DELTAPOINT, INC.
00 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
UNDERWRITING AGREEMENT
_________, 1997
X.X. Xxxxxx & Co., Inc.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
DELTAPOINT, INC., a California corporation (the "Company"), proposes to
issue and sell pursuant to this Underwriting Agreement (the "Agreement"), an
aggregate of 3,200,000 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 480,000 additional Shares.
The aggregate of 3,200,000 Shares, together with all or any part of the
480,000 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 480,000 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.
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 -- Recent De-listing from
Nasdaq SmallCap Market; Potential De-listing from Pacific Exchange; 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 articles 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) Price Waterhouse LLP, 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.
(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.
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(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 480,000 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 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
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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 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
7
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 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.
8
(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, shareholders, 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
shareholders 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 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.
9
(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 OTC Bulletin Board. As soon as practicable after the offering,
the Company will 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 approval. 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.
(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
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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) For a period of thirty-six (36) months from the closing of the
offering, the Underwriter shall have the right to designate two members of
the Board of Directors provided that the designees are acceptable to the
Company and, provided further, that not more than one of the designees will
be an affiliate of the Underwriter. Such members 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
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
11
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
California 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 shareholders of the
Company do not have any preemptive rights or other rights to subscribe for
or to purchase which have not been effectively waived; 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
articles 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 valid and legally
binding obligations of the Company except as enforceability may be limited
12
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 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, and such counsel does not know of any contracts or documents of
a character required to be
13
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 than the financial statements
and other financial data contained therein), the execution of this
14
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 Price Waterhouse 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, and any reasonable
request on the part of the Commission for additional information shall
15
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 320,000 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 Xxxxxxx Ait of DeltaPoint, Inc. 00 Xxxxx Xxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000, with copy sent to Xxxxxxx X. Xxxxx, 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.
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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,
DeltaPoint, 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
----------- ---------------
X.X. Xxxxxx & Co., Inc. 3,200,000
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