally available to its security holders" (within the meaning of Rule 158
under the Act) an earnings statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least 12 consecutive months
beginning after the effective date of the registration statement.
(j) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence and memoranda described below and to the
managing underwriters, copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to the registration statement and
permit each Holder and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD") or an Exchange. Such investigation shall include access
to books, records and properties and opportunities to discuss the business of
the Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder or
underwriter shall reasonably request.
(k) The Company shall enter into an underwriting agreement with the managing
underwriters, which may be the Underwriter. Such agreement shall be satisfactory
in form and substance to the Company, and such managing underwriters, and shall
contain such representations, warranties and covenants by the Company and such
other terms as are customarily contained in agreements of that type used by the
managing underwriter; provided however, that no Holder shall be required to make
any representations, warranties or covenants or grant any indemnity to which it
shall object in any such underwriting agreement. The Holders shall be parties to
any underwriting agreement relating to an underwritten sale of their Warrant
Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holders.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
(l) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Warrants or Warrant Securities, shall mean in excess of fifty (50%)
of the then outstanding Warrants and Warrant Securities that (i) are not held by
the Company, an affiliate, officer, creditor, employee or agent thereof or any
of their respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith or (ii) have not been resold to the public
pursuant to a registration statement filed with the Commission under the Act.
(11.) Buy-Out of Registration Demand. In lieu of carrying out its
obligations to effect a Piggyback Registration or Demand Registration of any
registrable securities pursuant to the Section, the Company may carry out such
obligation by offering to purchase and purchasing such Registrable Securities
requested to be registered in an amount in cash equal to the difference between
(a) 95% of the last sale price of the Common Stock on the day the request for
registration is made and (b) the Exercise Price in effect on such day; the
purchase transaction closing within three (3) business days; provided however,
that the Holder or Holders may decline such request rather than accept such
offer by the Company.
(12.) Conditions of Company's Obligations. The Company's obligation under
Section 10 hereof shall be conditioned as to each such public offering, upon a
timely receipt by the Company in writing of: (a) Information as to the terms of
such public offering furnished by or on behalf of the Holders making a public
distribution of their Warrant Securities.
(13.) Continuing Effect of Agreement. The Company's agreements with respect
to the Warrant Securities in this Warrant will continue in effect regardless of
the exercise or surrender of this Warrant.
(14.) Notices. Any notices or certificates by the Company to the Holder and
by the Holder to the Company shall be deemed delivered if in writing and
delivered personally or sent by certified mail, to the Holder, addressed to him
or sent to 000 Xxxxx Xxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000, or, if the Holder has designated, by
notice in writing to the Company, any other address, to such other address, and,
if to the Company, addressed to Xxxx X. Xxxxxxx, 000 Xxxx Xxxxxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxxxx, 00000. The Company may change its address by written notice
to
(15.) Limited Transferability. This Warrant Certificate and the Warrant may
not be sold, transferred, assigned or hypothecated for a one-year period after
the effective date of the Registration Statement except to underwriters of the
Offering referred to in the Underwriting Agreement or to individuals who are
either partners or officers of such an underwriter or by will or by operation of
law and if transfer occurs after one year, the warrant must be exercised
immediately upon transfer or it shall lapse. The Warrant may be divided or
combined, upon request to the Company by the Warrant holder, into a certificate
or certificates evidencing the same aggregate number of Warrants. The Warrant
may not be offered, sold, transferred, pledged or hypothecated in the absence of
any effective registration statement as to such Warrant filed under the Act, or
an exemption from the requirement of such registration, and compliance with the
applicable federal and state securities laws. The Company may require an opinion
of counsel satisfactory to the Company that such registration is not required
and that such laws are complied with. The Company may treat the registered
holder of this Warrant as he or it appears on the Company's book at any time as
the Holder for all purposes. The Company shall permit the Holder or his duly
authorized attorney, upon written request during ordinary business hours, to
inspect and copy or make extracts from its books showing the registered holders
of Warrants.
(16.) Transfer to Comply With the Securities Act of 1933. The Company
may cause the following legend, or one similar thereto, to be set forth on the
Warrants and on each certificate representing Warrant Securities, or any other
security issued or issuable upon exercise of this Warrant not theretofore
distributed to the public or sold to underwriters for distribution to the public
pursuant to Sections (8) or (9) hereof; unless counsel satisfactory to the
Company is of the opinion as to any such certificate that such legend, or one
similar thereto, is unnecessary: "The warrants represented by this certificate
are restricted securities and may not be offered for sale, sold or otherwise
transferred unless an opinion of counsel satisfactory to the Company is obtained
stating that such offer, sale or transfer is in compliance wrath state and
federal securities law.
(17.) Applicable Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Washington, without giving effect to
conflict of law principles.
(18.) Amendment/Assignability. This Warrant may not be amended except in a
writing signed by each Holder and the Company. This Warrant Certificate and the
options evidenced hereby may not be sold, transferred, pledged, hypothecated or
otherwise disposed of except by Will, the Laws of Descent and Distribution, or
other testamentary transfer. Each Holder of this Warrant Certificate, and any
shares of capital stock of the Company issued upon exercise of any such warrant,
by taking or holding the same, consents to and agrees to be bound by the
provisions of this Section 7. Notwithstanding the above the Holder may transfer
twelve (12) months from the date herein, a portion or all of the Holder's
Warrants to certain persons, including but not limited to the Holder's officers,
directors, shareholders, employees or Registered Representatives,
(19.) Severability. If any provisions of this Warrant shall be held to be
invalid or unenforceable, such invalidity or enforceability shall not affect any
other provision of this Warrant.
(20.) Survival of Indemnification Provisions. The indemnification provisions
of this Warrant shall survive until , 2012.
(21) Company to Provide Reports. Etc. While this Warrant Certificate remains
outstanding, the Company shall mail to the persons in whose name this Warrant
Certificate is registered copies of all reports and correspondence which the
Company mails to its stockholders.
(22) Representations and Warranties of Holder. The Holder hereby represents
and warrants to the Company:
(a) The Holder understands that this Warrant Certificate and the Common
Shares to be issued herein, HAS NOT BEEN APPROVED OR DlSAPPROVED BY TME UNITED
STATES SECURITIES AND EXCHANGE COMMISION, THE STATE OF WASHINGTON, OR ANY OTHER
STATE SECURITIES AGENCIES.
(b) This Warrant Certificate and the Common Stock to be issued herein may
not be transferred, encumbered, sold, hypothecated, or otherwise disposed of to
any person, without the express prior written consent of the Company and the
prior opinion of counsel for the Company, that such disposition will not violate
Federal and/or State Securities Acts. Disposition shall include, but is not
limited to acts of selling, assigning, transferring, pledging, encumbering,
hypothecating, giving, and any form of conveying, whether voluntary or not.
(c) To the extent that any Federal and/or State Securities laws shall
require, the Holder hereby agrees that any shares acquired pursuant to this
Warrant Certificate shall be without preference as to dividends, assets, or
voting rights and shall have no greater or lesser rights per share than the
securities issued for cash or its equivalent.
(d) This Warrant is subject in all respects to the terms and provisions of
an Underwriting Agreement between the Company and Public Securities, Inc., (the
Underwriter therein and the initial Holder hereof), relating to a public
offering of the Common Stock of the Company dated , 2001.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officers and to be sealed with the seal of the Company this day of
June, 2001.
TEMPORARY FINANCIAL SERVICES, INC.
By
, President
Date:
Attest:
Secretary
Exhibt 1 (iii)
PURCHASE FORM
The Undersigned hereby exercises the Warrant Certificate to subscribe for and
purchase shares of Common Stock, $.001 par value ("Common Shares"), of
Temporary Financial Services, Inc., a Washington Corporation, evidenced by the
within the Warrant Certificate and herewith makes payment of the Exercise.
Kindly issue certificates for the Common Shares in accordance with the
instructions given below. The certificate for the unexercised balance, if any,
of the within Warrant Certificate will be registered in the name of the
undersigned.
Dated:
(Signature)
Instructions for registration of Common Shares
Name (Please print)
Social Security or Other Identifying Number:
Address:
Street
City, State and Zip Code
HOLDER:
PUBLIC SECURITIES, INC.
By:
Title: President
Instructions for registration of certificate representing the unexercised
balance of Warrant (if any)
Name (Please print)
Social Security or Other Identifying Number:
Address:
Street
City, State and Zip Code
FORM OF ASSIGNMENT
(to be executed by the registered holder hereof)
FOR VALUE RECEIVED, does hereby sell, assign and transfer
unto the right to purchase shares of the
Common Stock of the Company, $.001 par value ("Common Shares"), of Temporary
Financial Services, Inc. evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint
attomey, to transfer such right on the books of the Company with full power of
substitution in the premises.
DATED: , 200
(Signature)
(Signature
FORM OF SELECTED DEALER AGREEMENT
800,000 SHARES
(A WASHINGTON CORPORATION)
($5.00 PER SHARE)
SELECTED DEALERS AGREEMENT
----------------------------
, 0000
Xxxxxxxxx:
We have agreed to act as the exclusive agent of Temporary Financial Services,
Inc., a Washington Corporation ("Company"), pursuant to an Underwriting
Agreement between the Company and us ("Underwriter"), which may be obtained from
us on written request, for the sale to the public of an aggregate of 800,000
Shares of Common Stock, par value $0.001 ("Shares"). The Shares are described in
the enclosed Prospectus, additional copies of which will be supplied in
reasonable quantities upon request to us.
We invite your participation as a Selected Dealer ("Selected Dealer") in
offering to the public, a part of the Shares at the initial public offering
price of $5.00 per share. As a Selected Dealer, you will be allowed, subject to
the sale of Shares in the public offering, a Commission of % per Shares on all
Shares sold by you. Payment of such commissions will be made within five (5)
business days after the payment of the proceeds to the Company. The Shares will
be offered to the public on a "best efforts" basis subject to the approval of
certain legal matters by counsel and subject to certain other items and
conditions. We reserve the right to withdraw, cancel or modify any offer.
You confirm you are a Selected Dealer: (i) registered with the Securities and
Exchange Commission ("Commission") as a broker-dealer under the Securities
Exchange Act of 1934, as amended ("1934 Act"), and a member in good standing
with the National Association of Securities Dealers, Inc. ("NASD"); (ii) and, in
making sales, to comply with the NASD's interpretation with Respect to
FreeRiding and Withholding (IM-2110-1); (iii) actually engaged in the
investment banking or securities business and who is a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD").
In making sales, you hereby agree to comply with the provisions of Article III
of the Rules of Fair Practice of the NASD. Any agreement herein is conditioned
on your being qualified and registered under applicable securities laws, if any,
to act as a dealer or broker in securities and your compliance with the NASD's
Rules of Fair Practice, including, but not limited to, IM2300, and Sections 8,
24, 25 and 36 of such Rules, or if you are a foreign broker-dealer not eligible
for NASD membership, then it is conditioned upon your agreement to make no offer
or sale of the Shares within the United States, its territories or possessions
or to residents therein or nationals thereof, and in making offers and sales to
conform to the applicable NASD Rules of Fair Practice and interpretations as
though you were a member of the NASD. You represent that you meet such
conditions and acknowledge your familiarity with applicable law, rules,
regulations and releases, and agree that you will not directly or indirectly
violate any of such applicable provisions in connection with your acting as a
Selected Dealer.
You confirm that you agree to abide by all the applicable rules and regulations
of the Securities and Exchange Commission and interpretations thereof, including
those as to "xxxxx stocks" and "designated securities". Such rules include but
are not limited to Rule 15c2-6, Exchange Act Rule 15(g), and the interpretations
thereunder, and Exchange Act Rule 15c2-6. Your attention is called to and you
agree to comply with the following: (a) Article III, Section 1 of the Rules of
Fair Practice of the NASD and the interpretations of said Section promulgated by
the Board of Governors of the NASD; (b) Section 10(b) of the 1934 Act and
Regulation M, 10b-10 of the general rules and regulations promulgated under the
1934 Act; (c) Rule 15c2-8 of the general rules and regulations promulgated under
the 1934 Act requiring the distribution of a preliminary Prospectus to all
persons reasonably expected to be purchasers of the Securities from you at least
48 hours prior to the time you expect to mail confirmations; and, (d) all the
applicable rules and regulations of the NASD and the interpretations thereof
promulgated by the Board of Governors thereof, including those as to "Free
Riding and Withholding", including Sections 8-24 and 8-36.
All orders will be strictly subject to confirmation and we reserve the right in
our uncontrolled discretion to reject any order in whole or in part, to accept
or reject orders in the order of their receipt or otherwise, and allot. Neither
you nor any other person is authorized by the Company or us to give any
information or make any representations other than those contained in the
Prospectus in connection with the sale of any of the Shares. No Dealer is
authorized to act as agent for us when offering the Shares to the public or
otherwise. A registration statement covering the offering has been filed with
the Securities and Exchange Commission in respect to the Securities. You will be
promptly advised when the registration statement becomes effective. Each
Selected Dealer in selling Securities pursuant hereto agrees (which agreement
shall also be for the benefit of the Company) that it will comply with the
applicable requirements of the Securities Act of 1933 and of the Securities
Exchange Act of 1934 and any applicable rules and regulations issued under said
Acts. Nothing contained herein shall render the Selected Dealers a member of the
Underwriting Group or partners with the Underwriter or with one another.
Payment for the Shares purchased by your customer is to be made by 12:00 noon
the next business day following receipt of the proceeds from your customers by
your customer's check or by your certified or banks cashier's check made payable
to "Sterling Savings Bank, ESCROW AGENT FOR TEMPORARY FINANCIAL SERVICES" at
00000-0000, at the initial public offering price against delivery of the Shares
to be purchased by your customer. In addition, there shall be provided to us at
000 Xxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx, 00000 Attn: Xxxxxxx X.
Xxxx, President, the names and addresses of the purchasers, the number of Shares
purchased by each, the amount paid therefor, and whether the amount paid was in
the form of cash or evidenced by a check.
This agreement shall terminate at the close of business on the day after the
Date of Delivery (as defined in the Underwriting Agreement), unless earlier
terminated. We may terminate this Agreement at any time by written or
telegraphic notice to you.
In the event that prior to the termination of this Agreement we purchase in the
open market or otherwise, any Shares delivered to you, you agree to repay to us
the amount of the above concession to Selected Dealers plus brokerage
commissions and transfer taxes paid in connection with such purchase or contract
to purchase.
You agree to indemnify us and to hold us harmless and each person, if any, who
controls us, within the meaning of Section 15, of the Securities Act of 1933
("1933 Act"), against any and all losses, claims, damages, or liabilities to
which we may become subject as a result of you breach of this agreement or of
your failure to perform any of the promises contained herein, and will also
reimburse us, or any controlling connection with investigation or defending such
action or claim.
We shall have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the offering. We shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by us in this Agreement. Nothing contained in this paragraph is intended
to operate as, and the provisions of this paragraph shall not in any way
whatsoever constitute, a waiver by you of compliance with any provision of the
1933 Act, or of the rules and regulations of the Securities and Exchange
Commission ("Commission") issued thereunder.
Upon application to us, we will inform you as to the jurisdictions in which we
believe the Shares have been qualified for sales under, or are exempt from the
requirements of, the respective securities laws of such jurisdictions, but we
assume no responsibility or obligation as to your right to sell Shares in any
jurisdiction. You agree not to sell Securities in any other state or
jurisdiction and to not sell Securities in any state or jurisdiction unless you
are qualified or licensed to sell securities in such state or jurisdiction.
You confirm that you are familiar with Rule 15c2-8 under the 1934 Act relating
to the distribution of preliminary and final prospectuses and confirm that you
have complied and will comply therewith.
We hereby confirm that we will make available to you such number of copies of
the Prospectus (as amended or supplemented) as you may reasonably request for
the purposes contemplated by the 1933 Act, or the 1934 Act or the rules and
regulations of the Commission thereunder.
You, as a member of the NASD, by signing this Agreement, acknowledge that you
are familiar with the cited laws and rules and agree that you will not directly
and/or indirectly violate any provisions of applicable law in connection with
your participation in the distribution of the Securities. You, by becoming a
member of the Selected Dealers represent that (a) neither you nor any of your
directors, officers, partners or "persons associated with" you (as defined in
the By-Laws of the NASD), nor to your knowledge, any "related person" (defined
by the NASD to include counsel, financial consultants and advisors, finders,
members of the selling group or distribution group, and any other persons
associated with or related to any of the foregoing) or any other broker-dealer,
(i) within the last 18 months have purchased in private transactions, or intends
before, at or within 6 months after the commencement of the public offering of
the Securities, to purchase in private transactions, any securities of the
Company or any parent, predecessor, or subsidiary thereof, (ii) within the last
12 months had any dealings with any of the Company or the parent, predecessor,
subsidiary or controlling shareholder thereof, or (iii) have, except as
contemplated by this Agreement, any agreement, arrangement or understanding to
receive compensation in connection with (as defined by the NASD) the
distribution of the Securities.
Any notice from us to you shall be deemed to have been duly given if mailed or
telegraphed to you at the address to which this Agreement is mailed.
This Agreement will be governed by and construed in accordance with the laws of
the State of Washington.
Any controversy arising out of, connected to, or relating to any matters herein
of the transactions between Selected Dealer and Public Securities, Inc.
(including for purposes of arbitration, officers, directors, employees,
controlling persons, affiliates, professional advisors, agents, or promoters of
the Public Securities), on behalf of the undersigned, or this Agreement, or the
breach thereof, including, but not limited to any claims of violations of
Federal and/or State Securities Acts, Banking Statutes, Consumer Protection
Statutes, Federal and/or State anti-Racketeering (e.g. RICO) claims as well as
any common law claims and any State Law claims of fraud, negligence, negligent
misrepresentations, and/or conversion shall be settled by arbitration; and in
accordance with this paragraph and judgment on the arbitrator's award may be
entered in any court having jurisdiction thereof in accordance with the
provisions of Revised Code of Washington, 7.04. In the event of such a
dispute, each party to the conflict shall select an arbitrator, both of whom
then shall select a third arbitrator, which shall constitute the three person
arbitration board. The decision of a majority of the board of arbitrators, who
shall render their decision within thirty (30) days of appointment of the final
arbitrator, shall be binding upon the parties.
Please confirm your agreement hereto by a facsimile transmission of your
acceptance and by signing and returning at once to us at 000 Xxxxx Xxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxxxx, 00000 Attn: Xxxxxxx X. Xxxx, President,
(509-892-5620) the enclosed duplicate of this letter. Upon receipt thereof,
this letter and such signed duplicate copy will evidence the agreement between
us.
Your Truly:
PUBLIC SECURITIES, INC.
By:
Title:
Shares
Selected Dealers Allocation
AGREED AND ACCEPTED as of the date first above written:
SELECTED DEALER
By:
Title:
