Exhibit 1.1
Skypath Networks, Inc.
SB-2 Amendment 1
SKYPATH NETWORKS, INC.
0 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
UNDERWRITING AGREEMENT
June 7, 2004
ACAP Financial, Inc.
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Gentlemen:
Skypath Networks, Inc. (the "Company"), a Delaware corporation, proposes to
issue and sell through you, (the "Underwriter"), up to 2,000,000 Shares of the
Company's $.001 par value Common Stock for $1.00 per share ("Share"). The
offering will be a "best efforts all or none" offering for the first 500,000
Shares and a "best efforts" offering thereafter. The offering of the Shares is
further described in the Registration Statement filed on Form SB-2 with the
United States Securities and Exchange Commission (the "Commission").
1. Representations and Warranties of the Company. In order to induce the
Underwriter to enter into this Agreement, the Company represents and warrants as
follows:
A. The Company has filed, a Registration Statement on Form SB-2
relating to the Shares with the Commission pursuant to the Securities Act
of 1933, (the "Act"), as amended. The Company has furnished to the
Underwriter, copies of the Registration Statement together with all
amendments and exhibits. As used in this Agreement, the term "Registration
Statement" means the Registration Statement, including the Prospectus, the
Exhibits, and the financial statements, and all amendments including any
amendments after the effective date of the Registration Statement. The term
"Prospectus" means the Prospectus filed as a part of Part I of the
Registration Statement, including all pre-effective and post-effective
amendments and supplements thereto.
B. The Registration Statement and all other documents previously filed
or filed after the date hereof with the Commission, conform and will
conform with all of the requirements of the Act in all material respects.
Neither the Registration Statement, the Prospectus, nor the other material
filed or to be filed with the Commission, contain nor will contain any
untrue statements of material fact nor are there or will there be any
omissions of material facts required to be stated therein or that are
necessary to make the statements therein not misleading. This warranty does
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by and with
respect to you, or any dealer through you, expressly for use in the
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Registration Statement or Prospectus or any amendment or supplement
thereto.
C. The Company will obtain a CUSIP number for its Common Stock and the
Company has used its best efforts to qualify the Shares for offering in
every state reasonably designated by the Underwriter. The materials
previously filed or filed after the date hereof with any state do not and
will not contain any untrue statements of material fact nor are there or
will there be any omissions of material facts required to be stated therein
or that are necessary to make the statements therein not misleading.
D. The outstanding capital stock of the Company has been duly and
validly authorized, issued, and is fully paid and non-assessable and
conforms to all statements made in the Registration Statement and
Prospectus with respect thereto. The Shares have been duly and validly
authorized and, when issued and delivered against payment as provided in
this Agreement, will be validly issued, fully paid, and non assessable. The
Shares, upon issuance, will not be subject to the pre-emptive rights of any
shareholders of the Company. The Shares will conform to all statements in
the Registration Statement and Prospectus.
E. The Company has been legally incorporated and is now, and always
during the period of the offering will be, a validly existing corporation
under the laws of the State of Delaware, lawfully qualified to conduct the
business for which it was organized and which it proposes to conduct. The
Company will always, during the period of the offering, be qualified to
conduct business as a foreign corporation in each jurisdiction where the
nature of its business requires such qualification.
F. The Company has an authorization capitalization of 20,000,000
shares of Common Stock ($.001 par value) and 5,000,000 shares of preferred
stock. A total of 8,520,912 shares of the Company's Common Stock is
presently issued and outstanding. There are no outstanding options,
warrants, or other rights to purchase securities of the Company, however
characterized, except as described in the Registration Statement. There are
no securities of the Company, however characterized, held in its treasury.
With respect to the offer to sell, offer to purchase, or purchase of any of
its securities, the Company has not made any intentional or reckless
violations of the anti-fraud provisions of the federal securities laws,
rules, or regulations promulgated thereunder or the laws, rules, or
regulations of any jurisdiction wherein such securities transactions or
solicitations occurred.
G. The Company has no subsidiaries.
H. The financial statements, together with related schedules and
notes, included in the Registration Statement and Prospectus, present
fairly the financial condition of the Company and are reported upon by
independent public accountants according to generally accepted accounting
principles.
I. Except as disclosed in the Registration Statement and the
Prospectus, the Company does not have any contingent claims or regulatory
action. Further, except as disclosed in the Registration Statement and
definitive Prospectus, and prior to the close of the offering: (i) there
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shall not be any material adverse change in the management or conditions,
financial or otherwise, of the Company or in its business taken as a whole;
(ii) there shall not have been any material transaction entered into by the
Company other than transaction in the ordinary course of business; (iii)
the Company shall not have incurred any material obligations, contingent or
otherwise, which are not disclosed in the Registration Statement and the
Prospectus; (iv) there shall not have been nor will there be any change in
the capital or long-term debt of the Company; and (v) the Company has not
and will not have paid or declared any dividends or other distributions on
its common shares.
J. The Company's securities, however characterized, are not subject to
pre-emptive rights.
K. The Company will have the legal right and authority to enter into
this Underwriting Agreement upon its execution, to effect the proposed sale
of the Shares, and to effect all other transactions contemplated by this
Agreement.
L. The Company knows of no person who rendered any services in
connection with the introduction of the Company to the Underwriter. No
broker's or other finder's fees are due and payable by the Company and none
will be paid by it in connection with the sale of the Shares.
M. The Company is eligible to use Form SB-2 for the offering of the
Shares.
N. The Company will not file any amendment or supplement to the
Registration Statement, Prospectus, or Exhibits if the Underwriter and its
counsel have not been previously furnished a copy, or if the Underwriter or
its counsel, have objected in writing to the filing of the amendment or
supplement.
O. The Company has filed all tax returns required to be filed and is
not in default in the payment of any taxes which have become due pursuant
to any law or any assessment.
P. All original documents and other information relating to the
Company's affairs has and will continue to be made available upon request
to the Underwriter and to its counsel at the office of the Company. Copies
of any such documents will be furnished upon request to the Underwriter and
to its counsel. Included within the documents made available, have been at
least the Articles of Incorporation and any amendments, minutes of all of
the meetings of the incorporators, directors, and shareholders, all
financial statements and copies of all contracts, leases, patents,
copyrights, licenses, or agreements to which the Company is a party or in
which the Company has an interest.
Q. The Company will use the proceeds from the sale of the Shares as
set forth in the Registration Statement and Prospectus.
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R. There are no contracts or other documents required to be described
in the Registration Statement or to be filed as Exhibits to the
Registration Statement which have not been described or filed as required.
S. The Company is not in material default under any of the contracts,
leases, licenses, or agreements to which it is a party. The proposed
offering of the Shares will not cause the Company to become in material
default under any of its contracts, leases, subleases, patents, copyrights,
licenses, or agreements nor will it create a conflict between the Company
and any of the contracting parties to the contracts, leases, and other
agreements. Further, the Company is not in material default in the
performance of any obligation, agreement, or condition contained in any
debenture, note, or other evidence of indebtedness or any indenture or loan
agreement of the Company. The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated and compliance
with the terms of this Agreement will not conflict with or result in a
breach of any of the material terms, conditions, or provisions of, or
constitute a material default under the Articles of Incorporation or Bylaws
of the Company, as amended, or any note, indenture, mortgage, deed of
trust, or other agreement or instrument to which the Company is a party or
by which it or any of its property is bound, or any existing law, order,
rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality, agency or body, arbitration tribunal, or
court, domestic or foreign, having jurisdiction over the Company or its
property. The consent, approval, authorization, or order of any court or
governmental instrumentality, agency, or body is not required for the
consummation of the transactions herein contemplated except such as may be
required under the Act, under the blue sky or securities laws of any or
jurisdiction, or the rules of the NASD.
T. The Company has not made any representation, whether oral or in
writing, to anyone whether an existing shareholder or not, that any of the
Shares will be reserved for or directed to them during the proposed public
offering.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
2. Representation and Warranties of the Underwriter. The Underwriter
represents and warrants as follows:
A. It is registered as a broker-dealer with the Commission, in good
standing with the Utah Securities Division, and is registered, to the
extent registration is required, with the appropriate governmental agency
in each state in which it offers or sells the Shares and is a member of the
National Association of Securities Dealers, Inc., ("NASD"), and will use
its best efforts to maintain such registrations, qualifications, and
memberships throughout the term of the offering.
B. To the knowledge of the Underwriter, no action or proceeding is
pending against the Underwriter or any of its officers or directors
concerning the Underwriter's activities as a broker or dealer that would
affect the Company's offering of the Shares.
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C. The Underwriter will offer the Shares only in those states and in
the quantities that are identified in the blue sky memorandum from the
Company's counsel to the Underwriter that the offering of the Shares has
been qualified for sale under the applicable state statutes and
regulations. The Underwriter, however, may offer the Shares in other states
if (i) the transaction is exempt from the registration requirements in that
state; (ii) the Company's counsel has received notice ten days prior to the
proposed sale; and (iii) the Company's counsel does not object within said
ten day period.
D. The Underwriter, in connection with the offer and sale of the
Shares and in the performance of its duties and obligations under this
Agreement, agrees to use its best efforts to comply with all applicable
federal laws; the laws of the states or other jurisdictions in which the
Shares are offered and sold; and the rules and regulations of the NASD.
E. The Underwriter is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Utah with all requisite
power and authority to enter into this Agreement and to carry out its
obligations hereunder.
F. This Agreement has been duly authorized, executed, and delivered by
the Underwriter and is a valid agreement on the part of the Underwriter.
G. Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will result in any breach of any of the
terms or conditions of, or constitute a default under, the Articles of
Incorporation or Bylaws of the Underwriter or any indenture, agreement, or
other instrument to which the Underwriter is a party or violate any order
directed to the Underwriter of any court or any federal or state regulatory
body or administrative agency having jurisdiction over the Underwriter or
its affiliates.
H. The Underwriter knows of no person who rendered any services in
connection with the introduction of the Company to the Underwriter. No
person acting by, through, or under the Underwriter will be entitled to
receive from the Underwriter of from the Company any finder's fees or
similar payments.
I. The written information provided by the Under-writer for inclusion
in the Registration Statement and Prospectus consists of certain
information on the front and back Prospectus.
J. The Underwriter will, reasonably promptly after the closing date,
supply the Company with all information required from the Underwriter for
the completion of Form SR and such additional information as the Company
may reasonably request to be supplied to the securities commissions of such
states in which the Shares have been qualified for sale.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
3. Employment of the Underwriter. In reliance upon the representations and
warranties and subject to the terms and conditions of this Agreement:
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A. The Company employs the Underwriter as its exclusive agent to sell
for the Company's account the Shares, on a cash basis only, at a price of
$1.00 per Share. The Underwriter shall offer the Shares solely as an agent
for the Company. The Underwriter agrees to use its best efforts, as agent
for the Company, to sell the Shares subject to the terms and conditions set
forth in this Agreement. It is understood between the parties that there is
no firm commitment by the Underwriter to purchase any or all or the Shares.
B. The obligation of the Underwriter to offer the Shares is subject to
receipt by it of written advice from the Commission that the Registration
Statement is effective, is subject to the Shares being qualified for
offering under applicable laws in the states as may be reasonably
designated by the Underwriter, is subject to the absence of any prohibitory
action by any governmental body, agency, or official, and is subject to the
terms and conditions contained in this Agreement and in the Registration
Statement covering the offering to which this Agreement relates.
C. The Company and the Underwriter agree that unless a minimum of
500,000 Shares are sold within six months after the Effective Date, the
agency between the Company and the Underwriter will terminate. The parties
agree that the maximum number of Shares to be sold is 2,000,000. If the
agency between the Company and the Underwriter terminates, prior to the
sale of 500,000 Shares of the Company's Common Stock, the full proceeds
which have been paid for the Shares hall be returned to the purchasers.
Prior to the sale of all of the Shares to be offered, all proceeds received
from the sale of the Shares will be deposited in an escrow account entitled
"Skypath Networks, Inc., Escrow Account" with Xxxxx Bank , Salt Lake City,
Utah.
D. The Company, the Underwriter, and Xxxxx Bank, Salt Lake City, Utah,
will, prior to the beginning of the offering of the Shares, enter into a
fund escrow agreement in form satisfactory to the parties. The parties
mutually agree to faithfully perform their obligations under the fund
escrow agreement. The Underwriter will transmit by twelve noon of the next
business day following receipt the funds into the escrow account in
accordance with Rule 15(c)2-4 of the Securities Exchange Act of 1934, as
amended. The parties agree that all checks for subscription of Shares in
the offering will be made payable to "Xxxxx Bank, Escrow Agent for Skypath
Networks, Inc."
E. The Underwriter shall have the right to associate with other
underwriters and dealers as it may determine and shall have the right to
grant such persons such concessions out of the commissions to be received
by the Underwriter as the Underwriter may determine, under and pursuant to
a Participating Dealer Agreement in the form filed as an Exhibit to the
Registration Statement.
F. Subject to the sale of at least 500,000 Shares, the Company agrees
to pay to the Underwriter an underwriting commission computed at the rate
of $.10 (10% of the public offering price) for each of the Shares sold by
the Underwriter at the public offering price of $1.00 per Share. This
commission shall be payable in certified funds upon the release of the
funds which have been deposited in the escrow account.
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G. The Company will pay the Underwriter an expense allowance of
$10,000, of which $5,000 has been paid and the balance of $5,000 which will
be paid upon the mutual filing of the Form SB-2 with the SEC.
4. Expenses of the Company. The Company agrees that it will pay the
following fees and expenses:
A. All fees and expenses of its legal counsel who will be engaged to
prepare certain information, documents, and papers for filing with the
Commission and with state or local securities authorities;
B. All fees and expenses of its accountants incurred in connection
with the offering of the Shares and the preparation of all documents and
filings made as part of the offering;
C. All costs in issuing and delivering the Shares;
D. All costs of printing and delivering to the Underwriter and dealers
as many copies of the Registration Statement and amendments, preliminary
Prospectuses, and definitive Prospectuses as reasonably requested by the
Underwriter;
E. All of the Company's mailing, telephone, travel, clerical, and
other office costs incurred or to be incurred in connection with the
offering of the Shares;
F. All fees and costs which may be imposed by the Commission, the
various state or local securities authorities, and the NASD for review of
the offering of the Shares;
G. All other expenses incurred by the Company in performance of its
obligations under this Agreement.
5. Underwriter Shares. Subject to the sale of a minimum of 500,000 Shares,
the Company has agreed to issue the Underwriter one share of common stock for
each 20 shares sold in the offering. The underwriter shares will be registered
in the offering.
6. Threat of Regulatory Action. The Company and the Underwriter agree to
advise each other immediately and confirm in writing the receipt of any threat
of or the initiation of any steps or procedures which would impair or prevent
the right to offer the Shares or the issuance of any "suspension orders" or
other prohibitions preventing or impairing the proposed offering of the Shares.
In the case of the happening of any such event, neither the Company nor the
Underwriter will acquiesce in such steps, procedures, or suspension orders if
such acquiescence would adversely affect the other party and, in such event,
each party agrees to actively defend any such actions or orders unless both
parties agree in writing to acquiesce in such actions or orders or unless
counsel for each party advises the parties that the probability of successfully
defending against such action or orders is remote.
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7. Further Agreements of the Company. The Company further agrees with the
Underwriter as follows:
A. The Company will use its best efforts to cause the Registration
Statement and any Post-Effective Amendment subsequently filed, to become
effective as promptly as reasonably practicable and will promptly advise
the Underwriter, and will confirm such advice in writing, of the following:
(i) when the Registration Statement shall have become effective and when
any Amendment thereto shall have become effective and when any Amendment of
or supplement to the Prospectus shall be filed with the Commission; (ii)
when the Commission shall make a request or suggestion for any amendment to
the Registration Statement or the Prospectus or for additional information
and the nature and substance thereof; (iii) of the issuance by the
Commission of an order suspending the effectiveness of the Registration
Statement pursuant to Section 8 of the Act or of the initiation of any
proceedings for that purpose; (iv) of the happening of any event which in
the judgment of the Company makes any material statement in the
Registration Statement or Prospectus untrue or which required the making of
any changes in the Registration Statement or Prospectus in order to make
the statements therein not misleading; and (v) of the refusal to qualify or
the suspension of the qualification of the Shares for offering or sale in
any jurisdiction, or of the institution of any proceedings for any of such
purposes. The Company will use every reasonable effort to prevent the
issuance of any such order or of any order preventing or suspending such
use, to prevent any such refusal to qualify or any such suspension and to
obtain as soon as possible a lifting of any such order, the reversal of any
such refusal and the termination of any such suspension.
B. The Company will prepare and file promptly with the Commission,
upon request of the Underwriter, such amendments or supplements to the
Registration Statement or Prospectus, in form satisfactory to counsel to
the Company, as in the opinion of counsel to the Underwriter may be
necessary or advisable in connection with the offering or distribution of
the Shares and will use its best efforts to cause the same to become
effective as promptly as possible.
C. The Company will use its best efforts to qualify or register the
Shares for sale under the securities or "blue sky" laws of such
jurisdictions as the Underwriter may reasonably designate and will make
such applications and furnish such information as may be required for that
purpose and to comply with such laws, provided the Company shall not be
required to qualify as a foreign corporation or a dealer in securities or
to execute a general consent to service of process in any jurisdiction in
any action other than one arising out of the offering or sale of the
Shares. The Company will, from time to time, prepare and file such
statements and reports as are or may be required to continue such
qualification in effect for so long a period as the Underwriter may
reasonably request for the purposes of distribution of the Shares.
D. The Company will provide the Underwriter and its counsel with
copies of all applications for the registration of Shares filed with the
various state authorities and will provide the Underwriter and its counsel
with copies of all comments and orders received from these authorities.
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E. The Company will deliver to the Underwriter and to other
broker-dealers as requested by the Underwriter as many copies of the
definitive Prospectus as the Underwriter may reasonably request during the
period of the offering.
F. The Company will furnish the Underwriter for so long as the
Company's Common Stock is subject to the periodic reporting requirements of
the Securities Exchange Act of 1934, and for so long as the Underwriter is
a principal market-maker in such Common Stock with:
(i) Within 90 days after the close of each fiscal year of the
Company, a financial report of the Company and its subsidiaries, if
any, on a consolidated basis, such report to include such information
in such form as the Company shall be required to include in reports
for that fiscal year to be filed with the Commission and such report
to be certified by independent public accountants;
(ii) Within 60 days after the end of each quarterly fiscal period
of the Company other than the last quarterly fiscal period in any
fiscal year, copies in printable form of the financial statements of
the Company and its subsidiaries, if any, on a consolidated basis, for
that period and as of the end of that period, which financial
statements shall include a narrative discussion of such financial
statements and of the business conducted by the Company and its
subsidiaries, if any, during such fiscal quarter and such information
in such form as the Company shall be required to include in reports
for that period to be filed with the Commission, all subject to
year-end adjustment, signed by the principal financial or accounting
officer of the Company;
(iii) As soon as is available, a copy of each report of the
Company mailed to shareholders or filed with the Commission;
(iv) Copies of all news, press, or public information releases
when made;
(v) Upon request in writing from the Underwriter, such other
information as may reasonably be requested concerning the properties,
business, and affairs of the Company and its subsidiaries, if any.
G. The Company agrees to notify the Underwriter immediately within the
90 day period after the effective date and such longer period if the
offering is still continuing, of any event that materially affects the
Company or its securities and that should be set forth in an amendment or
supplement to the Prospectus in order to make the statements made therein
not misleading. Similarly, the Company agrees to, as soon as possible
thereafter, prepare and furnish to the Underwriter as many copies as the
Underwriter may request of an amended Prospectus or a supplement to the
Prospectus in order that the Prospectus as amended or supplemented will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or that is necessary in order
to make the statements made therein not misleading.
H. The Company will file with the Commission the required reports on
Form SR and will file with the appropriate state securities commissioners
any sales and other reports required by the rules and regulations of such
agencies and will supply copies to the Underwriter.
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I. Except with the Underwriter's approval, the Company agrees that the
Company will not do the following until (i) the completion of the offering
of the Shares, (ii) the termination of this Agreement, or (iii) 90 days
after the effective date, whichever occurs later:
(i) Undertake or authorize any change in its capital structure or
authorize, issue, or permit any public or private offering of
additional securities;
(ii) Authorize, create, issue, or sell any funded obligations,
notes, or other evidences of indebtedness, except in the ordinary
course of business and within 12 months of their creation;
(iii) Consolidate or merge with or into any other corporation; or
(iv) Create any mortgage or any lien upon any of its properties
or assets except in the ordinary course of its business.
J. For so long as the Company is a reporting company under either
Section 12(g) or 15(d) of the Securities Exchange Act of 1934, the Company
will, at its expense: (i) as promptly as possible after each annual fiscal
period, render and distribute annual reports to its shareholders prepared
in accordance with the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder, which will include audited statements
of its operations and changes of financial position during such period and
its balance sheet as of the end of such period, as to which statements the
Company's independent certified public accountants shall have rendered an
opinion; and (ii) as promptly as possible after each quarterly fiscal
period, other than the last quarterly fiscal period of each year, render
and distribute quarterly reports to its shareholders which will include at
least the same information which is included in the Company's quarterly
reports filed with the Commission under wither Section 13 and 15 (d) of the
Securities Exchange Act of 1934, and the rules and regulations promulgated
thereunder. In the event the Company has an active subsidiary or
subsidiaries, the financial statements contained in all such reports shall
be on a consolidated basis to the extent such consolidation is applicable.
K. The Company has appointed Interwest Transfer Company, Inc., 0000
Xxxxxx-Xxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, as transfer agent for the
Company's Common Stock.
L. Within 30 days after the successful termination of the offering of
the Shares, the Company agrees to submit information about the Company to
be included in various securities manuals, including Standard & Poor's, to
facilitate secondary trading in the Company's Common Stock.
M. The Company agrees to cause the stock certificates of all of the
current shareholders of the Company and of any future officers or directors
of the Company to be clearly legended as being restricted against transfer
without compliance with the Act and to cause the Company's transfer agent
to put stop transfer instructions against such stock certificates.
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8. Company's Indemnification.
A. The Company agrees to indemnify, defend, and hold harmless the
Underwriter and each person who controls the Underwriter within the meaning
of Section 15 of the Act, from and against any and all losses, claims,
damages, liabilities, and expenses (including reasonable legal or other
expenses) incurred by the Underwriter in connection with defending or
investigating any such claims of liabilities, whether or not resulting in
any liability to the Underwriter, which the Underwriter may incur under the
federal or state securities laws and regulations thereunder, state statutes
or at common law or otherwise, but only to the extent that such losses,
claims, damages, liabilities, and expenses shall arise out of or be based
upon a violation of alleged violation of the federal or state securities
laws or regulations promulgated thereunder, a state statute, or the common
law resulting from any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or in any application
or other papers filed with the various state securities authorities
(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 therein or necessary to make the
statements therein not misleading, provided, however, that this indemnity
agreement shall not apply to any such losses, claims, damages, liabilities,
or expenses arising out of or based upon any such violation based upon a
statement or omission made in reliance upon written information furnished
for use in the Registration Statement or in a Blue Sky Application by the
Underwriter.
B. The foregoing indemnity of the Company in favor of the Underwriter
shall not be deemed to protect the Underwriter against any liability to
which the Underwriter would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of the
Underwriter's obligations and duties under the Act or this Agreement.
C. The Underwriter agrees to give the Company an opportunity to
participate in the defense or preparation of the defense of any action
brought against the Underwriter to enforce any such claim or liability and
the Company shall have the right so to participate. The agreement of the
Company under the foregoing indemnity is expressly conditioned upon notice
of any such action having been sent by the Underwriter to the Company, by
letter or telegram (addressed as provided in this Agreement), promptly
after the receipt of written notice of such action against the Underwriter
such notice either being accomplished by copies of papers served or filed
in connection with such action or by a statement of the nature of the
action to the extent known to Underwriter. Failure to notify the Company as
herein provided shall not relieve it from any liability which it may have
to the Underwriter other than on account of the indemnity agreement
contained in this paragraph 7.
9. Underwriter's Indemnification.
A. The Underwriter likewise agrees to indemnify, defend, and hold
harmless the Company and each person who controls the Company within the
meaning of Section 15 of the Act, against any and all losses, claims,
damages, expenses, and liabilities to which the Company may become subject,
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or in
any Blue Sky Application or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
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the statements therein not misleading, resulting from the use of written
information furnished to the Company by the for use in the preparation of
the Registration Statement or in any Blue Sky Application.
B. The Company agrees to give the Underwriter an opportunity to
participate in the defense or preparation of the defense of any action
brought against the Company to enforce any such claim or liability and the
Underwriter shall have the right to so participate. The Underwriter's
liability under the foregoing indemnity is expressly conditioned upon
notice of any such action having been sent by the Company to the
Underwriter by letter or telegram (addressed as provided for in this
Agreement), promptly after the receipt by the Company of written notice of
such action against the Company, 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 action to the extent known to the Company.
Failure to notify the Underwriter as herein provided shall not relieve the
Underwriter from any liability which the Underwriter may have to the
Company other than on account of the indemnity agreement contained in this
paragraph.
C. The provisions of paragraphs 7 and 8 shall not in any way prejudice
any right or rights which the Underwriter may have against the Company or
the Company may have against the Underwriter under any statute, including
the Act, at common law or otherwise.
D. The indemnity agreements contained in paragraph 7 and 8 shall
survive the termination of this Agreement and shall inure to the benefit of
the Company, the Underwriter, their respective successors, and the persons
specified in Section 16 below, and their respective heirs, personal
representatives, and successors and shall be valid irrespective of any
investigation made by or on behalf of the Underwriter or the Company.
10. Conditions Precedent to the Obligations of the Underwriter. All
obligations of the Underwriter under this Agreement are subject to the following
conditions precedent:
A. The Underwriter shall have completed a review of the form and
content of the Registration Statement and Prospectus, of the organization
and present legal status of the Company and of the legality and validity of
the authorization and issuance of the issued and outstanding stock of the
Company and of the Shares.
B. The Company shall have performed all of its obligations under this
Agreement. All of the statements, representations, and warranties contained
in this Agreement shall be complete and true.
C. From the date of this Agreement until the completion of the
offering, no material adverse changes shall have occurred in the business,
properties, nor assets of the Company other than changes occurring in the
ordinary course of business.
D. From the date of this Agreement until the completion of the
offering, no claims or litigation shall have been instituted or threatened
against the Company for substantial amounts or which would materially
adversely affect the Company, its business, or its property, and no
reasonable basis exists for such claims or threats. Further, no proceeding
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shall have been instituted or threatened against the Company before any
regulatory body wherein an unfavorable ruling would have a material adverse
effect on the Company.
E. From the date of this Agreement until the completion of the
offering of the Shares, no material adverse change shall have occurred in
the operation, financial condition, management, or credit of the Company or
in any conditions affecting the prospectus of its business.
F. From the date of this Agreement until the completion of the
offering, the Company shall not have sustained any loss on account of fire,
flood, accident, or calamity of such character as materially adversely
affects its business or property, regardless or whether or not the loss has
been insured.
G. On the date of the release of the funds in the Escrow Account to
the Company, the Underwriter shall have received from the president or vice
president and the treasurer of the Company, certificates dated as of such
date, in form satisfactory to the Underwriter, to the effect that:
(i) The representations and warranties of the Company contained
in paragraph 1 of this Agreement are complete and true.
(ii) All of the conditions precedent in this Agreement have been
performed and the representations of these conditions precedent are
true.
(iii) No stop order or other proceedings have been instituted or
threatened by the Commission or any state authority which would
adversely affect the offering of the Shares.
(iv) This Agreement has been duly authorized and executed and
constitutes a valid agreement of the Company and is binding and
enforceable according to its terms.
(v) The respective signers have each carefully examined the
Registration Statement and definitive Prospectus and any amendments
and supplements, and to the best of their knowledge, the Registration
Statement and definitive Prospectus and any amendments and supplements
contain all statements required to be stated therein. All statements
contained therein are true and correct, neither the Registration
Statement, definitive Prospectus, or any amendment, supplement, or
sticker thereto includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. Since the
effective date of the Registration Statement, there has occurred no
event required to be set forth in an amended or supplemented
Prospectus which has not been so set forth.
H. On the effective date and on the closing date, the Underwriter
shall have received from the Company's legal counsel, a blue sky memorandum
setting forth the states in which the Shares may be sold and the number of
Shares that may be sold in each such state.
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11. Termination.
A. This Agreement may be terminated by the Underwriter by notice to
the Company in the event that the Company shall have failed or been unable
to comply with any of the terms, conditions, or provisions of this
Agreement on the part of the Company to be performed, complied with, or
fulfilled within the respective times herein provided for, unless
compliance therewith or performance or satisfaction thereof shall have been
expressly waived by the Underwriter in writing.
B. This Agreement may be terminated by the Underwriter by notice to
the Company if the Underwriter believes in is sole judgment that any
adverse changes have occurred in the management of the Company, that
material adverse changes have occurred in the financial condition or
obligations of the Company, or if the Company shall have sustained a loss
by strike, fire, flood, accident, or other calamity of such a character as,
in the sole judgment of the Underwriter, may interfere materially with the
conduct of the Company's business and operations regardless of whether or
not such loss shall have been insured.
C. This Agreement may be terminated by the Underwriter by notice to
the Company at any time if, in the sole judgment of the Underwriter,
payment for and delivery of the Shares is rendered impracticable or
inadvisable because (i) additional material governmental restrictions not
in force and effect on the date hereof shall have been imposed upon the
trading in securities generally, or (ii) a war or other national calamity
shall have occurred, or (iii) substantial and material changes in the
condition of the market (either generally or with reference to the sale of
the Shares to be offered hereby) beyond normal fluctuations are such that
it would be undesirable, impracticable, or inadvisable in the sole judgment
of the Underwriter to proceed with this Agreement or with the public
offering or (iv) of any matter materially adversely affecting the Company.
D. In the event any action or proceeding shall be instituted or
threatened against the Underwriter, either in any court of competent
jurisdiction, before the Commission or any state securities commission
concerning its activities as a broker or dealer that would prevent the
Underwriter from acting as such, at any time prior to the effective date
hereunder, or in any court pursuant to any federal, state, local, or
municipal statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of the
Underwriter's assets or if the Underwriter makes an assignment for the
benefit of creditors, the Company shall have the right on three days'
written notice to the Underwriter to terminate this Agreement without any
liability to the Underwriter of any kind.
E. Any termination of this Agreement pursuant to this Section shall be
without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party
thereto.
F. In the event the offering is terminated, the Underwriter will be
reimbursed only for actual, accountable out-of-pocket expenses incurred in
connection with the offering.
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12. Notices. All notices shall be in writing and shall be delivered at or
mailed to the following addresses or sent by telegram to the following addresses
with written confirmation thereafter:
To the Company: Skypath Networks, Inc.
0 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
To the Underwriter: ACAP Financial, Inc.
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
13. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Company and the Underwriter (including the participating
dealers as provided for herein) and their successors. Nothing expressed in this
Agreement is intended to give any person other than the persons mentioned in the
preceding sentence any legal or equitable right, remedy, or claim under this
Agreement. However, the representations, warranties, and indemnity and defense
obligations of the Company included in this Agreement also inure to the benefit
of any person who controls the Underwriter and participating dealers within the
meaning of Section 15 of the Act.
14. Miscellaneous Provisions.
A. Time shall be of the essence of this Agreement.
B. This Agreement shall be construed according to the laws of the
State of Utah.
C. The representations and warranties made in this Agreement shall
survive the termination of this Agreement and shall continue in full force
and effect regardless of any investigation made by the party relying upon
any such representation or warranty.
D. This Agreement is made solely for the benefit of the Company and
its officers, directors, and controlling persons within the meaning of
Section 15 of the act and of the Underwriter and its officers, directors,
and controlling persons within the meaning and personal representative, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successor" as used in this Agreement shall not include
any purchaser, as such, of the Shares.
E. The Underwriter will provide upon closing a list of all the names
and addresses of all participating dealers and shall provide the Company
with such changes of the address or name of such participating dealers as
occur and of which the Underwriter is notified. Further, the Underwriter
shall use its best efforts to maintain the current name and address of all
participating dealers during the terms of this Agreement.
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If this Agreement correctly sets forth our understanding please indicate
your acceptance in the space provided below for that purpose.
Very truly yours,
Skypath Networks, Inc.
a Delaware corporation
By: /s/ Xxxxx X. Paolo
Chief Executive Officer
Confirmed and accepted as of
the date of this Agreement:
ACAP FINANCIAL, INC., a Utah corporation
By: /s/ Xxxx Xxxxxxxx
President
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