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EXHIBIT 1.1
800,000 UNITS
CONSISTING OF
800,000 SHARES OF COMMON STOCK
AND
800,000 WARRANTS
PACIFIC SOFTWORKS, INC.
UNDERWRITING AGREEMENT
May ___, 1999
Xxxxxxx Xxxxxxx, Inc.
0000 Xxxxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
PACIFIC SOFTWORKS, INC., a California corporation (the "Company")
hereby confirms its agreement with you (who are sometimes hereinafter referred
to as the "Representative") and with the other members of the underwriting group
(the "Underwriters") named on Schedule 1 hereto as follows:
1. Introductory. Subject to the terms and conditions contained herein, the
Company proposes to issue and sell to the Underwriters 800,000 Units (the
"Units"), comprised of 800,000 shares of common stock (the "Common Stock") and
800,000 redeemable warrants (the "Warrants"). Common Stock and Warrants shall be
immediately separately transferable and the Units shall not be listed for
trading on the Nasdaq SmallCap Market. For the purpose of this Agreement,
references hereinafter to Common Stock and Warrants shall be deemed to include,
where appropriate, the Units. In addition, solely for the purpose of covering
over-allotments, the Company grants to the Representative the option to purchase
up to an additional 120,000 units, consisting of 120,000 shares of Common Stock
and 120,000 Warrants (the "Additional Securities"), which option to purchase
shall be exercisable, in whole or in part, from time to time during the
forty-five (45) day period commencing on the date on which the Registration
Statement (as hereinafter defined) is initially declared effective (the
"Effective Date") by the Securities and Exchange Commission (the "Commission").
Unless otherwise noted, the Common Stock, together with the additional 120,000
shares of Common Stock issuable on exercise of the over-allotment
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option, is referred to hereinafter as the "Common Stock" and the Warrants and
the 120,000 Warrants issuable on exercise of the over-allotment option are
referred to hereinafter as the "Warrants".
2. Each Warrant will entitle the holder to purchase one share of Common Stock (a
"Warrant Share") at a price equal to $7.50 during the twenty-four (24) month
exercise period of the Warrants, subject to the Company's right of redemption.
The Warrants may be redeemed by the Company commencing one 30 days from the
Effective Date of the Registration Statement upon at least 30 days prior written
notice, in whole but not in part, at a price of $.05 per Warrant provided the
closing bid price for the Company's Common Stock is at least $8.00 during each
day of the fifteen (15) trading day period ending five days preceding the date
of the written notice. The terms and provisions of the Warrants shall be
governed by a warrant agreement between the Company and its transfer agent (the
"Warrant Agreement"), which Warrant Agreement will contain, among other
provisions, anti-dilution protection for warrantholders on terms acceptable to
the Representative. The Company shall not lower the exercise price of the
Warrants during such one year period without the Representative's prior written
consent. The Warrant Agreement governing the Warrants will contain anti-dilution
protection on terms reasonably acceptable to the Representative. The Common
Stock, Warrants and Additional Securities are more fully described in the
Prospectus referred to below. All references to the Company below shall be
deemed to include, where appropriate, the Company's subsidiaries, if any.
3. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each of the Underwriters that:
a. The Company has filed with the Commission a registration statement,
and may have filed one or more amendments thereto, on Form SB-2
(Registration No. 333- ), including in such registration statement and
each such amendment a facing sheet, the information called for by Part
I, audited consolidated financial statements for the past two fiscal
years or such other period as may be appropriate, the information
called for by Part II, the undertakings to deliver certificates, file
reports and file post-effective amendments, the required signatures,
consents of experts, exhibits, a related preliminary prospectus (a
"Preliminary Prospectus") and any other information or documents which
are required for the registration of the Common Stock and Warrants, the
Warrant Shares, the purchase options referred to in Section 2(n) (the
"Representative's Options"), and the securities referred to in Section
2(n) underlying the Representative's Options (the "Representative's
Option Securities"), under the Securities Act of 1933, as amended (the
"Act"). As used in this Agreement, the term "Registration Statement"
means such registration statement, including incorporated documents,
all exhibits and consolidated financial statements and schedules
thereto, as amended, when it becomes effective, and shall include
information
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with respect to the Common Stock, the Warrants, the Warrant Shares, the
Representative's Options, and the Representative's Option Securities
and the offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A of the
General Rules and Regulations promulgated under the Act (the
"Regulations"), which information is deemed to be included therein when
it becomes effective as provided by Rule 430A; the term "Preliminary
Prospectus" means each prospectus included in the Registration
Statement, or any amendments thereto, before it becomes effective under
the Act and any prospectus filed by the Company with the consent of the
Representative pursuant to Rule 424(a) of the Regulations; and the term
"Prospectus" means the final prospectus included as part of the
Registration Statement, except that if the prospectus relating to the
securities covered by the Registration Statement in the form first
filed on behalf of the Company with the Commission pursuant to Rule
424(b) of the Regulations shall differ from such final prospectus, the
term "Prospectus" shall mean the prospectus as filed pursuant to Rule
424(b) from and after the date on which it shall have first been used.
b. When the Registration Statement becomes effective, and at all times
subsequent thereto, to and including the Closing Date (as defined in
Section 3) and each Additional Closing Date (as defined in Section 3),
and during such longer period as the Prospectus may be required to be
delivered in connection with sales by the Representative or any dealer,
and during such longer period until any post-effective amendment
thereto shall become effective, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment or supplement to the Registration Statement or the
Prospectus) will contain all statements which are required to be stated
therein in accordance with the Act and the Regulations, will comply
with the Act and the Regulations, and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should
have been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such
an amendment or supplement; and no Preliminary Prospectus, as of the
date filed with the Commission, included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; except that no representation or warranty is made in this
Section 2(b) with respect to statements or omissions made in reliance
upon and in conformity with written information furnished to the
Company as stated in Section 8(b) with respect to the Underwriters by
or on behalf of the Underwriters expressly for inclusion in any
Preliminary
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Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto.
c. Neither the Commission nor the "blue sky" or securities authority of
any jurisdiction have issued an order (a "Stop Order") suspending the
effectiveness of the Registration Statement, preventing or suspending
the use of any Preliminary Prospectus, the Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to permit
the effectiveness of the Registration Statement, or suspending the
registration or qualification of the Common Stock, the Warrants, the
Warrant Shares, the Representative's Options, or the Representative's
Option Securities, nor has any of such authorities instituted or
threatened to institute any proceedings with respect to a Stop Order.
d. Any contract, agreement, instrument, lease, or license required to
be described in the Registration Statement or the Prospectus has been
properly described therein. Any contract, agreement, instrument, lease,
or license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to or has
been incorporated as an exhibit by reference into the Registration
Statement.
e. The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of California, with full
power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to carry on the
business in the manner described in the Prospectus. The Company is duly
qualified to do business and is in good standing in every jurisdiction
in which its ownership, leasing, licensing, or use of property and
assets or the conduct of its business makes such qualifications
necessary. The Company has no subsidiaries except as disclosed in the
Prospectus.
f. The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, of which 3,500,000 shares of Common Stock are
issued and outstanding, and 345,000 shares of Common Stock are reserved
for issuance upon the exercise of outstanding options and warrants, and
10,000,000 shares of Preferred Stock, none of which are issued or
outstanding. There is no commitment, plan, or arrangement to issue, and
no outstanding option, warrant, or other right calling for the issuance
of, any share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for capital stock of the Company, except as set forth
above, and as may be properly described in the Prospectus.
g. The consolidated financial statements of the Company included in the
Registration Statement and the Prospectus fairly present with respect
to the Company the consolidated
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financial position, the results of operations, and the other
information purported to be shown therein at the respective dates and
for the respective periods to which they apply. Such consolidated
financial statements have been prepared in accordance with generally
accepted accounting principles, except to the extent that certain
footnote disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
consistently applied throughout the periods involved, are correct and
complete, and are in accordance with the books and records of the
Company. The accountants whose report on the audited consolidated
financial statements is filed with the Commission as a part of the
Registration Statement are, and during the periods covered by their
report(s) included in the Registration Statement and the Prospectus
were, independent certified public accountants with respect to the
Company within the meaning of the Act and the Regulations. No other
financial statements are required by Form SB-2 or otherwise to be
included in the Registration Statement or the Prospectus. There has at
no time been a material adverse change in the consolidated financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company from the latest
information set forth in the Registration Statement or the Prospectus,
except as may be properly described in the Prospectus.
h. There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, or, to the
knowledge of the Company, threatened, or in prospect with respect to
the Company or any of its operations, businesses, properties, or
assets, except as may be properly described in the Prospectus or such
as individually or in the aggregate do not now have and will not in the
future have a material adverse effect upon the operations, business,
properties, or assets of the Company. The Company is not in violation
of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in
the future have a material adverse effect upon the operations,
business, properties, or assets of the Company; nor is the Company
required to take any action in order to avoid any such violation or
default.
i. The Company has good and marketable title in fee simple absolute to
all real properties and good title to all other properties and assets
which the Prospectus indicates are owned by it, free and clear of all
liens, security interests, pledges, charges, encumbrances, and
mortgages except as may be properly described in the Prospectus or such
as in the aggregate do not now have and will not in the future have a
material adverse effect upon the operations, business, properties, or
assets of the Company. No real property owned, leased, licensed, or
used by the Company lies in an area which is, or to the
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knowledge of the Company will be, subject to zoning, use, or building
code restrictions which would prohibit, and no state of facts relating
to the actions or inaction of another person or entity or his or its
ownership, leasing, licensing, or use of any real or personal property
exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the
business of the Company as presently conducted or as the Prospectus
indicates it contemplates conducting, except as may be properly
described in the Prospectus or such as in the aggregate do not now have
and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company.
j. Neither the Company nor any other party is now or is expected by the
Company to be in violation or breach of, or in default with respect to
complying with, any material provision of any contract, agreement,
instrument, lease, license, arrangement, or understanding which is
material to the Company, and each such contract, agreement, instrument,
lease, license, arrangement, and understanding is in full force and is
the legal, valid, and binding obligation of the parties thereto and is
enforceable as to them in accordance with its terms. The Company enjoys
peaceful and undisturbed possession under all leases and licenses under
which it is operating. The Company is not a party to or bound by any
contract, agreement, instrument, lease, license, arrangement, or
understanding, or subject to any charter or other restriction, which
has had or may in the future have a material adverse effect on the
financial condition, results of operations, business, properties,
assets, liabilities, or future prospects of the Company. The Company is
not in violation or breach of, or in default with respect to, any term
of its Articles of Incorporation (or other charter document) or
by-laws.
k. All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
technology, know-how and other intangible properties and assets (all of
the foregoing being herein called "Intangibles") that the Company owns
or has pending, or under which it is licensed, are in good standing and
uncontested. Except as otherwise disclosed in the Registration
Statement, the Intangibles are owned by the Company, free and clear of
all liens, security interests, pledges, and encumbrances. "Pacific
Softworks (and design)" is a registered trademark used by the Company
to identify its services and such xxxx is protected by registration in
the name of the Company on the principal register of the United States
Patent Office. There is no right under any Intangible necessary to the
business of the Company as presently conducted or as the Prospectus
indicates it contemplates conducting (except as may be so designated in
the Prospectus). The Company has not infringed, is not infringing, and
has not received notice of infringement with respect to asserted
Intangibles of others. To the knowledge of the
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Company, there is no infringement by others of Intangibles of the
Company. To the knowledge of the Company, there is no Intangible of
others which has had or may in the future have a materially adverse
effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company.
l. Neither the Company nor any director, officer, agent, employee, or
other person associated with or acting on behalf of the Company has,
directly or indirectly: used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or
made any bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment. The Company has not accepted any material advertising
allowances or marketing allowances from suppliers to the Company and,
to the extent any advertising allowance has been accepted, the Company
has provided proper documentation to the supplier with respect to
advertising as to which the advertising allowance has been granted.
m. The Company has all requisite power and authority to execute and
deliver, and to perform thereunder each of this Agreement, the
Warrants, and the Representative's Options. All necessary corporate
proceedings of the Company have been duly taken to authorize the
execution and delivery, and performance thereunder by the Company of
this Agreement, the Warrants, and the Representative's Options. This
Agreement has been duly authorized, executed, and delivered by the
Company, is a legal, valid, and binding obligation of the Company, and
is enforceable as to the Company in accordance with its terms. Each of
the Warrants and the Representative's Options has been duly authorized
by the Company and, when executed and delivered by the Company, will
each be a legal, valid, and binding obligation of the Company, and will
be enforceable against the Company in accordance with its respective
terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or
other tribunal is required by the Company for the execution and
delivery, or performance thereunder by the Company of this Agreement,
the Warrants or the Representative's Options except filings under the
Act which have been or will be made before the Closing Date and such
consents consisting only of consents under "blue sky" or securities
laws which are required in connection with the transactions
contemplated by this Agreement and which have been obtained at or prior
to the date of this Agreement. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to
which the Company is a party, or to which any of its properties or
assets are subject, is required for the execution or delivery, or
performance
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thereunder of this Agreement, the Warrants and the Representative's
Options; and the execution and delivery, and performance thereunder of
this Agreement, the Warrants and the Representative's Options will not
violate, result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or violate
or result in a breach of any term of the Articles of Incorporation or
by-laws of the Company, or violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree binding on
the Company or to which any of its operations, businesses, properties,
or assets are subject.
n. The Common Stock, the Warrants, the Warrant Shares, purchase options
(the "Representative's Options") entitling the Representative or its
assigns to purchase the Representative's Option Securities, and the
Representative's Option Securities are validly authorized and reserved
for issuance. The Common Stock, when issued and delivered in accordance
with this Agreement, the Warrant Shares, when issued and delivered upon
exercise of the Warrants, the Representative's Option Securities, when
issued and delivered upon exercise of the Representative's Options and
the Representative's Option Shares issuable on exercise of warrants
included in the Representative's Option Securities, upon payment of the
exercise price therefor, will be validly issued, fully paid, and
nonassessable, without any personal liability attaching to the
ownership thereof, and will not be issued in violation of any
preemptive rights of stockholders, and the Underwriters will receive
good title to the Common Stock and the Warrants purchased, the
Representative will receive good title to the Representative's Options
purchased and any purchaser of the Warrant Shares or Representative's
Option Securities will receive good title thereto, all such title free
and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts.
o. The Common Stock, the Warrants, the Warrant Shares, the
Representative's Options and the Representative's Option Securities
conform to all statements relating thereto contained in the
Registration Statement and the Prospectus.
p. Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may
otherwise be properly described in the Prospectus, the Company has not
(i) issued any securities or incurred any liability or obligation,
primary or contingent, for borrowed money, (ii) entered into any
transaction not in the ordinary course of business, or (iii) declared
or paid any dividend on its capital stock.
q. Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, prior to the termination of the
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distribution of securities contemplated by this Agreement, any action
designed to stabilize or manipulate the price of any security of the
Company, or which has caused or resulted in, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate
the sale or resale of the Common Stock and Warrants.
r. The Company has not incurred any liability for a fee, commission, or
other compensation on account of the employment of a broker or finder
in connection with the transactions contemplated by this Agreement.
s. The Company has obtained from each officer, director and person who
beneficially owns shares of the Company's capital stock or derivative
securities convertible into shares of the Company's capital stock his
or her enforceable written agreement that for a period of 13 months
from the Effective Date, he or she will not, without the
Representative's prior written consent, offer, pledge, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of capital stock or any security or
other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock (except that, subject
to compliance with applicable securities laws, any such officer,
director or stockholder may transfer his or her stock in a private
transaction, provided that any such transferee shall agree, as a
condition to such transfer, to be bound by the restrictions set forth
in this Agreement and further provided that the transferor, except in
the case of the transferor's death, shall continue to be deemed the
beneficial owner of such shares in accordance with Regulation 13d-(3)
of the Exchange Act). For a period of three (3) years from the
Effective Date, all public sales by officers, directors and
stockholders of the Company prior to the Effective Date shall be
effected through or with the Representative on an exclusive basis,
provided that the Representative offers the best price reasonably
available to the selling stockholders. In addition, for a period of
three years commencing 24 months from the Effective Date in the case of
private transactions in the Company's Common Stock, each such selling
security holder specified above shall offer the Representative the
exclusive opportunity to purchase or sell the securities on terms at
least as favorable as the selling security holder can obtain elsewhere.
If the Representative fails to accept in writing any such proposal for
sale by the selling security holders within three (3) business days
after receipt of a notice containing such proposal, then the
Representative shall have no claim or right with respect to any such
sales contained in such notice. If, thereafter, such proposal is
modified in any material respect, the selling security holders shall
adopt the same procedure as with respect to the original proposal. An
appropriate legend shall be marked on the face of stock certificates
representing all of such securities. Public or private sales of Common
Stock by such
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persons shall not include gifts, intra-family transfers or transfers
for estate planning purposes, which shall be exempt from the foregoing
provisions. The Company, on behalf of itself, and all officers,
directors and holders of one percent or more of the Common Stock of the
Company, have provided the Representative their enforceable written
agreements not to sell, transfer, or hypothecate capital stock or
derivative securities of the Company (i) through a "Regulation S"
transaction for a minimum period of five years from the Effective Date
without the prior written consent of the Representative, or (ii)
through a "Regulation D" transaction for a minimum period of 24 months
from the Effective Date. The Company will also obtain from each holder
of options to acquire Common Stock of the Company such person's written
enforceable agreement not to sell Common Stock pursuant to the
exemption afforded by Rule 701 under the 1933 Act for a minimum period
of 13 months from the Effective Date without the prior written consent
of the Representative.
t. Except as otherwise provided in the Registration Statement, no
person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement.
u. The Company is eligible to use Form SB-2 for registration of the
Common Stock, the Warrants, the Warrant Shares, the Representative's
Options and the Representative's Option Securities.
v. No unregistered securities of the Company, of an affiliate of the
Company or of a predecessor of the Company have been sold within three
years prior to the date hereof, except as described in the Registration
Statement.
w. Except as set forth in the Registration Statement, there is and at
the Closing Date there will be no action, suit or proceeding before any
court, arbitration tribunal or governmental agency, authority or body
pending or, to the knowledge of the Company, threatened which might
result in judgments against the Company not adequately covered by
insurance or which collectively might result in any material adverse
change in the condition (financial or otherwise), the business or the
prospects of the Company or would materially affect the properties or
assets of the Company. a.
x. The Company has filed all federal and state tax returns which are
required to be filed by it and has paid all taxes shown on such returns
and all assessments received by it to the extent such taxes have become
due. All taxes with respect to which the Company is obligated have been
paid or adequate accruals have been set up to cover any such unpaid
taxes.
y. Except as set forth in the Registration Statement:
i. The Company has obtained all permits, licenses and other
authorizations which are required under the Environmental Laws for the
ownership,
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use and operation of each location operated or leased by the Company
(the "Property"), all such permits, licenses and authorizations are in
effect, no appeal nor any other action is pending to revoke any such
permit, license or authorization, and the Company is in full compliance
with all terms and conditions of all such permits, licenses and
authorizations.
ii. The Company and the Property are in compliance with all
Environmental Laws including, without limitation, all restrictions,
conditions, standards, limitations, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental
Laws or contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
iii. The Company has not, and to the best knowledge of the
Company's executive officers, no other person has, released, placed,
stored, buried or dumped any Hazardous Substances, Oils, Pollutants or
Contaminants or any other wastes produced by, or resulting from, any
business, commercial, or industrial activities, operations, or
processes, on, beneath, or adjacent to the Property or any property
formerly owned, operated or leased by the Company except for
inventories of such substances to be used, and wastes generated
therefrom, in the ordinary course of business of the Company (which
inventories and wastes, if any, were and are stored or disposed of in
accordance with applicable laws and regulations and in a manner such
that there has been no release of any such substances into the
environment).
iv. Except as provided to the Representative, there exists no
written or tangible report, synopsis or summary of any asbestos, toxic
waste or Hazardous Substances, Oils, Pollutants or Contaminants
investigation made with respect to all or any portion of the assets of
the Company (whether or not prepared by experts and whether or not in
the possession of the executive officers of the Company).
v. Definitions: As used herein:
(1) Environmental Laws means all federal, state and
local laws, regulations, rules and ordinances relating to
pollution or protection of the environment, including, without
limitation, laws relating to Releases or threatened Releases
of Hazardous Substances, Oils, Pollutants or Contaminants into
the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, land,
surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
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(2) Hazardous Substances, Oils, Pollutants or
Contaminants means all substances defined as such in the
National Oil and Hazardous Substances Pollutant Contingency
Plan, 40 C.F.R. Section300.6, or defined as such under any
Environmental Law.
(3) Release means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or
outdoor environmental (including, without limitation, ambient
air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement
of Hazardous Substances, Oils, Pollutants or Contaminants
through or in the air, soil, surface water, groundwater or any
property.
a. Any pro forma financial or other information and related notes
included in the Registration Statement, each Preliminary Prospectus and
the Prospectus comply (or, if the Prospectus has not been filed with
the Commission, as to the Prospectus, will comply) in all material
respects with the requirements of the Act and the rules and regulations
of the Commission thereunder and present fairly the pro forma
information shown, as of the dates and for the periods covered by such
pro forma information. Such pro forma information, including any
related notes and schedules, has been prepared on a basis consistent
with the historical financial statements and other historical
information, as applicable, included in the Registration Statement, the
Preliminary Prospectus and the Prospectus, except for the pro forma
adjustments specified therein, and give effect to assumptions made on a
reasonable basis to give effect to historical and, if applicable,
proposed transactions described in the Registration Statement, each
Preliminary Prospectus and the Prospectus.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
1. Purchase, Sale, and Delivery of the Units. On the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters, severally and not jointly, and the
Underwriters, severally and not jointly, agree to purchase from the Company the
number of Units set forth opposite the Underwriters' names in Schedule 1 hereto.
2. The purchase price per Unit to be paid by the Underwriters shall be $____.
The initial public offering price of the Units shall be $_____.
3. Payment for the Units by the Underwriters shall be made by certified or
official bank check in clearing house funds, payable to the order of the Company
at the offices of Pacific Softworks, Inc., 000 Xxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx
Xxxx, Xxxxxxxxxx 00000, or at such
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other place as the Representative shall determine and advise the Company by at
least two full days' notice in writing, upon delivery of the Units to the
Representative. Such delivery and payment shall be made at 10:00 a.m., Mountain
Time, on the third business day following the time of the initial public
offering, as defined in Section 10(a). The time and date of such delivery and
payment are herein called the "Closing Date."
4. In addition, the Company hereby grants to the Representative the option to
purchase all or a portion of the Additional Securities as may be necessary to
cover over-allotments, at the same purchase price per Additional Security as the
price per Unit provided for in this Section 3. This option may be exercised by
the Representative on the basis of the representations, warranties, covenants,
and agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, at any time and from time to time on or before the
45th day following the Effective Date of the Registration Statement, by written
notice by the Representative to the Company. Such notice shall set forth the
aggregate number of Additional Securities as to which the option is being
exercised, and the time and date, as determined by the Representative, when such
Additional Securities are to be delivered (such time and date are herein called
an "Additional Closing Date"); provided, however, that no Additional Closing
Date shall be earlier than the Closing Date nor earlier than the third business
day after the date on which the notice of the exercise of the option shall have
been given nor later than the eighth business day after the date on which such
notice shall have been given; and further provided, that not more than two
Additional Closings shall be noticed and held following purchase of Additional
Securities by the Representative.
5. Payment for the Additional Securities shall be made by certified or official
bank check in clearing house funds payable to the order of the Company at the
offices of Pacific Softworks, Inc., 000 Xxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxx,
Xxxxxxxxxx 00000, or at such other place in Denver, Colorado as you shall
determine and advise the Company by at least two full days' notice in writing,
upon delivery of certificates representing the Additional Securities to you.
6. Certificates for the Units and any Additional Securities purchased shall be
registered in such name or names and in such authorized denominations as you may
request in writing at least two full business days prior to the Closing Date or
Additional Closing Date, as applicable. The Company shall permit you to examine
and package such certificates for delivery at least one full business day prior
to any such closing with respect thereto.
7. If for any reason one or more Underwriters shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 10 hereof) to purchase and pay for the number of Units
agreed to be purchased by such Underwriter, the Company shall immediately give
notice thereof to the Representative, and the non-defaulting Underwriters shall
have the right within 24 hours after the receipt by the
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Representative of such notice, to purchase or procure one or more other
Underwriters to purchase, in such proportions as may be agreed upon among the
Representative and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, the Units which such defaulting Underwriter or
Underwriters agreed to purchase. If the non-defaulting Underwriters fail so to
make such arrangements with respect to all such Units, the number of Units which
each non-defaulting Underwriter is otherwise obligated to purchase under the
Agreement shall be automatically increased pro rata to absorb the remaining
Units which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the Units which the defaulting Underwriter or Underwriters agreed to
purchase in excess of 10% of the total number of Units which such non-defaulting
Underwriter agreed to purchase hereunder, and provided further that the
non-defaulting Underwriters shall not be obligated to purchase any Units which
the defaulting Underwriter or Underwriters agreed to purchase if such additional
purchase would cause the Underwriter to be in violation of the net capital rule
of the Commission or other applicable law. If the total number of Units which
the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
above referred to, to make arrangements with other underwriters or purchasers
satisfactory to the Representative for the purchase of such Units on the terms
herein set forth. In any such case, either the Representative or the Company
shall have the right to postpone the Closing for not more than seven business
days after the date originally fixed as the Closing in order that any necessary
changes in the Registration Statement, the Prospectus or any other documents or
arrangements may be made. If neither the non-defaulting Underwriters nor the
Company shall make arrangements within the 24-hour periods stated above for the
purchase of all the Units which the defaulting Underwriter or Underwriters
agreed to purchase hereunder, this Agreement shall be terminated without further
act or deed and without any liability on the part of the Company any
non-defaulting Underwriter, except the Company shall be liable for actual
expenses incurred by the Representative as provided in Section 10 hereof, and
without any liability on the part of any non-defaulting Underwriter to the
Company.
8. Nothing contained herein shall relieve any defaulting Underwriter of its
liability, if any, to the Company or to the remaining Underwriters for damages
occasioned by its default hereunder.
9. Offering. The Underwriters are to make a public offering of the Units as
soon, on or after the effective date of the Registration Statement, as the
Representative deems it advisable so to do. The Units are to be initially
offered to the public at the initial public offering price as provided for in
Section 3 (such price being herein called the "public offering price"). After
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the initial public offering, you may from time to time increase or decrease the
price of the Units, in your sole discretion, by reason of changes in general
market conditions or otherwise.
10. Covenants of the Company. The Company covenants that it will:
a. Use its best efforts to cause the Registration Statement to become
effective as promptly as possible. If the Registration Statement has
become or becomes effective with a form of Prospectus omitting certain
information pursuant to Rule 430A of the Regulations, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
file the Prospectus, properly completed, pursuant to Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to
you of such timely filing.
b. Notify you immediately, and confirm such notice in writing, (i) when
the Registration Statement and any post-effective amendment thereto
become effective, (ii) of the receipt of any comments from the
Commission or the "blue sky" or securities authority of any
jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement
thereto, and (iii) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding with
respect to a Stop Order. The Company will use its best efforts to
prevent the issuance of any Stop Order and, if any Stop Order is
issued, to obtain the lifting thereof as promptly as possible.
c. During the time when a prospectus relating to the Units or the
Additional Securities is required to be delivered hereunder or under
the Act or the Regulations, comply so far as it is able with all
requirements imposed upon it by the Act, as now existing and as
hereafter amended, and by the Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or
dealings in the Units and Additional Securities in accordance with the
provisions hereof and the Prospectus. If, at any time when a prospectus
relating to the Units or Additional Securities is required to be
delivered hereunder or under the Act or the Regulations, any event
shall have occurred as a result of which, in the reasonable opinion of
counsel for the Company or counsel for the Representative, the
Registration Statement or the Prospectus, as then amended or
supplemented, contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, or if, in the opinion of
either of such counsel, it is necessary at any time to amend or
supplement the Registration Statement or the Prospectus to comply with
the Act or the Regulations, the Company will immediately notify you and
promptly prepare and file with the Commission an appropriate amendment
or supplement (in form and substance satisfactory to you) which will
correct such statement or omission or which will effect such
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compliance and will use its best efforts to have any such amendment
declared effective as soon as possible.
d. Deliver without charge to you such number of copies of each
Preliminary Prospectus as you may reasonably request and, as soon as
the Registration Statement or any amendment thereto becomes effective
or a supplement is filed, deliver without charge to you two signed
copies of the Registration Statement or such amendment thereto, as the
case may be, including exhibits, and two copies of any supplement
thereto, and deliver without charge to you such number of copies of the
Prospectus, the Registration Statement, and amendments and supplements
thereto, if any, without exhibits, as you may reasonably request for
the purposes contemplated by the Act.
e. Endeavor in good faith, in cooperation with you, at or prior to the
time the Registration Statement becomes effective, to qualify the Units
and Additional Securities for offering and sale under the "blue sky" or
securities laws of such jurisdictions as you may designate; provided,
however, that no such qualification shall be required in any
jurisdiction where, as a result thereof, the Company would be subject
to service of general process or to taxation as a foreign corporation
doing business in such jurisdiction to which it is not then subject. In
each jurisdiction where such qualification shall be effected, the
Company will, unless you agree in writing that such action is not at
the time necessary or advisable, file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
f. Make generally available (within the meaning of Section 11(a) of the
Act and the Regulations) to its security holders as soon as
practicable, but not later than fifteen (15) months after the date of
the Prospectus, an earnings statement (which need not be certified by
independent certified public accountants unless required by the Act or
the Regulations, but which shall satisfy the provisions of Section
11(a) of the Act and the Regulations) covering a period of at least 12
months beginning after the effective date of the Registration
Statement.
g. For a period of 13 months after the date of the Prospectus, not,
without your prior written consent, offer, issue, sell, contract to
sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or any security or
other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock) except as provided in
Section 3 and except for (i) the issuance of Warrant Shares issuable
upon the exercise of Warrants or issuance of Common Stock underlying
options outstanding on the date hereof which are properly described in
the Prospectus, (ii) the issuance of Representative's Option
Securities, or (iii)
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the grant of options pursuant to the Company's existing stock option
plans, or (iv) the issuance of capital stock in connection with any
acquisitions undertaken by the Company.
h. For a period of five years after the Effective Date of the
Registration Statement, furnish you, without charge, the following:
i. Within 90 days after the end of each fiscal year,
three copies of consolidated financial statements certified by
independent certified public accountants, including a balance
sheet, statement of operations, and statement of cash flows of
the Company and its then existing subsidiaries, with
supporting schedules, prepared in accordance with generally
accepted accounting principles, at the end of such fiscal year
and for the 12 months then ended;
ii. As soon as practicable after they have been sent
to stockholders of the Company or filed with the Commission,
three copies of each annual and interim financial and other
report or communication sent by the Company to its
stockholders or filed with the Commission;
iii. As soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company;
iv. Notice of any regular quarterly or special
meeting of the Company's Board of Directors concurrently with
the sending of such notice to the Company's directors; and
v. Such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its subsidiaries as you may from time to time reasonably
request.
a. Designate an Audit Committee and a Compensation Committee, the
members of which shall be subject to your reasonable approval, which
will generally supervise the financial affairs of the Company and
review executive compensation, respectively.
b. Furnish to you as early as practicable prior to the Closing Date and
any Additional Closing Date, as the case may be, but not less than two
full business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements of the Company
which have been read by the Company's independent certified public
accountants, as stated in their letters to be furnished pursuant to
Section 7(e). a.
c. File no amendment or supplement to the Registration Statement or
Prospectus at any time, whether before or after the Effective Date of
the Registration Statement, unless such filing shall comply with the Act
and the Regulations and unless you shall previously have been advised of
such filing and furnished with a copy thereof, and
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you and counsel for the Representative shall have approved such filing
in writing within a reasonable time of receipt thereof.
d. Comply with all periodic reporting and proxy solicitation
requirements which may from time to time be applicable to the Company
as a result of the Company's registration under the Exchange Act on a
Registration Statement on Form 8-A .
e. Comply with all provisions of all undertakings contained in the
Registration Statement.
f. Prior to the Closing Date or any Additional Closing Date, as the
case may be, issue no press release or other communication, directly or
indirectly, and hold no press conference and grant no interviews with
respect to the Company, the financial condition, results of operations,
business, properties, assets, or liabilities of the Company, or this
offering, without your prior written consent.
g. On or prior to the Closing Date, sell to the Representative for a
total purchase price of $100, Representative's Options entitling the
Representative or its assigns to purchase (i) 80,000 Units at a price
equal to 120% of the public offering price of the Units, with the terms
of the Representative's Options, including exercise period,
anti-dilution provisions, exercise price, exercise provisions,
transferability, and registration rights, to be in the form filed as an
exhibit to the Registration Statement.
h. Until expiration of the Representative's Options, keep reserved
sufficient shares of Common Stock and Warrants for issuance upon
exercise of the Representative's Options, and shares of Common Stock
for issuance upon exercise of the warrants contained in the
Representative's Options. a.
i. If the Representative, any employee of the Representative or any
company controlled by or under control of the Representative acts as
the introducing broker or finder during the five year period commencing
on the Effective Date with regard to (i) the sale of all or
substantially all of the assets and properties of the Company, (ii) the
merger or consolidation of the Company (other than a merger or
consolidation effected for the purpose of changing the Company's
domicile) or (iii) the acquisition by the Company of the assets or
stock of another business entity, which agreement or understanding is
thereafter consummated during such five-year period or within one year
of expiration of such five-year period, pay to the Representative or
such person(s) as the Representative may designate an amount equal to
5% of the first $1,000,000 or portion thereof in value or consideration
received or paid by the Company, 4% of the second $1,000,000 or portion
thereof in value or consideration received or paid by the Company and
3% of such value or consideration received by the Company in excess of
the first $2,000,000 of such value or consideration received or paid by
the Company. The fee payable to the Representative will be in the same
form of consideration as that paid by or to the Company, as the case
may be, in any
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such transaction. It is understood that the designation of the
Representative to act as a finder is not exclusive and that the
Representative shall not be entitled to the foregoing amounts unless it
participates in the introduction.
j. Adopt procedures for the application of the net proceeds it receives
from the sale of the Units and apply the net proceeds from the sale of
the Units substantially in the manner set forth in the Registration
Statement, which does not contemplate repayment of debt to officers,
directors, stockholders or affiliates of the Company, unless any
deviation from such application is in accordance with the Registration
Statement and occurs only after approval by the Board of Directors of
the Company and then only after the Board of Directors has obtained the
written opinion of recognized legal counsel experienced in federal and
state securities laws as to the propriety of any such deviation.
k. Within the time period which the Prospectus is required to be
delivered under the Act, comply, at its own expense, with all
requirements imposed upon it by the Act, as now or hereafter amended,
by the Rules and Regulations, as from time to time may be enforced, and
by any order of the Commission, so far as necessary to permit the
continuance of sales or dealing in the Units, Common Stock and
Warrants.
l. At the Closing, deliver to the Representative true and correct
copies of the Articles of Incorporation of the Company and all
amendments thereto, all such copies to be certified by the Secretary of
the Company; true and correct copies of the by-laws of the Company and
of the minutes of all meetings of the directors and stockholders of the
Company held prior to the Closing which in any way relate to the
subject matter of this Agreement or the Registration Statement.
m. Use all reasonable efforts to comply or cause to be complied with
the conditions precedent to the several obligations of the Underwriters
in Section 7 hereof.
n. File with the Commission all required information concerning use of
proceeds of the Public Offering in Forms 10-QSB and 10-KSB in
accordance with the provisions of the Act and to provide a copy of such
reports to the Representative and its counsel.
o. Supply to the Representative and the Representative's counsel at the
Company's cost, two bound volumes each containing material documents
relating to the offering of the Common Stock and Warrants within a
reasonable time after the Closing, not to exceed 90 days.
p. As soon as possible prior to the Effective Date, and as a condition
of the Underwriter's obligations hereunder, (i) have the Company listed
on an accelerated basis, and to maintain such listing for not less than
ten years from the Closing Date, in Standard & Poor's Standard
Corporation Records; and (ii) have the Units, Common Stock and Warrants
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quoted on The Nasdaq SmallCap Market" as of the Effective Date, on the
Closing Date, on the Additional Closing Date and thereafter for at
least ten years provided the Company is in compliance with The Nasdaq
SmallCap Market" maintenance requirements.
y. At such time as the Company qualifies for listing on the
Nasdaq National Market, take all steps necessary to have the Company's
Common Stock and Warrants, to the extent eligible, listed on the Nasdaq
National Market.
z. Continue, for a period of at least five years following the
Effective Date of the Registration Statement, to appoint such auditors
as are reasonably acceptable to the Representative, which auditors
shall (i) prepare consolidated financial statements in accordance with
Regulation S-B or, if applicable, Regulation S-X under the General
Rules and Regulations of the Act and (ii) examine (but not audit) the
Company's consolidated financial statements for each of the first three
(3) fiscal quarters prior to the announcement of quarterly financial
information, the filing of the Company's 10-QSB quarterly report and
the mailing of quarterly financial information to security holders.
aa. Within 90 days of the Effective Date of the Registration
Statement, obtain a "key man" life insurance policy in the amount of
$_________ on the life of Xxxxx X. Xxxxxxx, with the Company designated
as the beneficiary of such policy, and pay the annual premiums thereon
for a period of not less than three years from the Effective Date of
the Registration Statement.
bb. Cause its transfer agent to furnish the Representative a
duplicate copy of the daily transfer sheets prepared by the transfer
agent upon the reasonable request of the Representative, at the
Company's expense, for a period of five years after the Effective Date.
cc. Refrain from filing a Form S-8 Registration Statement for
a period of 180 days from the Effective Date of the Registration
Statement without the Representative's prior written consent. On or
prior to the filing of the Form S-8 Registration Statement, the Company
shall (i) obtain from all officers and directors their written
agreement not to sell the registered Common Stock underlying options
for the duration of the period through 13 months from the Effective
Date, and (ii) not permit the sale by non-officer and non-director
employees of in excess of an aggregate of 25,000 shares of Common Stock
during the period from the Effective Date of the Form S-8 Registration
Statement through 13 months from the Effective Date. The Company will
also obtain from each holder of options to acquire Common Stock of the
Company such person's written enforceable agreement not to sell shares
of Common Stock pursuant to the exemption afforded by Rule 701 under
the 1933 Act for a minimum period of 13 months from the Effective Date
without the prior written consent of the Representative.
dd. Afford the Representative the right, but not the
obligation, to designate an observer to attend meetings of the Board of
Directors, which right shall commence on the Effective Date and survive
for a period through the later of (i) three years from the Effective
Date, or (ii) exercise of the Representative's Warrants. The designee,
if any, and the Representative will receive notice of each meeting of
the Board of Directors in accordance with Colorado law, of which no
less than four meetings will be held each year. Any such designee will
receive reimbursement for all reasonable costs and expenses incurred in
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attending meetings of the Board of Directors, including but not limited
to, food, lodging and transportation. Moreover, to the extent permitted
by law, the Representative and its designee shall be indemnified for
the actions of such designee as an observer to the Board of Directors
and in the event the Company maintains a liability insurance policy
affording coverage for the acts of its officers and/or directors, to
the extent permitted under such policy, each of the Representative and
its designee shall be an insured under such policy.
ee. On behalf of itself and on behalf of its officers and
directors, provide the Representative a non-assignable right of first
refusal, which right of first refusal shall extend for a period of
three years after the Effective Date. The right of first refusal shall
entitle the Representative to purchase for its account, or to sell for
the account of the Company, any of the Company's subsidiaries or any
selling security holders or officers, directors or affiliates of such
persons, any debt or equity securities of the Company or common stock
owned by such selling security holders with respect to which the
Company, any of its subsidiaries or successors (other than a successor
entity which has acquired the Company and in which the stockholders of
the Company own less than 25% of the outstanding shares) or selling
security holders may seek to offer and sell pursuant to a registration
statement under the Act or in a private transaction other than with a
lending institution. The Company, its subsidiaries and any selling
security holders will consult with the Representative with regard to
any such offering and will offer the Representative the opportunity to
purchase or sell any such securities on terms not more favorable to the
Company than it can secure elsewhere. If the Representative fails to
accept in writing such proposal for financing made by the Company, its
subsidiaries or such selling security holders within fifteen (15) days
after the receipt by the Representative of a notice containing such
proposal, then the Representative shall have no further claim or right
with respect to the financing proposal contained in such notice. If
thereafter such proposal is modified, the Company, its subsidiaries or
affiliates shall adopt the same procedure as with respect to the
original proposal, except that upon re-presentation, such term for
response by the Representative shall be ten (10) days. Should the
Representative not avail itself of such opportunity, the right of first
refusal shall not be affected thereby, and the right of first refusal
shall continue in effect for the remaining period thereof. The Company
further agrees that any breach by the Company of the Representative's
right of first refusal shall be enforceable through injunctive relief.
The offer or sale by the Company of equity securities in connection
with acquisitions or mergers shall be exempted from the foregoing right
of first refusal.
1. Payment of Expenses. The Company hereby agrees to pay all expenses (subject
to the last sentence of this Section 6) in connection with the offering,
including but not limited to (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement and the
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Prospectus, including NASD, SEC, Nasdaq filing and/or application fees, and the
printing, filing, distribution, and mailing of this Agreement, any Agreement
Among Underwriters, Selected Dealers Agreement, preliminary and final Blue Sky
Memorandums, material to be circulated to the Underwriters by you and other
incidental or related documents, including the cost of all copies thereof and of
the Preliminary Prospectuses and of the Prospectus, and any amendments or
supplements thereto, supplied to the Representative in quantities as hereinabove
stated, (b) the issuance, sale, transfer, and delivery of the Units, the
Additional Securities, the Warrant Shares, the Representative's Options and the
Representative's Option Securities, including, without limitation, any original
issue, transfer or other taxes payable thereon and the costs of preparation,
printing and delivery of certificates representing such securities, as
applicable, (c) the qualification of the Units, Additional Securities,
Representative's Options, Representative's Option Securities, and Warrant Shares
under state or foreign "blue sky" or securities laws, (d) the fees and
disbursements or counsel for the Company and the accountants for the Company,
(e) the listing of the Units, Common Stock and Warrants on The Nasdaq SmallCap
Market", and (f) the Representative's non-accountable expense allowance equal to
3% of the aggregate gross proceeds from the sale of the Units and the Additional
Securities. Prior to or immediately following the Closing Date, the Company
shall bear the costs of tombstone announcements not to exceed $1,500, if
requested to do so by the Representative.
2. The Company has previously remitted to the Representative the sum of $35,000,
which sum has been credited as a partial payment in advance of the
non-accountable expense allowance provided for in Section 6(f) above.
3. Conditions of Underwriters' Obligations. The Underwriters' obligation to
purchase and pay for the Units and the Additional Securities, as provided
herein, shall be subject to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to you, as of the date hereof
and as of the Closing Date (or the Additional Closing Date, as the case may be),
to the performance by the Company of its obligations hereunder, and to the
following conditions:
a. The Registration Statement shall have become effective not later
than 5:00 p.m., Mountain time, on the date of this Agreement or such
later date and time as shall be consented to in writing by you.
b. At the Closing Date and any Additional Closing Date, you shall have
received the favorable opinion of Resch, Polster, Xxxxxx & Xxxxxx, LLP,
counsel for the Company, dated the date of delivery, addressed to you,
and in form and scope satisfactory to your counsel, to the effect that:
i. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of California, with full power and
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authority, and all necessary consents, authorizations,
approvals, orders, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other
tribunals, to own, lease, license, and use its properties and
assets and to conduct its business in the manner described in
the Prospectus. The Company is duly qualified to do business
and is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets
or the conduct of its business makes such qualification
necessary;
ii. The authorized capital stock of the Company as of
the date of this Agreement consisted of 50,000,000 shares of
Common Stock, of which 3,300,000 shares of Common Stock are
issued and outstanding, 320,000 shares of Common Stock are
reserved for issuance upon the exercise of options; and
10,000,000 shares of Preferred Stock, none of which are issued
and outstanding; and there have been no changes in the
authorized and outstanding capital stock of the Company since
the date of this Agreement, except as contemplated by the
Registration Statement and the Prospectus. Each outstanding
share of capital stock is validly authorized, validly issued,
fully paid, and nonassessable, with no personal liability
attaching to the ownership thereof, has not been issued and is
not owned or held in violation of any preemptive right of
stockholders. There is no commitment, plan, or arrangement to
issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of the
Company or any security or other instrument which by its terms
is convertible into, exercisable for, or exchangeable for
capital stock of the Company, except as set forth above, and
except as is properly described in the Prospectus. There is
outstanding no security or other instrument which by its terms
is convertible into or exchangeable for capital stock of the
Company, except as described in the Prospectus;
iii. There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or
investigation pending, threatened, or in prospect (or any
basis therefor) with respect to the Company or any of its
respective operations, businesses, properties, or assets,
except as may be properly described in the Prospectus or such
as individually or in the aggregate do not now have and will
not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company.
The Company is not in violation of, or in default with respect
to, any law, rule, regulation, order, judgment, or decree,
except as may be properly described in the Prospectus or such
as in the aggregate have been disclosed to the Representative
and do not now have and will not in the future
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have a material adverse effect upon the operations, business,
properties, or assets of the Company; nor is the Company
required to take any action in order to avoid any such
violation or default;
iv. Neither the Company nor any other party is now or
is expected by the Company to be in violation or breach of, or
in default with respect to, complying with any material
provision of any contract, agreement, instrument, lease,
license, arrangement, or understanding which is material to
the Company;
v. The Company is not in violation or breach of, or
in default with respect to, any term of its Articles of
Incorporation or by-laws;
vi. The Company has all requisite power and authority
to execute and deliver and to perform thereunder this
Agreement, the Warrants and the Representative's Options. All
necessary corporate proceedings of the Company have been taken
to authorize the execution and delivery and performance
thereunder by the Company of this Agreement, the Warrants and
the Representative's Options. Each of this Agreement, the
Warrants and the Representative's Options have been duly
authorized, executed and delivered by the Company, and is a
legal, valid, and binding obligation of the Company, and
(subject to applicable bankruptcy, insolvency, and other laws
affecting the enforceability of creditors' rights generally)
enforceable as to the Company in accordance with its
respective terms. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by the
Company for the execution or delivery, or performance
thereunder by the Company of this Agreement, the Warrants and
the Representative's Options (except filings under the Act
which have been made prior to the Closing Date and consents
consisting only of consents under "blue sky" or securities
laws which are required in connection with the transactions
contemplated by this Agreement, and which have been obtained
on or prior to the date the Registration Statement becomes
effective under the Act). No consent of any party to any
contract, agreement, instrument, lease, license, arrangement,
or understanding to which the Company is a party, or to which
any of its properties or assets are subject, is required for
the execution or delivery, or performance thereunder of this
Agreement, the Warrants and the Representative's Options; and
the execution and delivery and performance thereunder of this
Agreement, the Warrants and the Representative's Options will
not violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default
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under any such contract, agreement, instrument, lease,
license, arrangement, or understanding, or violate or result
in a breach of any term of the Articles of Incorporation or
by-laws of the Company, or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or
decree binding on the Company or to which any of its
operations, businesses, properties, or assets are subject;
vii. The shares of Common Stock are, the shares of
Common Stock issuable on exercise of the Warrants will be, the
shares of Common Stock underlying the Representative's Options
will be upon exercise of the Representative's Options, and the
Representative's Option Shares will be upon exercise of the
Warrants underlying the Representative's Options, validly
authorized, validly issued, fully paid, and nonassessable and
are not issued in violation of any preemptive rights of
stockholders, and the Underwriters have received good title to
the Units and Additional Securities purchased by them from the
Company, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and
voting trusts; upon payment for the Warrant Shares and the
Representative's Securities, the holders thereof will receive
good title to such securities, free and clear of all liens,
security interests, pledges, charges, encumbrances,
stockholders' agreement and voting trusts. The Units, Common
Stock, the Warrants, the Warrant Shares, the Representative's
Options and the Representative's Option Securities conform to
all statements relating thereto contained in the Registration
Statement or the Prospectus;
viii. The Warrant Shares have been duly and validly
reserved for issuance pursuant to the terms of the Warrant
Agreement between the Company and its transfer agent, the
Representative's Option Securities have been duly and validly
reserved for issuance pursuant to the terms of the
Representative's Options or the Warrant Agreement, as the case
may be;
ix. Any contract, agreement, instrument, lease, or
license required to be described in the Registration Statement
or the Prospectus has been properly described therein. Any
contract, agreement, instrument, lease, or license required to
be filed as an exhibit to the Registration Statement has been
filed with the Commission as an exhibit to or has been
incorporated as an exhibit by reference into the Registration
Statement;
x. Insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws,
rules, regulations, orders, judgments, decrees, contracts,
agreements, instruments, leases, or licenses, such statements
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have been prepared or reviewed by such counsel and accurately
reflect the status of such litigation and provisions purported
to be summarized and are correct in all material respects;
xi. Except as provided in the Registration Statement,
no person or entity has the right to require registration of
shares of Common Stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement;
xii. The Registration Statement has become effective
under the Act. No Stop Order has been issued and no
proceedings for that purpose have been instituted or
threatened;
xiii. The Registration Statement and the Prospectus,
and any amendment or supplement thereto, comply as to form in
all material respects with the requirements of the Act and the
Regulations;
xiv. Such counsel has no reason to believe that
either the Registration Statement or the Prospectus, or any
amendment or supplement thereto, contains any untrue statement
of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading (except that no opinion need be
expressed as to the consolidated financial statements and
other financial data and schedules which are or should be
contained therein);
xv. Since the Effective Date of the Registration
Statement, any event which has occurred which should have been
set forth in an amendment or supplement to the Registration
Statement or the Prospectus has been set forth in such an
amendment or supplement;
xvi. The Company is not currently offering any
securities for sale except as described in the Registration
Statement;
xvii. Such counsel has no knowledge of any promoter,
affiliate, parent or subsidiaries of the Company except as are
described in the Registration Statement;
xviii. The Company has no subsidiaries except as
described in the Registration Statement;
xix. The Company owns or possesses, free and clear of
all liens or encumbrances and rights thereto or therein by
third parties, the requisite licenses or other rights to use
all trademarks, copyrights, service marks, service names,
trade names and licenses necessary to conduct its business
(including without limitation, any such licenses or rights
described in the Registration Statement as being owned or
possessed by the Company or any subsidiary) (all of which are
collectively referred to herein as the "Intellectual
Property"); there is no actual or pending, or threatened
claim, proceeding or action by any person pertaining to or
which
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challenges the exclusive rights of the Company with respect to
any of the Company's Intellectual Property; based on a review
of all the Company's products, proposed products and
Intellectual Property, such products, proposed products or
Intellectual Property do not and will not infringe on any
trademarks, copyrights, service marks, service names, trade
names or valid patents or patents pending held by third
parties known to the Company and such counsel;
xx. The Company is not a party to any agreement
giving rise to any obligation by the Company or any subsidiary
to pay any third-party royalties or fees of any kind
whatsoever with respect to any technology developed, employed,
used or licensed by the Company or any subsidiary, other than
as disclosed in the Prospectus;
xxi. The Units, Common Stock and Warrants are
eligible for quotation on The Nasdaq SmallCap Market;
xxii. All issued and outstanding shares of Common
Stock and all other securities issued and sold or exchanged by
the Company or its subsidiaries have been issued and sold or
exchanged in compliance with all applicable state and federal
securities laws and regulations; and
xxiii. The Company and all of its Property are in
compliance with all Environmental Laws and the Company is in
full compliance with all permits, licenses and authorizations
relating to Environmental Laws.
In rendering such opinion, counsel for the Company may rely
(A) as to matters involving the application of laws other than the laws
of the United States and the laws of the State of California, to the
extent counsel for the Company deems proper and to the extent specified
in such opinion, upon an opinion or opinions (in form and substance
satisfactory to counsel for the Representative) of other counsel,
acceptable to counsel for the Representative, familiar with the
applicable laws, in which case the opinion of counsel for the Company
shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company
and that reliance thereon by counsel for the Company is reasonable; (B)
as to matters of fact, to the extent the Representative deems proper,
on certificates of responsible officers of the Company; and (C) to the
extent they deem proper, upon written statements or certificates of
officers of departments of various jurisdictions having custody of
documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates
shall be delivered to counsel for the Representative.
a. On or prior to the Closing Date and any Additional Closing Date, as
the case may be, you shall have been furnished such information,
documents, certificates, and
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opinions as you may reasonably require for the purpose of enabling you
to review the matters referred to in Sections 7(b) and (c), and in
order to evidence the accuracy, completeness, or satisfaction of any of
the representations, warranties, covenants, agreements, or conditions
herein contained, or as you may reasonably request.
b. At the Closing Date and any Additional Closing Date, as the case may
be, you shall have received a certificate of the chief executive
officer and of the chief financial officer of the Company, dated the
Closing Date or such Additional Closing Date, as the case may be, to
the effect that the conditions set forth in Section 7(a) have been
satisfied, that as of the date of this Agreement and as of the Closing
Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were and
are accurate, and that as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed.
c. At the time this Agreement is executed and at the Closing Date and
any Additional Closing Date, as the case may be, you shall have
received a letter from Merdinger, Fruchter, Xxxxx & Xxxxx, P.C.,
Certified Public Accountants, addressed to you and dated the date of
delivery but covering a period within three business days of such date,
in form and substance satisfactory to you.
d. All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Units and the Additional Securities shall
be satisfactory in form and substance to you and to counsel for the
Representative, and you shall have received a favorable opinion from
counsel to the Company, dated as of the Closing Date or the Additional
Closing Date, as the case may be, with respect to such of the matters
set forth under Sections 7(b) and 7(c), respectively, and with respect
to such other related matters, as you may reasonably request.
e. The NASD, upon review of the terms of the public offering of the
Units and the Additional Securities, shall not have objected to your
participation in such offering.
f. The Company shall have received notice that the Units, Common Stock
and Warrants will be quoted on The Nasdaq SmallCap Market" as of the
Effective Date.
Any certificate or other document signed by any officer of the Company
and delivered to you or to counsel for the Representative shall be deemed a
representation and warranty by such officer individually and by the Company
hereunder to the Representative as to the statements made therein. If any
condition to your obligations hereunder to be fulfilled prior to or at the
Closing Date or any Additional Closing Date, as the case may be, is not so
fulfilled, you may terminate this Agreement or, if you so elect, in writing
waive any such conditions which have not been fulfilled or extend the time for
their fulfillment.
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1. Indemnification and Contribution.
a. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriters, the Representative, and
each of their officers, directors, partners, employees, agents, and
counsel, and each person, if any, who controls the Representative or
any one of the Underwriters within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, against any and all loss,
liability, claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 8, but not be limited to, attorneys'
fees and any and all expense whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation) as and when incurred arising out
of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement, or the Prospectus
(as from time to time amended and supplemented), or any amendment or
supplement thereto, or (B) in any application or other document or
communication (in this Section 8 collectively called an "application")
in any jurisdiction in order to qualify the Units and Additional
Securities under the "blue sky" or securities laws thereof or filed
with the Commission or any securities exchange; or any omission or
alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) any
breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Agreement;
however, the Company shall have no liability under this Section 8 if
such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company as stated in Section
8(b) with respect to the Underwriters by or on behalf of the
Underwriters expressly for inclusion in any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or in any application, as the case may be.
If any action is brought against the Underwriters, the Representative
or any of their officers, directors, partners, employees, agents, or counsel, or
any controlling persons of an Underwriter or the Representative (an "indemnified
party") in respect of which indemnity may be sought against the Company pursuant
to the foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but the failure
so to notify shall not relieve the Company from any liability it may have other
than pursuant to this Section 8(a)) and the Company shall promptly assume the
defense of such action, including the employment of counsel (satisfactory to
such indemnified party or parties) and payment of expenses. Such indemnified
party
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or parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of such
action or the Company shall not have promptly employed counsel satisfactory to
such indemnified party or parties to have charge of the defense of such action
or such indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those available to
the Company, in any of which events such fees and expenses shall be borne by the
Company. Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent. The Company agrees promptly to notify the
Underwriters and the Representative of the commencement of any litigation or
proceedings against the Company or against any of its officers or directors in
connection with the sale of the Units or the Additional Securities, any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or any application.
a. The Underwriters agree to indemnify and hold harmless the Company,
each director of the Company, each officer of the Company who shall
have signed the Registration Statement, each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Underwriters in Section 8(a), but
only with respect to statements or omissions, if any, made in any
Preliminary Prospectus, the Registration Statement, or the Prospectus
(as from time to time amended and supplemented), or any amendment or
supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company as stated
in this Section 8(b) with respect to the Underwriters by or on behalf
of the Underwriters expressly for inclusion in any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may
be; provided, however, that the obligation of the Underwriters to
provide indemnity under the provisions of this Section 8(b) shall be
limited to the amount which represents the product of the number of
Units and Additional Securities sold hereunder and the initial public
offering prices per Unit set forth on the cover page of the Prospectus.
For all purposes of this Agreement, the amounts of the selling
concession and reallowance set forth in the Prospectus, the information
under "Underwriting" and the identification of counsel to the
Representative under "Legal Matters" constitute the only information
furnished in writing by or on behalf of the Underwriters expressly for
inclusion in any Preliminary Prospectus, the Registration Statement, or
the Prospectus (as from time to time amended or supplemented),
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31
or any amendment or supplement thereto, or in any application, as the
case may be. If any action shall be brought against the Company or any
other person so indemnified based on any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or any application, and in respect of which
indemnity may be sought against the Underwriters pursuant to this
Section 8(b), the Underwriters shall have the rights and duties given
to the Company, and the Company and each other person so indemnified
shall have the rights and duties given to the indemnified parties, by
the provisions of Section 8(a).
b. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 8 is for any reason held to be unavailable to the Underwriters
or the Company, then the Company shall contribute to the damages paid
by the several Underwriters, and the several Underwriters shall
contribute to the damages paid by the Company; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties
are entitled, there shall be considered the relative benefits received
by each party from the sale of the Units and Additional Securities
(taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in
the aggregate exceeds the total public offering price of the Units and
Additional Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages which such
Underwriter and its controlling persons have otherwise been required to
pay in respect of the same or any substantially similar claim. The
Underwriters' obligations to contribute hereunder are several in
proportion to their respective underwriting obligations and not joint.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act shall have the
same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, shall have the same rights to
contribution as the Company. Anything in this Section 8(c) to the
contrary
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notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written
consent. This Section 8(c) is intended to supersede any right to
contribution under the Act, the Exchange Act, or otherwise.
2. Representations and Agreements to Survive Delivery. All representations,
warranties, covenants, and agreements contained in this Agreement shall be
deemed to be representations, warranties, covenants, and agreements at the
Closing Date and any Additional Closing Date, and such representations,
warranties, covenants, and agreements of the Underwriters and the Company,
including the indemnity and contribution agreements contained in Section 8,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Representative, the Underwriters or
any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 8(b), and shall survive
termination of this Agreement or the delivery of the Units and the Additional
Securities to the Underwriters for a period equal to the statute of limitations
for claims related hereto, but not to exceed an aggregate of three years from
the date hereof. In addition, the provisions of Sections 5(a), 6, 8, 9, 10, and
12 shall survive termination of this Agreement, whether such termination occurs
before or after the Closing Date or any Additional Closing Date.
3. Effective Date of This Agreement and Termination Thereof.
a. This Agreement shall be executed within 24 hours of the Effective
Date of the Registration Statement and shall become effective on the
Effective Date or at the time of the initial public offering of the
Units, whichever is earlier. The time of the initial public offering
shall mean the time, after the Registration Statement becomes
effective, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating
to the Units or the time, after the Registration Statement becomes
effective, when the Units are first released by the Representative for
offering by dealers by letter or telegram, whichever shall first occur.
The Representative or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party,
except as noted below in this Section 10, by giving the notice
indicated in Section 10(c) before the time this Agreement becomes
effective.
b. The Representative shall have the right to terminate this Agreement
at any time prior to the Closing Date or any Additional Closing Date,
as the case may be, by giving notice to the Company if there shall have
been a general suspension of, or a general limitation on prices for,
trading in securities on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market; or if there shall
have been an outbreak of major hostilities or other national or
international calamity; or if a banking moratorium has been declared by
a state or federal authority; or if a moratorium in foreign exchange
trading by major international banks or persons has been declared; or
if there
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shall have been a material interruption in the mail service or other
means of communication within the United States; or if the Company
shall have sustained a material or substantial loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage, or other calamity or
malicious act which, whether or not such loss shall have been insured,
will, in the Representative's opinion, make it inadvisable to proceed
with the offering, sale, or delivery of the Units or the Additional
Securities, as the case may be; or if there shall have been such
material and adverse change in the market for securities in general so
as to make it inadvisable to proceed with the offering, sale, and
delivery of the Units or the Additional Securities, as the case may be,
on the terms contemplated by the Prospectus due to the impaired
investment quality of the Units or the Additional Securities; or if the
Dow Xxxxx Industrial Average shall have fallen by 15% or more from its
closing price on the day immediately preceding the date that the
Registration Statement is declared effective by the Commission.
c. If the Representative elects to prevent this Agreement from becoming
effective as provided in this Section 10, or to terminate this
Agreement, it shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects
to prevent this Agreement from becoming effective, the Company shall
notify the Representative promptly by telephone, telex, or telegram,
confirmed by letter.
d. Anything in this Agreement to the contrary notwithstanding other
than Section 10(e), if this Agreement shall not become effective by
reason of an election pursuant to this Section 10 or if this Agreement
shall terminate or shall otherwise not be carried out prior to
September 30, 1999 because (i) of any reason solely within the control
of the Company or its stockholders and not due to the breach of any
representation, warranty or covenant or bad faith of the
Representative, (ii) the Company unilaterally withdraws the proposed
Public Offering from the Representative in favor of another
underwriter, (iii) the Company does not permit the Registration
Statement to become effective for any reason (iv) of any material
discrepancy in any representation by the Company and/or its officers,
directors, stockholders, agents, advisers or representatives, made in
writing, including but not limited to the Registration Statement, to
the Representative, (v) the Company is, directly and/or indirectly,
negotiating with other persons or entities of whatsoever nature
relating to a possible Public Offering of its securities, or (vi) of
any failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to be
performed or satisfied, then, in any of such events, the Company shall
be obligated to reimburse the Representative for its out-of-pocket
expenses on an accountable basis. Should the Representative be required
to account for "out-of-pocket" expenses, any expense incurred by the
Representative shall be deemed to be reasonable and unobjectionable
upon
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a reasonable showing by the Representative that such expenses were
incurred, directly or indirectly, in connection with the proposed
transaction and/or relationship of the parties hereto, as described
herein. In no event will the Representative be entitled to
reimbursement of accountable expenses exceeding $50,000, inclusive of
the $35,000 advanced against the non-accountable expense allowance. The
Representative will return to the Company any portion of the $35,000
payment previously received that is not used in the payment of
accountable expenses.
e. Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out,
the provisions of Sections 5(a), 6, 8, 9, and 10 shall not be in any
way affected by such election or termination or failure to carry out
the terms of this Agreement or any part hereof.
f. Anything in this Agreement to the contrary notwithstanding other
than Sections 10(d) and (e), if this Agreement shall not be carried out
within the time specified herein for any reason other than as set forth
in Section 10(d), the Company shall have no liability to the
Representative other than for the Representative's accountable expenses
up to a maximum aggregate amount of $35,000, which amount has been paid
in advance in accordance with Section 6 hereof. The Representative will
return to the Company any portion of the $35,000 payment previously
received that is not used in the payment of accountable expenses.
4. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the
Representative, shall be mailed, delivered, or sent by facsimile transmission
and confirmed by original letter, to Xxxxxxx Xxxxxxx, Inc., 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx Xxxxx, President , with
a copy to Xxxxxx X. Xxxxxx, Esq., Berliner Xxxxxx Xxxxxx & Xxxxxxxx, P.C., 0000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000; or if sent to the Company
shall be mailed, delivered, or telexed or telegraphed and confirmed by letter,
to Pacific Softworks, Inc., 000 Xxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxx,
Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxx, President, with a copy to Xxxxx
X. Xxxxxxxx, Esq., Resch, Polster, Xxxxxx & Xxxxxx LLP, 00000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000. All notices hereunder shall be
effective upon receipt by the party to which it is addressed.
5. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters, the Company, and the persons and entities
referred to in Section 8 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which shall
not include any buyer, as such, of the Units or the Additional Securities) and
no other person shall have or be construed to have any legal or equitable right,
remedy, or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.
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6. Construction. This Agreement shall be construed in accordance with the laws
of the State of Colorado, without giving effect to conflict of laws. Time is of
the essence in this Agreement. The parties acknowledge that this Agreement was
initially prepared by the Representative, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that, because
all parties participated in negotiating and drafting this Agreement, no rule of
construction shall apply to this Agreement which construes ambiguous language in
favor of or against any party by reason of that party's role in drafting this
Agreement.
If the foregoing correctly sets forth the understanding between us, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between us.
Very truly yours,
Pacific Softworks, Inc.
By:_______________________________
Xxxxx X. Xxxxxxx, President
Accepted as of the date first above written.
Denver, Colorado
XXXXXXX XXXXXXX, INC.
for itself
By:_______________________________
Xxxxxx Xxxxx, President
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PACIFIC SOFTWORKS, INC.
(A CALIFORNIA CORPORATION)
SCHEDULE 1
This Schedule sets forth the name of each Underwriter referred to in the
Underwriting Agreement and the number of Units to be sold by the Company.
NUMBER OF
NAME UNITS
---- ---------
Xxxxxxx Xxxxxxx, Inc.
-------
Total 800,000
=======
36
