1
Exhibit 1.1
1,850,000 SHARES(1)
SeaMED CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
November __, 1996
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇▇ & COMPANY, INC.
As Representatives of the several
Underwriters named in Schedule II hereto
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
SeaMED Corporation, a Washington corporation (the "Company"), and the
shareholders of the Company listed in Schedule I hereto (the "Selling
Shareholders") severally propose to sell to the several underwriters named in
Schedule II hereto (the "Underwriters") an aggregate of 1,850,000 shares (the
"Firm Shares") of common stock, no par value (the "Common Stock"), of the
Company. The Firm Shares consist of 1,361,942 authorized but unissued shares
of Common Stock to be issued and sold by the Company and 488,058 outstanding
shares of Common Stock to be sold by the Selling Shareholders. The Company has
also granted to the several Underwriters an option to purchase up to 277,500
additional shares of Common Stock on the terms and for the purposes set forth
in Section 3 hereof (the "Option Shares"). The Firm Shares and any Option
Shares purchased pursuant to this Purchase Agreement (this "Agreement") are
herein collectively called the "Securities."
The Company and the Selling Shareholders hereby confirm their
agreement with respect to the sale of the Securities to the several
Underwriters, for whom you are acting as Representatives (the
"Representatives").
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(1) Plus an option to purchase up to 277,500 additional shares to cover
over-allotments.
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1. REGISTRATION STATEMENT AND PROSPECTUS
A registration statement on Form S-1 (File No. 333-13455) with respect
to the Securities, including a preliminary form of prospectus, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder and has been filed with the Commission; one or more amendments to
such registration statement have also been so prepared and have been, or will
be, so filed; and, if the Company has elected to rely upon Rule 462(b) of the
Rules and Regulations to increase the size of the offering registered under the
Act, the Company will prepare and file with the Commission a registration
statement with respect to such increase pursuant to Rule 462(b) of the Rules
and Regulations. Copies of such registration statement(s) and amendments and
each related preliminary prospectus have been delivered to you. If the Company
has elected not to rely upon Rule 430A of the Rules and Regulations, the
Company has prepared and will promptly file an amendment to the registration
statement and an amended prospectus (including a term sheet meeting the
requirements of Rule 434 of the Rules and Regulations). If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare
and file a prospectus (or a term sheet meeting the requirements of Rule 434 of
the Rules and Regulations) pursuant to Rule 424(b) of the Rules and Regulations
that discloses the information previously omitted from the prospectus in
reliance upon Rule 430A of the Rules and Regulations. Such registration
statement as amended at the time it is or was declared effective by the
Commission, and, in the event of any amendment thereto after the effective date
and prior to the First Closing Date (as hereinafter defined), such registration
statement as so amended (but only from and after the effectiveness of such
amendment), including a registration statement (if any) filed pursuant to Rule
462(b) of the Rules and Regulations increasing the size of the offering
registered under the Act and information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rules 430A(b)
of the Rules and Regulations and 434(d) of the Rules and Regulations, is
hereinafter called the "Registration Statement." The prospectus included in
the Registration Statement at the time it is or was declared effective by the
Commission is hereinafter called the "Prospectus," except that if any
prospectus (including any term sheet meeting the requirements of Rule 434 of
the Rules and Regulations provided by the Company for use with a prospectus
subject to completion within the meaning of Rule 434 of the Rules and
Regulations in order to meet the requirements of Section 10(a) of the Act)
filed by the Company with the Commission pursuant to Rule 424(b) (and Rule 434,
if applicable) of the Rules and Regulations or any other such prospectus
provided to the Underwriters by the Company for use in connection with the
offering of the Securities (whether or not required to be filed by the Company
with the Commission pursuant to Rule 424(b) of the Rules and Regulations)
differs from the prospectus on file at the time the Registration
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Statement is or was declared effective by the Commission, the term "Prospectus"
shall refer to such differing prospectus (including any term sheet within the
meaning of Rule 434 of the Rules and Regulations) from and after the time such
prospectus is filed with the Commission or transmitted to the Commission for
filing pursuant to such Rule 424(b) (and Rule 434, if applicable) of the Rules
and Regulations or from and after the time it is first provided to the
Underwriters by the Company for such use. The term "Preliminary Prospectus" as
used herein means any preliminary prospectus included in the Registration
Statement prior to the time it becomes or became effective under the Act and
any prospectus subject to completion as described in Rule 430A or 434 of the
Rules and Regulations.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS
(a) The Company represents and warrants to, and agrees with, the
several Underwriters as follows:
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each Preliminary
Prospectus, at the time of filing thereof, did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing shall not apply to statements in or omissions from any Preliminary
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by you, or by any Underwriter through you,
specifically for use in the preparation thereof.
(ii) As of the time the Registration Statement (or any
post-effective amendment thereto, including a registration statement (if any)
filed pursuant to Rule 462(b) of the Rules and Regulations increasing the size
of the offering registered under the Act) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of the
Prospectus (or any supplement to the Prospectus (including any term sheet
meeting the requirements of Rule 434 of the Rules and Regulations)) and at the
First Closing Date and Second Closing Date (as hereinafter defined), (A) the
Registration Statement and Prospectus (in each case, as so amended and/or
supplemented) conformed or will conform in all material respects to the
requirements of the Act and the Rules and Regulations, (B) the Registration
Statement (as so amended) did not or will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they are or were made, not misleading, and (C) the Prospectus (as so
supplemented) did not or will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
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make the statements therein, in light of the circumstances in which they are or
were made, not misleading; except that the foregoing shall not apply to
statements in or omissions from any such document in reliance upon, and in
conformity with, written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation thereof. If
the Registration Statement has been declared effective by the Commission, no
stop order suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission.
(iii) The financial statements of the Company, together
with the notes thereto, set forth in the Registration Statement and Prospectus
comply in all material respects with the requirements of the Act and the Rules
and Regulations and fairly present the financial condition of the Company as of
the dates indicated and the results of operations and changes in cash flows for
the periods therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise stated therein); and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. No other financial statements or schedules are required to be
included in the Registration Statement or Prospectus. Ernst & Young LLP, which
has expressed its opinion with respect to the financial statements and
schedules filed as a part of the Registration Statement and included in the
Registration Statement and Prospectus, is an independent public accountant as
required by the Act and the Rules and Regulations.
(iv) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the state of
Washington. The Company has full corporate power and authority to own its
properties and conduct its business as currently being carried on and as
described in the Registration Statement and Prospectus, and is duly qualified
to do business as a foreign corporation in good standing in each jurisdiction
in which it owns or leases real property or in which the conduct of its
business makes such qualification necessary and in which the failure to so
qualify would have a material adverse effect upon its business, condition
(financial or otherwise) or properties, taken as a whole.
(v) Except as contemplated in the Prospectus, subsequent
to the respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company has not incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any distributions of
any kind with respect to its capital stock; and there has not been any change
in the capital stock (other than a change in the number of outstanding shares
of Common Stock due to the issuance of shares upon the exercise of outstanding
options or warrants), or any material change in the short-term or long-term
debt, or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock, of
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the Company, or any material adverse change, or any development involving a
prospective material adverse change, in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects, net
worth or results of operations of the Company, taken as a whole.
(vi) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Company, threatened or contemplated, any
action, suit or proceeding to which the Company is a party before or by any
court or governmental agency, authority or body, or any arbitrator, which might
reasonably be expected to result in any material adverse change in the
condition (financial or otherwise), business, prospects, net worth or results
of operations of the Company, taken as a whole.
(vii) There are no contracts or documents of the Company
that are required to be filed as exhibits to the Registration Statement by the
Act or by the Rules and Regulations that have not been so filed.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. The execution, delivery and
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 statute, any agreement or
instrument to which the Company is a party or by which it is bound or to which
any of its property is subject, the Company's charter or by-laws, or any order,
rule, regulation or decree of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; no consent, approval,
authorization or order of, or filing with, any court or governmental agency or
body is required for the execution, delivery and performance of this Agreement
or for the consummation of the transactions contemplated hereby, including the
issuance or sale of the Securities by the Company, except such as may be
required under the Act or state securities or blue sky laws; and the Company
has full power and authority to enter into this Agreement and to authorize,
issue and sell the Securities as contemplated by this Agreement.
(ix) All of the issued and outstanding shares of capital
stock of the Company, including the outstanding shares of Common Stock, are
duly authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws (other than
such noncompliance as would not have a material adverse effect on the condition
(financial or otherwise), prospects, net worth or results of operations of the
Company), were not issued in violation of or subject to any
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preemptive rights or other rights to subscribe for or purchase securities, and
the holders thereof are not subject to personal liability by reason of being
such holders; the Securities which may be sold hereunder by the Company have
been duly authorized and, when issued, delivered and paid for in accordance
with the terms hereof, will have been validly issued and will be fully paid and
nonassessable, and the holders thereof will not be subject to personal
liability by reason of being such holders; and the capital stock of the
Company, including the Common Stock, conforms to the description thereof in the
Registration Statement and Prospectus. Except as otherwise stated in the
Registration Statement and Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the voting or
transfer of, any shares of Common Stock pursuant to the Company's charter,
by-laws or any agreement or other instrument to which the Company is a party or
by which the Company is bound. Except to the extent of the sales by the
Selling Shareholders contemplated by this Agreement, neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights which have not been
waived for or relating to the registration of any shares of Common Stock or
other securities of the Company. Except as described in the Registration
Statement and the Prospectus, there are no options, warrants, agreements,
contracts or other rights in existence to purchase or acquire from the Company
any shares of the capital stock of the Company. The Company has an authorized
and outstanding capitalization as set forth in the Registration Statement and
the Prospectus.
(x) The Company holds, and is operating in compliance in
all material respects with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business, except where the
failure, individually or in the aggregate, to obtain or noncompliance with such
would not have a material adverse effect on the condition (financial or
otherwise), prospects, net worth or results of operations of the Company; all
such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and effect; and
the Company is in compliance in all respects with all applicable federal,
state, local and foreign laws, regulations, orders and decrees, which
noncompliance would have a material adverse effect on the condition (financial
or otherwise), prospects, net worth or results of operations of the Company.
(xi) The Company has good and marketable title to all
property described in the Registration Statement and Prospectus as being owned
by it, in each case free and clear of all liens, claims, security interests or
other encumbrances, except such as are described in the Registration Statement
and the Prospectus or such as do not materially affect the value of such
property, are not material in amount and do not interfere in any material
respect with the use of the property or the conduct of the business of the
Company; the property held under lease by the Company is held by it under
valid,
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subsisting and enforceable leases with only such exceptions with respect to any
particular lease as do not interfere in any material respect with the conduct
of the business of the Company; the Company owns or possesses all patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses, inventions,
trade secrets and rights necessary for the conduct of the business of the
Company as currently carried on and as described in the Registration Statement
and Prospectus; except as stated in the Registration Statement and Prospectus,
no name which the Company uses and no other aspect of the business of the
Company will involve or give rise to any infringement of, or license or similar
fees for, any patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service ▇▇▇▇ registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of others material
to the business or prospects of the Company, and the Company has not received
any notice alleging any such infringement or fee.
(xii) The Company is not in violation of its charter or
by-laws or in breach of or otherwise in default in the performance of any
material obligation, agreement or condition contained in any bond, debenture,
note, indenture, loan agreement or any other material contract, lease or other
instrument to which it is subject or by which it is bound, or to which any of
the material property or assets of the Company is subject.
(xiii) The Company has filed all federal, state, local and
foreign income and franchise tax returns required to be filed and is not in
default in the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto, other than any which the Company is
contesting in good faith.
(xiv) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary Prospectus or
the Prospectus or other materials permitted by the Act to be distributed by the
Company.
(xv) The Securities have been conditionally approved for
listing on the Nasdaq National Market ("Nasdaq") and, on the date the
Registration Statement became or becomes effective, the Company's Registration
Statement on Form 8-A or other applicable form under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), became or will become effective.
(xvi) The Company owns no capital stock or other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust or other entity.
(xvii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are
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recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in accordance
with management's general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xviii) Other than as contemplated by this Agreement, the
Company has not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(xix) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(xx) Except as disclosed in the Registration Statement and
except as would not, singly or in the aggregate, reasonably be expected to have
a material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company, (A) to the
best knowledge of the Company, the Company is in compliance with all applicable
Environmental Laws (as defined below), (B) to the best knowledge of the
Company, the Company has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with the
requirements of such permits, authorizations and approvals, (C) there are no
pending or, to the best knowledge of the Company, threatened Environmental
Claims against the Company and (D) under applicable law, there are no
circumstances with respect to any property or operations of the Company that
are reasonably likely to form the basis of an Environmental Claim against the
Company.
For purposes of this Agreement, the following terms shall have
the following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) federal, state, local or municipal statute, law,
rule, regulation, ordinance, code or rule of common law and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or any chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority. "Environmental Claims"
means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
(xxi) No labor dispute with the employees of the Company
exists or, to the best knowledge of the Company, is imminent; and the Company
is not aware of any existing or imminent labor dispute by the employees of any
of its principal suppliers,
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manufacturers, contractors or customers which might, singly or in the
aggregate, be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company.
(xxii) To the best of the Company's knowledge, neither the
Company nor any employee or agent of the Company has made any payment of funds
of the Company or received or retained any funds in violation of any law, rule
or regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(xxiii) The Company is not now, and after sale of the
Securities to be sold by it hereunder and application of the net proceeds from
such sale as described in the Prospectus under the caption "Use of Proceeds"
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(xxiv) The Company maintains insurance of the types and in
amounts adequate for its business and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering product liability and real and personal property
owned or leased against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full
force and effect.
(b) Each Selling Shareholder, severally and not jointly,
represents and warrants to, and agrees with, the several Underwriters as
follows:
(i) Such Selling Shareholder is the record and beneficial
owner of, and has, and on the First Closing Date and/or the Second Closing Date
(as hereinafter defined), as the case may be, will have, good and marketable
title to the Securities to be sold by such Selling Shareholder, free and clear
of any adverse claims (within the meaning of Revised Code of Washington ("RCW")
62A.8-102(1)(a)), all restrictions on transferability, legends, proxies or
other encumbrances; and upon delivery of and payment (within the meaning of RCW
62A.1-201(44)) for such Securities hereunder, the several Underwriters will
acquire good and marketable title thereto, free and clear of any adverse claims
(within the meaning of RCW 62A.8-102(1)(a) and RCW 62A.8-105) and obtain
control thereto (within the meaning of RCW 62A.8-106). Such Selling
Shareholder is selling the Securities to be sold by such Selling Shareholder
for such Selling Shareholder's own account and is not selling such Securities,
directly or indirectly, for the benefit of the Company, and no part of the
proceeds of such sale received by such Selling Shareholder will inure, either
directly or indirectly, to the benefit of the Company.
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(ii) Such Selling Shareholder has duly authorized,
executed and delivered a Letter of Transmittal and Custody Agreement ("Custody
Agreement"), which Custody Agreement is a valid and binding obligation of such
Selling Shareholder, to ChaseMellon Shareholder Services, as Custodian (the
"Custodian"); pursuant to the Custody Agreement such Selling Shareholder has
placed or caused to be placed in custody with the Custodian, for delivery under
this Agreement, the certificates representing the Securities to be sold by such
Selling Shareholder; such certificates represent validly issued, outstanding,
fully paid and nonassessable shares of Common Stock; and such certificates were
duly and properly endorsed in blank for transfer, or were accompanied by all
documents duly and properly executed that are necessary to validate the
transfer of title thereto, to the Underwriters, free of any legend, restriction
on transferability, proxy, lien or claim, whatsoever.
(iii) Such Selling Shareholder has the power and authority
to enter into this Agreement and to sell, transfer and deliver the Securities
to be sold by such Selling Shareholder; and such Selling Shareholder has duly
authorized, executed and delivered to W. ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as
attorneys-in-fact (the "Attorneys-in-Fact"), an irrevocable power of attorney
(a "Power of Attorney") authorizing and directing the Attorneys-in-Fact, or
either of them, to effect the sale and delivery of the Securities being sold by
such Selling Shareholder, to enter into this Agreement and to take all such
other action as may be necessary hereunder.
(iv) This Agreement, the Custody Agreement and the Power
of Attorney have each been duly authorized, executed and delivered by or on
behalf of such Selling Shareholder and each constitutes a valid and binding
agreement of such Selling Shareholder, enforceable in accordance with its
terms, except as rights to indemnity hereunder or thereunder may be limited by
federal or state securities laws and except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or laws affecting the rights
of creditors generally and subject to general principles of equity. The
execution and delivery of this Agreement, the Custody Agreement and the Power
of Attorney and the performance of the terms hereof and thereof and the
consummation of the transactions herein and therein contemplated will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder is bound, or any
law, regulation, order or decree applicable to such Selling Shareholder; no
consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Custody Agreement and the Power of Attorney
or for the consummation of the transactions contemplated hereby and thereby,
including the sale of the Securities being sold by such Selling Shareholder,
except such as may be required under the Act or state securities laws or blue
sky laws.
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(v) Such Selling Shareholder has not distributed and will
not distribute any prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary Prospectus or
the Prospectus or other materials permitted by the Act to be distributed by
such Selling Shareholder.
(vi) To the extent that any statements or omissions made
in the Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, insofar as such statements or omissions
relate to such Selling Shareholder, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any amendments or
supplements to the Registration Statement or Prospectus (including any term
sheet meeting the requirements of Rule 434 of the Rules and Regulations) will,
when they become effective or are filed with the Commission, as the case may
be, 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 the statements
therein not misleading
(c) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby; any certificate signed by or on behalf of any Selling
Shareholder as such and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by such Selling Shareholder to
each Underwriter as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell 1,361,942 Firm Shares, and each Selling
Shareholder agrees, severally and not jointly, to sell the number of Firm
Shares set forth opposite the name of such Selling Shareholder in Schedule I
hereto, to the several Underwriters, and each Underwriter agrees, severally and
not jointly, to purchase from the Company and the Selling Shareholders the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule II hereto. The purchase price for each Firm Share shall be [$_____]
per share. The obligation of each Underwriter to each of the Company and the
Selling Shareholders shall be to purchase from each of the Company and the
Selling Shareholders that number of Firm Shares (to be adjusted by the
Representatives to avoid fractional shares) which represents the same
proportion of the number of Firm Shares to be sold by each of the Company and
the Selling Shareholders pursuant to this Agreement as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule II hereto
represents to the total number of Firm Shares to be purchased by all
Underwriters pursuant to this Agreement. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as provided in
paragraph (c) of this Section 3 and in
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Section 8 hereof, the agreement of each Underwriter is to purchase only the
respective number of Firm Shares specified in Schedule II.
The Firm Shares will be delivered by the Company and the Custodian to
you for the accounts of the several Underwriters against payment of the
purchase price therefor by wire transfer of same-day funds payable to the order
of the Company and the Custodian, as appropriate, at the offices of ▇▇▇▇▇
▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable, at 9:00 a.m.
Central time on the third (or if the Securities are priced, as contemplated by
Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern time, the
fourth) full business day following the date hereof, or at such other time and
date as you and the Company determine pursuant to Rule 15c6-1(a) under the
Exchange Act, such time and date of delivery being herein referred to as the
"First Closing Date." If the Representatives so elect, delivery of the Firm
Shares may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives. Certificates
representing the Firm Shares, in definitive form and in such denominations and
registered in such names as you may request upon at least two business days'
prior notice to the Company and the Custodian, will be made available for
checking and packaging not later than 10:30 a.m., Central time, on the business
day next preceding the First Closing Date at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.,
▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such
other location as may be mutually acceptable.
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company, with respect to the Option Shares hereby grants to the several
Underwriters an option to purchase all or any portion of the Option Shares at
the same purchase price as the Firm Shares, for use solely in covering any
over-allotments made by the Underwriters in the sale and distribution of the
Firm Shares. The option granted hereunder may be exercised at any time (but
not more than once) within 30 days after the effective date of this Agreement
upon notice (confirmed in writing) by the Representatives to the Company
setting forth the aggregate number of Option Shares as to which the several
Underwriters are exercising the option, the names and denominations in which
the certificates for the Option Shares are to be registered and the date and
time, as determined by you, when the Option Shares are to be delivered, such
time and date being herein referred to as the "Second Closing" and "Second
Closing Date," respectively; provided, however, that the Second Closing Date
shall not be earlier than the First Closing Date nor earlier than the second
business day after the date on which the option shall have been exercised. The
First Closing Date and the Second Closing Date are sometimes herein
individually called the "Closing Date" and collectively called the "Closing
Dates." The number of Option Shares to be purchased by each Underwriter shall
be the same percentage of the total number of Option Shares to be purchased by
the several Underwriters as the number of
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Firm Shares to be purchased by such Underwriter is of the total number of Firm
Shares to be purchased by the several Underwriters, as adjusted by the
Representatives in such manner as the Representatives deem advisable to avoid
fractional shares. No Option Shares shall be sold and delivered unless the
Firm Shares previously have been, or simultaneously are, sold and delivered.
The Option Shares will be delivered by the Custodian and the Company,
as appropriate, to you for the accounts of the several Underwriters against
payment of the purchase price therefor by wire transfer of same-day funds
payable to the order of the Custodian or the Company, as appropriate, at the
offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable at
9:00 a.m., Central time, on the Second Closing Date. If the Representatives so
elect, delivery of the Option Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by the
Representatives. Certificates representing the Option Shares in definitive
form and in such denominations and registered in such names as you have set
forth in your notice of option exercise will be made available for checking and
packaging not later than 10:30 a.m., Central time, on the business day next
preceding the Second Closing Date at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇
▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other
location as may be mutually acceptable.
(c) It is understood that you, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated
to) make payment to the Company or the Selling Shareholders, on behalf of any
Underwriter for the Securities to be purchased by such Underwriter. Any such
payment by you shall not relieve any such Underwriter of any of its obligations
hereunder. Nothing herein contained shall constitute any of the Underwriters
an unincorporated association or partner with the Company or any Selling
Shareholder.
4. COVENANTS
(a) The Company covenants and agrees with the several Underwriters
as follows:
(i) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best efforts to
cause the Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible; the Company will notify you promptly
of the time when the Registration Statement or any post-effective amendment to
the Registration Statement has become effective or any supplement to the
Prospectus (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) has been filed and of any request by the Commission for
any amendment or supplement to the Registration Statement or
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Prospectus or additional information; if the Company has elected to rely on
Rule 430A of the Rules and Regulations, the Company will prepare and file a
Prospectus (or term sheet within the meaning of Rule 434 of the Rules and
Regulations) containing the information omitted therefrom pursuant to Rule 430A
of the Rules and Regulations with the Commission within the time period
required by, and otherwise in accordance with the provisions of, Rules 424(b),
430A and 434, if applicable, of the Rules and Regulations; if the Company has
elected to rely upon Rule 462(b) of the Rules and Regulations to increase the
size of the offering registered under the Act, the Company will prepare and
file a registration statement with respect to such increase with the Commission
within the time period required by, and otherwise in accordance with the
provisions of, Rule 462(b) of the Rules and Regulations; the Company will
prepare and file with the Commission, promptly upon your request, any
amendments or supplements to the Registration Statement or Prospectus
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations) that, in your opinion, may be necessary or advisable in connection
with the distribution of the Securities by the Underwriters; and the Company
will not file any amendment or supplement to the Registration Statement or
Prospectus (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to which you shall reasonably object by notice to the
Company after having been furnished a copy a reasonable time prior to the
filing.
(ii) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement,
of the suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any proceeding for
any such purpose; and the Company will promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such a stop order
should be issued.
(iii) Within the time during which a prospectus (including
any term sheet within the meaning of Rule 434 of the Rules and Regulations)
relating to the Securities is required to be delivered under the Act, the
Company will comply as far as it is able with all requirements imposed upon it
by the Act, as now and hereafter amended, and by the Rules and Regulations, as
from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Securities as contemplated by the provisions hereof
and the Prospectus. If during such period any event occurs as a result of
which the Prospectus would include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances then existing, not misleading, or if during such
period it is necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act, the Company will promptly notify you and
will amend the Registration Statement or supplement the Prospectus (at the
expense of the Company) so as to correct such statement or omission or effect
such compliance.
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(iv) The Company will use its best efforts to qualify the
Securities for sale under the securities laws of such jurisdictions as you
reasonably designate and to continue such qualifications in effect so long as
required for the distribution of the Securities, except that the Company shall
not be required in connection therewith to qualify as a foreign corporation or
to execute a general consent to service of process in any state.
(v) The Company will furnish to the Underwriters copies
of the Registration Statement (three of which will be signed and will include
all exhibits), each Preliminary Prospectus, the Prospectus, and all amendments
and supplements (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to such documents, in each case as soon as available and
in such quantities as you may from time to time reasonably request.
(vi) During a period of five years commencing with the
date hereof, the Company will furnish to the Representatives, and to each
Underwriter who may so request in writing, copies of all periodic and special
reports furnished to the shareholders of the Company and all information,
documents and reports filed with the Commission, the National Association of
Securities Dealers, Inc., Nasdaq or any securities exchange.
(vii) The Company will make generally available to its
shareholders as soon as practicable, but in any event not later than 15 months
after the end of the Company's current fiscal quarter, an earnings statement
(which need not be audited) covering a 12-month period beginning after the
effective date of the Registration Statement that shall satisfy the provisions
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations.
(viii) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is prevented from
becoming effective under the provisions of Section 9(a) hereof or is
terminated, will pay or cause to be paid (A) all expenses (including transfer
taxes allocated to the respective transferees) incurred in connection with the
delivery to the Underwriters of the Securities, (B) all expenses and fees
(including, without limitation, fees and expenses of the Company's accountants
and counsel but, except as otherwise provided below, not including fees of the
Underwriters' counsel) incurred in connection with the preparation, printing,
filing, delivery, and shipping of the Registration Statement (including the
financial statements therein and all amendments, schedules, and exhibits
thereto), the Securities, each Preliminary Prospectus, the Prospectus, and any
amendment thereof or supplement thereto, and the printing, delivery, and
shipping of this Agreement and other underwriting documents, including Blue Sky
Memoranda, (C) all filing fees and fees and disbursements of the Underwriters'
counsel incurred in connection with the qualification of the Securities for
offering and sale by the Underwriters or by dealers under the securities or
blue sky laws
-15-
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of the states and other jurisdictions which you shall designate in accordance
with Section 4(a)(iv) hereof, (D) the fees and expenses of any transfer agent
or registrar, (E) the filing fees incident to any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of
the Securities, (F) listing fees, if any, and (G) all other costs and expenses
incident to the performance of its obligations hereunder that are not otherwise
specifically provided for herein. If the sale of the Securities provided for
herein is not consummated by reason of action by the Company pursuant to
Section 9(a) hereof which prevents this Agreement from becoming effective, or
by reason of any failure, refusal or inability on the part of the Company or
the Selling Shareholders to perform any agreement on its or their part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company or the Selling Shareholders
is not fulfilled, the Company will reimburse the several Underwriters for all
out-of-pocket disbursements (including fees and disbursements of counsel)
incurred by the Underwriters in connection with their investigation, preparing
to market and marketing the Securities or in contemplation of performing their
obligations hereunder. The Company shall not in any event be liable to any of
the Underwriters for loss of anticipated profits from the transactions covered
by this Agreement.
(ix) The Company will apply the net proceeds from the sale
of the Securities to be sold by it hereunder for the purposes set forth in the
Prospectus and will file such reports with the Commission with respect to the
sale of the Securities and the application of the proceeds therefrom as may be
required in accordance with Rule 463 of the Rules and Regulations.
(x) The Company will not, without ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ prior
written consent, offer for sale, sell, contract to sell, grant any option for
the sale of or otherwise issue or dispose of any Common Stock or any securities
convertible into or exchangeable for, or any options or rights to purchase or
acquire, Common Stock, except to the Underwriters pursuant to this Agreement
for a period of 180 days after the commencement of the public offering of the
Securities by the Underwriters, other than (i) the grant of options (but not
the issuance of the Common Stock underlying such options) currently authorized
under the Company's 1988 Stock Option Plan and 1995 Employee Stock Option and
Incentive Plan and (ii) the issuance of shares of Common Stock pursuant to
stock options or warrants outstanding on the date of the Prospectus and
disclosed in the Prospectus.
(xi) The Company either has caused to be delivered to you
or will cause to be delivered to you prior to the effective date of the
Registration Statement a letter from each of the Company's directors and
officers, each of the Selling Shareholders, and holders of _______ shares of
the Company's Common Stock and ______ shares of Preferred Stock stating that
such person agrees that he, she or it will not, without your prior written
consent, sell, contract to sell, make any short sale, pledge or otherwise
-16-
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dispose of any shares of Common Stock or rights to purchase Common Stock,
except to the Underwriters pursuant to this Agreement, for a period of 180 days
after the closing of the public offering of the Securities by the Underwriters.
(xii) The Company has not taken and will not take, directly
or indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities, and has not sold any Common Stock which are required to be
disclosed in response to Item 701 of Regulation S-K under the Act which have
not been so disclosed in the Registration Statement.
(xiii) The Company will inform the Florida Department of
Banking and Finance at any time prior to the consummation of the distribution
of the Securities by the Underwriters if it commences engaging in business with
the government of Cuba or with any person or affiliate located in Cuba. Such
information will be provided within 90 days after the commencement thereof or
after a change occurs with respect to previously reported information.
(xiv) During a period of one hundred eighty (180) days
after the commencement of the public offering of the Securities by the
Underwriters, the Company will not file a registration statement for the
purpose of registering shares of the Company's equity securities issuable under
any option plan or other employee benefit plan.
(b) Each Selling Shareholder, severally and not jointly, covenants
and agrees with the several Underwriters as follows:
(i) Except as otherwise agreed to by the Company and the
Selling Shareholder, such Selling Shareholder will pay all taxes, if any, on
the transfer and sale, respectively, of the Securities being sold by such
Selling Shareholder, the fees of such Selling Shareholder's counsel and such
Selling Shareholder's proportionate share (based upon the number of Securities
being offered by such Selling Shareholder pursuant to the Registration
Statement) of all costs and expenses (except for legal and accounting expenses
and fees of the registrar and transfer agent) incurred by the Company pursuant
to the provisions of Section 4(a)(viii) of this Agreement; provided, however,
that each Selling Shareholder severally agrees to reimburse the Company for any
reimbursement made by the Company to the Underwriters pursuant to Section
4(a)(viii) hereof to the extent such reimbursement resulted from the failure or
refusal on the part of such Selling Shareholder to comply under the terms or
fulfill any of the conditions of this Agreement.
(ii) If this Agreement shall be terminated by the
Underwriters because of any failure, refusal or inability on the part of such
Selling Shareholder to perform any
-17-
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agreement on such Selling Shareholder's part to be performed, or because any
other condition of the Underwriters' obligations hereunder required to be
fulfilled by such Selling Shareholder is not fulfilled, such Selling
Shareholder agrees to reimburse the several Underwriters for all out-of-pocket
disbursements (including fees and disbursements of counsel for the
Underwriters) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Selling
Shareholder shall not in any event be liable to any of the Underwriters for
loss of anticipated profits from the transactions covered by this Agreement.
(iii) The Securities to be sold by such Selling
Shareholder, represented by the certificates on deposit with the Custodian
pursuant to the Custody Agreement of such Selling Shareholder, are subject to
the interest of the several Underwriters and the other Selling Shareholders;
the arrangements made for such custody are, except as specifically provided in
the Custody Agreement, irrevocable; and the obligations of such Selling
Shareholder hereunder shall not be terminated, except as provided in this
Agreement or in the Custody Agreement, by any act of such Selling Shareholder,
by operation of law, whether by the liquidation, dissolution or merger of such
Selling Shareholder, by the death of such Selling Shareholder, or by the
occurrence of any other event. If any Selling Shareholder should liquidate,
dissolve or be a party to a merger or if any other such event should occur
before the delivery of the Securities hereunder, certificates for the
Securities deposited with the Custodian shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such
liquidation, dissolution, merger or other event had not occurred, whether or
not the Custodian shall have received notice thereof.
(iv) Such Selling Shareholder will not, without your prior
written consent, offer for sale, sell, contract to sell, grant any option for
the sale of or otherwise dispose of any Common Stock or any securities
convertible into or exchangeable for, or any options or rights to purchase or
acquire, Common Stock, except to the Underwriters pursuant to this Agreement,
for a period of 180 days after the commencement of the public offering of the
Securities by the Underwriters.
(v) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities,
and has not effected any sales of Common Stock which, if effected by the
Company, would be required to be disclosed in response to Item 701 of
Regulation S-K.
(vi) Such Selling Shareholder shall immediately notify you
if any event occurs, or of any change in information relating to such Selling
Shareholder or the Company or any new information relating to the Company or
relating to any matter stated
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in the Prospectus or any supplement thereto (including any term sheet within
the meaning of Rule 434 of the Rules and Regulations), which results in the
Prospectus (as supplemented) including an untrue statement of a material fact
or omitting to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS
The obligations of the several Underwriters hereunder are subject to
the accuracy, as of the date hereof and at each of the First Closing Date and
the Second Closing Date (as if made at such Closing Date), of and compliance
with all representations, warranties and agreements of the Company and the
Selling Shareholders contained herein, to the performance by the Company and
the Selling Shareholders of their respective obligations hereunder and to the
following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m., Central time, on the date of this Agreement, or such
later time and date as you, as Representatives of the several Underwriters,
shall approve, and all filings required by Rules 424, 430A and 434 of the Rules
and Regulations shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereof shall have
been issued; no proceedings for the issuance of such an order shall have been
initiated or threatened; and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) No Underwriter shall have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations), contains an untrue statement of fact which, in your
reasonable opinion, is material, or omits to state a fact which, in your
opinion, is material and is required to be stated therein or necessary to make
the statements therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, the Company shall not have incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business, or declared or paid any
dividends or made any distribution of any kind with respect to its capital
stock; and there shall not have been any change in the capital stock (other
than a change in the number of outstanding shares of Common Stock due to the
issuance of shares upon the exercise of outstanding options or warrants), or
any material change in the short-term or long-term debt of the Company, or any
issuance of options, warrants, convertible securities or other rights to
purchase the capital stock of the
-19-
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Company, or any material adverse change or any development involving a
prospective material adverse change (whether or not arising in the ordinary
course of business), in the general affairs, condition (financial or
otherwise), business, key personnel, property, prospects, net worth or results
of operations of the Company, taken as a whole, that, in your judgment, makes
it impractical or inadvisable to offer or deliver the Securities on the terms
and in the manner contemplated in the Prospectus.
(d) On each Closing Date, there shall have been furnished to you,
as Representatives of the several Underwriters, the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇, counsel for the Company and the Selling Shareholders, dated such Closing
Date and addressed to you, in the form attached hereto as Exhibit A.
In rendering such opinions such counsel may rely (i) as to matters of
law other than the law of the State of Washington and federal law, upon the
opinion or opinions of local counsel, provided that the extent of such reliance
is specified in such opinion and that such counsel shall state that such
opinion or opinions of local counsel are satisfactory to them and that they
believe they and you are justified in relying thereon and (ii) as to matters of
fact, to the extent such counsel deems reasonable upon certificates of officers
of the Company provided that the extent of such reliance is specified in such
opinion.
(e) On each Closing Date, there shall have been furnished to you,
as Representatives of the several Underwriters, such opinion or opinions from
▇▇▇▇▇▇▇ Coie, counsel for the several Underwriters, dated such Closing Date and
addressed to you, with respect to the formation of the Company, the validity of
the Securities, the Registration Statement, the Prospectus and other related
matters as you reasonably may request, and such counsel shall have received
such papers and information as they request to enable them to pass upon such
matters.
(f) On each Closing Date you, as Representatives of the several
Underwriters, shall have received a letter of Ernst & Young LLP, dated such
Closing Date and addressed to you, confirming that they are independent public
accountants within the meaning of the Act and are in compliance with the
applicable requirements relating to the qualifications of accountants under
Rule 2-01 of Regulation S-X of the Commission, and stating, as of the date of
such letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the date of
such letter), the conclusions and findings of said firm with respect to the
financial information and other matters covered by its letter delivered to you
concurrently with the execution of this Agreement, and the effect of the letter
so to be delivered on such Closing Date shall be to confirm the conclusions and
findings set forth in such prior letter.
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(g) On each Closing Date, there shall have been furnished to you,
as Representatives of the Underwriters, a certificate, dated such Closing Date
and addressed to you, signed by the chief executive officer and by the chief
financial officer of the Company, to the effect that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, in all material respects, as if made at
and as of such Closing 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 such Closing Date;
(ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any amendment thereof or the
qualification of the Securities for offering or sale has been issued, and no
proceeding for that purpose has been instituted or, to the best of their
knowledge, is contemplated by the Commission or any state or regulatory body;
and
(iii) The signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any amendments
thereof or supplements thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), and (A) such documents contain all
statements and information required to be included therein, the Registration
Statement, or any amendment thereof, does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and the Prospectus, as amended or
supplemented, does not include any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, (B) since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented prospectus which has not
been so set forth, (C) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company has not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, not in the ordinary
course of business, or declared or paid any dividends or made any distributions
of any kind with respect to its capital stock, except for those dividends on
the Company's Class A Preferred Stock and Class D Preferred Stock to be paid at
the First Closing in the amount set forth in the Registration Statement under
"Use of Proceeds" and except as disclosed in the Prospectus, there has not been
any change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants), or any material change in the
short-term or long-term debt, or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock, of the Company, or
any material adverse change or any development involving a prospective material
adverse change (whether or not arising
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in the ordinary course of business), in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects, net
worth or results of operations of the Company, taken as a whole, and (D) except
as stated in the Registration Statement and the Prospectus, there is not
pending, or, to the knowledge of the Company, threatened or contemplated, any
action, suit or proceeding to which the Company is a party before or by any
court or governmental agency, authority or body, or any arbitrator, which might
result in any material adverse change in the condition (financial or
otherwise), business, prospects or results of operations of the Company, taken
as a whole.
(h) On each Closing Date, there shall have been furnished to you,
as Representatives of the several Underwriters, a certificate or certificates,
dated such Closing Date and addressed to you, signed by each of the Selling
Shareholders or such Selling Shareholder's Attorneys-in-Fact to the effect
that the representations and warranties of such Selling Shareholder contained
in this Agreement are true and correct as if made at and as of such Closing
Date, and that such Selling Shareholder has complied with all the agreements
and satisfied all the conditions on such Selling Shareholder's part to be
performed or satisfied at or prior to such Closing Date.
(i) The Company shall have furnished to you and counsel for the
Underwriters such additional documents, certificates and evidence as you or
they may have reasonably requested.
(j) The Securities shall have been approved for quotation on
Nasdaq.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and counsel for the Underwriters.
The Company will furnish you with such conformed copies of such opinions,
certificates, letters and other documents as you shall reasonably request.
6. INDEMNIFICATION AND CONTRIBUTION
(a) The Company and each Selling Shareholder, jointly and
severally, agree to indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company and/or such Selling Shareholders, as the case may be),
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, including
the information deemed to be a part of the Registration Statement at the time
of effectiveness pursuant to Rules 430A and 434(d) of the Rules and
Regulations, if applicable, any Preliminary
-22-
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Prospectus, the Prospectus, or any amendment or supplement thereto (including
any term sheet within the meaning of Rule 434 of the Rules and Regulations), or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability or
action; provided, however, that neither the Company nor any Selling Shareholder
shall be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by you, or by any Underwriter through you,
specifically for use in the preparation thereof; and further provided, however,
that in no event shall any Selling Shareholder be liable under the provisions
of this Section 6 for any amount in excess of the aggregate amount of proceeds
such Selling Shareholder received from the sale of the Securities pursuant to
this Agreement.
In addition to their other obligations under this Section 6(a), the
Company and each Selling Shareholder, jointly and severally, 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 statement or
omission, or any alleged statement or omission, described in this Section 6(a),
they will reimburse each Underwriter on a monthly basis for all reasonable
legal fees or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's and/or the Selling Shareholder's obligation to
reimburse the Underwriters for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, the Underwriter that received such payment shall
promptly return it to the party or parties that made such payment, together
with interest, compounded daily, determined on the basis of the prime rate (or
other commercial lending rate for borrowers of the highest credit standing)
announced from time to time by The Chase Manhattan Bank, N.A. (the "Prime
Rate"). Any such interim reimbursement payments which are not made to an
Underwriter within 30 days of a request for reimbursement shall bear interest
at the Prime Rate from the date of such request. This indemnity agreement
shall be in addition to any liabilities which the Company or the Selling
Shareholders may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company
and each Selling Shareholder against any losses, claims, damages or liabilities
to which the Company and the Selling Shareholders may become subject, under the
Act or otherwise (including in settlement of any litigation, if such settlement
is effected with the written
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consent of such Underwriter), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any such
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by you, or by such Underwriter
through you, specifically for use in the preparation thereof, and will
reimburse the Company and the Selling Shareholders for any legal or other
expenses reasonably incurred by the Company or any such Selling Shareholder in
connection with investigating or defending against any such loss, claim,
damage, liability or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party. In case any such action shall be
brought against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that if, in the sole reasonable judgment of the Representatives, it is
advisable for the Underwriters to be represented as a group by separate
counsel, the Representatives shall have the right to employ a single counsel to
represent the Representatives and all Underwriters who may be subject to
liability arising from any claim in respect of which indemnity may be sought by
the Underwriters under subsection (a) of this Section 6, in which event the
reasonable fees and expenses of such separate counsel shall be borne by the
indemnifying party or parties and reimbursed to the Underwriters as incurred
(in accordance with the provisions of the second paragraph in subsection (a)
above). An indemnifying party shall not be
-24-
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obligated under any settlement agreement relating to any action under this
Section 6 to which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Shareholders on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and Selling Shareholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Shareholders or the
Underwriters and the parties' relevant intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company, the Selling Shareholders and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (d) 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 account of the equitable considerations referred to in the first
sentence of this subsection (d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection (d),
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and
(ii) no Selling Shareholder shall be required to contribute any amount in
excess of the
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aggregate amount of proceeds such Selling Shareholder received from the sale of
the Securities pursuant to this Agreement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Selling Shareholders
under this Section 6 shall be in addition to any liability which the Company
and the Selling Shareholders may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 6 shall be in addition to any liability that the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director
of the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company or any Selling
Shareholder within the meaning of the Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY
All representations, warranties, and agreements of the Company herein
or in certificates delivered pursuant hereto, and the agreements of the several
Underwriters, the Company and the Selling Shareholders contained in Section 6
hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
thereof, or the Company or any of its officers, directors, or controlling
persons, or any Selling Shareholders or any controlling person thereof, and
shall survive delivery of, and payment for, the Securities to and by the
Underwriters hereunder.
8. SUBSTITUTION OF UNDERWRITERS
(a) If any Underwriter or Underwriters shall fail to take up and
pay for the amount of Firm Shares agreed by such Underwriter or Underwriters to
be purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total amount of Firm Shares set forth in Schedule II
hereto, the remaining Underwriters shall be obligated to take up and pay for
(in proportion to their respective underwriting obligations hereunder as set
forth in Schedule II hereto except as may otherwise be determined by you) the
Firm Shares that the withdrawing or defaulting Underwriters agreed but failed
to purchase.
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(b) If any Underwriter or Underwriters shall fail to take up and
pay for the amount of Firm Shares agreed by such Underwriter or Underwriters to
be purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased aggregates more than
10% of the total amount of Firm Shares set forth in Schedule II hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall
terminate. In the event of any such termination neither the Company nor any
Selling Shareholder shall be under any liability to any Underwriter (except to
the extent provided in Section 4(a)(viii), Section 4(b)(ii) and Section 6
hereof) nor shall any Underwriter (other than an Underwriter who shall have
failed, otherwise than for some reason permitted under this Agreement, to
purchase the amount of Firm Shares agreed by such Underwriter to be purchased
hereunder) be under any liability to the Company or the Selling Shareholders
(except to the extent provided in Section 6 hereof).
If Firm Shares to which a default relates are to be purchased by the
non-defaulting Underwriters or by any other party or parties, the
non-defaulting Representatives or the Company shall have the right to postpone
the First Closing Date for not more than seven business days in order that the
necessary changes in the Registration Statement, Prospectus and any other
documents, as well as any other arrangements, may be effected. As used herein,
the term "Underwriter" includes any person substituted for an Underwriter under
this Section 8.
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION
(a) This Agreement shall become effective at 10:00 a.m., Central
time, on the first full business day following the effective date of the
Registration Statement, or at such earlier time after the effective time of the
Registration Statement as you in your discretion shall first release the
Securities for sale to the public; provided, that if the Registration Statement
is effective at the time this Agreement is executed, this Agreement shall
become effective at such time as you in your discretion shall first release the
Securities for sale to the public. For the purpose of this Section 9, the
Securities shall be deemed to have been released for sale to the public upon
release by you of the publication of a newspaper advertisement relating thereto
or upon release by you of telexes offering the Securities for sale to
securities dealers, whichever shall first occur. By giving notice as
hereinafter specified before the time this Agreement becomes effective, you, as
Representatives of the several Underwriters, or the Company may prevent this
Agreement from becoming effective without liability of any party to any other
party, except that the provisions of Section 4(a)(viii), Section 4(b)(ii) and
Section 6 hereof shall at all times be effective.
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(b) You, as Representatives of the several Underwriters, shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time at or prior to the First Closing Date, and the option
referred to in Section 3(b), if exercised, may be cancelled at any time prior
to the Second Closing Date, if (i) the Company shall have failed, refused or
been unable, at or prior to such Closing Date, to perform any agreement on its
part to be performed hereunder, (ii) any other condition of the Underwriters'
obligations hereunder is not fulfilled, (iii) trading on the New York Stock
Exchange, the American Stock Exchange or Nasdaq shall have been wholly
suspended, (iv) minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the New
York Stock Exchange, the American Stock Exchange or Nasdaq, by such exchange or
by order of the Commission or any other governmental authority having
jurisdiction, (v) a banking moratorium shall have been declared by federal, New
York or Washington authorities, or (vi) there has occurred any material adverse
change in the financial markets in the United States or an outbreak of major
hostilities (or an escalation thereof) in which the United States is involved,
a declaration of war by Congress, any other substantial national or
international calamity or any other event or occurrence of a similar character
since the execution of this Agreement that in your judgment, makes it
impractical or inadvisable to proceed with the completion of the sale of and
payment for the Securities. Any such termination shall be without liability of
any party to any other party except that the provisions of Section 4(a)(viii),
Section 4(b)(ii) and Section 6 hereof shall at all times be effective.
(c) If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section 9, the Company and
an Attorney-in-Fact, on behalf of the Selling Shareholders, shall be notified
promptly by you by telephone or telegram, confirmed by letter. If the Company
elects to prevent this Agreement from becoming effective, you and an
Attorney-in-Fact, on behalf of the Selling Shareholders, shall be notified by
the Company by telephone or telegram, confirmed by letter.
10. DEFAULT BY ONE OR MORE OF THE SELLING SHAREHOLDERS OR THE COMPANY
If one or more of the Selling Shareholders shall fail at the First
Closing Date to sell and deliver the number of Securities which such Selling
Shareholder or Selling Shareholders are obligated to sell hereunder, and the
remaining Selling Shareholders do not exercise the right hereby granted to
increase, pro rata or otherwise, the number of Securities to be sold by them
hereunder to the total number of Securities to be sold by all Selling
Shareholders as set forth in Schedule I hereto, then the Underwriters may at
your option, by notice from you to the Company and the non-defaulting Selling
Shareholders, either (a) terminate this Agreement without any liability on the
part of any non- defaulting party or (b) elect to purchase the Securities which
the Company and the non-defaulting Selling Shareholders have agreed to sell
hereunder.
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In the event of a default by any Selling Shareholder as referred to in
this Section 10, either you or the Company or, by joint action only, the
non-defaulting Selling Shareholders shall have the right to postpone the First
Closing Date for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements.
If the Company shall fail at the First Closing Date to sell and
deliver the number of Securities which it is obligated to sell hereunder, then
this Agreement shall terminate without any liability on the part of any
non-defaulting party.
No action taken pursuant to this Section 10 shall relieve the Company
or any Selling Shareholders so defaulting from liability, if any, in respect of
such default.
11. INFORMATION FURNISHED BY UNDERWRITERS
The statements set forth in the last paragraph of the cover page and
under the caption "Underwriting" in any Preliminary Prospectus and in the
Prospectus constitute the written information furnished by or on behalf of the
Underwriters referred to in Section 2 and Section 6 hereof.
12. NOTICES
Except as otherwise provided herein, all communications hereunder
shall be in writing or by telegraph and, if to the Underwriters, shall be
mailed, telegraphed or delivered to the Representatives, c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇
Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, except that notices given to an Underwriter pursuant to Section 6 hereof
shall be sent to such Underwriter at the address stated in the Underwriters'
Questionnaire furnished by such Underwriter in connection with this offering;
if to the Company, shall be mailed, telegraphed or delivered to it at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇; if to any of the Selling Shareholders, at the address of the
Attorneys-in-Fact as set forth in the Powers of Attorney, or in each case to
such other address as the person to be notified may have requested in writing.
All notices given by telegram shall be promptly confirmed by letter. Any party
to this Agreement may change such address for notices by sending to the parties
to this Agreement written notice of a new address for such purpose.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns and the controlling
persons, officers and directors referred to in Section 6. Nothing in this
Agreement is intended or shall be construed to give to any other person, firm
or corporation any legal or equitable remedy
-29-
30
or claim under or in respect of this Agreement or any provision herein
contained. The term "successors and assigns" as herein used shall not include
any purchaser, as such purchaser, of any of the Securities from any of the
several Underwriters.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota.
[Signature Page Follows]
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Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement among the Company,
the Selling Shareholders and the several Underwriters in accordance with its
terms.
Very truly yours,
SEAMED CORPORATION
By
---------------------------------
W. ▇▇▇▇▇▇ ▇▇▇▇
President and Chief Executive Officer
SELLING SHAREHOLDERS NAMED IN
SCHEDULE I ATTACHED HERETO
By
---------------------------------
Attorney-in-Fact
Confirmed as of the date first
above mentioned, on behalf of
themselves and the other several
Underwriters named in Schedule II
hereto.
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By
--------------------------------
Managing Director
▇▇▇▇▇▇▇ & COMPANY, INC.
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By
--------------------------------
Managing Director
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SCHEDULE I
SELLING SHAREHOLDERS
NUMBER OF
FIRM SHARES
NAME TO BE SOLD
----------------------------------------------- ----------
▇▇▇▇▇ & Co., Inc. 33,333
▇▇▇▇ ▇▇▇▇▇▇ 3,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ 322
▇▇▇▇▇▇ ▇▇▇▇▇▇ 12,400
Brae Group Inc. 25,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. 3,689
▇▇▇▇▇▇▇ Enterprises 161,347
The Equitable Life Assurance Society of the
United States 38,535
Equitable Variable Life Insurance Company 15,358
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 10,000
IBM Retirement Plan Trust 27,788
▇.▇. ▇▇▇▇▇▇▇▇ 4,166
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ 20,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 2,781
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 33,333
▇▇▇▇▇ ▇. ▇▇▇▇▇ 50,000
▇▇▇▇▇▇▇▇▇▇ Associates 17,367
▇▇▇▇▇▇ ▇. ▇▇▇▇ 5,000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 8,342
▇▇▇▇▇ ▇▇▇▇▇▇▇ 800
▇▇▇▇▇ ▇. ▇▇▇▇ 2,781
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 8,412
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 1,385
S. B. Enterprises ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 1,385
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee 800
------------
Total 488,058
============
34
SCHEDULE II
UNDERWRITER NUMBER OF FIRM SHARES (1)
----------- -------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ & Company, Inc.
---------------
Total . . . . . . . . . . . . . . . . . . . . . .
===============
----------------
(1) The Underwriters may purchase up to an additional 277,500 Option
Shares, to the extent the option described in Section 3(b) of the
Agreement is exercised.
