EXHIBIT 1.01
1,650,000 SHARES OF COMMON STOCK
1,650,000 WARRANTS TO PURCHASE COMMON STOCK
NATURAL GAS SERVICES GROUP, INC.
UNDERWRITING AGREEMENT
June _____, 2002
Neidiger, Tucker, Bruner, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Natural Gas Services Group, Inc., a Colorado corporation (the
"Company"), hereby confirms its agreement with you (who are sometimes
hereinafter referred to as the "Representative") and with the other members of
the underwriting group (the "Underwriters") named on Schedule 1 hereto as
follows:
1. Introductory. Subject to the terms and conditions contained herein,
the Company proposes to issue and sell to the Underwriters 1,650,000 shares of
common stock (the "Common Stock") and 1,650,000 redeemable warrants to purchase
Common Stock (the "Warrants"). The Common Stock and Warrants shall be offered
and sold separately and traded separately on the American Stock Exchange. For
the purpose of this Agreement, references hereinafter to Common Stock and
Warrants shall sometimes be referred to as the "Securities" where appropriate.
In addition, solely for the purpose of covering over-allotments, the Company
grants to the Representative options to purchase up to an additional 247,500
shares of Common Stock and/or 247,500 Warrants (the "Additional Securities"),
which options to purchase shall be exercisable, in whole or in part, from time
to time during the sixty (60) day period commencing on the date on which the
Registration Statement (as hereinafter defined) is initially declared effective
(the "Effective Date") by the Securities and Exchange Commission (the
"Commission"). Unless otherwise noted, the Common Stock, together with the
additional 247,500 shares of Common Stock issuable on exercise of the
over-allotment option, is referred to hereinafter as the "Common Stock" and the
Warrants and the 247,500 Warrants issuable on exercise of the over-allotment
option are referred to hereinafter as the "Warrants".
Each Warrant will entitle the holder to purchase one share of Common
Stock (a "Warrant Share") at a price equal to 125% of the offering price of the
Common Stock during the four year exercise period of the Warrants, subject to
the Company's right of redemption. The Warrants may be redeemed by the Company
commencing one year from the Effective Date of the Registration Statement upon
at least 30 days prior written notice, in whole but not in part, at a price of
$.25 per Warrant provided the closing bid price for the Company's Common Stock
is at least 175% of the exercise price of the Warrant during each day of the
twenty (20) trading days immediately preceding the date of the Company's written
notice of redemption; provided, that notice of any such redemption must be given
not more than five days after such 20 day trading period. The terms and
provisions of the Warrants shall be governed by a warrant agreement between the
Company and its transfer agent (the "Warrant Agreement"), which Warrant
Agreement will contain, among other provisions, anti-dilution protection for
warrantholders on terms acceptable to the Representative. The Common Stock,
Warrants and Additional Securities are more fully described in the Prospectus
referred to below. All references to the Company below shall be deemed to
include, where appropriate, the Company's subsidiaries, if any.
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
a. The Company has filed with the Commission a registration
statement, and may have filed one or more amendments thereto, on Form
SB-2 (Registration No. __________), including in such registration
statement and each such amendment a facing sheet, the information
called for by Part I, audited consolidated financial statements for the
past three fiscal years or such other period as may be appropriate, the
information called for by Part II, the undertakings to deliver
certificates, file reports and file post-effective amendments, the
required signatures, consents of experts, exhibits, a related
preliminary prospectus (a "Preliminary Prospectus") and any other
information or documents which are required for the registration of the
Common Stock and Warrants, the Warrant Shares, the Representative's
purchase options and underlying Common Stock (hereinafter collectively
referred to as the "Representative's Options" as more fully described
in Section 5(p)), under the Securities Act of 1933, as amended (the
"Act"). As used in this Agreement, the term "Registration Statement"
means such registration
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statement, including incorporated documents, all exhibits and
consolidated financial statements and schedules thereto, as amended,
when it becomes effective, and shall include information with respect
to the Common Stock, the Warrants, the Warrant Shares and the
Representative's Options, and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A of the General Rules and Regulations promulgated
under the Act (the "Regulations"), which information is deemed to be
included therein when it becomes effective as provided by Rule 430A;
the term "Preliminary Prospectus" means each prospectus included in the
Registration Statement or any amendments thereto, before it becomes
effective under the Act and any prospectus filed by the Company with
the consent of the Representative pursuant to Rule 424(a) of the
Regulations; and the term "Prospectus" means the final prospectus
included as part of the Registration Statement, except that if the
prospectus relating to the securities covered by the Registration
Statement in the form first filed on behalf of the Company with the
Commission pursuant to Rule 424(b) of the Regulations shall differ from
such final prospectus, the term "Prospectus" shall mean the prospectus
as filed pursuant to Rule 424(b) from and after the date on which it
shall have first been used.
b. When the Registration Statement becomes effective, and at
all times subsequent thereto, to and including the Closing Date (as
defined in Section 3) and each Additional Closing Date (as defined in
Section 3), and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Representative
or any dealer, and during such longer period until any post-effective
amendment thereto shall become effective, the Registration Statement
(and any post-effective amendment thereto) and the Prospectus (as
amended or as supplemented if the Company shall have filed with the
Commission any amendment or supplement to the Registration Statement or
the Prospectus) will contain all statements which are required to be
stated therein in accordance with the Act and the Regulations, will
comply with the Act and the Regulations, and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should
have been set forth in an
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amendment or supplement to the Registration Statement or the Prospectus
which has not then been set forth in such an amendment or supplement;
and no Preliminary Prospectus, as of the date filed with the
Commission, included any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; except that no
representation or warranty is made in this Section 2(b) with respect to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company as stated in Section 8(b)
with respect to the Underwriters by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto.
c. Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of the Common Stock, the
Warrants, the Warrant Shares, or the Representative's Options, nor has
any of such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order.
d. Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease, or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to or has been incorporated as an exhibit by
reference into the Registration Statement.
e. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Colorado,
with full power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other
tribunals, to own, lease, license, and use its properties and assets
and to carry on the business in the manner described in the Prospectus.
The Company is duly qualified to do business and is in good standing in
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every jurisdiction in which its ownership, leasing, licensing, or use
of property and assets or the conduct of its business makes such
qualifications necessary. The Company has no subsidiaries except as
disclosed in the Prospectus.
f. The authorized capital stock of the Company consists of
30,000,000 shares of Common Stock, of which __________ shares of Common
Stock are issued and outstanding, __________ shares of Common Stock are
reserved for issuance upon the exercise or conversion of currently
outstanding options and warrants and 10% Convertible Series A Preferred
Stock ("Convertible Preferred Stock"), __________ shares of Common
Stock are reserved for issuance upon the exercise of the remaining
options authorized under the Company's option plan; and 5,000,000
shares of preferred stock, of which __________ shares of Convertible
Preferred Stock are issued and outstanding. Each outstanding share of
Common Stock and Convertible Preferred Stock is validly authorized,
validly issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and has not been issued
and is not owned or held in violation of any preemptive rights of
stockholders. There is no commitment, plan, or arrangement to issue,
and no outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of the Company or any security
or other instrument which by its terms is convertible into, exercisable
for, or exchangeable for capital stock of the Company, except as set
forth above, and as may be properly described in the Prospectus.
g. The consolidated financial statements of the Company
included in the Registration Statement and the Prospectus fairly
present with respect to the Company the consolidated financial
position, the results of operations, and the other information
purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles, except to the extent that certain footnote
disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
consistently applied throughout the periods involved, are correct and
complete, and are in accordance with the books and records of the
Company.
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The accountants whose report on the audited consolidated financial
statements is filed with the Commission as a part of the Registration
Statement are, and during the periods covered by their report(s)
included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company
within the meaning of the Act and the Regulations. No other financial
statements are required by Form SB-2 or otherwise to be included in the
Registration Statement or the Prospectus. There has at no time been a
material adverse change in the consolidated financial condition,
results of operations, business, properties, assets, liabilities, or
future prospects of the Company from the latest information set forth
in the Registration Statement or the Prospectus, except as may be
properly described in the Prospectus.
h. There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending, or, to
the knowledge of the Company, threatened, or in prospect with respect
to the Company or any of its operations, businesses, properties, or
assets, except as may be properly described in the Prospectus or such
as individually or in the aggregate do not now have and will not in the
future have a material adverse effect upon the operations, business,
properties, or assets of the Company. The Company is not in violation
of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in
the future have a material adverse effect upon the operations,
business, properties, or assets of the Company; nor is the Company
required to take any action in order to avoid any such violation or
default.
i. The Company has good and marketable title in fee simple
absolute to all real properties and good title to all other properties
and assets which the Prospectus indicates are owned by it, free and
clear of all liens, security interests, pledges, charges, encumbrances,
and mortgages except as may be properly described in the Prospectus or
such as in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business,
properties, or assets of the Company. No real property owned, leased,
licensed, or used by the Company lies in an area which is, or to the
knowledge of the Company will be, subject to zoning, use, or building
code
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restrictions which would prohibit, and no state of facts relating to
the actions or inaction of another person or entity or his or its
ownership, leasing, licensing, or use of any real or personal property
exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the
business of the Company as presently conducted or as the Prospectus
indicates it contemplates conducting, except as may be properly
described in the Prospectus or such as in the aggregate do not now have
and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company.
j. Neither the Company nor any other party is now or is
expected by the Company to be in violation or breach of, or in default
with respect to complying with, any material provision of any contract,
agreement, instrument, lease, license, arrangement, or understanding
which is material to the Company, and each such contract, agreement,
instrument, lease, license, arrangement, and understanding is in full
force and is the legal, valid, and binding obligation of the parties
thereto and is enforceable as to them in accordance with its terms. The
Company enjoys peaceful and undisturbed possession under all leases and
licenses under which it is operating. The Company is not a party to or
bound by any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other
restriction, which has had or may in the future have a material adverse
effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company.
The Company is not in violation or breach of, or in default with
respect to, any term of its Articles of Incorporation (or other charter
document) or bylaws.
k. All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
technology, know-how and other intangible properties and assets (all of
the foregoing being herein called "Intangibles") that the Company owns
or has pending, or under which it is licensed, are in good standing and
uncontested. Except as otherwise disclosed in the Prospectus, the
Intangibles are owned by the Company, free and clear of all liens,
security interests, pledges, and encumbrances. All registered
trademarks used by the Company to identify its services are protected
by registration in the name of the Company on the principal register of
the United States
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Patent Office. There is no right under any Intangible necessary to the
business of the Company as presently conducted or as the Prospectus
indicates it contemplates conducting (except as may be so designated in
the Prospectus). The Company has not infringed, is not infringing, and
has not received notice of infringement with respect to asserted
Intangibles of others. To the knowledge of the Company, there is no
infringement by others of Intangibles of the Company. To the knowledge
of the Company, there is no Intangible of others which has had or may
in the future have a materially adverse effect on the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company.
l. Neither the Company nor any director, officer, agent,
employee, or other person associated with or acting on behalf of the
Company has, directly or indirectly: used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment. The Company has not accepted any material
advertising allowances or marketing allowances from suppliers to the
Company and, to the extent any advertising allowance has been accepted,
the Company has provided proper documentation to the supplier with
respect to advertising as to which the advertising allowance has been
granted.
m. The Company has all requisite power and authority to
execute and deliver, and to perform thereunder each of this Agreement,
the Warrants, the Representative's Options and the Consulting Agreement
described in Section 5(ff). All necessary corporate proceedings of the
Company have been duly taken to authorize the execution and delivery,
and performance thereunder by the Company of this Agreement, the
Warrants, the Representative's Options and the Consulting Agreement.
This Agreement has been duly authorized, executed, and delivered by the
Company, is a legal, valid, and binding obligation of the Company, and
is enforceable as to the Company in accordance with its terms. Each of
the Warrants and the Consulting Agreement has been duly
8
authorized by the Company and, when executed and delivered by the
Company, will each be a legal, valid, and binding obligation of the
Company, and will be enforceable against the Company in accordance with
its respective terms. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing
with, any federal, state, local, or other governmental authority or any
court or other tribunal is required by the Company for the execution
and delivery, or performance thereunder by the Company of this
Agreement, the Warrants, the Representative's Options or the Consulting
Agreement except filings under the Act which have been or will be made
before the Closing Date and such consents consisting only of consents
under "blue sky" or securities laws which are required in connection
with the transactions contemplated by this Agreement and which have
been obtained at or prior to the date of this Agreement. No consent of
any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party, or to
which any of its properties or assets are subject, is required for the
execution or delivery, or performance thereunder of this Agreement, the
Warrants, the Representative's Options or the Consulting Agreement; and
the execution and delivery, and performance thereunder of this
Agreement, the Warrants, the Representative's Options and the
Consulting Agreement will not violate, result in a breach of, conflict
with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under any
such contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the
Articles of Incorporation or by-laws of the Company, or violate, result
in a breach of, or conflict with any law, rule, regulation, order,
judgment, or decree binding on the Company or to which any of its
operations, businesses, properties, or assets are subject.
n. The Common Stock, the Warrants, the Warrant Shares, and the
Representative's Option Securities are validly authorized and reserved
for issuance. The Common Stock, when issued and delivered in accordance
with this Agreement, the Warrant Shares, when issued and delivered upon
exercise of the Warrants, the Common Stock underlying the
Representative's Option Securities, when issued and delivered upon
exercise of the Representative's Options, upon payment of the exercise
price therefor,
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will be validly issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, and will not be
issued in violation of any preemptive rights of stockholders, and
purchasers of any of the foregoing will receive good title thereto, all
such title free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, and voting trusts.
o. The Common Stock, the Warrants, the Warrant Shares, and the
Representative's Options conform to all statements relating thereto
contained in the Registration Statement and the Prospectus.
p. Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may otherwise be properly described in the Prospectus, the Company
has not (i) issued any securities or incurred any liability or
obligation, primary or contingent, for borrowed money, (ii) entered
into any transaction not in the ordinary course of business, or (iii)
declared or paid any dividend on its capital stock.
q. Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, prior to the termination of the distribution of
securities contemplated by this Agreement, any action designed to
stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate
the sale or resale of the Common Stock and Warrants.
r. The Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement.
s. The Company has obtained from each officer, director and
person who beneficially owns 5% or more of the shares of the Company's
Common Stock or derivative securities convertible into shares of the
Company's Common Stock his or her enforceable written agreement that
for a period of 12 months from the Effective Date, he, she or it will
not, without the Representative's prior written consent, offer, sell,
contract to sell, pledge, hypothecate, or grant any option to purchase,
or otherwise dispose of,
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directly or indirectly, any shares of Common Stock or any security or
other instrument convertible into or exchangeable for shares of Common
Stock (except that, subject to compliance with applicable securities
laws, any such officer, director or stockholder may transfer his, her
or its stock in a transaction specified in such agreement, provided
that any such transferee shall agree, as a condition to such transfer,
to be bound by the restrictions set forth in the agreement).
t. Except as otherwise provided in the Registration Statement,
no person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement.
u. The Company is eligible to use Form SB-2 for registration
of the Common Stock, the Warrants, the Warrant Shares and the
Representative's Options.
v. No unregistered securities of the Company or of a
predecessor of the Company have been sold by the Company or a
predecessor within three years prior to the date hereof, except as
described in the Registration Statement.
w. Except as set forth in the Prospectus, there is and at the
Closing Date there will be no action, suit or proceeding before any
court, arbitration tribunal or governmental agency, authority or body
pending or, to the knowledge of the Company, threatened which might
result in judgments against the Company not adequately covered by
insurance or which collectively might result in any material adverse
change in the condition (financial or otherwise), the business or the
prospects of the Company or would materially affect the properties or
assets of the Company.
x. The Company has filed all federal and state tax returns
which are required to be filed by it and has paid all taxes shown on
such returns and all assessments received by it to the extent such
taxes have become due. All taxes with respect to which the Company is
obligated have been paid or adequate accruals have been set up to cover
any such unpaid taxes.
y. Except as set forth in the Prospectus:
i. The Company has obtained all permits, licenses and
other authorizations which are required under the
Environmental Laws for the ownership, use and operation of
each location operated or leased by the Company
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(the "Property"), all such permits, licenses and
authorizations are in effect, no appeal nor any other action
is pending to revoke any such permit, license or
authorization, and the Company is in full compliance with all
terms and conditions of all such permits, licenses and
authorizations.
ii. The Company and the Property are in material
compliance with all Environmental Laws including, without
limitation, all restrictions, conditions, standards,
limitations, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws
or contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
iii. The Company has not, and to the best knowledge
of the Company's executive officers, no other person has,
released, placed, stored, buried or dumped any Hazardous
Substances, Oils, Pollutants or Contaminants or any other
wastes produced by, or resulting from, any business,
commercial, or industrial activities operations, or processes,
on, beneath, or adjacent to the Property or any property
formerly owned, operated or leased by the Company except for
inventories of such substances to be used, and wastes
generated therefrom, in the ordinary course of business of the
Company (which inventories and wastes, if any, were and are
stored or disposed of in accordance with applicable laws and
regulations and in a manner such that there has been no
material release of any such substances into the environment).
iv. Except for a Phase I Environmental Assessment and
Limited Subsurface Investigation Report dated May 21, 2001 and
prepared by Gosling ▇▇▇▇▇▇ Engineering Sciences, Inc. and a
report by Innovative Risk Management dated December 27, 1999,
there exists no written or tangible report, synopsis or
summary of any asbestos, toxic waste or Hazardous Substances,
Oils, Pollutants or Contaminants investigation made with
respect to all or any portion of the assets of the Company
(whether or not prepared by experts and whether or not in the
possession of the executive officers of the Company).
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v. Definitions: As used herein:
(1) Environmental Laws means all federal,
state and local laws, regulations, rules and
ordinances relating to pollution or protection of the
environment, including, without limitation, laws
relating to Releases or threatened Releases of
Hazardous Substances, Oils, Pollutants or
Contaminants into the indoor or outdoor environment
(including, without limitation, ambient air, surface
water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
(2) Hazardous Substances, Oils, Pollutants
or Contaminants means all substances defined as such
in the National Oil and Hazardous Substances
Pollutant Contingency Plan, 40 C.F.R. Section 300.6,
or defined as such under any Environmental Law.
(3) Release means any release, spill,
emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environmental
(including, without limitation, ambient air, surface
water, groundwater, and surface or subsurface strata)
or into or out of any property, including the
movement of Hazardous Substances, Oils, Pollutants or
Contaminants through or in the air, soil, surface
water, groundwater or any property.
z. Any pro forma financial or other information and related
notes included in the Registration Statement, each Preliminary
Prospectus and the Prospectus comply in all material respects with the
requirements of the Act and the rules and regulations of the Commission
thereunder and present fairly the pro forma information shown, as of
the dates and for the periods covered by such pro forma information.
Such pro forma information, including any related notes and schedules,
has been prepared on a basis consistent with the historical financial
statements and other historical information, as applicable, included in
the Registration Statement, the Preliminary Prospectus and the
Prospectus, except for the pro forma adjustments specified therein, and
give effect to
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assumptions made on a reasonable basis to give effect to historical
and, if applicable, proposed transactions described in the Registration
Statement, each Preliminary Prospectus and the Prospectus.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
3. Purchase, Sale, and Delivery of the Common Stock and the Warrants.
On the basis of the representations, warranties, covenants, and agreements of
the Company herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters, severally and not
jointly, and the Underwriters, severally and not jointly, agree to purchase from
the Company the number of shares of Common Stock and Warrants set forth opposite
the Underwriters' names in Schedule 1 hereto.
The purchase price per share of Common Stock to be paid by the
Underwriters shall be $__________ and the purchase price per Warrant to be paid
by the Underwriters shall be $.225. The initial public offering price of the
Common Stock shall be $__________ and the initial public offering price of the
Warrants shall be $.25.
Payment for the Common Stock and Warrants by the Underwriters shall be
made by certified or official bank check in clearing house funds, payable to the
order of the Company at the offices of the Representative, or at such other
place in Denver, Colorado as the Representative shall determine and advise the
Company by at least two full days' notice in writing, upon delivery of the
Common Stock and Warrants to the Representative. Such delivery and payment shall
be made at 10:00 a.m., Mountain Time, on the third business day following the
time of the initial public offering, as defined in Section 10(a). The time and
date of such delivery and payment are herein called the "Closing Date."
In addition, the Company hereby grants to the Representative the option
to purchase all or a portion of the Additional Securities as may be necessary to
cover over-allotments, at the same purchase price per Additional Security as the
price per share of Common Stock or Warrant provided for in this Section 3. The
Representative may purchase Common Stock and/or Warrants when exercising such
option, in its sole discretion. This option may be exercised by the
Representative on the basis of the representations, warranties, covenants, and
agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, at any
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time and from time to time on or before the 60th day following the Effective
Date of the Registration Statement, by written notice by the Representative to
the Company. Such notice shall set forth the aggregate number of Additional
Securities as to which the option is being exercised, and the time and date, as
determined by the Representative, when such Additional Securities are to be
delivered (such time and date are herein called an "Additional Closing Date");
provided, however, that no Additional Closing Date shall be earlier than the
Closing Date nor earlier than the third business day after the date on which the
notice of the exercise of the option shall have been given nor later than the
eighth business day after the date on which such notice shall have been given;
and further provided, that not more than two Additional Closings shall be
noticed and held following purchase of Additional Securities by the
Representative.
Payment for the Additional Securities shall be made by certified or
official bank check in clearing house funds payable to the order of the Company
at the offices of the Representative, or at such other place in Denver, Colorado
as you shall determine and advise the Company by at least two full days' notice
in writing, upon delivery of certificates representing the Additional Securities
to you.
Certificates for the Common Stock and Warrants and any Additional
Securities purchased shall be registered in such name or names and in such
authorized denominations as you may request in writing at least two full
business days prior to the Closing Date or Additional Closing Date, as
applicable. The Company shall permit you to examine and package such
certificates for delivery at least one full business day prior to any such
closing with respect thereto.
If for any reason one or more Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 10 hereof) to purchase and pay for the
number of shares of Common Stock and Warrants agreed to be purchased by such
Underwriter, the Company shall immediately give notice thereof to the
Representative, and the non-defaulting Underwriters shall have the right within
24 hours after the receipt by the Representative of such notice, to purchase or
procure one or more other Underwriters to purchase, in such proportions as may
be agreed upon among the Representative and such purchasing Underwriter or
Underwriters and upon the terms herein set forth, the Common Stock and Warrants
which such defaulting Underwriter or Underwriters agreed to
15
purchase. If the non-defaulting Underwriters fail so to make such arrangements
with respect to all such Common Stock and Warrants, the number of shares of
Common Stock and Warrants which each non-defaulting Underwriter is otherwise
obligated to purchase under the Agreement shall be automatically increased pro
rata to absorb the remaining Common Stock and Warrants which the defaulting
Underwriter or Underwriters agreed to purchase; provided, however, that the
non-defaulting Underwriters shall not be obligated to purchase the Common Stock
and Warrants which the defaulting Underwriter or Underwriters agreed to purchase
in excess of 10% of the total number of shares of Common Stock and Warrants
which such non-defaulting Underwriter agreed to purchase hereunder, and provided
further that the non-defaulting Underwriters shall not be obligated to purchase
any Common Stock and Warrants which the defaulting Underwriter or Underwriters
agreed to purchase if such additional purchase would cause the Underwriter to be
in violation of the net capital rule of the Commission or other applicable law.
If the total number of shares of Common Stock and Warrants which the defaulting
Underwriter or Underwriters agreed to purchase shall not be purchased or
absorbed in accordance with the two preceding sentences, the Company shall have
the right, within the 24 hours next succeeding the 24-hour period above referred
to, to make arrangements with other underwriters or purchasers satisfactory to
the Representative for the purchase of such Common Stock and Warrants on the
terms herein set forth. In any such case, either the Representative or the
Company shall have the right to postpone the Closing for not more than seven
business days after the date originally fixed as the Closing in order for any
necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements to be made. If neither the non-defaulting Underwriters
nor the Company shall make arrangements within the 24-hour periods stated above
for the purchase of all the Common Stock and Warrants which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company to any non-defaulting Underwriter, except the Company shall be
liable for actual expenses incurred by the Representative as provided in Section
10 hereof, and without any liability on the part of any non-defaulting
Underwriter to the Company.
16
Nothing contained herein shall relieve any defaulting Underwriter of
its liability, if any, to the Company or to the remaining Underwriters for
damages occasioned by its default hereunder.
4. Offering. The Underwriters are to make a public offering of the
Common Stock and Warrants as soon, on or after the effective date of the
Registration Statement, as the Representative deems it advisable so to do. The
Common Stock and Warrants are to be initially offered to the public at the
initial public offering prices as provided for in Section 3 (such prices being
herein called the "public offering prices"). After the initial public offering,
you may from time to time increase or decrease the prices of the Common Stock
and/or Warrants, in your sole discretion, by reason of changes in general market
conditions or otherwise.
5. Covenants of the Company. The Company covenants that it will:
a. Use its best efforts to cause the Registration Statement to
become effective as promptly as possible. If the Registration Statement
has become or becomes effective with a form of Prospectus omitting
certain information pursuant to Rule 430A of the Regulations, or filing
of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus, properly completed, pursuant to Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to you of such timely filing.
b. Notify you immediately, and confirm such notice in writing,
(i) when the Registration Statement and any post-effective amendment
thereto become effective, (ii) of the receipt of any comments from the
Commission or the "blue sky" or securities authority of any
jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement
thereto, and (iii) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding with
respect to a Stop Order. The Company will use its best efforts to
prevent the issuance of any Stop Order and, if any Stop Order is
issued, to obtain the lifting thereof as promptly as possible.
c. During the time when a prospectus relating to the Common
Stock and Warrants or the Additional Securities is required to be
delivered hereunder or under the Act or the Regulations, comply so far
as it is able with all requirements imposed upon it by the Act, as now
existing and as hereafter amended, and by the Regulations, as from
17
time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Common Stock and Warrants and Additional
Securities in accordance with the provisions hereof and the Prospectus.
If, at any time when a prospectus relating to the Common Stock and
Warrants or Additional Securities is required to be delivered hereunder
or under the Act or the Regulations, any event shall have occurred as a
result of which, in the reasonable opinion of counsel for the Company
or counsel for the Representative, the Registration Statement or the
Prospectus, as then amended or supplemented, contains 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, or if, in the opinion of either of such
counsel, it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the Act or the
Regulations, the Company will immediately notify you and promptly
prepare and file with the Commission an appropriate amendment or
supplement (in form and substance satisfactory to you) which will
correct such statement or omission or which will effect such compliance
and will use its best efforts to have any such amendment declared
effective as soon as possible.
d. Deliver without charge to you such number of copies of each
Preliminary Prospectus as you may reasonably request and, as soon as
the Registration Statement or any amendment thereto becomes effective
or a supplement is filed, deliver without charge to you two signed
copies of the Registration Statement or such amendment thereto, as the
case may be, including exhibits, and two copies of any supplement
thereto, and deliver without charge to you such number of copies of the
Prospectus, the Registration Statement, and amendments and supplements
thereto, if any, without exhibits, as you may reasonably request for
the purposes contemplated by the Act.
e. Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to
qualify the Common Stock and Warrants and Additional Securities for
offering and sale under the "blue sky" or securities laws of such
jurisdictions as you reasonably may designate; provided, however, that
no such qualification shall be required in any jurisdiction where, as a
result thereof, the Company would be subject to service of general
process or to taxation as a foreign corporation
18
doing business in such jurisdiction to which it is not then subject. In
each jurisdiction where such qualification shall be effected, the
Company will, unless you agree in writing that such action is not at
the time necessary or advisable, file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
f. Make generally available (within the meaning of Section 11
(a) of the Act and the Regulations) to its security holders as soon as
practicable, but not later than fifteen (15) months after the date of
the Prospectus, an earnings statement (which need not be certified by
independent certified public accountants unless required by the Act or
the Regulations, but which shall satisfy the provisions of Section
11(a) of the Act and the Regulations) covering a period of at least 12
months beginning after the effective date of the Registration
Statement.
g. For a period of 12 months after the date of the Prospectus,
not, without your prior written consent, offer, issue, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or any security or
other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock) except as provided in
Section 3 and except for (i) the issuance of Warrant Shares issuable
upon the exercise of Warrants or issuance of Common Stock underlying
options or warrants outstanding on the date hereof, (ii) the issuance
of shares underlying the Representative's Options, (iii) the issuance
of Common Stock upon conversion of Convertible Preferred Stock, or (iv)
the grant of options pursuant to the Company's existing stock option
plan.
h. For a period of five years after the Effective Date of the
Registration Statement, furnish you, without charge, the following:
i. Within 90 days after the end of each fiscal year,
three copies of consolidated financial statements certified by
independent certified public accountants, including a balance
sheet, statement of operations, and statement of cash flows of
the Company and its then existing subsidiaries, with
supporting schedules, prepared in accordance with generally
accepted accounting principles, at the end of such fiscal year
and for the 12 months then ended;
19
ii. As soon as practicable after they have been sent
to stockholders of the Company or filed with the Commission,
three copies of each annual and interim financial and other
report or communication sent by the Company to its
stockholders or filed with the Commission;
iii. As soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company;
iv. Notice of any regular quarterly or special
meeting of the Company's Board of Directors concurrently with
the sending of such notice to the Company's directors; and
v. Such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its subsidiaries as you may from time to time reasonably
request.
i. Designate an Audit Committee and a Compensation Committee,
the members of which shall be subject to your reasonable approval,
which will generally supervise the financial affairs of the Company and
review executive compensation, respectively.
j. Furnish to you as early as practicable prior to the Closing
Date and any Additional Closing Date, as the case may be, but not less
than two full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the
Company which have been read by the Company's independent certified
public accountants, as stated in their letters to be furnished pursuant
to Section 7(e).
k. File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the
Effective Date of the Registration Statement, unless such filing shall
comply with the Act and the Regulations and unless you shall previously
have been advised of such filing and furnished with a copy thereof, and
you and counsel for the Representative shall have approved such filing
in writing within a reasonable time of receipt thereof.
l. Comply with all periodic reporting and proxy solicitation
requirements which may from time to time be applicable to the Company
as a result of the Company's
20
registration under the Exchange Act on a Registration Statement on Form
8-A as required under Section 7(a) hereof.
m. Comply with all provisions of all undertakings contained in
the Registration Statement.
n. Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication,
directly or indirectly, and hold no press conference and grant no
interviews with respect to the Company, the financial condition,
results of operations, business, properties, assets, or liabilities of
the Company, or this offering, without your prior written consent.
o. File timely with the Commission or the American Stock
Exchange all reports required to be filed.
p. On or prior to the Closing Date, sell to the Representative
for a total purchase price of $100, Representative's Options entitling
the Representative or its assigns to purchase (i) 165,000 shares of
Common Stock at a price equal to 120% of the public offering price of
the Common Stock, and (ii) 165,000 Warrants at a price equal to 120% of
the public offering price of the Warrants, with the terms of the
Representative's Options, including exercise period, anti-dilution
provisions, exercise price, exercise provisions, transferability, and
registration rights, to be in the form filed as an exhibit to the
Registration Statement.
q. Until expiration of the Representative's Options, keep
reserved sufficient shares of Common Stock for issuance upon exercise
of the Representative's Options, and shares of Common Stock for
issuance upon exercise of the warrants contained in the
Representative's Options.
r. For a period of three years from the effective date of the
Registration Statement, the Representative shall have a right of first
refusal to act as the Company's investment banker with respect to any
future public offerings and/or private offerings involving securities
of the Company or any of its subsidiaries or mergers, acquisitions,
and/or business combinations involving the Company or any of its
subsidiaries. The right shall continue in effect during the entire
three-year period despite the exercise of the right
21
or the refusal to exercise the right during the period. The
Representative shall have 15 calendar days in which to accept such
offer.
s. Upon the Closing Date, engage a financial public relations
firm acceptable to the Representative to assist the Company in
preparing regular announcements and disseminating such information to
the financial community, such engagement to extend for four consecutive
six month terms; provided the Representative shall have the right to
approve the public relations firm before the renewal of any six-month
term.
t. Adopt procedures for the application of the net proceeds
the Company receives from the sale of the Common Stock and Warrants and
apply the net proceeds from the sale of the Common Stock and Warrants
substantially in the manner set forth in the Prospectus, which does not
contemplate repayment of debt to officers, directors, stockholders or
affiliates of the Company, unless any deviation from such application
is in accordance with the Prospectus and occurs only after approval by
the Board of Directors of the Company and then only after the Board of
Directors has obtained the written opinion of recognized legal counsel
experienced in federal and state securities laws as to the propriety of
any such deviation.
u. Within the time period which the Prospectus is required to
be delivered under the Act, comply, at its own expense, with all
requirements imposed upon it by the Act, as now or hereafter amended,
by the Rules and Regulations, as from time to time may be enforced, and
by any order of the Commission, so far as necessary to permit the
continuance of sales or dealing in the Common Stock and Warrants.
v. At the Closing, deliver to the Representative true and
correct copies of the Articles of Incorporation of the Company and all
amendments thereto, all such copies to be certified by the Secretary of
the Company; true and correct copies of the by-laws of the Company and
of the minutes of all meetings of the directors and stockholders of the
Company held prior to the Closing which in any way relate to the
subject matter of this Agreement or the Registration Statement.
w. Use all reasonable efforts to comply or cause to be
complied with the conditions precedent to the several obligations of
the Underwriters in Section 7 hereof.
22
x. File with the Commission all required information
concerning use of proceeds of the Public Offering in Forms 10-QSB and
10-KSB in accordance with the provisions of the Act and to provide a
copy of such reports to the Representative and its counsel.
y. Supply to the Representative and the Representative's
counsel at the Company's cost, two bound volumes each containing
material documents relating to the offering of the Common Stock and
Warrants within a reasonable time after the Closing, not to exceed 90
days.
z. As soon as possible prior to the Effective Date, and as a
condition of the Underwriter's obligations hereunder, (i) have the
Company listed on an accelerated basis, and maintain such listing for
not less than five years from the Closing Date, in Standard & Poor's
Standard Corporation Records; (ii) have the Common Stock and Warrants
quoted on The American Stock Exchange as of the Effective Date, on the
Closing Date, on the Additional Closing Date and thereafter for at
least five years provided the Company is in compliance with The
American Stock Exchange maintenance requirements; and (iii) have
appointed Computershare Trust Company, Inc. in Denver, Colorado or a
firm acceptable to the Representative as its transfer agent, subject to
competitive pricing.
aa. As soon as possible prior to the Effective Date and at
such time as the Company qualifies for listing on the American Stock
Exchange, take all steps necessary to have the Company's Common Stock
and Warrants, to the extent eligible, listed on the American Stock
Exchange.
bb. Continue, for a period of at least three years following
the Effective Date of the Registration Statement, to appoint such
auditors as are reasonably acceptable to the Representative, which
auditors shall (i) prepare consolidated financial statements in
accordance with Regulation S-B or, if applicable, Regulation S-X under
the General Rules and Regulations of the Act and (ii) examine (but not
audit) the Company's consolidated financial statements for each of the
first three (3) fiscal quarters prior to the announcement of quarterly
financial information, the filing of the Company's 10-QSB quarterly
report and the mailing of quarterly financial information to security
holders.
23
cc. Upon the Effective Date of the Registration Statement,
obtain "key man" life insurance policies in the amount of $1,000,000 on
the lives of certain key employees designated by the Representative,
with the Company designated as the beneficiary of such policy, and pay
the annual premiums thereon for a period of not less than three years
from the Effective Date of the Registration Statement.
dd. Cause its transfer agent to furnish the Representative a
duplicate copy of the daily transfer sheets prepared by the transfer
agent during the six-month period commencing on the Effective Date of
the Registration Statement and instruct the transfer agent to timely
provide, upon the request of the Representative, duplicate copies of
such transfer sheets and/or a duplicate copy of a list of stockholders,
all at the Company's expense, for a period of 4 1/2 years after such
six-month period.
ee. On the Closing Date, enter into a Consulting Agreement
with the Representative whereby the Company will agree to pay the
Representative a financial consulting fee of $3,000 per month for the
succeeding 24 month period.
ff. Afford the Representative the right, but not the
obligation, commencing on the Effective Date and surviving for a period
of three years, to designate an observer to attend meetings of the
Board of Directors. The designee, if any, and the Representative will
receive notice of each meeting of the Board of Directors in accordance
with Colorado law. Any such designee will receive reimbursement for all
reasonable costs and expenses incurred in attending meetings of the
Board of Directors, including but not limited to, food, lodging and
transportation, together with such other fee or such compensation as is
paid by the Company to the highest compensated outside member of the
Board of Directors. Moreover, to the extent permitted by law, the
Representative and its designee shall be indemnified for the actions of
such designee as an observer to the Board of Directors and in the event
the Company maintains a liability insurance policy affording coverage
for the acts of its officers and/or directors, to the extent permitted
under such policy, each of the Representative and its designee shall be
an insured under such policy. During the stated three-year period, the
Representative's adviser to the Company's Board of Directors will be
(i) invited to attend meetings of the Company's Board of Directors;
(ii) provided with a copy of all Actions by Unanimous Written consent
of the Board of
24
Directors in lieu of an actual meeting; (iii) furnished with a copy of
all public filings by the Company and Company press releases as
released; (iv) updated by the Company's management on at least a
quarterly basis, regarding the Company's activities, prospects and
financial condition; and (v) advised immediately of material events to
the extent consistent with applicable law. During the subject
three-year period, the Company will hold meetings of its Board of
Directors at intervals of not less than 90 days. Any adviser designated
by the Representative, as herein provided, shall be acceptable to the
Company, which acceptance shall not be unreasonably withheld, and such
designated adviser shall make certain representations in writing to the
Company concerning his responsibilities under the federal securities
laws with respect to information obtained by such adviser as a result
of his attendance at meetings of the Board of Directors of the Company
and as a result of the receipt by him of other nonpublic information
concerning the Company. It is currently anticipated that the
Representative will request ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to be appointed as
Board adviser.
6. Payment of Expenses. The Company hereby agrees to pay all expenses
(subject to the last sentence of this Section 6) in connection with the
offering, including but not limited to (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement and the Prospectus,
including SEC and American Stock Exchange filing and/or application fees, and
the printing, filing, distribution, and mailing of this Agreement, any Agreement
Among Underwriters, Selected Dealers Agreement, preliminary and final Blue Sky
Memorandums, material to be circulated to the Underwriters by you and other
incidental or related documents, including the cost of all copies thereof and of
the Preliminary Prospectuses and of the Prospectus, and any amendments or
supplements thereto, supplied to the Representative in quantities as hereinabove
stated, (b) the issuance, sale, transfer, and delivery of the Common Stock and
Warrants, the Additional Securities, the Warrant Shares and the Representative's
Options, including, without limitation, any original issue, transfer or other
taxes payable thereon and the costs of preparation, printing and delivery of
certificates representing such securities, as applicable, (c) the qualification
of the Common Stock and Warrants, Additional Securities, Warrant Shares and the
Representative's Options under state or foreign "blue sky" or securities laws,
(d) the fees and disbursements of counsel for the Company and the accountants
for the
25
Company, (e) the listing of the Common Stock and Warrants on the American Stock
Exchange, and (f) a Representative's non-accountable expense allowance equal to
3% of the aggregate gross proceeds from the sale of the Common Stock and
Warrants and the Additional Securities. Prior to or immediately following the
Closing Date, the Company shall bear the costs of tombstone announcements not to
exceed $4,000, if requested to do so by the Representative. The Company shall
pay all expenses incurred in connection with any road shows.
The Company has previously remitted to the Representative the sum of
$40,000, which sum has been credited as a partial payment in advance of the
non-accountable expense allowance provided for in Section 6(f) above.
7. Conditions of Underwriters' Obligations. The Underwriters'
obligation to purchase and pay for the Common Stock and Warrants and the
Additional Securities, as provided herein, shall be subject to the continuing
accuracy of the representations and warranties of the Company contained herein
and in each certificate and document contemplated under this Agreement to be
delivered to you, as of the date hereof and as of the Closing Date (or the
Additional Closing Date, as the case may be), to the performance by the Company
of its obligations hereunder, and to the following conditions:
a. The Registration Statement shall have become effective
under the Securities Act of 1933, and the Company's Common Stock and
Warrants shall have been registered under Section 12(g) of the
Securities Exchange Act of 1934, not later than 5:00 p.m., local Denver
time, on the date of this Agreement or such later date and time as
shall be consented to in writing by you.
b. At the Closing Date and any Additional Closing Date, you
shall have received the favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
counsel for the Company, dated the date of delivery, addressed to you,
and in form and scope satisfactory to your counsel, to the effect that:
i. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Colorado, with corporate power to own, lease,
license, and use its properties and assets and to conduct its
business in the manner described in the Prospectus. The
Company is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in
26
which its ownership, leasing, licensing, or use of property
and assets or the conduct of its business makes such
qualification necessary, except where the failure to be so
qualified would not preclude it from enforcing its rights with
respect to any material contract or expose it to any material
liability;
ii. The authorized capital stock of the Company as of
the date of this Agreement consisted of 30,000,000 shares of
Common Stock, of which __________ shares of Common Stock are
issued and outstanding, _______ shares of Common Stock are
reserved for issuance upon the exercise or conversion of
outstanding options, warrants and Convertible Preferred Stock;
__________ shares of Common Stock are reserved for issuance
upon the exercise of the remaining options authorized under
the Company's option plan; and 5,000,000 shares of preferred
stock, of which __________ shares of Convertible Preferred
Stock are issued and outstanding. Each outstanding share of
capital stock has been duly authorized, validly issued and
fully paid and is nonassessable. Based upon a written inquiry
to the Company and a review of the records of the Company in
counsel's possession, counsel is not aware of any (i)
commitment, plan, or arrangement to issue, or of an
outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of the Company or any
security or other instrument which by its terms is convertible
into, exercisable for, or exchangeable for capital stock of
the Company, except as set forth above, and except as is
properly described in the Prospectus or (ii) any outstanding
security or other instrument which by its terms is convertible
into or exchangeable for capital stock of the Company, except
as described in the Prospectus;
iii. Based upon a written inquiry to the Company and
a review of the records of the Company in counsel's
possession, counsel is not aware that there is any litigation,
arbitration, claim, governmental or other proceeding (formal
or informal), or investigation pending, threatened, or in
prospect (or any basis therefor) with respect to the Company
or any of its respective operations, businesses, properties,
or assets, except as may be properly described in the
Prospectus or such as individually or in the aggregate do not
now have and will
27
not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company.
Based upon a written inquiry to the Company and a review of
the records of the Company in counsel's possession, counsel is
not aware of any violation of, or that the Company is in
default with respect to, any law, rule, regulation, order,
judgment, or decree, except as may be properly described in
the Prospectus or such as in the aggregate have been disclosed
to the Representative and do not now have and will not in the
future have a material adverse effect upon the operations,
business, properties, or assets of the Company; nor is counsel
aware that the Company is required to take any action in order
to avoid any such violation or default;
iv. Neither the Company nor any other party is now or
is expected by the Company to be in violation or breach of, or
in default with respect to, complying with any material
provision of any contract, agreement, instrument, lease,
license, arrangement, or understanding which is material to
the Company;
v. The Company is not in violation or breach of, or
in default with respect to, any term of its Articles of
Incorporation or by-laws;
vi. The Company has all requisite corporate power and
authority to execute and deliver and to perform under this
Agreement, the Warrants, the Representative's Option and the
Consulting Agreement. All necessary corporate proceedings of
the Company have been taken to authorize the execution and
delivery and performance thereunder by the Company of this
Agreement, the Warrants, the Representative's Options and the
Consulting Agreement. Each of this Agreement, the Warrants,
the Representative's Options and the Consulting Agreement have
been duly authorized, executed and delivered by the Company,
and is a legal, valid, and binding obligation of the Company,
and (subject to applicable bankruptcy, insolvency, and other
laws affecting the enforceability of creditors' rights
generally and equitable principles that may limit the
enforceability of certain terms, including concepts of
mutuality, responsibility, good faith and fair dealing, and
other similar doctrines affecting the enforceability of
agreements generally), enforceable as to the Company in
accordance with their
28
respective terms. No opinion need be given, however, to the
enforceability of any indemnity provisions, forum selection
clauses or arbitration clauses. No consent, authorization,
approval, order, license, certificate, or permit of or from,
or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is
required by the Company for the execution or delivery, or
performance thereunder by the Company of this Agreement, the
Warrants, Representative's Options and the Consulting
Agreement (except filings under the Act which have been made
prior to the Closing Date and consents consisting only of
consents under "blue sky" or securities laws which are
required in connection with the transactions contemplated by
this Agreement, and which have been obtained on or prior to
the date the Registration Statement becomes effective under
the Act). No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to
which the Company is a party, or to which any of its
properties or assets are subject, is required for the
execution or delivery, or performance thereunder of this
Agreement, the Warrants, the Representative's Options or the
Consulting Agreement; and the execution and delivery and
performance thereunder of this Agreement, the Warrants, the
Representative's Options and the Consulting Agreement will not
violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under any
such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a
breach of any term of the Articles of Incorporation or by-laws
of the Company, or violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree
binding on the Company or to which any of its operations,
businesses, properties, or assets are subject;
vii. The shares of Common Stock are, the shares of
Common Stock issuable on exercise of the Warrants will be, and
the shares of Common Stock underlying the Representative's
Options will be upon exercise of the Representative's Options
and upon issuance, delivery and payment therefor as described
in the Registration Statement, validly authorized, validly
issued, fully
29
paid, and nonassessable and not issued in violation of any
preemptive rights of stockholders of the Company, and the
Underwriters will have received good title to the Common Stock
and Warrants and Additional Securities purchased by them from
the Company, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and
voting trusts; upon payment for the Warrant Shares and the
Representative's Options, the holders thereof will receive
good title to such securities, free and clear of all liens,
security interests, pledges, charges, encumbrances,
stockholders' agreement and voting trusts. The Common Stock,
the Warrants, the Warrant Shares and the Representative's
Options conform to all statements relating thereto contained
in the Registration Statement or the Prospectus;
viii. The Warrant Shares have been duly and validly
reserved for issuance pursuant to the terms of the Warrant
Agreement between the Company and its transfer agent and
shares of Common Stock underlying the Representative's Options
have been duly and validly reserved for issuance pursuant to
the terms of the Representative's Options or the Warrant
Agreement, as the case may be;
ix. Any contract, agreement, instrument, lease, or
license that is known to counsel and that is required to be
described in the Registration Statement or the Prospectus has
been properly described therein. Any contract, agreement,
instrument, lease, or license that is known to counsel and
that is required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to
or has been incorporated as an exhibit by reference into the
Registration Statement;
x. Insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws,
rules, regulations, orders, judgments, decrees, contracts,
agreements, instruments, leases, or licenses, such statements
have been prepared or reviewed by such counsel and accurately
reflect the status of such litigation and provisions purported
to be summarized and are correct in all material respects;
30
xi. Except as provided in the Registration Statement,
no person or entity has the right to require registration of
shares of Common Stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement;
xii. The Registration Statement has been declared
effective under the Act. No Stop Order has been issued and no
proceedings for that purpose have been instituted or
threatened, and the Company's Common Stock and Warrants have
been registered under the Securities Exchange Act of 1934;
xiii. The Registration Statement and the Prospectus,
and any amendment or supplement thereto, comply as to form in
all material respects with the requirements of the Act and the
Regulations;
xiv Such counsel has no reason to believe that either
the Registration Statement or the Prospectus, or any amendment
or supplement thereto, contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (except that no opinion need be expressed as to the
consolidated financial statements and other financial data and
schedules which are or should be contained therein);
xv. Since the Effective Date of the Registration
Statement, such counsel has not been informed of any event
which has occurred which should have been set forth in an
amendment or supplement to the Registration Statement or the
Prospectus has been set forth in such an amendment or
supplement;
xvi. The Company has not informed counsel that the
Company is currently offering any securities for sale except
as described in the Registration Statement;
xvii. Such counsel has no knowledge of any promoter,
affiliate, parent or subsidiaries of the Company except as are
described in the Registration Statement;
xviii. Counsel has no knowledge of any subsidiaries
of the Company except as described in the Registration
Statement;
31
xix. Such counsel has not been informed that Company
is a party to any agreement giving rise to any obligation by
the Company or any subsidiary to pay any third-party royalties
or fees of any kind whatsoever with respect to any technology
developed, employed, used or licensed by the Company or any
subsidiary, other than is disclosed in the Prospectus;
xx. The Common Stock and Warrants are eligible for
quotation on The American Stock Exchange;
xxi. Such counsel has no reason to believe that
issued and outstanding shares of Common Stock and all other
securities issued and sold or exchanged by the Company or its
subsidiaries have not been issued and sold or exchanged in
compliance with all applicable state and federal securities
laws and regulations; and
xxii. Such counsel has not been informed that Company
or any of its Property are not in compliance with any
Environmental Laws or that the Company is not in full
compliance with all permits, licenses and authorizations
relating to Environmental Laws.
In rendering such opinion, counsel for the Company may rely
(A) as to matters involving the application of laws other than the laws
of the United States and the laws of the State of Colorado, to the
extent counsel for the Company deems proper and to the extent specified
in such opinion, upon an opinion or opinions (in form and substance
satisfactory to counsel for the Representative) of other counsel,
acceptable to counsel for the Representative, familiar with the
applicable laws, in which case the opinion of counsel for the Company
shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company
and that reliance thereon by counsel for the Company is reasonable; (B)
as to matters of fact, to the extent the Representative deems proper,
on certificates of responsible officers of the Company; and (C) to the
extent they deem proper, upon written statements or certificates of
officers of departments of various jurisdictions having custody of
documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates
shall be delivered to counsel for the Representative.
32
c. On or prior to the Closing Date and any Additional Closing
Date, as the case may be, you shall have been furnished such
information, documents, certificates, and opinions as you may
reasonably require for the purpose of enabling you to review the
matters referred to in Section 7(b), and in order to evidence the
accuracy, completeness, or satisfaction of any of the representations,
warranties, covenants, agreements, or conditions herein contained, or
as you may reasonably request.
d. At the Closing Date and any Additional Closing Date, as the
case may be, you shall have received a certificate of the chief
executive officer and of the chief financial officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect that the conditions set forth in Section 7(a) have
been satisfied, that as of the date of this Agreement and as of the
Closing Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were and
are accurate, and that as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed.
e. At the time this Agreement is executed and at the Closing
Date and any Additional Closing Date, as the case may be, you shall
have received a letter from ▇▇▇▇ + ASSOCIATES, LLP, Certified Public
Accountants, addressed to you and dated the date of delivery but
covering a period within three business days of such date, in form and
substance satisfactory to you.
f. All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Common Stock and Warrants and the
Additional Securities shall be satisfactory in form and substance to
you and to counsel for the Representative, and you shall have received
a favorable opinion from counsel to the Company, dated as of the
Closing Date or the Additional Closing Date, as the case may be, with
respect to such of the matters set forth under Section 7(b), and with
respect to such other related matters, as you may reasonably request.
g. The American Stock Exchange, upon review of the terms of
the public offering of the Common Stock and Warrants and the Additional
Securities, shall not have objected to your participation in such
offering.
33
h. The Company shall have received notice that the Common
Stock and Warrants will be quoted on the American Stock Exchange as of
the Effective Date.
Any certificate or other document signed by any officer of the Company
and delivered to you or to counsel for the Representative shall be deemed a
representation and warranty by the Company hereunder to the Representative as to
the statements made therein. If any condition to your obligations hereunder to
be fulfilled prior to or at the Closing Date or any Additional Closing Date, as
the case may be, is not so fulfilled, you may terminate this Agreement or, if
you so elect, in writing waive any such conditions which have not been fulfilled
or extend the time for their fulfillment.
8. Indemnification and Contribution.
a. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Underwriters, the
Representative, and each of their officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls
the Representative or any one of the Underwriters within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any
and all loss, liability, claim, damage, and expense whatsoever (which
shall include, for all purposes of this Section 8, but not be limited
to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any
untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or (B) in any
application or other document or communication (in this Section 8
collectively called an "application") in any jurisdiction in order to
qualify the Common Stock and Warrants and Additional Securities under
the "blue sky" or securities laws thereof or filed with the Commission
or any securities exchange; or any omission or alleged omission to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) any breach of any
representation, warranty, covenant, or agreement of the Company
contained in this Agreement. The foregoing agreement to indemnify shall
34
be in addition to any liability the Company may otherwise have,
including liabilities arising under this Agreement; however, the
Company shall have no liability under this Section 8 if such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 8(b) with
respect to the Underwriters by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto,
or in any application, as the case may be.
If any action is brought against the Underwriters, the
Representative or any of their officers, directors, partners,
employees, agents, or counsel, or any controlling persons of an
Underwriter or the Representative (an "indemnified party") in respect
of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but
the failure so to notify shall not relieve the Company from any
liability it may have other than pursuant to this Section 8(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in
connection with the defense of such action or the Company shall not
have promptly employed counsel satisfactory to such indemnified party
or parties to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses
shall be borne by the Company. Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written
consent. The Company agrees promptly to notify the Underwriters and the
Representative of the commencement of any litigation or proceedings
against the Company or against any of its officers or directors in
connection
35
with the sale of the Common Stock and Warrants or the Additional
Securities, any Preliminary Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or any
application.
b. The Underwriters agree to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who
shall have signed the Registration Statement, each other person, if
any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriters in Section
8(a), but only with respect to statements or omissions, if any, made in
any Preliminary Prospectus, the Registration Statement, or the
Prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance
upon and in conformity with written information furnished to the
Company as stated in this Section 8(b) with respect to the Underwriters
by or on behalf of the Underwriters expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto, or in any application, as the
case may be; provided, however, that the obligation of the Underwriters
to provide indemnity under the provisions of this Section 8(b) shall be
limited to the amount which represents the product of the number of
shares of Common Stock and Warrants and Additional Securities sold
hereunder and the initial public offering prices per share of Common
Stock and Warrant set forth on the cover page of the Prospectus. For
all purposes of this Agreement, the amounts of the selling concession
and reallowance set forth in the Prospectus, the information under
"Underwriting" and the identification of counsel to the Representative
under "Legal Matters" constitute the only information furnished in
writing by or on behalf of the Underwriters expressly for inclusion in
any Preliminary Prospectus, the Registration Statement, or the
Prospectus (as from time to time amended or supplemented), or any
amendment or supplement thereto, or in any application, as the case may
be. If any action shall be brought against the Company or any other
person so indemnified based on any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, or any application, and in respect of which
indemnity may be sought against the
36
Underwriters pursuant to this Section 8(b), the Underwriters shall have
the rights and duties given to the Company, and the Company and each
other person so indemnified shall have the rights and duties given to
the indemnified parties, by the provisions of Section 8(a).
c. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 8 is for any reason held to be unavailable to the Underwriters
or the Company, then the Company shall contribute to the damages paid
by the several Underwriters, and the several Underwriters shall
contribute to the damages paid by the Company; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties
are entitled, there shall be considered the relative benefits received
by each party from the sale of the Common Stock and Warrants and
Additional Securities (taking into account the portion of the proceeds
of the offering realized by each), the parties' relative knowledge and
access to information concerning the matter with respect to which the
claim was asserted, the opportunity to correct and prevent any
statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Underwriters
agree that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose). No
Underwriter or person controlling such Underwriter shall be obligated
to make contribution hereunder which in the aggregate exceeds the total
public offering price of the Common Stock and Warrants and Additional
Securities purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages which such Underwriter and its
controlling persons have otherwise been required to pay in respect of
the same or any substantially similar claim. The Underwriters'
obligations to contribute hereunder are several in proportion to their
respective underwriting obligations and not joint. For purposes of this
Section, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same rights to
contribution as such Underwriter, and each director of the
37
Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, shall have the same rights to
contribution as the Company. Anything in this Section 8(c) to the
contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without
its written consent. This Section 8(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
9. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Representative, the Underwriters or
any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 8(b), and shall survive
termination of this Agreement or the delivery of the Common Stock and Warrants
and the Additional Securities to the Underwriters for a period equal to the
statute of limitations for claims related hereto, but not to exceed an aggregate
of three years from the date hereof. In addition, the provisions of Sections
5(a), 6, 8, 9, 10, and 12 shall survive termination of this Agreement, whether
such termination occurs before or after the Closing Date or any Additional
Closing Date.
38
10. Effective Date of This Agreement and Termination Thereof.
a. This Agreement shall be executed within 24 hours of the
Effective Date of the Registration Statement and shall become effective
on the Effective Date or at the time of the initial public offering of
the Common Stock and Warrants, whichever is earlier. The time of the
initial public offering shall mean the time, after the Registration
Statement becomes effective, of the release by the Representative for
publication of the first newspaper advertisement which is subsequently
published relating to the Common Stock and Warrants or the time, after
the Registration Statement becomes effective, when the Common Stock and
Warrants are first released by the Representative for offering by
dealers by letter or telegram, whichever shall first occur. The
Representative or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except as
noted below in this Section 10, by giving the notice indicated in
Section 10(c) before the time this Agreement becomes effective.
b. The Representative shall have the right to terminate this
Agreement at any time prior to the Closing Date or any Additional
Closing Date, as the case may be, by giving notice to the Company if
there shall have been a general suspension of, or a general limitation
on prices for, trading in securities on the New York Stock Exchange or
the American Stock Exchange or in the over-the-counter market; or if
there shall have been an outbreak of major hostilities or other
national or international calamity, or terrorist activity, that causes
significant disruption in the financial markets; or if a banking
moratorium has been declared by a state or federal authority; or if a
moratorium in foreign exchange trading by major international banks or
persons has been declared; or if there shall have been a material
interruption in the mail service or other means of communication within
the United States; or if the Company shall have sustained a material or
substantial loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage, or other calamity or malicious act which, whether or
not such loss shall have been insured, will, in the Representative's
opinion, make it inadvisable to proceed with the offering, sale, or
delivery of the Common Stock and Warrants or the Additional Securities,
as the case may be; or if there shall have been such material and
adverse change in the market for securities in general so as to make it
inadvisable to proceed with
39
the offering, sale, and delivery of the Common Stock and Warrants or
the Additional Securities, as the case may be, on the terms
contemplated by the Prospectus due to the impaired investment quality
of the Common Stock and Warrants or the Additional Securities; or if
the Dow ▇▇▇▇▇ Industrial Average shall have fallen by 15% or more from
its closing price on the day immediately preceding the date that the
Registration Statement is declared effective by the Commission.
c. If the Representative elects to prevent this Agreement from
becoming effective as provided in this Section 10, or to terminate this
Agreement, it shall notify the Company promptly by telephone or
facsimile, confirmed by letter. If, as so provided, the Company elects
to prevent this Agreement from becoming effective, the Company shall
notify the Representative promptly by telephone or facsimile, confirmed
by letter.
d. Anything in this Agreement to the contrary notwithstanding
other than Section 10(e), if this Agreement shall not become effective
by reason of an election pursuant to this Section 10 or if this
Agreement shall terminate or shall otherwise not be carried out prior
to September 30, 2002 because (i) of any reason solely within the
control of the Company or its stockholders and not due to the breach of
any representation, warranty or covenant or bad faith of the
Representative, (ii) the Company unilaterally withdraws the proposed
Public Offering from the Representative in favor of another
underwriter, (iii) the Company does not permit the Registration
Statement to become effective for any reason other than if the Common
Stock is proposed to be priced at less than $5.00 per share, in which
event this provision will not apply, (iv) of any material discrepancy
in any representation by the Company and/or its officers, directors,
stockholders, agents, advisers or representatives, made in writing,
including but not limited to the Registration Statement, to the
Representative, (v) the Company is, directly and/or indirectly,
negotiating with other persons or entities of whatsoever nature
relating to a possible Public Offering of its securities, or (vi) of
any failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to be
performed or satisfied, then, in any of such events, the Company shall
be obligated to reimburse the Representative for its out-of-pocket
expenses on an accountable basis. Should the Representative be required
to account for "out-of-pocket"
40
expenses, any expense incurred by the Representative shall be deemed to
be reasonable and unobjectionable upon a reasonable showing by the
Representative that such expenses were incurred, directly or
indirectly, in connection with the proposed transaction and/or
relationship of the parties hereto, as described herein. In no event
will the Representative be entitled to reimbursement of accountable
expenses exceeding $70,000, inclusive of the $40,000 advanced against
the non-accountable expense allowance.
e. Notwithstanding any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 5(a), 6, 8, 9, and 10 shall not
be in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
f. Anything in this Agreement to the contrary notwithstanding
other than Sections 10(d) and (e), if this Agreement shall not be
carried out within the time specified herein for any reason other than
as set forth in Section 10(d), the Company shall have no liability to
the Representative other than for the Representative's accountable
expenses up to a maximum aggregate amount of $40,000, which amount has
been paid in advance in accordance with Section 6 hereof.
11. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the
Representative, shall be mailed, delivered, or sent by facsimile transmission
and confirmed by original letter, to Neidiger, Tucker, Bruner, Inc., ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; or if sent to the Company shall be mailed,
delivered, or telexed or telegraphed and confirmed by letter, to Natural Gas
Services Group, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.,
▇▇▇▇▇▇ & Whitney LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. All
notices hereunder shall be effective upon receipt by the party to which it is
addressed.
12. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company, and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Common Stock
41
and Warrants or the Additional Securities) and no other person shall have or be
construed to have any legal or equitable right, remedy, or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
13. Construction. This Agreement shall be construed in accordance with
the laws of the State of Colorado, without giving effect to conflict of laws.
Time is of the essence in this Agreement. The parties acknowledge that this
Agreement was initially prepared by the Representative, and that all parties
have read and negotiated the language used in this Agreement. The parties agree
that, because all parties participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which construes
ambiguous language in favor of or against any party by reason of that party's
role in drafting this Agreement.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
NATURAL GAS SERVICES
GROUP, INC.
By: ______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Accepted as of the date first above written.
Denver, Colorado
NEIDIGER, TUCKER, BRUNER, INC.
By: ___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
42
NATURAL GAS SERVICES GROUP, INC.
(A COLORADO CORPORATION)
SCHEDULE 1
This Schedule sets forth the name of each Underwriter referred to in
the Underwriting Agreement and the number of shares of Common Stock and Warrants
to be sold by the Company.
NUMBER OF
SHARES OF NUMBER OF
NAME COMMON STOCK WARRANTS
---- ------------ ---------
Neidiger, Tucker, Bruner, Inc.
--------- ---------
Total 1,650,000 1,650,000
========= =========
