ENTRUST TECHNOLOGIES INC.
COMMON STOCK ($0.01 PAR VALUE PER SHARE)
UNDERWRITING AGREEMENT
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_________ __, 2000
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
SoundView Technology Group, Inc.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Entrust Technologies Inc., a Maryland corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 1,875,000 shares, and, at the election of the Underwriters, up to an
additional 305,625 shares of Common Stock, $0.01 par value ("Stock"), of the
Company, and the Stockholders of the Company named in Schedule II hereto (the
"Selling Stockholders") propose, subject to the terms and conditions stated
herein, to sell the Underwriters an aggregate of 6,275,000 shares and, at the
election of the Underwriters a certain Selling Stockholder proposes to sell, up
to an additional 916,875 shares of Stock. The aggregate of 8,150,000 shares to
be sold by the Company and the Selling Stockholders is herein called the "Firm
Shares" and the aggregate of 1,222,500 additional shares to be sold by the
Company and the certain Selling Stockholder is herein called the "Optional
Shares". The Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares".
1. (a) The Company and Entrust Technologies Limited, a Canadian
corporation and the Company's majority-owned subsidiary ("Entrust Limited"),
jointly and severally represent and warrant to, and agree with, each of the
Underwriters that:
(i) A registration statement on Form S-3 (File No. 333-95375)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to you
for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing, no
other document with respect to the Initial Registration Statement or
document
incorporated by reference therein has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment thereto or
the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"; the various parts of the
Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and including (i) the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was
declared effective and (ii) the documents incorporated by reference in
the prospectus contained in the Initial Registration Statement at the
time such part of the Initial Registration Statement became effective,
each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the "Prospectus"); 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 Item 12 of Form S-3 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference
to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the
case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the
Initial Registration Statement that is incorporated by reference in the
Registration Statement;
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use
therein or by a Selling Stockholder expressly for use in the
preparation of the answers therein to Item 7 of Form S-3;
(iii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and
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none of such documents contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and any further documents
so filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through ▇▇▇▇▇▇▇,
Sachs & Co. expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects, to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein or by a Selling
Stockholder expressly for use in the preparation of the answers therein
to Item 7 of Form S-3;
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock (other
than as a result of the grant or exercise of stock options pursuant to
the Company's Amended and Restated 1996 Stock Incentive Plan, 1998
Employee Stock Purchase Plan or 1999 Non-Officer Employee Stock
Incentive Plan (collectively, the "Company Stock Plans") or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, business,
properties, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(vi) The Company and its subsidiaries have good and valid
title in fee simple to all real property and good and valid title to
all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as
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are described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries;
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Maryland, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the Company
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation;
(viii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description of the
Stock contained in the Prospectus; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and
(except for directors' qualifying shares and except as set forth in the
Prospectus) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(ix) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will
be duly and validly issued and fully paid and non-assessable and will
conform to the description of the Stock contained in the Prospectus;
(x) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions herein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions
of the Articles of Incorporation or By-laws of the Company, any statute
or any rule or regulation of any governmental agency or regulatory body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties or any order or decree of any court that
specifically names the Company or any of its subsidiaries or any of
their properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or regulatory body is required for the issue and sale of the
Shares or the consummation by the Company of the transactions
contemplated by
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this Agreement, except the registration under the Act of the Shares and
such consents, approvals, authorizations, registrations or
qualifications as may be required under foreign or state securities or
Blue Sky laws and the approval by the National Association of
Securities Dealers, Inc. of the underwriting terms and arrangements in
connection with the purchase and distribution of the Shares by the
Underwriters;
(xi) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or By-laws or (ii) in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except for
such defaults which, individually or in the aggregate, have not had,
and are not reasonably likely to result in, any material adverse effect
on the business, properties, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect").
(xii) The statements set forth in the Prospectus under the
caption "Underwriting", insofar as they purport to describe the
provisions of the documents referred to therein, are accurate summaries
and descriptions of such terms and provisions in all material respects;
(xiii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a Material Adverse Effect; and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xiv) Other than as set forth in the Prospectus, the Company
and its subsidiaries have sufficient interests in all patents,
trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes ("Intellectual Property")
necessary for their business as described in the Prospectus and, to the
Company's knowledge, necessary in connection with the products and
services under development, without any conflict with or infringement
of the interests of others, except for such conflicts which,
individually or in the aggregate, have not had and are not reasonably
likely to result in, a Material Adverse Effect, and have taken all
reasonable steps necessary to secure interests in such Intellectual
Property from their contractors; except as set forth in the Prospectus,
the Company is not aware of outstanding options, licenses or agreements
of any kind relating to the Intellectual Property of the Company which
are required to be set forth in the Prospectus, and, except as set
forth in the Prospectus, neither the Company nor any of its
subsidiaries is a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property of any other
person or entity which are required to be set forth in the Prospectus;
none of the technology employed by the Company has been obtained or is
being used by the Company or its subsidiaries in violation of any
contractual fiduciary obligation binding on the Company or any of its
subsidiaries or any of its directors or executive officers or, to the
Company's knowledge, any of its employees or otherwise in violation of
the rights of any persons; except as disclosed in the Prospectus,
neither
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the Company nor any of its subsidiaries has received any written or, to
the Company's knowledge, oral communications alleging that the Company
or any of its subsidiaries has violated, infringed or conflicted with,
or, by conducting its business as set forth in the Prospectus, would
violate, infringe or conflict with any of the Intellectual Property of
any other person or entity other than any such violations,
infringements or conflicts which, individually or in the aggregate,
have not had, and are not reasonably likely to result in a Material
Adverse Effect; and the Company and its subsidiaries have taken and
will maintain reasonable measures to prevent the unauthorized
dissemination or publication of their confidential information and, to
the extent contractually required to do so, the confidential
information of third parties in their possession;
(xv) The Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, but not
limited to, business interruption insurance, 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;
(xvi) There are no contracts, other documents or other
agreements 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 thereunder 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 neither the Company nor, to
the Company's knowledge, any other party is in breach of or default
under any of such contracts other than such breaches or defaults which,
individually or in the aggregate, have not had, and are not reasonably
likely to result in, a Material Adverse Effect;
(xvii) Except as described in or contemplated by the
Prospectus, the Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or
modification of, or failure to obtain, any such certificate,
authorization or permit which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect;
(xviii) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or
an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(xix) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(xx) The Shares have been approved for listing on the Nasdaq
National Market, subject to official notice of issuance; and
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(xxi) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement, and the right of each person who is a party to any contract,
agreement or understanding so described to include such securities
pursuant to the Registration Statement has been effectively satisfied
or waived.
(b) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder of
this Agreement, and for the sale and delivery of the Shares to be sold
by such Selling Stockholder hereunder, have been obtained; and such
Selling Stockholder has full right, power and authority to enter into
this Agreement, and to sell, assign, transfer and deliver the Shares to
be sold by such Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any violation of
the provisions of any statute, rule or regulation of any governmental
agency or regulatory body having jurisdiction over such Selling
Stockholder or the property of such Selling Stockholder or any order or
decree of any court that specifically names such Selling Stockholder or
any of its subsidiaries or any of their properties, except in each case
as would not adversely affect the ability of such Selling Stockholder
to consummate the transactions contemplated by this Agreement;
(iii) Such Selling Stockholder has good and valid title to the
Shares to be sold by such Selling Stockholder or shares of Exchangeable
Shares of Entrust Limited, which shares are exchangeable into the
Shares to be sold, and, immediately prior to each Time of Delivery (as
defined in Section 4 hereof), such Selling Stockholder will have, good
and valid title to the Shares to be sold by such Selling Stockholder
hereunder, free and clear of all liens, encumbrances, equities or
claims; and, assuming that the Underwriters purchase the Shares to be
sold by such Selling Stockholder for value, in good faith and without
notice of any adverse claim within the meaning of the Uniform
Commercial Code, upon delivery of such Shares and payment therefor
pursuant hereto, good and valid title to such Shares, free and clear of
all liens, encumbrances, equities or claims, will pass to the several
Underwriters;
(iv) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, such Selling Stockholder will not, without your prior
written consent (A) offer, sell, contract to sell
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or otherwise dispose of, except as provided hereunder, any securities
of the Company that are substantially similar to the Shares, including
but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any
such substantially similar securities (other than upon the conversion
or exchange of convertible or exchangeable securities outstanding as of
the date of this Agreement) or (B) engage directly or indirectly in any
transaction the likely result of which would involve a transaction
prohibited by subclause (B) of this Section 1(b)(iv) (notwithstanding
the foregoing restrictions on transfer, each Selling Stockholder shall
be permitted to make transfers permitted by Section 5(b) hereof);
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did not, and the Prospectus
and any further amendments or supplements to the Registration Statement
and the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; and
(vii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or
at the First Time of Delivery (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department
regulations in lieu thereof) if such Selling Stockholder is a
corporation, partnership or other entity organized in the United
States, or a properly completed and executed United States Treasury
Department Form W-8 and Form 1001, if such Selling Stockholder is a
corporation organized outside the United States.
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Selling Stockholders agree, severally and not jointly,
to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and each of the Selling
Stockholders, at a purchase price per share of $_____, the number of Firm Shares
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Firm Shares to be sold by the Company and
each of the Selling Stockholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number of Firm Shares to be purchased by all of the Underwriters
from the Company and all of the Selling Stockholders hereunder and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Company and each of the Selling
Stockholders agrees, severally and not jointly, to sell to each of the
Underwriters, and
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each of the Underwriters agrees, severally and not jointly, to purchase from the
Company and each of the Selling Stockholders, at the purchase price per share
set forth in clause (a) of this Section 2, that portion of the number of
Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction, the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to purchase
as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Shares that all of the
Underwriters are entitled to purchase hereunder.
The Company and a certain Selling Stockholder, as and to the extent
indicated in Schedule II hereto, hereby grant, severally and not jointly, to the
Underwriters the right to purchase at their election up to 1,222,500 Optional
Shares, at the purchase price per share set forth in the paragraph above, for
the sole purpose of covering overallotments in the sale of the Firm Shares. Any
such election to purchase Optional Shares shall be made in proportion to the
maximum number of Optional Shares to be sold by the Company and such Selling
Stockholder as set forth in Schedule II hereto. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company
and Nortel Networks Corporation, given within a period of 30 calendar days after
the date of this Agreement and setting forth the aggregate number of Optional
Shares to be purchased and the date on which such Optional Shares are to be
delivered, as determined by you but in no event earlier than the First Time of
Delivery (as defined in Section 4 hereof) or, unless you and the Company and
Nortel Networks Corporation otherwise agree in writing, earlier than two or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders, shall be delivered by or on
behalf of the Company and the Selling Stockholders to ▇▇▇▇▇▇▇, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company and each Selling Stockholder to ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co. at least forty-eight hours in advance. The Company and each Selling
Stockholder will cause the certificates representing the Shares to be made
available for checking and packaging at least twenty-four hours prior to the
Time of Delivery (as defined below) with respect thereto at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New
York City time, on _________ or such other time and date as ▇▇▇▇▇▇▇, Sachs &
Co., the Company and the Selling Stockholders may agree upon in writing, and,
with respect to the Optional Shares, 9:30 a.m., New York time, on the date
specified by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in the written notice given by ▇▇▇▇▇▇▇, Sachs
& Co. of the Underwriters' election to purchase such Optional Shares, or such
other time and date as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., the Company and the Selling
Stockholders may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery", such time and date
for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional
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documents requested by the Underwriters pursuant to Section 7(o) hereof, will be
delivered at the offices of ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Closing Location"), and the Shares will be delivered
at the Designated Office, all at such Time of Delivery. A meeting will be held
at the Closing Location at 3:00 p.m., New York City time, on the New York
Business Day next preceding such Time of Delivery, at which meeting the final
drafts of the documents to be delivered pursuant to the preceding sentence will
be available for review by the parties hereto. For the purposes of this Section
4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. (a) The Company and Entrust Limited jointly and severally agree with
each of the Underwriters:
(i) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the last Time of Delivery
which shall be disapproved by you promptly after reasonable notice
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; to advise you, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish you with copies thereof; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(ii) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(iii) Prior to 12:00 Noon, New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and, if
the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the Shares and if at such time
any event
-10-
shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Act or the Exchange Act, to notify you and upon your request
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter,
to prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(iv) To make generally available to its securityholders as
soon as practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Act), an earnings statement of the Company and
its subsidiaries (which need not be audited) complying with Section
11(a) of the Act and the rules and regulations thereunder (including,
at the option of the Company, Rule 158);
(v) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any securities of the Company that
are substantially similar to the Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities; provided, however, that the Company may (i) issue shares
upon the exercise of options granted pursuant to the Company Stock
Plans, (ii) issue shares upon the conversion or exchange of convertible
or exchangeable securities outstanding as of the date of this
Agreement, (iii) issue shares in connection with a merger or the
acquisition by the Company of the assets or capital stock of another
person or entity so long as the shares so issued by the Company may not
be resold for a period of 90 days after the date of the Prospectus and
(iv) grant options and offer to sell shares of Common Stock to its
employees, consultants and directors pursuant to the plans listed in
clause (i), without your prior written consent;
(vi) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries certified by independent
public accountants);
(vii) During a period of three years from the effective date
of the Registration Statement, to furnish to you at your request copies
of all reports or other communications (financial or other) furnished
to stockholders, and to deliver to you (i) as soon as they are
available, copies of any reports and financial statements furnished to
or filed with the Commission or any national securities
-11-
exchange on which any class of securities of the Company is listed; and
(ii) such additional information concerning the business and financial
condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its stockholders generally or to
the Commission);
(viii) To use the net proceeds received by it from the sale of
the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(ix) To use its best efforts to list for quotation the Shares
on the Nasdaq National Market ("NASDAQ"); and
(x) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act.
(b) Each of the Selling Stockholders agrees with each of the
Underwriters that during the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the Prospectus,
such Selling Stockholder will not, without your prior written consent (i) offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder,
any securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than upon the conversion or exchange of
convertible or exchangeable securities outstanding as of the date of this
Agreement) or (ii) engage directly or indirectly in any transaction the likely
result of which would involve a transaction prohibited by subclause (i) of this
Section 5(b). Notwithstanding the foregoing restrictions on transfer, each
Selling Stockholder shall be permitted to make the following transfers: (i)
transfers made by gift, will or intestacy, provided the donee thereof agrees in
writing to be bound by the terms of this Section 5(b); (ii) transfers to such
Selling Stockholder's affiliates, as such term is defined in Rule 405
promulgated under the Act, provided that each transferee agrees in writing to be
bound by the terms of this Section 5(b); (iii) in the event the Selling
Stockholder is an individual, transfers to his immediate family or a trust the
beneficiaries of which are exclusively such Selling Stockholder or a member or
members of his immediate family, provided that any transferee agrees in writing
to be bound by the terms of this Section 5(b); and (iv) transfers pursuant to
the Registration Statement.
6. The Company and each of the Selling Stockholders covenant and agree
with one another and with the several Underwriters that (a) the Company will pay
or cause to be paid the following: (i) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, the Blue
Sky Memorandum, closing documents (including compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for
-12-
offering and sale under state securities laws as provided in Section 5(a)(ii)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) all fees and expenses in connection with listing the Shares on the NASDAQ;
(v) the filing fees incident to, and the fees and disbursements of counsel for
the Underwriters in connection with, securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; and (viii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section; and (b) such Selling
Stockholder will pay or cause to be paid all costs and expenses incident to the
performance of such Selling Stockholder's obligations hereunder which are not
otherwise specifically provided for in this Section, including (i) any fees and
expenses of counsel for such Selling Stockholder and (ii) all expenses and taxes
incident to the sale and delivery of the Shares to be sold by such Selling
Stockholders to the Underwriters hereunder. It is understood, however, that the
Company shall bear, and the Selling Stockholders shall not be required to pay or
to reimburse the Company for, the cost of any other matters not directly
relating to the sale and purchase of the Shares pursuant to this Agreement, and
that, except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, stock transfer taxes on resale of any of the Shares by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and the Selling Stockholders herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Selling
Stockholders shall have performed all of their obligations hereunder theretofore
to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a)(i) hereof; if the Company has elected to
rely upon Rule 462(b), the Rule 462(b) Registration Statement shall
have become effective by 10:00 P.M., Washington, D.C. time, on the date
of this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Ropes & ▇▇▇▇, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions (a draft of such
opinion is attached as Annex II(a) hereto), dated as of such Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii)
(as to the Shares being delivered at such Time of Delivery), (v),
(viii) and (xi) of subsection (c) below as well as such other related
matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c) ▇▇▇▇ and ▇▇▇▇ LLP, counsel for the Company, shall have
furnished to you their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated as of such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Maryland, with corporate
-13-
power and authority to own its properties and conduct its
business, as such properties and business are described in the
Prospectus;
(ii) The Company has the authorized, issued and
outstanding capital stock as set forth in the Prospectus, and
all of the issued shares of capital stock of the Company
(including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and
are fully paid and nonassessable; and the Shares conform, or
when issued, delivered and paid for in accordance with the
terms of this Agreement will conform, in all material
respects, to the description of the Stock contained in the
Prospectus;
(iii) The Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing in each of the jurisdictions listed in Schedule
III hereto, which are the only jurisdictions in the United
States in which the Company owns or leases real property or
maintains an office;
(iv) To such counsel's knowledge, there are no legal
or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the
subject which are required to be described in the Prospectus
which are not described in the Prospectus;
(v) This Agreement has been duly authorized, executed
and delivered by the Company;
(vi) The issue and sale of the Shares being delivered
at such Time of Delivery by the Company and the compliance by
the Company with all of the provisions of this Agreement and
the consummation of the transactions herein contemplated will
not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument binding upon the Company or any of its
subsidiaries that is an exhibit to the Registration Statement,
nor will such action result in any violation of the provisions
of the Articles of Incorporation or By-laws of the Company or
(assuming compliance with all applicable foreign and state
securities and Blue Sky laws) any statute, rule or regulation
known to such counsel of any governmental agency or regulatory
body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or any order or decree
known to such counsel of any court specifically naming the
Company or any of its subsidiaries or any of their properties;
(vii) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or regulatory body is required for the
issue and sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement,
except the registration under the Act of the Shares, and such
consents, approvals, authorizations, registrations or
qualifications as may be required under foreign or state
securities or Blue Sky laws and the approval by the National
Association of Securities Dealers, Inc. of the underwriting
terms and arrangements in connection with the purchase and
distribution of the Shares by the Underwriters;
-14-
(viii) The statements set forth in the Prospectus
under the caption "Underwriting", insofar as they purport to
describe the documents referred to therein, are accurate
summaries and descriptions of such terms and provisions in all
material respects;
(ix) The Company is not an "investment company" or an
entity "controlled" by an "investment company", as such terms
are defined in the Investment Company Act;
(x) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the
financial statements, including the notes and schedules
thereto, and other financial and accounting data, as to which
such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the
requirements of the Act or the Exchange Act, as applicable and
the rules and regulations of the Commission thereunder; and
(xi) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the
financial statements, including the notes and schedules
thereto, and other financial and accounting data, as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the
rules and regulations thereunder, although they do not assume
any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or
the Prospectus; they have no reason to believe that, as of its
effective date, the Registration Statement or any further
amendment thereto made by the Company prior to such Time of
Delivery (other than the financial statements, including the
notes and schedules thereto, and other financial and
accounting data, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or
that, as of its date, the Prospectus or any further amendment
or supplement thereto made by the Company prior to such Time
of Delivery (other than the financial statements, including
the notes and schedules thereto, and other financial and
accounting data, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading or that, as of such Time
of Delivery, the Prospectus or any further supplement thereto
made by the Company prior to such Time of Delivery (other than
the financial statements, including the notes and schedules
thereto, and other financial and accounting data, as to which
such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
they do not know of any amendment to the Registration
Statement required to be filed or of any contracts or other
documents of a character required to be filed as an exhibit to
the Registration Statement or required to be incorporated by
reference into the Prospectus or required to be described in
the Registration Statement or the Prospectus which are not
filed or incorporated by reference or described as required;
-15-
(d) ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇, counsel to the Company, shall have
furnished to you its written opinion, dated as of such Time of
Delivery, in form and substance satisfactory to you, to the effect that
Entrust Limited has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation; and all of the issued shares of capital stock of such
subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable, and (except for directors' qualifying shares
and except as otherwise set forth in the Prospectus) are owned directly
or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to rely
in respect of the opinion in this clause upon opinions of local counsel
and in respect to matters of fact upon certificates of officers of the
Company or its subsidiaries, provided that such counsel shall state
that they believe that both you and they are justified in relying upon
such opinions and certificates);
(e) ▇▇▇ ▇▇▇▇▇▇, Esq., general counsel to the Company, shall
have furnished to you his written opinion, dated as of such Time of
Delivery, in form and substance satisfactory to you, to the effect that
(i) the issue and sale of the Shares being delivered at such Time of
Delivery by the Company and the compliance by the Company with all of
the provisions of this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, (ii) with respect to
certain intellectual property matters as you may reasonably request,
and (iii) such counsel has no reason to believe that any of the
documents incorporated by reference in the Prospectus or any further
amendments or supplements thereto made by the Company prior to such
Time of Delivery, when such documents became effective or were so
filed, as the case may be, contained, in the case of a registration
statement which became effective under the Act, an untrue statement of
a material fact, or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or, in the case of other documents which were filed under
the Exchange Act with the Commission, an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading;
(f) Markison & ▇▇▇▇▇▇▇, P.C., intellectual property counsel
for the Company, shall have furnished to you their written opinion (a
draft of each such opinion is attached as Annex II(c) hereto), dated as
of such Time of Delivery, in form and substance reasonably satisfactory
to you; to you, with respect to such matters as you may reasonably
request;
(g) The respective counsel for each of the Selling
Stockholders, as indicated in Schedule II hereto, each shall have
furnished to you their written opinion with respect to each of the
Selling Stockholders for whom they are acting as counsel, dated such
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) This Agreement has been duly executed and
delivered by or on behalf of such Selling Stockholder; and the
sale of the Shares to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with
all of the provisions of this Agreement and the consummation
of the transactions herein contemplated will not conflict with
or result in a breach or violation of any terms or provisions
of, or constitute a default under, any statute, indenture,
mortgage, deed
-16-
of trust, loan agreement or other agreement or instrument
known to such counsel to which such Selling Stockholder is a
party or by which such Selling Stockholder is bound or to
which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any
violation of the provisions of any rule or regulation known to
such counsel of any governmental agency or regulatory body
having jurisdiction over such Selling Stockholder or the
property of such Selling Stockholder or of an order or decree
known to such counsel of any court specifically naming such
Selling Stockholder or any of its properties, except in each
case as would not adversely affect the ability of such Selling
Stockholder to consummate the transactions contemplated by
this Agreement;
(ii) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated by this
Agreement in connection with the Shares to be sold by such
Selling Stockholder hereunder, except the registration under
the Act of the Shares, and such consents, approvals,
authorizations, registrations or qualifications as may be
required under foreign or state securities or Blue Sky laws
and the approval by the National Association of Securities
Dealers, Inc. of the underwriting terms and arrangements in
connection with the purchase and distribution of such Shares
by the Underwriters;
(iii) Immediately prior to any Time of Delivery, such
Selling Stockholder (A) is the owner of record and, to such
counsel's knowledge, the beneficial owner of the Shares to be
sold at such Time of Delivery by such Selling Stockholder
under this Agreement, and (B) has the full corporate right,
power and authority to sell, assign, transfer and deliver
valid and unencumbered title to the Shares to be sold by such
Selling Stockholder hereunder; and
(iv) Assuming that the Underwriters purchase the
Shares to be sold by such Selling Stockholder for value, in
good faith and without notice of any adverse claim within the
meaning of the Uniform Commercial Code, upon delivery and
payment for the Shares to be sold by such Selling Stockholder,
the Underwriters will receive valid title to such Shares, free
and clear of all liens, encumbrances, equities or claims.
In rendering the opinion in paragraph (iii), such counsel may rely upon
a certificate of such Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on, the Shares sold by
such Selling Stockholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate
and that an original of such certificate is delivered to you;
(h) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, Deloitte & Touche LLP shall have furnished to
you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto;
(i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other
-17-
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock (other than
as a result of the grant or exercise of stock options pursuant to the
Company Stock Plans) or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, business, properties,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in Clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(j) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
(k) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on
NASDAQ; (ii) a suspension or material limitation in trading in the
Company's securities on NASDAQ; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York or
Massachusetts State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such
event specified in this Clause (iv) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner contemplated in
the Prospectus;
(l) The Shares to be sold at such Time of Delivery shall have
been duly listed for quotation on NASDAQ, subject to official notice of
issuance;
(m) The Company shall have complied with the provisions of
Section 5(a)(iii) hereof with respect to the furnishing of prospectuses
on the New York Business Day next succeeding the date of this
Agreement; and
(n) The Company and the Selling Stockholders shall have
furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company and the Selling Stockholders,
respectively, satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Selling
Stockholders, respectively herein at and as of such Time of Delivery,
as to the performance by the Company and the Selling Stockholders, of
all of their respective obligations hereunder to be performed at or
prior to such Time of Delivery and as to such other matters as you may
reasonably request and the Company shall have furnished or caused to be
furnished certificates as to the matters set forth in subsections (a)
and (i) of this Section.
8. (a) The Company, Entrust Limited, Nortel Networks Corporation and
Nortel Networks Inc., (Nortel Networks Corporation and Nortel Networks Inc.,
collectively, the "Nortel
-18-
Group"), ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (▇▇▇▇ ▇. ▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, each an "Indemnifying Person"), jointly and
severally, will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under
the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus,
the Registration Statement or 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, and will reimburse each
Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating
or defending any such action or claim as such expenses are
incurred; provided, however, that the Company, the Nortel
Group and each Indemnifying Person shall not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information
furnished to the Company by any Underwriter through ▇▇▇▇▇▇▇,
Sachs & Co. expressly for use therein; provided, further that
(i) the liability of each Indemnifying Person pursuant to this
subsection (a) shall not exceed the product of the number of
Shares sold by such Indemnifying Person and the initial public
offering price less underwriting discount of the Shares, as
set forth in the Prospectus and (ii) the liability of the
Nortel Group pursuant to this subsection (a) shall not exceed
the product of the aggregate number of Shares sold by the
members of the Nortel Group who are Selling Stockholders and
the initial public offering price less underwriting discount
of the Shares, as set forth in the Prospectus.
(b) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or such Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or 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 any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
expressly for use therein; and will reimburse the Company and each Selling
Stockholder for any legal or other expenses reasonably incurred by the Company
or such Selling Stockholder in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
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election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares purchased
under this Agreement (before deducting expenses) received by the Company and the
Selling Stockholders bear to the total underwriting discounts and commissions
received by the Underwriters with respect to the Shares purchased under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, 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 relates to information
supplied by the Company or the Selling Stockholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, each of the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (d)
were determined 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 equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) no Selling Stockholder shall be required
to contribute any amount in excess of the product of the number of Shares sold
by such Selling Stockholder and the initial
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public offering price less underwriting discount of the Shares as set forth in
the Prospectus. 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 in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company, Entrust Limited and the Selling
Stockholders under this Section 8 shall be in addition to any liability which
the Company and the respective Selling Stockholders may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and the
Selling Stockholders (including any person who, with his or her consent, is
named in the Registration Statement as about to become a director of the
Company) and to each person, if any, who controls the Company or the Selling
Stockholders within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Stockholders shall be entitled to
a further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company and
the Selling Stockholders that you have so arranged for the purchase of such
Shares, or the Company and the Selling Stockholders notify you that they have so
arranged for the purchase of such Shares, you or the Company shall have the
right to postpone such Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholders shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of Delivery,
-21-
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Selling Stockholders to sell the Optional
Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders, except for
the expenses to be borne by the Company and the Selling Stockholders and the
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or the Selling Stockholders or any officer or
director or controlling person of the Company or the Selling Stockholders, and
shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor Entrust Limited nor the Selling Stockholders shall then
be under any liability to any Underwriter except as provided in Sections 6 and 8
hereof; but, if for any other reason any Shares are not delivered by or on
behalf of the Company and the Selling Stockholders as provided herein, the
Company and each of the Selling Stockholders (pro rata based on the number of
Shares to be sold by the Company and such Selling Stockholders hereunder) will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company, Entrust Limited and
the Selling Stockholders shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇, Sachs & Co. on behalf of you as the
representatives and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co., ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration
Department; and if to any Selling Stockholders shall be delivered or sent by
mail, telex or facsimile transmission to counsel for such Selling Stockholder at
its address set forth in Schedule II hereto; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, Entrust Limited and the Selling
Stockholders and, to the extent provided in Sections 8 and 10 hereof, the
officers and directors of the Company and Selling
-22-
Stockholder and each person who controls the Company, any Selling Stockholder or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and each of the Selling Stockholders. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company and the Selling Stockholders for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
ENTRUST TECHNOLOGIES INC.
By:
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
ENTRUST TECHNOLOGIES LIMITED
By:
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
NORTEL NETWORKS INC.
By:
--------------------------------------------
Name:
Title:
-23-
NORTEL NETWORKS CORPORATION
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Accepted as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
SoundView Technology Group, Inc.
By: ______________________
(▇▇▇▇▇▇▇, Sachs & Co.)
On behalf of each of the Underwriters
-24-
SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- ---------
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.........................
Bear, ▇▇▇▇▇▇▇ & Co. Inc.....................
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation...............................
SoundView Technology Group, Inc. ...........
-25-
SCHEDULE II
Number of
Optional
Shares to
be
Total Sold if
Number of Maximum
Firm Shares Option
to be Sold Exercised
The Company.................................... 1,875,000 305,625
The Selling Stockholders:
Nortel Networks Corporation..... 5,157,289 --
Nortel Networks Inc............. 967,711 916,875
▇▇▇▇ ▇. ▇▇▇▇.................... 125,000 --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇................ 25,000 --
--------- ---------
Total ...................... 8,150,000 1,222,500
========= =========
Each of Nortel Networks Corporation and Nortel Networks Inc. is represented by
its General Counsel. Each of ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is represented by
▇▇▇▇ and ▇▇▇▇ LLP.
-26-
SCHEDULE III
JURISDICTIONS OF FOREIGN QUALIFICATIONS
California
Illinois
Indiana
Missouri
New Jersey
New York
North Carolina
North Dakota
Ohio
Pennsylvania
South Dakota
Texas
Virginia
Wyoming
-27-
ANNEX I
Pursuant to Section 7(h) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been furnished to the representatives of the Underwriters (the
"Representatives") and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to
in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing
came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10 Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act as it applies to Form 10 Q and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus, for
them to be conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in
the Company's Annual Report on Form 10 K for the most recent
fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited financial statements included or
incorporated by reference in the Company's Annual Report on
Form 10 K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included
or incorporated by reference in the Prospectus) or any
increase in the consolidated long term debt of the Company and
its subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the Representatives which are derived from the general
accounting records of the Company and its subsidiaries, which appear in
the Prospectus (excluding documents incorporated by reference) or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives or in documents incorporated by
reference in the Prospectus specified by the Representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
2
