Exhibit 1
1,666,666 Shares
MICROSOURCEONLINE INC.
COMMON STOCK
UNDERWRITING AGREEMENT
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January ___, 04
▇▇▇▇▇▇▇▇ ▇▇▇▇ Inc.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
ph ▇▇▇-▇▇▇-▇▇▇▇
Fax ▇▇▇-▇▇▇-▇▇▇▇
Dear Sir:
Microsourceonline Inc., a Delaware corporation (the "Company"), proposes to
sell an aggregate of up to 1,666,666 shares (the "Shares") of the Company's
common stock, One Cent ($0.01) par value (the "Common Stock") pursuant to a
public offering of Shares (the "Offering") solely on a best-efforts,
minimum-or-none (as to 100,000 Shares) basis". This is to confirm the agreement
concerning the facilitation of the Offering of Shares of the Company by ▇▇▇▇▇▇▇▇
▇▇▇▇ Securities Corporation ("▇▇▇▇▇▇▇▇ ▇▇▇▇").
1. Representations, Warranties, and Agreements of the Company. The
Company represents, warrants, and agrees that:
(a) A registration statement on Form SB-1 (the "SB-1") with respect
to the Company's proposed offering of the Shares (the "Offering") has (i) been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933 (the "Securities Act") and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities Act, and
(iii) become effective under the Securities Act. A true and correct copy of the
SB-1 has been delivered by the Company to ▇▇▇▇▇▇▇▇ ▇▇▇▇. As used in this
Agreement, "Effective Time" means with respect to the SB-1, the date and the
time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time of the SB-1; "Preliminary Prospectus"
means each prospectus included in the SB-1 or amendments thereof, before it
became effective under the Securities Act; "Primary Registration Statement"
means the SB-1 as filed with the Commission, including all information contained
in the final prospectus filed with the Commission pursuant to the Rules and
Regulations and deemed to be a part of the Registration Statement as of the
Effective Time of the SB-1 pursuant to paragraph (b) of Rule 430A of the Rules
and Regulations; and "Prospectus" means such final prospectus, as first filed
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with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules
and Regulations. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus.
(b) The SB-1 conforms (and the Prospectus and any further amendments
or supplements to the SB-1 or the Prospectus, when they become effective or are
filed with the Commission, as the case may be, will conform) in all respects to
the requirements of the Securities Act and the Rules and Regulations, and do not
and will not, as of the applicable effective date (as to the SB-1 and any
amendment thereto) and as of the applicable filing date (as to the Prospectus
and any amendment or supplement thereto) contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the SB-1 or the Prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business, and is in good standing as a
foreign corporation in each jurisdiction, if any, in which its ownership or
lease of property or the conduct of its business requires such qualification,
and has all power and authority necessary to own or hold its properties and to
conduct the business in which it is engaged.
(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable,
and conform to the description thereof contained in the Prospectus.
(e) The unissued Shares to be issued and sold by the Company through
the efforts of ▇▇▇▇▇▇▇▇ ▇▇▇▇ hereunder, and others, have been duly and validly
authorized and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued, fully paid, and non-assessable; and the
Shares will conform to the description thereof contained in the Prospectus.
(f) The execution, delivery, and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is
bound or to which any of the properties or assets of the Company is subject, nor
will such actions result in any violation of the provisions of the charter or
bylaws of the Company or any statute or any order, rule, or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
of its properties or assets; and except for the registration of the Shares under
the Securities Act and such consents, approvals, authorizations, registrations,
or qualifications as may be required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and applicable state securities laws in
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connection with the purchase and distribution of the Shares, no consent,
approval, authorization, or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery,
and performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(g) There are no contracts, agreements, or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
SB-1.
(h) The Company has not sustained, since the date of the latest
audited financial statements included in the Prospectus, any material loss or
interference with its business from fire, explosion, flood, or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order, or decree, other than as set forth or contemplated
in the Prospectus; and, since such date, there has not been any change in the
capital stock or long-term debt of the Company or any material adverse change,
or any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position, stockholders
equity, or results of operations of the Company other than as set forth or
contemplated in the Prospectus.
(i) The financial statements (including the related notes and
supporting schedules) filed as part of the SB-1 or included in the Prospectus
present fairly the Company's financial condition and results of operations
purported to be shown thereby, at the dates and for the periods indicated, and
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved.
(j) ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Chartered Accountants., who have certified
certain financial statements of the Company, whose report appears in the
Prospectus, and who have delivered the initial letter referred to in Section
7(e) hereof, are independent public accountants as required by the Securities
Act and the Rules and Regulations.
(k) There are no legal or governmental proceedings pending to which
the Company is a party or of which any property or asset of the Company is the
subject which, if determined adversely to the Company, might have a material
adverse effect on the consolidated financial position, stockholders' equity,
results of operations, business, or prospects of the Company; and to the best of
the Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(l) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to either of the
Registration Statements by the Securities Act or by the Rules and Regulations
which have not been described in the Prospectus or filed as exhibits to the SB-1
or incorporated therein by reference as permitted by the Rules and Regulations.
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3. Offer of the Shares; Commission to ▇▇▇▇▇▇▇▇ ▇▇▇▇. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, ▇▇▇▇▇▇▇▇ ▇▇▇▇ agrees to use its best efforts to
facilitate the Company's sale of Shares at a price of Six Dollars ($6.00) per
Share. In consideration of those efforts, ▇▇▇▇▇▇▇▇ ▇▇▇▇ shall be entitled to a
commission of Eight and One-half Percent (8-1/2%) of the sales proceeds
receivable by the Company on all sales effected as a result of such efforts by
▇▇▇▇▇▇▇▇ ▇▇▇▇.
4. Escrow of Share Sales Proceeds. Pursuant to a separate written
agreement, a copy of which is attached as Exhibit "A", the Company has secured
the services of the law offices of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ to serve as escrow holder
("Holder") for the escrow of proceeds received from sales of Shares in the
Offering. Said agreement provides, in pertinent part, that all proceeds
representing the consideration received for purchases of Shares shall be
deposited into, and held in, an escrow account maintained by Holder, until such
time as the total proceeds held in the account aggregates Six Hundred Thousand
Dollars ($600,000), at which time all proceeds shall be delivered forthwith to
the Company and the escrow shall terminate. ▇▇▇▇▇▇▇▇ ▇▇▇▇ agrees to take all
reasonable steps to facilitate the deposit into escrow of proceeds from the sale
of Shares derived from its sales efforts hereunder. If the Offering concludes
without reaching the $600,000 ($600,000) minimum figure, all proceeds shall be
returned to the payors, and the escrow shall terminate.
5. Further Agreements of the Company. The Company agrees:
(a) To furnish promptly to ▇▇▇▇▇▇▇▇ ▇▇▇▇ a signed copy of the
Registration Statement as originally filed with the Commission, and each
amendment thereto filed with the Commission, including all consents and exhibits
filed therewith;
(b) To deliver promptly to ▇▇▇▇▇▇▇▇ ▇▇▇▇ the following documents as
▇▇▇▇▇▇▇▇ ▇▇▇▇ shall reasonably request: (i) copies of the Registration
Statements as originally filed with the Commission and each amendment thereto
(in each case excluding exhibits other than this Agreement and the computation
of per share earnings) (ii) each Preliminary Prospectus, the Prospectus, and any
amended or supplemented Prospectus in connection with the offering or sale of
the Stock (or any other securities relating thereto), and if any events shall
have occurred as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus in order to comply
with the Securities Act, to notify ▇▇▇▇▇▇▇▇ ▇▇▇▇ and, upon its request, to
prepare and furnish to ▇▇▇▇▇▇▇▇ ▇▇▇▇ and to any dealer in securities copies of
an amended or supplemented Prospectus which will correct such statement or
omission or effect such compliance, and in case ▇▇▇▇▇▇▇▇ ▇▇▇▇ is required to
deliver a prospectus in connection with sales of any of the Shares at any time
after the Effective Time of the Primary Registration Statement, upon the request
of and at the expense of ▇▇▇▇▇▇▇▇ ▇▇▇▇, to prepare and deliver to ▇▇▇▇▇▇▇▇ ▇▇▇▇
a copy of an amended or supplemented Prospectus complying with Section l0(a)(3)
of the Securities Act;
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(c) To file promptly with the Commission any amendment to the
Registration Statements or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company, be required by the Securities Act or
requested by the Commission;
(d) Prior to filing with the Commission any (i) amendment to either
of the Registration Statements or supplement to the Prospectus, or (ii) any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to ▇▇▇▇▇▇▇▇ ▇▇▇▇;
(e) As soon as practicable after the Effective Date of the Primary
Registration Statement, to make generally available to the Company's security
holders and to deliver ▇▇▇▇▇▇▇▇ ▇▇▇▇ an earnings statement of the Company (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(f) Promptly from time to time to take such action as may be
reasonably advisable to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as the Company may determine and to comply
with such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the distribution
of the Shares;
(g) To apply the net proceeds from the sale of the Shares being sold
by the Company as set forth in the Prospectus; and
(h) To take such steps as shall be necessary to ensure that the
Company shall not become an "investment company" within the meaning of such term
under the Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale, and delivery of the Shares and any taxes payable
in that connection; (b) the costs incident to the preparation, printing and
filing under the Securities Act of the Registration Statements and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statements as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus, and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of reproducing and distributing
this Agreement; (e) the filing fees incident to securing any required review by
the National Association of Securities Dealers, Inc. of the terms of sale of the
Shares; (f) the fees and expenses of qualifying the Shares under the securities
laws of the several jurisdictions as provided in Section 5(g) and of preparing,
printing and distributing a Blue Sky Memorandum; and (g) all other costs and
expenses incident to the performance of the obligations of the Company; provided
that, except as provided in this Section 6, ▇▇▇▇▇▇▇▇ ▇▇▇▇ shall pay its own
costs and expenses, including the costs and expenses of its counsel, any
transfer taxes on the Shares which it may sell, and the expenses of advertising
any offering of the Shares made by ▇▇▇▇▇▇▇▇ ▇▇▇▇. Notwithstanding the foregoing,
▇▇▇▇▇▇▇▇ ▇▇▇▇ shall be entitled to receive promptly from time to time an amount
equal to One and One-half Percent (1-1/2%) of the total proceeds realized by the
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Company from sales of Shares effected by ▇▇▇▇▇▇▇▇ ▇▇▇▇, as and for a non
accountable reimbursement to ▇▇▇▇▇▇▇▇ ▇▇▇▇ for its expenses in connection with
said sales.
7. Conditions of ▇▇▇▇▇▇▇▇ ▇▇▇▇'▇ Obligations. The obligations of ▇▇▇▇▇▇▇▇
▇▇▇▇ hereunder are subject to the accuracy, when made and on each Delivery Date,
of the representations and warranties of the Company contained herein, to the
performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Rule 462(b) Registration Statement, if any, and the
Prospectus shall have been timely filed with the Commission; no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement or the
Prospectus, or otherwise, shall have been complied with.
(b) The Company shall not have discovered that the Registration
Statement or the Prospectus or any amendment or supplement thereto contains any
untrue statement of a fact which, in the opinion of counsel for the Company, is
material or omits to state any fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to made the
statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
`the authorization, form and validity of this Agreement, the Registration
Statement, and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby, shall be reasonably
satisfactory in all respects, and the Company shall have furnished to ▇▇▇▇▇▇▇▇
▇▇▇▇ all documents and information that ▇▇▇▇▇▇▇▇ ▇▇▇▇ may reasonably request.
(d) The Law Offices of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall have furnished its
written opinion, as counsel to the Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its
businesses requires such qualification, and has all power and
authority necessary to own or hold its properties and conduct the
businesses in which it is engaged;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company (including the Shares) have been duly and validly
authorized and issued, are fully paid and non-assessable, and conform
to the description thereof contained in the Prospectus;
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(iii) There are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or transfer
of, any of the Shares pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such counsel;
(iv) The Company has good and marketable title in fee simple
to all real property owned by them, in each case free and clear of all
liens, encumbrances, and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not materially interfere with the use made and
proposed to be made of such property by the Company; and all real
property and buildings held under lease by the Company are held by it
under valid, subsisting, and enforceable leases, with such exceptions
as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company;
(v) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending to which the Company is a
party or of which any property or asset of the Company is the subject
which, if determined adversely to the Company, might have a material
adverse effect on the consolidated financial position, stockholders'
equity, results of operations, business, or prospects of the Company;
and, to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others;
(vi) The Primary Registration Statement was declared
effective under the Securities Act as of the date and time specified
in such opinion, the Rule 462(b) Registration Statement, if any, was
filed with the Commission on the date specified therein, the
Prospectus was filed with the Commission pursuant to the subparagraph
of Rule 424(b) of the Rules and Regulations specified in such opinion
on the date specified therein and no stop order suspending the
effectiveness of any of the Registration Statements has been issued
and, to the knowledge of such counsel, no proceeding for that purpose
is pending or threatened by the Commission;
(vii) The Registration Statements, as of their respective
Effective Dates, and the Prospectus, as of its date, and any further
amendments or supplements thereto, as of their respective dates, made
by the Company (other than the financial statements and other
financial data contained therein, as to which such counsel need
express no opinion) complied as to form in all material respects with
the requirements of the Securities Act and the Rules and Regulations;
(viii) To the best of such counsel' s knowledge, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statements by the
Securities Act or by the Rules and Regulations which have not been
described or filed as exhibits to the Registration Statements or
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incorporated therein by reference as permitted by the Rules and
Regulations;
(ix) This Agreement has been duly authorized, executed, and
delivered by the Company;
(x) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, or other agreement or
instrument known to such counsel to which the Company is a party or by
which the Company is bound or to which any of the properties or assets
of the Company is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company
or any statute or any order, rule, or regulation known to such counsel
of any court or governmental agency or body having jurisdiction over
the Company or any of its properties or assets; and, except for the
registration of the Shares under the Securities Act and such consents,
approvals, authorizations, registrations, or qualifications as may be
required under the Exchange Act and applicable state securities laws
in connection with the purchase and distribution of the Shares by
▇▇▇▇▇▇▇▇ ▇▇▇▇, no consent, approval, authorization, or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery, and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby; and
(xi) To the best of such counsel's knowledge, there are no
contracts, agreements, or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to the Registration Statements or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.
In rendering such opinion, such counsel may (i) state that their
opinion is limited to matters governed by the Federal laws of the United States
of America, the laws of the State of California, and the General Corporation Law
of the State of Delaware, and that such counsel is not admitted in the States of
Delaware or New York, and (ii) in giving the opinion referred to here, state
that no examination of record titles for the purpose of such opinion has been
made, and that it is relying upon a general review of the titles of the Company,
upon any opinions of local counsel and abstracts, reports, and policies of title
companies rendered or issued at or subsequent to the time of acquisition of such
property by the Company, upon opinions of counsel to the lessors of such
property, and, in respect of matters of fact, upon certificates of officers of
the Company, provided that such counsel shall state that it believes that it is
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justified in relying upon such opinions, abstracts, reports, policies, and
certificates. Such opinion shall also state that (x) such counsel has acted as
counsel to the Company on a regular basis and has acted as counsel to the
Company in connection with the preparation of the Registration Statement, and
(y) based on the foregoing, no facts have come to the attention of such counsel
which leads it to believe that the Registration Statement, as of its Effective
Date, contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The foregoing
opinion and statement may be qualified by a statement to the effect that such
counsel does not assume any responsibility for the accuracy, completeness, or
fairness of the statements contained in the Registration Statement or the
Prospectus.
(e) With respect to the letter of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Chartered
Accountants. ("DH") to be delivered to ▇▇▇▇▇▇▇▇ ▇▇▇▇ upon the execution of this
Agreement (the "initial letter"), the Company shall have furnished to ▇▇▇▇▇▇▇▇
▇▇▇▇ a letter (the "bring-down letter") of such accountants, addressed to the
Company's underwriters, (i) confirming that DH are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, or its exemption from said rule
(ii) stating, as of the date of the bring-down letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date of the bring-down letter), the conclusions
and findings of such firm with respect to the financial information and other
matters covered by the initial letter, and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(f) The Company shall have furnished to ▇▇▇▇▇▇▇▇ ▇▇▇▇ a certificate,
dated such Delivery Date, of its Chairman of the Board, its President, or a Vice
President and its chief financial officer, stating that:
(i) The representations, warranties, and agreements of the
Company in Section 1 are true and correct as of such Delivery Date;
the Company has complied with all its agreements contained herein; and
the conditions set forth in Sections 7(a) and 7(g) have been
fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, (A) the Registration
Statement, as of its Effective Date, and the Prospectus, as of each of
the Effective Dates, did not include any untrue statement of a
material fact and did not omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date of the Primary
Registration Statement, no event has occurred which should have been
set forth in a supplement or amendment to either the Registration
Statement or the Prospectus.
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(g) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from fire,
explosion, flood, or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order, or decree,
otherwise than as set forth or contemplated in the Prospectus, or (ii) since
such date there shall not have been any change in the capital stock or long-term
debt of the Company or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
stockholders' equity, or results of operations of the Company, otherwise than as
set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares on the terms and in the manner contemplated in the Prospectus.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless ▇▇▇▇▇▇▇▇ ▇▇▇▇, its
officers, and employees, and each person, if any, who controls ▇▇▇▇▇▇▇▇ ▇▇▇▇
within the meaning of the Securities Act, from and against any loss, claim,
damage, or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability, or action
relating to purchases and sales of Shares), to which ▇▇▇▇▇▇▇▇ ▇▇▇▇, or that
officer, employee, or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability, or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or (B) in any blue sky application or other document prepared or
executed by the Company (or based upon any written information furnished by the
Company) specifically for the purpose of qualifying any or all of the Shares
under the securities laws of any state or other jurisdiction (any such
application, document, or information being hereinafter called a "Blue Sky
Application"), or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessarily to make the statements therein
not misleading; and shall reimburse ▇▇▇▇▇▇▇▇ ▇▇▇▇ and each such officer,
employee, and controlling person promptly upon demand for any legal or other
expenses reasonably incurred by ▇▇▇▇▇▇▇▇ ▇▇▇▇ or that officer, employee, or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability, or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement, or the Prospectus, or in any such amendment or
supplement, or in any Blue Sky Application in reliance upon and in conformity
with written information furnished to the Company by or on behalf of ▇▇▇▇▇▇▇▇
▇▇▇▇; and provided further that the Company shall not be liable in the case of
any matter covered herein above to the extent that it is determined in a final
judgement by a court of competent jurisdiction that such loss, claim, damage,
liability, or action resulted directly from any act or failure to act undertaken
or omitted to be taken by ▇▇▇▇▇▇▇▇ ▇▇▇▇ through its gross negligence or willful
misconduct.
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(b) ▇▇▇▇▇▇▇▇ ▇▇▇▇ shall indemnify and hold harmless the Company, its
officers, and employees, each of its directors, and each person, if any, who
controls the Company within the meaning of the Securities Act, from and against
any loss, claim, damage, or liability, joint or several, or any action in
respect thereof, to which the Company or any such director, officer, or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability, or action arises out of, or is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the Registration Statement, or
the Prospectus, or in any amendment or supplement thereto, or (B) in any Blue
Sky Application; or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company through
or by ▇▇▇▇▇▇▇▇ ▇▇▇▇, and shall reimburse the Company and any such director,
officer, or controlling person for any legal or other expenses reasonably
incurred by the Company or any such director, officer, or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability, or action as such expenses are incurred.
The foregoing indemnity agreement is in addition to any liability which ▇▇▇▇▇▇▇▇
▇▇▇▇ may otherwise have to the Company or any such director, officer, or
controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation. Each indemnified party, as
a condition of the indemnity agreements contained in Sections 8(a) and 8(b),
shall use its best efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit, or
proceeding in respect of which indemnification or contribution may be sought
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hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise, or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit, or proceeding, or (ii) be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss of liability by reason of such settlement or
judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or (b) in respect of any loss, claim, damage, or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage, or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, on the one hand, and ▇▇▇▇▇▇▇▇ ▇▇▇▇, on the other, from
the offering of the Shares, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above, but
also the relative fault of the Company, on the one hand, and ▇▇▇▇▇▇▇▇ ▇▇▇▇ on
the other, with respect to the statements or omissions which resulted in such
loss, claim, damage, or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and ▇▇▇▇▇▇▇▇ ▇▇▇▇, on the other, with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Shares purchased under this Agreement (before deducting
expenses) received by the Company, on the one hand, and the total underwriting
discounts and commissions received by ▇▇▇▇▇▇▇▇ ▇▇▇▇ with respect to the Shares
purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the Shares under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, or ▇▇▇▇▇▇▇▇ ▇▇▇▇, the
intent of the parties, and their relative knowledge, access to information, and
opportunity to correct or prevent such statement or omission. The Company and
▇▇▇▇▇▇▇▇ ▇▇▇▇ agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage, or liability, or action in respect
thereof, referred to above in this Section 8(d) shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) ▇▇▇▇▇▇▇▇ ▇▇▇▇ confirms that the statements with respect to the
public offering of the Shares set forth on the cover page of, and under the
12
caption "Underwriting" in, the Prospectus are correct and constitute the only
information furnished in writing to the Company by or on behalf of ▇▇▇▇▇▇▇▇ ▇▇▇▇
specifically for inclusion in the Registration Statement and the Prospectus.
9. Notices, etc. All statements, requests, notices, and agreements
hereunder shall be in writing, and:
(a) if to ▇▇▇▇▇▇▇▇ ▇▇▇▇, shall be delivered or sent by mail, telex,
or facsimile transmission to ▇▇▇▇▇▇▇▇ ▇▇▇▇, Inc., ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, Attention: President; and
(b) if to the Company, shall be delivered or sent by mail, telex, or
facsimile transmission to the address of the Company set forth in the Primary
Registration Statement, Attention: CEO.
Any such statements, requests, notices, or agreements shall take effect at
the time of receipt thereof.
10. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
personal representatives and successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities, and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
officers and employees of ▇▇▇▇▇▇▇▇ ▇▇▇▇ and the person or persons, if any, who
control ▇▇▇▇▇▇▇▇ ▇▇▇▇ within the meaning of Section 15 of the Securities Act,
and (B) the indemnity agreement of ▇▇▇▇▇▇▇▇ ▇▇▇▇ contained in Section 8(b) of
this Agreement shall be deemed to be for the benefit of directors, officers, and
employees of the Company and any person controlling the Company within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 15, any legal or equitable right, remedy, or claim
under or in respect of this Agreement or anything contained herein.
11. Survival. The respective indemnities, representations, warranties, and
agreements of the parties contained in this Agreement, or made by or on behalf
of them, respectively, pursuant to this Agreement, shall survive the delivery of
and payment for the Shares, and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
12. Definition of the Terms "Business Day" and "Subsidiary". For purposes
of this Agreement, (a) "business day" means any day on which the New York Stock
Exchange, Inc. is open for trading, and (b) "subsidiary" has the meaning set
forth in Rule 405 of the Rules and Regulations.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California.
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14. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument. Signatures received by
facsimile shall be deemed as originals.
15. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
16. Assignment. This Agreement is personal to the parties hereto, and may
not be assigned without the prior written consent of the other party had and
received (which consent may be withheld by either party in its discretion). Any
purported assignment without such consent shall be null and void and of no force
or effect.
If the foregoing correctly sets forth the agreement among the Company and
▇▇▇▇▇▇▇▇ ▇▇▇▇, please indicate your acceptance in the space provided for that
purpose below.
Very truly yours.
MICROSOURCEONLINE, INC.
By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇
CEO
Accepted:
▇▇▇▇▇▇▇▇ ▇▇▇▇ INC.
By:
----------------------------------
▇▇▇▇ ▇▇▇▇
President
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