JAVELIN SYSTEMS, INC.
UNDERWRITING AGREEMENT
_________________, 1998
XXX XXXXXX & COMPANY
L.H. FRIEND, WEINRESS, XXXXXXXX & XXXXXXX , INC.
MERIDIAN CAPITAL GROUP, INC.
As Representatives of the
Several Underwriters
c/o Xxx Xxxxxx & Company
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Javelin Systems, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
several Underwriters named in Schedule I hereto (each, an "Underwriter" and
collectively, the "Underwriters") an aggregate of 1,250,000 shares (the "Firm
Shares") of its authorized but unissued Common Stock, par value $0.01 per share
(the "Common Stock"). Certain stockholders of the Company listed on Schedule II
hereto (the "Selling Stockholders") also propose to grant to the Underwriters an
option to purchase up to 187,500 additional shares of Common Stock (the "Option
Shares") for the sole purpose of covering over-allotments, if any, in connection
with the sale of the Firm Shares. The Firm Shares and any Option Shares
purchased pursuant to this Agreement are collectively referred to below as the
"Shares." Xxx Xxxxxx & Company ("Xxx Xxxxxx"), L.H. Friend, Weinress, Xxxxxxxx &
Xxxxxxx, Inc. and Meridian Capital Group, Inc. are acting as Representatives of
the several Underwriters and in that capacity are referred to in this Agreement
as the "Representatives."
The Company hereby confirms its agreement with the several Underwriters as
follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to and agrees with each Underwriter as follows:
(a) A registration statement (Registration No. 333-____________) on
Form SB-2 under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the Shares, including such amendments to such registration statement
as may have been required to the date of this Agreement, has been prepared by
the Company under and in conformity with the provisions of the Securities Act
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder and has been filed with
the Commission. After the execution of this Agreement, the Company will file
with the Commission either (i) if such registration statement, as it may have
been amended, has been declared by the Commission to be effective under the
Securities Act, either (A) if the Company
1
relies on Rule 434 under the Securities Act, a Term Sheet (defined below)
relating to the Shares, that identifies the Preliminary Prospectus (defined
below) that it supplements and contains such information as is required or
permitted by Rules 434, 430A and 424(b) of the Rules and Regulations or (B)
if the Company does not rely on Rule 434 under the Securities Act, a
prospectus in the form most recently included in an amendment to such
registration statement (or, if no such amendment has been filed, in such
registration statement), with such changes or insertions as are required by
Rule 430A of the Rules and Regulations or permitted by Rule 424(b) of the
Rules and Regulations, and in the case of either (i)(A) or (i)(B) of this
sentence, as has been provided to and approved by the Representatives prior
to the execution of this Agreement, or (ii) if such registration statement,
as it may have been amended, has not been declared by the Commission to be
effective under the Securities Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Representatives prior to the execution of
this Agreement. As used in this Agreement, the term "Registration Statement"
means such registration statement, as amended at the time when it was or is
declared effective, including all financial schedules and exhibits thereto,
any information omitted therefrom pursuant to Rule 430A of the Rules and
Regulations and included in the Prospectus (defined below) and further
including all filings or other documents incorporated therein, as well as any
additional registration statement filed in connection with the offering of
the Shares pursuant to Rule 462(b) under the Securities Act; the term
"Preliminary Prospectus" means each prospectus subject to completion filed
with such registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration
Statement or any amendment thereto at the time it was or is declared
effective and further including all filings or documents incorporated
therein); and the term "Prospectus" means the following, including any
filings or documents incorporated therein:
(A) if the Company relies on Rule 434 under the Securities
Act, the Term Sheet relating to the Securities that is first filed pursuant to
Rule 424(b)(7) under the Securities Act, together with the Preliminary
Prospectus identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the
Securities Act, the prospectus first filed with the Commission pursuant to
Rule 424(b) under the Securities Act; or
(C) if the Company does not rely on Rule 434 under the
Securities Act and if no prospectus is required to be filed pursuant to
Rule 424(b) under the Securities Act, the prospectus included in the
Registration Statement;
provided that if any revised prospectus that is provided to the Underwriters by
the Company for use in connection with the offering of the Shares differs from
the prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective, whether or not the
revised prospectus is required to be filed with the Commission pursuant to
Rule 424(b)(3) of the Rules and Regulations, the term "Prospectus" shall mean
such revised prospectus (including all filings and documents incorporated
therein) from and after the time it is first provided to the Underwriters for
such use. The term "Term Sheet" as used in this Agreement means any term sheet
that satisfies the requirements of Rule 434 under the Securities
2
Act. Any reference in this Agreement to the "date" of a Prospectus that
includes a Term Sheet means the date of such Term Sheet.
(b) No order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary Prospectus or
the Prospectus has been issued and no proceedings for that purpose are pending
or, to the best knowledge of the Company, threatened or contemplated by the
Commission; no stop order suspending the sale of the Shares in any jurisdiction
has been issued and no proceedings for that purpose are pending or, to the best
knowledge of the Company, threatened or contemplated, and any request of the
Commission for additional information (to be included in the Registration
Statement, any Preliminary Prospectus or the Prospectus or otherwise) has been
complied with.
(c) As used in this Agreement, the word "subsidiary" means any
corporation, partnership, limited liability company or other entity of which the
Company directly or indirectly owns 50% or more of the equity or that the
Company directly or indirectly controls. The subsidiaries of the Company (the
"Subsidiaries") and the jurisdiction of incorporation of each Subsidiary are
listed on Exhibit A hereto. The Company has no subsidiaries other than the
Subsidiaries listed on Exhibit A hereto; except as set forth on Exhibit A, the
Company owns 100 percent of the issued and outstanding stock of each of the
Subsidiaries free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest of any type, kind or nature. Exhibit B hereto lists
each entity in which the Company or any Subsidiary holds an equity interest,
whether as shareholder, partner, member, joint venturer or otherwise. Except as
set forth on Exhibit B, neither the Company nor any Subsidiary has any equity
interest in any person. The Company and each of its Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has full power (corporate and
other) and authority to own or lease its properties and conduct its business as
described in the Registration Statement and the Prospectus and as is currently
being conducted by it and is duly qualified as a foreign corporation and in good
standing in all jurisdictions in which the character of the property owned or
leased or the nature of the business transacted by it makes qualification
necessary (except where the failure to be so qualified would not have a material
adverse effect on the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company and its Subsidiaries, taken as
a whole (a "Consolidated Material Adverse Effect")). The Company and each of
its Subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits from
federal, state, local and other governmental or regulatory authorities that are
material to the conduct of its or their business, all of which are valid and in
full force and effect. Each contractual joint venture in which the Company or
any Subsidiary is involved and, to the Company's best knowledge, each
participant therein is operating in compliance with the terms of its joint
venture agreement.
(d) When any Preliminary Prospectus was filed with the Commission
it (i) contained all statements required to be contained therein and complied in
all respects with the requirements of the Securities Act, the Rules and
Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations of the Commission thereunder (the "Exchange
Act Rules and Regulations") and (ii) did not include any untrue
3
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, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective (the "Effective Date"), it (i)
contained or will contain all statements required to be contained therein and
complied or will comply in all respects with the requirements of the
Securities Act, the Rules and Regulations, the Exchange Act and the Exchange
Act Rules and Regulations and (ii) did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading. When the Prospectus or any Term
Sheet that is a part thereof or any amendment or supplement to the Prospectus
is filed with the Commission pursuant to Rule 424(b) (or, if the Prospectus
or part thereof or such amendment or supplement is not required to be so
filed, when the Registration Statement or the amendment thereto containing
such amendment or supplement to the Prospectus was or is declared effective)
and on the Closing Date (defined below) and any date on which Option Shares
are to be purchased, the Prospectus, as amended or supplemented at any such
time, (i) contained or will contain all statements required to be contained
therein and complied or will comply in all respects with the requirements of
the Securities Act, the Rules and Regulations and the Exchange Act Rules and
Regulations and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph (d) do
not apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
(e) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there has not been
any material loss or interference with the business of the Company or any of
its Subsidiaries from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any court or governmental action, order or
decree, or any changes in the capital stock or, except in the ordinary course
of its business, long-term debt of the Company or any of its Subsidiaries, or
any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company, or any material change, or a development known
to the Company that might cause or result in a Consolidated Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business, in each case other than as may be set forth in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), and since such dates, except in the
ordinary course of business, neither the Company or any of its Subsidiaries
has entered into any material transaction not described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(f) There is no agreement, contract, license, lease or other
document required to be described in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. All contracts
described in the Prospectus
4
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), if any, are in full force and effect on the date hereof, and
neither the Company nor any of its direct or indirect subsidiaries nor, to
the best knowledge of the Company, any other party, is in material breach of
or default under any such contract.
(g) The authorized and outstanding capital stock of the Company
is set forth in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), and the description of the capital
stock therein conforms with and accurately describes the rights set forth in
the instruments defining the same. The Shares are duly authorized and will,
when issued in accordance with the terms of this Agreement and against
payment therefor, be validly issued, fully paid and non-assessable, and the
issuance of the Shares is not subject to any preemptive or similar rights.
(h) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities.
All of the issued shares of capital stock or other equity interests of each
Subsidiary have been duly and validly authorized and issued, are fully paid
and non-assessable, have been issued in compliance with all applicable laws,
including securities laws, were not issued in violation of or subject to any
preemptive or other rights to subscribe for or purchase such securities and
are directly or indirectly owned by the Company, except as otherwise set
forth in the Prospectus (or, if the Prospectus is not in existence, in the
most recent Preliminary Prospectus) and on Exhibit A hereto. The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted or exercised
thereunder, set forth in the Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus), accurately and fairly
present the information required to be shown with respect to such plans,
arrangements, options and rights. Other than this Agreement and the options
and warrants to purchase Common Stock described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
there are no options, warrants or other rights outstanding to subscribe for
or purchase any shares of the Company's capital stock. There are no
preemptive rights applicable to any shares of capital stock of the Company.
There are no options, warrants or other rights outstanding to subscribe for
or purchase any shares of the capital stock or registered capital of any
Subsidiary and no Subsidiary is subject to any obligation, commitment, plan,
arrangement or court or administrative orders with respect to the same. There
are no preemptive rights applicable to any shares of capital stock or
registered capital of the Subsidiaries. There are no restrictions upon the
voting or transfer of any of the Firm Shares or Option Shares pursuant to the
Company's certificate of incorporation, as amended to date ("Certificate of
Incorporation"), bylaws or other governing documents or any agreement to
which the Company is a party or by which it may be bound. Neither the filing
of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those
which have been waived, for or relating to the registration of any securities
of the Company.
5
(i) The Company has full right, power and authority to enter into
and perform its obligations under this Agreement and to issue, sell and
deliver the Shares. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding agreement of
the Company, and each is enforceable against the Company in accordance with
its terms except insofar as enforceability may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except insofar as the indemnification and contribution
provisions of Section 8 of this Agreement may be affected by public policy
concerns.
(j) Neither the Company nor any of its Subsidiaries is, nor with
the giving of notice or lapse of time or both would be, in violation of or in
default under, nor will the execution or delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement result in a
violation of or constitute a breach of or a default (including without
limitation with the giving of notice, the passage of time or otherwise) under
the Certificate of Incorporation, bylaws or other governing documents of the
Company or any of its Subsidiaries or any obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any contract, indenture, mortgage, deed of trust, loan
agreement, lease, license, joint venture or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any of
its or their properties may be bound or affected. The Company has not
incurred any liability, direct or indirect, for any finders' or similar fees
payable on behalf of the Company or the Underwriters in connection with the
transactions contemplated by this Agreement. The performance by the Company
of its obligations under this Agreement will not violate any law, ordinance,
Rule or regulation or any order, writ, injunction, judgment or decree of any
governmental agency or body or of any court having jurisdiction over the
Company or any of its direct or indirect subsidiaries or any of its or their
properties, or result in the creation or imposition of any lien, charge,
claim or encumbrance upon any property or asset of the Company or any of its
Subsidiaries. Except for permits and similar authorizations required under
the Securities Act, the Exchange Act or under state securities or Blue Sky
laws of certain jurisdictions and for such permits and authorizations that
have been obtained, no consent, approval, authorization or order of any
court, governmental agency or body, financial institution or any other person
is required in connection with the consummation of the transactions
contemplated by this Agreement.
(k) Each of the Company and its Subsidiaries owns, or has valid
rights to use, all items of real and personal property which are material to
the business of the Company and its Subsidiaries, taken as a whole, free and
clear, except as described in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), of all liens, encumbrances and claims that might materially
interfere with the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company and its Subsidiaries, taken
as a whole, and subject to such exceptions that do not adversely affect the
present or prospective business of the Company or its Subsidiaries.
(l) Each of the Company and its Subsidiaries, taken as a whole,
owns or possesses adequate rights to use all material patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, tradenames
and copyrights described or referred to in the
6
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) as owned by or used by any
of them, or which are necessary for the conduct of its or their business as
described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus); and
the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, tradenames or
copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a Consolidated Material
Adverse Effect.
(m) There is no litigation or governmental proceeding to which
the Company or any of its Subsidiaries is a party or to which any property of
the Company or any of its Subsidiaries is subject which is pending or, to the
best knowledge of the Company, is threatened or contemplated against the
Company or any of its Subsidiaries that might have a Consolidated Material
Adverse Effect, that might prevent consummation of the transactions
contemplated by this Agreement or that is required to be disclosed in the
Registration Statement or Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and are that is so
disclosed.
(n) Except as disclosed in the Prospectus (or, if the Prospectus
is not in existence, in the most recent Preliminary Prospectus), neither the
Company nor any of its Subsidiaries is in violation of any law, order,
ordinance, Rule or Regulation, or any order, writ, injunction, judgment or
decree of any governmental agency or body or of any court, to which it or its
properties (whether owned or leased) may be subject, which violation might
have a Consolidated Material Adverse Effect.
(o) Neither the Company nor, to the Company's knowledge, any of
the Selling Stockholders have taken, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to cause or result in, under the Exchange Act, the
Exchange Act Rules and Regulations or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares. No bid or purchase by the Company and, to the
best knowledge of the Company, no bid or purchase of any Selling Stockholder
or any bid or purchase that could be attributed to the Company (as a result
of bids or purchases by an "affiliated purchaser" within the meaning of
Regulation M under the Exchange Act) for or of the Common Stock, any
securities of the same class or series as the Common Stock or any securities
convertible into or exchangeable for or that represent any right to acquire
the Common Stock is now pending or in progress or will have commenced at any
time prior to the completion of the distribution of the Shares.
(p) Each of PricewaterhouseCoopers LLP, Ernst & Young LLP,
Xxxxxx & Xxxxx and Rubin, Brown, Gornstein & Co. LLP, whose reports appear in
the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) are, and during the
periods covered by their reports in the Registration Statement were,
independent accountants as required by the Securities Act and the Rules and
Regulations. The historical and pro forma financial statements and schedules
included in the Registration Statement, each Preliminary Prospectus and the
Prospectus present fairly (or, if the Prospectus has not been filed with the
Commission, as to the Prospectus, will present fairly) the
7
financial condition, results of operations, cash flows and changes in
stockholders' equity of the Company and its Subsidiaries at the dates and for
the periods indicated, and the historical and pro forma financial statements
and schedules included in the Registration Statement present fairly the
information required to be stated therein in all material respects. Such
financial statements and schedules have been prepared in accordance with U.S.
generally accepted accounting principles applied on a consistent basis
throughout the periods presented, except as may be stated therein. All
accounts receivable (net of any allowance for doubtful accounts) shown on the
Company's most recent financial statements included in the Registration
Statement are good, and the Company expects to collect all such accounts
receivable in the ordinary course of business. The selected and summary
financial and statistical data included in the Registration Statement and the
Prospectus present fairly (or, if the Prospectus has not been filed with the
Commission, as to the Prospectus, will present fairly) the information shown
therein and have been compiled on a basis consistent with the audited
financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement.
(q) The historical and any pro forma financial or other
information and related notes included in the Registration Statement, each
Preliminary Prospectus and the Prospectus comply (or, if the Prospectus has
not been filed with the Commission, as to the Prospectus, will comply) in all
material respects with the requirements of the Securities Act and the Rules
and Regulations and present fairly the historical and pro forma information
shown, as of the dates and for the periods covered by such information. Such
pro forma information, including any related notes and schedules, has been
prepared on a basis consistent with the historical financial statements and
other historical information, as applicable, included in the Registration
Statement, the Preliminary Prospectus and the Prospectus (if filed with the
Commission), except for the pro forma adjustments specified therein, and give
effect to assumptions made on a reasonable basis to give effect to historical
and, if applicable, proposed transactions described in the Registration
Statement, each Preliminary Prospectus and the Prospectus (if filed with the
Commission).
(r) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in and dispositions of the assets of the Company and its
Subsidiaries. The systems of internal accounting controls maintained by the
Company and its Subsidiaries are sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary (x) to
permit preparation of financial statements in conformity with U.S. generally
accepted accounting principles and (y) to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(s) The Company has delivered to Xxx Xxxxxx the written agreement
of each of its officers and directors and, to the knowledge of the Company at
the date of this Agreement, the beneficial owners of one percent or more of
the Common Stock (assuming for this purpose that all options and convertible
securities held by each beneficial owner, but not by any other person, have
been exercised or exchanged for or converted into Common Stock)
(collectively,
8
the "Holders") to the effect that each of the Holders will not, for a period
of 180 days following the date of this Agreement, without the prior written
consent of Xxx Xxxxxx, offer, sell, grant any option to purchase, contract to
sell, or otherwise dispose of any Common Stock or options or convertible
securities exercisable or exchangeable for, or convertible into, Common Stock
or any rights to purchase or acquire Common Stock, or announce any offer to
do so.
(t) No labor disturbance by the employees of the Company or any
of its Subsidiaries exists, or, to the knowledge of the Company, is imminent,
contemplated or threatened; and the Company is not aware of an existing,
imminent or threatened labor disturbance by the employees of any principal
suppliers, manufacturers, contractors or others which such disturbance might
be expected to result in any Consolidated Material Adverse Effect. Except as
set forth in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), no collective bargaining agreement
exists with any of the Company's employees or those of its Subsidiaries and,
to the best knowledge of the Company, no such agreement is imminent.
(u) Each of the Company and its Subsidiaries has filed all
federal, state, local and foreign tax returns which are required to be filed
or has requested extensions thereof and has paid all taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges to the extent that the same have become due and payable. No tax
assessment or deficiency has been made or proposed against the Company or any
of its Subsidiaries nor has the Company or any of its Subsidiaries received
any notice of any proposed tax assessment or deficiency. All tax liabilities
of the Company and its Subsidiaries are adequately provided for on the books
of the Company.
(v) Except as set forth in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there are no
outstanding loans, advances or guaranties of indebtedness by the Company or
any of its Subsidiaries to or for the benefit of any of (i) its "affiliates,"
as such term is defined in the Rules and Regulations, (ii) except for
immaterial advances in the ordinary course of business, any of the officers
or directors of any of its direct or indirect subsidiaries, or (iii) any of
the members of the families of any of them, in each case, required to be set
forth in the Prospectus (or, if the Prospectus is not in existence, in the
most recent Preliminary Prospectus), under the Securities Act or Rules and
Regulations.
(w) Neither the Company nor any of its Subsidiaries has directly
or indirectly, at any time within the last five years: (i) made any
contributions to any candidate for political office, or failed to disclose
fully any such contribution, in violation of applicable law; (ii) made any
payment to any local, state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by all applicable laws; or (iii)
violated any applicable provision of the Foreign Corrupt Practices Act of
1977, as amended.
(x) Neither the Company nor any of its Subsidiaries has any
liability, absolute or contingent, relating to: (i) public health or safety;
(ii) worker health or safety; or (iii) product defect or warranty (all except
as would not reasonably be expected to have a Consolidated
9
Material Adverse Effect or as are disclosed in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus)).
(y) The Company has not distributed and will not distribute prior
to the Closing Date or on or prior to any date on which the Option Shares are to
be purchased, as the case may be, any prospectus or other offering material in
connection with the offering and sale of the Shares other than the Preliminary
Prospectus(es), the Prospectus, the Registration Statement and any other
material which may be permitted by the Securities Act and the Rules and
Regulations.
(z) Subject to official notice of issuance, the Shares have been
approved for inclusion for listing on the Nasdaq National Market.
(aa) The Company is not now, and intends to conduct its affairs in
the future in such a manner so that it will not become, an investment company
within the meaning of the Investment Company Act of 1940, as amended.
(bb) The Company and each of its Subsidiaries is in compliance in
all material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) for which the Company or any of its Subsidiaries would have
any liability has occurred; neither the Company nor any of its Subsidiaries has
incurred or expects to incur liability under (1) Title IV of ERISA with respect
to termination of, or withdrawal from, any "pension plan" or (2) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company or any of its Subsidiaries would have any liability that
is intended to be qualified under Section 401(a) of the Code is so qualified in
all material respects and nothing has occurred, whether by action or by failure
to act, which would cause the loss of such qualification.
(cc) Except as set forth in the Prospectus (or if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there has, to
the best knowledge of the Company, been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, hazardous wastes or hazardous substances by the Company or any of its
Subsidiaries (or any of their predecessors in interest) at, upon or from any
of the property now or previously owned or leased by the Company or its
Subsidiaries in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action
under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit; there has to the best knowledge of the Company been no
material spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto such property or into the environment surrounding
such property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or any of its
Subsidiaries or with respect to which the Company or any of its direct or
indirect subsidiaries have knowledge; and the terms "hazardous wastes,"
"toxic wastes" and "hazardous substances" shall have the meanings specified
in any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
10
(dd) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for; and neither the Company
nor any such Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not cause a Consolidated Material Adverse
Effect.
(ee) Each certificate signed by any officer of the Company or any
of its Subsidiaries, as amended in writing from time to time, and delivered
to the Representatives or Underwriters' counsel shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(ff) Except as described in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), neither the
Company nor any Subsidiary has entered into any transaction with any
affiliate of the Company other than an arm's length transaction, and all such
transactions required to be described in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) have been described therein.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder, severally and not jointly, represents and warrants to
and agrees with each Underwriter and the Company that:
(a) Such Selling Stockholder now has and on any date on which
Option Shares are purchased will have valid marketable title to the Shares to
be sold by such Selling Stockholder, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest other than
pursuant to this Agreement; and upon delivery of such Shares hereunder and
payment of the purchase price as herein contemplated, each of the
Underwriters will obtain valid marketable title to the Shares purchased by it
from such Selling Stockholder, free and clear of any pledge, lien, security
interest pertaining to such Selling Stockholder or such Selling Stockholder's
property, encumbrance, claim or equitable interest, including any liability
for estate or inheritance taxes, or any liability to or claims of any
creditor, devisee, legatee or beneficiary of such Selling Stockholder.
(b) Such Selling Stockholder has duly authorized (if applicable),
executed and delivered, in the form heretofore furnished to the
Representatives, an irrevocable Power of Attorney (the "Power of Attorney")
appointing ___________ and ___________ as attorneys-in-fact (collectively,
the "Attorneys" and individually, an "Attorney") and a Letter of Transmittal
and Custody Agreement (the "Custody Agreement") with
______________________________, as custodian (the "Custodian"); each of the
Power of Attorney and the Custody Agreement constitutes a valid and binding
agreement on the part of such Selling Stockholder, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles; and each of such Selling
11
Stockholder's Attorneys, acting alone, is authorized to execute and deliver
this Agreement and the certificate referred to in Section 6(f) hereof on
behalf of such Selling Stockholder, to determine the purchase price to be
paid by the several Underwriters to such Selling Stockholder as provided in
Section 3 hereof, to authorize the delivery of the Option Shares to be sold
by such Selling Stockholder under this Agreement and to duly endorse (in
blank or otherwise) the certificate or certificates representing such Shares
or a stock power or powers with respect thereto, to accept payment therefor,
and otherwise to act on behalf of such Selling Stockholder in connection with
this Agreement.
(c) All consents, approvals, authorizations and orders required for
the execution and delivery by such Selling Stockholder of the Power of Attorney
and the Custody Agreement, the execution and delivery by or on behalf of such
Selling Stockholder of this Agreement and the sale and delivery of the Option
Shares to be sold by such Selling Stockholder under this Agreement (other than,
at the time of the execution hereof (if the Registration Statement has not yet
been declared effective by the Commission), the issuance of the order of the
Commission declaring the Registration Statement effective and such consents,
approvals, authorizations or orders as may be necessary under state or other
securities or Blue Sky laws) have been obtained and are in full force and
effect; such Selling Stockholder, if other than a natural person, has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization as the type of entity that it purports to be;
and such Selling Stockholder has full legal right, power and authority to enter
into and perform its obligations under this Agreement and such Power of Attorney
and Custody Agreement, and to sell, assign, transfer and deliver the Shares to
be sold by such Selling Stockholder under this Agreement.
(d) Certificates in negotiable form for all Option Shares to be
sold by such Selling Stockholder under this Agreement, together with a stock
power or powers duly endorsed in blank by such Selling Stockholder, have been
placed in custody with the Custodian for the purpose of effecting delivery
hereunder.
(e) This Agreement has been duly authorized by each Selling
Stockholder that is not a natural person and has been duly executed and
delivered by or on behalf of such Selling Stockholder and is a valid and binding
agreement of such Selling Stockholder, enforceable in accordance with its terms,
except as rights to indemnification hereunder may be limited by applicable law
and except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; and the
performance of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the terms and
provisions of or constitute a default under any bond, debenture, note or other
evidence of indebtedness, or under any lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling Stockholder,
or any Option Shares to be sold by such Selling Stockholder hereunder, may be
bound or, to the best of such Selling Stockholders' knowledge, result in any
violation of any law, order, rule, regulation, writ, injunction, judgment or
decree of any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over such Selling Stockholder or over the
properties of such Selling Stockholder, or,
12
if such Selling Stockholder is other than a natural person, result in any
violation of any provisions of the charter, bylaws or other organizational
documents of such Selling Stockholder.
(f) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
(g) Such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
(h) All information furnished by or on behalf of such Selling
Stockholder relating to such Selling Stockholder and the Option Shares that is
contained in the representations and warranties of such Selling Stockholder in
such Selling Stockholder's Power of Attorney or set forth in the Registration
Statement or the Prospectus is, and at the time the Registration Statement
became or becomes, as the case may be, effective and at all times subsequent
thereto up to and on any date on which Option Shares are to be purchased, was or
will be, true, correct and complete, and does not, and at the time the
Registration Statement became or becomes, as the case may be, effective and at
all times subsequent thereto up to and on any date on which Option Shares are to
be purchased will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make such
information not misleading.
(i) Such Selling Stockholder will review the Prospectus and will
comply with all agreements and satisfy all conditions on its part to be complied
with or satisfied pursuant to this Agreement on or prior to any date on which
Option Shares are to be purchased, and will advise one of its Attorneys and Xxx
Xxxxxx & Company prior to the date on which Option Shares are to be purchased if
any statement to be made on behalf of such Selling Stockholder in the
certificate contemplated by Section 6(f) would be inaccurate if made as of such
date on which Option Shares are to be purchased.
(j) Such Selling Stockholder does not have, or has waived prior to
the date hereof, any preemptive right, co-sale right or right of first refusal
or other similar right to purchase any of the Shares that are to be sold by the
Company or any of the other Selling Stockholders to the Underwriters pursuant to
this Agreement; such Selling Stockholder does not have, or has waived prior to
the date hereof, any registration right or other similar right to participate in
the offering made by the Prospectus, other than such rights of participation as
have been satisfied by the participation of such Selling Stockholder in the
transactions to which this Agreement relates in accordance with the terms of
this Agreement; and such Selling Stockholder does not own any warrants, options
or similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, rights, warrants, options or other securities from
the Company, other than those described in the Registration Statement and the
Prospectus.
(k) Such Selling Stockholder is not aware (without having conducted
any investigation or inquiry) that any of the representations and warranties of
the Company set forth in Section 1 above is untrue or inaccurate in any material
respect.
13
(l) To the best of such Selling Stockholder's knowledge, when any
Preliminary Prospectus was filed with the Commission it (i) contained all
statements required to be contained therein and complied in all respects with
the requirements of the Securities Act, the Rules and Regulations, the Exchange
Act and the Exchange Act Rules and Regulations and (ii) did not include any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. To the best of such Selling Stockholder's
knowledge, on the Effective Date, the Registration Statement (i) contained or
will contain all statements required to be contained therein and complied or
will comply in all respects with the requirements of the Securities Act, the
Rules and Regulations, the Exchange Act and the Exchange Act Rules and
Regulations and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. To the best of such Selling Stockholder's
knowledge, when the Prospectus or any Term Sheet that is a part thereof or any
amendment or supplement to the Prospectus is filed with the Commission pursuant
to Rule 424(b) (or, if the Prospectus or part thereof or such amendment or
supplement is not required to be so filed, when the Registration Statement or
the amendment thereto containing such amendment or supplement to the Prospectus
was or is declared effective) and on any date on which Option Shares are to be
purchased, the Prospectus, as amended or supplemented at any such time,
(i) contained or will contain all statements required to be contained therein
and complied or will comply in all respects with the requirements of the
Securities Act, the Rules and Regulations and the Exchange Act Rules and
Regulations and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (l) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.
3. PURCHASE, SALE AND DELIVERY OF SHARES
(a) On the basis of the representations, warranties, covenants and
agreements of the Company contained in this Agreement and subject to the terms
and conditions set forth in this Agreement, the Company agrees to sell to the
several Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $______ per share,
the respective number of Firm Shares set forth opposite the name of such
Underwriter on Schedule I to this Agreement (subject to adjustment as provided
in Section 9 of this Agreement).
(b) On the basis of the several (and not joint) covenants and
agreements of the Underwriters contained in this Agreement and subject to the
terms and conditions set forth in this Agreement, the Selling Stockholders grant
an option to the several Underwriters to purchase from the Selling Stockholders,
severally and not jointly, all or any portion of the Option Shares at the same
price per share as the Underwriters are to pay for the Firm Shares. This option
may be exercised only to cover over-allotments in the sale of the Firm Shares by
the Underwriters and
14
may be exercised in whole or in part at any time (but not more than once) on
or before the 45th day after the date of the Prospectus upon written or
telecopied notice by the Representatives to the Company setting forth the
aggregate number of Option Shares as to which the several Underwriters are
exercising the option and the settlement date; notwithstanding the foregoing,
if the 45th day after the date of the Prospectus is not a business day, then
the time period for delivery of the notice of the exercise of the
over-allotment option shall automatically be extended until the business day
following the 45th day after the date of the Prospectus. The Option Shares
shall be purchased severally, and not jointly, by each Underwriter, if
purchased at all, in the same proportion that the number of Firm Shares set
forth opposite the name of the Underwriter in Schedule I to this Agreement
bears to the total number of Firm Shares to be purchased by the Underwriters
under Section 3(a) above, subject to such adjustments as the Representatives
in their absolute discretion shall make to eliminate any fractional shares.
If the Underwriters elect to purchase less than all of the Option Shares,
then the Underwriters shall purchase from each Selling Stockholder his pro
rata portion of all the Option Shares. Delivery of certificates for the
Option Shares, and payment therefor, shall be made as provided in Section
3(c) and Section 3(d) below. Nothing contained in this Section 3 shall
relieve any defaulting Underwriter of its liability, if any, to the Company
or to the remaining Underwriters for damages occasioned by its default
hereunder.
(c) Delivery of the Firm Shares and payment therefor, shall be
made at the office of Xxx Xxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 (or at such other location as is agreed by the
parties), at 6:30 a.m., San Francisco time, on the third business day after
the date of this Agreement, or at such time on such other day, not later than
seven full business days after such third business day, as shall be agreed
upon in writing by the Company and the Representatives, or as provided in
Section 8(h) of this Agreement. The date and hour of delivery and payment
for the Firm Shares are referred to in this Agreement as the "Closing Date."
As used in this Agreement, "business day" means a day on which the Nasdaq
National Market is open for trading and on which banks in New York and
California are open for business and not permitted by law or executive order
to be closed.
(d) Delivery of the Option Shares and payment therefor, shall be
made at the office of Xxx Xxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 (or at such other location as is agreed by the
parties), at 6:30 a.m., San Francisco time, on the date specified by the
Representatives (which shall be three business days after the exercise of the
option, but not in excess of the period of time specified in the Rules and
Regulations).
(e) Payment of the purchase price for the Firm Shares by the
several Underwriters shall be made at the election of the Representatives by
(i) certified or official bank check or checks drawn in next-day funds,
payable to the order of the Company, or (ii) wire transfer of immediately
available funds to such account of the Company as the Company shall advise
the Representatives in writing at least three business days prior to the
Closing Date. Such payment shall be made upon delivery of certificates for
the Firm Shares to the Representatives for the respective accounts of the
several Underwriters. Certificates for the Firm Shares to be delivered to
the Representatives shall be registered in such name or names and shall be in
such denominations as the Representatives may request at least two business
days before the Closing
15
Date. Such certificates will be made available to the Underwriters for
inspection, checking and packaging at the offices of BT Xxxx Xxxxx, New York,
New York, not less than one full business day prior to the Closing Date. It
is understood that the Representatives, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for Firm Shares to be purchased by any Underwriter whose check shall not have
been received by the Representatives on the Closing Date for the account of
such Underwriter. Any such payment shall not relieve such Underwriter from
any of its obligations hereunder.
(f) Payment of the purchase price for the Option Shares by the
several Underwriters shall be made at the election of the Representatives by
(i) certified or official bank check or checks drawn in next-day funds, payable
to the order of the Custodian, or (ii) wire transfer of immediately available
funds to such account of the Custodian as the Custodian shall advise the
Representatives in writing at least three business days prior to the date on
which any Option Shares are purchased. Such payment shall be made upon delivery
of certificates for the Option Shares to the Representatives for the respective
accounts of the several Underwriters. Certificates for the Option Shares to be
delivered to the Representatives shall be registered in such name or names and
shall be in such denominations as the Representatives may request at least one
business day before the date on which any Option Shares are purchased. Such
certificates will be made available to the Underwriters for inspection, checking
and packaging at the offices of BT Xxxx Xxxxx, New York, New York, not less than
one full business day prior to the Closing Date. It is understood that the
Representatives, individually and not on behalf of the Underwriters, may (but
shall not be obligated to) make payment to the Custodian for Option Shares to be
purchased by any Underwriter whose check shall not have been received by the
Representatives on any date on which Option Shares are purchased for the account
of such Underwriter. Any such payment shall not relieve such Underwriter from
any of its obligations hereunder.
(g) It is understood that the several Underwriters propose to offer
the Shares for sale to the public as soon as the Representatives deems it
advisable to do so. The Firm Shares are to be initially offered to the public
at the public offering price set forth (or to be set forth) in the Prospectus.
The Representatives may from time to time thereafter change the public offering
price and other selling terms.
(h) The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), the legend
respecting stabilization set forth on the inside front cover page and the
statements set forth under the caption "Underwriting" in any Preliminary
Prospectus and in the final form of Prospectus filed pursuant to Rule 424(b)
constitute the only information furnished by the Underwriters to the Company for
inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement.
4. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. The
Company and the Selling Stockholders covenant and agrees with the several
Underwriters as follows:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the time of execution
of this Agreement, to
16
become effective as promptly as possible. If the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will file the
Prospectus, properly completed (and in form and substance reasonably
satisfactory to the Underwriters) pursuant to Rule 424(b) within the time
period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will not file the
Prospectus, any amended Prospectus, any amendment (including post-effective
amendments) to the Registration Statement or any supplement to the Prospectus
without (i) advising the Representatives of and, a reasonable time prior to
the proposed filing of such amendment or supplement, furnishing the
Representatives with copies thereof and (ii) obtaining the prior consent of
the Representatives to such filing. The Company will prepare and file with
the Commission, promptly upon the request of the Representatives, any
amendment to the Registration Statement or supplement to the Prospectus that
may be necessary or advisable in connection with the distribution of the
Shares by the Underwriters and use its best efforts to cause the same to
become effective as promptly as possible.
(b) The Company will promptly advise the Representatives (i) when
the Registration Statement becomes effective, (ii) when any post-effective
amendment thereof becomes effective, (iii) of any request by the Commission for
any amendment of or supplement to the Registration Statement or the Prospectus
or for any additional information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (v) of the
receipt by the Company of any notification with respect to the suspension of the
registration, qualification or exemption from registration or qualification of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order or suspension and, if issued, to obtain as
soon as possible the withdrawal thereof.
(c) The Company will (i) on or before the Closing Date, deliver to
the Representatives and to Underwriters' counsel a signed copy of the
Registration Statement as originally filed and of each amendment thereto filed
prior to the time the Registration Statement becomes effective and, promptly
upon the filing thereof, a signed copy of each post-effective amendment, if any,
to the Registration Statement (together with, in each case, all exhibits thereto
unless and to the extent previously furnished to the Representatives) and all
documents filed by the Company with the Commission under the Exchange Act and
deemed to be incorporated by reference into any Preliminary Prospectus or the
Prospectus and will also deliver to the Representatives, for distribution to the
several Underwriters, a sufficient number of additional conformed copies of each
of the foregoing (excluding exhibits) so that one copy of each may be
distributed to each Underwriter, (ii) as promptly as possible deliver to each of
the Representatives and send to the several Underwriters, at such office or
offices as the Representatives may designate, as many copies of the Prospectus
as the Representatives may reasonably request and (iii) thereafter from time to
time during the period in which a prospectus is required by law to be delivered
by an Underwriter or a dealer, likewise send to the Underwriters as many
additional copies of the Prospectus and as many copies of any supplement to the
Prospectus and of any amended Prospectus, filed by the Company with the
Commission,
17
as the Representatives may reasonably request for the purposes contemplated
by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or a dealer any event shall
occur as a result of which it is necessary to supplement or amend the Prospectus
in order to make the Prospectus not misleading or so that the Prospectus will
not omit to state a material fact necessary to be stated therein, in each case
at the time the Prospectus is delivered to a purchaser of the Shares, or if it
shall be necessary to amend or to supplement the Prospectus to comply with the
Securities Act or the Rules and Regulations, the Company will forthwith prepare
and file with the Commission a supplement to the Prospectus or an amended
Prospectus so that the Prospectus as so supplemented or amended will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading and so that it
then will otherwise comply with the Securities Act and the Rules and
Regulations. If, after the public offering of the Shares by the Underwriters
commences and during such period, the Underwriters propose to vary the terms of
offering thereof by reason of changes in general market conditions or otherwise,
the Representatives will advise the Company in writing of the proposed variation
and if, in the opinion either of counsel for the Company or counsel for the
Underwriters, such proposed variation requires that the Prospectus be
supplemented or amended, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended Prospectus setting forth
such variation. The Company authorizes the Underwriters and all dealers to whom
any of the Shares may be sold by the Underwriters to use the Prospectus, as from
time to time so amended or supplemented, in connection with the sale of the
Shares in accordance with the applicable provisions of the Securities Act and
the Rules and Regulations for such period.
(e) The Company will cooperate with the Representatives and
Underwriters' counsel in the qualification or registration of the Shares for
offer and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and, if applicable, in connection with
exemptions from such qualification or registration and, during the period in
which a Prospectus is required by law to be delivered by an Underwriter or a
dealer, in keeping such qualifications, registrations and exemptions in effect;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction in which it is not so qualified. The Company
will, from time to time, prepare and file such statements, reports and other
documents as are or may be required to continue such qualifications,
registrations and exemptions in effect for so long a period as the
Representatives may reasonably request for the distribution of the Shares.
(f) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to the Representatives and to each
Underwriter who may so request in writing copies of (i) all periodic and special
reports furnished by it to stockholders of the Company, (ii) all information,
documents and reports filed by it with the Commission, Nasdaq National Market,
any securities exchange or the NASD, (iii) all press releases and material news
items or articles in respect of the Company, its products or affairs released or
prepared by the Company (other than promotional and marketing materials
18
disseminated solely to customers and potential customers of the Company in the
ordinary course of business) and (iv) any additional information concerning the
Company or its business which the Representatives may reasonably request.
(g) As soon as practicable, but not later than the 45th day
following the end of the fiscal quarter first ending after the first anniversary
of the Effective Date, the Company will make generally available to its
securities holders and furnish to the Representatives an earnings statement or
statements in accordance with Section 11(a) of the Securities Act and Rule 158
thereunder.
(h) The Company agrees that, without Xxx Xxxxxx'x prior written
consent, the Company will not, and will not allow the Holders to, in each
case directly or indirectly, issue, sell, offer, contract to sell, grant any
option to purchase or otherwise dispose of any shares of Common Stock, or any
securities convertible into, exchangeable for or exercisable for Common Stock
or any rights to purchase or acquire Common Stock, for a period of 180 days
following the date of this Agreement, excluding only (i) the sale of the
Shares to be sold to the Underwriters pursuant to this Agreement and (ii) the
grant of options to purchase Common Stock (provided that none of such options
are or become exercisable during such 180-day period) or the issuance of
shares of Common Stock upon the exercise in accordance with of options
previously granted under the Company's presently authorized stock option
plans as described in the Prospectus or in documents incorporated therein, or
upon the exercise in accordance with their terms of previously granted
warrants which are described in the Prospectus or in documents incorporated
therein.
(i) Each Selling Stockholder agrees that, without Xxx Xxxxxx'x
prior written consent, such Selling Stockholder will not, directly or
indirectly, sell, offer, contract to sell, grant any option to purchase or
otherwise dispose of any shares of Common Stock, or any securities convertible
into, exchangeable for or exercisable for Common Stock or any rights to purchase
or acquire Common Stock, for a period of 180 days following the date of this
Agreement, excluding only the sale of the Option Shares to be sold to the
Underwriters pursuant to this Agreement.
(j) The Company will establish and maintain all financial control
and financial reporting systems customary for well-established public
companies, including but not limited to adequate management information and
reporting systems, and will employ and maintain, with adequate staffing
levels at headquarters and at each significant Subsidiary or significant
functional division, and at each level of responsibility, an employee staff
of well trained and highly qualified financial professionals. As soon as
practicable after the Closing Date, the Company will hire a full-time
corporate controller with sufficient experience and authority to assist the
Chief Financial Officer of the Company in managing and implementing adequate
management information and reporting systems.
(k) The Company will apply the net proceeds from the offering
received by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus and for a period ending on the date which is five years after
the date of this Agreement the Company agrees that any expenditure or
authorization for any expenditure by the Company or any Subsidiary in
19
excess of $10,000 shall be in writing signed by the Chief Executive Officer
and one additional officer who shall be the Chairman of the Board or the
Chief Financial Officer of the Company.
(l) The Company will, and at all times for a period of at least
five years after the date of this Agreement, unless such securities are then
listed on a national securities exchange, use its best efforts to cause the
Common Stock (including the Shares) to be included for listing on the Nasdaq
National Market, and the Company will comply with all registration, filing,
reporting and other requirements of the Exchange Act and the Nasdaq National
Market which may from time to time be applicable to the Company.
(m) The Company will use commercially reasonable efforts to
maintain insurance of the types and in the amounts which it deems adequate for
its business consistent with insurance coverage maintained by companies of
similar size and engaged in similar businesses including, but not limited to,
general liability insurance covering all real and personal property owned or
leased by the Company against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against.
(n) The Company will issue no press release prior to or within
70 days after the Closing Date without prior consultation with the
Representatives with respect to the contents thereof.
(o) Within a reasonable time after the Closing Date, the Company
shall supply to the Representatives and its counsel, at the Company's cost, up
to six bound volumes as requested by such counsel each containing all material
documents relating to the offering of the Shares.
5. FEES AND EXPENSES.
(a) The Company and the Selling Stockholders agree with each
Underwriter that:
(i) The Company and the Selling Stockholders will pay and
bear all costs and expenses in connection with: the preparation, printing and
filing of the Registration Statement (including financial statements, schedules
and exhibits), Preliminary Prospectuses and the Prospectus, any drafts of each
of them and any amendments or supplements to any of them; the duplication or, if
applicable, printing (including all drafts thereof) of this Agreement, the
Agreement Among Underwriters, any Selected Dealer Agreements, the Preliminary
Blue Sky Survey and any Supplemental Blue Sky Survey, the Underwriters'
Questionnaire and the Power of Attorney and the duplication and printing
(including of drafts thereof) of any other underwriting documents and material
(including but not limited to marketing memoranda and other marketing material)
in connection with the offering, purchase, sale and delivery of the Shares; the
issuance, transfer and delivery of the Shares under this Agreement to the
several Underwriters, including all expenses, taxes, duties, fees and
commissions on the purchase and sale of the Shares and Nasdaq National Market,
brokerage and transaction levies with respect to the purchase and, if
applicable, the sale of the Shares (x) incident to the sale and delivery of the
Shares by the Company and the Selling Stockholders to the Underwriters and
(y) incident to the
20
sale and delivery of the Shares by the Underwriters to the initial purchasers
thereof; the cost of printing all stock certificates; the Transfer Agent's
and Registrar's fees; the Custodian's fees; the fees and disbursements of
counsel for the Company; all fees and other charges of the Company's
independent public accountants and any other experts named in the Prospectus;
the cost of furnishing to the several Underwriters copies of the Registration
Statement (including appropriate exhibits), Preliminary Prospectus(es) and
the Prospectus, the agreements and other documents and instruments referred
to above and any amendments or supplements to any of the foregoing; NASD
filing fees and fees and disbursements of Underwriters' counsel incurred in
connection with the review by the NASD of the terms of the Offering of the
Shares; the cost of qualifying or registering the Shares (or obtaining
exemptions from qualification or registration) under the laws of such
jurisdictions as the Representatives may designate (including filing fees in
connection with such state securities or blue sky qualifications,
registrations and exemptions) and preparing the preliminary and any final
Blue Sky Memorandum (including fees and disbursements of Underwriters'
counsel in connection therewith) and all such fees and costs shall be paid on
or prior to the Closing Date; all fees and expenses in connection with
qualification of the Shares for inclusion for listing on the Nasdaq National
Market; the Company's share of roadshow expenses; and all other expenses
incurred by the Company in connection with the performance of its obligations
hereunder. Except as provided in this Section 5, the Underwriters, including
the Representatives, shall bear all expenses incurred by it in connection
with the offering, including (but not limited to) the expenses of its own
counsel. The provisions of this Section 5(a)(i) are intended to relieve the
Underwriters from the payment of the expenses and costs which the Selling
Stockholders and the Company hereby agree to pay, but shall not affect any
agreement which the Selling Stockholders and the Company may make, or may
have made, for the sharing of any of such expenses and costs. Such
agreements shall not impair the obligations of the Company and the Selling
Stockholders hereunder to the several Underwriters.
(ii) In addition to its obligations under Section 8(a) of
this Agreement, the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any loss, claim, damage or liability described in
Section 8(a) of this Agreement, it will reimburse or advance to or for the
benefit of the Underwriters, and each of them, on a monthly basis (or more
often, if requested) for all legal and other expenses incurred in connection
with investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the Company's obligation to reimburse or
advance for the benefit of the Underwriters for such expenses or the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any portion, or all, of any such
interim reimbursement payments or advances are so held to have been improper,
the Underwriters receiving the same shall promptly return such amounts to the
Company together with interest, compounded daily, at the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Bank of America, NT&SA, San Francisco, California (the
"Prime Rate"), but not in excess of the maximum rate permitted by applicable
law. Any such interim reimbursement payments or advances that are not made to
or for the Underwriters within 30 days of a request for reimbursement or for an
advance shall bear interest at the Prime Rate, but not in excess of the maximum
rate permitted by applicable law, from the date of such request until the date
paid.
21
(iii) In addition to his obligations under Section 8(b) of
this Agreement, each Selling Stockholder, severally and not jointly, agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
loss, claim, damage or liability described in Section 8(b) of this Agreement, he
will reimburse or advance to or for the benefit of the Underwriters, and each of
them, on a monthly basis (or more often, if requested) for all legal and other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of such
Selling Stockholder's obligation to reimburse or advance for the benefit of the
Underwriters for such expenses or the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any portion, or all, of any such interim reimbursement payments or
advances are so held to have been improper, the Underwriters receiving the same
shall promptly return such amounts to such Selling Stockholder together with
interest, compounded daily, at the prime rate (or other commercial lending rate
for borrowers of the highest credit standing) announced from time to time by
Bank of America, NT&SA, San Francisco, California (the "Prime Rate"), but not in
excess of the maximum rate permitted by applicable law. Any such interim
reimbursement payments or advances that are not made to or for the Underwriters
within 30 days of a request for reimbursement or for an advance shall bear
interest at the Prime Rate, but not in excess of the maximum rate permitted by
applicable law, from the date of such request until the date paid.
(b) In addition to their obligations under Section 8(c) of this
Agreement, the Underwriters severally and in proportion to their obligation to
purchase Firm Shares as set forth on Schedule I hereto, agree that, as an
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any loss, claim, damage or
liability described in Section 8(c) of this Agreement, they will reimburse or
advance to (for the benefit of the Company on a monthly basis (or more often, if
requested) for all legal and other expenses incurred by the Company in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety or enforceability of the
Underwriters' obligation to reimburse or advance for the benefit of the Company
for such expenses and the possibility that such payments or advances might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any portion, or all, of any such interim reimbursement payments or
advances are so held to have been improper, the Company shall promptly return
such amounts to the Underwriters together with interest, compounded daily, at
the Prime Rate, but not in excess of the maximum rate permitted by applicable
law. Any such interim reimbursement payments or advances that are not made to
the Company within 30 days of a request for reimbursement or for an advance
shall bear interest at the Prime Rate, but not in excess of the maximum rate
permitted by applicable law, from the date of such request until the date paid.
(c) Any controversy arising out of the operation of the interim
reimbursement and advance arrangements set forth in Sections 5(a)(ii), 5(a)(iii)
and 5(b) above, including the amounts of any requested reimbursement payments or
advance, the method of determining such amounts and the basis on which such
amounts shall be apportioned among the indemnifying parties, shall be settled by
arbitration conducted under the provisions of the Constitution and
22
Rules of the Board of Governors of the New York Stock Exchange, Inc. or
pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration
or a written notice of intention to arbitrate, therein electing the
arbitration tribunal. If the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the
party responding to the demand or notice is authorized to do so. Any such
arbitration will be limited to the interpretation and obligations of the
parties under the interim reimbursement and advance provisions contained in
Sections 5(a)(ii), 5(a)(iii) and 5(b) above and will not resolve the ultimate
propriety or enforceability of the obligation to indemnify for or contribute
to expenses that is created by the provisions of Section 8 of this Agreement.
(d) If the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 of this Agreement is not satisfied, or because of any
termination pursuant to Section 9(b) of this Agreement, or because of any
refusal, inability or failure on the part of the Company to perform any material
covenant or agreement set forth in this Agreement or to comply with any
provision of this Agreement other than by reason of a default by any of the
Underwriters, the Company agrees to reimburse the Representatives upon demand
for, or pay directly, all out-of-pocket expenses (including fees and
disbursements of counsel) that shall have been incurred by the Representatives
in connection with investigating, preparing to market or marketing the Shares or
otherwise in connection with this Agreement or the offering of the Shares.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase and pay for the Shares shall be subject, to the
reasonable satisfaction of the Representatives, to the accuracy as of the date
of execution of this Agreement, the Closing Date and the date on which the
Option Shares are to be purchased, as the case may be, of the representations
and warranties of the Company and, with respect to any purchase of any Option
Shares, of the Selling Stockholders set forth in this Agreement and the accuracy
of the statements of the Company, its officers and the Selling Stockholders made
in any certificate delivered pursuant to this Agreement, to the performance by
the Company of all of their respective obligations to be performed under this
Agreement at or prior to the Closing Date or any later date on which Option
Shares are to be purchased, as the case may be, to the satisfaction of all
conditions to be satisfied or performed by the Company and the Selling
Stockholders at or prior to that date and to the following additional
conditions:
(a) The Registration Statement shall have become effective (or, if
a post effective amendment is required to be filed pursuant to Rule 462(b) under
the Act, such post effective amendment shall become effective and the Company
shall have provided evidence satisfactory to the Representatives of such filing
and effectiveness) not later than 5:00 p.m., New York time, on the date of this
Agreement or at such later date and time as the Representatives may approve in
writing and, at the Closing Date or, with respect to the Option Shares, the date
on which such Option Shares are to be purchased; no stop order suspending the
effectiveness of the Registration Statement or any qualification, registration
or exemption from qualification or registration for the sale of the Shares in
any jurisdiction shall have been issued and no proceedings for that purpose
shall have been instituted or threatened; and any request for
23
additional information on the part of the Commission shall have been complied
with to the reasonable satisfaction of the Representatives and Underwriters'
counsel.
(b) The Representatives shall have received from Xxxx Xxxx Xxxx &
Freidenrich LLP, counsel for the Underwriters, an opinion, dated as of the
Closing Date or, if applicable, the date on which the Option Shares are to be
purchased, and the Company shall have furnished such counsel with all documents
which they may reasonably request for the purpose of enabling them to pass upon
such matters.
(c) The Representatives shall have received on the Closing Date and
on any later date on which Option Shares are purchased, as the case may be, the
opinion of Xxxxxx Godward LLP, counsel for the Company and the Selling
Stockholders, addressed to the Underwriters and dated as of the Closing Date or
such later date, with reproduced copies or signed counterparts thereof for each
of the Underwriters, covering the matters set forth in Annex A to this Agreement
and in form and substance reasonably satisfactory to the Representatives.
(d) The Representatives shall be satisfied that there has not been
any material change in the market for securities in general or in political,
financial or economic conditions as to render it impracticable in the
Representatives' sole judgment to make a public offering of the Shares, or a
material adverse change in market levels for securities in general or financial
or economic conditions which render it inadvisable to proceed.
(e) The Representatives shall have received on or before the
Closing Date and on any later date on which Option Shares are purchased a
certificate, dated as of the Closing Date or such later date, as the case may
be, and signed by the President and the Chief Financial Officer of the Company
stating that:
(i) the representations and warranties of the Company set
forth in Section 1 of this Agreement are true and correct with the same force
and effect as if expressly made at and as of the Closing Date or such later
date, and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date or such later date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been instituted or are pending or are threatened under the Securities Act; and
(iii) (A) the respective signers of the certificate have
carefully examined the Registration Statement in the form in which it originally
became effective and the Prospectus and any supplements or amendments to any of
them and, as of the Effective Date, the statements made in the Registration
Statement and the Prospectus were true and correct in all material respects and
neither the Registration Statement nor the Prospectus omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, (B) since the Effective Date, no event has
occurred that should have been set forth in an amendment to the Registration
Statement or a supplement or amendment to the Prospectus
24
that has not been set forth in such an amendment or supplement, (C) since the
respective dates as of which information is given in the Registration
Statement in the form in which it originally became effective and the
Prospectus contained therein, there has not been any Consolidated Material
Adverse Effect or any development involving a prospective Consolidated
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, and, since such dates, except in the ordinary
course of business, neither the Company nor any of its direct or indirect
subsidiaries has entered into any material transaction not referred to in the
Registration Statement in the form in which it originally became effective
and the Prospectus contained therein, (D) there are not any pending or known
threatened legal proceedings to which the Company or any of its direct or
indirect subsidiaries is a party or of which property of the Company or any
of its direct or indirect subsidiaries is the subject which are material and
which are not disclosed in the Registration Statement and the Prospectus and
(E) there are not any license agreements, contracts, leases or other
documents that are required to be filed as exhibits to the Registration
Statement that have not been filed as required.
(f) You shall be satisfied that, and you shall have received a
certificate, dated the date on which Option Shares are to be purchased from the
Attorneys for each Selling Stockholder to the effect that, as of the date on
which Option Shares are to be purchased, they have not been informed that:
(i) The representations and warranties made by such Selling
Stockholder herein are not true or correct in any material respect on the date
on which Option Shares are to be purchased; or
(ii) Such Selling Stockholder has not complied with any
obligation or satisfied any condition which is required to be performed or
satisfied on the part of such Selling Stockholder at or prior to the date on
which Option Shares are to be purchased.
(g) The Representatives shall have received from
PricewaterhouseCoopers LLP a letter or letters, addressed to the Underwriters
and dated as of the Closing Date and any later date on which Option Shares are
purchased, confirming that they are independent accountants with respect to the
Company within the meaning of the Securities Act and the applicable Rules and
Regulations thereunder and, based upon the procedures described in their letter,
referred to below, delivered to the Representatives concurrently with the
execution of this Agreement (the "Original Letter"), but carried out to a date
not more than five business days prior to the Closing Date or such later date on
which Option Shares are purchased, (i) confirming, to the extent true, that the
statements and conclusions set forth in the Original Letter are accurate as of
the Closing Date or such later date, as the case may be, and (ii) setting forth
any revisions and additions to the statements and conclusions set forth in the
Original Letter that are necessary to reflect any changes in the facts
described in the Original Letter since the date of the Original Letter or to
reflect the availability of more recent financial statements, data or
information. Such letters shall not disclose any change, or any development
involving a prospective change, in or affecting the business, properties or
condition (financial or otherwise), results of operations or prospects of the
Company or any of its direct or indirect subsidiaries which, in the
Representatives' sole judgment, makes it impractical or inadvisable to proceed
with the public offering of the Shares or the purchase of the Option Shares as
contemplated by the
25
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). In addition, the Representatives shall have
received from PricewaterhouseCoopers LLP, on or prior to the Closing Date, a
letter addressed to the Company and made available to the Representatives for
the use of the Underwriters stating that their review of the Company's system
of internal controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's consolidated financial statements
as of June 30, 1998, or in delivering their Original Letter, did not disclose
any weaknesses in internal controls that they considered to be a material
weaknesses.
(h) Prior to the Closing Date, the Shares shall have been
designated national market system securities, duly authorized for listing on the
Nasdaq National Market upon official notice of issuance.
(i) On or prior to the Closing Date, you shall have received from
all Holders executed agreements covering the matters described in Section 1(s)
of this Agreement.
(j) The Company shall have furnished to the Representatives such
further certificates and documents as the Representatives shall reasonably
request (including certificates of officers of the Company), as to the accuracy
of the representations and warranties of the Company set forth in this
Agreement, the performance by the Company of its obligations under this
Agreement and the other conditions concurrent and precedent to the obligations
of the Underwriters under this Agreement. Counsel to the Representatives shall
provide a written memorandum to the Company identifying closing documents which
such counsel deems necessary for the Underwriters' review, not less than two
business days before the Closing Date.
All the agreements, opinions, certificates and letters mentioned above or
elsewhere in this Agreement will be in compliance with the provisions of this
Agreement only if they are reasonably satisfactory to the Representatives. The
Company will furnish the Representatives with such number of conformed copies of
such opinions, certificates, letters and documents as the Representatives shall
reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, time
being of the essence, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and
Underwriters' counsel, this Agreement and all obligations of the Underwriters
hereunder may be canceled by the Representatives at, or at any time prior to,
the Closing Date or (with respect to the Option Shares) prior to the date upon
which the Option Shares are to be purchased, as the case may be. Notice of such
cancellation shall be given to the Company in writing or by telephone or
telecopy confirmed in writing. Any such termination shall be without liability
of the Company to the Underwriters (except as provided in Section 5 or Section 8
of this Agreement) and without liability of the Underwriters to the Company
(except to the extent provided in Section 8 of this Agreement).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The respective obligations of the Company and the Selling
26
Stockholders to sell and deliver the Shares required to be delivered as and
when specified in this Agreement shall be subject to the condition that, at
the Closing Date or (with respect to the Option Shares) the date upon which
the Option Shares are to be purchased, no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings therefor shall be pending or threatened by the Commission.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statute,
law or regulation, at common law or otherwise, specifically including but not
limited to losses, claims, damages or liabilities (or actions in respect
thereof) related to negligence on the part of any Underwriter, and the Company
agrees to reimburse each such Underwriter and controlling person for any legal
or other expenses (including, except as otherwise provided below, settlement
expenses and fees and disbursements of counsel) incurred by the respective
indemnified parties in connection with defending against any such losses,
claims, damages or liabilities or in connection with any investigation or
inquiry of, or other proceeding that may be brought against, the respective
indemnified parties, in each case insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon, in
whole or in part, (i) any breach of any representation, warranty, covenant or
agreement of the Company in this Agreement, (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement in
the form originally filed or in any amendment thereto (including the Prospectus
as part thereof) or any post-effective amendment thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading or (iii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (iv) any untrue
statement or alleged untrue statement of a material fact contained in any
application or other document, or any amendment or supplement thereto, executed
by the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify or register the Shares
under the securities or Blue Sky laws thereof or to obtain an exemption from
such qualification or registration or filed with the Commission or any
securities association, the Nasdaq National Market, or any securities exchange,
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided, however,
that (1) the indemnity agreements of the Company contained in this Section 8(a)
shall not apply to any such losses, claims, damages, liabilities or expenses if
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter
27
through the Representatives specifically for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any such amendment
thereof or supplement thereto and (2) the indemnity agreement contained in
this Section 8(a) with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages, liabilities or expenses purchased the Shares that
are the subject thereof (or to the benefit of any person controlling such
Underwriter) if the Company can demonstrate that at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) (excluding the documents incorporated
therein by reference) was not sent or delivered to such person and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented), unless the failure is the result of noncompliance by the
Company with Section 4 of this Agreement. The indemnity agreements of the
Company contained in this Section 8(a) and the representations and warranties
of the Company contained in Section 1 of this Agreement shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Shares. This indemnity agreement shall be in addition to
any liabilities which the Company may otherwise have.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter and each person (including each
partner or officer thereof) who controls any Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Exchange Act or
other federal or state statute, law or regulation, at common law or otherwise,
specifically including but not limited to losses, claims, damages or liabilities
(or actions in respect thereof) related to negligence on the part of any
Underwriter, and each Selling Stockholder, severally and not jointly, agrees to
reimburse each such Underwriter and controlling person for any legal or other
expenses (including, except as otherwise provided below, settlement expenses and
fees and disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding that may be brought against, the respective indemnified parties, in
each case insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon, in whole or in part, (i) any
breach of any representation, warranty, covenant or agreement of such Selling
Stockholder in this Agreement, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement in the form
originally filed or in any amendment thereto (including the Prospectus as part
thereof) or any post-effective amendment thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading or (iii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment thereof or supplement thereto) or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (iv) any untrue
statement or alleged untrue statement of a material fact
28
contained in any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order
to qualify or register the Shares under the securities or Blue Sky laws
thereof or to obtain an exemption from such qualification or registration or
filed with the Commission or any securities association, the Nasdaq National
Market, or any securities exchange, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, provided, however, that (1) the indemnity
agreements of the Selling Stockholders contained in this Section 8(b) shall
not apply to any such losses, claims, damages, liabilities or expenses if
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for use in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
such amendment thereof or supplement thereto, (2) the indemnity agreement
contained in this Section 8(b) with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages, liabilities or expenses purchased
the Shares that are the subject thereof (or to the benefit of any person
controlling such Underwriter) if the Selling Stockholder can demonstrate that
at or prior to the written confirmation of the sale of such Shares a copy of
the Prospectus (or the Prospectus as amended or supplemented) (excluding the
documents incorporated therein by reference) was not sent or delivered to
such person and the untrue statement or omission of a material fact contained
in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented), unless the failure is the result of
noncompliance by the Company with Section 4 of this Agreement and (3) the
indemnity agreements of the Selling Stockholders contained in this Section
8(b) shall apply in the case of subparagraphs (ii) and (iii) of this Section
8(b) to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company or
such Underwriter by such Selling Stockholder, directly or through such
Selling Stockholder's representatives, specifically for use in the
preparation thereof. The indemnity agreements of the Selling Stockholders
contained in this Section 8(b) and the representations and warranties of the
Selling Stockholders contained in Section 2 of this Agreement shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Shares. This indemnity agreement shall be in addition to
any liabilities which the Selling Stockholders may otherwise have.
(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its officers who signs the
Registration Statement, each of its directors, each other Underwriter, each
Selling Stockholder and each person (including each partner or officer thereof)
who controls the Company or any such other Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages or liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, the Exchange Act, or
other federal or state statute, law or regulation or at common law or otherwise
and to reimburse each of them for any legal or other expenses (including, except
as otherwise hereinafter provided, settlement expenses and fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with
29
defending against any such losses, claims, damages or liabilities or in
connection with any investigation or inquiry of, or other proceeding that may
be brought against, the respective indemnified parties, in each case arising
out of or based upon (i) any breach of any representation, warranty, covenant
or agreement of the indemnifying Underwriter in this Agreement, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (including the Prospectus as part thereof) or any
post-effective amendment thereto, or the omission or alleged omission to
state therein 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 or (iii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus
or the Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but in
each case under clauses (ii) and (iii) above, as the case may be, only if
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such
indemnifying Underwriter through the Representatives specifically for use in
the Registration Statement, in any Preliminary Prospectus or the Prospectus
or any such amendment thereof or supplement thereto. The Company and the
Selling Stockholders acknowledge and agree that the matters described in
Section 3(g) of this Agreement constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus. The
indemnity agreement of each Underwriter contained in this Section 8(c) shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the delivery
of and payment for the Shares. This indemnity agreement shall be in addition
to any liabilities which each Underwriter may otherwise have.
Notwithstanding anything to the contrary in this Section 8, no Underwriter
shall be required to make any payments in respect of any claim arising under
this Section 8(b) in excess of the underwriting discount applicable to the
Shares purchased by that Underwriter.
(d) Each person or entity indemnified under the provisions of
Sections 8(a), 8(b) and 8(c) above agrees that, upon the service of a summons or
other initial legal process upon it in any action or suit instituted against it
or upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
Sections, it will, if a claim in respect thereunder is to be made against the
indemnifying party or parties under this Section 8, and give written notice (the
"Notice") of such service or notification to the party or parties from whom
indemnification may be sought hereunder within ten (10) calendar days after
receipt by them of written notice of the commencement of any actions against
them. No indemnification provided for in Sections 8(a), 8(b) and 8(c) above
shall be available to any person who fails to so give the Notice if the party to
whom such Notice was not given was unaware of the action, suit, investigation,
inquiry or proceeding to which the Notice would have related, but only to the
extent such party was materially prejudiced by the failure to receive the
Notice, and the omission so to notify such indemnifying party or parties shall
not relieve such indemnifying party or parties from any liability which it or
they may have to the indemnified
30
party for contribution or otherwise than on account of Sections 8(a), 8(b)
and 8(c). Any indemnifying party shall be entitled at its own expense to
participate in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified party. Any indemnifying party
shall be entitled, if it so elects within a reasonable time after receipt of
the Notice by giving written notice (the "Notice of Defense") to the
indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to
the indemnified party or parties; provided, however, that (i) if the
indemnified party or parties reasonably determine that there may be a
conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties in conducting the defense of such action,
suit, investigation, inquiry or proceeding or that there may be legal
defenses or rights available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or parties,
then separate counsel for and selected by the indemnified party or parties
shall be entitled to conduct, at the expense of the indemnifying parties, the
defense of the indemnified parties to the extent determined by such counsel
to be necessary to protect the interests of the indemnified party or parties,
and (ii) provided, further, that the indemnifying party shall not be liable
for the fees and expenses of more than one separate counsel, reasonably
approved by the indemnifying party, for all of the indemnified parties, plus,
if applicable, local counsel in each jurisdiction. In addition, in any event,
the indemnified party or parties shall be entitled to have counsel selected
by such indemnified party or parties participate in, but not conduct, the
defense. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and, unless separate counsel is
to be chosen by the indemnified party or parties as provided above, the
counsel chosen by the indemnifying party or parties is reasonably
satisfactory to the indemnified party or parties, the indemnifying party or
parties will not be liable under Sections 8(a), 8(b) and 8(c) for any legal
or other expenses subsequently incurred by the indemnified party or parties
in connection with the defense of the action, suit, investigation, inquiry or
proceeding, except that (A) the indemnifying party or parties shall bear and
pay the legal and other expenses incurred in connection with the conduct of
the defense as referred to in clause (i) of the proviso to the preceding
sentence and (B) the indemnifying party or parties shall bear and pay such
other expenses as it or they have authorized to be incurred by the
indemnified party or parties. If, within a reasonable time after receipt of
the Notice, no Notice of Defense has been given, the indemnifying party or
parties shall be responsible for any legal or other expenses incurred by the
indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding.
(e) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 8
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right to appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 8 provides for
indemnification in such case, each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in Section 8(a), 8(b)
and 8(c) above (i) in such proportion as is appropriate to reflect the relative
31
benefits received by each indemnifying party from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
each party in connection with the statements or omissions that 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, the Selling Stockholders and the Underwriters shall be deemed to
be in the same respective proportions as the total proceeds from the offering of
the Shares, net of the underwriting discounts, received by the Company and the
Selling Stockholders and the total underwriting discount retained by the
Underwriters bear to the aggregate public offering price of the Shares.
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 a
party and the party's relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The parties agree that it would not be just and equitable if contribution
pursuant to this Section 8(e) were to be 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 into account the equitable
considerations referred to in the first sentence of this Section 8(e) and to the
considerations referred to in the third sentence of the first paragraph of this
Section 8(e). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities, or actions in respect thereof, referred
to in the first sentence of this Section 8(e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating, preparing to defend or defending against any
action or claim which is the subject of this Section 8(e). Notwithstanding the
provisions of this Section 8(e), no Underwriter shall be required to contribute
any amount in excess of the underwriting discount applicable to the Shares
purchased by that Underwriter. For purposes of this Section 8(e), each person
who controls an Underwriter within the meaning of the Securities Act shall have
the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of the Securities Act, each officer of
the Company who signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the immediately preceding and immediately following sentences. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 1l(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute in this Section 8(e) are several in
proportion to their respective underwriting obligations and not joint.
Each party or other entity entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in Section 8(d) above). This Section 8(e) shall not be
operative as to any Underwriter to the extent that the Company is entitled to
receive or has received indemnity under this Section 8.
32
(f) The Company shall not, without the prior written consent of
each Underwriter, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
such Underwriter or any person who controls such Underwriter within the meaning
of Section 15 of the Securities Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each such Underwriter and each such controlling person
from all liability arising out of such claim, action, suit or proceeding.
(g) No Underwriter shall, without the consent of the Company,
settle or compromise or consent to the entry of any judgment in any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Company is a party to such claim, action, suit or proceeding), which consent
shall not be unreasonably withheld, unless such settlement, compromise or
consent includes an unconditional release of the Company, each of its
officers who signed the Registration Statement, each of its directors, each
Selling Stockholder and each person who controls the Company within the
meaning of Section 15 of the Securities Act, from all liability arising out
of such claim, action, suit or proceeding.
(h) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of Sections 5(a)(ii), 5(a)(iii), 5(b) and 5(c) and
this Section 8 of this Agreement and that they are fully informed regarding
all such provisions. They further acknowledge that the provisions of
Sections 5(a)(ii), 5(a)(iii), 5(b) and 5(c) and this Section 8 of this
Agreement fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement, each Preliminary Prospectus
and the Prospectus as required by the Securities Act, the Rules and
Regulations, the Exchange Act and the rules and regulations of the Commission
under the Exchange Act. The parties are advised that federal or state
policy, as interpreted by the courts in certain jurisdictions, may be
contrary to certain provisions of Sections 5(a)(ii), 5(a)(iii), 5(b) and 5(c)
and this Section 8 of this Agreement and, to the extent permitted by law, the
parties hereto hereby expressly waive and relinquish any right or ability to
assert such public policy as a defense to a claim under Sections 5(a)(ii),
5(a)(iii), 5(b) or 5(c) or this Section 8 of this Agreement and further agree
not to attempt to assert any such defense.
9. SUBSTITUTION OF UNDERWRITERS. If for any reason one or more of the
Underwriters fails or refuses (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 6
or Section 10 of this Agreement) to purchase and pay for the number of Firm
Shares agreed to be purchased by such Underwriter or Underwriters, the
Company shall immediately give notice thereof to the Representatives and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by the Representatives of such notice to purchase, or procure one or
more other Underwriters to purchase, in such proportions as may be agreed
upon among the Representatives and such purchasing Underwriter or
Underwriters and upon the terms set forth herein, all or any part of the
33
Firm Shares that such defaulting Underwriter or Underwriters agreed to
purchase. If the non-defaulting Underwriters fail to make such arrangements
with respect to all such Shares, the number of Firm Shares that each
non-defaulting Underwriter is otherwise obligated to purchase under this
Agreement shall be automatically increased on a pro rata basis to absorb the
remaining Shares that the defaulting Underwriter or Underwriters agreed to
purchase, provided, however, that the non-defaulting Underwriters shall not
be obligated to purchase the Shares that the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such Shares
exceeds 10% of the total number of Firm Shares that all Underwriters agreed
to purchase under this Agreement. If the total number of Firm Shares that
the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the first
24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to the Representatives for purchase
of such Shares on the terms set forth in this Agreement. In any such case,
either the Representatives or the Company shall have the right to postpone
the Closing Date determined as provided in Section 3(c) of this Agreement for
not more than seven business days after the date originally fixed as the
Closing Date pursuant to said Section 3(c) in order that any necessary
changes in the Registration Statement, the Prospectus or any other documents
or arrangements may be made.
If neither the non-defaulting Underwriters nor the Company makes
arrangements within the time periods provided in the first three sentences of
the first paragraph of this Section 9 for the purchase of all the Firm Shares
that the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter (except
as provided in Section 5 or Section 8 of this Agreement) and without any
liability on the part of any non-defaulting Underwriter to the Company (except
to the extent provided in Section 8 of this Agreement). Nothing in this
Section 9, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability, if any, to the Company or any non-defaulting
Underwriter for damages occasioned by its default under this Agreement. The
term "Underwriter" in this Agreement shall include any persons substituted for
an Underwriter under this Section 9.
10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
(a) If the Registration Statement has not been declared effective
prior to the date of this Agreement, this Agreement shall become effective at
such time, after notification of the effectiveness of the Registration Statement
has been released by the Commission, as the Representatives and the Company
shall agree upon the public offering price and the purchase price of the Shares.
If the public offering price and the purchase price of the Shares shall not have
been determined prior to 5:00 p.m., New York time, on the fifth full business
day after the Registration Statement has become effective, this Agreement shall
thereupon terminate without liability on the part of the Company to the
Underwriters (except as provided in Section 5 or Section 8 of this Agreement) or
the Underwriters to the Company (except as set forth in Section 8 of this
Agreement). By giving notice before the time this Agreement becomes effective,
the Representatives may prevent this Agreement from becoming effective without
liability of any party to the other party, except that the Company shall remain
obligated to pay
34
costs and expenses to the extent provided in Section 5 and Section 8 of this
Agreement. If the Registration Statement has been declared effective prior
to the date of this Agreement, this Agreement shall become effective upon
execution and delivery by the Representatives, the Company and the Attorneys.
(b) This Agreement may be terminated by the Representatives in
their absolute discretion by giving written notice to the Company at any time
on or prior to the Closing Date or, with respect to the purchase of the
Option Shares, on or prior to any later date on which the Option Shares are
to be purchased, as the case may be, if prior to such time any of the
following has occurred or, in the Representatives' opinion, is likely to
occur: (i) after the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective adverse change in or affecting
particularly the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company and its direct and indirect
subsidiaries, taken as a whole, whether or not arising in the ordinary course
of business, occurs which would, in the Representatives' sole judgment, make
the offering or the delivery of the Shares impracticable or inadvisable; or
(ii) if there shall have been the engagement in hostilities or an escalation
of major hostilities by the United States or the declaration of war or a
national emergency by the United States on or after the date hereof, or any
outbreak of hostilities or other national or international calamity or crisis
or change in economic or political conditions, if the effect of such
outbreak, calamity, crisis or change in economic or political conditions on
the financial markets of the United States would, in the Representatives'
sole judgment, make the offering or delivery of the Shares impracticable or
inadvisable; or (iii) if there shall have been suspension of trading in
securities generally or a material adverse decline in value of securities
generally on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market, or limitations on prices (other than limitations on
hours or numbers of days of trading) for securities on either such exchange
or system; or (iv) if there shall have been the enactment, publication,
decree or other promulgation of any federal or state statute, regulation,
rule or order of, or commencement of any proceeding or investigation by, any
court, legislative body, agency or other governmental authority which in the
Representatives' sole judgment has or may have a Consolidated Material
Adverse Effect; or (v) if there shall have been the declaration of a banking
moratorium by federal, New York or California state authorities; or (vi) if
there shall have been the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in
the Representatives' sole judgment has a material adverse effect on the
securities markets in the United States; or (vii) existing international
monetary conditions shall have undergone a material change which, in your
sole judgment, makes the offering or delivery of the Shares impracticable or
inadvisable. If this Agreement shall be terminated pursuant to this Section
10, there shall be no liability of the Company or the Selling Stockholders to
the Underwriters (except pursuant to Section 5 and Section 8 of this
Agreement) and no liability of the Underwriters to the Company or the Selling
Stockholders (except to the extent provided in Section 8 of this Agreement).
11. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing and, if to the Underwriters, shall be mailed,
telecopied or delivered to Xxx Xxxxxx & Company, 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
35
Attention: Syndicate Manager (telecopier: (000) 000-0000); and if to the
Company, shall be mailed, telecopied or delivered to it at 00000 Xxxxxxxxxx
Xxxx, Xxxxxx, XX 00000 (telecopier: (714/223-5138) Attention: President. All
notices given by telecopy shall be promptly confirmed by letter.
12. PERSONS ENTITLED TO THE BENEFIT OF THIS AGREEMENT. This Agreement
shall inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 5 and Section 8 of this Agreement, the
several parties (in addition to the Company, the Selling Stockholders and the
several Underwriters) indemnified under the provisions of Section 5 and
Section 8, and their respective personal Representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision contained herein. The
term "successors and assigns" as herein used shall not include any purchaser, as
such purchaser, of any of the Shares from the several Underwriters.
13. GENERAL. Notwithstanding any provision of this Agreement to the
contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties, covenants and
agreements in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof or by or on behalf of
the Company or any Selling Stockholder or their respective directors or officers
and (c) delivery and payment for the Shares under this Agreement; provided,
however, that if this Agreement is terminated prior to the Closing Date, the
provisions of Sections 4(f)-4(n) of this Agreement shall be of no further force
or effect.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which together shall constitute one and
the same instrument, and may be delivered by facsimile transmission.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS, OF THE
STATE OF CALIFORNIA.
14. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement,
the Representatives will act for and on behalf of the several Underwriters, and
any action taken under this Agreement by the Representatives, as Representatives
of the several Underwriters, will be binding on all the Underwriters.
36
If the foregoing correctly sets forth your understanding, please so
indicate by signing in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among the Company, the Selling
Stockholders and the several Underwriters.
Very truly yours,
JAVELIN SYSTEMS, INC.
By:
-----------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
SELLING STOCKHOLDERS
By
------------------------------
Attorney-in-Fact for the Selling
Stockholders named in Schedule II hereto
The foregoing Agreement is hereby confirmed and accepted as of the date
first above written.
On their own behalf and on behalf of each of the several Underwriters named
in Schedule I hereto.
XXX XXXXXX & COMPANY
L.H. FRIEND, WEINRESS, XXXXXXXX & XXXXXXX, INC.
MERIDIAN CAPITAL GROUP, INC.
As Representatives of the
Several Underwriters
By: Xxx Xxxxxx & Company
By:
-----------------------------
Xxxxx X. Xxxxxxx
Senior Vice President
37
SCHEDULE I
UNDERWRITERS
Underwriters Number of Firm Shares
------------ to be Purchased:
---------------
Xxx Xxxxxx & Company . . . . . . . . . . . . . . . . . . . . .
L.H. Friend, Weinress, Xxxxxxxx & Xxxxxxx, Inc. . . . . . . .
Meridian Capital Group, Inc. . . . . . . . . . . . . . . . . .
Total.. . . . . . . . . . . . . . . . . . . . . . . . . .
I-1
SCHEDULE II
SELLING STOCKHOLDERS
Selling Stockholder Number of Option Shares
------------------- to be Sold:
-----------
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxx
C. Xxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxxx
I-2
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE COMPANY
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of Delaware; each of CCI Group, Inc.
and POSNET Computers, Inc. (ogether, the "Subsidiaries") has been duly organized
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of formation;
(ii) The Company and each Subsidiary has the corporate power to own,
lease and operate its properties and to conduct its business as described in the
Prospectus;
(iii) The Company and each Subsidiary is duly qualified to do business
as a foreign corporation and is in good standing in all jurisdictions in which
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure so to qualify would not
have a Consolidated Material Adverse Effect on such entity;
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the captions "Capitalization"
and "Description of Capital Stock" as of the dates stated therein; the issued
and outstanding shares of capital stock (or other securities) of the Company and
each Subsidiary have been duly and validly authorized and issued, are fully paid
and nonassessable and have not been issued in violation of any statutory, or, to
the best knowledge of such counsel, other preemptive right or other rights to
subscribe for or purchase securities or in violation of any applicable federal
or state securities laws; and except as reflected on Exhibit A to the
Underwriting Agreement, the Company directly or indirectly owns all of the
issued and outstanding equity securities of each of its Subsidiaries and, to
such counsel's actual, current knowledge, there are no outstanding options,
warrants or other rights to acquire any equity securities of any Subsidiary;
(v) The Shares will, upon issuance and delivery against payment
therefor in accordance with the terms of the Agreement, be duly authorized,
validly issued, fully paid and nonassessable and will not have been issued in
violation of any statutory, or, to the best knowledge of such counsel, other
preemptive right or other rights to subscribe for or purchase securities and
have been duly approved for listing on the Nasdaq National Market subject only
to official notice of issuance thereof;
(vi) The Company has corporate power to enter into the Agreement and to
issue, sell and deliver the Shares to the Underwriters.
(vii) The Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company and, assuming its due authorization, execution and delivery by the
Representatives, is the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except insofar as the
indemnification and contribution provisions of the Agreement may be limited by
public policy concerns and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable principles;
(viii) We have been informed by the staff of the Securities and Exchange
Commission that the Registration Statement has become effective under the
Securities Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
threatened under the Securities Act;
(ix) The Registration Statement and the Prospectus, and each amendment
or supplement thereto (other than the financial statements and supporting
schedules included therein, as to which such counsel need express no opinion),
as of the effective date of the Registration Statement, complied as to form in
all material respects with the requirements of the Securities Act and the
applicable Rules and Regulations;
(x) The terms and provisions of the capital stock of the Company
conform in all material respects to the description thereof contained in the
Registration Statement and Prospectus, and the forms of certificates evidencing
the Common Stock comply with Delaware law;
(xi) The information in the Prospectus under the captions "Description
of Capital Stock" and "Shares Eligible for Future Sale," to the extent it
constitutes matters of law or legal conclusions, has been reviewed by such
counsel and is correct in all material respects;
(xii) The description in the Registration Statement and the Prospectus
of the Certificate of Incorporation and Bylaws of the Company and of statutes
and, to the best knowledge of such counsel, contracts are accurate in all
material respects and fairly present in all material respects the information
required to be presented by the Securities Act and the Rules and Regulations;
(xiii) To the best knowledge of such counsel, there are no agreements,
contracts, licenses, leases or documents of a character required to be described
or referred to in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement that are not described or referred to
therein or filed as required;
(xiv) The execution and delivery of the Agreement do not, and the
Company's performance of the Agreement and the consummation of the transactions
contemplated thereby will not, conflict with, violate or result in the material
breach of or a material default (including without limitation with the giving of
notice, the passage of time or otherwise) under any of the terms and provisions
of the Company's Certificate of Incorporation or Bylaws or, to such counsel's
actual current knowledge, any contract, indenture, mortgage, deed of trust, loan
agreement, lease, license, joint venture or, without limitation, other agreement
or instrument to which the Company or any Subsidiary is a party or by which any
of its or their properties are bound or any law, ordinance, rule or regulation
or, to the best knowledge of such counsel, any order, writ, injunction, judgment
or decree of any governmental agency or body or of any court or arbitration
tribunal having jurisdiction over the Company or any Subsidiary or over any of
its or their properties; provided, however, that no opinion need be rendered
concerning state securities or Blue Sky laws;
(xv) No authorization, approval or consent or other order of any
governmental authority or agency is necessary in connection with the
consummation of the transactions contemplated by the Agreement, except such as
have been obtained under the Securities Act;
(xvi) To the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the Company or any
Subsidiary of a character which are required to be disclosed in the Registration
Statement or the Prospectus by the Securities Act or the applicable Rules and
Regulations, other than those described therein;
(xvii) To the best knowledge of such counsel, neither the Company nor any
Subsidiary is presently in breach of, or in default under, any bond, debenture,
note or other evidence of indebtedness or any contract, indenture, mortgage,
deed of trust, loan agreement, lease, license or, without limitation, other
agreement or instrument to which the Company or any Subsidiary is a party or by
which any of its or their properties are bound which breach or default,
individually or in the aggregate, is reasonably likely to result in a
Consolidated Material Adverse Effect.
(xviii) To the best knowledge of such counsel, except as set forth in the
Registration Statement and Prospectus, no holders of Common Stock or other
securities of the Company have unexercised registration rights with respect to
any securities of the Company;
In addition, such counsel shall state that such counsel has participated
in the preparation of the Registration Statement and Prospectus, including
participating in conferences with officers and other representatives of the
Company, the independent public accountants of the Company, the
Representatives and counsel to the Underwriters, at which conferences the
contents of the Registration Statement and the Prospectus and related matters
were discussed and, although they have not independently verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, nothing has come to the attention
of such counsel that caused them to believe that, at the time the
Registration Statement became effective, the Registration Statement (except
as to financial statements and supporting schedules contained therein, as to
which such counsel need express no opinion) contained any 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 at the
Closing Date or any later date on which the Option Shares are to be
purchased, as the case may be, the Prospectus contained any 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.
EXHIBIT "A"
LIST OF SUBSIDIARIES
EXHIBIT "B"
