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EXHIBIT 99.2
[XXXX XXXXXXXX LETTERHEAD]
___________, 1996
Digital Systems International, Inc.
0000-000xx Xxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Chairman and Chief Executive Officer
Dear Xx. Xxxxxx:
This letter agreement serves to supplement (the "Supplement") the
agreement dated September 20, 1996 (the "Agreement") between Digital Systems
International, Inc. (the "Company") and Xxxx Xxxxxxxx Incorporated ("Dain") to
describe additional services to be provided by Dain to the Company.
1. Additional Services.
In connection with the pending acquisition of ViewStar Corporation
("ViewStar") in a stock for stock merger (the "Merger") and in order for the
Merger to qualify for the pooling of interests accounting treatment, the
Company intends to sell up to 300,000 shares of its common stock, $.01 par
value per share, (the "Common Stock") in a Rule 415 offering pursuant to the
Form S-3 Registration Statement, Statement No. 333-16053 (the "Registration
Statement"). Dain will use its best efforts to sell in open market
transactions at prevailing market prices for the Common Stock less the a
discount of the lesser of $.40 per share or 3.0% from the sales price such
number of shares covered by the Registration Statement when it is effective and
at such times as the Company may request. The compensation for Xxxx's services
under this paragraph shall be the amount of the discount referred to in the
preceding sentence. In addition, the Company will reimburse Dain for
reasonable out of pocket cost and expenses in connection with this Supplement
and the transactions contemplated by this paragraph 1 up to $10,000.
2. Representations and Warranties.
The Company represents and warrants to and agrees with Xxxx as follows
as of the date hereof and as of the date of each sale of shares pursuant to
paragraph 1:
(a) All of the representations and warranties made by the
Company in the Agreement and Plan of Merger dated October 14, 1996
(the "Merger Agreement") among the Company, Vision Merger Corporation
and ViewStar are true and correct and the Company has complied with
all of its covenants and agreement under the Merger Agreement. To the
best of the knowledge of the Company after due inquiry and
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investigation, the representations and warranties made by ViewStar in
the Merger Agreement are true and correct and ViewStar has complied
with all of its covenants and agreement under the Merger Agreement.
(b) The Registration Statement has been declared effective
under the Securities Act of 1933, as amended (the "1933 Act") and no
post-effective amendment to the Registration Statement has been filed.
No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or threatened by the Securities Exchange Commission (the
"Commission").
(c) No order preventing or suspending the use of the
prospectus which is part of the Registration Statement (the
"Prospectus") has been issued by the Commission, and the Prospectus,
at the time of filing thereof, conformed in all material respects to
the requirements of the 1933 Act and the rules and regulations of the
Commission promulgated thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, the Company makes no representation or warranty as
to information contained in or omitted in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of Xxxx expressly for use in the preparation thereof.
(d) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 Act"), as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, when such documents
become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the 1933
Act or the 1934 Act, as applicable, and the rules and regulations of
the Commission thereunder and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(e) The Registration Statement conforms, and the Prospectus
and any amendments or supplements thereto will conform, in all
material respects to the requirements of the 1933 Act and the rules
and regulations thereunder. Neither the Registration Statement nor
any amendment thereto, and neither the Prospectus nor any supplement
thereto, contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes
no representation or warranty as to information contained in or
omitted from the Registration Statement or the
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Prospectus, or any such amendment or supplement, in reliance upon, and
in conformity with, written information furnished to the Company by or
on behalf of Dain expressly for use in the preparation thereof.
(f) The outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. All offers and sales by the Company of outstanding
shares of capital stock and other securities of the Company were made
in compliance with the 1933 Act and all applicable state securities or
blue sky laws. The shares to be issued and sold by the Company
pursuant to the Registration Statement have been duly authorized and,
when issued and paid for, will be validly issued, fully paid and
nonassessable. Except for that certain Shareholders Agreement among
the Company, certain shareholders of the Company and certain
shareholders of ViewStar dated as of October 14, 1996, there are no
preemptive rights or other rights to subscribe for or to purchase, or
any restriction upon the voting or transfer of, any shares of capital
stock of the Company pursuant to the Company's Articles of
Incorporation, Bylaws or any agreement or other instrument to which
the Company is a party or by which the Company is bound. Neither the
filing of the Registration Statement nor the offering or the sale of
the shares as contemplated by this Supplement gives rise to any rights
for, or relating to, the registration of any shares of capital stock
or other securities of the Company, except such rights which have been
validly waived or satisfied.
(g) The financial statements, together with the related notes
and schedules as set forth or incorporated by reference in the
Registration Statement and Prospectus, present fairly the financial
position, results of operations and changes in financial position of
the Company and its subsidiaries on the basis stated in the
Registration Statement at the indicated dates and for the indicated
periods. Such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved, and all adjustments necessary for a
fair presentation of results for such periods have been made, except
as otherwise stated therein.
(h) The issuance and sale of the shares of Common Stock by
the Company covered by the Registration Statement and the compliance
by the Company with all of the provisions of this Supplement and the
consummation of the transactions contemplated herein will not violate
any provision of the Articles of Incorporation or Bylaws of the
Company or any of its subsidiaries or any statute or any order,
judgment, decree, rule, regulation or authorization of any court or
governmental or administrative agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties, and
will not conflict with, result in a breach or violation of, or
constitute, either by itself or upon notice or passage of time or
both, a default under any indenture, mortgage, deed of trust, loan
agreement, lease, franchise, license or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any
property or assets of the Company or any of its subsidiaries is
subject. No approval, consent, order, authorization, designation,
declaration or filing by or with any court or governmental agency or
body is required for
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the execution and delivery by the Company of this Supplement and the
consummation of the transactions herein contemplated, except as may be
required under the 1933 Act.
(i) The Company has the power and authority to enter into
this Supplement and to authorize, issue and sell the shares of Common
Stock it will sell hereunder. This Supplement has been duly and
validly authorized, executed and delivered by the Company.
(j) KPMG Peat Marwick LLP which has certified certain of the
financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required
by the Act and the rules and regulations thereunder.
(k) The Company has not taken and will not take, directly or
indirectly, any action designed to, or which has constituted, or which
might reasonably be expected to cause or result in, stabilization or
manipulation of the price of the Common Stock.
(l) The shares of Common Stock covered by the Registration
Statement have been approved for listing upon notice of issuance on
the Nasdaq National Market.
(m) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the
offering and sale of the shares of Common Stock covered by the
Registration Statement other than the Prospectus or other materials
permitted by the 1933 Act to be distributed by the Company.
(n) The Company is in compliance with all provisions of
Florida Statutes Section 517.075 (Chapter 92-198, laws of Florida).
The Company does not do any business, directly or indirectly, with the
government of Cuba or with any person or entity located in Cuba.
3. Covenants of the Company. The Company covenants and agrees
with Xxxx as follows:
(a) The Company will furnish Dain with as many copies of
the Prospectus as Dain may reasonably request.
(b) If, during the period in which a prospectus is
required by law to be delivered by an underwriter or dealer, any event
shall occur as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statement therein, in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading, or if for
any other reason it shall be necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly
will prepare and file with the Commission an appropriate amendment to
the Registration Statement or supplement to the Prospectus so that the
Prospectus as so amended or supplemented will not include an untrue
statement of a material fact or omit to state any
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material fact necessary in order to make the statements therein in
light of the circumstances existing when it is so delivered, not
misleading, or so that the Prospectus will comply with law.
(c) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not
later than 18 months after the effective date of the Registration
Statement, an earnings statement (which need not be audited) in
reasonable detail, covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement,
which earnings statement shall satisfy the requirements of Section
11(a) of the Act and Rule 158 thereunder and will advise you in
writing when such statement has been so made available.
4. Deliveries by the Company. In connection with the sale of any
shares of Common Stock pursuant to paragraph 1, the obligations of Dain
hereunder shall be subject to the receipt by Xxxx of the following documents
from the Company:
(a) The opinion of Perkins Coie, counsel for the Company,
addressed to Xxxx to the effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the state of Washington, with corporate power and
authority to own or lease its properties and conduct its
business as described in the Prospectus.
(ii) The Company has authorized and outstanding
capital stock as described in the Prospectus. The form of
certificate for the shares is in due and proper form and
complies with all applicable statutory requirements. The
shares to be issued and sold by the Company pursuant to the
Registration Statement have been duly authorized and, when
issued and paid for, will be validly issued, fully paid and
nonassessable. No preemptive rights exist with respect to any
of such shares or the issue and sale thereof. The capital
stock of the Company conforms in all material respects to the
description thereof contained in the Prospectus.
(iii) The Registration Statement has become
effective under the 1933 Act and, to the knowledge of such
counsel, no stop order proceedings with respect thereto have
been instituted or are pending or threatened by the
Commission.
(iv) The Registration Statement, the Prospectus and
each amendment or supplement thereto comply as to form in all
material respects with the requirements of the 1933 Act and
the rules and regulations thereunder (except that such counsel
need express no opinion as to the financial statements and
related schedules included therein). The documents
incorporated by reference in the Prospectus (other than the
financial statements and related schedules therein, as to
which such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may
be, complied as to form in all material respects
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with the requirements of the 1933 Act or the 1934 Act, as
applicable, and the rules and regulations of the commission
thereunder.
(v) The execution and delivery of this Supplement
and the Agreement and the consummation of the transactions
contemplated by the Supplement do not and will not conflict
with or result in a violation of or default under the charter
or bylaws of the Company.
(vi) The Company has the corporate power and
authority to enter into this Supplement and the Agreement and
to authorize, issue and sell the shares of Common Stock as
contemplated hereby. This Supplement and the Agreement have
been duly and validly authorized, executed and delivered by
the Company.
(vii) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body is necessary in
connection with the execution and delivery of this Supplement
and the consummation of the transactions herein contemplated
(other than as may be required by state securities and blue
sky laws, as to which such counsel need express no opinion)
except such as have been obtained or made, specifying the
same.
(b) The statement of Perkins Coie, addressed to Xxxx, to the
effect that Perkins Coie has participated in conferences with officers
and other representatives of the Company, representatives of the
independent accountants for the Company and representatives of
ViewStar in which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although Xxxxxxx
Xxxx has not independently verified the factual accuracy, completeness
or fairness of the statements contained in the Registration Statement
or the Prospectus (except as stated in its opinion referred to in
paragraph (a) of this Section 4), nothing has come to their attention
that leads them to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the
Company (other than all information relating to ViewStar, as well as
the financial statements and related schedules and any statistical
information therein and the documents incorporated by reference into
the Registration Statement, other than the Registration Statement on
Form S-4 relating to the Merger (the "Form S-4"), as to which such
counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by the Company (other than all
information relating to ViewStar, as well as the financial statements
and related schedules and any statistical information therein and the
documents incorporated by reference into the Prospectus, other than
the Form S-4, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading or that, as
of the date of the opinion, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
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Company prior to such date, as the case may be, (other than all
information relating to ViewStar, as well as the financial statements
and related schedules and any statistical information therein and the
documents incorporated by reference into the Prospectus, other than
the Form S-4, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and they do
not know of any amendment to the Registration Statement required to be
filed.
(c) A certificate from the Chief Executive Officer and Chief
Financial Officer to the effect that the representations and
warranties of the Company under paragraph 2 above are true, correct
and complete.
5. Indemnification.
The Company agrees to indemnify and hold Dain harmless in accordance
with the terms and conditions of Exhibit A to the Agreement with respect to the
additional services to be provided by Dain pursuant to this Supplement. The
provisions of this paragraph shall survive any termination of the Agreement or
this Supplement.
6. Binding Effect.
The Agreement as supplemented hereby shall continue in full force and
effect in accordance with the terms of this Agreement and this Supplement.
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If the foregoing sets forth our supplemental agreement, please sign
and dated the enclosed copy of this letter and return it to Dain.
XXXX XXXXXXXX INCORPORATED
By________________________________
Its_______________________________
Xxxxxx and accepted as of
_____________, 1996
DIGITAL SYSTEMS INTERNATIONAL, INC.
By________________________________
Its_______________________________
