EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT
QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.
3,450,000 Shares*
Common Stock
($0.001 par value per share)
----------------------
Underwriting Agreement
[__________], 200[_]
Xxxxx, Xxxxxxxx & Xxxx, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dear Sirs:
Quantum Fuel Systems Technologies Worldwide, Inc., a Delaware corporation
(the "Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to you (collectively, the "Underwriters") an aggregate of
3,000,000 shares (the "Firm Shares") and, at the election of the Underwriters,
up to 450,000 additional shares (the "Optional Shares") of common stock of the
Company, $0.001 par value per share ("Common Stock"). The Firm Shares and the
Optional Shares which the Underwriters elect to purchase pursuant to Section 3
hereof are herein collectively called the "Shares."
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-101668) (the
"Initial Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement including any pre-effective amendments thereto and any
post-effective amendments thereto, each in the form heretofore delivered to you
and, excluding exhibits thereto, delivered to you for each of the other
Underwriters, have been declared effective by the Commission in such form; other
than a registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective upon
filing, no other document with respect to the Initial Registration Statement has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the
_____________
* Includes 450,000 shares subject to an option to purchase additional
shares to cover over-allotments.
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus"); the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto, including the
information contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective or the Rule 462(b)
Registration Statement, if any, at the time it became effective, each as amended
at the time such part of such Initial Registration Statement became effective,
are hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus";
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through you expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date and the applicable
Time of Delivery (as hereinafter defined) as to the Prospectus and any amendment
or supplement thereto, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or, in the case of the
Registration Statement or any amendment thereto, necessary to make the
statements therein not misleading and, in the case of the Preliminary
Prospectus, the Prospectus or any supplement thereto, necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through you expressly for use therein;
(d) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act or by the rules and regulations thereunder which have not
been described in or filed as exhibits to the Registration Statement, as
required; the contracts so described in the Prospectus to which the Company is a
party have been duly authorized, executed and delivered by the Company,
constitute valid and binding agreements of the Company and are enforceable in
accordance with their respective terms against the Company, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of creditors' rights generally, (ii) general
principles of equity, whether considered in a proceeding at law or in equity and
(iii) state or federal
2
securities laws or policies relating to the non-enforceability of the
indemnification provisions contained therein, and, to the Company's knowledge,
such contracts are enforceable in accordance with their respective terms by the
Company against the other parties thereto, except as such enforceability may be
limited by (x) applicable bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance or similar laws in effect which affect the enforcement of
creditors' rights generally, (y) general principles of equity, whether
considered in a proceeding at law or in equity and (z) state or federal
securities laws or policies relating to the non-enforceability of the
indemnification provisions contained therein, and such contracts are in full
force and effect on the date hereof; and neither the Company nor, to the best of
the Company's knowledge, any other party thereto, is in breach of or default
under any of such contracts, except for such breaches or defaults that will not
result in a material adverse change in the business, assets, management,
financial position or results of operations of the Company (hereinafter, a
"Material Adverse Change");
(e) Since the date of the latest audited financial statements included
in the Prospectus, the Company has not sustained any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, that is in each case material to the Company, otherwise than as
set forth or contemplated in the Prospectus or as would not result in a Material
Adverse Change; and, since the respective dates as of which information is given
in the Registration Statement and the Prospectus (i) there has not been any
change in the capital stock (other than issuances of Common Stock pursuant to
Company stock option and stock purchase plans described in the Registration
Statement and Prospectus) or long-term debt of the Company or any Material
Adverse Change and (ii) the Company has not entered into any material
transaction or incurred any material obligation outside of the ordinary course
of business, otherwise than as set forth in the Prospectus;
(f) The Company owns no real property and has good and marketable
title to all other properties and assets described in the Prospectus as owned by
it, in each case free and clear of all liens, charges, encumbrances or
restrictions, except such as (i) are described in the Prospectus or (ii) do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company; any real property
and buildings held under lease by the Company are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company; the Company owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be conducted,
except where the failure to so own or lease would not result in a Material
Adverse Change;
(g) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
full power and authority (corporate and otherwise) to own its properties and
conduct its business as described in the Prospectus, and the Company has been
duly qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification,
except where the failure to be so qualified or in good standing would not result
in a Material Adverse Change;
3
(h) The Company has an authorized capitalization as set forth in the
Prospectus, and all the issued shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable and
conform to the description of the Common Stock contained in the Prospectus;
except as disclosed in or contemplated by the Prospectus and the consolidated
financial statements of the Company, and the related notes thereto, included in
the Prospectus, the Company does not have outstanding any options to purchase,
or any preemptive rights or other rights to subscribe for or to purchase any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations; and the description of the Company's
stock option plans and the options or other rights granted and exercised
thereunder set forth in the Prospectus accurately and fairly presents in all
material respects the information required to be shown with respect to such
plans, options and rights;
(i) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform to the
description of the Common Stock contained in the Prospectus; no preemptive
rights or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Shares by the Company pursuant to this Agreement; no
stockholder of the Company has any right, which has not been waived, to require
the Company to register the sale of any shares of capital stock owned by such
stockholder under the Act in the public offering contemplated by this Agreement;
and assuming that the offering contemplated by this Agreement constitutes a
"public offering" under the Marketplace Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), no further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Shares to be sold by the Company as contemplated
herein;
(j) The Company has full corporate power and authority to enter into
this Agreement; and this Agreement has been duly authorized, executed and
delivered by the Company, constitutes a valid and binding obligation of the
Company and is enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or similar laws in
effect which affect the enforcement of creditors' rights generally, (ii) general
principles of equity, whether considered in a proceeding at law or in equity and
(iii) state or federal securities laws or policies relating to the
non-enforceability of the indemnification provisions contained herein;
(k) The issue and sale of the Shares by the Company and the compliance
by the Company with all of the provisions of this Agreement and the consummation
of the transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
material agreement or material instrument to which the Company is a party or by
which the Company is bound or to which any of the property or assets of the
Company is subject, except for any conflict, breach, violation or default that
would not result in a Material Adverse Change, nor will such action result in
any violation of the provisions of the Certificate of Incorporation or By-laws
of the Company as currently in effect or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
4
over the Company or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares or
the consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws or the bylaws and rules of the
NASD in connection with the purchase and distribution of the Shares by the
Underwriters;
(l) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company is or may be a party or of
which property owned or leased by the Company is or may be the subject, or
related to environmental or discrimination matters, which actions, suits or
proceedings, would reasonably be expected, individually or in the aggregate, to
prevent or adversely affect the transactions contemplated by this Agreement or
result in a Material Adverse Change; no labor disturbance by the employees of
the Company exists or, to the knowledge of the Company, is imminent that would
reasonably be expected to result in a Material Adverse Change; and the Company
is not a party or subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other governmental body, that would reasonably be expected to result in a
Material Adverse Change;
(m) The Company possesses all licenses, certificates, authorizations
or permits issued by the appropriate governmental or regulatory agencies or
authorities that are necessary to enable it to own, lease and operate its
properties and to carry on its business as presently conducted, except where the
failure to possess such licenses, certificates, authorization or permits would
not reasonably be expected to result in a Material Adverse Change; and the
Company has not received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit which, singly
or in the aggregate, would reasonably be expected to result in a Material
Adverse Change;
(n) The Company (i) is in compliance in all material respects with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, including, without
limitation, those relating to occupational safety and health, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants, including,
without limitation, those relating to the storage, handling or transportation of
hazardous or toxic materials (collectively, "Environmental Laws") and (ii) is in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, reasonably be expected to result in a Material
Adverse Change. The Company, in its reasonable judgment, has concluded that any
costs or liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) would not, singly or in the aggregate, reasonably
be expected to result in a Material Adverse Change;
5
(o) Ernst & Young LLP, who have audited certain financial statements
of the Company, are independent public accountants as required by the Act and
the rules and regulations of the Commission thereunder;
(p) The consolidated financial statements and schedules of the
Company, and the related notes thereto, included in the Registration Statement
and the Prospectus present fairly in all material respects the financial
position of the Company as of the respective dates of such financial statements
and schedules, and the results of operations and cash flows of the Company for
the respective periods covered thereby; such statements, schedules and related
notes have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis as certified by the independent public
accountants named in paragraph (o) above; no other financial statements or
schedules are required to be included in the Registration Statement; and the
selected financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Consolidated Financial Information" fairly
present in all material respects the information set forth therein on the basis
stated in the Registration Statement;
(q) Except as disclosed in the Registration Statement and Prospectus,
(i) the Company owns, possesses or has the right to use all trademarks, service
marks, trade names, patent rights, copyrights, licenses, trade secrets and
proprietary rights necessary to conduct its business as now conducted, (ii) the
Company has not received notice of any infringement by the Company of trademark,
service xxxx, trade name, patent, copyright, license, trade secret, proprietary
or other similar rights of others, and (iii) to the Company's knowledge, there
is no claim of infringement being made against the Company regarding trademark,
service xxxx, trade name, patent, copyright, license, trade secret, proprietary
or other similar rights and no reasonable basis therefor exists, which, in each
case, if adversely decided, would reasonably be expected to result in a Material
Adverse Change. Except as disclosed in the Registration Statement and
Prospectus, (w) none of the technology employed by the Company has been obtained
or is being used by the Company in violation of any contractual obligation
binding on the Company or, to the Company's knowledge, any of its officers,
directors, employees or consultants or otherwise in violation of the rights of
any person, except for such violations that would not reasonably be expected to
result in a Material Adverse Change; (x) the Company has not received, and to
the Company's knowledge, none of its employees has received, any written or oral
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the intellectual property or
proprietary rights of any other person or entity; (y) the operation of the
business of the Company as currently operated will not, to the Company's
knowledge, result in a breach or violation of the terms, conditions or
provisions of, or constitute a default under, any material contract, covenant or
instrument under which any of such employees is now obligated; and (z) the
Company has taken reasonable measures to prevent the unauthorized dissemination
or publication of its confidential information or the confidential information
of third parties in its possession. Each current technical employee of the
Company has executed an agreement with the Company regarding confidential
information and the assignment of proprietary information to the Company;
(r) The Company has filed all necessary federal, state and foreign
income and franchise tax returns, each of which has been true and correct in all
material respects, and has paid all taxes shown as due thereon; and the Company
has no knowledge of any tax deficiency
6
which has been or might be asserted or threatened against the Company which
could reasonably be expected to result in a Material Adverse Change;
(s) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company", as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(t) The Company maintains insurance of the types and in the amounts
which it deems adequate for its business, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect;
(u) The Company has not at any time during the last five years (i)
made any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any foreign, federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments required
or permitted by the laws of the United States, any foreign government, or any
jurisdiction thereof;
(v) Other than exempted activity under Regulation M, the Company has
not taken and will not take, directly or indirectly through any of its
directors, officers or controlling persons, any action which is designed to or
which has constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares; and
(w) The Common Stock of the Company has been registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the Company is not required to take any further action for the
inclusion of the Shares on the Nasdaq National Market.
2. Shares Subject to Sale.
(a) On the basis of the representations, warranties and agreements of
the Company contained herein, and subject to the terms and conditions of this
Agreement, (i) the Company agrees to issue and sell the Firm Shares to the
several Underwriters and (ii) each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price per share of
$[_____], the respective number of Firm Shares set forth opposite the name of
such Underwriter in Schedule I hereto; and
(b) In the event and to the extent that the Underwriters shall
exercise the election to purchase Optional Shares as provided below, (i) the
Company agrees to issue and sell the Optional Shares to the several Underwriters
and (ii) each of the Underwriters agrees, severally and not jointly, to purchase
from the Company, at the purchase price per share set forth in clause (a) of
this Section 2, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction, the numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set
7
forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of the Optional Shares which all of
the Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 450,000 Optional Shares at the purchase price per share set
forth in clause (a) of this Section 2, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised on one occasion by written notice from you to
the Company, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event (i) earlier than the First Time of Delivery
(as hereinafter defined) or, (ii) unless you and the Company otherwise agree in
writing, earlier than two or later than three business days after the date of
such notice. The Representatives confirm that each Underwriter has authorized
the Representatives for its account, to accept delivery of, and receipt for, and
make payment of the purchase price for, the Firm Shares and the Optional Shares,
if any, which such Underwriter has agreed to purchase.
3. Offering. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. Closing. Certificates in definitive form for the Shares to be purchased
by each Underwriter hereunder, and in such denominations and registered in such
names as Xxxxx, Xxxxxxxx & Xxxx, Inc. may request upon at least forty-eight
hours' prior notice to the Company, shall be delivered by or on behalf of the
Company to you for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
same day funds, all at the office of Xxxxx, Xxxxxxxx & Xxxx, Inc., 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., Boston time, on
[__________], 2002 or such other time and date as you and the Company may agree
upon in writing, and, with respect to the Optional Shares, 9:30 a.m., Boston
time, on the date specified by you in the written notice given by you of the
Underwriters' election to purchase such Optional Shares, or at such other time
and date as you and the Company may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "First Time of Delivery,"
such time and date for delivery of the Optional Shares, if not the First Time of
Delivery, is herein called the "Second Time of Delivery," and each such time and
date for delivery is herein called a "Time of Delivery." Such certificates will
be made available for checking and packaging at least twenty-four hours prior to
each Time of Delivery at such location as you may specify. If the Underwriters
so elect, delivery of the Shares may be made by credit through full fast
transfer to the accounts at the Depository Trust Company designated by Xxxxx,
Xxxxxxxx & Xxxx, Inc.
5. Covenants of the Company. The Company agrees with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act, to make no
8
further amendment or any supplement to the Registration Statement or Prospectus
which shall be reasonably disapproved by you promptly giving reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of the time
when the Registration Statement, or any amendment thereto, has been filed or
becomes effective or any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish you copies thereof; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission of any stop order
or of any order preventing or suspending the use of any Preliminary Prospectus
or Prospectus, of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly, from time to time, to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Shares, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus in such
quantities as you may from time to time reasonably request, and, if the delivery
of a prospectus is required at any time prior to the expiration of nine months
after the time of issuance of the Prospectus in connection with the offering or
sale of the Shares and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance, and in
case any Underwriter is required by law to deliver a prospectus in connection
with sales of any of the Shares at any time nine months or more after the time
of issue of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as you
may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than the forty-fifth (45th) day
following the end of the full fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement (as defined in
Rule 158(c)), an earning statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158);
9
(e) During the period beginning from the date hereof and continuing to and
including the date 90 days after the date of the Prospectus, not to offer, sell,
contract to sell or otherwise dispose of any securities of the Company which are
substantially similar to the Shares, without your prior written consent, other
than (i) the sale of the Shares to be sold by the Company hereunder; (ii) the
issuance of shares and the award of options under the Company's stock plans in
amounts not in excess of the amount described in the Prospectus as available for
grant under such plans, and the issuance of Common Stock upon the exercise
thereof; (iii) the issuance of shares of Common Stock upon exercise of warrants
or conversion of other convertible securities outstanding on the date of this
Agreement and described in the Prospectus; (iv) the issuance of Series B common
stock pursuant to the terms of the Company's Certificate of Incorporation; (v)
the issuance of warrants to purchase 300,000 shares of Common Stock in
connection with the Company's spin-off and the issuance of shares of Common
Stock underlying such warrants upon the exercise thereof; and (vi) the issuance
of securities as consideration in connection with any acquisition transaction or
strategic partnership not primarily for equity financing purposes.
(f) Except as permitted under paragraph (e) above, not to grant options to
purchase shares of Common Stock which would become exercisable during a period
beginning from the date hereof and continuing to and including the date 90 days
after the date of the Prospectus;
(g) To furnish to its stockholders as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, stockholders' equity and cash flow of the Company and its consolidated
subsidiaries certified by independent public accountants) and to make available
(within the meaning of Rule 158(b) under the Act) as soon as practicable after
the end of each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(h) During a period of five years from the effective date of the
Registration Statement, to furnish to you upon your request copies of all
reports or other communications (financial or other) furnished to stockholders
generally, and deliver to you as soon as they are available, copies of any
publicly available reports and financial statements furnished to or filed with
the Commission, the Nasdaq National Market or any national securities exchange
on which any class of securities of the Company is listed (such financial
statements to be on a combined or consolidated basis to the extent the accounts
of the Company and its subsidiaries are combined or consolidated in reports
furnished to its stockholders generally or to the Commission);
(i) To use the net proceeds acquired by it from the sale of the Shares in
the manner specified in the Prospectus under the caption "Use of Proceeds" and
in a manner such that the Company will not become an "investment company" as
that term is defined in the Investment Company Act; and
(j) Not to accelerate the vesting of any option issued under any stock
option plan such that any such option may be exercised within 90 days from the
date of the Prospectus.
10
6. Expenses. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of reproducing any
Agreement among Underwriters, this Agreement, the Blue Sky Memorandum and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses and filing fees in connection with the
qualification of the Shares for offering and sale under state securities laws as
provided in Section 5(b) hereof and securing any required review by the NASD of
the terms of the sale of the Shares, including the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and review and in connection with the Blue Sky survey, which shall
not exceed an aggregate of $5,000; (iv) the cost of preparing stock
certificates; (v) the cost and charges of any transfer agent or registrar; (vi)
out-of-pocket accountable fees, disbursements and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, incident
to the performance of the Underwriter's obligations hereunder which are not
otherwise specifically provided for in this Section, which shall not exceed an
aggregate of $100,000 (or such lesser amount as required under the rules,
regulations or determinations of the NASD); and (vii) all other costs and
expenses incident to the performance of the Company's obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, Section 8 and
Section 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale of
any of the Shares by them, and any advertising expenses connected with any
offers they may make.
7. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder, as to the Shares to be delivered at each Time of
Delivery, shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of the Company herein are,
at and as of such Time of Delivery, true and correct, the condition that the
Company shall have performed all of its respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof, no stop order suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to your reasonable satisfaction;
(b) Xxxxxxx Procter LLP, counsel to the Underwriters, shall have furnished
to you such opinion or opinions, dated such Time of Delivery, with respect to
this Agreement, the Registration Statement, the Prospectus, and other related
matters as you may reasonably request;
11
(c) Xxxxxxxx & Xxxxxxxx LLP, counsel to the Company, shall have furnished
to you their written opinion, dated such Time of Delivery, in form and substance
reasonably satisfactory to you, with respect to the matters set forth in Annex I
hereto;
(d) On the date hereof and also at each Time of Delivery, Ernst & Young
LLP, shall have furnished to you a letter or letters, dated the respective date
of delivery thereof, in form and substance reasonably satisfactory to you, to
the effect set forth in Annex II hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, that is in each case material to the Company and its subsidiaries
taken as a whole, otherwise than as set forth or contemplated in the Prospectus,
or as would not result in a Material Adverse Change, and (ii) since the
respective dates as of which information is given in the Prospectus, there shall
not have been any change in the capital stock (other than issuances of Common
Stock pursuant to Company stock option and stock purchase plans or upon exercise
of outstanding warrants described in the Registration Statement and Prospectus)
or long-term debt of the Company or any Material Adverse Change, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is in your good faith judgment so material
and adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(f) On or after the date hereof there shall not have occurred any of the
following: (i) additional material governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally established on
the New York Stock Exchange or on the American Stock Exchange or in the over the
counter market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the NASD,
or a general banking moratorium shall have been established by federal or New
York authorities, (ii) an outbreak of major hostilities or other national or
international calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated or escalated
to such an extent, as, in the good faith judgment of the Underwriters, to affect
materially and adversely the marketability of the Shares, or (iii) there shall
be any action, suit or proceeding pending or threatened, or there shall have
been any development or prospective development involving particularly the
business or properties or securities of the Company or any of its subsidiaries
or the transactions contemplated by this Agreement, which has materially and
adversely affected the Company's business or earnings and which, in the good
faith judgment of the Underwriters, makes it impracticable or inadvisable to
offer or sell the Shares;
(g) The Shares to be sold by the Company at such Time of Delivery shall
have been accepted for quotation, subject to notice of issuance, on the Nasdaq
National Market System;
12
(h) Each director and officer of the Company shall have executed and
delivered to you agreements in which such holder undertakes, for 90 days after
the date of the Prospectus, subject to certain exceptions stated therein, not to
offer, sell, contract to sell, pledge, grant any option to purchase, make any
short sale or otherwise dispose of any shares of Common Stock, or any securities
convertible into or exchangeable for, or any rights to purchase or acquire,
shares of Common Stock, without the prior written consent of Xxxxx, Xxxxxxxx &
Xxxx, Inc.; and
(i) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company, in their
capacities as such, satisfactory to you, as to the accuracy of the
representations and warranties of the Company, herein at and as of such Time of
Delivery, as to the performance by the Company, of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, and as to such
other matters as you may reasonably request and the Company shall have furnished
or caused to be furnished certificates as to the matters set forth in
subsections (a) and (f) of this Section, and as to such other matters as you may
reasonably request.
8. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter and each
person, if any, who controls such Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter or
controlling person may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or, in the case of the Registration
Statement or any amendment thereto, necessary to make the statements therein not
misleading and, in the case of the Preliminary Prospectus, the Prospectus or any
supplement thereto, necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you expressly for use
therein; and provided further, that with respect to any untrue statement or
omission made in any Preliminary Prospectus, the indemnification agreement
contained in this paragraph shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Shares concerned if both (y) a copy of the Prospectus was not sent or given to
such person at or prior to the written confirmation of the sale of such Shares
to such person as required by the Act, and (z) the untrue statement or omission
in the Preliminary Prospectus was corrected in the Prospectus.
13
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or, in the case of the Registration Statement or any amendment thereto,
necessary to make the statements therein not misleading and, in the case of the
Preliminary Prospectus, the Prospectus or any supplement thereto, necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through you expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof. No indemnification provided for in subsection (a) or (b)
above shall be available hereunder to any party who shall fail to give notice as
provided in the preceding sentence if, but only to the extent that, 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 and was materially
prejudiced by the failure to give such notice; provided, however, that the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. In the event the indemnifying party does not assume the defense
of any action brought against an indemnified party, the indemnifying party shall
not, in connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all indemnified persons, except to the extent that
local counsel, in addition to regular counsel, is required in order to
effectively defend against such action or proceeding, unless (i) the
indemnifying party has agreed in writing to pay such fees and expenses or (ii)
an indemnified party reasonably determines that there may be conflicting
interests between such indemnified
14
party and other indemnified parties in conducting the defense of such action,
including situations in which there are one or more legal defenses available to
such indemnified party that are different from or in addition to those available
to other indemnified parties. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party. No indemnifying party shall be liable for
any settlement of any action or claim effected without its written consent,
which consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company 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,
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 statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such
15
untrue or alleged untrue statement or omission or alleged omission. 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 under this Section 8 shall be in
addition to any liability which the Company 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
Underwriter under this Section 8 shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and to each person,
if any, who controls the Company within the meaning of the Act.
9. Termination.
(a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six (36) hours after
such default by any Underwriter you do not arrange for the purchase of such
Shares, then the Company shall be entitled to a further period of thirty-six
(36) hours within which to procure another party or other parties satisfactory
to you to purchase such Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Shares, or the Company notify you that it has so
arranged for the purchase of such Shares, you or the Company shall have the
right to postpone such Time of Delivery for a period of not more than seven (7)
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-tenth of the aggregate number of all the
Shares to be purchased at such Time of Delivery, then the Company shall have the
right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-tenth of
16
the aggregate number of all the Shares to be purchased at such Time
of Delivery, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase Shares
of a defaulting Underwriter or Underwriters, then this Agreement (or, with
respect to the Second Time of Delivery, the obligations of the Underwriters to
purchase and of the Company to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6 hereof (excluding subsection (vi) of
Section 6) and the indemnity and contribution agreements in Section 8 hereof,
but nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Shares.
11. Expenses of Termination. If this Agreement shall be terminated pursuant
to Section 9 hereof, the Company shall then have no liability to any Underwriter
except as provided in Section 6 (excluding subsection (vi) of Section 6) and
Section 8 hereof (provided that the indemnification and contribution agreements
in Section 8 hereof shall not survive in the event that this Agreement
terminates prior to the First Time of Delivery); but, if this Agreement is
terminated due to any of the conditions set forth in Section 7 hereof not having
been met, or the Shares are not delivered by or on behalf of the Company as
provided herein (unless in either case such termination, failure to satisfy such
conditions is due to the default or omission of any Underwriter), the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel but
excluding wages and salaries paid by you, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company shall have no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Section 6 and Section 8 hereof (provided that the indemnification and
contribution agreements in Section 8 hereof shall not survive in the event that
this Agreement terminates prior to the First Time of Delivery).
12. Notice. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxx, Xxxxxxxx & Xxxx, Inc. on behalf of you as the
Underwriters.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the Underwriters in care of Xxxxx, Xxxxxxxx &
Xxxx, Inc., 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxx Xxxxxx; if to
the Company shall be delivered or sent by mail, telex or facsimile transmission
to the address of the Company set forth in the Registration Statement,
Attention: President; provided, however, that any notice to an Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its
17
address set forth in its Underwriter's Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company by you on request.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
13. Information Provided by the Underwriters. The Company and the
Underwriters acknowledge that, for purposes of this Agreement, the statements
set forth under the heading "Underwriting" in the Prospectus (with the exception
of information regarding (i) the amount of expenses estimated by the Company to
be incurred in connection with the transactions contemplated hereby and (ii) the
aggregate number of shares of common stock held by officers and directors with
respect to which such holders have agreed with the underwriters not to offer to
sell, contract to sell, or otherwise sell, dispose of, pledge or grant any
rights without the prior written consent of Xxxxx, Xxxxxxxx & Xxxx, Inc.)
constitute the only information furnished in writing to the Company by any
Underwriter specifically for inclusion in the Registration Statement or the
Prospectus.
14. Miscellaneous.
(a) This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters and the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
(b) Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
(c) This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
(d) This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
18
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination, upon request, but without warranty on your part as to the authority
of the signors thereof.
Very truly yours,
QUANTUM FUEL SYSTEMS
TECHNOLOGIES WORLDWIDE, INC.
By:
---------------------------------------
Xxxx X. Xxxxxxxxxxx
President and Chief Executive Officer
Accepted as of the date hereof at Boston,
Massachusetts
XXXXX, XXXXXXXX & XXXX, INC.,
By:
---------------------------------------
Name:
Title:
19
SCHEDULE I
Number of
Optional Shares
Total Number to be Purchased
of Firm Shares if Maximum
to be Purchased Option Exercised
--------------- ----------------
Xxxxx, Xxxxxxxx & Xxxx, Inc. ..........
TOTAL..................................
20
ANNEX I
Form of Xxxxxxxx & Xxxxxxxx LLP Opinion
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware with corporate power and
authority to conduct its business as described in the Prospectus. The Company is
duly qualified to transact business as a foreign corporation in the States of
California and Michigan.
2. The Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization" as of the dates stated therein.
All of the issued and outstanding shares of capital stock have been duly
authorized and validly issued and, to such counsel's knowledge, are fully paid
and nonassessable. The Shares have been duly authorized and, when issued and
delivered in accordance with the Underwriting Agreement, will be validly issued,
fully paid and nonassessable and will conform in all material respects to the
description of the capital stock contained in the Prospectus.
3. The Company has the corporate power and authority to enter into the
Underwriting Agreement and perform its obligations thereunder and the
Underwriting Agreement has been duly authorized, executed and delivered by the
Company.
4. The issuance and sale by the Company of the Shares and the performance
by the Company of its obligations under the Underwriting Agreement does not and
will not (i) violate the certificate of incorporation or by-laws of the Company,
(ii) constitute a material breach of the terms, conditions or provisions of or
constitute a default under any agreement, indenture or other instrument filed as
an exhibit to the Registration Statement to which the Company is a party or by
which it is bound, or to which any of its properties is subject, or (iii)
violate any existing Delaware, California or federal law, rule or administrative
regulation known to such counsel to be customarily applicable to transactions of
the nature contemplated in the Underwriting Agreement or any decree known to
such counsel of any court or any governmental agency or body having jurisdiction
over the Company or any of its properties, except that such counsel need express
no opinion as to state securities or "Blue Sky" laws or as to compliance with
the anti-fraud provisions of federal and state securities laws.
5. No authorization, approval or consent of any court or governmental
authority or agency is required in connection with the transactions contemplated
by the Underwriting Agreement, except such as have been obtained under the Act
and such as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Shares by the several
Underwriters and such as may be required by the National Association of
Securities Dealers, Inc. (as to which such counsel need express no opinion).
6. The Company is not, and after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in the
Prospectus will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
I-1
Such counsel shall also state that such counsel has participated in
conferences with representatives of the Underwriters and with representatives of
the Company and its accountants concerning the Registration Statement and the
Prospectus and has considered the matters required to be stated therein and the
statements contained therein, without having independently verified the
accuracy, completeness or fairness of such statements. Such counsel shall state
that on the basis of information that such counsel has gained in the course of
such counsel's representation of the Company in connection with its preparation
of the Registration Statement and Prospectus and such counsel's participation in
the discussions referred to above, such counsel believes that the Registration
Statement, as of its effective date, and the Prospectus, as of its date,
complied as to form in all material respects with the requirements of the Act
and the published rules and regulations of the Commission thereunder (except as
to the financial statements, supporting schedules, footnotes, and other
financial and statistical information included therein, as to which such counsel
need express no opinion) and such counsel does not know of any legal or
governmental proceedings pending to which the Company is a party or of which any
property of the Company is the subject that are required to be described in the
Registration Statement or Prospectus that are not so described or of any
contracts or any other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or Prospectus that are not filed or described as
required. Further, such counsel shall state that based upon and subject to such
information and participation, nothing came to the attention of such counsel
that caused such counsel to believe that (i) the Registration Statement as of
its effective date contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) that the Prospectus at the time it
was filed with the Commission pursuant to Rule 424(b) under the Act or as of the
date hereof, contained an untrue statement of a material fact or omitted to
state a material necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel has not been requested to and need not make any comment in
this paragraph with respect to the financial statements, supporting schedules,
footnotes, and other financial and statistical information, or industry data
attributed to an identified source, contained in the Registration Statement or
Prospectus).
Such counsel may state that the limitations inherent in the independent
verification of factual matters and the character of the determinations involved
in such counsel's review are such that such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements made
or the information contained in the Registration Statement and Prospectus except
for those made under the caption "Description of Capital Stock," which
accurately summarize in all material respects the provisions of the laws and
documents referred to therein.
Such counsel shall also include a statement in such opinion as to the
matters set forth in this paragraph. The Registration Statement has become
effective under the Act. To the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued by
the Commission nor has any proceeding been instituted or contemplated for that
purpose under the Act. The Prospectus has been filed with the Commission
pursuant to Rule 424(b) of the rules and regulations under the Act within the
time period required thereby.
I-2
ANNEX II
Pursuant to Section 7(d) of the Underwriting Agreement, Ernst & Young LLP
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, pro forma
financial information) examined by them and included in the Registration
Statement or the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the related published rules and regulations thereunder;
and, if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data, pro
forma financial information, or condensed financial statements derived from
audited financial statements of the Company for the periods specified in
such letter, as indicated in their reports thereon, copies of which have
been separately furnished to the Underwriters;
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus; and
on the basis of specified procedures including inquiries of officials of
the Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing came
to their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the four most recent fiscal years included in the Prospectus agrees
with the corresponding amounts (after restatement where applicable) in the
audited consolidated financial statements for such four fiscal years which
were included in the Company's Annual Report on Form 10-K for the most
recent fiscal year;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
II-1
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act and the related published rules and regulations, or (ii)
any material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus, for
them to be conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Company's Annual Report on Form
10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included in the Company's Annual Report on Form
10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity or other
items specified by the Underwriters, or any increases in
II-2
any items specified by the Underwriters, in each case as compared with
amounts shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in each case as
compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Underwriters,
except in each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Underwriters which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus or in Part II of, or in exhibits and schedules to,
the Registration Statement specified by the Underwriters, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found them
to be in agreement.
II-3