EXHIBIT 1.2
FLEX ACQUISITIONS CORPORATION
FORM OF SELECTED BROKER-DEALER AGREEMENT
____________, 1997
Gentlemen:
Flex Acquisitions Corporation (the "Company"), incorporated under the laws of
Texas hereby confirms its agreement with you, as follows:
1. Description of the Offering. The Company proposes to sell a
maximum of 100,000 and a minimum of 20,000 of its authorized but unissued
Units consisting of one common share, par value $0.001 per share, Two Class B
Warrants and two Class C Warrants at $6.00 per Unit. If the minimum of 20,000
Units have not been sold within 120 days of the date of the Prospectus and any
extension thereto, the offering will terminate and all funds received from
purchasers of Units will be promptly returned to them without interest or
deduction therefrom. The Company may terminate the Offering at any time after
the 20,000 Units have been sold, and the Company reserves the right to reject
any orders in whole or in part, for the purchase of any of the offered Units.
Persons purchasing Units and becoming shareholders and Warrant holders of the
Company are herein referred to as "Shareholders." The Company and the
Offering are more fully described in the Prospectus described in Paragraph
2(a). All terms used herein, unless specifically defined herein, shall have
the meanings as ascribed in the prospectus. For the purposes of this
Agreement an "affiliate" of any person shall have the meaning ascribed in Rule
405 of the Rules and Regulations of the Securities and Exchange Commission
(the "Commission").
2. Representation and Warranties of the Company. The Company
represents, covenants, warrants and agrees with you for your benefit that:
(a) The Company has prepared or caused to be prepared a
Prospectus (the "Prospectus"), which furnishes all information required to be
furnished to offerees under the Securities Act of 1933, as amended (the "1933
Act"). The prospectus does not contain an untrue statement of any material
fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading;
(b) The performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a material breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute (except federal and state securities laws, compliance with
which is elsewhere provided for in particular detail), indenture, mortgage or
other agreement or instrument to which the Company is a party or by which it
is bound, or any order, rule or regulation directed to the Company, or its
affiliates by any court or governmental agency or body having jurisdiction
over it or its affiliates; and no other consent, approval, authorization or
action is required for the consummation of the transactions herein
contemplated other than such as have been obtained;
(c) The Units, consisting of Common Shares, Class B Warrants and
Class C Warrants, to be issued will conform in all material respects to all
statements concerning them contained in the Prospectus, and the Units, when
issued, will be duly authorized, validly and legally issued, not subject to
assessment or further payment to the Company except as to the Warrants;
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Texas with full power and authority to own its properties and conduct its
business as described in the Prospectus;
(e) The Company will become qualified to do business as a
foreign corporation or similar entity in those jurisdictions where such
qualification is necessary, and will take such other action as is necessary,
and will take such other action as is necessary in any jurisdiction where the
Company engages in business or owns property;
(f) Since the respective dates as of which information is given
in the Prospectus and other than as therein contemplated, the Company has not,
nor during the period of the Offering will it have incurred any material
liabilities or obligations contingent or otherwise, except in the ordinary
course of business, and there has not been, and during the period of the
Offering there will not have been, any material adverse change in the
condition of the Company, financial or otherwise;
(g) The Company will notify you immediately and confirm the
notice in writing of the issuance by the Securities and Exchange Commission or
by any state securities administration of any stop order suspending the
effectiveness of any qualification of the Units for sale or enjoining the sale
of the Units or of the initiation of any proceedings for that purpose. The
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if any such stop order shall at any time be issued, to obtain
the lifting thereof at the earliest possible moment; and
(h) During the course of the Offering, and to the extent any
representations other than those set forth in the Prospectus are made by the
Company and its affiliates, they will not make any untrue statements of a
material fact or omit to state a material fact required to be stated or
necessary to make any statement made, in light of the circumstances in which
they are made, not misleading concerning the Offering or any matters set forth
in or contemplated by the Prospectus.
3. Representations and warranties of Selected Broker-Dealer. You
represent and warrant to the Company and to each other Broker-Dealer firm who
has or may enter into a Selected Broker-Dealer Agreement with the Company
that:
(a) You are a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which you are
incorporated, with all requisite power and authority to enter into this
Agreement and to carry out your obligations hereunder;
(b) This Agreement has been duly authorized, executed and
delivered by you and is a valid and binding agreement on your part;
(c) The consummation of the transactions contemplated herein and
those contemplated by the Prospectus will not result in any breach of any of
the terms or conditions of or constitute a default under any indenture,
agreement or other instrument to which you are a party, to violate any law or
any order, directed to you, of any court or any federal or state regulatory
body or administrative agency having jurisdiction over you or over your
property;
(d) You are duly registered pursuant to the provisions of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), as a
Broker-Dealer and you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and are duly registered as a
Broker-Dealer in those states in which you are required to be so registered in
order to carry out the Offering contemplated by the Prospectus;
(e) Pursuant to your appointment made in Paragraph 6 below,
insofar as is under your control, you will in good faith use your best efforts
to conduct the Offering in a manner intended to be in compliance with the
Prospectus. Furthermore, you agree to comply with all applicable federal laws
including, but not limited to, the 1933 Act and 1934 Act and the Rules and
Regulations of the Commission thereunder; the laws of the state or other
jurisdictions in which Units may be offered or sold; and the Rules of Business
Conduct of the NASD. Further, you agree that you will not offer or sell the
Units in any state or jurisdiction except in those jurisdictions in which they
may lawfully be sold. You also acknowledge you understand that you shall not
be entitled to any compensation hereunder for any period during which you have
been suspended or expelled from membership in NASD; and
(f) By accepting this Agreement, you assume full responsibility
for thorough and proper training of your employees and other agents and
representatives concerning the selling methods to be used in connection with
the Public Offering of the Units, giving special emphasis to the principles of
full and fair disclosure to prospective investors and the prohibitions against
"Free-Riding and Withholding" as set forth the Interpretation in the Rules of
Business Conduct of the Association.
(g) You undertake to comply with Rules of Business Conduct
contained in Section 2000 of the NASD Manual.
4. Covenants of the Company. The Company represents, covenants,
warrants and agrees with you for your benefit that:
(a) The Company has delivered or will deliver to you such number
of Prospectuses as you may reasonably require from time to time during the
course of the Offering;
(b) Until the Initial, Interim or Final Closing Date ("Closing
Date"), if any event affecting the Company or any of its affiliates shall
occur which, in the Company's or your opinion should be set forth in a
supplement or an amendment to the Prospectus, the Company will forthwith at
its own expense prepare and furnish to you a reasonable number of copies of a
supplement or amendment to the Prospectus so that it, as so supplemented or
amended, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading; and
(c) The Company will apply the net proceeds from the sale of the
Units substantially in accordance with the terms and conditions of the
Prospectus.
5. State Securities Registration. The Company further covenants,
warrants and agrees that:
(a) It will use its best efforts to either take all necessary
action and file all necessary forms and documents in order to qualify or
register all 100,000 Units in the various states in which the Units are
proposed to be offered and to register such number of Units for sale as you
shall from time to time request during the course of the Offering or will take
any necessary action and file any and all forms which are required to obtain
an exemption from such qualification or registration in such states as you and
the Company mutually agree upon;
(b) In each jurisdiction where the Units have been registered or
qualified or offered in an exempt transaction as provided above, the Company
will make and file such statements, documents, materials and reports in each
year and take all other actions as are or may be required to be made or filed
by the Company by the laws of such jurisdictions, and you will similarly make
and file such statements and reports as are required of you after receipt by
you of written advice of such requirements by the Company; and
(c) The Company will promptly provide to you for delivery to all
offerees and purchasers and their representatives any additional information,
documents and instruments which you or the Company deems necessary to comply
with the rules, regulations and judicial and administrative interpretations
respecting compliance with such exemptions or qualifications and registration
requirements in those states where the Units are to be offered or sold.
6. Selling Agreement. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth:
(a) The Company hereby engages you as its agent to sell the
Units in accordance with the terms of the Prospectus and this Agreement, and
you agree to use your best efforts to sell the Units. You may, however,
discharge your responsibilities under this Agreement by forming a group of
securities dealers to find purchasers for the Units. Any allocation of Units
among you that the other Broker-Dealers selected by you shall be made by you;
(b) As compensation for the Selected Broker-Dealer's services
hereunder, the Company shall allow to the Selected Broker-Dealer a $0.12 per
Unit nonaccountable expense allowance on Offered Units sold from referrals by
the Company hereunder and a sales commission or discount of $0.60 per Unit and
a $0.12 per Unit nonaccountable expense allowance on all other Offered Units
sold hereunder. The nonaccountable expense allowance is limited to a maximum
of $18,000 on all Offered Units sold. It shall be conclusively presumed that
the following persons who purchase offered Units are from referrals by the
Company: Any past or present shareholder of the Company; and any person whom
you have not identified in writing as a non-company referral. Such payment
shall be made to you by the Company at the time of Closing. You may reallow
any portion of you commission to other Broker-Dealers with whom you may have
contracted for the sale of the Units, which payment shall be made as
compensation for their services;
(c) The above-described commission shall be considered
compensation for your brokerage services rendered during the course of the
Offering pursuant to this Agreement. You will not be considered to have any
continuing or future duty or obligation of any kind to the Company or to any
of the shareholders as a consequence of this right. You have not assumed,
will not assume nor be permitted to assume any duties, responsibilities or
obligations regarding the management, operations or any of the business
affairs of the Company after the Closing Date. You shall be held harmless by
the Company from and against any claim, suit, loss, damage, liability or
action by or of the Company based upon or arising out of the assertion by it
that you have any continuing duty or obligation after the Closing Date to the
Company or any shareholder arising out of your right to receive or your
receipt of the commission;
(d) Unless a minimum of 20,000 Units are sold and paid for under
the terms hereof within 120 days of the date of the Prospectus and any
extension thereto, the Offering shall be terminated, in which event no fee
shall be payable to you and all funds advanced by subscribers shall be
returned to them without interest. Prior to the Closing Date, all proceeds
received by you from the sale of shares will be held in an escrow account
until Closing in accordance with Paragraph 8 hereof; and
(e) Closing of the sale of Units shall be within five business
days following the date of the termination of your offering efforts specified
in subparagraph (d) hereof ("Closing Date").
7. Delivery of Funds. YOU SHALL TRANSMIT PROMPTLY (BY NOON OF THE
FIRST BUSINESS DAY FOLLOWING RECEIPT), AND ONLY TO THE ESCROW AGENT, ALL FUNDS
RECEIVED FROM THE PURCHASERS IN THE PUBLIC OFFERING (WITHOUT DEDUCTION FOR ANY
COMMISSION OR CONCESSION), IN COMPLIANCE WITH RULE 15c2-4 UNDER THE 1934 ACT
AND A CONFIRMATION OR A RECORD OF EACH SALE WHICH SHALL SET FORTH THE NAME,
RESIDENCE ADDRESS AND SOCIAL SECURITY NUMBER OF EACH INDIVIDUAL PURCHASER, THE
NUMBER OF UNITS PURCHASED AND, IF THERE SHALL BE MORE THAN ONE REGISTERED
OWNER, WHETHER THE CERTIFICATE OR CERTIFICATES EVIDENCING THE UNITS PURCHASED
ARE TO BE ISSUED TO THE PURCHASERS IN JOINT TENANCY OR OTHERWISE. On the
Closing Date, you shall report in writing to the Company the number of Units
which have been sold in each state and the number of persons in each state who
purchased Units from you. Any sale may be rejected by the Company and, if so
rejected, all funds paid by the purchaser which have been received by the
Escrow Agent from you, shall be returned to the purchaser by the Escrow Agent.
In such event, the Escrow Agent shall return to the purchaser (within 5
business days after notification of rejection) the full purchase price paid
for the Units subscribed for by the purchaser.
8. Escrow of Proceeds. The proceeds from the sale of the minimum of
20,000 Units in the Public Offering consisting of $120,000 will be escrowed
(the "Escrow Deposit"). If the Escrow Deposit has not been deposited with the
Escrow Agent within 120 days from the date of the Prospectus and any extension
thereto, the full amount paid will be refunded to the purchaser by the Escrow
Agent. No certificate evidencing the Units will be issued unless and until
the Escrow Deposit has been deposited with the Escrow Agent and such funds
released and the net proceeds thereof delivered to the Company at the Closing.
If the Escrow Deposit is deposited within the time period provided above, all
amounts to be deposited will be delivered to the Company ("Initial Closing").
Proceeds from the sale of additional Units will also be placed in Escrow, and
released to the Company every thirty days ("Interim Closings") until the
termination of the offering, when any remaining funds in escrow will be
released to the Company ("Final Closing"). No commission will be paid by the
Company to you unless and until the Escrow Deposit shall have been deposited
with the Escrow Agent and such funds released and the net proceeds thereof
delivered to the Company.
9. Form of Payment of Subscriptions. PAYMENTS FOR ALL 100,000 UNITS
SHALL ACCOMPANY ALL CONFIRMATIONS AND APPLICATIONS, AND SHALL BE DELIVERED TO
THE ESCROW AGENT. All checks and other orders for payment of subscriptions to
Units in the Public Offering shall be made payable to: "Flex Acquisitions
Corporation, Escrow Account."
10. Expenses of Sale. The Company will pay all expenses incident to
the performance of its obligations, including but not limited to the fees and
expenses of the Company's counsel and accountants and the cost of qualifying
the offer and sale of the securities in various states or obtaining an
exemption from state registration requirements. Except as may be reimbursed
or paid to you under Paragraph 6(b) hereof, you will pay all expenses incident
to your obligations including your expenses directly related to the offering
of the shares and your counsel fees.
11. Conditions of Your Obligations. Your obligations hereunder shall
be subject to the accuracy of and compliance with, as of the date hereof and
on the Closing Date, of the representations and warranties contained in
Paragraphs 2, 4 and 5 hereof, to the performance by the Company of its
obligations hereunder required to be performed on or before the Closing Date,
and to the following further conditions:
(a) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the Company
and the Company has adequate authorization and has taken all action necessary
to authorize the indemnification provisions contained in Paragraph 13 herein;
and
(b) To the best of the knowledge of counsel to the Company,
there is not in existence, pending or threatened any action, suit or
proceeding to which the Company is a party, except as set forth in the
Prospectus, before any court or governmental agency or body, which might, if
decided adversely, affect the subject matter of this Agreement or the
financial condition, business or prospects of the Company.
12. Conditions to Company's Obligations. The obligations of the
Company shall be subject to the accuracy as of the date hereof and on the
Closing Date of the representations and warranties contained in Paragraph 3
hereof, to the performance by you of your obligations hereunder required to be
performed on or before the Closing Date. It is understood and agreed that
neither you nor any of your representatives nor any other Broker-Dealer is
authorized to make any representations on behalf of the Company other than
those contained in the Offering Circular or to act as the agent of the Company
in any other capacity except as expressly set forth herein, and you shall
deliver to the Company on the Closing Date a certificate executed by a
responsible officer of your firm to the effect that you have complied with the
foregoing to the best of the knowledge of the officer executing the
certificate.
13. Indemnification.
(a) The Company will indemnify and hold you harmless against any
losses, claims, damages or liabilities, joint or several, to which you may
become subject under the Act, the various state securities acts or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in the Prospectus, any other offering
documentation prepared on behalf of the Company or any amendment or supplement
thereto, 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 not misleading; and will reimburse you for any
legal or other expenses reasonably incurred 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
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 made in the Prospectus, in any other offering documentation prepared
on behalf of the Company or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by you
specifically for use in the preparation thereof.
The foregoing indemnity agreement shall extend upon the same terms
and conditions to, and shall inure to the benefit of, your officers and
directors, and each person, if any who "controls" you within the meaning of
the Act.
(b) You will indemnify and hold harmless the Company against any
losses, claims, damages, liabilities, joint or several, to which any of them
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 Prospectus, in any other offering documentation prepared
on behalf of the Company or any amendment or supplement thereto, or arise out
of or are based upon the omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Prospectus, in any other offering documentation prepared on behalf of the
Company or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by you specifically for use
in the preparation thereof. You also will reimburse the Company for such
legal or other expenses reasonably incurred in connection with investigating
or defending such loss, claim, damage, liability or action as to which you are
required to indemnify the Company.
The foregoing indemnity agreement shall extend upon the same
terms and conditions to, and shall inure to benefit of, the officers,
directors and each person, if any, who "controls" the Company within the
meaning of the Act.
(c) Promptly after receipt by an indemnified person of notice of
the commencement of any action, such indemnified personal shall, if a claim in
respect thereof is to be made against the indemnifying party under such
subparagraph, notify the indemnifying party in writing of the commencement
thereof; but the omission to so notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party
otherwise than under such subparagraph. In case any such action shall be
brought against such indemnified party, and it shall notify the indemnifying
party of the commencement hereof, 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 selected by the indemnifying party but satisfactory to such
indemnified party, and after the indemnified party shall have received notice
from the agreed upon counsel that the defense under such paragraph has been
assumed, the indemnifying party shall not be responsible for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof, other than reasonable cost of investigation.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for above is for any
reason held by a court of competent jurisdiction to be unenforceable as to the
Company or you, the Company and you shall contribute to the aggregate losses
and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceedings or any claims asserted which
would have been covered by the foregoing indemnification provisions to which
the Company and you may be subject in such proportion so that you shall be
responsible for that portion represented by the percentage that the aggregate
amounts received by you pursuant to Section 6 of the Agreement bear to the
aggregate of the capital contribution made to the Company, the Company is
responsible for the balance; provided, however, that in no case shall you be
responsible for any amount in excess of the fees paid to you pursuant to
Section 6 of this Agreement.
14. Representation and Agreements to Survive Delivery. All
representation, warranties, and agreements of the Company and you herein or in
certificates delivered pursuant hereto, and the indemnity and contribution
agreements contained in Paragraph 13 hereof, shall survive the delivery,
execution and Closing hereof and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of you or any
controlling person, the Company, or any of its officers, directors, partners,
or any controlling persons, and shall survive delivery of the Units hereunder.
The indemnification and contribution provisions of Paragraph 13 hereof are in
addition to any and all remedies or rights any of the parties hereto may have,
including the right to xxx and recover damages for any breach of any
representation, warranty or covenant made or given by one or more parties to
any other party.
15. Termination. You shall have the right to terminate this
Agreement by giving notice as hereinafter specified any time at or prior to
the Closing Date if:
(a) The Company shall have failed, refused, or been unable to
fully comply with any of the provisions of this Agreement its parts to be
performed prior to the Closing Date, or if any of the agreements, conditions,
covenants, representations or warranties of the Company herein contained
should have been performed or fulfilled within the times specified;
(b) Prior to the Closing Date, the Congress of the United States
or any state legislative body passes any act or measure, or any order, rule or
regulation is adopted by any governmental body or any authoritative accounting
institute or board, or any governmental executive, which is believed in good
faith by you to have a material impact on the markets for securities in
general, or if a general banking moratorium should have been declared;
(c) Prior to the Closing Date, there should have occurred the
outbreak of any war or any other event or calamity which, in your reasonable
judgement, materially disrupts the financial markets of the United States; or
(d) Prior to the Closing Date, any materially adverse change
occurs, since the date of this Agreement, in the conditions (financial or
other), business, operations, income, properties, earnings, affairs or
business prospects of the Company, whether or not arising in the ordinary
course of business.
If you elect to terminate this Agreement the Company shall be
notified promptly by you by telephone or telegram, and confirmed by letter.
16. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to you
shall be mailed, delivered or telegraphed and confirmed by you at your address
listed below and if sent to the Company shall be mailed, delivered or
telegraphed and confirmed to it at the address contained in the Prospectus.
You or the Company may change such address for receiving notices by written
notice to the other parties.
17. Parties. This Agreement shall inure to the benefit of and be
binding upon you, the Company and each of your and its respective successors
and assigns and, if expressly applicable, its affiliates. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their respective
successors and assigns, affiliates, and the controlling persons, officers and
directors referred to in Paragraph 13, any legal or equitable right, remedy or
claim under or in respect to 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, assigns, affiliates, and said controlling persons and
officers and directors and for the benefit of no other person or corporation.
No purchaser of any of the Units from you shall be construed a successor or
assign by reason merely of such purchase.
18. Severability. Every provision in this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder hereof.
19. Captions. The captions or headings in this Agreement are
inserted for convenience and identification only and are in no way intended to
describe, interpret, define, or limit the scope, extent, or intent of this
Agreement or any provisions hereof.
20. Applicable Law. This Agreement shall be governed by and
construed under Texas law.
21. Prior Agreements. This Agreement supersedes all prior
agreements, oral or written, covering the same subject matter.
If the foregoing correctly sets forth our understanding, please so
indicate in the space provided below for that purpose whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
FLEX ACQUISITIONS CORPORATION.
By:
Xxxxxxx X. Xxxxxxx
President
ACCEPTED AS OF THE DATE FIRST
ABOVE WRITTEN:
_________________________________
Selected Broker-Dealer
By: _____________________________
Authorized Representative
_________________________________
Street Address
_________________________________
City, State, Zip Code
