RETROSPETTIVA, INC.
500,000 UNITS
UNDERWRITING AGREEMENT
July ___, 1997
Kensington Securities, Inc.
000 Xxxxxxxx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
On behalf of the Several
Underwriters named in
Schedule I attached hereto
Ladies and Gentlemen:
Retrospettiva, Inc., a California corporation (the "Company"), proposes to
issue and sell to you and the other underwriters named in Schedule I to this
Agreement (the "Underwriters"), for whom you are acting as Representative, an
aggregate of 500,000 units (the "Firm Units"), each unit ("Unit") consisting of
two (2) shares of the Company's no par value Common Stock (the "Common Stock"),
and one Redeemable Common Stock Warrant entitling the holder thereof to purchase
for $7.50, one share of Common Stock for a term of five (5) years from the
effective date of the Registration Statement described below in Section 1(a).
The terms of the Units and the components of the Units shall be as described in
the Registration Statement. In addition, for the sole purpose of covering over-
allotments in connection with the sale of the Firm Units, the Company proposes
to grant to the Underwriters an option to purchase up to an additional 75,000
Units (the "Option Units"). The Company further agrees to sell and issue to you
as Representative, a five-year warrant (the "Representative's Warrant") to
purchase for $14.40 per Unit an aggregate of 50,000 Units (the "Representative's
Warrant Units"). Each Representative's Warrant Unit consists of two (2) shares
of Common Stock and one Redeemable Warrant ("Underlying Warrant"). The terms
and conditions of the Representative's Warrant, Representative's Warrant Units
and Underlying Warrants, including the purchase price thereof, shall be as set
forth in the Representative's Warrant filed as an exhibit to the Registration
Statement.
The Firm Units, any Option Units purchased pursuant to this Agreement and
the Representative's Warrant Units are collectively called herein the "Units"
and the Warrants included in the Units and the Representative's Warrant are
collectively called herein the "Warrants." The shares of Common Stock issuable
upon exercise of the Warrants are collectively called the "Warrant Shares" and
the Warrant Shares, together with the shares of Common Stock included in the
Units, are collectively called the "Shares."
You have advised the Company that you intend to purchase the Firm Units,
and that you have been authorized to execute this Agreement. The Company
confirms the agreements made by it with respect to the purchase of the Firm
Units by the Underwriters, as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with, the Underwriters
that:
(a) A registration statement (File No. 333-__________) on Form SB-2
relating to the public offering of the Units, Warrants and Shares, including a
preliminary form of prospectus, copies of which have heretofore been delivered
to you, has been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the Commission
under the Act. "Preliminary Prospectus" shall mean each prospectus filed
pursuant to Rule 430 of the Rules and Regulations. The registration statement
(including all financial schedules and exhibits) as amended at the time it
becomes effective and the final prospectus included therein are respectively
referred to as the "Registration Statement" and the "Prospectus", except that
(i) if the prospectus first filed by the Company pursuant to Rule 424(b) or Rule
430A of the Rules and Regulations or otherwise utilized and not required to be
so filed shall differ from said prospectus as then amended, the term
"Prospectus" shall mean the prospectus first filed pursuant to Rule 424(b) or
Rule 430A, or so utilized from and after the date on which it shall have been
filed or utilized and (ii) if such registration statement or prospectus is
amended or such prospectus is supplemented, after the effective date (the
"Effective Date") of such registration statement and prior to the Option Closing
Date (as defined in Section 2(b)), the term "Registration Statement" shall
include such registration statement as so amended, and the term "Prospectus"
shall include the prospectus as so amended or supplemented, or both, as the case
may be.
(b) At the time the Registration Statement becomes effective and at all
times subsequent thereto up to the Option Closing Date (defined above), (i) the
Registration Statement and Prospectus will in all respects conform to the
requirements of the Act and the Rules and Regulations, (ii) there will be no
stop order of the Commission, any court of competent jurisdiction or the
securities administrator of any state in which the Units, Warrants and Shares
have been, or are to be, registered or qualified, in effect, pending or
threatened with respect to the effectiveness of the Registration Statement or
the distribution of the Prospectus and (iii) neither the Registration Statement
nor the Prospectus will include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
statements therein not misleading; provided, however, that the Company makes no
representations, warranties or agreements as to information contained in or
omitted from the Registration Statement or Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
the Underwriters specifically for use in the preparation thereof. It is
understood that the statements set forth in the Prospectus with respect to
stabilization, the material set forth under the heading "Underwriting", and the
identity
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of counsel to the Underwriters under the heading "Legal Matters" constitute
the only information furnished in writing by or on behalf of the Underwriters
for inclusion in the Registration Statement and Prospectus, as the case may
be.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full power and corporate authority to own its properties and
conduct its business as described in the Prospectus and is duly qualified to do
business as a foreign corporation and is in good standing in all other
jurisdictions in which the nature of its business or the character or location
of its properties requires such qualification, except where failure to so
qualify will not materially affect the Company's business, properties or
financial condition.
(d) The authorized capital stock of the Company as of the date of the
Prospectus, as set forth under "Description of Securities" in the Prospectus,
was 15,000,000 shares of Common Stock, no par value per share, of which not more
than 2,000,000 shares will be issued and outstanding or subject to outstanding
options or warrants as of the Effective Date and 1,000,000 shares of Preferred
Stock, no par value per share, of which no shares will be issued and
outstanding. The shares of issued and outstanding capital stock of the Company
set forth thereunder have been duly authorized, validly issued and are fully
paid and non-assessable; except as set forth in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to issue,
or agreements or other rights to convert any obligation into, any shares of
capital stock of the Company have been granted or entered into by the Company.
The Preferred Stock conforms to all statements relating thereto contained in the
Registration Statement and Prospectus.
(e) The Units and the Representative's Warrant and their respective
components upon issuance and delivery and payment therefor in the manner
contemplated by this Agreement will be duly authorized, validly issued, fully
paid and nonassessable. The shares of Common Stock are not subject to
preemptive rights of any security holder of the Company. Neither the filing of
the Registration Statement nor the offering or sale of the Units, Warrants or
Shares, as contemplated in this Agreement and the Representative's Warrant,
gives rise to any rights, other than those which have been waived or satisfied,
for or relating to the registration of any shares of Common Stock or other
securities of the Company, except as described in the Registration Statement.
(f) All offers and sales of the Company's capital stock prior to the date
hereof, other than pursuant to effective registration statements under the Act,
were at all relevant times exempt from the registration requirements of the Act
and were duly registered or the subject of an available exemption from the
registration requirements of the applicable state securities or Blue Sky laws,
or the relevant statutes of limitations have expired, or civil liability
therefor has been eliminated by an offer to rescind.
(g) This Agreement, including the Representative's Warrant, the agreement
between the Company and the warrant agent (the "Warrant Agreement") and the
other agreements of the
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Company provided for herein, have been duly authorized, executed and
delivered by the Company and constitute valid and binding agreements of the
Company enforceable against the Company in accordance with their respective
terms, except insofar as rights to indemnity and/or contribution may be
limited by federal or state securities laws or the public policy underlying
such laws and except as enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally,
and be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
Units, Warrants and Shares have been duly authorized for issuance and sale,
and, when issued pursuant to this Agreement and the Representative's Warrant
against payment of the consideration therefor, will be validly issued, fully
paid and nonassessable and not subject to preemptive rights. The Warrant
Shares issuable upon exercise of the Warrants have been duly authorized and
reserved for issuance upon exercise of the Warrants and when issued upon
payment of the exercise price therefor will be validly issued, fully paid and
nonassessable shares of Common Stock and not subject to preemptive rights.
(h) Except as described in the Prospectus, the Company is not in
violation, breach or default of or under, and consummation of the transactions
herein contemplated and the fulfillment of the terms of this Agreement will not
conflict with, or result in a breach of, any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
property or assets of the Company are subject, nor will such action result in
any violation of the provisions of the articles of incorporation or the
by-laws of the Company, as amended, or any statute or any order, rule or
regulation applicable to the Company of any court or of any regulatory authority
or other governmental body having jurisdiction over the Company.
(i) Subject to the qualifications stated in the Prospectus, the Company
has good and marketable title to all properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are not materially significant or important in
relation to its business; all of the material leases and subleases under which
the Company is the lessor or sublessor of properties or assets or under which
the Company holds properties or assets as lessee or sublessee as described in
the Prospectus are in full force and effect, and, except as described in the
Prospectus, the Company is not in default in any material respect with respect
to any of the terms or provisions of any of such leases or subleases, and no
claim has been asserted by anyone adverse to rights of the Company as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company to continued
possession of the leased or subleased premises or assets under any such lease or
sublease except as described or referred to in the Prospectus; and the Company
owns or leases all such properties described in the prospectus as are necessary
to its operations as now conducted and, except as otherwise stated in the
Prospectus, as proposed to be conducted as set forth in the Prospectus.
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(j) X.X. Xxxxxxx, P.C., who have given their reports on certain financial
statements filed and to be filed with the Commission as a part of the
Registration Statement, which are incorporated in the Prospectus, are with
respect to the Company independent public accountants as required by the Act and
the Rules and Regulations.
(k) The financial statements and schedules, together with related notes,
set forth in the Prospectus or the Registration Statement present fairly the
financial position and results of operations and changes in financial position
of the Company on the basis stated in the Registration Statement, at the
respective dates and for the respective periods to which they apply. Said
statements and schedules and related notes have been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent
during the periods involved.
(l) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as may otherwise be stated or
contemplated therein: (i) there has not been any material adverse change in the
condition of the Company and its subsidiaries, taken as a whole, financial and
otherwise, or in the earnings, business prospects or current operations of the
Company and its subsidiaries, taken as a whole, whether or not arising in the
ordinary course of business, (ii) there have not been any material transactions
entered into by the Company or any of its subsidiaries which are required to be
disclosed in the Registration Statement, (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock or any material change in the capital stock or material
increase in the long-term indebtedness of the Company; (iv) no action, suit or
proceeding at law or in equity and no governmental or regulatory proceeding has
occurred or is pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
consummation of this Agreement or the business, operations, financial condition,
income or business prospects of the Company and its subsidiaries, taken as a
whole and (v) neither the Company nor any of its subsidiaries has sustained a
loss of, or damage to, its properties (whether or not insured) which would have
a material adverse effect on the business, operations, financial condition,
income or business prospects of the Company and its subsidiaries, taken as a
whole.
(m) Except as set forth in the Prospectus, there is not now pending nor,
to the knowledge of the Company, threatened, any action, suit or proceeding
(including those related to environmental matters or discrimination on the basis
of age, sex, religion or race) to which the Company is a party before or by any
court or governmental agency or body, which might result in any material adverse
change in the condition (financial or other), business prospects, net worth or
properties of the Company; and no labor disputes involving the employees of the
Company exist which might be expected to materially adversely affect the conduct
of the business, property or operations or the financial condition or earnings
of the Company.
(n) Except as disclosed in the Prospectus, the Company has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes shown as due thereon;
5
and there is no tax deficiency which has been or to the knowledge of the
Company might be asserted against the Company.
(o) The Company has sufficient licenses, permits and other governmental
authorizations currently required for the conduct of its business or the
ownership of its property as described in the Prospectus and is in all material
respects complying therewith and, except as disclosed in the Prospectus, owns or
possesses adequate rights to use all material patents, patent applications,
trademarks, xxxx registrations, copyrights and licenses necessary for the
conduct of such business and has not received any notice of conflict with the
asserted rights of others in respect thereof. To the best knowledge of the
Company, none of the activities or business of the Company is in violation of,
or cause the Company to violate, any law, rule, regulation or order of any
foreign governmental authority or of the United States, any state, county or
locality, or of any agency or locality, the violation of which would have a
material adverse impact upon the condition (financial or otherwise), business,
property, prospective results of operations or net worth of the Company.
(p) The Company has not, directly or indirectly, at any time (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contribution in violation of law, or (ii) made any payment to any
state, federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments or
contributions required or allowed by applicable law. The Company's internal
accounting controls and procedures are sufficient to cause the Company to comply
in all material respects with the Foreign Corrupt Practices Act of 1977, as
amended.
(q) On the Closing Dates (as defined in Section 2(c)), all transfer or
other taxes (including franchise, capital stock or other tax, other than income
taxes imposed by any jurisdiction), if any, which are required to be paid in
connection with the sale and transfer of the Units, Warrants and Shares to the
Underwriters hereunder will have been fully paid or provided for by the Company
and all laws imposing such taxes will have been fully complied with.
(r) All contracts and other documents of the Company which are, under the
Rules and Regulations, required to be filed as exhibits to the Registration
Statement have been so filed.
(s) The Company has not taken and will not take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of the Units, Warrants and Shares to facilitate the sale or resale of
the Units, Warrants and Shares hereunder.
(t) Except as set forth in the Prospectus, the Company has no
subsidiaries.
(u) The Company has not entered into any agreement pursuant to which any
person is entitled either directly or indirectly to compensation from the
Company for services as a finder in connection with the proposed public
offering.
6
(v) As of the effective date of the Registration Statement, the Common
Stock has been duly registered under Section 12(g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the Common Stock and the
Warrants have been approved for quotation on the National Association of
Securities Dealers Automated Quotation National Market System (the "Nasdaq
National Market") upon official notice of issuance.
Any certificate signed by any officer of the Company and delivered to you
or to counsel for the Underwriters in connection with the Closing shall be
deemed a representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
2. PURCHASE, DELIVERY AND SALE OF THE SHARES.
(a) Subject to the terms and conditions of this Agreement, and upon the
basis of the representations, warranties and agreements herein contained, the
Company agrees to issue and sell to the Underwriters, and the Underwriters agree
to buy from the Company at $10.80 per Unit at the place and time hereinafter
specified, 500,000 Units.
Delivery of the Firm Units as well as the Representative's Warrant against
payment therefor shall take place at the offices of Kensington Securities, Inc.,
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (or at such other
place as may be designated by agreement between you and the Company) at 9:00
a.m. local time on July ___, 1997 or at such later time and date as you may
designate within ten business days of the effective date of the Registration
Statement or the date which you receive the Prospectus in sufficient quantity to
send confirmations of sale, such time and date of delivery for the Firm Units
being herein called the "First Closing Date." Time shall be of the essence and
delivery at the time and place specified in this subsection (a) is a further
condition to the obligations of the Underwriters hereunder. Payment shall be
made to the order of the Company on the First Closing Date.
(b) In addition, subject to the terms and conditions of this Agreement,
and upon the basis of the representations, warranties and agreements herein
contained, the Company hereby grants an option to you to purchase all or any
part of an aggregate of an additional 75,000 Units at the same price per Unit as
you shall pay for the Firm Units being sold pursuant to the provision of
subsection (a) of this Section 2. This option may be exercised within thirty
(30) days after the First Closing Date upon notice by you to the Company
advising it as to the amount of Option Units as to which the option is being
exercised, the names and denominations in which the certificates for such Option
Units are to be registered and the time and date when such certificates are to
be delivered. Such time and date shall be determined by you but shall not be
earlier than four and not later than ten full business days after the exercise
of said option, nor in any event prior to the First Closing Date, and such time
and date is referred to herein as the "Option Closing Date." Delivery of the
Option Units against payment therefor shall take place at the offices of the
Underwriters. Time shall be of the essence and delivery at the time and place
specified in this subsection (b) is a further condition to your obligations
hereunder. The Option granted hereunder may be exercised only to cover
over-allotments in the sale by the Underwriters of Firm Units referred to in
subsection (a) above.
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(c) On the basis of the representations, warranties, covenants and
agreements herein contained, and subject to the terms and conditions herein set
forth, the Company shall sell to you individually, and/or your designated
officers, at the First Closing Date, as defined below, for $100, the
Representative's Warrant to purchase an aggregate of up to 50,000
Representative's Warrant Units. The price, terms and provisions of the
Representative's Warrant Units and the respective rights and obligations of the
Company and the holders of the Representative's Warrant and/or Representative's
Warrant Units and the components thereof are set forth in the Representative's
Warrant between the Company and the Representative.
(d) The Company will make the certificates for the securities comprising
the Units to be purchased by the Underwriters hereunder available to you for
examination at least two full business days prior to the First Closing Date or
the Option Closing Date (which are collectively referred to herein as the
"Closing Dates" and individually as a "Closing Date"), as the case may be. The
certificates shall be in such names and denominations as you may request, at
least two full business days prior to the relevant Closing Dates. Time shall be
of the essence and the availability of the certificates at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters.
Definitive engraved certificates in negotiable form for the Firm Units and
the Option Units to be purchased by the Underwriters hereunder will be delivered
by the Company to you for your account against payment of the purchase price by
you by certified or bank cashier's checks in certified funds, payable to the
order of the Company.
In addition, in the event you exercise the option to purchase from the
Company all or any portion of the Option Units pursuant to the provisions of
subsection (b) above, payment for such Option Units shall be made to or upon the
order of the Company not later than ten (10) business days after the Option
Closing Date by certified checks at the time and date of delivery of such Option
Units as required by the provisions of subsection (b) above, against receipt of
the certificates for such Option Units by you for your account, registered in
such names and in such denominations as you may request.
It is understood that the Underwriters propose to offer the Units to be
purchased hereunder to the public upon the terms and conditions set forth in the
Registration Statement, after the Registration Statement becomes effective.
3. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and, upon notification from the Commission that
the Registration Statement has become effective, will so advise you and will not
at any time, whether before or after the effective date, file any amendment to
the Registration Statement or supplement to the Prospectus of which you shall
not previously have been advised and furnished with a copy or to which you
8
or your counsel shall have objected in writing or which is not in compliance
with the Act and the Rules and Regulations. At any time prior to the later
of (i) the completion by the Underwriters of the distribution of the Shares
contemplated hereby (but in no event more than nine months after the date on
which the Registration Statement shall have become or been declared
effective) and (ii) 25 days after the Effective Date, the Company will
prepare and file with the Commission, promptly upon your request, any
amendments or supplements to the Registration Statement or Prospectus which,
in your reasonable opinion, may be necessary or advisable in connection with
the distribution of the Shares.
(i) Promptly after you or the Company is advised thereof, you
will advise the Company or the Company will advise you, as the case
may be, and confirm the advice in writing, of the receipt of any
comments of the Commission, of the effectiveness of any post-effective
amendment to the Registration Statement, of the filing of any
supplement to the Prospectus or any amended Prospectus, of any request
made by the Commission for amendment of the Registration Statement or
for supplementing of the Prospectus or for additional information with
respect thereto, of the issuance by the Commission or any state or
regulatory body of any stop orders or other order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any Preliminary Prospectus, or of the suspension
of the qualification of the Shares for offering in any jurisdiction,
or the institution of any proceedings for any of such purposes, and
the Company will use its reasonable efforts to prevent the issuance of
any such order and, if issued, to obtain as soon as possible the
lifting thereof.
(ii) The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby
consents to the use of such copies for the purposes permitted by the
Act. The Company authorizes the Underwriters and selected dealers to
use the Prospectus in connection with the sale of the Units for such
period as in the opinion of counsel of the Underwriters (whether
general, special, patent or otherwise) the use thereof is required to
comply with the applicable provisions of the Act and the Rules and
Regulations. In case of the happening, at any time within such period
as a Prospectus is required under the Act to be delivered in
connection with sales by an underwriter or dealer, of any event of
which the Company has knowledge and which materially affects the
Company or the Securities, or which, in the opinion of counsel for the
Company or counsel for the Underwriters, should be set forth in an
amendment to the Registration Statement or a supplement to the
Prospectus in order to make the statements therein not then
misleading, in light of the circumstances existing at the time the
Prospectus is required to be delivered to a purchaser of the Units, or
in case it shall be necessary to amend or supplement the Prospectus to
comply with the Act or with the Rules and Regulations, the Company
will notify you promptly and forthwith prepare and furnish to you
copies of such amended Prospectus or of such supplement to be attached
to the
9
Prospectus, in such quantities as you may reasonably request, in
order that the Prospectus, as so amended or supplemented, will not
contain any untrue statement of a material fact or omit to state any
material facts necessary in order to make the statements in the
Prospectus, in the light of the circumstances under which they are
made, not misleading. The preparation and furnishing of any such
amendment or supplement to the Registration Statement or amended
Prospectus or supplement to be attached to the Prospectus shall be
without expense to the Underwriters, except that in case the
Underwriters are required, in connection with the sale of the Shares,
to deliver a Prospectus nine months or more after the effective date
of the Registration Statement, the Company will upon your request and
at your expense, amend or supplement the Registration Statement and
Prospectus or file a new registration statement on Form XX-0, X-0 or
S-3, if necessary, and furnish the Underwriters with reasonable
quantities of prospectuses complying with Section 10(a)(3) of the Act.
(iii) The Company will comply with the Act, the Rules and
Regulations and the Exchange Act and the rules and regulations
thereunder in connection with the offering and issuance of the Shares.
(b) The Company will use its best efforts and shall pay all costs and
expenses to qualify or register ("Blue Sky") the Firm Units and Option Units for
sale under the securities or "blue sky" laws of such jurisdictions as you may
designate and will make such applications and furnish such information to
counsel for the Underwriters as may be required for that purpose and to comply
with such laws, provided that the Company shall not be required to qualify as a
foreign corporation or a dealer in securities or to execute a general consent of
service of process in any jurisdiction in any action other than one arising out
of the offering or sale of the Firm Units and Option Units. Blue Sky
applications shall be prepared by the Company's counsel, Xxxx X. Agron, at the
Company's expense. On the Effective Date of this Agreement as defined in
Section 9 below, counsel for the Company shall deliver to Underwriters' counsel
a Blue Sky Memorandum describing, among other things, all states wherein the
Offering has been qualified or registered for sale, the number of Units
registered in each such state and the period of effectiveness of such
qualification or registration. The Company will, from time to time, prepare and
file such statements and reports as are or may be required to continue such
qualification in effect for so long a period as you may reasonably request.
(c) If the sale of the Units provided for herein is not consummated for
any reason caused by the Company, the Company shall pay all costs and expenses
incident to the performance of the Company's obligations hereunder, including
but not limited to, all of the expenses itemized in Section 8, including your
accountable expenses, as provided in Section 8(b).
10
(d) The Company will use its best efforts to cause a Registration
Statement under the Exchange Act to be declared effective concurrently with the
completion of the offering of the Shares or promptly thereafter, but in no event
later than three days after the date of the Prospectus.
(e) For so long as the Company is a reporting company under either Section
12(g) or 15(d) of the Exchange Act, the Company, at its expense, will furnish to
the holders of its Common Stock, Units and Warrants an annual report (including
financial statements audited by independent public accountants), in reasonable
detail and at its expense, will furnish to you during the period ending five
years from the date hereof, (i) within 90 days of the end of each fiscal year, a
balance sheet of the Company and any subsidiaries as at the end of such fiscal
year, together with statements of income, stockholders' equity and cash flows of
the Company and any subsidiaries as at the end of such fiscal year, all in
reasonable detail and accompanied by a copy of the certificate or report thereon
of independent auditors; (ii) as soon as they are available, a copy of all
reports (financial or other) mailed to security holders; (iii) as soon as they
are available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission; and (iv) such other information as
you may from time to time reasonably request.
(f) In addition to the information and reports set forth in Section 3(e)
above, for a period of two years from the Effective Date, the Company, at its
expense, shall furnish to you (i) unaudited quarterly financial statements on a
timely basis, and (ii) monthly shareholder lists prepared by the Company's
transfer agent.
(g) In the event the Company has an active subsidiary or subsidiaries,
such financial statements referred to in subsection (e) above will be on a
consolidated basis to the extent the accounts of the Company and its subsidiary
or subsidiaries are consolidated in reports furnished to its stockholders
generally.
(h) The Company will deliver to you at or before the First Closing Date
two signed copies of the Registration Statement including all financial
statements and exhibits filed therewith, and of all amendments thereto. The
Company will deliver to or upon order of the Underwriters, from time to time
until the Effective Date, as many copies of any Preliminary Prospectus filed
with the Commission prior to the Effective Date as the Underwriters may
reasonably request. The Company will deliver to the Underwriters on the
Effective Date and thereafter for so long as a Prospectus is required to be
delivered under the Act, from time to time, as many copies of the Prospectus, in
final form, or as thereafter amended or supplemented, as the Underwriters may
from time to time reasonably request.
(i) The Company will make generally available to its security holders and
deliver to you as soon as it is practicable to do so, but in no event later than
90 days after the end of 12 months after its current fiscal quarter, an earnings
statement (which need not be audited) covering a period of at least 12
consecutive months beginning after the Effective Date, which shall satisfy the
requirements of Section ll(a) of the Act.
11
(j) The Company will apply the net proceeds from the sale of the Firm
Units substantially for the purposes set forth under "Use of Proceeds" in the
Prospectus, and will file such reports with the Commission with respect to the
sale of the Units and the application of the proceeds therefrom as may be
required pursuant to Rule 463 of the Rules and Regulations.
(k) The Company will, promptly upon your request, prepare and file with
the Commission any amendments or supplements to the Registration Statement,
preliminary Prospectus or Prospectus and take any other action, which in the
reasonable opinion of Pezzola & Xxxxxx, A Professional Corporation, counsel to
the Underwriters, may be reasonably necessary or advisable in connection with
the distribution of the Shares and will use its reasonable efforts to cause the
same to become effective as promptly as possible.
(l) Except as stated below, each of the existing stockholders of the
Company at the date hereof (the "Existing Stockholders"), will execute
agreements ("Lock Up Agreements"), in the form previously delivered, to the
effect that for a period of 24 months from the date of the Prospectus, they will
not sell, assign, hypothecate, pledge or otherwise dispose of, directly or
indirectly, any shares of Common Stock of the Company owned prior to the date
hereof without your prior written consent, and will agree to permit all
certificates evidencing their shares to be endorsed with the appropriate
restrictive legends, and consent to the placement of appropriate stop transfer
orders with the transfer agent for the Company. Further, options of Company
employees shall be excluded from the Lock-Up Agreement except for ______________
options of Xxxxxxxx Xxxxxxxxxxx, the Company's Chief Executive Officer which
will be subject to a Lock-Up Agreement for 12 months from the date hereof after
which one-half of such options shall be released from the Lock-Up Agreement with
all remaining options released from the Lock-Up Agreement on July 31, 1998.
Excluded from the Lock-Up Agreement shall be those shares of Common Stock that
certain Existing Stockholders are registering for sale as part of the
Registration Statement. The Company further agrees that for a period of 12
months from the date hereof, it will not register any shares of Common Stock
underlying any existing stock purchase warrants.
(m) The Company shall immediately make all filings required to seek
approval for the quotation of the Common Stock and the Warrants on the Nasdaq
National Market and will use its reasonable efforts to effect and maintain the
aforesaid approval for at least five years from the date of this Agreement.
(n) The Company and the Existing Stockholders represent that it or they
have not taken, and agree that it or they will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result in the stabilization or manipulation of the price of
the Units to facilitate the sale or resale of the Units.
(o) For a period of thirty-six months from the Closing, the Company shall,
at your option, appoint a non-voting advisor to the Company's Board of
Directors, designated by you and such advisor shall receive notice of and be
entitled to attend all meetings of the Board of Directors. The Company agrees
it shall fully indemnify, defend and hold harmless such advisor
12
to the fullest extent permitted by law with respect to all acts and omissions
as an advisor to the Company's Board of Directors.
(p) The Company will reserve and keep available that maximum number of its
authorized but unissued Shares which are issuable upon exercise of the Warrants
and the Representative's Warrant (as defined in Section 11).
(q) For a period of thirty-six (36) months from the Effective Date, you
shall have the right to provide a competitive 401k program to management and all
employees of the Company.
(r) The Company shall select Common Stock and Warrant certificates and
utilize a stock transfer agent satisfactory to you.
(s) So long as any Warrants are outstanding, the Company shall use its
best efforts to cause post-effective amendments to the Registration Statement to
become effective in compliance with the Act and without any lapse of time
between the effectiveness of any such post-effective amendments and cause a copy
of each Prospectus, as then amended, to be delivered to each holder of record of
a Warrant and to furnish to the Underwriters and each dealer as many copies of
each such Prospectus as the Underwriters or dealer may reasonably request.
4. CONDITIONS OF UNDERWRITERS' OBLIGATION.
The obligations of the Underwriters to purchase and pay for the Units which
they have agreed to purchase hereunder are subject to the accuracy (as of the
date hereof, and as of the Closing Dates) of and compliance with the
representations and warranties of the Company herein, to the performance by the
Company of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and you shall
have received notice thereof not later than 4:00 p.m., Eastern time, on the date
of this Agreement, or at such later time or on such later date as to which you
may agree in writing; on the Closing Dates, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that or any similar purpose shall have been instituted or shall
be pending or, to your knowledge or to the knowledge of the Company, shall be
contemplated by the Commission; any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of Pezzola & Xxxxxx, counsel to the Underwriters; and no stop order
shall be in effect denying or suspending effectiveness of the Registration
Statement nor shall any stop order proceedings with respect thereto be
instituted or pending or threatened under the Act.
(b) At the First Closing Date, you shall have received the opinion, dated
as of the First Closing Date, of Xxxx X. Agron, counsel for the Company, in form
and substance satisfactory to counsel for the Underwriters, to the effect that:
13
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of California and is duly qualified or licensed to do business as a
foreign corporation in good standing in each other jurisdiction in
which the ownership or leasing of its properties or the conduct of its
business requires such qualification except where failure to so
qualify would not result in a material adverse effect on the Company;
(ii) to the best knowledge of such counsel, (a) the Company has
obtained, or is in the process of obtaining, all licenses, permits and
other governmental authorizations necessary to the conduct of its
business as described in the Prospectus, (b) such obtained licenses,
permits and other governmental authorizations are in full force and
effect, and (c) the Company is in all material respects complying
therewith;
(iii) the authorized capitalization of the Company as of the
date of the Prospectus was as set forth under "Description of
Securities" in the Prospectus; all of the shares of the Company's
outstanding stock requiring authorization for issuance by the
Company's Board of Directors have been duly authorized and validly
issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; the outstanding
shares of Common Stock of the Company have not been issued in
violation of the preemptive rights of any stockholder, and the
stockholders of the Company do not have any preemptive rights or other
rights to subscribe for or to purchase, and there are no restrictions
upon the voting or transfer of, any of the Common Stock; the Units,
Common Stock, Warrants and the Representative's Warrant conform to the
respective descriptions thereof contained in the Prospectus; the Units
and each Unit component to be issued as contemplated in the
Registration Statement have been duly authorized and, when paid, will
be non-assessable and free of preemptive rights, and no personal
liability will attach to the ownership thereof; all prior sales of the
Company's securities have been made in compliance with, or under an
exemption from, the Act and applicable state securities laws; a
sufficient number of shares of Common Stock have been reserved for
issuance upon exercise of the Warrants and the Representative's
Warrant; and to the best of such counsel's knowledge, neither the
filing of the Registration Statement nor the offering or sale of the
Units as contemplated by this Agreement gives rise to any registration
rights or other rights, other than those which have been waived or
satisfied, for or relating to the registration of the Units;
(iv) each of this Agreement, the Representative's Warrant, the
Warrant Agreement and the Warrants has been duly and validly
authorized, executed and delivered by the Company, and assuming due
authorization, execution and delivery of this Agreement by the
Underwriters and of such other agreements by the other parties
thereto, all of such agreements are, or when duly executed will be,
the valid and legally binding obligations of the Company (except as to
14
bankruptcy and related matters described in paragraph 1(f), above);
provided that no opinion need be expressed as to the enforceability of
the indemnity provisions contained in Section 6 or the contribution
provisions contained in Section 7 of this Agreement;
(v) the Warrant Shares (including those issuable upon exercise
of the Representative's Warrant) and Representative's Warrant Units
have been duly authorized and reserved for issuance and, when issued
and delivered in accordance with the terms of this Agreement and the
Representative's Warrant, respectively, will be duly and validly
issued, fully paid and nonassessable.
(vi) the certificate evidencing the Unit components and the
Representative's Warrant are in valid and proper legal form; the
Warrants and the Representative's Warrant will be exercisable for
shares of Common Stock of the Company in accordance with the terms of
the Warrant Agreement and the Representative's Warrant, respectively;
and at the respective prices therein provided for; the shares of
Common Stock of the Company issuable upon exercise of the Warrants and
the Representative's Warrant have been duly authorized and reserved
for issuance upon such exercise or conversion, and such shares, when
issued upon such exercise in accordance with the terms of the Warrants
and the Representative's Warrant and at the price paid, or upon such
conversion, shall be fully paid and non-assessable;
(vii) such counsel knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could
materially and adversely affect the business, property, financial
condition or operations of the Company or which question the validity
of the Units or the components thereof, this Agreement, the Warrant
Agreement or the Representative's Warrant or of any action taken or to
be taken by the Company pursuant to this Agreement, the Warrant
Agreement or the Representative's Warrant; no such proceedings are
known to such counsel to be contemplated against the Company; and
there are no governmental proceedings or regulations known to such
counsel required to be described or referred to in the Registration
Statement which are not so described or referred to;
(viii) to the best knowledge of such counsel, the Company is
not in violation of or default under this Agreement, the Warrant
Agreement or the Representative's Warrant, and the execution and
delivery hereof and thereof and the incurrence of the obligations
herein and therein set forth and the consummation of the transactions
herein or therein contemplated will not result in a violation of, or
constitute a default under, the certificate or articles of
incorporation or by-laws of the Company, or in the performance or
observation of any material obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any contract,
15
indenture, mortgage, loan agreement, lease, joint venture or other
agreement or instrument to which the Company is a party or in a violation
of any material order, rule, regulation, writ, injunction or decree or any
government, governmental instrumentality or court, domestic or foreign;
(ix) the Registration Statement has become effective under the
Act, and to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement is in
effect, no proceedings for that purpose have been instituted or are
pending before, or threatened by, the Commission and the Registration
Statement and the Prospectus (except for the financial statements and
other financial data contained therein, or omitted therefrom, as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and the
Rules and Regulations;
(x) such counsel has participated in the preparation of the
Registration Statement and the Prospectus and nothing has come to the
attention of such counsel to cause such counsel to have reason to
believe that the Registration Statement or any amendment thereto at
the time it became effective contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any supplement thereto contains
any untrue statement of a material fact or omits to state a material
fact necessary in order to make statements therein in light of the
circumstances under which they were made not misleading (except, in
the case of both the Registration Statement and any amendment thereto
and the Prospectus and any supplement thereto, for the financial
statements, notes thereto and other financial information and
statistical data contained therein, as to which such counsel need
express no opinion);
(xi) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and
other documents filed as exhibits to the Registration Statement are
accurate and fairly present the information required to be shown, and
such counsel is familiar with all contracts and other documents filed
as exhibits to the Registration Statement and the Prospectus and any
such amendment or supplement, or filed as exhibits to the Registration
Statement, and such counsel does not know of any contracts or
documents of a character required to be summarized or described
therein or to be filed as exhibits thereto which are not so
summarized, described or filed;
(xii) no authorization, approval, consent or license of any
governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or
delivery of the Units or Unit components by the Company, in connection
with the execution, delivery and performance of this Agreement by the
Company or in connection with the taking of any action
16
contemplated herein, or the issuance of the Warrants, Representative's
Warrant or the securities underlying the Warrants and the Representative's
Warrant, other than registration or qualification of the Units and
Representative's Warrant under applicable state or foreign securities
or blue sky laws and registration under the Act;
(xiii) the statements in the Registration Statement under the
captions "Business," "Use of Proceeds," "Management" and "Description of
Securities" have been reviewed by such counsel and, insofar as they
refer to descriptions of agreements, statements of law, descriptions
of statutes, licenses, rules or regulations or legal conclusions, are
correct in all material respects; and
Such opinion shall also cover such matters including to the
transactions contemplated hereby as you or counsel for the
Underwriters shall reasonably request. In rendering such opinion, such
counsel may rely upon certificates of any officer of the Company or
public officials as to matters of fact; and may rely as to all matters
of law other than the law of the United States or the corporate law of
the State of California upon opinions of counsel satisfactory to you,
which may also be addressed to you, in which case the opinion shall
state that they have no reason to believe that you and they are not
entitled to so rely.
(c) All corporate proceedings and other legal matters relating to this
Agreement, the Registration Statement, the Prospectus, and other related matters
shall be reasonably satisfactory to or approved by Pezzola & Xxxxxx, counsel to
the Underwriters, and you shall have received from such counsel a signed
opinion, dated as of the First Closing Date, with respect to the validity of the
issuance of the Units, the form of the Registration Statement and Prospectus
(other than the financial statements and other financial data contained
therein), the execution of this Agreement and other related matters as you may
reasonably require. The Company shall have furnished to counsel for the
Underwriters such documents as they may reasonably request for the purpose of
enabling them to render such opinion.
(d) At both the time of the execution of this Agreement by the Company and
at the Closing Date, you shall have received letters in form and substance
satisfactory to you, from X.X. Xxxxxxx, P.C. (collectively the "Auditors"),
dated respectively as of the date of this Agreement and as of the Closing Date,
to the effect that they are independent certified public accountants with
respect to the Company within the meaning of the Act and published Rules and
Regulations, and that the Registration Statement is correct insofar as it
relates to them and stating in effect that:
(i) In their opinion the audited financial statements and notes
of the Company in the Registration Statement and the Prospectus
examined by them comply as to form in all material respects with the
applicable accounting requirements of the Act and the published Rules
and Regulation with respect to registration statements on Form SB-2.
17
(ii) On the basis of inquiries and procedures conducted by them
(not constituting an examination in accordance with generally accepted
auditing standards), including a reading of the financial information
and other data included in the Registration Statement and the
Prospectus in response to Item 310 of Regulation S-B; that on the
basis of inquiries of officials of the Company who have responsibility
for financial accounting matters, especially as to whether there was
any adverse change in revenues, net income, or any change in the
capital stock of the Company or any change in the long-term debt or
any increase in bank borrowings or any decreases in total assets, net
current assets or shareholders' equity of the Company; reviewing
minutes of all meetings of shareholders and boards of directors (and
various committees thereof) of the Company since inception and other
specified inquiries and procedures, nothing has come to their
attention as a result of the foregoing inquiries and procedures that
caused them to believe that:
(A) the audited financial statements for the years ended
December 31, 1995 and December 31, 1996, as to the Company, included
in the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
published Rules and Regulations with respect to registration
statements on Form SB-2; or said financial statements are fairly
presented in conformity with generally accepted accounting principles;
or the amounts included in the Registration Statement and the
Prospectus in response to Item 310 of Regulation S-B are not
consistent with the corresponding amounts in the audited or unaudited
financial statements from which such amounts were derived; or
(B) during the period from December 31, 1996 to a specified date
not more than five (5) days prior to the date of such letter, there
has been any change in the Common Stock or long-term debt of the
Company or any increase in bank borrowings of the Company or any
decrease in the shareholders' equity or working capital of the Company
or change in any other item appearing on the Company's financial
statements as to which the Underwriters may request advice, in each
case as compared with amounts shown in the financial statements
included in the Prospectus, except in each case for increases or
deficiencies which the Prospectus discloses have occurred or may
occur, or as specified in such letter, in which case the letter shall
be accompanied by an explanation by the Company of the significance
thereof.
(iii) On the basis of certain procedure agreed to by the
Underwriters and the Auditors and described in their letter or
letters, certain numerical data and information included in the
Registration Statement and Prospectus and referred to in their letter
were in agreement with specifically designated records of the Company
which were not included in the Registration Statement and Prospectus
18
but from which information in the Registration Statement or the
Prospectus was derived.
(e) At each of the Closing Dates, (i) the representations and warranties
of the Company contained in this Agreement shall be true and correct with the
same effect as if made on and as of such Closing Date, and the Company shall
have performed all of its obligations hereunder and satisfied all the conditions
on its part to be satisfied at or prior to such Closing Date; (ii) the
Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statements of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; (iii) there shall have been, since the respective dates as of
which information is given, no material adverse change in the business,
properties, condition (financial or otherwise), results of operations, capital
stock, long-term or short-term debt or general affairs of the Company from that
set forth in the Registration Statement and the Prospectus, except changes which
the Registration Statement and Prospectus indicate might occur after the
effective date of the Registration Statement, and the Company shall not have
incurred any material liabilities nor entered into any agreement not in the
ordinary course of business other than as referred to in the Registration
Statement and Prospectus; and (iv) except as set forth in the Prospectus, no
action, suit or proceeding at law shall be pending or threatened against the
Company which would be required to be disclosed in the Registration Statement,
and no proceedings shall be pending or threatened against the Company before or
by any commission, board or administrative agency in the United States or
elsewhere, wherein an unfavorable decision, ruling or finding would materially
and adversely affect the business, property, condition (financial or otherwise),
results of operations or general affairs of the Company. In addition, you shall
have received, at the First Closing Date, a certificate signed by the Chairman
of the Board and the principal financial or accounting officer of the Company,
dated as of the First Closing Date, evidencing compliance with the provisions of
this subsection (e).
(f) Upon exercise of the option provided for in Section 2(b) hereof, your
obligations to purchase and pay for the Option Units referred to therein will be
subject (as of the date hereof and as of the Option Closing Date) to the
following additional conditions:
(i) The Registration Statement shall remain effective at the
Option Closing Date, no stop order suspending the effectiveness
thereof shall have been issued, and no proceedings for that purpose
shall have been instituted or shall be pending, or, to your knowledge
or the knowledge of the Company, shall be contemplated by the
Commission, and any reasonable request on the part of the Commission
for additional information shall have been complied with to the
satisfaction of Pezzola & Xxxxxx, counsel to the Underwriters.
19
(ii) At the Option Closing Date there shall have been delivered
to you the signed opinion of Xxxx X. Agron, counsel for the Company,
dated as of the Option Closing Date, in form and substance
satisfactory to Pezzola & Xxxxxx, counsel to the Underwriters, which
opinion shall be substantially the same in scope and substance as the
opinion furnished to you at the First Closing Date pursuant to Section
4(b) hereof, except that such opinion, where appropriate, shall cover
the Option Shares rather than the Firm Shares. If the First Closing
Date is the same as the Option Closing Date, such opinions may be
combined.
(iii) At the Option Closing Date, there shall have been
delivered to you a certificate of the Chairman of the Board and the
principal financial or accounting officer of the Company dated the
Option Closing Date, in form and substance satisfactory to Pezzola &
Xxxxxx, counsel to the Underwriters, substantially the same in scope
and substance as the certificate furnished to you at the First Closing
Date pursuant to Section 4(e) hereof.
(iv) At the Option Closing Date, there shall have been delivered
to you letters in form and substance satisfactory to you from the
Auditors, dated the Option Closing Date and addressed to you,
confirming the information in their letter referred to in Section 4(d)
hereof as of the date thereof and stating that, without any additional
investigation required, nothing has come to their attention during the
period from the ending date of their review referred to in said letter
to a date not more than five (5) business days prior to the Option
Closing Date which would require any change in said letter if it were
required to be dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option Closing Date
in connection with the sale and issuance of the Option Units shall be
satisfactory in form and substance to you, and you and Pezzola &
Xxxxxx, counsel to the Underwriters, shall have been furnished with
all such documents, certificates and opinions as you may request in
connection with this transaction in order to evidence the accuracy and
completeness of any of the representations, warranties or statements
of the Company or its compliance with any of the covenants or
conditions contained therein.
(g) If any of the conditions herein provided for in this Section shall not
have been completely fulfilled as of the date indicated, this Agreement and all
obligations of the Underwriters under this Agreement may be cancelled at, or at
any time prior to, each Closing Date by your notifying the Company of such
cancellation in writing or by telegram at or prior to the applicable Closing
Date. Any such cancellation shall be without liability of the Underwriters to
the Company, except as otherwise provided herein.
20
5. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to sell and deliver the Units is subject to
the following conditions:
(a) The Registration Statement shall have become effective not later than
4:00 P.M. Eastern time, on the date of this Agreement, or on such later date or
time as the Company and you may agree in writing.
(b) On the Closing Dates, no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Act or any
proceedings therefor initiated or threatened by the Commission.
If the conditions to the obligations of the Company provided for in this
Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company to sell and deliver the Option Units on exercise of
the option provided for in Section 2(b) hereof shall be affected.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Underwriters and
each person, if any, who controls the Underwriters, within the meaning of the
Act, from and against any losses, claims, damages or liabilities (which shall,
for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all attorneys' fees), joint or
several, to which such Underwriters or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
(i) the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment thereof or supplement thereto, or (ii) any blue sky application or
other document executed by the Company specifically for that purpose or based
upon written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Units or other securities
under the securities laws thereof (any such application, document or information
being hereinafter called a "Blue Sky Application"), or arise out of or are based
upon the omission or alleged omission to state in the Registration Statement,
any supplement thereto, or in any Blue Sky Application, a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent, but only to the extent, that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Underwriters
specifically for use in the preparation of the Registration Statement or any
such amendment or supplement thereof or any such Blue Sky Application or any
such Preliminary
21
Prospectus or the Prospectus or any such amendment or supplement thereto.
This indemnity will be in addition to any liability which the Company may
otherwise have.
(b) The Underwriters agree to indemnify and hold harmless the Company and
each person, if any, who controls the Company, within the meaning of the Act,
from and against any losses, claims, damages or liabilities (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all attorneys' fees) to which the Company
or any such director, nominee, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Underwriters, specifically for use in preparation thereof. This indemnity
agreement will be in addition to any liability which the Underwriters may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify in writing the indemnifying party of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is the
Underwriters or a person who controls the Underwriters within the meaning of the
Act, the fees and expenses of such counsel shall be at the expense of the
indemnifying party if (i) the employment of such counsel has been specifically
authorized in writing by the indemnifying party or (ii) the named parties to any
such action (including any impleaded parties) include both the Underwriters or
such controlling person and the indemnifying party, and in the reasonable
judgment of the
22
Underwriters, it is advisable for the Underwriters or controlling persons to
be represented by separate counsel (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of
the Underwriters or such controlling person, it being understood, however,
that the indemnifying party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys). No settlement of any action against an indemnified party shall be
made without the consent of the indemnified party, which shall not be
unreasonably withheld in light of all factors of importance to such
indemnified party.
7. CONTRIBUTION.
In order to provide for just and equitable contribution under the Act in
any case in which (i) the Underwriters makes claims for indemnification pursuant
to Section 6 hereof but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact that
the express provisions of Section 6 provide for indemnification in such case, or
(ii) contribution under the Act may be required on the part of the Underwriters,
then the Company and each person who controls the Company, in the aggregate, and
the Underwriters shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees) in either such case (after
contribution from others) in such proportions that such Underwriters are
responsible in the aggregate for that portion of such losses, claims, damages or
liabilities represented by the percentage that the underwriting discount per
Unit appearing on the cover page of the Prospectus bears to the public offering
price per Unit appearing thereon, and the Company shall be responsible for the
remaining portion, provided, however, that (a) if such allocation is not
permitted by applicable law, then the relative fault of the Company and the
Underwriters and controlling persons, in the aggregate, in connection with the
statements or omissions which resulted in such damages and other relevant
equitable considerations shall also be considered. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement of a material fact or the omission to state a material fact, such
statement or omission relates to information supplied by the Company or the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriters agree (a) that it would not be just and equitable
if the respective obligations of the Company and the Underwriters to contribute
pursuant to this Section 7 were to be determined by PRO RATA or PER CAPITA
allocation of the aggregate damages or by any other method of allocation that
does not take account of the equitable considerations referred to in the first
sentence of this Section 7 and (b) that the contribution of the Underwriters
shall not be in excess of its proportionate share of the portion of such losses,
claims, damages or liabilities for which the Underwriters are responsible. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
ll(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent
23
misrepresentation. As used in this paragraph, the word "Company" includes
any officer, director, or person who controls the Company within the meaning
of Section 15 of the Act. If the full amount of the contribution specified
in this paragraph is not permitted by law, then the Underwriters and each
person who controls the Underwriters shall be entitled to contribution from
the Company to the full extent permitted by law. The foregoing contribution
agreement shall in no way affect the contribution liabilities of any persons
having liability under Section 11 of the Act other than the Company and the
Underwriters. No contribution shall be requested with regard to the
settlement of any matter from any party who did not consent to the
settlement; provided, however, that such consent shall not be unreasonably
withheld in light of all factors of importance to such party.
8. COSTS AND EXPENSES.
(a) Whether or not this Agreement becomes effective or the sale of the
Firm Units or Option Units to the Underwriters is consummated, the Company will
pay all costs and expenses incident to the performance of this Agreement by the
Company, including but not limited to the fees and expenses of counsel to the
Company and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the Registration
Statement (including the financial statements therein and all amendments and
exhibits thereto), each Preliminary Prospectus and the Prospectus, as amended or
supplemented, the fee of the NASD in connection with the filing required by the
NASD relating to the offering of the Units contemplated hereby; all expenses,
including reasonable fees (but not in excess of the amount set forth in Section
3(b)) and disbursements of counsel to the Underwriters, in connection with the
qualification of the Units and Unit components under the State Securities or
Blue Sky Laws which we shall mutually designate; the cost of printing and
furnishing to the Underwriters copies of the Registration Statement, each
Preliminary Prospectus, the Prospectus, this Agreement, the Selling Agreement
and the Blue Sky Memorandum; the cost of printing the certificates representing
the components comprising the Units, expenses of Company due diligence meetings
and presentations. The Company shall pay any and all taxes (including any
transfer, franchise, capital stock or other tax imposed by any jurisdiction) on
sales to the Underwriters hereunder. The Company will also pay all costs and
expenses incident to the furnishing of any amended Prospectus or of any
supplement to be attached to the Prospectus as called for in Section 3(a) of
this Agreement except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses, the Company shall at the First
Closing Date pay to you the balance of a non-accountable expense allowance of
$__________, of which $___________ has been paid. In the event the
over-allotment option is exercised in full, the Company shall pay to you at the
Option Closing Date an additional amount equal to 3% of the gross proceeds
received upon exercise of the over-allotment option. In the event the
transactions contemplated hereby are not consummated for any reason, the
Underwriters will retain that portion of the $_____________ non-accountable
expense allowance deposit received from the Company as is equal to its actual
accountable expenses and will reimburse the Company for the remainder, if any.
24
(c) No person is entitled either directly or indirectly to compensation
from the Company, from the Underwriters or from any other person for services as
a finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless the Underwriters, and the Underwriters agree to
indemnify and hold harmless the Company from and against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all attorneys' fees), to which the indemnified party may
become subject insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon the claim of any
person (other than an employee of the party claiming indemnity) or entity that
he or it is entitled to a finder's fee in connection with the proposed offering
by reason of such person's or entity's influence or prior contact with the
indemnifying party.
9. EFFECTIVE DATE.
The Agreement shall become effective upon its execution, except that you
may, at your option, delay its effectiveness until 10:00 A.M., Eastern time, on
the first full business day following the Effective Date, or at such earlier
time after the Effective Date as you in your discretion shall first commence the
initial public offering of any of the Shares. The time of the initial public
offering shall mean the time of release by you of the first newspaper
advertisement with respect to the Shares, or the time when the Shares are first
generally offered by you to dealers by letter or telegram, whichever shall first
occur. This Agreement may be terminated by you at any time before it becomes
effective as provided above, except that Sections 3(c), 6, 7, 8, 12, 13, 14 and
15 shall remain in effect notwithstanding such termination.
10. TERMINATION.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12, 13, 14 and 15,
may be terminated at any time prior to the First Closing Date, and the option
referred to in Section 2(b), if exercised, may be cancelled, at any time prior
to the Option Closing Date, by you if in your judgment it is impracticable to
offer for sale or to enforce contracts made by the Underwriters for the resale
of the Units agreed to be purchased hereunder, by reason of (i) the Company
having sustained a material loss, whether or not insured, by reason of fire,
earthquake, flood, accident or other calamity, or from any labor dispute or
court or government action, order or decree, (ii) trading in securities on the
New York Stock Exchange or the American Stock Exchange having been suspended or
limited, (iii) material governmental restrictions having been imposed on trading
in securities generally which are not in force and effect on the date hereof,
(iv) a banking moratorium having been declared by federal or New York State
authorities, (v) an outbreak of major international hostilities or other
national or international calamity having occurred, (vi) the passage by the
Congress of the United States or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which is reasonably believed likely by
you to have a material adverse impact on the business, financial condition or
financial statements of the Company, (vii) any adverse change having occurred in
the sole opinion of the Underwriters in the financial or securities markets
25
since the date of this Agreement, or (viii) any adverse change having occurred
in the sole opinion of the Underwriters with respect to the earnings, business
prospects or general condition of the Company, financial or otherwise, other
than normal fluctuations in sales, whether or not arising in the ordinary course
of business.
(b) If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 10 or in Section 9, the
Company shall be promptly notified by you, by telephone or telegram, confirmed
by letter.
11. REPRESENTATIVE'S WARRANT.
On the First Closing Date, the Company will issue to you, for a
consideration of $100 and upon the terms and conditions set forth in the form of
the Representative's Warrant annexed as an exhibit to the Registration
Statement, the Representative's Warrant to purchase up to 50,000 Units at an
exercise price of $14.40 per Unit. In the event of conflict in the terms of
this Agreement and the Representative's Warrant, the language of the
Representative's Warrant shall control.
12. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and
other statements of the Company, and the Underwriters, set forth in or made
pursuant to this Agreement will remain in full force and effect regardless of
any investigation made by or on behalf of the Underwriters, the Company or any
of its officers or directors or any controlling persons and will survive
delivery of and payment for the Units and the termination of this Agreement.
13. NOTICE.
All communications hereunder will be in writing and, except as otherwise
expressly provided herein, if sent to you, will be mailed, certified mail,
return receipt requested, delivered or telegraphed and confirmed at 000 Xxxxxxxx
Xxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx, 00000, or if sent to the Company, will be
mailed, certified mail, return receipt requested, delivered, or telegraphed and
confirmed to it at 0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx,
00000.
14. PARTIES IN INTEREST.
The Agreement herein set forth is made solely for the benefit of the
Underwriters and the Company and any person controlling the Company, or the
Underwriters, and directors of the Company, nominees for directors of the
Company (if any) named in the Prospectus, the officers of the Company who have
signed the Registration Statement, and their respective executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such purchaser, from the
Underwriters of the Units.
26
15. APPLICABLE LAW.
This Agreement will be governed by, and construed in accordance with, the
laws of the State of California applicable to agreements made and to be entirely
performed within California.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this agreement, whereupon it will become a binding
agreement between the Company and the Underwriters in accordance with its terms.
Yours very truly,
RETROSPETTIVA, INC.
By
-------------------------------------
Xxxxxxxx Xxxxxxxxxxx,
Chief Executive Officer
Dated: , 1997
---------------
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written. The undersigned hereby is acting on behalf of
itself and as representative of the several Underwriters named in Schedule I to
this Agreement.
KENSINGTON SECURITIES, INC.
By
-------------------------------------
Xxxxxx Xxxxx, President
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SCHEDULE I
NAME OF UNDERWRITER NUMBER OF UNITS TO BE PURCHASED
------------------- -------------------------------
Total
28
