EXHIBIT 1
DSI TOYS, INC.
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
UNDERWRITING AGREEMENT
Boston, Massachusetts
May __, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED
SUTRO & CO. INCORPORATED
As Representatives of the
Several Underwriters
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated
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Ladies and Gentlemen:
DSI Toys, Inc., a Texas corporation (the "Company"), and The ▇▇▇▇▇
▇▇▇▇ Living Trust (the "Firm Selling Stockholder") confirm their agreement with
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") and Sutro & Co. Incorporated
("Sutro"), and each of the other underwriters, if any, named in Schedule A
hereto (collectively, the "Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 11), for whom ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Sutro are acting as representatives (in such capacity, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Sutro are herein called the "Representatives"), with respect to the
sale by the Company and the Firm Selling Stockholder and the purchase by the
Underwriters, acting severally and not jointly, of an aggregate of 3,000,000
shares of the common stock, $0.01 par value per share, of the Company ("Common
Stock"), of which 2,500,000 shares are to be sold by the Company and 500,000
shares are to be sold by the Firm Selling Stockholder (collectively, the "Firm
Shares"), and with respect to the grant by the Company, the Firm Selling
Stockholder, and Hibernia Corporation (the "Option Selling Stockholder" and,
together with the Firm Selling Stockholder, the "Selling Stockholders") to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase therefrom all or any part of 450,000 additional
shares of Common Stock for the purpose of covering over-allotments, if any. The
Firm Shares and all or any part of the shares of Common Stock subject to the
option described in Section 2(b) hereof (the "Option Shares") are hereinafter
collectively referred to as the "Shares." The Company has also agreed to issue
to the Representatives "Representatives' Warrants" (defined below) to purchase
up to 250,000 shares of Common Stock. The words "you" and "your" refer to the
Representatives of the Underwriters.
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING STOCKHOLDERS.
I. The Company represents and warrants to, and agrees with, each of the
Underwriters as of the date hereof, and as of the Closing Date, as defined in
Section 2(c) hereof, and the Option Closing Date, as defined in Section 2(b)
hereof, if any, as follows:
(a) A registration statement on Form S-1 (File No. 333-23961) with respect
to the Shares, the Representatives' Warrants, and the shares issuable upon
exercise of the Representatives' Warrants (the "Underwriters' Warrant Shares")
including a prospectus subject to completion, has been prepared by the Company
in conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the applicable Rules and Regulations (as defined below) of the
Securities and Exchange Commission (the "Commission") and has been filed with
the Commission; such amendments to such registration statement, and such amended
prospectuses subject to completion, as may have been required prior to the date
hereof have been similarly prepared and filed with the Commission; and the
Company will file such additional amendments to such registration statement, and
such amended prospectuses subject to completion, as may hereafter be required.
Copies of such registration statement and each such amendment, each such related
prospectus subject to completion (collectively, the "Preliminary Prospectuses"
and individually, a "Preliminary Prospectus"), each document incorporated by
reference therein and each exhibit thereto have been delivered to you. For
purposes hereof, "Rules and Regulations" means the rules and regulations adopted
by the Commission under either the Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as applicable.
If the registration statement has been declared effective under the Act by
the Commission, the Company will prepare and promptly file with the Commission,
pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations
under the Act or as part of a post-effective amendment to the registration
statement (including a final form of prospectus), the information omitted from
the registration statement pursuant to Rule 430A(a) of the Rules and Regulations
under the Act. If the registration statement has not been declared effective
under the Act by the Commission, the Company will prepare and promptly file a
further amendment to the registration statement, including a final form of
prospectus. The term "Registration Statement" as hereinafter used in this
Agreement shall mean such registration statement, including financial
statements, schedules and exhibits in the form in which it became or becomes,
effective (including, if the Company omitted information from the registration
statement pursuant to Rule
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430A(a) of the Rules and Regulations under the Act, the information deemed to be
a part of the registration statement at the time it became effective pursuant to
Rule 430A(b) of the Rules and Regulations under the Act) and, in the event of
any amendment thereto after the effective date of such registration statement,
shall also mean (from and after the effectiveness of such amendment) such
registration statement as so amended, together with any registration statement
filed by the Company pursuant to Rule 462(b) under the Act. The term
"Prospectus" as used in this Agreement shall mean the prospectus relating to the
Shares as included in such registration statement at the time it became or
becomes effective, except that if any revised prospectus shall be provided to
the Underwriters by the Company for use in connection with the offering of the
Shares that differs from the Prospectus on file with the Commission at the time
the registration statement became or becomes effective (whether or not such
revised prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations under the Act), the term "Prospectus"
shall refer to such revised prospectus from and after the time it is first
provided to the Underwriters for such use, together with the term sheet or
abbreviated term sheet filed with the Commission pursuant to Rule 424(b)(7)
under the Act. Any reference herein to the Registration Statement, the
Prospectus, any amendment or supplement thereto or any Preliminary Prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement or Prospectus shall be
deemed to refer to and include the filing of any document with the Commission
deemed to be incorporated by reference therein.
(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus,
at the time of filing thereof, or instituted proceedings for that purpose, and
each such Preliminary Prospectus, at the time of filing thereof, has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and, at the time of filing thereof, has not included any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements therein not misleading and at the time the Registration
Statement became or becomes effective and at all times subsequent thereto up to
and including the Closing Date (as hereinafter defined) and any Option Closing
Date (as hereinafter defined), and during such longer period as the Prospectus
may be required to be delivered in connection with sales by an Underwriter or a
dealer, (i) the Registration Statement and Prospectus, and any amendments or
supplements thereto, contained and will contain all material information
required to be included therein by the Act and the
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Rules and Regulations are conformed and will conform in all material respects to
the requirements of the Act and the Rules and Regulations, and (ii) neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto included or will include any untrue statement of a material fact or
omitted 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. The documents incorporated by reference in
the Registration Statement, the Prospectus, any amendment or supplement thereto
or any Preliminary Prospectus, when they became or become effective under the
Act or were or are filed with the Commission under the Exchange Act conformed or
will conform in all material respects with the requirements of the Act or the
Exchange Act, as applicable, and the Rules and Regulations, and as of the date
any such document was or is filed with the Commission under the Exchange Act
such document did not, and on the Closing Date and on any Option Closing Date
will not, omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Texas. Each of the
subsidiaries of the Company (collectively, the "Subsidiaries" and individually,
a "Subsidiary") has been duly organized and is validly existing in good standing
under the laws of its jurisdiction of organization. The Company and each of the
Subsidiaries are duly qualified and licensed as a foreign corporation and in
good standing in each jurisdiction in which their respective operations requires
such qualification or licensing, except where the failure to be so qualified
would not have a material adverse effect on the condition, financial or
otherwise, or on the business affairs, position, prospects, value, operation,
properties, business or results of operation of the Company and the Subsidiaries
taken as a whole whether or not arising in the ordinary course of business (a
"Material Adverse Effect"). The Company and each of the Subsidiaries have all
requisite power and authority, and have obtained any and all necessary
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials and bodies
(including, without limitation, the United States Environmental Protection
Agency and those other officials and bodies having jurisdiction over similar
matters), to own or lease their respective properties and conduct their
respective businesses as described in the Prospectus (collectively, "Government
Approvals"), except where the failure to so obtain any such Government Approval
would not have a Material Adverse Effect; the Company and each of the
Subsidiaries are and have been doing business in compliance with all such
Government Approvals, except where the failure to so comply would not have a
Material Adverse
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Effect; and neither the Company nor any of the Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
Government Approvals. All of the outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and, except as set forth on Exhibit 1 are owned by the
Company free and clear of all liens, encumbrances and security interests, and no
options, warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligations into, or exchange any
securities for, shares of capital stock of or ownership interests in any of the
Subsidiaries are outstanding.
(d) The Company has the duly authorized, issued and outstanding
capitalization set forth in the Prospectus under "Capitalization" based upon the
assumptions set forth therein and would have had the as adjusted capitalization
set forth therein based upon the assumptions set forth therein, and the Company
is not a party to or bound by any instrument, agreement or other arrangement
(except as disclosed in the Prospectus) providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement
and the warrant agreement executed simultaneously with this Agreement between
the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Sutro setting forth the terms of the
Representatives' Warrants (the "Warrant Agreement"). The Shares, the
Representatives' Warrants and all other securities issued or issuable by the
Company conform in all material respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus. All issued and
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and were not issued in
violation of any preemptive rights or other rights to subscribe for or purchase
securities. The Shares have been duly authorized and, when issued, paid for and
delivered in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable and are not and will not be subject to any preemptive or
other rights to subscribe for or purchase securities; the holders thereof will
not be subject to any liability solely as such holders; and the certificates
representing the Shares will be in due and proper form as previously authorized
by the Company. The Representatives' Warrant Shares have been validly authorized
and reserved for issuance upon exercise of the Representatives' Warrants and,
when issued in accordance with the Warrant Agreement, will be validly issued,
fully paid and non-assessable and free of preemptive rights.
(e) The audited and unaudited consolidated financial statements of the
Company, together with the notes and schedules thereto, included in the
Registration Statement, each Preliminary
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Prospectus and the Prospectus fairly present the financial position and the
results of operations, changes in cash flows and changes in stockholders' equity
of the Company at the respective dates and for the respective periods to which
they apply; and each of such audited consolidated financial statements has been
prepared in conformity with generally accepted accounting principles and the
Rules and Regulations, consistently applied throughout the periods involved, all
adjustments necessary for a fair presentation of results for such periods have
been made and such unaudited consolidated financial statements have been
prepared on a basis substantially consistent with that of such audited
consolidated financial statements. Except as described in the Prospectus, there
has been no change or development involving a Material Adverse Effect since the
date of the consolidated financial statements included in any of the Preliminary
Prospectuses, the Prospectus and the Registration Statement, and the outstanding
debt, the property, both tangible and intangible, and the business of the
Company and each of the Subsidiaries conform in all material respects to the
descriptions thereof contained in the Registration Statement and the Prospectus.
The summary and selected consolidated financial and statistical data included in
the Registration Statement and the Prospectus present fairly the or incorporated
by reference information shown therein and have been compiled on a basis
consistent with the unaudited and audited consolidated financial statements
included therein. The Company's internal accounting controls are sufficient to
cause the Company to comply with the Foreign Corrupt Practices Act of 1977, as
amended. Neither the Company nor any of the Subsidiaries has any material
contingent obligation which is not disclosed in the Registration Statement.
(f) Price Waterhouse LLP ("Price Waterhouse"), whose reports are filed
with the Commission as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules and
Regulations.
(g) (i) The Company and each of the Subsidiaries has paid all material
federal, state, local and foreign taxes for which they are respectively liable
and which are due and payable, including, but not limited to, withholding taxes
and amounts payable under Chapters 21 through 24 of the Internal Revenue Code of
1986, as amended, and (ii) none of the Company or any Subsidiary has any tax
deficiency or claims outstanding, assessed or, to their knowledge, proposed
against it.
(h) No transfer tax, stamp duty or other similar tax is payable by or
on behalf of the Underwriters in connection with (i) the issuance by the Company
of the Shares, (ii) the purchase by the Underwriters of the Shares, or (iii) the
consummation by the
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Company and the Selling Stockholders of any of their respective obligations
under this Agreement.
(i) The Company and each of the Subsidiaries maintain insurance of the
types and in the amounts which the Company reasonably believes to be adequate
for their respective businesses, all of which insurance is in full force and
effect.
(j) Except as disclosed in the Prospectus, there is no action, suit,
proceeding, inquiry, investigation, litigation or governmental proceeding,
domestic or foreign, pending or, to the Company's knowledge, threatened against
(or currently existing or previously occurring facts or circumstances that
provide a basis for the same), or involving the properties or business of the
Company or any of the Subsidiaries, that (i) questions the validity of the
capital stock of the Company or this Agreement or of any action taken or to be
taken by the Company pursuant to or in connection with this Agreement, (ii) is
required to be disclosed in the Registration Statement that is not so disclosed
(and such proceedings, if any, as are summarized in the Registration Statement
are accurately summarized in all material respects), (iii) would have a Material
Adverse Effect or (iv) relates to or affects the Company or processes or
products which the Company designed, developed, licenses, uses, manufactures or
markets which, if adversely determined, would have a Material Adverse Effect.
(k) The Company has full legal right, power and authority to enter
into this Agreement and the Warrant Agreement and to consummate the transactions
provided for herein and therein; and this Agreement and the Warrant Agreement
have been duly authorized, executed and delivered by the Company. This
Agreement, assuming it has been duly authorized, executed and delivered by the
Underwriters, constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law), and none of the Company's
execution or delivery of this Agreement, its performance hereunder, its
consummation of the transactions contemplated herein or the conduct of its
business and that of each of the Subsidiaries as described in the Registration
Statement, the Prospectus and any amendments or supplements thereto conflicts
with or will conflict with in any material respect or results, or will result,
in any breach or violation of any of the material terms or provisions of, or
constitutes, or will constitute, a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance,
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pledge, security interest, defect or other restriction on equity of any kind
whatsoever upon, any property or assets (tangible or intangible) of the Company
or any of the Subsidiaries, pursuant to the terms of (i) the corporate charter,
operating agreement or by-laws of the Company or any of the Subsidiaries, (ii)
any license, contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any other
agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which any of them is or may be bound or to which any of their
respective properties or assets (tangible or intangible) is or may be subject or
(iii) any statute, judgment, decree, order, rule or regulation applicable to the
Company or any of the Subsidiaries of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of the Subsidiaries or any of their
respective activities or properties. The Representatives' Warrants, when issued
and sold to you in accordance with the Warrant Agreement will have been
authorized and validly issued and will constitute the legal, valid, and binding
obligations of the Company, entitled to the benefits of the Warrant Agreement.
(l) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Shares pursuant to the Prospectus
and the Registration Statement, or the performance of this Agreement and the
transactions contemplated hereby, except such as have been or may be obtained
under the Act, the Exchange Act or the Rules and Regulations or may be required
under state securities or Blue Sky laws in connection with the Underwriters'
purchase and distribution of the Shares.
(m) All executed agreements or copies of executed agreements filed as
exhibits to the Registration Statement to which the Company or any of the
Subsidiaries is a party or by which any of them may be bound or to which any of
their respective assets, properties or businesses may be subject have been duly
and validly authorized, executed and delivered by the Company or such
Subsidiaries, and, assuming due authorization, execution and delivery by the
other parties thereto, constitute the legal, valid and binding agreements of the
Company and such Subsidiaries enforceable against the Company and such
Subsidiaries in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable
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law). The descriptions in the Registration Statement of contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown with respect thereto by Form S-1, and there are
no contracts or other documents that are required by the Act to be described in
the Registration Statement or filed as exhibits to the Registration Statement
that are not described or filed as required, and the exhibits that have been
filed are complete and correct copies of the documents of which they purport to
be copies.
(n) Subsequent to the respective dates as of which information is set
forth in the Registration Statement and Prospectus, and except as may otherwise
be indicated or contemplated herein or therein, neither the Company nor any of
the Subsidiaries has (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money (except for borrowings made
pursuant to the Company's and the Subsidiaries' existing credit agreements),
(ii) entered into any transaction which could reasonably be expected to have a
Material Adverse Effect or (iii) declared or paid any dividend or made any other
distribution on or in respect of its capital stock.
(o) Except as disclosed in the Registration Statement, no material
default exists in the due performance and observance of any term, covenant or
condition of any license, contract, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement, stockholders agreement,
note, loan or credit agreement or any other agreement or instrument evidencing
an obligation for borrowed money, or any other agreement or instrument to which
the Company or any of the Subsidiaries is a party or by which the Company or any
of the Subsidiaries may be bound or to which any of the property or assets
(tangible or intangible) of the Company or any of the Subsidiaries is subject or
affected.
(p) The Company and each of the Subsidiaries have a generally
satisfactory employer-employee relationship with their respective employees and
are in compliance with all federal, state, local, and, where applicable,
foreign, laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to so comply would not have a Material Adverse Effect. To the Company's
knowledge, there are no pending investigations involving the Company or any of
the Subsidiaries by the United States Department of Labor or any other
governmental agency responsible for the enforcement of such federal, state,
local or foreign laws and regulations. To the Company's knowledge, there is no
unfair labor practice charge or complaint against the Company or any of the
Subsidiaries pending before the National Labor Relations
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Board or any strike, picketing, boycott, dispute, slowdown or stoppage pending
or threatened against or involving the Company or any of the Subsidiaries, and
no such strike, picketing, boycott, dispute, slowdown or stoppage has ever
occurred. No representation question exists respecting the employees of the
Company or any of the Subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company or any of the
Subsidiaries. There are no expired or existing collective bargaining agreements
of the Company or any of the Subsidiaries.
(q) Neither the Company nor any of the Subsidiaries has incurred any
liability arising under or as a result of the application of the provisions of
the Act.
(r) Except as disclosed in the Prospectus or Exhibit 2 hereto, neither
the Company nor any of the Subsidiaries maintains, sponsors or contributes to
any program or arrangement that is an "employee pension benefit plan," an
"employee welfare benefit plan," or a "multiemployer plan" (collectively, the
"ERISA Plans") as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). With respect to any "defined benefit plan," as defined in Section
3(35) of ERISA, that the Company or any of the Subsidiaries, now or at any time
previously, maintains or contributes to, all applicable federal laws and
regulations have been complied with, except for such instances of noncompliance
which, either singly or in the aggregate, would not have a Material Adverse
Effect. Neither the Company nor any of the Subsidiaries has ever completely or
partially withdrawn from a "multiemployer plan."
(s) The Company and its Subsidiaries are in compliance with all
applicable existing federal, state, local and foreign laws and regulations
relating to the protection of human health or the environment or imposing
liability or requiring standards of conduct concerning any Hazardous Materials
("Environmental Laws"), except for such instances of noncompliance which, either
singly or in the aggregate, would not have a Material Adverse Effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (ii) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.
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(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(u) The Company has not distributed and will not distribute (within
the meaning of Rule 140 of the Rules and Regulations under the Act) any offering
material in connection with the offering and sale of the Shares, other than the
Prospectus, any Preliminary Prospectus, the Registration Statement and other
materials permitted by the Act.
(v) No holders of any securities of the Company or of any options,
warrants or other convertible or exchangeable securities of the Company
exercisable for or convertible or exchangeable for securities of the Company
have the right, except as may have been waived, to include any securities issued
by the Company in the Registration Statement or any registration statement to be
filed by the Company within 180 days of the date hereof or to require the
Company to file a registration statement under the Act during such 180 day
period.
(w) The Company has not taken and will not take, directly or
indirectly (except for any action that may be taken by the Underwriters), any
action designed to or which has constituted or which might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or otherwise.
(x) Except to the extent disclosed in the Prospectus, (i) the Company
and each of the Subsidiaries own or possess, or have a license or other right to
use, the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), technology, trademarks,
service marks and trade names, together with all applications for any of the
foregoing, currently used or held for use by them in connection with their
respective businesses, except where the failure to own or possess, alone or in
aggregate, would not have a Material Adverse Effect on the Company, (ii) neither
the Company nor any of the Subsidiaries has received any notice of
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infringement of or conflict with asserted rights of others with respect to any
of the foregoing which has not been finally resolved and (iii) except as set
forth in the Registration Statement, neither the Company nor any of the
Subsidiaries is obligated or under any liability whatsoever to make any material
payments by way of royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any patent, patent right, license, invention, trademark,
service ▇▇▇▇, trade name, copyright, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), technology or other intangible asset, with respect to the use
thereof or in connection with the conduct of its business or otherwise.
(y) The Company and each of the Subsidiaries have good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property stated in the Prospectus (including the financial statements
included or incorporated by reference therein) to be owned or leased by them,
free and clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects or other restrictions on equity of any kind whatsoever, other
than (i) those referred to in the Prospectus (including such financial
statements), (ii) liens for taxes not yet due and payable and (iii) mechanics,
materialmen, warehouse and other statutory liens arising in the ordinary course
of business which, either individually or in the aggregate, do not have a
Material Adverse Effect.
(z) Except as described in the Prospectus under "Underwriting" and on
the cover page thereof, there are no claims, payments, issuances, arrangements
or understandings for services in the nature of a finder's or origination fee
with respect to the sale of the Shares hereunder or any other arrangements,
agreements, understandings, payments or issuance with respect to the Company or
any of the Subsidiaries or any of their respective officers, directors,
employees or affiliates that may affect the Underwriters' compensation, as
determined by the National Association of Securities Dealers, Inc. ("NASD").
(aa) Quotations and last sale data with respect to the Company's
Common Stock will be reported on the National Association of Securities Dealers
Automated Quotation National Market (the "NASDAQ-NM") under the symbol "DSIT"
and the Company knows of no currently existing reason or set of facts which is
likely to result in the inability or refusal to so quote the Common Stock or the
Shares.
(ab) The Company is not an "investment company" or an "affiliated
person" or "promoter" of, or "principal underwriter" for, an "investment
company", as such terms are defined in the
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Investment Company Act of 1940, as amended (the "1940 Act"), or subject to
regulation under the 1940 Act.
(ac) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to the Underwriters' Counsel (as hereinafter
defined) shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(ad) The Company has delivered to the Representatives written
agreements, in form and substance satisfactory to the Representatives, with each
of its directors and executive officers who own Common Stock, the Selling
Stockholders, and certain other holders of the Company's securities (each such
person is named in Schedule C hereto), to the effect that, among other things,
such person will not, for a period ending 180 days after the date of the
Prospectus, directly or indirectly, offer, sell, assign, transfer, encumber,
contract to sell, grant an option to purchase or otherwise sell or dispose of
shares of Common Stock or other capital stock of the Company, any options,
rights or warrants to purchase shares of Common Stock or other capital stock of
the Company or any securities convertible into or exchangeable or exercisable
for shares of Common Stock or other capital stock of the Company now owned by
such person or subsequently acquired (or as to which such person now or
hereafter has the right to direct the disposition of) otherwise than hereunder
or with the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; provided, however, that
such agreements may contain an exception providing that such persons during such
period may, without such consent, convey shares of Common Stock (i) by gift to
immediate family members or (ii) by will or intestacy to immediate family
members provided in both cases that such transferees enter into agreements for
the benefit of the Underwriters containing all of the restrictions set forth in
this Section 1.I.(ad) with respect to such shares of Common Stock.
II. Each Selling Stockholder represents and warrants to, and agrees with,
each of the Underwriters and the Company as of the date hereof and as of the
Closing Date, as defined in Section 2(c) hereof, and the Option Closing Date, as
defined in Section 2(b) hereof, if any, that:
(a) Such Selling Stockholder as of the Closing Date and the Option
Closing Date, as applicable, will have valid marketable title to such of the
Shares as are to be sold by such Selling Stockholder, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest other
than pursuant to this Agreement; such Selling Stockholder has full right, power
and authority to sell, assign, transfer and deliver the Shares to be sold by
such Selling Stockholder hereunder; and upon delivery of
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such Shares and payment of the purchase price as herein contemplated, each of
the Underwriters will obtain valid marketable title to the Shares purchased by
it from such Selling Stockholder, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest.
(b) Such Selling Stockholder has duly authorized, executed and
delivered, in the form heretofore furnished to the Representatives, a Power of
Attorney (the "Power of Attorney") appointing M.D. ▇▇▇▇▇, _____________________
and _________________ as attorneys-in-fact (collectively, the "Attorneys" and
individually, an "Attorney") and a Custody Agreement (the "Custody Agreement")
with American Stock Transfer & Trust Company named therein, as custodian (the
"Custodian"); each of the Power of Attorney and such Custody Agreement
constitutes a valid and binding agreement of the Selling Stockholder,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or contribution may be
limited by applicable law; and each of such Attorneys approved by such Selling
Stockholder, acting alone, is authorized to execute and deliver this Agreement
and the certificate referred to in Section 6(j) hereof on behalf of such Selling
Stockholder, to determine the purchase price to be paid by the several
Underwriters to such Selling Stockholder as provided in Section 2 hereof, to
authorize the delivery of the Shares as are to be sold by such Selling
Stockholder under this Agreement and to duly endorse (in blank or otherwise) the
certificate or certificates representing such Shares or a stock power or powers
with respect thereto, to accept payment therefor and otherwise to act on behalf
of such Selling Stockholder in connection with this Agreement and to pay all
expenses in connection therewith.
(c) All authorizations, approvals, consents and orders necessary for
the execution and delivery on behalf of the Selling Stockholder of the Power of
Attorney and the Custody Agreement, the execution and delivery on behalf of such
Selling Stockholder of this Agreement, and the sale and delivery of the Shares
as are to be sold by such Selling Stockholder under this Agreement (other than,
at the time of the execution hereof (if the Registration Statement has not yet
been declared effective by the Commission), the issuance of the order of the
Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state or other
securities or Blue Sky laws) have been obtained and are in full force and
effect; and the Selling Stockholder has full right, power and authority to enter
into and perform its obligations under the Power of Attorney
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and the Custody Agreement and this Agreement, to sell, assign, transfer and
deliver the Shares to be sold by such Selling Stockholder under this Agreement.
(d) Such Selling Stockholder will not, for a period ending 180 days
after the effective date of the Registration Statement, offer, sell, assign,
transfer, encumber, contract to sell, grant an option to purchase, or otherwise
sell or dispose of any shares of Common Stock, any options or warrants to
purchase any shares of Common Stock, or any securities convertible into or
exchangeable for shares of Common Stock, owned directly by such Selling
Stockholder or with respect to which such Selling Stockholder has the power of
disposition, otherwise than hereunder or with the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇. In addition, for a period beginning 181 days after the
commencement of the Offering and ending 360 days thereafter, the Firm Selling
Stockholder may only sell up to 2,000 shares of Common Stock per day (but in no
event more than 20,000 shares of Common Stock during any calendar month) in
transactions that comply with sections (f) and (g) of Rule 144 under the
Securities Act of 1933, as amended. Such Selling Stockholder agrees and consents
to the entry of stop transfer instruction with the Company's transfer agent
against the transfer of shares of Common Stock held by such Selling Stockholder
except in compliance with the foregoing restrictions.
(e) Certificates in negotiable form for all Shares to be sold by such
Selling Stockholder under this Agreement, together with a stock power or powers
duly endorsed in blank by such Selling Stockholder, have been placed in custody
with the Custodian for the purpose of effecting delivery of such Shares
hereunder.
(f) This Agreement has been duly executed and delivered by or on
behalf of such Selling Stockholder and is a valid and binding agreement of such
Selling Stockholder, enforceable in accordance with its terms, except as the
indemnification and contribution provisions hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and the
application of equitable principles in any action, legal or equitable; and the
performance of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach of or default under any bond,
debenture, note or other evidence of indebtedness, or any contract, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which such Selling Stockholder is a party or by which such Selling
Stockholder or any Shares as are to be sold by such Selling Stockholder
hereunder may be bound or result in any violation of any law, order, rule,
regulation,
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writ, injunction or decree of any court or governmental agency or body.
(g) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to, or which might reasonably be expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(h) Such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
(i) All information furnished by or on behalf of such Selling
Stockholder relating to such Selling Stockholder and the Shares as are to be
sold by such Selling Stockholder that is contained in such representations and
warranties of such Selling Stockholder, in the Selling Stockholder's Power of
Attorney or set forth in the Registration Statement and the Prospectus is, and
on the Closing Date and on the Option Closing Date, as applicable, will be,
true, correct and complete, and does not, and on the Closing Date and on the
Option Closing Date, as applicable, 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.
(j) Such Selling Stockholder will review the Prospectus and will
comply with all agreements and satisfy all conditions on its part to be complied
with or satisfied pursuant to this Agreement on or prior to the Closing Date or
the Option Closing Date, as applicable, and will advise one of its Attorneys
prior to the Closing Date or Option Closing Date, as applicable, if any
statement to be made on behalf of the Selling Stockholder in the certificate
contemplated by Section 6.I.(j) would be inaccurate if made of the Closing Date
or the Option Closing Date, as applicable.
(k) The Selling Stockholder does not have any preemptive right, co-
sale right or right of first refusal or other similar right to purchase any of
the Shares that are to be sold by the Company to the Underwriters pursuant to
this Agreement.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties, covenants and agreements
herein contained, and subject to the terms and conditions herein set forth, the
Company agrees to sell 2,500,000 Firm Shares and the Representatives' Warrants
to the several Underwriters, the Firm Selling Stockholder agrees to sell to the
several Underwriters the number of Firm Shares set forth on
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Schedule B opposite the name of Firm Selling Stockholder, and each Underwriter,
severally and not jointly, agrees to purchase that number of Firm Shares set
forth in Schedule A opposite its name plus any additional number of Firm Shares
that such Underwriter may become obligated to purchase pursuant to the
provisions of Section 11 hereof.
As of the Closing Date, certificates in negotiable form for the total
number of Shares (or securities exercisable for such Shares in negotiable form
together with the exercise price thereon in cash) to be sold hereunder by the
Selling Stockholders will have been placed in custody with the Custodian
pursuant to the Custody Agreements executed by the Selling Stockholders for
delivery of all Shares to be sold hereunder by the Selling Stockholders. The
Selling Stockholders specifically agree that the Shares represented by the
certificates held and to be held in custody for the Selling Stockholders under
the Custody Agreements are subject to the interests of the Underwriters
hereunder, and that the obligations of the Selling Stockholders hereunder shall
not be terminable by any act or deed of such Selling Stockholders (or by any
other person, firm or corporation including the Company, the Custodian or the
Underwriters) or by operation of law (including without limitation, the
bankruptcy, insolvency, dissolution, liquidation or termination of the Selling
Stockholders) or by the occurrence of any other event or events, except as set
forth in the Custody Agreements. If any such event should occur prior to the
delivery to the Underwriters of the Shares hereunder, certificates for the
Shares shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such event has not occurred, regardless of
whether or not the Custodian shall have received notice of such event.
(b) In addition, on the basis of the representations, warranties, covenants
and agreements herein contained and upon not less than two business days' notice
from the Representatives of the Underwriters, for a period of forty-five days
from the effective date of this Agreement, the Company and the Selling
Stockholders grant to the Underwriters an option to purchase up to 450,000
Option Shares (such Option Shares, if less than the aggregate amount, to be
apportioned first between the Selling Stockholders on a pro rate basis based on
the maximum amount of Option Shares which the Selling Stockholders are obligated
to sell to the Underwriters pursuant to this Section 2(b) and then from the
Company, adjusted by the Representatives in such manner as they deem advisable
to avoid fractional shares). Such option is granted solely for the purpose of
covering over-allotments in the sale of Firm Shares and is exercisable as
provided in Section 4 hereof. Option Shares shall be purchased severally for the
account of the Underwriters in proportion to the number of Firm Shares set forth
opposite the name
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of such Underwriters in Schedule A hereto. (The time and date of delivery of any
of the Option Shares is herein called the "Option Closing Date.") The respective
purchase obligations of each Underwriter with respect to the Option Shares may
be adjusted by the Representatives so that no Underwriter shall be obligated to
purchase Option Shares other than in 100 share increments. The price of both the
Firm Shares and any Option Shares shall be $____ per share.
(c) Payment of the purchase price for, and delivery of certificates for,
the Firm Shares and the Option Shares shall be made on each of the Closing Date
and the Option Closing Date, respectively, by wire transfer of immediately
available funds, payable to the order of the Company and the Custodian, as
applicable, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, or at such other place as shall be agreed upon by the
Representatives, the Company and the Selling Stockholders or, if mutually agreed
to by the Company and the Representatives, by wire transfer, upon delivery of
certificates (in form and substance satisfactory to the Representatives)
representing such securities to the Representatives. Delivery and payment for
the Firm Shares shall be made at 10:00 a.m. (Eastern Time) on the third business
day following the public offering, or at such other time and date as shall be
agreed upon by the Representatives and the Company. The time and date of payment
for and delivery of the Firm Shares is herein called the "Closing Date." In the
event that any or all of the Option Shares are purchased by the Underwriters,
the date and time at which certificates for Option Shares are to be delivered
shall be determined by the Representatives and the Company but shall not be
earlier than three nor later than ten full business days after the exercise of
such option, nor in any event prior to the Closing Date. Certificates for the
Firm Shares and the Option Shares, if any, shall be in definitive, fully
registered form, shall bear no restrictive legends and shall be in such
denominations and registered in such names as the Representatives may request in
writing at least two (2) business days prior to the Closing Date or the Option
Closing Date, as applicable. The certificates for the Firm Shares and the Option
Shares, if any, shall be made available to the Representatives at such office or
such other place as the Representatives may designate for inspection and
packaging not later than 9:30 a.m. (Eastern Time) on the last business day prior
to the Closing Date or the Option Closing Date, as applicable.
(d) As of the Closing Date, the Company will issue and sell to you or, at
your direction, to your bona fide officers, for a total purchase price of
$2,500, warrants entitling the holders to purchase 250,000 shares of Common
Stock (equal to 10% of the Firm Shares being sold by the Company) at $_____ per
Share (120% of the
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public offering price on the Effective Date) (the "Representatives' Warrants")
for a period of four years commencing one year after the effective date of the
Registration Statement. The Representatives' Warrants include the terms set
forth in the Warrant Agreement. You may designate that the Representatives'
Warrants be issued to your bona fide officers only if you determine that such
issuances would not violate the interpretations of the NASD relating to the
review of corporate financing arrangements. No sale, transfer, assignment, or
hypothecation of the Underwriter's Warrants shall be made for a period of five
(5) years from the effective date of the Registration Statement except to bona
fide officers of the Underwriter and officers or partners of selected dealers.
The holders of the Representatives' Warrants will be entitled to the
registration rights set forth in the Warrant Agreement.
3. PUBLIC OFFERING OF THE SHARES.
As soon after the Registration Statement becomes effective as the
Representatives deem advisable, the Underwriters shall make a public offering of
the Shares at the price and upon the other terms set forth in the Prospectus.
4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDER.
I. The Company agrees with each of the Underwriters as follows:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; it will notify the Representatives, promptly
after it shall receive notice thereof, of the time when the Registration
Statement or any subsequent amendment to the Registration Statement has become
effective or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a), the Company will
provide evidence satisfactory to the Representatives that the Prospectus
contains such information and has been filed, within the time period prescribed,
with the Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the
Rules and Regulations under the Act or as part of a post-effective amendment to
such Registration Statement as originally declared effective which is declared
effective by the Commission; if for any reason the filing of the final form of
Prospectus is required under Rule 424(b)(3) of the Rules and Regulations under
the Act, it will provide evidence satisfactory to the Representatives that the
Prospectus contains such information and has been filed with the Commission
within the time period
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prescribed; it will notify the Representatives promptly of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; promptly upon the Representatives'
request, it will prepare and file with the Commission any amendments or
supplements to the Registration Statement or Prospectus which, in the opinion of
counsel for the several Underwriters ("Underwriters' Counsel"), may be necessary
or advisable so as to comply with all applicable laws and regulations
(including, without limitation, Section 11 under the Act and Rule 10b-5 under
the Exchange Act) in connection with the distribution of the Shares by the
Underwriters; it will promptly prepare and file with the Commission, and
promptly notify the Representatives of the filing of, any amendments or
supplements to the Registration Statement or Prospectus which may be necessary
to correct any statements or omissions, if, at any time when a prospectus
relating to the Shares is required to be delivered under the Act, any event
shall have occurred as a result of which the Prospectus or any other prospectus
relating to the Shares as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; in case any Underwriter is required so as to comply with all
applicable laws and regulations (including, without limitation, Section 11 under
the Act and Rule 10b-5 under the Exchange Act) to deliver a prospectus nine
months or more after the effective date of the Registration Statement in
connection with the sale of the Shares, it will prepare promptly upon request,
but at the expense of such Underwriter, such amendment or amendments to the
Registration Statement and such prospectus or prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Act; and
it will file no amendment or supplement to the Registration Statement or
Prospectus (other than any document required to be filed under the Exchange Act
that upon filing is deemed incorporated therein by reference) which shall not
previously have been submitted to the Representatives a reasonable time prior to
the proposed filing thereof or to which you shall reasonably object in writing
or which is not in compliance with the Act and the Rules and Regulations under
the Act. The Company will furnish to the Representatives at or prior to the
filing thereof a copy of any document that upon filing is deemed to be
incorporated by reference in the Registration Statement or Prospectus.
(b) The Company will advise the Representatives, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of the Registration
Statement or of the initiation or threat of any proceeding for that purpose; and
it will promptly use its best efforts to prevent the issuance of any stop order
or to
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obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(c) The Company will use its best efforts to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as the
Representatives may designate and to continue such qualifications in effect for
so long as may be required for purposes of the distribution of the Shares,
except that the Company shall not be required in connection therewith or as a
condition thereof to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction. In each jurisdiction in which
the Shares shall have been qualified as above provided, the Company will make
and file such statements and reports in each year as are or may be reasonably
required by the laws of such jurisdiction.
(d) The Company will furnish to each of the Underwriters, as soon as
available, copies of the Registration Statement (three of which, to be delivered
to the Representatives, will be manually signed and which will include all
exhibits), each Preliminary Prospectus, the Prospectus and any amendment or
supplements to such documents, including any prospectus prepared to permit
compliance with Section 10(a)(3) of the Act, all in such quantities as you may
from time to time reasonably request.
(e) The Company will make generally available to its stockholders as
soon as practicable, but in any event not later than the 45th day following the
end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement (which will
be in reasonable detail but need not be audited) complying with the provisions
of Section 11(a) of the Act and covering a twelve-month period beginning after
the effective date of the Registration Statement.
(f) The Company will file Form SR in conformity with the requirements
of the Act and the Rules and Regulations.
(g) During a period of five years after the date hereof, the Company
will furnish to its stockholders, to the extent required by applicable laws or
the Rules and Regulations, as soon as practicable after the end of each
respective period, annual reports (including financial statements audited by
independent certified public accountants) and unaudited quarterly reports of
operations for each of the first three quarters of the fiscal year, and will
furnish to you and each of the Underwriters, upon written request (i)
concurrently with furnishing to its stockholders, statements of operations of
the Company for each of the first three quarters in the form furnished to the
Company's stockholders;
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(ii) concurrently with furnishing to its stockholders, a balance sheet of the
Company as of the end of such fiscal year, together with statements of
operations, cash flows and stockholders' equity of the Company for such fiscal
year, accompanied by a copy of the certificate or report thereon of independent
certified public accountants; (iii) as soon as they are available, copies of all
reports (financial or other) mailed to stockholders; (iv) as soon as they are
available, copies of all reports and financial statements furnished to or filed
with the Commission, any securities exchange or the NASD; (v) every material
press release and every material news item or article in respect of the Company
or its affairs which was released or prepared by the Company or any of the
Subsidiaries; and (vi) any additional information of a public nature concerning
the Company or any of the Subsidiaries, or their respective businesses, which
you may reasonably request. During such five year period the foregoing financial
statements shall be on a consolidated basis to the extent that the accounts of
the Company and the Subsidiaries are consolidated, and shall be accompanied by
similar financial statements for any Subsidiary which is not so consolidated.
(h) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(i) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
(j) The Company will cause the transfer agent for the Common Stock to
register the transfer of the Shares upon their presentation in proper form for
transfer by the Selling Stockholder and to have certificates representing the
Shares available to you as required hereunder; provided, that the Company shall
not be required to take any action unless the Registration Statement is then
effective under the Act.
(k) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company or the
Selling Stockholders to perform any agreement on its part to be performed
hereunder or to fulfill any condition of the Underwriters' obligations
hereunder, or if the Company shall terminate this Agreement under Section 10(a)
, the Company will reimburse the several Underwriters for all reasonable out-of-
pocket expenses up to $50,000 plus reasonable fees and disbursements of
Underwriters' Counsel up to $125,000) incurred by the Underwriters in
investigating, preparing to market and marketing the Shares.
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(l) If at any time during the 90-day period after the Registration
Statement becomes effective, any publication or event relating to or affecting
the Company shall occur as a result of which in your opinion the market price of
the Common Stock has been or is likely to be materially affected (regardless of
whether such publication or event necessitates a supplement to or amendment of
the Prospectus), the Company will, after written notice from the Representatives
advising the Company to the effect set forth above, forthwith prepare, consult
with the Representatives concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to the
Representatives, responding to or commenting on such publication or event.
(m) For a period ending 180 days from the date of the Prospectus, the
Company will not, without your prior written consent, issue, sell, offer or
agree to sell, or otherwise dispose of, directly or indirectly, any Common
Stock, any options, rights or warrants with respect to any shares of Common
Stock or any securities convertible into, exercisable for or exchangeable for
Common Stock other than the sale of the Shares and the Option Shares to be sold
by the Company hereunder, and the Company's issuance of shares of Common Stock
pursuant to the exercise of currently outstanding stock options and warrants or
grants of options under the Company's 1997 Stock Option Plan.
II. The Selling Stockholders agree with each of the Underwriters and the
Company that in order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transactions herein contemplated, the Selling Stockholders shall
deliver to you prior to or on the Closing Date or the Option Closing Date, as
applicable, a properly completed and executed United States Treasury Department
Form W-9 or Form W-8 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
5. PAYMENT OF EXPENSES.
(a) The Company and the Selling Stockholders hereby agree to pay on each of
the Closing Date and the Option Closing Date (to the extent not paid on the
Closing Date) all expenses and fees (other than fees of Underwriters' Counsel,
except as provided in (iii), (v) and (vii) below) incident to the performance of
the obligations of the Company and the Selling Stockholders under this Agreement
(provided that as between the Company and the Selling Stockholders their
relative obligations to pay shall be in such a manner as the Company and the
Selling Stockholders have agreed or shall agree), including, without limitation,
(i) the fees and expenses of
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accountants and counsel for the Company and the Selling Stockholder, (ii) all
costs and expenses incurred in connection with the preparation, duplication,
printing, filing (including the filing fees of the Commission), mailing
(including postage with respect thereto) and delivery of the Registration
Statement, the Preliminary Prospectuses and the Prospectus and any amendments
and supplements thereto, including the cost of all copies thereof supplied to
the Underwriters in quantities as hereinabove stated, (iii) all costs and
expenses incurred in connection with the printing, mailing and delivery of this
Agreement, the Selected Dealer Agreements, the Agreement Among Underwriters,
Underwriters' Questionnaires, Underwriters' Powers of Attorney, the Selling
Stockholders' Powers of Attorney and Custody Agreements and related documents,
including the cost of all copies thereof supplied to the Underwriters in
quantities as hereinabove stated, (iv) the printing, engraving, issuance and
delivery of the Shares, including any transfer or other taxes payable thereon,
(v) the qualification of the Shares under state or foreign securities or Blue
Sky laws, including the costs of printing and mailing a Blue Sky Memorandum and
any supplements or amendments thereto and disbursements and fees of
Underwriters' Counsel, in connection therewith, (vi) fees and expenses of the
Company's transfer agent, (vii) fees and expenses incurred in connection with
the review by the NASD of certain of the matters set forth in this Agreement,
and (viii) the fees and expenses incurred in connection with the listing of the
Shares on the NASDAQ-NM and any other exchange.
(b) If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 6, Section 10(b) or Section 12, unless the basis
upon which the Representatives terminate this Agreement results from the default
or omission of any Underwriter, the Company shall reimburse and indemnify the
Underwriters for all of their reasonable out-of-pocket expenses (provided that
as between the Company and the Selling Stockholders their relative obligations
to pay shall be in such a manner as the Company and the Selling Stockholders
have agreed or shall agree), including the fees and disbursements of
Underwriters' Counsel, and the Blue Sky fees and expenses identified in Section
5(a)(v) above.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS.
I. The obligations of the Underwriters hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company and the
Selling Stockholders herein as of the date hereof and as of the Closing Date and
the Option Closing Date, if any, as if they had been made on and as of the
Closing Date or the Option Closing Date, as the case may be; the accuracy on and
as of the Closing Date or Option Closing Date, if any, of the statements of
officers of the Company made pursuant to the
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provisions hereof; and the performance by the Company and the Selling
Stockholders on and as of the Closing Date and the Option Closing Date, if any,
of its respective covenants and obligations hereunder and to the following
further conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., Eastern Time, on the date of this Agreement or such later date
and time as shall be consented to in writing by the Representatives, and, at the
Closing Date and the Option Closing Date, if any, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the Commission for
additional information shall have been complied with to the satisfaction of
Underwriters' Counsel. If the Company has elected to rely upon Rule 430A of the
Rules and Regulations under the Act, the price of the Shares and any other
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the Rules and Regulations under the Act within
the prescribed time period, and, prior to the Closing Date, the Company shall
have provided evidence satisfactory to the Representatives of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations under the Act.
(b) The Representatives shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact that, in the Representatives' opinion or in the opinion of Underwriters'
Counsel, is material, or omits to state a fact that, in the Representatives'
opinion or in the opinion of Underwriters' Counsel, is material and is required
to be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact that, in the Representatives' opinion or in the opinion
of Underwriters' Counsel, is material, or omits to state a fact that, in the
Representatives' opinion or in the opinion of Underwriters' Counsel, is material
and is required to be stated therein or is necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) On the Closing Date and the Option Closing Date, if any, the
Representatives shall have received from Representatives' Counsel the favorable
opinion to the effect that:
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(i) the capital stock of the Company, including, without limitation,
the Common Stock, conforms in all material respects to the description
thereof contained in the Prospectus;
(ii) the Registration Statement is effective under the Act, and if
applicable, the filing of all pricing and other information has been timely
made in the appropriate form under Rule 430A of the Rules and Regulations,
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or threatened by the
Commission. Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company, counsel
for the Company, representatives of the independent certified public
accountants for the Company and the Representatives, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed, and, although such counsel is not passing upon and
does not assume any responsibility for, nor has such counsel independently
verified, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as to
matters referred to in subparagraph (i) above of this Section 6(c)), no
facts have come to the attention of such counsel (relying as to materiality
to a large extent upon the opinions of officers and other representatives
of the Company) that lead them to believe that either the Registration
Statement or any amendment thereto, at the time such Registration Statement
or amendment became effective or any Preliminary Prospectus (other than
information omitted pursuant to Rule 430A) or the Prospectus or any
amendment or supplement thereto as of the date of such opinion contained or
contains any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading (it being understood that such
counsel need express no view with respect to the financial statements and
schedules and other financial and statistical data included in any
Preliminary Prospectus, the Registration Statement (including any exhibit
thereto) or the Prospectus or any amendment or supplement thereto);
(iii) each of the Preliminary Prospectuses, the Registration Statement
and the Prospectus and any amendments or supplements thereto (other than
the financial statements and schedules and other financial and statistical
data included therein, as to which no opinion need be rendered)
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comply as to form in all material respects with the requirements of the Act
and the Rules and Regulations; and
(iv) this Agreement has been duly authorized, executed and delivered
by the Company.
The opinion of Underwriters' Counsel to be dated the Option Closing Date,
if any, may confirm as of the Option Closing Date the statements made by such
counsel in their opinion delivered on the Closing Date.
(d) On the Closing Date and the Option Closing Date, if any, the
Underwriters shall have received the favorable opinion of ▇▇▇▇▇▇▇▇ & Knight,
P.C., counsel to the Company, dated the Closing Date and the Option Closing
Date, if any, addressed to the Underwriters and in form and substance reasonably
satisfactory to Underwriters' Counsel, to the effect that:
(i) (A) the Company and each of the Subsidiaries are duly organized
and validly existing as corporations in good standing under the laws of the
jurisdiction of their organization, and (B) the Company is duly qualified
as a foreign corporation and in good standing in New York; all of the
outstanding shares of capital stock of each of the Subsidiaries have been
duly authorized and validly issued and are fully-paid and non-assessable,
and are owned of record by the Company; the outstanding shares of capital
stock of the Subsidiaries are owned by the Company free and clear of all
liens, encumbrances and security interests (except as described in the
Prospectus), and, to such counsel's knowledge, no options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into, or exchange any securities for, any
shares of capital stock of or ownership interests in any of the
Subsidiaries are outstanding;
(ii) the Company and each of the Subsidiaries have the corporate power
to own, lease and operate their respective properties and to conduct their
respective businesses as described in the Prospectus;
(iii) the authorized and outstanding capital stock of the Company is
as set forth in the Prospectus under the heading "Capitalization," subject
to the assumptions set forth therein, and, except as provided for in this
Agreement and as described in the Prospectus, to such counsel's knowledge,
the Company is not a party to or bound by any instrument, agreement or
other arrangement providing for it to issue any capital stock, rights,
warrants, options or other securities.
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All shares of Common Stock of the Company issued and outstanding on the
date hereof prior to the issuance of the Shares have been duly authorized
and validly issued and are fully paid and non-assessable; and to such
counsel's knowledge, none of such shares were issued in violation of any
preemptive rights under the Texas Business Corporation Act, or similar
statutory rights; and the capital stock of the Company, including, without
limitation, the Common Stock, conforms in all material respects to the
description thereof contained in the Prospectus. To such counsel's
knowledge, the Firm Shares and the Option Shares are not and will not be
subject to any preemptive rights under the Texas Business Corporation Act
or similar statutory rights. The Firm Shares and the Option Shares being
sold by the Company have been duly authorized and (with respect to the
Shares being sold by the Company), when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued, fully paid and
non-assessable; and the certificates representing the Shares are in due and
proper form. To such counsel's knowledge, no holders of any securities of
the Company or of any options, warrants or other convertible or
exchangeable securities of the Company exercisable for or convertible or
exchangeable for securities of the Company have the right, except as have
been waived, to include any securities issued by the Company in the
Registration Statement or any registration statement to be filed by the
Company within 180 days of the date hereof or to require the Company to
file a registration statement under the Act during such 180 day period;
(iv) the Registration Statement is effective under the Act, and, if
applicable, the filing of all pricing and other information has been timely
made in the appropriate form under Rule 430A of the Rules and Regulations
under the Act, and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued,
and no proceedings for that purpose have been instituted or, to such
counsel's knowledge, threatened by the Commission;
(v) the Registration Statement and the Prospectus and any amendment or
supplement thereto (other than the financial statements and schedules,
related notes and other financial and statistical data included therein, as
to which no opinion need be rendered) comply as to form in all material
respects with the requirements of the Act and the Rules and Regulations
under the Act;
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(vi) (A) to such counsel's knowledge, there is not pending or
threatened against the Company or any of the Subsidiaries, or involving any
of their respective properties or businesses, any action, suit, proceeding,
inquiry, investigation, litigation or governmental proceeding, domestic or
foreign, that (y) is required to be disclosed in the Registration Statement
and is not so disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all material respects),
or (z) questions the validity of the capital stock of the Company, this
Agreement, the Warrant Agreement, or any action taken or to be taken by the
Company pursuant to or in connection with this Agreement and (B) no statute
or regulation or legal or, to such counsel's knowledge, governmental
proceeding required to be described in the Prospectus is not described as
required;
(vii) the Company has the corporate power and authority to enter into
this Agreement and the Warrant Agreement and to consummate the transactions
provided for herein and therein; and this Agreement and the Warrant
Agreement have been duly authorized, executed and delivered by the Company.
None of the Company's execution or delivery of this Agreement and the
Warrant Agreement, its performance hereunder or its consummation of the
transactions contemplated herein or therein or results or will result in
any breach or violation of any of the material terms or provisions of, or
constitutes or will constitute a default under, or result in the creation
or imposition of any lien, charge, claim, pledge, security interest, or
other encumbrance upon, any property or assets (tangible or intangible) of
the Company or any of the Subsidiaries pursuant to the terms of (A) the
corporate charter, operating agreement or by-laws or other governing
instrument of the Company or any of the Subsidiaries, (B) to such counsel's
knowledge, any voting trust agreement or any stockholders agreement, or any
indenture, mortgage, deed of trust, note, loan or credit agreement or
other agreement or instrument known to such counsel to which the Company or
any of the Subsidiaries is a party or by which any of them is or may be
bound or to which any of their respective properties or assets (tangible or
intangible) is or may be subject, or (C) any statute, rule or regulation
or, to such counsel's knowledge, any judgment, decree or order applicable
to the Company or any of the Subsidiaries of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries or
any of their respective activities or properties, the violation of which
would have a Material Adverse Effect;
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(viii) no consent, approval, authorization or order, and no filing
with, any federal or state court, regulatory body, government agency or
other body (other than such as have been effected under the Act and the
Exchange Act and such as may be required under Blue Sky or state securities
laws or the rules of the NASD in connection with the purchase and
distribution of the Shares by the Underwriters, as to which no opinion need
be rendered) is required in connection with the issuance of the Shares
pursuant to the Prospectus and the Registration Statement, the performance
of this Agreement and the transactions contemplated hereby;
(ix) to such counsel's knowledge neither the Company nor any of the
Subsidiaries is in violation of any term or provision of its corporate
charter, operating agreement, or by-laws or other governing instrument;
(x) the statements in the Prospectus under the captions "THE
RECAPITALIZATION," "DIVIDEND POLICY," "-GOVERNMENT AND INDUSTRY
REGULATION," "-TARIFFS AND DUTIES," "MANAGEMENT-EMPLOYMENT AGREEMENTS," "-
1997 STOCK OPTION PLAN," "-BONUS PLAN," "401(K) PLAN," "-INDEMNIFICATION
ARRANGEMENTS," "CERTAIN TRANSACTIONS," "SHARES ELIGIBLE FOR FUTURE SALE,"
and "DESCRIPTION OF CAPITAL STOCK" have been reviewed by such counsel, and
insofar as they refer to statements of law, descriptions of statutes,
written contracts, or rules or regulations are correct in all material
respects;
(xi) the Company is not an "investment company" or an "affiliated
person" or "promoter" of, or "principal underwriter" for, an "investment
company," as defined in the 1940 Act or subject to regulation under such
Act; and
(xii) The Representatives' Warrants will conform to their description
in the Registration Statement and Prospectus and have been authorized, and,
when issued and sold in accordance with the Warrant Agreement, will
constitute the legal, valid, and binding obligations of the Company
entitled to the rights and benefits of the Warrant Agreement, subject as to
enforceability of the application of bankruptcy law or general principles
of equity. The Underwriter's Warrant Shares have been validly authorized
and reserved for issuance upon exercise of the Representatives' Warrants
and, when issued in accordance with the Warrant Agreement, will be validly
issued, fully paid and nonassessable and free of preemptive rights under
the Texas Business Corporation Act.
Such counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company
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and representatives of the independent certified public accountants for the
Company, at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed, and, although such counsel is not
passing upon and does not assume any responsibility for, nor has such counsel
independently verified, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus no facts have come to the
attention of such counsel that lead them to believe that either the Registration
Statement or any amendment thereto, at the time such Registration Statement or
amendment became effective or any Preliminary Prospectus circulated by the
Underwriters (other than information omitted pursuant to Rule 430A) or the
Prospectus or any amendment or supplement thereto as of the date of such opinion
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; (it being understood that such
counsel need express no view with respect to the financial statements and
schedules, related notes, and other financial and statistical data included or
incorporated by reference in any Preliminary Prospectus circulated by the
Underwriters, the Registration Statement (including any exhibit thereto) or the
Prospectus or any amendment or supplement thereto). In addition, such counsel
shall state that they know of no contracts, leases or other documents of a
character required to be described in the Registration Statement or Prospectus
or to be filed or incorporated by reference as exhibits to the Registration
Statement which are not described or filed or incorporated by reference as
required.
The foregoing opinions may be limited to the laws of the State of Texas,
the laws of Hong Kong and applicable United States federal law. In rendering
the foregoing opinions, counsel may rely, to the extent they deem such reliance
proper, on the opinions of other counsel as to matters governed by the laws of
jurisdictions other than the United States and the State of Texas. In rendering
such opinions, such counsel may rely as to matters of fact, to the extent they
deem proper, on certificates and written statements of responsible officers of
the Company and the Subsidiaries and certificates or other written statements of
officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company and the
Subsidiaries, provided that copies of any such statements or certificates shall
be delivered to Underwriters' Counsel if requested.
For purposes of any of the opinions to be rendered by such counsel pursuant
to this subsection d of Section 6, the term "to such counsel's knowledge" shall
mean, to the extent that such opinion relates to a factual issue or to a mixed
question of law
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and fact, that after examination of documents in such counsel's files and
considering the actual knowledge of the individual attorneys in such counsel's
firm who have given substantive attention to matters on behalf of the Company,
such counsel finds no reason to believe that any of such opinions is factually
incorrect.
The opinion of counsel to the Company, to be dated the Option Closing Date,
if any, may confirm as of the Option Closing Date the statements made by such
counsel in their opinion delivered on the Closing Date.
(e) The Underwriters shall have received, on the Closing Date the favorable
opinion of counsel to the Firm Selling Stockholder, dated the Closing Date, and
on the Option Closing Date, if any, the favorable opinion of counsel to each of
the Selling Stockholders addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) the Power of Attorney and the Custody Agreement of such Selling
Stockholder have been duly authorized, executed and delivered on behalf of
such Selling Stockholder and are valid instruments legally sufficient for
the purposes intended;
(ii) such Selling Stockholder has full right, power and authority to
enter into and to perform its obligations under this Agreement and to sell,
transfer, assign and deliver the Shares to be sold by such Selling
Stockholder hereunder;
(iii) this Agreement has been duly authorized, executed and delivered
on behalf of the Selling Stockholder;
(iv) upon the delivery of and payment for the Shares as contemplated
in this Agreement, and upon registration of the Shares in the names of the
Underwriters, the Underwriters will have acquired good and valid title to
the Shares being sold by such Selling Stockholder free of any pledge, lien,
security interest, encumbrance, claim or equitable interest, including any
lien in favor of the Company or any restriction on transfer imposed by the
Company; and the owner of the Shares being sold by such Selling Stockholder
hereunder, if other than the Selling Stockholder, is precluded from
asserting against such Underwriters the ineffectiveness of any unauthorized
endorsement.
(f) On the Closing Date and the Option Closing Date, if any, the
Underwriters shall have received the favorable opinion of patent counsel to the
Company, dated the Closing Date and the
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Option Closing Date, if any, addressed to the Underwriters and in form and
substance satisfactory to Underwriters' Counsel, to the effect that:
(i) such counsel is not aware that any of the Company's patents is
invalid or that any patent issued in respect of any of the Company's patent
applications would be invalid;
(ii) such counsel is not aware that any valid patent is infringed by
the activities of the Company described in the Prospectus;
(iii) such counsel is not aware of any material defects or form in
the preparation or filing of patent applications on behalf of the Company.
Such patent applications have been diligently pursued by the Company;
(iv) such counsel is not aware of any pending or threatened action,
suit, proceeding or claim by others that the Company is infringing or
otherwise violating any patents, trademarks, trade secrets, know-how or
other proprietary rights;
(v) except as specifically disclosed in the Prospectus, such counsel
is not aware of any pending or threatened action, suit, proceeding, or
claim by others challenging the validity or scope of the patent
applications or the patents held by or licensed to the Company;
(vi) according to such counsel's records, the Company is listed or is
in the process of being listed in the records of the appropriate foreign
office as the sole holder of record of the foreign patents and foreign
patent applications set forth in a schedule of such opinion. Such counsel
knows of no claims of third parties to any ownership interest or lien with
respect to any of such patents or patent applications.
Such counsel shall also state that since at least ____ it has represented
the Company in the prosecution of all of its patents and that such counsel has
participated in conferences with employees of the Company at which the Company's
patents, patent applications and the contents of the Intellectual Property
portion of the Registration Statement were discussed, and, although such counsel
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement (except as to matters referred to in subparagraph (vi) of this Section
6(f)), on the basis of such conferences and such representation of the Company,
nothing has come to the attention of such counsel which leads them
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to believe that the Intellectual Property portion of the Registration Statement
or any amendment thereto, at the time such Registration Statement or amendment
became effective, and such portion of the Prospectus or any amendment or
supplement thereto, on the date such Prospectus or amendment or supplement
thereto was filed pursuant to Rule 424(b), and such portion of the Registration
Statement and the Prospectus, or any amendment or supplement thereto, as of the
date of such opinion contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
For purposes of any of the opinions to be rendered by such counsel pursuant
to this subsection (f) of Section 6, the term "to the best of such counsel's
knowledge" shall mean, to the extent that such opinion relates to a factual
issue or to a mixed question of law and fact, that after examination of
documents in such counsel's files and considering the actual knowledge of the
individual attorneys in such counsel's firm who have given substantive attention
to matters on behalf of the Company, such counsel finds no reason to believe
that any of such opinions is factually incorrect.
The favorable opinion of patent counsel to the Company, to be dated the
Option Closing Date, if any, may confirm as of the Option Closing Date the
statements made in their opinion delivered on the Closing Date.
(g) On or prior to each of the Closing Date and the Option Closing Date, if
any, Underwriters' Counsel shall have been furnished such customary documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions of the
Company, the Selling Stockholders or herein contained.
(h) Prior to each of the Closing Date and the Option Closing Date, if any,
(i) from the respective dates as of which information is set forth in the
Registration Statement and Prospectus, there shall have been no developments
that, individually or in the aggregate, have had a Material Adverse Effect; (ii)
there shall have been no transaction, not in the ordinary course of business,
entered into by the Company or any of the Subsidiaries, from the latest date as
of which the financial condition of the Company and the Subsidiaries is set
forth in the Registration Statement and Prospectus, that, individually or in the
aggregate, has had a Material Adverse Effect; (iii) neither the Company nor any
of the
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Subsidiaries shall be in default under any provision of any instrument relating
to any of their respective outstanding indebtedness; (iv) no material amount of
the assets of the Company or any of the Subsidiaries shall have been pledged or
mortgaged, except as set forth in the Registration Statement and Prospectus
(including the exhibits to the Registration Statement); (v) no action, suit or
proceeding, at law or in equity, shall have been pending or, to the knowledge of
the Company, threatened against the Company or any of the Subsidiaries, or
affecting any of their respective properties or businesses before or by any
court or federal, state or foreign commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect; and (vi) no stop order shall have been issued under the Act and
no proceedings therefor shall have been initiated, or, to the Company's
knowledge, threatened or contemplated by the Commission.
(i) At each of the Closing Date and the Option Closing Date, if any, the
Underwriters shall have received a certificate of the Company signed by the
principal executive officer and by the chief financial officer of the Company,
dated the Closing Date or Option Closing Date, as the case may be, to the effect
that each of such persons has carefully examined the Registration Statement, the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date or
the Option Closing Date, as the case may be, and the Company has complied
with all agreements and covenants and satisfied all conditions contained in
this Agreement on its part to be performed or satisfied at or prior to such
Closing Date or Option Closing Date, as the case may be;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of such officer, are
threatened under the Act;
(iii) none of the Registration Statement, the Prospectus nor any
amendment or supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and neither the
Preliminary Prospectus nor any supplement thereto included any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; and
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(iv) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the Company
nor any of the Subsidiaries have incurred up to and including the Closing
Date or the Option Closing Date, as the case may be, other than in the
ordinary course of their respective businesses, any material liabilities or
obligations, direct or contingent; the Company has not paid or declared any
dividends or other distributions on its capital stock; neither the Company
nor any of the Subsidiaries has entered into any transactions not in the
ordinary course of business; and there has not been any material change in
the capital stock or long-term debt or any material increase in the short-
term borrowings of the Company or any of the Subsidiaries; neither the
Company nor any of the Subsidiaries has sustained any material loss or
damage to its property or assets, whether or not insured; there is no
litigation that is pending or, to the knowledge of such officers,
threatened against the Company or any of the Subsidiaries that is required
to be set forth in an amended or supplemented Prospectus that has not been
set forth; and there has occurred no event required to be set forth in an
amended or supplemented Prospectus that has not been set forth.
References to the Registration Statement and the Prospectus in this
subsection (i) are to such documents as amended and supplemented at the date of
such certificate.
(j) At the Closing Date, the Underwriters shall have received a certificate
of the Firm Selling Stockholder dated the Closing Date or, of each Selling
Stockholder, dated the Option Closing Date, as applicable, to the effect that
the representations and warranties of such Selling Stockholder in this Agreement
are true and correct, as if made on and as of the Closing Date or the Option
Closing Date, as applicable, and such Selling Stockholder has complied with all
agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to the Closing
Date or the Option Closing Date, as applicable.
(k) On the date of this Agreement, the Representatives shall have received
a letter in form and substance satisfactory to the Underwriters and the
Underwriters' Counsel addressed to the Underwriters and dated the date of this
Agreement from Price Waterhouse and signed by such firm with respect to such
matters as shall have been specified to such firm by the Representatives prior
to the date hereof. At the Closing Date and the Option Closing Date, if any,
the Underwriters shall have received from Price Waterhouse a letter, dated as of
the Closing Date or the Option Closing Date, as the case may be, reaffirming the
statements made
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in the letter furnished by Price Waterhouse to the Underwriters concurrently
with the execution of this Agreement, each such reaffirming letter to be in form
and substance satisfactory to the Underwriters and the Underwriters' Counsel.
(l) On each of the Closing Date and the Option Closing Date, if any, there
shall have been duly tendered to the Representatives for the several
Underwriters' accounts the appropriate number of Shares.
(m) No order suspending the sale of the Shares in any jurisdiction
designated by the Representatives pursuant to subsection I(c) of Section 4
hereof shall have been issued on either the Closing Date or the Option Closing
Date, if any, and no proceedings for that purpose shall have been instituted or
to the knowledge of the Representatives or the Company shall be contemplated.
(n) The Underwriters shall have received the written agreements of the
persons referred to in Section 1.I(ad) hereof.
(o) The Shares delivered on the Closing Date or the Option Closing Date
shall have been duly listed, subject to notice of official issuance, on the
NASDAQ-NM.
(p) The Company shall have executed the Warrant Agreement and shall have
delivered properly executed Underwriter's Warrants to you simultaneously with
the closing of the sale of the Firm Shares.
If any condition to the Underwriters' obligations thereunder to be
fulfilled prior to or at the Closing Date or the relevant Option Closing Date,
as the case may be, is not so fulfilled, the Representatives may terminate this
Agreement or, if the Representatives so elect, they may waive any such
conditions that have not been fulfilled or extend the time for their
fulfillment.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, specifically
including but not limited to losses, claims, damages or liabilities related to
negligence on the part of any Underwriter, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any breach of any representation, warranty, agreement or covenant of the
Company herein contained or any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
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Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
and agrees to reimburse each Underwriter for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable in any such case 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 the
Registration Statement, such Preliminary Prospectus or the Prospectus, or any
such amendment or supplement, in reliance upon and in strict conformity with
written information furnished with respect to any Underwriter by such
Underwriter expressly for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, provided
that such written information or omissions only pertain to disclosures in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto directly relating to the transactions effected
by the Underwriters in connection with this offering, and provided further that
the foregoing indemnity with respect to any Preliminary Prospectus shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) if such untrue statement or omission or alleged
untrue statement or omission made in any Preliminary Prospectus is eliminated or
remedied in the Prospectus and a copy of the Prospectus has not been furnished
to the person asserting any such loss, claim, damage or liability at or prior to
the written confirmation of the sale of such Shares to such person.
The indemnity agreement in this Section 7(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of each person, if any,
who controls any Underwriter within the meaning of the Act. This indemnity
agreement shall be in addition to any liabilities which the Company or the
Selling Stockholder may otherwise have.
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(b) Each Selling Stockholder agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities to which such
Underwriter 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 breach of any representation, warranty, agreement or
covenant of such Selling Stockholder contained in Section 1.II, or any untrue
statement or alleged untrue statement of any material fact concerning such
Selling Stockholder contained under the captions "The Recapitalization,"
"Certain Transactions" or "Business-Legal Proceedings" 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 alleged
omission to state therein a material fact concerning such Selling Stockholder
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading if made
regarding such Selling Stockholder or in reliance upon information supplied to
the Company by such Selling Stockholder; and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Selling Stockholder shall not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or any such
alleged untrue statement or any such omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus or the Prospectus, or any
such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by any Underwriter, directly or through
you, specifically for use in the preparation thereof.
The indemnity agreement in this Section 7(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of each person, if any,
who controls any Underwriter within the meaning of the Act. This indemnity
agreement shall be in addition to any liabilities which the Company or the
Selling Stockholder may otherwise have.
(c) Each Underwriter, severally and not jointly, agrees to indemnify and
hold harmless the Company and the Selling Stockholder to the same extent as the
foregoing indemnity from the Company to the Underwriters but only with respect
to statements or omissions, if any, made in the Registration Statement, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
made in reliance upon, and in strict conformity with, written information
furnished with respect to any Underwriter by such Underwriter expressly for use
in the Registration Statement, any Preliminary Prospectus or the Prospectus or
any amendment or
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supplement thereto, provided that such written information or omissions only
pertain to disclosures in the Registration Statement, any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto directly relating to
the transactions effected by the Underwriters in connection with this offering.
The indemnity agreement in this Section 7(c) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer and
director of the Company who has signed the Registration Statement, the Selling
Stockholder and each person, if any, who controls the Company or the Selling
Stockholder within the meaning of the Act. This indemnity agreement shall be in
addition to any liabilities which each Underwriter may otherwise have. For
purposes of this Agreement, the Company and the Selling Stockholder acknowledge
that the statements with respect to the public offering of the Shares set forth
under the heading "UNDERWRITING" and the stabilization legend in the Prospectus
and the last paragraph on the outside front cover page of the Prospectus have
been furnished by the Underwriters expressly for use therein and constitute the
only information furnished in writing by or on behalf of the Underwriters for
inclusion in the Prospectus.
(d) Promptly after receipt by an indemnified party under this Section 7 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 7, notify the indemnifying party in writing 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 under this Section 7
(except to the extent that the omissions of such notice causes actual prejudice
to the indemnifying party), or otherwise than under this Section 7. In case any
such action is brought against any indemnified party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified parties and the
indemnifying party and counsel for the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel reasonably satisfactory to the indemnifying party or
parties to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of
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such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel approved by the indemnifying
party, representing all the indemnified parties under Section 7(a), 7(b) or 7(c)
hereof who are parties to such action), (ii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action, or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. In no event
shall any indemnifying party be liable in respect of any amounts paid in
settlement of any action unless the indemnifying party shall have approved the
terms of such settlement; provided however that such consent shall not be
unreasonably withheld.
(e) In order to provide for just and equitable contribution in any action
in which a claim for indemnification is made pursuant to this Section 7 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 this Section 7 provides for indemnification
in such case, all the parties hereto shall contribute to the aggregate loses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that, except as set forth in Section 7(f)
hereof, the Underwriters are responsible pro rata for the portion represented by
the percentage that the underwriting discount bears to the initial public
offering price, and the Company and the Selling Stockholder are responsible for
the remaining portion, provided, however, that (i) no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter, and (ii) no person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to a contribution from any person who is not guilty
of such fraudulent misrepresentation. This subsection (e) shall not be
operative as to any Underwriter to the extent that the Company or the Selling
Stockholder has received indemnity payments from such Underwriter
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under this Section 7 which are not required to be returned pursuant to the order
of any court of competent jurisdiction.
(f) The liability of each Selling Stockholder under the representations and
warranties contained in Section 1 hereof and under the indemnity agreements
contained in the provisions of this Section 7 shall be limited in the aggregate
to an amount equal to the initial public offering price of the Shares sold by
such Selling Stockholder to the Underwriters minus the amount of the
underwriting discount paid thereon to the Underwriters by the Selling
Stockholder. The Company and the Selling Stockholders may agree, as between
themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which they each
shall be responsible.
(g) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including without limitation the
provisions of this Section 7, and are fully informed regarding such provisions.
They further acknowledge that the provisions of this Section 7 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act. The parties are advised that federal or state public policy, as
interpreted by the courts in certain jurisdictions, may be contrary to certain
of the provisions of this Section 7, and the parties hereto hereby expressly
waive and relinquish any right or ability to assert such public policy as a
defense to a claim under this Section 7 and further agree not to attempt to
assert any such defense.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement
or contained in certificates of officers of the Company submitted pursuant
thereto shall be deemed to be representations, warranties and agreements at the
Closing Date and the Option Closing Date, as the case may be, and such
representations, warranties and agreements, and the indemnity and contribution
agreements contained in Section 7 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter, the Company, the Selling Stockholders or any controlling person,
and shall survive termination of this Agreement or the issuance or sale and
delivery of the Shares to the Underwriters.
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9. EFFECTIVE DATE.
This Agreement shall become effective at 9:30 a.m., Eastern Time, on the
date hereof, or at such earlier time after the Registration Statement becomes
effective as the Representatives, in their sole discretion, shall release the
Shares for the sale to the public, provided, however that the provisions of
Sections 5, 7 and 9 of this Agreement shall at all times be effective. For
purposes of this Section 9, the Shares to be purchased hereunder shall be deemed
to have been so released upon the earlier of dispatch by the Representatives of
telegrams to securities dealers releasing such Shares for offering or the
release by the Representatives for publication of the first newspaper
advertisement that is subsequently published relating to the Shares.
10. TERMINATION.
(a) Subject to subsection (d) of this Section 10, the Company may at any
time before this Agreement becomes effective in accordance with Section 9,
terminate this Agreement.
(b) Subject to subsection (d) of this Section 10, the Representatives shall
have the right to terminate this Agreement, (i) if any calamitous domestic or
international event or act or occurrence has materially disrupted, or in the
Representatives' opinion will in the immediate future materially disrupt,
general securities markets in the United States; or (ii) if trading on the New
York Stock Exchange, the NASDAQ-NM or in the over-the-counter market shall have
been suspended, or minimum or maximum prices for trading shall have been fixed,
or maximum ranges for prices for securities shall have been required on the
over-the-counter market by the NASD or by order of the Commission or any other
government authority having jurisdiction; or (iii) if the United States shall
have become involved in a war or major hostilities; or (iv) if a banking
moratorium has been declared by the State of Texas, the State of New York, the
Commonwealth of Massachusetts or any federal authority; or (v) if a moratorium
in foreign exchange trading has been declared; or (vi) if the Company shall have
sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act that, whether or not such loss shall have been insured, will, in the
Representatives' reasonable opinion, make it inadvisable to proceed with the
delivery of the Shares; or (vii) if there shall have been a Material Adverse
Effect.
(c) If any party hereto elects to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10, such
party shall notify, on the same day as such election is made, the other parties
hereto in accordance with the provisions of Section 13 hereof.
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(d) Notwithstanding any contrary provision contained in this Agreement, any
election hereunder or any termination of this Agreement (including, without
limitation, pursuant to Sections 11 and 12 hereof), and whether or not this
Agreement is otherwise carried out, the provisions of Sections 5, 7 and 9 shall
not be in any way affected by such election or termination or failure to carry
out the terms of this Agreement or any part hereof.
11. SUBSTITUTION OF THE UNDERWRITERS.
If one or more of the Underwriters shall fail (otherwise than for a reason
sufficient to justify the termination of this Agreement under the provisions of
Section 6, Section 10 or Section 12 hereof) to purchase the Shares that it or
they are obligated to purchase on such date under this Agreement (the "Defaulted
Securities"), the Representatives shall use their best efforts within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24 hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the total
number of Firm Shares to be purchased on such date, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total number
of Firm Shares and arrangements satisfactory to the Representatives for the
purchase of the Defaulted Securities are not made within 36 hours, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriters. The Company or the Selling Stockholder may assist the
Representatives in making such arrangements by procuring another party
satisfactory to the Representatives to purchase the Defaulted Securities on the
terms set forth herein.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default that does not result in a termination of
this Agreement, the Representatives shall have the right to postpone the Closing
Date for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.
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12. DEFAULT BY THE COMPANY OR THE SELLING STOCKHOLDERS.
If the Company or either of the Selling Stockholders, as applicable, shall
fail at the Closing Date or the Option Closing Date, as applicable, to sell and
deliver the number of Shares that it is obligated to sell hereunder on such
date, then this Agreement shall terminate (or, if such default shall occur with
respect to any Option Shares to be purchased on the Option Closing Date, the
Underwriters may at the Representatives' option, by notice from the
Representatives to the Company, terminate the Underwriters' several obligations
to purchase Shares from the Company on such date) without any liability on the
part of any non-defaulting party other than pursuant to Section 5 and Section 7
hereof. No action taken pursuant to this Section shall relieve the Company or
the Selling Stockholder from liability, if any, in respect of such default.
13. NOTICES.
All notices and communications hereunder may be mailed or transmitted by
any standard form of telecommunication and, except as herein otherwise
specifically provided, shall be in writing and shall be deemed to have been duly
given when delivered to a notice party hereto at the address specified herein or
at the address subsequently communicated in writing to the notice parties.
Notices to the Underwriters shall be directed to the Representatives c/o ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
________________________, with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., c/o Stroock &
Stroock & ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇. Notices to the Company shall be directed to DSI Toys, Inc., ▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇), ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chairman, with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., c/o Thompson & ▇▇▇▇▇▇, P.C.,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇. Notices to the Firm
Selling Stockholder shall be directed to The ▇▇▇▇▇ ▇▇▇▇ Living Trust, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Trustee, with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, c/▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Notices to the Option Selling
Stockholders shall be directed to Hibernia Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: _____________________, with a copy to
_________________________. In each case a notice party may change its address
for notice hereunder by a written communication to the other notice parties.
14. PARTIES.
This Agreement shall inure solely to the benefit of and shall be binding
upon, the Underwriters, the Selling Stockholders, the
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Company and the controlling persons, directors and officers referred to in
Section 7 hereof, and their respective successors, legal representatives and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provisions herein contained. No purchaser of Shares from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
15. CONSTRUCTION.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT GIVING
EFFECT TO THE CHOICE OF LAW OR CONFLICT OF LAWS PRINCIPLES.
16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which taken together shall be
deemed to be one and the same instrument.
17. ENTIRE AGREEMENT.
This Agreement and the Schedules hereto contain the entire agreement
between the parties hereto in connection with the subject matter hereof and
supersede all prior agreements, written or oral, with respect to such subject
matter.
18. AMENDMENT.
This Agreement and the Schedules hereto may not be amended, modified or
altered without the written agreement of the Company, the Selling Stockholder
and the Representatives. If the foregoing correctly sets forth the
understanding between the Underwriters and the Company, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.
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Very truly yours,
DSI TOYS, INC.
By:
----------------------------------
NAME:
TITLE: CHAIRMAN
SELLING STOCKHOLDERS LISTED ON
SCHEDULE B HERETO
THE ▇▇▇▇▇ ▇▇▇▇ LIVING TRUST
By:
----------------------------------
NAME:
HIBERNIA CORPORATION
By:
----------------------------------
NAME:
TITLE:
CONFIRMED AND ACCEPTED AS OF
THE DATE FIRST ABOVE WRITTEN
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED
SUTRO & CO. INCORPORATED
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INCORPORATED
By:
-------------------------------------
Title:
For themselves and on behalf of and as the
Representatives of the other Underwriters
named in Schedule A hereto.
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SCHEDULE A
NUMBER OF
NAME FIRM SHARES
---- -----------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated..............................
Sutro & Co. Incorporated.................................
----------
3,000,000
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SCHEDULE B
NUMBER OF NUMBER OF
NAME FIRM SHARES OPTION SHARES
---- ----------- -------------
FIRM SELLING STOCKHOLDER
------------------------
The ▇▇▇▇▇ ▇▇▇▇ Living Trust 500,000 281,000
OPTION SELLING STOCKHOLDER
--------------------------
Hibernia Corporation 150,000
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SCHEDULE C
NAME
----
M.D. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇ Kong
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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The ▇▇▇▇▇ ▇▇▇▇ Living Trust
Hibernia Corporation
▇▇▇▇▇▇/▇▇▇▇▇▇▇ Merchant Banking Group Ltd.
Rust Capital, Ltd.
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