Exhibit 1.3
Form SB-2
Skypath Networks, Inc.
ACAP FINANCIAL, INC.
Underwriting of
2,000,000 Shares
SKYPATH NETWORKS, INC.
COMMON STOCK
PARTICIPATING DEALERS AGREEMENT
ACAP Financial, Inc., 00 Xxxx 000 Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx
00000, telephone (000) 000-0000, ("Underwriter"), as Underwriter for Skypath
Networks, Inc., a Delaware corporation, ("Company"), invites your participation
as a Participating Dealer, ("Participating Dealer"), in an offering of 2,000,000
Shares of the $.001 par value Common Stock of the Company to be offered to the
public at $1.00 per Share. The Underwriter is offering the shares subject to the
terms of (i) its Underwriting Agreement with the Company, (ii) this Agreement,
and (iii) the Underwriter's instructions which may be forwarded to the
Participating Dealers from time to time. The terms of the offering and the
shares are more fully described in the enclosed Prospectus. This invitation is
made by the Underwriter only if the Company's Shares may be lawfully offered to
dealers in the state(s) in which the Participating Dealer is registered as a
broker/dealer. The terms and conditions of this invitation are as follows:
1. Acceptance of Orders. Orders received from the Participating Dealer will
be accepted only at the price, in the amounts, and on the terms which are set
forth in the Company's current Prospectus, the Underwriting Agreement, and this
Agreement.
2. Selling Commission. As a Participating Dealer, you will be allowed, on
all shares sold by you, a commission of __% of the total sales price as shown in
the Company's current Prospectus, provided that a minimum of 500,000 Shares are
sold in the offering.
3. Status of Dealer. The Participating Dealer agrees to purchase the
Company's Shares for its customers through the Underwriter, and all purchases
shall be made only upon orders already received by the Dealer from its
customers. In all sales of the Shares to the public, the Participating Dealer
shall confirm as agent for another. The Participating Dealer agrees that it will
make no sales to any accounts over which it exercises discretionary authority.
4. Acceptance. The Participating Dealer will promptly transmit by 12:00
noon of the next business day to the Escrow Agent, all funds received from
purchasers and a confirmation and a record of each sale which sets forth the
name, address, social security number of each individual beneficial purchaser,
the number of Shares purchased, and, if there is more than one registered owner,
whether the certificate or certificates evidencing the shares purchased are to
be issued to the purchasers in joint tenancy or otherwise. A copy of such
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information will be sent to the Underwriter by the Participating Dealer. All
checks for subscription of Shares shall be made payable to Xxxxx Union Bank, the
Escrow Agent.
5. Blue Sky Approval and Rejection of Sales. The Shares have been approved
for sale only in certain states as shall be described by the Underwriter to the
Participating Dealer under separate cover or as an Exhibit hereto. Each
Participating Dealer shall report in writing, to the Underwriter, the number of
the Company's Shares which have been sold in each state and the number of
persons in each such state who purchased Company shares through the
Participating Dealer. Each sale may be rejected by the Underwriter for any
reason, and if rejected, the Escrow Agent will return to you all funds paid by
the purchaser which have been received by the Underwriter. In such event, the
Participating Dealer will return to the purchaser within five (5) business days
after actual receipt from the Underwriter, the full purchase price paid by the
purchaser.
6. Escrow of Proceeds. The proceeds from the sale of all of the Shares
offered in the offering will be deposited into the Escrow Account. If the
proceeds, in cleared funds, from the sale of a minimum of 500,000 Shares have
not been deposited with the Escrow Agent within one year from the date of the
Company's definitive Prospectus, the full amount paid will be refunded to the
purchasers. No certificates evidencing the Shares will be issued unless and
until the escrow amount has been deposited with the Escrow Agent, and such funds
have been released and the net proceeds thereof delivered to the Company. If the
escrow amount is deposited within the time period provided above, all amounts so
deposited will be delivered to the Company except that the Underwriter may
deduct its underwriting commissions from the proceeds of the offering prior to
delivery of such proceeds to the Company. No commissions will be paid by the
Company or commissions allowed by the Underwriter unless and until proceeds, in
cleared funds, from the sale of at least 500,000 Shares, have been deposited
with the Escrow Agent and such funds have been released and the net proceeds
thereof delivered to the Company.
7. Delivery and Payment. Delivery of shares shall be made on or about
___________, 2003, or such later date as we may advise, at the office of ACAP
Financial, Inc., 47 West 000 Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000, or at
such other place as we shall specify on not less than one day's notice to you.
Subject to the sale of the minimum number of Shares offered, payment for the
shares is to be made, against delivery, at the fully authorized, public offering
price stated above, or, if we shall so advise you, at the public offering price,
less the dealer's selling commission stated above, by wire transfer to the
credit of ACAP Financial, Inc., at the Escrow Account at Xxxxx Union Bank, 00
Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000, opened under the name
"Utah Bank & Trust, Escrow Account for Skypath Networks Inc.."
8. Dealer's Undertakings.
A. No person is authorized to make any representations concerning the
Company's shares except those contained in the Company's then current
Prospectus. The Participating Dealer agrees to comply with the Prospectus
delivery requirements of the Securities act of 1933 and Regulations
thereunder. The Participating Dealer agrees not to use any supplemental
sales literature of any kind without prior written approval of the
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Underwriter unless it is furnished by the Underwriter for such purpose. In
offering and selling the shares, the Participating Dealer will rely solely
on the representations contained in the Company's current Prospectus.
Additional copies of the then current Prospectus will be supplied by the
Underwriter in reasonable quantities upon request.
B. The Participating Dealer will comply with the preliminary and
definitive Prospectus delivery requirements of Rule 15c2-8 adopted under
the Securities Exchange Act of 1934. The Participating Dealer will not sell
the shares pursuant to this Agreement unless a preliminary or final
Prospectus is furnished to the purchaser at least 48 hours prior to the
mailing of the confirmation of sale or is sent to such person under such
circumstances that it would be received by him 48 hours prior to his
receipt of a confirmation of sale. In addition, the Participating Dealer
understands and agrees that during the 90-day period after the first date
upon which the shares are first offered to the public, all dealers
effecting transactions in the shares may be required to deliver the
Company's then current Prospectus to any purchasers thereof prior to or
concurrent with the receipt of the confirmation of sale. Additional copies
of the then current Prospectus will be supplied by the Underwriter in
reasonable quantities upon request for such purposes.
C. The Participating Dealer will comply with all applicable provisions
of federal and state securities laws in connection with the sale of the
shares to its customers. In furtherance of this undertaking, the
Participating Dealer agrees not to engage in any "parking arrangements" or
"multiple tying arrangements" or accept any after market orders for the
Company's Common Stock prior to the closing of the offering.
9. Conditions of Offering. All sales will be subject to delivery by the
Company of certificates evidencing its $.001 par value Common Stock. The
Underwriter shall have full authority to take such action as it deems advisable
in respect of all matters pertaining to the offering or arising thereunder. The
Underwriter shall incur no liabilities to the Participating Dealer except as may
be incurred under the Securities Act of 1933, the Rules and Regulations
thereunder, for lack of good faith, or for obligations assumed in this
Agreement.
10. Failure of Order. If an Order is rejected or if a payment is received
which proves insufficient or worthless, any compensation paid to the
Participating Dealer shall be returned either by the Participating Dealer's
remittances in cash or by a charge against the account of the Participating
Dealer, as the Underwriter may elect.
11. Representations and Agreements of Dealer. By accepting this Agreement,
the Participating Dealer represents that it is registered as a broker/dealer
under the Securities Exchange Act of 1934, as amended; is qualified to act as a
Dealer in the states or other jurisdictions in which it offers the Company's
shares; is a member in good standing of the National Association of Securities
Dealers, Inc.; and will maintain such registrations, qualifications, and
memberships throughout the term of this Agreement. Further, the Participating
Dealer agrees to comply with all applicable federal laws and laws of the states
or other jurisdictions concerned; and the Rules and Regulations of the National
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Association of Securities Dealers, Inc. Further, the Participating Dealer agrees
that it will not offer or sell the Company's shares in any state or jurisdiction
except those specified in Paragraph 5 hereof. The Participating Dealer shall not
be entitled to any compensation during any period in which it has been suspended
or expelled from membership in the National Association of Securities Dealers,
Inc. The Participating Dealer hereby agrees to comply with Sections 8, 23, 24,
25, and 36 of the Rules of Fair Practice as promulgated by the N.A.S.D.
12. Dealer's Representatives. By accepting this Agreement, the
Participating Dealer has assumed full responsibility for thorough and proper
training of its representatives concerning the selling methods to be used in
connection with the offer and sale of the shares, giving special emphasis to the
principles of full and fair disclosure to prospective investors and the full
N.A.S.D. prohibitions against "Free-Riding and Withholding".
13. Company's Indemnification. The Company has agreed in the Underwriting
Agreement to indemnify, defend, and hold the Underwriter, the Participating
Dealer, and each person, if any, who controls the Underwriter and Participating
Dealer within the meaning of Section 15 of the Act, free and harmless from and
against any and all losses, claims, demands, liabilities, and expenses
(including reasonable legal or other expense incurred by each such person in
connection with defending or investigating any such claims or liabilities,
whether or not resulting in any liability to such person), which the
Underwriter, Participating Dealer, or controlling person may incur under the
federal or state securities law or otherwise, but only to the extent that such
losses, claims, demands, liabilities, and expenses shall arise out of or be
based upon a violation or alleged violation of the federal or state securities
laws and regulations thereunder, state statutes, or the common law, including
any untrue statement or alleged untrue statement of material fact contained in
the Registration Statement, or in any Amendment or Amendments to the
Registration Statement, or in any application or other papers, hereinafter
collectively called Blue Sky Applications, or shall arise out of or be based
upon any omission or alleged omission to state therein a material fact required
to be stated in the Registration Statement, in any Amendment or Amendments, in
any Blue Sky Application, or necessary to make the statements in any thereof not
misleading, provided, however, that the indemnity agreement shall not apply to
any such losses, claims, demands, liabilities, or expenses arising out of or
based upon such violation, statement, or omission made in reliance upon
information furnished to the Company by the Underwriter or Participating Dealer
in writing expressly for use in the Registration Statement or in any Amendment
or Amendments or in a Blue Sky Application. The Underwriter or Participating
Dealer agrees to give the Company an opportunity to participate in the defense
or preparation of the defense of any action brought against the Underwriter or
Participating Dealer or controlling person, as the case may be, to the Company,
by letter or telegram, promptly after the commencement of such action against
the Underwriter, Participating Dealer, or controlling persons, such notice
either being accompanied by copies of papers served or filed in connection with
such action or by a statement of the nature of the actions to the extent known
to the Underwriter or Participating Dealer. Failure to notify the Company within
a reasonable amount of time of any such action shall relieve the Company of its
liabilities under the foregoing indemnity, but failure to notify the Company as
herein provided shall not relieve it from any liability which it may have to the
Under-writer, Participating Dealer, or controlling persons other than on account
of the indemnity agreement.
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14. Participating Dealer's Indemnification. The Participating Dealer hereby
agrees to indemnify and to hold harmless the Underwriter, the Company, and each
person, if any, who controls the Underwriter or the Company within the meaning
of Section 15 of the Act, from and against any and all losses, claims, damages,
or liabilities to which the Company or the Underwriter 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 information
contained in the Registration Statement, or other document filed with the
Securities and Exchange Commission to the extent such information is supplied by
the Participating Dealer to the Underwriter or the Company for inclusion
therein, or are based upon alleged misrepresentations or omissions to state
material facts in connection with statements made by the Participating Dealer or
the Participating Dealer's salesmen orally or by other means; and the
Participating Dealer will reimburse the Company and the Underwriter for any
legal or other expenses reasonably incurred in connection with the investigation
of or the defending of any such action or claim. The Underwriter shall, after
receiving the first summons or other legal process disclosing the nature of the
action being served upon it or the Company, in any proceeding in respect of
which indemnity may be sought by the Company or the Underwriter hereunder,
promptly notify the Participating Dealer in writing of the commencement thereof.
In case any such litigation be brought against the Company or the Underwriter,
the Underwriter shall notify the Participating Dealer of the commencement
thereof and the Participating Dealer shall be entitled to participate in (and,
to the extent the Participating Dealer shall wish to direct) the defense thereof
at the Participating Dealer's own expense, but such defense shall be conducted
by counsel of good standing satisfactory to the Company and the Underwriter. If
the Participating Dealer shall fail to provide such defense, the Company may
defend such action at the Participating Dealer's cost and expense. The
Participating Dealer's obligation under this paragraph shall survive the
termination of this Agreement.
15. Expenses. No expenses will be charged to or reimbursed to the
Participating Dealers.
16. Communications. All communications to the Underwriter should be sent to
the address shown in the opening paragraph of this Agreement. Any notice to the
Participating Dealer shall be properly given if mailed or telephoned to the
Participating Dealer below. This Agreement shall be construed according to the
laws of Utah.
17. Assignment and Termination. This Agreement may not be assigned by the
Participating Dealer without the Company's consent. This Agreement will
terminate upon the termination of the offering of the shares except that either
party may terminate this Agreement at any time by giving written notice to the
other.
18. Acceptance. This Agreement shall be accepted upon receipt by the
Underwriter of a copy of the Agreement executed by the Participating Dealer in
the space provided which furnishes the other information requested.
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ACAP FINANCIAL, INC.
By _____________________________
______________________
Accepted on _____________, 2003
Firm Name:
_______________________________
By ____________________________
Address: ______________________
_______________________________
Telephone No.: ________________
IRS Employer Identification No.:
_______________________________
Share Allocation: _____________
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