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DRAFT #2
4/21/99
XXXXXXX.XXX, INC.
__________ SHARES
COMMON STOCK
UNDERWRITING AGREEMENT
[DATE], 1999
CRUTTENDEN XXXX INCORPORATED,
as Representative of the several Underwriters
The undersigned, XXXXXXX.XXX, INC., a Nevada corporation (the
"Company") hereby addresses you as the representative (the "Representative") of
each of the persons, firms and corporations listed on Schedule I hereto
(collectively, the "Underwriters") and hereby confirm its agreement with the
several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and
sell to the Underwriters _____________ shares of its Common Stock (the "Firm
Shares"). Solely for the purpose of covering over-allotments in the sale of the
Firm Shares, the Company further proposes to grant the right to the Underwriters
to purchase up to an additional ___________ shares of its Common Stock (the
"Option Shares"), as provided in Section 3 of this Agreement. The Firm Shares
and the Option Shares are herein sometimes referred to as the Shares and are
more fully described in the Prospectus hereinafter defined.
2. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Underwriters the Firm Shares, and each such Underwriter agrees, severally and
not jointly, (i) to purchase from the Company, at a purchase price of per share,
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto and (ii) to purchase from the Company any additional number of
Option Shares which such Underwriter may become obligated to purchase pursuant
to Section 3 hereof.
The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as you may request upon at least forty-eight hours' prior notice to the
Company shall be delivered by or on behalf of the Company to
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you, through the facilities of the Depository Trust Company ("DTC"), for the
account of such Underwriter, against payment by or on behalf of such Underwriter
of the purchase price therefor by wire transfer of Clearinghouse (next-day)
funds to the account specified by the Company to you at least forty-eight hours
in advance. The Company will cause the certificates representing the Shares to
be made available for checking and packaging at least twenty-four hours prior to
the Time of Delivery (as defined below) with respect thereto at the office of
DTC or its designated custodian (the "Designated Office"). The time and date of
such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m.,
Phoenix, Arizona time, on , 1999 or such other time and date as you and the
Company may agree upon in writing, and, with respect to the Optional Shares,
9:30 a.m., Phoenix, Arizona time, on the ate specified by you in the written
notice given by you of the Underwriters' election to purchase such Optional
shares, or such other time and date as you and the Company may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein called the
"First Time of Delivery," such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the "Second Time of
Delivery," and each such time and date for delivery is herein called a "Time of
Delivery."
The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 6 hereof, including the
cross receipt for the Shares will be delivered at the offices of Xxxxx Xxxx LLP,
Two Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000 (the "Closing
Location"), and the Shares will be delivered at the Designated Office, all at
such Time of Delivery. A meeting will be held at the Closing Location at 3:00
p.m., Phoenix, Arizona time, on the Business Day next preceding such Time of
Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 2, "Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES. The
Company hereby grants an option to the Underwriters to purchase from it up to
______________ Option Shares on the same terms and conditions as the Firm
Shares; provided, however, that such option may be exercised only for the
purpose of covering any over-allotments which may be made by the Underwriters in
the sale of the Firm Shares. No Option Shares shall be sold or delivered unless
all of the Firm Shares previously have been, or simultaneously are, sold and
delivered.
The option is exercisable on behalf of the several
Underwriters by you, as Representative, at any time, and from time to time,
before the expiration of 45 days from the date of this Agreement, for the
purchase of all or part of the Option Shares covered thereby, by notice given by
you to the Company in the manner provided in Section 13 hereof (the "Option
Notice"), setting forth the number of Option Shares as to which the Underwriters
are exercising the option, and the date of delivery of said Option Shares, which
date shall not be less than two business days after such Option Notice unless
otherwise agreed to by the parties. You may terminate the option at any time, as
to any unexercised portion thereof, by giving written notice to the Company to
such effect.
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You, as Representative, shall make such allocation of the
Option Shares among the Underwriters as may be required to eliminate purchases
of fractional Shares.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
(a) The Company represents and warrants to and agrees with
each Underwriter that:
(i) The Company meets the requirements for use of Form
S-1 under the Securities Act of 1933, as amended (the "Act").
A registration statement on Form S-1 (Registration No.
________________) in respect to the Shares, including a
preliminary prospectus, and such amendments to such
registration statement as may have been required to the date
of this Agreement, has been prepared by the Company pursuant
to and in conformity with the requirements of the Act, and the
rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission")
promulgated thereunder and has been filed with the Commission
under the Act. Copies of such registration statement,
including any amendments thereto, each related preliminary
prospectus (meeting the requirements of Rule 430 or 430A of
the Rules and Regulations) contained therein, the exhibits,
financial statements and schedules have heretofore been
delivered by the Company to you. If such registration
statement has not become effective under the Act, a further
amendment to such registration statement, including a form of
final prospectus, necessary to permit such registration
statement to become effective will be filed promptly by the
Company with the Commission. If such registration statement
has become effective under the Act, a final prospectus
containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will
be filed promptly by the Company with the Commission in
accordance with Rule 424(b) of the Rules and Regulations. The
term Registration Statement as used herein means the
registration statement as amended at the time it becomes or
became effective under the Act (the "Effective Date") and, in
the event any post-effective amendment thereto becomes
effective prior to the First Time of Delivery, the
registration statement as so amended, including financial
statements and all exhibits and all documents incorporated by
reference therein and, if applicable, the information deemed
to be included by Rule 430A of the Rules and Regulations. The
term Prospectus as used herein means the prospectus as first
filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the
Effective Date, except that if the prospectus provided to the
Underwriters by the Company for use in connection with the
offering of Shares differs from the Prospectus on file with
the Commission at the time the Registration Statement becomes
effective (whether or not the Company is required to file with
the Commission such revised Prospectus pursuant to Rule 424(b)
of the Rules and Regulations), the term Prospectus shall refer
to such revised Prospectus from and after the time it is first
provided to the Underwriters for such use. The term
Preliminary Prospectus as used herein shall mean a preliminary
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prospectus as contemplated by Rule 430 or 430A of the Rules
and Regulations included at any time in the Registration
Statement. All references in this Agreement to financial
statements and schedules and other information which is
contained, included, stated or described in the Registration
Statement, Preliminary Prospectus or the Prospectus shall be
deemed to mean and include all such financial statements and
schedules and other information which is incorporated by
reference in, or deemed to be a part of, the Registration
Statement, Preliminary Prospectus or Prospectus, as the case
may be.
(ii) The Commission has not issued, and is not to the
best knowledge of the Company threatening to issue, an order
preventing or suspending the use of any Preliminary Prospectus
or the Prospectus nor instituted proceedings for that purpose.
Each Preliminary Prospectus at its date of issue, the
Registration Statement and the Prospectus and any amendments
or supplements thereto contains or will contain, as the case
may be, all statements which are required to be stated therein
by, and in all material respects conforms or will conform, as
the case may be, to the requirements of, the Act and the Rules
and Regulations. Neither the Registration Statement nor any
amendment thereto, as of the applicable effective date,
contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state
any material fact required to be stated therein or necessary
to make the statements therein not misleading, and neither the
Prospectus nor any supplement thereto contains or will
contain, as the case may be, any untrue statement of a
material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the
Company makes no representation, warranty or agreement as to
information contained in or omitted from the Registration
Statement, the Preliminary Prospectus or the Prospectus, or
any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company
by or on behalf of the Underwriters specifically for use in
the preparation of: (i) the statements therein regarding
over-allotment, stabilization or passive market making by the
Underwriters, or (ii) the section thereof under the caption
Underwriting.
(iii) The documents, if any, incorporated by reference
in the Prospectus, at the time they were filed with the
Commission, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations
adopted by the Commission thereunder (the "1934 Act Rules and
Regulations"), and, when read together and with the other
information contained in the Prospectus, at the time the
Registration Statement became effective and at the First Time
of Delivery, did not or will not, as the case may be, contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading.
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(iv) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Nevada, with full corporate power and
authority to own, lease and operate its properties and conduct
its business as described in the Registration Statement; the
Company is duly qualified to transact business as a foreign
corporation in good standing in each state or other
jurisdiction in which its ownership or leasing of property or
conduct of business requires such qualification, except where
the failure to be so qualified would not, individually or in
the aggregate, have a material adverse effect on the ability
of the Company to conduct its business as described in the
Registration Statement. The Company does not own or control,
directly or indirectly, any corporation, association or other
entity. The Company has no subsidiaries (as defined in Rule
405 of the Rules and Regulations).
(v) The Company has full right and corporate power and
authority to enter into this Agreement and to perform the
transactions contemplated hereby. The filing of the
Registration Statement and the execution and delivery of this
Agreement have been duly authorized by the Board of Directors
of the Company. This Agreement constitutes a valid and legally
binding obligation of the Company enforceable in accordance
with its terms (except to the extent the enforceability of the
indemnification, exculpation and contribution provisions of
Section 7 hereof may be limited by applicable law, and except
as enforceability of this Agreement may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws affecting creditors' rights
generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in
equity or at law). The issue and sale of the Shares by the
Company and the performance of this Agreement by the Company
and the consummation of the transactions herein contemplated
will not result in a violation of the Company's articles of
incorporation or bylaws or result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the
Company under, any statute which is applicable to it, or under
any indenture, mortgage, deed of trust, note, loan agreement,
sale and leaseback arrangement or other agreement or
instrument to which the Company is a party or by which they
are bound or to which any of the properties or assets of the
Company is subject, or any order, rule or regulation
applicable to the Company of any court or public, regulatory
or governmental agency or body having jurisdiction over the
Company or its properties, other than any such breach,
violation, default, lien, charge or encumbrance, as the case
may be, which does not individually or in the aggregate
materially adversely affect the business of the Company. No
consent, approval, authorization, order, registration or
qualification of or with any court or public, regulatory or
governmental agency or body is required for the consummation
of the transactions herein contemplated, except such as may be
required by the National Association of Securities Dealers,
Inc. (the "NASD") or under the Act or the Rules and
Regulations or any state securities laws.
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(vi) Except as described in the Prospectus, the Company
has not sustained since the date of the latest audited
financial statements included in the Prospectus any material
loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action,
order or decree. Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the
Company has not incurred any material liabilities or material
obligations, direct or contingent, other than in the ordinary
course of business, or entered into any material transactions
not in the ordinary course of business, and there has not been
any material change in the capital stock or long-term debt of
the Company or any material adverse change in the financial
condition, net worth, business, management, or results of
operations of the Company. The Company has filed all necessary
federal, state and foreign income and franchise tax returns
and paid all taxes shown as due thereon, except as are being
contested by the Company in good faith. All tax liabilities,
including those being contested by the Company, are adequately
provided for on the books of the Company. The Company has made
all necessary payroll tax payments and is current and
up-to-date as of the date of this Agreement to the extent
necessary to avoid a material adverse effect on the business
of the Company. The Company has no knowledge of any tax
proceeding or action pending or threatened against the
Company.
(vii) Except as described in the Prospectus, there is
no action, suit, arbitration, investigation or governmental
proceeding, domestic or foreign, pending or, to the best of
the Company's knowledge, threatened or involving the
properties or business of the Company which challenges the
validity of this Agreement or any action taken or required to
be taken by the Company pursuant to or in connection with this
Agreement or which could reasonably be expected to materially
and adversely affect the financial condition, operation,
properties, business or results of operations of the Company.
The Company is not a party and is not subject to the
provisions of any injunction, judgment, decree or order of any
court or any public, regulatory or governmental agency or
body. There are no contracts or documents to which the Company
is a party which would be required to be filed as exhibits to
the Registration Statement by the Act or by the Rules and
Regulations which have not been filed as exhibits to the
Registration Statement; the contracts and documents to which
the Company is a party which are so described in the
Registration Statement are in full force and effect on the
date hereof; and the Company does not have notice that any
other party is in breach of or default under any of such
contracts to a material extent.
(viii) The Company has duly and validly authorized
capital stock as described in the Prospectus. Except as
disclosed in or contemplated by the Prospectus and the
financial statements of the Company and the related notes
thereto included in the Prospectus, the Company does not have
outstanding any options to purchase or any preemptive rights
or other rights to subscribe or to
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purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible
securities or obligations. The description of outstanding
warrants to purchase Common Stock and the Company's stock
option plans and the options or other rights granted and
exercised thereunder set forth in the Prospectus accurately
presents in all material respects the information required to
be shown with respect to such warrants, plans, options and
rights. All outstanding shares of Common Stock of the Company
conform, and the Shares when issued will conform, in all
material respects to the description thereof in the
Registration Statement and the Prospectus and have been, or,
when issued and paid for will be, duly authorized, validly
issued, fully paid and nonassessable, issued in material
compliance with all applicable Federal and state securities
laws and not issued in violation of or subject to any
preemptive rights or other rights to purchase or subscribe for
securities of the Company. No shareholder of the Company has
any right to require the Company to register the sales of any
shares or other securities owned by such shareholder under the
Act in the public offering contemplated by this Agreement.
Upon delivery of the Shares to be sold by the Company and full
payment therefor pursuant to this Agreement, good and valid
title to such Shares, free and clear of all liens,
encumbrances, security interests, restrictions on transfer,
equities or claims whatsoever, will pass to the Underwriters.
(ix) The Company owns no real property and the Company
has good and marketable title to personal property owned by
it, subject to no lien, charge, defect or encumbrances of any
kind except such as are described in the Prospectus, such as
not materially interfere with the use made and proposed to be
made of such property by the Company. Except as disclosed in
the Prospectus, the Company owns or leases all such assets as
are materially necessary to its operations as now conducted.
(x) Xxxxxxxx Xxxxx Xxxxxxx & Xxxxxxx PC, the accounting
firm which has certified the financial statements filed with
the Commission as a part of the Registration Statement, is an
independent public accounting firm within the meaning of the
Act and the Rules and Regulations.
(xi) The financial statements and schedules of the
Company, including the notes thereto, filed with and as a part
of the Registration Statement, are accurate in all material
respects and present fairly the financial position of the
Company as of the respective dates thereof and the results of
operations and statements of cash flow for the respective
periods covered thereby, all in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved except as otherwise disclosed
in the Prospectus. The selected financial data included in the
Registration Statement and Prospectus present fairly the
information shown therein and have been compiled on a basis
consistent with that of the audited financial statements
included in the Registration Statement and Prospectus.
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(xii) The Company is not in default with respect to any
contract or agreement to which it is a party; provided that
this representation shall not apply to defaults which in the
aggregate could not materially adversely affect the financial
condition or the business of the Company.
(xiii) The Company is not in breach or violation of any
provision of its articles of incorporation or bylaws or any
laws, ordinances or governmental rules or regulations to which
it is subject, and the Company has not failed to obtain,
maintain or comply with the terms of any of the material
licenses, certificates, permits, franchises, easements,
consents, or other governmental authorizations necessary to
the ownership, leasing and operation of its properties or to
the conduct of its business, which breach, violation or
failure would materially adversely affect the business,
operations, properties, profits or financial condition of the
Company.
(xiv) Except as described in the Prospectus, the
Company has sufficient interests in all patents, trademarks,
service marks, trade names, domain names, copyrights, trade
secrets, information, proprietary rights and processes
("Intellectual Property") necessary for the conduct of the
business now conducted by it as described in the Prospectus,
and, to the Company's knowledge necessary in connection with
the products and services under development, without, to the
Company's knowledge, any infringement of or the interests of
others, and has taken all reasonable steps necessary to secure
interests in such Intellectual Property from its contractors;
except as set forth in the Prospectus, the Company is not
aware of outstanding options, licenses or agreements of any
kind relating to the Intellectual Property of the Company
which are required to be set forth in the Prospectus, and,
except as set forth in the Prospectus, the Company is not a
party to or bound by any options, licenses or agreements with
respect to the Intellectual Property of any other person or
entity which are required to be set forth in the Prospectus;
none of the technology employed by the Company has been
obtained or is being used by the Company in violation of any
contractual fiduciary obligation binding on the Company or to
the knowledge of the Company any of its directors, officers or
employees or otherwise in violation of the rights of any
persons; except as disclosed in the Prospectus, the Company
has not received any written or, to the Company's knowledge,
oral communications alleging that the Company has violated,
infringed or conflicted with, or by conducting its business as
set forth in the Prospectus, would violate, infringe or
conflict with any of the Intellectual Property of any other
person or entity other than any such violations, infringements
or conflicts which, individually or in the aggregate, have not
had and are not reasonably likely to result in a material
adverse effect on the Company's conduct of its business as
described in the Prospectus or on its result of operations or
financial condition; and the Company has taken and will
maintain reasonable measures to prevent the unauthorized
dissemination or publication of its confidential information
and, to the extent contractually required to do so, the
confidential information of third parties in their possession.
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(xv) The Company maintains insurance of the types and
in the amounts generally deemed adequate for its business,
including, but not limited to, general liability insurance,
business interruption insurance and insurance covering
personal property owned or leased by the Company against
theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is
in full force and effect.
(xvi) The Company has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Company's Common Stock, and
the Company is not aware of any such action taken or to be
taken by any director, officer, employee, consultant, or
shareholder of the Company.
(xvii) The Company is not and, after giving effect to
the offering and sale of the Shares, will not be an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(xviii) The Common Stock of the Company is registered
pursuant to Section 12(g) of the Securities Exchange Act of
1934, as amended, and is approved for trading on the Nasdaq
Stock Market National Market (the "NNM") under the symbol
"PASA." The Company has taken no action that was designed to
terminate, or that is likely to have the affect of
terminating, trading of its Common Stock on the NNM, nor has
the Company received any notification that the Commission or
the Nasdaq Stock Market is contemplating terminating such
trading.
(xix) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any person
or affiliate located in Cuba, within the meaning of Section
517.075 of the Florida Statutes.
(xx) Except as disclosed in the Registration Statement
and the Prospectus, no officer, director or beneficial of five
percent or more of the Company's capital stock is, directly or
indirectly, associated with a NASD member broker-dealer and
the Company has no management or financial consulting
agreement with any third party.
(xxi) No person is entitled, directly or indirectly, to
compensation from the Company for services as a finder in
connection with the transactions contemplated by this
Agreement.
(xxii) The Company has reviewed its operations and that
of any third parties with which the Company has a material
relationship to evaluate the extent to which the business or
operations of the Company or any of its subsidiaries will be
affected by Year 2000 issues. As a result of such review, the
Company represents and warrants that the disclosure in the
Registration Statement relating to Year 2000 issues is
accurate and complies in all material respects with the rules
and regulations of the Act. "Year 2000 issues" as used herein
means Year 2000 issues
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described in or contemplated by the Commission's
Interpretation: Disclosure of Year 2000 Issues and
Consequences by Public Companies, Investment Advisers,
Investment Companies, and Municipal Securities Issuers
(Release No. 33-7558).
(b) Any certificate signed by any officer of the Company
and delivered to you or to counsel for the Underwriters shall be deemed
a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
5. ADDITIONAL COVENANTS. The Company covenants and agrees with
the several Underwriters that:
(a) If the Registration Statement is not effective under
the Act, the Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible, and
it will notify you, promptly after it shall receive notice thereof, of
the time when the Registration Statement has become effective. The
Company (i) will prepare and timely file with the Commission under Rule
424(b) of the Rules and Regulations, if required, a Prospectus
containing information previously omitted at the time of effectiveness
of the Registration Statement in reliance on Rule 430A of the Rules and
Regulations or otherwise; (ii) will not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Underwriters shall not previously have been advised and furnished with
a copy or to which the Underwriters shall have reasonably objected in
writing or which is not in compliance in all material respects with the
Rules and Regulations; and (iii) will promptly notify you after it
shall have received notice thereof of the time when any amendment to
the Registration Statement becomes effective or when any supplement to
the Prospectus has been filed.
(b) The Company will advise the Underwriters promptly,
after it has received notice or obtained knowledge thereof, of any
comments of the Commission with respect to the Registration Statement,
of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use
of the Prospectus or of the institution or threat of any proceedings
for that purpose, and the Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof,
if issued.
(c) The Company will cooperate with the Underwriters and
their counsel in endeavoring to qualify the Shares for sale under (or
obtain exemptions from the application of) the securities laws of such
jurisdictions as they may have designated and will make such
applications, file such documents, and furnish such information as may
be reasonably necessary so as to permit the continuance of sales and
dealings therein for so long as may be necessary to complete the
distribution of the Shares, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so
qualified. The Company will advise you promptly of the suspension of
the qualification or registration of (or any such
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exemption relating to) the Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal
thereof. (d) The Company will deliver to, or upon the order of, the
Underwriters, without charge from time to time, as many copies of any
Preliminary Prospectus (including all documents incorporated by
reference therein) as they may reasonably request. The Company will
deliver to, or upon the order of, the Underwriters without charge as
many copies of the Prospectus (including all documents incorporated by
reference therein), or as it thereafter may be amended or supplemented,
as they may from time to time reasonably request. The Company consents
to the use of such Prospectus by the Underwriters and by all dealers to
whom the Shares may be sold, in connection with the offering or sale of
the Shares and for such period of time thereafter as the Prospectus is
required by law to be delivered in connection therewith. The Company
will deliver to you at or before the First Time of Delivery two signed
copies of the Registration Statement and all amendments thereto,
including all exhibits filed therewith or incorporated by reference
therein, and all documents incorporated by reference in the Prospectus,
and will deliver to the Underwriters such number of copies of the
Registration Statement, without exhibits, and of all amendments
thereto, as they may reasonably request.
(e) If, during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the reasonable judgment of the Company
or in your reasonable judgment or in the written opinion of counsel for
the Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend
or supplement the Prospectus to comply with any law, the Company
promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus
so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or
so that the Prospectus will comply with applicable law.
(f) The Company will make generally available to its
shareholders, as soon as it is practicable to do so, but in any event
not later than 18 months after the effective date of the Registration
Statement, an earnings statement in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective
date of the Registration Statement, which earnings statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158 of
the Rules and Regulations and will advise the Underwriters in writing
when such statement has been so made available.
(g) The Company will, for a period of five years from the
Effective Date, deliver to the Underwriters at their principal
executive offices a reasonable number of copies of annual reports,
quarterly reports, current reports and copies of all other documents,
reports and information furnished by the Company to its shareholders or
filed
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with any securities exchange or national securities market pursuant to
the requirements of such exchange or market or with the Commission
pursuant to the Act or the 1934 Act. Any report, document or other
information required to be furnished under this subsection (g) shall be
furnished as soon as practicable after such report, document or
information becomes available.
(h) The Company will apply the proceeds from the sale of
the Shares as set forth in the description under the caption "Use of
Proceeds" in the Prospectus.
(i) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Act.
(j) Prior to each Time of Delivery, the Company will
furnish to you, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for
any periods subsequent to the periods covered by the financial
statements appearing in the Registration Statement and the Prospectus.
(k) Prior to the 30th day after the last Time of Delivery,
the Company will not issue any press releases or other communications
directly or indirectly and will hold no press conferences with respect
to the Company, the financial condition, results of operations,
business, properties, assets or liabilities of the Company, or the
offering of the Shares, without your prior written consent except as
otherwise required by law.
(l) The Company will use its best efforts to obtain
approval for, and maintain the listing of the Shares on, the NNM.
(m) For a period of 180 days from the Effective Date, the
Company will not, and will cause its directors, officers and
pre-Effective Date securityholders (including, without limitation,
holders of options, warrants or other rights to acquire securities of
the Company) to not (in each case without the Representative's prior
written consent), (i) offer, pledge, sell, hypothecate, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend
or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or (ii) enter into any hedge, swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is be settled by
delivery of Common Stock or such other securities, in cash or
otherwise, without your prior written consent, except for the Shares
sold hereunder and except for sales by the Company of shares of Common
Stock to the Company's employees pursuant to the exercise of options
under the Company's stock option plan as described in the Prospectus.
The foregoing sentence shall not apply to the sale of any Shares to the
Underwriters pursuant to this Agreement.
(n) The Company will file with the Commission such
information on Form 10-Q or Form 10-K as may be required by Rule 463
under the Act.
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(o) The Company will maintain and keep accurate books and
records reflecting its assets and will maintain internal accounting
controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii)
transactions are recorded as necessary to permit the preparation of the
Company's consolidated financial statements and to maintain
accountability for the assets of the Company, (iii) access to the
assets of the Company is permitted only in accordance with management's
authorization, and (iv) the recorded accounts of the assets of the
Company are compared with existing assets at reasonable intervals.
(p) Prior to the Effective Date, the Company shall have
issued to the transfer agent for the Common Stock (the "Transfer
Agent") a "stop transfer" instruction with respect to all the shares of
Common Stock issued and outstanding immediately prior to the Effective
Date (the "Pre-offering Shares"), instructing the Transfer Agent to not
honor any requests to transfer any Pre-offering Shares prior to the
expiration of the 180-day period described in Section 5(m) of this
Agreement without the Representative's prior written consent, and such
stop transfer instruction shall be in full force and effect at each
Time of Delivery.
(q) The Company shall have furnished to the Representative,
at least five days before the Effective Date, a true, correct and
complete copy of the stock transfer records of the Company from the
date of the Company's inception, and the Company will make available
its stock transfer records to the Representative upon the
Representative's request during the 12-month period following the
Effective Date.
(r) The Company will not, without the prior written consent
of the Representative, directly or indirectly grant any options,
warrants or rights to purchase or acquire Common Stock for a period of
[120] days commencing on the Effective Date or permit to be outstanding
during such period any such options, warrants or rights, other than (i)
an aggregate of up to _________ options and warrants; (ii) warrants or
other rights which are outstanding on the Effective Date and describe
din the Prospectus; and (iii) the Representative's Warrants. The
Company will not, without the prior written consent of the
Representative, grant any options, warrants or rights to purchase or
acquire Common Stock for a price below the market price for the Common
Stock on the date of grant, for a period of one year commencing on the
Effective Date. The Company will not, without the prior written consent
of the Underwriter, file a Registration Statement on Form S-8 during
the 180 day period following the Effective Date.
(s) The Company will not prepay any indebtedness owed to
The Monolith Limited Partnership or Xxxxxxx X. Xxxxxxxx, prior to the
one year anniversary date of the first Time of Delivery, and will not
amend or otherwise modify the terms of any such indebtedness during
such period, without the prior written consent of the Representative.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase and pay for the Shares being sold
hereunder by the Company to the Underwriters shall be subject to the accuracy in
all material respects, as of the date hereof and as of
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each Time of Delivery of the representations and warranties of the Company
contained herein, to the performance in all material respects by the Company of
its covenants and obligations hereunder, and to the additional conditions set
forth in this Section 6.
(a) If the Company and the Underwriters have determined not
to proceed pursuant to Rule 430A, the Registration Statement shall have
become effective not later than 10:00 a.m., Phoenix, Arizona, on the
day following the date of this Agreement or such later date as may be
consented to in writing by you. If the Company and the Underwriters
have determined to proceed pursuant to Rule 430A, all filings required
by Rule 424 and Rule 430A of the Rules and Regulations shall have been
made. No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceeding for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened or contemplated
by the Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Underwriters.
(b) No person or entity shall have disclosed in writing to
the Company or the Underwriters on or prior to the relevant Time of
Delivery, that the Registration Statement or Prospectus or any
amendment or supplement thereto contains an untrue statement of fact
which, in the opinion of counsel to the Underwriters, is material, or
omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading.
(c) You shall have received opinions of the Law Office of
Xxxx X. Agron and Brownstein, Hyatt, Xxxxxx & Xxxxxxxxxx, counsel for
the Company, addressed to you and dated such Time of Delivery to the
effect that:
(i) The Company has been duly incorporated and is a
validly existing corporation in good standing under the laws
of the State of Nevada with corporate power and authority to
own, lease and operate its properties and conduct its business
as described in the Registration Statement. The Company is
duly qualified as a foreign corporation in good standing in
each state or other jurisdiction in which its ownership or
leasing of property or conduct of business legally requires
such qualification, except where, in the aggregate, the
failure to be so qualified would not have a material adverse
effect on the ability of the Company to conduct its business
as described in the Registration Statement.
(ii) The Company's authorized capital stock is as set
forth under the caption "Capitalization" in the Prospectus.
The Common Stock of the Company conforms in all material
respects to the description thereof in the Prospectus under
the caption "Description of Capital Stock," and the statements
in the Prospectus under such caption fairly summarize in all
material respects the provisions referred to in the Company's
articles of incorporation, bylaws and the law of the State of
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Nevada. The form of certificate used to evidence the Common
Stock filed as an exhibit to the Registration Statement has
been approved by the Company's Board of Directors, and
assuming such certificate is signed by the proper and
authorized officers of the Company as required by the law of
the State of Nevada will comply as to form with the
requirements of such law. The outstanding shares of Common
Stock have been duly authorized and are validly issued, fully
paid and non-assessable, were issued in material compliance
with all applicable Federal and state securities laws and the
laws of the State of Nevada, and were not issued in violation
of or subject to any preemptive rights or other rights to
purchase or subscribe for securities of the Company. The
Shares being sold by the Company have been duly authorized
and, when delivered and fully paid for in accordance with this
Agreement, will be validly issued, fully paid and
non-assessable, and the shareholders of the Company have no
preemptive rights with respect to the Shares. Except as
disclosed in the Prospectus, there are no outstanding options,
warrants, or other rights calling for the issuance of, and no
present commitments, plans or arrangements of the Company at
this time to issue any shares of capital stock of the Company
or any security convertible into or exchangeable for capital
stock of the Company. Upon delivery of the Shares being sold
by the Company and full payment therefor pursuant to this
Agreement and registration of the ownership of such Shares by
the transfer agent for such Shares, good and valid title to
such Shares free and clear of all liens, encumbrances,
security interests, restrictions on transfer, equities or
claims whatsoever other than those created or granted by this
Agreement or by the Underwriters, will pass to the
Underwriters.
(iii) Such counsel has been advised by the staff of the
Commission that the Registration Statement has become
effective under the Act and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or
contemplated under the Act; any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b)
of the Rules and Regulations has been made in the manner and
within the time period required by such Rule 424(b).
(iv) The Registration Statement and the Prospectus, and
each amendment or supplement thereto, as of their respective
effective or issue dates, comply as to form in all material
respects with the requirements of Form S-1 under the Act and
the applicable Rules and Regulations (except that such counsel
need express no opinion or belief as to numerical, financial
and statistical data, financial statements and notes and
related schedules thereto).
(v) The descriptions in the Registration Statement and
Prospectus of contracts and other documents filed as exhibits
to the Registration Statement are accurate in all material
respects.
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(vi) No authorization, approval, consent, order,
registration or qualification of or with any court or public,
regulatory or governmental body, authority or agency is
required with respect to the Company in connection with the
transactions contemplated by this Agreement, except such as
may be required under the Act, the Rules and Regulations or
the 1934 Act or by the NASD or under state securities laws in
connection with the purchase and distribution of the Shares by
the Underwriters.
(vii) The Company has the corporate power and authority
to enter into this Agreement and to sell and deliver the
Shares to be sold by it to the several Underwriters. The
filing of the Registration Statement with the Commission has
been duly authorized by the Board of Directors of the Company.
This Agreement has been duly authorized, executed and
delivered by the Company, and is a valid and legally binding
obligation of the Company enforceable in accordance with its
terms (except to the extent the enforceability of the
indemnification, exculpation and contribution provisions of
Section 7 hereof may be limited by applicable law and except
as enforceability of this Agreement may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws affecting creditors' rights
generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in
equity or at law). The making and performance of this
Agreement by the Company and the consummation of the
transactions herein contemplated will not result in a
violation of the Company's articles of incorporation or bylaws
or to the best knowledge of such counsel result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any properties or assets
of the Company under, any applicable Federal or state statute,
or under any indenture, mortgage, deed of trust, note, loan
agreement, lease, franchise, license, permit or any other
agreement or instrument known to such counsel to which the
Company is a party or by which it is bound or to which any of
the properties or assets of the Company is subject, or any
order, rule or regulation known to such counsel of any court
or public, regulatory or governmental agency, authority or
body having jurisdiction over the Company or its properties,
except, in the case of any such violation, breach, default,
creation or imposition, to such extent as does not materially
adversely affect the business of the Company.
(viii) To the best knowledge of such counsel, (i) there
are no legal, governmental or regulatory proceedings pending
or threatened to which the Company is a party or of which the
business or properties of the Company is the subject which
(individually or in the aggregate) would have a material
adverse effect on the business or property of the Company or
on the ability of the Company to consummate the transactions
contemplated herein, and which are not disclosed in the
Registration Statement and Prospectus; (ii) there are no
contracts or documents of a character required to be described
in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which are not
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described therein or filed as required; (iii) the Company is
not a party or subject to the provisions of any injunction,
judgment, decree or order of any court or any public,
regulatory or governmental agency, authority or body which
would have a material adverse effect on the business or
property of the Company or on the ability of the Company to
consummate the transactions contemplated herein; and (iv)
there are no applicable Federal or state statutes, orders,
rules or regulations required to be described in the
Registration Statement or Prospectus under the Act, the 1934
Act or applicable state securities laws which are not
described therein as required.
(ix) The Company holds all licenses, certificates,
permits, franchises, consents, authorizations and approvals
from all state and federal regulatory authorities, that are
required for the Company to conduct its business as described
in the Prospectus, except in the case of any such license,
certificate, permit, franchise, consent, authorization or
approval the loss of which or failure to maintain would not
have a material adverse effect on the business of the Company.
(x) The Company is not in violation of its articles of
incorporation and bylaws. The Company is not in breach of, or
in default with respect to, any provisions of any agreement,
mortgage, deed of trust, lease, note, agreement, franchise,
license, indenture, permit or other instrument known to such
counsel to which the Company is a party or by which the
Company or any of the properties thereof may be bound or
affected, which breach or default would have a material
adverse effect on the business or property of the Company or
on the Company's ability to consummate the transactions
contemplated herein, and the Company is in material compliance
with all judgments, decrees and orders of any court to which
the Company is subject, except where noncompliance would not
have a material adverse effect on the business of the Company.
(xi) The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(xii) No holders of securities of the Company have
preemptive rights or other rights to purchase or subscribe for
shares of Common Stock or other securities of the Company, nor
any rights to require the Company to register any securities
under the Act in connection with the transactions contemplated
hereby.
Such counsel shall confirm that during the preparation of the
Registration Statement and Prospectus, such counsel participated in conferences
with officers and other representatives of the Company, representatives of the
independent certified public accountants for the Company and representatives of
the Underwriters and their counsel, at which time the contents of the
Registration Statement and Prospectus and related matters were discussed and
although such counsel is not opining with respect to and does not assume any
responsibility for the accuracy, truthfulness, completeness or fairness of the
statements contained in the Registration Statement or Prospectus, such counsel
confirms that no facts have come to their attention which have caused them to
believe that either (i) the Prospectus or any supplement thereto as of its date
(other than numerical, financial
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or statistical data, the financial statements and notes or any related schedules
thereto, as to which such counsel need express no opinion or belief) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading or
(ii) the Registration Statement or any amendment thereto at the time it became
effective (other than numerical, financial or statistical data, the financial
statements and notes or any related schedules thereto, as to which such counsel
need express no opinion or belief) contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
In rendering the foregoing opinion, such counsel may expressly
state that it is qualified to render an opinion only as to matters involving the
Federal laws of the United States, the general corporation law of the State of
Nevada and may rely as to all matters of fact upon, among other things,
certificates and written statements of officers of the Company and government
officials and the representations and warranties of the Company contained
herein; provided that such counsel shall state that nothing has come to the
attention of such counsel that would reasonably cause such counsel to believe
that such counsel and the Underwriters are not justified in relying upon such
certificates, statements, representations and warranties.
(d) You shall have received on such Time of Delivery, from
Xxxxx Xxxx LLP, counsel to the Underwriters, such opinion or opinions,
dated such Time of Delivery with respect to corporate existence and
good standing of the Company, the validity of the Shares, the
Registration Statement, the Prospectus and other related matters as you
may reasonably require; the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose of
enabling them to opine with respect to such matters.
(e) On the date of the Prospectus and on each Time of
Delivery, you shall have received from Xxxxxxxx Xxxxx Xxxxxxx & Xxxxxxx
PC a letter or letters, dated the date of the Prospectus and Time of
Delivery, respectively, in form and substance reasonably satisfactory
to you, providing confirmation that they are independent public
accountants with respect to the Company within the meaning of the Act
and the published Rules and Regulations, and the answer to Item 509 of
Regulation S-K set forth in the Registration Statement is correct
insofar as it relates to them, and providing a statement similar in
substance to the one set forth in Schedule II hereto.
(f) Except as contemplated in the Prospectus, (i) the
Company shall not have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and (ii)
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company shall not
have incurred any liability or obligation, direct or contingent, or
entered into transactions, and there shall not have been any change in
the capital stock or long-term debt of the Company or any change in the
financial condition, net worth, business, management,
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or results of operations of the Company, the effect of which, in any
such case described in clause (i) or (ii), is in your reasonable
judgment so material or materially adverse as to make it impracticable
to proceed with the public offering or the delivery of the Shares being
delivered on such Time of Delivery on the terms and in the manner
contemplated in the Prospectus.
(g) There shall not have occurred any of the following: (i)
a suspension or material limitation in trading in securities generally
on the New York Stock Exchange or the American Stock Exchange or the
NNM or establishing on such exchanges or the NNM by the Commission or
by such exchanges or the NNM of minimum or maximum prices which are not
in force and effect on the date hereof; (ii) a general moratorium on
commercial banking activities declared by either federal or state
authorities; or (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war, any calamity or crisis, material change in
national, international or world affairs, natural disaster, material
change in the international or domestic markets, or material change in
the existing financial, political or economic conditions in the United
States or elsewhere, or the enactment, publication, decree, or other
promulgation of any federal or state statute, regulation, rule, or
order of any court or other governmental authority, or the taking of
any action by any federal, state or local government or agency in
respect of fiscal or monetary affairs, if the effect of any such event
specified in this clause (iii) is in your reasonable judgment so
material or materially adverse as to make it impracticable to proceed
with the public offering or the delivery of the Shares on the terms and
in the manner contemplated in the Prospectus.
(h) As a condition precedent to the several obligations of
the Underwriters to purchase and pay for the Shares being sold
hereunder, you shall have received a certificate or certificates, dated
the Time of Delivery and signed on behalf of the Company by the
President and Chief Executive Officer and the Chief Financial Officer
of the Company stating that: (A) such party has carefully examined the
Registration Statement and the Prospectus as amended or supplemented
and all documents incorporated by reference therein and nothing has
come to such party's attention that would lead him to believe that
either the Registration Statement or the Prospectus, or any amendment
or supplement thereto or any documents incorporated by reference
therein as of their respective effective, issue or filing dates,
contained, and the Prospectus as amended or supplemented and all
documents incorporated by reference therein and when read together with
the documents incorporated by reference therein, at such Time of
Delivery, contains any untrue statement of a material fact, or omits to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that
such party makes no representation, warranty or agreement as to
information contained in or omitted from the Registration Statement,
the Preliminary Prospectus or the Prospectus, or any such amendment or
supplement thereto, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of the
Underwriters specifically for use in the preparation of (i) the
statements therein regarding over-allotment, stabilization or passive
market making by the Underwriters, or (ii) the section thereof under
the caption
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"Underwriting"; (B) all representations and warranties made herein by
the Company are true and correct in all material respects at such Time
of Delivery, with the same effect as if made on and as of such Time of
Delivery, and all agreements herein required to be performed by the
Company on or prior to such Time of Delivery have been duly performed
in all material respects; and (C) such other matters as you may
reasonably request.
(i) As a condition precedent to the several obligations of
the Underwriters to purchase and pay for the Shares being sold
hereunder, the Company shall not have failed, refused, or been unable,
on or by such Time of Delivery to have performed in all material
respects any agreement on its part required to be performed by it or
any of the conditions herein contained and required to be performed or
satisfied by it on or by such Time of Delivery.
(j) The Shares shall have been approved for trading or
quotation upon official notice of issuance on the NNM under the symbol
"PASA," and on the Time of Delivery the Shares shall be trading or
quoted under such symbol.
(k) As a condition precedent to the several obligations of
the Underwriters to purchase and pay for the shares being sold
hereunder, you shall have received, at or prior to the first Time of
Delivery:
(i) from each officer and each director of the Company,
and each record holder of shares of Common Stock outstanding
immediately prior to the first Time of Delivery, an executed
"lock-up" agreement in the form of Exhibit A hereto;
(ii) from the Transfer Agent an acknowledgment of the
Company's instruction's described in Section 5(p) of this
Agreement; and
(iii) from the Company, a noncompetition agreement,
duly executed, between the Company and Xxxxxxx X. Xxxxxxxx, in
form and substance satisfactory to you (you agree that a
two-year noncompetition period following termination of
employment is satisfactory for purposes of such agreement).
All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory to you and to Xxxxx Xxxx LLP, counsel for the several Underwriters.
The Company will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you may reasonably request.
If any of the conditions specified above in this Section 6
shall not have been satisfied at or prior to the Time of Delivery or waived by
you in writing, this Agreement may be terminated by you on written notice to the
Company.
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7. INDEMNIFICATION.
(a) The Company will indemnify and hold harmless each
Underwriter and its officers and directors and each person, if any, who
controls any Underwriter within the meaning of the Act or the 34 Act,
against any losses, claims, damages or liabilities, joint or several,
to which such Underwriter, officer, director or controlling person may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
in any Preliminary Prospectus, in the Prospectus, or in any amendment
or supplement thereto, or in any Blue Sky application or other document
executed by the Company or based on any information furnished in
writing by the Company and filed in any jurisdiction in order to
qualify any or all of the Shares under (or obtain exemption from) the
securities laws thereof (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 statements
therein, in light of the circumstances under which they were made, not
misleading; and will reimburse each Underwriter and each such officer,
director and controlling person for any legal or other expenses
reasonably incurred by such Underwriter, officer, director or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
the Company shall not be liable in any such case to the extent, but
only to the extent, that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission that is: (i) contained in the
Registration Statement, such Preliminary Prospectus, the Prospectus, or
any such amendment or supplement thereto, or in such Blue Sky
Application or such other document and (ii) both relates to and was
made in reliance upon and in conformity with written information
furnished to the Company by you or by any Underwriter through you,
specifically for use in the preparation of: (a) the last paragraph of
the cover page of the form of prospectus included in the Registration
Statement, such Preliminary Prospectus or the Prospectus, or any such
amendment or supplement thereto or (b) the statements therein regarding
over-allotment, stabilization or passive market making by the
Underwriters or (c) the section thereof under the caption Underwriting;
and provided, further, that if any Preliminary Prospectus or the
Prospectus contained any alleged untrue statement or allegedly omitted
to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and such statement or
omission shall have been corrected in a revised Preliminary Prospectus
or in the Prospectus or in an amended or supplemented Prospectus, the
Company shall not be liable to any Underwriter, officer, director or
controlling person under this subsection (a) with respect to such
alleged untrue statement or alleged omission to the extent that any
such loss, claim, damage or liability of such Underwriter, officer,
director or controlling person results from the fact that such
Underwriter sold Shares to a person or entity to whom there was not
sent or given, at or prior to the written confirmation of such sale,
such revised Preliminary Prospectus or Prospectus or amended or
supplemented Prospectus.
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(b) Each Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed
the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company or any
such director, officer or controlling person may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, any amendment or supplement thereto, or any
Blue Sky Application or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission that is:
(i) contained in the Registration Statement, such Preliminary
Prospectus, the Prospectus, or any such amendment or supplement
thereto, or in such Blue Sky Application or such other document and
(ii) both relates to and was made in reliance upon and in conformity
with written information furnished to the Company by you or by any
Underwriter through you, specifically for use in the preparation of:
(a) the last paragraph of the cover page of the form of prospectus
included in the Registration Statement, such Preliminary Prospectus or
the Prospectus, or any such amendment or supplement thereto or (b) the
statements therein regarding over-allotment, stabilization or passive
market making by the Underwriters or (c) the section thereof under the
caption Underwriting; and each Underwriter will reimburse the Company
and each such director, officer and controlling person for any legal or
other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action.
(c) Any party which proposes to assert the right to be
indemnified under this Section 7 shall, within ten days after receipt
of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim is to be made against an
indemnifying party under this Section 7 notify each such indemnifying
party of the commencement of such action, suit or proceeding, enclosing
a copy of all papers served, but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not
relieve such indemnifying party from any liability which it may have to
any indemnified party otherwise than under this Section 7. In case any
such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any
other indemnifying party, similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have
the right to employ its own counsel
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in any such action, but the fees and expenses of such counsel shall be
solely at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party at the expense of the
indemnifying party has been authorized in writing by the indemnifying
party, (ii) the indemnified party shall have been advised by such
counsel in a written opinion that there may be a conflict of interest
between the indemnifying party and the indemnified party in the conduct
of the defense, or certain aspects of the defense, of such action (in
which case the indemnifying party shall not have the right to direct
the defense of such action with respect to those matters or aspects of
the defense on which a conflict exists or may exist on behalf of the
indemnified party) or (iii) the indemnifying party shall not in fact
have employed counsel to assume the defense of such action, in any of
which events the reasonable fees and expenses of such party to the
extent applicable shall be borne by the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action
or claim effected without its prior written consent. Each indemnified
party, as a condition of such indemnity, shall furnish such information
concerning itself or the claim in question as an indemnifying party may
reasonably request in connection with the defense of such claim and
shall cooperate in good faith with the indemnifying party in the
defense of any such action or claim.
(d) If the indemnification provided for in this Section 7
is for any reason, other than pursuant to the terms hereof, judicially
determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and upon the expiration of time to appeal or the
denial of the last right to appeal) to be unavailable to an indemnified
party under paragraphs (a), (b) or (c) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred
to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company
and the Underwriters from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault, as applicable, of the Company and
the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as other relevant equitable considerations.
The relative benefits received by, as applicable, the Company and the
Underwriters shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this paragraph 4 were
determined by pro rata allocation (even if the
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Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Subsection (d). The amount
paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred
to above in this Subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Subsection (d), no Underwriter
shall be required to contribute any amount in excess of the aggregate
underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in
this Subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company contained in Sections
4, 5, 7, and 11, herein or in certificates delivered pursuant hereto, and the
agreements of the Underwriters contained in Sections 7 and 11 hereof, and the
liability of a defaulting Underwriter, if any, pursuant to Section 9 hereof,
shall remain operative and in full force and effect regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any Underwriter or any controlling person thereof, the Company or any
of its officers, directors or any controlling person thereof, and shall survive
delivery of the Shares to the Underwriters hereunder.
9. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder, you may
in your discretion arrange for you or another party or other parties
reasonably satisfactory to the Company to purchase such Shares on the
terms contained herein. If within thirty-six hours after such default
by any Underwriter you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or parties reasonably
satisfactory to you to purchase such Shares on such terms. In the event
that, within the respective prescribed periods, you notify the Company
that you have so arranged for the purchase of such Shares, or the
Company notify you that they have so arranged for the purchase of such
Shares, you or the Company shall have the right to postpone the Time of
Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements,
and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in the written opinion
of your counsel may thereby be made necessary. The term Underwriter as
used in this Agreement shall include any persons substituted under this
Section I with like effect as if such person had originally been a
party to this Agreement with respect to such Shares and any such
substituted person shall be entitled to all of the benefits conferred
hereby and shall be subject to all of the obligations of an Underwriter
hereunder as if such person had originally been a party to this
Agreement.
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(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters made
by you or the Company as provided in subsection (a) above, the
aggregate number of Shares which remains unpurchased does not exceed
one tenth of the total Shares to be sold on the Time of Delivery, then
the Company shall have the right to require each non-defaulting
Underwriter to purchase the Shares which such Underwriter agreed to
purchase hereunder and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of
Shares which such Underwriter agreed to purchase hereunder) of the
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters made
by you or the Company as provided in subsection (a) above, the number
of Shares which remains unpurchased exceeds one tenth of the total
Shares to be sold on the Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require the
non-defaulting Underwriters to purchase the unpurchased Shares of the
defaulting Underwriter or Underwriters, then this Agreement shall
thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to
be borne by the Company and the Underwriters as provided in Section 11
hereof and the indemnity and contribution agreements in Section 7
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective at _____ a.m.,
Phoenix, Arizona time, on the first business day following the
effective date of the Registration Statement, or at such earlier time
after the effective date of the Registration Statement as you in your
discretion shall first release the Shares for offering to the public;
provided, however, that the provisions of Section 7 and Section 11
shall at all times be effective. For the purposes of this Section
10(a), the Shares shall be deemed to have been released to the public
upon release by you of the publication of a newspaper advertisement
relating to the Shares or upon release of telegrams, facsimile
transmissions or letters offering the Shares for sale to securities
dealers, whichever shall first occur.
(b) This Agreement may be terminated by you at any time
before it becomes effective in accordance with Section 10(a) by notice
to the Company; provided, however, that the provisions of this Section
10(a) and of Section 7 and Section 11 hereof shall at all times be
effective. In the event of any termination of this Agreement pursuant
to Section 10(a) or this Section 10(b) hereof, the Company shall not
then be under any liability to any Underwriter except as provided in
Section 7 or Section 11 hereof.
(c) This Agreement may be terminated by you at any time at
or prior to the First Time of Delivery by notice to the Company if any
condition specified in Section 6 hereof required to be satisfied by the
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Company shall not have been satisfied by the Company in all material
respects on or prior to the First Time of Delivery. Any such
termination shall be without liability of any party to any other party
except as provided in Sections 7 and Section 11 hereof.
(d) This Agreement also may be terminated by you, by notice
to the Company, as to any obligation of the Underwriters to purchase
the Option Shares, if any condition specified in Section 6 hereof shall
not have been satisfied by the Company in all material respects at or
prior to the Second Time of Delivery or as provided in Section 9 of
this Agreement.
If you terminate this Agreement as provided in Sections 10(b),
10(c) or 10(d), you shall notify the Company in writing or by telephone or
telegram, confirmed by letter.
11. COSTS AND EXPENSES. The Company will bear and pay the
costs, fees and expenses incident to the registration of the Shares and public
offering thereof, including, without limitation, (a) the fees and expenses of
the Company's accountants and the fees and expenses of counsel for the Company,
(b) the preparation, printing, filing, delivery and shipping of the Registration
Statement, each Preliminary Prospectus, the Prospectus and any amendments or
supplements thereto and the printing, delivery and shipping of this Agreement,
the Agreement Among Underwriters, the Selected Dealer Agreement, Underwriters'
Questionnaires and Powers of Attorney and any Blue Sky Memoranda, to the
Underwriters, (c) the furnishing of copies of such documents, (d) the
registration or qualification (or obtaining exemption therefrom) of the Shares
for offering and sale under the securities laws of the various states, including
the reasonable fees and disbursements of Underwriters' counsel relating thereto,
(e) the fees payable to the NASD and the Commission in connection with their
review of the proposed offering of the Shares, (f) all printing and engraving
costs related to preparation of the certificates for the Shares, including
transfer agent and registrar fees, (g) all initial transfer taxes, if any, (h)
all fees and expenses relating to the authorization of the Shares for trading on
the NNM, (i) all travel expenses, including air fare and accommodation expenses,
of representatives of the Company in connection with the offering of the Shares
and (j) all of the other costs and expenses incident to the performance by the
Company of the registration and offering of the Shares; provided, however, that
the Underwriters will bear and pay all of the fees and expenses of the
Underwriters' counsel (other than fees and disbursements relating to the
registration or qualification of the Shares for offering and sale under the
securities laws of the various states), the Underwriters' out-of-pocket
expenses, and any advertising costs and expenses incurred by the Underwriters
incident to the public offering of the Shares.
If this Agreement is terminated by you in accordance with the
provisions of Section 10(c), the Company shall reimburse the Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel to the Underwriters.
12. NOTICES. All notices or communications hereunder, except
as herein otherwise specifically provided, shall be in writing and if sent to
the Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o:
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Cruttenden Xxxx Incorporated
or if sent to the Company shall be mailed, delivered, sent by
facsimile transmission, or telegraphed and confirmed to the Company at:
xxxxxxx.xxx, inc.
One Arizona Center
000 Xxxx Xxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
Notice to any Underwriter pursuant to Section 7 shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed
to such Underwriter's address as it appears in the Underwriters' Questionnaire
furnished in connection with the offering of the Shares or as otherwise
furnished to the Company. Any party hereto may change such address or facsimile
number for notices by sending to the other parties to this Agreement written
notice of a new address or facsimile number for such purpose.
13. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Company, the Underwriters and their respective successors
and assigns. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, corporation, partnership or other entity,
other than the parties hereto and their respective successors and assigns and
the controlling persons, officers and directors referred to in Section 7, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns and
said controlling persons and said officers and directors, and for the benefit of
no other person, corporation, partnership or other entity. No purchaser of any
of the Shares from any Underwriter shall be construed a successor or assign
hereunder by reason merely of such purchase.
In all dealings with the Company under this Agreement you
shall act on behalf of each of the several Underwriters, and the Company shall
be entitled to act and rely upon any statement, instruction, demand, request,
notice or agreement on behalf of the Underwriters, made or given by you on
behalf of the Underwriters, as if the same shall have been made or given in
writing by all of the Underwriters.
14. COUNTERPARTS. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
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15. PRONOUNS. Whenever a pronoun of any gender or number is
used herein, it shall, where appropriate, be deemed to include any other gender
and number.
16. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other section, paragraph or
provision hereof.
17. GENERAL. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written and oral
agreements and all contemporaneous oral agreements, undertakings and
negotiations with respect to the subject matter hereof. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, and by you or, in the case of a
waiver, by the party waiving compliance.
18. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Arizona without giving
effect to the provisions thereof regarding the choice of law.
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for such purpose, whereupon this letter
shall constitute a binding agreement among the Company, and the Underwriters.
xxxxxxx.xxx, inc.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
Accepted in ________________________,
_______________ as of the date first
above written, on behalf of ourselves
and each of the several Underwriters
named in Schedule I hereto.
CRUTTENDEN XXXX INCORPORATED
As Representative for the Several Underwriters
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
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SCHEDULE I
Name Number of Shares
---- ----------------
Cruttenden Xxxx Incorporated ----------
----------
Total ==========
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SCHEDULE II
Pursuant to Section 6(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
1. They are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable Rules
and Regulations thereunder.
2. In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
prospective financial statements and/or pro forma financial information)
examined by them and included in the Prospectus or the Registration Statement
comply as to form with the applicable accounting requirements of the Act and the
Rules and Regulations with respect to registration statements on Form S-1; and,
if applicable, they have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the interim
financial statements, selected financial data, pro forma financial information,
prospective financial statements and/or condensed financial statements derived
from audited financial statements of the Company for the periods specified in
such letter, as indicated in their reports thereon, copies of which have been
furnished to the Representative of the Underwriters (the "Representative").
3. The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the Company
for the fiscal years included in the Prospectus agrees with the corresponding
amounts (after restatements where applicable) in the audited consolidated
financial statements for such years which were included in the Prospectus.
4. They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that cause them to believe
that this information does not conform in all material respects with the
disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K
5. On the basis of a reading of the unaudited financial
statements, pro forma financial statements, if any, and other information
contained in the Prospectus, a reading of the latest available interim financial
statements of the Company, inspection of the minute books of the Company since
the date of the latest audited financial statements included in the Prospectus,
inquiries of officials of the Company responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(a) any of the above unaudited financial statements or
other information contained in the Prospectus do not comply as to form
with the accounting requirements of the Rules and Regulations or that
such unaudited financial statements are not fairly
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presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with the audited financial
statements;
(b) as of a specified date not more than two days prior to
the date of such letter, there have been any changes in the capital
stock or any increase in the indebtedness of the Company, or any
increases or decreases in net current assets or net assets or any
changes in any other items specified by the Representative, in each
case as compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes, increases
or decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; or
(c) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred to
in clause (B) above there were any decreases in revenues or the total
or per share amounts of net income, or any other changes in any items
specified by the Representative, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representative, except in each
case for changes or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
In addition to the audit referred to in their report(s) included in the
Prospectus and the limited procedures, inspection of minute books, inquiries and
other procedures referred to in paragraph 5 above, they have carried out certain
specified procedures, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representative, which are derived from
the general accounting records of the Company for the periods covered by their
reports and any interim or other periods since the latest period covered by
their reports, which appear in the Prospectus, or in Part II of, or in exhibits
and schedules to, the Registration Statement specified by the Representative,
and have compared certain of such amounts, percentages and financial information
with the accounting records of the Company and have found them to be in
agreement.
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EXHIBIT A
Form of Lock-up Agreement
_____________________, 1999
Cruttenden Xxxx Incorporated
As Representative of the Several Underwriters
Re: Lock-up Agreement Affecting Stock of xxxxxxx.xxx, inc.
Ladies and Gentlemen:
The undersigned shareholder (the "Shareholder") of xxxxxxx.xxx, inc., a
Nevada corporation (the "Company"), wishes to facilitate the initial public
offering (the "Offering") of shares of common stock of the Company. The
Shareholder recognizes that the Offering will be of benefit to the Company and
the Shareholder.
To induce you, as the representative (the "Representative") of the
underwriters (the "Underwriters") of the Offering to enter into an underwriting
agreement with the Company (the "Underwriting Agreement") relating to the
Offering and to you and the Underwriters to complete the purchase of the shares
of common stock pursuant to such Underwriting Agreement, the Shareholder hereby
agrees with the Underwriters as follows:
1. During the term of this Agreement, as specified in
paragraph 3 hereof, the Shareholder will not, directly or indirectly, offer,
sell, contract to sell, pledge, hypothecate or otherwise dispose of any shares
of the Company's common stock or any securities convertible into or exercisable
or exchangeable for, or any rights to purchase or acquire, shares of the
Company's common stock or the beneficial ownership thereof (collectively the
"Subject Securities"), without your prior written consent as Representative of
the Underwriters.
2. Any purported transfer of any Subject Securities in
violation of paragraph 1 hereof (an "Unauthorized Transfer") will be null and
void. The Company will not be required to register, recognize or give effect to
any Unauthorized Transfer and the purported transferee of any Subject Securities
or any interest therein pursuant to an Unauthorized Transfer will not acquire
any rights in such Subject Securities during the term of this Agreement as
specified in paragraph 3 hereof. The Company may issue stop transfer or similar
instructions to the transfer agent for its common stock covering all Subject
Shares, but shall not be required to do so.
3. This Agreement shall become effective upon the execution
hereof by the Shareholder. This Agreement shall terminate without any prior
notice upon the earlier of (i) the
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date which is one hundred and eighty (180) days after the effective date of the
Registration Statement filed by the Company with the Securities and Exchange
Commission on March 10, 1999 (SEC Registration No. 33-74201) in connection with
the Offering, or (ii) the termination or cancellation of the Underwriting
Agreement for any reason prior to the sale of the common stock to the
Underwriters. Notwithstanding the foregoing, this Agreement shall terminate
immediately upon the abandonment of the Registration Statement.
4. This Agreement shall be construed and enforced in
accordance with the laws of the State of Arizona. The Underwriters shall be
entitled to all legal and equitable remedies in enforcing this Agreement,
including without limitation an injunction against any sale of shares of the
common stock in contravention of this Agreement. If at any time subsequent to
the date of this Agreement any provision hereof shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability of such
provision shall have no effect upon, and shall not impair the legality or
enforceability of, any other provision of this Agreement.
5. This Agreement may be executed in one or more counterparts,
each of which shall be an original, but all of which taken together shall
constitute one and the same instrument.
6. All of the terms and provisions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, successors,
personal representatives and permitted assigns of the parties hereto.
If the foregoing correctly sets forth the agreement between the
undersigned and the Underwriters, please indicate your acceptance in the space
provided below for that purpose.
Very truly yours,
-------------------------------------
(Signature)
Print Name:
--------------------------
Date:
--------------------------------
Agreed to and accepted as of the date above written:
Cruttenden Xxxx Incorporated,
For itself and as Representative of the several Underwriters
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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