EXHIBIT 1.1
SOLOPOINT, INC.
000-X Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
UNDERWRITING AGREEMENT
----------------------
_________, 1997
X.X. Xxxxxx & Co., Inc.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
SOLOPOINT, INC., a California corporation (the "Company"), proposes to
issue and sell pursuant to this Underwriting Agreement (the "Agreement"), an
aggregate of 3,000,000 shares of Common Stock, no par value per share (the
"Shares"), commencing on the effective date of the Registration Statement (the
"Effective Date"). In addition, the Company proposes to grant the option
referred to in Section 2(b) to purchase all or any part of an aggregate of
450,000 additional Shares.
The aggregate of 3,000,000 Shares, together with all or any part of the
450,000 Shares which you have the option to purchase, are herein called the
"Shares." The Common Stock of the Company to be outstanding after giving effect
to the sale of the Shares (including the 450,000 Shares that the Underwriter has
the option to purchase) is herein called the "Common Stock."
You have advised the Company that you desire to purchase the Shares. The
Company confirms the agreements made by it with respect to the purchase of the
Shares by you, as follows:
1. Representations and Warranties of the Company.
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The Company represents and warrants to, and agrees with you that:
(a) A registration statement (File No. 333-______) on Form SB-2
relating to the public offering of the Shares, including a preliminary form of
prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with the Commission under the Act. "Preliminary
Prospectus" shall mean each prospectus filed pursuant to Rule 430 of the Rules
and Regulations. The registration statement (including all
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financial schedules and exhibits) as amended at the time it becomes effective
and the final prospectus included therein are respectively referred to as the
"Registration Statement" and the "Prospectus", except that (i) if the prospectus
first filed by the Company pursuant to Rule 424(b) or Rule 430A of the Rules and
Regulations or otherwise utilized and not required to be so filed shall differ
from said prospectus as then amended, the term "Prospectus" shall mean the
prospectus first filed pursuant to Rule 424(b) or Rule 430A or so utilized from
and after the date on which it shall have been filed or utilized, and (ii) if
such registration statement or prospectus is amended or such prospectus is
supplemented, after the effective date of such registration statement and prior
to the Option Closing Date (as defined in Section 2(b)), the term "Registration
Statement" shall include such registration statement as so amended, and the term
"Prospectus" shall include the prospectus as so amended or supplemented, or
both, as the case may be.
(b) At the time the Registration Statement becomes effective and at
all times subsequent thereto up to the Option Closing Date (as defined below),
(i) the Registration Statement and Prospectus will in all material respects
conform to the requirements of the Act and the Rules and Regulations; and (ii)
neither the Registration Statement nor the Prospectus will include 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 in
light of the circumstances under which they were made; provided, however, that
the Company makes no representations, warranties or agreements as to information
contained in or omitted from the Registration Statement or Prospectus in
reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of you specifically for use in the preparation thereof.
It is understood that the statements set forth in the last paragraph on the
cover page of the Prospectus, set forth in the Prospectus with respect to
stabilization, the second paragraph under the caption "Risk Factors -- De-
listing of Securities from the Nasdaq Market; Limited Liquidity of Trading
Market; Possible Inability of Underwriter to Make a Market in the Company's
Common Stock," the material set forth under the heading "Underwriting" and the
identity of counsel to you under the heading "Legal Matters" constitute the only
information furnished in writing by you for inclusion in the Registration
Statement and Prospectus, as the case may be.
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and is duly
qualified to do business as a foreign corporation and is in good standing in all
other jurisdictions in which the nature of its business or the character or
location of its properties requires such qualification, except where failure to
so qualify is not reasonably likely to materially adversely affect the Company's
business, properties or financial condition.
(d) The authorized capital stock of the Company as of the Effective
Date was as set forth under "Capitalization" in the Prospectus. The shares of
issued and outstanding capital stock of the Company set forth thereunder have
been duly authorized, validly issued and are fully paid and non-assessable;
except as set forth in the Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or agreements or other
rights to convert any obligation into, any shares of capital stock of the
Company have been granted or entered into by the Company. The
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Shares and Underwriter's Warrant conform in all material respects to all
statements relating thereto contained in the Registration Statement and
Prospectus.
(e) The Shares are duly authorized and, when issued, delivered and
paid for pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights of any security
holder of the Company. The certificates evidencing the Shares are and will be
in valid and proper legal form. The Underwriter's Warrant (as defined in
Section 11) will be exercisable for shares of Common Stock of the Company in
accordance with the terms of the Underwriter's Warrant and at the prices therein
provided for. The shares of Common Stock have been duly authorized and reserved
for issuance upon such exercise, and such shares, when issued upon such exercise
in accordance with the terms of the Underwriter's Warrant and when the price is
paid, shall be fully paid and non-assessable. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated in
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any securities of the
Company, except as described in the Registration Statement.
(f) This Agreement and the Underwriter's Warrant have been duly and
validly authorized, executed and delivered by the Company, and assuming due
execution by the other party or parties hereto and thereto, constitute valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except as rights to indemnity and contribution
hereunder may be limited by applicable law and except as enforceability may be
limited by bankruptcy, insolvency or other laws affecting the rights of
creditors generally or by general equitable principles. The Company has full
power and lawful authority to authorize, issue and sell the Shares to be sold by
it hereunder on the terms and conditions set forth herein, and no consent,
approval, authorization or other order of any governmental authority is required
in connection with such authorization, execution and delivery or with the
authorization, issue and sale of the Shares or the Underwriter's Warrant, except
such as may be required under the Act or state securities laws.
(g) Except as described in the Prospectus, the Company is not in
material violation, breach or default of or under, and consummation of the
transactions herein contemplated and the fulfillment of the terms of this
Agreement and the Underwriter's Warrant will not conflict with, or result in a
breach of, any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance pursuant
to the terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company are
subject, which would have a material adverse effect on the business, properties
or financial condition of the Company, nor will such action result in any
violation of the provisions of the certificate of incorporation or the By-laws
of the Company, as amended, or any statute or any order, rule or regulation
applicable to the Company of any court or of any regulatory authority or other
governmental body having jurisdiction over the Company, which would have a
material adverse effect on the business, properties or financial condition of
the Company.
(h) The Company owns no real property and, subject to the
qualifications stated in the Prospectus, the Company has good and marketable
title to all properties and assets described in the Prospectus as owned by it,
free and clear of all liens, charges, encumbrances or restrictions,
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except such as are not materially significant or important in relation to its
business; all of the leases and subleases under which the Company is the lessor
or sublessor of properties or assets or under which the Company holds properties
or assets as lessee or sublessee as described in the Prospectus are in full
force and effect, and, except as described in the Prospectus, the Company is not
in default in any respect with respect to any of the terms or provisions of any
of such leases or subleases which would have a material adverse effect on the
business, properties or financial condition of the Company, and no claim has
been asserted by anyone adverse to rights of the Company as lessor, sublessor,
lessee or sublessee under any of the leases or subleases mentioned above, or
affecting or questioning the right of the Company to continued possession of the
leased or subleased premises or assets under any such lease or sublease except
as described or referred to in the Prospectus, which would have a material
adverse effect on the business properties or financial condition of the Company;
and the Company owns or leases all such properties described in the Prospectus
as are necessary to its operations as now conducted and, except as otherwise
stated in the Prospectus, as proposed to be conducted as set forth in the
Prospectus.
(i) Ernst & Young, who have given their report on certain financial
statements filed and to be filed with the Commission as a part of the
Registration Statement, which are included in the Prospectus, are with respect
to the Company independent public accountants as required by the Act and the
Rules and Regulations.
(j) The financial statements and schedules, together with related
notes, set forth in the Prospectus or the Registration Statement present fairly
the financial position and results of operations and changes in financial
position of the Company on the basis stated in the Registration Statement, at
the respective dates and for the respective periods to which they apply. Said
statements and schedules and related notes have been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent
during the periods involved.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, the Company has not incurred
any liabilities or obligations, direct or contingent, not in the ordinary course
of business, or entered into any transaction not in the ordinary course of
business, which is material to the business of the Company, and there has not
been any change in the capital stock of, or any incurrence of long-term debt by,
the Company or any issuance of options, warrants or other rights to purchase the
capital stock of the Company or any adverse change or any development involving,
so far as the Company can now reasonably foresee, a prospective adverse change
in the condition (financial or other), net worth, results of operations,
business, key personnel or properties of it which would be material to the
business or financial condition of the Company, and the Company has not become
party to, and neither the business nor the property of the Company has become
the subject of, any material litigation whether or not in the ordinary course of
business.
(l) Except as set forth in the Prospectus, there is not now pending
nor, to the knowledge of the Company, threatened, any action, suit or proceeding
(including those related to environmental matters or discrimination on the basis
of age, sex, religion or race) to which the Company is a party before or by any
court or governmental agency or body, which, if adversely determined, would
result in any material adverse change in the condition (financial or other),
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business prospects, net worth or properties of the Company; and, except as set
forth in the Prospectus, no labor disputes involving the employees of the
Company exist which, if adversely determined, would result in any material
adverse change in the condition (financial or otherwise), business prospects,
net worth or property of the Company.
(m) Except as disclosed in the Prospectus, the Company has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes shown as due thereon; and there is no tax deficiency which has
been or to the knowledge of the Company might be asserted against the Company
which has not been adequately reserved for on the Company's balance sheet.
(n) The Company has sufficient licenses, permits and other
governmental authorizations currently required for the conduct of its business
or the ownership of its property as described in the Prospectus and is in all
material respects complying therewith and owns or possesses adequate rights to
use all material patents, patent applications, trademarks, xxxx registrations,
copyrights and licenses necessary for the conduct of such business and has not
received any notice of conflict with the asserted rights of others in respect
thereof. To the best knowledge of the Company, none of the activities or
business of the Company is in violation of, or causes the Company to violate,
any law, rule, regulation or order of the United States, any state, county or
locality, or of any agency or locality, the violation of which would have a
material adverse effect upon the condition (financial or otherwise), business
prospects, net worth or properties of the Company.
(o) The Company has not, directly or indirectly, at any time (i) made
any contributions to any candidate for foreign political office, or if made,
failed to disclose fully any such contribution made in violation of law, (ii)
made any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments or contributions required or allowed by applicable law,
(iii) made any payment outside the ordinary course of business to any purchasing
or selling agent or person charged with similar duties of any entity to which
the Company sells or from which the Company buys products for the purpose of
influencing such agent or person to buy products from or sell products to the
Company, or (iv) except as set forth in the Prospectus, engaged in any
transaction, maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Company. The Company's internal
accounting controls and procedures are sufficient to cause the Company to comply
in all material respects with the Foreign Corrupt Practices Act of 1977, as
amended.
(p) On the Closing Dates (as defined in Section 2(c)), all transfer or
other taxes (including franchise, capital stock or other tax, other than income
taxes imposed by any jurisdiction), if any, which are required to be paid in
connection with the sale and transfer of the Shares to the Underwriter hereunder
will have been fully paid or provided for by the Company and all laws imposing
such taxes will have been fully complied with.
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(q) All contracts and other documents of the Company which are, under
the Rules and Regulations, required to be filed as exhibits to the Registration
Statement have been so filed.
(r) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Shares or to facilitate the sale or resale of
the Shares.
(s) The Company has no subsidiaries.
(t) Except for this Agreement and other agreements with you, the
Company has not entered into any agreement pursuant to which any person is
entitled either directly or indirectly to compensation from the Company for
services as a finder in connection with the proposed public offering.
(u) The Company's Common Stock is registered with the Commission
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(v) The Company is not in violation of any law, ordinance,
governmental rule or regulation or court decree to which it may be subject which
violation would have a material adverse effect on the financial condition,
results of operations, business or prospects of the Company.
2. Purchase, Delivery and Sale of the Shares.
-----------------------------------------
(a) Subject to the terms and conditions of this Agreement, and upon
the basis of the representations, warranties and agreements herein contained,
the Company agrees to issue and sell to you, and you agree to buy from the
Company at $_____ per Share at the place and time hereinafter specified, the
number of Shares set forth opposite your name in Schedule I hereto (the "Firm
Shares").
Delivery of the Firm Shares against payment therefor shall take
place at the offices of X.X. Xxxxxx & Co., Inc., 0000 Xx. Xxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 (or at such other place as may be designated by
agreement between you and the Company) at 9:30 a.m. New York time on ________,
1997, or at such other time and date, not later than three business days
thereafter (or four business days if the Registration Statement is declared
effective after the close of the business day), as you may designate, such time
and date of payment and delivery for the Firm Shares being herein called the
"First Closing Date." Time shall be of the essence and delivery at the time and
place specified in this subsection (a) is a further condition to your
obligations hereunder.
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants you an option to purchase all or any
part of an aggregate of 375,000 additional Shares at the same price per Share as
you shall pay for the Shares being sold pursuant to the provisions of subsection
(a) of this Section 2 (such additional Shares being referred to herein as the
"Option Shares"). This option may be exercised on one occasion within 30
business days after the Effective Date upon
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notice by you to the Company advising it as to the amount of Option Shares as to
which the option is being exercised, the names and denominations in which the
certificates for such Option Shares are to be registered and the time and date
when such certificates are to be delivered. Such time and date shall be
determined by you but shall not be earlier than four and not later than ten full
business days after the exercise of said option, nor in any event prior to the
First Closing Date, and such time and date is referred to herein as the "Option
Closing Date." Delivery of the Option Shares against payment therefor shall take
place at the offices of X.X. Xxxxxx & Co., Inc., 0000 Xx. Xxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000. Time shall be of the essence and delivery at the time
and place specified in this subsection (b) is a further condition to your
obligations hereunder.
The Option granted hereunder may be exercised only to cover over-
allotments in the sale by you of Firm Shares referred to in subsection (a)
above.
(c) The Company will make the certificates for the Shares to be
purchased by you hereunder available to you for checking at least one full
business day prior to the First Closing Date or the Option Closing Date (which
are collectively referred to herein as the "Closing Dates" and individually as a
"Closing Date"), as the case may be. The certificates shall be in such names
and denominations as you may request, at least two full business days prior to
the relevant Closing Dates. Time shall be of the essence and the availability
of the certificates at the time and place specified in this Agreement is a
further condition to your obligations.
Definitive engraved certificates in negotiable form for the Shares
to be purchased by you hereunder will be delivered by the Company to you for
your account against payment of the purchase price by you, at your option, by
certified or bank cashier's checks in New York Clearing House funds or by wire
transfer, payable to the order of the Company.
In addition, in the event you exercise the option to purchase from
the Company all or any portion of the Option Shares pursuant to the provisions
of subsection (b) above, payment for such Option Shares shall be made to or upon
the order of the Company by you, at your option, by certified or bank cashier's
checks payable in New York Clearing House funds or by wire transfer, at the
offices of X.X. Xxxxxx & Co., Inc. at the time and date of delivery of such
Option Shares as required by the provisions of subsection (b) above, against
receipt of the certificates for such Option Shares by you, registered in such
names and in such denominations as you may request.
It is understood that you propose to offer the Shares to be
purchased hereunder to the public upon the terms and conditions set forth in the
Registration Statement, after the Registration Statement becomes effective.
3. Covenants of the Company.
------------------------
The Company covenants and agrees with you that:
(a) Company will use its best efforts to cause the Registration
Statement to become effective and, upon notification from the Commission that
the Registration Statement has become effective, will so advise you and will not
at any time, whether before or after the Effective
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Date, file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished
with a copy or to which you or your counsel shall have reasonably objected in
writing or which is not in compliance with the Act and the Rules and
Regulations. At any time prior to the completion by you of the distribution of
the Shares contemplated hereby (but in no event more than nine months after the
Effective Date) the Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration Statement
or Prospectus which, in your reasonable opinion, may be necessary or advisable
in connection with the distribution of the Shares.
Promptly after you or the Company is advised thereof, you will
advise the Company or the Company will advise you, as the case may be, and
confirm the advice in writing, of the receipt of any comments of the Commission,
of the effectiveness of any post-effective amendment to the Registration
Statement, of the filing of any supplement to the Prospectus or any amended
Prospectus, of any request made by the Commission for amendment of the
Registration Statement or for supplementing of the Prospectus or for additional
information with respect thereto, of the issuance by the Commission or any state
or regulatory body of any stop orders or other order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or of the
suspension of the qualification of the Shares for offering in any jurisdiction,
or the institution of any proceedings for any of such purposes, and will use its
best efforts to prevent the issuance of any such order and, if issued, to obtain
as soon as possible the lifting thereof.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company
authorizes you and selected dealers to use the Prospectus in connection with the
sale of the Shares for such period not to exceed nine months from the Effective
Date as in the reasonable opinion of counsel for you the use thereof is required
to comply with the applicable provisions of the Act and the Rules and
Regulations. In case of the happening, at any time within such period as a
Prospectus is required under the Act to be delivered in connection with sales by
an underwriter or dealer, of any event of which the Company has knowledge and
which materially affects the Company or the Shares, or which in the opinion of
counsel for the Company or counsel for you should be set forth in an amendment
to the Registration Statement or a supplement to the Prospectus in order to make
the statements therein not then misleading, in light of the circumstances
existing at the time the Prospectus is required to be delivered to a purchaser
of the Shares, or in case it shall be necessary to amend or supplement the
Prospectus to comply with the Act or with the Rules and Regulations, the Company
will notify you promptly and forthwith prepare and furnish to you copies of such
amended Prospectus or of such supplement to be attached to the Prospectus, in
such quantities as you may reasonably request, in order that the Prospectus, as
so amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Registration Statement or amended Prospectus or supplement
to be attached to the Prospectus shall be without expense to the Underwriter,
except that in case you are required, in connection with the sale of the Shares,
to deliver a Prospectus nine months or more after the Effective Date, the
Company will upon request of and
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at your expense, amend or supplement the Registration Statement and Prospectus
and furnish you with reasonable quantities of prospectuses complying with
Section 10(a)(3) of the Act.
(b) The Company will comply with the Act, the Rules and Regulations
and the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations thereunder in connection with the offering and issuance of
the Shares.
The Company will use its best efforts to qualify or register the
Shares for sale under the securities or "blue sky" laws of such jurisdictions as
you may have designated in writing prior to the execution hereof and will make
such applications and furnish such information to counsel for you as may be
required for that purpose and to comply with such laws, provided that the
Company shall not be required to qualify as a foreign corporation or a dealer in
securities or to execute a general consent to service process in any
jurisdiction. The Company will, from time to time, prepare and file such
statements and reports as are or may be required to continue such qualification
in effect for so long a period as you may reasonably request. Legal fees for
such qualifications shall be itemized based on the time expended and costs
incurred, shall be reasonable and shall not in any event exceed $35,000.00,
exclusive of filing fees (unless otherwise agreed).
(c) The Company will instruct its transfer agent to provide you with
copies of the Depository Trust Company stock transfer sheets on a weekly basis
for a period of six months from the First Closing Date and on a monthly basis
thereafter for six additional months.
(d) For so long as the Company is a reporting company under either
Section 12(g), 13 or 15(d) of the Exchange Act, the Company, at its expense,
will furnish to its shareholders an annual report (including financial
statements audited by independent public accountants), in reasonable detail and
at its expense, will furnish to you during the period ending five years from the
date hereof, (i) as soon as practicable after the end of each fiscal year, a
balance sheet of the Company and any subsidiaries as at the end of such fiscal
year, together with statements of income, stockholders, equity and cash flows of
the Company and any subsidiaries as at the end of such fiscal year, all in
reasonable detail and accompanied by a copy of the certificate or report thereon
of independent accountants; (ii) as soon as they are available, a copy of all
reports (financial or other) mailed to security holders; (iii) as soon as they
are available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission; and (iv) such other information of a
public nature as you may from time to time reasonably request.
(e) In the event the Company has an active subsidiary or subsidiaries,
such financial statements referred to in subsection (e) above will be on a
consolidated basis to the extent the accounts of the Company and its subsidiary
or subsidiaries are consolidated in reports furnished to its stockholders
generally.
(f) The Company will deliver to you at or before the First Closing
Date one signed copy of the Registration Statement including all financial
statements and exhibits filed therewith, and of all amendments thereto. The
Company will deliver to or upon your order, from time to time until the
Effective Date as many copies of any Preliminary Prospectus filed with the
Commission prior to the Effective Date as the Underwriter may reasonably
request. The Company
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will deliver to you on the Effective Date and thereafter for so long as a
Prospectus is required to be delivered under the Act, from time to time, as many
copies of the Prospectus, in final form, or as thereafter amended or
supplemented, as you may from time to time reasonably request.
(g) The Company will make generally available to its security holders
and deliver to you as soon as it is practicable to do so, but in no event later
than 90 days after the end of 12 months after its current fiscal quarter, an
earnings statement (which need not be audited) covering a period of at least 12
consecutive months beginning after the Effective Date which shall satisfy the
requirements of Section 11(a) of the Act.
(h) The Company will apply the net proceeds from the sale of the
Shares substantially for the purposes set forth under "Use of Proceeds" in the
Prospectus, and will file such reports with the Commission with respect to the
sale of the Shares and the application of the proceeds therefrom as may be
required pursuant to Rule 463 of the Rules and Regulations.
(i) The Company will, promptly upon your request, prepare and file
with the Commission any amendments or supplements to the Registration Statement,
preliminary Prospectus or Prospectus and take any other action, which in the
opinion of Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, counsel to you may be
reasonably necessary or advisable in connection with the distribution of the
Shares and will use its best efforts to cause the same to become effective as
promptly as possible.
(j) Prior to the Effective Date, the Company will use its best efforts
to cause all the Directors and officers of the Company to enter into a written
agreement with you, which, among other things, shall provide that for a period
of 13 months following the closing date of the offering, such Directors and
officers will not sell, assign, hypothecate or pledge any of the shares of
Common Stock of the Company owned by them on the Effective Date, or subsequently
acquired by the exercise of any options or warrants or conversion of any
convertible security of the Company held by them on the Effective Date directly
or indirectly, except with your prior written consent and such Directors and
officers will permit all certificates evidencing those shares to be stamped with
an appropriate restrictive legend, and will cause the transfer agent for the
Company to note such restrictions on the transfer books and records of the
Company.
(k) The Company shall, upon the initial filing of the Registration
Statement, make all filings required to obtain approval for the quotation of the
Shares on the Nasdaq SmallCap Market ("NASDAQ") and will use its best efforts to
effect and maintain the aforesaid approval for at least five (5) years from the
date of this Agreement. The Company shall cause its listing in the Standard &
Poor's Corporate Records to be maintained for five years from the date of this
Agreement.
(l) The Company represents that it has not taken, and agrees that it
will not take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Shares or to facilitate the
sale or resale the Shares.
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(m) During the period of the offering, and for a period of twelve (12)
months from the Effective Date, the Company will not sell or otherwise dispose
of any securities of the Company (except for shares of Common Stock issuable
upon exercise of options or warrants or conversion of convertible securities
outstanding on the Effective Date or upon exercise of options granted or the
grant of options under said plan less any options to purchase shares granted
prior to the Effective Date, pursuant to the Company's Stock Option Plans)
without your prior written consent, which consent shall not be unreasonably
withheld. For a period of twenty-four (24) months from the Effective Date, the
Company will not issue, sell or otherwise dispose of any securities of the
Company pursuant to Regulation S under the Act without your prior written
consent.
(n) Prior to the filing of the Registration Statement, the Company
shall retain a public relations firm acceptable to you, and shall continue to
retain such firm, or any alternate firm acceptable to you, for a minimum period
of two (2) years.
(o) The Company will reserve and keep available that maximum number of
its authorized but unissued securities which are issuable upon exercise of the
Underwriter's Warrant outstanding from time to time.
(p) The Company shall deliver to you, at the Company's expense, three
(3) bound volumes in form and content acceptable to you, containing the
Registration Statement and all exhibits filed therewith, and all amendments
thereto, and all other material correspondence, filings, certificates and other
documents filed and/or delivered in connection with this offering. The Company
shall use its best efforts to deliver such volumes with one hundred eighty (180)
days of the First Closing Date.
(q) The Company shall deliver to you an executed financial consulting
agreement in form and substance reasonably acceptable to you whereby you agree
to act as a financial consultant for a period of one year from the First Closing
Date for a fee of $6,000 per month, which shall be paid in full on the First
Closing Date.
(r) For a period of thirty-six (36) months from the closing of the
offering, the Underwriter shall have the right to designate one member of the
Board of Directors provided that the designee is acceptable to the Company.
Such member shall be entitled to the same compensation, reimbursements and
indemnification as other members of the Company's Board of Directors.
4. Conditions of Obligations of X.X. Xxxxxx & Co., Inc.
----------------------------------------------------
Your obligations to purchase and pay for the Shares which you have
agreed to purchase hereunder are subject to the accuracy (as of the date hereof,
and as of the Closing Dates) of and compliance with the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and you
shall have received notice thereof not later than 10:00 a.m., New York time, on
the date of this Agreement, or at such later time or on such later date as to
which you may Agree in writing; on the Closing Dates, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that or any similar purpose shall have been instituted or shall
be pending or, to the knowledge of any Underwriter or to the knowledge of the
Company, shall be contemplated by the Commission; any request on the part of the
Commission for additional information shall have
11
been complied with to the reasonable satisfaction of Freshman, Marantz,
Orlanski, Xxxxxx & Xxxxx, counsel to you; and no stop order shall be in effect
denying or suspending effectiveness of the Registration Statement nor shall any
stop order proceedings with respect thereto be instituted or pending or
threatened under the Act.
(b) At the First Closing Date, you shall have received the opinion,
dated as of the First Closing Date, of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, counsel for the Company, in form and substance
reasonably satisfactory to counsel for you, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and is duly qualified or licensed to do business as a
foreign corporation in good standing in each other jurisdiction in which
the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where failure to so qualify
will not have a material adverse effect in the business, properties or
financial condition of the Company. The Company has the corporate power
to own, lease and operate its properties and to conduct its business as
described in the prospectus and to enter into and perform its
obligations under this Agreement, the Warrant Agreement and the
Underwriter's Warrant;
(ii) the authorized capitalization of the Company as of the date
of the Prospectus was as set forth in the Prospectus; all of the shares
of the Company's outstanding stock requiring authorization for issuance
by the Company's Board of Directors have been duly authorized and
validly issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; the outstanding shares
of Common Stock of the Company to such counsels knowledge, have not been
issued in violation of the preemptive rights of any stockholder and the
stockholders of the Company do not have any preemptive rights or other
rights to subscribe for or to purchase; except for the transfer
restrictions regarding "affiliates" contained in Rule 144 promulgated
under the Act, there are no restrictions upon the voting or transfer of,
any of the Shares; the Common Stock and the Underwriter's Warrant
conform in all material respects to the respective descriptions thereof
contained in the Prospectus; the Shares to be issued as contemplated in
the Registration Statement and this Agreement have been duly authorized
and, when paid, will be validly issued, fully paid and non-assessable
and free of preemptive rights contained in the Company's certificate of
incorporation or By-laws, or any other document, instrument or agreement
known to counsel; a sufficient number of shares of Common Stock has been
reserved for issuance upon exercise of the Underwriter's Warrant; to
such counsels knowledge, neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any registration rights or other rights, other
than those contemplated by the Underwriter's Warrant or which have been
waived or satisfied, for or relating to the registration of the Shares;
(iii) this Agreement and the Underwriter's Warrant (sometimes
hereinafter collectively referred to as the "Underwriter Agreements")
have been duly and validly authorized, executed and delivered by the
Company, and assuming due execution and delivery of this Agreement by
you, such agreements are, or when duly executed will be, the
12
valid and legally binding obligations of the Company except as
enforceability may be limited by bankruptcy, insolvency, moratorium or
other laws affecting the rights of creditors, or by general equitable
principles; provided that no opinion need be expressed as to the
enforceability of the indemnity provisions contained in Section 6 or the
contribution provisions contained in Section 7 of this Agreement;
(iv) the certificates evidencing the Shares are in valid and
proper legal form; the Underwriter's Warrant will be exercisable for
shares of Common Stock of the Company in accordance with the terms of
the Underwriter's Warrant and at the prices therein provided for; the
shares of Common Stock of the Company issuable upon exercise of the
Underwriter's Warrant have been duly authorized and reserved for
issuance upon such exercise, and such shares, when issued upon such
exercise in accordance with the terms of the Underwriter's Warrant and
when the price is paid shall be fully paid and non-assessable;
(v) Such counsel knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which are
required to be described or referred to in the Registration Statement
which are not so described or referred to;
(vi) The execution and delivery of this Agreement and the
Underwriter's Warrant and the incurrence of the obligations herein and
therein set forth and the consummation of the transactions herein or
therein contemplated will not result in a violation of, or constitute a
default under, the certificate or articles of incorporation or By-laws
of the Company, or in a violation of or default under any obligation,
agreement, covenant or condition contained in any material bond,
debenture, note or other evidence of indebtedness or in any of the
material contracts, indentures, mortgages, loan agreements, leases,
joint ventures or other agreements or instruments to which the Company
is a party that are filed as Exhibits to the Registration Statement or
otherwise known to counsel;
(vii) Based upon a telephone conversation from a member of the
Staff of the Commission, the Registration Statement has become effective
under the Act, and to such counsels knowledge, no stop order suspending
the effectiveness of the Registration Statement is in effect, no
proceedings for that purpose have been instituted or are pending before,
or threatened by, the Commission and the Registration Statement and the
Prospectus (except, in the case of both the Registration Statement and
any Amendment thereto, and the Prospectus and any supplement thereto for
the financial statements and notes and schedules thereto, and other
financial information or statistical data contained therein, or omitted
therefrom, as to which such counsel need express no opinion) comply as
to form in all material respects with the applicable requirements of the
Act and the Rules and Regulations;
(viii) All descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and
other documents are accurate and fairly present the information required
to be shown, and such counsel is familiar with all contracts and other
documents referred to in the Registration Statement and the Prospectus
and any such amendment or supplement, or filed as exhibits to the
Registration Statement,
13
and such counsel does not know of any contracts or documents of a
character required to be summarized or described therein or to be filed
as exhibits thereto which are not so summarized, described or filed;
(ix) No authorization, approval, consent or license of any
governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or delivery
of the Shares by the Company, in connection with the execution, delivery
and performance of this Agreement or the Underwriter's Warrant by the
Company or in connection with the taking of any action contemplated
herein or therein, or the issuance of the Underwriter's Warrant or the
Shares underlying the Underwriter's Warrant, other than registration or
qualification of the Shares under applicable state or foreign securities
or blue sky laws (as to which such counsel need express no opinion) and
registration under the Act; and
(x) The statements in the Registration Statement under the
caption "Description of Capital Stock," to the extent that such
statements constitute a matter of law or legal conclusion have been
reviewed by such counsel and are correct in all material respects; and
Such counsel has participated in the preparation of the
Registration Statement and the Prospectus and although such counsel has not
reviewed the accuracy or completeness of the statements contained in the
Registration Statement or Prospectus nothing has come to the attention of such
counsel that caused such counsel to have reason to believe that the Registration
Statement or any amendment thereto at the time it became effective contained 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 or that the Prospectus or any supplement thereto contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make statements therein in light of the circumstances under which they
were made not misleading (except, in the case of both the Registration Statement
and any amendment thereto and the Prospectus and any supplement thereto, for the
financial statements, notes and schedules thereto and other financial
information and statistical data contained therein, as to which such counsel
need express no opinion);
In rendering such opinion, such counsel may rely upon certificates
of any officer of the Company or public officials as to matters of fact; and in
rendering such opinion may either (i) rely as to all matters of law other than
the law of the United States or of the State of California upon opinions of
counsel satisfactory to you, in which case the opinion shall state that they
have no reason to believe that you and they are not entitled to so rely or (ii)
assume that the laws of any state other than the State of California are
identical to the laws of the State of California, in rendering such opinion.
(c) All corporate proceedings and other legal matters relating to this
Agreement, the Registration Statement, the Prospectus, and other related matters
shall be reasonably satisfactory to or approved by Freshman, Marantz, Orlanski,
Xxxxxx & Xxxxx, counsel to you, and you shall have received from such counsel a
signed opinion, dated as of the First Closing Date, with respect to the validity
of the issuance of the Shares, the form of the Registration Statement and
Prospectus (other
14
than the financial statements and other financial data contained therein), the
execution of this Agreement and other related matters as you may reasonably
require. The Company shall have furnished to counsel for you such documents as
they may reasonably request for the purpose of enabling them to render such
opinion.
(d) You shall have received a letter on and as of the Effective Date
and again on and as of the First Closing Date, in each instance describing
procedures carried out to a date within five (5) days of the date of the letter,
from Ernst & Young LLP, independent public accountants for the Company,
substantially in the form approved by you.
(e) At each of the Closing Dates, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of such Closing Date, and the Company
shall have performed all of its obligations hereunder and satisfied all the
conditions on its part to be satisfied at or prior to such Closing Date; (ii)
the Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statements 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 in light of the circumstances under which they were made; (iii)
there shall have been, since the respective dates as of which information is
given, no material adverse change in the business, properties, condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt or general affairs of the Company from that set forth in the
Registration Statement and the Prospectus, except changes which the Registration
Statement and Prospectus indicate might occur after the Effective Date and the
Company shall not have incurred any material liabilities nor entered into any
agreement not in the ordinary course of business other than as referred to in
the Registration Statement and Prospectus; and (iv) except as set forth in the
Prospectus, no action, suit or proceeding at law shall be pending or threatened
against the Company which would be required to be disclosed in the Registration
Statement, and no proceedings shall be pending or threatened against the Company
before or by any commission, board or administrative agency in the United States
or elsewhere, wherein an unfavorable decision, ruling or finding would
materially and adversely affect the business, property, condition (financial or
otherwise), results of operations or general affairs of the Company. In
addition, you shall have received, at the First Closing Date, a certificate
signed by the President and the principal financial or accounting officer of the
Company, dated as of the First Closing Date, evidencing compliance with the
provisions of this subsection (e).
(f) Upon exercise of the option provided for in Section 2(b) hereof,
your obligations to purchase and pay for the Option Shares referred to therein
will be subject (as of the date hereof and as of the Option Closing Date) to the
following additional conditions:
(i) The Registration Statement shall remain effective at the
Option Closing Date, no stop order suspending the effectiveness thereof
shall have been issued, and no proceedings for that purpose shall have
been instituted or shall be pending, or, to your knowledge or the
knowledge of the Company, shall be contemplated by the Commission,
15
and any reasonable request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction
of Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, counsel to you.
(ii) At the Option Closing Date there shall have been delivered
to you the signed opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, counsel for the Company, dated as of the
Option Closing Date, in form and substance reasonably satisfactory to
Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, counsel to you, which
opinion shall be substantially the same in scope and substance as the
opinion furnished to you at the First Closing Date pursuant to Section
4(b) hereof, except that such opinion, where appropriate, shall cover
the Option Shares rather than the Firm Shares. If the First Closing Date
is the same as the Option Closing Date, such opinions may be combined.
(iii) At the Option Closing Date, there shall have been delivered
to you a certificate of the President and the Chairman of the Board of
the Company dated the Option Closing Date, in form and substance
reasonably satisfactory to Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx,
counsel to you, substantially the same in scope and substance as the
certificate furnished to you at the First Closing Date pursuant to
Section 4(e) hereof.
(iv) At the Option Closing Date, there shall have been delivered
to you a letter in form and substance satisfactory to you from Price
Waterhouse LLP, dated the Option Closing Date and addressed to you,
confirming the information in their letter referred to in Section 4(d)
hereof as of the date thereof and stating that, without any additional
investigation required, nothing has come to their attention during the
period from the ending date of their review referred to in said letter
to a date not more than five (5) days prior to the Option Closing Date
which would require any change in said letter if it were required to be
dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option Closing Date
in connection with the sale and issuance of the Option Shares shall be
reasonably satisfactory in form and substance to you, and you and
Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, counsel to you, shall have
been furnished with all such documents and certificates as you may
request in connection with this transaction in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company or its compliance with any of the covenants or
conditions contained therein.
(g) If any of the conditions herein provided for in this Section shall
not have been completely fulfilled as of the date indicated, this Agreement and
all obligations of the Underwriter under this Agreement may be canceled at, or
at any time prior to, each Closing Date by your notifying the Company of such
cancellation in writing or by telegram at or prior to the applicable Closing
Date. Any such cancellation shall be without liability of any Underwriter to
the Company, except as otherwise provided herein.
16
5. Conditions of the Obligations of the Company.
--------------------------------------------
The obligation of the Company to sell and deliver the Shares is
subject to the following conditions:
(a) The Registration Statement shall have become effective not later
than 9:00 a.m. New York time, on the date of this Agreement, or on such later
date or time as you and the Company may agree in writing.
(b) on the Closing Dates, no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the Act or any
proceedings therefor initiated or threatened by the Commission.
If the conditions to the obligations of the Company provided for in
this Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company to sell and deliver the Option Shares on exercise of
the option provided for in Section 2(b) hereof shall be affected.
6. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless you and each
person, if any, who controls you, within the meaning of the Act, from and
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys, fees), to which you
or such controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in (A) the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment thereof or supplement
thereto, (B) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all
of the Shares under the securities laws thereof (any such application, document
or information being hereinafter called a "Blue Sky Application"), or arise out
of or are based upon the omission or alleged omission to state in the
Registration Statement, or any supplement thereto, or in any Blue Sky
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
not be liable in any such case to the extent, but only to the extent, that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company through you specifically for use in the preparation of the Registration
Statement or any such amendment or supplement thereof or any such Blue Sky
Application or any such Preliminary Prospectus or the Prospectus or any such
amendment or supplement thereto and provided further, that the indemnity
agreement provided in this Section 6(b) with respect to any preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any losses, claims, charges, liabilities or litigation based
upon any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state therein a material
17
fact purchased Shares, if a copy of the Prospectus in which such untrue
statement or alleged untrue statement or omission or alleged omission was
corrected has not been sent or given to such person within the time required by
the Act and the Rules and Regulations thereunder. This indemnity will be in
addition to any liability which the Company may otherwise have.
(b) You agree to indemnify and hold harmless the Company, each of its
directors, each nominee (if any) for director named in the Prospectus, each of
its officers who have signed the Registration Statement, and each person, if
any, who controls the Company, within the meaning of the Act, from and against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, shall include, but not be limited to, all reasonable costs of
defense and investigation and all reasonable attorneys, fees) to which the
Company or any such director, nominee, officer or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged untrue statement or omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or omission or alleged untrue statement or omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company through you specifically for use in
preparation thereof. This indemnity agreement will be in addition to any
liability which you may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify in writing the indemnifying party of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is any Underwriter
or a person who controls any Underwriter within the meaning of the Act, the fees
and expenses of such counsel shall be at the expense of the indemnifying party
if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter
18
or such controlling person and the indemnifying party, and in your judgment,
upon advice of counsel, it is advisable for such Underwriter or controlling
persons to be represented by separate counsel (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
such Underwriter or such controlling person, it being understood, however, that
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnified party, which shall not be unreasonably withheld.
7. Contribution.
------------
In order to provide for just and equitable contribution under the Act
in any case in which (i) the indemnified party makes claims for indemnification
pursuant to Section 6 hereof but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact that
the express provisions of Section 6 provide for indemnification in such case, or
(ii) contribution under the Act may be required on the part of you, then the
Company and each person who controls the Company, in the aggregate, and you
shall contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees) in either such case (after
contribution from others) in such proportions that such Underwriter is
responsible in the aggregate for that portion of such losses, claims, damages or
liabilities represented by the percentage that the underwriting discount per
Share appearing on the cover page of the Prospectus bears to the public offering
price per Share appearing thereon, and the Company shall be responsible for the
remaining portion, provided, however, that if such allocation is not permitted
by applicable law, then the relative fault of the Company and you and
controlling persons, in the aggregate, in connection with the statements or
omissions which resulted in such damages and other relevant equitable
considerations shall also be considered. The relative fault shall be determined
by reference to, among other things, whether in the case of an untrue statement
of a material fact or the omission to state a material fact, such statement or
omission relates to information supplied by the Company or you, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Underwriter
agree (a) that it would not be just and equitable if the respective obligations
of the Company and you to contribute pursuant to this Section 7 were to be
determined by pro rata or per capita allocation of the aggregate damages (even
if the Underwriter has to be treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the first sentence of this Section 7 and (b) that
the contribution of any Underwriter shall not be in excess of its proportionate
share of the portion of such losses, claims, damages or liabilities for which
you are responsible. No person guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. As used in
this paragraph, the word "Company" within the meaning of Section 15 of the Act.
Your obligations to contribute pursuant to this Section 7 are several in
proportion to their respective underwriting obligations and not joint. If the
full amount
19
of the contribution specified in this paragraph is not permitted by law, then
you and each person who controls you shall be entitled to contribution from the
Company to the full extent permitted by law. The foregoing contribution
agreement shall in no way affect the contribution liabilities of any persons
having liability under Section 11 of the Act other than the Company and you. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent to the settlement; provided, however, that such
consent shall not be unreasonably withheld.
8. Costs and Expenses.
------------------
(a) Whether or not this Agreement becomes effective or the sale of the
Shares to you is consummated, the Company will pay all costs and expenses
incident to the performance of this Agreement by the Company, including but not
limited to the fees and expenses of counsel to the Company and of the Company's
accountants; the costs and expenses incident to the preparation, printing,
filing and distribution under the Act of the Registration Statement (including
the financial statements therein and all amendments and exhibits thereto), each
Preliminary Prospectus and the Prospectus, as amended or supplemented, the fee
of the National Association of Securities Dealers, Inc. ("NASD") in connection
with the filing required by the NASD relating to the offering of the Shares
contemplated hereby; all expenses, including reasonable fees (but not in excess
of the amount set forth in Section 3(b)) and disbursements of counsel to you, in
connection with the qualification of the Shares under the State Securities or
Blue Sky Laws which you shall designate; the cost of printing and furnishing to
you copies of the Registration Statement, each Preliminary Prospectus, the
Prospectus, this Agreement, the Warrant Agreement and the Blue Sky Memorandum;
the cost of printing the certificates representing the Shares, the expenses of
Company due diligence meetings and presentations, (but not of you or your
counsel in connection therewith) and the expense (which shall not exceed
$10,000) of placing one or more "tombstone" advertisements as directed by you.
The Company and shall pay any and all taxes (including any transfer, franchise,
capital stock or other tax imposed by any jurisdiction) on sales to you
hereunder. The Company will also pay all costs and expenses incident to the
furnishing of any amended Prospectus or of any supplement to be attached to the
Prospectus as called for in Section 3(a) of this Agreement except as otherwise
set forth in said Section.
(b) In addition to the foregoing expenses, the Company shall at the
First Closing Date pay to you the balance of a non-accountable expense allowance
3% of the gross proceeds of the offering. In the event the over-allotment
option is exercised in part or in full, the Company shall pay to you at the
Option Closing Date an additional amount equal to 3% of the gross proceeds
received upon exercise of the overallotment option. In the event the
transactions contemplated hereby are not consummated for any reason, the Company
shall be liable for your actual accountable out-of-pocket expenses including
legal fees, and further provided that if the contemplated transactions are not
consummated by reason of breach by the Company of this Agreement or of any
representation, warranty, covenant or condition contained herein, the Company
shall be liable for your accountable out-of-pocket expenses.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from any Underwriter or from any other person for
services as a finder in connection with
20
the proposed offering, and the Company agrees to indemnify and hold harmless
you, and you agree to indemnify and hold harmless, the Company from and against
any losses, claims, damages or liabilities, (which shall, for all purposes of
this Agreement, include, but not be limited to, all reasonable costs of defense
and investigation and all reasonable attorneys' fees), to which the indemnified
party may become subject insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon the claim of any
person (other than an employee of the party claiming indemnity) or entity that
he or it is entitled to a finder's fee in connection wit the proposed offering
by reason of such person's or entity's influence or prior contact with the
indemnifying party.
9. Effective Date.
--------------
The Agreement shall become effective upon its execution, except that
you may, at your option, delay its effectiveness until the earlier to occur of
10:00 A.M., New York time on the first full business day following the Effective
Date as you in your discretion shall first commence the public offering by you
of any of the Shares. The time of the public offering shall mean the time of
release by you of the first newspaper advertisement with respect to the Shares,
or the time when the Shares are first generally offered by you to dealers by
letter or telecopier, whichever shall first occur. This Agreement may be
terminated by you at any time before it becomes effective as provided above,
except that Sections 3(c), 6, 7, 8, 12, 13, 14 and 15 shall remain in effect
notwithstanding such termination.
10. Termination.
-----------
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12, 13, 14 and
15, may be terminated at any time prior to the First Closing Date, and the
option referred to in Section 2(b), if exercised, may be canceled, at any time
prior to the Option Closing Date, by you if in your judgment it is impracticable
to offer for sale or to enforce contracts made by you for the resale of the
Shares agreed to be purchased hereunder, by reason of (i) the Company having
sustained a material loss, whether or not insured, by reason of fire,
earthquake, flood, accident or other calamity, or from any labor dispute or
court or government action, order or decree, (ii) trading in securities on the
New York Stock Exchange or the American Stock Exchange having been suspended or
limited, (iii) material governmental restrictions having been imposed on trading
in securities generally which are not in force and effect on the date hereof,
(iv) a banking moratorium having been declared by federal of New York State
authorities, (v) an outbreak of major international hostilities or other
national or international calamity having occurred, (vi) the passage by the
Congress of the United States or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which is reasonably believed likely by
you to have a material adverse impact on the business, financial condition or
financial statements of the Company, (vii) any material adverse change in the
financial or securities markets beyond normal fluctuations in the United States
having occurred since the date of this Agreement, or (viii) any material adverse
change having occurred, since the respective dates for which information is
given in the Registration Statement and Prospectus, in the earnings, business,
prospects or general condition of the Company, financial or otherwise, whether
or not arising in the ordinary course of business.
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(b) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section 10 or in Section 9, the
Company shall be promptly notified by you, by telephone or facsimile
transmission, confirmed by letter.
11. Underwriter's Warrant.
---------------------
On the First Closing Date, the Company will issue to you, for a
consideration of $5.00 and upon the terms and conditions set forth in the form
of Underwriter's Warrant annexed as an exhibit to the Registration Statement, an
Underwriter's Warrant to purchase 250,000 Shares. In the event of conflict in
the terms of this Agreement and the Underwriter's Warrant, the language of the
Underwriter's Warrant shall control.
12. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
The respective indemnities, agreements, representations, warranties
and other statements of the Company and you, set forth in or made pursuant to
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of you, the Company or any of its officers or
directors or any controlling persons and will survive delivery of and payment
for the Shares and the termination of this Agreement.
13. Notice.
------
All communications hereunder will be in writing and, except as
otherwise expressly provided herein, if sent to you, will be mailed, delivered
or telecopied and confirmed to it at X.X. Xxxxxx & Co., Inc., 0000 Xx. Xxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000-0000, with a copy sent to Xxxxxx X. Xxxxxxx,
Esq. at Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, 0000 Xxxxxxxx Xxxxxxxxx,
0xx Xxxxx Xxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000, or if sent to the Company,
will be mailed, delivered, or facsimiled and confirmed to Xxxxxx X. Xxxxx, Xx.
of SoloPoint, Inc., 000-X Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, with copy
sent to Xxxxxxx X. X'Xxxxxxx, Esq. of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000.
14. Parties in Interest.
-------------------
The Agreement herein set forth is made solely for your benefit, the
Company and, to the extent expressed, any person controlling the Company, or
you, and directors of the Company, nominees for directors of the Company (if
any) named in the Prospectus, the officers of the Company who have signed the
Registration Statement, and their respective executors, administrators,
successors and assigns, and no other person shall acquire for have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser, as such purchaser, from you of the Shares.
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15. Applicable Law.
--------------
This Agreement will be governed by, and construed in accordance with,
the laws of the State of New York applicable to agreements made and to be
entirely performed within New York.
23
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Underwriting Agreement, whereupon it will
become a binding agreement between the Company and you in accordance with its
terms.
Very truly yours,
SoloPoint, Inc.
Dated: _______, 1997 By:________________________________
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
X.X. Xxxxxx & Co., Inc.
Dated: _______, 1997 By:________________________________
Authorized Officer
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SCHEDULE I
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Underwriting Agreement dated _______, 1997
Number of Firm
Shares
Underwriter to be Purchased
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X.X. Xxxxxx & Co., Inc. 2,500,000
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