Exhibit 1.1
1,970,000 Shares
Xxxxxxxx'x, Inc.
Common Stock
UNDERWRITING AGREEMENT
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October __, 1996
XXXXXXXXXX SECURITIES
SALOMON BROTHERS INC
XXXXXXXXX XXXXXXXX & COMPANY
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. Certain stockholders (the "Selling
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Stockholders") of Xxxxxxxx'x, Inc., a Delaware corporation (the "Company), named
in Schedule B annexed hereto, propose to sell 1,970,000 shares of the Common
Stock of the Company (the "Common Stock") to you (the "Underwriters"). Said
1,970,000 shares are herein called the "Firm Common Shares." In addition, the
Selling Stockholders named in Schedule C hereto propose to grant to the
Underwriters an option to purchase up to 295,500 additional shares of Common
Stock (the "Optional Common Shares"), as provided in Section 5 hereof. The Firm
Common Shares and, to the extent such option is exercised, the Optional Common
Shares are hereinafter collectively referred to as the "Common Shares" or
"Shares."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of the Common Shares on the
effective date of the registration statement hereinafter referred to, or as soon
thereafter as in your judgment is advisable.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The Company
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represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-) with
respect to the Common Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. The
Company has prepared and has filed or proposes to file prior to the
effective date of such registration statement an amendment or
amendments to such registration statement, which amendment or
amendments have been or will be similarly prepared. There have been
delivered to you four signed copies of such registration statement and
amendments, together with four copies of each exhibit filed therewith.
Conformed copies of such registration statement and amendments (but
without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested
for each of the Underwriters. The Company will next file with the
Commission one of the following: (i) prior to the effectiveness of such
registration statement, a further amendment thereto, including the form
of final prospectus, (ii) a final prospectus in accordance with Rules
430A and 424(b) of the Rules and Regulations, or (iii) a term sheet
(the "Term Sheet") as described in and in accordance with Rules 434 and
424(b) of the Rules and Regulations. As filed, the final prospectus,
if one is used, or the Term Sheet and Preliminary Prospectus, if a
final prospectus is not used, shall include all Rule 430A Information
(as defined herein) and, except to the extent that you shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the date and time that this Agreement
was executed and delivered by the parties hereto, or, to the extent not
completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus (as defined)) as the Company shall have
previously advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement
shall mean registration statement at the time such registration
statement becomes effective and, in the event any post-effective
amendment thereto becomes effective prior to the First Closing Date (as
hereinafter defined), shall also mean such registration statement as so
amended; provided, however, that such term shall also include (i) all
Rule 430A Information deemed to be included in such registration
statement at the time such registration statement becomes effective as
provided by Rule 430A of the Rules and Regulations, and (ii) a
registration statement, if any, filed pursuant to Rule 462(b) of the
Rules and Regulations relating to the Common Shares. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred
to in the preceding paragraph and any preliminary prospectus included
in the Registration Statement at the time it becomes effective that
omits Rule 430A Information. The term "Prospectus" as used in this
Agreement shall
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mean either (i) the prospectus relating to the Common Shares in the
form in which it is first filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations or, (ii) if a Term Sheet is not
used and no filing pursuant to Rule 424(b) of the Rules and Regulations
is required, the form of final prospectus included in the Registration
Statement at the time such registration statement becomes effective, or
(iii) if a Term Sheet is used, the Term Sheet in the form in which it
is first filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations, together with the Preliminary Prospectus included in
the Registration Statement at the time it becomes effective. The term
"Rule 430A Information" means information with respect to the Common
Shares and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A
of the Rules and Regulations. Any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Form S-1
under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus that has been distributed by the Underwriters or the Company
to prospective investors has conformed in all material respects to the
requirements of the Act and the Rules and Regulations and as of its
date, has not included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including each
Closing Date hereinafter mentioned, the Registration Statement and
Prospectus, and any amendments or supplements thereto, will contain all
material statements and information required to be included therein by
the Act and the Rules and Regulations and will in all material respects
conform to the requirements of the Act and the Rules and Regulations,
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any 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;
provided, however, no representation or warranty contained in this
subsection 2(b) shall be applicable to information contained in or
omitted from any Preliminary Prospectus, the Registration Statement,
the Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by or
on behalf of any Underwriters directly or through the Underwriters
specifically for use in the preparation thereof.
(c) Any term sheet and prospectus subject to completion
provided by the Company to the Underwriters for use in connection with
the offering and sale of the Shares pursuant to Rule 434 under the Act
together are not materially
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different from the prospectus included in the Registration Statement
(exclusive of any information deemed a part thereof by virtue of Rule
434(d));
(d) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 22 to the Registration Statement. The
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware, with full
power and authority (corporate and other) to own and lease its
properties and conduct its business as described in the Prospectus; the
Company is in possession of and operating in compliance in all material
respects with all authorizations, licenses, permits, consents,
certificates and orders material to the conduct of its respective
business, all of which are valid and in full force and effect; the
Company is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the ownership or
leasing of properties or the conduct of its business require such
qualification, except for jurisdictions in which the failure to so
qualify would not have a material adverse effect upon the Company; and,
to the best of the Company's knowledge, no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
(e) The Company has an authorized and outstanding capital
stock as set forth under the heading "Description of Capital Stock" in
the Prospectus (subject to the exercise of outstanding stock options
after the date of the Prospectus); the issued and outstanding shares of
Common Stock (including the shares to be sold by the Selling
Stockholders) have been duly authorized and validly issued, are fully
paid and nonassessable, have been issued in compliance with all federal
and state securities laws, were not issued in violation of or subject
to any preemptive rights or other rights to subscribe for or purchase
securities, and conform to the description thereof contained in the
Prospectus. Except as disclosed in or contemplated by the Prospectus
and the financial statements of the Company, and the related notes
thereto, included in the Prospectus, the Company has no outstanding
options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other
rights granted and exercised thereunder, set forth in the Prospectus,
accurately and fairly presents in all material respects the information
required to be shown with respect to such plans, arrangements, options
and rights.
(f) No stockholder of the Company has any right which has not
been waived to require the Company to register the sale of any shares
owned by such stockholder under the Act in the public offering
contemplated by this Agreement. No further approval or authority of
the stockholders (other than the Selling
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Stockholders individually) or the Board of Directors of the Company
will be required for the transfer and sale of the Common Shares to be
sold by the Selling Stockholders as contemplated herein.
(g) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and except as to those provisions
relating to indemnity or contribution for liabilities arising under the
Act. The making and performance of this Agreement by the Company and
the consummation of the transactions herein contemplated will not
violate any provisions of the certificate of incorporation or bylaws,
or other organizational documents, of the Company, and will not
conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which the Company is
a party or by which the Company or any of its properties may be bound
or affected, any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or any of
its properties, except for any violation, breach or default that would
not have a material adverse effect on the Company or on the
consummation of the transactions contemplated hereby. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for compliance with
the Act, the Blue Sky laws applicable to the public offering of the
Common Shares by the several Underwriters and the clearance of such
offering with the National Association of Securities Dealers, Inc. (the
"NASD") and except for any such consent, approval, authorization or
other order the failure of which to obtain would not have a material
adverse effect on the Company or on the consummation of the
transactions contemplated hereby.
(h) Ernst & Young LLP, who have expressed their opinion with
respect to the financial statements and schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus and in the Registration Statement, are independent
accountants as required by the Act and the Rules and Regulations.
(i) The financial statements and schedules of the Company and
the related notes thereto, included in the Registration Statement
present fairly the financial position of the Company as of the
respective dates of such financial statements and schedules, and the
results of operations and changes in financial
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position of the Company for the respective periods covered thereby.
Such statements, schedules and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis as certified by the independent accountants named in
subsection 2(h). No other financial statements or schedules are
required to be included in the Registration Statement. The selected
financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Consolidated Financial Data" fairly
present the information set forth therein on the basis stated in the
Registration Statement.
(j) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(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 the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(k) Except as disclosed in the Prospectus, and except as to
defaults which individually or in the aggregate would not be material
to the Company, the Company is not in violation or default of any
provision of its certificate of incorporation or bylaws, or other
organizational documents, or in breach of or default with respect to
any provision of any agreement, judgment, decree, order, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other
instrument to which it is a party or by which any of its properties are
bound; and, to the best of the Company's knowledge, there does not
exist any state of facts which constitutes an event of default on the
part of the Company as defined in such documents or which, with notice
or lapse of time or both, would constitute such an event of default.
(l) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to
the Registration Statement by the Act or by the Rules and Regulations
which have not been described or filed as required. The contracts so
described in the Prospectus are in full force and effect on the date
hereof; and the Company is not, nor to the best of the Company's
knowledge, is any other party in breach of or default under any of such
contracts, except for such breaches or defaults that individually or in
the aggregate would not be material to the Company.
(m) There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge,
threatened to which the Company is or may be a party or of which
property owned or leased by the Company is or may be the subject, or
related to environmental or discrimination matters, which actions,
suits or proceedings might, individually or in the
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aggregate, prevent or materially adversely affect the transactions
contemplated by this Agreement or result in a material adverse change
in the condition (financial or otherwise), properties, business,
operations or prospects of the Company. The Company is not a party or
subject to the provisions of any material injunction, judgment, decree
or order of any court, regulatory body, administrative agency or other
governmental body.
(n) There is (i) no significant unfair labor practice
complaint pending against the Company or, to the best knowledge of the
Company, threatened against it, before the National Labor Relations
Board or any state or local labor relations board, and no significant
grievance or more significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the
Company or, to the best knowledge of the Company, threatened against
any of them, and (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Company or, to the best knowledge of the
Company, threatened against it except for such actions specified in
clause (i) or (ii) above, which, singly or in the aggregate could not
reasonably be expected to have a material adverse effect on the
Company.
(o) Except as disclosed in the Prospectus, there are no
material business relationships or related party transactions required
to be disclosed therein by Item 404 of Regulation S-K of the
Commission.
(p) The Company has not violated any foreign, federal, state
or local law or regulation relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), nor any federal or
state law relating to discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages and hours laws, nor
any provisions of the Employee Retirement Income Security Act or the
rules and regulations promulgated thereunder, except for such
violations which singly or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company.
(q) The Company has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits"),
including, without limitation, under any applicable Environmental Laws,
as are necessary to own, lease and operate its properties and to
conduct its business as described in the Prospectus; the Company has
fulfilled and performed all of its material obligations with respect to
such permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results
in any other material impairment of the rights of the holder of any
such permit; and, except as described in the Prospectus, such permits
contain no restrictions that are materially burdensome to the Company.
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(r) The Company has good title to all the properties and
assets reflected as owned in the financial statements hereinabove
described (or elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those,
if any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not
adversely affect the use made and proposed to be made of such property
by the Company. The Company holds its leased properties under valid
and binding leases, with such exceptions as are not materially
significant in relation to the business of the Company. Except as
disclosed in the Prospectus, the Company owns or leases all such
properties as are necessary to its operations as now conducted.
(s) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as
described in or specifically contemplated by the Prospectus: (i) the
Company has not incurred any material liabilities or obligations,
indirect, direct or contingent, or other transaction which is not in
the ordinary course of business or which could result in a material
reduction in the future earnings of the Company; (ii) the Company has
not sustained any material loss or interference with its business or
properties from fire, flood, windstorm, accident or other calamity,
whether or not covered by insurance; (iii) the Company has not paid or
declared any dividends or other distributions with respect to its
capital stock and the Company is not in default in the payment of
principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock (other than upon the
exercise of options and warrants described in the Registration
Statement) or indebtedness material to the Company (other than in the
ordinary course of business); and (v) there has not been any material
adverse change in the condition (financial or otherwise), business,
properties, result of operations or prospects of the Company.
(t) Except as disclosed in or specifically contemplated by
the Prospectus, the Company has sufficient trademarks, trade names,
patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct its business as now conducted;
the expiration of any trademarks, trade names, patent rights, mask
works, copyrights, licenses, approvals or governmental authorizations
would not have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the
Company; and the Company has no knowledge of any material infringement
by it of trademark, trade name rights, patent rights, mask works,
copyrights, licenses, trade secret or other similar rights of others,
and there is no claim being made against the Company regarding
trademark, trade name, patent, mask work, copyright, license, trade
secret or other infringement which could have a material adverse effect
on the condition (financial or otherwise), business, results of
operations or prospects of the Company.
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(u) The Company has filed all necessary federal, state and
foreign income and franchise tax returns and has paid all taxes shown
as due thereon; and the Company has no knowledge of any tax deficiency
which has been or might be asserted or threatened against the Company
which would materially and adversely affect the business, operations or
properties of the Company.
(v) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(w) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(x) The Company has not distributed and will not distribute
prior to the First Closing Date any offering material in connection
with the offering and sale of the Common Shares other than the
Preliminary Prospectus, the Prospectus, the Registration Statement and
the other materials permitted by the Act.
(y) The Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, but not
limited to, insurance covering real and personal property owned or
leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(z) The Company has not at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation of
law or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(aa) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Common Shares.
SECTION 3. Representations, Warranties and Covenants of the Selling
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Stockholders.
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(a) Each of the Selling Stockholders represents and warrants
severally and not jointly to, and agrees with, the several Underwriters
that:
(i) Such Selling Stockholder has, and on the First
Closing Date and the Second Closing Date hereinafter mentioned
will have, good title to the Common Shares proposed to be sold
by such Selling
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Stockholder hereunder on such Closing Date and full right,
power and authority to enter into this Agreement and to sell,
assign, transfer and deliver such Common Shares hereunder,
free and clear of all voting trust arrangements, liens,
encumbrances, equities, security interests, restrictions and
claims whatsoever; and upon delivery of and payment for such
Common Shares hereunder, such Selling Stockholder will convey
to the Underwriters good title thereto, free and clear of all
liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts or other defects of title whatsoever.
(ii) Such Selling Stockholder has executed and
delivered a Power of Attorney and (except for the Xxxxxx
Funds, as defined in Section 8 herein) caused to be executed
and delivered on its, his or her behalf a Custody Agreement
(hereinafter collectively referred to as the "Stockholders
Agreement," except with respect to the Xxxxxx Funds the term
"Stockholders Agreement" shall only refer to the Power of
Attorney) and in connection herewith such Selling Stockholder
further represents, warrants and agrees that, except as
provided in the Stockholders Agreement, such Selling
Stockholder (except for the Xxxxxx Funds) has deposited in
custody, under the Stockholders Agreement, with the agent
named therein (the "Agent") as custodian, certificates in
negotiable form for the Common Shares to be sold hereunder by
such Selling Stockholder, for the purpose of further delivery
pursuant to this Agreement. Such Selling Stockholder agrees
that the Common Shares to be sold by such Selling Stockholder
on deposit with the Agent are subject to the interests of the
Company and the Underwriters to the extent set forth herein
and in the Stockholders Agreement, that the arrangements made
for such custody are to that extent irrevocable, and that the
obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the
Stockholders Agreement, by any act of such Selling
Stockholder, by operation of law, by the death or incapacity
of such Selling Stockholder or by the occurrence of any other
event. If the Selling Stockholder should die or become
incapacitated, or if any other event should occur, before the
delivery of the Common Shares hereunder, the documents
evidencing Common Shares then on deposit with the Agent shall
be delivered by the Agent in accordance with the terms and
conditions of this Agreement and the Stockholders Agreement as
if such death, incapacity or other event had not occurred,
regardless of whether or not the Agent shall have received
notice thereof. This Agreement and the Stockholders Agreement
have been duly executed and delivered by or on behalf of such
Selling Stockholder and the form of such Stockholders
Agreement has been delivered to you.
(iii) The performance of this Agreement and the
Stockholders Agreement and the consummation of the
transactions
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contemplated hereby and by the Stockholders Agreement will not
result in a breach or violation by such Selling Stockholder of
any of the terms or provisions of, or constitute a default by
such Selling Stockholder under any material indenture,
mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement or
instrument to which such Selling Stockholder is a party or by
which such Selling Stockholder or any of its properties is
bound, or any judgment, decree, order, rule or regulation of
any court or governmental agency or body applicable to such
Selling Stockholder or any of its properties, except (x) for
any violation, breach, or default that could not have an
adverse effect on the Selling Stockholder's sale of the Common
Shares to be sold by it, him or her hereunder or its
performance of any of its, his or her other obligations
hereunder or under the Stockholders Agreement and (y) that
such Selling Stockholder makes no representation or warranty
hereunder with respect to federal or state securities or Blue
Sky laws.
(iv) 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
of the Company to facilitate the sale or resale of the Common
Shares.
(v) Each Preliminary Prospectus that has been
distributed by the Underwriters or the Company to prospective
investors and the Prospectus, insofar as it includes or
reflects information with respect to such Selling Stockholder,
has conformed in all material respects to the requirements of
the Act and the Rules and Regulations and has not included any
untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein not
misleading in light of the circumstances under which it was
made; and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, insofar
as they include or reflect information with respect to such
Selling Stockholder, will include any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading.
(vi) Such Selling Stockholder (except for each of the
Xxxxxx Funds, as defined in Section 8 herein), without
independent investigation, is not aware that any of the
representations and warranties set forth in Section 2 above is
untrue or inaccurate in any material respect.
(vii) All stock transfer or other taxes (other than
income taxes), if any, that are required to be paid in
connection with the sale and transfer of the Common Shares
proposed to be sold by such Selling
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Stockholder to the several Underwriters pursuant to the
Underwriting Agreement will be fully paid or provided for by
such Selling Stockholder.
(viii) No consent, approval, authorization or order of,
or any filing with, any court or governmental agency or body
is required for the consummation by such Selling Stockholder
of the transactions on its part contemplated in this
Underwriting Agreement, the Power of Attorney or the Custody
Agreement, except as may be required under the Act or state or
provincial securities or "blue sky" laws.
(ix) Other than as permitted by the Act and the rules
and regulations thereunder, such Selling Stockholder has not
distributed and will not distribute any preliminary
prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Common Shares
proposed to be sold by such Selling Stockholder.
(b) Each of the Selling Stockholders agrees with the Company
and the Underwriters not to offer to sell, sell or contract to sell or
otherwise dispose of any shares of Common Stock or securities
convertible into or exchangeable for any shares of Common Stock in
accordance with the terms of separate letter agreements between each
Selling Stockholder and the Underwriters.
SECTION 4. Representations and Warranties of the Underwriters. The
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Underwriters, on behalf of the several Underwriters, represent and warrant to
the Company and to the Selling Stockholders that the information set forth (i)
on the cover page of the Prospectus with respect to price, underwriting
discounts and commissions and terms of offering and (ii) under "Underwriting" in
the Prospectus was furnished to the Company by and on behalf of the Underwriters
for use in connection with the preparation of the Registration Statement and the
Prospectus and is correct in all material respects.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the
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basis of the representations, warranties and conditions herein contained, but
subject to the terms and conditions herein set forth, each of the Selling
Stockholders agrees, severally and not jointly, to sell to the Underwriters the
Firm Common Shares set forth opposite such Selling Stockholder's name in
Schedule B hereto. The Underwriters agree, severally and not jointly, to
purchase from the Selling Stockholders the number of Firm Common Shares
described below. The purchase price per share to be paid by the several
Underwriters to the Selling Stockholders shall be $____ per share.
The obligation of each Underwriter to each Selling Stockholder shall
be to purchase from such Selling Stockholder that number of full shares which
(as nearly as practicable, as determined by you) bears to the total number of
Firm Common Shares to be sold by such Selling Stockholder as set forth opposite
such Selling Stockholder's name in Schedule
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B hereto the same proportion as the number of shares set forth opposite the name
of such Underwriter in Schedule A hereto bears to the total number of Firm
Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by
the Underwriters and payment therefor shall be made at the offices of Xxxxxxxxxx
Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed upon by the Company and the Underwriters) at such time
and date, not later than the third (or, if the Firm Common Shares are priced, as
contemplated by Rule 15c6-1(c) of the Securities Exchange Act of 1934, after
4:30 P.M. Washington, D.C. time, the fourth) full business day following the
first date that any of the Common Shares are released by you for sale to the
public, as you shall designate by at least 48 hours prior notice to the Company
(or at such other time and date, not later than one week after such third or
fourth, as the case may be, full business day as may be agreed upon by the
Company and the Underwriters) (the "First Closing Date"); provided, however,
that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third or fourth, as the case may be, full business day following the first
date that any of the Common Shares are released by you for sale to the public or
the date that is 48 hours after the date that the Prospectus has been so
recirculated.
Delivery of certificates for the Firm Common Shares shall be made by
or on behalf of the Selling Stockholders to you, for the respective accounts of
the Underwriters with respect to the Firm Common Shares to be sold by the
Selling Stockholders against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfer of same day funds
to the order of the Company. Within one business day after receipt of such
funds, the Company shall pay to each Selling Stockholder an amount equal to (i)
the purchase price per share set forth above multiplied by the number of Shares
sold by such Selling Stockholder minus (ii) such Selling Stockholder's pro rata
portion (calculated based on the total number of Common Shares sold on such
Closing Date) of the Expenses (as defined below) incurred in connection with the
Offering and payable by the Selling Stockholders pursuant to Section 7 below;
provided, however, that compliance by the Company with this obligation shall not
be a condition subsequent to the obligations of the Selling Stockholders to the
Underwriters under this Agreement. The certificates for the Firm Common Shares
shall be registered in such names and denominations as you shall have requested
at least two full business days prior to the First Closing Date, and shall be
made available for checking and packaging on the business day preceding the
First Closing Date at a location in New York, New York, as may be designated by
you. Time shall be of the essence, and delivery at the time and place specified
in this Agreement is a further condition to the obligations of the Underwriters.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, each of the Selling Stockholders listed on Schedule C hereto hereby
grants an option to the several Underwriters to purchase, severally and not
jointly, up to an aggregate of 295,500 Optional Common Shares (comprised of the
respective number of shares set forth next to each such Selling Stockholder's
name on Schedule C attached hereto) at the purchase price per share to be paid
for the Firm Common Shares, for use solely in covering any over-allotments made
by you for the account of
13
the Underwriters in the sale and distribution of the Firm Common Shares. In the
event the option granted to the Underwriters hereunder is not exercised with
respect to all 295,500 Optional Common Shares, the Underwriters shall purchase
from each Selling Stockholder that number of full shares which (as nearly as
practicable as determined by you) equals the product of the total number of
Optional Common Shares to be purchased by the Underwriters as set forth in the
notice to be provided below, multiplied by a fraction, the numerator of which is
the number of Optional Common Shares set forth opposite such Selling
Stockholder's name on Schedule C hereto and the denominator of which is 295,500.
The option granted hereunder may be exercised at any time (but not more than
once) within 30 days after the first date that any of the Common Shares are
released by you for sale to the public, upon notice by you to the Company and
Selling Stockholders setting forth the aggregate number of Optional Common
Shares as to which the Underwriters are exercising the option, the names and
denominations in which the certificates for such shares are to be registered and
the time and place at which such certificates will be delivered. Such time of
delivery (which may not be earlier than the First Closing Date), being herein
referred to as the "Second Closing Date," shall be determined by you, but if at
any time other than the First Closing Date shall not be earlier than three nor
later than five full business days after delivery of such notice of exercise.
The number of Optional Common Shares to be purchased by each Underwriter shall
be determined by multiplying the number of Optional Common Shares to be sold by
the Selling Stockholders pursuant to such notice of exercise by a fraction, the
numerator of which is the number of Firm Common Shares to be purchased by such
Underwriter as set forth opposite its name in Schedule A and the denominator of
which is 1,970,000 (subject to such adjustments to eliminate any fractional
share purchases as you in your discretion may make). Certificates for the
Optional Common Shares will be made available for checking and packaging on the
business day preceding the Second Closing Date at a location in New York, New
York, as may be designated by you. The manner of payment for and delivery of
the Optional Common Shares shall be the same as for the Firm Common Shares as
specified in the two preceding paragraphs. At any time before lapse of the
option, you may cancel such option by giving written notice of such cancellation
to the Company and said Selling Stockholders. If the option is canceled or
expires unexercised in whole or in part, the Company will deregister under the
Act the number of Optional Common Shares as to which the option has not been
exercised.
Subject to the terms and conditions hereof, the Underwriters propose
to make a public offering of their respective portions of the Common Shares as
soon after the effective date of the Registration Statement as in the judgment
of the Underwriters is advisable and at the public offering price set forth on
the cover page of and on the terms set forth in the final prospectus, if one is
used, or on the first page of the Term Sheet, if one is used.
SECTION 6. Covenants of the Company. The Company covenants and
------------------------
agrees that:
(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 at the earliest practicable
time. If the Registration Statement has become
14
or becomes effective pursuant to Rule 430A of the Rules and
Regulations, or the filing of the Prospectus is otherwise required
under Rule 424(b) of the Rules and Regulations, the Company will file
the Prospectus, properly completed, pursuant to the applicable
paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of
such timely filing. The Company will promptly advise you in writing
(i) of the receipt of any comments of the Commission, (ii) of any
request of the Commission for amendment of or supplement to the
Registration Statement (either before or after it becomes effective),
any Preliminary Prospectus or the Prospectus or for additional
information, (iii) when the Registration Statement shall have become
effective, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
of the institution of any proceedings for that purpose. If the
Commission shall enter any such stop order at any time, the Company
will use its best efforts to obtain the lifting of such order at the
earliest practicable moment. The Company will not file any amendment
or supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the Prospectus
(including the issuance or filing of any Term Sheet) of which you
have not been furnished with a copy a reasonable time prior to such
filing or to which you reasonably object or which is not in
compliance with the Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or the Prospectus (including the issuance or
filing of any Term Sheet) which in your judgment may be necessary or
advisable to enable the several Underwriters to continue the
distribution of the Common Shares and will use its best efforts to
cause the same to become effective as promptly as possible. The
Company will fully and completely comply with the provisions of Rule
430A of the Rules and Regulations with respect to information omitted
from the Registration Statement in reliance upon such Rule.
(c) If at any time, within the nine-month period referred to in
Section 10(a)(3) of the Act, at which a prospectus relating to the
Common Shares is required to be delivered under the Act any event
occurs, as a result of which the Prospectus, including any amendments
or supplements, would include an 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, or if it is
necessary at any time to amend the Prospectus, including any
amendments or supplements, to comply with the Act or the Rules and
Regulations, the Company will promptly advise you thereof and will
promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission
or an amendment or supplement which will effect such compliance and
will use its best efforts to cause the same to become effective as
soon as possible; and, in case any Underwriter is required to deliver
a prospectus after such nine-month period, the Company upon request,
but at the
15
expense of such Underwriter, will promptly prepare 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.
(d) As soon as practicable, but not later than 45 days after
the end of the first quarter ending after one year following the
"effective date of the Registration Statement" (as defined in Rule
158(c) of the Rules and Regulations), the Company will make generally
available to its stockholders an earnings statement (which need not
be audited) covering a period of 12 consecutive months beginning
after the effective date of the Registration Statement which will
satisfy the provisions of the last paragraph of Section 11(a) of the
Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred
to in Section 10(a)(3) of the Act, will furnish to you and the
Selling Stockholders or mail to your order copies of the Registration
Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents in each case as soon
as available and in such quantities as you and the Selling
Stockholders may request, for the purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in
order to qualify or register the Common Shares for sale under (or
obtain exemptions from the application of) the Blue Sky laws of such
jurisdictions as you designate, will comply with such laws and will
continue such qualifications, registrations and exemptions in effect
so long as reasonably required for the distribution of the Common
Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation. The Company
will advise you promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Common Shares
for offering, sale or trading in any jurisdiction or any initiation
or threat of any proceeding for any such purpose, and in the event of
the issuance of any order suspending such qualification, registration
or exemption, the Company, with your cooperation, will use its best
efforts to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to the Underwriters: (i) as soon as practicable after the
end of each fiscal year, copies of the Annual Report of the Company
containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash
flows for the year then ended and the opinion thereon of the
Company's independent public accountants; (ii) as soon as practicable
after the filing thereof, copies of each proxy statement, Annual
Report
16
on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or
other report filed by the Company with the Commission, the NASD or
any securities exchange; and (iii) as soon as available, copies of
any report or communication of the Company mailed generally to
holders of its Common Stock.
(h) During the period of 120 days after the date of the
Prospectus, without the prior written consent of Xxxxxxxxxx
Securities, the Company will not (other than pursuant to the grant of
stock options and awards authorized under the Company's Stock Plans
(as defined in the Prospectus), the exercise of outstanding stock
options and warrants and the conversion of outstanding shares of
Class B Common Stock, in each case as disclosed in the Prospectus)
issue, offer, sell, grant options to purchase or otherwise dispose of
any of the Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or other
equity security.
(i) The Company will use its best efforts to designate and
maintain the inclusion of the Common Stock for quotation as a
national market system security on the NASD Automated Quotation
System.
(j) The Company will use its best efforts to do and perform all
things required or necessary to be done and performed under this
Agreement by the Company prior to the First Closing Date or any
Second Closing Date, as the case may be, and to satisfy all
conditions precedent to the delivery of the Shares.
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
-------------------
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company and the Selling Stockholders agree to pay all costs,
fees and expenses incurred in connection with the performance of their
obligations hereunder and in connection with the transactions contemplated
hereby, including without limiting the generality of the foregoing, (i) all
expenses incident to the issuance and delivery of the Common Shares (including
all printing and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Stock, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Common Shares
to be sold by the Company to the Underwriters, (iv) all fees and expenses of the
Company's counsel and the Company's independent accountants, (v) all costs and
expenses incurred in connection with the preparation, printing, filing, shipping
and distribution of the Registration Statement, each Preliminary Prospectus and
the Prospectus (including all exhibits and financial statements) and all
amendments and supplements provided for herein, this Agreement, the Agreement
Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney and the Blue Sky memorandum,
(vi) all filing fees, attorneys' fees and expenses (not in excess of an
aggregate of $17,500, including for counsel fees in
17
connection with the filings referenced in subparagraph (vii) below) incurred by
the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Common Shares for offer and sale under the Blue Sky laws (including the
securities laws of Canada), (vii) the filing fee of the National Association of
Securities Dealers, Inc. (the "NASD"), and attorneys' fees and expenses incurred
by the Company or the Underwriters in connection with the filing with the NASD
and (viii) all other fees, costs and expenses referred to in Item 13 of the
Registration Statement. At least one day prior to each Closing Date, the
Company shall deliver to the Selling Stockholders a statement setting forth the
Expenses not previously paid by the Selling Stockholders and each Selling
Stockholder's pro rata portion of such Expenses. If the transactions
contemplated hereunder are consummated, then the Company shall retain an amount
equal to the Expenses not previously paid by the Selling Stockholders from the
proceeds received by the Company from the Underwriters on each Closing Date and
the Company shall use such retained amount to pay the Expenses to the
appropriate parties. The Company shall then pay the remainder of such proceeds
to the Selling Stockholders as set forth in Section 5 hereof. Except as
provided in this Section 7, Section 9 and Section 11 hereof, the Underwriters
shall pay all of their own expenses, including the fees and disbursements of
their counsel (excluding those relating to qualification, registration or
exemption under the Blue Sky laws and the Blue Sky memorandum referred to
above). This Section 7 shall not affect any agreements relating to the payment
of expenses between the Company and the Selling Stockholders.
In addition to the obligation to pay the Expenses as provided above,
the Selling Stockholders, severally and not jointly, will pay the following fees
and expenses: (i) any fees and expenses of counsel for such Selling
Stockholders; (ii) any fees and expenses of the Agent as provided for in the
Power of Attorney; and (iii) all expenses and taxes incident to the sale and
delivery of the Common Shares to be sold by such Selling Stockholders, which are
not otherwise specifically provided for in the previous paragraph, to the
Underwriters hereunder.
SECTION 8. Conditions of the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective
not later than 5:00 P.M. (or in the case of a registration statement
filed pursuant to Rule 462(b) of the Rules and Regulations relating
to the Common Shares, not later than 10 P.M.), Washington, D.C. time,
on the date of this Agreement, or at such later time as shall have
been consented to by you; if the filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b) of the Rules
and Regulations, the Prospectus shall have been filed in the manner
and within the
18
time period required by Rule 424(b) of the Rules and Regulations; and
prior to such Closing Date, 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, to the knowledge of the Company, the Selling
Stockholders or you, shall be contemplated by the Commission; and any
request of the Commission for inclusion of additional information in
the Registration Statement, or otherwise, shall have been complied
with to your satisfaction.
(b) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, (i) there shall
not have been any change in the capital stock (other than pursuant to
the exercise of outstanding options and warrants disclosed in the
Prospectus) of the Company or any material change in the indebtedness
(other than as set forth or contemplated by the Registration
Statement or the Prospectus, or in the ordinary course of business)
of the Company, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material verbal or
written agreement or other transaction shall have been entered into
by the Company, which is not in the ordinary course of business or
which could result in a material reduction in the future earnings of
the Company, (iii) no loss or damage (whether or not insured) to the
property of the Company shall have been sustained which materially
and adversely affects the condition (financial or otherwise),
business, results of operations or prospects of the Company, (iv) no
legal or governmental action, suit or proceeding affecting the
Company which is material to the Company or which materially affects
or may affect the transactions contemplated by this Agreement shall
have been instituted or threatened, (v) there shall not have been any
material change in the condition (financial or otherwise), business,
management, results or operations or prospects of the Company which
makes it impractical or inadvisable in the judgment of the
Underwriters to proceed with the public offering or purchase the
Common Shares as contemplated hereby, (vi) on the Closing Date you
shall have received a certificate dated the Closing Date, signed by
Xxxxxx Xxxxxx and Xxxxxx Xxxxx, in their capacities as the President
and Chief Financial Officer of the Company, confirming the matters
set forth in paragraphs (a) and (b) of this Section 8.
(c) There shall have been furnished to you, on each Closing
Date, in form and substance satisfactory to you, (and there shall
have been furnished to the Selling Stockholders the documents set
forth in paragraphs (i), (iv) and (vi) below, provided, however that
you shall have the sole discretion as to the form and substance of
such documents) except as otherwise expressly provided below:
(i) An opinion of Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx, counsel for the Company, addressed to the Underwriters
and the Selling Stockholders, dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
19
(1) 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 as a foreign corporation and
is in good standing in all other jurisdictions where, to
the best of such counsel's knowledge, the ownership or
leasing of properties or the conduct of its business
requires such qualification, except for jurisdictions in
which the failure to so qualify would not have a material
adverse effect on the Company, and has full corporate
power and authority to own its properties and conduct its
business as described in the Registration Statement;
(2) The authorized, and, based on our
examination of stock books and corporate records, the
issued and outstanding capital stock of the Company is as
set forth under the caption "Description of Capital Stock"
in the Prospectus (subject to the exercise of outstanding
stock options after the date of the Prospectus); all
necessary and proper corporate proceedings have been taken
in order to authorize validly such authorized Common
Stock; all outstanding shares of Common Stock (including
the Firm Common Shares and any Optional Common Shares)
have been duly and validly issued, are fully paid and
nonassessable, have been issued in compliance with federal
and state securities laws (except that no such opinion
related to state securities laws is given as to any shares
of Common Stock issued in the Company's initial public
offering in May 1996), were not issued in violation of or
subject to any preemptive rights or other rights to
subscribe for or purchase any securities created by
operation of law or under the Company's certificate of
incorporation or by-laws or any agreement known to such
counsel to which the Company is a party or by which it is
bound and conform to the description thereof contained in
the Prospectus;
(3) The certificates evidencing the Common
Shares to be delivered hereunder are in due and proper
form under Delaware law;
(4) Except as disclosed in or specifically
contemplated by the Prospectus, to the best of such
counsel's knowledge, there are no outstanding options,
warrants or other rights calling for the issuance of, any
shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the
Company;
20
(5)(a) The Registration Statement has become
effective under the Act, and, to the best of such
counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or preventing
the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated by the Commission; any required
filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules and Regulations has
been made in the manner and within the time period
required by such Rule 424(b);
(b) The Registration Statement (including any
Registration Statement filed under 462(b) of the Act, if
any), the Prospectus and each amendment or supplement
thereto (except for the financial statements and schedules
included therein as to which such counsel need express no
opinion), as of their respective issue dates, complied as
to form in all material respects with the requirements of
the Act and the Rules and Regulations, provided, however,
that in passing upon such compliance as to form, such
counsel may assume that the statements made in such
Registration Statement and Prospectus are complete and
correct;
(c) To the best of such counsel's knowledge,
there are no franchises, leases, contracts, agreements or
documents of a character required to be disclosed in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not
disclosed or filed, as required;
(d) To the best of such counsel's knowledge,
there are no legal or governmental actions, suits or
proceedings pending or threatened against the Company
which are required to be described in the Prospectus which
are not described as required; and
(6) The Company has the corporate power and
authority to enter into this Agreement; this Agreement has
been duly and validly authorized by all necessary
corporate action by the Company, has been duly and validly
executed and delivered by and on behalf of the Company;
and no approval, authorization, order, consent,
registration, filing, qualification, license or permit of
or with any court, regulatory, administrative or other
governmental body of the United States or the State of New
York or under the Delaware General Corporation Law is
required for
21
the execution and delivery of this Agreement by the
Company or the consummation of the transactions
contemplated by this Agreement, except such as have been
obtained and are in full force and effect under the Act
and such as may be required under applicable Blue Sky laws
in connection with the purchase and distribution of the
Common Shares by the Underwriters and the clearance of
such offering with the NASD;
(7) The execution and performance of this
Agreement and the consummation of the transactions herein
contemplated will not violate any provisions of the
certificate of incorporation or bylaws, or other
organizational documents, of the Company, and, so far as
is known to such counsel, will not conflict with, result
in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other
instrument known to such counsel to which the Company is a
party or by which the Company or any of its properties may
be bound or affected, any statute or any authorization,
judgment, decree, order, rule or regulation of any court
or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its
properties, except for any violation, breach or default
that would not have a material adverse effect on the
Company or on the consummation of the transactions
contemplated by this Agreement;
(8) The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940,
as amended;
(9) To the best of such counsel's knowledge, all
leases to which the Company is a party are valid and
binding and no default has occurred or is continuing
thereunder, which might result in any material adverse
change in the business or results of operation of the
Company taken as a whole, and the Company enjoys peaceful
and undisturbed possession under all such leases to which
it is a party as lessee with such exceptions as do not
materially interfere with the use made by the Company;
(10) Under the law of the State of New York and
the federal law of the United States, no transfer taxes
are required to be paid by the Company in connection with
the sale and delivery of the Common Shares to the
Underwriters hereunder.
22
The opinion set forth in paragraph (10) may be rendered by
Xxxxxx Xxxxxxx of the Company instead of by Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx. In rendering such opinion, such counsel may
rely, as to matters of local law, on opinions of local counsel,
and as to matters of fact, the representations and warranties of
the Company set forth in paragraphs (a), (c), (h), (i), (j), (n),
(o), (p), (q), (s), (t), (u) (w), (x), (y) and (z) of Section 2
hereunder, on certificates of the Selling Stockholders and of
officers of the Company and of governmental officials, in which
case copies of said opinions or certificates are to be attached to
the opinion. Such counsel shall also include a statement to the
effect that nothing has come to such counsel's attention that
would lead such counsel to believe that either at the effective
date of the Registration Statement or at the applicable Closing
Date, the Registration Statement or the Prospectus, or any such
amendment or supplement, contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein (in
light of the circumstances under which they were made, in the case
of the Prospectus or any amendment or supplement thereto) not
misleading, provided that in each case such counsel shall not be
required to make any statement with respect to the financial
statements or other financial or statistical data included in the
Registration Statement, the Prospectus or any such amendment or
supplement;
(ii) An opinion of the following counsel: Xxxxxx,
Xxxxxxx & Xxxxxxx, counsel for Sefinco Ltd., Trust U/D
Xxxx X. Xxxxx, Trust U/D Xxxx X. Xxxxx; Xxxxxxx Xxxx,
counsel for Sprout Capital V, Sprout Growth, L.P., DLJ
Venture Capital Fund II, L.P., Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation; Xxxxxx & Calder, counsel
for Sprout Growth, Ltd.; and Proskauer Xxxx Xxxxx &
Xxxxxxxxxx LLP, counsel for Xxxxx Xxxxxx, dated the First
Closing Date or the Second Closing Date, as the case may
be, to the effect that:
(1) To the best of such counsel's
knowledge, this Agreement and the Stockholders
Agreement have been duly authorized, executed and
delivered by or on behalf of the Selling
Stockholder; the Agent has been duly and validly
authorized to act as the custodian of the Common
Shares to be sold by such Selling Stockholder; and
the performance of this Agreement and the
Stockholders Agreement and the consummation of the
transactions herein contemplated by the Selling
Stockholder will not result in a breach of or
constitute a default under, any material indenture,
mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license
or other agreement or instrument to which the
Selling Stockholder is a party or by which the
Selling Stockholder or any of its properties may be
bound, or violate any statute, judgment, decree,
order, rule or
23
regulation known to such counsel of any court or
governmental body having jurisdiction over the
Selling Stockholder or any of its properties,
except (x) for any violation, breach, or default
that could not have an adverse effect on the
Selling Stockholder's sale of the Common Shares to
be sold by it, him or her hereunder or its
performance of any of its, his or her other
obligations hereunder or under the Stockholders
Agreement and (y) that no opinion is given with
respect to federal or state securities or Blue Sky
laws; and to the best of such counsel's knowledge,
no approval, authorization, order or consent of any
court, regulatory body, administrative agency or
other governmental body is required for the
execution and delivery of this Agreement or the
Stockholders Agreement or the consummation by the
Selling Stockholder of the transactions
contemplated by this Agreement, except such as are
required to be obtained;
(2) To the best of such counsel's
knowledge, the Selling Stockholder has full right,
power and authority to enter into this Agreement
and the Stockholders Agreement and to sell,
transfer and deliver the Common Shares to be sold
on such Closing Date by such Selling Stockholder
hereunder and good and marketable title to such
Common Shares so sold, free and clear of all liens,
encumbrances, equities, claims, restrictions,
security interests, voting trusts, or other defects
of title whatsoever, has been transferred to the
Underwriters (whom counsel may assume to be bona
fide purchasers) who have purchased such Common
Shares hereunder; and
(3) To the best of such counsel's
knowledge, this Agreement and the Stockholders
Agreement are valid and binding agreements of the
Selling Stockholder in accordance with their terms
except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting
creditors' rights generally and except with respect
to those provisions relating to indemnities or
contributions for liabilities under the Act, as to
which no opinion need be expressed.
(iii) An opinion of Xxxxxx, Xxxxx & Bockius, counsel
to Equity Linked Investors, L.P. and Equity Linked
Investors, Inc. (the "Xxxxx Selling Stockholders"), dated
the First Closing Date or the Second Closing Date, as the
case may be, to the effect that:
(1) To such counsel's knowledge, this
Agreement and the Stockholders Agreement have been
duly
24
authorized, executed and delivered by or on behalf
of each of the Xxxxx Selling Stockholders; the Agent
has been duly and validly authorized to act as the
custodian of the Common Shares to be sold by such
Xxxxx Selling Stockholder; and the performance of
this Agreement and the Stockholders Agreement and
the consummation of the transactions herein
contemplated by the Selling Stockholder will not
result in a breach of or constitute a default under,
any material indenture, mortgage, deed of trust,
trust (constructive or other), loan agreement,
lease, franchise, license or other agreement or
instrument to which the Xxxxx Selling Stockholder is
a party or by which the Xxxxx Selling Stockholder or
any of its properties may be bound, or violate any
statute, judgment, decree, order, rule or regulation
known to such counsel of any court or governmental
body having jurisdiction over the Selling
Stockholder or any of its properties, except (x) for
any violation, breach, or default that could not
have an adverse effect on the Selling Stockholder's
sale of the Common Shares to be sold by it, him or
her hereunder or its performance of any of its, his
or her other obligations hereunder or under the
Stockholders Agreement and (y) that no opinion is
given with respect to federal or state securities or
Blue Sky laws; and to the best of such counsel's
knowledge, no approval, authorization, order or
consent of any court, regulatory body,
administrative agency or other governmental body is
required for the execution and delivery of this
Agreement or the Stockholders Agreement or the
consummation by the Selling Stockholder of the
transactions contemplated by this Agreement, except
such as are required to be obtained and are in full
force and effect under federal and state securities
or Blue Sky laws and such as may be required under
the rules of the NASD;
(2) To such counsel's knowledge, each
Xxxxx Selling Stockholder has full right, power and
authority to enter into this Agreement and the
Stockholders Agreement and to sell, transfer and
deliver the Common Shares to be sold by it on such
Closing Date hereunder. Each Xxxxx Selling
Stockholder has conveyed good title to such Common
Shares so sold, free and clear of all liens,
encumbrances, equities, claims, restrictions,
security interests, voting trusts, or other defects
of title whatsoever to the Underwriters (whom
counsel may assume to be bona fide purchasers) who
have purchased such Common Shares hereunder; and
(3) To such counsel's knowledge, this
Agreement and the Stockholders Agreement are valid
and
25
binding agreements of the Xxxxx Selling Stockholders
enforceable in accordance with their terms except as
enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights
generally and except with respect to those
provisions relating to indemnities or contributions
for liabilities under the Act, as to which no
opinion need be expressed.
(iv) An opinion of Ropes & Xxxx, counsel for
Xxxxxx Diversified Income Trust, Xxxxxx Master
Intermediate Income Trust, Xxxxxx Managed High Yield
Trust, Xxxxxx Master Income Trust, Xxxxxx Capital Manager
Trust--PCM High Yield Fund, Xxxxxx High Income Convertible
and Bond Fund, Xxxxxx High Yield Managed Trust, Xxxxxx
Premier Income Trust, Ameritech Corp. Pension Trust
(collectively, the "Xxxxxx Funds"), dated the First
Closing Date, to the effect that:
(1) To the best of such counsel's
knowledge, this Agreement, and the Power of
Attorney, have been duly authorized, executed and
delivered by or on behalf of each of the Xxxxxx
Funds; and the performance of this Agreement and the
Power of Attorney or and the consummation of the
transactions herein contemplated by each of the
Xxxxxx Funds will not result in a breach of or
constitute a default under, any material indenture,
mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or
other agreement of instrument to which any of the
Xxxxxx Funds is a party or by which any of the
Xxxxxx Funds or any of their properties may be
bound, or violate any statute, judgment, decree,
order, rule or regulation known to such counsel of
any court or governmental body having jurisdiction
over any of the Xxxxxx Funds or any of their
properties, except (x) for any violation, breach, or
default that could not have an adverse effect on the
Selling Stockholder's sale of the Common Shares to
be sold by it, him or her hereunder or its
performance of any of its, his or her other
obligations hereunder or under the Stockholders
Agreement and (y) that no opinion is given with
respect to federal or state securities or Blue Sky
laws; and to the best of such counsel's knowledge,
no approval, authorization, order or consent of any
court, regulatory body, administrative agency or
other governmental body is required for the
execution and delivery of this Agreement or the
Stockholders Agreement or the consummation by the
Selling Stockholder of the transactions contemplated
by this Agreement, except such as are required to be
obtained and are in full force and effect under
federal and state securities or Blue Sky laws and
such as may be required under the rules of the NASD;
and
26
(2) To the best of such counsel's
knowledge, each of the Xxxxxx Funds has full right,
power and authority to enter into this Agreement and
the Power of Attorney and to sell, transfer and
deliver the Common Shares to be sold on such Closing
Date by such Xxxxxx Fund hereunder. Immediately
prior to the date hereof, each of the Xxxxxx Funds
was the sole registered owner of the Shares to be
sold by such Xxxxxx Fund pursuant to the
Underwriting Agreement; upon transfer of such Shares
to the Underwriters in compliance with Section 8-
302(1)(a)-(c), assuming the Underwriters purchased
the Shares in good faith and without notice of any
adverse claim within the meaning of Section 8-302 of
the Massachusetts Uniform Commercial Code, the
Underwriters will have acquired all rights of such
Xxxxxx Fund in such Shares free of any adverse
claim, any lien in favor of the Company, and any
restrictions on transfer imposed by the Company; and
the owner of the Shares, if other than such Xxxxxx
Fund, is precluded from asserting against the
Underwriters the ineffectiveness of any unauthorized
endorsement.
(v) An opinion of Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx, counsel to Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, and
Xxxxxx Xxxxxx and for the purposes of this opinion, with
respect to the Xxxxxx Funds, dated the First Closing Date
or the Second Closing Date, as the case may be, to the
effect that, to the best of such counsel's knowledge, upon
payment for and delivery of the respective Selling
Stockholder's Shares in accordance with the Agreement, the
Underwriters will own such Shares free and clear of any
adverse claim (assuming the Underwriters are bona fide
purchasers within the meaning of the Uniform Commercial
Code of the State of New York).
(vi) Such opinion or opinions of Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx (a partnership including
professional corporations) ("Xxxxx, Xxxxx"), counsel for
the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to
the incorporation of the Company, the sufficiency of all
corporate proceedings and other legal matters relating to
this Agreement, the validity of the Common Shares, the
Registration Statement and the Prospectus and other related
matters as you may reasonably require, and the Company and
the Selling Stockholders shall have furnished to such
counsel such documents and shall have exhibited to them
such papers and records as they may reasonably request for
the purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on
27
representations or certificates of officers of the Company
and governmental officials.
(vii) A certificate of the Company executed by the
Chairman of the Board or President and the chief financial
or accounting officer of the Company, dated the First
Closing Date or the Second Closing Date, as the case may
be, to the effect that:
(1) The representations and warranties of
the Company set forth in Section 2 of this Agreement
are true and correct as of the date of this
Agreement and as of the First Closing Date or the
Second Closing Date, as the case may be, and the
Company has complied with all the agreements and
satisfied all the conditions on its part to be
performed or satisfied on or prior to such Closing
Date;
(2) The Commission has not issued any
order preventing or suspending the use of the
Prospectus or any Preliminary Prospectus filed as a
part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness
of the Registration Statement has been issued; and
to the best of the knowledge of the respective
signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the
Act;
(3) Each of the respective signers of the
certificate has carefully examined the Registration
Statement and the Prospectus; in his opinion and to
the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or
supplements thereto contain all statements required
to be stated therein regarding the Company; and
neither the Registration Statement nor 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;
(viii) On the First Closing Date or the Second
Closing Date, as the case may be, a certificate, dated such
Closing Date and addressed to you, signed by or on behalf
of each of the Selling Stockholders to the effect that the
representations and warranties of such Selling Stockholder
in this Agreement are true and correct, as if made at and
as of the First Closing Date or the Second Closing Date, as
the case may be, and such Selling Stockholder has complied
with all the agreements and satisfied all
28
the conditions on his part to be performed or satisfied
prior to the First Closing Date or the Second Closing Date,
as the case may be.
(ix) On the date this Agreement is executed and
also on the First Closing Date and the Second Closing Date
a letter addressed to you, as Underwriters, from Ernst &
Young LLP, independent accountants, the first one to be
dated the date of this Agreement, the second one to be
dated the First Closing Date and the third one (in the
event of a Second Closing) to be dated the Second Closing
Date, in form and substance satisfactory to you with
respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectus.
(x) On or before the First Closing Date, letters
from each of the Selling Stockholders and each director and
officer (except Xxxxxx Xxxxx) of the Company, in the forms
attached hereto as Exhibit A, confirming that for a period
of 120 days after the date of the Prospectus, such person
will not directly or indirectly sell or offer to sell or
otherwise dispose of any shares of Common Stock or any
right to acquire such shares without the prior written
consent of Xxxxxxxxxx Securities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Xxxxx, Xxxxx, counsel for the Underwriters. The Company shall
furnish you with such manually signed or conformed copies of such opinions,
certificates, letters and documents as you request. Any certificate signed by
any officer of the Company and delivered to the Underwriters or to counsel for
the Underwriters shall be deemed to be a representation and warranty by the
Company to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Underwriters to the Company and the Selling Stockholders without liability on
the part of any Underwriter or the Company or the Selling Stockholders except
for the expenses to be paid or reimbursed by the Company and by the Selling
Stockholders pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding any
---------------------------------------
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 8, or if the sale to the Underwriters of the Common Shares at the
First Closing is not consummated because of any refusal, inability or failure on
the part of the Company or the Selling Stockholders to perform any agreement
herein or to comply with any provision hereof, the Company and the Selling
Stockholders agree to reimburse you and the other Underwriters upon demand for
all out-of-pocket expenses that shall have been reasonably incurred by you and
them in connection with the proposed purchase and the sale of the Common Shares
(the "Underwriters Expenses"), including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, telegraph
charges and telephone charges relating
29
directly to the offering contemplated by the Prospectus. Any such termination
shall be without liability of any party to any other party except that the
provisions of this Section, Section 7 and Section 11 shall at all times be
effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. You and the
---------------------------------------
Company will use your and its best efforts to cause the Registration Statement
to become effective, to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as practicable the lifting thereof.
SECTION 11. Indemnification. (a) The Company and each of the Selling
---------------
Stockholders (subject to the limitations set forth in clauses (i) through (v),
inclusive, of the proviso to this sentence) agree to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Underwriter or such controlling person
may become subject, under the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, or any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus, or the
Prospectus or any amendment or supplement thereto, in light of the circumstances
under which they were made, or arise out of or are based upon the omission or
alleged omission to state in any of them a material fact required to be stated
therein or necessary to make the statements in any of them not misleading, or
arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Company or the Selling Stockholders
contained herein or any failure of the Company or the Selling Stockholders to
perform their respective obligations hereunder; and will reimburse each
Underwriter and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that
(i) neither the Company nor any Selling
Stockholder will be liable in any such case to the extent
that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 4
hereof;
(ii) with respect to any untrue statement or
omission or alleged untrue statement or omission made in any
Preliminary Prospectus, the indemnity agreement contained in
this paragraph shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses,
30
claims, damages, liabilities or expenses purchased the
Common Shares concerned (or to the benefit of any person
controlling such Underwriter) to the extent that any such
loss, claim, damage, liability or expense of such
Underwriter or controlling persons results from the fact
that a copy of the Prospectus was not sent or given to such
person at or prior to the written confirmation of sale of
such Common Shares to such person as required by the Act and
if the untrue statement or omission has been corrected in
the Prospectus, unless such failure to deliver the
Prospectus was a result of noncompliance by the Company with
its obligations under Section 6(f) hereof;
(iii) in no event shall any Selling Stockholder,
other than Sefinco Ltd., Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation, Sprout Capital V, Sprout Growth,
L.P., DLJ Venture Capital Fund II, L.P. and Sprout Growth,
Ltd., Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxx be
liable in respect of such loss, claim, damage, liability or
expense to the extent not (x) attributable to information
included or reflected in any Preliminary Prospectus,
Prospectus or the Registration Statement with respect to
such Selling Stockholder, (y) arising out of any inaccuracy
in the representations and warranties of such Selling
Stockholder or (z) arising out of any failure of such
Selling Stockholder to perform its respective obligations
hereunder;
(iv) each Selling Stockholder's liability
hereunder shall in any event be limited to the amount of net
proceeds received by such Selling Stockholder from the sale
of the Common Shares sold by it hereunder;
(v) no Selling Stockholder shall be required to
provide indemnification hereunder unless (A) the Underwriter
or controlling person seeking indemnification shall have
first made a demand for payment on the Company with respect
any such loss, claim, damage, liability or expense, (B) the
Company shall have failed to make such requested payment
within 60 days after receipt of such demand and (C) the
Company shall be the subject of a pending bankruptcy
proceeding or shall have been dissolved or liquidated or the
Underwriter or controlling person seeking indemnification
can demonstrate that the Company is insolvent; furthermore,
no Selling Stockholder shall be required to provide
indemnification hereunder unless the Underwriter or
controlling person seeking indemnification shall have made a
claim against each other Selling Stockholder subject to an
indemnification obligation for the matter in question under
this Section 11(a) and shall have pursued each such claim
with vigor reasonably comparable under the circumstances,
taking into account each such Selling Stockholder's
financial ability to satisfy any portion of its potential
indemnification obligation relating to such matter.
31
In addition to their other obligations under this Section 11(a), the Company and
each Selling Stockholder (subject to the limitations set forth in clauses (i)
through (v), inclusive, of the proviso of the preceding sentence) agrees that,
as an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Company or the Selling Stockholders herein
or failure to perform their obligations hereunder, all as described in this
Section 11(a), it will reimburse each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's or each Selling Stockholder's obligation to
reimburse each Underwriter for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, each Underwriter shall promptly return it to the
Company and such Selling Stockholders together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate for
borrowers of the highest credit standing) announced from time to time by Bank of
America NT&SA, San Francisco, California (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter within 30 days of a
request for reimbursement, shall bear interest at the Prime Rate from the date
of such request. This indemnity agreement will be in addition to any liability
which the Company or each Selling Stockholder may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement, the Selling Stockholders and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of the Act,
against any losses, claims, damages, liabilities or expenses to which the
Company, or any such director, officer, Selling Stockholder or controlling
person may become subject, under the Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including the
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with the information furnished to the Company pursuant to Section 4
hereof; and will reimburse the Company, or any such director, officer, Selling
Stockholder or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer, Selling Stockholder or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 11(b), each
Underwriter severally agrees that, as an
32
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 11(b) which relates
to information furnished to the Company pursuant to Section 4 hereof, it will
reimburse the Company (and, to the extent applicable, each officer, director,
Selling Stockholder or controlling person) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company (and, to
the extent applicable, each officer, director, Selling Stockholder or
controlling person) for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to have
been improper, the Company (and, to the extent applicable, each officer,
director, Selling Stockholder or controlling person) shall promptly return it to
the Underwriters together with interest, compounded daily, determined on the
basis of the Prime Rate. Any such interim reimbursement payments which are not
made to the Company (and, to the extent applicable, each officer, director,
Selling Stockholder or controlling person) within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, 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 for
contribution or otherwise than under the indemnity agreement contained in this
Section or to the extent it is not prejudiced as a proximate result of such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties similarly
notified, 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 party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or 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 to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
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 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
such counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence (it being understood, however,
that
33
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Underwriters in the case of paragraph (a),
representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 11 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to herein
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, each of the Selling Stockholders and the Underwriters
from the offering of the Common 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, each of the Selling
Stockholders and the Underwriters in connection with the statements or omissions
or inaccuracies in the representations and warranties herein which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The respective relative benefits received by
the Company, each of the Selling Stockholders and the Underwriters shall be
deemed to be in the same proportion, in the case of the Company and each Selling
Stockholder as the total price paid to the Company and to each Selling
Stockholder, respectively, for the Common Shares sold by them to the
Underwriters (net of underwriting commissions but before deducting expenses),
and in the case of the Underwriters as the underwriting commissions received by
them bears to the total of such amounts paid to the Selling Stockholders and
received by the Underwriters as underwriting commissions. The relative fault of
the Company, each Selling Stockholder and the Underwriters shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact or the inaccurate or the alleged inaccurate representation and/or
warranty relates to information supplied by the Company, each Selling
Stockholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in subparagraph (c) of this
Section 11, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in subparagraph (c) of this Section 11 with respect to
notice of commencement of any action shall apply if a claim for contribution is
to be made under this subparagraph (d); provided, however, that no additional
notice shall be required with respect to any action for which notice has been
given under subparagraph (c) for purposes of indemnification. The Company, each
Selling Stockholder and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined solely by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the
34
equitable considerations referred to in the preceding provisions of this
paragraph. Notwithstanding the provisions of this Section 11, no Underwriter
shall be required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public, and no Selling
Stockholder shall be required to contribute any amount in excess of the net
proceeds received by such Selling Stockholder from the sale of Common Shares
hereunder. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 11 are several in proportion
to their respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections 11(a)
and 11(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD or pursuant to the procedures of the American
Arbitration Association, as selected by the indemnifying party. Any such
arbitration must be commenced by service of a written demand for arbitration or
written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Such an arbitration
would be limited to the operation of the interim reimbursement provisions
contained in Sections 11(a) and 11(b) hereof and would not resolve the ultimate
propriety or enforceability of the obligation to reimburse expenses which is
created by the provisions of such Sections 11(a) and 11(b) hereof.
SECTION 12. Default of Underwriters. It shall be a condition to
-----------------------
this Agreement and the obligation of the Company and the Selling Stockholders to
sell and deliver the Common Shares hereunder, and of each Underwriter to
purchase the Common Shares in the manner as described herein, that, except as
hereinafter in this paragraph provided, each of the Underwriters shall purchase
and pay for all the Common Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Underwriters of all such shares in accordance with
the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Common Shares hereunder on either the First or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date
does not exceed 10% of the total number of Common Shares which the Underwriters
are obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Common Shares which such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Common Shares with respect
to which such default occurs is more than the above percentage and arrangements
satisfactory to the Underwriters and the Company for the purchase of such Common
Shares by other persons are not made within 48 hours after such default, this
Agreement will terminate without liability on the part of any non-
35
defaulting Underwriter or the Company or the Selling Stockholders except for the
expenses to be paid by the Company and the Selling Stockholders pursuant to
Section 7 hereof and except to the extent provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to
be purchased by the non-defaulting Underwriters or by another party or parties,
the Underwriters or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become effective
--------------
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 P.M., California time, on the first full business
day following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this Section 13, the Common Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Common Shares or upon the release by you of telegrams (i)
advising Underwriters that the Common Shares are released for public offering,
or (ii) offering the Common Shares for sale to securities dealers, whichever may
occur first.
SECTION 14. Termination. Without limiting the right to terminate this
-----------
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice
to you and the Selling Stockholders or by you by notice to the Company
and the Selling Stockholders at any time prior to the time this Agreement
shall become effective as to all its provisions, and any such termination
shall be without liability on the part of the Company or the Selling
Stockholders to any Underwriter (except for the expenses to be paid or
reimbursed by the Company and the Selling Stockholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof) or of any Underwriter to the Company or the Selling Stockholders
(except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum
or maximum prices shall have
36
been generally established on the New York Stock Exchange or in the over
the counter market by the NASD, or trading in securities generally shall
have been suspended on such Exchange or in the over the counter market by
the NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any
substantial change in political, financial or economic conditions shall
have occurred or shall have escalated to such an extent, as, in the
judgment of the Underwriters, to materially and adversely affect the
marketability of the Common Shares, (iii) if any adverse event shall have
occurred or shall exist which makes untrue or incorrect in any material
respect any statement or information contained in the Registration
Statement or Prospectus or which is not reflected in the Registration
Statement or Prospectus but should be reflected therein in order to make
the statements or information contained therein not misleading in any
material respect, or (iv) if there shall be any action, suit or
proceeding pending or threatened, or there shall have been any
development or prospective development involving particularly the
business or properties or securities of the Company or the transactions
contemplated by this Agreement, which, in the reasonable judgment of the
Underwriters, may materially and adversely affect the Company's business
or earnings and makes it impracticable or inadvisable to offer or sell
the Common Shares. Any termination pursuant to this subsection (b) shall
be without liability on the part of any Underwriter to the Company or the
Selling Stockholders or on the part of the Company or the Selling
Stockholders to any Underwriter (except for expenses to be paid or
reimbursed by the Company and the Selling Stockholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof).
(c) This Agreement shall also terminate at 5:00 P.M.,
California Time, on the tenth full business day after the Registration
Statement shall have become effective if the initial public offering
price of the Common Shares shall not then as yet have been determined as
provided in Section 5 hereof. Any termination pursuant to this
subsection (c) shall be without liability on the part of any Underwriter
to the Company or the Selling Stockholders or on the part of the Company
or the Selling Stockholders or on the part of the Company or the Selling
Stockholders to any Underwriter (except for expenses to be paid or
reimbursed by the Company and the Selling Stockholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof).
SECTION 15. Representations and Indemnities to Survive Delivery. The
---------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors, or the Selling Stockholders, or any controlling person,
as the case may be, and will survive delivery of and payment for the Common
Shares sold hereunder, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of
37
any Underwriter or by or on behalf of the Selling Stockholders, the officers or
directors of the Company or any controlling person of the Selling Stockholders,
(ii) acceptance of the Shares and payment for them hereunder and (iii)
termination of this Agreement.
SECTION 16. Notices. All communications hereunder shall be in writing
-------
and, if sent to the Underwriters shall be mailed, delivered or telegraphed and
confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx Xxxx, with a copy to Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx,
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxxxxx; if sent to the Company, shall be mailed, delivered or telegraphed and
confirmed to the Company at 0000 Xxxxxx Xxxxxx, Xxxxx, Xxx Xxxx 00000 with a
copy to Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Xxxxxx X. Xxxxxxx and if sent to the
Selling Stockholders, shall be mailed, delivered or telegraphed and confirmed to
the addresses set forth next to the names of such Selling Stockholders listed in
Schedule B. The Company, the Selling Stockholders or you may change the address
for receipt of communications hereunder by giving notice to the others.
SECTION 17. Successors. This Agreement will inure to the benefit of and
----------
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal representatives and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not include
any purchaser of the Common Shares as such from any of the Underwriters merely
by reason of such purchase.
SECTION 18. Partial Unenforceability. The invalidity or
------------------------
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 19. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of New York.
SECTION 20. General. This Agreement constitutes the entire agreement of
-------
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the
38
convenience of the parties only and will not affect the construction or
interpretation of this Agreement. This Agreement may be amended or modified,
and the observance of any term of this Agreement may be waived, only by a
writing signed by the Company, the Selling Stockholders and you.
Any person executing and delivering this Agreement as Attorney-in-fact
for a Selling Stockholder represents by so doing that he has been duly appointed
as Attorney-in-fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-fact to take
such action. Any action taken under this Agreement by any of the Attorneys-in-
fact will be binding on all the Selling Stockholders.
To the extent that the sale of shares pursuant to this Agreement would
violate the provisions of a lock-up agreement dated April 4, 1996 between a
Selling Stockholder and the underwriters for the Company's initial public
offering, Xxxxxxxxxx Securities hereby waives the provisions of such lock-up
agreement.
39
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company, the Selling Stockholders and
the several Underwriters including you, all in accordance with its terms.
Very truly yours,
Xxxxxxxx'x, Inc.
By:
---------------------------------
President
SELLING STOCKHOLDERS
By:
---------------------------------
(Attorney-in-fact)
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
XXXXXXXXX XXXXXXXX & COMPANY
SALOMON BROTHERS INC
By XXXXXXXXXX SECURITIES
By:
--------------------------------
Managing Director
40
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxxxxx Securities . . . . . . . . . . . . . .
Salomon Brothers Inc . . . . . . . . . . . . . .
Xxxxxxxxx Xxxxxxxx
& Company LLC . . . . . . . . . . . . . . . . .
----------
TOTAL . . . . . . . . . . . . . . . . . . . . . . 1,970,000
==========
A-1
SCHEDULE B
Number of Firm
Common Shares to
be Sold by
Address of Selling Selling
Name of Selling Stockholder Stockholder Stockholders
--------------------------- ----------------- ------------
Sprout Growth, Ltd. Xxxxxxx X. Xxxxx 18,701
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Sprout Capital V Xxxxxxx X. Xxxxx 138,920
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Sprout Growth, L.P. Xxxxxxx X. Xxxxx 167,973
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
DLJ Venture Capital Fund, II Xxxxxxx X. Xxxxx 8,349
LP 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxxxx, Lufkin and Xxxxxxx X. Xxxxx 87,292
Xxxxxxxx Securities 000 Xxxx Xxxxxx
Xxxxxxxxxxx Xxx Xxxx, XX 00000
Sefinco, Ltd. 000 Xxxxx Xxxxxx, 0xx Xxxxx 000,000
Xxx Xxxx, XX 00000
Equity-Linked Investors, Xxxxx Capital Management, Inc. 273,954
L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Equity-Linked Investors II Xxxxx Capital Management Inc. 53,328
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xx. Xxxxx Xxxxxx 0 Xxxxxxxx Xxxx 80,000
Xxxxxxxxx, XX 00000
B-1
Number of Firm
Common Shares to
be Sold by
Address of Selling Selling
Name of Selling Stockholder Stockholder Stockholders
--------------------------- ----------------- ------------
Xxxxxx Funds c/x Xxxxxx Investment
Management, Inc.
The Xxxxxx Advisory Company, 373,586
Inc., and Xxxxxx Fiduciary
Trust Company,
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Trust U/D Xxxx X. Xxxxx 10,827
Trust U/D Xxxx X. Xxxxx 10,827
Mr. Xxxxxx Xxxxxx 78,991
Mr. Xxxxxx Xxxxxxxx 109,371
Xx. Xxxxxx X. Xxxxxxxx 000 Xxxxxxx Xxxxxx, 00xx Floor 46,272
Xxx Xxxx, XX 00000 ________
TOTAL 1.970,000
=========
B-2
SCHEDULE C
Number of
Optional
Common Shares
to be Sold by
Address of Selling Selling
Name of Selling Stockholder Stockholder Stockholders
--------------------------- ----------------- ------------
Sprout Growth, Ltd. Xxxxxxx X. Xxxxx 3,414
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Sprout Capital V Xxxxxxx X. Xxxxx 25,358
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Sprout Growth, L.P. Xxxxxxx X. Xxxxx 30,661
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
DLJ Venture Capital Fund, II LP Xxxxxxx X. Xxxxx 1,524
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxxxx, Xxxxxx and Xxxxxxxx Xxxxxxx X. Xxxxx 15,934
Securities Corporation 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Sefinco, Ltd. 000 Xxxxx Xxxxxx, 0xx Xxxxx 00,000
Xxx Xxxx, XX 00000
Equity-Linked Investors II Xxxxx Capital Management Inc. 59,741
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
C-1
Number of
Optional Common
Shares to be
Address of Selling Sold by Selling
Name of Selling Stockholder Stockholder Stockholders
--------------------------- ----------------- ------------
Xx. Xxxxx Xxxxxx 0 Xxxxxxxx Xxxx 14,603
Xxxxxxxxx, XX 00000
Trust U/D Xxxx X. Xxxxx 1,976
Trust U/D Xxxx X. Xxxxx 1,976
Mr. Xxxxxx Xxxxxx 15,798
Mr. Xxxxxx Xxxxxxxx 21,874
Xx. Xxxxxx X. Xxxxxxxx 000 Xxxxxxx Xxxxxx, 00xx Floor 9,254
Xxx Xxxx, XX 00000 ______
TOTAL 295,500
=======
C-2
