UNDERWRITING AGREEMENT
BETWEEN
PACIFIC MULTIMEDIA, INC.
AND
TRADEWAY SECURITIES GROUP, INC.
DATED
SEPTEMBER , 1997
UNDERWRITING AGREEMENT
TABLE OF CONTENTS
Page
----
Section 1. Representations and Warranties
of the Company . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Offering and Sale of Shares . . . . . . . . . . . . . . . . . . 4
Section 3. Compliance with Conduct Rules. . . . . . . . . . . . . . . . . . 5
Section 4. Blue Sky Survey. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Covenants of the Company . . . . . . . . . . . . . . . . . . . . 6
Section 6. Payment of Expenses and Fees . . . . . . . . . . . . . . . . . . 7
Section 7. Conditions of Closing. . . . . . . . . . . . . . . . . . . . . . 8
Section 8. Prospectus Terms and Descriptions
Controlling . . . . . . . . . . . . . . . . . . . . . . .10
Section 9. Indemnification and Exculpation. . . . . . . . . . . . . . . . .10
Section 10. Status of Parties . . . . . . . . . . . . . . . . . . . . . . .11
Section 11. Termination . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 12. Notices and Authority to Act. . . . . . . . . . . . . . . . . .12
Section 13. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 14. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 15. Requirements of Law . . . . . . . . . . . . . . . . . . . . . .12
Section 16. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . .12
Pacific MultiMedia, Inc.
(A Washington Corporation)
1,250,000 Shares of Common Stock
$5.00 per Share
UNDERWRITING AGREEMENT
September , 1997
Tradeway Securities Group, Inc.
000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000,
as Underwriter
Dear Sirs:
This Underwriting Agreement is made by and between Pacific MultiMedia,
Inc., a Washington corporation (the "Company"), and Tradeway Securities Group,
Inc., a California corporation (the "Underwriter"), as of the date set forth
above.
The Company proposes to issue and sell a minimum of 750,000 shares
(the "Minimum") and up to a maximum of 1,250,000 shares (the "Maximum") of
its authorized and unissued Common Stock as contemplated by the Prospectus
(as defined below). The shares of Common Stock to be sold by the
Company as described in the prospectus are hereafter referred to as the
"Shares." All shares of the Common Stock of the Company, including the
Shares, are hereinafter referred to as the "Common Stock."
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Underwriter as follows:
(a) A registration statement on Form SB-2 (File No. 333-26245) with
respect to the Shares, including a preliminary form of prospectus, has been
prepared by the Company in conformity with the Securities Act of 1933, as
amended (the "Securities Act"), and the applicable rules and regulations ("SEC
Regulations") of the Securities and Exchange Commission (the "SEC") under the
Securities Act and has been filed with the SEC; such amendments to such
registration statement and such amended preliminary prospectuses as may have
been required prior to the date hereof have been similarly prepared and filed
with the SEC; and the Company will file such additional amendments to such
registration statement and such amended prospectuses as may hereafter be
required. Copies of such registration statement and amendments and of each
related preliminary prospectus (the "Preliminary Prospectuses") have been
delivered to the Underwriter. If the registration statement has been declared
effective under
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the Securities Act by the SEC, the Company has prepared and will promptly
file with the SEC the information, if any, omitted from the registration
statement pursuant to Rule 430(A) of the SEC Regulations as part of an
amendment or supplement to the prospectus pursuant to subparagraph (1) or (4)
of Rule 424(b) of the SEC Regulations or as part of a post-effective
amendment to the registration statement (including an amended prospectus);
otherwise the Company has prepared and will promptly file an amendment to the
registration statement (including an amended prospectus). The term
"Registration Statement" as used in this Agreement shall mean such
registration statement, including financial statements, schedules and
exhibits in the form in which it became or becomes, as the case may be,
effective (including, if the Company omitted information from the
registration statement pursuant to Rule 430A(a) of the SEC Regulations, the
information deemed to be a part of the registration statement at the time it
became effective pursuant to Rule 430A(b) of the SEC Regulations) and, in the
event of any amendment thereto after the effective date of such registration
statement, shall also mean (from and after the effectiveness of such
amendment) such registration statement as so amended. The term "Prospectus"
as used in this Agreement shall mean the prospectus relating to the Shares as
included in such registration statement at the time it becomes effective,
except that if any revised prospectus shall thereafter be provided to the
Underwriters by the Company for use in connection with the offering of the
Shares that differs from the Prospectus on file with the SEC at the time the
registration statement became or becomes, as the case may be, effective
(whether or not such revised prospectus is required to be filed with the SEC
pursuant to Rule 424(b)(3) of the SEC Regulations), the term "Prospectus"
shall refer to such revised prospectus from and after the time it is first
provided to the Underwriters for such use.
(b) The SEC has not issued any order preventing or suspending the use
of any Preliminary Prospectus and each such Preliminary Prospectus, at the time
of filing thereof, has conformed in all material respects to the requirements of
the Securities Act and the SEC Regulations; when the Registration Statement
became or becomes, as the case may be, effective (the "Effective Date") and when
the Prospectus is first filed (if required) in accordance with Rule 424(b) and
at all times subsequent thereto up to and at the Closing Time (as hereinafter
defined ) and any later date on which Option Shares are to be purchased, as the
case may be, (i) the Registration Statement and the Prospectus, and any
amendments or supplements thereto, will in all material respects conform to the
requirements of the Securities Act and the SEC Regulations, on the Effective
Date, the Registration Statement did not or 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 in light of the
circumstances under which they were made not misleading; provided, however, that
none of the representations and warranties contained in this subparagraph shall
apply to information contained in or omitted from the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company by the Underwriter
specifically for inclusion therein.
(c) The Company is a corporation duly organized pursuant to the
Washington Business Corporations Act and is validly existing under the laws
of the State of Washington with full power and authority to engage in the
business to be conducted by it, as described in the Prospectus. The Company
is in good standing and qualified to do business in each jurisdiction in
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which such qualification is necessary in which the nature or conduct of its
business as described in the Registration Statement requires such
qualification and the failure to be so qualified would materially adversely
affect the Company.
(d) The Company has full corporate power and authority, under
applicable law to perform its obligations under this Agreement, and to act as
described in the Registration Statement and Prospectus.
(e) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable; the
capital stock of the Company conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus (and
such statements correctly state the substance of the instruments defining the
capitalization of the Company); the Shares to be purchased from the Company
hereunder have been duly authorized for issuance and sale as contemplated by the
Prospectus and, when issued and delivered by the Company against payment
therefor in accordance with the terms of the Prospectus, will be duly and
validly issued and fully paid and nonassessable; and no preemptive right,
co-sale right, registration right, right of first refusal or other similar right
of shareholders exists with respect to any of the Shares or the issue and sale
thereof other than those that have been expressly waived prior to the date
hereof or those that will automatically expire upon the consummation of the
transactions contemplated on the Closing Date. No further approval or
authorization of any shareholder, the Board of Directors or others is required
for the issuance and sale or transfer of the Shares except as may be required
under the Securities Act or under state or other securities or "Blue Sky" laws.
(f) The accountants who certified the financial statements filed with
the SEC as part of the Registration Statement are, with respect to the Company,
independent public accountants as required by the Securities Act and the SEC
Regulations.
(g) The financial statements filed as part of the Registration
Statement and those included in the Prospectus present fairly the financial
position of the Company as of the dates indicated and said financial statements
have been prepared in conformity with generally accepted accounting principles
(as described therein), or, in the case of unaudited financial statements, in
substantial conformity with generally accepted accounting principles, applied on
a basis which is consistent in all material respects for each balance sheet date
presented.
(h) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as may otherwise be stated
in or contemplated by the Registration Statement and the Prospectus, there has
not been any material adverse change in the condition (financial or otherwise),
business or prospects of the Company, whether or not arising in the ordinary
course of business.
(i) This Agreement has been duly and validly authorized, executed and
delivered by the Company, and constitutes a valid, binding and enforceable
agreement of the Company, in accordance with its terms.
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(j) The execution and delivery of this Agreement, the incurrence of
the obligations as set forth herein and the consummation of the transactions
contemplated herein and in the Prospectus will not constitute a breach of, or
default under, any instrument or agreement by which the Company is bound, or any
order, rule or regulation applicable to the Company of any court or any
governmental body or administrative agency having jurisdiction over the Company.
(k) Except as otherwise disclosed in the Registration Statement or
the Prospectus, there is not pending or, to the best of the Company's knowledge,
threatened any action, suit or proceeding before or by any court or other
governmental body to which the Company is a party, or to which any of the assets
of the Company are subject, which might reasonably be expected to result in any
material adverse change in the condition (financial or otherwise), business or
prospects of the Company or is required to be disclosed in the Prospectus
pursuant to the Securities Act and the SEC Regulations.
Section 2. OFFERING AND SALE OF SHARES.
(a) The Underwriter is hereby appointed the exclusive Underwriter
of the Company during the offering period specified in the Prospectus (the
"Offering Period") for the purpose of finding acceptable subscribers for up
to the Maximum number of Shares through a public offering. Subject to the
performance by the Company of its obligations to be performed hereunder and
to the completeness and accuracy in all material respects of all the
representations and warranties of the Company contained herein, the
Underwriter hereby accepts such agency and agrees on the terms and conditions
herein set forth to use its best efforts during the Offering Period to find
acceptable subscribers for the Shares at a public offering price of $5.00 per
Share. It is understood that the Underwriter's agreement to use its best
efforts to find acceptable subscribers for the Shares shall not prevent it
from acting as a Underwriter or underwriter for the securities of other
issuers which may be offered or sold during the Offering Period. The agency
of the Underwriter hereunder shall continue until the close of business on
the later of the Offering Termination Date (as defined below) and the Closing
Date, or such later date as the Underwriter and the Company shall agree upon
(the date on which the Offering Period terminates being hereinafter referred
to as the "Offering Termination Date"), including such additional period as
may be required to effect the closing of the sale of the Shares.
The Company will pay the Underwriter at Closing Time compensation
in an amount equal to eight percent (8%) of the gross sales price of each
Share sold. In addition, in the event the Minimum Shares are sold, the
Company will pay to the Underwriter at Closing Time a Common Stock Purchase
Warrant, in the form attached hereto as Annex A (the "Warrant"), for the
purchase of shares of Common Stock at a purchase price of $5.00 per share.
The number of shares of Common Stock purchasable under the Warrant (the
"Warrant Shares") shall equal one (1) Warrant Share for every ten (10) Shares
sold in the offering, up to a maximum of 100,000 Warrant Shares (assuming
sale of the Maximum Shares). The Warrant shall be exercisable for a period of
5 years from the date of issuance.
(b) In the event the offering is commenced and acceptable
subscriptions for at least the "Minimum Shares" shall not have been received
prior to the end
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of the Offering Period (unless extended by the Company as contemplated by the
Prospectus), all funds received from subscribers shall be returned in full,
with any interest payable thereon (except as otherwise described in the
Prospectus) and without deduction for any escrow or other fee or expense; and
thereupon the Underwriter's duties as agent and this Agreement shall
terminate without further obligation hereunder on the part of the Underwriter
or the Company.
(c) On the Offering Termination Date or at such earlier time as
(i) subscriptions for the Shares shall have been received, or (ii) as the
Company may determine to terminate the offering, or at such later date should
the Company extend the offering as contemplated by the Prospectus, the Company
shall notify the Underwriter of the aggregate number of Shares for which the
Company has received acceptable subscriptions and, if at least the Minimum
Shares shall have been so subscribed for, then payment of the purchase price for
the Shares shall be made at the office of Xxxxxxx Xxxxx & Xxxxx LLP, 5000
Columbia Center, 000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000, or at such other place as
shall be agreed upon between the Underwriter and the Company, at 10:00 A.M.,
Pacific Standard Time ("PST"), on such day (the "Closing Date") and time (the
"Closing Time") as shall be agreed upon between the Underwriter and the Company
(not later than three (3) business days after the end of the Offering Period).
(d) Except as set forth herein, the Company shall not be in any
respect responsible for any commissions.
Section 3. COMPLIANCE WITH CONDUCT RULES.
(a) The Underwriter will use its best efforts to find eligible
persons to purchase the Shares on the terms stated herein and in the
Registration Statement and Prospectus. It is understood that the Underwriter
has no commitment with regard to the sale of the Shares other than to use its
best efforts. In connection with the offer and sale of the Shares, the
Underwriter represents that it will comply fully with all applicable laws,
and the rules of the NASD, the SEC, state securities administrators and any
other regulatory body. In particular, and not by way of limitation, the
Underwriter represents and warrants that it is aware of the Conduct Rules of
the NASD Rules and that it will comply fully with all the applicable terms
thereof in connection with the offering and sale of the Shares. The
Underwriter shall not execute any sales of Shares from a discretionary
account over which it has control without prior written approval of the
customer in whose name such discretionary account is maintained.
(b) The Underwriter agrees not to recommend the purchase of Shares to
any subscriber unless the Underwriter shall have reasonable grounds to believe,
on the basis of information obtained from the subscriber concerning, among other
things, the subscriber's investment objectives, other investments, financial
situation and needs; the subscriber has a fair market net worth sufficient to
sustain the risks inherent in participating in the Company, including loss of
investment and lack of liquidity (which, as described in the Prospectus, may be
significant); and the Shares are otherwise a suitable investment for the
subscriber.
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The Underwriter represents and warrants that it has reasonable grounds to
believe, based on information in the Prospectus, that all material facts
relating to an investment in the Shares are adequately and accurately
disclosed in the Prospectus.
In connection with making the representations and warranties set forth in
this paragraph, the Underwriter has not relied on inquiries made by or on behalf
of any other parties.
(c) None of the Underwriter or the Company shall, directly or
indirectly, pay or award any finder's fees, commissions or other compensation to
any person engaged by a potential investor for investment advice as an
inducement to such advisor to advise the purchase of Shares; PROVIDED, HOWEVER,
the normal sales commissions payable to a registered broker-dealer or other
properly licensed person for selling Shares shall not be prohibited hereby.
(d) All payments for subscriptions shall be made by subscriber
check payable to First Trust NA, as Escrow Agent for Pacific MultiMedia
maintained at First National NA, Seattle, Washington (the "Escrow Agent").
All such payments received by the Underwriters will be transmitted to the
Escrow Agent by Noon, PST, on the business day following receipt thereof by
the Underwriter in accordance with the procedures set forth in the Prospectus
and the Subscription Agreement attached thereto.
Section 4. BLUE SKY SURVEY. The Company has caused counsel to
prepare and deliver to the Underwriter a Blue Sky Survey which sets forth, for
the guidance of such persons or entities, the United States jurisdictions in
which the Shares may be offered and sold. It is understood and agreed that the
Underwriter may rely, in connection with the offering and sale of Shares in any
United States jurisdiction, on advice given by such counsel as to the legality
of the offer or sale of the Shares in such jurisdiction; PROVIDED, HOWEVER, that
the Underwriter shall be responsible for compliance with all applicable laws,
rules and regulations with respect to the actions of its employees, acting as
such, in connection with the sales of Shares in any jurisdiction.
Section 5. COVENANTS OF THE COMPANY.
(a) The Company will notify the Underwriter immediately and confirm
such notification in writing (i) when any amendment to the Registration
Statement shall have become effective, (ii) of the receipt of any further
comments from the SEC or any other Federal or state regulatory or
self-regulatory body with respect to the Registration Statement, (iii) of any
request by the SEC or any other Federal or state regulatory or self-regulatory
body for any further amendment to the Registration Statement or any amendment or
further supplement to the Prospectus or for additional information relating
thereto, (iv) of any material criminal, civil or administrative proceedings
against or involving the Company, and (v) of the issuance by the SEC or any
other Federal or state regulatory or self-regulatory body of any order
suspending the effectiveness of the Registration Statement under the Securities
Act, or the registration of Shares under the "Blue Sky" or securities laws of
any state or other jurisdiction or any order or decree
6
enjoining the offering or the use of the then current Prospectus or of the
institution, or notice of the intended institution, of any action or
proceeding for that purpose.
(b) The Company will deliver to the Underwriter such number of
conformed copies of the Registration Statement as originally filed and of
each amendment thereto (without exhibits) as the Underwriter shall reasonably
require.
(c) The Company will deliver to the Underwriter as promptly as
practicable from time to time during the period when the Prospectus is required
to be delivered under the Securities Act, such number of copies of the
Prospectus (as amended or supplemented) as the Underwriter may reasonably
request for the purposes contemplated by the Securities Act or the SEC
Regulations.
(d) During the period when the Prospectus is required to be delivered
pursuant to the Securities Act, the Company will comply with all requirements
imposed upon it by the Securities Act as now and hereafter amended, and by any
SEC Regulations, as from time to time in force, so far as necessary to permit
the continuance of sales of the Shares during such period in accordance with the
provisions hereof and as set forth in the Prospectus.
(e) If any event relating to or affecting the Company shall occur as
a result of which it is necessary, in the reasonable opinion of the Company, to
amend or supplement the Prospectus in order to make the Prospectus not
materially misleading in the light of the circumstances existing at the time it
is delivered to a subscriber, the Company shall forthwith prepare and furnish to
the Underwriter, at the expense of the Company, a reasonable number of copies of
an amendment or amendments of, or a supplement or supplements to, the Prospectus
which will amend or supplement the Prospectus so that as amended or supplemented
it will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time the Prospectus is delivered to a
subscriber, not misleading. No such amendment or supplement shall be filed
without the approval of the Underwriter which approval will not be unreasonably
withheld.
Section 6. PAYMENT OF EXPENSES AND FEES. The Company will pay all
expenses incident to the performance of the obligations of the Company
hereunder, including: (i) the printing and delivery to the Underwriter in
quantities as hereinabove stated of copies of the Registration Statement and all
amendments thereto, of the Prospectus and any supplements or amendments thereto,
and of any supplemental sales materials; (ii) the printing and filing of the
Registration Statement and the Prospectus (and, in certain cases, the exhibits
thereto) with the SEC; (iii) the qualification of the Shares under the
securities or "Blue Sky" laws in the various jurisdictions, including filing
fees and the fees and disbursements of the Company's counsel incurred in
connection therewith; and (iv) the services of counsel and accountants for the
Company. Other than as set forth above, each party hereto shall bear its own
expenses relating hereto and to the offering of the Shares.
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Section 7. CONDITIONS OF CLOSING. The obligations of each of the
parties hereunder are subject to the accuracy of the representations and
warranties of the other parties hereto, to the performance by such other parties
of their respective obligations hereunder and to the following further
conditions:
(a) The Registration Statement shall have become effective and at
Closing Time no order suspending the effectiveness thereof shall have been
issued under the Securities Act or proceeding therefor initiated or threatened
by the SEC.
(b) At Closing Time, Xxxxxxx Xxxxx & Xxxxx LLP, counsel to the
Company and the Company, shall deliver its opinion, in form and substance
reasonably satisfactory to the parties hereto, to the effect that:
(i) The Company is duly organized and validly existing as a
corporation under the laws of the State of Washington and is in good standing
and qualified to do business in each other jurisdiction in which the failure to
so qualify might reasonably be expected to result in material adverse
consequences to the Company. The Company has full corporate power and authority
to perform its obligations as described in the Registration Statement, the
Prospectus and herein.
(ii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under the caption "Capitalization"
as of the dates stated therein; the issued and outstanding shares of Common
Stock of the Company have been duly and validly authorized and issued, are fully
paid and nonassessable.
(iii) The Shares to be issued and sold by the Company as
contemplated by the Prospectus will be, upon issuance and delivery against
payment therefor in accordance with the terms hereof, duly authorized and
validly issued and fully paid and nonassessable.
(iv) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Company, and assuming that this Agreement is
binding on the Underwriter, this Agreement constitutes a valid, binding and
enforceable agreement of the Company in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws at the time
in effect affecting the enforceability generally of rights of creditors and
except as enforceability of indemnification provisions may be limited by
applicable law and the enforcement of any specific terms or remedies may be
unavailable.
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(v) The execution and delivery of this Agreement and the
incurrence of the obligations herein set forth and the consummation of the
transactions contemplated herein and in the Prospectus will not be in
contravention of any of the provisions of the Company's Articles of
Incorporation or Bylaws and, to their knowledge, will not constitute a breach
of, or default under, any instrument by which the Company is bound or any
order, rule or regulation applicable to the Company of any court or any
governmental body or administrative agency having jurisdiction over the
Company.
(vi) To their knowledge, there are no actions, claims or
proceedings pending or threatened in any court or before or by any governmental
or administrative agency or body to which the Company is a party, or to which
any of its assets is subject, which are required to be, but are not, disclosed
in the Registration Statement or Prospectus.
(vii) No authorization, approval or consent of any
governmental authority or agency is necessary in connection with the
subscription for and sale of the Shares, except such as may be required under
the Securities Act, NASD rules or applicable securities or "Blue Sky" laws.
(viii) The Registration Statement is effective under the
Securities Act and no proceedings for a stop order are pending or, to their
knowledge, threatened under Section 8(d) or Section 8(e) of the Securities Act
or any applicable state "Blue Sky" laws.
(ix) At the time the Registration Statement initially became
effective and at the time any post-effective amendment thereto became effective,
the Registration Statement, and at the time the Prospectus and any amendments or
supplements thereto were first issued, the Prospectus, complied as to form in
all material respects with the requirements of the Securities Act and SEC
Regulations.
Counsel rendering the foregoing opinion may rely as to questions of fact
upon representations or certificates of officers of the Company and of
governmental officials, in which case their opinion is to state that they are so
relying.
(c) At Closing Time, the Company shall deliver a certificate to the
effect that: (i) no order suspending the effectiveness of the Registration
Statement has been issued and no proceedings therefor have been instituted or to
the best of their knowledge threatened by the SEC or other regulatory or
self-regulatory body; (ii) the representations and warranties of the Company
contained herein are true and correct with the same effect as though expressly
made at Closing Time and in respect of the Registration Statement as in effect
at Closing Time; and (iii) the Company has performed all covenants and
agreements herein contained which are required to be performed on their part at
or prior to Closing Time.
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(d) The parties hereto shall have been furnished with such
additional information, opinions and documents, including supporting
documents relating to parties described in the Prospectus and certificates
signed by such parties with regard to information relating to them and
included in the Prospectus as they may reasonably require for the purpose of
enabling them to pass upon the sale of the Shares as herein contemplated and
related proceedings, in order to evidence the accuracy or completeness of any
of the representations or warranties or the fulfillment of any of the
conditions herein contained; and all actions taken by the parties hereto in
connection with the sale of the Shares as herein contemplated shall be
reasonably satisfactory in form and substance to Xxxxxxx Xxxxx & Xxxxx LLP.
If the conditions specified in this Section 7 shall not have been
fulfilled in all material respects when and as required by this Agreement to be
fulfilled, this Agreement and all obligations hereunder may be cancelled by any
party hereto by notifying the other parties hereto of such cancellation in
writing or by telegram at any time at or prior to Closing Time, and any such
cancellation or termination shall be without liability of any party to any other
party except as otherwise provided in Section 9 of this Agreement.
Section 8. PROSPECTUS TERMS AND DESCRIPTIONS CONTROLLING. All
parties hereto expressly agree that the description of this Agreement contained
in the Registration Statement and Prospectus shall control against the terms and
conditions contained herein.
Section 9. INDEMNIFICATION AND EXCULPATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Underwriter, its officers, directors, and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act against any and all loss, liability, claim, damage and expense
whatsoever arising from any (i) breach by the Company of this Agreement or (ii)
untrue statement of a material fact or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment thereto) or any
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary in order to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
for any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with information relating to the
Underwriter and furnished by the Underwriter for use in the Prospectus.
In no case shall the Company be liable under this indemnity agreement with
respect to any claim made against any indemnified party unless the Company shall
be notified in writing of the nature of the claim within a reasonable time after
the assertion thereof, but failure to so notify the Company shall not relieve
the Company from any liability which it may have otherwise than on account of
this indemnity agreement. The Company shall be entitled to participate at its
own expense in the defense or, if either so elects within a reasonable time
after receipt of such notice,
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to assume the defense of any suit so brought, which defense shall be
conducted by counsel chosen by it and satisfactory to the indemnified party
or parties, defendant or defendants therein.
The Company agrees to notify the Underwriter within a reasonable time of
the assertion of any claim in connection with the sale of the Shares against it
or any of its officers or directors or any person who controls the Company
within the meaning of Section 15 of the Securities Act.
(b) INDEMNIFICATION BY THE UNDERWRITER. The Underwriter agrees to
indemnify and hold harmless the Company, its officers, directors, and each
person, if any, who controls the Company within the meaning of Section 15 of
the Securities Act against any and all loss, liability, claim, damage and
expense whatsoever arising from any (i) breach by the Underwriter of this
Agreement or (ii) untrue statement of a material fact or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto) or any omission or alleged omission therefrom of a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that any such untrue statement or omission or
alleged untrue statement or omission was made in reliance upon and in conformity
with information relating to the Underwriter and furnished by the Underwriter
for use in the Prospectus.
In no case shall the Underwriter be liable under this indemnity agreement
with respect to any claim made against any indemnified party unless the
Underwriter shall be notified in writing of the nature of the claim within a
reasonable time after the assertion thereof, but failure to so notify the
Underwriter shall not relieve the Underwriter from any liability which it may
have otherwise than on account of this indemnity agreement. The Underwriter
shall be entitled to participate at its own expense in the defense or, if either
so elects within a reasonable time after receipt of such notice, to assume the
defense of any suit so brought, which defense shall be conducted by counsel
chosen by it and satisfactory to the indemnified party or parties, defendant or
defendants therein.
The Underwriter agrees to notify the Company within a reasonable time of
the assertion of any claim in connection with the sale of the Shares against it
or any of its officers or directors or any person who controls the Underwriter
within the meaning of Section 15 of the Securities Act.
Section 10. STATUS OF PARTIES. In selling the Shares for the
Company, the Underwriter is acting solely as agent for the Company, and not as
principal. The Underwriter will use its best efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase Shares from the
Company has been accepted on behalf of the Company, but the Underwriter shall
not have any liability to the Company in the event that Subscription Agreements
are improperly completed or any such purchase is not consummated for any reason.
Except as specifically provided herein, the Underwriter shall in no respect be
deemed to be an agent of the Company.
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Section 11. TERMINATION. The Company shall have the right to
terminate this Agreement at any time prior to Closing Time by giving written
notice of such termination to the Underwriter.
Section 12. NOTICES AND AUTHORITY TO ACT. All communications
hereunder shall be in writing and, if sent to the Company, shall be mailed,
delivered or telecopied and confirmed to the Company at: 0000 Xxxx Xxxxxxxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxxxx, III, with a copy to
Xxxxxxx Xxxxx & Xxxxx LLP, 5000 Columbia Center, 000 Xxxxx Xxxxxx, Xxxxxxx, XX
00000, Attention: Xxxx Xxxxxx. If sent to Tradeway Securities Group, Inc.,
shall be mailed, delivered or telecopied and confirmed to it at: 000 Xxxx Xxxxx
Xxxxx, Xxxxx 000, Xxxxx, XX 00000, Attention: Xxxx Xxxxxxxx. Notices shall be
effective when actually received.
Section 13. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Underwriter, the Company and such parties' respective
successors to the extent provided herein. This Agreement and the conditions and
provisions hereof are intended to be and are for the sole and exclusive benefit
of the parties hereto and their respective successors, assigns and controlling
persons and parties indemnified hereunder, and for the benefit of no other
person, firm or corporation. No purchaser of a Share shall be considered to be
a successor or an assignee solely on the basis of such purchase.
Section 14. GOVERNING LAW. This Agreement and the rights and
obligations of the parties created hereby shall be governed by the laws of the
State of Washington.
Section 15. REQUIREMENTS OF LAW. Whenever in this Agreement it is
stated that a party will take or refrain from taking a particular action, such
party may nevertheless refrain from taking or take such action if advised by
counsel that doing so is required by law or advisable to ensure compliance with
law, and shall not be subject to any liability hereunder for doing so, although
such action shall permit termination of the Agreement by the other parties
hereto.
Section 16. CONSENT TO JURISDICTION. The parties hereto agree that
any action or proceeding arising directly, indirectly, or otherwise in
connection with, out of, related to, or from this Agreement, any breach hereof,
or any transaction covered hereby, shall be resolved, whether by arbitration or
otherwise, within the County of King, City of Seattle, and State of Washington.
Accordingly, the parties hereto consent and submit to the jurisdiction of the
federal and state courts and applicable arbitral body located within the County
of King, City of Seattle, and State of Washington. The parties further agree
that any such action or proceeding brought by any party to enforce any right,
assert any claim, or obtain any relief whatsoever in connection with this
Agreement shall be brought by such party exclusively in the federal or state
courts, or if appropriate, before any applicable arbitral body, located within
the County of King, City of Seattle, and State of Washington.
[remainder of page intentionally blank]
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If the foregoing is in accordance with each party's understanding of
their agreement, each party is requested to sign and return to the Company a
counterpart hereof, whereupon this instrument along with all counterparts will
become a binding agreement among them in accordance with its terms.
Very truly yours,
PACIFIC MULTIMEDIA, INC.
By:___________________________
Xxxxx X. Xxxxxxxx, III
President and Chief Executive Officer
Confirmed and accepted as of
the date first above written:
TRADEWAY SECURITIES GROUP, INC.
By:___________________________
Name: Xxxx Xxxxxxxx
Title:
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ANNEX A
FORM OF WARRANT
No. 1
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
PACIFIC MULTIMEDIA, INC.
COMMON STOCK WARRANT
Issue Date: ___________, 1997 [ ] Shares of Common Stock
For good and valuable consideration, Tradeway Securities Group, Inc. (the
"Holder") is entitled to subscribe for and purchase from Pacific MultiMedia,
Inc. (the "Company"), [ ] shares of the Company's Common Stock, having no
par value (the "Warrant Shares"). The Exercise Price per Warrant Share shall be
$5.00 per Warrant Share.
1. EXERCISE OF WARRANT.
1.1 EXERCISE OF WARRANT. Subject to the provisions of Sections 1.2 and
1.3 hereof, the Holder may exercise this Warrant in whole, or in part, at any
time prior to _________, 2002 being the fifth (5th) anniversary of the date
of closing of the Company's offering of Common Stock (the "Effective Date")
as contemplated by the Company's Registration Statement on Form SB-2 (Reg.
No. 333-26245), at which time this Warrant shall expire. Notwithstanding
anything to the contrary herein, the Warrant Shares may not be sold,
transferred, assigned or hypothecated until one year from the Effective Date
(except as otherwise permitted under Rule 2710(c)(7)(A) of the NASD Conduct
Rules).
1.2 METHOD OF EXERCISE.
(a) Subject to Section 1.1, the Holder shall exercise this Warrant by
surrendering it at the offices of the Company at the address designated for
notice purposes under Section 4.2 below, together with (i) a duly executed
subscription in substantially the form of the Subscription Notice appearing at
the end of this Warrant, and (ii) cash or a certified check payable to the
Company in the amount equal to the aggregate Exercise Price for the number of
Warrant Shares being purchased.
(b) Within three (3) business days after the Warrant has been
exercised, the Company at its expense shall issue and deliver, in such name or
names as Holder may direct, a certificate or certificates for the number of
Warrant Shares for which Holder subscribed and is entitled. A surrendered
Warrant shall be canceled by or on behalf of the Company, except that if
the Warrant is exercised in part, the Company shall execute and deliver a new
Warrant evidencing the right of Holder to purchase the balance of the Warrant
Shares. The Holder shall for all purposes be deemed to become the holder of
Warrant Shares on the date this Warrant is duly exercised for such Warrant
Shares.
1.3 NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall round up the number of shares to the nearest whole
share.
1.4 REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver in lieu of this Warrant, a
Warrant of like tenor and amount.
1.5 RIGHTS OF HOLDER. The Holder shall not be entitled to vote or receive
dividends or be deemed the holder of Common Stock or any other securities of the
Company that may at any time be issuable on the exercise hereof for any purpose,
nor shall anything contained herein be construed to confer upon the Holder, as
such, any of the rights of a shareholder of the Company until the Warrant shall
have been exercised as provided herein.
2. TRANSFER OF THE WARRANT.
This Warrant may not be transferred without the prior written consent of
the Company, in its sole and absolute discretion. With the prior written
consent of the Company, this Warrant may be transferred, in whole or in part, to
any person by presentation of the Warrant to the Company with written
instructions for transfer; provided, however, that Holder agrees to comply with
Section 3.2 below.
3. PROVISIONS FOR PROTECTION OF THE HOLDER.
3.1 RESERVATION OF SHARES. The Company shall at all times reserve such
number of shares of its authorized but unissued Common Stock as necessary to
permit the exercise of the Warrant for of all of the Warrant Shares. If at any
time an insufficient number of shares is authorized for such purpose, the
Company will take such action as, in the opinion of its counsel, may be
necessary to increase its authorized but unissued Common Stock to such number of
shares as shall be sufficient for such purpose.
3.2 COMPLIANCE WITH SECURITIES LAWS. Neither this Warrant nor the Warrant
Shares have been registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws. This Warrant has been acquired
for investment purposes and not with a view to distribution or resale and may
not be pledged, hypothecated, sold or otherwise transferred without an effective
registration statement for such Warrant under the Securities Act or any
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applicable state securities laws or an opinion of counsel or other evidence
reasonably satisfactory to the Company that registration is not required
thereunder. Certificates representing the Warrant Shares shall bear a legend
substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO
THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
3.3 ADJUSTMENT FOR DIVIDENDS, STOCK SPLITS, OR RECLASSIFICATION. In case
the Company shall:
(a) declare a dividend of Common Stock (or other securities of the
Company) on its Common Stock (or any other class of securities issuable upon
exercise of this Warrant),
(b) subdivide outstanding Common Stock (or any other class of
securities issuable upon exercise of this Warrant) into a larger number of
shares of Common Stock (or such other securities) by reclassification or
otherwise, or
(c) combine outstanding Common Stock (or any other class of
securities issuable upon exercise of this Warrant) into a smaller number of
shares of Common Stock (or such other securities) by reclassification or
otherwise,
the number of shares of Common Stock (or other securities) issuable upon
exercise of this Warrant immediately prior to any such event shall be adjusted
proportionately, and the Exercise Price shall be equitably adjusted, so that
thereafter the Holder shall be entitled to receive upon exercise of this Warrant
the number of shares of Common Stock (or other securities) which such Holder
would have owned after the happening of any of the events described above had
this Warrant been exercised immediately prior to the happening of such event.
An adjustment made pursuant to this paragraph shall become effective immediately
after the record date in the case of a dividend and shall become effective
immediately after the effective date in the case of a subdivision or
combination. The determination of an adjustment that is made by the Board of
Directors in good faith and absent error shall be final, conclusive and binding.
3.4 ADJUSTMENTS FOR MERGERS AND REORGANIZATIONS. If, prior to exercise of
this Warrant, the Company shall at any time consolidate or merge with another
corporation (other than a merger or consolidation in which the Company is the
surviving corporation), the Holder hereof will thereafter be entitled to
receive, upon the exercise hereof, the securities or property to which a holder
of the number of shares of Common Stock (or other securities) then deliverable
upon the exercise hereof would have been entitled upon such consolidation or
merger, and the Company shall take such steps in connection with such
consolidation or merger as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as
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reasonably may be, in relation to any securities or property thereafter
deliverable upon the exercise of this Warrant.
3.5 NOTICE OF ADJUSTMENT. The Company shall provide the Holder notice
within three (3) business days after any adjustment under Sections 3.3 or 3.4,
together with reasonable details of the manner and effect of the adjustment.
4. MISCELLANEOUS PROVISIONS.
4.1 APPLICABLE LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Washington.
4.2 NOTICES. Any notice or other document required or permitted to be
given in connection with this Warrant shall be sufficiently given if sent by
first class mail, postage prepaid, addressed to the Company at its executive
offices and to the Holder at the last address shown on the books of the Company
or its transfer agent maintained for the registry and transfer of Warrants.
4.3 SUCCESSORS. All covenants and provisions of this Warrant by or for
the benefit of the Company shall bind and inure to the benefit of its respective
successors and assigns.
4.4 BENEFITS OF THIS WARRANT. Nothing in this Warrant shall be construed
to give to any person or corporation other than the Company and the Holder any
legal or equitable right, remedy or claim under this Warrant. This Warrant
shall be for the sole and exclusive benefit of the Company and the Holder.
PACIFIC MULTIMEDIA, INC.
___________________________________________
Xxxxx X. Xxxxxxxx, III, President
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(FORM OF SUBSCRIPTION NOTICE TO BE EXECUTED
UPON EXERCISE OF WARRANT)
SUBSCRIPTION NOTICE
The undersigned, the registered holder of Warrant __ (the "Warrant"),
issued by Pacific MultiMedia, Inc. hereby (i) irrevocably subscribes for
_________ shares of Common Stock which the undersigned is entitled to purchase
under the terms and conditions of the Warrant, (ii) makes payment of
$___________ in full [in cash/by certified check] therefor as called for by the
Warrant, and (iii) directs that the certificates for such shares of Common Stock
issuable upon exercise of the Warrant be issued in the name of and delivered to
________________ whose address is _______________________________.
__________________________________
(Name)
__________________________________
(Address)
SIGNATURE: __________________________________
Dated: _________________, 199___
________________________________________________________________
NOTICE: The signature on this Subscription Notice must correspond with the
name as written upon the face of the Warrant, or upon an assignment form
attached hereto.
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